UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant  þx                            

Filed by a Party other than the Registrant  ¨

Check the appropriate box:

BIOLASE, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

BIOLASE, INC.

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON May 6, 2016

Dear Stockholder:

You are cordially invited to attend the annual meeting of stockholders of BIOLASE, Inc., a Delaware corporation (the “Company”), on May 6, 2016, at 11:00 a.m. local time at the Company’s corporate headquarters, located at 4 Cromwell, Irvine, California, 92618 (the “annual meeting”). At the annual meeting, you will be asked to vote on the election of the Company’s board of directors (our “Board”) and other matters described in the accompanying proxy materials.

YOUR VOTE IS IMPORTANT

Your vote is important, and all stockholders are cordially invited to attend the annual meeting in person. Whether or not you expect to attend the annual meeting, we urge you to complete, date, sign and return the enclosed proxy card or the enclosed voting instruction card as promptly as possible, or to vote by Internet or by telephone, to ensure your representation at the meeting. Internet or telephonic voting is available by following the instructions provided on the proxy card.

Our Board has nominated five candidates for election to our Board at the annual meeting: Paul N. Clark, Harold C. Flynn, Jr., Dr. Jonathan T. Lord, Dr. Frederic H. Moll and James R. Talevich.

Our Board recommends that you vote FOR its nominees, Paul N. Clark, Harold C. Flynn, Jr., Dr. Jonathan T. Lord, Dr. Frederic H. Moll and James R. Talevich, and FOR Proposals 2, 3, and 4.

Our Board is deeply committed to the Company, its stockholders and enhancing shareholder value. We look forward to seeing you at the annual meeting.

Sincerely,
Paul N. Clark Chairman of the Board		Harold C. Flynn, Jr. President and Chief Executive Officer

Irvine, California — April 7, 2016

BIOLASE, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD JUNEMay 6, 20132016

TO OUR STOCKHOLDERS:

NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of BIOLASE, Inc., a Delaware corporation (the “Company”), will be held on Thursday, JuneMay 6, 2013,2016, at 11:00 a.m. local time at the Company’s corporate headquarters, located at 4 Cromwell, Irvine, California, 92618, forto consider the following purposes,matters, as more fully described in the proxy statement accompanying this notice:

1. to elect fourthe election of five directors named in the proxy statement accompanying this notice to serve until the next annual meeting of stockholders;stockholders and until their successors are duly elected and qualified;

2. to ratifythe ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2013;2016;

3. an advisory vote on the compensationamendment of our named executive officers;

4. to amend the Company’s 2002 Stock Incentive Plan to extendincrease the termnumber of the Plan to May 5, 2019 and to increase the shares of our common stock reservedavailable for issuance thereunderunder the Stock Incentive Plan by 800,000 shares;an additional 4,000,000 shares and to remove the limit on the number of stock-based awards that may be granted under the Stock Incentive Plan;

4. an advisory vote to approve the compensation of the Company’s named executive officers; and

5. to consider and act uponthe transaction of such other business as may properly come before the meeting, or any adjournment or postponement thereof.

Stockholders of record at the close of business on April 29, 20136, 2016 are entitled to notice of and to vote at our annual meeting and any adjournment or postponement thereof. All stockholders are cordially invited to attend the meeting in person.

YOUR VOTE IS IMPORTANT.

Whether or not you plan to attend the meeting, please sign and return the enclosed proxy card as promptly as possible in the envelope enclosed for your convenience, or please vote via the Internet or by telephone. ShouldIf you receive more than one proxy card because your shares are registered in different names and addresses, each proxy card should be signed and returned to assure that all of your shares are represented at the meeting. Proxies forwarded by or for banks, brokers or other nominees should be returned as requested by them. The prompt return of proxies will be voted. save the expense involved in further communication.

You may revoke yourcan find detailed information regarding voting in the section entitled “General Information” on pages 1 through 4 of the accompanying proxy at any time prior to ourstatement.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON May 6, 2016

The proxy statement and the Company’s 2016 annual meeting. If you are a stockholder of record and vote by ballot at our annual meeting, your proxy will be revoked automatically and only your vote at our annual meeting will be counted.

We are providing or making available to you the Proxy Statement for our 2013 Annual Meeting of Shareholders and our 2012 Annual Reportreport on Form 10-K. You may also access these materials via the Internet10-K are available at www.biolase.com.

BY ORDER OF THE BOARD OF DIRECTORS

Sincerely,

Federico PignatelliMichael C. Carroll Chairman of the Board and Chief Executive OfficerSecretary

Irvine, California — April 7, 2016

Irvine, California – April    , 2013

TABLE OF CONTENTS

BIOLASE, INC.

4 Cromwell

Irvine, California 92618

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNEMAY 6, 20132016

PROXY STATEMENT

SOLICITATION OF PROXIESGENERAL INFORMATION

General

The accompanyingThis proxy statement is solicited on behalf of the Board of Directors (the “Board”)furnished to stockholders of BIOLASE, Inc., a Delaware corporation (“BIOLASE,(the “Company,” “the Company,“we,” “we,” “our,“our” or “us”“us”), in connection with the solicitation of proxies by our Board of Directors (our “Board”) for use at our annual meeting of stockholders to be held on Thursday, JuneMay 6, 20132016, and at any adjournment or postponement thereof.thereof (“our annual meeting”). Our annual meeting will be held at 11:00 a.m. local time at our corporate headquarters located at 4 Cromwell, Irvine, California, 92618. TheseThis proxy solicitation materials were mailedstatement and the accompanying proxy card are first being sent or given to stockholders on or about April , 2013 to all stockholders entitled to vote at our annual meeting.

If the enclosed form of proxy is properly signed and returned to us, the shares represented thereby will be voted at our annual meeting in accordance with the instructions specified thereon. If the proxy of a stockholder of record does not specify how the shares represented thereby are to be voted, the proxy will be voted FOR:7, 2016.

We will also consider other business, if any, that properly comes before our annual meeting.

Any stockholder hasyour admission. If you do not provide photo identification or comply with the powerother procedures outlined above upon request, you will not be admitted to revoke his or her proxy at any time before it is voted. A proxy may be revokedour annual meeting. Please note that if your shares are held of record by a stockholderbank, broker or other nominee, and you decide to attend our annual meeting, you may not vote in person at our annual meeting unless you present a legal proxy, issued in your name from the record holder (your bank, broker or other nominee).

Q. How can I vote my shares without attending our annual meeting?

A. If you are a holder of record by:of shares of our common stock, you may direct your vote without attending our annual meeting by signing, dating and mailing your proxy card in the enclosed postage-paid envelope or by following the instructions on the proxy card to vote by Internet or by telephone.

If you hold your shares in street name via a broker, bank or other nominee, you may direct your vote without attending our annual meeting by signing, dating and mailing your voting instruction card in the enclosed postage-paid envelope. Internet or telephonic voting may also be available. Please see your voting instruction card for instructions.

Q. Can I change my vote or revoke my proxy?

Attendance at our annual meeting will not, by itself, revoke a proxy.

If your shares are held in the name of a bank, broker or other nominee, you may change your vote by submitting new voting instructions to your bank, broker or other nominee. Please note that if your shares are held of record by a bank, broker bank or other nominee, and you decide to attend and vote at our annual meeting, your vote in person at our annual meeting will not be effective unless you present a legal proxy, issued in your name from the record holder your broker.

Voting; Quorum

On April 29, 2013, the record date for determination of stockholders entitled to notice of and to vote at our annual meeting, 31,579,348 shares of our common stock, par value $0.001 per share, were outstanding. No shares of our preferred stock were outstanding on such record date. Only stockholders of record of our common stock on April 29, 2013 will be entitled to notice of and to vote at our annual meeting(your bank, broker or any adjournment or postponement thereof. Each stockholder is entitled to one vote for each share of our common stock held by such stockholder on such record date. Stockholders may not cumulate votes in the election of directors.

The presence at our annual meeting, either in person or by proxy, of holders of shares of our outstanding common stock entitled to vote and representing a majority of the voting power of all of such shares shall constitute a quorum for the transaction of business.other nominee).

Q.	What constitutes a quorum?

Our bylaws providecontemplate that each incumbent director nominated for re-election will tender a majority voting standard forresignation to become effective upon the electionoccurrence of directors in uncontested elections. Under this majority voting standard, in uncontested electionsboth (i) the failure to receive the affirmative vote of directors, such as this election, each director must be elected by a majority of the votes cast at an annual meeting (in uncontested elections) and (ii) acceptance of such resignation by the Nominating and Governance Committee. Generally, the Nominating and Governance Committee (or other committee of independent directors) is required to accept or reject such resignation within 90 days following the annual meeting.

Ratification of the Appointment of BDO USA, LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2016. (Proposal Two). The affirmative vote of the majority of the shares of our common stock present in person or represented by proxy and entitled to vote.vote is required for approval. An abstention on Proposal Two will have the same effect as a vote against Proposal Two. A “majoritybroker non-vote will not have any effect on Proposal Two and will not be counted.

The amendment of the votes cast” means thatCompany’s 2002 Stock Incentive Plan to increase the number of votes cast “for” a director nominee must exceedshares of our common stock available for issuance under the Stock Incentive Plan by an additional 4,000,000 shares and to remove the limit on the number of votes cast “against”stock-based awards that nominee. If a director is not elected by a majority ofmay be granted under the votes cast in an uncontested election, our Nominating and Corporate Governance Committee shall accept any previously tendered resignation by such director absent a compelling reason (as determined consistent with our Board’s fiduciary duties) for such director to remain on our Board. Our Board’s policy is not to nominate a director for election unless the director has tendered in advance an irrevocable resignation effective in such circumstances where the director does not receive a majority of the votes cast in an uncontested election.Stock Incentive Plan (Proposal Three). The Committee shall act on any such resignation offer and publicly disclose its decision within 90 days from the date of the certification of the election results.

With regard to the other proposals, the affirmative vote of the holdersmajority of the shares of our common stock representing a majority of the voting power present in person or represented by proxy and entitled to vote on the subject matter is required for approval.

Abstentions may be specified An abstention on all proposals andProposal Three will be counted as present for purposes of determining the existence of a quorum regarding the item on which the abstention is noted. Abstentions from any vote and broker non-votes may have the effect of preventing approval of a proposal where the number of “for” votes, although a majority of the votes cast, does not constitute a majority of the required quorum.

If a shareholder of record signs and returns a valid proxy but does not provide instructions as to how shares should be voted, then all the shares represented by such proxy will be voted in accordance with the recommendations of the Board on all the proposals described in this Proxy Statement. If a shareholder is a beneficial owner (i.e., a shareholder who holds shares in street name via a broker or bank) and does not give a proxy to the broker or bank with instructions as to how to vote such shares, then the broker or bank who is the shareholder of record generally has discretionary authority to vote those shares only in “routine” matters, such as the proposal to ratify our auditors. However, banks and brokers do not have discretionary authority to vote on their clients’ behalf on “non-routine” proposals such as the election of our directors and the amendment to our 2002 Stock Incentive Plan. Therefore, such brokers and banks are not able to vote on a shareholder’s behalf in any director or on the proposal to amend the 2002 Stock Incentive Plan without specific voting instructions from the shareholder. If a shareholder who is a beneficial owner does not give a proxy to the shareholder’s broker or bank with instructions as to how to vote such shares on these “non-routine” proposals, the shares will be considered “broker non-votes” which will be counted as present for purposes of establishing a quorum but may have the same effect as a vote “against” these “non-routine” proposals.against Proposal Three. A broker non-vote will not have any effect on Proposal Three and will not be counted.

The persons named as attorneys-in-fact inAdvisory Vote to Approve the formCompensation of the accompanyingCompany’s Named Executive Officers (Proposal Four). Proposal Four is being submitted asking our stockholders to approve, on an advisory basis, the compensation of the Company’s named executive officers. The affirmative vote of the majority of the shares of our common stock present in person or represented by proxy Federico Pignatelli and Frederick D. Furry, were selected byentitled to vote is required for approval. An abstention on Proposal Four will have the same effect as a vote against Proposal Four. A broker non-vote will not have any effect on Proposal Four and will not be counted. Proposal Four is an advisory vote only, and, therefore, it will not bind the Company or our Board. However, our Board and are our officers. All properly executed proxies returned in time to be counted at our annual meetingthe Compensation Committee will be voted by such persons at our annual meeting. If you provide specific instructions with regard to certain items, your shares will be votedconsider the voting results, as you instruct on such items. Aside from appropriate, when making future decisions regarding executive compensation.

if our annual meeting is adjourned, by 1:00 a.m. Central Time on the day on which our annual meeting is reconvened), and proxies submitted by mail should be received prior to the date of our annual meeting.

If you hold your shares in street name via a broker, bank or other nominee and do not provide the broker, bank or other nominee with voting instructions (including by signing and returning a blank voting instruction card), your shares:

Our Board knows of no other matter to be presented at our annual meeting.meeting other than the election of directors, ratification of our independent registered public accounting firm, the amendment to the Company’s 2002 Stock Incentive Plan and the advisory resolution to approve the compensation of our named executive officers. If any other matters should be presented atproperly come before our annual meeting upon which a vote properly may be taken, shares represented by all proxies received by us on the proxy card will be voted with respect thereto as permitted and in accordance with the judgment of the persons named as attorneys-in-fact in the proxies.proxy holders.

Solicitation

We will bear the entire cost of solicitation, including the preparation, assembly, printing and mailing of this proxy statement, the proxy and any additional solicitation materials furnished to our stockholders. Copies of solicitation materials will be furnished to brokerage houses, fiduciaries and custodians holding shares in their names that are beneficially owned by others so that they may forward this solicitation material to such beneficial owners. In addition, we may reimburse such persons for their costs in forwarding the solicitation materials to such beneficial owners. The original solicitation of proxies by mail may be supplemented by a solicitation by telephone, facsimile or other means by our directors, officers or employees. No additional compensation will be paid to these individuals for any such services. Except as described above, we do not presently intend to solicit proxies other than by mail. In accordance with Delaware law, a list of stockholders entitled to vote at our annual meeting will be available at our annual meeting, and for 10 days prior to our annual meeting, at BIOLASE, Inc., 4 Cromwell, Irvine, California 92618 between the hours of 8:00 a.m. and 5:00 p.m. Pacific Time.

MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING

PROPOSAL ONE

ELECTION OF DIRECTORS

General

Our Board of Directors currently consists of fourfive directors whose term of office expires at our annual meeting. Our bylaws provide that our Board will consist of no more than five directors.

On July 17, 2010, Drs. Alexander K. ArrowJune 6, 2013, the Company, three Company directors who no longer serve on our Board and Norman J. Nemoy were appointed as Directors of the Company. On November 1, 2010, Mr. Gregory E. Lichtwardt was appointed as a Director of the Company.

Our Board, upon the recommendation of the Nomination and Corporate Governance Committee, appointed Mr. Federico Pignatelli, as our interim Chief Executive Officer and Executive Chairman on August 27, 2010. On September 30, 2010, Mr. Pignatelli was appointed as ourformer Chairman of the Board and Chief Executive Officer ofwho was serving in such offices at the Company. Priortime, entered into an agreement that provides, among other things, that the Company and such former directors agree to his appointment as Chief Executive Officer,nominate Mr. Pignatelli wasfor re-election as a director at the annual meeting of stockholders. Under SEC rules, the Company may not include Mr. Pignatelli in its proxy statement or on its proxy card without the consent of Mr. Pignatelli. On March 10, 2016, counsel to the Company sent to Mr. Pignatelli and his counsel a letter stating that the Company would conclude that Mr. Pignatelli does not consent to serving as a director, if elected, or being named in the Company’s proxy materials, if by the close of business on March 17, 2016, (a) he does not return a completed questionnaire indicating such consent or (b) the Company’s counsel does not otherwise receive a clear and unequivocal written statement to the contrary. Neither Mr. Pignatelli nor his counsel responded to such letter. As a consequence, the Company has not included Mr. Pignatelli in this proxy statement or on its proxy card.

At a meeting held on March 9, 2016, our PresidentBoard nominated each of Paul N. Clark, Harold C. Flynn, Jr., Dr. Jonathan T. Lord, Dr. Frederic H. Moll, and Chairman Emeritus ofJames R. Talevich (collectively, the Board.

The authorized number of directors on the “Board is currently fixed at not less than three and not more than nine.

The four nomineesNominees”) for election to be electedour Board at our annual meeting willmeeting. All of the Board Nominees currently serve on our Board. All of the Board Nominees have consented to be named in this proxy statement and have agreed to serve, if elected, until the 2014 Annual Meeting2017 annual meeting of Stockholdersstockholders and until their successors have been duly elected and qualified or until their earlier resignation, removal or death. All of our four nominees currently serve on our Board. Each of the director nominees has agreed to serve if elected. We have no reason to believe that any of the nominees will be unavailable to serve. Although it is anticipated that each nominee will be able to serve as a director, should any nominee become unavailable to serve, the proxies will be voted for such other person or persons as may be designated by our Board.

Our Board, upon recommendation from its Nominating and Corporate Governance Committee, has nominated the persons listed below for re-election to serve as directors for the term beginning at our annual meeting of stockholders on June 6, 2013. Unless otherwise instructed, the proxy holders will vote the shares represented by proxies received by them FOR each of the four nominees named below.

Our Nominees/DirectorsBoard Nominees.

The following table sets forth certain information as of April 29, 2013 regarding our directors:the Board Nominees.

Dr. Alexander K. Arrow(1)(2)(3)(4)Name		42Age				Principal Occupation and Business Experience		Director Since
						Cialis. From 1984 to 1998, he worked at Abbott Laboratories (“Abbott”) as the President of the Pharmaceuticals Division, retiring as a member of the Abbott board of directors and Executive Vice President. Mr. Clark is currently a member of the board of directors of Agilent Technologies, Inc., Chairman of the Board of Keysight Technologies, and Chairman of the Board of Cerevast Therapeutics, Inc. Mr. Clark received a Bachelor of Arts degree in Finance from the University of Alabama and a Master of Business Administration degree from Dartmouth College. Mr. Clark brings to our Board extensive experience within our industry and expertise in business finance.
Mr. Gregory E. Lichtwardt (1)(2)(3)(4)Harold C. Flynn, Jr.		58	50			Mr. Flynn was appointed President and Chief Executive Officer of the Company and to the Board of Directors in July 2015. Prior to joining the Company, Mr. Flynn was President of Zimmer Dental from 2007 to July 2015, a leading manufacturer and provider of medical devices for the dental market including dental implants, prosthetics, and a range of other oral rehabilitation products. Previously, from 2004-2007, he was Divisional Vice President and General Manager at Abbott Hematology, a division of Abbott Laboratories. Mr. Flynn holds a Bachelor of Science degree in Electrical Engineering from the University of Maine at Orono. Mr. Flynn holds patents in laser-based hematology and implantable devices for dentistry. Mr. Flynn provides our Board with extensive business operational experience and expertise in the building of medical device companies, particularly in the dental market.			July 2015
Jonathan T. Lord, M.D.(1)(2).			61			Dr. Lord was appointed to the Board of Directors in August 2014 and serves as Chairman of our Compensation Committee. Dr. Lord is a board-certified forensic pathologist and Fellow of the College of American Pathologists. From March 2012 to January 2013, Dr. Lord was the Chief Operating Officer of the Miller School and Uhealth-University of Miami Health System. From August 2011 to March 2012, Dr. Lord served as the Chief			August 2014

Name		Age				Principal Occupation and Business Experience		Director Since
						Innovation Officer at the University of Miami, Florida. From April 2009 to January 2010, Dr. Lord served as President and Chief Executive Officer of Navigenics, Inc., a privately held healthcare company. Prior to this role, he served as a senior executive in a variety of healthcare organizations including the Anne Arundel Medical Center and SunHealth and served as the Chief Operating Officer of the American Hospital Association. Dr. Lord was also the former Chief Innovation Officer and Senior Vice President of Humana Inc. He began his medical career in the U.S. Navy, serving for 11 years in a number of leadership roles in the Navy Medical Department. Since 2008, Dr. Lord has served on the board of directors of DexCom, Inc., a medical device company focused on the design, development and commercialization of continuous glucose monitoring systems, and he has served as its Chairman since May 2010. Dr. Lord previously served as a director of Stericycle, Inc., a publicly traded medical and pharmaceutical waste management company, and MAKO Surgical Corp., a publicly traded medical device company that was subsequently sold. Dr. Lord also serves or has served as a director of a number of private companies. Dr. Lord received a Bachelor of Science degree in Chemistry and a Doctor of Medicine degree from the University of Miami. Dr. Lord has also earned certificates in Governance and Audit from Harvard Business School. Mr. Lord brings to our Board wide-ranging business and operational experience as well as his expertise in business transactions.
Frederic H. Moll, M.D.(2)(3)			64			Dr. Moll was appointed to the Board of Directors in June 2013 and has served as the Chairman of Auris Surgical Robotics, Inc., an ophthalmic robotics company, since June 2011 and has served as its Chief Executive Officer since August 2012. Dr. Moll co-founded Hansen Medical, Inc., a medical robotics company, in September 2002, served as its Chief Executive Officer through June 2010, and served on its board of directors through May 2012. In November 1995,			June 2013

Name		Age				Principal Occupation and Business Experience		Director Since
						Dr. Moll co-founded Intuitive Surgical, Inc., a medical device company, and served as its first Chief Executive Officer and, later, its Vice President and Medical Director until September 2003. In 1989, Dr. Moll co-founded Origin Medsystems, Inc., a medical device company, which later became an operating company within Guidant Corporation, a medical device company, following its acquisition by Eli Lilly and Company in 1992. Dr. Moll served as Medical Director of Guidant’s surgical device division until November 1995. Dr. Moll holds a Bachelor of Science degree in Economics from the University of California, Berkeley, a Master of Science degree in Management from Stanford University and a Doctor of Medicine degree from the University of Washington School of Medicine. Dr. Moll provides our Board with medical technology expertise and significant knowledge of, and experience in, the medical device industry.
Dr. Norman J. Nemoy(1)(2)James R. Talevich(2)(3)(4)		74	65			Mr. Talevich was appointed to the Board of Directors in December 2013 and serves as the Chairman of our Audit Committee. Previously, he served as a director of Nova LifeStyle, Inc., a publicly held international manufacturing company. Since 2009, Mr. Talevich has been a consultant and a private investor. Mr. Talevich was Chief Financial Officer of I-Flow Corporation, a publicly held medical technology company, from 2000 to 2009. Prior to I-Flow, he served as Chief Financial Officer of Gish Biomedical, Inc., a publicly held medical device company, from 1999 to 2000, and as Chief Financial Officer of Tectrix Fitness Equipment, Inc., a privately held manufacturer of virtual reality fitness equipment, from 1995 to 1999. Mr. Talevich previously held financial management positions with Mallinckrodt Medical, Inc., Sorin Biomedical Inc. (Fiat S.p.A.), Pfizer Inc., SensorMedics Corporation, Baxter International Inc. and KPMG LLP. Mr. Talevich holds a Bachelor of Arts degree in Physics from California State University, Fullerton, and			December 2013

Name		Age		Principal Occupation and Business Experience		Director Since
				a Master of Business Administration from the UCLA Anderson School of Management. He is licensed as a Certified Public Accountant. Mr. Talevich brings to our Board his experience as a public company chief financial officer in the medical device and other industries and experience in dealing with finance and accounting matters.

Federico Pignatelli, 60, has served as our Chief Executive Officer since August 2010, and as our Chairman of the Board and Chief Executive Officer since September 2010. Mr. Pignatelli previously served as our Chairman of the Board from 1994 until March 2006, at which point he became our Chairman Emeritus. Mr. Pignatelli has served as our President from January 2008 until June 2010. From November 2007 to January 2008, he served as interim Chief Executive Officer. Mr. Pignatelli has served as a director since 1991. He is the founder, and has served as President, of Art & Fashion Group since 1992. Art & Fashion Group is a holding company of an array of businesses providing services to the advertising industry, including the world’s largest complex of digital and film still photography studios for production and post-production. Previously, Mr. Pignatelli was a Managing Director at Gruntal & Company, an investment banking and brokerage firm, and was a Managing Director of Ladenburg, Thalmann & Co., also an investment banking and brokerage firm.

Alexander K. Arrow,M.D., CFA, 42, was appointed to the Board in July 2010. Dr. Arrow is the Chief Medical and Strategic Officer of Circuit Therapeutics, Inc., a company seeking to realize commercial potential in the field of optogenetics, a position Dr. Arrow has held since July 2012. Previously, Dr. Arrow was the Chief Financial Officer of Arstasis, Inc., a 115-employee cardiology device manufacturer. From 2002 to 2007, Dr. Arrow headed medical technology equity research at the global investment bank Lazard, providing research coverage on a wide variety of medical device manufacturers. Dr. Arrow also spent two years as Chief Financial Officer of the Patent & License Exchange, later renamed PLX Systems, Inc., and three years as the publishing life sciences research analyst at Wedbush Morgan Securities. In 1996, Dr. Arrow was a surgical resident at the UCLA Medical Center. Dr. Arrow received his CFA in 1999. He was awarded an M.D. from Harvard Medical School in 1996 and a B.A. in Biophysics,magna cum laude, from Cornell University in 1992.

Gregory E. Lichtwardt, 58, was appointed to the Board in November 2010. Mr. Lichtwardt is Executive Vice President, Operations, Treasurer, and Chief Financial Officer of Conceptus, Inc. (NASDAQ:CPTS), developer of the Essure^® procedure, a non-surgical permanent birth control procedure. He joined Conceptus in November 2003 as Executive Vice President, Treasurer and Chief Financial Officer and was promoted to his current position in April 2008. From 2000 to 2002, he was Executive Vice President, Finance, Chief Financial Officer and Corporate Secretary of Innoventry, Inc., a financial services company. From 1993 to 2000, Mr. Lichtwardt was Vice President, Finance, Chief Financial Officer and Treasurer of Ocular Sciences, Inc., a worldwide developer and marketer of soft contact lenses. Prior to his employment with Ocular Sciences, Mr. Lichtwardt, from 1989 to 1993, held senior management positions in various divisions of Allergan, Inc. In addition to these positions, Mr. Lichtwardt has held various financial positions at AST Research, Inc. and at divisions of American Hospital Supply Corporation. He holds a B.B.A. degree from the University of Michigan and M.B.A. degree from Michigan State University.

Norman J. Nemoy,M.D., F.A.C.S., 74, was appointed to the Board in July 2010. Dr. Nemoy is a partner at Tower Urology Medical Group and is on the surgical attending staff at Cedars-Sinai Medical Center. Dr. Nemoy graduated from the University of Illinois, School of Medicine, and obtained his urological training at Stanford University Medical Center in Palo Alto, California. Following his training at Stanford, he had served on the clinical faculty at UCLA School of Medicine. He is a fellow of the American College of Surgeons, and is Board Certified by the American Board of Urology. Dr. Nemoy is an expert in advanced robotic surgery and has been involved in numerous clinical research studies designed to test the safety and clinical effectiveness of new urological drugs and devices.

Recommendation of Our Board

THEOur Board believes that it is important to ensure that our Board is comprised of highly qualified individuals who have relevant experience and are accomplished in their respective fields. Our Board also believes that it is important for the full Board to work together constructively with a focus on shareholder value and a duty to both the Company and to the interests of all of the Company’s stockholders. Our Board believes that all of the Board Nominees meet these criteria.

FOR THESE REASONS, OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH NOMINEE NAMED ABOVE.MESSRS. CLARK, FLYNN, AND TALEVICH, AND DRS. LORD AND MOLL.

CORPORATE GOVERNANCE

Board Role in Risk Oversight

Our Board takes an enterprise-wide approach to risk management that seeks to complement our organizational objectives, strategic objectives, long-term organizational performance and the overall enhancement of shareholderstockholder value. Our Board assesses and considers the risks we face on an ongoing basis, including risks that are associated with our financial position, our competitive position, the impact of our operations on our cost structure, our historical reliance on a small number of distributors, and our reliance on single source suppliers for some of our components. Our Board, at each of its meetings, considers these and other risks that we face from time to time. Our Board’s approach to risk management includes developing a detailed understanding of the risks we face, analyzing them with the latest information available and determining the steps that should be taken to manage those risks, with a view toward the appropriate level of risk for a company of our size and financial condition.

Certain committees of theour Board actively manage risk within their given purview and authority. Our Audit Committee, for example, reviews our disclosure controls and our internal controls over financial reporting on a quarterly basis, including our overall risk assessment and our processes and procedures for assessing risks. In addition, our Compensation Committee, in setting performance metrics, creates incentives for our senior executives that encourage only an appropriate level of risk-taking that is commensurate with our Company’s short-term and long-term strategies and their attendant risks. Finally, our Quality and Compliance Committee reviews and assists with management’s proper compliance with operational, safety, and regulatory requirements, which by their nature help to minimize risks that relate to our operations, the safety of our employees, and the end-users of our products and their patients.

Board Composition and Qualifications

Each director nomineeBoard Nominee brings a strong and unique set of skills and background to our Board and gives our Board as a whole substantial experience and competence in a wide variety of areas, including board of directors service, executive management, medical device,devices, capital equipment, specialty healthcare, consumer products, sales and marketing, international operations, public accounting, corporate finance, risk assessment and manufacturing.

Board Leadership Structure

Our Board currently consists of four non-management directors and our President and Chief Executive Officer, Mr. Pignatelli, whoFlynn. Mr. Clark, one of our independent directors, is Chairman of our Board. Our Board has broad experience in successful business ventures and has a professional background in investment banking, has been with us since 1991 and brings to our Board his years of experience and history with our operations, andno policy requiring that the types of issues we face on a recurring basis. Dr. Arrow, through his executive experience with a commercial stage medical device manufacturer, knowledgepositions of the medical technology industry gained in investment banking, and a medical educational background, brings a depth of knowledge of our industry. Mr. Lichtwardt, as a public company chief financial officer in the medical device industry and prior history as a chief financial officer in other industries including eye care, has valuable experience dealing with finance and accounting principles, financial reporting rules and regulations, and evaluating financial results. Dr. Nemoy, an expert in advanced robotic surgery and a frequent participant in clinical studies who is on the attending staff of one of the most preeminent hospitals in the nation, brings to our Board his medical expertise and his perspective as a user of high technology in the practice of medicine.

Board Leadership Structure

The positions of our principal executive officer and the chairman of our Board are served by one individual, Mr. Federico Pignatelli. Our Board provides oversight of our risk exposure by receiving periodic reports from management regarding matters relating to financial, operational, legal, and strategic risks and mitigation strategies for such risks, currently provided to the Board on a monthly basis. As Mr. Pignatelli is an officer of the Company, he does not serve on the Audit, Compensation, Nominating and Corporate Governance, or Quality and Compliance Committees of the Board. The Board believes that the existing leadership structure of the Board and its Committees is appropriate based on the sizeChairman of the Board and the Company’s current circumstances.Chief Executive Officer be separate or that they be occupied by the same individual. Our Board believes that this matter is properly addressed as part of the succession planning process and that it is in the best interests of the Company for our Board to determine whether to combine the positions from time to time. At this time, our Board believes that the independent Chairman arrangement serves the Company well.

Director Independence

Our Board has determined that each of Messrs. Arrow, Nemoy, and Lichtwardt arethe Board Nominees other than Mr. Flynn is an independent directorsdirector as defined by the listing standards of the NASDAQ Marketplace Rules (“(the “NASDAQ Rules”Rules”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The Committees of the Board currently and throughout 2012 have been comprised solely of independent directors and otherwise meet the applicable qualification requirements of NASDAQ and the SEC. In making its independence determinations, the Board considered the following relationship: Mr. Pignatelli wasFlynn is determined not to not be independent based on his current service beginning in November 2007 as our interimcurrent President and Chief Executive Officer. Jeffrey M. Nugent, our former President and Chief Executive Officer, served on the Board during 2015 and was determined not to be independent based on his service, since January 2008, as our President, and currently as our Chief Executive Officer.

Board Committees and Meetings

Our Board held sevensix meetings (including regularly scheduled and special meetings and acted by unanimous written consent three timesmeetings) during the year ended December 31, 2012. Each2015. During 2015, each person currently serving as a director then in office attended at least 75% of the aggregate of (i) the total number of meetings of our Board held during the period for which he was a director and (ii) the total number of meetings held by all committees of our Board on which such director served during 2012.the

period for which he served. Although we have no policy with regard to Board members’director attendance at our annual meetingmeetings of stockholders, it is customary for, and we encourage, all Board membersof our directors to attend our annual meeting, and we permit attendance by telephone or video conference, if necessary, to mitigate scheduling conflicts.meetings of stockholders. All of our Board members standing for reelectioncurrent directors, except Mr. Flynn who had not yet been appointed, attended our 20122015 annual meeting of stockholders.

Our Board has established fourthree standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, and the Quality and Compliance Committee. Each committee operates pursuant to a written charter that has been approved by our Board. A copy of the current charter for each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee and the Quality and Compliance Committee is available on our website at www.biolase.com.www.biolase.com under the tab “Investors,” then the link “Corporate Governance.” We do not intend the address to be an active link or to otherwise incorporate the contents of our website into this proxy statement.

Audit Committee.The Audit Committee currently consists of Drs. ArrowMessrs. Clark and Nemoy, and Mr. Lichtwardt,Talevich and Dr. ArrowMoll. Mr. Talevich serves as its chairman. Our Board has determined that Dr. ArrowMr. Talevich qualifies as the “audit committee financial expert” under the SEC rules and meets the financial sophistication requirements of the NASDAQ rules.Rules. Each member of the Audit Committee is independent as defined in the NASDAQ Rules, including the enhanced independence standards for Audit Committee members.

The primary responsibilities of the Audit Committee include, but are not limited to: (i) the appointment, compensation and oversight of the work of our independent auditor; (ii) reviewing the reports of the independent auditors regarding our accounting practices and systems of internal accounting controls, as applicable; (iii) reviewing our financial reports, our accounting and financial policies in general, and management’s procedures and policies with respect to our internal accounting controls; and (iv) reviewing the independence qualifications and quality controls of the independent auditor. The Audit Committee held ninesix meetings during 2012.2015.

Compensation Committee.The Compensation Committee currently consists of Drs. Arrow and Nemoy, and Mr. Lichtwardt,Clark and Dr. ArrowLord. Dr. Lord serves as its chairman. Each of the current members of the Compensation Committee (i) is independent as defined in the NASDAQ Rules, considering the additional standards for Compensation Committee members set forth therein, (ii) qualifies as a “non-employee” director under SEC rules and regulations and (iii) qualifies as an “outside” director under the Internal Revenue Code.Code of 1986, as amended (the “Code”).

The Compensation Committee’s primary responsibilities include, but are not limited to: (i) reviewing and developing our general compensation policies; (ii) reviewing and approving the compensation of our Chief Executive Officer and other executive officers, including salary, bonus, long-term incentive and equity compensation, and any other perquisites or special benefits; (iii) making awards under and acting as administrator of our equity incentive plans; (iv) overseeing administration of our other employee benefit plans; (v) making recommendations to our Board regarding director compensation; and (vi) producing an annual report on executive compensation for inclusion in our annual proxy statement. The charter for the Compensation Committee requires it to meet at least twice annually. The Compensation Committee held fourtwo meetings and acted by unanimous written consent seven times during 2012.2015.

For compensation decisions relating to our executive officers other than our Chief Executive Officer, our Compensation Committee also considershas historically considered the recommendations of our Chief Executive Officer, based on his assessment of each executive officer’s position and responsibilities, experience and tenure, his observations of theeach executive officer’s performance during the year and his review of competitive pay practices. Our Chief Executive Officer does not have a role in determining or recommending director compensation. Our Chief Executive Officer regularly attends Compensation Committee meetings, but abstains from portions of meetings at the request of other members of the Compensation Committee to enable it to freely consider issues related to the compensation of our Chief Executive Officer. The Compensation Committee has the sole authority to retain consultants and advisors as it may deem appropriate in its discretion, and the Compensation Committee has the sole authority to approve related fees and other retention terms.

Secondary Stock OptionThe Compensation Committee.The Secondary Stock Option Committee currently consists of our Chief Executive Officer and Chief Financial Officer. In September 2003 and as further modified in May 2006, May 2009 and March 2011, our Board granted our Chief Executive Officer and Chief Financial Officer joint has the authority to make discretionary option grantshire and fire its own outside compensation consultant and any other advisors it deems necessary. Since July 2014, the Compensation Committee has engaged Arnosti

Consulting, Inc. (“Arnosti”) to new employees,act as its independent consultant. The consultant provides the Compensation Committee with information regarding market compensation levels, general compensation trends and best practices. The Compensation Committee also asks the consultant to opine on the reasonableness of specific pay decisions and actions for the named executive officers, as well as the appropriateness of the design of the Company’s executive compensation programs.

The activities of the compensation consultant are directed by the Compensation Committee, although the consultant may communicate with members of management, as appropriate, to gather data and prepare analyses as requested by the Compensation Committee. During 2015, the Compensation Committee asked Arnosti to review market data and advise our Compensation Committee and management on setting executive compensation and the competitiveness and reasonableness of the Company’s executive compensation program; and review and advise the Compensation Committee regarding the Company’s pay for performance, equity grant and dilution levels, each relative to the market. The Compensation Committee also asked Arnosti to provide opinions on named executive officer pay decisions.

In 2015, Arnosti did not provide any other services to the Company. The Compensation Committee assessed the independence of Arnosti pursuant to SEC rules and concluded that Arnosti’s work for the Compensation Committee does not raise any conflict of interest.

The Compensation Committee has determined that Arnosti is independent because it does no work for us other than executive officers and Board members, subject to a limitation of 12,000 shares per individual employee grant and compliance with the express terms and conditions of our 2002 Stock Incentive Plan. Grants to employees that exceed 12,000 shares are first reviewed with the Board orrequested by the Compensation Committee. The Chief Executive Officer must review these grants at least semiannually withChairman of the Compensation Committee. In addition, all such options must have an exercise price not less thanCommittee reviews the closing sale price of our common stock onconsultant’s invoices, which are paid by the date of grant. The Secondary Stock Option Committee granted options to purchase an aggregate of 343,000 shares of our common stock in 2012.

Nominating and Corporate Governance Committee.The Nominating and Corporate Governance Committee currently consists of Messrs. Clark and Talevich and Drs. ArrowLord and Nemoy, andMoll. Mr. Lichtwardt, and Dr. NemoyClark serves as its chairman. Each of the members of the Nominating and Corporate Governance Committee is independent as defined in the NASDAQ Rules. The Nominating and Corporate Governance Committee is responsible for, among other things: (i) identifying individuals who are qualified to be members of our Board and selecting or recommending that our Board select the nominees for directorships; (ii) to the extent deemed appropriate by the committee, developing and recommending to our Board a set of corporate governance principles applicable to us;for the Company; (iii) establishing the criteria and procedures for selecting new directors; (iv) overseeing the process for evaluating our Board and management; and (v) reviewing and reassessing, at least annually, the adequacy of the Nominating and Corporate Governance Committee, including the compliance of the committee with its charter. The Nominating and Corporate Governance Committee held two meetingsone meeting during 2012.2015.

The Nominating and Corporate Governance Committee considers candidates for membership to our Board suggested by its members and our other Board members, as well as by our management and stockholders. The Nominating and Corporate Governance Committee may also retain a third-party executive search firm to identify candidates. All recommendations submitted by stockholders should be submitted to the Chairperson of the Nominating and Corporate Governance Committee, to the attention of the Corporate Secretary. The stockholderSecretary, BIOLASE, Inc., 4 Cromwell, Irvine, California 92618 and must submitbe accompanied by (1) a detailed resume of the candidate, and(2) an explanation of the reasons why the stockholder believes this candidate is qualified for service on our Board. The stockholder must also provideBoard, (3) such other information about the candidate that would be required by the SEC rules to be included in a proxy statement. In addition, the stockholder must includestatement, (4) the consent of the candidate, and describe(5) a description of any relationships, arrangements or undertakings between the stockholder and the candidate regarding the nomination or otherwise. The stockholder must also submitotherwise and (6) proof of the stockholder’s stockholdings in the Company. All communications areA stockholder wishing to be directed toformally nominate a director for election at a stockholder meeting must comply with the Chairpersonprovisions in the Company’s bylaws addressing stockholder nominations of the Nominating and Corporate Governance Committee, to the attention of the Corporate Secretary, Biolase, Inc., 4 Cromwell, Irvine, California 92618.directors.

The Nominating and Corporate Governance Committee focuses on the following criteria in determining whether a candidate is qualified to serve on our Board: (i) rolespersonal and contributions valuable to the business community;professional integrity, ethics and values; (ii) personal qualitiesexperience in corporate management, such as serving as an officer or former officer of leadership, character and judgment, and whether the candidate possesses and maintains a reputationpublicly held

company; (iii) experience in the community at largeCompany’s industry and with relevant social policy concerns; (iv) experience as a board member of integrity, trust, respect, competence and adherence to high ethical standards; (iii) relevant knowledge and diversityanother publicly held company; (v) academic expertise in an area of the candidate’s backgroundCompany’s operations; (vi) practical and experience in areas such asmature business finance and accounting, marketing, international business and other similar areas; (iv)judgment; (vii) whether the candidate has the time required for preparation, participation and attendance at meetings; and (v)(viii) requirements relating to Boardboard and Boardboard committee composition under applicable law and the NASDAQ Rules. The Nominating and Corporate Governance Committee, and our Board, may also consider the overall diversity of our Board when making a determination on qualification for service on our Board to ensure that theour Board is able to represent the best interests of all of our stockholders and to encourage innovative solutions and viewpoints by considering background, education, experience, business specialization, technical skills as well asand other factors ofwith respect to a particular candidate, as compared to composition of our Board at a given time. The Nominating and Corporate Governance Committee applies the same criteria to nomineeswill consider director candidates recommended by stockholders as to new candidates recommended byon the Nominating and Corporate Governance Committee.same basis that it evaluates other nominees for director.

The Nominating and Corporate Governance Committee reviews each existing director whose term is set to expire and considers the following in determining whether to recommend the re-election of that director: (i) occupation or business association changes; and (ii) whether circumstances have arisen that may raise questions about a director’s continuing qualifications in relation to our Board’s membership criteria.

Quality and Compliance Committee.The Quality and Compliance Committee currently consists of Drs. Arrow and Nemoy, Mr. Lichtwardt, and Mr. Lichtwardt serves as its chairman.

The primary responsibilities of the Quality and Compliance Committee include, but are not limited to: (i) assisting the Board in carrying out its oversight responsibility with respect to quality and compliance issues; (ii) overseeing management’s efforts to adopt and implement policies and procedures that require the Company and its employees to deliver high quality services in compliance with high ethical and legal standards; and (iii) ensuring compliance with operational, health, safety, and regulatory requirements and best practices. The Quality and Compliance Committee held two meetings during 2012.

Stockholder Communications

Any stockholder who wishes to communicate with our Board or any individual director may send hiswritten communications to our Board or her communication in writing to:such director c/o Corporate Secretary, BIOLASE, Inc., 4 Cromwell, Irvine, California 92618. The communication must include the stockholder’s name, address and an indication that the person is our stockholder. The Corporate Secretary will review any communications received from stockholders and all materialwill forward such communications from stockholders will be forwarded to the appropriate director or directors, or committee of our Board, based on the subject matter.

Section 16(a) Beneficial Ownership Reporting Compliance

The members of our Board, the executive officers and beneficial holders of more than ten percent of the outstanding shares of our common stock are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) which requires them to file reports with respect to their ownership of our securities. BasedTo our knowledge, based solely upon the copies of Section 16(a) reports and written representations which we received from such persons for their 20122015 fiscal year transactions in our common stock and their common stock holdings, we believe that all reporting requirements under Section 16(a) for such fiscal year were met in a timely manner by our directors, executive officers and greater than ten percent beneficial owners.

Director CompensationCode of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics. This code of ethics applies to our directors, executive officers and employees. This code of ethics is publicly available on our website atwww.biolase.com under the tab “Investors,” using the links “Corporate Governance,” followed by “Conduct,” and in print upon request to the Secretary at BIOLASE, Inc., 4 Cromwell, Irvine, California, 92618. If we make amendments to the code of ethics or grant any waiver that we are required to disclose, we will disclose the nature of such amendment or waiver on our website.

DIRECTOR COMPENSATION

The following table sets forth all compensation earned or paid to our non-employee directors during the year ended December 31, 2012.2015. Mr. Pignatelli, ourNugent, the Company’s President and Chief Executive Officer and a director until July 2015, and Mr. Flynn, the Company’s current President and Chairman of the BoardChief Executive Officer, did not receive additionalearn any compensation for histheir services as a director.

Director Compensation Tabledirectors in 2015.

The following table sets forth the aggregate grant date fair value of each grant of stock option grantoptions and restricted stock units awarded to our non-employee directors in 2012 and 2011.2015.

The grant date fair value for the May 10, 2012 option grant to Drs. Arrow and Nemoy and Mr. Lichtwardt was $1.75, also determined using the Black-Scholes option valuation model with the following assumptions: market price of $2.56, exercise price of $2.56, expected volatility of 103%, risk free interest rate of 0.87%, expected option life of 3.7 years, and an expected dividend yield of 0%.

The grant date fair value for the May 5, 2011 option grant to Drs. Arrow and Nemoy and Mr. Lichtwardt was $3.84, also determined using the Black-Scholes option valuation model with the following assumptions: market price of $5.34, exercise price of $5.34, expected volatility of 106.9%, risk free interest rate of 1.81%, expected option life of four years, and an expected dividend yield of 0%.

Effective as of the 2010 annual meeting, the Board, based on the recommendation of the Compensation Committee, increased the number of options granted automatically to each individual who is elected to our Board as a non-employee director at an annual meeting of stockholders to an option to purchase 20,000 shares of our common stock. In addition, the Board modified the calculation for options granted automatically to newly appointed non-employee directors to the number of shares equal to the sum of (a) 20,000 and (b) the product of (i) 1,250 and (ii) one plus the number of whole calendar months that will have elapsed between the date of appointment to the Board and the anticipated date of the next annual meeting of stockholders.

Each annual option grant vests over one year in equal quarterly increments, with the first vesting date occurring three months after the date of grant, except in the case of initial option grants for non-employee directors, which vest in monthly installments upon the non-employee director’s completion of each month of service as a non-employee director measured from the option grant date. Vesting is accelerated in full if certain changes in control or ownership occur or if the optionee dies or becomes disabled while serving as a director. Each option has an exercise price per share equal to the closing sale price of our common stock on the grant date and has a maximum term of ten years, subject to earlier termination on the first anniversary of the director’s cessation of our Board service for any reason. Each automatic option is immediately exercisable for all of the option shares and the director would receive unvested shares for each unvested option exercised. However, any unvested shares are subject to repurchase by us, at the lower of the exercise price paid per share or the fair market value per share (determined at the time of repurchase), should the director cease Board service prior to vesting of those shares.

The following table sets forth the number of shares underlying outstanding stock options (vested and unvested) held by each of our non-employee directors as of December 31, 2012.2015 by each of the persons who served as a non-employee director during 2015. Our non-employee directors did not hold any unvested shares of restricted stock units as of December 31, 2012.

EXECUTIVE COMPENSATION

Our Executive Officers

The following table sets forth certain information regarding our executive officers as of April 29, 2013:2015.

The executive officers are appointed by our Board on an annual basis and serve at the discretion of our Board, subject to the terms of any employment agreement with us, until their earlier resignation or removal. There are no family relationships among any of the directors or executive officers. The following is a brief description of the present and past business experience of Mr. Furry. The biography of Mr. Pignatelli appears earlier in this Proxy Statement under “Proposal One — Election of Directors.”

Mr. Furry,45, has served as our Chief Financial Officer since November 2010 and our Chief Operating Officer since October 2011. Mr. Furry is a certified public accountant (inactive) and has significant experience working with manufacturing and high technology companies for more than 18 years with public accounting firms, including PricewaterhouseCoopers LLP. From July 2004 to December 2009, Mr. Furry served as an audit partner of Windes & McClaughry. He holds an M.B.A. from the A. Gary Anderson Graduate School of Management at the University of California, Riverside.

Compensation Discussion and Analysis

The following discussion and analysis contains statements regarding company performance targets and goals. These are disclosed in the limited context of our compensation programs and should not be understood to be statements of management’s expectations or estimates of results or other guidance. The Company specifically cautions investors not to apply these statements to other contexts.COMPENSATION DISCUSSION AND ANALYSIS

This compensation discussion and analysis section discusses the compensation policies and programs for our named executive officers, which consist of: Federico Pignatelli,

The Compensation Committee of our Board of Directors is primarily responsible for overseeing the development and administration of the total compensation program for corporate officers and key executives and administering our executive incentive bonus and stock plans.

Compensation Objectives.Objectives

It is important that we employ energetic people who are enthusiastic about our mission and our products, and we believe this must start at the top with our executive officers who set an example for the entire company. We are engaged in a very competitive industry, and our success depends upon our ability to attract and retain qualified executive officers by offering them competitive compensation packages. Our compensation programs for our executive officers are designed to attract and retain such key executive officers and to reward them in a fashion commensurate with our corporate performance and the value created for our stockholders. Our compensation programs are also designed to support our short-term and long-term strategic goals and values and reward the individual contributions of our executive officers to our success.

Our policy is to provide our executive officers with competitive compensation opportunities that reward their contribution to our financial success and individual performance, while providing financial stability and security. Accordingly, the compensation package for executive officers is mainly comprised of the following compensation elements: (1) a base salary, designed to be competitive with salary levels in the industry and to reflect individual performance; (2) an annual discretionary bonus payable in cash and based on the review of certain annual financial and other performance measures, which supportsdesigned to support our short-term performance; and (3) where appropriate, long-term stock-based incentive awards, whichdesigned to support our long-term performance and are designed to strengthen the mutual interests between our executive officers and our stockholders;stockholders. In addition, during 2015 severance benefits were received by Messrs. Nugent and (4)Furry in some cases severance payments and other benefits payable upon termination of an officer’s employment by us without cause or by our officer for good reason, including following a change of control of us, which promotes executive retention and efforts towardconnection with their separations from the best interests of the stockholders in the event of an actual or threatened change of control of us.Company. We believe that each of these elements and their combination supports our overall compensation objectives.

Determination of Compensation Awards.Awards

The Compensation Committee determines the compensation to be paid to our executive officers. For compensation decisions relating to our executive officers other than our Chief Executive Officer, our Compensation Committee has historically considered the recommendations of our Chief Executive Officer, based on his assessment of each executive officer’s position and responsibilities, experience and tenure, his observations of each executive officer’s performance during the year and his review of competitive pay practices. In addition, as noted earlier this proxy statement, Arnosti provides independent executive consulting services to the Compensation Committee. The Compensation Committee periodically reviews the total compensation levels and the distribution of compensation among the compensation elements identified above for each of our executive officers. The Compensation Committee determines the total compensation levels for our executive officers by considering each executive officer’s position and responsibilities, the individual’s performance of his job-related duties and responsibilities and our financial performance, in the context of our compensation policies and objectives and competitive market data (evaluated with the assistance of Arnosti) applicable to each executive officer’s position. Our

The principal factors that were taken into account in establishing each executive officer’s compensation package for 2015 are described below. The Compensation Committee may in its discretion apply entirely different factors, such as different measures of financial performance, in future years.

Market Comparisons

The Compensation Committee periodically reviews competitive market data with the assistance of Amosti, as they believe that compensation decisions are complex and require a deliberate review of Company performance and the market’s compensation levels, as well as the overall business environment and the contributions of each individual. Accordingly, the Committee’s approach is to consider competitive compensation practices as a relevant factor rather than establishing compensation at specific benchmark percentiles. ThisWe believe that this enables us to respond to dynamics in the labor market and provides us with flexibility in maintaining and enhancing our executive officers’ engagement, focus, motivation and enthusiasm for our future.

The principal factors that were taken into account in establishing each executive officer’s compensation package for 2012 are described below. The Compensation Committee may in its discretion apply entirely different factors, such as different measures of financial performance, for future years.

In addition, the Compensation Committee periodically reviews peer group data. The Compensation Committee believes that our most direct competitors for executive talent include significantly larger and better-capitalized companies in the medical device industry, comprising a broader range of companies than those with which we usually are compared for purposes of stock performance.

Components of Compensation.Compensation

During the 2012 fiscal year,2015, our executive officers’ direct compensation was composed of base salary, annual incentive bonuses, and equity compensation. In addition, in connection with their departures, Messrs. Nugent and Furry received severance payments in 2015. After review of certain annual financial and other performance measures, as well as certain other factors, the Company paid annual incentive bonuses and/or granted equity compensation certain perquisites and in one case a potential severance payment payable upon certain events, including a qualifying terminationto all of the named executive officer’s employment subsequentofficers in 2015.

The Compensation Committee monitors the results of the annual advisory “say-on-pay” proposal and incorporates such results as one of many factors considered in connection with the discharge of its

responsibilities. Because a substantial majority of our stockholders approved the compensation program described in our proxy statement in 2015, the Compensation Committee did not implement any changes to our executive compensation program as a changeresult of control of us.the stockholder advisory vote.

Base Salaries.Salaries

Our executive officers’ base salaries are assessed annually by the Compensation Committee, taking into account each officer’s position and responsibilities, including accomplishments and contributions, experience and tenure. In addition, the Compensation Committee considered theour stockholders’ previous approval, on an advisory basis, of the compensation of the Company’s named executive officers, as well as the Company’s recent performance and current market conditions.

Mr. Pignatelli.Flynn. In August 2010On May 14, 2015, the Company entered into an employment agreement with Mr. Pignatelli was appointedFlynn to the position of Interimserve as President and Chief Executive Officer atof the Company, effective July 13, 2015. Under the terms of Mr. Flynn’s employment agreement, Mr. Flynn receives an annual salary of $1.00. Mr. Pignatelli was appointed our permanent Chief Executive Officer on September 30, 2010 and has agreed to continue at a symbolic annual cash salary of $1.00 since that time.

Mr. Furry.   Mr. Furry’s annual base salary was set, at the time of his hire as our Chief Financial Officer in November 2010, at $180,000.$425,000. His base salary was negotiated and was based on comparable market data, andas well as our compensation goals and objectives.

Mr. Furry’sDreyer. On February 22, 2015, the Company entered into an employment agreement with Mr. Dreyer to serve as Chief Financial Officer of the Company, effective March 9, 2015. Under the terms of Mr. Dreyer’s employment agreement, Mr. Dreyer receives an annual base salary was not adjusted at the time of his appointment to Chief Financial Officer and Chief Operating Officer on October 19, 2011. On November 8, 2012, Mr. Furry’s annual base salary was increased to $195,000.

Mr. Brown.   Mr. Brown is our Vice President of Sales and Marketing. His current annual base salary is $160,000.$275,000. His base salary was negotiated and was based on comparable market data, andas well as our sales compensation goals and objectives.

Mr. Merkin.   Barousse.Mr. Merkin is our National Sales Manager. His current base salary is $155,400. HisBarousse’s annual base salary was negotiated and was based on comparableincreased from $275,000 to $283,250 in January 2015 after review by the Compensation Committee of competitive market data presented by Arnosti.

Mr. Boutoussov.Mr. Boutoussov’s annual base salary was increased from $250,000 to $275,000 in January 2015 after review by the Compensation Committee of competitive market data presented by Arnosti.

Mr. Brown.Mr. Brown’s annual base salary was increased from $160,000 to $220,000 in January 2015 after review by the Compensation Committee of competitive market data presented by Arnosti and our sales compensation goals and objectives.to offset the 2015 elimination of Mr. Brown’s 0.2% commission on international sales.

Mr. Nugent.Mr. Nugent’s annual base salary prior to his 2015 resignation was $300,000.

Mr. Furry. Mr. Furry’s annual base salary prior to his 2015 resignation was $220,000.

Annual Bonuses.Bonuses and Stock-Based Incentive Awards

Our annualAnnual cash bonuses have been historicallyare intended to reward accomplishment of our overall short-term corporate performance and objectives for a fiscal year.

Mr. Pignatelli.   No formal annual bonus opportunity was set for Mr. Pignatelli in 2010, 2011, or 2012.

Mr. Furry.   No formal annual bonus opportunity was set for Mr. Furry in 2010, 2011, or 2012.

Mr. Brown.   No formal annual bonus opportunity was set for Mr. Brown in 2010, 2011, or 2012.

Mr. Merkin.   No formal annual bonus opportunity was set for Mr. Merkin in 2010, 2011, or 2012.

Stock-Based Incentive Awards.

Effective 2014 and during 2015 the Compensation Committee determined stock options and restricted stock units (“RSUs”) could also be utilized as a tool to incentivize certain executive members of management, and to further align management and stockholder interest. Stock-based incentives are designed to align the interests of our executive officers with those of our stockholders and provide each individual with a significant incentive to manage us from the perspective of an owner with an equity stake in theour business. Stock options allow theour executive officers to acquirepurchase shares of our common stock at a fixed price per share (which is at least the closing sale price of our stock on the grant date) over a specified period of time. Stock options generally become exercisable in a series of installments over either a three- or four-year period, contingent upon the officer’s continued employment with us. Accordingly, stock options provide a return to the executive officer only if he remains employed by us during the vesting period, and then only if the market price of the shares appreciates over the option term. As such, stock options not only reward our corporate performance but are also a key retention tool. The size of the option grant to each executive officer, including any grant considered for the Chief Executive Officer and our other named executive officers, is set at a level that is intended to create a

meaningful opportunity for stock ownership based on the individual’s current position with us, the individual’s performance of his job relatedjob-related duties and responsibilities in recent periods and his or her potential for future responsibility and promotion over the option term. The Compensation Committee also takes into account the number of unvested options held by the executive officer in order to maintain an appropriate level of equity incentive for that individual. The relevant weight given to each of these factors varies from individual to individual.

Mr. Pignatelli.Flynn. OptionsMr. Flynn was eligible to acquire 35,000receive an annual performance bonus of up to 60% his base salary, which for the partial 2015 employment year, was up to $150,000, based upon the achievement of certain criteria as established by the Compensation Committee relating to product sales and strategy. These performance goals were designed to be challenging, yet achievable with strong management performance. In connection with the commencement of his employment, Mr. Flynn’s 2015 bonus was guaranteed at $100,000. As of December 31, 2015 Mr. Flynn was granted a total bonus of $150,000, which was accrued in 2015, and will be paid in 2016 in the form of the $100,000 guaranteed portion in cash, and a stock option based award with a cash value of $50,000. In connection with Mr. Flynn’s new hire agreement, the Compensation Committee approved on July 13, 2015 equity incentive compensation for Mr. Flynn consisting of non-qualified stock option to purchase 870,000 shares of Company common stock at an exercise price of $5.34$1.64 per share, and 100,000870,000 restricted stock units. The restricted stock units vest based upon specific performance criteria established by the Compensation Committee relating to product sales and strategy. These performance goals were designed to be challenging, yet achievable with strong management performance. With respect to his 2015 stock option grant, one-fourth of the stock options vest on July 13, 2016 and the remaining three-fourths vest ratably monthly over a thirty-six month period, commencing on August 13, 2016, subject to Mr. Flynn’s continued service with the Company through the applicable vesting dates.

Mr. Dreyer. Mr. Dreyer was eligible to receive an annual performance bonus of up to 50% his base salary, based on a qualitative assessment of Mr. Dreyer’s performance by the Compensation Committee. For the partial 2015 employment year, no cash bonus was paid to Mr. Dreyer, however he received 70,000 RSUs valued on March 10, 2016 based on his 2015 performance, which will vest on July 1, 2016. In connection with Mr. Dreyer’s new hire agreement, the Compensation Committee approved on March 9, 2015 equity incentive compensation for Mr. Dreyer consisting of non-qualified stock options to purchase 871,710 shares of Company common stock at an exercise price of $2.58 were granted$1.99 per share, subject to performance and time-based vesting criteria.

Mr. Barousse. Mr. Barousse was eligible to receive an annual performance bonus of up to 50% his base salary, which was determined based on a qualitative assessment of employee performance and revenue generation. No cash bonus was paid to Mr. PignatelliBarousse in May 20112015, however in-lieu of cash he received 55,000 restricted stock units on February 26, 2016 based on his 2015 performance, which will vest on July 1, 2016. In addition, during 2015 Mr. Barousse received 290,575 stock options subject to performance and December 2011, respectively, in his capacity as an officertime-based vesting criteria. The performance-based vesting criteria was deemed to be challenging, yet achievable with strong management performance. In 2015, the Company achieved 80% of the Company. The May 2011performance conditions and this portion of the stock option grant vested on December 31, 2015.

Mr. Boutoussov. Mr. Boutoussov was eligible to receive an annual performance bonus of up to 40% his base salary, which was determined based on a qualitative assessment of employee performance and became exercisable immediately.revenue generation. No cash bonus was paid to Mr. Boutoussov in 2015, however in-lieu of cash he received 50,000 restricted stock units on February 26, 2016 based on his 2015 performance, which will vest on July 1, 2016. In addition, during 2015 Mr. Boutoussov received 290,575 stock options subject to performance and time-based vesting criteria. The Decemberperformance-based vesting criteria was deemed to be challenging, yet achievable with strong management performance. In 2015, the Company achieved 80% of the performance conditions and this portion of the stock option originallygrant vested on December 31, 2015.

Mr. Brown. Mr. Brown was eligible to receive an annual performance bonus of up to 50% his base salary, which was determined based on a qualitative assessment of employee performance and revenue generation. Mr. Brown did receive a bonus in the amount of $41,229, which was paid in 2015 based on the

discretion of the Compensation Committee, along with 50,000 restricted stock units on February 26, 2016 based on 2015 performance, which will vest and become exercisable over forty-eight equal monthly installments commencing December 23, 2011,on July 1, 2016. In addition, during 2015 Mr. Brown received 145,287 stock options subject to performance and time-based vesting criteria. The performance-based vesting criteria was deemed to be challenging, yet achievable with strong management performance. In 2015, the Company achieved 80% of the performance conditions and this portion of the stock option grant vested on December 31, 2015

Mr. Pignatelli’s continued employment with us. In March 2012, the unvested shares were accelerated and subsequently exercised for cash. On November 8, 2012, Mr. PignatelliNugent.No formal annual bonus opportunity was granted stock options to acquire 100,000 shares at an exercise price of $2.50, which options vest and become exercisable over twelve equal monthly installments commencing November 8, 2012. The Compensation Committee considered these grants as necessary and appropriateset for Mr. Pignatelli’s services.Nugent in 2015. Accordingly, no bonus was paid to, or accrued for, Mr. Nugent for 2015.

Mr. Furry. Options to acquire 47,500 shares were granted toNo formal annual bonus opportunity was set for Mr. Furry in December 2011 at an exercise price of $2.58. The December 2011 stock option vests and becomes exercisable over forty-eight equal monthly installments commencing December 23, 2011, subject2015. Accordingly, no bonus was paid to, Mr. Furry’s continued employment with us. The Compensation Committee considered this grant as necessary and appropriateor accrued for, Mr. Furry’s services. No options were granted to Mr. Furry in 2012.for 2015.

Mr. Brown.   No options were granted to Mr. Brown in 2011. Options to acquire 40,000 shares were granted to Mr. Brown in February 2012 at an exercise price of $2.89. The February 2012 stock option vests and becomes exercisable over forty-eight equal monthly installments commencing February 16, 2012, subject to Mr. Brown’s continued employment with us. The Compensation Committee considered this grant as necessary and appropriate for Mr. Brown’s services.

Mr. Merkin.   No options were granted to Mr. Merkin in 2011. Options to acquire 60,000 shares were granted to Mr. Merkin in April 2012 at an exercise price of $2.73. The April 2012 stock option vests and becomes exercisable over forty-eight equal monthly installments commencing April 3, 2012, subject to Mr. Merkin’s continued employment with us. The Compensation Committee considered this grant as necessary and appropriate for Mr. Merkin’s services.

Policies with Respect to Equity Compensation Award Determinations.Determinations

We do not time the award of stock option grants in advance of material announcements in order to achieve lower exercise prices. In the past, we have not granted any equity compensation awards other than stock options. Our policy is that stock options are granted with an exercise price equal to or greater than the closing price of our common stock on the date of grant and that all option grants are approved in advance of or on the date of the grant. The Secondary Stock Option Committee (consisting of our Chief Executive Officer and Chief Financial Officer) is delegated authority by the Board to approve stock option grants in an amount not to exceed 12,000 shares per person and only for newly-hired employees. For stock option grants to new employees, our policy is that they be issued on, and receivehave an exercise price equal to or greater than the closing stock price of our common stock on such employee’s startthe date presuming thatof grant. All grants to employees are first reviewed with our Board or the award was pre-approved by the Secondary Stock OptionCompensation Committee.

Perquisites and Other Benefits.

The Compensation Committee does not generally provide any perquisites at this time, except for a car allowance that is provided to Mr. Merkin in connection with his sales manager role.

Severance and Change of Control Arrangements.Arrangements

Messrs. Pignatelli, Furry, Brown, and MerkinAll 2015 named executive officers are employed by the Company on an “at will” basis, and they do not have anybasis. Pursuant to the terms of select employment agreements, or severance provisions. Mr. Brown has an agreement that provides certain benefits may be provided in the event of a changethat either the Company terminates employment without cause or the officer resigns for good reason. In addition, during 2015, Messrs. Nugent and Furry received severance benefits in control ofconnection with their 2015 separations from the Company. As of December 31, 2012, Mr. Brown’s change in control benefits totaled approximately $176,360, which represents one-year of salary and certain medical and dental benefits. Messrs. Pignatelli, Furry, and Merkin do not have any change in control agreements withPlease see the Company.

Compliance with Internal Revenue Code Section 162(m).

Section 162(m) of the Internal Revenue Code disallows a tax deduction to publicly held companies for compensation paid to certain of their executive officers to the extent that such compensation exceeds $1.0 million per covered officer in any fiscal year. The limitation applies only to compensation that is not considered to be performance-based. Nonperformance-based compensation paid to our executive officers for the 2012 fiscal year did not exceed the $1.0 million limit per officer, and we do not expect the nonperformance-based compensation to be paid to our executive officers for the 2012 fiscal year to exceed that limit. Our option grants under our 2002 Stock Incentive Plan have been designed to qualify as performance-based compensation.

There are certain circumstances under which the Board and Compensation Committee may decide to exceed the deductibility limit imposed under Section 162(m) or to otherwise pay non-deductible compensation. These circumstances may include maintaining a competitive salary for a named executive officer position or attracting highly qualified executives to join us and to promote their retention with compensation that is not performance based as part of their initial employment offers. Because it is unlikely that the cash compensation payable to any of our executive officers in the foreseeable future will approach the $1.0 million limit, we do not expect to take any action to limit or restructure the elements of cash compensation payable to our executive officers so as to qualify that compensation as performance-based compensation under Section 162(m). We will reconsider this decision should the individual cash compensation of any executive officer ever approach the $1.0 million level.

Sections 280G and 4999 of the Internal Revenue Code impose certain adverse tax consequences on compensation treated as excess parachute payments. An executive is treated as having received excess parachute payments for purposes of Sections 280G and 4999 of the Internal Revenue Code if he or she receives compensatory payments or benefits that are contingent on a change in the ownership or control of a corporation, and the aggregate amount of such contingent compensatory payments and benefits equals or exceeds three times the executive’s base salary amount. An executive’s excess parachute payments are subject to a 20% excise tax under Section 4999 of the Internal Revenue Code, in addition to any applicable federal income and employment taxes. Also, the corporation’s compensation deduction in respect of the executive’s excess parachute payments is disallowed under Section 280G of the Internal Revenue Code. If we were to be subject to a change in control, certain amounts received by our executives could be excess parachute payments under Sections 280G and 4999 of the Internal Revenue Code. As discussed under “Potential Payments Upon Termination or Change in Control” we do not provide our executive officers with tax gross up payments insection below for a quantification of the eventamounts to be received by each NEO assuming a termination of employment or a change in control.control occurred as of December 31, 2015 or, in the case of Messrs. Nugent and Furry, based on their actual terminations of employment.

COMPENSATION COMMITTEE REPORT

The Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth above, and based on its review and discussions, the Compensation Committee recommended to our board of Directors that the Compensation Discussion and Analysis set forth above be included in this Proxy Statement for the 2016 annual meeting of stockholders and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Submitted by the Compensation Committee of our Board:

Jonathan T. Lord, Chairman

Paul M. Clark

The foregoing Compensation Committee Report is not “soliciting material,” is not deemed “filed” with the SEC, and shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing of ours under the Securities Act of 1933, as amended, or under the Exchange Act, except to the extent we expressly incorporate this report by reference.

EXECUTIVE COMPENSATION

2015 Summary Compensation Table

The following table shows the compensation earned by, or awarded or paid to,information for each of our named executive officers, (“NEOs”) for the fiscal years ended December 31, 2012, 2011, and 2010:

Summary Compensation Tablewhich we sometimes refer to as “NEOs” in this proxy statement:

in 2015, and will be paid in 2016 in the form of $100,000 in cash and restricted stock units with a $50,000 cash value. The amount reported in the “Bonus” column represents the guaranteed portion of his 2015 bonus, while the amount reported in the “Non-Equity Incentive Plan Compensation” column represents the portion of the bonus paid in RSUs based on the Company’s achievement of the 2015 performance goals.

(8)

Stock and option awards during 2015 were subject to performance-based vesting conditions. In accordance with FASB ASC 718, amounts presented represent the probable achievement of the goals at the time of grant. Assuming maximum achievement of the performance goals, the grant date fair value would be as follows: (i) Mr. Flynn maximum achievement for stock awards was $1,712,160 and maximum achievement for stock options was $1,037,005 (maximum was projected at time of grant); (ii) Mr. Dreyer maximum achievement was $1,363,291; and (iii) Messrs. Barousse, Boutoussov and Brown maximum achievement was $432,458, $432,458, and $216,228, respectively (maximum was projected at time of grant).

Grants of Plan-Based Awards in 2015

The following table presents information regarding annual incentive bonus awards and equity incentive awards granted to the named executive officers during 2012.2015.

(6)	Although grants were awarded as of the start date for Messrs. Flynn and Dreyer, approval of grants were as of May 14, 2015 and February 22, 2015, respectively.

(7)

Pursuit Mr. Nugent’s severance agreement, all unvested stock and option award were subject to modification to become vested and exercisable as of his termination date of July 12, 2015. As Mr. Nugent’s remaining stock and options were set to fully vest as of July 13, 2015, the only remaining unvested portion consisted of 390 options valued at $465. As amount is immaterial no modification, pursuant to FASB ASC Topic 718, was made in 2015.

Outstanding Equity Awards at Fiscal Year-End 2015

The following table sets forth summary information regarding the outstanding equity awards held by each of our named executive officers at December 31, 2012. We have not granted equity awards other than options in the past.2015.

(3)

Represents equity incentive compensation consisting a non-qualified stock option granted on January 2, 2015. The options vested based upon specific performance criteria established by the Compensation Committee, which were only 80% achieved during 2015. As such 20% of the award was forfeited and the remaining options vested on December 31, 2015.

(4)	Represents stock options granted on March 23, 2013. These stock options vest ratably monthly over a thirty-six month period, subject to Mr. Boutoussov and Mr. Brown’s continued service with the Company through the applicable vesting dates.

(5)	Represents stock options granted on February 16, 2012. These stock options vest ratably monthly over a forty-eight month period, subject to Mr. Brown’s continued service with the Company through the applicable vesting dates.

(6)

Represents equity incentive compensation consisting a non-qualified stock option and RSUs granted to Mr. Flynn on July 13, 2015. The RSUs vest based upon specific performance criteria established by the Compensation Committee, and 25% of the stock options vest on July 13, 2016 and the remaining 75% vest ratably monthly over a thirty-six month period, commencing on August 13, 2016, subject to Mr. Flynn’s continued service with the Company through the applicable vesting dates.

Option Exercises and Stock Vested in 2015

The following table summarizes the option exercisesstock vested in 2015 held by each of our named executive officers for the year ended December 31, 2012. No shares of restricted stock have been granted to any of the named executive officers.2015.

Potential Payments upon Termination or Change of Control

As described below, pursuant to the terms of select employment agreements, severance benefits may be provided in Controlthe event that the Company terminates employment without cause, the officer resigns for good reason or following a change in control. The following is a description and quantification of the benefits that the executive would have received assuming a termination as of December 31, 2015 or, in the case of Messrs. Nugent and Furry, based on their actual separations from the Company.

Mr. PignatelliFlynn.In the event that Mr. Flynn is terminated without cause (or resigns for good reason), he shall be entitled to (i) twelve months of base salary as of the date of termination, payable over twenty-six equal installments ($16,346 per month), and (ii) paid COBRA premiums for the twelve-month period following such termination ($1,208 per month). In the event that Mr. Pignatelli wasFlynn is terminated within twelve months following a change in control, in addition to the above severance benefits, Mr. Flynn will also receive (i) his target performance bonus then in effect ($100,000), (ii) his unvested stock options shall vest and be exercisable (870,000 shares, assuming a closing stock price of $0.84 on December 31, 2015), and (iii) one-half of his performance-based equity awards shall vest (435,000 shares, assuming a closing stock price of $0.84 on December 31, 2015).

Mr. Dreyer.In the event that Mr. Dreyer is terminated without cause (or resigns for good reason), he shall be entitled to (i) twelve months of base salary as of the date of termination, plus the full amount of Mr. Dreyer’s performance bonus target then in effect, payable over twenty-six equal installments ($10,577 per month), (ii) paid COBRA premiums for the twelve-month period following such termination ($1,945 per month), and (iii) the unvested portion of any stock options that are not tied to financial performance (523,026 shares, assuming a partyclosing stock price of $0.84 on December 31, 2015). In the event that Mr. Dreyer is terminated within twelve months following a change in control, the same severance benefits apply, however the compensation will be paid as a lump sum rather than over twenty-six equal installments.

Mr. Barousse. Mr. Barousse is not entitled to any severance or change in control agreement during 2012 andbenefits under his employment agreement.

Mr. Boutoussov. In the event that Mr. Boutoussov is notterminated within eighteen months following a party to such an agreement currently.

Mr. Furry.    Mr. Furry was not a party to any severance or change in control, agreement during 2012Mr. Boutoussov will receive (i) twelve months of base salary as of the date of termination, plus the full amount of any performance bonus target then in effect ($22,917 per month), and is not a party to(ii) paid COBRA premiums for the twelve-month period following such an agreement currently.termination ($1,905 per month).

Mr. Brown. Mr. Brown wasis not a partyentitled to any severance, agreement during 2012. Hehowever in the event that Mr. Brown is a party toterminated within twelve months following a change in control agreementis entitled to receive (i) twelve months of base salary as of the date of termination ($18,333 per month), and (ii) paid COBRA premiums for the twelve-month period following such termination ($1,482 per month).

Mr. Nugent.In connection with us that providesMr. Nugent’s resignation in 2015 he was entitled to severance including (i) compensation equal to $150,000, payable in five equal installments ($30,000 per month), (ii) paid COBRA premiums for one yearthe eighteen-month period following such termination ($1,638 per month), and (iii) the period to exercise vested stock options shall be extended until the expiration date of salarysuch option and certain medicaloutstanding options and dental benefits which total approximately $176,360RSUs shall continue to vest in accordance with the original vesting dates set forth in the eventunderlying award agreements.

Mr. Furry. In connection with Mr. Furry’s resignation in 2015 he was provided a transition success severance package upon the satisfactory completion of a changetransitional duties. As Mr. Furry met the criteria he received in 2015 (i) additional three months compensation at his current base salary at date of controltermination ($18,333 per month), (ii) the period to exercise stock options that have vested on or before January 31, 2015 was extended ninety days, in addition to the ninety days afforded employees separated without cause under the Company’s 2002 Stock Incentive Plan, and (iii) the Company agreed to pay for the reasonable cost of outplacement services of the Company.Company’s choosing, not to exceed $20,000.

Mr. Merkin.    Mr. Merkin was not a party to any severance or change in control agreement during 2012 and is not a party to such an agreement currently.

Equity Compensation Plan InformationEQUITY COMPENSATION PLAN INFORMATION

Our 2002 Stock Incentive Plan is designed to attract and retain the services of individuals essential to itsthe Company’s long-term growth and success. We also formerly maintained the 1990 Stock Option Plan and the 1993 Stock Option Plan. The 1990 Stock Option Plan and the 1993 Stock Option Plan have terminated pursuant to their terms and no grants under those plans remain outstanding.

The following table summarizes information as of December 31, 20122015 with respect to the shares of our common stock that may be issued upon exercise of options, warrants or rights under our existing equity compensation plans.2002 Stock Incentive Plan.

Compensation Committee Interlocks

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

On the basis of filings with the SEC and Insider Participationother information, we believe that based on 58,227,539 shares of our common stock being issued and outstanding as of April 1, 2016, the following persons, including groups of persons, beneficially owned more than five percent (5%) of our outstanding common stock:

None

Each of the Oracle Reporting Persons is a party that certain Standstill Agreement, dated as of November 10, 2015, with the Company, pursuant to which the Oracle Reporting Persons agreed, among other things, that neither they, nor any of their affiliates or associates would purchase or acquire any additional shares of our common stock, if , after such purchase, the aggregate beneficial ownership of the Oracle Reporting Persons and their affiliates and associates would exceed 25% of the issued and outstanding shares of our common stock.

In accordance with SEC rules, the percentage indicated in the table above is based on 58,227,539 shares outstanding as of April 1, 2016, together with the addition of 1,344,186 shares issuable upon exercise of the warrants held by the Oracle Reporting Persons.

respect to 5,898,265 shares of our common stock. Such beneficial ownership excludes warrants held by the Schuler Foundation to purchase 3,824,252 shares of our common stock that became exercisable on May 7, 2015. The terms of the warrants prohibit the holder of such warrants from exercising the warrants to the extent that the exercise would result in the holder and its affiliates beneficially owning more than 19.99% of the outstanding shares of our common stock.

Each of the Schuler Reporting Persons is a party that certain Standstill Agreement, dated as of November 10, 2015, with the Company, pursuant to which the Schuler Reporting Persons agreed, among other things, that neither they, nor any of their affiliates or associates would purchase or acquire any additional shares of our common stock, if, after such purchase, the aggregate beneficial ownership of the Schuler Reporting Persons and their affiliates and associates would exceed 25% of the issued and outstanding shares of our common stock.

In accordance with SEC rules, the percentage indicated in the table above is based on 58,227,539 shares outstanding as of April 1, 2016, together with the addition of 3,824,252 shares issuable upon exercise of the warrants held by the Schuler Reporting Persons.

The following table sets forth the beneficial ownership of shares of our common stock as of April 1, 2016 by (i) each current director, (ii) each of the Board Nominees, (iii) each named executive officer and (iv) all current directors and executive officers as a group. Except as indicated in the footnotes to this table, the persons named in the table have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them, subject to community property laws, where applicable. Percentage ownership is based on 58,227,539 shares of our common stock outstanding as of April 1, 2016. Shares underlying options or warrants exercisable within 60 days of April 1, 2016 are deemed outstanding for the purpose of computing the percentage ownership of the person or persons holding such options or warrants, but are not deemed outstanding for computing the percentage ownership of any other persons.

Name		Owned Shares of Common Stock				Number of Shares Underlying Options or Warrants Exercisable Within 60 Days of April 1, 2016				Percentage of Class
Paul N. Clark(1)			1,155,257	(5)(6)			582,606	(7)			3.0	%
Harold C. Flynn, Jr.(1)(2)			50,000				—				*
Jonathan T. Lord(1)			126,690	(5)			267,087	(8)			*
Frederic H. Moll(1)			9,217	(5)			230,837				*
James R. Talevich(1)			9,217	(5)(8)			207,695				*
David C. Dreyer(2)			53,000				623,026				1.2	%
Clark Barousse(2)			—				164,660				*
Dmitri Boutoussov(2)			—				309,660				*
William E. Brown, Jr.(2)			—				312,330				*
All current directors and executive officers as a group			1,403,381				2,697,900				7.0	%
Jeffrey M. Nugent(2)(3)			130,427	(9)			198,584	(10)			*
Frederick D. Furry(2)(3)			18,198				—				*

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The charter of the Audit Committee requires that it review any insider or related party transactions. In connection with this requirement, our written policy for the review of related party transactions (transactions with the Company or any of its subsidiaries involving our directors, executive officers or holders of more than five percent of our outstanding common stock or any member of the immediate family of the foregoing) is reviewed by our Audit Committee and our Board at least annually. Under our policy, any related party transactions require prior approval by the Audit Committee or by a majority of the disinterested members of our Board. In addition, transactions involving our directors are disclosed and reviewed by the CompensationNominating and Corporate Governance Committee wasin its assessment of our directors’ independence. To the extent any related party transactions are ongoing business relationships, the transactions are reviewed annually by the Audit Committee. Related party transactions must be on terms no less favorable to the Company than those that it believes could be obtained from unaffiliated third parties.

Since January 1, 2015, there has not been, and there is not currently proposed, any transaction or series of related transactions in which we were or are to be a participant or are currently a participant involving an amount in excess of $120,000 and in which (a) any director, nominee for director, executive officer or employeestockholder known to the Company to be the beneficial owner of more than five percent of our outstanding common stock or (b) any member of the Company duringimmediate family of any person identified in clause (a) had or will have a direct or indirect material interest.

AUDIT COMMITTEE REPORT

The Audit Committee oversees our independent registered public accounting firm and assists our Board in fulfilling its oversight responsibilities on matters relating to the integrity of our financial statements, our compliance with legal and regulatory requirements and the independent registered public accounting firm’s qualifications and independence by meeting regularly with the independent registered public accounting firm and financial management personnel. Management is responsible for the preparation, presentation and integrity of our financial statements; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; and evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed our financial statements as of and for the fiscal year ended December 31, 2012, or in any prior year, and none of the members of the committee had any relationship requiring disclosure under Item 404 of Regulation S-K. There were no Compensation Committee interlocks as described in Item 407(e)(4) of Regulation S-K.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis2015 with management and basedBDO USA, LLP, our independent registered public accounting firm. The Audit Committee also discussed with BDO USA, LLP the matters required to be discussed by Auditing Standard No. 16,Communications with Audit Committees, as amended. This included a discussion of the independent registered public accounting firm’s judgments as to the quality, not just the acceptability, of our accounting principles and such other matters that generally accepted auditing standards require to be discussed with the Audit Committee. The Audit Committee also received the written disclosures and the letter from BDO USA, LLP required by Public Company Accounting Oversight Board Rule 3526, Independence Discussion with Audit Committees, as amended, and the Audit Committee discussed the independence of BDO USA, LLP with that firm.

Based on itsthe Audit Committee’s review and discussions noted above, the CompensationAudit Committee recommended to theour Board, of Directorsand our Board approved, that the Compensation Discussion and Analysis set forth aboveaudited financial statements be included in our 2012 Annual Report on Form 10-K and in this Proxy Statement for the 2013 Annual Meeting of Stockholders.

Submitted byfiscal year ended December 31, 2015 for filing with the CompensationSEC. The Audit Committee of our Board:

Date: April    , 2013

PROPOSAL TWO

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The firm ofalso appointed BDO USA, LLP was selected by the Audit Committee to act as our independent registered public accounting firm for fiscal year 2016, subject to stockholder ratification.

Submitted by the Audit Committee of our Board:

James R. Talevich, Chairman

Paul N. Clark

Frederic H. Moll, M.D.

Date: April 6, 2016

PROPOSAL TWO

RATIFICATION OF THE APPOINTMENT OF BDO USA, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING

DECEMBER 31, 2016.

The Audit Committee has appointed BDO USA, LLP as our independent registered public accounting firm for 2016, subject to stockholder ratification. Our Board and the Audit Committee is asking our stockholders to ratify the appointment by the Audit Committee of BDO USA, LLP’s as the independent public accounting firm to conduct the audit of our financial statements for the fiscal year ending December 31, 2013. BDO USA, LLP was initially engaged by us on August 8, 2005 and has served in that capacity through December 31, 2012. Our Board is asking the stockholders to ratify BDO USA, LLP’s appointment.2016. Stockholder ratification of such selection is not required by our bylaws or any other applicable legal requirement. However, our Board is submitting the selection of BDO USA, LLP to our stockholders for ratification as a matter of good corporate governance.

In the event our stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to continue to retain BDO USA, LLP for the 20132016 fiscal year. Even if the selection is ratified, the Audit Committee in its discretion may considerdirect the appointment of a different independent registered public accounting firm at any time during the year if ourthe Audit Committee believes that such a change wouldshould be in our and our stockholders’ best interests.made.

A representative of BDO USA, LLP is expected to be present at our annual meeting, will have the opportunity to make a statement if he or she desires to do so and willis expected to be available to respond to appropriate questions.

Recommendation of Our Board

THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE SELECTION OF BDO USA, LLP TO SERVE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2013.

PRINCIPAL ACCOUNTANT FEES AND SERVICESPrincipal Accountant Fees and Services

The following table presents fees billed and billable to us for professional services rendered by BDO USA, LLP for the fiscal years ended December 31, 20122015 and 2011.2014.