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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 27, 2006
ALIGN TECHNOLOGY, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-32259 94-3267295
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(Commission File Number) (IRS Employer Identification No.)
881 Martin Avenue, Santa Clara, California 95050
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(Address of Principal Executive Offices) (Zip Code)
(408) 470-1000
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(Registrant's Telephone Number, Including Area Code)
Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On September 27, 2006, Align Technology, Inc. ("Align") entered into a
Binding Settlement Term Sheet with OrthoClear, Inc., OrthoClear Holdings, Inc.,
and OrthoClear Pakistan Pvt. Ltd. ("OrthoClear") to end all pending litigation
between the parties and execute a formal settlement agreement within fifteen
days (the "Settlement". Effective immediately, OrthoClear will no longer accept
new patient cases for treatment. Upon the earlier of the Closing of the formal
settlement agreement or October 12, 2006, OrthoClear will consent to the entry
of an Exclusion Order by the International Trade Commission (ITC), prohibiting
importation of OrthoClear aligners into the United States, and will assign and
transfer to Align all intellectual property rights with application to the
correction of malocclusion.
The Settlement includes the following terms:
- - Effective immediately, OrthoClear will stop accepting new patient cases for
treatment;
- - OrthoClear will consent to the entry of an exclusion order by the United
States International Trade Commission (ITC), enforced by the United States
Customs Service, which prevents OrthoClear from importing its dental
aligner products into the U.S., either directly or through a third party;
- - OrthoClear and Zia Chishti, its CEO, and Charlie Wen, its President, will
transfer and assign to Align all intellectual property rights with
application to the treatment of malocclusion;
- - OrthoClear principals Zia Chishti, Charlie Wen, Peter Riepenhausen, and
Christopher Kawaja will sign 5-year, global non-compete agreements in the
field of removable aligner therapy products and related software market;
- - OrthoClear employees Joe Breeland and Jeff Tunnell will sign 5-year U.S.
non-compete agreements prohibiting their personal participation in the
removable aligner therapy product and related software market;
- - Align will make Invisalign treatment available to OrthoClear patients in
the United States, Canada and Hong Kong at no charge from Align;
- - The Parties will dismiss all pending litigation against each other and
release all related claims;
- - Align will make a one-time cash payment of $10 million to OrthoClear
Holdings, Inc.
The Settlement further provides that Align will pay OrthoClear an additional $10
million if, at or prior to the Closing of the formal settlement agreement,
OrthoClear obtains requisite approval from its shareholders to discontinue all
design, manufacture, marketing and sales of removable dental aligners worldwide.
If at the Closing OrthoClear does not have the requisite shareholder approval,
Align will place $10 million in escrow for a period of 30 days. If OrthoClear
obtains and certifies the requisite shareholder approval on or prior to the 30th
day, the escrowed amount plus accrued interest will be released to OrthoClear.
If OrthoClear does not certify that it has shareholder approval by the 30th day,
all escrowed funds will be returned to Align and Align shall have no further
payment obligation.
The foregoing description of the Settlement does not purport to be complete
and is qualified in its entirety by reference to the Binding Settlement Term
Sheet, a copy of which is attached to this report as Exhibit 10.1, and
incorporated herein by reference.
ITEM 8.01 OTHER EVENTS
On September 28, 2006, the Company announced that it reached an agreement
to end OrthoClear litigation. The full text of the press release is attached
hereto as Exhibit 99.1.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) EXHIBITS.
EXHIBIT NO. DESCRIPTION
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10.1 Binding Settlement Term Sheet
99.1 Press Release dated September 28, 2006 announcing agreement to
end OrthoClear litigation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: September 28, 2006 ALIGN TECHNOLOGY, INC.
By: /s/ Eldon M. Bullington
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Eldon M. Bullington
Vice President of Finance and
Chief Financial Officer
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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10.1 Binding Settlement Term Sheet
99.1 Press Release dated September 28, 2006 announcing agreement to
end OrthoClear litigation
Exhibit 10.1
CONFIDENTIAL AND BINDING SETTLEMENT TERM SHEET
This Confidential and Binding Settlement Term Sheet ("Term Sheet") sets forth
the terms of a settlement between and among the following parties: Align
Technology, Inc. ("Align"); OrthoClear Holdings, Inc., OrthoClear, Inc., and
OrthoClear Pakistan Pvt. Ltd. (collectively, "OrthoClear"); Joe Breeland, Zia
Chishti, Christopher Kawaja, Ross Miller, Peter Riepenhausen, Jeff Tunnell, and
Charlie Wen (collectively, the "OrthoClear Individuals") and Ross J. Miller,
DDS, a Professional Corporation, and Bao Tran; and Thomas M. Prescott, Roger E.
George, Eldon M. Bullington, Patricia Wadors, Gil Laks, Kelsey Wirth and Julie
Yeomans (collectively, the "Align Individuals"). The purpose of the settlement
is global peace between Align, OrthoClear, the OrthoClear Individuals, and the
Align Individuals (collectively, the "Parties"). The Parties will enter a formal
settlement agreement effectuating these terms within fifteen (15) days
("Closing"); provided, however, that if they fail to do so, this Term Sheet
shall control and constitute Closing at noon Pacific on the fifteenth day after
this Term Sheet is signed.
1. Exclusion Order. OrthoClear consents to the entry by the ITC of an
exclusion order upon Closing, effective upon entry by the International Trade
Commission. Said exclusion order shall apply to all OrthoClear removable dental
aligners.
2. Settlement Payment by Align. a. In consideration of the global
settlement and mutual releases and other agreements and mutual covenants set
forth herein other than Section 4, Align shall pay $10 million to OrthoClear
Holdings, Inc. by wire transfer simultaneously with the execution and delivery
to Align of (a) a consent to a joint motion to terminate the ITC investigation
and enter the exclusion order provided in paragraph 1 and (b) assignments of
Intellectual Property and covenants not to compete as provided in paragraph 5.
b. If OrthoClear shall at or prior to Closing certify that the
requisite shareholder approval referred to in Section 4 has been obtained, Align
shall pay an additional $10 million to OrthoClear Holdings, Inc. by wire
transfer simultaneously with the making of the payment described in Section 2(a)
above. If at the Closing OrthoClear shall not have certified that such approval
has been obtained, Align shall instead pay $10 million to O'Melveny and Myers
LLP, by wire transfer simultaneously with the making of the payment described in
Section 2(a) above. O'Melveny and Myers LLP shall hold such amount in escrow for
a period of 30 days after Closing. If OrthoClear shall certify that the approval
has been obtained on or prior to the 30th day after Closing, the escrowed amount
and accrued interest thereon shall be released to OrthoClear Holdings. If no
such certification is made on or prior to the 30th day after Closing, then the
escrowed amount and accrued interest thereon shall be released to Align and
Align shall have no further payment obligation under this paragraph 2 b.
3. Patient Transition.
a. Effective upon the execution of this Term Sheet, OrthoClear will
accept no additional patient cases for treatment of malocclusion, for treatment
using removable dental positioners, or for treatment involving other activities
using OrthoClear's existing proprietary technology.
b. Upon Closing, Align will make treatment using removable plastic
dental aligners available for all existing OrthoClear patient cases in the
United States, Canada, and Hong Kong, at no charge from Align to the patient,
the doctor, or OrthoClear. OrthoClear will provide patient case numbers and
dentist contact information for the purposes of facilitating the transfer of
patient cases to Align, which information Align shall maintain in accordance
with the same privacy protections as it does its own customer and patient
information.
c. Align and OrthoClear will cooperate to determine plans for and
to implement the transfer of OrthoClear's patient cases to Align.
4. Shutdown. Upon the later to occur of Closing and the certification by
OrthoClear Holdings, Inc. that all requisite approval of its shareholders for
such action has been obtained, OrthoClear will discontinue, worldwide, all
design, manufacture, marketing and sales of removable dental aligners. This
obligation shall not take effect unless both the Closing and such certification
occur. OrthoClear Holdings, Inc. will take such steps as it determines necessary
or appropriate to solicit such shareholder approval.
5. Transfer Of Intellectual Property. In consideration of the global
settlement and mutual releases and other agreements and mutual covenants set
forth herein, OrthoClear shall assign to Align all of its world-wide
intellectual property rights disclosed in the litigation and any other
intellectual property rights with application to the correction of
malocclusions, including but not limited to OrthoClear's process for designing
and manufacturing removable plastic dental aligners or other activities using
OrthoClear's existing proprietary technology and Zia Chishti and Charlie Wen
shall assign to Align all of their worldwide intellectual property rights with
application to the correction of malocclusions (the "Transferred Rights") on the
following terms:
a. Scope. The Transferred Rights shall include, but are not limited
to, patents and patent applications, software and confidential process
information, trademarks, copyrights, and trade secrets;
b. Representations and Warranties. OrthoClear, Chishti and Wen will
provide standard representations and warranties regarding ownership of and right
to transfer the Transferred Rights, including confirmation that there have been
no transfers of rights to third parties between September 19, 2005 and Closing.
In addition, prior to Closing, Chishti and Wen will disclose to Align's
representatives, on a confidential basis, any intellectual property rights
outside the scope of this section but which have application or potential
application to the dental field;
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c. Delivery. OrthoClear shall deliver to Align all copies of those
materials reasonably necessary to prosecute all patent applications and to
maintain any issued patents. OrthoClear shall make reasonable efforts to locate
and deliver to Align all materials relating to or embodying the transferred
intellectual property and shall make reasonable efforts to destroy all copies of
such material not delivered to Align; provided, however, that OrthoClear may
retain an archival copy of all business records. OrthoClear consents to the
disclosure to Align of all discovery responses produced by OrthoClear during
discovery in the ITC investigation that describe or embody the Transferred
Rights (including software, training materials, process manuals, and FDA January
and July filings); provided, however, that Align shall return or destroy (at
OrthoClear's option) all confidential discovery responses that relate to
OrthoClear's finances, sales, marketing strategic plans, disk images, personal
information, regulatory filings other than the January and July FDA submission,
patient data, employees, customers, suppliers, contractors, and/or business
plans;
d. Covenants not to compete for five years in the field of
removable aligner therapy and related software throughout the world by the
following individuals: Zia Chishti, Christopher Kawaja, Peter Riepenhausen,
Charlie Wen;
e. Covenants not to compete for five years in the field of
removable aligner therapy and related software in the United States by the
following individuals: Joseph Breeland and Jeff Tunnell. These two individuals
are permitted to work for a company that competes in the field of removable
aligner therapy and related software, so long as the individuals are not
personally involved with those products.
6. Immediate Stays And Future Dismissals.
a. Upon the execution of this Term Sheet, the Parties shall
immediately seek the stay of all pending actions, including without limitation
the state case between Align and OrthoClear, the two pending federal cases
between Align and OrthoClear, and federal case between Align and Ross Miller. In
seeking such stays, the Parties shall indicate that they have reached a
settlement and seek the stay to complete the documentation to memorialize its
terms. To the maximum extent possible, the Parties shall file under seal all
requests to stay unless a press release or securities filing has already been
issued as described in Paragraph 9, below. Immediately following the Closing,
the Parties shall dismiss with prejudice all pending actions and proceedings,
with each party bearing its own costs and attorney fees. In addition, OrthoClear
shall take no further action with respect to any inter partes patent
reexamination proceedings instituted by OrthoClear against Align.
b. In the event that OrthoClear, any OrthoClear employees or
agents, or any former OrthoClear employees or agents (collectively, "OrthoClear
Witnesses") are subpoenaed or otherwise required by Align to produce documents
or provide testimony in connection with any litigation between Align and Bao
Tran (including the state case between Align and Bao Tran if any portion of such
action continues), Align shall reimburse OrthoClear, its successors, or
OrthoClear Witnesses for any and all attorneys' fees, costs, and other related
expenses associated with responding to any such subpoena or producing documents
or providing testimony. Nothing in this section shall be construed as consent by
any current or former OrthoClear Witness to deposition in any location other
than his or her principal residence.
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7. Releases. The Parties shall execute general releases of all claims,
known or unknown, between them, with the exception that as between Align and
Tran, Align and Tran shall mutually release each other from all claims, known or
unknown, that are related to OrthoClear or any current litigation. The Parties
shall covenant that neither they nor their agents shall directly or indirectly
initiate or assist with, in any manner whatsoever, litigation against any or all
of the Parties, based on any of the subject matter of or information obtained in
any of the dismissed actions, and will not voluntarily provide information or
otherwise cooperate with any person or entity to assert a claim based on the
subject matter of or information obtained in any of those actions except as
required by law. However, in the event any party violates this provision, then
the party or parties against whom the claim is asserted shall not be precluded
from asserting any claims or defenses it may have against the party who violated
this provision.
8. Confidentiality and Nondisparagement. The terms of this Term Sheet shall
be confidential unless and until such terms are disclosed in a press release
and/or securities filing in accordance with Paragraph 9, below. The Parties
shall each take reasonable steps to assure that they and their employees will
not disparage any other Party or make public statements accusing another Party
of criminal or unethical conduct in connection with any of the settled claims.
9. Press Release. Only after execution of the Term Sheet, which is
currently anticipated to be before Wednesday, September 27, 2006, any Party may
issue press releases and/or make securities law filings regarding the settlement
and the terms of the settlement. Prior to issuing any such release, the parties
shall make reasonable efforts to consult and to agree as to its contents. Any
press release issued by Align regarding the settlement and/or the terms of the
settlement shall name each of the OrthoClear Parties specifically and shall
state that there has been no finding of wrongdoing by any Party or any of the
individuals referenced herein.
10. Definitive Agreement. The Parties shall each use all reasonable efforts
to finalize and execute a final agreement as promptly as reasonably possible.
However, if no such agreement is executed within fifteen (15) days of the
execution of this Term Sheet, this Term Sheet shall control and shall be binding
at Closing as if it were the final, definitive agreement of the Parties.
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IN WITNESS WHEREOF, each Party has caused this Agreement to be executed as of
the Effective Date.
ALIGN TECHNOLOGY, INC. ORTHOCLEAR HOLDINGS, INC.
/s/ Thomas M. Prescott /s/ Z. Chishti
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Name: Thomas M. Prescott Name: Muhammad Ziaullah Chishti
Title: President & CEO Title: Chief Executive Officer
Date: September 27, 2006 Date: September 27, 2006
ORTHOCLEAR, INC. ORTHOCLEAR PAKISTAN PVT LTD.
/s/ Z. Chishti /s/ Mudasser Rathore
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Name: Muhammad Ziaullah Chishti Name: Mudasser Rathore
Title: Chief Executive Officer Title: Director
Date: September 27, 2006 Date: September 27, 2006
MUHAMMAD ZIAULLAH CHISHTI HUA FENG "CHARLIE" WEN
/s/ Z. Chishti
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Date: September 27, 2006 Date:
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PETER RIEPENHAUSEN CHRISTOPHER KAWAJA
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Date: Date:
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JEFFREY TUNNELL JOSEPH BREELAND
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Date: Date:
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BAO TRAN ROSS J. MILLER, DDS, P.C.
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Name:
Date: Title:
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Date:
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5
Exhibit 99.1
ALIGN TECHNOLOGY REACHES AGREEMENT TO END ORTHOCLEAR LITIGATION
ORTHOCLEAR TO STOP ACCEPTING CASES, STOP IMPORTING ALIGNERS AND TRANSFER IP TO
ALIGN
SANTA CLARA, Calif., Sept. 28 /PRNewswire-FirstCall/ -- Align Technology,
Inc. (Nasdaq: ALGN), the inventor of Invisalign(R), a proprietary method of
straightening teeth without wires or brackets, announced today that it has
signed a Binding Settlement Term Sheet with OrthoClear, Inc., OrthoClear
Holdings, Inc., and OrthoClear Pakistan Pvt. Ltd. ("OrthoClear") to end all
pending litigation between the parties and execute a formal settlement
agreement within fifteen days. Effective immediately, OrthoClear will no
longer accept new patient cases for treatment. Upon the earlier of the Closing
of the formal settlement agreement or October 12, 2006, OrthoClear will
consent to the entry of an Exclusion Order by the International Trade
Commission (ITC), prohibiting importation of OrthoClear aligners into the
United States, and will assign and transfer to Align all intellectual property
rights with application to the correction of malocclusion.
The Binding Settlement Term Sheet includes the following terms:
-- Effective immediately, OrthoClear will stop accepting new patient cases
for treatment;
-- OrthoClear will consent to the entry of an exclusion order by the United
States International Trade Commission (ITC), enforced by the United
States Customs Service, which prevents OrthoClear from importing its
dental aligner products into the U.S., either directly or through a third
party;
-- OrthoClear and Zia Chishti, its CEO, and Charlie Wen, its President, will
transfer and assign to Align all intellectual property rights with
application to the treatment of malocclusion;
-- OrthoClear principals Zia Chishti, Charlie Wen, Peter Riepenhausen, and
Christopher Kawaja will sign 5-year, global non-compete agreements in the
field of removable aligner therapy products and related software market;
-- OrthoClear employees Joe Breeland and Jeff Tunnell will sign 5-year U.S.
non-compete agreements prohibiting their personal participation in the
removable aligner therapy product and related software market;
-- Align will make Invisalign treatment available to OrthoClear patients in
the United States, Canada and Hong Kong at no charge from Align;
-- The Parties will dismiss all pending litigation against each other and
release all related claims;
-- Align will make a one-time cash payment of $10 million to OrthoClear
Holdings, Inc.
"This resolution achieves all of Align's litigation objectives and allows us
to fully focus the Company's energies and resources on providing innovative
products and excellent service to Invisalign customers," said Thomas M.
Prescott, Align President and Chief Executive Officer. "We are particularly
committed to helping OrthoClear patients and their doctors minimize disruptions
in their treatment by getting started with Invisalign."
Align will pay OrthoClear an additional $10 million if, at or prior to the
Closing of the formal settlement agreement, OrthoClear obtains requisite
approval from its shareholders to discontinue all design, manufacture, marketing
and sales of removable dental aligners worldwide. If at the Closing OrthoClear
does not have the requisite shareholder approval, Align will place $10 million
in escrow for a period of 30 days. If OrthoClear obtains and certifies the
requisite shareholder approval on or prior to the 30th day, the escrowed amount
plus accrued interest will be released to OrthoClear. If OrthoClear does not
certify that it has shareholder approval by the 30th day, all escrowed funds
will be returned to Align and Align shall have no further payment obligation.
The Binding Settlement Term Sheet is the result of a settlement conference
mandated and supervised by an administrative law judge as part of pre-trial
proceedings in the ITC action against OrthoClear. There has been no finding of
wrongdoing by any Party or by Joe Breeland, Zia Chishti, Christopher Kawaja,
Ross Miller, Peter Riepenhausen, Jeff Tunnell or Charlie Wen.
Align Technology will host a conference call and web cast on Thursday,
September 28, 2006 at 8:30 a.m. EDT / 5:30 a.m. PDT. To access the web cast
please visit the Investor Relations section of Align Technology's website at
investor.aligntech.com. To access the conference call, please dial
+1-201-689-8341 approximately fifteen minutes prior to the start of the call. If
you are unable to listen to the call, an archived web cast will be available
beginning approximately one hour after the call's conclusion and will remain
available through 5:30 p.m. EDT on October 25, 2006. Additionally, a telephonic
replay of the call can be accessed by dialing 877-660-6853 with account number
292 followed by # and conference number 215292 followed by #. The replay may be
accessed from international locations by dialing +1-201-612-7415 and using the
same account and conference numbers referenced above. The telephonic replay will
be available through 5:30 p.m. EDT on October 10, 2006.
About Align Technology, Inc.
Align Technology designs, manufactures and markets Invisalign, a proprietary
method for treating malocclusion, or the misalignment of teeth. Invisalign
corrects malocclusion using a series of clear, nearly invisible, removable
appliances that gently move teeth to a desired final position. Because it does
not rely on the use of metal or ceramic brackets and wires, Invisalign
significantly reduces the aesthetic and other limitations associated with
braces. Invisalign is appropriate for treating adults and older teens. Align
Technology was founded in March 1997 and received FDA clearance to market
Invisalign in 1998.
To learn more about Invisalign or to find a certified Invisalign doctor in
your area, please visit www.invisalign.com or call 1-800-INVISIBLE.
SOURCE Align Technology, Inc.
-0- 09/28/2006
/CONTACT: investors, Barbara Domingo of Align Technology, Inc.,
+1-408-470-1000, or investorinfo@aligntech.com; or Shannon Mangum Henderson of
Ethos Communication, Inc., +1-678-540-9222, or align@ethoscommunication.com,
for Align Technology/
/Web site: http://www.invisalign.com/
(ALGN)