<PAGE>
 
   
As filed with the Securities and Exchange Commission on December 28, 2000     
                                                   
                                                Registration No. 333-49932     
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
 
                                ---------------
                                
                             Amendment No. 1     
                                       
                                    to     
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
                                ---------------
                            ALIGN TECHNOLOGY, INC.
            (Exact name of registrant as specified in its charter)
 

<TABLE>
<CAPTION>
            Delaware                              3843                            94-3267295
<S>                                <C>                                <C>
 (State or other jurisdiction of      (Primary Standard Industrial             (I.R.S. Employer
 incorporation or organization)       Classification Code Number)           Identification Number)
</TABLE>

 
       851 Martin Avenue, Santa Clara, California 95050, (408) 470-1000
  (Address, including zip code, and telephone number, including area code, of
                 the registrant's principal executive offices)
 
                                ---------------
                                  Zia Chishti
                            Chief Executive Officer
                            Align Technology, Inc.
       851 Martin Avenue, Santa Clara, California 95050, (408) 470-1000
  (Name and address, including zip code, and telephone number, including area
                          code, of agent for service)
 
                                ---------------
                                  Copies to:

<TABLE>
<S>                                                <C>
               John W. Larson, Esq.                              John T. Sheridan, Esq.
              Patrick J. Shea, Esq.                               Richard S. Au, Esq.
             Jeanine M. Larrea, Esq.                            Carolynn W. Jones, Esq.
               Mark C. Hornor, Esq.                      WILSON SONSINI GOODRICH & ROSATI, P.C.
         BROBECK, PHLEGER & HARRISON LLP                           650 Page Mill Road
                    One Market                                  Palo Alto, CA 94304-1050
                Spear Street Tower                                   (650) 493-9300
             San Francisco, CA 94105
                  (415) 442-0900
</TABLE>

                                ---------------
     As soon as practicable after the effective date of this Registration
                                  Statement.
       (Approximate date of commencement of proposed sale to the public)
 
                                ---------------
   If the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") check the following box. [_]
   If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
   If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
   If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
   If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
                                ---------------

                        CALCULATION OF REGISTRATION FEE
 
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

<TABLE>   
<CAPTION>
                                                           Proposed Maximum
 Title of Each Class of                       Proposed        Aggregate
    Securities to be       Amount to be   Maximum Offering     Offering          Amount of
       Registered         Registered(2)   Price per Share    Price(1)(2)    Registration Fee(3)
-----------------------------------------------------------------------------------------------
<S>                      <C>              <C>              <C>              <C>
Common Stock, $0.0001
 par value.............     11,500,000         $16.00        $184,000,000         $52,800
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
</TABLE>
    
(1) Estimated solely for the purpose of computing the amount of the
    registration fee pursuant to Rule 457(o).
(2) Includes amount subject to the over-allotment option granted to the
    underwriters.
   
(3) $52,800 was paid at the time of the initial filing of this Registration
    Statement.     
 
                                ---------------
   The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+                                                                              +
+The information in this preliminary prospectus is not complete and may be     +
+changed. We may not sell these securities until the registration statement    +
+filed with the Securities and Exchange Commission is declared effective. This +
+preliminary prospectus is not an offer to sell these securities and it is not +
+soliciting an offer to buy these securities in any state where the offer or   +
+sale is not permitted.                                                        +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
   
Subject to Completion, Dated December 28, 2000     
                                                Filed Pursuant to Rule 424(b)(4)
                                                      Registration No. 333-37020
 
 
 [Align Technology, Inc. Logo]
 
--------------------------------------------------------------------------------
    
 10,000,000 Shares     
 Common Stock
--------------------------------------------------------------------------------
    
 This is the initial public offering of Align Technology, Inc. We are offering
 10,000,000 shares of our common stock. We anticipate that the initial public
 offering price will be between $14.00 and $16.00 per share. We have applied
 to list our common stock on the Nasdaq National Market under the symbol
 "ALGN."     
    
 Investing in our common stock involves risk. See "Risk Factors" beginning on
 page 5.     
 
 Neither the Securities and Exchange Commission nor any state securities
 commission has approved or disapproved of these securities or passed upon the
 adequacy or accuracy of this prospectus. Any representation to the contrary
 is a criminal offense.
 

<TABLE>   
<CAPTION>
                                                       Per Share Total
<S>                                                    <C>       <C>
 Public offering price                                 $         $
 Underwriting discounts and commissions                $         $
 Proceeds, before expenses, to Align Technology, Inc.  $         $
</TABLE>
    
    
 We have granted the underwriters the right to purchase up to 1,500,000
 additional shares of common stock to cover over-allotments.     
 
 Deutsche Banc Alex. Brown
 
            Bear, Stearns & Co. Inc.
 
                                      J.P. Morgan & Co.
 
                                                              Robertson Stephens
    
 The date of this prospectus is      , 2001     

<PAGE>
 
                            Description of artwork
 
Inside front cover page:
 
Middle top: "Align Technology, Inc. Presents Invisalign, A New Way To
Straighten Teeth Without Braces"
 
Middle center: Invisalign mark
 
Middle center: Align logo
 
Middle bottom: Graphic of hand holding Aligner between thumb and forefinger.
 
Inside foldout:
 
Center of Page: Close-up of smiling woman wearing an Aligner--surrounded by
various smaller graphics and captions as listed below.
 
Moving from top center left clockwise: Graphic: two smiling faces, facing each
other displaying teeth. One of the smiles is wearing braces, the other is
wearing an Aligner. Caption: "Both of these people are straightening their
teeth."
 
Top right corner: Graphic: three pictures of smiling people. Caption: "Which
of these people is wearing Invisalign They all are."
 
Right of page: Graphic: three pairs of before and after pictures with numbers
1, 2, 3. Caption: "Invisalign Aligners effectively straighten teeth more
gently and comfortably than braces."
 
Bottom right corner: Align logo and Invisalign mark
 
Bottom center: Graphic: three pictures of a woman placing an Aligner on her
teeth. Caption: "Invisalign Aligners are removable and nearly invisible."
 
Bottom left: Graphic: hand holding an Aligner between thumb and forefinger.
Caption: "A series of clear, removable Invisalign Aligners is custom
manufactured to match each stage of treatment."
 
Left center of page: Graphic: computer graphic of human dentition. Caption:
"Our proprietary software, ClinCheck, lets orthodontists visualize their
treatment plans by projecting how the teeth will move over time."
 
Left center of page: Graphic: impression of human dentition. Caption: "The
impression is scanned into our 3-D graphics computers."
 
Left top of page: Graphic: impression of human dentition. Caption: "Treatment
begins when the orthodontist makes an impression."

<PAGE>
 
                               

                            PROSPECTUS SUMMARY     
   
   This summary highlights selected information contained in greater detail
elsewhere in this prospectus. This summary may not contain all of the
information that you should consider before investing in our common stock. You
should carefully read the entire prospectus, including "Risk Factors" and the
financial statements, before making an investment decision.     
 
                                  Our Company
 
   We design, manufacture and market the Invisalign System, a proprietary new
method for treating malocclusion, or the misalignment of teeth. The System
corrects malocclusion using a series of clear, 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, the System significantly reduces the
aesthetic and other limitations associated with braces. The Invisalign System
also offers orthodontists a new means of carrying out their diagnosis and
treatment planning processes. We believe the Invisalign System has the
potential to transform the traditional practice of orthodontics by appealing to
people who would not otherwise seek treatment.
   
   In the U.S. alone, over 200 million individuals have some form of
malocclusion. Each year, less than one percent of these individuals, or
approximately two million Americans, enter orthodontic treatment, spending
approximately $7 billion in the aggregate. We believe the Invisalign System is
a compelling treatment alternative for most of the patients who would seek
traditional orthodontic treatment. In addition, given the significant benefits
of our System, we have the opportunity to expand the U.S. orthodontic market by
addressing the needs of millions of individuals who would not otherwise seek
treatment. Further, we believe the international opportunity is larger than the
U.S. opportunity.     
   
   We received FDA clearance to market the Invisalign System in 1998 and
started commercial sales of the System in July 1999. Our 510(k) clearance from
the FDA allows us to market the Invisalign System to treat patients with any
type of malocclusion. We voluntarily restrict the use of the Invisalign System
to adults and adolescents with mature dentition. Individuals with mature
dentition have fully erupted second molars and substantially complete jaw
growth. This group represents approximately 130 million people in the U.S.
Currently, we do not treat children whose teeth and jaws are still developing,
as the effectiveness of the Invisalign System relies on our ability to
accurately predict the movement of teeth over the course of treatment. Based on
our clinical studies to date, we recommend that orthodontists use the
Invisalign System as a complete treatment for mild and moderate malocclusions
and as a component of treatment for unusually severe malocclusions.     
   
   As of November 2000, we had trained more than 5,300 orthodontists to use the
Invisalign System, representing approximately 60% of all practicing U.S. and
Canadian orthodontists. In addition, over 1,000 orthodontists have enrolled in
our training program scheduled for January 2001. As of November 2000, over
2,000 of the orthodontists we have trained had submitted one or more cases to
us. To date, approximately 9,200 patients have commenced treatment with the
Invisalign System, including more than 1,700 patients in November 2000.     
 
   Our objective is to establish the Invisalign System as the standard method
for treating orthodontic malocclusion. Our sales and marketing efforts focus on
educating both consumers and orthodontists on the significant benefits of the
System. We continue to train orthodontists and work with them to increase the
use of the Invisalign System within their practices. We recently initiated a
national advertising campaign to create awareness of the Invisalign System as a
treatment alternative and to stimulate demand for treatment with the System.
 
 
                                       1

<PAGE>
 
                             The Invisalign System
   
   The Invisalign System has two components: ClinCheck and Aligners. ClinCheck
is an Internet-based application that allows orthodontists to simulate
treatment in three dimensions by modeling two-week stages of tooth movement.
Aligners are thin, clear plastic, removable dental appliances that correspond
to each stage of the ClinCheck simulation. Each custom-fabricated Aligner is
worn over the teeth for two weeks before being disposed of and replaced by the
next Aligner, until the last Aligner in the series is worn and treatment is
complete.     
 
   The Invisalign System addresses many of the significant limitations of
conventional braces. Braces call attention to the patient's condition and
treatment and are often identified with adolescence. Braces are uncomfortable
and at times painful. Braces trap food and make it more difficult to brush and
floss.
 
   By contrast, Aligners are nearly invisible when worn. Aligners move teeth
more gently than braces and are made of smooth polymer rather than sharp metal,
making them substantially more comfortable and less abrasive. Patients can
remove Aligners to eat, brush and floss, improving oral hygiene.
       
   The Invisalign System is straightforward for orthodontists to learn and to
use, since the System relies on the same biomechanical principles that underlie
traditional orthodontic treatment. Our initial certification training is
generally completed in a one day workshop, and orthodontists can be equipped to
submit cases immediately thereafter with minimal financial outlay.
 
   We believe our Invisalign System provides orthodontists with an opportunity
to substantially increase the profitability of their practices. The Invisalign
System allows orthodontists to broaden their patient base by offering a new,
attractive treatment alternative to people who would not otherwise elect
treatment. We believe that orthodontists using the System have generally been
able to command a premium over the fees charged for conventional treatment. In
addition, since our System eliminates many time-intensive activities associated
with conventional treatment, orthodontists are able to reduce the time spent on
each case and, accordingly, increase practice capacity.
   
   Depending on each orthodontist's pricing policy, the cost of the Invisalign
System to the patient may be greater than for conventional braces.
Orthodontists must incorporate our custom manufacturing cycle times into their
overall treatment plan, as they generally receive a patient's Aligners a month
or more after a case is submitted. In addition, because Aligners are removable,
treatment using the Invisalign System depends on patients wearing their
Aligners as recommended. Some patients may experience a temporary period of
adjustment to wearing Aligners that may mildly affect speech.     
   
   We were incorporated in Delaware on April 3, 1997. We are located at 851
Martin Avenue, Santa Clara, California 95050 and our telephone number is (408)
470-1000. Our website is located at www.invisalign.com. The information on our
website is not incorporated into and is not intended to be a part of this
prospectus.     
 
                                       2

<PAGE>
 
 
                                  The Offering
 

<TABLE>   
 <C>                                          <S>
 Common stock offered by Align Technology.... 10,000,000 shares
 Common stock to be outstanding after this
  offering................................... 45,615,722 shares
 Use of proceeds............................. Expansion of manufacturing
                                              capacity, advertising and other
                                              sales and marketing activities,
                                              research and development,
                                              working capital and general
                                              corporate purposes. See "Use of
                                              Proceeds."
 Nasdaq National Market symbol............... ALGN
</TABLE>
    
   
   The number of shares of our common stock outstanding upon completion of this
offering is based on shares outstanding as of November 30, 2000. This number
assumes the conversion into common stock of all of our preferred stock
outstanding on that date, including 1,436,710 shares of Series D preferred
stock issued in October 2000, which converts into 1,462,317 shares of common
stock, but does not include:     
     
  .  2,126,184 shares of common stock issuable upon exercise of outstanding
     stock options at a weighted average exercise price of $0.73 per share;
            
  .  2,067,390 shares of common stock available for grant under our 1997
     Equity Incentive Plan;     
     
  .  8,000,000 shares of common stock to be reserved for issuance under our
     2001 Stock Incentive Plan;     
     
  .  1,500,000 shares of common stock to be reserved for issuance under our
     Employee Stock Purchase Plan; and     
     
  .  645,834 shares of common stock issuable upon exercise of outstanding
     warrants to purchase preferred stock, or common stock upon the
     completion of this offering, at a weighted average exercise price of
     $1.94 per share.     
 
                                ----------------
   
   Unless otherwise indicated, all information contained in this prospectus
assumes:     
     
  .  a 2 for 1 split of the common stock to be completed prior to the
     effectiveness of the offering;     
     
  .  the conversion of all outstanding shares of preferred stock into common
     stock upon the closing of this offering, taking into account the Series
     D preferred stock antidilution conversion price adjustment for certain
     option grants through November 30, 2000. Unless otherwise indicated,
     this prospectus does not assume adjustment to the Series D conversion
     price which will result from options to be granted by us subsequent to
     that date. See "Certain Transactions--Preferred Stock Sales." The
     outstanding preferred stock is presented on an as-if-converted basis;
     and     
     
  .  no exercise of the underwriters' over-allotment option.     
       
                                ----------------
   
   ClinCheck(R) and Invisalign(R) are our registered trademarks. We have filed
applications for several trademarks with the U.S. Patent and Trademark Office,
including Invisalign System, the Invisalign System logo and the Align logo.
Trademarks, trade names and service marks of other companies appearing in this
prospectus are the property of the respective holders. Use or display by Align
of other parties' trade names, trademarks or service marks is not intended to
and does not imply a relationship with, or endorsement or sponsorship of Align
by, the trade name, trademark or service mark owners.     
 
                                       3

<PAGE>
 
                      Summary Consolidated Financial Data
                     (in thousands, except per share data)
 

<TABLE>   
<CAPTION>
                              Period from
                             April 3, 1997                      Nine Months
                               (date of       Year Ended           Ended
                             inception) to   December 31,      September 30,
                             December 31,  -----------------  -----------------
                                 1997       1998      1999     1999      2000
                             ------------- -------  --------  -------  --------
<S>                          <C>           <C>      <C>       <C>      <C>
Statement of Operations
 Data:
Revenue....................     $  --      $   --   $    411  $    77  $  3,236
Cost of revenue............        --          --      1,754      357    11,313
                                ------     -------  --------  -------  --------
Gross loss.................        --          --     (1,343)    (280)   (8,077)
                                ------     -------  --------  -------  --------
Operating expenses:
 Sales and marketing.......        283         133     5,688    2,726    19,664
 General and
  administrative...........        --        2,344     3,474    2,000    12,349
 Research and development..        405       1,474     4,200    3,068     5,904
                                ------     -------  --------  -------  --------
  Total operating
   expenses................        688       3,951    13,362    7,794    37,917
                                ------     -------  --------  -------  --------
Loss from operations.......       (688)     (3,951)  (14,705)  (8,074)  (45,994)
Interest and other income
 (expense), net............         24         176      (710)    (499)   (7,317)
                                ------     -------  --------  -------  --------
Net loss...................       (664)     (3,775)  (15,415)  (8,573)  (53,311)
Dividend related to
 beneficial conversion
 feature of preferred
 stock.....................        --          --        --       --    (44,150)
                                ------     -------  --------  -------  --------
Net loss available to
 common stockholders.......     $ (664)    $(3,775) $(15,415) $(8,573) $(97,461)
                                ======     =======  ========  =======  ========
Net loss per share
 available to common
 stockholders, basic and
 diluted...................     $(0.43)    $ (1.33) $  (3.65) $ (2.11) $ (17.94)
                                ======     =======  ========  =======  ========
Shares used in computing
 net loss per share
 available to common
 stockholders, basic and
 diluted...................      1,542       2,842     4,218    4,060     5,434
                                ======     =======  ========  =======  ========
Pro forma net loss per
 share available to common
 stockholders, basic and
 diluted (unaudited).......                         $  (0.92)          $  (2.11)
                                                    ========           ========
Shares used in computing
 pro forma net loss per
 share available to common
 stockholders, basic and
 diluted (unaudited).......                           16,678             25,270
                                                    ========           ========
</TABLE>
    
 

<TABLE>   
<CAPTION>
                                                  September 30, 2000
                                         -------------------------------------
                                                                  Pro Forma
                                          Actual   Pro Forma(1) As Adjusted(2)
                                         --------  ------------ --------------
<S>                                      <C>       <C>          <C>
Balance Sheet Data:
Cash, cash equivalents and marketable
 securities............................. $ 37,867    $53,079       $190,279
Restricted cash.........................   18,127     18,127         18,127
Working capital.........................   47,758     62,970        200,170
Total assets............................   75,567     90,779        227,979
Long term obligations, net of current
 portion................................    1,569      1,569          1,569
Convertible preferred stock and
 warrants...............................  115,708        --             --
Total stockholders' equity (deficit)....  (56,086)    74,834        212,034
</TABLE>
    
--------
   
(1) The pro forma column reflects the sale of 1,436,710 shares of Series D
    preferred stock in October 2000 at an offering price of $10.625 per share
    less estimated offering expenses of $53,000, and the conversion of all
    outstanding shares of preferred stock into 25,957,668 shares of common
    stock effective upon the closing of this offering. This amount also
    includes an additional 169,934 shares of common stock which reflects the
    effect of the conversion price adjustment to the Series D preferred stock
    resulting from stock option grants through November 30, 2000.     
   
(2) The pro forma, as adjusted column reflects the sale of 10,000,000 shares of
    our common stock in the public offering at an assumed initial public
    offering price of $15.00 per share, after deducting underwriting discounts,
    commissions and estimated offering expenses.     
 
                                       4

<PAGE>
 

                                  RISK FACTORS
          
   Investing in our common stock involves a high degree of risk. You should
carefully consider the following risk factors and all other information
contained in this prospectus before purchasing our common stock. The risks and
uncertainties described below are not the only ones facing us. Additional risks
and uncertainties that we are unaware of, or that we currently deem immaterial,
also may become important factors that affect us.     
   
   If any of the following risks occur, our business, financial condition or
results of operations could be materially and adversely affected. In that case,
the trading price of our common stock could decline, and you may lose some or
all of your investment.     
 
                         Risks Related to Our Business
 
Since we have a history of losses and negative cash flows, and we expect our
operating expenses to continue to increase, we may not achieve or maintain
profitability in the future.
 
   We have incurred significant operating losses and have not achieved
profitability. We have incurred net losses of $73.2 million for the period from
our inception in April 1997 through September 30, 2000, including a net loss of
$15.4 million in 1999 and $53.3 million for the nine months ended September 30,
2000. We incurred negative cash flows of $11.6 million from operating
activities in 1999 and $31.2 million for the nine months ended September 30,
2000. From inception through July 2000, we have spent significant funds in
organizational and start-up activities, to recruit key managers and employees,
to develop the Invisalign System and to develop our manufacturing and customer
support resources. We have also spent significant funds on clinical trials and
training programs to train orthodontists in the use of the Invisalign System.
We expect to have increasing net losses and negative operating cash flows for
at least the next two years.
 
   We intend to increase our operating expenses as we continue to:
 
  .  scale our manufacturing operations;
 
  .  develop new software and increase the automation of our manufacturing
     processes;
 
  .  execute our national direct to consumer marketing campaign;
 
  .  increase the size of our sales force and orthodontist training staff;
 
  .  undertake quality assurance and improvement initiatives; and
 
  .  increase our general and administrative functions to support our growing
     operations.
 
   As a result, we will need to increase our revenue significantly, while
controlling our expenses, to achieve profitability. It is possible that we will
not achieve profitability, and even if we do achieve profitability, we may not
sustain or increase profitability in the future.
 
We have a limited operating history and expect our future financial results to
fluctuate significantly, which may cause our stock price to decline.
 
   We were incorporated in April 1997 and have only recently begun selling our
Invisalign System in commercial quantities. Thus, we have a limited operating
history which makes an evaluation of our future prospects and your investment
in our stock difficult. In addition, we expect our future quarterly and annual
operating results to fluctuate as we increase our commercial sales. These
fluctuations could cause our stock price to decline. Some of the factors that
could cause our operating results to fluctuate include:
 
  .  changes in the timing of product orders;
 
  .  unanticipated delays in production caused by insufficient capacity or in
     the introduction of new production processes;
 
                                       5

<PAGE>
 
  .  inaccurate forecasting of revenue, production and other operating costs;
     and
 
  .  the development and marketing of directly competitive products by
     potential competitors.
 
   To respond to these and other factors, we may need to make business
decisions that could adversely affect our operating results. Most of our
expenses, such as employee compensation and lease payment obligations, are
relatively fixed in the short term. Moreover, our expense levels are based, in
part, on our expectations regarding future revenue levels. As a result, if our
revenue for a particular period fall below our expectations, we may be unable
to adjust spending quickly enough to offset any unexpected shortfall in revenue
growth or any decrease in revenue levels.
 
   Due to these and other factors, we believe that quarter-to-quarter
comparisons of our operating results may not be meaningful. You should not rely
on our results for any one quarter as an indication of our future performance.
   
We have limited product offerings, and if demand for our Invisalign System
declines or fails to develop as we expect, our revenue will decline.     
   
   We derive a substantial portion of our revenue from the sale of our
Invisalign System. For the nine-month period ended September 30, 2000, we
derived 71% of our revenue from the sale of our Invisalign System. We expect
that revenue from the sale of our Invisalign System will continue to account
for a substantial portion of our total revenue. Continued and widespread market
acceptance of our System is critical to our future success. The Invisalign
System may not achieve market acceptance at the rate at which we expect, or at
all, which could reduce our revenue.     
 
If orthodontists do not adopt our Invisalign System in sufficient numbers or as
rapidly as we anticipate, our operating results will be harmed.
   
   As of November 30, 2000, approximately 2,000 of the 5,300 orthodontists we
had trained had submitted one or more cases to us. Our success depends upon
increasing acceptance by orthodontists and dentists of the Invisalign System.
The Invisalign System requires orthodontists and their staff to undergo special
training and learn to interact with patients in new ways and to interact with
us as a supplier. In addition, because our Invisalign System has only been in
clinical testing since July 1997 and commercially available since July 1999,
orthodontists may be reluctant to adopt it until more historical clinical
results are available. Also, increasing adoption by orthodontists will depend
on factors such as the capability, safety, efficacy, ease of use, price,
quality and reliability of our products and our provision of effective sales
support, training and service. In the future, unanticipated poor clinical
performance of the Invisalign System could result in significant adverse
publicity and consequently in reduced acceptance by orthodontists. If our
Invisalign System does not achieve growing acceptance in the orthodontic and
dental communities, our operating results will be harmed.     
 
If consumers do not adopt our Invisalign System in sufficient numbers or as
rapidly as we anticipate, our operating results will be harmed.
 
   Our Invisalign System represents a significant change from traditional
orthodontic treatment, and patients may be reluctant to accept it or may not
find it preferable to conventional treatment. In addition, patients may not
comply with recommended treatment
 
                                       6

<PAGE>
 
   
guidelines which could compromise the effectiveness of their treatment. While
we have generally received positive feedback from both orthodontists and
patients regarding our Invisalign System as both an alternative to braces and
as a clinical method for treatment of malocclusion, our success will depend
upon the rapid acceptance of our System by the substantially larger number of
potential patients to which we are now actively marketing. We have had a
limited number of complaints from patients and prospective patients generally
related to shipping delays and minor manufacturing irregularities. Patient
acceptance will depend in part upon the recommendations of dentists and
orthodontists, as well as other factors including effectiveness, safety,
reliability, improved treatment aesthetics and greater comfort and hygiene
compared to conventional orthodontic products. Furthermore, consumers may not
respond to our direct marketing campaigns or we may be unsuccessful in reaching
our target audience. If consumers prove unwilling to adopt our Invisalign
System as rapidly or in the numbers that we anticipate, our operating results
will be harmed.     
   
Our success depends in part on our proprietary technology and if we are unable
to successfully enforce our intellectual property rights, our competitive
position may be harmed.     
          
   Our success will depend in part on our ability to maintain existing
intellectual property and to obtain and maintain further intellectual property
protection for our products, both in the U.S. and in other countries. Our
inability to do so could harm our competitive position. We have one issued U.S.
patent and 46 pending U.S. patent applications. We have two foreign-issued
patents and 111 pending foreign patent applications. We intend to rely on our
portfolio of issued and pending patent applications in the U.S. and in other
countries to protect a large part of our intellectual property and our
competitive position. However, our currently pending or future patent filings
may not issue as patents. Additionally, any patents issued to us may be
challenged, invalidated, held unenforceable, circumvented, or may not be
sufficiently broad to prevent third parties from producing competing products
similar in design to our products. In addition, protection afforded by foreign
patents may be more limited than that provided under U.S. patents and
intellectual property laws.     
          
   We also rely on protection of copyrights, trade secrets, know-how and
proprietary information. We generally enter into confidentiality agreements
with our employees, consultants and our collaborative partners upon
commencement of a relationship with us. However, these agreements may not
provide meaningful protection against the unauthorized use or disclosure of our
trade secrets or other confidential information and adequate remedies may not
exist if unauthorized use or disclosure were to occur. Our inability to
maintain the proprietary nature of our technology through patents, copyrights
or trade secrets would impair our competitive advantages and could have a
material adverse effect on our operating results, financial condition and
future growth prospects. In particular, a failure of our proprietary rights
might allow competitors to copy our technology, which could adversely affect
pricing and market share.     
          
If we infringe the patents or proprietary rights of other parties, our ability
to grow our business will be severely limited.     
          
   Extensive litigation over patents and other intellectual property rights is
common in the medical device industry. We have been sued for infringement of
another party's patent in the past and, while that action has been dismissed,
we may be the subject of patent or other litigation in the future.     
          
   In January 2000, Ormco Corporation filed suit against us asserting an
infringement of U.S. Patent Nos. 5,447,432 and 5,683,243. The complaint sought
unspecified monetary damages and equitable relief. The complaint alleged that
the Invisalign System infringed certain claims of the two patents relating to
computer modeling of an ideal dentition and the production of     
 
                                       7

<PAGE>
 
   
orthodontic appliances based upon the ideal dentition. The suit has been
dismissed but can be recommenced under certain circumstances. See "Business--
Legal Proceedings." If the Ormco suit were recommenced and if Ormco were to
prevail, we would have to seek a license from Ormco, which license might not be
available on commercially reasonable terms or at all. In that event, we could
be subject to damages or an injunction which could materially adversely affect
our business.     
          
   From time to time, we have received and may again receive letters from third
parties drawing our attention to their patent rights. While we do not believe
that we infringe any valid and enforceable rights which have been brought to
our attention, there may be other more pertinent rights of which we are
presently unaware. The defense and prosecution of intellectual property suits,
interference proceedings and related legal and administrative proceedings could
result in substantial expense to us and significant diversion of effort by our
technical and management personnel. An adverse determination in a patent suit
by Ormco or in any other litigation or interference proceeding to which we may
become a party could subject us to significant liabilities. An adverse
determination of this nature could also put our patents at risk of being
invalidated or interpreted narrowly or require us to seek licenses from third
parties. Licenses may not be available on commercially reasonable terms or at
all, in which event, our business would be materially adversely affected.     
       
We have limited experience in manufacturing our products and if we encounter
manufacturing problems or delays, our ability to generate revenue will be
limited.
 
   We have manufactured a limited number of our products to date. Our
manufacturing processes rely on complex three-dimensional scanning, geometrical
manipulation and modeling technologies that have historically not been used on
the scale we require. Each item that we manufacture is geometrically unique and
we have not manufactured our products in the commercial volumes which will be
required to make us profitable. Accordingly, we may be unable to establish or
maintain reliable, high-volume manufacturing capacity. Even if this capacity
can be established and maintained, the cost of doing so may increase the cost
of our products. We may encounter difficulties in scaling up production to meet
demand, including:
 
  .  problems involving production yields;
 
  .  shortages of key manufacturing equipment;
 
  .  shortages of qualified personnel, in particular dental and orthodontic
     personnel;
 
  .  failure to develop new software processes; and
 
  .  compliance with applicable Quality System regulations enforced by the
     Food and Drug Administration, or FDA.
 
   Our manufacturing process is complex. Since all our products are designed
for individual patients, we manufacture our products to fill purchase orders
rather than maintaining inventories of assembled products. If demand for our
products exceeds our manufacturing capacity, we could develop a substantial
backlog of customer orders. If we are unable to establish and maintain larger-
scale manufacturing capabilities, our ability to generate revenue will be
limited and our reputation in the marketplace would be damaged.
 
We currently rely on third parties to provide key inputs to our manufacturing
process, and if our access to these inputs is diminished, our business may be
harmed.
 
   We currently outsource key portions of our manufacturing process. We rely on
a third party manufacturer in Mexico to fabricate Aligners and to ship the
completed product to customers. In addition, third party rapid prototyping
bureaus fabricate some molds from which
 
                                       8

<PAGE>
 
the Aligners are formed. As a result, if any of our third party manufacturers
fail to deliver their components or if we lose their services, we may be unable
to deliver our products in a timely manner and our business may be harmed.
Finding substitute manufacturers may be expensive, time-consuming or
impossible. Although we are in the process of developing the capability to
fabricate all molds and Aligners internally, we may not be successful and may
continue to rely on outsourcing in the future.
 
   In addition, we are highly dependent on manufacturers of specialized
scanning equipment, rapid prototyping machines, resin and other advanced
materials. We maintain single supply relationships for many of these machines
and materials technologies. Our rapid growth may exceed the capacity of these
manufacturers to produce the needed equipment and materials in sufficient
quantities to support our growth. In the event of delivery delays or shortages
of these items, our business and growth prospects may be harmed.
 
We are dependent on our international manufacturing operations, which exposes
us to foreign operational and political risks that may harm our business.
   
   Two of our key production steps are performed in manufacturing operations
located outside the U.S. We currently rely on our facilities in Pakistan to
create electronic treatment plans with the assistance of sophisticated
software. We employ approximately 650 people in Lahore, Pakistan in this
effort. We anticipate that we will need to expand our personnel and facilities
in Pakistan in order to scale our manufacturing operations. In addition, we
rely on third party manufacturers in Mexico to fabricate Aligners and to ship
the completed product to customers. Our reliance on international operations
exposes us to risks and uncertainties, including:     
 
  .  difficulties in staffing and managing international operations;
 
  .  controlling quality of manufacture;
 
  .  political, social and economic instability;
 
  .  interruptions and limitations in telecommunication services;
 
  .  product or material transportation delays or disruption;
 
  .  trade restrictions and changes in tariffs;
 
  .  import and export license requirements and restrictions;
 
  .  fluctuations in currency exchange rates; and
 
  .  potential adverse tax consequences.
 
   If any of these risks materialize, our operating results may be harmed.
 
We are growing rapidly, and our failure to manage this growth could harm our
business.
   
   We have experienced significant growth in recent periods. Our headcount
increased from 50 employees as of June 30, 1999 to approximately 1,080
employees as of November 30, 2000. In mid-2000, we approved major expansions to
our existing facilities and the building of new facilities. We expect that our
growth will place significant demands on our management and other resources and
will require us to continue to develop and improve our operational, financial
and other internal controls both in the U.S. and internationally. In
particular, continued growth increases the challenges involved in a number of
areas, including: recruiting and retaining sufficient skilled personnel,
providing adequate training and supervision to maintain our high quality
standards, and preserving our culture and values. Our inability to manage this
growth effectively would harm our business.     
 
                                       9

<PAGE>
 
       
If we lose our key personnel or are unable to attract and retain key personnel,
we may be unable to pursue business opportunities or develop our products.
 
   We are highly dependent on the key employees in our clinical engineering and
management teams. The loss of the services of those individuals may
significantly delay or prevent the achievement of our product development and
other business objectives and could harm our business. Our future success will
also depend on our ability to identify, recruit, train and retain additional
qualified personnel. There is currently a shortage of skilled clinical,
engineering and management personnel and intense competition for these
personnel, especially in Silicon Valley where our headquarters is located. In
addition, few orthodontists are accustomed to working in a manufacturing
environment since they are generally trained to work in private practices,
universities and other research institutions. Thus, we may be unable to attract
and retain personnel with the advanced qualifications necessary for the further
development of our business. Furthermore, we may not be successful in retaining
our key personnel or their services.
 
We experience competition from manufacturers of traditional braces and expect
aggressive competition in the future.
   
   We are not aware of any company that is marketing or developing a system
directly comparable to our Invisalign System. However, manufacturers of
traditional braces, such as 3M Company, Sybron International Corporation and
Dentsply International, Inc. have substantially greater financial resources and
manufacturing and marketing experience than we do and may, in the future,
attempt to develop an orthodontic system similar to ours. Large consumer
products companies may also enter the orthodontic supply market. Furthermore,
we may face competition in the future from new companies that may introduce new
technologies. We may be unable to compete with these competitors and one or
more of these competitors may render our technology obsolete or economically
unattractive. If we are unable to compete effectively with existing products or
respond effectively to any products developed by our competitors, our business
will be harmed.     
 
Complying with the Food and Drug Administration and other regulations is an
expensive and time-consuming process, and any failure to comply could result in
substantial penalties.
 
   Our products are medical devices and subject to extensive regulation in the
U.S. and internationally. FDA regulations are wide ranging and govern, among
other things:
 
  .  product design, development, manufacture and testing;
 
  .  product labeling;
 
  .  product storage;
 
  .  premarket clearance or approval;
 
  .  advertising and promotion; and
 
  .  product sales and distribution.
 
   Noncompliance with applicable regulatory requirements can result in
enforcement action which may include recalling products, ceasing product
marketing, and paying significant fines and penalties, which could limit
product sales, delay product shipment and adversely affect our profitability.
 
   In the U.S. we must comply with facility registration and product listing
requirements of the FDA and adhere to applicable Quality System regulations.
The FDA enforces its Quality
 
                                       10

<PAGE>
 
System regulations through periodic unannounced inspections, which we have yet
to undergo. If we or any third party manufacturer of our products do not
conform to applicable Quality System regulations, we may be required to find
alternative manufacturers, which could be a long and costly process.
 
   Before we can sell a new medical device in the U.S., we must obtain FDA
clearance or approval, which can be a lengthy and time-consuming process. Even
though the devices we market have obtained the necessary clearances from the
FDA through the premarket notification provisions of Section 510(k) of the
federal Food, Drug, and Cosmetic Act, we may be unable to maintain the
necessary clearances in the future. Furthermore, we may be unable to obtain the
necessary clearances for new devices that we market in the future. Please see
"Business--Government Regulation" for a more detailed discussion of the
regulations that govern our industry.
 
Extensive and changing government regulation of the healthcare industry may be
expensive to comply with and exposes us to the risk of substantial government
penalties.
 
   In addition to medical device laws and regulations, numerous state and
federal healthcare-related laws regulate our business, covering areas such as:
 
  .  storage, transmission and disclosure of medical information and
     healthcare records;
 
  .  prohibitions against the offer, payment or receipt of remuneration to
     induce referrals to entities providing healthcare services or goods; and
 
  .  the marketing and advertising of our products.
 
   Complying with these laws and regulations could be expensive and time-
consuming, and could increase our costs or reduce or eliminate certain of our
activities or our revenues. See "Business--Government Regulation."
 
We face risks related to our international operations, including the need to
obtain necessary foreign regulatory clearance or approvals.
 
   Sales of our products outside the U.S. are subject to foreign regulatory
requirements that vary widely from country to country. The time required to
obtain clearances or approvals required by other countries may be longer than
that required for FDA clearance or approval, and requirements for such
approvals may differ from FDA requirements. We may be unable to obtain
regulatory approvals in other countries. We may also incur significant costs in
attempting to obtain and in maintaining foreign regulatory approvals. If we
experience delays in receipt of approvals to market our products outside of the
U.S., or if we fail to receive these approvals, we may be unable to market our
products or enhancements in international markets in a timely manner, if at
all.
 
Our business exposes us to risks of product liability claims, and we may incur
substantial expenses if we are sued for product liability.
 
   Medical devices involve an inherent risk of product liability claims and
associated adverse publicity. We may be held liable if any product we develop
or any product that uses or incorporates any of our technologies causes injury
or is otherwise found unsuitable. Although we intend to continue to maintain
product liability insurance, adequate insurance may not be available on
acceptable terms and may not provide adequate coverage against potential
liabilities. A product liability claim, regardless of its merit or eventual
outcome, could result in significant legal defense costs. These costs would
have the effect of increasing our expenses and could harm our business.
 
                                       11

<PAGE>
 
   
We may be unable to raise additional capital if it should be necessary, which
could harm our ability to compete.     
 
   We expect to expend significant capital to establish a national brand, build
manufacturing infrastructure and develop both product and process technology.
These initiatives may require us to raise additional capital over the next few
years. We believe that the proceeds from this offering and the capital that we
have already raised should be sufficient to fund our operations for at least
the next 12 months. However, we may consume available resources more rapidly
than anticipated and we may not be able to raise additional funds when needed,
or on acceptable terms.
                         
                      Risks Related to this Offering     
 
The market price for our common stock may be highly volatile, and you may not
be able to resell your shares at or above the initial public offering price.
 
   Before this offering, there has not been a public market for our common
stock. An active trading market for our common stock may not develop following
this offering. You may not be able to sell your shares quickly or at the market
price if trading in our stock is not active. Further, the market price of our
common stock may decline below the price you paid for your shares. The initial
public offering price for the shares will be determined by negotiations between
us and the representatives of the underwriters and may not be indicative of
prices that will prevail in the trading market. Please see "Underwriting" for
more information regarding our arrangement with the underwriters and the
factors considered in setting the initial public offering price.
 
   The trading price of our common stock is likely to be highly volatile and
could be subject to wide fluctuations in price in response to various factors,
many of which are beyond our control, including:
 
  .  quarterly variations in our results of operations;
 
  .  changes in recommendations by the investment community or in their
     estimates of our revenues or operating results;
 
  .  speculation in the press or investment community;
 
  .  strategic actions by our competitors, such as product announcements or
     acquisitions; and
 
  .  general market conditions.
 
   In addition, the stock market in general, and the market for technology and
medical device companies in particular, have experienced extreme price and
volume fluctuations that have often been unrelated to or disproportionate to
the operating performance of those companies. These broad market and industry
factors may seriously harm the market price of our common stock, regardless of
our operating performance.
 
   In the past, following periods of volatility in the market price of a
company's securities, class action litigation has often been brought against
the company. If a securities class action suit is filed against us, we would
incur substantial legal fees and our management's attention and resources would
be diverted from operating our business in order to respond to the litigation.
 
The large number of shares eligible for public sale after this offering could
cause our stock price to decline.
 
   The market price of our stock could decline as a result of sales by our
existing stockholders of a large number of shares of our stock in the market
after this offering or the
 
                                       12

<PAGE>
 
   
perception that these sales could occur. These sales also might make it more
difficult for us to sell equity securities in the future at a time and at a
price that we deem appropriate.     
   
   After this offering, we will have 45,615,722 shares of common stock
outstanding. All of our officers and directors and substantially all of our
existing stockholders have entered into lock-up agreements providing that they
will not sell any of our common stock until 180 days from the date of this
prospectus, without the prior written consent of Deutsche Bank Securities Inc.,
the legal name of which is expected to change to "Deutsche Banc Alex. Brown
Inc." on January 16, 2001. Deutsche Bank Securities Inc. may release the shares
subject to the lock-up agreements in whole or in part at any time without prior
public notice. However, Deutsche Bank Securities Inc. has no current plans to
effect such a release. Please see "Shares Eligible for Future Sale" for a
description of sales that may occur in the future.     
   
Our management has broad discretion in using the proceeds from this offering,
which might not be used in ways that improve our operating results or increase
our market value.     
   
   Our management will have broad discretion as to how the net proceeds of this
offering will be used, including uses which may not improve our operating
results or increase our market value. Investors will rely on the judgment of
management regarding the application of the proceeds of this offering.     
 
Anti-takeover provisions in our charter documents and under Delaware law may
make an acquisition of us more difficult.
 
   Provisions of our certificate of incorporation and bylaws could make it more
difficult for a third party to acquire us, even if doing so would be beneficial
to our stockholders. These provisions:
 
  .  prevent stockholders from taking action by written consent;
 
  .  limit the persons who may call special meetings of stockholders;
 
  .  authorize the issuance of preferred stock in one or more series; and
 
  .  require advance notice for stockholder proposals and director
     nominations.
 
   In addition, Section 203 of the Delaware General Corporation Law also
imposes restrictions on mergers and other business combinations between us and
any holder of 15% or more of our common stock. Please see "Description of
Capital Stock--Preferred Stock" and "Description of Capital Stock--Antitakeover
Effects of Provisions of the Certificate of Incorporation, Bylaws and Delaware
Law" for a more detailed discussion of these anti-takeover provisions.
 
Concentrations of ownership and agreements among our existing executive
officers, directors and principal stockholders may prevent new investors from
influencing significant corporate transactions.
   
   The interest of management could conflict with the interest of our other
stockholders. Upon completion of this offering, our executive officers,
directors and principal stockholders will beneficially own, in total, 61.3% of
our outstanding common stock. As a result, these stockholders will be able to
exercise control over all matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions. This
could have the effect of delaying or preventing a change of control of Align,
which in turn could reduce the market price of our stock.     
 
                                       13

<PAGE>
 
New investors in our common stock will experience immediate and substantial
dilution.
   
   The offering price of our common stock will be substantially higher than the
net tangible book value per share of our existing capital stock. As a result,
if you purchase common stock in this offering, you will incur immediate and
substantial dilution of $10.09 in net tangible book value per share of common
stock, based on as assumed public offering price of $15.00 per share. You will
also experience additional dilution upon the exercise of outstanding stock
options and warrants. Please see "Dilution" for a more detailed discussion of
the dilution new investors will incur in this offering.     
 
                                       14

<PAGE>
 
      SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
   
   We make many statements in the prospectus under the captions Prospectus
Summary, Risk Factors, Management's Discussion and Analysis of Financial
Condition and Results of Operations, Business and elsewhere that are forward-
looking and are not based on historical facts. These statements relate to our
future plans, objectives, expectations and intentions. We may identify these
statements by the use of words such as believe, expect, will, anticipate,
intend and plan and similar expressions. These forward-looking statements
involve a number of risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those we discuss in Risk Factors and
elsewhere in this prospectus. These forward-looking statements speak only as of
the date of this prospectus, and we caution you not to rely on these statements
without considering the risks and uncertainties associated with these
statements and our business that are addressed in this prospectus.     
 
   Given these uncertainties, you should not place undue reliance on such
forward-looking statements. We are not under any duty to update any of the
forward-looking statements after the date of this prospectus to conform these
statements to actual results except as required by law.
 
   Information regarding market and industry statistics contained in the
Summary and Business sections is included based on information available to us
that we believe is accurate. It is generally based on academic and other
publications that are not produced for purposes of securities offerings or
economic analysis. We have not reviewed or included data from all sources and
cannot assure you of the accuracy of the data we have included.
 
                                       15

<PAGE>
 

                                USE OF PROCEEDS
   
   Our net proceeds from the sale of 10,000,000 shares of common stock we are
offering are estimated to be $137,200,000 ($158,125,000 if the underwriters'
over-allotment option is exercised in full) assuming an initial public offering
price of $15.00 per share and after deducting the underwriting discounts and
commissions and our estimated offering expenses.     
 
   We currently intend to use the net proceeds of this offering, along with our
existing cash balances, primarily to expand our manufacturing capacity, to fund
our national advertising campaign and other sales and marketing activities, to
continue to develop our product and manufacturing process technology, to fund
working capital and for general corporate purposes. As of the date of this
prospectus, we have not allocated any specific amount of the proceeds for the
purposes listed in this paragraph. A portion of the net proceeds may also be
used to acquire or invest in complementary businesses, technologies, product
lines or products. Pending our use of the proceeds, the net proceeds of this
offering will be invested in short term, interest-bearing, investment-grade
securities.
 

                                DIVIDEND POLICY
 
   Payments of future dividends, if any, will be at the discretion of our board
of directors after taking into account various factors our board of directors
deems relevant, including our financial condition, operating results, current
and anticipated cash needs, plans for expansion and debt covenants. We have
never declared or paid any cash dividends on shares of our capital stock and do
not intend to do so at any time in the foreseeable future.
 
                                       16

<PAGE>
 

                                CAPITALIZATION
 
   The following table sets forth the following information:
 
  .  our actual capitalization as of September 30, 2000;
     
  .  our pro forma capitalization, which gives effect to the sale of
     1,436,710 shares of Series D preferred stock in October 2000 at an
     offering price of $10.625 per share less estimated offering expenses of
     $53,000, and the conversion of all outstanding shares of preferred stock
     into 25,957,668 shares of common stock effective upon the closing of
     this offering. This amount also includes an additional 169,934 shares of
     common stock which reflects the effect of the conversion price
     adjustment to the Series D preferred stock resulting from stock option
     grants through November 30, 2000; and     
     
  .  our pro forma as adjusted capitalization to reflect the sale of
     10,000,000 shares of common stock at an assumed initial public offering
     price of $15.00 per share in this offering, less the underwriting
     discounts and commissions and estimated offering expenses.     
 

<TABLE>   
<CAPTION>
                                                   As of September 30, 2000
                                                 -------------------------------
                                                             Pro      Pro Forma
                                                  Actual    Forma    As Adjusted
                                                 --------  --------  -----------
                                                    (dollars in thousands)
<S>                                              <C>       <C>       <C>
Long term obligations, net of current portion..  $  1,569  $  1,569   $  1,569
                                                 --------  --------   --------
Convertible preferred stock, $0.0001 par value;
 13,605,427 shares authorized, actual and pro
 forma; 5,000,000 shares authorized, pro forma
 as adjusted; 24,351,024 shares issued and
 outstanding, actual; and no shares outstanding
 pro forma and pro forma as adjusted...........   113,890       --         --
                                                 --------  --------   --------
Preferred stock warrants.......................     1,818       --         --
                                                 --------  --------   --------
Stockholders' equity (deficit):
Common stock, $0.0001 par value; 60,000,000
 shares authorized, actual and pro forma;
 7,188,392 shares issued and outstanding,
 actual; 33,146,060 shares issued and
 outstanding, pro forma; 200,000,000 shares
 authorized, pro forma as adjusted; 43,146,060
 shares issued and outstanding, pro forma as
 adjusted......................................         1         3          4
Additional paid-in capital.....................    91,925   222,843    360,042
Deferred stock-based compensation..............   (74,847)  (74,847)  (74,847)
Accumulated deficit............................   (73,165)  (73,165)  (73,165)
                                                 --------  --------   --------
Total stockholders' equity (deficit)...........   (56,086)   74,834    212,034
                                                 --------  --------   --------
Total capitalization...........................  $ 61,191  $ 76,403   $213,603
                                                 ========  ========   ========
</TABLE>
    
 
   The number of shares of common stock referenced above excludes as of
September 30, 2000:
     
  .  4,305,156 shares of common stock issuable upon the exercise of
     outstanding stock options at a weighted average exercise price of $0.79
     per share;     
     
  .  2,362,074 shares of common stock available for grant under our 1997
     Equity Incentive Plan;     
   
       
  .  8,000,000 shares of common stock to be reserved for issuance under our
     2001 Stock Incentive Plan;     
     
  .  1,500,000 shares of common stock to be reserved for issuance under our
     Employee Stock Purchase Plan;     
     
  .  645,834 shares of common stock issuable upon the exercise of outstanding
     warrants to purchase preferred stock, or common stock upon the
     completion of this offering, at a weighted average exercise price of
     $1.94 per share; and     
     
  .  the adjustment to the conversion price for the Series D preferred stock
     resulting from option grants subsequent to November 30, 2000. See
     "Certain Transactions--Preferred Stock Sales."     
 
                                      17

<PAGE>
 
                                    DILUTION
   
   Our net tangible book value as of September 30, 2000 was approximately $59.6
million, or approximately $1.89 per share of common stock assuming conversion
of all preferred stock outstanding at that date into an aggregate of 24,351,024
shares of common stock upon completion of the offering. Our net tangible book
value per share has been determined by dividing net tangible book value (total
tangible assets less total liabilities) by the pro forma number of shares of
common stock outstanding at September 30, 2000.     
   
   After giving effect to the sale of 10,000,000 shares of common stock in this
offering at an assumed price of $15.00 per share and after deduction of the
underwriting discount and estimated offering expenses, our net tangible book
value after the offering would have been approximately $196.8 million, or $4.74
per share. The offering will result in an increase in net tangible book value
of $2.85 per share to existing stockholders and an immediate dilution of $10.26
per share to new investors, or approximately 68% of the assumed offering price
of $15.00 per share.     
   
   Pro forma net tangible book value dilution per share represents the
incremental dilutive effect of the sale of 1,436,710 shares of Series D
preferred stock at an offering price of $10.625 per share, after deducting
estimated offering expenses of $53,000. The Series D preferred stock converts
into an additional 169,934 shares of common stock as a result of an
antidilution conversion feature of our Series D preferred stock. See "Certain
Transactions--Preferred Stock Sales." The following table illustrates this
calculation of per share dilution:     
 

<TABLE>   
   <S>                                                             <C>   <C>
   Assumed initial public offering price per share...............        $15.00
     Net tangible book value per share as of September 30, 2000..  $1.89
     Increase per share attributable to new investors............   2.85
                                                                   -----
   Net tangible book value per share after this offering.........          4.74
                                                                         ------
     Dilution per share to new investors.........................         10.26
   Incremental dilution occurring upon sale and effect of the
    conversion price adjustment of Series D preferred stock......         (0.17)
                                                                         ------
   Pro forma dilution per share to new investors.................        $10.09
                                                                         ======
</TABLE>
    
   
   The following table summarizes, on the pro forma basis described above, the
differences between the number of shares of common stock issued by us, the
total consideration paid and the average price per share paid by the existing
stockholders and by new investors, before deducting underwriting discounts and
commissions and estimated offering expenses, at an assumed initial public
offering price of $15.00 per share:     
 
 

<TABLE>   
<CAPTION>
                             Shares Purchased  Total Consideration
                            ------------------ -------------------- Average Price
                              Number   Percent    Amount    Percent   Per Share
                            ---------- ------- ------------ ------- -------------
   <S>                      <C>        <C>     <C>          <C>     <C>
   Existing stockholders... 33,146,060    77%  $129,093,000    46%     $ 3.89
   New investors........... 10,000,000    23    150,000,000    54       15.00
                            ----------   ---   ------------   ---
    Total.................. 43,146,060   100%  $279,093,000   100%
                            ==========   ===   ============   ===
</TABLE>
    
   
   These tables do not assume exercise of stock options and warrants
outstanding as of September 30, 2000. As of September 30, 2000, there were
4,305,156 shares of common stock issuable upon exercise of outstanding stock
options under our 1997 Equity Incentive Plan at a weighted average exercise
price of $0.79 per share, 2,362,074 shares remaining to be issued under the
Plan, and 645,834 shares of common stock issuable upon exercise of outstanding
warrants at a weighted average exercise price of $1.94 per share. There will be
8,000,000 shares of common stock reserved for issuance under our 2001 Stock
Incentive Plan. There will be 1,500,000 shares of common stock reserved for
issuance under our Employee Stock Purchase Plan. Giving effect to the exercise
of the options and warrants outstanding and exercisable as of September 30,
2000, the pro forma net tangible book value per share would be $4.51 and the
dilution per share to the new investors would be $0.40.     
 
                                       18

<PAGE>
 

                      SELECTED CONSOLIDATED FINANCIAL DATA
       
   You should read the following selected consolidated financial data in
conjunction with the Consolidated Financial Statements and related Notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The consolidated statement
of operations data for the period from April 3, 1997 (date of inception) to
December 31, 1997 and for each of the two years in the period ended December
31, 1999, and the balance sheet at December 31, 1998 and 1999, are derived from
the audited consolidated financial statements included elsewhere in this
prospectus. The consolidated balance sheet data at December 31, 1997 is derived
from audited consolidated financial statements not included in this prospectus.
The selected consolidated results of operations for the nine months ended
September 30, 1999 and 2000 and the selected consolidated balance sheet data as
of September 30, 2000 are derived from unaudited financial statements included
in this prospectus. In the opinion of management, the unaudited consolidated
financial statements include all adjustments, consisting principally of normal
recurring adjustments, necessary for a fiscal presentation of the results of
operations for the periods. Our historical results are not necessarily
indicative of results to be expected for future periods. See the Notes to our
Consolidated Financial Statements for a detailed explanation of the
determination of the shares used to compute basic and diluted net loss per
share.
 

<TABLE>   
<CAPTION>
                          Period from
                           Inception
                           (April 3,      Year Ended        Nine Months Ended
                            1997) to     December 31,         September 30,
                          December 31, -----------------  ----------------------
                              1997      1998      1999     1999        2000
                          ------------ -------  --------  -------  -------------
                                 (in thousands, except per share data)
<S>                       <C>          <C>      <C>       <C>      <C>
Statement of Operations
 Data:
Revenue.................     $  --     $   --   $    411  $    77    $  3,236
Cost of revenue.........        --         --      1,754      357      11,313
                             ------    -------  --------  -------    --------
Gross loss..............        --         --     (1,343)    (280)     (8,077)
                             ------    -------  --------  -------    --------
Operating expenses:
 Sales and marketing....        283        133     5,688    2,726      19,664
 General and
  administrative........        --       2,344     3,474    2,000      12,349
 Research and
  development...........        405      1,474     4,200    3,068       5,904
                             ------    -------  --------  -------    --------
 Total operating
  expenses..............        688      3,951    13,362    7,794      37,917
                             ------    -------  --------  -------    --------
Loss from operations....       (688)    (3,951)  (14,705)  (8,074)    (45,994)
Interest and other
 income (expense), net..         24        176      (710)    (499)     (7,317)
                             ------    -------  --------  -------    --------
Net loss................       (664)    (3,775)  (15,415)  (8,573)    (53,311)
Dividend related to
 beneficial conversion
 feature of preferred
 stock..................        --         --        --       --      (44,150)
                             ------    -------  --------  -------    --------
Net loss available to
 common stockholders....     $ (664)   $(3,775) $(15,415) $(8,573)   $(97,461)
                             ======    =======  ========  =======    ========
Net loss per share
 available to common
 stockholders, basic and
 diluted................     $(0.43)   $ (1.33) $  (3.65) $ (2.11)   $ (17.94)
                             ======    =======  ========  =======    ========
Shares used in computing
 net loss per share
 available to common
 stockholders, basic and
 diluted................      1,542      2,842     4,218    4,060       5,434
                             ======    =======  ========  =======    ========
 
 
<CAPTION>
                                  December 31,
                          ------------------------------           September 30,
                              1997      1998      1999                 2000
                          ------------ -------  --------           -------------
<S>                       <C>          <C>      <C>       <C>      <C>
Balance Sheet Data:
Cash, cash equivalents
 and marketable
 securities.............     $1,506    $ 6,923  $ 12,085             $ 37,867
Restricted cash.........        --         --        340               18,127
Working capital.........      1,370      6,815    10,027               47,758
Total assets............      1,642      8,117    17,091               75,567
Total long term
 obligations............          4         10         3                1,569
Convertible preferred
 stock and warrants.....      2,164     12,147    32,755              115,708
Total stockholders'
 deficit................       (661)    (4,433)  (19,414)             (56,086)
</TABLE>
    
 
                                       19

<PAGE>
 

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS
 
   The following discussion and analysis of our financial condition and results
of operations should be read together with "Selected Consolidated Financial
Data" and our financial statements and related notes appearing elsewhere in
this prospectus. This discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. The actual
results may differ materially from those anticipated in these forward-looking
statements as a result of many factors, including but not limited to those set
forth under "Risk Factors" and elsewhere in this prospectus.
 
Overview
   
   From our inception in April 1997 to July 2000, we were engaged in the
design, manufacture and marketing of the Invisalign System, a proprietary new
System for treating malocclusion, or the misalignment of teeth. In July 1999,
we commenced commercial sales of our Invisalign System. Prior to July 1999, we
devoted nearly all our resources to developing our software and manufacturing
processes, clinical trials of the Invisalign System and to building our sales
force, customer support and management teams. We exited the development stage
in July 2000.     
   
   The Invisalign System has two components: ClinCheck and Aligners. ClinCheck
is an Internet-based application that allows orthodontists to simulate
treatment, in three dimensions, by modeling two-week stages of tooth movement.
Aligners are thin, clear plastic, removable dental appliances that are
manufactured in a series to correspond to each two-week stage of the ClinCheck
simulation. Aligners are customized to perform the treatment prescribed for an
individual patient by an orthodontist using ClinCheck.     
 
   In the third quarter of 1999, we recognized revenue for the first time from
the sale of the Invisalign System and related dental impression machines
manufactured by ESPE America, Inc. We expect to sell dental impression machines
only once. Accordingly, sales of such machines are expected to represent a
lower proportion of our revenue in the future. Substantially all our revenue is
generated in the U.S. and Canada, which, taken together, we regard as our
domestic market.
   
   While our expansion outside of our domestic market is still in an
exploratory stage, we do incur substantial operating costs outside of our
domestic market. Two of our key production steps are performed in operations
located outside of the U.S. In our facilities in Pakistan, technicians use a
sophisticated, internally developed computer modeling program to prepare
electronic treatment plans, which are transmitted via the Internet back to the
U.S. These files form the basis of our ClinCheck product and are used for the
manufacture of Aligner molds. In addition, a third party manufacturer in Mexico
fabricates and performs finishing work on completed Aligners and ships the
completed products to our customers. Our costs associated with these operations
are denominated in Pakistani rupees and Mexican pesos. Our reliance on
international operations exposes us to risks and uncertainties that may affect
our business or results of operations including, among others, difficulties in
staffing and managing international operations, controlling quality of
manufacture, political, social and economic instability, interruptions and
limitations in telecommunication services, product or material transportation
delays or disruption, and trade restrictions and changes in tariffs. However,
we believe these risks are mitigated in Pakistan by the fact that our
operations there do not involve the shipping or manufacturing of any physical
products, and in Mexico by the fact that our operations there are governed
under the provisions of the North American Free Trade Agreement, or NAFTA.     
 
   We incurred net losses of $664,000 in 1997, $3.8 million in 1998 and $15.4
million in 1999. For the nine months ended September 30, 2000, we incurred a
net loss of $53.3 million
 
                                       20

<PAGE>
 
   
compared to a net loss of $8.6 million for the nine months ended September 30,
1999. As of September 30, 2000, we had an accumulated net deficit of $73.2
million. We expect to have net losses and negative operating cash flows for at
least the next 18 months due, in part, to our national advertising campaign,
the expansion of manufacturing capacity and continued research and development
efforts.     
   
   We earn revenue primarily from the sale of our Invisalign System. Our
revenue consists of the ClinCheck fee and the charge for each Aligner. We
charge orthodontists a fixed fee for the treatment simulation viewed via
ClinCheck on our website, Invisalign.com. This fee is invoiced when the
orthodontist orders ClinCheck prior to the production of Aligners. In addition,
we charge orthodontists a fee for Aligners as we ship them. Fees from the sale
of ClinCheck and Aligners, taken together, are treated as revenue from a single
System and are recognized ratably as batches of Aligners are shipped to the
orthodontist.     
   
   We also earn ancillary revenue from the sale to orthodontists of dental
impression machines. To facilitate adoption of the Invisalign System, we sell
machines to some of our customers to assist them in preparing the impressions
required for submission of Invisalign cases. These machines, which cost
approximately $600 each, are manufactured by ESPE America, Inc. Many of our
customers have adequate dental impression making equipment or pay general
dentists to take impressions on their behalf and, as such, do not purchase an
impression machine from us.     
   
   To date, we have shipped Aligners in batches. The first batch, which
typically represents the first several months of treatment, is produced once
the prescribing orthodontist approves ClinCheck. Thereafter, Aligners are sent
at approximately six month intervals until treatment is complete.     
   
   We are in the process of changing the pattern of Aligner shipments. We
intend to ship all the Aligners associated with a given case in a single batch
beginning in early 2001. When this happens, all the revenue associated with a
given case, including ClinCheck fees, will be recognized at the time the
Aligners are shipped. Payment terms will range from net 30 days from shipment
on ClinCheck, dental impression machines and a portion of the single batch
Aligner shipment to net 120 days from shipment on the remaining portion of the
single batch Aligner shipment.     
   
   The costs of producing the ClinCheck treatment plan, which are incurred
prior to the production of Aligners, are capitalized and recognized as related
revenue is earned. In the cases where we expect a net loss, the entire loss is
recognized immediately and the remaining costs are deferred and those costs are
recognized ratably as batches of Aligners are shipped to the orthodontist.     
 
Deferred Compensation
   
   In connection with the grant of stock options to employees and non-
employees, we recorded deferred stock-based compensation as a component of
stockholders' deficit. Deferred stock compensation for options granted to
employees is the difference between the fair value of our common stock on the
date such options were granted and their exercise price. For stock options
granted to non-employees, the fair value of the options, estimated using the
Black-Scholes valuation model, is initially recorded on the date of grant. As
the non-employee options become exercisable, we revalue the remaining unvested
options, with the change in fair value from period to period represented as a
change in the deferred compensation charge. This stock-based compensation is
amortized as charges to operations over the vesting periods of the options. We
recorded amortization of deferred compensation of $394,000 for the year ended
December 31, 1999 and $7.9 million for the nine months ended September 30,
2000.     
 
                                       21

<PAGE>
 
       
Results of Operations
 
  Nine Months Ended September 30, 1999 and 2000
   
   Revenue. We recorded revenue for the first time in the third quarter of
1999. For the nine months ended September 30, 1999, we recorded revenue of
$77,000. Almost all our revenue in this period related to the sale to
orthodontists of dental impression machines. In the nine months ended September
30, 2000, we recorded revenue of $3.2 million, of which approximately
$2.3 million was derived from the sale of our Invisalign System. The balance of
our revenue for the nine month period ended September 30, 2000 represented
sales of dental impression machines. We expect to sell a dental impression
machine to an orthodontist only once. Accordingly, sales of these machines are
expected to represent a substantially lower proportion of our revenue in the
future.     
   
   Cost of revenue. Cost of revenue includes the salaries of staff involved in
production, the cost of materials and packaging used in production and shipping
together with an allocation of the cost of facilities and depreciation on the
capital equipment used in the production process. We reported cost of revenue
of $357,000 for the nine months ended September 30, 1999. For the nine months
ended September 30, 2000, we reported cost of revenue of $11.3 million, which
includes manufacturing costs and reflects a substantial increase in the scale
of our manufacturing operations.     
 
   Sales and marketing. Sales and marketing expenses include sales force
compensation together with the expense of professional marketing, principally,
conducting training workshops and market surveys, advertising and attending
orthodontic trade shows. Sales and marketing expenses increased from $2.7
million for the nine months ended September 30, 1999 to $19.7 million for the
nine months ended September 30, 2000. This increase resulted from a substantial
increase in doctor training, our participation in the annual convention of the
American Association of Orthodontists in April and May, 2000 and the launch of
our national advertising campaign in September 2000.
 
   General and administrative. General and administrative expenses include
costs for the compensation of administrative personnel, outside consulting
services, facilities, legal expenses and general corporate expenses. General
and administrative expenses increased from $2.0 million for the nine months
ended September 30, 1999 to $12.3 million for the nine months ended September
30, 2000, primarily due to increased personnel cost. We expect administrative
expenses to continue to increase in the future to support expanding business
activities and the additional administrative costs related to being a public
company.
 
   Research and development. Research and development expenses include the
costs associated with software engineering, the costs of designing, developing
and testing our products and the conduct of both clinical and post-marketing
trials. Research and development is expensed as incurred. Research and
development expenses increased from $3.1 million for the nine months ended
September 30, 1999 to $5.9 million for the nine months ended September 30,
2000. The expenses incurred in the 1999 period included the costs of
researching processes to manufacture our product. Starting in the third quarter
of 1999, we transitioned from recording manufacturing process research as
research and development expense to recognizing it as cost of sales.
 
   Interest and other income (expense), net. Net interest and other expense
increased from $499,000 for the nine months ended September 30, 1999 to $7.3
million for the nine months ended September 30, 2000. This increase resulted
primarily from non-cash interest expense related to the beneficial conversion
feature of a bridge loan financing.
 
                                       22

<PAGE>
 
   
   Dividend related to beneficial conversion feature of preferred stock. In the
three months ended June 30, 2000, we issued 8,097,672 shares of Series D
preferred stock. The difference between the conversion price and the fair
market value per share of the common stock on the transaction date resulted in
a beneficial conversion feature of $44.2 million which has been reflected as a
preferred stock dividend in the September 30, 2000 consolidated interim
financial statements.     
 
  Period from April 3, 1997 (date of inception) to December 31, 1997, and the
  Years Ended December 31, 1998 and 1999
 
   Revenue. Revenue was recorded for the first time in 1999. For the year ended
December 31, 1999, we recorded $411,000 in revenue from sales of the Invisalign
System and related ancillary products. Approximately $98,000 was derived from
the sale of the Invisalign System products. The balance of our revenue, or
$313,000, represented sales to orthodontists of dental impression machines.
 
   Cost of revenue. No cost of revenue was incurred in 1997 and 1998. We
incurred cost of revenue of $1.8 million relating to the manufacture of
products sold for the year ended December 31, 1999.
 
   Sales and marketing. Sales and marketing expenses in 1997 and 1998 were
insignificant because we had not launched our product commercially. Sales and
marketing expenses decreased from $283,000 in 1997 to $133,000 in 1998 and
increased to $5.7 million in 1999, reflecting the hiring of our sales force,
the training of doctors to support our commercial launch and the testing of
direct advertising in two markets.
 
   General and administrative. General and administrative expenses increased
from none in 1997 and $2.3 million in 1998 to $3.5 million in 1999, reflecting
the growth in our administrative staff, rent on our facilities and other
general expenses as we prepared for commercial launch of the Invisalign System.
 
   Research and development. Research and development expenses increased from
$405,000 in 1997 to $1.5 million in 1998, reflecting the commencement of
clinical trials of the Invisalign System and the development of software and
processes for the manufacture of the Invisalign System. In 1999, research and
development expenses increased to $4.2 million, reflecting the development of
manufacturing processes and continuation of our clinical trials.
 
   Interest and other income (expense), net. Net interest and other income
increased from a negligible amount in 1997 to $176,000 in 1998 due to interest
income earned on higher average cash balances, resulting from the sale of
preferred stock in July 1998. In 1999, net interest expense was $710,000 due to
non-cash interest expense created by the amortization of warrants issued in
connection with a line of credit.
 
Income Taxes
 
   We have not incurred any income tax expense to date since we have not been
profitable. As of December 31, 1999, we had federal net operating loss
carryforwards of $10.5 million. As of December 31, 1999, we had recorded a full
valuation allowance for our existing net deferred tax assets due to
uncertainties regarding their realization. We also have federal research tax
credit carryforwards of $606,000 as of December 31, 1999. The federal net
operating loss and credit carryforwards expire beginning in the year 2017 if
not utilized. Utilization of the federal net operating losses and credit
carryforwards may be limited by the change of ownership provisions contained in
Section 382 of the Internal Revenue Code.
 
 
                                       23

<PAGE>
 
Liquidity and Capital Resources
   
   Historically, we have funded our operations with the proceeds from the sale
of our common and preferred stock, equipment leases and bridge loans. As of
September 30, 2000, we had $37.9 million in cash, cash equivalents and
marketable securities and an accumulated deficit of $73.2 million.
Additionally, we have $17.6 million of restricted cash held in an escrow
account to fund our national advertising campaign. Our equipment lease line was
repaid in July 2000 and expired in July 2000. We currently have no outstanding
debt arrangements.     
 
   Net cash used in operating activities totaled $522,000 in 1997, $3.8 million
in 1998 and $11.6 million in 1999. For the nine months ended September 30,
2000, net cash used in operations totaled $31.2 million compared to $6.8
million for the nine months ended September 30, 1999. In each of these periods
net cash used by operating activities consisted primarily of net operating
losses, partially offset by increases in accounts payable, depreciation and
amortization of deferred stock compensation.
   
   Net cash used in investing activities totaled $1.6 million in 1997, $3.8
million in 1998 and $3.6 million in 1999. For the nine months ended September
30, 2000, net cash used in investing activities totaled $24.3 million compared
to net cash provided by investing activities of $1.8 million for the nine
months ended September 30, 1999. In each of these periods, net cash used in
investing activities consisted primarily of purchases of property and equipment
and marketable securities offset by sales and maturities of marketable
securities. For the nine months ended September 30, 2000, there was a
substantial increase in restricted cash related to the transfer of funds to our
media buying agent to fund our national advertising campaign. These funds,
totaling $17.6 million at September 30, 2000, are due to be released to cover
expenses related to our national advertising campaign over the next three
quarters.     
 
   Net cash from financing activities was $2.2 million in 1997, $10.0 million
in 1998 and $19.6 million in 1999. For the nine months ended September 30,
2000, net cash from financing activities totaled $82.6 million compared to
$17.9 million for the nine months ended September 30, 1999. In May 2000, we
sold $14.0 million of convertible promissory notes to preferred stockholders.
In May and June 2000, we sold $72.0 million of preferred stock to investors.
Also in May 2000, the convertible promissory notes were converted to preferred
stock. In October 2000, we sold an additional $15.3 million of preferred stock.
   
   We expect that our operating expenses will increase with an overall increase
in the level of our business activity, including increased sales and the
related costs of products sold, the launch of our national advertising
campaign, continuing efforts to expand our manufacturing capacity, research and
development and other costs. We are in the process of changing the pattern of
Aligner shipments, which will have a negligible effect on our cash flows. In
addition, we may use cash to fund acquisitions of complementary businesses or
technologies. We believe the net proceeds from this offering will be sufficient
to meet our operating, working capital and capital expenditure requirements for
at least the next 12 months. Thereafter, we may find it necessary to obtain
additional equity or debt financing. In the event additional financing is
required, we may not be able to raise it on acceptable terms or at all.     
 
Quantitative and Qualitative Disclosures about Market Risk
 
   Our exposure to market risk is currently confined to our cash and cash
equivalents that have maturities of less than three months. We currently do not
hedge interest rate exposure. Because of the short-term maturities of our cash
and cash equivalents and marketable securities, we do not believe that an
increase in market rates would have any significant negative impact on the
realized value of our investments.
 
                                       24

<PAGE>
 
Recent Accounting Pronouncements
          
   In June 1998, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," or SFAS No. 133. SFAS No. 133 establishes
accounting and reporting standards for derivative investments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. In July 1999, the FASB issued Statement of Financial Accounting
Standards No. 137, "Accounting for Derivative and Hedging Activities--Deferral
of the Effective Date of FASB Statement No. 133," or SFAS No. 137. SFAS No. 137
deferred the effective date of SFAS No. 133 until fiscal years beginning after
June 15, 2000. We will adopt SFAS No. 133 during fiscal 2001. To date, we have
not engaged in derivative or hedging activities.     
   
   In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," or
SAB 101, which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements filed with the Securities and
Exchange Commission. SAB 101 outlines the basic criteria that must be met to
recognize revenue and provides guidance for disclosures related to revenue
recognition policies. In June 2000, the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 101B, "Second Amendment: Revenue
Recognition in Financial Statements," or SAB 101B. SAB 101B deferred the
implementation date of SAB 101 until no later than the fourth fiscal quarter of
fiscal years beginning after December 15, 1999. We have adopted the provisions
of SAB 101 and believe that our current revenue recognition is in compliance
with SAB 101.     
   
   In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation--an Interpretation of APB
25," or FIN 44. This interpretation clarifies (i) the definition of employee
for purposes of applying Opinion 25, (ii) the criteria for determining whether
a plan qualifies as a noncompensatory plan, (iii) the accounting consequence of
various modifications to the terms of a previously fixed stock option or award,
and (iv) the accounting for an exchange of stock compensation awards in a
business combination. This interpretation is effective July 1, 2000, but
certain conclusions in this interpretation cover specific events that occur
after either December 15, 1998, or January 12, 2000. To the extent that this
interpretation covers events occurring during the period after December 15,
1998, or January 12, 2000, but before the effective date of July 1, 2000, the
effects of applying this interpretation are recognized on a prospective basis
from July 1, 2000. The adoption of FIN 44 did not have a material impact on our
consolidated financial statements.     
   
   In March 2000, the Emerging Issues Task Force reached a consensus on Issue
00-2, "Accounting for the Costs of Developing a Web Site," or EITF 00-2. In
general, EITF 00-2 states that the costs of developing a web site should be
accounted for under provisions of statement of position (SOP) 98-1, "Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use." The
adoption of the provisions of EITF 00-2 did not have a material impact on our
consolidated financial statements.     
 
                                       25

<PAGE>
 

 
                                   BUSINESS
 
Overview
 
   We design, manufacture and market the Invisalign System, a proprietary new
method for treating malocclusion, or the misalignment of teeth. The System
corrects malocclusion using a series of clear, 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, the System significantly reduces the
aesthetic and other limitations associated with braces. The Invisalign System
also offers orthodontists a new means of carrying out their diagnosis and
treatment planning processes. We believe the Invisalign System has the
potential to transform the traditional practice of orthodontics by appealing to
people who would not otherwise seek treatment.
   
   In the U.S. alone, over 200 million individuals have some form of
malocclusion. Each year, less than one percent of these individuals, or
approximately two million Americans, enter orthodontic treatment, spending
approximately $7 billion in the aggregate. We believe the Invisalign System is
a compelling treatment alternative for most of the patients who would seek
traditional orthodontic treatment. In addition, given the significant benefits
of our System, we have the opportunity to expand the U.S. orthodontic market by
addressing the needs of millions of individuals who would not otherwise seek
treatment. Further, we believe the international opportunity is larger than the
U.S. opportunity.     
   
   We received FDA clearance to market the Invisalign System in 1998 and
started commercial sales of the System in July 1999. Our 510(k) clearance from
the FDA allows us to market the Invisalign System to treat patients with any
type of malocclusion. We voluntarily restrict the use of the Invisalign System
to adults and adolescents with mature dentition. Individuals with mature
dentition have fully erupted second molars and substantially complete jaw
growth. This group represents approximately 130 million people in the U.S.
Typically, girls by the age of 13 years and boys by the age of 16 years will
have developed mature dentition. Currently, we do not treat children whose
teeth and jaws are still developing, as the effectiveness of the Invisalign
System relies on our ability to accurately predict the movement of teeth over
the course of treatment. Based on our clinical studies to date, we recommend
that orthodontists use the Invisalign System as a complete treatment for mild
and moderate malocclusions and as a component of treatment for unusually severe
malocclusions.     
   
   As of November 2000, we had trained more than 5,300 orthodontists to use the
Invisalign System, representing approximately 60% of all practicing U.S. and
Canadian orthodontists. In addition, over 1,000 orthodontists have enrolled in
our training program scheduled for January 2001. As of November 2000, over
2,000 of the orthodontists we have trained had submitted one or more cases to
us. To date, approximately 9,200 patients have commenced treatment with the
Invisalign System, including more than 1,700 patients in November 2000.     
 
   Our objective is to establish the Invisalign System as the standard method
for treating orthodontic malocclusion. Our sales and marketing efforts focus on
educating both consumers and orthodontists on the significant benefits of the
System. We continue to train orthodontists and work with them to increase the
use of the Invisalign System within their practices. We recently initiated a
national advertising campaign to create awareness of the Invisalign System as a
treatment alternative and to stimulate demand for treatment with the System.
 
Industry Background
 
  Malocclusion
 
   Malocclusion is one of the most prevalent clinical conditions, affecting
over 200 million individuals, or approximately 75% of the U.S. population.
Approximately two million people
 
                                       26

<PAGE>
 
annually elect orthodontic treatment in the U.S., generating industry revenues
of approximately $7 billion. While most individuals seek orthodontic treatment
to improve their appearance, malocclusion may also be responsible for dental
problems such as tooth decay, tooth loss, gum disease, jaw joint pain and
headaches. Only a relatively small proportion of people with malocclusion seek
treatment because of the compromised aesthetics, discomfort and other drawbacks
associated with conventional orthodontic treatments.
 
  Traditional Orthodontic Treatment
 
   Orthodontists apply traditional techniques and principles of treatment
developed in the early 20th century. In the U.S., orthodontists treat
malocclusion primarily with metal archwires and brackets, commonly referred to
as braces. Occasionally, in an attempt to improve treatment aesthetics,
orthodontists use ceramic, tooth-colored brackets or bond brackets on the
inside, or lingual surfaces, of the patient's teeth. Orthodontists also augment
braces with elastics, metal bands, headgear and other ancillary devices.
 
   The average treatment takes approximately two years to complete and requires
several hours of direct orthodontist involvement, or chair time. To initiate
treatment, an orthodontist will diagnose a patient's condition and create an
appropriate treatment plan. In a subsequent visit, the orthodontist will bond
brackets to the patient's teeth with cement and attach an archwire to the
brackets. Thereafter, by tightening or otherwise adjusting the braces
approximately every six weeks, the orthodontist is able to exert sufficient
force on the patient's teeth to achieve desired tooth movement. Because of the
length of time between visits, the orthodontist must tighten the braces to a
degree sufficient to achieve sustained tooth movement during the interval. In a
final visit, the orthodontist removes each bracket and residual cement from the
patient's teeth.
 
   Fees for orthodontic treatment typically range between $3,000 to $5,000 and
are generally not reimbursed by insurance. In addition, orthodontists commonly
charge a premium for lingual or ceramic alternatives. Fees are based on the
difficulty of the particular case and on the orthodontist's estimate of chair
time and are generally negotiated in advance. A treatment that exceeds the
orthodontist's estimate of chair time generally results in decreased fees per
hour of chair time, or reduced profitability for the orthodontist.
 
  Limitations of Traditional Orthodontic Treatment
 
   Although braces are generally effective in correcting a wide range of
malocclusions, they are subject to many limitations and disadvantages.
Conventional orthodontic treatment is associated with:
 
  .  Unattractive appearance. Braces call attention to the patient's
     condition and treatment. In addition, braces trap food, which can
     further compromise appearance. Braces can also result in permanent
     discoloration of teeth. Many adults associate braces with adolescence.
     As a result of these and other limitations, less than one half of one
     percent of American adults with malocclusion elect orthodontic treatment
     annually.
 
  .  Oral discomfort. Braces are sharp and bulky and can abrade and irritate
     the interior surfaces of the mouth. The tightening or adjustment of
     braces results in root and gum soreness and discomfort, especially in
     the days after an orthodontic visit.
 
  .  Poor oral hygiene. Braces compromise oral hygiene by making it more
     difficult to brush and floss. These problems can result in tooth decay
     and periodontal damage. Additionally, the bonding of brackets to teeth
     can cause permanent markings on the teeth.
 
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<PAGE>
 
  .  Inability to project treatment. Historically, orthodontists have not had
     a means to model the movement of teeth over a course of treatment.
     Accordingly, orthodontists must rely on intuition and judgment to plan
     and project treatment. As a result, they cannot be precise about the
     direction or distance of expected tooth movement between patient visits.
     This lack of predictability may result in unwanted tooth movements and
     can limit the orthodontist's ability to estimate the duration of
     treatment. Because most orthodontic treatment is performed on a fixed
     price basis, extended treatment duration reduces profitability for the
     orthodontist.
 
  .  Physical demands on orthodontists. The manipulation of wires and
     brackets requires sustained manual dexterity and visual acuity, and may
     place other physical burdens on the orthodontist.
 
  .  Root resorption. The sustained high levels of force associated with
     conventional treatment can result in root resorption, a shortening of
     tooth roots. This shortening can have substantial adverse periodontal
     consequences for the patient.
 
  .  Emergencies. At times, braces need to be repaired or replaced on an
     emergency basis. Such emergencies cause significant inconvenience to
     both the patient and the orthodontist.
 
   Due to the poor aesthetics, discomfort and other limitations of braces,
relatively few people with malocclusion elect orthodontic treatment.
Accordingly, we believe there is a large unmet need for an orthodontic system
that addresses these patient concerns. We also believe there is an unmet need
among orthodontists for a treatment system that increases the predictability
and efficiency of treatment and enhances practice profitability.
 
The Align Solution
   
   Our Invisalign System is a proprietary new system for treating malocclusion.
The Invisalign System consists of two components: ClinCheck and Aligners.     
   
   ClinCheck. ClinCheck is an interactive Internet application that allows
orthodontists to diagnose and plan treatment for their patients. We use a
dental impression and a treatment prescription submitted by an orthodontist to
develop a customized, three-dimensional treatment plan that simulates
appropriate tooth movement in a series of two-week increments. ClinCheck allows
the orthodontist to view this three-dimensional simulation with a high degree
of magnification and from any angle. Accordingly, ClinCheck enables the
orthodontist to project tooth movement with a level of accuracy not previously
possible.     
   
   Upon review of the ClinCheck simulation, the orthodontist may immediately
approve our projected treatment, or may provide us with feedback for
modification. We reflect any requested adjustments in a modified simulation.
Upon the orthodontist's approval of the ClinCheck simulation, we use the data
underlying the simulation to manufacture the patient's Aligners.     
   
   Aligners. Aligners are custom-manufactured, clear, removable dental
appliances that, when worn in prescribed series, provide orthodontic treatment.
Each Aligner covers a patient's teeth and is nearly invisible when worn.
Aligners are commonly worn in pairs, over the upper and lower dental arches.
Aligners are generally worn for consecutive two-week periods which correspond
to the approved ClinCheck treatment simulation. After two weeks of use, the
patient discards the Aligners and replaces them with the next pair in the
series. This process is repeated until the final Aligners are used and
treatment is complete. Upon completion of the treatment, the orthodontist may,
in his or her discretion, prescribe that the patient wear the final Aligner as
a retainer. In our experience to date, the typical Invisalign System patient
uses 22 sets of Aligners over 44 weeks of treatment.     
 
                                       28

<PAGE>
 
  Benefits of the Invisalign System
 
   We believe that the Invisalign System provides benefits to patients and
orthodontists that have the potential to establish the System as the preferred
alternative to conventional braces.
 
    Benefits to the Patient
 
  .  Excellent aesthetics. Aligners are nearly invisible when worn,
     eliminating the aesthetic concerns associated with conventional braces.
 
  .  Comfort. By replacing the six-week adjustment cycle of traditional
     braces with two-week stages, Aligners move teeth more gently. Also,
     Aligners are thin, smooth and low in profile. As a result, Aligners are
     substantially more comfortable and less abrasive than conventional
     braces.
 
  .  Improved oral hygiene. Patients can remove Aligners for tasks that are
     difficult with conventional braces, such as eating, brushing and
     flossing. We believe this feature has the potential to reduce tooth
     decay and periodontal damage during treatment.
     
  .  Potentially reduced overall treatment time. Aligners control force by
     distributing it broadly over the exposed surfaces of the teeth. In
     addition, the ClinCheck simulation from which Aligners are produced is
     designed to reduce unintended and unnecessary tooth movements. Together,
     these factors may significantly reduce overall treatment time relative
     to conventional braces.     
 
  .  Potentially reduced root resorption. We believe that controlling force
     and shortening treatment time has the potential to reduce the incidence
     of root resorption.
 
  .  Reduced incidence of emergencies. Typically, a lost or broken Aligner is
     simply replaced with the next Aligner in series, minimizing
     inconvenience to both patient and orthodontist.
 
   We believe that these benefits will prove attractive to people who currently
do not seek treatment because of the limitations of conventional braces.
 
    Benefits to the Orthodontist
     
  .  Ability to visualize treatment and likely outcomes. We believe that
     ClinCheck is the only product that enables orthodontists to preview a
     course of treatment and the likely final outcome of treatment in an
     interactive three-dimensional computer model. ClinCheck allows
     orthodontists to analyze multiple treatment alternatives before
     selecting the alternative they feel is most appropriate for the patient.
            
  .  Minimal additional training. The biomechanical principles that underlie
     the Invisalign System are consistent with those of traditional
     orthodontics. Orthodontists can complete our initial training and
     certification program within a day.     
 
  .  Ease of use. When treating patients with the Invisalign System,
     orthodontists do not spend their time manipulating wires and brackets.
     This allows them to spend proportionately more time diagnosing and
     interacting with their patients.
 
  .  Significantly expanded patient base. We believe the Invisalign System
     has the potential to transform the practice of orthodontics. Currently,
     less than one percent of the over 200 million people with malocclusion
     in the U.S. enter treatment each year. We believe that our System will
     allow orthodontists to attract patients who would not otherwise seek
     orthodontic treatment.
 
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<PAGE>
 
  .  Higher fees. Orthodontists typically charge between $3,000 and $5,000
     for a course of conventional treatment. Due to the substantial patient
     benefits of the Invisalign System, we believe orthodontists offering our
     System have generally been able to command a significant premium. In our
     experience, the premiums charged by orthodontists for the Invisalign
     System have been comparable to other treatment alternatives that attempt
     to improve the aesthetics of conventional braces, such as ceramic and
     lingual braces.
 
  .  Decreased orthodontist and staff time. The Invisalign System reduces
     both the frequency and length of patient visits. The Invisalign System
     eliminates the need for time-intensive processes such as bonding
     appliances to the patient's teeth, adjusting archwires during the course
     of treatment and removing the appliances at the conclusion of treatment.
     As such, use of the Invisalign System significantly reduces orthodontist
     and staff chair time and can increase practice throughput.
   
   We believe the combination of increased patient volume, higher fees per case
and reduced chair time has the potential to substantially improve orthodontic
practice profitability.     
      
   Limitations of the Invisalign System     
   
   In some instances, the Invisalign System may have certain limitations
relative to conventional treatment. Aligners cost more to produce than
conventional braces, and we charge orthodontists more than they generally pay
for the supplies used in conventional treatment. Depending on the individual
pricing policies of each orthodontist, the cost of the Invisalign System to the
patient may be greater than for conventional braces. Orthodontists must also
incorporate our manufacturing cycle times into their overall treatment plan.
Once an orthodontist submits a case to us, there is generally a turn-around
time of a month or more before the corresponding Aligners are delivered.
Aligners may not be appropriate for all cases, such as unusually severe
malocclusion, which may require Aligners to be used in combination with
conventional braces for optimal results. In addition, because Aligners are
removable, treatment using the Invisalign System depends on patients wearing
their Aligners as recommended. Some patients may experience a temporary period
of adjustment to wearing Aligners that may mildly affect speech.     
          
   We believe that these limitations are outweighed by the many benefits of the
Invisalign System to both patients and orthodontists.     
 
Our Target Market
 
   Commercial sales of our Invisalign System commenced in the U.S. in July
1999. Since then, over 7,600 patients have entered treatment using the
Invisalign System.
   
   Our 510(k) clearance from the FDA allows us to market the Invisalign System
to treat patients with any type of malocclusion. We voluntarily restrict the
use of the Invisalign System to adults and adolescents with mature dentition.
Individuals with mature dentition have fully erupted second molars and
substantially complete jaw growth. This group represents approximately
130 million people in the U.S. Typically, girls by the age of 13 years and boys
by the age of 16 years will have developed mature dentition. Currently, we do
not treat children whose teeth and jaws are still developing, as the
effectiveness of the Invisalign System relies on our ability to accurately
predict the movement of teeth over the course of treatment. Based on our
clinical studies to date, we recommend that orthodontists use the Invisalign
System as a complete treatment for mild and moderate malocclusions and as a
component of treatment for unusually severe malocclusions.     
 
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<PAGE>
 
   Approximately two million patients enter into traditional orthodontic
treatment in the U.S. annually. These patients represent less than one percent
of the population of people with malocclusion. Of these, over 50%, or more than
one million patients, have mature dentition and are therefore natural
candidates for the Invisalign System.
 
   In addition, we believe that we have an immediate and substantial market
expansion opportunity. Our market research indicates that the great majority of
people with malocclusion who desire treatment do not elect traditional
treatment because of its many limitations. We believe that by addressing the
primary limitations of braces, our Invisalign System will encourage this group
to seek treatment. Adults, who are particularly sensitive to the aesthetic
limitations of traditional treatment, represent our most significant market
expansion opportunity.
 
   We are currently focused on the domestic market opportunity but we also
believe that a large international market opportunity exists.
 
Business Strategy
 
   Our objective is to establish the Invisalign System as the standard method
for treating orthodontic malocclusion. Key elements of our strategy include the
following:
   
   Educate orthodontists and stimulate demand for Invisalign System
treatment. Our market research indicates that the great majority of people with
malocclusion who desire treatment do not elect traditional treatment because of
its many limitations. By communicating the benefits of the Invisalign System to
both orthodontists and consumers, we intend to significantly increase the
number of patients who seek orthodontic treatment annually. As of November
2000, we had trained over 5,300 orthodontists in the U.S. and Canada on the use
and benefits of the Invisalign System, and intend to continue training
orthodontists at a rapid pace. We have successfully tested consumer advertising
in two lead markets and recently initiated a national advertising campaign in
order to create awareness of the Invisalign System as a treatment alternative
and to establish the Invisalign brand name.     
 
   Communicate practice benefits of the Invisalign System to orthodontists. The
Invisalign System provides substantial financial incentives to orthodontists by
enabling them to increase patient volume, charge a premium price and reduce
chair time per treatment. We intend to continue to emphasize these practice
benefits to orthodontists through our sales and training efforts.
 
   Expand and enhance manufacturing capability. Our manufacturing operations
are designed to produce large numbers of custom Aligners at a high level of
quality. To improve cost efficiency, we conduct labor intensive processes in
relatively low wage countries, including Pakistan and Mexico. We intend to
maintain manufacturing capacity in excess of projected demand to reduce the
risk that manufacturing capacity constrains our ability to grow. Our
proprietary software underlies our manufacturing process. By continually
developing this software and other manufacturing processes, we plan to increase
the level of production automation. Increased automation will enhance
production capacity and reduce both unit costs and production times.
 
   Extend and defend technology leadership. The Invisalign System represents a
significant technological advancement in orthodontics. We believe that our
issued patents, multiple pending patents and other intellectual property
provide a substantial lead over potential competitors. Our issued U.S. patent
is written to broadly cover any algorithmic method of segmenting orthodontic
treatment into a sequence of three or more steps, based on calculated initial
and final representations of a patient's dentition. We continue to pursue
further
 
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<PAGE>
 
intellectual property protection through U.S. and foreign patent applications
and non-disclosure agreements. We also seek to protect our software,
documentation and other written materials under trade secret and copyright
laws.
 
   Expand our target patient base. The Invisalign System can provide complete
treatment for those patients with mature dentition and mild or moderate
malocclusion. In addition, we believe that the System can provide partial
treatment of unusually severe malocclusions. In an effort to demonstrate the
System's ability to comprehensively treat such cases, we are undertaking post-
marketing studies and making additional improvements to the product.
 
   Build an international presence. In the near term, we intend to focus our
sales and marketing efforts on the U.S. and Canadian market opportunities.
However, we are developing our strategy for introducing the Invisalign System
in selected international markets. We believe that potential international
demand for the Invisalign System exceeds that of our domestic markets.
 
Manufacturing
 
   We produce highly customized, close tolerance, medical quality products in
volume. To do so, we have developed a number of proprietary processes and
technologies. These technologies include complex software solutions, laser,
destructive and white light scanning techniques and stereolithography, wax
modeling and other rapid prototyping methods.
 
   We believe the complexity inherent in producing such highly customized
devices in volume is a barrier to potential competitors. Furthermore, we
believe the sophisticated software we use to guide a custom manufacturing
process on a large scale was not available until we developed it.
   
   Manufacturing is coordinated in Santa Clara, California where, as of
November 2000, we employed a manufacturing staff of approximately 250 people.
In addition, as of November 2000, we employed a software development team
comprising approximately 30 software engineers with backgrounds in
computational geometry, animation, computer-aided design and manufacturing
industries. We also employ approximately 650 software operators and other staff
in our facilities in Lahore, Pakistan, who are responsible for the creation of
treatment simulations. In addition, we outsource the fabrication and packaging
of Aligners to a contract manufacturer based in Juarez, Mexico.     
   
The Invisalign Treatment Process     
 
   The Invisalign System treatment process comprises the following five stages:
   
   Orthodontic diagnosis and transmission of treatment data to us. In an
initial patient visit, the orthodontist determines whether the Invisalign
System is an appropriate treatment. The orthodontist then prepares treatment
data which consists of an impression of the relevant dental arches, x-rays of
the patient's dentition, photographs of the patient, a wax bite depicting the
relationship between the patient's upper and lower dental arches and an
Invisalign System treatment planning form, or prescription. The impression is a
critical component as it depicts the three-dimensional geometry of the
patient's teeth and hence forms the basis for our computer models. An
impression requires the patient to bite into a viscous material. This material
hardens, capturing the shape of the patient's teeth. The prescription is also a
critical component, describing the desired positions and movement of the
patient's teeth. The orthodontist sends the treatment data to our Santa Clara
facility.     
 
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<PAGE>
 
   Preparation of three-dimensional computer models of the patient's initial
malocclusion. Upon receipt, we use the treatment data to construct plaster
models of the patient's dentition. We scan the plaster models to develop a
digital, three-dimensional computer model of the patient's current dentition.
We then transmit this initial computer model together with the orthodontist's
prescription via the Internet to our facilities in Lahore, Pakistan.
   
   Preparation of computer-simulated treatment and viewing of treatment using
ClinCheck. In Pakistan, we transform this initial model into a customized,
three-dimensional treatment plan that simulates appropriate tooth movement in a
series of two-week increments. This simulation is then transmitted back to our
Santa Clara facility for review. Upon passing review, the simulation is then
delivered to the prescribing orthodontist via ClinCheck on our website at
www.invisalign.com. The orthodontist then reviews the ClinCheck simulation on a
computer and, on occasion, asks us to make adjustments. By reviewing and
amending the treatment simulation, the orthodontist retains control over the
treatment plan and, thus, participates in the customized design of the
Aligners. At this point, the orthodontist may also invite the patient to review
ClinCheck, allowing the patient to see the projected course of treatment. The
orthodontist then approves the proposed treatment and, in doing so, engages us
for the manufacture of corresponding Aligners.     
   
   Construction of molds corresponding to each step of treatment. We use the
approved ClinCheck simulation to construct a series of molds of the patient's
teeth. Each mold is a replica of the patient's teeth at each two-week stage of
the simulated course of treatment. These molds are fabricated at our Santa
Clara facility using custom manufacturing techniques that we have adapted for
use in orthodontic applications.     
 
   Manufacture of Aligners and shipment to orthodontist. We ship these molds to
Juarez, Mexico, where our contract manufacturer fabricates Aligners by pressure
forming polymeric sheets over each mold. The Aligners are then trimmed,
polished, cleaned, packaged and, following final inspection, shipped directly
to the prescribing orthodontist. In certain cases, orthodontists may use the
Invisalign System in conjunction with clear attachments bonded to the patient's
teeth. These attachments are used to increase the force applied to a tooth or
teeth in circumstances where the Aligners alone may have difficulty in
effecting the desired movement.
   
   To date, we have shipped Aligners in batches. The first batch, which
typically represents the first several months of treatment, is produced once
the prescribing orthodontist approves ClinCheck. Thereafter, Aligners are sent
at approximately six month intervals until treatment is complete. We are in the
process of changing the pattern of Aligner shipments. We intend to ship all the
Aligners associated with a given case in a single batch beginning in early
2001.     
 
  Throughput Management
 
   Because we manufacture each case on a build-to-order basis, we cannot build
inventories. As a result, we must conservatively build manufacturing throughput
for anticipated demand. To increase throughput, we must improve the efficiency
and increase the scale of our manufacturing processes.
   
   In order to increase the efficiency of our manufacturing processes, we focus
our efforts on software development and the improvement of rate-limiting
processes, or bottlenecks. Our next generation of software is being developed
to enhance computer analysis of treatment data, reducing time spent for each
case on manual and judgmental tasks, thereby increasing     
 
                                       33

<PAGE>
 
the efficiency of our technicians in Pakistan. We are also developing an
automated system for the fabrication of Aligners currently conducted in Mexico.
 
   In order to scale our manufacturing capacity, we continue to add labor and
invest in facilities and capital equipment. In particular, we recently expanded
our operations to two facilities in Santa Clara, California, together totaling
approximately 70,000 square feet, which serve as our manufacturing
headquarters. We are also expanding our technician base in Pakistan and
continue to hire in Santa Clara.
 
  Quality Assurance
   
   Our quality assurance team maintains compliance with FDA regulations,
monitors customer satisfaction with our products and services, and helps ensure
a high level of quality of final product. The prescribing orthodontist's review
of the ClinCheck treatment simulation represents an important step in our
overall quality control procedures.     
 
Sales and Marketing
   
   We market the Invisalign System by communicating the System's benefits
directly to consumers with a nationwide advertising campaign. Based on our
experience with advertising and commercial sales in our test markets, we
believe that making consumers aware of the Invisalign System as a new treatment
alternative generates significant demand for the System. In order to serve
anticipated demand in North America, we are training a broad base of
orthodontists.     
 
  Consumer Marketing
 
   We tested our consumer marketing strategy in two markets, Austin, Texas and
San Diego, California. Based on the positive results of these initial marketing
efforts, we recently have launched a nationwide consumer marketing campaign to
create awareness and stimulate demand for the Invisalign System. Our national
consumer marketing efforts primarily focused on television advertising and will
be supported by print, public relations and direct mail campaigns.
 
   Our experience indicates that prospective patients exposed to our
advertising seek information from four primary sources:
 
  .  a general practice dentist;
 
  .  an orthodontist;
 
  .  our toll-free support line (1-800-INVISIBLE); and
 
  .  our website (www.invisalign.com).
 
   Our marketing efforts have generated substantial consumer interest directed
toward our telephone support line and our website. In the first five weeks of
our national advertising campaign, our support line received approximately
150,000 calls and we received a comparable number of visitors to our website.
Our telephone support line and our website not only provide consumers with
information on the Invisalign System, but, importantly, also allow us to
channel consumer interest to orthodontists of our choice. We outsource the
telephone support function to a large national call center operator.
 
 
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<PAGE>
 
  Professional Marketing
   
   As of November 2000, our sales team consisted of 29 salespeople experienced
in orthodontic product sales. Approximately 25 technical support staff,
together with the marketing department and our in-house orthodontic staff,
support the sales team. Our sales and support staff has been engaged in
marketing the Invisalign System to orthodontists since July 1999. Professional
marketing consists of training orthodontists and assisting them in building
their practices. In addition, we are creating awareness of the System among
general practice dentists to help them refer patients to orthodontists.     
   
   As of November 2000, we had trained over 5,300 orthodontists, representing
over 60% of the orthodontists in the U.S. and Canada. Over 2,000 of those
orthodontists had submitted one or more cases to us by November 2000. Our sales
and orthodontic teams conduct training primarily in a workshop format. The key
topics covered in training include case selection criteria, instructions on
filling out the Invisalign prescription form, guidance on pricing and
instructions on interacting with our ClinCheck software and the many other
features of our website.     
 
   The Invisalign System relies on the same orthodontic principles that apply
to traditional treatment, and we present our training material in a manner
consistent with orthodontists' training and experience. As a result, we are
able to complete these training workshops within one day. Our success in
training a large number of orthodontists confirms our belief that training
represents a minimal barrier to adoption for most orthodontists.
 
   After training, sales representatives follow up with orthodontists to ensure
that their staff is prepared to handle Invisalign System cases. Such follow up
may include assisting orthodontists in taking dental impressions, establishing
an Internet connection and familiarizing them with our website. Sales
representatives may also provide practice-building assistance, including
helping orthodontists market to local general practice dentists and to
prospective patients through direct mail or other media. Indeed, many practices
have commenced promotional activity in their local region with our assistance.
   
   To facilitate adoption of the Invisalign System, we sell machines to some of
our customers to assist them in preparing the impressions required for
submission of Invisalign cases. These machines are manufactured by ESPE
America, Inc.     
 
   We have developed a system of tiering orthodontists that encourages our
sales force to devote more time to those orthodontists most proficient in the
use of the Invisalign System.
 
   We use objective criteria, primarily the number of cases initiated with the
Invisalign System, to tier orthodontists. Inquiries from prospective patients
through our customer call center and our website are directed to higher tier
orthodontists. We believe the tiering process will rapidly increase the
penetration of our product within selected orthodontists' offices.
 
   General dentists play an important role in informing their patients about
orthodontics and are a key source of referrals to orthodontists. There are over
120,000 active general practice dentists in the U.S. and Canada. We have
commenced educating these general dentists and staff to encourage them to
recommend the Invisalign System to their patients. We communicate with the
dental community using a combination of direct mail, telemarketing, journal
advertising and trade shows.
 
Research and Development
   
   As of November 2000, our research and development team consisted of 16
individuals with medical device development, orthodontic and other relevant
backgrounds. Our research     
 
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<PAGE>
 
   
and development expenses to develop the Invisalign System totaled $405,000 for
the year ended December 31, 1997, $1.5 million for the year ended December 31,
1998, $4.2 million for the year ended December 31, 1999 and $5.9 million for
the nine months ended September 30, 2000.     
   
   Prior to commercial launch in July 1999, our research and development
strategy had three primary objectives: developing the Invisalign System,
establishing the ability of the System to treat malocclusion and developing
software and processes to enable the manufacture of Aligners in volume. Since
our commercial launch, our research and development effort has focused on
extending the range of clinical applicability of the Invisalign System,
enhancing the software used in the manufacturing process and enhancing our line
of products.     
 
   We are conducting a number of post-marketing studies to establish the
effectiveness of the System in comprehensively treating unusually severe cases
of malocclusion. We are developing a next-generation of software primarily to
increase our manufacturing capacity and efficiency. Our product development
team is testing enhanced materials and a number of complementary products that
we expect will provide additional revenue opportunities.
 
Intellectual Property
   
   We believe our intellectual property position represents a substantial
business advantage. We have one issued U.S. patent and 46 pending U.S. patent
applications. We have two foreign-issued patents and 111 pending foreign patent
applications. The issued U.S. patent is written to cover any algorithmic method
of segmenting orthodontic treatment into a sequence of three or more steps,
based on calculated initial and final representations of a patient's dentition.
    
   We continue to pursue further intellectual property protection through U.S.
and foreign patent applications and non-disclosure agreements. We also seek to
protect our software, documentation and other written materials under trade
secret and copyright laws. We cannot assure you that patents will be issued as
a result of any patent application or that patents that have been issued to us
or may issue in the future will be found to be valid and enforceable and
sufficient to protect our technology or products.
 
Competition
 
   We are not aware of any company that has developed or is marketing a system
comparable to our Invisalign System. However, we compete for the attention of
orthodontists with manufacturers of other orthodontic products. These suppliers
include manufacturers of traditional orthodontic appliances such as 3M Company,
Sybron International Corporation and Dentsply International, Inc.
 
   We believe that, in addition to price, the principal competitive factors in
the market for orthodontic appliances include the following factors:
 
  .  aesthetic appeal of the treatment method;
 
  .  comfort associated with the treatment method;
 
  .  effectiveness of treatment;
 
  .  ease of use; and
 
  .  orthodontist chair time.
 
 
                                       36

<PAGE>
 
   We believe that the Invisalign System compares favorably with respect to
each of these factors.
 
Government Regulation
 
   FDA Regulation of Medical Devices. The Invisalign System is regulated as a
medical device. Accordingly, our product development, labeling, manufacturing
processes and promotional activities are subject to extensive review and
rigorous regulation by government agencies in countries in which we sell our
products.
 
   In the U.S., the FDA regulates the design, manufacture, distribution,
preclinical and clinical study, clearance and approval of medical devices.
Medical devices are classified in one of three classes on the basis of the
controls necessary to reasonably assure their safety and effectiveness. Class I
or II devices require the manufacturer to submit a premarket notification
requesting permission for commercial distribution, which is known as 510(k)
clearance. Class III devices, which are deemed by the FDA to pose greater risk
than Class I and II devices, require FDA approval of a premarket approval
application which includes, among other things, extensive preclinical and
clinical trial data and information about the device's and its components'
design, manufacturing and labeling.
 
   The Invisalign System is a Class I device, the least stringent class, which
only requires general controls, including labeling, premarket notification and
adherence to the FDA's Quality System regulations.
 
   In November 1998, our Invisalign System received 510(k) Pre-Market
Notification by the FDA, allowing us to market the Invisalign System in the
U.S. In addition, we have recently applied for FDA registration for our Santa
Clara facility. The manufacture and distribution of the Invisalign System are
subject to continuing regulation by the FDA. We are subject to routine
inspections by the FDA to determine compliance with facility registration,
product listing requirements, medical device reporting regulations and Quality
System requirements. The Quality System regulation is similar to good
manufacturing practices and relates to product testing and quality assurance,
as well as the maintenance of records and documentation.
 
   If the FDA finds that we have failed to comply, it can institute a wide
variety of enforcement actions against us, ranging from a public Warning Letter
to more severe sanctions, including but not limited to financial penalties,
withdrawal of 510(k) premarket notification clearances already granted, and
criminal prosecution.
 
   When introduced in Europe, the Invisalign System will be regulated as a
custom device. As such, we will not be subject to regulations promulgated by
the European Community, although we have the option to CE mark our product. We
are working toward the certification of our manufacturing process under ISO
9001, an internationally recognized quality standard, which will facilitate the
commercialization of the Invisalign System outside the U.S.
 
   Other Federal and State Laws. As a participant in the health care industry
we are subject to extensive and frequently changing regulation under many other
laws administered by governmental entities at the federal, state and local
levels, some of which are, and others of which may be, applicable to our
business. Furthermore, our health care service provider customers are also
subject to a wide variety of laws and regulations that could affect the nature
and scope of their relationships with us.
 
   Laws regulating medical device manufacturers and health care providers cover
a broad array of subjects. For example, the confidentiality of patient medical
information and the
 
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circumstances under which such information may be released for inclusion in our
databases, or released by us to third parties, are subject to substantial
regulation by state governments. These state laws and regulations govern both
the disclosure and the use of confidential patient medical information and are
evolving rapidly. In addition, provisions of the Social Security Act prohibit,
among other things, paying or offering to pay any remuneration in exchange for
the referral of patients to a person participating in, or for the order,
purchase or recommendation of items or services that are subject to
reimbursement by Medicare, Medicaid and similar other federal or state health
care programs. Most states have also enacted illegal remuneration laws that are
similar to the federal laws. These laws are applicable to our financial
relationships with, and any marketing or other promotional activities
involving, our orthodontist customers. Finally, various states regulate the
operations of an advertising and referral service for dentists, and may require
registration of such services with a state agency as well as compliance with
various requirements and restrictions on how they conduct business and
structure their relationships with participating dentists. Violations of any of
these laws or regulations could subject us to a variety of civil and criminal
sanctions.
 
Employees
   
   As of November 2000, we had approximately 1,080 employees, of whom
approximately 430 were employed in the U.S., with the balance employed in
Pakistan. Of our 430 U.S. employees, approximately 250 are employed in
manufacturing, 30 are software engineers, 29 are sales representatives, 25 are
customer support staff, 16 are employed in research and development and 80 are
employed in various management, administrative and support positions.     
   
   We employ a staff of approximately 650 employees in our two facilities in
Pakistan, most of whom are computer operators and approximately 50 of whom are
dental and orthodontic supervisors. We believe that our relations with our
employees are good.     
 
Facilities
 
   Our headquarters are located in Santa Clara, California. We lease
approximately 70,000 square feet of space where we house our manufacturing,
customer support, software engineering and administrative personnel. The lease
for the larger of the two Santa Clara facilities will expire in August 2005,
while the lease for the smaller facility, roughly 15,000 square feet, will
expire in August 2002. The combined monthly rent for the Santa Clara facilities
is approximately $240,000.
   
   We operate two facilities in Pakistan, both in the city of Lahore. Each
facility accommodates approximately 325 employees. The main facility comprises
over 5,000 square feet of office space. The lease for this facility expires at
the end of 2002. The second facility comprises over 10,000 square feet of
office space. The lease for this facility expires in August 2010.     
 
Legal Proceedings
 
   In January 2000, Ormco Corporation filed suit against us asserting
infringement of U.S. Patent Nos. 5,447,432 and 5,683,243. The complaint sought
unspecified and monetary damages and injunctive relief. In March 2000, we
answered the complaint and asserted counterclaims seeking a declaration by the
Court of invalidity and non-infringement of the asserted patents.
   
   In June 2000, we entered into a Stipulation of Dismissal with Ormco. Ormco
agreed for a period of at least two years not to pursue litigation with respect
to these patents, except as set forth below. Further, Ormco agreed that it
would not bring any patent action against us for at     
 
                                       38

<PAGE>
 
   
least a period of one year with respect to any as yet unissued patents. If
Ormco were to bring such an action concerning as yet unissued patents after one
year, the Stipulation of Dismissal would allow Ormco to include in such an
action claims involving U.S. Patent Nos. 5,447,432 and 5,683,243. No assurance
can be given that Ormco will not bring another action against us or, that if
brought, it will not be successful. Should the suit be recommenced and should
our technology be found to infringe, we would have to seek a license from
Ormco, which license might not be available on commercially reasonable terms or
at all. In that event, we could be subject to damages or an injunction which
could materially adversely affect our business. It is possible that, depending
on the scope of any new patents that are issued to Ormco, Ormco will bring
another patent action after a period of one year has passed.     
   
   The claims at issue in the Ormco suit relate to methods and systems for
forming and manufacturing custom orthodontic appliances. The relevant claims
are limited to the calculation of the final positioning of a patient's teeth
based upon a derived or ideal dental archform of the patient. The treatment
plan simulation developed in our Pakistan facilities determines the final
positioning of a patient's teeth but not based on a derived or ideal dental
archform of the patient.     
 
   From time to time, we have received, and may again receive, letters from
third parties drawing our attention to their patent rights. While we do not
believe that we infringe any such rights which have been brought to our
attention, there may be other more pertinent rights of which we are presently
unaware.
 
                                       39

<PAGE>
 

                                   MANAGEMENT
 
Executive Officers and Directors
   
   The following table sets forth information regarding our executive officers
and directors as of November 30, 2000:     
 

<TABLE>   
<CAPTION>
Name                     Age Position
----                     --- --------
<S>                      <C> <C>
Zia Chishti............. 29  Chief Executive Officer and Chairman of the Board
Kelsey Wirth............ 30  President, Secretary and Director
Stephen Bonelli......... 38  Chief Financial Officer and Vice President, Finance
Amir Abolfathi.......... 35  Vice President, Research and Development
Joe Breeland............ 48  Vice President, Sales
Len Hedge............... 43  Vice President, Manufacturing
James Heslin............ 49  Vice President, General Counsel
Christian Skieller...... 52  Vice President, Operations
Ike Udechuku............ 34  Vice President, Corporate Strategy
Ken Vargha.............. 36  Vice President, Marketing
Ross Miller, DDS, MS.... 39  Chief Clinical Officer
Peter Riepenhausen...... 64  Chairman, Align Technology, Europe
Charlie Wen............. 34  Chief Technology Officer
H. Kent Bowen........... 58  Director
Brian Dovey............. 59  Director
Joe Lacob............... 43  Director
Mark Logan.............. 61  Director
</TABLE>
    
 
   Zia Chishti is one of our founders and has served as our Chief Executive
Officer and the Chairman of our Board of Directors since inception. From July
1992 to September 1995, Mr. Chishti worked for Morgan Stanley's investment
banking division. Mr. Chishti received his M.B.A. from Stanford University's
Graduate School of Business and his B.S. and B.A. from Columbia College.
   
   Kelsey Wirth is one of our founders and has served as our President and
Secretary and as a director since inception. From 1993 to 1995, Ms. Wirth
worked for the Environmental Working Group and World Resources Institute as an
environmental consultant, and in 1992 she worked for the Lamm Senate campaign
as director of constituency outreach. Ms. Wirth received her M.B.A. from
Stanford University's Graduate School of Business and her B.A. from Harvard
College.     
 
   Stephen Bonelli has served as our Chief Financial Officer and Vice President
of Finance since November 2000. From April 2000 to November 2000, Mr. Bonelli
was a financial consultant for various medical device and telecommunications
companies. From February 2000 to April 2000, Mr. Bonelli was the Chief
Financial Officer and Treasurer at Oplink Communications, Inc., an optical
networking components company. Prior to joining Oplink, Mr. Bonelli was the
Chief Financial Officer, Vice President of Finance and Administration and
Treasurer of General Surgical Innovations, Inc., a medical device company, from
September 1994 until shortly after General Surgical Innovations was acquired by
Tyco International Ltd. in November 1999. From November 1993 to August 1994,
Mr. Bonelli held a financial management position at Coactive Computing
Corporation, a computer networking company. Mr. Bonelli received his B.S. in
business administration from California Polytechnic State University, San Luis
Obispo. Mr. Bonelli is a Certified Public Accountant.
   
   Amir Abolfathi has served as our Vice President of Research and Development
since March 2000. From November 1999 to March 2000, Mr. Abolfathi served as our
Senior Director     
 
                                       40

<PAGE>
 
   
of Planning and Execution. Mr. Abolfathi served as a consultant for a number of
medical device companies from February 1999 through November 1999. From April
1995 through January 1999, Mr. Abolfathi served as Senior Director of Research
and Development for EndoTex Interventional Systems, Inc., a company focused on
the treatment of neurovascular diseases which he co-founded. From 1991 to 1995,
he served as Program Manager at Pfizer, Inc. From 1989 to 1991, Mr. Abolfathi
served as Group Leader of Reliability Engineering at Guidant Corporation. Mr.
Abolfathi received his M.S. in engineering management from the University of
Southern California and his B.S. in biomedical engineering from the University
of California at San Diego.     
   
   Joe Breeland has served as our Vice President of Sales since August 1998.
Mr. Breeland was Regional Manager for the "A" Company Orthodontics, a leading
manufacturer of orthodontic devices. Prior to that, Mr. Breeland served as
Southwest Regional Manager for Allergan, Inc., a manufacturer and distributor
of ophthalmic implantables and associated capital equipment, and National Sales
Director for Ioptex Research, a manufacturer of intraocular lenses. Mr.
Breeland received his M.B.A. from Golden Gate University and his B.S. in
pharmacy from the University of Texas.     
   
   Len Hedge has served as our Vice President of Manufacturing since January
1999. Mr. Hedge served as Vice President of Operations for Plynetics Express
Corporation, a rapid-prototyping and stereolithography services supplier, from
December 1996 to December 1998. From October 1991 to December 1996, Mr. Hedge
worked at Beckman Instruments Corporation as Manager for Prototype
Manufacturing and Process Development. Prior to joining Beckman, Mr. Hedge
spent 13 years with General Dynamics Corporation, holding positions of
increasing responsibility from Machinist to Manager of Mechanical Fabrication.
Mr. Hedge received his B.S. from La Verne University.     
   
   James Heslin has served as our Vice President and General Counsel since
August 2000. Since 1986, Mr. Heslin was a Partner at Townsend, Townsend and
Crew LLP. Mr. Heslin was head of the firm's Medical Device Practice Group and a
member of its Executive Committee. Mr. Heslin's practice concentrated on
advising clients on how to best obtain, protect, and enforce their intellectual
property rights. Prior to Townsend, Townsend and Crew LLP, Mr. Heslin was a
patent attorney with FMC Corporation and a process engineer with Fluor
Corporation. Mr. Heslin received his J.D. from the University of California's
Boalt Hall School of Law and his B.S. in chemical engineering from University
of California at Santa Barbara.     
   
   Christian Skieller has served as our Vice President of Operations since July
2000. From November 1998 to June 2000, Mr. Skieller served as Vice President of
Operations at CardioVention, a medical device company. From August 1996 through
May 1998, he was Vice President of Operations at CardioThoracic Systems, a
manufacturer of devices for cardiac surgery. From January 1992 through July
1996, Mr. Skieller served as Vice President of Manufacturing for Medtronic
CardioRhythm, a manufacturer of catheters for electrophysiology. Mr. Skieller
received his M.B.A. from Stanford University's Graduate School of Business and
his B.S. from the Technical University in Copenhagen, Denmark.     
 
   Ike Udechuku has served as our Vice President of Corporate Strategy since
November 2000. From January 2000 until July 2000, Mr. Udechuku served as one of
our consultants in various financial positions. In July 2000, he became an
employee, serving as Chief Financial Officer from July 2000 to November 2000.
From 1989 to January 2000, Mr. Udechuku worked for Morgan Stanley's investment
banking division in London, most recently as an Executive Director. While at
Morgan Stanley, Mr. Udechuku concentrated on mergers and acquisitions and
capital raising for European clients. From 1985 to 1989, Mr. Udechuku worked
for the Australian government in the Treasury. Mr. Udechuku graduated with B.A.
degrees in both economics and law from the Australian National University in
1988.
 
                                       41

<PAGE>
 
   Ken Vargha has served as our Vice President of Marketing since September
1998. From November 1994 through August 1998, Mr. Vargha served in a number of
positions for Pharmacia & Upjohn, Inc. including Brand Manager, Senior Brand
Manager and Director of Marketing. At Pharmacia & Upjohn, Mr. Vargha was
responsible for the strategic direction, marketing research, and advertising
development for Pharmacia & Upjohn's hair care brands, of which Rogaine is the
largest. Prior to that, Mr. Vargha worked in beauty care at both Maybelline,
Inc., where he was responsible for a targeted line of cosmetics, and at the
Procter & Gamble Company, where Mr. Vargha was responsible for the advertising
and launch of Pantene Pro-V styling products. Mr. Vargha received his M.B.A.
from the University of California at Los Angeles' Anderson School of Business
and his B.A. from Brigham Young University.
   
   Ross Miller, DDS, MS, has served as our Chief Clinical Officer since July
1998. Dr. Miller served in private clinical practice for seven years prior to
joining us, most recently as Dental Director for the Tuolumne Indian Health
Center. Dr. Miller received his M.S. and B.S. in Oral Biology from the
University of California at San Francisco, his D.D.S and Certificate of
Orthodontics from the University of California at San Francisco and his B.S. in
Biological Sciences from the University of California at Irvine.     
   
   Peter Riepenhausen has served as our Chairman, Align Technology, Europe
since September 2000. From March 1998 to September 2000, Mr. Riepenhausen was a
business consultant. From 1994 to 1998, Mr. Riepenhausen was President and
Chief Executive Officer of ReSound Corporation, a hearing aid producer. Since
September 2000, Mr. Riepenhausen has served as a director of GAP A.G. and as a
director of Advanced Polymer Systems, Inc. since 1991. From January 1987 until
September 1989, Mr. Riepenhausen served as Vice Chairman of the board of
directors of the Cooper Companies, Inc., a medical device company serving the
vision and surgical markets. Mr. Riepenhausen has also held executive positions
with Blendax- Werke R. Schneider Gmbh & Co. and PepsiCo Inc. Mr. Riepenhausen
received his Industrie- Kaufman degree in Commerce from IHK, Wuerzburg,
Germany.     
 
   Charlie Wen has served as our Chief Technology Officer since July 2000,
having joined us as Director of Software Engineering in June 1998. Mr. Wen has
over 10 years of working experience specializing in high end 3D computer
graphics/animation, computational geometry and pattern recognition. From
January 1997 to June 1998, Mr. Wen served as Software Engineering Project
Manager for Sony Pictures Corporation, Special Effects Division. From December
1993 to January 1997, Mr. Wen was a Senior Software Engineer for the McNeal
Schwendler Corporation, a leading CAD/CAM/CAE software provider. Mr. Wen
received his M.S. degree in Computer Science from the California Institute of
Technology and his B.S. degree from University of Science and Technology,
China. Mr. Wen is a two-time winner of the Chinese National Mathematics Award.
   
   H. Kent Bowen has served as a director since May 2000. Mr. Bowen has been
the Bruce Rauner Professor in Business Administration at Harvard University's
Graduate School of Business Administration since 1992. Professor Bowen's
current research and teaching is in the field of operations and technology
management. From 1975 to 1992, Professor Bowen was the Ford Professor of
Engineering at the Massachusetts Institute of Technology, where he was the
founder of Leaders for Manufacturing, a joint research and education program
developed by M.I.T.'s School of Engineering and the Sloan School of Management.
At M.I.T., Professor Bowen's research focused on advanced materials, materials
processing, technology management and manufacturing. Professor Bowen is a
member of the National Academy of Engineering and the American Academy of Arts
and Sciences, a fellow of the American Association for the Advancement of
Science, and a member of several professional societies. He serves as a
director of Ceramics Process Systems, a developer of thermal management     
 
                                       42

<PAGE>
 
   
solutions, and for a number of private companies. He received his Ph.D. from
M.I.T in Engineering, and his B.S. from the University of Utah.     
   
   Brian Dovey has served as a director since July 1998. Mr. Dovey has been a
Managing Member of Domain Associates, L.L.C., a venture capital firm, since
1988. Since joining Domain, he has served as Chairman of Athena Neurosciences,
Creative BioMolecules, Inc. (now Curis, Inc.) and Univax Biologics. Mr. Dovey
is currently a director of Connetics Corporation and Ista Pharmacitules Inc.,
both biopharmaceutical companies and Cardiac Sciences, a developer of cardiac
defibrillator devices, as well as several private companies. From 1986 to 1988,
Mr. Dovey served Rorer Group (now Aventis) as President. Mr. Dovey has served
as both President and Chairman of the National Venture Capital Association and
is on the Board of Trustees for the Cornell Institute and the University of
Pennsylvania School of Nursing. Mr. Dovey is a former Board Member of the
Health Industry Manufacturers Association and the Non-Prescription Drug
Manufacturers Association. Mr. Dovey received his M.B.A. from Harvard
University's Graduate School of Business and his B.A. from Colgate University.
       
   Joseph Lacob has served as a director since August 1997 and has been a
Partner of Kleiner Perkins Caufield and Byers, a venture capital firm, since
May 1987. Prior to that, Mr. Lacob was an executive with Cetus Corporation, a
biotechnology company, and FHP International, a health maintenance organization
and the management consulting firm of Booz, Allen & Hamilton. Since joining
Kleiner Perkins Caufield and Byers in 1987, Mr. Lacob has led Kleiner Perkins
Caufield and Byers' investments in over 30 life science companies, including
the start-up or incubation of a dozen ventures. He leads Kleiner Perkins
Caufield and Byers' growing medical technology practice, which includes over 30
therapeutic and diagnostic medical device companies. Mr. Lacob is also active
in Kleiner Perkins Caufield and Byers' new media and e-commerce company
initiatives. Mr. Lacob currently serves on the board of directors of three
public companies including Corixa Corporation, a biopharmaceutical company,
Heartport, Inc., a medical device company, and SportsLine.com, an Internet-
based sports media company, as well as several other privately held companies.
Mr. Lacob received his M.B.A. from Stanford University's Graduate School of
Business, his M.P.H. in Public Health from University of California at
Los Angeles and his B.S. in Biological Sciences from the University of
California at Irvine.     
   
   Mark Logan has served as a director since May 2000. Mr Logan is Chairman of
the Board and Chief Executive Officer of VISX, Inc., a medical equipment
manufacturing company which he joined in November 1994. From 1992 to 1994, Mr.
Logan was Chairman of the Board, President and Chief Executive Officer of
Insmed Pharmaceuticals, Inc., a development stage biopharmaceutical company.
From 1981 to 1985, Mr. Logan was President of Bausch and Lomb's Health Care and
Consumer Group and also served on the board of directors. From 1975 to 1981,
Mr. Logan served as Consumer Group President of Becton, Dickinson & Co.'s
worldwide diabetes syringe business. From 1967 to 1974, Mr. Logan served as
President and General Manager of American Home Products Corporation's Mexican
subsidiary. He serves as a director on the boards of Abgenix, Inc., a
biopharmaceutical company, VIVUS, Inc., a drug development company, and Somnus
Medical Technologies, Inc., a medical device company. Mr. Logan is a graduate
of Hiram College, the Program for Management Development at Harvard University
and was a Woodrow Wilson Fellow at New York University.     
 
                                       43

<PAGE>
 
Scientific Advisory Board
 
   We employ a scientific advisory board, comprised of leading clinicians and
scientists, to serve as advisors and liaisons to the orthodontic community. The
current members of the scientific advisory board are:
 
   Dr. Robert Boyd is Professor and Chairperson of the Department of
Orthodontics at the University of Pacific School of Dentistry. His practice and
clinical research focuses on the orthodontic-periodontic relationship. In this
area, he has published more than 100 scientific
articles and given more than 200 continuing education courses and lectures to
dental groups around the world. Dr. Boyd is a Diplomate of the American Board
of Orthodontics, a Fellow of the American College of Dentistry, a member of the
E.H. Angle Society and has received many teaching awards. Dr. Boyd received his
D.D.S. from Temple University, his M.A. in Education from the University of
Florida, his B.S. from Indiana University and his Certificates of Orthodontics
and Periodontics from the University of Pennsylvania.
 
   Dr. Donald Kennedy is President Emeritus of Stanford University and Bing
Professor of Environmental Science. From 1977 to 1979, Dr. Kennedy was
Commissioner of the U.S. Food and Drug Administration. Following his return to
Stanford in 1979, Dr. Kennedy served for 12 years as President of the
University. Dr. Kennedy serves as a member of the Board of Directors of the
Health Effects Institute and Children Now. He is also a member of the National
Academy of Sciences, the American Academy of Arts and Sciences and the American
Philosophical Society. Dr. Kennedy received his Ph.D., M.S. and A.B. degrees in
Biology from Harvard University. In June 2000, Dr. Kennedy began a term as
Editor-in-Chief of Science, the Journal of the American Association for the
Advancement of Science.
 
   Dr. Gregory King is Professor and Chairman of the Department of Orthodontics
at the University of Washington's School of Dentistry. Dr. King received the
Milo Hellman Research Award of the American Association of Orthodontics for his
outstanding contributions to orthodontic research. Prior to joining the
University of Washington, Dr. King was Professor and Chairman of the Department
of Orthodontics at the University of Florida. Dr. King is a Diplomate of the
American Association of Orthodontists. He received his D.M.D. from Tufts
University, his Ph.D. and B.A. from Brown University and his Certificate in
Orthodontics from Harvard University.
 
   Dr. Elizabeth Rekow is Professor and Chairperson of the Department of
Orthodontics at the University of Medicine and Dentistry of New Jersey, a
visiting Professor of the Department of Mechanical Engineering at the
University of Maryland and the Director of the Associated Institutions for
Material Science. She has focused her teaching and research on the interaction
between engineering, advanced materials and dentistry and in these fields has
published numerous articles. Dr. Rekow is a member of the E.H. Angle Society, a
member of the International and American Associations for Dental Research and a
fellow of the Academy of Dental Materials. Dr. Rekow received her D.D.S., her
Ph.D. in Biomedical Engineering and her Orthodontic Certificate from the
University of Minnesota.
 
   Dr. Van P. Thompson is Associate Dean for Research and Professor of
Prosthodontics and Biomaterials at the University of Medicine and Dentistry of
New Jersey. Dr. Thompson has published many articles and made numerous
presentations on dental materials in the U.S. and internationally. Co-developer
of the etched casting resin bonded retainer, Dr. Thompson has published and
presented extensively in this area. He has served on the ADA Council on Dental
Materials Instruments and Equipment and is Chair of the ADA Council on
Scientific Affairs. Dr. Thompson received his D.D.S. from the University of
Maryland, his Ph.D. in Biology and his B.S. in Biology and Biophysics from the
Rensselaer Polytechnic Institute.
 
                                       44

<PAGE>
 
Board of Directors
   
   We currently have six directors. Other than expenses in connection with
attendance at meetings and other customary expenses, we have not provided cash
compensation to any non-employee member of the board. Directors who are also
employees do not receive additional compensation for serving as directors. As
of November 30, 2000, the directors have been granted options to purchase an
aggregate of 248,000 shares of our common stock.     
   
   Under the automatic option grant program which will be in effect for the
non-employee board members under the 2001 Stock Incentive Plan, each non-
employee board member will receive an automatic option grant for 8,000 shares
at each annual stockholders meeting during his or her period of continued
service on the board, with such shares to vest upon completion of one year of
board service measured from the grant date. Each new non-employee board member
will receive, at the time of his or her initial election or appointment to the
board, an automatic option grant for 32,000 shares which will vest in four
successive equal annual installments over his or her first four years of board
service. For further information concerning the automatic option grant program,
see the "Stock Plans" section below.     
 
   Our bylaws provide that the number of members of our board of directors
shall be determined by the board of directors. All members of our board of
directors hold office until the next annual meeting of stockholders or until
their successors are duly elected and qualified.
 
Committees of the Board of Directors
   
   The audit committee is composed of Brian Dovey, Joseph Lacob and Mark Logan.
It is responsible for reviewing and evaluating our financial control, audit and
reporting functions. In addition, the audit committee makes recommendations to
the board of directors regarding the selection of our independent accountants,
reviews the fees to be paid to our independent accountants and reviews any
independence issues with our independent accountants.     
   
   The compensation committee is composed of Kent Bowen, Brian Dovey and Mark
Logan. It recommends to our board of directors the compensation and benefits of
all our officers and establishes and reviews general policies relating to
compensation and benefits to our employees.     
 
Executive Officers
 
   Each officer is elected by, and serves at the discretion of, the board of
directors. Each of our officers and directors, other than non-employee
directors, devotes full-time to our affairs. Our non-employee directors devote
such time to our affairs as is necessary to discharge their duties. There are
no family relationships among any of our directors, officers or key employees.
 
                                       45

<PAGE>
 

Executive Compensation
 
   The following table sets forth information concerning compensation that we
paid during the fiscal year ended December 31, 1999, to our Chief Executive
Officer and to each of our four other most highly compensated executive
officers for that fiscal year, referred to collectively in this prospectus as
the named executive officers. There were no long-term compensation awards or
other compensation awarded to our named executive officers during 1999.
 
                           Summary Compensation Table
 

<TABLE>   
<CAPTION>
                                                                    Annual
                                                                 Compensation
                                                               ----------------
Name and Principal Position                                     Salary   Bonus
---------------------------                                    -------- -------
<S>                                                            <C>      <C>
Zia Chishti................................................... $130,327 $   --
 Chief Executive Officer and Chairman of the Board
 
Kelsey Wirth..................................................  130,327     --
 President, Secretary and Director
 
Ross Miller, DDS, MS..........................................  173,767     --
 Chief Clinical Officer
 
Kenneth Vargha................................................  133,223  16,560
 Vice President, Marketing
 
Joe Breeland..................................................   87,012  40,916
 Vice President, Sales
</TABLE>
    
 
Option Grants in 1999
 
   The following table sets forth information with respect to stock options
granted to each of our named executive officers in 1999, including the
potential realizable value over the term of the options, based on assumed rates
of stock appreciation of 5% and 10%, compounded annually. No stock appreciation
rights were granted during 1999.
 

<TABLE>   
<CAPTION>
                                                                   Potential
                                                                  Realizable
                                                                   Value at
                                                                Assumed Annual
                                                                Rates of Stock
                                                                     Price
                                Percent of                       Appreciation
                     Number of    Options                       for Option Term
                     Securities Granted to                         at Public
                     Underlying Employees  Exercise             Offering Price
                      Options   in Fiscal    Price   Expiration ---------------
Name                  Granted      Year    Per Share    Date      5%      10%
----                 ---------- ---------- --------- ---------- ------- -------
<S>                  <C>        <C>        <C>       <C>        <C>     <C>
Zia Chishti.........      --        --%      $ --         --     $ --    $ --
Kelsey Wirth........      --        --         --         --       --      --
Ross Miller.........   20,000      2.7        0.15    1/28/09   440,237 640,077
Kenneth Vargha......      --        --         --         --       --      --
Joe Breeland........      --        --         --         --       --      --
</TABLE>
    
   
   In 1999, we granted options to purchase up to an aggregate of 736,600 shares
to employees, directors and consultants under our 1997 Plan at exercise prices
equal to the fair market value of our common stock on the date of grant, as
determined in good faith by our board of directors.     
   
   Options granted are immediately exercisable in full, but any shares
purchased under these options that are not vested are subject to our right to
repurchase the shares at the original option exercise price paid per share. In
general, this repurchase right lapses as to 25% of the shares after one year of
service, and as to the remaining shares, in equal monthly installments over the
subsequent, additional three-year period.     
 
 
                                       46

<PAGE>
 
   The potential realizable value is calculated assuming the potential public
offering price appreciates at the indicated rate for the entire term of the
option and that the option is exercised and sold on the last day of its term at
the appreciated price. Stock price appreciation of 5% and 10% is assumed
pursuant to the rules of the Commission. We can give no assurance that the
actual stock price will appreciate over the term of the options at the assumed
5% and 10% levels or at any other defined level. Actual gains, if any, on stock
option exercises will be dependent on the future performance of our common
stock. Unless the market price of the common stock appreciates over the option
term, no value will be realized from the option grants made to the named
executive officers.
 
Aggregate Option Exercises in 1999 and Year-end Values at December 31, 1999
   
   The following table sets forth information concerning the number and value
of shares of common stock underlying the unexercised options held by the named
executive officers. The options listed in the following table were granted
under our 1997 Plan. See "Management--Compensation Plans." No stock
appreciation rights were exercised during 1999 and no stock appreciation rights
were outstanding as of December 31, 1999. The value of unexercised in-the-money
options at December 31, 1999 is calculated on the basis of the fair market
value of our common stock at December 31, 1999, as determined by our board of
directors, less the aggregate exercise price of the options.     
 

<TABLE>   
<CAPTION>
                                                      Number of
                                                Securities Underlying     Value of Unexercised
                                               Unexercised Options at    In-the-Money Options at
                           Shares                 December 31, 1999         December 31, 1999
                         Acquired on  Value   ------------------------- -------------------------
Name                      Exercise   Realized Exercisable Unexercisable Exercisable Unexercisable
----                     ----------- -------- ----------- ------------- ----------- -------------
<S>                      <C>         <C>      <C>         <C>           <C>         <C>
Zia Chishti.............       --    $   --        --           --        $   --        $ --
Kelsey Wirth............       --        --        --           --            --          --
Ross Miller.............    10,624     2,656    39,376          --          9,844         --
Kenneth Vargha..........    40,000    10,000    60,000          --         15,000         --
Joe Breeland............   100,000    25,000       --           --            --          --
</TABLE>
    
 
Compensation Plans
 
  Amended and Restated 1997 Equity Incentive Plan
   
   At November 30, 2000, a total of 9,709,092 shares of common stock had been
reserved for issuance under our 1997 Plan. On that date, options to purchase an
aggregate of 2,126,184 shares of stock, with a weighted average exercise price
of $0.73 per share, were outstanding and options to purchase an aggregate of
2,067,390 shares of common stock were available for future grant.     
 
   The 1997 Plan provides for the grant of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, non-
statutory stock options, stock bonuses and restricted stock purchase rights to
our employees, consultants and nonemployee directors. The 1997 Plan is
administered by the board of directors or a committee appointed by the board of
directors, which determines the terms of options granted, including the
exercise price and the number of shares subject to each option. The board of
directors also determines the schedule upon which options become exercisable.
The exercise price of incentive stock options granted under the 1997 Plan must
be at least equal to the fair market value of our common stock on the date of
grant. The exercise price of nonqualified stock options is set by the
administrator of the 1997 Plan and will be no less than 85% of the fair market
value on the date of grant. However, for any person holding more than 10% of
the voting power of all classes of our capital stock, the exercise price,
whether the
 
                                       47

<PAGE>
 
option is an incentive stock option or a nonqualified option, will be no less
than 110% of the fair market value on the date of grant. Any stock option will
be exercisable at such time as determined by the administrator of the 1997
Plan. However, the right to exercise an option must vest at the rate of at
least 20% per year over five years. The maximum term of options granted under
the 1997 Plan is ten years. The 1997 Plan will terminate in 2007, unless
terminated earlier in accordance with its provisions.
   
  The vesting provisions of individual options granted under the 1997 Plan
vary. However, in each case it provides for vesting of at least 20% per year of
the total number of shares subject to the option. The 1997 Plan also provides
that options granted may include a right of repurchase by us whereby, prior to
the underlying shares being listed on a securities exchange, we may elect to
repurchase all or any part of the vested shares exercised pursuant to the
option. We may elect to exercise the repurchase right only for a period of time
following the termination of the optionee's employment relationship or service
as a director or consultant. The repurchase price is equal to the fair market
value of our common stock at the time of the optionee's termination.     
 
  2001 Stock Incentive Plan
   
  The 2001 Stock Incentive Plan is intended to serve as the successor program
to the 1997 Plan. The 2001 Plan was adopted by the board on August 24, 2000.
The 2001 Plan will become effective on the date on which our common stock is
approved for listing upon notice of issuance on the national market system of
the Nasdaq Stock Market. At that time, all outstanding options under the 1997
Plan will be transferred to the 2001 Plan, and no further option grants will be
made under the 1997 Plan. The transferred options will continue to be governed
by their existing terms, unless our compensation committee decides to extend
one or more features of the 2001 Plan to those options. Except as otherwise
noted below, the transferred options have substantially the same terms as will
be in effect for grants made under the discretionary option grant program of
the 2001 Plan.     
   
  A total of 8,000,000 shares of our common stock have been authorized for
issuance under the 2001 Plan. This share reserve is in addition to the number
of shares we expect will be carried over from the 1997 Plan and in addition to
the special options for 1,000,000 shares at $15.00 per share to be granted
prior to the closing of this offering to each of our Chief Executive Officer
and our President. The share reserve under the 2001 Plan will automatically
increase on the first trading day in January each calendar year, beginning in
calendar year 2002, by an amount equal to five percent of the total number of
shares of our common stock outstanding on the last trading day in December of
the immediately preceding calendar year, but in no event will this annual
increase exceed 3,000,000 shares. In addition, no participant in the 2001 Plan
may be granted stock options, separately exercisable stock appreciation rights
and direct stock issuances for more than 3,000,000 shares of common stock in
any calendar year.     
 
  The 2001 Plan has five separate programs:
 
  .  The discretionary option grant program, under which eligible individuals
     in our employ may be granted options to purchase shares of our common
     stock at an exercise price not less than the fair market value of those
     shares on the grant date.
 
  .  The stock issuance program, under which eligible individuals may be
     issued shares of common stock directly, through the purchase of such
     shares at a price not less than their fair market value at the time of
     issuance or as a bonus tied to the attainment of performance milestones
     or the completion of a specified period of service.
 
                                       48

<PAGE>
 
     
  .  The salary investment option grant program, under which our executive
     officers and other highly compensated employees may be given the
     opportunity to apply a portion of their base salary each year to the
     acquisition of stock options at an exercise price equal to the fair
     market value of our stock less the portion of their salary applied to
     this program.     
 
  .  The automatic option grant program, under which option grants will
     automatically be made at periodic intervals to eligible non-employee
     board members to purchase shares of common stock at an exercise price
     equal to the fair market value of those shares on the grant date.
     
  .  The director fee option grant program, under which our non-employee
     board members may be given the opportunity to apply a portion of any
     retainer fee otherwise payable to them in cash each year to the
     acquisition of stock options at an exercise price equal to the fair
     market value of our stock less the portion of their salary applied to
     this program.     
 
   The individuals eligible to participate in the 2001 Plan include our
officers and other employees, our board members and any consultants we hire.
 
   The discretionary option grant and stock issuance programs will be
administered by the compensation committee. This committee will determine which
eligible individuals are to receive option grants or stock issuances under
those programs, the time or times when the grants or issuances are to be made,
the number of shares subject to each grant or issuance, the status of any
granted option as either an incentive stock option or a non-statutory stock
option under the federal tax laws, the vesting schedule to be in effect for the
option grant or stock issuance and the maximum term for which any granted
option is to remain outstanding. The compensation committee will also have the
exclusive authority to select the executive officers and other highly
compensated employees who may participate in the salary investment option grant
program in the event that program is put into effect for one or more calendar
years.
 
   The 2001 Plan will include the following features:
     
  .  The exercise price for any option granted under the plan may be paid in
     cash or in shares of our common stock valued at fair market value on the
     exercise date. The option may also be exercised through a same-day sale
     program without any cash outlay by the optionee. In addition, the plan
     administrator may provide financial assistance to one or more
     participants in the exercise of their outstanding options or the
     purchase of their shares by allowing such individuals to deliver a full-
     recourse, interest-bearing promissory note in payment of the exercise or
     purchase price of the shares and any associated withholding taxes
     incurred in connection with such exercise or purchase.     
 
  .  The compensation committee will have the authority to cancel outstanding
     options under the discretionary option grant program, including any
     transferred options from the 1997 Plan, in return for the grant of new
     options for the same or different number of option shares with an
     exercise price per share based upon the fair market value of our common
     stock on the new grant date.
 
  .  Stock appreciation rights may be issued under the discretionary option
     grant program. These rights will provide the holders with the election
     to surrender their outstanding options for a payment from us equal to
     the fair market value of the shares subject to
 
                                       49

<PAGE>
 
     the surrendered options less the exercise price payable for those
     shares. We may make the payment in cash or in shares of our common
     stock. None of the options under the 1997 Plan have any stock
     appreciation rights.
 
   The 2001 Plan will include the following change in control provisions which
may result in the accelerated vesting of outstanding option grants and stock
issuances:
 
  .  In the event that we are acquired by merger or asset sale, each
     outstanding option under the discretionary option grant program which is
     not to be assumed by the successor corporation will immediately become
     exercisable for all the option shares, and all outstanding unvested
     shares will immediately vest, except to the extent our repurchase rights
     with respect to those shares are to be assigned to the successor
     corporation.
 
  .  The compensation committee will have complete discretion to grant one or
     more options which will become exercisable for all the option shares in
     the event those options are assumed in the acquisition but the
     optionee's service with us or the acquiring entity is subsequently
     terminated. The vesting of any outstanding shares under the 2001 Plan
     may be accelerated upon similar terms and conditions.
 
  .  The compensation committee may grant options and structure repurchase
     rights so that the shares subject to those options or repurchase rights
     will immediately vest in connection with a successful tender offer for
     more than 50% of our outstanding voting stock or a change in the
     majority of our board through one or more contested elections. Such
     accelerated vesting may occur either at the time of such transaction or
     upon the subsequent termination of the individual's service.
 
  .  The options outstanding under our 1997 Plan will immediately vest in the
     event we are acquired by merger or asset sale, unless those options are
     assumed by the acquiring entity or our repurchase rights with respect to
     any unvested shares subject to those options are assigned to such
     option. In addition, those options will vest in full if the optionee's
     employment with us is involuntarily terminated within 12 months
     following an acquisition in which the options are assumed.
 
   In the event the compensation committee decides to put the salary investment
option grant program into effect for one or more calendar years, each of our
executive officers and other highly compensated employees selected for
participation may, prior to the start of the calendar year, elect to reduce his
or her base salary for the calendar year by an amount not less than $10,000 nor
more than $50,000. Each selected individual who makes such an election will
automatically be granted, on the first trading day in January of the calendar
year for which his or her salary reduction is to be in effect, an option to
purchase that number of shares of common stock determined by dividing the
salary reduction amount by two-thirds of the fair market value per share of our
common stock on the grant date. The option will have exercise price per share
equal to one-third of the fair market value of the option shares on the grant
date. As a result, the option will be structured so that the fair market value
of the option shares on the grant date less the exercise price payable for
those shares will be equal to the amount by which the optionee's salary is to
be reduced under the program. The option will become exercisable in a series of
12 equal monthly installments over the calendar year for which the salary
reduction is to be in effect.
   
   Under the automatic option grant program, each individual who first becomes
a non-employee board member at any time after the effective date of this
offering will receive an option grant to purchase 32,000 shares of common stock
on the date the individual joins the board. In addition, on the date of each
annual stockholders meeting held after the effective     
 
                                       50

<PAGE>
 
   
date of this offering, each non-employee board member who is to continue to
serve as a non-employee board member, including each of our current non-
employee board members, will automatically be granted an option to purchase
8,000 shares of common stock, provided the individual has served on the board
for at least six months.     
   
   Each automatic grant will have an exercise price per share equal to the fair
market value per share of our common stock on the grant date and will have a
term of ten years, subject to earlier termination following the optionee's
cessation of board service. The option will be immediately exercisable for all
of the option shares; however, we may repurchase, at the exercise price paid
per share, any shares purchased under the option which are not vested at the
time of the optionee's cessation of board service. The shares subject to each
initial 32,000-share automatic option grant will vest in a series of four
successive annual installments upon the optionee's completion of each year of
board service over the four year period measured from the grant date. The
shares subject to each 8,000-share annual option grant will vest upon
optionee's completion of one year of board service measured from the grant
date. The shares subject to each option will immediately vest in full upon
certain changes in control or ownership or upon the optionee's death or
disability while a board member.     
   
   If the director fee option grant program is put into effect in the future,
then each non-employee board member may elect to apply all or a portion of any
cash retainer fee for the year to the acquisition of stock options at an
exercise price equal to the fair market value of our stock less the portion of
their salary applied to this program. The option grant will automatically be
made on the first trading day in January in the year for which the retainer fee
would otherwise be payable in cash. The option will have an exercise price per
share equal to one-third of the fair market value of the option shares on the
grant date, and the number of shares subject to the option will be determined
by dividing the amount of the retainer fee applied to the program by two-thirds
of the fair market value per share of our common stock on the grant date. As a
result, the option will be structured so that the fair market value of the
option shares on the grant date less the exercise price payable for those
shares will be equal to the portion of the retainer fee applied to that option.
The option will become exercisable in a series of 12 equal monthly installments
over the calendar year for which the election is in effect. However, the option
will become immediately exercisable for all the option shares upon the death or
disability of the optionee while serving as a board member.     
 
   The 2001 Plan will also have the following features:
 
  .  Outstanding options under the salary investment option grant program and
     the automatic and director fee option grant programs will immediately
     vest if we are acquired by a merger or asset sale or if there is a
     successful tender offer for more than 50% of our outstanding voting
     stock or a change in the majority of our board through one or more
     contested elections.
 
  .  Limited stock appreciation rights will automatically be included as part
     of each grant made under the salary investment option grant program and
     the automatic and director fee option grant programs, and these rights
     may also be granted to one or more officers as part of their option
     grants under the discretionary option grant program. Options with this
     feature may be surrendered to us upon the successful completion of a
     hostile tender offer for more than 50% of our outstanding voting stock.
     In return for the surrendered option, the optionee will be entitled to a
     cash distribution from us in an amount per surrendered option share
     based upon the highest price per share of our common stock paid in that
     tender offer.
 
  .  The board may amend or modify the 2001 Plan at any time, subject to any
     required stockholder approval. The 2001 Plan will terminate no later
     than August 23, 2011.
 
                                       51

<PAGE>
 
  Employee Stock Purchase Plan
   
   Our Employee Stock Purchase Plan was adopted by the board on August 24,
2000. The Purchase Plan will become effective on the date on which our common
stock is approved for listing upon notice of issuance on the national market
system of the Nasdaq Stock Market. The Purchase Plan is designed to allow our
eligible employees and the eligible employees of our participating subsidiaries
to purchase shares of common stock, at semi-annual intervals, with their
accumulated payroll deductions.     
   
   A total of 1,500,000 shares of our common stock will initially be reserved
for issuance under the Purchase Plan. The reserve will automatically increase
on the first trading day in January each calendar year, beginning in calendar
year 2002, by an amount equal to three percent of the total number of
outstanding shares of our common stock on the last trading day in December of
the immediately preceding calendar year. In no event will any such annual
increase exceed 1,500,000 shares.     
 
   The Purchase Plan will have a series of successive overlapping offering
periods, with a new offering period beginning on the first business day of
February and August each year. Each offering period will continue for a period
of 24 months, unless otherwise determined by our compensation committee.
However, the initial offering period will start on the date the underwriting
agreement for this offering is signed and will end on the last business day of
January 2003. The next offering period will start on the first business day of
August 2001 and end on the last business day in July 2003.
 
   Individuals scheduled to work more than 20 hours per week for more than five
calendar months per year may join an offering period on the start date of that
period. Employees may participate in only one offering period at any time.
   
   A participant may contribute up to 15% of his or her cash earnings through
payroll deductions, and the accumulated deductions will be applied to the
purchase of shares on each semi-annual purchase date. For the first purchase
interval under the plan, the participant may effect his or her contribution
through a lump sum payment of up to 15% of his or her cash earnings for that
period. Semi-annual purchase dates will occur on the last business day of
January and July each year, with the first purchase to occur on the last
business day of July 2001. The purchase price per share on each semi-annual
purchase date will be equal to 85% of the fair market value per share on the
start date of the offering period or, if lower, 85% of the fair market value
per share on the semi-annual purchase date. However, a participant may not
purchase more than 2,500 shares on any purchase date, and not more than
400,000 shares may be purchased in total by all participants on any purchase
date. Our compensation committee will have the authority to change these
limitations for any subsequent offering period.     
 
   If the fair market value per share of our common stock on any purchase date
is less than the fair market value per share on the start date of the 24-month
offering period, then the participants in that offering period will, following
the purchase of shares on their behalf on that date, be automatically enrolled
in the next offering period beginning immediately after such purchase date.
 
   Should we be acquired by merger or sale of substantially all of our assets
or more than 50% of our voting securities, then all outstanding purchase rights
will automatically be exercised immediately prior to the effective date of the
acquisition. The purchase price will be equal to 85% of the market value per
share on the start date of the offering period in which the acquisition occurs
or, if lower, 85% of the fair market value per share immediately prior to the
acquisition.
 
                                       52

<PAGE>
 
   The following provisions will also be in effect under the Purchase Plan:
 
  .  The Purchase Plan will terminate no later than the last business day of
     January 2011.
 
  .  The board may at any time amend, suspend or discontinue the Purchase
     Plan. However, certain amendments may require stockholder approval.
 
Limitations of Liability and Indemnification Matters
   
   Our certificate of incorporation eliminates, to the maximum extent allowed
by the Delaware General Corporation Law, directors' personal liability to our
stockholders for monetary damages for breaches of fiduciary duties. Our
certificate of incorporation does not, however, eliminate or limit the personal
liability of a director for the following:     
 
  .  any breach of the director's duty of loyalty to us or our stockholders;
 
  .  acts or omissions not in good faith or that involve intentional
     misconduct or a knowing violation of law;
 
  .  unlawful payments of dividends or unlawful stock repurchases or
     redemptions; or
 
  .  any transaction from which the director derived an improper personal
     benefit.
   
   Our certificate of incorporation provides that we shall indemnify our
directors and officers to the fullest extent permitted under the Delaware
General Corporation Law and may indemnify our other employees and other agents
as set forth in the Delaware General Corporation Law. In addition, we have
entered into an indemnification agreement with each of our directors. The
indemnification agreements contain provisions that require us, among other
things, to indemnify our directors against liabilities (other than liabilities
arising from intentional or knowing and culpable violations of law) that may
arise by reason of their status or service as directors for us or other
entities to which they provide service at our request and to advance expenses
they may incur as a result of any proceeding against them as to which they
could be indemnified. We believe that these certificate of incorporation
provisions and indemnification agreements are necessary to attract and retain
qualified directors and officers.     
 
   Prior to the consummation of the offering, we will obtain an insurance
policy covering directors and officers for claims they may otherwise be
required to pay or for which we are required to indemnify them.
 
   At present, there is no pending litigation or proceeding involving any of
our directors, officers, employees or agents where indemnification will be
required or permitted, and we are not aware of any threatened litigation or
proceeding that may result in a claim for indemnification.
 
                                       53

<PAGE>
 

                              CERTAIN TRANSACTIONS
   
Preferred Stock Sales     
   
   On August 29, 1997, we issued a total of 4,350,000 shares of Series A
Preferred Stock at a purchase price of $0.50 per share. Of the 4,350,000 shares
of Series A Preferred Stock sold by us, a total of 3,676,000 shares were sold
to our executive officers, directors and greater than 5% stockholders, and
persons associated with them, listed in the table below for a total purchase
price of $1,838,000.     
   
   On July 13, 1998, we issued a total of 6,717,124 shares of Series B
Preferred Stock at a purchase price of $1.50 per share. Of the 6,717,124 shares
of Series B Preferred Stock sold by us, a total of 5,080,414 shares were sold
to our executive officers, directors and greater than 5% stockholders, and
persons associated with them, listed in the table below for a total purchase
price of $7,620,621.     
   
   On August 19, 1999, we issued a promissory note in the principal amount of
$750,000 bearing interest at 6% per annum to Kleiner Perkins Caufield and
Byers. Immediately upon the first closing of the Series C Preferred Stock
financing, the principal amount under the notes automatically converted into
shares of Series C Preferred Stock at $4.00 per share.     
   
   On September 24, 1999 and October 14, 1999, we issued a total of 5,186,228
shares of Series C Preferred Stock at a purchase price of $4.00 per share. Of
the 5,186,228 shares of Series C Preferred Stock sold by us, a total of
3,929,000 shares were sold to our executive officers, directors and greater
than 5% stockholders, and persons associated with them, listed in the table
below for a total purchase price of $15,711,000.     
   
   In May 2000, we issued promissory notes to purchasers in the total principal
amount of $14,000,000 bearing interest at 10% per annum. Of the $14,000,000
principal amount of the notes issued by us, $3,000,000 principal amount of the
notes was issued to entities affiliated with Kleiner Perkins Caufield and
Byers, $2,000,000 principal amount of the notes was issued to Domain Partners
III, L.P., $4,000,000 principal amount of the notes was issued to QuestMark
Partners, L.P. and $5,000,000 principal amount of the notes was issued to
Gordon Gund and trusts held for his immediate family members. Immediately upon
the first closing of the Series D Preferred Stock financing, the principal
amount under the notes and accrued interest thereon automatically converted
into shares of Series D Preferred Stock at $10.625 per share.     
   
   On May 25, June 20 and October 5, 2000, we issued a total of 9,534,382
shares of Series D Preferred Stock at a purchase price of $10.625 per share. Of
the 9,534,382 shares of Series D Preferred Stock sold by us, a total of
7,379,828 shares were sold to our executive officers, directors and greater
than 5% stockholders, and persons associated with them, listed in the table
below for a total purchase price of $78,410,673.     
   
   Our Series D preferred stock is subject to an antidilution conversion price
adjustment feature which we triggered when we granted options to purchase our
common stock beyond the number of options that were authorized under our 1997
Plan at the time we commenced our Series D preferred stock offering in May
2000. The conversion feature provides that if, during the period between May
12, 2000 and the earlier of the closing of an initial public offering or
January 31, 2001, we have granted more than an aggregate of 3,331,978 options
to purchase our common stock, then the conversion price of our Series D
preferred stock shall be adjusted downward from its original conversion price
of $10.625 per share. As of November 30, 2000, we had granted an excess of
514,214 options over the 3,331,978 allowed under the conversion price
adjustment feature. On December 22, 2000 we granted an additional
755,400 options to employees and we intend to grant 1,000,000 options to each
of our Chief Executive Officer and our President at $15.00 per share prior to
the closing of this     
 
                                       54

<PAGE>
 
   
offering. As a result, the Series D preferred stock conversion price will be
adjusted downward to $9.53. This adjustment causes the 9,534,382 issued and
outstanding shares of Series D preferred stock to be converted into 10,631,508
shares of our common stock, an increase of 1,097,126 shares of common stock.
       
   The number of shares of our common stock issued upon conversion of our
Series D preferred stock could be adjusted upward in the event the existing
Series D conversion price is greater than 80% of the price per share of our
common stock in this offering. Were such an adjustment to occur, the existing
Series D conversion price will be adjusted to equal 80% of the price per share
of our common stock in this offering.     
   
   The following table summarizes the description in this section of the shares
of common stock and preferred stock purchased by our executive officers,
directors and 5% stockholders and persons associated with them, through
November 30, 2000. Each share of preferred stock listed in the table below is
convertible into one share of our common stock, except for shares of our Series
D preferred stock, which are subject to the antidilution conversion price
adjustments described above.     
 

<TABLE>   
<CAPTION>
                                                                               Total
Executive Officers,                             Preferred Stock             Shares on an
Directors and              Common   --------------------------------------- as-Converted
5% Stockholders             Stock   Series A  Series B  Series C  Series D     Basis
------------------------  --------- --------- --------- --------- --------- ------------
<S>                       <C>       <C>       <C>       <C>       <C>       <C>
Entities affiliated with
 Kleiner Perkins
 Caufield and Byers,
 L.P. ..................        --  3,450,000 1,620,656 1,000,000   283,124  6,358,826
Entities affiliated with
 Oak Hill Capital
 Partners, L.P. ........        --        --        --        --  2,823,530  2,873,855
Entities affiliated with
 The Carlyle Group......        --        --        --        --  2,635,294  2,682,262
Entities affiliated with
 Domain Associates,
 L.L.C. ................     60,000       --  1,986,424   375,000   188,802  2,613,591
Kelsey Wirth............  2,480,454    46,000    22,500    16,668       --   2,565,622
Zia Chishti.............  2,480,454    30,000       --        --        --   2,510,454
Entities affiliated with
 QuestMark Partners,
 L.P. ..................        --        --        --  2,000,000   377,398  2,384,124
Gordon Gund(1)..........        --        --  1,333,334   425,000   471,878  2,238,622
Artal Services, N.V. ...        --        --        --        --    470,588    478,975
Ike Udechuku............    254,428       --     40,000    15,000     9,410    319,006
Joe Breeland............    293,034       --        --      4,000     3,500    300,596
Len Hedge...............    275,670       --        --      1,250       --     276,920
James Heslin............    234,428       --      6,666     3,750       --     244,844
Christian Skieller......    234,428       --        --        --        --     234,428
Ken Vargha..............    177,558       --        --      1,250       --     178,808
Charlie Wen.............    175,820       --        --        --      1,200    177,041
Wren Wirth(2)...........        --     50,000    22,500    50,000    47,058    170,396
Amir Abolfathi..........    163,732       --        --        --        --     163,732
Ross Miller.............    146,518       --      3,334     3,750     2,000    155,638
Christopher Wirth.......        --     50,000    22,500    16,666     9,410     98,744
Timothy Wirth...........        --     50,000    22,500    16,666       --      89,166
H. Kent Bowen...........     64,000       --        --        --        --      64,000
Mark Logan..............     64,000       --        --        --        --      64,000
Stephen Bonelli.........     60,000       --        --        --        --      60,000
Timothy and Wren Wirth..        --        --        --        --     50,822     51,728
Saadia Chishti..........        --        --        --        --      4,704      4,788
George Andrew Lear III..        --        --        --        --      1,110      1,130
</TABLE>
    
--------
   
(1) Includes 1,510,341 shares held in trust for immediate family members and
    shares held by immediate family members.     
   
(2) Includes 47,058 shares held in trust for immediate family members.     
 
   Holders of shares of our preferred stock are entitled to registration rights
in respect of the common stock issued or issuable upon conversion thereof. See
"Description of Securities--Registration Rights."
 
 
                                       55

<PAGE>
 
   Joseph Lacob, one of our directors, is a principal of the general partner of
one or more of the Kleiner Entities, shares voting and dispositive power with
respect to the shares held by one or more of such entities, and disclaims
beneficial ownership of such shares in which he has no pecuniary interest.
 
   Brian Dovey, one of our directors, is a principal of the general partner of
one or more of the Domain Entities, shares voting and dispositive power with
respect to the shares held by one or more of such entities, and disclaims
beneficial ownership of such shares in which he has no pecuniary interest.
 
Agreements with Officers and Directors
   
   As of November 2000, each of Messrs. Hedge, Heslin, Abolfathi, Breeland,
Miller, Skieller, Udechuku, Vargha, and Wen delivered full-recourse promissory
notes to us in payment of the exercise price of outstanding stock options they
held under our 1997 Plan. The aggregate principal amount secured under the
notes and the number of shares underlying the options are as follows: Hedge--
$211,540, 242,338 shares; Heslin--$249,666, 234,428 shares; Abolfathi--
$174,375, 163,732 shares; Breeland--$172,331, 193,034 shares; Miller--$28,242,
26,518 shares; Skieller--$36,666, 34,428 shares; Udechuku--$270,967, 254,428
shares; Vargha--$57,084, 53,600 shares; and Wen--$91,398, 85,820 shares. Each
note has a term of two years and bears interest at a rate of 9.5% per annum,
compounded annually. The notes are each secured by pledges of the purchased
shares to us and pledges of collateral which, together with the shares, have a
value of twice the principal amount of each note. The shares and collateral
underlying the pledges will be released from the pledges only upon the entire
payment or prepayment of the principal balance of each note, together with
payment of all accrued interest on the principal amount so paid or prepaid.
Accrued interest becomes due on each anniversary of the signing of each note
and the principal balance will become due and payable in one lump sum on the
second anniversary of the signing of each note. However, the entire unpaid
balances of the notes will become due and payable upon termination of
employment, failure to pay any installment of principal or interest when due,
the insolvency of the maker of the notes, or in the event we are acquired and
receive cash or freely tradable securities for our shares in the acquisition.
None of the shares serving as security for the notes may be sold unless the
principal portion of the note attributable to those shares, together with the
accrued interest on that principal portion, is paid to us.     
 
   In November 2000, we entered into an agreement with Stephen Bonelli, who
serves as our Chief Financial Officer and Vice President of Finance. The
agreement provides that Mr. Bonelli's employment is at-will and sets his annual
base salary. Mr. Bonelli's agreement also provides that he will be eligible for
an annual bonus and stock options exercisable for shares of our common stock,
plus certain other standard employee benefits. In addition, the agreement
provides that if we terminate Mr. Bonelli without "cause" or if Mr. Bonelli
resigns with "good reason," Mr. Bonelli will be credited with one year of
vesting of his stock options in addition to any other vesting he had earned,
provided he signs a full release of all claims against us at the time his
employment terminates.
 
   We have granted options and issued common stock to our executive officers
and directors. See "Management--Executive Compensation" and "Principal
Stockholders."
 
Indemnification Agreements
   
   We have entered into indemnification agreements with our directors
containing provisions which may require us, among other things, to indemnify
them against certain liabilities that may arise by reason of their status or
service as directors. See "Management--Limitations of Liability and
Indemnification Matters" for more information regarding indemnification of our
officers and directors.     
 
                                       56

<PAGE>
 
                             PRINCIPAL STOCKHOLDERS
   
   The table below sets forth information regarding the beneficial ownership of
our common stock on an as-converted basis as of November 30, 2000, by the
following individuals or groups:     
 
  .  each person or entity who is known by us to own beneficially more than
     5% of our outstanding stock;
 
  .  each of the named executive officers;
 
  .  each of our directors; and
 
  .  all directors and executive officers as a group.
   
   Each stockholder's percentage ownership in the following table is based on
35,615,722 shares of common stock outstanding as of November 30, 2000 which
reflects the automatic conversion of all series of preferred stock outstanding
as of November 30, 2000 into 25,957,668 shares of common stock upon completion
of this offering. This amount includes the 1,436,710 shares of Series D
preferred stock issued in October 2000 and an additional 169,934 shares of
common stock which reflects the effect of the conversion price adjustment to
the Series D preferred stock resulting from option grants through November 30,
2000. This table excludes the effect on the Series D conversion price of
options granted subsequent to November 30, 2000. See "Certain Transactions--
Preferred Stock Sales." For purposes of calculating each stockholder's
percentage ownership, all options and warrants exercisable within 60 days of
November 30, 2000 held by the particular stockholder and that are included in
the first column are treated as outstanding shares. The numbers shown in the
table below assume no exercise by the underwriters of their over-allotment
option.     
 
   Unless otherwise indicated, the principal address of each of the
stockholders below is c/o Align Technology, Inc., 851 Martin Ave., Santa Clara,
California 95050. Except as otherwise indicated, and subject to applicable
community property laws, except to the extent authority is shared by both
spouses under applicable law, we believe the persons named in the table have
sole voting and investment power with respect to all shares of common stock
held by them.
 

<TABLE>   
<CAPTION>
                                                    Shares Beneficially Owned
                                                   ----------------------------
                                                              Percent  Percent
                                                               Before   After
Beneficial Owner                                     Number   Offering Offering
----------------                                   ---------- -------- --------
<S>                                                <C>        <C>      <C>
Joseph Lacob(1)..................................   6,418,826   18.0%    14.0%
Entities affiliated with Kleiner Perkins Caufield
 & Byers, L.P.(2)................................   6,358,826   17.9     13.9
Kelsey Wirth(3)..................................   2,975,656    8.4      6.5
Entities affiliated with Oak Hill Capital
 Partners, L.P.(4)...............................   2,873,855    8.1      6.3
Entities affiliated with QuestMark Partners,
 L.P.(5).........................................   2,863,099    8.0      6.3
Entities affiliated with The Carlyle Group(6)....   2,682,262    7.5      5.9
Entities affiliated with Domain Associates,
 L.L.C.(7).......................................   2,613,591    7.3      5.7
Brian Dovey(8)...................................   2,613,591    7.3      5.7
Zia Chishti(9)...................................   2,516,372    7.1      5.5
Gordon Gund(10)..................................   2,238,622    6.3      4.9
Peter Riepenhausen(11)...........................     420,000    1.2       *
Len Hedge(12)....................................     323,588     *        *
Ike Udechuku(13).................................     319,006     *        *
Joe Breeland(14).................................     300,596     *        *
Ken Vargha(15)...................................     274,750     *        *
Amir Abolfathi(16)...............................     263,732     *        *
Stephen Bonelli(17)..............................     260,000     *        *
James Heslin(18).................................     244,844     *        *
Christian Skieller(19)...........................     234,428     *        *
Charlie Wen(20)..................................     177,041     *        *
Ross Miller(21)..................................     155,638     *        *
H. Kent Bowen(22)................................      64,000     *        *
Mark Logan(23)...................................      64,000     *        *
All directors, executive officers and key
 employees as a group (17 persons) ..............  17,626,061   48.2     37.9
</TABLE>
    
--------
  * Represents beneficial ownership of less than one percent of our common
    stock.
 
                                       57

<PAGE>
 
   
 (1) Includes 6,358,826 shares held by entities affiliated with Kleiner Perkins
     Caufield & Byers, L.P. Mr. Lacob disclaims beneficial ownership of these
     shares except to the extent of his pecuniary interest in these shares.
     Also includes 60,000 shares of common stock issuable upon exercise of
     immediately exercisable options within 60 days of November 30, 2000, of
     which 41,250 shares are subject to repurchase by us.     
   
 (2) Principal address is 2750 Sand Hill Road, Menlo Park, CA 94025. Consists
     of 5,771,234 shares held by Kleiner Perkins Caufield & Byers VIII, L.P.,
     334,060 shares held by KPCB VIII Founders Fund, L.P. and 253,532 shares
     held by KPCB Life Sciences Zaibatsu Fund II, L.P. Joseph Lacob, one of our
     directors, is a principal of the general partner of one or more of the
     Kleiner Entities, shares voting and dispositive power with respect to the
     shares held by one or more of such entities and disclaims beneficial
     ownership of such shares in which he has no pecuniary interest.     
   
 (3) Includes 170,396 owned by Wren Wirth, 89,166 shares owned by Timothy
     Wirth, 98,744 shares owned by Christopher Wirth and 51,728 shares owned by
     Timothy and Wren Wirth, all of whom are immediate family members of Kelsey
     Wirth.     
   
 (4) Principal address is 201 Main Street, Suite 2300, Fort Worth, TX 76102.
     Consists of 2,615,208 shares held by Oak Hill Capital Partners, L.P. and
     258,647 shares held by OHCMP Align, L.P.     
   
 (5) Principal address is One South Street, Suite 800, Baltimore, MD 21202.
     Includes 2,083,152 shares held by QuestMark Partners, L.P., 300,972 shares
     held by QuestMark Partners Side Fund, L.P., and 478,975 shares held by
     Artal Services, N.V.     
   
 (6) Principal address is 1001 Pennsylvania Avenue, N.W., Suite 220 South,
     Washington, D.C. 20004. Consists of 2,614,868 shares held of record by
     Carlyle Partners III, L.P. and 67,394 shares held of record by CP III
     Coinvestment, L.P. Voting and dispositive power with respect to such
     shares may be deemed to be shared by (i) TC Group III, L.P., as the sole
     general partner of Carlyle Partners III, L.P. and CP III Co-investment,
     (ii) TC Group III, L.L.C., as the sole general partner of TC Group III,
     L.P., (iii) TC Group, L.L.C., as the managing member of TC Group II,
     L.L.C., (iv) TCG Holdings, L.L.C., as the managing member of TC Group,
     L.L.C. and (v) William E. Conway, Jr., David M. Rubenstein and Daniel A.
     D'Aniello, as managing member of TCG Holding, L.L.C. Messrs. Conway,
     Rubenstein and D'Aniello disclaim such beneficial ownership.     
   
 (7) Principal address is One Palmer Square, Suite 515, Princeton, NJ 08542.
     Consists of 2,487,167 shares held by Domain Partners III, L.P., 66,424
     shares held by DP III Associates, L.P. and 60,000 shares held by Domain
     Associates L.L.C., of which 25,000 shares are subject to repurchase by us.
     Brian Dovey, one of our directors, is a general partner of One Palmer
     Square Associates III, L.P., the general partner of Domain Partners III,
     L.P. and DP III Associates, L.P. and is a managing member of Domain
     Associates, L.L.C. Mr. Dovey shares voting and investment power with
     respect to these shares and disclaims beneficial ownership of such shares
     except to the extent of his proportionate interest therein.     
   
 (8) Consists of 2,487,167 shares held by Domain Partners III, L.P., 66,424
     shares held by DP III Associates, L.P. and 60,000 shares held by Domain
     Associates, L.L.C., of which 25,000 shares are subject to repurchase by
     us. Brian Dovey, one of our directors, is a general partner of One Palmer
     Square Associates III, L.P., the general partner of Domain Partners III,
     L.P. and DP III Associates, L.P. and is a managing member of Domain
     Associates, L.L.C. Mr. Dovey shares voting and investment power with
     respect to these shares and disclaims beneficial ownership of such shares
     except to the extent of his proportionate interest therein.     
   
 (9) Includes 4,788 shares owned by Saadia Chishti and 1,130 shares owned by
     George Andrew Lear III, both of whom are immediate family members of Zia
     Chishti.     
   
(10) Principal address is Post Office Box 449 Princeton, NJ 08542. Includes
     351,666 shares owned by each of Grant Gund and Zachary Gund and 807,009
     shares held in trust for each of Grant Gund and Zachary Gund, both of whom
     are immediate family members of Gordon Gund.     
   
(11) Includes 420,000 shares of common stock issuable upon exercise of
     immediately exercisable options within 60 days of November 30, 2000, which
     shares are also subject to our right of repurchase.     
   
(12) Includes 242,338 shares subject to repurchase by us at the original
     exercise price in the event of termination of Mr. Hedge's employment with
     us, which right lapses over time. Also includes 46,668 shares of common
     stock issuable upon exercise of immediately exercisable options within 60
     days of November 30, 2000, some of which shares are also subject to our
     right of repurchase.     
   
(13) Includes 254,428 shares subject to repurchase by us at the original
     exercise price in the event of termination of Mr. Udechuku's employment
     with us, which right lapses over time.     
   
(14) Includes 236,784 shares subject to repurchase by us at the original
     exercise price in the event of termination of Mr. Breeland's employment
     with us, which repurchase right lapses over time.     
 
 
                                       58

<PAGE>
 
   
(15) Includes 31,250 shares held jointly with Shawna Vargha and 1,250 shares
     held by Pearl Vargha, both of whom are immediate family members of Kenneth
     Vargha. Includes 123,392 shares subject to repurchase by us at the
     original exercise price in the event of termination of Mr. Vargha's
     employment with us, which repurchase right lapses over time. Also includes
     95,942 shares of common stock issuable upon exercise of immediately
     exercisable options within 60 days of November 30, 2000, which shares are
     also subject to our right of repurchase.     
   
(16) Includes 163,732 shares subject to repurchase by us at the original
     exercise price in the event of termination of Mr. Abolfathi's employment
     with us, which right lapses over time. Also includes 100,000 shares of
     common stock issuable upon exercise of immediately exercisable options
     within 60 days of November 30, 2000, some of which shares are also subject
     to our right of repurchase.     
   
(17) Includes 60,000 shares subject to repurchase by us at the original
     exercise price in the event of termination of Mr. Bonelli's employment
     with us, which right lapses over time. Also includes 200,000 shares of
     common stock issuable upon exercise of immediately exercisable options
     within 60 days of November 30, 2000, which shares are also subject to our
     right of repurchase.     
   
(18) Includes 234,428 shares subject to repurchase by us at the original
     exercise price in the event of termination of Mr. Heslin's employment with
     us, which repurchase right lapses over time.     
   
(19) Includes 234,428 shares subject to repurchase by us at the original
     exercise price in the event of termination of Mr. Skieller's employment
     with us, which repurchase right lapses over time.     
   
(20) Includes 124,364 shares subject to repurchase by us at the original
     exercise price in the event of termination of Mr. Wen's employment with
     us, which repurchase right lapses over time.     
   
(21) Includes 5,316 shares held individually by wife Cheryl A. Miller. Also
     includes 1,250 shares held by Rita and Troy Miller and 1,250 shares held
     by Janice and Jonathan Sykes and 1,250 shares held by Cliff Williams, all
     of whom are immediate family members of Ross Miller. Includes 119,852
     shares subject to repurchase by us at the original exercise price in the
     event of termination of Mr. Miller's employment with us, which right
     lapses over time.     
   
(22) Includes 64,000 shares of common stock issuable upon exercise of
     immediately exercisable options within 60 days of November 30, 2000, which
     shares are subject to repurchase by us.     
   
(23) Includes 64,000 shares subject to repurchase by us at the original
     exercise price, which repurchase right lapses over time.     
 
 
                                       59

<PAGE>
 

                          DESCRIPTION OF CAPITAL STOCK
 
General
   
   At the closing of this offering, we will be authorized to issue 200,000,000
shares of common stock, $0.0001 par value, and 5,000,000 shares of undesignated
preferred stock, $0.0001 par value, after giving effect to the amendment of our
certificate of incorporation to delete references to the existing preferred
stock following conversion of that stock. Immediately following the completion
of this offering, and assuming no exercise of the underwriters' over-allotment
option, based on the number of shares outstanding as of November 30, 2000, a
total of 45,615,722 shares of common stock will be issued and outstanding, and
no shares of preferred stock will be issued and outstanding. This number is
subject to upward adjustment as a result of the conversion price adjustment for
the Series D preferred stock resulting from option grants subsequent to
November 30, 2000. This number is also subject to upward adjustment in the
event the existing Series D conversion price is greater than 80% of the price
per share of our common stock in this offering. Were such an adjustment to
occur, the existing Series D Conversion price will be adjusted to equal 80% of
the price per share of our common stock in this offering. Following the grant
of certain stock options by us prior to January 31, 2001, the Series D
conversion price will be approximately $9.53. See "Certain Transactions--
Preferred Stock Sales."     
 
   The following description of our capital stock and certain provisions of our
certificate of incorporation is a summary and is qualified in its entirety by
the provisions of our certificate of incorporation, where such rights are set
forth in full, and the provisions of applicable laws.
 
Common Stock
   
   At November 30, 2000, 9,658,054 shares of common stock were outstanding,
options to purchase 2,126,184 shares of common stock were outstanding and
options to purchase an aggregate of 2,067,390 shares of common stock were
available for future grant pursuant to our 1997 Plan. The holders of common
stock are entitled to one vote for each share held of record on all matters
submitted to a vote of the stockholders.     
 
   Subject to preferences that may be applicable to any then outstanding shares
of preferred stock, holders of common stock are entitled to receive ratably
such dividends as may be declared by the Board of Directors out of funds
legally available therefore. In the event of our liquidation, dissolution or
winding up, holders of the common stock are entitled to share ratably in all
assets remaining after payment of liabilities and the liquidation preference of
any then outstanding shares of preferred stock. Holders of common stock have no
preemptive rights and no right to convert their common stock into any other
securities. There are no redemption or sinking fund provisions applicable to
the common stock. All outstanding shares of common stock are fully paid and
nonassessable.
 
Preferred Stock
 
   Our board of directors is authorized to issue from time to time, without
stockholder authorization, in one or more designated series, authorized but
unissued shares of preferred stock, with any dividend, redemption, conversion
and exchange provisions as may be provided in the particular series. Any series
of preferred stock may possess voting, dividend, liquidation and redemption
rights superior to those of the common stock.
 
   The rights of the holders of our common stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that
may be issued in the future.
 
                                       60

<PAGE>
 
Issuance of a new series of preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of entrenching our board of directors and
making it more difficult for a third party to acquire, or discourage a third-
party from acquiring, a majority of our outstanding voting stock. We have no
present plans to issue any shares of or designate any series of preferred
stock.
 
Warrants
   
   At November 30, 2000, there were warrants outstanding to purchase a total of
533,334 shares of our preferred stock at an exercise price of $1.50 per share
and 112,500 shares of our preferred stock at $4.00 per share. Following the
closing of the offering, the warrants automatically will become exercisable to
purchase 645,834 shares of common stock and will expire five years thereafter
if not exercised. Some of these warrants have net exercise provisions under
which the holder may, in lieu of payment of the exercise price in cash,
surrender the warrants and receive a net amount of shares based on the fair
market value of our common stock at the time of exercise of the warrants after
deduction of the total exercise price.     
 
Registration Rights
   
   As of November 30, 2000, the holders of an aggregate of approximately
25,957,668 shares of common stock as well as warrants to purchase up to
approximately 645,834 shares of our common stock will be entitled to certain
rights with respect to the registration of the shares under the Securities Act.
This number is subject to upward adjustment as a result of the conversion price
adjustments for the Series D preferred stock. See "Certain Transactions--
Preferred Stock Sales." These rights are provided under the terms of agreements
between us and the holders of these securities. If we propose to register any
of our securities under the Securities Act, either for our own account or for
the account of other security holders exercising registration rights, these
holders are entitled to notice of the registration and are entitled to include
shares of common stock in the registration. The rights are subject to
conditions and limitations, among them the right of the underwriters of an
offering subject to the registration to limit the number of shares included in
the registration. At any time following 180 days after this offering, holders
of these rights may also require us to file up to two registration statements
under the Securities Act at our expense with respect to their shares of common
stock, and we are required to use our best efforts to effect the registration,
subject to conditions and limitations. Furthermore, stockholders with
registration rights may require us to file additional registration statements
on Form S-3, subject to conditions and limitations. Upon registration, these
shares will be freely tradable in the public market without restriction.     
 
Antitakeover Effects of Provisions of the Certificate of Incorporation, Bylaws
and Delaware Law
 
   We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. In general, Section 203 prohibits a Delaware corporation
from engaging in any business combination with any interested stockholder for a
period of three years following the date that the stockholder became an
interested stockholder, unless:
 
  .  prior to that date, the board of directors of the corporation approved
     either the business combination or the transaction that resulted in the
     stockholder becoming an interested stockholder;
 
  .  upon consummation of the transaction that resulted in the stockholder
     becoming an interested stockholder, the interested stockholder owned at
     least 85% of our voting
 
                                       61

<PAGE>
 
     stock outstanding at the time the transaction commenced, excluding for
     purposes of determining the number of shares outstanding those shares
     owned by:
 
    (i)  persons who are directors and also officers; and
 
    (ii) employee stock plans in which employee participants do not have the
         right to determine confidentially whether shares held subject to
         the plan will be tendered in a tender or exchange offer; or
 
  .  on or subsequent to that date, the business combination is approved by
     the board of directors of the corporation and authorized at an annual or
     special meeting of stockholders, and not by written consent, by the
     affirmative vote of at least 66 2/3% of the outstanding voting stock
     that is not owned by the interested stockholder.
 
   Section 203 defines "business combination" to include the following:
 
  .  any merger or consolidation involving the corporation and the interested
     stockholder;
 
  .  any sale, transfer, pledge or other disposition of 10% or more of the
     assets of the corporation involving the interested stockholder;
 
  .  subject to certain exceptions, any transaction that results in the
     issuance or transfer by the corporation of any stock of the corporation
     to the interested stockholder;
 
  .  any transaction involving the corporation that has the effect of
     increasing the proportionate share of the stock of any class or series
     of the corporation beneficially owned by the interested stockholder; or
 
  .  the receipt by the interested stockholder of the benefit of any loans,
     advances, guarantees, pledges or other financial benefits provided by or
     through the corporation.
 
   In general, Section 203 defines an interested stockholder as any entity or
person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by any of these entities or persons.
 
   Our certificate of incorporation:
 
  .  provides that any action required or permitted to be taken by our
     stockholders must be effected at a duly called annual or special meeting
     of stockholders and not by written consent;
 
  .  provides that the authorized number of directors may be changed only by
     our board of directors; and
     
  .  authorizes our board of directors to issue undesignated preferred stock
     to increase the amount of outstanding shares.     
   
   The authorization of undesignated preferred stock makes it possible for the
board of directors to issue preferred stock with voting or other rights or
preferences that could impede the success of any attempt to change control of
our company.     
 
   Our bylaws provide that candidates for director may be nominated, and
proposals for business to be considered by the stockholders at an annual
meeting may be made, only by our board of directors or by a stockholder who
gives us written notice no later than 90 days or no earlier than 120 days
prior to the first anniversary of the date of the preceding year's annual
meeting, subject to certain adjustments.
 
                                      62

<PAGE>
 
   Delaware law and the foregoing provisions of our certificate of
incorporation and bylaws and the issuance of preferred stock in certain
circumstances may have the effect of deterring hostile takeovers or delaying
changes in control of our management, which could depress the market price of
our common stock.
 
Transfer Agent and Registrar
 
   Our transfer agent and registrar for our common stock is Equiserve L.P.
 
Listing
 
   We have applied to list our common stock on the Nasdaq National Market under
the trading symbol ALGN.
 
                                       63

<PAGE>
 
                        SHARES ELIGIBLE FOR FUTURE SALE
   
   Upon completion of this offering, we will have 45,615,722 shares of common
stock outstanding. Of these shares, all of the shares sold in this offering
will be freely tradable, except that any shares held by our affiliates, as that
term is defined in Rule 144 promulgated under the Securities Act, may only be
sold in compliance with the limitations described below. The remaining
35,615,722 shares of common stock will be deemed "restricted securities" as
defined under Rule 144. Restricted shares may be sold in the public market only
if they are registered under the Securities Act or if they qualify for an
exemption from registration under Rules 144, 144(k) or 701 promulgated under
the Securities Act, which rules are summarized below. Subject to the lock-up
agreements described below and the provisions of Rules 144, 144(k) and 701,
shares will be available for sale in the public market as follows:     
 

<TABLE>   
<CAPTION>
  Number of
    Shares                                  Date
  ----------                                ----
 <C>         <S>
  10,020,822 After the date of this prospectus, freely tradable shares sold in
              this offering and shares eligible for resale under Rule 144(k)
              that are not subject to the 180-day lock-up.
 
      65,968 After 90 days from the date of this prospectus, shares eligible
              for resale under Rule 144(k), Rule 144 (subject, in some cases,
              to volume limitations) or Rule 701 that are not subject to the
              180-day lock-up.
 
  24,318,266 After 180 days from the date of this prospectus, the 180-day lock-
              up is released and these shares are eligible for resale under
              Rule 144 (subject, in some cases, to volume limitations) or Rule
              144(k).
 
   6,494,754 After 180 days from the date of this prospectus, the 180-day lock-
              up is released and these shares are eligible for resale under
              Rule 701.
 
   4,715,912 After 180 days from the date of this prospectus, restricted
              securities that are held for less than one year and are not yet
              eligible for resale.
</TABLE>
    
 
Rule 144
 
   In general, under Rule 144 a person (or persons whose shares are aggregated)
who has beneficially owned shares for at least one year is entitled to sell
within any three-month period commencing 90 days after the date of this
prospectus a number of shares that does not exceed the greater of
     
  .  1% of the then outstanding shares of our common stock (approximately
     456,157 shares immediately after this offering) or     
     
  .  the average weekly trading volume of our common stock during the four
     calendar weeks preceding the date on which notice of such sale is filed
     with the Securities and Exchange Commission, subject to restrictions.
         
   A person (or persons whose shares are aggregated) who is not deemed to have
been our affiliate at any time during the 90 days immediately preceding the
sale who has beneficially owned his or her shares for at least two years is
entitled to sell these shares pursuant to Rule 144(k) without regard to the
limitations described above. Affiliates must always sell pursuant to Rule 144,
even after the applicable holding periods have been satisfied.
 
   We cannot estimate the number of shares that will be sold under Rule 144, as
this will depend on the market price for our common stock, the personal
circumstances of the sellers and other factors. Prior to this offering, there
has been no public market for our common stock, and there can be no assurance
that a significant public market for our common stock will develop or be
sustained after this offering. Any future sale of substantial amounts of our
common stock in the open market may adversely affect the market price of our
common stock.
 
                                       64

<PAGE>
 
   
Rule 701     
   
   Any of our employees or consultants who purchased his or her shares pursuant
to a written compensatory plan or contract is entitled to rely on the resale
provisions of Rule 701, which permits nonaffiliates to sell their Rule 701
shares without having to comply with the public information, holding period,
volume limitations or notice provisions of Rule 144 and permits affiliates to
sell their Rule 701 shares without having to comply with the Rule 144 holding
period restrictions, in each case commencing 90 days after the date of this
prospectus. Based on options exercised as of November 30, 2000, the holders of
6,494,754 shares of our common stock will be eligible to sell their shares in
reliance upon Rule 701 or pursuant to an S-8 registration statement as
described below upon the expiration of the 180-day lockup period.     
   
Lock-Up Agreements     
   
   We and our directors, executive officers and substantially all of our
stockholders have agreed, pursuant to the underwriting agreement and other
agreements, not to sell any of our common stock until 180 days from the date of
this prospectus without the prior consent of Deutsche Bank Securities Inc., the
legal name of which is expected to change to "Deutsche Banc Alex. Brown Inc."
on January 16, 2001. Transfers or dispositions can be made sooner only with the
prior written consent of Deutsche Bank Securities Inc.     
 
Stock Options
   
   As of November 30, 2000, options to purchase a total of 2,126,184 shares of
our common stock were outstanding, all of which were exercisable, and 1,131,506
of which were vested. Following the closing of this offering, we intend to file
a registration statement on Form S-8 under the Securities Act to register
shares of our common stock that are subject to outstanding options or reserved
for issuance under our 1997 Plan, our 2001 Plan and our Purchase Plan.
Accordingly, shares of common stock underlying these options will be eligible
for sale in the public markets from time to time, subject to vesting
restrictions or the lock-up agreements described above and, in the case of our
affiliates, the volume limitations of Rule 144 described above.     
 
Registration Rights
   
   After this offering the holders of approximately 25,957,668 shares of our
outstanding common stock and warrants to purchase 645,834 shares of our common
stock will be entitled to certain rights with respect to registration of such
shares under the Securities Act. This number is subject to upward adjustment as
a result of the conversion price adjustments for the Series D preferred stock.
See "Certain Transactions--Preferred Stock Sales." Registration of these shares
under the Securities Act would result in these shares becoming freely tradable
without restriction under the Securities Act except for shares purchased by
affiliates. See "Description of Capital Stock--Registration Rights."     
 
                                       65

<PAGE>
 

                                  UNDERWRITING
   
   Subject to the terms and conditions of the underwriting agreement, the
underwriters named below, through their representatives Deutsche Bank
Securities Inc./1/, Bear, Stearns & Co. Inc., J.P. Morgan Securities Inc. and
Robertson Stephens Inc., have severally agreed to purchase from us the
following respective number of shares of common stock at a public offering
price less the underwriting discounts and commissions set forth on the cover
page of this prospectus:     
 

<TABLE>   
<CAPTION>
                                                                      Number of
   Underwriters                                                         Shares
   ------------                                                       ----------
   <S>                                                                <C>
   Deutsche Bank Securities Inc./1/ .................................
   Bear, Stearns & Co. Inc...........................................
   J.P. Morgan Securities Inc........................................
   Robertson Stephens Inc............................................
                                                                      ----------
     Total........................................................... 10,000,000
                                                                      ==========
</TABLE>
    
   
   The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares of common stock offered hereby are subject
to certain conditions precedent and that the underwriters will purchase all of
the shares of common stock offered hereby, other than those covered by the
over-allotment option described below, if any of these shares are purchased.
       
   We have been advised by the representatives of the underwriters that the
underwriters propose to offer the shares of common stock to the public at the
public offering price set forth on the cover of this prospectus and to dealers
at a price that represents a concession not in excess of $       per share
under the public offering price. The underwriters may allow, and these dealers
may re-allow, a concession of not more than $       per share to other dealers.
After the initial public offering, representatives of the underwriters may
change the offering price and other selling terms.     
   
   We have granted to the underwriters an option, exercisable not later than 30
days after the date of this prospectus, to purchase up to 1,500,000 additional
shares of common stock at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this prospectus. The
underwriters may exercise this option only to cover over-allotments made in
connection with the sale of the common stock offered hereby. To the extent that
the underwriters exercise this option, each of the underwriters will become
obligated, subject to conditions, to purchase approximately the same percentage
of additional shares of common stock as the number of shares of common stock to
be purchased by it in the above table bears to the total number of shares of
common stock offered hereby. We will be obligated, pursuant to the option, to
sell these additional shares of common stock to the underwriters to the extent
the option is exercised. If any additional shares of common stock are
purchased, the underwriters will offer the additional shares on the same terms
as those on which the 10,000,000 shares are being offered.     
   
   The underwriting discounts and commissions per share are equal to the public
offering price per share of common stock less the amount paid by the
underwriters to us per share of common stock. The underwriting discounts and
commissions are 7% of the initial public offering price. We have agreed to pay
the underwriters the following discounts and commissions, assuming either no
exercise or full exercise by the underwriters of the underwriters' over-
allotment option:     
 

<TABLE>   
<CAPTION>
                                                      Total Fees
                                      -------------------------------------------
                                       Without Exercise of  With Full Exercise of
                        Fee Per Share Over-Allotment Option Over-Allotment Option
                        ------------- --------------------- ---------------------
<S>                     <C>           <C>                   <C>
Discounts and
 commissions paid by
 us....................     $                 $                     $
</TABLE>
    
-------
   
(1) Following the merger of the two U.S. broker dealers, which is expected to
    occur on January 16, 2001, the legal name will change to "Deutsche Banc
    Alex. Brown Inc."     
 
                                       66

<PAGE>
 
   
   In addition, we estimate that the total expenses of this offering, excluding
underwriting discounts and commissions, will be approximately $2.3 million.
    
   We have agreed to indemnify the underwriters against some specified types of
liabilities, including liabilities under the Securities Act, and to contribute
to payments the underwriters may be required to make in respect of any of these
liabilities.
   
   Each of our officers and directors, and substantially all of our
stockholders and holders of options and warrants to purchase our stock, have
agreed not to offer, sell, contract to sell or otherwise dispose of, or enter
into any transaction that is designed to, or could be expected to, result in
the disposition of any shares of our common stock or other securities
convertible into or exchangeable or exercisable for shares of our common stock
or derivatives of our common stock owned by these persons prior to this
offering or common stock issuable upon exercise of options or warrants held by
these persons for a period of 180 days after the effective date of the
registration statement of which this prospectus is a part without the prior
written consent of Deutsche Bank Securities Inc./1/ This consent may be given
at any time without public notice. We have entered into a similar agreement
with the representatives of the underwriters, except that we may grant options
and issue shares under our 1997 Plan and 2001 Plan and sell shares under our
Purchase Plan. In addition, we can sell up to an aggregate of 1,000,000 shares
to strategic and corporate partners and equipment lessors without such consent.
There are no agreements between the representatives and any of our stockholders
or affiliates releasing them from these lock-up agreements prior to the
expiration of the 180-day period.     
 
   The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.
   
   In order to facilitate the offering of our common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
market price of our common stock. Specifically, the underwriters may over-allot
shares of our common stock in connection with this offering, thus creating a
short sales position in our common stock for their own account. A short sales
position results when an underwriter sells more shares of common stock than
that underwriter is committed to purchase. A short sales position may involve
either "covered" short sales or "naked" short sales. Covered short sales are
sales made for an amount not greater than the underwriters' over-allotment
option to purchase additional shares in the offering described above. The
underwriters may close out any covered short position by either exercising
their over-allotment option or purchasing shares in the open market. In
determining the source of shares to close out the covered short position, the
underwriters will consider, among other things, the price of shares available
for purchase in the open market as compared to the price at which they may
purchase shares through the over-allotment option. Naked short sales are sales
in excess of the over-allotment option. The underwriters will have to close out
any naked short position by purchasing shares in the open market. A naked short
position is more likely to be created if the underwriters are concerned that
there may be downward pressure on the price of the shares in the open market
after pricing that could adversely affect investors who purchase in the
offering.     
   
   Accordingly, to cover these short sales positions or to stabilize the market
price of our common stock, the underwriters may bid for, and purchase, shares
of our common stock in the open market. These transactions may be effected on
the Nasdaq National Market or otherwise. Additionally, the representatives, on
behalf of the underwriters, may also reclaim selling concessions allowed to an
underwriter or dealer if the underwriting syndicate     
--------
   
(1) Following the merger of the two U.S. broker dealers, which is expected to
    occur on January 16, 2001, the legal name will change to "Deutsche Banc
    Alex. Brown Inc."     
 
                                       67

<PAGE>
 
   
repurchases shares distributed by that underwriter or dealer. Similar to other
purchase transactions, the underwriters' purchases to cover the syndicate short
sales or to stabilize the market price of our common stock may have the effect
of raising or maintaining the market price of our common stock or preventing or
mitigating a decline in the market price of our common stock. As a result, the
price of the shares of our common stock may be higher than the price that might
otherwise exist in the open market. The underwriters are not required to engage
in these activities and, if commenced, may end any of these activities at any
time.     
   
   At our request, the underwriters have reserved for sale at the initial
public offering price up to 700,000 shares of our common stock being sold in
this offering for our vendors, employees, family members of employees,
customers and other third parties. The number of shares of our common stock
available for sale to the general public will be reduced to the extent these
reserved shares are purchased. Any reserved shares that are not purchased by
these persons will be offered by the underwriters to the general public on the
same basis as the other shares in this offering.     
   
   In addition, the underwriters intend to inquire of orthodontists in the U.S.
and Canada their interest in purchasing a limited number of shares (generally
no more than 300 shares per individual) of our common stock being sold in this
offering at the initial public offering price. Any sales by the underwriters to
orthodontists will be at the discretion of the underwriters and no shares have
been reserved by the underwriters in this offering for any such sales to
orthodontists.     
   
   A prospectus in electronic format is being made available on Internet web
sites maintained by one or more of the underwriters of this offering and may be
made available on web sites maintained by other underwriters. Other than the
prospectus in electronic format, the information on any underwriter's web site
and any information contained in any other web site maintained by an
underwriter is not part of the prospectus or the registration statement of
which the prospectus forms a part.     
 
Pricing of This Offering
   
   Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price of our common stock will
be determined by negotiation among us and the representatives of the
underwriters. Among the primary factors that will be considered in determining
the public offering price are:     
 
  .  prevailing market conditions;
 
  .  our results of operations in recent periods;
 
  .  the present stage of our development;
     
  .  the market capitalizations and stages of development of other companies
     that we and the representatives of the underwriters believe to be
     comparable to our business; and     
 
  .  estimates of our business potential.
         
                                       68

<PAGE>
 

                                 LEGAL MATTERS
 
   The validity of the common stock offered will be passed upon for us by
Brobeck, Phleger & Harrison LLP, San Francisco, California. Wilson Sonsini
Goodrich & Rosati, Professional Corporation, Palo Alto, California, is acting
as counsel for the underwriters in connection with selected legal matters
relating to the shares of common stock offered by this prospectus.
 

                                    EXPERTS
 
   The consolidated financial statements as of December 31, 1998 and 1999 and
for the period from April 3, 1997 (Date of inception) to December 31, 1997 and
for each of the two years in the period ended December 31, 1999, included in
this prospectus, have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
 
                   WHERE YOU CAN FIND ADDITIONAL INFORMATION
 
   We have filed with the Securities and Exchange Commission, Washington, D.C.
20549, under the Securities Act a registration statement on Form S-1 relating
to the common stock offered. This prospectus does not contain all of the
information set forth in the registration statement and its exhibits and
schedules. For further information with respect to us and the shares we are
offering pursuant to this prospectus, you should refer to the registration
statement and its exhibits and schedules. Statements contained in this
prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete, and you should refer to the copy of
that contract or other document filed as an exhibit to the registration
statement. You may read or obtain a copy of the registration statement,
including exhibits, at the commission's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Each statement in this prospectus
relating to a contract or document filed as an exhibit is qualified in all
respects by the filed exhibit. You may obtain information on the operation of
the public reference room by calling the commission at 1-800-SEC-0330. The
commission maintains a website that contains reports, proxy information
statements and other information regarding registrants that file electronically
with the commission. The address of this website is http://www.sec.gov.
 
   As a result of the offering, the information and reporting requirements of
the Securities Exchange Act of 1934 will apply to us. We intend to furnish
holders of our common stock with annual reports containing, among other
information, audited financial statements certified by an independent public
accounting firm and quarterly reports containing unaudited condensed financial
information for the first three quarters of each fiscal year. We intend to
furnish other reports as we may determine or as may be required by law.
 
                                       69

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
                          

                       INDEX TO FINANCIAL STATEMENTS     
 

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Report of Independent Accountants.......................................... F-2
 
Consolidated Balance Sheets................................................ F-3
 
Consolidated Statements of Operations...................................... F-4
 
Consolidated Statements of Stockholders' Deficit........................... F-5
 
Consolidated Statements of Cash Flows...................................... F-6
 
Notes to Consolidated Financial Statements................................. F-7
</TABLE>

 
                                      F-1

<PAGE>
 

                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors and Stockholders
 of Align Technology, Inc.
   
   The stock split described in Note 11 to the consolidated financial
statements has not been consummated at the date of our opinion. When it has
been consummated, we will be in a position to furnish the following report:
       
   "In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of stockholders' deficit and of
cash flows present fairly, in all material respects, the financial position of
Align Technology, Inc. at December 31, 1998 and 1999, and the results of their
operations and their cash flows for the period from April 3, 1997 (date of
inception) to December 31, 1997 and for the years ended December 31, 1998 and
1999, in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion."     
          
PricewaterhouseCoopers LLP     
 
San Jose, California
August 18, 2000, except for Note 11 for

    
 which the date is December   , 2000     
 
                                      F-2

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
                          CONSOLIDATED BALANCE SHEETS
                      
                   (in thousands, except per share data)     
 

<TABLE>   
<CAPTION>
                                                                    Pro Forma
                                                                  Stockholders'
                                                                    Equity at
                                   December 31,                   September 30,
                                 -----------------  September 30,     2000
                                  1998      1999        2000        (Note 2)
                                 -------  --------  ------------- -------------
                                                            (unaudited)
<S>                              <C>      <C>       <C>           <C>
ASSETS
Current assets:
Cash and cash equivalents......  $ 2,471  $  6,832    $ 33,940
Restricted cash................      --        340      18,127
Marketable securities..........    4,452     5,253       3,927
Accounts receivable, net of
 allowance for doubtful
 accounts of none, $33 and $300
 at December 31, 1998 and 1999
 and September 30, 2000,
 respectively..................      --        314       2,179
Inventories....................      --        366         667
Deferred costs.................      --        --        1,380
Other current assets...........      285       669       1,914
                                 -------  --------    --------
  Total current assets.........    7,208    13,774      62,134
Property and equipment, net....      770     3,317      11,938
Other assets...................      139       --        1,495
                                 -------  --------    --------
  Total assets.................  $ 8,117  $ 17,091    $ 75,567
                                 =======  ========    ========
LIABILITIES, CONVERTIBLE
 PREFERRED STOCK AND
 STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable...............  $   257  $  1,572    $ 10,762
Accrued liabilities............      129     2,050       2,033
Deferred revenue...............      --        119       1,145
Current portion of capital
 lease obligations.............        7         6         436
                                 -------  --------    --------
  Total current liabilities....      393     3,747      14,376
Capital lease obligations, net
 of current portion............       10         3       1,569
                                 -------  --------    --------
  Total liabilities............      403     3,750      15,945
                                 -------  --------    --------
Commitments and contingencies
 (Note 4)
 
Convertible preferred stock:
 $0.0001 par value;
 Authorized: 13,605 shares;
 Issued and outstanding:
  11,067, 16,253 and 24,351
  shares at December 31, 1998,
  1999 and September 30, 2000
  (unaudited), respectively,
  and none pro forma (aggregate
  liquidation preference:
  $32,996 at December 31, 1999
  and $119,034 at September 30,
  2000 (unaudited))............   12,223    31,713     113,890      $    --
Notes receivable from

 stockholders..................      (76)      --          --            --
Preferred stock warrants (Note
 6)............................      --      1,042       1,818           --
                                 -------  --------    --------      --------
                                  12,147    32,755     115,708           --
                                 -------  --------    --------      --------
Stockholders' equity (deficit):
 Common stock: $0.0001 par
  value
 Authorized: 60,000 shares;
 Issued and outstanding: 5,355,
  5,644 and 7,188 shares at
  December 31, 1998, 1999 and
  September 30, 2000
  (unaudited), respectively,
  and 31,613 shares pro forma
  (unaudited)..................        1         1           1             3
 Additional paid-in capital....        5     2,219      91,925       207,631
 Deferred stock-based
  compensation.................      --     (1,780)    (74,847)      (74,847)
 Accumulated deficit ..........   (4,439)  (19,854)    (73,165)      (73,165)
                                 -------  --------    --------      --------
  Total stockholders' equity
   (deficit)...................   (4,433)  (19,414)    (56,086)     $ 59,622
                                 -------  --------    --------      ========
  Total liabilities,
   convertible preferred stock
   and warrants, and
   stockholders' equity
   (deficit)...................  $ 8,117  $ 17,091    $ 75,567
                                 =======  ========    ========
</TABLE>
    
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-3

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
 

<TABLE>   
<CAPTION>
                             Period from
                            April 3, 1997    Year Ended        Nine Months
                              (date of        Dec. 31,       Ended Sept. 30,
                            inception) to -----------------  -----------------
                            Dec. 31, 1997  1998      1999     1999      2000
                            ------------- -------  --------  -------  --------
                                                               (unaudited)
<S>                         <C>           <C>      <C>       <C>      <C>
Revenues:
 Revenue--Ancillary
  products................     $  --      $   --   $    313  $    70  $    950
 Revenue--Invisalign......        --          --         98        7     2,286
                               ------     -------  --------  -------  --------
  Total revenue...........        --          --        411       77     3,236
                               ------     -------  --------  -------  --------
Cost of revenues:
 Cost of revenue--
  Ancillary products......        --          --        246       62       912
 Cost of revenue and
  manufacturing costs--
  Invisalign..............        --          --      1,508      295    10,401
                               ------     -------  --------  -------  --------
  Total cost of revenue...        --          --      1,754      357    11,313
                               ------     -------  --------  -------  --------
Gross loss................        --          --     (1,343)    (280)   (8,077)
                               ------     -------  --------  -------  --------
Operating expenses:
 Sales and marketing......        283         133     5,688    2,726    19,664
 General and
  administrative..........        --        2,344     3,474    2,000    12,349
 Research and
  development.............        405       1,474     4,200    3,068     5,904
                               ------     -------  --------  -------  --------
  Total operating
   expenses...............        688       3,951    13,362    7,794    37,917
                               ------     -------  --------  -------  --------
Loss from operations......       (688)     (3,951)  (14,705)  (8,074)  (45,994)
 Interest income..........         25         185       362      148     1,514
 Interest expense.........        --          --       (986)    (639)   (8,807)
 Other expense............         (1)         (9)      (86)      (8)      (24)
                               ------     -------  --------  -------  --------
Net loss..................       (664)     (3,775)  (15,415)  (8,573)  (53,311)
Dividend related to
 beneficial conversion
 feature of preferred
 stock....................         --         --        --       --    (44,150)
                               ------     -------  --------  -------  --------
Net loss available to
 common stockholders......     $ (664)    $(3,775) $(15,415) $(8,573) $(97,461)
                               ======     =======  ========  =======  ========
Net loss per share
 available to common
 stockholders, basic and
 diluted..................     $(0.43)    $ (1.33) $  (3.65) $ (2.11) $ (17.94)
                               ======     =======  ========  =======  ========
Shares used in computing
 net loss per share
 available to common
 stockholders, basic and
 diluted..................      1,542       2,842     4,218    4,060     5,434
                               ======     =======  ========  =======  ========
Pro forma net loss per
 share available to common
 stockholders, basic and
 diluted (unaudited) (Note
 2).......................                         $  (0.92)          $  (2.11)
                                                   ========           ========
Shares used in computing
 pro forma net loss per
 share available to common
 stockholders, basic and
 diluted (unaudited)
 (Note 2).................                           16,678             25,270
                                                   ========           ========
</TABLE>
    
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-4

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
 
 For the period from April 3, 1997 (date of inception) to December 31, 1997 and
  for the years ended December 31, 1998 and 1999 and for the nine months ended
                         September 30, 2000 (unaudited)
                                 (in thousands)
 

<TABLE>   
<CAPTION>
                          Common Stock   Additional   Deferred
                          --------------  Paid-In      Stock     Accumulated
                          Shares  Amount  Capital   Compensation   Deficit    Total
                          ------  ------ ---------- ------------ ----------- --------
<S>                       <C>     <C>    <C>        <C>          <C>         <C>
Issuance of common stock
 for services rendered..  4,860    $ 1    $    --     $    --     $    --    $      1
Stock options
 exercised..............    979    --            2         --          --           2
Issuance of common
 stock..................    160    --          --          --          --         --
Net loss................    --     --          --          --         (664)      (664)
                          -----    ---    --------    --------    --------   --------
Balance at December 31,
 1997...................  5,999      1           2         --         (664)      (661)
Repurchase of common
 stock..................   (740)   --           (2)        --          --          (2)
Stock options
 exercised..............     92    --            5         --          --           5
Issuance of common
 stock..................      4    --          --          --          --         --
Net loss................    --     --          --          --       (3,775)    (3,775)
                          -----    ---    --------    --------    --------   --------
Balance at December 31,
 1998...................  5,355      1           5         --       (4,439)    (4,433)
Repurchase of common
 stock .................    (42)   --           (2)        --          --          (2)
Stock options
 exercised..............    331    --           42         --          --          42
Deferred stock
 compensation, net of
 cancellations..........    --     --        2,174      (2,174)        --         --
Amortization of deferred
 stock compensation.....    --     --          --          394         --         394
Net loss................    --     --          --          --      (15,415)   (15,415)
                          -----    ---    --------    --------    --------   --------
Balance at December 31,
 1999...................  5,644      1       2,219      (1,780)    (19,854)   (19,414)
Stock options
 exercised..............  1,640    --          680         --          --         680
Repurchase of common
 stock .................    (96)   --          (38)        --          --         (38)
Deferred stock
 compensation, net of
 cancellations..........    --     --       80,970     (80,970)        --         --
Amortization of deferred
 stock compensation.....    --     --          --        7,903         --       7,903
Charge for accelerated
 vesting of employee
 stock options..........    --     --          405         --          --         405
Issuance of bridge loan
 with beneficial
 conversion feature.....    --     --        7,689         --          --       7,689
Issuance of preferred
 stock with beneficial
 conversion feature.....    --     --       44,150         --          --      44,150
Deemed dividend on
 preferred stock........    --     --      (44,150)        --          --     (44,150)
Net loss................    --     --          --          --      (53,311)   (53,311)
                          -----    ---    --------    --------    --------   --------
Balance at September 30,
 2000 (unaudited).......  7,188    $ 1    $ 91,925    $(74,847)   $(73,165)  $(56,086)
                          =====    ===    ========    ========    ========   ========
</TABLE>
    
 
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-5

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
 

<TABLE>
<CAPTION>
                             Period from
                            April 3, 1997    Year Ended        Nine Months
                              (date of        Dec. 31,       Ended Sept. 30,
                            inception) to -----------------  -----------------
                            Dec. 31, 1997  1998      1999     1999      2000
                            ------------- -------  --------  -------  --------
                                                               (unaudited)
<S>                         <C>           <C>      <C>       <C>      <C>
Cash flows from operating
 activities:
 Net loss..................    $  (664)   $(3,775) $(15,415) $(8,573) $(53,311)
 Adjustments to reconcile
  net loss to net cash used
  in operating activities:
 Depreciation and
  amortization.............         16        115       559      331     1,465
 Amortization of deferred
  compensation.............        --         --        394      184     7,903
 Amortization of
  accelerated vesting of
  stock options............        --         --        --       --        405
 Gain on sale of
  property.................        --          32       --       --        --
 Allowance for doubtful
  accounts.................        --         --         33      --        267
 Amortization of
  capitalized financing
  costs and debt
  discount.................        --         --        984      637       776
 Non-cash interest expense
  on bridge loans..........        --         --        --       --      7,689
 Changes in operating
  assets and liabilities:
  Accounts receivable......        --         --       (347)     (94)   (2,132)
  Deferred costs...........        --         --        --       --     (1,380)
  Inventories..............        --         --       (366)    (144)     (301)
  Other assets.............         (9)      (415)     (187)     (90)   (2,740)
  Accounts payable.........         90        167       672      134     9,190
  Deferred revenue.........        --         --        119       14     1,026
  Accrued liabilities......         45         84     1,921      826       (17)
                               -------    -------  --------  -------  --------
   Net cash used in
    operating activities...       (522)    (3,792)  (11,633)  (6,775)  (31,160)
                               -------    -------  --------  -------  --------
Cash flows from investing
 activities:
 Purchase of property and
  equipment................       (136)      (973)   (2,463)  (1,652)   (7,877)
 Increase in restricted
  cash.....................        --         --       (340)      (6)  (17,787)
 Purchase of marketable
  securities ..............     (1,470)    (6,451)   (5,906)  (1,582)   (4,013)
 Maturities of marketable
  securities ..............        --       2,665     3,365    3,389     1,250
 Proceeds from sale of
  marketable securities ...        --         804     1,740    1,625     4,089
 Proceeds from sale of
  property.................        --         198       --       --        --
                               -------    -------  --------  -------  --------
   Net cash provided by
    (used in) investing
    activities.............     (1,606)    (3,757)   (3,604)   1,774   (24,338)
                               -------    -------  --------  -------  --------
Cash flows from financing
 activities:
 Proceeds from issuance of
  common stock.............          3          5        42      --        680
 Proceeds from issuance of
  convertible preferred
  stock, net of issuance
  costs....................      2,164      9,983    18,740   17,851    68,177
 Proceeds from note
  receivable for preferred
  stock....................        --         --         76       76       --
 Repurchase common stock...        --          (2)       (2)      (2)      (38)
 Proceeds from convertible
  subordinated notes.......        --         --        750      --     14,000
 Proceeds from draw down of
  line of credit...........        --         --        --       --      5,000
 Repayment of line of
  credit...................        --         --        --       --     (5,000)
 Payments on capital lease
  obligations..............         (2)        (3)       (8)      (5)     (213)
                               -------    -------  --------  -------  --------
   Net cash provided by
    financing activities...      2,165      9,983    19,598   17,920    82,606
                               -------    -------  --------  -------  --------
Net increase in cash and
 cash equivalents..........         37      2,434     4,361   12,919    27,108
Cash and cash equivalents,
 beginning of period.......        --          37     2,471    2,471     6,832
                               -------    -------  --------  -------  --------
Cash and cash equivalents,
 end of period.............    $    37    $ 2,471  $  6,832  $15,390  $ 33,940
                               =======    =======  ========  =======  ========
Supplemental cash flow
 information:
 Taxes paid................    $     1    $     4  $      1  $   --   $      1
                               =======    =======  ========  =======  ========
 Interest paid.............    $   --     $   --   $    614  $   --   $    342
                               =======    =======  ========  =======  ========
Noncash investing and
 financing activities:
 Note receivable for
  preferred stock..........    $   --     $    76  $    --   $   --   $    --
                               =======    =======  ========  =======  ========
 Fixed assets acquired
  under capital lease......    $     8    $    14  $    --   $   --   $  2,209
                               =======    =======  ========  =======  ========
 Fixed assets acquired with
  accounts payable.........    $   --     $   --   $    643  $   --   $    --
                               =======    =======  ========  =======  ========
 Transfer of accounts
  payable to capital lease
  obligation...............    $   --     $   --   $    --   $   --   $    643
                               =======    =======  ========  =======  ========
 Issuance of warrants in
  conjunction with line of
  credit financing.........    $   --     $   --   $  1,042  $ 1,042  $    776
                               =======    =======  ========  =======  ========
 Deferred stock based
  compensation.............    $   --     $   --   $  2,174  $   674  $ 80,970
                               =======    =======  ========  =======  ========
 Conversion of convertible
  subordinated notes into
  convertible preferred
  stock....................    $   --     $   --   $    750  $   --   $ 14,000
                               =======    =======  ========  =======  ========
</TABLE>

 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-6

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   
Note 1 Organization     
 
  Formation and business of the Company
 
   Align Technology, Inc., (the "Company") was incorporated in April 1997 and
is engaged in the development, manufacturing and marketing of the Invisalign
System (the "System"), used for treating malocclusion, or the misalignment of
teeth. The System uses a series of clear plastic "Aligners" to move the
patients' teeth in small increments from their original state to a final
treated state. The Company has exited the development stage as of July 2000.
   
Note 2 Summary of Significant Accounting Policies     
 
  Basis of consolidation
 
   The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary. All intercompany transactions have been
eliminated in consolidation.
 
  Use of estimates
 
   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Unaudited interim results
 
   The accompanying interim consolidated financial statements for the nine
months ended September 30, 1999 and 2000, together with the related notes, are
unaudited. The unaudited interim financial statements have been prepared on the
same basis as the annual financial statements and, in the opinion of
management, reflect all adjustments, which include only normal recurring
adjustments, necessary to present fairly the Company's results of their
operations and their cash flows for the nine months ended September 30, 1999
and 2000. The results of operations for any interim period are not necessarily
indicative of the results of operations for the full year.
 
  Unaudited pro forma stockholders' equity
   
   If the offering contemplated by this prospectus is consummated, all of the
convertible preferred stock outstanding at September 30, 2000 will
automatically convert into 24,424,350 shares of common stock. Unaudited pro
forma stockholders' equity, as adjusted for the assumed conversion of the
preferred stock, is set forth on the balance sheet.     
 
  Fair value of financial instruments
 
   The carrying amounts of certain of the Company's financial instruments
including cash and cash equivalents, short-term investments and accounts
payable approximate fair value due to their short maturities. Based on
borrowing rates currently available to the Company for leases with similar
terms, the carrying value of its lease obligations approximates fair value.
 
                                      F-7

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  Cash and cash equivalents and restricted cash
 
   Cash equivalents are stated at cost, which approximates market value. The
Company considers all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents. The Company invests
primarily in money market funds and commercial paper, accordingly, these
investments are subject to minimal credit and market risks.
 
  Restricted cash
 
   Restricted cash as of December 31, 1999 primarily comprises amounts held on
deposit which is required as a collateral for an outstanding Line of Credit
(see Note 5) and for security on customer credit card transactions.
 
   Restricted cash as of September 30, 2000 is primarily comprised of $17.6
million held in escrow for deposits on future advertising (Note 4).
 
  Marketable securities
   
   Marketable securities are classified as available-for-sale in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting
for Certain Investments in Debt and Securities" and are carried at fair value.
Marketable securities classified as current assets have scheduled maturities of
less than one year. Unrealized holding gains or losses on such securities are
included in accumulated comprehensive income/(loss) in stockholders' deficit.
Realized gains and losses on sales of all such securities are reported in
earnings and computed using the specific identification cost method. There were
no realized or unrealized gains or losses as of December 31, 1998 and 1999.
    
   The cost and fair value of available-for-sale securities at December 31,
1998 are as follows (in thousands):
 

<TABLE>
<CAPTION>
                                                               Cost   Fair Value
                                                              ------- ----------
     <S>                                                      <C>     <C>
     Commercial paper........................................ $ 4,452   $4,452
                                                              -------   ------
                                                              $ 4,452   $4,452
                                                              =======   ======
</TABLE>

 
   The cost and fair value of available-for-sale securities at December 31,
1999 are as follows (in thousands):
 

<TABLE>
<CAPTION>
                                                               Cost   Fair Value
                                                              ------- ----------
     <S>                                                      <C>     <C>
     Commercial paper........................................ $ 1,239   $1,239
     Corporate notes.........................................     997      997
     Medium term notes.......................................   3,017    3,017
                                                              -------   ------
                                                              $ 5,253   $5,253
                                                              =======   ======
</TABLE>

 
  Certain risks and uncertainties
 
   The Company's operating results depend to a significant extent on the
Company's ability to market and develop its products. The life cycles of the
Company's products are difficult to estimate due in part to the effect of
future product enhancements and competition. The inability of the Company to
successfully develop and market its products as a result of
 
                                      F-8

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
competition or other factors would have a material adverse effect on the
Company's business, financial condition and results of operations.
 
   Financial instruments which potentially expose the Company to concentrations
of credit risk consist primarily of cash equivalents and accounts receivable.
The Company invests excess cash primarily in money market funds of major
financial institutions, commercial paper and notes. The Company provides credit
to customers in the normal course of business. Collateral is not required for
accounts receivable, but ongoing credit evaluations of customers' financial
condition are performed. The Company maintains reserves for potential credit
losses and such losses have been within management's expectations.
 
   In the U.S., the FDA regulates the design, manufacture, distribution,
preclinical and clinical study, clearance and approval of medical devices.
Products developed by the Company may require approvals or clearances from the
Food and Drug Administration ("FDA") or other international regulatory agencies
prior to commercialized sales. There can be no assurance that the Company's
products will receive any of the required approvals or clearances. If the
Company was denied approval or clearance or such approval was delayed, it may
have a material adverse impact on the Company.
 
   The Company has manufacturing operations located outside the United States.
The Company currently relies on its manufacturing facilities in Pakistan to
create virtual treatment plans with the assistance of sophisticated software.
In addition, the Company relies on third party manufacturers in Mexico to
fabricate Aligners and to ship the completed product to the Company's
customers. The Company's reliance on international operations exposes it to
related risks and uncertainties, including; difficulties in staffing and
managing international operations; controlling quality of manufacture;
political, social and economic instability; interruptions and limitations in
telecommunication services; product and/or material transportation delays or
disruption; trade restrictions and changes in tariffs; import and export
license requirements and restrictions; fluctuations in currency exchange rates;
and potential adverse tax consequences. If any of these risks materialize, the
Company's international manufacturing operations, as well as its operating
results, may be harmed.
 
  Inventories
 
   Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market.
 
  Property and equipment
 
   Property and equipment are stated at historical cost less accumulated
depreciation and amortization. Depreciation and amortization are computed using
the straight-line method over the estimated useful lives of the assets, which
range from three to seven years. Amortization of leasehold improvements is
computed using the straight-line method over the estimated useful lives of the
assets, or the remaining lease term, whichever is shorter. Upon sale or
retirement, the asset's cost and related accumulated depreciation are removed
from the accounts and any related gain or loss is reflected in operations.
 
  Website development costs
 
   The Company accounts for website development and related costs in accordance
with the AICPA Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed
 
                                      F-9

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
   
or Obtained for Internal Use." Website development and related costs consist of
external and internal costs incurred to purchase and implement the website
software and significant enhancements used in the Company's business. Costs
incurred in the development of application and infrastructure of the website
are capitalized and amortized over the useful life of the website. Website
development costs of $35,000 had been capitalized as of December 31, 1999.
Amortization of website development costs commenced in April 2000 upon launch
of the website.     
   
   Internal and external costs of designing, creating and maintaining website
content, graphics and user interface on the website are expensed as incurred
and included in the accompanying Statement of Operations in accordance with SOP
98-1.     
 
   There was no other software developed or obtained for internal use or
capitalized in the period. No amortization of other software developed or
obtained was made in the period ended December 31, 1999.
 
  Impairment of long-lived assets
 
   The Company identifies and records impairment losses on long-lived assets
used in operations when events and circumstances indicate that the assets are
less than the carrying amounts of those assets. Recoverability is measured by
comparison of the assets carrying amount to future net undiscounted cash flows
the assets are expected to generate. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the projected discounted future net
cash flows arising from the asset. None of these events have occurred with
respect to the Company's long-lived assets, which consist primarily of
computers and equipment, furniture and fixtures and leasehold improvements.
 
  Revenue recognition
   
   Revenue from the Invisalign product and Ancillary product sales are
recognized upon receipt of a purchase order and product shipment provided no
significant obligations remain and collection of the receivables is deemed
probable. Up-front fees received in connection with the Invisalign product are
deferred and recognized over the associated product shipments. The costs of
producing the ClinCheck treatment plan, which are incurred prior to the
production of Aligners, are capitalized and recognized as related revenues are
earned.     
 
   The sales recorded by the Company through September 30, 2000 have had
significant losses. The Company estimates its loss on the sale, and records a
provision for the entire amount of estimated loss in the period such losses are
determined.
 
  Research and development
 
   Research and development costs are expensed as incurred.
 
  Advertising costs
 
   The cost of advertising is expensed as incurred. For the period from April
3, 1997 (date of inception) to December 31, 1997 and the years ended December
31, 1998 and December 31, 1999, advertising costs totaled none, $31,000 and
$1,722,000, respectively.
 
                                      F-10

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  Income taxes
 
   Income taxes are recorded under the liability method, under which deferred
tax assets and liabilities are determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.
 
  Accounting for stock-based compensation
 
   The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and complies with the
disclosure provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123").
 
   Under APB 25, compensation expense for grants to employees is based on the
difference, if any, on the date of the grant, between the fair value of the
Company's stock and the option's exercise price. SFAS 123 defines a "fair
value" based method of accounting for an employee stock option or similar
equity investment. The pro forma disclosure of the difference between
compensation expense included in net loss and the related cost measured by the
fair value method is presented in Note 8.
 
   The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of SFAS 123 and Emerging Issues Task Force Issue
No. 96-18, "Accounting for Equity Instruments that are Issued to Other Than
Employees, or in Conjunction with Selling Goods and Services," and Financial
Accounting Standards Board Interpretation No. 28, "Accounting for Stock
Appreciation Rights and Other Variable Stock Option or Award Plan" ("FIN 28").
 
  Segments
 
   The Company operates in one segment, using one measurement of profitability
to manage its business. There were no export sales.
 
   The Company maintains two facilities in Pakistan which generate no revenue
and are comprised of none and $256,000 of identifiable assets as of December
31, 1998 and 1999, respectively.
 
  Pro forma net loss per share (unaudited)
   
   Pro forma net loss per share for the year ended December 31, 1999 and the
nine month period ended September 30, 2000 was computed using the weighted
average number of shares of common stock outstanding, including the pro forma
effect of the automatic conversion of all of the Company's preferred stock into
shares of the Company's common stock effective upon the closing of the
Company's initial public offering as if such conversion occurred on January 1,
1999 or at the date of original issuance, if later. The resulting pro forma
adjustment includes an increase in the weighted average shares used to compute
pro forma basic net loss per share of 12,460,000 shares and 19,836,000 shares
for the year ended December 31, 1999 and the nine month period ended September
30, 2000, respectively. The calculation of pro forma diluted net loss per share
excludes warrants and stock options as their effect would be anti-dilutive.
    
                                      F-11

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  Net loss per share
 
   Basic and diluted net loss per share are computed by dividing the net loss
for the period by the weighted average number of shares of common stock
outstanding during the period. The calculation of diluted net loss per share
excludes potential common stock if their effect is anti-dilutive. Potential
common stock consists of common stock subject to repurchase, incremental common
shares issuable upon the exercise of stock options and warrants and shares
issuable upon conversion of the preferred stock.
 
   The following is a reconciliation of the numerator (net loss) and the
denominator (number of shares) used in the basic and diluted EPS calculations
(in thousands, except per share data):
 

<TABLE>   
<CAPTION>
                          Period from
                         April 3, 1997                             Nine Months
                           (date of                              Ended September
                         inception) to  Year Ended   Year Ended        30,
                         December 31,  December 31, December 31, -----------------
                             1997          1998         1999      1999      2000
                         ------------- ------------ ------------ -------  --------
                                                                   (unaudited)
<S>                      <C>           <C>          <C>          <C>      <C>
Basic and diluted:
 Net loss available to
  common stockholders...    $ (664)      $(3,775)     $(15,415)  $(8,573) $(97,461)
                            ------       -------      --------   -------  --------
 Weighted-average common
  shares outstanding....     5,558         5,620         5,334     5,318     6,254
 Less: Weighted average
  shares subject to
  repurchase............     4,016         2,778         1,116     1,258       820
                            ------       -------      --------   -------  --------
 Weighted-average shares
  used in basic and
  diluted net loss per
  share.................     1,542         2,842         4,218     4,060     5,434
                            ======       =======      ========   =======  ========
Net loss per share
 available to common
 stockholders...........    $(0.43)      $ (1.33)     $  (3.65)  $ (2.11) $ (17.94)
                            ======       =======      ========   =======  ========
Pro forma basic and diluted:
 Net loss..........................................   $(15,415)           $(53,311)
                                                      ========            ========
 Adjustments to reflect weighted-average effect of
  assumed conversion of preferred stock
  (unaudited)......................................     12,460              19,836
                                                      ========            ========
 Weighted-average shares used in pro forma basic
  and diluted net loss per share (unaudited).......     16,678              25,270
                                                      ========            ========
 Pro forma basic and diluted net loss per share
  (unaudited)......................................   $  (0.92)           $  (2.11)
                                                      ========            ========
</TABLE>
    
 
 
                                      F-12

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
   The following table sets forth potential shares of common stock that are not
included in the diluted net loss per share because to do so would be anti-
dilutive for the periods indicated (in thousands):
 

<TABLE>   
<CAPTION>
                                     Period from
                                    April 3, 1997                 Nine Months
                                      (date of     Year Ended        Ended
                                    inception) to  December 31,  September 30,
                                    December 31,  ------------- ---------------
                                        1997       1998   1999   1999    2000
                                    ------------- ------ ------ ------- -------
                                                                  (unaudited)
<S>                                 <C>           <C>    <C>    <C>     <C>
Preferred stock (as if
 converted).......................      4,350     11,067 16,253  16,253  24,351
Options to purchase common stock..        195        952  1,285   1,540   4,305
Common stock subject to
 repurchase.......................      3,860      1,779    654     784   1,394
Warrants..........................        --         --     533     533     646
                                        -----     ------ ------ ------- -------
                                        8,405     13,798 18,725  19,110  30,696
                                        =====     ====== ====== ======= =======
</TABLE>
    
 
  Recent accounting pronouncements
 
   In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative investments, including certain derivative
instruments embedded in other contracts, and for hedging activities. In July
1999, the FASB issued SFAS No. 137, "Accounting for Derivative and Hedging
Activities--Deferral of the Effective Date of FASB Statement No. 133." SFAS No.
137 deferred the effective date of SFAS No. 133 until fiscal years beginning
after June 15, 2000. The Company will adopt SFAS No. 133 during fiscal 2001. To
date, the Company has not engaged in derivative or hedging activities.
   
   In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements," which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements
filed with the SEC. SAB 101 outlines the basic criteria that must be met to
recognize revenue and provides guidance for disclosures related to revenue
recognition policies. In June 2000, the SEC issued SAB 101B, "Second Amendment:
Revenue Recognition in Financial Statements" ("SAB 101B"). SAB 101B deferred
the implementation date of SAB 101 until no later than the fourth fiscal
quarter of fiscal years beginning after December 15, 1999. The Company has
adopted the provisions of SAB 101 and believes that its current revenue
recognition is in compliance with the SAB.     
 
   In March 2000, the FASB issued Interpretation No. 44, ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation--an
Interpretation of APB 25." This interpretation clarifies (a) the definition of
employee for purposes of applying Opinion 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. This interpretation is effective July 1,
2000, but certain conclusions in this interpretation cover specific events that
occur after either December 15, 1998, or January 12, 2000. To the extent that
this interpretation covers events occurring during the period after December
15, 1998, or January 12, 2000, but before the effective date of July 1, 2000,
the effects of applying this interpretation are recognized on a prospective
basis from July 1, 2000. The adoption of FIN 44 did not have a material impact
on the Company's financial statements.
 
                                      F-13

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
   
   In March 2000, the Emerging Issues Task Force reached a consensus on Issue
00-2, Accounting for the Costs of Developing a Web Site ("EITF 00-2"). In
general, EITF 00-2 states that the costs of developing a web site should be
accounted for under provisions of statement of position (SOP) 98-1, Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use. The
adoption of the provisions of EITF 00-2 did not have a material effect on the
consolidated financial statements of the Company.     
   
Note 3 Balance Sheet Components     
 
   Inventories consist of the following (in thousands):
 

<TABLE>
<CAPTION>
                                                      December 31, September 30,
                                                          1999         2000
                                                      ------------ -------------
                                                                    (unaudited)
     <S>                                              <C>          <C>
     Raw materials..................................      $ 73         $432
     Finished goods.................................       293          235
                                                          ----         ----
                                                          $366         $667
                                                          ====         ====
</TABLE>

 
   As of December 31, 1998, the Company had no inventory.
 
   Property and Equipment consist of the following (in thousands):
 

<TABLE>
<CAPTION>
                                                                  December 31,
                                                                  -------------
                                                                  1998    1999
                                                                  -----  ------
     <S>                                                          <C>    <C>
     Computer hardware........................................... $ 524  $1,580
     Clinical equipment..........................................   156   1,537
     Computer software...........................................     9     302
     Furniture and fixtures......................................   129     313
     Leasehold improvements......................................    83     275
                                                                  -----  ------
                                                                    901   4,007
     Less: Accumulated depreciation and amortization.............  (131)   (690)
                                                                  -----  ------
                                                                  $ 770  $3,317
                                                                  =====  ======
</TABLE>

 
   Property and equipment includes $21,400 and $18,957 of assets under capital
leases at December 31, 1998 and 1999, respectively. Accumulated amortization of
assets under capital leases totaled $4,103 and $9,607 at December 31, 1998 and
1999, respectively.
 
   Depreciation expense was $16,000, $115,000 and $559,000 for the period from
April 3, 1997 (date of inception) to December 31, 1997 and the years ended
December 31, 1998 and 1999, respectively.
 
   Accrued and other current liabilities consist of the following (in
thousands):
 

<TABLE>
<CAPTION>
                                                                     December
                                                                        31,
                                                                    -----------
                                                                    1998  1999
                                                                    ---- ------
     <S>                                                            <C>  <C>
     Accrued payroll and benefits.................................. $ 33 $  744
     Accrued marketing expenses....................................  --     385
     Accrued loss reserve on product sales.........................  --     351
     Other.........................................................   96    570
                                                                    ---- ------
                                                                    $129 $2,050
                                                                    ==== ======
</TABLE>

 
                                      F-14

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
   
Note 4 Commitments and Contingencies     
 
  Operating lease
 
   The Company leases two facilities in Sunnyvale, California expiring in
September and December 2000. One lease was paid in its entirety in advance in
1998, and accordingly is being amortized over the life of the lease. Total rent
expense was $16,000, $147,000 and $295,000 for the period from April 3, 1997
(date of inception) to December 31, 1997, and for the years ended December 31,
1998 and 1999, respectively. The future minimum lease payments under these
noncancelable operating leases for the year ending December 31, 2000 is
$622,000.
 
   In June 2000, the Company entered into a noncancelable operating lease to
lease a manufacturing facility in Santa Clara, California. The lease term is
for five years, commencing July 1, 2000. The Company paid $1,175,000 security
deposit upon execution of the lease.
 
   In July 2000, the Company entered into an agreement to sublease additional
manufacturing space in Santa Clara, California. The lease term begins on July
14, 2000 and expires on August 14, 2002. A security deposit of $184,448 was
paid by the Company upon execution of the lease.
 
   The minimum lease payments under these leases as of September 30, 2000 are
$1,450,000, $2,969,000, $2,701,000, $2,264,000, $2,355,000 and $1,177,000 for
the years ended December 31, 2000, 2001, 2002, 2003, 2004 and thereafter,
respectively.
 
  Advertising Commitments
 
   In May 2000, the Company entered into an escrow agreement between TBWA
Chiat/Day, Inc. ("TBWA") and Greater Bay Trust Company ("Escrow Agent"). TBWA
has been employed by the Company to procure non-cancellable television and
radio media time on behalf of the Company. In consideration of the services
provided by TBWA, the Company has agreed to deposit a certain amount with the
Escrow Agent for purposes of repaying TBWA. At September 30, 2000, the Company
had $17,787,000 held in money market funds with the Escrow Agent. This amount
has been classified as restricted cash.
 
  Contingencies
 
   The Company was involved in a patent infringement proceeding with a
plaintiff asserting infringement of two of its patents. On June 30, 2000, the
Company entered into a stipulation of dismissal with the plaintiff whereby the
plaintiff agreed not to recommence a suit against the Company for two years
with respect to the disputed patents. Pursuant to the agreement, if a patent is
subsequently issued to the plaintiff and the plaintiff believes the Company is
infringing it, then the plaintiff may commence suit after one year from the
effective date of the agreement and include in such action claims involving the
two previously disputed patents. If any such action is successful, it could
result in a significant monetary damages judgment against the Company.
 
   The Company is subject to claims and assessments from time to time in the
ordinary course of business. Management does not believe that any such matters,
individually or in the aggregate, will have a material adverse effect on the
Company's financial condition.
 
                                      F-15

<PAGE>
 
                            ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  Capitalized lease obligations
 
   The Company is leasing equipment from several leasing companies. Under the
terms of the capital lease obligations, which bear interest at 10.155% at
December 31, 1998 and December 31, 1999 and expire from May 2000 through
October 2001, the Company is responsible for insurance, transportation and
support service costs.
 
   Future minimum payments under capital lease obligations are as follows (in
thousands):
 

<TABLE>
<CAPTION>
     Year Ended December 31,
     -----------------------
     <S>                                                                    <C>
       2000................................................................ $ 6
       2001................................................................   4
                                                                            ---
       Minimum lease payments..............................................  10
       Less: Amount representing interest..................................  (1)
                                                                            ---
       Present value of minimum lease payments.............................   9
       Amount due within one year..........................................  (6)
                                                                            ---
       Amount due after one year........................................... $ 3
                                                                            ===
</TABLE>

 
   In February 2000, the Company leased a stereolithography apparatus from
Leasing Technologies International, Inc. ("LTI") under a master lease
agreement entered into between the Company and LTI in July 1999. Under the
terms of the lease, the value of the leased equipment is $729,000 at a
borrowing rate of 11.154% per annum. The term of the lease is for 48 months
with a bargain purchase option at the end of the lease to purchase the
equipment at 15% of the purchase price. Accordingly, the Company has
capitalized the leased equipment in accordance with SFAS 13, "Accounting for
Leases."
 
   In May and June 2000, the Company leased two stereolithography machines
from 3D Capital Corporation ("3D") under a Master Lease Agreement entered into
in September 1999 for a total value of $1,479,000 at a borrowing rate of
6.533% per annum for a period of 60 months. The Company has capitalized these
machines in accordance with SFAS 13.
   
Note 5 Credit Facilities     
 
   The Company had a $450,000 line of credit which expired on March 18, 1999.
This line of credit was not drawn against in either the year ended December
31, 1998 or December 31, 1999.
   
   The Company entered into a line of credit agreement (the "Line") with a
financing institution (the "Lender") on April 12, 1999 to make available up to
an aggregate principal amount of $5,000,000. The Line is available in minimum
advances of $1,000,000 with each advance to be evidenced by a note bearing
interest at 12% per annum. The agreement requires that each note shall be
payable in 36 monthly installments of principal and interest. The assets of
the Company are pledged as collateral for the loan agreement. Under the Line,
the Company is required to maintain certain negative and financial covenants,
which require, among other things, written consent from the Lender prior to
the declaration and payment of dividends and sale of material assets of the
Company. The Company did not borrow money under this agreement in 1999. A
secured promissory note for the entire $5,000,000 was executed on April 12,
2000. In connection with this Line the Company issued 533,334 warrants to
purchase convertible preferred stock (Note 6).     
 
                                     F-16

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
   In July 1999, the Company entered into an agreement with a leasing company
for a leasing line of credit of $1,000,000. Amounts borrowed under this
agreement bear interest at a rate of 11.154% and are collateralized by leased
assets. At December 31, 1999, the Company had not borrowed against this line of
credit.
 
   In September 1999, the Company entered into an agreement with a leasing
company for a leasing line of credit of $3,000,000. Amounts borrowed under this
agreement bear interest at a rate of 12.00% and are collateralized by leased
assets. At December 31, 1999, the Company had not borrowed against this line of
credit.
   
   In January 2000, the Company exercised its right to extend its draw period
relating to the Line entered into with the Lender. in April 1999 from an
original draw expiration date of January 2000 to October 2000. In conjunction
with the draw period extension, the Company issued the Lender a warrant to
purchase 112,500 shares of the Company's Series C preferred stock at a price of
$4.00 per share (Note 6). In April 2000, the Company drew down a total of
$5,000,000 against the line. The note was subsequently repaid in full in July
2000.     
   
Note 6 Convertible Preferred Stock     
 
  Convertible preferred stock
 
   Convertible preferred stock consists of the following (in thousands):
 

<TABLE>   
<CAPTION>
                                                   December 31,
                                                  --------------- September 30,
                                                   1998    1999       2000
                                                  ------- ------- -------------
                                                                   (unaudited)
<S>                                               <C>     <C>     <C>
Series A: 4,350 shares authorized, issued and
 outstanding at December 31, 1998, 1999 and
 September 30, 2000 (unaudited) (liquidation
 preference at September 30, 2000 (unaudited)
 $2,175)........................................  $ 2,164 $ 2,164   $  2,164
 
Series B: 7,650 shares authorized; 6,717 shares
 issued and outstanding at December 31, 1998,
 1999 and September 30, 2000 (unaudited)
 (liquidation preference at September 30, 2000
 (unaudited) $10,076)...........................   10,059  10,059     10,059
 
Series C: no shares authorized at December 31,
 1998 and 5,312 shares authorized at December
 31, 1999 and September 30, 2000 (unaudited); no
 shares issued and outstanding at December 31,
 1998 and 5,186 shares issued and outstanding at
 December 31, 1999 and September 30, 2000
 (unaudited) (liquidation preference at
 September 30, 2000 (unaudited) $20,745)........      --   19,490     19,490
 
Series D: none, none and 9,898 shares authorized
 at December 31, 1998, 1999 and September 30,
 2000 (unaudited), respectively; none, none and
 8,098 shares issued and outstanding at
 December 31, 1998, 1999 and September 30, 2000
 (unaudited), respectively (liquidation
 preference at September 30, 2000 (unaudited)
 $86,038).......................................      --      --      82,177
                                                  ------- -------   --------
                                                  $12,223 $31,713   $113,890
                                                  ======= =======   ========
</TABLE>
    
 
 
                                      F-17

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  Sale of preferred securities
   
   In May and June 2000, the Company sold 8,097,672 shares of Series D
preferred shares for gross proceeds of $86,000,000. Included in the 8,097,672
total shares issued, the Company issued 1,321,202 Series D shares upon the
conversion of the Convertible Subordinated Promissory Notes financing (the
"Notes") and associated interest as discussed below. The issuance of Series D
convertible preferred stock resulted in a beneficial conversion feature,
calculated in accordance with Emerging Issues Task Force Issue No. 98-5,
"Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios." Accordingly, the Company has
recognized $44,150,000 as a charge to additional paid in capital to account for
the deemed dividend on the preferred stock as of the issuance date in the
September 30, 2000 unaudited interim financial statements. In addition, the
Series D preferred shares have certain contingent rights and preferences which,
if perfected, could cause the Company to record an incremental beneficial
conversion feature charge.     
 
   The Company has accounted for a beneficial conversion feature embedded in
convertible subordinated notes (the "Notes") entered into on May 15, 2000. The
beneficial conversion feature, amounting to $7,689,000, represents an
additional interest yield on the debt which may be converted at any time at the
option of the holders into immediately convertible preferred stock.
Accordingly, the beneficial conversion feature has been recorded as an
immediate charge to interest expense in May 2000. Under the terms of the loan
agreement, the Notes, and associated accrued interest, were converted into the
Company's convertible Series D preferred stock ("Series D shares") in May 2000.
The Company sold the Notes, in the aggregate face amount of $14,000,000,
bearing a stated interest rate of 10% per annum and a maturity date one month
from the date of issuance.
 
  Convertible subordinated note
   
   During 1999, the Company issued $750,000 in convertible subordinated notes
payable to certain preferred stockholders. The amount subsequently converted
into 187,500 shares of Series C convertible preferred stock at $4.00 per share.
    
   The rights, preferences and privileges of Series A, Series B, Series C and
Series D preferred stock are as follows:
 
  Voting rights
 
   Holders of Series A, Series B, Series C and Series D preferred stock are
entitled to one vote for each share of common stock into which such shares can
be converted. Certain votes, as defined in the Company's Articles of
Incorporation, require the approval of at least a majority of Series A, Series
B, Series C and Series D preferred stock stockholders. The holders of Series A
and Series B preferred stock, voting as separate classes, are each entitled to
elect one member to the Company's Board of Directors. Beginning January 1,
2001, the holders of the Series D preferred stock are entitled to elect one
member of Align's Board of Directors in the event that the Company has not yet
closed an initial public offering of its common stock at that time. The holders
of common stock and Preferred Stock, voting together as a single class, are
entitled to elect all remaining members of the Board of Directors.
 
  Dividends
 
   The holders of Series A, Series B, Series C and Series D preferred stock are
entitled to noncumulative dividends, when and if declared by the Board of
Directors, in the amount of
 
                                      F-18

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
   
$0.04, $0.12, $0.32 and $0.85, respectively, per share per annum, on each
outstanding share of Series A, Series B, Series C and Series D preferred stock,
subject to certain adjustments. No dividends have been declared or paid as of
June 30, 2000.     
 
  Conversion rights
   
   Shares of Series A, Series B, Series C and Series D preferred stock are
convertible into common stock at the option of the holder or automatically upon
a public offering of at least $75,000,000 of common stock or upon the written
consent of the holders of more than two-thirds of the then outstanding shares
of Series A, Series B, Series C and Series D preferred stock. The conversion
rate is one share of common stock for one share of preferred stock (subject to
certain adjustments). In the event of a sale of common stock below any
preferred stock conversion price, such preferred stock conversion price shall
be adjusted. In addition, in the event that the Company issues more than
3,331,978 additional shares of common stock, as defined, before the earlier of
January 31, 2001, or the effectiveness of a registration statement, the Series
D conversion price will be adjusted as of such date. As of September 30, 2000,
the Company has issued 274,030 stock options above the 3,331,978 shares as
defined above. As a result the Series D stockholders would receive an
additional 73,326 shares of common stock upon conversion of the preferred
stock.     
 
  Liquidation
   
   In the event of liquidation or sale of the Company, each class of preferred
stock shall be entitled to be paid out of the assets of the Company an amount
of $0.50, $1.50, $4.00 and $10.625, respectively, for the Series A, Series B,
Series C and Series D, plus all declared but unpaid dividends relating to
preferred stock.     
 
   Holders of Series D preferred stock have preference over holders of Series
A, Series B, Series C and common stockholders. Holders of Series C preferred
stock have preference over holders of Series A and Series B preferred stock and
common stockholders. Holders of Series B preferred stock have preference over
holders of Series A preferred stock. Holders of Series A preferred stock have
preference over common stockholders.
   
   The remaining assets of the Company shall be distributed among all
stockholders on an as-if-converted basis until such time as the Series D
preferred stockholders have received $31.875 per share, Series C preferred
stockholders have received $8.00 per share, the Series B preferred stockholders
have received $4.50 per share and the Series A preferred stockholders have
received $2.00 per share. The remaining assets of the Company shall then be
distributed ratably to the common stockholders.     
 
   The following events are considered a liquidation: (i) any consolidation,
merger or corporate reorganization in which the stockholders immediately prior
to such transaction own less than 50% of the Company's voting power immediately
after the transaction; or any transaction or series of related transactions in
which in excess of 50% of the Company's voting power is transferred and (ii) a
sale, lease or other disposition of all or substantially all of the Company's
assets.
 
  Warrants
   
   In April 1999, in connection with a financing arrangement, the Company
issued 533,334 warrants to purchase Series B convertible preferred stock at
$1.50 per share. The     
 
                                      F-19

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
warrants are exercisable for a period of ten years from the date of issuance or
5 years from the Company's initial public offering of common stock, whichever
is shorter. The aggregate fair value of these warrants of $1,042,000 was
calculated using the Black-Scholes pricing method and has been charged to
preferred stock warrants. The related amount is being amortized as interest
expense over the life of the notes. A total of $984,000 was amortized in 1999.
   
   In conjunction with the draw period extension, the Company issued the Lender
a warrant to purchase 112,500 shares of the Company's Series C preferred stock
at a price of $4.00 per share. The warrants are exercisable for a period of ten
years from the date of issuance. The fair value of the warrants was calculated
using the Black-Scholes pricing method and has been charged to preferred stock
warrants and amortized as interest expense over the life of the note. A total
of $776,000 was amortized during the nine months ended September 30, 2000 over
the total amount discounted from the value of the note of $776,000.     
   
Note 7 Common Stock     
 
  Common stock
 
   The holders of common stock, voting as a separate class, may elect two
members of the Board of Directors. Any additional members of the Board of
Directors shall be elected by the holders of common stock and preferred stock
voting together as a class.
 
   The holders of common stock are also entitled to receive dividends whenever
funds are legally available and when declared by the Board of Directors subject
to the prior rights of holders of all classes of stock having priority rights
as to dividends. No dividends have been declared or paid as of September 30,
2000.
 
  Restricted stock purchase agreement
   
   The Company has sold shares of its common stock to founders and employees of
the Company under agreements which provide for repurchase of the stock by the
Company at the stock's original purchase price upon termination of employment.
The Company's right to repurchase lapses at any time prior to the earlier of:
(i) three years from date of agreement; (ii) the closing of an "Asset Transfer"
or an "Acquisition"; or (iii) the voluntary liquidation, dissolution, or
winding up of the Company. At December 31, 1998 and 1999, 1,778,932 and 653,542
shares of common stock, respectively, were subject to repurchase, including
104,516 shares of common stock which were subject to a right of repurchase at
the Company's discretion until October 2002.     
   
Note 8 Stock Options     
   
   In April 1997, the Company adopted the 1997 Equity Incentive Plan (the
"Plan") under which the Board of Directors may issue incentive and non-
qualified stock options to employees, directors and consultants. The Company
has reserved 9,709,092 shares of common stock for issuance under the Plan. The
Board of Directors has the authority to determine to whom options will be
granted, the number of shares, the term and exercise price. Options are to be
granted at an exercise price not less than fair market value for incentive
stock options or 85% of fair market value for non-qualified stock options. For
individuals holding more than 10% of the voting rights of all classes of stock,
the exercise     
 
                                      F-20

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
price of incentive stock options will not be less than 110% of fair market
value. Options become exercisable and vest on a cumulative basis at the
discretion of the Board of Directors but at a rate not less than 20% per year
over five years from the date of grant and generally vest at a rate of 25% on
the first anniversary and 1/48th each month thereafter. The term of the options
is no longer than five years for incentive stock options for which the grantee
owns greater than 10% of the voting power of all classes of stock and no longer
than ten years for all other options.
 
   Activity under the Plan is set forth below (in thousands, except per share
data):
 

<TABLE>   
<CAPTION>
                                                       Options Outstanding
                                                    --------------------------
                                                            Weighted
                                           Shares           Average
                                          Available         Exercise Aggregate
                                          for Grant Shares   Price     Price
                                          --------- ------  -------- ---------
<S>                                       <C>       <C>     <C>      <C>
 Initial shares reserved.................   2,509      --   $   --    $  --
 Options granted.........................  (1,174)   1,174  $0.0093       11
 Options exercised.......................     --      (979) $0.0020       (2)
                                           ------   ------            ------
Balances at December 31, 1997............   1,335      195  $0.0451        9
 Options granted.........................  (1,009)   1,009  $0.1040      105
 Options exercised.......................     --       (92) $0.0543       (5)
 Options cancelled.......................     160     (160) $0.0500       (8)
                                           ------   ------            ------
Balances at December 31, 1998............     486      952  $0.1061      101
 Increase in pool........................   1,600      --       --       --
 Options granted.........................    (737)     737  $0.1953      144
 Options exercised.......................     --      (331) $0.1269      (42)
 Options cancelled.......................      73      (73) $0.1369      (10)
                                           ------   ------            ------
Balances at December 31, 1999............   1,422    1,285  $0.1501      193
 Increase in pool........................   5,600      --       --       --
 Options granted.........................  (4,818)   4,818  $0.8188    3,945
 Options exercised.......................     --    (1,640) $0.4146     (680)
 Options cancelled.......................     158     (158) $0.2531      (40)
                                           ------   ------            ------
Balances at September 30, 2000
 (unaudited).............................   2,362    4,305  $0.7939   $3,418
                                           ======   ======            ======
</TABLE>
    
 
   The options outstanding and currently exercisable by exercise price at
December 31, 1999 are as follows:
 

<TABLE>   
<CAPTION>
                          Options Outstanding and Exercisable
             -------------------------------------------------------------------------------
                                                                                  Weighted
                                                                                   Average
                                         Number                                   Remaining
                                       Outstanding                               Contractual
             Exercise                      and                                      Life
              Price                    Exercisable                                 (Years)
             --------                  -----------                               -----------
             <S>                       <C>                                       <C>
              $0.05                         324                                     8.38
               0.15                         808                                     9.20
               0.30                          88                                     9.65
               0.40                          65                                     9.81
                                          -----
                                          1,285
                                          =====
</TABLE>
    
 
                                      F-21

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
   The options outstanding and currently exercisable by exercise price at
September 30, 2000 are as follows (unaudited) (in thousands, except per share
data):
 

<TABLE>   
<CAPTION>
                          Options Outstanding and Exercisable
             -------------------------------------------------------------------------------
                                                                                  Weighted
                                                                                   Average
                                         Number                                   Remaining
                                       Outstanding                               Contractual
             Exercise                      and                                      Life
              Price                    Exercisable                                 (Years)
             --------                  -----------                               -----------
             <S>                       <C>                                       <C>
             $0.05                          116                                     7.72
              0.15                          360                                     8.59
              0.30                           62                                     8.91
              0.40                        1,084                                     9.54
              1.07                        2,683                                     9.96
                                          -----
                                          4,305
                                          =====
</TABLE>
    
 
   The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-
Based Compensation." Had compensation cost for the Incentive Stock Plan been
determined based on the fair value at the grant date for awards during 1997,
1998 and 1999, consistent with the provisions of SFAS No. 123, the Company's
pro forma net loss and pro forma net loss per share would have been as follows
(in thousands, except per share amounts):
 

<TABLE>   
<CAPTION>
                                                Period from
                                               April 3, 1997
                                                 (date of      Years Ended
                                               inception) to   December 31,
                                               December 31,  -----------------
                                                   1997       1998      1999
                                               ------------- -------  --------
   <S>                                         <C>           <C>      <C>
   Net loss, as reported.....................     $ (664)    $(3,775) $(15,415)
   Net loss, pro forma.......................     $ (664)    $(3,777) $(15,519)
   Net loss per share, as reported, basic and
    diluted..................................     $(0.43)    $ (1.33) $  (3.65)
   Net loss per share, pro forma, basic and
    diluted..................................     $(0.43)    $ (1.33) $  (3.68)
</TABLE>
    
 
   Such pro forma disclosure may not be representative of future compensation
cost because options vest over several years and additional grants are
anticipated to be made each year.
 
   The value of each option grant is estimated on the date of grant using the
minimum value method with the following weighted assumptions:
 

<TABLE>
<CAPTION>
                                          Period from
                                         April 3, 1997
                                           (date of          Years Ended
                                         inception) to      December 31,
                                         December 31,  ------------------------
                                             1997         1998         1999
                                         ------------- -----------  -----------
   <S>                                   <C>           <C>          <C>
   Risk-free interest rate..............     6.11%     4.22 - 5.63% 4.91 - 6.03%
   Expected life........................    5 years      5 years      5 years
   Expected dividends...................       0%           0%           0%
</TABLE>

 
   Volatility was not included in the calculation of the fair value of options
grants as the Company's equity securities are not publicly traded.
 
 
                                      F-22

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
   
   The weighted average per share fair values of options granted during the
period from April 3, 1997 (date of inception) to December 31, 1997, and the
years ended December 31, 1998 and 1999 were $0.03, $0.06 and $3.285,
respectively.     
 
  Stock-based compensation
 
   During the years ended December 31, 1998 and 1999, the Company recorded
unearned stock-based compensation for the excess of the deemed fair market
value over the exercise price at the date of grant of none and $1,772,000,
respectively, related to options granted to employees. The Company has recorded
additional unearned stock-based compensation of $73,602,000 related to options
issued to employees to purchase common stock issued through September 30, 2000.
The compensation expense is being recognized over the option vesting period of
four years using the straight-line method. For the period from April 3, 1997
(date of inception) to December 31, 1997 and the years ended December 31, 1998
and 1999, the Company recorded amortization of stock-based compensation of
none, none and $267,000, respectively, in connection with options granted to
employees.
 
   During the years ended December 31, 1998 and 1999, the Company recorded
unearned stock-based compensation of none and $402,000, respectively, related
to options granted to consultants. For options granted to consultants, the
Company determined the fair value of the options using the Black-Scholes
pricing model. The Company has recorded additional unearned stock-based
compensation of $7,368,000 related to options issued to consultants to purchase
common stock issued through September 30, 2000. The compensation expense is
being recognized over the option vesting period of four years, using the method
presented by FIN 28. For the period from April 3, 1997 (date of inception) to
December 31, 1997 and the years ended December 31, 1998 and 1999, the Company
recorded amortization of stock-based compensation of none, none and $127,000,
respectively, in connection with options granted to consultants.
 
   Amortization of deferred stock compensation has been allocated to cost of
revenue, sales and marketing, general and administrative and research and
development expenses as follows (in thousands):
 

<TABLE>
<CAPTION>
                                        Period from
                                       April 3, 1997               Nine Months
                                         (date of    Years Ended      Ended
                                       inception) to December 31, September 30,
                                       December 31,  --------------------------
                                           1997       1998  1999  1999   2000
                                       ------------- ------ -------------------
                                                                   (unaudited)
   <S>                                 <C>           <C>    <C>   <C>   <C>
   Cost of revenue....................     $ --      $  --  $  80 $  21 $ 1,339
   Sales and marketing................       --         --    111    50   1,461
   General and administrative.........       --         --    106    46   3,374
   Research and development...........       --         --     97    70   1,729
                                           -----     ------ ----- ----- -------
                                           $ --      $  --  $ 394 $ 187 $ 7,903
                                           =====     ====== ===== ===== =======
</TABLE>

    
  Accelerated Vesting     
   
   During the nine month period ended September 30, 2000, the Company
accelerated the vesting of options to an employee in connection with a
severance package. The acceleration     
 
                                      F-23

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
   
was accounted for in accordance with FIN 44 as a one time charge to the
statement of operations. The change was equal to the intrinsic value difference
between the exercise price of the accelerated options and the fair value of the
common stock on the date of acceleration.     
   
Note 9 Income Taxes     
   
   No provision for federal or state income taxes has been recorded for the
years ended December 31, 1998 and 1999 as the Company incurred net operating
losses.     
 
   Deferred tax assets and liabilities consist of the following (in thousands):
 

<TABLE>
<CAPTION>
                                                                 Year Ended
                                                                December 31,
                                                               ----------------
                                                                1998     1999
                                                               -------  -------
   <S>                                                         <C>      <C>
   Deferred tax assets:
     Start-up costs........................................... $ 1,014  $ 2,514
     Net operating loss carryforwards.........................     695    3,968
     Research and development credit..........................     219      606
     Other....................................................      (4)     181
                                                               -------  -------
       Deferred tax assets....................................   1,924    7,269
       Less: Valuation allowance..............................  (1,924)  (7,269)
                                                               -------  -------
         Net deferred tax asset............................... $   --   $   --
                                                               =======  =======
</TABLE>

   
   Due to the uncertainty surrounding the realization of favorable tax
attributes in future tax returns, the Company has placed a valuation allowance
against all of its net deferred tax assets. At such time as it is determined
that it is more likely than not that the deferred tax assets are realizable,
the valuation allowance will be reduced. The valuation allowance increased by
$1,635,000 and $5,345,000 during 1998 and 1999, respectively.     
 
   At December 31, 1998 and 1999, the Company had federal and state net
operating loss carryforwards of approximately $10,500,000 and $1,700,000,
respectively, available to offset future regular and alternative minimum
taxable income. The Company's federal and state net operating loss
carryforwards will begin to expire in 2017 for federal purposes and 2005 for
state purposes if not utilized.
 
   At December 31, 1998 and 1999, the Company had federal and state research
and experimentation tax credit carryforwards of approximately $219,000 and
$606,000, respectively, available to offset future income tax liabilities. The
Company's federal research and experimentation credit will begin to expire in
2017.
 
   The Tax Reform Act of 1986 limits the use of net operating loss and tax
credit carryforwards in certain situations where changes occur in the stock
ownership of a Company. If the Company should have an ownership change, as
defined by the tax law, utilization of the carryforwards could be restricted.
   
Note 10 Employee Benefit Plan     
 
   In January 1999, the Company adopted a defined contribution retirement plan
under Section 401(k) of the Internal Revenue Code. This plan covers
substantially all employees who
 
                                      F-24

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
meet minimum age and service requirements and allows participants to defer a
portion of their annual compensation on a pre-tax basis. Company contributions
to the plan may be made at the discretion of the Board of Directors. There have
been no contributions by the Company since the inception of the plan.
 
Note 11 Subsequent Events:
 
  Initial Public Offering
 
   In September 2000, the Board of Directors authorized management of the
Company to file a registration statement with the Securities and Exchange
Commission permitting the Company to sell shares of its common stock to the
public. If the initial public offering is closed under the terms presently
anticipated, all of the convertible preferred stock outstanding will
automatically convert into shares of common stock on a one-for-one basis.
Unaudited pro forma stockholders' equity, as adjusted for the assumed
conversion of the preferred stock, is set forth on the balance sheet.
    
  Stock Split     
   
   On December   , 2000, the Company's Board of Directors approved a 2 for 1
stock split. All common and preferred stock and per share amounts for all
periods presented in the accompanying financial statements have been restated
to reflect the stock split.     
 
  Loan to Officer
   
   In September 2000, the Company issued a loan in the amount of $95,000 at a
rate of 6% per annum to the Company's Vice President of Corporate Strategy. The
loan is due on demand, but in no event later than September 19, 2001. However,
the Company plans to forgive the loan over the period and record compensation
expense as long as the officer remains employed with the Company during the
period.     
 
  Employee Notes Receivable
   
   In November through December 2000, the Company loaned $1,790,948 to certain
employees and officers for the exercise of incentive stock options. All of the
full recourse notes accrue interest at 9.5% and are due on the second
anniversary of the issuance date. The notes are secured by the shares of common
stock held by the employees and their personal guarantee.     
 
  Sale of Preferred Securities
   
   In October 2000, the Company sold 1,436,710 additional shares of Series D
preferred stock for gross proceeds of $15.3 million. The issuance of Series D
convertible preferred stock resulted in a beneficial conversion feature of
$6.3 million, calculated in accordance with Emerging Issues Task Force Issue
No. 98-5, "Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios." Accordingly, the
Company will recognize a charge to additional paid in capital to account for
the deemed dividend on the preferred stock as of the issuance date in its third
fiscal quarter of 2000. In addition, the Series D preferred shares have certain
contingent rights and preferences which, if perfected, could cause the Company
to record an incremental beneficial conversion feature charge.     
 
                                      F-25

<PAGE>
 
                             ALIGN TECHNOLOGY, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
  Conversion Rights
   
   In accordance with the Company's certificate of incorporation, as amended in
connection with the Series D preferred stock sale, as of December 22, 2000,
because the Company has issued 1,269,614 shares of common stock in excess of
the 3,331,978 shares of common stock permitted, as defined in the certificate
of incorporation, the Company will be required to issue an additional total
number of 422,886 shares of common stock upon the conversion of the preferred
stock.     
 
   In addition, the additional shares issued as per above will result in a
beneficial conversion feature, calculated in accordance with EITF No. 98-5.
Accordingly, the Company will recognize a deemed dividend on this additional
common stock based on the fair value of the common stock at the conversion
date.
 
  2001 Stock Incentive Plan
 
   In August 2000, the Board of Directors adopted the 2001 Stock Incentive Plan
(the "2001 Plan"). The 2001 Plan, which will terminate no later than 2011,
provides for the granting of incentive stock options, nonstatutory stock
options and restricted stock purchase rights and stock bonuses to employees,
and consultants.
   
   A total of 8,000,000 shares of common stock have been authorized for
issuance under the 2001 Plan. At the date of the stockholders' meeting in 2001,
and annually thereafter, the authorized shares will automatically be increased
by a number of shares equal to the least of:     
     
  .  5% of the then outstanding shares of common stock on a fully-diluted
     basis;     
 
  .  3,000,000 shares; or
 
  .  a lesser number of shares determined by the Board of Directors.
 
  Employee Stock Purchase Plan
   
   In August 2000, the Board of Directors adopted the Employee Stock Purchase
Plan (the "Purchase Plan"), authorizing the issuance of 1,500,000 shares of
common stock pursuant to purchase rights granted to in the United States
employees.     
 
   At the date of the stockholders' meeting in 2001, and annually thereafter,
for a period of 20 years, the share reserve will automatically be increased by
a number of shares equal to the least of:
     
  .  3.0% of the then outstanding shares of common stock on a fully diluted
     basis;     
     
  .  1,500,000 shares; or     
 
  .  a lesser number of shares determined by the Board of Directors.
 
   The Purchase Plan is intended to qualify as an employee stock purchase plan
within the meaning of Section 423 of the Internal Revenue Code of 1986, as
amended. As of the date hereof, no shares of common stock have been purchased
under the Purchase Plan.
 
   The Purchase Plan permits eligible employees to purchase common stock at a
discount through payroll deductions during defined offering periods. The price
at which stock is purchased under the purchase plan is equal to 85% of the fair
market value of the common stock on the first day of the offering period of 85%
of the fair market value on the subsequent designated purchase dates, whichever
is lower. The initial offering period will commence on the effective date of
the offering.
 
                                      F-26

<PAGE>
 
Inside back page:
 
Middle top of page: Caption: "Which of these people is wearing Invisalign?"
Graphic: Top of page is a series of four pictures of people smiling.
 
Center of page: Caption: "They all are."
 
Center third of page: Graphic: three pictures of woman placing an Aligner on
her teeth.
 
Bottom right corner: Align mark; Invisalign mark

<PAGE>
 
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide information different from that contained in
this prospectus. We are offering to sell, and seeking offers to buy, shares of
common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of
this prospectus, regardless of the time of delivery of this prospectus or of
any sale of our common stock.
 
 
                              TABLE OF CONTENTS
 

<TABLE>   
<CAPTION>
                                                                          Page
                                                                          ----
<S>                                                                       <C>
Prospectus Summary.......................................................   1
Risk Factors.............................................................   5
Special Note Regarding Forward-Looking Statements and Industry Data......  15
Use of Proceeds..........................................................  16
Dividend Policy..........................................................  16
Capitalization...........................................................  17
Dilution.................................................................  18
Selected Consolidated Financial Data.....................................  19
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  20
Business.................................................................  26
Management...............................................................  40
Certain Transactions.....................................................  54
Principal Stockholders...................................................  57
Description of Capital Stock.............................................  60
Shares Eligible for Future Sale..........................................  64
Underwriting.............................................................  66
Legal Matters............................................................  69
Experts..................................................................  69
Where You Can Find Additional Information................................  69
Index to Financial Statements............................................ F-1
</TABLE>
    
   
Until          , 2001 (25 days after the date of this prospectus), all dealers
that effect transactions in these securities, whether or not participating in
this offering, may be required to deliver a prospectus. This is in addition to
the dealer's obligation to deliver a prospectus when acting as an underwriter
and with respect to unsold allotments or subscriptions.     
 
--------------------------------------------------------------------------------
 
 
  [LOGO OF ALIGN TECHNOLOGIES, INC.]
     
  10,000,000 Shares     
 
  Common Stock
 
 
 
  Deutsche Banc Alex. Brown
  Bear, Stearns & Co. Inc.
  J.P. Morgan & Co.
  Robertson Stephens
 
 
   Prospectus
      
         , 2001     

<PAGE>
 

                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 

Item 13. Other Expenses of Issuance and Distribution
 
   The following table sets forth the costs and expenses, other than the
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts are estimates except the SEC
registration fee, the NASD filing fees and the Nasdaq National Market listing
fee.
 

<TABLE>   
   <S>                                                               <C>
   SEC Registration Fee............................................. $   52,800
   NASD Filing Fee..................................................     20,500
   Nasdaq National Market Listing Fee...............................     95,000
   Printing and Engraving Expenses..................................    350,000
   Legal Fees and Expenses..........................................    700,000
   Accounting Fees and Expenses.....................................    975,000
   Blue Sky Fees and Expenses.......................................      3,000
   Transfer Agent Fees..............................................     10,000
   Miscellaneous....................................................     93,700
                                                                     ----------
    Total........................................................... $2,300,000
                                                                     ==========
</TABLE>
    
 

Item 14. Indemnification of Directors and Officers
   
   Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's board of directors to grant indemnification to
directors and officers in terms sufficiently broad to permit the
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). Article VIII of our certificate of
incorporation provides for mandatory indemnification of our directors and
officers and permissible indemnification of employees and other agents to the
maximum extent permitted by the Delaware General Corporation Law. Our
certificate of incorporation provides that, subject to Delaware law, our
directors will not be personally liable for monetary damages for breach of the
directors' fiduciary duty as directors to Align Technology, Inc. and its
stockholders.This provision in the certificate of incorporation does not
eliminate the directors' fiduciary duty, and in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief
will remain available under Delaware law. In addition, each director will
continue to be subject to liability for breach of the director's duty of
loyalty to the company or our stockholders for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director, and for payment
of dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws. We have entered into indemnification
agreements with our directors, which provide our directors with further
indemnification to the maximum extent permitted by the Delaware General
Corporation Law. Reference is also made to the underwriting agreement contained
in Exhibit 1.1 hereto, indemnifying our officers and directors against certain
liabilities, and our Amended and Restated Investors' Rights Agreement contained
in Exhibit 10.1 hereto, indemnifying the parties thereto, including controlling
stockholders, against liabilities.     
 
                                      II-1

<PAGE>
 

Item 15. Recent Sales of Unregistered Securities
 
   Set forth below is information regarding shares of common stock and
Preferred Stock issued, and options and warrants granted, by the registrant
within the past three years.
          
   (1)  Between April and August 1997, the registrant sold an aggregate of
4,960,908 shares of common stock to the registrant's founders for an aggregate
cash consideration of approximately $24,805.     
   
   (2)  In November 1998, the registrant sold an aggregate of 4,290 shares of
common stock to Jeff Jarvela for consulting services for an aggregate cash
consideration of approximately $214.50.     
   
   (3)  On August 29, 1997, the registrant sold 4,350,000 shares of Series A
Preferred Stock, convertible into 4,350,000 shares of common stock, to a group
of investors for an aggregate cash consideration of $2,175,000.     
   
   (4)  On July 13, 1998, the registrant sold 6,717,124 shares of Series B
Preferred Stock, convertible into 6,717,124 shares of common stock, to a group
of investors for an aggregate cash consideration of $10,121,904.     
   
   (5)  On September 24, 1999, the registrant sold 5,186,228 shares of Series C
Preferred Stock, convertible into 5,186,228 shares of common stock, to a group
of investors for an aggregate cash consideration of $20,594,912.     
   
   (6)  On May 25, June 20 and October 5, 2000, the registrant sold 9,704,316
shares of Series D Preferred Stock, convertible into 9,704,316 shares of common
stock, to a group of investors for an aggregate cash consideration of
$101,266,996.     
   
   (7)  As of November 30, 2000, options to purchase 5,489,292 shares of common
stock had been exercised for an aggregate consideration of $2,874,085 and
options to purchase 2,126,184 shares of common stock, at a weighted average
exercise price of $0.73, were outstanding under the 1997 Plan.     
   
   (8)  As of November 30, 2000, no options under the 2001 Plan or the Purchase
Plan have been granted.     
       
       
          
   None of the foregoing transactions involved any underwriters, underwriting
discounts or commissions, or any public offering, and we believe that each
transaction was exempt from the registration requirements of the Securities Act
by virtue of Section 4(2) thereof (paragraphs 1 and 2) Regulation D promulgated
thereunder (paragraphs 3-6) or Rule 701 pursuant to compensatory benefit plans
and contracts relating to compensation as provided under Rule 701 (paragraph
7). The recipients in each transaction represented their intention to acquire
the securities for investment only and not with a view to or for sale in
connection with any distribution thereof, and appropriate legends were affixed
to the share certificates and instruments issued in these transactions. All
recipients had adequate access, through their relationships with us, to
information about us.     
 
                                      II-2

<PAGE>
 

Item 16. Exhibits
 

<TABLE>   
<CAPTION>
 Exhibit
 Number                          Description of Document
 ------- ----------------------------------------------------------------------
 <C>     <S>
  1.1**  Form of Underwriting Agreement.
 
  3.1    Amended and Restated Certificate of Incorporation of registrant, to be
         effective upon consummation of this offering.
 
  3.2    Amended and Restated Bylaws of registrant, to be effective upon
         consummation of this offering.
 
  4.1*   Form of Specimen Common Stock Certificate.
 
  5.1*   Opinion of Brobeck, Phleger & Harrison LLP regarding the legality of
         the common stock being registered.
 
 10.1    Amended and Restated Investors' Rights Agreement, among registrant and
         certain of its stockholders, dated September 16, 2000.
 
 10.2    Employment Agreement between registrant and Stephen Bonelli, dated
         November 6, 2000.
 
 10.3**  Lease and License Agreement by and between Pakistan Services Ltd. and
         registrant for its manufacturing space in Pakistan located at Pearl
         Continental, Pavilion 44, Lahore, Pakistan, dated March 4, 1999.
 
 10.4**  Lease Agreement by and between James Lindsay and registrant, dated
         June 20, 2000, for office space located at 881 Martin Avenue, Santa
         Clara, CA.
 
 10.5    Sublease Agreement by and between GW Com, Inc. and registrant, dated
         July 2000, for office space located at 851 Martin Avenue, Santa Clara,
         CA.
 
 10.6**  Lease Agreement by and between registrant and Saadia Kahwar Khan
         Chishti for manufacturing space in Pakistan located at the Bhallah
         House, Bhalla Stop, Multan Road, Lahore, Pakistan dated September 1,
         2000.
 
 10.7**  Shelter Services Agreement between registrant and Elamex, S.A. de C.V.
         dated February 16, 2000.
 
 10.8**  Joint Development Agreement by and between registrant and 3D Systems
         dated September 9, 1999.
 
 10.9    Loan and Security Agreement by and between Comdisco Inc. and
         registrant, dated April 12, 1999.
 
 10.10   Secured Promissory Note Agreement by and between Comdisco Inc. and
         registrant, dated April 12, 2000.
 
 10.11** Warrant Agreement, dated April 12, 1999, by and between Comdisco and
          registrant.
 
 10.12*  Warrant Agreement, dated January 7, 2000, by and between Comdisco and
          registrant.
 
 10.13   Registrant's 2001 Stock Incentive Plan.
 
 10.14   Registrant's Employee Stock Purchase Plan.
 
 21.1    Subsidiaries of Registrant.
 
 23.1    Consent of PricewaterhouseCoopers LLP, Independent Accountants.
 
 23.2*   Consent of Brobeck, Phleger & Harrison LLP (contained in their opinion
         filed as Exhibit 5.1).
 
 24.1**  Power of Attorney (see Page II-5).
 
 27.1**  Financial Data Schedule.
</TABLE>
    
--------
   
*  To be filed by amendment.     
   
** Filed previously.     
 
                                      II-3

<PAGE>
 
       
       

Item 17. Undertakings
 
   We hereby undertake to provide to the underwriters at the closing specified
in the underwriting agreement, certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
 
   Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons pursuant to
the Delaware General Corporation Law, our certificate of incorporation or our
bylaws, indemnification agreements entered into between the registrant and our
officers and directors, the underwriting agreement, or otherwise, we have been
advised that in the opinion of the commission such indemnification is against
public policy as expressed in the Securities Act, and is, therefore,
unenforceable. If a claim for indemnification against such liabilities (other
than the payment by us of expenses incurred or paid by any of our directors,
officers or controlling persons in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question of whether such
indemnification by us is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
 
   The undersigned registrant hereby undertakes:
 
   (1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by us pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of
the time it was declared effective;
 
   (2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
 
                                      II-4

<PAGE>
 

                                   SIGNATURES
   
   Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Santa
Clara, State of California, on December 28, 2000.     
 
                                          ALIGN TECHNOLOGY, INC.
                                                   
                                                /s/ Stephen Bonelli        
                                          By: _________________________________
                                                      
                                                   Stephen Bonelli,     
                                                 
                                              Chief Financial Officer and Vice
                                                  President, Finance     
                                                    
   Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
 

<TABLE>   
<CAPTION>
 Signature                          Title                                 Date
 ---------                          -----                                 ----
 
 <C>                                <S>                                   <C>
                 *                  Chief Executive Officer and Chairman  December 28, 2000
 _________________________________   of the Board (Principal Executive
            Zia Chishti              Officer)
 
       /s/ Stephen Bonelli          Chief Financial Officer and Vice      December 28, 2000
 _________________________________   President, Finance (Principal
          Stephen Bonelli            Accounting Officer)
 
                 *                  President                             December 28, 2000
 _________________________________
            Kelsey Wirth
 
                 *                  Director                              December 28, 2000
 _________________________________
            Brian Dovey
 
                 *                  Director                              December 28, 2000
 _________________________________
            Joseph Lacob
 
                 *                  Director                              December 28, 2000
 _________________________________
             Mark Logan
 
                 *                  Director                              December 28, 2000
 _________________________________
           H. Kent Bowen
 
      /s/ Stephen Bonelli           Chief Financial Officer and Vice      December 28, 2000
 *By: ____________________________   President, Finance
 Stephen Bonelli, Attorney-In-Fact
</TABLE>
    
 
                                      II-5

<PAGE>
 

                                 EXHIBIT INDEX
 

<TABLE>   
<CAPTION>
 Exhibit
 Number                          Description of Document
 ------- ----------------------------------------------------------------------
 <C>     <S>
  1.1**  Form of Underwriting Agreement.
 
  3.1    Amended and Restated Certificate of Incorporation of registrant, to be
         effective upon consummation of this offering.
 
  3.2    Amended and Restated Bylaws of registrant, to be effective upon
         consummation of this offering.
 
  4.1*   Form of Specimen Common Stock Certificate.
 
  5.1*   Opinion of Brobeck, Phleger & Harrison LLP regarding the legality of
         the common stock being registered.
 
 10.1    Amended and Restated Investors' Rights Agreement, among registrant and
         certain of its stockholders, dated September 16, 2000.
 
 10.2    Employment Agreement between registrant and Stephen Bonelli, dated
         November 6, 2000.
 
 10.3**  Lease and License Agreement by and between Pakistan Services Ltd. and
         registrant for its manufacturing space in Pakistan located at Pearl
         Continental, Pavilion 44, Lahore, Pakistan, dated March 4, 1999.
 
 10.4**  Lease Agreement by and between James Lindsay and registrant, dated
         June 20, 2000, for office space located at 881 Martin Avenue, Santa
         Clara, CA.
 
 10.5    Sublease Agreement by and between GW Com, Inc. and registrant, dated
         July 2000, for office space located at 851 Martin Avenue, Santa Clara,
         CA.
 
 10.6**  Lease Agreement by and between registrant and Saadia Kahwar Khan
         Chishti for manufacturing space in Pakistan located at the Bhallah
         House, Bhalla Stop, Multan Road, Lahore, Pakistan dated September 1,
         2000.
 
 10.7**  Shelter Services Agreement between registrant and Elamex, S.A. de C.V.
         dated February 16, 2000.
 
 10.8**  Joint Development Agreement by and between registrant and 3D Systems
         dated September 9, 1999.
 
 10.9    Loan and Security Agreement by and between Comdisco Inc. and
         registrant, dated April 12, 1999.
 
 10.10   Secured Promissory Note Agreement by and between Comdisco Inc. and
         registrant, dated April 12, 2000.
 
 10.11** Warrant Agreement, dated April 12, 1999, by and between Comdisco and
          registrant.
 
 10.12*  Warrant Agreement, dated January 7, 2000, by and between Comdisco and
         registrant.
 
 10.13   Registrant's 2001 Stock Incentive Plan.
 
 10.14   Registrant's Employee Stock Purchase Plan.
 
 21.1    Subsidiaries of Registrant.
 
 23.1    Consent of PricewaterhouseCoopers LLP, Independent Accountants.
 
 23.2*   Consent of Brobeck, Phleger & Harrison LLP (contained in their opinion
         filed as Exhibit 5.1).
 
 24.1**  Power of Attorney (see Page II-5).
 
 27.1**  Financial Data Schedule.
</TABLE>
    
--------
*  To be filed by amendment.
   
** Filed previously.     





<PAGE>
 
                                                                     EXHIBIT 3.1


               AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

                                      OF

                            ALIGN TECHNOLOGY, INC.

     ZIA CHISHTI hereby certifies that:

     ONE:  The present name of this corporation is ALIGN TECHNOLOGY, INC. (the
"Corporation"), which is the name under which the Corporation was originally
incorporated; and the date of filing of the original Certificate of
Incorporation of the Corporation with the Secretary of State of the State of
Delaware is April 3, 1997.

     TWO:  He is the duly elected and acting Chief Executive Officer of the
Corporation.

     THREE:  The Amended and Restated Certificate of Incorporation of the
Corporation is hereby amended and restated to read in full as follows:

                                      I.
                                     NAME

     The name of the corporation is Align Technology, Inc.

                                      II.
                               REGISTERED OFFICE

     The address of the registered office of the Corporation in the State of
Delaware is:

                           9 East Loockerman Street
                                 City of Dover
                                County of Kent
                                Delaware 19901

     The name of the Corporation's registered agent at said address is National
Registered Agents, Inc.

                                     III.
                                  POWERS/TERM

     The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.  The Corporation is to have perpetual
 existence.

                                       1

<PAGE>
 
                                      IV.
                                 CAPITAL STOCK

     A.   Classes of Stock.  This corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the Corporation is authorized to issue is Two
Hundred Five Million (205,000,000) shares, Two Hundred Million (200,000,000)
shares of which shall be Common Stock (the "Common Stock") and Five Million
(5,000,000) shares of which shall be Preferred Stock (the "Preferred Stock").
The Common Stock shall have a par value of one-hundredth of one cent ($0.0001)
per share and the Preferred Stock shall have a par value of one-hundredth of one
cent ($0.0001) per share.

     B.   Preferred Stock.  The Preferred Stock may be issued from time to time
in one or more series.  The Board of Directors is hereby authorized to provide
for the issuance of shares of Preferred Stock in one or more series and, by
filing a certificate pursuant to the applicable law of the State of Delaware
(the "Preferred Stock Designation"), to establish from time to time the number
of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations and restrictions thereof.  The authority of the
Board of Directors with respect to each series shall include, but not be limited
to, determination of the following:

          (1)  The designation of the series, which may be by distinguishing
number, letter or title.

          (2)  The number of shares of the series, which number the Board of
Directors may thereafter (except where otherwise provided in the Preferred Stock
Designation) increase or decrease (but not below the number of shares thereof
then outstanding).

          (3)  The amounts payable on, and the preferences, if any, of shares of
the series in respect of dividends, and whether such dividends, if any, shall be
cumulative or noncumulative.

          (4)  Dates at which dividends, if any, shall be payable.

          (5)  The redemption rights and price or prices, if any, for shares of
the series.

          (6)  The terms and amount of any sinking funds provided for the
purchase or redemption of shares of the series.

          (7)  The amounts payable on, and the preferences, if any, of shares of
the series in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Corporation.

          (8)  Whether the shares of the series shall be convertible into or
exchangeable for shares of any other class or series, or any other security, of
the Corporation or any other corporation, and, if so, the specification of such
other class or series or such other security, the conversion or exchange price
or prices or rate or rates, any adjustments thereof, the date or dates 

                                       2

<PAGE>
 
at which such shares shall be convertible or exchangeable and all other terms
and conditions upon which such conversion or change may be made.

          (9)  Restrictions on the issuance of shares of the same series or of
any other class or series.

          (10) The voting rights, if any, of the holders of shares of the
series.

     C.   Common Stock; Voting.  The Common Stock shall be subject to the
express terms of the Preferred Stock and any series thereof. Except as may
otherwise be provided in this Certificate of Incorporation, in a Preferred Stock
Designation or by applicable law, the holders of shares of Common Stock shall be
entitled to one vote for each such share upon all questions presented to the
stockholders, the Common Stock shall have the exclusive right to vote for the
election of directors and for all other purposes, and holders of Preferred Stock
shall not be entitled to vote at or receive notice of any meeting of
stockholders.

     The number of shares of authorized Common Stock may be increased or
decreased (but not below the number then outstanding) by the affirmative vote of
the holders of a majority in voting power of the outstanding shares of capital
stock of the Corporation entitled to vote thereon, voting together as a single
class notwithstanding the provisions of Section 242(b)(2) of the General
Corporation Law of the State of Delaware.

     The Corporation shall be entitled to treat the person in whose name any
share of its stock is registered as the owner thereof for all purposes and shall
not be bound to recognize any equitable or other claim to, or interest in, such
share on the part of any other person whether or not the Corporation shall have
notice thereof, except as expressly provided by applicable law.

                                      V.
                                   DIRECTORS

     The number of directors of the Corporation shall be determined by
resolution of the Board of Directors.

     Elections of directors need not be by written ballot unless the Bylaws of
the Corporation shall so provide.  Advance notice of stockholders nominations
for the election of directors and of any other business to be brought before any
meeting of the stockholders shall be given in the manner provided in the Bylaws
of this Corporation.

     At each annual meeting of stockholders, directors of the Corporation shall
be elected to hold office until the expiration of the term for which they are
elected, or until their successors have been duly elected and qualified; except
that if any such election shall not be so held, such election shall take place
at a stockholder's meeting called and held in accordance with the General
Corporation Law of the State of Delaware.

     Vacancies occurring on the Board of Directors for any reason may be filled
by vote of a majority of the remaining members of the Board of Directors, even
if less than a quorum, at any meeting of the Board of Directors.  A person so
elected by the Board of Directors to fill a vacancy shall hold office for the
remainder of the full term of the director for which the vacancy 

                                       3

<PAGE>
 
was created or occurred and until such director's successor shall have been duly
elected and qualified. A director or the entire Board of Directors may be
removed from office at any time by the affirmative vote of at least sixty-six
and two-thirds percent (66 2/3%) of the outstanding shares of voting stock of
the Corporation entitled to vote at an election of directors, provided that such
removal is for cause.

                                      VI.
                             STOCKHOLDER MEETINGS

     Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide.  Special meetings of stockholders for any
purpose may be called only by the Board of Directors.  The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the bylaws of the Corporation.  The
stockholders of the Corporation may not take any action by written consent in
lieu of a meeting.

                                     VII.
                      LIMITATION OF DIRECTORS' LIABILITY

     A director of the Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended.  Any amendment, modification or repeal of
the foregoing sentence shall not adversely affect any right or protection of a
director of the Corporation hereunder in respect of any act or omission
occurring prior to the time of such amendment, modification or repeal.  If the
General Corporation Law of the State of Delaware is amended after approval by
the stockholders of this ARTICLE VII to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended.

                                     VIII.
                                INDEMNIFICATION

     A.   Right to Indemnification.  The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person (a "Covered Person") who was or
is made or is threatened to be made a party or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he is or was or has
agreed to become, or a person for whom he is the legal representative, is or was
or has agreed to become a director or officer of the Corporation or, while a
director or officer of the Corporation, is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust, enterprise or nonprofit entity,
including service with respect to employee benefit plans, against all liability
and loss suffered and expenses (including attorneys' fees) reasonably incurred
by such Covered Person.  Notwithstanding the preceding sentence, except as
otherwise provided in this Article VIII, the 

                                       4

<PAGE>
 
Corporation shall be required to indemnify a Covered Person in connection with a
proceeding (or part thereof) commenced by such Covered Person only if the
commencement of such proceeding (or part thereof) by the Covered Person was
authorized by the Board of Directors of the Corporation. The rights to
indemnification provided herein shall continue with respect to a Covered Person
notwithstanding that such Covered Person ceases to be a director, officer or
other employee or agent of the Corporation.

     B.   Prepayment of Expenses.  The Corporation shall pay the expenses
(including attorneys' fees) incurred by a Covered Person in defending any
proceeding in advance of its final disposition, provided, however, that, to the
extent required by law, such payment of expenses in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
by the Covered Person to repay all amounts advanced if it should be ultimately
determined that the Covered Person is not entitled to be indemnified under this
Article VIII or otherwise.

     C.   Claims.  If a claim for indemnification or advancement of expenses
under this Article VIII is not paid in full within sixty (60) days after a
written claim therefor by the Covered Person has been received by the
Corporation, the Covered Person may file suit to recover the unpaid amount of
such claim and, if successful in whole or in part, shall be entitled to be paid
the expense of prosecuting such claim.  In any such action the Corporation shall
have the burden of proving that the Covered Person is not entitled to the
requested indemnification or advancement of expenses under applicable law.

     D.   Nonexclusivity of Rights.  The rights conferred on any Covered Person
by this Article VIII shall not be exclusive of any other rights which such
Covered Person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, the bylaws, agreement, vote of stockholders or
disinterested directors or otherwise.  The Corporation may, to the extent
authorized from time to time by its Board of Directors, grant indemnification
rights to other employees or agents of the Corporation or other persons serving
the Corporation and such rights may be equivalent to, or greater or less than,
those provided herein.

     E.   Other Sources.  The Corporation's obligation, if any, to indemnify or
to advance expenses to any Covered Person who was or is serving at its request
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, enterprise or nonprofit entity shall be reduced by any
amount such Covered Person may collect as indemnification or advancement of
expenses from such other corporation, partnership, joint venture, trust,
enterprise or non-profit enterprise.  The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against and incurred by such person in any such
capacity, or arising out of such person's status as such.

     F.   Amendment or Repeal.  Any repeal or modification of the foregoing
provisions of this Article VIII shall not adversely affect any right or
protection hereunder of any Covered Person in respect of any act or omission
occurring prior to the time of such repeal or modification.

                                       5

<PAGE>
 
     G.   Other Indemnification and Prepayment of Expenses.  This Article VIII
shall not limit the right to the Corporation to the extent and in the manner
permitted by law, to indemnify and to advance expenses to persons other than
Covered Persons when and as authorized by appropriate corporate action.

                                      IX.
                              AMENDMENT OF BYLAWS

     In furtherance of and not in limitation of powers conferred by statute, the
Board of Directors of the Corporation is expressly authorized to adopt, repeal,
alter, amend and rescind the bylaws of the Corporation by vote of a majority of
the Board of Directors.  In addition, the bylaws may be amended by the
affirmative vote of holders of at least sixty-six and two-thirds percent (66
2/3%) of the outstanding shares of voting stock of the Corporation entitled to
vote at an election of directors.

                                      X.
                   AMENDMENT OF CERTIFICATE OF INCORPORATION

     The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute and this Amended and
Restated Certificate of Incorporation, and all rights conferred upon
stockholders herein are granted subject to this reservation.  Notwithstanding
the foregoing, the provisions set forth in Articles V, VI, VII, VIII, IX and X
of this Amended and Restated Certificate of Incorporation may not be repealed or
amended in any respect without the affirmative vote of holders at least sixty-
six and two-thirds percent (66-2/3%) of the outstanding voting stock of the
Corporation entitled to vote at an election of directors.

                                      ***

     FOUR: That the foregoing Amended and Restated Certificate of Incorporation
of the Corporation has been duly adopted in accordance with Sections 242 and 245
of the General Corporation Law of the State of Delaware by the directors and
stockholders of the Corporation.

     FIVE: That the foregoing Amended and Restated Certificate of Incorporation
of the Corporation was approved by the holders of the requisite number of shares
of the Corporation, and written notice was given, in accordance with Section 228
of the General Corporation Law of the State of Delaware.

                                       6

<PAGE>
 
     IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation
has been signed this __ day of December, 2000.



                                       ALIGN TECHNOLOGY, INC.


                                       By:  ____________________________________
                                            Zia Chishti, Chief Executive Officer

                                       7



<PAGE>
 

                                                                     EXHIBIT 3.2

                          AMENDED AND RESTATED BY-LAWS
                                       OF
                             ALIGN TECHNOLOGY, INC.
                                        

                                  ARTICLE I.

                    CERTIFICATE OF INCORPORATION AND BYLAWS

     Section 1. These By-Laws are subject to the Certificate of Incorporation of
the Corporation, as amended to date. In these By-Laws, references to law, the
Certificate of Incorporation and By-Laws mean the law, the provisions of the
Certificate of Incorporation and the By-Laws as from time to time in effect.


                                  ARTICLE II.
                                    OFFICES

     Section 1. The registered office of the Corporation in the State of
Delaware shall be 9 East Loockerman Street, City of Dover, County of Kent,
Delaware 19901 and the name of the registered agent at that address is National
Registered Agents, Inc.

     Section 2. The Corporation may also have offices at such other places both
within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the Corporation may require.


                                 ARTICLE III.
                            MEETINGS OF STOCKHOLDERS

     Section 1. All meetings of the stockholders for the election of directors
shall be held at such place as may be fixed from time to time by the Board of
Directors, or at such other place either within or without the State of Delaware
as shall be designated from time to time by the
 Board of Directors and stated in
the notice of the meeting. Meetings of stockholders for any other purpose may be
held at such time and place, within or without the State of Delaware, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.

     Section 2. Annual meetings of stockholders shall be held at such date and
time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting, at which they shall elect by a plurality
vote the directors to be elected at such meeting, and transact such other
business as may properly be brought before the meeting.

     Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not fewer than ten (10) nor more than sixty (60) days before the date of
the meeting.

     Section 4. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten (10) days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the

<PAGE>
 
meeting, during ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

     Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, shall be called by the Chairman of the Board, the President or
Secretary at the request in writing of a majority of the Board of Directors.

     Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not fewer than ten (10) nor more than sixty (60) days before the
date of the meeting, to each stockholder entitled to vote at such meeting.

     Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.

     Section 8. The holders of fifty percent (50%) of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.

     Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
Certificate of Incorporation, a different vote is required, in which case such
express provision shall govern and control the decision of such question.

     Section 10. Unless otherwise provided in the Certificate of Incorporation,
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.

     Section 11. Unless otherwise provided in the Certificate of Incorporation,
the Chairman of the Board may adjourn a meeting of stockholders from time to
time, without notice other than

                                       2

<PAGE>
 
announcement at the meeting. No notice of the time and place of an adjourned
meeting need be given except as required by law.

     Section 12.

          A.   Annual Meetings of Stockholders

               1.    Nominations of persons for election to the Board of
Directors and the proposal of business to be considered by the stockholders may
be made at an annual meeting of stockholders only (a) pursuant to the
Corporation's notice of meeting (or any supplement thereto), (b) by or at the
direction of the Board of Directors or (c) by any stockholder of the Corporation
who was a stockholder of record at the time of giving of notice provided for in
this Section 12, who is entitled to vote at the meeting and who complies with
the notice procedures set forth in this Section 12.

               2.    For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(a)(1) of this Section 12, the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation and such other business must
otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
ninetieth (90th) day nor earlier than the close of business on the one hundred
twentieth (120th) day prior to the first anniversary of the date of the
preceding year's annual meeting; provided, however, that if either the date of
the annual meeting is more than thirty (30) days before or more than seventy
(70) days after such anniversary date, notice by the stockholder to be timely
must be so delivered not earlier than the close of business on the one hundred
twentieth (120th) day prior to such annual meeting and not later than the close
of business on the later of the ninetieth (90th) day prior to such annual
meeting or the close of business on the tenth (10th) day following the day on
which public announcement of the date of such meeting is first made by the
Corporation. Such stockholder's notice shall set forth (a) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and Rule 14a-11 thereunder
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director it elected); (b) as to any other
business that the stockholder proposes to bring before the meeting, the text of
the proposal or business (including the text of any resolutions proposed for
consideration and in the event that such business includes a proposal to amend
the By-laws of the Corporation, the language of the proposed amendment), the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner, (ii) the class and number of
shares of capital stock of the Corporation which are owned beneficially and of
record by such stockholder and such beneficial owner, (iii) a representation
that the stockholder is a holder of record of stock of the Corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to propose such business or nomination,  

                                       3

<PAGE>
 
and (iv) a representation whether the stockholder or the beneficial owner, if
any, intends or is part of a group which intends (a) to deliver a proxy
statement and/or form of proxy to holders of at least the percentage of the
Corporation's outstanding capital stock required to approve or adopt the
proposal or elect the nominee and/or (b) otherwise to solicit proxies from
stockholders in support of such proposal or nomination. The Corporation may
require any proposed nominee to furnish such other information as it may
reasonably require to determine the eligibility of such proposed nominee to
serve as a director of the Corporation.

               3.    Notwithstanding anything in the second sentence of
paragraph (a)(2) of this Section 12 to the contrary, in the event that the
number of directors to be elected to the Board of Directors of the Corporation
is increased and there is no public announcement by the Corporation naming all
of the nominees for director or specifying the size of the increased Board of
Directors at least one hundred (100) days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this Section
12 shall also be considered timely, but only with respect to nominees for any
new positions created by such increase, if it shall be delivered to the
Secretary at the principal executive office of the Corporation not later than
the close of business on the tenth (10th) day following the day on which such
public announcement is first made by the Corporation.

          B.   Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Board of
Directors or (b) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time notice provided for in
this Section 12 is delivered to the Secretary of the Corporation, who is
entitled to vote at the meeting and upon such election, who complies with the
notice procedures set forth in this Section 12. If the Corporation calls a
special meeting of stockholders for the purpose of electing one or more
directors to the Board of Directors, any such stockholder entitled to vote in
such election of directors may nominate a person or persons (as the case may
be), for election to such position(s) as specified in the Corporation's notice
of meeting, if the stockholder's notice required by paragraph (A)(2) of this
Section 12 shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the close of business on the one
hundred twentieth (120) day prior to such special meeting and not later than the
later of (x) the close of business of the ninetieth (90th) day prior to such
special meeting or (y) the close of business of the tenth (10th) day following
the day on which public announcement is first made of the date of such special
meeting and of the nominees proposed by the Board of Directors to be elected at
such meeting. In no event shall the public announcement of an adjournment or
postponement of a special meeting commence a new time period (or extend any time
period) for the giving of a stockholder's notice as described above.

          C.   General.

               1.    Only such persons who are nominated in accordance with the
procedures set forth in this Section 12 shall be eligible to be elected at an
annual or special meeting of stockholders of the Corporation to serve as
directors and only such business shall be

                                       4

<PAGE>
 
conducted at a meeting of stockholders as shall have been brought before the
meeting in accordance with the procedures set forth in this Section 12. Except
as otherwise provided by law, the Certificate of Incorporation or these By-Laws,
the chairman of the meeting shall have the power and duty (a) to determine
whether a nomination or any business proposed to be brought before the meeting
was made or proposed, as the case may be, in accordance with the procedures set
forth in this Section 12 (including whether the stockholder or beneficial owner,
if any, on whose behalf the nomination or proposal is made solicited (or is part
of a group which solicited) or did not so solicit, as the case may be, proxies
in support of such stockholder's nominee or proposal in compliance with such
stockholder's representation as required by clause (A)(2)(c)(iv) of this Section
12) and (b) if any proposed nomination or business was not made or proposed in
compliance with this Section 12, to declare that such nomination shall be
disregarded or that such proposed business shall not be transacted.

          2.   For purposes of this Section 12, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Sections 13,
14 and 15(d) of the Exchange Act.

          3.   Notwithstanding the foregoing provisions of this Section 12, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth herein. Nothing in this Section 12 shall be deemed to affect any rights
(i) of stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of Preferred Stock to elect directors pursuant to any applicable
provisions of the Certificate of Incorporation.


                                  ARTICLE IV.
                                   DIRECTORS

     Section 1. Unless otherwise restricted by the Certificate of Incorporation
or these By-Laws, the number of directors which shall constitute the whole Board
shall be determined by resolution of the Board of Directors or by the
stockholders at the annual meeting of the stockholders, except as provided in
Section 2 of this Article. Directors need not be stockholders.

     Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election at which such director's class is to be elected and until their
successors are duly elected and shall qualify, unless sooner displaced. If there
are no directors in office, then an election of directors may be held in the
manner provided by statute. If, at the time of filling any vacancy or any newly
created directorship, the directors then in office shall constitute less than a
majority of the whole Board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such

                                       5

<PAGE>
 
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.

     Section 3. The business of the Corporation shall be managed by or under the
direction of its Board of Directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation or by these By-Laws directed or required to be
exercised or done by the stockholders.

        Meetings of the Board of Directors

     Section 4. The Board of Directors of the Corporation may hold meetings,
both regular and special, either within or without the State of Delaware.

     Section 5. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board. Members of the Board of Directors may participate in regular or
special meetings by means of conference telephone or similar communications
equipment by which all persons participating in the meeting can hear each other.
Such participation shall constitute presence in person.

     Section 6. Special meetings of the Board may be called by the chairman of
the board or president on two (2) days' notice to each director by mail or 
forty-eight (48) hours notice to each director either personally or by
facsimile; special meetings shall be called by the president or secretary or
chairman of the board in like manner and on like notice on the written request
of two directors unless the Board consists of only one director, in which case
special meetings shall be called by the chairman of the board or the president
or secretary in like manner and on like notice on the written request of the
sole director.

     Section 7. At all meetings of the Board a majority of the directors fixed
by Section 1 shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.

     Section 8. Unless otherwise restricted by the Certificate of Incorporation
or these By-Laws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.

     Section 9. Unless otherwise restricted by the Certificate of Incorporation
or these By-Laws, members of the Board of Directors, or any committee designated
by the Board of Directors, may participate in a meeting of the Board of
Directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.

                                       6

<PAGE>
 
        Committees of Directors

     Section 10. The Board of Directors may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of one or more of the directors of the Corporation. The Board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.

        In the absence of disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.

        Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the By-Laws of the Corporation; and,
unless the resolution or the Certificate of Incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.

     Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.

        Compensation of Directors

     Section 12. Unless otherwise restricted by the Certificate of Incorporation
or these By-Laws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Director and may be paid a fixed sum
for attendance at each meeting of the Board of Directors and a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.

        Removal of Directors

     Section 13. Any director or the entire Board of Directors may be removed
only in accordance with the provisions of the Corporation's Certificate of
Incorporation. 

                                       7

<PAGE>
 
                                  ARTICLE V.
                                   NOTICES

     Section 1. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these By-Laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by facsimile.

     Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the Certificate of Incorporation or of these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.

                                   ARTICLE VI.
                                    OFFICERS

     Section 1. The officers of the Corporation shall be chosen by the Board of
Directors and shall consist of a Chairman of the Board, a President, a Chief
Financial Officer, a Treasurer and a Secretary. The Board of Directors may also
choose one or more Vice Presidents, Assistant Secretaries and Assistant
Treasurers. Any number of offices may be held by the same person, unless the
Certificate of Incorporation or these By-Laws otherwise provide.

     Section 2. The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a Chairman of the Board, a President, a
Treasurer, and a Secretary and may choose Vice Presidents.

     Section 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board.

     Section 4. The salaries of all officers and agents of the Corporation shall
be fixed by the Board of Directors.

     Section 5. The officers of the Corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the Corporation
shall be filled by the Board of Directors.

        The Chairman of the Board 

     Section 6. The Chairman of the Board of Directors shall perform such duties
and possess such powers as are assigned to him by the Board of Directors,
including the duties of Chief Executive Officer. Unless otherwise provided by
the Board of Directors, the Chairman of the Board shall preside at all meetings
of the stockholders and at all meetings of the Board of Directors.

                                       8

<PAGE>
 
        Chief Executive Officer

     Section 7. The Chief Executive Officer or Chairman of the Board shall
conduct general and active management of the business of the Corporation and
shall see that all orders and resolutions of the Board are carried into effect,
subject, however, to the right of the directors to delegate any specific powers,
except such as may be by statute exclusively conferred on the Chief Executive
Officer or Chairman of the Board, to any other officer or officers of the
Corporation. The Chief Executive Officer or Chairman of the Board shall have the
general power and duties of supervision and management usually vested in the
office of President of a corporation.

        President

     Section 8. The President shall perform such duties and possess such powers
as are assigned to her by the Chairman of the Board or by the Board of
Directors. In the absence or disability of the Chairman of the Board, the
President shall preside at all meetings of the stockholders and the Board of
Directors.

        The Vice-Presidents

     Section 9. In the absence of the President or in the event of his inability
or refusal to act, the Vice President, if any, (or in the event there be more
than one Vice President, the Vice Presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.

        The Secretary and Assistant Secretary

     Section 10. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the Corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. Such individual shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or president, under whose supervision such individual shall be. Such individual
shall have custody of the corporate seal of the Corporation and he, or an
Assistant Secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest the affixing by his signature.

     Section 11. The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the Board of directors may from
time to time prescribe.

                                       9

<PAGE>
 
        The Chief Financial Officer, Treasurer and Assistant Treasurers

     Section 12. The Board of Directors shall have the authority to appoint a
Chief Financial Officer who may also be the Treasurer or a Chief Financial
Officer and a Treasurer and any Assistant Treasurers which the Board of
Directors deems necessary to the operation of the Company. The Chief Financial
Officer shall have the custody of the corporate funds and securities and shall
keep full and accurate accounts of receipts and disbursements in books belonging
to the Corporation and shall deposit all moneys and other valuable effects in
the name and to the credit of the Corporation in such depositories as may be
designated by the Board of Directors. The Treasurer, if there be one separate
from the Chief Financial Officer, shall have the duties prescribed by the Board
of Directors.

     Section 13. The Chief Financial Officer shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, taking proper vouchers
for such disbursements, and shall render to the President and the Board of
Directors, at its regular meetings, or when the Board of Directors so requires,
an account of all his transactions as Chief Financial Officer and of the
financial condition of the Corporation.

     Section 14. If required by the Board of Directors, the Chief Financial
Officer or Treasurer shall give the Corporation a bond (which shall be renewed
every six years) in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.

     Section 15. The Assistant Treasurer, or if there shall be more than one,
the Assistant Treasurers in the order determined by the Board of Directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the Chief Financial Officer or Treasurer or in the event of
his inability or refusal to act, perform the duties and exercise the powers of
the Chief Financial Officer or Treasurer and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.

                                 ARTICLE VII.
                             CERTIFICATE OF STOCK

     Section 1. Every holder of stock in the Corporation shall be entitled to
have a certificate, signed by, or in the name of the Corporation by, the
Chairman of the Board of Directors, or the President or a Vice President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the Corporation, certifying the number of shares owned by him in the
Corporation.

        If the Corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions or such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to 

                                       10

<PAGE>
 
represent such class or series of stock, provided that, except as otherwise
provided in Section 202 of the General Corporation Law of Delaware, in lieu of
the foregoing requirements, there may be set forth on the face or back of the
certificate which the Corporation shall issue to represent such class or series
of stock, a statement that the Corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.

     Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
individual were such officer, transfer agent or registrar at the date of issue.

        Lost Certificates

     Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.

        Transfer of Stock

     Section 4. Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.

        Fixing Record Date

     Section 5. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting unless expressly disallowed by the Certificate of
Incorporation, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to

                                       11

<PAGE>
 
any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.

        Registered Stockholders

     Section 6. The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.

                                 ARTICLE VIII.
                              GENERAL PROVISIONS

        Dividends

     Section 1. Dividends upon the capital stock of the Corporation, subject to
the provisions of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.

     Section 2. Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purposes as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.

        Checks

     Section 3. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.

        Fiscal Year

     Section 4. The fiscal year of the Corporation shall end on December 31,
unless otherwise fixed by resolution of the Board of Directors.

        Seal

     Section 5. The Board of Directors may adopt a corporate seal having
inscribed thereon the name of the Corporation, the year of its organization and
the words "Corporate Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.

                                       12

<PAGE>
 
     Section 6. No contract or transaction between the Corporation and one or
more of the directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in which one or
more of the directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
such director or officer is present at or participates in the meeting of the
Board of Directors or a committee of the Board of Directors which authorizes the
contract or transaction or solely because his, her or their votes are counted
for such purpose, if: 

          (1)  The material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith authorizes
the contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum;

          (2)  The material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or

          (3)  The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified, by the Board of Directors, a
committee of the Board of Directors, or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.

                                  ARTICLE IX.
                                  AMENDMENTS

        These By-Laws may be repealed, altered, amended or rescinded by the
stockholders of the Corporation by vote of not less than sixty-six and two-
thirds percent (66-2/3%) of the outstanding shares of voting stock of the
Corporation entitled to vote at the election of directors. In addition, in
accordance with the Corporation's Certificate of Incorporation, the Board of
Directors may adopt, repeal, alter, amend or rescind these By-Laws by vote of a
majority of the Board of Directors.

                                       13



<PAGE>
 
                                                                    Exhibit 10.1

                            ALIGN TECHNOLOGY, INC.

                             AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT

          This Amended And Restated Investor Rights Agreement (the "Agreement")
is entered into as of the 13th day of September, 2000, by and among Align
Technology, Inc., a Delaware corporation (the "Company"), the holders of the
Company's Series A Preferred Stock (the "Series A Stock") set forth on Exhibit A
                                                                       ---------
hereto, the holders of the Company's Series B Preferred Stock (the "Series B
Stock") set forth on Exhibit B hereto, the holders of the Company's Series C
                     ---------                                              
Preferred Stock (the "Series C Stock") set forth on Exhibit C hereto, the
                                                    ---------            
holders of the Company's Series D Preferred Stock (the "Series D Stock") set
forth in Parts I and II of Exhibit D hereto and the purchasers of the Company's
                           ---------                                           
Series D Stock set forth in Part III of Exhibit A of that certain Series D
                                        ---------                         
Preferred Stock Purchase Agreement of even date herewith (the "Purchase
Agreement") and Part III of Exhibit D hereto.  The holders of the Series A
                            ---------                                     
Stock, the holders of the Series B Stock, the holders of the Series C Stock, the
holders of the Series D Stock and the purchasers of the Series D Stock shall be
referred to hereinafter as the "Investors" and each individually as an
"Investor."

                                    Recitals

          Whereas, certain Investors
 hold shares of the Company's Series A
Stock, Series B Stock, Series C Stock, Series D Stock and/or shares of Common
Stock issued upon conversion thereof and possess registration rights and other
rights provided pursuant to an Amended and Restated Investor Rights Agreement
dated as of  May 25, 2000 (the "Prior Agreement");

          Whereas, the Company and the Investors who hold Series A Stock, Series
B Stock, Series C Stock and Series D Stock agreed in Section 5.6 (c) of the
Prior Agreement that the Prior Agreement could be amended with only the written
consent of the Company to include additional purchasers of shares of Series D
Stock;

          Whereas, the Company proposes to sell and issue up to an additional
894,118 shares of its Series D Stock pursuant to the Purchase Agreement to the
Investors set forth in Part III of Exhibit D hereto; and
                                   ---------            

          Whereas, as a condition of entering into the Purchase Agreement,
certain of the Investors have requested that the Company extend to any
additional purchasers of the Series D Stock the registration rights, information
rights and other rights as set forth in the Prior Agreement, which rights are
restated in their entirety below.

          Now, Therefore, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties mutually agree that the
Prior Agreement is amended and restated to read in its entirety as follows:

<PAGE>
 
SECTION 1.     GENERAL

     1.1  Definitions.

          As used in this Agreement the following terms shall have the following
respective meanings:

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Form S-3" means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.

          "Holder" means any person owning of record Registrable Securities that
have not been sold to the public, or any assignee of record of such Registrable
Securities in accordance with Section 2.10 hereof.

          "Initial Offering" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act with aggregate proceeds in excess of $75,000,000.

          "Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.

          "Registrable Securities" means (a) Common Stock of the Company issued
or issuable upon conversion of the Shares; and (b) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, such above-described
securities or the Shares.  Notwithstanding the foregoing, Registrable Securities
shall not include any securities sold by a person to the public either pursuant
to a registration statement or Rule 144 or sold in a private transaction in
which the transferor's rights under Section 2 of this Agreement are not
assigned.

          "Registrable Securities then outstanding" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (a) are then issued and
outstanding or (b) are issuable pursuant to then exercisable or convertible
securities.

          "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed Fifty Thousand Dollars ($50,000) of a single special counsel for the
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).

                                       2

<PAGE>
 
          "SEC" or "Commission" means the Securities and Exchange Commission.

          "Securities Act" shall mean the Securities Act of 1933, as amended.

          "Series D Holders" shall mean Investors that hold outstanding shares
of Series D Stock and Investors that purchase Series D Stock pursuant to the
Purchase Agreement and their permitted transferees and assigns.

          "Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale.

          "Shares" shall mean the Series A Stock, Series B Stock, Series C Stock
and Series D Stock outstanding as of the date hereof and Series D Stock issued
pursuant to the Purchase Agreement, all as held by the Investors listed on
Exhibits A, B, C and D hereto and their permitted assigns.
----------  -  -     -                                    

SECTION 2.     RESTRICTIONS ON TRANSFER; REGISTRATION.

     2.1  Restrictions on Transfer.

          (a)  Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and until:

               (i)    There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or

               (ii)   (A) The transferee (other than a transferee of Shares or
Registrable Securities pursuant to Rule 144 or pursuant to a transfer of the
type referred to in Section 2(a)(iii) below) has agreed in writing to be bound
by the terms of this Agreement, (B) such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (C) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144.

               (iii)  Notwithstanding the provisions of paragraphs (i) and (ii)
above, no such registration statement, opinion of counsel or agreement to be
bound by this Agreement shall be necessary for a transfer by a Holder which is
(A) a partnership to its partners or former partners in accordance with
partnership interests, (B) a corporation to its stockholders in accordance with
their interest in the corporation, (C) a limited liability company to its
members or former members in accordance with their interest in the limited
liability company, or (D) to the Holder's family member or to a trust for the
benefit of an individual Holder; provided that in each case the transferee will
be subject to the terms of this Agreement to the same extent as if he were an
original Holder hereunder.

                                       3

<PAGE>
 
          (b)  Each certificate representing Shares or Registrable Securities
shall (unless otherwise permitted by the provisions of this Agreement) be
stamped or otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable state securities
laws or as provided elsewhere in this Agreement):

          THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
          OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
          HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR
          UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
          SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
          REGISTRATION IS NOT REQUIRED.

          (c)  The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities proposed
to be disposed of may lawfully be so disposed of without registration,
qualification or legend.

          (d)  Any legend endorsed on an instrument pursuant to applicable state
securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.

     2.2  Demand Registration.

          (a)  Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from the Holders of at least fifty percent (50%)
of the Registrable Securities then outstanding or the holders of at least twenty
(20) percent of the Company's Common Stock issued or issuable upon conversion of
the Series D Stock (the "Initiating Holders") that the Company file a
registration statement under the Securities Act covering the registration of
Registrable Securities having an aggregate offering price to the public in
excess of $20,000,000 (a "Qualified Public Offering"), then the Company shall,
within ten (10) days of the receipt thereof, give written notice of such request
to all Holders and, subject to the limitations of this Section 2.2, use its best
efforts to effect, as soon as practicable, and in any event within sixty (60)
days of the receipt of such request, the registration under the Securities Act
of all Registrable Securities that the Holders request to be registered.

          (b)  If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 2.2
or any request pursuant to Section 2.4 and the Company shall include such
information in the written notice referred to in Section 2.2(a) or Section
2.4(a), as applicable. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting

                                       4

<PAGE>
 
(unless otherwise mutually agreed by a majority in interest of the Initiating
Holders and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority-in-interest of the Initiating
Holders (which underwriter or underwriters shall be reasonably acceptable to the
Company). Notwithstanding any other provision of this Section 2.2 or Section
2.4, if the underwriter advises the Company that marketing factors require a
limitation of the number of securities to be underwritten (including Registrable
Securities) then the Company shall so advise all Holders of Registrable
Securities which would otherwise be underwritten pursuant hereto, and the number
of shares that may be included in the underwriting shall be allocated to the
Holders of such Registrable Securities on a pro rata basis based on the number
of Registrable Securities held by all such Holders (including the Initiating
Holders), provided however that the number of Shares of Registrable Securities
to be included in such underwriting shall not be reduced unless all other
securities are first entirely excluded from the underwriting. Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
the registration.

          (c)  The Company shall not be required to effect a registration
pursuant to this Section 2.2:

               (i)    prior to the earlier of (A) the second anniversary of the
date of this Agreement and (B) the date which is 180 days after the effective
date of the registration statement pertaining to the Initial Offering; or

               (ii)   after the Company has effected two (2) registrations
pursuant to this Section 2.2 for all Registrable Securities and two (2)
registrations for the Holders of Series D Preferred Stock and such registrations
have been declared or ordered effective; or

               (iii)  during the period starting with the date of filing of, and
ending on the date one hundred eighty (180) days following the effective date of
the registration statement pertaining to the Initial Offering; provided that the
Company makes all reasonable good faith efforts to cause such registration
statement to become effective; or

               (iv)   if within ten (10) days of receipt of a written request
from Initiating Holders pursuant to Section 2.2(a), the Company gives notice to
the Holders of the Company's intention to make its Initial Offering within
ninety (90) days; provided, that, (a) the Company makes all reasonable good
faith efforts to file and cause to become effective within such 90 day period
the registration statement pertaining to such Initial Offering and (b) such
right to delay a request shall be exercised by the Company not more than once in
any twelve (12) month period; or

               (v)    if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2, a certificate signed by the
Chairman of the Board stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its stockholders for such registration statement to be effected at such time, in
which event the Company shall have the right to defer such filing for a period
of not more than ninety (90) days after receipt of the request of the Initiating
Holders; provided that 

                                       5

<PAGE>
 
such right to delay a request shall be exercised by the Company not more than
once in any twelve (12) month period.

     2.3  Piggyback Registration.

          The Company shall notify all Holders in writing at least thirty (30)
days prior to the initial filing of any registration statement under the
Securities Act for purposes of a public offering of securities of the Company
(including, but not limited to, registration statements relating to secondary
offerings of securities of the Company, and registrations commenced pursuant to
Section 2.2, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder.  Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within 20 days after receipt of the above-described notice from the
Company, so notify the Company in writing and the Company shall, subject to
Section 2.3(a), cause to be registered under the Securities Act all of the
Registrable Securities that each such Holder has requested to be registered.  If
a Holder decides not to include all of its Registrable Securities in any
registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.

          (a)  Underwriting.  If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders. In such event, the right of any such Holder
to be included in a registration pursuant to this Section 2.3 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated, first, to
the Company; second, to the Holders on a pro rata basis based on the total
number of Registrable Securities entitled and requested by the Holders to be
included in the offering under this Section 2.3; and third, to any stockholder
of the Company (other than a Holder) on a pro rata basis. No such reduction
shall reduce the amount of securities of the selling Holders included in the
registration below thirty percent (30%) of the total amount of securities
included in such registration, unless such offering is the Initial Offering and
such registration does not include shares of any other selling stockholder, in
which event any or all of the Registrable Securities of the Holders may be
excluded in accordance with the immediately preceding sentence. In no event will
shares of any other selling stockholder be included in such registration which
would reduce the number of shares which may be included by Holders without the
written consent of Holders of not less than a majority of the Registrable
Securities proposed to be sold in the offering.

                                       6

<PAGE>
 
          (b)  Right to Terminate Registration.  The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.5 hereof.

     2.4  Form S-3 Registration.

          In case the Company shall receive from any Holder or Holders a written
request or requests that the Company effect a registration on Form S-3 (or any
successor to Form S-3) or any similar short-form registration statement and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:

          (a)  promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders; and

          (b)  as soon as practicable and in any event within sixty (60) days of
the receipt of such request, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within 20
days after receipt of such written notice from the Company; provided, however,
that the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 2.4:

               (i)    if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or

               (ii)   if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than $500,000, or

               (iii)  if the Company shall furnish to the Holders a certificate
signed by the Chairman of the Board of Directors of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than ninety (90) days after receipt of the request of the
Holder or Holders under this Section 2.4; provided, that such right to delay a
request shall be exercised by the Company not more than once in any twelve (12)
month period, or

               (iv)   if the Company has, within the twelve (12) month period
preceding the date of such request, already effected two (2) registrations on
Form S-3 for the Holders pursuant to this Section 2.4, or

                                       7

<PAGE>
 
               (v)    in any particular jurisdiction in which the Company would
be required to qualify to do business or to execute a general consent to service
of process in effecting such registration, qualification or compliance.

          (c)  Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 2.4 shall not be counted as demands for registrations or registrations
pursuant to Section 2.2.

     2.5  Expenses of Registration.

          Except as specifically provided herein, all Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Sections 2.2, 2.3 or 2.4 herein shall be borne by the Company.  All
Selling Expenses incurred in connection with any registration hereunder, shall
be borne by the holders of the securities so registered pro rata on the basis of
the number of shares so registered.  The Company shall not, however, be required
to pay for expenses of any registration proceeding begun pursuant to Sections
2.2 or 2.4, the request of which has been subsequently withdrawn by the
Initiating Holders unless (a) the withdrawal is based upon material adverse
information concerning the Company of which the Initiating Holders were not
aware at the time of such request or (b) the Holders of a majority of
Registrable Securities agree to forfeit their right to one requested
registration pursuant to Sections 2.2 or 2.4, as applicable, in which event such
right shall be forfeited by all Holders).  If the Holders are required to pay
the Registration Expenses, such expenses shall be borne by the holders of
securities (including Registrable Securities) requesting such registration in
proportion to the number of shares for which registration was requested.  If the
Company is required to pay the Registration Expenses of a withdrawn offering
pursuant to clause (a) above, then the Holders shall not forfeit their rights to
a demand registration pursuant to Sections 2.2 or 2.4.

     2.6  Obligations of the Company.

          Whenever required to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:

          (a)  Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to one hundred and twenty (120)
days or, if earlier, until the Holder or Holders have completed the distribution
related thereto. If requested by any Initiating Holder, any registration
effected pursuant to Section 2.2 or Section 2.4 will be a registration that
contemplates a distribution of securities on a delayed or continuous basis
pursuant to Rule 415 promulgated under the Securities Act, in which case the
applicable registration statement shall be kept effective until all securities
covered thereby have been sold.

          (b)  Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as 

                                       8

<PAGE>
 
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement.

          (c)  Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.

          (d)  Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.

          (e)  In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

          (f)  Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.

          (g)  Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.

          (h)  Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.

          (i)  Cooperate and assist in any filings to be made with the National
Association of Securities Dealers.

          (j)  Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten

                                       9

<PAGE>
 
public offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any, and if
permitted by applicable accounting standards, to the Holders requesting
registration of Registrable Securities.

     2.7  Termination of Registration Rights.

          All registration rights granted under this Section 2 shall terminate
and be of no further force and effect five (5) years after the date of the
Company's Initial Offering.  In addition, a Holder's registration rights shall
expire if (a) the Company has completed its Initial Offering and is subject to
the provisions of the Exchange Act and (b) all Registrable Securities held by
and issuable to such Holder (and its affiliates, partners and former partners)
may be sold under Rule 144 during any ninety (90) day period.

     2.8  Delay of Registration; Furnishing Information.

          (a)  No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 2.

          (b)  It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Sections 2.2, 2.3 or 2.4 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.

     2.9  Indemnification.

          In the event any Registrable Securities are included in a registration
statement under Sections 2.2, 2.3 or 2.4:

          (a)  To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, stockholders, members, officers and
directors of each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse each such Holder, partner, officer, director,
stockholder, member, underwriter or controlling person for any legal or other
expenses reasonably incurred by them in connection

                                       10

<PAGE>
 
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
        --------  -------                                                
Section 2.9(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld, nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, partner, officer, director, legal counsel, underwriter or
controlling person of such Holder.

          (b)  To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify and hold
harmless the Company, each of its directors, its officers, and each person, if
any, who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will reimburse any legal
or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, or partner, officer,
director, or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 2.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 2.9 exceed the net proceeds from the offering
received by such Holder.

          (c)  Promptly after receipt by an indemnified party under this Section
2.9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party

                                       11

<PAGE>
 
within a reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.9, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.9.

           (D) If the indemnification provided for in this Section 2.9 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the net proceeds from the offering received by such
Holder.

           (e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.

           (f) The obligations of the Company and Holders under this Section 2.9
shall survive completion of any offering of Registrable Securities pursuant to a
registration statement and the termination of this Agreement. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.

     2.10  Assignment of Registration Rights.

           The rights to cause the Company to register Registrable Securities
pursuant to this Section 2 may be assigned by a Holder to a transferee or
assignee of Registrable Securities which (a) is a subsidiary, parent, general
partner, limited partner, member, stockholder, affiliate or retired partner or
retired member of a Holder, (b) is a Holder's family member or is a trust for
the benefit of an individual Holder, or (c) acquires at least fifty thousand
(50,000) shares of Registrable Securities (as adjusted for stock splits and
combinations) or 100% of the Registrable Securities held by the transferring
Holder; provided, however, (i) the transferor shall, within fifteen (15) days
        --------  -------                                                    
after such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration 

                                       12

<PAGE>
 
rights are being assigned and (ii) such transferee shall agree to be subject to
all restrictions set forth in this Agreement.

     2.11  Amendment of Registration Rights.

           Any provision of this Section 2 may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Holders of at least 66-2/3% of the Registrable Securities then
outstanding and holders of 76% of the outstanding Registrable Securities held by
all Series D Holders.  Any amendment or waiver effected in accordance with this
Section 2.11 shall be binding upon each Holder and the Company.  By acceptance
of any benefits under this Section 2, Holders of Registrable Securities hereby
agree to be bound by the provisions hereunder.

     2.12  Limitation on Subsequent Registration Rights.

           After the date of this Agreement, the Company shall not, without the
prior written consent of the Holders of a majority of the Registrable Securities
then outstanding, enter into any agreement with any holder or prospective holder
of any securities of the Company that would grant such holder registration
rights senior to, or on parity with, those granted to the Holders hereunder.

     2.13  "Market Stand-Off' Agreement.

           Each Holder hereby agrees that such Holder shall not sell or
otherwise transfer or dispose of any Common Stock (or other securities) of the
Company held by such Holder (other than those included in the registration) for
a period specified by the representative of the underwriters of Common Stock (or
other securities) of the Company not to exceed one hundred eighty (180) days
following the effective date of a registration statement of the Company filed
under the Securities Act, provided that:

               (i)  such agreement shall apply only to the Company's Initial
Offering; and

               (ii) all officers, directors, one-percent security holders of the
Company, and other persons holding a majority in interest of securities of the
Company with registration rights (whether or not pursuant to this Agreement),
enter into similar agreements.

           Each Holder agrees to execute and deliver such other agreements as
may be reasonably requested by the Company or the underwriter which are
consistent with the foregoing or which are necessary to give further effect
thereto. The obligations described in this Section 2.13 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a SEC Rule 145 transaction on Form S-4 or similar forms that
may be promulgated in the future. The Company may impose stop-transfer
instructions with respect to the shares of Common Stock (or other securities)
subject to the foregoing restriction until the end of said one hundred eighty
(180) day period.

                                       13

<PAGE>
 
     2.14  Rule 144 Reporting.

           (a) With a view to making available to the Holders the benefits of
certain rules and regulations of the SEC which may permit the sale of the
Registrable Securities to the public without registration, the Company agrees to
use its best efforts to:

           (b) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;

           (c) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and

           (d) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 of the Securities
Act, and of the Exchange Act (at any time after it has become subject to such
reporting requirements); a copy of the most recent annual or quarterly report of
the Company; and such other reports and documents as a Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to
sell any such securities without registration.

SECTION 3.  Covenants Of The Company

     3.1   Basic Financial Information and Reporting.

           (a) The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.

           (b) As soon as practicable after the end of each fiscal year of the
Company, and in any event within 90 days thereafter, the Company will furnish to
each Investor a consolidated balance sheet of the Company, as at the end of such
fiscal year, and a consolidated statement of operations and a consolidated
statement of cash flows of the Company, for such year, all prepared in
accordance with generally accepted accounting principles consistently applied
and setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail. Such financial statements shall be
accompanied by a report and opinion thereon by independent public accountants of
national standing selected by the Company's Board of Directors.

           (c) The Company will furnish to each Investor, as soon as practicable
after the end of each month, and in any event within thirty (30) days
thereafter, a consolidated balance sheet of the Company as of the end of each
such period, and a consolidated statement of operations and a consolidated
statement of cash flows of the Company for such period and for the current
fiscal year to date, prepared in accordance with generally accepted accounting

                                       14

<PAGE>
 
principles, with the exception that no notes need be attached to such statements
and year-end audit adjustments may not have been made.

           (d) So long as an Investor (with its affiliates) shall own not less
than one hundred thousand (100,000) shares of Registrable Securities (as
adjusted for stock splits and combinations) (a "Major Investor"), the Company
will furnish to each such Major Investor (i) at least thirty (30) days prior to
the beginning of each fiscal year an annual budget, business and operating plans
for such fiscal year (and as soon as available, any subsequent revisions
thereto); and (ii) as soon as practicable after the end of each month, and in
any event within twenty (20) days thereafter, a consolidated balance sheet of
the Company as of the end of each such month, and a consolidated statement of
operations and a consolidated statement of cash flows of the Company for such
month and for the current fiscal year to date, including a comparison to plan
figures for such period, prepared in accordance with generally accepted
accounting principles consistently applied, with the exception that no notes
need be attached to such statements and year-end audit adjustments may not have
been made.

     3.2   Inspection Rights.

           Each Investor shall have the right to visit and inspect any of the
properties of the Company or any of its subsidiaries, and to discuss the
affairs, finances and accounts of the Company or any of its subsidiaries with
its officers, and to review such information as is reasonably requested all at
such reasonable times and as often as may be reasonably requested; provided,
however, that the Company shall not be obligated under this Section 3.2 to
provide such access for any competitor of the Company or to any information
which the Board of Directors determines in good faith is confidential and should
not, therefore, be disclosed.

     3.3   Confidentiality of Records.
     
           Each Investor agrees to use, and to use its best efforts to ensure
that its authorized representatives use, the same degree of care as such
Investor uses to protect its own confidential information to keep confidential
any information furnished to it which the Company identifies as being
confidential or proprietary (so long as such information is not in the public
domain), except that such Investor may disclose such proprietary or confidential
information to any partner, subsidiary, affiliate or parent of such Investor for
the purpose of evaluating its investment in the Company as long as such partner,
subsidiary or parent is advised of the confidentiality provisions of this
Section 3.3).

     3.4   Reservation of Common Stock.

           The Company will at all times reserve and keep available, solely for
issuance and delivery upon the conversion of the Series A Stock, Series B Stock,
Series C Stock and Series D Stock, all Common Stock issuable from time to time
upon such conversion.

     3.5   Stock Vesting.

           Unless otherwise approved by the Board of Directors, all stock
options, stock and other stock equivalents issued after the date of this
Agreement to employees, directors, consultants and other service providers shall
be subject to vesting as follows: (a) twenty-five 

                                       15

<PAGE>
 
percent (25%) of such stock shall vest at the end of the first year following
the date of issuance or such person's services commencement date with the
Company, if earlier, and (b) seventy-five percent (75%) of such stock shall vest
in monthly increments over the remaining three (3) years. With respect to any
shares of stock purchased by any such person, the Company's repurchase option
shall provide that upon such person's termination of employment or service with
the Company, with or without cause, the Company or its assignee (to the extent
permissible under applicable securities laws and other laws) shall have the
option to purchase at cost any unvested shares of stock held by such person. In
addition, with respect to any shares of stock purchased by any such person, the
Company shall have a right of first refusal with respect to all transfers of any
such shares of stock (with customary exceptions for transfers in connection with
estate planning and similar matters).

     3.6  Proprietary Information and Inventions Agreement.

          The Company shall require all employees and consultants to execute and
deliver a Proprietary Information and Inventions Agreement in the form attached
to the Purchase Agreement.

     3.7  Real Property Holding Corporation.

          The Company covenants that it will operate in a manner such that it
will not become a "United States real property holding corporation" ("USRPHC"),
as that term is defined in Section 897(c)(2) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder ("FIRPTA").  The Company agrees
to make determinations as to its status as a USRPHC, and will file statements
concerning those determinations with the Internal Revenue Service, in the manner
and at the times required under Reg. (S) 1.897-2(h), or any supplementary or
successor provision thereto.  Within 30 days of a request from an Investor or
any of its partners, the Company will inform the requesting party, in the manner
set forth in Reg. (S) 1.897-2(h)(1)(iv) or any supplementary or successor
provision thereto, whether that party's interest in the Company constitutes a
United States real property interest (within the meaning of Internal Revenue
Code Section 897(c)(1) and the regulations thereunder) and whether the Company
has provided to the Internal Revenue Service all required notices as to its
USRPHC status.

     3.8  Visitation Rights.

          For so long as any entity whose investment decisions are directed by
QuestMark Advisers, LLC shall hold any of the Company's securities, the Company
shall allow one representative designated by QuestMark Advisers, LLC to attend
all meetings of the Company's Board of Directors in a non-voting capacity and,
in connection therewith, the Company shall give such representative copies of
all notices, minutes, consents and other materials, financial or otherwise,
which the Company provides to its Board of Directors; provided, however, that
                                                      --------  -------      
the Company reserves the right to exclude such representative from access to any
material or meeting or portion thereof if the Company believes upon advice of
counsel that such exclusion is reasonably necessary to preserve the attorney-
client privilege, to protect Confidential Information, or for other similar
reasons.  For so long as any entity whose investment decisions are directed by
any of Oak Hill Capital Partners, L.P., The Carlyle Group or ABS Ventures (the
"Series D Investors") shall hold any of the Company's securities, the Company
shall allow one 

                                       16

<PAGE>
 
representative designated by each Series D Investor, as applicable, to attend
all meetings of the Company's Board of Directors (including the Executive
Committee of the Board of Directors) in a non-voting capacity and, in connection
therewith, the Company shall give each such representative copies of all
notices, minutes, consents and other materials, financial or otherwise, which
the Company provides to its Board of Directors; provided, however, that the
                                                --------  ------- 
Company reserves the right to exclude such representative from access to any
material or meeting or portion thereof if the Company believes upon advice of
counsel that such exclusion is reasonably necessary to preserve the attorney-
client privilege.

     3.9   Major Company Investments.

           Without the prior written consent of the holders of a majority of the
outstanding Shares, voting separately as a class, the Company will not, and will
not permit any of its subsidiaries to purchase or otherwise acquire (by merger,
consolidation, reorganization, combination or otherwise), in one transaction or
a series of related transactions, the capital stock or equity securities of any
entity or all or any substantial portion of the assets of any person or entity,
if the aggregate fair market value of the consideration paid or surrendered
therefore equals or exceeds $50,000,000.

     3.10  Termination of Covenants.

           All covenants of the Company contained in Section 3 of this Agreement
(except those contained in Sections 3.4; and those contained in Section 3.8,
which Section 3.8 covenants shall expire on the second anniversary of the
effective date of the Initial Offering) shall expire and terminate as to each
Investor on the effective date of the registration statement pertaining to the
Initial Offering.

SECTION 4.  RIGHTS OF FIRST REFUSAL

     4.1   Subsequent Offerings.

           Each Investor shall have a right of first refusal to purchase its pro
rata share of all Equity Securities, as defined below, that the Company may,
from time to time, propose to sell and issue after the date of this Agreement,
other than the Equity Securities excluded by Section 4.6 hereof.  Each
Investor's pro rata share is equal to the ratio of (a) the number of shares of
the Company's Common Stock (including all shares of Common Stock issued or
issuable upon conversion of the Shares) of which such Investor is deemed to be a
holder immediately prior to the issuance of such Equity Securities to (b) the
total number of shares of the Company's outstanding Common Stock (including all
shares of Common Stock issued or issuable upon conversion of any securities
convertible into Common Stock or upon the exercise of any outstanding warrants
or options) immediately prior to the issuance of the Equity Securities.  The
term "Equity Securities" shall mean (i) any Common Stock, Preferred Stock or
other security of the Company, (ii) any security convertible, with or without
consideration, into any Common Stock, Preferred Stock or other security
(including any option to purchase such a convertible security), (iii) any
security carrying any warrant, option or right to subscribe to or purchase any
Common Stock, Preferred Stock or other security or (iv) any such warrant, option
or right.

                                       17

<PAGE>
 
     4.2  Exercise of Rights.

          If the Company proposes to issue any Equity Securities, it shall give
each Investor written notice of its intention, describing the Equity Securities,
the price and the terms and conditions upon which the Company proposes to issue
the same.  Each Investor shall have twenty (20) days from the receipt of such
notice to agree to purchase its pro rata share of the Equity Securities for the
price and upon the terms and conditions specified in the notice by giving
written notice to the Company and stating therein the quantity of Equity
Securities to be purchased.  Notwithstanding the foregoing, the Company shall
not be required to offer or sell such Equity Securities to any Investor who
would cause the Company to be in violation of applicable federal securities laws
by virtue of such offer or sale.

     4.3  Issuance of Equity Securities to Other Persons.

          If not all of the Investors elect to purchase their pro rata share of
the Equity Securities, then the Company shall promptly notify in writing the
Investors who do so elect and shall offer such Investors the right to acquire
such unsubscribed shares.  The Investors shall have 10 days after receipt of
such notice to notify the Company of their election to purchase their pro rata
portion of all or a portion of the unsubscribed shares.  If the Investors fail
to exercise in full the rights of first refusal, the Company shall have ninety
(90) days thereafter to sell the Equity Securities in respect of which the
Investors' rights were not exercised, at a price and upon general terms and
conditions materially no more favorable to the purchasers thereof than specified
in the Company's notice to the Investors pursuant to Section 4.2 hereof.  If the
Company has not sold such Equity Securities within ninety (90) days of the
notice provided pursuant to Section 4.2, the Company shall not thereafter issue
or sell any Equity Securities without first offering such securities to the
Investors in the manner provided above.

     4.4  Termination of Rights of First Refusal.

          The rights of first refusal established by this Section 4 shall not
apply to, and shall terminate upon the effective date of the registration
statement pertaining to, the Initial Offering.

     4.5  Transfer of Rights of First Refusal.

          The rights of first refusal of each Investor under this Section 4 may
be transferred to the same parties and subject to the same restrictions as any
transfer of registration rights pursuant to Section 2.10.

     4.6  Excluded Securities.

          The rights of first refusal established by this Section 4 shall have
no application to any of the following Equity Securities:

          (a)  shares of Common Stock (and/or options, warrants or other Common
Stock purchase rights) issued or to be issued to employees, officers or
directors of, or consultants or advisors to the Company or any subsidiary for
the primary purpose of soliciting or retaining their services, pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board of Directors; provided, however, that following the effective date of this

                                       18

<PAGE>
 
Agreement, options, warrants or other Common Stock purchase rights to purchase
more than an aggregate of 1,665,989 shares of the Company's Common Stock (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like) shall not be issued without the approval of the holders of at least
seventy-six percent (76%) of the outstanding Series D Preferred.

          (b)  stock issued pursuant to Common Stock purchase rights, options
and warrants outstanding as of the date of this Agreement; and stock issued
pursuant to any Common Stock purchase rights, options and warrants granted after
the date of this Agreement, provided that the rights of first refusal
established by this Section 4 applied with respect to the initial sale or grant
by the Company of such rights, options or warrants;

          (c)  any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business combination
and approved by at least seventy-six percent (76%) of the outstanding Series D
Preferred;

          (d)  shares of Common Stock issued in connection with any stock split,
stock dividend or recapitalization by the Company;

          (e)  shares of Common Stock issued upon conversion of the Shares;

          (f)  any Equity Securities issued pursuant to any equipment leasing
arrangement, or commercial credit arrangement from a bank or similar financial
institution; and

          (g)  any Equity Securities that are issued by the Company in its
Initial Offering.

          (h)  shares of Series D Preferred Stock issued at closings subsequent
to the date of this Agreement as contemplated by the Purchase Agreement.

SECTION 5.  MISCELLANEOUS.

     5.1  Governing Law.

          This Agreement shall be governed by and construed under the laws of
the State of California as applied to agreements among California residents
entered into and to be performed entirely within California.

     5.2  Survival.

          The representations, warranties, covenants, and agreements made herein
shall survive any investigation made by any Investor and the closing of the
transactions contemplated hereby.  All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.

                                       19

<PAGE>
 
     5.3  Successors and Assigns.

          Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors, and administrators of the parties hereto and shall inure to
the benefit of and be enforceable by each person who shall be a holder of
Registrable Securities from time to time; provided, however, that prior to the
receipt by the Company of adequate written notice of the transfer of any
Registrable Securities specifying the full name and address of the transferee,
the Company may deem and treat the person listed as the holder of such shares in
its records as the absolute owner and holder of such shares for all purposes,
including the payment of dividends or any redemption price.

     5.4  Entire Agreement.

          This Agreement, the Exhibits hereto, the Purchase Agreement and the
other documents delivered pursuant thereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.

     5.5  Severability.

          In case any provision of this Agreement shall be invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

     5.6  Amendment and Waiver.

          (a)  Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least 66-2/3% of the Registrable Securities; provided, however, any
                                                  --------  -------     
amendment or modification which adversely affects the rights, of the holders of
Series D Stock shall require the written consent of the holders of at least 76%
of the shares of Series D Stock.

          (b)  Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of at least 66-2/3% of the Registrable
Securities; provided, however, any waiver which adversely affects the rights, of
            --------  -------                                        
the holders of Series D Stock shall require the written consent of the holders
of at least 76% of the shares of Series D Stock.

          (c)  Notwithstanding the foregoing, this Agreement may be amended with
only the written consent of the Company to include additional purchasers of
Shares as "Investors," "Holders" and parties hereto.

     5.7  Delays or Omissions.

          It is agreed that no delay or omission to exercise any right, power,
or remedy accruing to any Holder, upon any breach, default or noncompliance of
the Company under this Agreement shall impair any such right, power, or remedy,
nor shall it be construed to be a waiver 

                                       20

<PAGE>
 
of any such breach, default or noncompliance, or any acquiescence therein, or of
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, by law, or otherwise
afforded to Holders, shall be cumulative and not alternative.

     5.8   Notices.

           All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to be
notified, (b) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient; if not, then on the next business day, (c) five
(5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt.  All communications shall be sent to the party to be
notified at the address as set forth on the signature pages hereof or the
Exhibits hereto or at such other address as such party may designate by ten (10)
days advance written notice to the other parties hereto.

     5.9   Attorneys' Fees.

           In the event that any dispute among the parties to this Agreement
should result in litigation, the prevailing party in such dispute shall be
entitled to recover from the losing party all fees, costs and expenses of
enforcing any right of such prevailing party under or with respect to this
Agreement including, without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

     5.10  Titles and Subtitles.

           The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.

     5.11  Counterparts.

           This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.

     5.12  Regulatory Matters.

           (a) Cooperation of Other Parties.  Each party hereto agrees to
               ----------------------------                              
cooperate with the Company in all reasonable respects in complying with the
terms and provisions of the letter agreement between the Company and ABS
Ventures, a copy of which is attached hereto as Exhibit E, regarding small
                                                ---------                 
business matters (the "Small Business Sideletter"), including without
limitation, voting to approve the Company's Amended and Restated Certificate of
Incorporation (the "Certificate"), the Company's By-Laws or this Agreement in a
manner reasonably acceptable to the parties and ABS Ventures or any Regulated
Holder (as defined in the Small Business Sideletter) entitled to make such
request pursuant to the Small Business Sideletter in order to remedy a
Regulatory Problem (as defined in the Small Business Sideletter).  Anything

                                       21

<PAGE>
 
contained in this Section 5.12 to the contrary notwithstanding, no party shall
be required under this Section 5.12 to take any action that would adversely
affect such party's rights under this Agreement or as a stockholder of the
Company.

          (b)  Covenant Not to Amend.  The Company and each party agree not to
               ---------------------                                          
amend or waive the voting or other provisions of the Certificate, the Company's
By-Laws or this Agreement if such amendment or waiver would cause any Regulated
Holder to have a Regulatory Problem (as defined in the Small Business
Sideletter).  Investor agrees to notify the Company as to whether or not it
would have a Regulatory Problem promptly after ABS Ventures has notice of such
amendment or waiver.  Anything contained in this Section 5.12 to the contrary
notwithstanding, no party shall be required under this Section 5.12 to take any
action that would adversely affect such party's rights under this Agreement or
as a stockholder of the Company.

                                       22

<PAGE>
 
          In Witness Whereof, the parties hereto have executed this Amended and
Restated Investors Rights Agreement as of the date set forth in the first
paragraph hereof.


                                   COMPANY:

                                   Align Technology, Inc.



                                   By:________________________________________
                                      Zia Chishti, Chief Executive Officer
                                      442 Potrero Avenue
                                      Sunnyvale, CA  94086

<PAGE>
 
                                   Exhibit A

                        SCHEDULE OF SERIES A INVESTORS


Kleiner Perkins Caufield & Byers VIII, L.P.
KPCB VIII Founders Fund, L.P.
KPCB Life Sciences Zaibatsu Fund II, L.P.
Muhammad Ziaullah Chishti
Gretchen Daily
Leela DeSouza
Mark DeSouza
Ann Ehrlich and Paul Ehrlich
Barbara Freyburger and Peter Freyburger
Barbara Garvey and James Garvey
Pam Green
Nick Lapham
Apostolos Lerios
Garret McDonald
Rachel Obstler
Richard Ridgley
Diane Voght and William Voght
Julie Weber
Christopher Wirth
Kelsey Wirth
Timothy Wirth
Wren Wirth
Robin Kellogg
David Golob
Greg Wadden
Dan Huttenlocher
Professional Community Management of California, Inc.
John Larson
Theros Logothetis
F. Scott Jackson, Esq.
Nitin Mehta
Edward G. Hall and Elaine C. Hall
Carly M. Kurth
Amy N. Kurth
Richard C. and Margaret A. Kurth
Krista L. Danner
Gregory D. Danner
Dennis and Rona Danner

                                  Exhibit A-1

<PAGE>
 
                                   Exhibit B

                        SCHEDULE OF SERIES B INVESTORS


Domain Partners III, L.P.
3i Bioscience Investment Trust plc
DP III Associates, L.P.
Kleiner Perkins Caufield & Byers VIII, L.P.
KPCB VIII Founders Fund, L.P.
KPCB Life Sciences Zaibatsu Fund II, L.P
Gordon Gund
Grant Gund
Zachary Gund
Gordon Gund - Grant Gund Trust
Gordon Gund - Zachary Gund Trust
Mehta Family Partners for Series B
John Larson
Ike Udechuku
Russell Byers, Jr.
Paul and Anne Ehrlich
Josh Green
Wren Wirth
Timothy Wirth
Kelsey Wirth
Christopher Wirth
Warren Thaler
The Mandato Family Trust
Robert Grady
Nick Lapham
Gretchen Daily
Pam Green
Steve Nichols
Garrett McDonald
Professional Community Management of California
James Heslin
David Golob
Omar Ralph Godin
Ross Miller
Karen Terrey
The Van Linge Family Trust, Bradley V. Van Linge and
Stephanie W. Elkins Co-Trustees
F. Scott Jackson
Barbara and James Garvey
Rachel Obstler
Leela DeSouza

                                  Exhibit B-1

<PAGE>
 
Carly M. Kurth
Amy N. Kurth
Richard C. and Margaret A. Kurth
Krista Danner
Gregory D. Danner
Dennis and Rona Danner

                                  Exhibit B-2

<PAGE>
 
                                   Exhibit C

                        SCHEDULE OF SERIES C INVESTORS


QuestMark Partners, L.P.
QuestMark Partners Side Fund, L.P.
Kleiner Perkins Caufield & Byers VIII, L.P.
KPCB VIII Founders Fund, L.P.
Domain Partners III, L.P.
3i Bioscience Investment Trust plc
Gordon Gund
Grant Gund
Zachary Gund
Grant Gund 1978 Trust
G. Zachary Gund 1978 Trust
Vector Later-Stage Equity Fund II (Q.P.), L.P.
Vector Later-Stage Equity Fund II, L.P.
Bayview 99 I, L.P.
Bayview 99 II, L.P.
BancBoston Robertson Stephens
Gretchen Daily
Paul and Anne Ehrlich
David Golob
Pam Green
F. Scott Jackson
Richard and Margaret Kurth
Nick Lapham
John Larson
Garrett McDonald
Mehta Family Partners
Professional Com. Mgmt of CA
Christopher Wirth
Kelsey Wirth
Timothy Wirth
Wren Wirth
James Heslin
Karen Terrey
Ike Udechuku
Brad Van Linge
Jae Ahn
Rafael Arapeles
Dr. Andy Barron
Joe Breeland
Doug Bukaty
Ka Man Cheang

                                  Exhibit C-1

<PAGE>
 
Julie Child
Julie Dela Fuente
Gene Detwiler
Trang Duong
Francisco Garcia
Marty Graham
Robert Hall
Beth Halloran
Cynthia & Joe Huber
Robert Huber
Ed Ivers
Bruce Jacobs
Alamgir Khan
Dr. James Kohl
Eric Kuo
Grace & Ben Kuo
Min-Jin Kuo
Helen Lear
Can Nguyen
Scott O'Neil
Elena Pavlovskaia
Mari Sawtelle
Lisa Scott
Bill Steuben
Ray Stewart
Jeff Tunnell
Russell Whorton
Cliff Williams
Ian Williams
Andrew Trosien
Allen Lee
Len Hedge
Kay White
Alex Benton
Elliott Benton
Ethan Benton
Meredith Benton
Leland Benton
Michele Beers
Jonathon and Leilani Beers
Raymond James & Assoc. Inc. CSDN FBO
Ronald B. Cooper DDS PA MPPP
John V. Terrey
Jeffrey D. Terrey
Janice Sykes
Rita or Troy P. Miller Jr.

                                  Exhibit C-2

<PAGE>
 
Pearl C. Vargha

                                  Exhibit C-3



<PAGE>
 
                                                                    EXHIBIT 10.2
 
[LETTERHEAD OF ALIGN]

November 6, 2000



Mr. Stephen Bonelli

Re:      Employment Terms

Dear  Steve:

Align Technology Incorporated is pleased to offer you the position of Chief
Financial Officer and Vice President of Finance, on the following terms.

You will be responsible for the entire finance and accounting functions of the
Company. Your place of work will be at the offices of Align Technology, 851
Martin Ave., Santa Clara, CA 95050.

Your base salary will be $16,666.67 monthly, less payroll deductions and all
required withholdings, which equates to $200,000.00 on an annualized basis. This
salary will be paid bi-weekly in accordance with the Company"s ordinary payroll
practices. You will also be eligible for a discretionary annual bonus, based
upon your achievement of objectives which will be set by Kelsey Wirth and me in
consultation with you. Furthermore, you will be eligible for the standard
Company benefits, including medical insurance, 20 days of paid vacation
annually, and sick leave. You will be eligible to participate in most benefits
on the first day of employment. Details about these benefit plans are available
for your review.

Subject to the approval of the Board of Directors, Align Technology
 will grant
you an immediately exercisable option to purchase 130,000 shares of Align
Technology common stock which shall be subject to a right of repurchase by the
Company until vested. The option shall vest as to 25% of the shares on the first
anniversary of your employment and as to 1/48th of the shares at the end of each
month thereafter, for full vesting after four (4) years. The exercise price
shall be 100% of the fair market value of the stock on the date of grant.
Subject to the approval by the Board, the Company will loan you funds adequate
to exercise at least 60% of your options. The loan will be repayable in two (2)
years and will bear interest at 7% per year payable annually. The loan will be
secured by stock being purchased.

You may terminate your employment with Align Technology at any time and for any
reason whatsoever; simply by notifying the Company. Likewise, the Company may
terminate your employment at any time and for any reason whatsoever, with or
without cause or advance notice. Although the Company may from time to time
change your position, duties, manager, hours and work location as it deems
necessary, the "at-will" nature of your employment relationship cannot be
changed except in writing signed by you and the President or CEO of the Company
expressly for that purpose.

Although your employment will be "at-will," if the Company terminates your
employment at any time without "Cause" or if you resign for "Good Reason" you
will be credited with one (1) year vesting of your options in addition to
whatever vesting you have earned to date, provided that you sign a full release
of all claims at the time your employment terminates.

For the purposes of additional vesting under this letter, "Cause" shall mean a
Company-initiated termination for any of the following reasons: (a) failure to
perform the material duties of your position; (b) being convicted of a crime;
(c) committing an act of fraud against, or the misappropriation of property
belonging to the Company; (d) intentional misconduct; or (e) a material breach
by you of this Agreement or any confidentiality or proprietary information
agreement between you and the Company. A termination by the Company for any
other reason is a termination without Cause.

<PAGE>
 
Also for the purposes of additional of vesting under this agreement, "Good
Reason" shall mean any reduction in your base salary, a change in reporting
responsibilities, a material change of work responsibilities as a result of a
change in control of the Company, or if you are required to relocate more than
45 miles from the current location of the Company. A resignation by you for any
other reason would be a resignation without Good Reason. You would be required
to give the Company notice and a reasonable opportunity during which to cure
before resigning for Good Reason.

This letter, together with your Proprietary Information and Inventions
Agreement, constitute the complete terms and conditions of your employment, and
these terms supersede any other agreements or promises made to you by anyone,
whether oral or written. As required by law, this offer is subject to
satisfactory proof of your right to work in the United States.

Please sign and date this letter upon your acceptance of our offer.

We look forward to your favorable reply and to a productive and enjoyable work
relationship.

Sincerely,


--------------------------------------
Zia Chishti, CEO



ACCEPTED:



-------------------------------------- 
Stephen J. Bonelli


--------------------------------------
Date



<PAGE>
 
                                                                    EXHIBIT 10.5

                             SUB-SUBLEASE AGREEMENT

  This Sub-sublease Agreement ("Sub-sublease") is made effective as of the ___
day of July, 2000, (the "Effective Date") by and between GW Com, Inc., a
Delaware corporation ("Sub-sublessor"), and Align Technology, Inc., a Delaware
corporation ("Sub-sublessee"). Sub-sublessor agrees to Sub-sublease to Sub-
sublessee, and Sub-sublessee agrees to Sub-sublease from Sub-sublessor, those
certain premises situated in the City of Santa Clara, County of Santa Clara,
State of California, consisting of approximately 15,704 rentable square feet of
space located in the building (the "Building") known as 851 Martin Avenue, Santa
Clara, California, more particularly set forth on Exhibit "A" hereto (the "Sub-
subleased Premises").

                                   ARTICLE 1

                  MASTER LEASE, SUBLEASE AND OTHER AGREEMENTS

     1.1  Subordinate to Master Lease. Except as specifically set forth herein, 
          ---------------------------                                  
this Sub-sublease is subject and subordinate to all of the terms and
conditions of the Sublease (the "Master Sublease") dated April 17, 2000,
between Golf Pro International, Inc., ("Master Sublessor") and Sub-sublessor
as "Sublessee" and the lease dated October 4, 1999 ("Master Lease") between
James S. Lindsey a "Lessor" ("Master Lessor"), and Master Sublessor, as the
"Lessee". Sub-sublessee
 hereby assumes and agrees to perform the obligations
of Sublessee under the Master Sublease and the Master Lease as more
particularly set forth herein, except as specifically stated to the contrary
herein. Unless otherwise defined, all capitalized terms used herein shall have
the same meanings as given them in the Master Sublease. A copy of the Master
Sublease is attached hereto as Exhibit "B1" and incorporated herein by this
reference. A copy of the Master Lease is attached hereto as Exhibit "B2" and
incorporated herein by this reference. Sub-sublessee shall not commit or
permit to be committed any act or omission which would violate any term or
condition of the Master Sublease or the Master Lease, as incorporated herein.
Sub-sublessee shall neither do nor permit anything to be done which would
cause the Master Sublease to be terminated or forfeited by reason of any right
of termination or forfeiture reserved or vested in Master Sublessor under the
Master Sublease, and Sub-sublessee shall indemnify and hold Sub-sublessor
harmless from and against all liability, judgments, costs, demands, claims,
and damages of any kind whatsoever (including, without limitation, attorneys'
fees and court costs) by reason of any failure on the part of Sub-sublessee to
perform any of the obligations of Sublessee under the Master Sublease which
Sub-sublessee has become obligated hereunder to perform. In the event of the
termination of Sub-sublessor's interest as Sublessee under the Master Sublease
for any reason, then this Sub-sublease shall terminate automatically upon such
termination without any liability of Master Lessor or Master Sublessor to Sub-
sublessee and other than for Sub-sublessor's breach, such termination shall be
without any liability of Sub-sublessor to Sub-sublessee. Sub-sublessee
represents and warrants to Sub-sublessor that it has read and is familiar with
the Master Sublease and the Master Lease. Notwithstanding any other provision
in this Sub-sublease, in the event the Master Sublease is canceled or
terminated for any reason, or involuntarily surrendered by operation of law
before the expiration date of this Sub-sublease, Sub-sublessee agrees, at the
sole option of the Master Sublessor, to attorn to the Master Sublessor for the
balance of the term of this Sub-sublease and on the then executory terms of
this Sub-sublease. That attornment will be evidenced by an

<PAGE>
 
agreement in form and substance reasonable satisfactory to the Master
Sublessor. Sub-sublessee agrees to execute and deliver such an agreement at
any time within ten (10) business days after request by the Master Sublessor.
Sub-sublessee waives the provisions of any law now or later in effect that may
provide Sub-sublessee any right to terminate this Sub-sublease or to surrender
possession of the Sub-subleased Premises in the event any proceeding is
brought by the Master Sublessor to terminate the Master Sublease. Sub-
sublessor will use reasonable efforts to cause Master Lessor and/or Master
Sublessor to fulfill their obligations under the Master Lease and Master
Sublease, respectively, as they pertain to the Sub-subleased Premises.

     1.2  Applicable Provisions. All of the terms and conditions contained in 
          ---------------------                                               
the Master Sublease as they may apply to the Sub-subleased Premises, except
those directly contradicted by the terms and conditions contained in this
document, and specifically except for Sections 1, 2, 3, 4, 5, 6.1, 6.2, 7, 9,
22, 23 and 25 of the Master Sublease are incorporated herein and shall be
terms and conditions of this Sub-sublease (with each reference therein to
"Sublessor" or "Sublessee", and "Sublease" to be deemed to refer to Sub-
sublessor, Sub-sublessee, and Sub-sublease, respectively, as appropriate).
With respect to the following provisions of the Master Lease that are
incorporated herein, the reference to Lessor shall mean Master Lessor only
8.2(b), 8.3(a), 8.3(b), 9.2, 9.3, 9.5, 10.1 and 57, and the following
additional sections of the Master Lease beyond those set forth or qualified in
Paragraph 10 of the Master Sublease are not incorporated herein 1, 2.1,
2.2,.2.3, 2.5, 2.6 as to the number of parking spaces, 3, 7.3(a), (b), 10,
11, 15.1, 37, 50, 56, 58, 59, and along with all of the following terms and
conditions set forth in this document, shall constitute the complete terms and
conditions of this Sub-sublease. Sub-sublessee's share of Common Area expenses
shall be 9.967% of expenses attributable to the entire Project, 15.446% of
expenses attributable to the Building, and 31.40% of the expenses attributable
to the common expenses of the Sublease Premises.

     1.3  Sub-sublessor shall have no liability to Sub-sublessee or any other
person for damage of any nature whatsoever as a result of the failure of Master
Sublessor or Master Lessor to perform said obligations except for Master
Sublessor's termination of the Sub-sublessor's interest as Sublessee under the
Master Sublease in the event of Sub-sublessor's breach of the Master Sublease,
and Sub-sublessee shall indemnify and hold Sub-sublessor harmless from any and
all claims and liability whatsoever for any such damage including, without
limitation, all costs and attorneys' fees incurred in defending against same.

                                  ARTICLE 2

                                    TERM

     2.1  Term.  The term of this Sub-sublease shall commence on the earlier of:
          ----    
(i) the date Sub-sublessor completes the demising wall and associated
improvements as set forth on Exhibit C hereto; or (ii) the date Sub-sublessee
commences to operate its business on the Sub-subleased Premises. This shall be
referred to as the "Commencement Date." The term of this Sub-sublease shall end
on August 14, 2002, unless sooner terminated pursuant to any provision of the
Master Sublease or Master Lease applicable to the Sub-subleased Premises (the
"Expiration Date"). Sublessor shall have no obligation to Sub-sublessee to
exercise any of its options to extend under the Master Sublease or Master Lease.

                                       2

<PAGE>
 
     2.2  Option to Extend.  Sub-sublessee shall have no option to extend this
          ----------------  
Sub-sublease.

     2.3  Sub-sublessor's Inability to Deliver Sub-subleased Premises. In the
          -----------------------------------------------------------        
event Sub-sublessor is unable to deliver possession of the Sub-subleased
Premises on or before the Commencement Date, Sub-sublessor shall not be liable
for any damage caused thereby, nor shall his Sub-sublease be void or voidable,
but Sub-sublessee shall not be liable for Rent until such time as Sub-sublessor
offers to deliver possession of the Sub-subleased Premises to Sub-sublessee, but
the term hereof shall not be extended by such delay.  Notwithstanding the
foregoing, if the Sub-subleased Premises are not delivered to Sub-sublessee in a
broom-clean condition on or before August 15, 2000, Sub-sublessee, at its
election and without waiving any other rights it may have, may terminate this
Sub-sublease upon written notice to Sub-sublessor and Sub-sublessor shall return
any payments made by Sub-sublessee to Sub-sublessor within the (10) days after
such termination.

    2.4  Early Access.  Subject to Master Lessor's and Master Sublessor's
         ------------                                                    
approval, and after execution of the Sub-Sublease by both parties, Sub-sublessee
may be permitted early access to the Sub-subleased Premises ("Early Access")
prior to the Commencement Date for the purpose of Tenant Improvement
construction (defined below). Such Early Access shall be subject to all of the
provisions of this Sub-sublease, except that Sub-sublessee shall not be required
to pay Rent.

                                   ARTICLE 3

                                      RENT

     3.1  Rent.  Sub-sublessee shall pay to Sub-sublessor each month during the 
          ----                             
term of this Sub-sublease, rent in the amount of:

                         Rental Period               Monthly Rent
                         -------------               ------------

          Commencement Date through July 14, 2001      $64,386
          July 15,2001 through July 14,2002            $66,899

     First month's rent shall be paid on execution hereof and monthly rent is
due and payable on or before the first of each month thereafter commencing on
the first day of the first calendar month immediately after the Commencement
Date.  Rent for partial months at the commencement or termination of this Sub-
sublease shall be prorated based on the number of days in such month. Rent shall
be paid to the Sub-sublessor at its business address noted herein, or at any
other place Sub-sublessor may from time to time designate by written notice
mailed or delivered to Sub-sublessee.

                                       3

<PAGE>
 
    3.2   Additional Rent.
          --------------- 

          (a) If Sub-sublessee shall procure any additional services from Master
Sublessor or Master Lessor, Sub-sublessee shall make such payment to Sub-
sublessor or Master Sublessor or Master Lessor, as Sub-sublessor shall direct.
Also, Sub-sublessee shall pay its pro rata share, as defined in Paragraph 1.2
above, of any increases in Common Area expenses or common expenses over and
above the base year of 2000 ("Base Year").

          (b) After Hours Charges.  Sub-sublessee shall pay to Sub-sublessor
              -------------------                                           
within fifteen (15) days of receipt of notice from Sub-sublessor for any charges
for extraordinary electrical or HVAC use ("After Hours Use").  Such After Hours
Use shall be charged at a rate that is reasonably determined by Sub-sublessor.
For the purposes of this Section 3.2, normal business hours shall be deemed to
be 8 a.m. through 6 p.m., Monday through Friday, and 9 a.m. through 1 p.m. on
Saturday, excepting locally recognized holidays.  All other use shall be "After
Hours Use".

          (c) Any rent or other sums payable by Sub-sublessee under this Article
3 shall constitute and be due as additional rent. Base Rent and additional rent
shall herein be referred to as "Rent".

          (d) Notwithstanding Section 10 of the Master Sublease, all rent or
other sums payable to Sub-sublessor hereunder shall be paid to Sub-sublessor,
unless otherwise directed by Sub-sublessor.

                                  ARTICLE 4

                              SECURITY DEPOSIT

     4.1  Security Deposit.  Upon execution hereof, Sub-sublessee shall deposit
          ----------------                             
with Sub-sublessor the sum of one hundred eighty-eight thousand four hundred
forty-eight dollars and 00/100 ($188,448.00) as and for a Security Deposit to
secure Sub-sublessee's full and timely performance of all of its obligations
hereunder. If Sub-sublessee fails to pay Rent or any other sums as and when
due hereunder, or otherwise defaults with respect to any provision of this Sub-
sublease, Sub-sublessor may (but shall not be obligated to) use, apply, or
retain all or any portion of said deposit for payment of any sum for which Sub-
sublessee is obligated or which will compensate Sub-sublessor for any loss or
damage which Sub-sublessor may suffer thereby. Any such use, application, or
retention shall not constitute a waiver by Sub-sublessor of its right to
enforce its other remedies hereunder, at law, or in equity. If any portion of
said deposit is so used, applied, or retained, Sub-sublessee shall, within 10
days after delivery of written demand from Sub-sublessor, restore said deposit
to its original amount. Sub-sublessee's failure to do so shall constitute a
material breach of this Sub-sublease, and in such event Sub-sublessor may
elect, among or in addition to other remedies, to terminate this Sub-sublease.
Sub-sublessor shall not be a trustee of such deposit, and shall not be
required to keep this deposit separate from its accounts. Sub-sublessor alone
shall be entitled to any interest or earnings thereon and Sub-sublessor shall
have the free use of same. If Sub-sublessee fully and faithfully performs all
of its obligations hereunder, then so much of the deposit as remains shall be
returned to Sub-sublessee (without payment of interest or earnings thereon)
within 30 days after the later of (i) expiration 

                                       4

<PAGE>
 
or sooner termination of the term hereof, or (ii) Sub-sublessee's surrender of
possession of the Sub-subleased Premises to Sub-sublessor.

     4.2  Letter of Credit.  Within three (3) days of receipt of a facsimile 
          ----------------                                        
copy of an executed Master Lessor and Master Sublessor consent to this Sub-
sublease, Sub-sublessee shall provide to Sub-sublessor an unconditional,
irrevocable standby Letter of Credit in the amount of one hundred eighty-eight
thousand four hundred forty-eight dollars and 00/100 ($188,448.00) in favor of
Sub-sublessor and issued by a bank located in the Bay Area and reasonably
acceptable to Sub-sublessor and for the term of one year and automatically
renewed each year for the term of the Sub-sublease ("Letter of Credit"). The
Letter of Credit shall secure all Sub-sublessee's performance of the terms and
conditions of the Sub-sublease and is an additional security deposit subject
to Paragraph 4.1 above. The Letter of Credit will automatically renew each
year during the Sub-sublease term unless the beneficiary under the Letter of
Credit is given at least thirty (30) days prior notice of a non-renewal by the
issuing bank, and Sub-sublessor shall be able to draw on the Letter of Credit
in the event of such notice.

                                  ARTICLE 5

                            CONDITION OF PREMISES

     5.1  Condition of the Sub-subleased Premises. Sub-sublessee acknowledges 
          ---------------------------------------     
that Sections 2.2 and 2.3 of the Master Lease are not incorporated herein and
that as of the Commencement Date, the Sub-subleased Premises, and every part
thereof, are in good condition and without need of repair, and Sub-sublessee
accepts the Sub-subleased Premises "as is", Sub-sublessee having made all
investigations and tests it has deemed necessary or desirable in order to
establish to its own complete satisfaction the condition of the Sub-subleased
Premises. Sub-sublessee accepts the Sub-subleased Premises in their condition
existing as of the Commencement Date, subject to all applicable zoning,
municipal, county and state laws, ordinances, and regulations governing and
regulating the use of the Sub-subleased Premises and any covenants or
restrictions of record. Sub-sublessee acknowledges that neither Sub-sublessor,
Master Sublessor nor Master Lessor have made any representation or warranties
as to the condition of the Sub-subleased Premises or its present or future
suitability for Sub-sublessee's purposes.

     5.2  Sub-sublessor Representation of Condition.  Sub-sublessor warrants 
          -----------------------------------------  
that at the Commencement Date the existing equipment and building systems,
including, without limitation, the plumbing, electrical, and HVAC system shall
be in good working order, that the carpets in the Sub-Subleased Premises have
been steam cleaned, and that there are no damaged ceiling tiles. If a non-
compliance with said warranty exists at the time of the Commencement Date, Sub-
sublessor shall, except as otherwise provided in this Sublease, promptly,
after receipt of written notice from Sub-sublessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at Sub-
sublessor's expense. If Sub-sublessee does not give Sub-sublessor written
notice of a non-compliance with this warranty within thirty (30) days after
the later of the Commencement Date or the date Sub-sublessor delivers
possession to Sub-sublessee of the entire Sub-subleased Premises, correction
of such non-compliance shall be the obligation of Sub-sublessee at Sub-
sublessee's sole cost and expenses. Notwithstanding anything to the contrary
in this paragraph or elsewhere in this Sub-sublease, Sub-sublessee shall have
no

                                       5

<PAGE>
 
obligation to perform any alteration, modification or improvement to the Sub-
subleased Premises which is required by law and is of a structural or capital
nature unless such alteration, modification or improvement is required due to
either Sub-sublessee's: (i) particular use; or (ii) alterations to the Sub-
subleased Premises by Sub-sublessee.

     5.3  Surrender.  Sub-sublessee shall keep the Sub-subleased Premises, and
          ---------                                                       
every part thereof in good order and repair. In addition to Sub-sublessee's
requirements under the Master Sublease and Master Lease, Sub-sublessee shall
surrender to Sub-subleased Premises in the same condition as received, ordinary
wear and tear and damage due to casualty excepted.

                                  ARTICLE 6

                                  INSURANCE

     6.1  Sub-sublessee's Insurance.  With respect to the Lessee's insurance
          -------------------------                                         
under the Master Lease, the same is to be provided by Sub-sublessee as described
in the Master Lease, and such policies of insurance shall include as named
insureds Master Sublessor, Master Lessor, Sub-sublessor and any lender as
required by Master Lessor.

     6.2  Waiver of Subrogation.  With respect to the waiver of subrogation
          ---------------------                                            
contained in Section 8.6 the Master Lease, such waiver shall be deemed to be
modified to constitute an agreement by and among Master Sublessor, Master
Lessor, Sub-sublessor and Sub-sublessee (and Master Sublessor's and Master
Lessor's consent to this Sub-sublease shall be deemed to constitute their
approval of this modification).

     6.3  Indemnity.  With respect to the indemnity contained in Section 8.7 of
          ---------                                                            
the Master Lease, Sub-sublessee shall indemnify Sub-sublessor, Master Sublessor
and Master Lessor.

     6.4  Exemption of Sub-Sublessor's Liability. With respect to the exemption
          --------------------------------------                               
from liability contained in Section 8.8 of the Master Lease, such exception from
liability shall apply to Sub-Sublessor as to Sub-Sublessee.

                                  ARTICLE 7

                   USE OF PREMISES; PARKING; IMPROVEMENTS

     7.1  Use of Premises.  Sub-sublessee shall use the Sub-subleased Premises
          ---------------                                                     
only for general office, administrative, light assembly, research and
development, engineering, warehouse and other legal related uses.

     7.2  Alterations; Improvements.
          ------------------------- 

          (a) Except as set forth herein, Sub-sublessee shall not make any
alterations, improvements, or modifications to the Sub-subleased Premises
without the express prior written consent of Sub-sublessor, Master Sublessor and
of Master Lessor, which consent by Sub-sublessor shall be given in its
reasonable discretion. Sub-sublessor understands that Sub-sublessee intends to
request consent to the addition of offices and a conference room to the Sub-
subleased Premises and Sub-sublessor will reasonably consent to such request.

                                       6

<PAGE>
 
          (b) Sub-sublessor, at Sub-sublessor's sole cost, shall make the
following improvements to the Sub-subleased Premises, subject to Master
Sublessor's and Master Lessor's approval; (i) construct a demising wall pursuant
to the site plan, which is attached hereto as Exhibit "C", and incorporated by
reference herein; (ii) remove the wood fence on the Sub-subleased Premises;
(iii) landscape where the wood fence previously stood; and (iv) remove the back
wall of the lobby in the Sub-subleased Premises to create an exit. Sub-sublessor
warrants that the improvements constructed by Sub-sublessor pursuant to this
Paragraph 7.2(b) shall be done in a first class workman-like manner with good
materials and in accordance with the site plan or other plans and
specifications, if applicable, and be in compliance with all applicable rules,
regulations, ordinances, statutes, and laws.

          (c) On termination of this Sub-sublease, Sub-sublessee shall remove
any or all improvements constructed by Sub-sublessee and to restore the Sub-
subleased Premises (or any part thereof) to the same condition as of the
Commencement Date of this Sub-sublease, reasonable wear and tear excepted or as
otherwise instructed in writing by either Sub-sublessor or Master Lessor.
Should Sub-sublessee fail to remove such improvements and restore the Sub-
subleased Premises on termination of this Sub-sublease unless instructed
otherwise in writing as set forth above, Sub-sublessor shall have the right to
do so, and charge Sub-sublessee therefore, plus an administrative charge of ten
percent (10%).

     7.3  Parking.  So long as Sub-sublessee is not in default and subject to
          -------                                                            
the rules and regulations imposed from time to time by Master Lessor or Sub-
sublessor, Sub-sublessee shall have the right to the non-exclusive use of sixty-
three (63) parking spaces in the common parking area, at no additional cost.

     7.4  Roof Rights.  Sub-sublessee shall have a non-exclusive right at no
          -----------                                                       
additional rent, to utilize roof space and Building conduits to maintain
satellite dishes or antenna devise on the roof, at Sub-sublessee's expense, so
long as such dishes and devise do not interfere with Sub-sublessor's equipment.

                                  ARTICLE 8

                    ASSIGNMENT, SUBLETTING & ENCUMBRANCE

     8.1  Consent Required.  Sub-sublessee shall not assign this Lease or any
          ----------------                                                   
interest therein nor shall Sub-sublessee sublet, license, encumber or permit the
Sub-subleased Premises or any part thereof to be used or occupied by others,
without Sub-sublessor's, Master Sublessor's and Master Lessor's prior written
consent which as to Sub-sublessor shall not be unreasonably withheld. The
consent by Sub-sublessor, Master Sublessor and Master Lessor to any assignment
or subletting shall not waive the need for Sub-sublessee (and Sub-sublessee's
assignee or subtenant) to obtain the consent of Sub-sublessor, Master Sublessor
and Master Lessor to any different or further assignment or subletting. All the
terms and conditions in the Master Lease and Master Sublease regarding
assignments and subletting shall apply, and to the extent there is any Bonus
Rents, (Rent paid by such Assignee or SubSub-sublessee in excess of Rent paid by
Sub-sublessee hereunder) the Bonus Rent shall first be split per the Master
Lease and Master Sublease and any Bonus Rent to go to Sub-sublessee shall be
split 50/50 with Sub-sublessor to be paid to Sub-sublessor within five (5) days
of receipt by Sub-sublessee.

                                       7

<PAGE>
 
     8.2  Form of Document.  Every assignment, agreement, or Sub Sub-sublease
          ----------------                                                   
shall (i) recite that it is and shall be subject and subordinate to the
provisions of this Sub-sublease, that the assignee or subtenant assumes Sub-
sublessee's obligation hereunder, that the termination of this Sub-sublease
shall at Sub-sublessor's sole election, constitute a termination of every such
assignment or subsub-sublease.

     8.3  No Release of Sub-sublessee.  Regardless of Sub-sublessor's consent,
          ---------------------------                                         
no subletting or assignment shall release Sub-sublessee of Sub-sublessee's
obligation or alter the primary liability of Sub-sublessee to pay the Rent and
to perform all other obligations to be performed by Sub-sublessee hereunder.
The acceptance of Rent by Sub-sublessor from any other person shall not be
deemed to be a waiver by Sub-sublessor of any provision hereof.  In the event of
default by any assignee, subtenant or any other successor of Sub-sublessee, in
the performance of any of the terms hereof, Sub-sublessor may proceed directly
against Sub-sublessee without the necessity of exhausting remedies against such
assignee, subtenant or successor.

     8.4  Default.  An involuntary assignment shall constitute a default and
          -------                                                           
Sub-sublessor shall have the right to elect to terminate this Sub-sublease, in
which case this Sub-sublease shall not be treated as an asset of Sub-sublessee.

     8.5  Recapture.  Notwithstanding the foregoing, in the event Sub-sublessee
          ---------                                                            
requests Sub-sublessor's consent to sublet or assign all or portion of this Sub-
sublease, Sub-sublessor may in its sole discretion, elect to terminate this Sub-
sublease within fifteen (15) days after receipt of Sub-sublessee's request by
written notification to Sub-sublessee of such election, in which case the Sub-
sublease shall terminate effective thirty (30) days following such election.

     8.6  Permitted Transfers.  Notwithstanding anything to the contrary in this
          -------------------                                                   
Sub-sublease, for the purposes of this Article 8, as to Sub-Sublessor's consent
only, the terms "assignment" and "subletting" shall not be deemed to include (i)
the trading of Sub-sublessee's stock on a nationally recognized exchange or
pursuant to an initial public offering or (ii) any assignment or other transfer
to an entity which controls, is controlled by or is under common control with
Sub-sublessee of any successor to Sub-sublessee or which succeeds to
substantially all of Sub-sublessee's assets and business by merger,
consolidation, reorganization or purchase (hereinafter collectively referred to
as "Corporate Transfers"). In addition, Sub-sublessor's right to terminate this
Sub-sublease pursuant to Paragraph 8.5 shall not be exercisable with respect to
Corporate Transfers. Sub-sublessee shall give Sub-sublessor written notice at
least ten (10) days prior to the effective date of such Corporate Transfer and
to the extent consent is required under the Sublease or Master Lease of Master
Sublessor or Master Lessor, any Corporate Transfers will be subject to such
consents. As used herein, the terms "controlled" or "controls" or "control"
shall mean ownership of at least fifty-one percent (51%) of voting control of
the relevant entity.

                                       8

<PAGE>
 
                                  ARTICLE 9

                                   DEFAULT

     9.1  Default Described.  The occurrence of any of the following shall
          -----------------                                               
constitute a material breach of this Sub-sublease and a default by Sub-
sublessee: (i) failure to pay Rent or any other amount within three (3) business
days after due; (ii) all those items of default set forth in the Master Lease
and Master Sublease which remain uncured after the cure period provided in the
Master Lease and Master Sublease; or (iii) Sub-sublessee's failure to perform
timely and subject to any cure periods any other material provision of this Sub-
sublease or the Master Sublease or the Master Lease as incorporated herein.

     9.2  Sub-sublessor's Remedies.  Sub-sublessor shall have the remedies set
          ------------------------                                            
forth in the Master Lease as if Sub-sublessor is Master Lessor and in the Master
Sublease as if Sub-sublessor is the Sublessor.  These remedies are not
exclusive; they are cumulative and in addition to any remedies now or later
allowed by law.

     9.3  All Sums Due and Payable as Rent.  Sub-sublessee shall also pay
          --------------------------------                               
without notice, or where notice is required under this Sub-sublease, immediately
upon demand without any abatement, deduction, or setoff, as additional rent all
sums, impositions, costs, expenses, and other payments which Sub-sublessee in
any of the provisions of this Sub-sublease assumes or agrees to pay, and, in
case of any nonpayment thereof, Sub-sublessor shall have, in addition to all
other rights and remedies, all the rights and remedies provided for in this Sub-
sublease or by 1aw in the case of nonpayment of rent.

     9.4  Sub-sublessor Default.  For purposes of this Sub-sublease, Sub-
          ---------------------                                         
sublessor shall not be deemed in default hereunder unless and until Sub-
sublessee shall first deliver to Sub-sublessor thirty (30) days' prior written
notice, and Sub-sublessor shall fail to cure said default within said thirty
(30) day period, or in the event Sub-sublessor shall reasonably require in
excess of thirty (30) days to cure said default, shall fail to commence said
cure with said thirty (30) day period, and thereafter diligently to prosecute
the same to completion.

     9.5  Notice of Event of Default under Master Sublease.  Sub-sublessor shall
          ------------------------------------------------                      
notify Sub-sublessee of any Event of Default under the Master Sublease, or of
any other event of which Sub-sublessor has actual knowledge which will impair
Sub-sublessee's ability to conduct its normal business at the Sub-subleased
Premises, as soon as reasonably practicable following Sub-sublessor's receipt of
notice from Master Sublessor or Master Lessor of an Event of Default or Sub-
sublessor's actual knowledge of such impairment.

                                 ARTICLE 10

                CONSENT OF MASTER SUBLESSOR AND MASTER LESSOR

     10.1  Precondition. The Master Lease and Master Sublease requires that Sub-
           ------------                                                        
sublessor obtain the consent of Master Lessor and Master Sublessor to any
subletting by Sub-sublessor. This Sub-sublease shall not be effective unless and
until Master Lessor and Master Sublessor sign a consent to this subletting
satisfactory to Sub-sublessor and Sub-sublessee. Sub-sublessor 

                                       9

<PAGE>
 
shall use its commercially reasonable efforts to obtain Master Lessor's and
Master Sublessor's consent to this Sub-sublease.

                                 ARTICLE 11

                                MISCELLANEOUS

     11.1  Conflict with Master Sublease and Master Lease: Interpretation.  In
           --------------------------------------------------------------     
the event of any conflict between the provisions of the Master Sublease and
Master Lease and this Sub-sublease, the Master Sublease and Master Lease shall
govern and control except to the extent directly contradicted by the terms of
this Sub-sublease. No presumption shall apply in the interpretation or
construction of this Sub-sublease as a result of Sub-sublessor having drafted
the whole or any part hereof.

     11.2  Remedies Cumulative. The rights, privileges, elections, and remedies
           -------------------                                                  
of Sub-sublessor in this Sub-sublease, at law, and in equity are cumulative and
not alternative.

     11.3  Waiver of Redemption.  Sub-sublessee hereby expressly waives any and
           --------------------                                                 
all rights of redemption to which it may be entitled by or under any present or
future law in the event Sub-sublessor shall obtain a judgment for possession of
the Premises.

     11.4  Holding Over. Sub-sublessee shall have no right to Holdover. If Sub-
           ------------                                                       
sublessee does not surrender and vacate the Sub-subleased Premises at Expiration
Date of this Sublease, Sub-sublessee shall be a tenant at sufferance and the
parties having agreed that the Rent shall be at a daily rate of two hundred
percent (200%) of the monthly Base Rent set forth in Article 3, divided by
thirty (30). In connection with the foregoing, Sub-sublessor and Sub-sublessee
agree that the reasonable rental value of the Sub-subleased premises following
the Expiration Date of the Sublease shall be the amounts set forth above per
month. Sub-sublessor and Sub-sublessee acknowledge and agree that, under the
circumstances existing as of the Effective Date, it is impracticable and/or
extremely difficult to ascertain the reasonable rental value of the Sub-
subleased Premises on the Expiration Date and that the reasonable rental value
established herein is a reasonable estimate of the damage that Sub-sublessor
would suffer as the result of the failure of Sub-sublessee to timely surrender
possession of the Sub-subleased Premises. The parties acknowledge that the
liquidated damages established herein is not intended as a forfeiture or penalty
within the meaning of California Civil Code sections 3275 or 3369, but is
intended to constitute liquidated damages to Sub-sublessor pursuant to
California Civil Code sections 1671, 1676, and 1677. Notwithstanding the
foregoing, and in addition to all other rights and remedies on the part of Sub-
sublessor if Sub-sublessee fails to surrender the Premises upon the termination
or expiration of this Lease, in addition to any other liabilities to Sub-
sublessor accruing therefrom, Sub-sublessee shall indemnify, defend and hold
Sub-sublessor harmless from all claims resulting from such failure, including,
without limitation, any claims by any third parties based on such failure to
surrender and any lost profits to Sub-sublessor resulting therefrom.

     11.5  Signage.  Sub-sublessee shall not place any signs on or about the
           -------                                                          
Sub-Sub-subleased Premises without Sub-sublessor's, Master Sublessor's and
Master Lessor's prior written consent. All signs shall be at Sub-sublessee's
sole cost and shall comply with all rules, regulations, ordinances, covenants,
conditions, statutes and other laws whether federal, state, 

                                       10

<PAGE>
 
local, quasi-governmental or otherwise affecting the Sub-subleased Premises,
at all times during the term hereof. Sub-sublessee acknowledges and agrees
that its request for consent to signage shall be limited to signage at the Sub-
subleased Premises.

     11.6  Sub-Sublessee's Access.  With respect to the access contained in
           ----------------------                                          
Section 32 of the Master Lease, such access to the Sub-Sublessee Premises shall
apply to Sub-Sublessor. Notwithstanding the foregoing, any entry by Sub-
sublessor or any of its agents or representatives shall be subject to Sub-
sublessee's security requirements (which the parties acknowledge will be
extensive, due to the extremely sensitive and confidential nature of Sub-
sublessee's business), including but not limited to, the requirement that a
representative of Sub-sublessee accompany such party when in certain parts of
the Sub-subleased Premises. Sub-sublessor will use its reasonable efforts to get
Master Sublessor and Master Lessor to comply with such security requirements.

     11.7  Notice Periods.  Any notice or cure periods set forth in the Master 
           --------------             
Lease shall be reduced by one-half.

     11.8  Trash Removal Janitorial and Telephone Service.  Sub-sublessee, at
           ----------------------------------------------                   
Sub-sublessee's sole cost and expense, shall be responsible for its own trash
removal, and janitorial and telephone services to the Sub-subleased Premises.

                                 ARTICLE 12

                            BROKER'S COMMISSIONS

     12.1  Commission.  Sub-sublessor and Sub-sublessee represent and warrant to
           ----------                                                           
each other that each has dealt with the following brokers: B.T. Commercial (Sub-
sublessor's Broker) and CPS (Sub-sublessee's Broker) and with no other agent,
finder, or other such person with respect to this Sub-sublease and each agrees
to indemnify and hold the other harmless from any claim asserted against the
other by any broker, agent, finder, or other such person not identified above as
Sub-sublessor's Broker or Sub-sublessee's Broker. The Commission to the Brokers
is pursuant to separate agreement.

                                 ARTICLE 13

                             HAZARDOUS MATERIALS

     13.1  Hazardous Materials.  Notwithstanding anything contained herein or in
           -------------------                                                  
the Master Lease to the contrary, Sub-Sublessee shall not store, use, or dispose
of any Hazardous Material (as such is defined in the Master Lease) on, under, or
about the Sub-Subleased Premises.

     13.2  Indemnity.  Sub-Sublessee shall be solely responsible for and shall
           ---------                                                          
defend, indemnify and hold Sub-Sublessor and its partners, employees and agents
harmless from and against all claims, penalties, expenses and liabilities,
including attorneys' and consultants' fees and costs, to the extent arising out
of or caused in whole or in part, directly or indirectly, by or in connection
with its storage, use, disposal or discharge of Hazardous Materials whether in
violation of this section or not, or Sub-Sublessee's failure to comply with any
Hazardous Materials law. Sub-Sub lessee shall further be solely responsible for
and shall defend, indemnify 

                                       11

<PAGE>
 
and hold Sub-Sublessor harmless from and against any and all claims, costs and
liabilities, including attorneys' and consultants' fees and costs, arising out
of or in connection with the removal, cleanup, detoxification, decontamination
and restoration work and materials necessary to return the Premises or the Sub-
Subleased Premises to their condition existing prior to Sub-Sublessee's
storage, use or disposal of the Hazardous Materials on the Premises or the Sub-
Subleased Premises. For the purposes of the indemnity provisions hereof, any
acts or omissions of Sub-Sublessee or by employees, agents, assignees,
contractors or subcontractors of Sub-sublessee (whether or not they are
negligent, intentional or unlawful) shall be strictly attributable to Sub-
Sublessee. Sub-Sublessee's obligations under this section shall survive the
termination of this Sub-Sublease.

     13.3  Indemnity.  Sub-sublessor represents and warrants to Sub-sublessee
           ---------                                                         
that to the best of Sub-sublessor's knowledge, without independent investigation
or inquiry, as of the Commencement Date, no Hazardous Materials are present or
have been released on or under the Sub-subleased Premises. Sub-sublessor shall
indemnify, defend, and hold harmless Sub-sublessee harmless from any damage
suffered by Sub-sublessee arising out of any release or use of any Hazardous
Materials in, on or under the Sub-subleased Premises or the Building by Sub-
sublessor.

                                 ARTICLE 14

                            NOTICES AND PAYMENTS

     14.1  Certified Mail.  Any notice, demand, request, consent, approval,
           --------------                                                   
submittal or communication that either party desires or is required to give to
the other party or any other person shall be in writing and either served
personally or sent by prepaid, first-class certified mail or commercial
overnight delivery service.  Such notice shall be effective on the date of
actual receipt (in the case of personal service or commercial overnight
delivery service) or two days after deposit in the United States mail, to the
following addresses:

           Sub-sublessor at:

           GWcom, Inc.
           3141 Coronado Drive
           Santa Clara, CA 95054
           (408) 567-1888

           Sub-sublessee:  At the Sub-subleased Premises, whether or not Sub-
           sublessee has abandoned or vacated the Premises or notified the Sub-
           sublessor of any other address, with a copy to:

           _________________________________________________
           _________________________________________________
           _________________________________________________

                                       12

<PAGE>
 
                                 ARTICLE 15

                               ATTORNEYS' FEES

     15.1  Sub-sublessor Made Party to Litigation.  If Sub-sublessor becomes a
           --------------------------------------                             
party to any litigation brought by someone other than Sub-sublessee and
concerning this Sub-sublease, the Sub-subleased Premises, or Sub-sublessee's use
and occupancy of the Sub-subleased Premises to the extent, based upon any real
or alleged act or omission of Sub-sublessee or its authorized representatives,
Sub-sublessee shall be liable to Sub-sublessor for reasonable attorneys' fees
and court costs incurred by Sub-sublessor in the litigation.

     15.2  Certain Litigation Between the Parties.  In the event any action or
           --------------------------------------                             
proceeding at law or in equity or any arbitration proceeding be instituted by
either party, for an alleged breach of any obligation of Sub-sublessee or Sub-
sublessor under this Sub-sublease, to recover rent, to terminate the tenancy of
Sub-sublessee at the Sub-subleased Premises, or to enforce, protect, or
establish any right or remedy of a party to this Sub-sublease Agreement, the
prevailing party (by judgment or settlement) in such action proceeding shall be
entitled to recover as part of such action or proceeding such reasonable
attorneys' fees, expert witness fees, and court costs as may be fixed by the
court or jury, but this provision shall not apply to any cross-complaint filed
by anyone other than Sub-sublessor in such action or proceeding.

                                 ARTICLE 16

                                  EXHIBITS

     16.1  Exhibits and Attachments.  All exhibits and attachments to this
           ------------------------  
Sub-sublease are a part hereof.

                                 ARTICLE 17

                                COUNTERPARTS

     17.1  Counterparts.  This agreement may be executed in counterparts, each
           ------------                                                       
of which shall be deemed to be an original, but such counterparts; when taken
together, shall constitute but one agreement. In addition, an executed copy
hereof received by facsimile transmission shall be effective as an original for
all purposes.

                                       13

<PAGE>
 
     IN WITNESS WHEREOF, Sub-sublessor and Sub-sublessee have executed and
delivered this Sub-sublease on the date first set forth above.

SUB-SUBLESSOR                           SUB-SUBLESSEE

GW COM, INC.                            ALIGN TECHNOLOGY, INC.,
a Delaware corporation                  a Delaware corporation

                                        /s/ ZIA CHISHTI
---------------------------------       -----------------------------------

By:                                     By: Zia Chishti
    -----------------------------           -------------------------------

Its:                                    Its: CEO
     ----------------------------            ------------------------------


                                        By:
                                            -------------------------------

                                        Its:
                                             ------------------------------

                                       14



<PAGE>
 
                                                                    Exhibit 10.9
 
                          LOAN AND SECURITY AGREEMENT

     THIS AGREEMENT (the "Agreement"), dated as of April 12, 1999 is entered
into by and between Align Technology Inc., a Delaware corporation having a
principal place of business at 442 Potrero Ave., Sunnyvale, CA 94086 (the
"Borrower") and Comdisco, Inc., a Delaware corporation having a principal place
of business at 6111 North River Road, Rosemont, Illinois 60018 (the "Lender").
In consideration of the mutual agreements contained herein, the parties hereto
agree as follows:

     WHEREAS, Borrower desires to borrow from the Lender hereunder the amount of
FIVE MILLION and 00/100 DOLLARS ($5,000,000.00) in minimum installments of ONE
MILLION and 00/100 DOLLARS ($1,000,000.00) each (as the same may from time to
time be amended, modified, supplemented or revised, the "Loan"), which would be
evidenced by Secured Promissory Notes(s) executed by Borrower substantially in
the form of Exhibit A hereto (as the same may from time to time be amended,
modified, supplemented or restated the "Note(s)").

     NOW, THEREFORE, it is agreed:
                      
SECTION 1. DEFINITIONS

     Unless otherwise defined herein, the following capitalized terms shall have
the following meanings (such meanings being equally applicable to both the
singular and
 plural form of the terms defined):

     1.1  "Account" means any "account," as such term is defined in Section 9106
of the UCC, now owned or hereafter acquired by Borrower or in which Borrower now
holds or hereafter acquires any interest and, in any event, shall include,
without limitation, all accounts receivable, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to Borrower (including, without limitation, under any trade
name, style or division thereof) whether arising out of goods sold or services
rendered by Borrower or from any other transaction, whether or not the same
involves the sale of goods or services by Borrower (including, without
limitation, any such obligation which may be characterized as an account or
contract right under the UCC) and all of Borrower's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for goods or
services, and all of Borrower's rights to any goods represented by any of the
foregoing (including, without limitation, unpaid seller's rights of rescission,
replevin, reclamation and stoppage in transit and rights to returned, reclaimed
or repossessed goods), and all monies due or to become due to Borrower under all
purchase orders and contracts for the sale of goods or the performance of
services or both by Borrower (whether or not yet earned by performance on the
part of Borrower or in connection with any other transaction), now in existence
or hereafter occurring, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts, and all collateral security and
guarantees of any kind given by any Person with respect to any of the foregoing.

     1.2  "Account Debtor" means any "account debtor," as such term is defined
in Section 9105(1)(a) of the UCC.

Blanket Loan and Security Agr.
                                      -1-

<PAGE>
 
     1.3  "Advance" means each installment made by the Lender to Borrower
pursuant to the Loan to be evidenced by the Note(s) secured by the Collateral.

     1.4  "Advance Date" means the funding date of any Advance of the Loan.

     1.5. "Advance Request" means the request by Borrower for an Advance under
the Loan, each to be substantially in the form of Exhibit B attached hereto, as
submitted by Borrower to Lender from time to time.

     1.6  "Chattel Paper" means any "chattel paper," as such term is defined in
Section 9105(l)(b) of the UCC, now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest.

     1.7  "Closing Date" means the date of this Agreement.

     1.8  "Collateral" shall have the meaning assigned to such term in Section 3
of this Agreement.

     1.9  "Commitment Amount" means Five Million Dollars ($5,000,000).

     1.10 "Contracts" means all contracts, undertakings, franchise agreements or
other agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which Borrower may now or hereafter have any right,
title or interest, including, without limitation, with respect to an Account,
any agreement relating to the terms of payment or the terms of performance
thereof.

     1.11 "Copyrights" means all of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (i) all copyrights, whether registered or unregistered, held pursuant
to the laws of the United States, any State thereof or of any other country;
(ii) registrations, applications and recordings in the United States Copyright
Office or in any similar office or agency of the United States, any state
thereof or any other country; (iii) any continuations, renewals or extensions
thereof; and (iv) any registrations to be issued in any pending applications.

     1.12 "Copyright License" means any written agreement granting any right to
use any Copyright or Copyright registration now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest.

     1.13 "Documents" means any "documents," as such term is defined in Section
9105(l)(f) of the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.

     1.14 "Equipment" means any "equipment," as such term is defined in Section
9109(2) of the UCC, now or hereafter owned or acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto.

Blanket Loan and Security Agr.

                                      -2-

<PAGE>
 
     1.15 "Facility Fee" means one percent (1.0%) of the principal amount of the
Loan, along with the due diligence, transaction, and legal expense fee in the
amount of $7,500.00, due at the Closing Date, less commitment fee in the amount
of $20,000.00 paid with check no. 7516.

     1.16 "Fixtures" means any "fixtures", as such term is defined in Section
9313(1)(a) of the UCC, now or hereafter owned or acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest and, now or
hereafter attached or affixed to or constituting a part of, or located in or
upon, real property wherever located, together with all right, title and
interest of Borrower in and to all extensions, improvements, betterments,
renewals, substitutes, and replacements of, and all additions and appurtenances
to any of the foregoing property, and all conversions of the security
constituted thereby, immediately upon any acquisition or release thereof or any
such conversion, as the case may be.

     1.17 "General Intangibles" means any "general intangibles," as such term is
defined in Section 9106 of the UCC, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest and, in any
event, shall include, without limitation, all right, title and interest which
Borrower may now or hereafter have in or under any contract, all customer lists,
Copyrights, Trademarks, Patents, rights to Intellectual Property, interests in
partnerships, joint ventures and other business associations, Licenses, permits,
trade secrets, proprietary or confidential information, inventions (whether or
not patented or patentable), technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill, expertise, recipes,
experience, processes, models, drawings, materials and records, goodwill
(including, without limitation, the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License),
claims in or under insurance policies, including unearned premiums,
uncertificated securities, cash and other forms of money or currency, deposit
accounts (including as defined in Section 9105(e) of the UCC), rights to sue for
past, present and future infringement of Copyrights, Trademarks and Patents,
rights to receive tax refunds and other payments and rights of indemnification.

     1.18 "Instruments" means any "instrument," as such term is defined in
Section 9105(1)(i) of the UCC, now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest.

     1.19 "Intellectual Property" means all Copyrights, Trademarks, Patents,
rights to Intellectual Property, Licenses, trade secrets, source codes, customer
lists, proprietary or confidential information, inventions (whether or not
patented or patentable), technical information, procedures, designs, knowledge,
know-how, software, data bases, skill, expertise, experience, processes, models,
drawings, materials and records.

     1.20 "Inventory" means any "inventory," as such term is defined in Section
9109(4) of the UCC, wherever located, now or hereafter owned or acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest, and,
in any event, shall include, without limitation, all inventory, goods and other
personal property which are held by or on behalf of Borrower for sale or lease
or are furnished or are to be furnished under a contract of service or which
constitute raw materials, work in process or materials used or consumed or to be
used or consumed in Borrower's business, or the processing, packaging,
promotion, delivery or shipping of the same, and all furnished goods whether or
not such inventory is listed on any schedules, assignments or reports furnished
to Lender from time to time and whether or not the 

Blanket Loan and Security Agr.

                                      -3-

<PAGE>
 
same is in transit or in the constructive, actual or exclusive occupancy or
possession of Borrower or is held by Borrower or by others for Borrower's
account, including, without limitation, all goods covered by purchase orders and
contracts with suppliers and all goods billed and held by suppliers and all
inventory which may be located on premises of Borrower or of any carriers,
forwarding agents, truckers, warehousemen, vendors, selling agents or other
persons.

     1.21 "License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest
and any renewals or extensions thereof.

     1.22 "Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, levy, lien or charge of
any kind, whether voluntarily incurred or arising by operation of law or
otherwise, against any property, any conditional sale or other title retention
agreement, any lease in the nature of a security interest, and the filing of any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.

     1.23 "Material Adverse Effect" means a material adverse effect upon: (i)
the business, operations, properties, assets or financial conditions of
Borrower; or (ii) the ability of Borrower to perform, or of Lender to enforce,
the Secured Obligations.

     1.24 "Maturity Date" means the date thirty six (36) months from the Advance
Date of each installment of the Loan.

     1.25 "Patent License" means any written agreement granting any right with
respect to any invention on which a Patent is in existence now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest.

     1.26 "Patents" means all of the following now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest:
(a) letters patent of, or rights corresponding thereto in, the United States or
any other county, all registrations and recordings thereof, and all applications
for letters patent of, or rights corresponding thereto in the United States or
any other country, including, without limitation, registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country;
(b) all reissues, continuations, continuations-in-part or extensions thereof;
(c) all petty patents, divisionals, and patents of addition; and (d) all patents
to issue in any such applications.

     1.27 "Permitted Liens" means:

               (i)  liens in favor of Lender;

               (ii) liens securing the payment of taxes or other governmental
     charges not yet delinquent or being contested in good faith by appropriate
     proceeding, for which adequate reserves are maintained in accordance with
     generally accepted accounting principles;

Blanket Loan and Security Agr.

                                      -4-

<PAGE>
 
          (iii)     liens securing claims or demands of materialism, mechanics,
     carriers, warehousemen, landlords and other like persons imposed without
     action of such parties, provided that the payment thereof is not yet
     required;

          (iv)      liens incurred or deposits made in the ordinary course of
     Borrower's or a subsidiary's business in connection with workers
     compensation, unemployment insurance, social security and other like laws;

          (v)       purchase money security interests in personal property
     acquired after the date of this Agreement, provided such are limited to the
     personal property so acquired and proceeds, thereof;

          (vi)      any liens existing as of the date hereof and specifically
     disclosed by Borrower to Lender herein;

          (vii)     leases, subleases, licenses and sublicenses granted to
     others in the ordinary course of business not interfering in any material
     respect with the conduct of the business of any Borrower;

          (viii)    liens arising from judgments, decrees or attachments to the
     extent and only so long as such judgment, decree or attachment as not
     caused or resulted in a Event of Default;

          (ix)      liens in favor of customs and revenue authorities arising as
     a matter of law to secure payment of customs duties in connection with the
     importation of goods;

          (x)       liens which constitute rights of set-off of a customary
     nature or bankers' liens with respect to amounts on deposit, whether
     arising by operation of law or by contract, in connection with arrangements
     entered into with banks in the ordinary course of business;

          (xi)      liens incurred in connection with the extension, renewal or
     refinancing of the indebtedness secured by liens of the type described in
     clause (vii) above, provided that any extensions, renewal or replacement
     lien shall be limited to the property encumbered by the existing lien and
     the principal amount of the indebtedness being extended, renewed or
     refinanced does not increase.

     1.28  "Proceeds" means "proceeds," as such term is defined in Section
9306(l) of the UCC and, in any event, shall include, without limitation, (a) any
and all Accounts, Chattel Paper, Instruments, cash or other forms of money or
currency or other proceeds payable to Borrower from time to time in respect of
the Collateral, (b) any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to Borrower from time to time with respect to any of the
Collateral, (c) any and all payments (in any form whatsoever) made or due and
payable to Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting under color of
governmental authority), (d) any claim of Borrower against third parties (i) for
past, present or future infringement of any Copyright, Patent or Patent License
or (ii) for past, present or future infringement or dilution of any Trademark or
Trademark License or for injury to the goodwill associated with any Trademark,

Blanket Loan and Security Agr.

                                      -5-

<PAGE>
 
Trademark registration or Trademark licensed under any Trademark License and (e)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.

     1.29   "Receivables" shall mean and include all of the Borrowers accounts,
instruments, documents, chattel paper and general intangibles whether secured or
unsecured, whether now existing or hereafter created or arising, and whether or
not specifically sold or assigned to Lender hereunder.

     1.30   "Secured Obligations" shall mean and include all principal,
interest, fees, costs, or other liabilities or obligations for monetary amounts
owed by Borrower to Lender, whether due or to become due, matured or unmatured,
liquidated or unliquidated, contingent or non-contingent, and all covenants and
duties regarding such amounts, of any kind of nature, present or future, arising
under this Agreement, the Note(s), or any of the other Loan Documents, whether
or not evidenced by any Note(s), Agreement or other instrument, as the same may
from time to time be amended, modified, supplemented or restated.

     1.31   "Trademark License" means any written agreement granting any right
to use any Trademark or Trademark registration now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest.

     1.32   "Trademarks" means any of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (a) any and all trademarks, tradenames, corporate names, business
names, trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and any applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof and (b) any reissues, extensions or
renewals thereof.

     1.33   "UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Illinois. Unless otherwise defined
herein, terms that are defined in the UCC and used herein shall have the
meanings given to them in the UCC.

     1.34   "Warrant Agreement(s)" shall mean those agreements entered into in
connection with the Loan, substantially in the form attached hereto as Exhibit C
pursuant to which Borrower granted Lender the right to purchase 266,667 shares
of Series B Preferred Stock of Borrower at an Exercise Price of $3.00 per share
as more particularly set forth therein.

SECTION 2.  THE LOAN

      2.1   Subject to the terms and conditions set forth herein, Lender shall
make Loans to Borrower in an aggregate amount not to exceed the Commitment
Amount. Each Advance, together with interest at the rate of twelve percent (12%)
per annum, shall be payable in 36 monthly installments as set forth in the
Note(s).

Blanket Loan and Security Agr.

                                      -6-

<PAGE>
 
          2.2 Upon the occurrence of and during an Event of Default (as defined
herein), interest shall thereafter be calculated at a rate of five percent (5%)
in excess of the rate that would otherwise be applicable ("Default Rate"). All
such interest shall be due and payable in arrears, on the first day of the
following month.

          2.3 Notwithstanding any provision in this Agreement, the Note(s), or
any other "Loan Document" (as defined herein), it is not the parties' intent to
contract for, charge or receive interest at a rate that is greater than the
maximum rate permissible by law which a court of competent jurisdiction shall
deem applicable hereto (which under the laws of the State of Illinois shall be
deemed to be the laws relating to permissible rates of interest on commercial
loans) (the "Maximum Rate"). If the Borrower actually pays Lender an amount of
interest, chargeable on the total aggregate principal Secured Obligations of
Borrower under this Agreement and the Note(s) (as said rate is calculated over a
period of time that is the longer of (i) the time from the date of this
Agreement through the maturity time as set forth on the Note(s), or (ii) the
entire period of time that any principal is outstanding on the Note(s)), which
amount of interest exceeds interest calculated at the Maximum Rate on said
principal chargeable over said period of time, then such excess interest
actually paid by Borrower shall be applied first, to the payment of principal
                                           -----
outstanding on the Note(s); second, after all principal is repaid, to the
                            ------
payment of Lender's out of pocket costs, expenses, and professional fees which
are owed by Borrower to Lender under this Agreement or the Loan Documents; and
third, after all principal, costs, expenses, and professional fees owed by
-----
Borrower to Lender are repaid, the excess (if any) shall be refunded to
Borrower.

          2.4  In the event any interest is not paid when due hereunder,
delinquent interest shall be added to principal and shall bear interest on
interest, compounded at the rate set forth in Section 2.1.

          2.5  Upon and during the continuation of an Event of Default hereunder
(as defined herein), all Secured Obligations, including principal, interest,
compounded interest, and reasonable professional fees, shall bear interest at a
rate per annum equal to the Default Rate.

          2.6  Borrower shall have the option to prepay the Loan, in whole or in
part, without penalty or premium, after 12 months from the Closing Date by
paying the principal amount thereon together with all accrued and unpaid
interest with respect to such principal amount, as of the date of such
prepayment, without premium. In the event Borrower prepays the Note(s) within 12
months from the Closing Date hereof, Borrower shall pay the principal amount
together with all accrued and unpaid interest and a prepayment premium equal to
1% of the then outstanding principal amount ("the Prepayment Penalty"),
provided, however, in the event of an initial public offering of Borrower's
          -------
stock, the Prepayment Penalty shall not apply.

          2.7  If the Borrower has not repaid the outstanding principal amount
under the Loan in its entirety by the Maturity Date (as defined in the
applicable Note(s)), then for each additional month, or portion thereof,
thereafter that the outstanding principal is not paid, Lender shall have the
right to purchase from the Borrower, at the Exercise Price (adjusted, as set
forth and defined in the Warrant Agreement), an additional number of shares of
Preferred Stock (as defined in the Warrant Agreement) which number shall be
determined by (i) multiplying the outstanding principal amount which is due but
unpaid by 1% and (ii) dividing the product thereof by the Exercise Price.

Blanket Loan Security Agr.

                                      -7-

<PAGE>
 
         2.8 Notwithstanding anything in this Agreement to the contrary,
Lender's obligations to provide the Loan(s) shall terminate on the earlier of
(i) January 7, 2000 or (ii) the occurrence of a Material Adverse Effect pursuant
to Section 1.22, and no Advance Requests shall be accepted after such date,
unless otherwise waived by Lender ("Draw Period"). Notwithstanding the
foregoing, in the event the Borrower closes a private equity round for a minimum
of Ten Million and No/l00 Dollars ($l0,000,000.00) with a price per share no
less than $4.50 ("Next Round"), Borrower may request an extension of the Draw
Period for an additional nine (9) months ("Extended Draw Period"), such Extended
Draw Period will only be available upon: (i) written request by Borrower and
(ii) the issuance to Lender of a Series C Preferred Stock warrant for an
aggregate purchase price of $450,000 divided by the Exercise Price, with the
same terms and conditions as the Warrant Agreement defined herein and attached
hereto as Exhibit C. The Exercise Price shall be defined as equal to the price
per share of the Next Round.

SECTION 3. SECURITY INTEREST  

          As security for the prompt, complete and indefeasible payment when due
(whether at stated payment dates or otherwise) of all the Secured Obligations
and in order to induce Lender to make the Loan upon the terms and subject to the
conditions of the Note(s), Borrower hereby assigns, conveys, mortgages, pledges,
hypothecates and transfers to Lender for security purposes only, and hereby
grants to Lender a security interest in, all of Borrower's right, title and
interest in, to and under each of the following (all of which being hereinafter
collectively called the "Collateral"):

          (a)  All Receivables;     

          (b)  All Equipment;   

          (c)  All Fixtures;  

          (d)  All General Intangibles;     

          (e)  All Inventory;     

          (f)  All other goods and personal property of Borrower whether
               tangible or intangible and whether now or hereafter owned or
               existing, leased, consigned by or to, or acquired by, Borrower
               and wherever located; and

          (g)  To the extent not otherwise included, all Proceeds of each of the
               foregoing and all accessions to, substitutions and replacements
               for, and rents, profits and products of each of the foregoing.

Notwithstanding the foregoing, Lender agrees to release all Receivables
necessary for the sole purpose of Borrower securing an accounts
receivable/factoring facility against executed firm orders with Orthodontists
and Dentists for Borrower's dental products, provided, however, Lender has the
right of first refusal to provide such receivable/factoring facility.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF BORROWER

The Borrower represents, warrants and agrees that:   

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                                      -8-

<PAGE>
 
          4.1  it has good title in and to the Collateral, free of all liens,
security interests, encumbrances and claims whatsoever, except for the interest
of the Lender therein;

         4.2   it has the full power and authority to, and does hereby grant and
convey to the Lender, a valid first priority perfected security interest in the
Collateral as security for the Secured Obligations, free of all liens, security
interests, encumbrances and claims, and shall execute such Uniform Commercial
Code financing statements in connection herewith as the Lender may reasonably
request. Except for Permitted Liens, no other lien, security interest, adverse
claim or encumbrance has been created by Borrower or is known by Borrower to
exist with respect to any Collateral;

         4.3   it is a corporation duly organized, legally existing and in good
standing under the laws of the State of Delaware, and is duly qualified as a
foreign corporation in all jurisdictions where the failure to so qualify would
have a Material Adverse Effect on the Collateral or the business of the Borrower
taken as a whole;

         4.4   the execution, delivery and performance of the Note(s), this
Agreement, the Warrant Agreement(s), and all financing statements, certificates
and other documents required to be delivered or executed in connection herewith
(collectively, the "Loan Documents") have been duly authorized by all necessary
corporate action of Borrower, the individual or individuals executing the Loan
Documents were duly authorized to do so, and the Loan Documents constitute
legal, valid and binding obligations of the Borrower, enforceable in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization or other similar laws generally affecting the enforcement of the
rights of creditors;

          4.5  the Loan Documents do not and will not violate any provisions of
its Certificate of Incorporation, bylaws or any material contract pr agreement,
law, regulation, order, injunction, judgment, decree or writ to which the
Borrower is subject, or result in the creation or imposition of any lien,
security interest or other encumbrance upon the Collateral, other than those
created by this Agreement;

          4.6  the execution, delivery and performance of the Loan Documents do
not require the consent or approval of any other person or entity including,
without limitation, any regulatory authority or governmental body of the United
States or any state thereof or any political subdivision of the United States or
any state thereof.

          4.7  as of the date hereof no fact or condition exists that would (or
could, with the passage of time, the giving of notice, or both) constitute an
Event of Default under this Agreement or any of the Loan Documents and no event
which has had or could reasonably be expected to have a Material Adverse Effect
has occurred and is continuing.

SECTION 5. INSURANCE AND RISK OF LOSS

          5.1  So long as there are any Secured Obligations outstanding,
Borrower shall cause to be carried and maintained commercial general liability
insurance against risks customarily insured against in Borrower's line of
business. Such risks shall include, without limitation, the risks of death,
bodily injury and property damage. So long as there are any Secured Obligations
outstanding, Borrower shall also cause to be carried and maintained insurance

Blanket Loan and Security Agr.

                                      -9-

<PAGE>
 
upon the Collateral and Borrower's business, covering casualty, hazard and such
other property risks in amounts equal to the full replacement cost of the
Collateral. Borrower shall deliver to Lender lender's loss payable endorsements
(Form BFU 438 or equivalent) naming Lender as loss payee and additional insured.
Borrower shall use commercially reasonable efforts to cause all policies
evidencing such insurance to provide for at least thirty (30) days prior written
notice by the underwriter or insurance company to Lender in the event of
cancellation or expiration. Such policies shall be issued by such insurers and
in such amounts as are reasonably acceptable to Lender.

     5.2  Borrower shall and does hereby indemnify and hold Lender, its agents
and shareholders harmless from and against any and all claims, costs, expenses,
damages and liabilities (including, without limitation, such claims, costs,
expenses, damages and liabilities based on liability in tort, including without
limitation, strict liability in tort), including reasonable attorneys' fees,
arising out of the disposition or utilization of the Collateral, other than
claims arising at or caused by Lender's gross negligence or willful misconduct.

SECTION 6. COVENANTS OF BORROWER

     Borrower covenants and agrees as follows at all times while any of the
Secured Obligations remain outstanding:

     6.1  Borrower shall furnish to Lender the financial statements listed
hereinafter, each prepared in accordance with generally accepted accounting
principles consistently applied (the "Financial Statements"):

          (a)  as soon as practicable (and in any event within thirty (30) days)
     after the end of each month, unaudited interim financial statements as of
     the end of such month (prepared on a consolidated and consolidating basis,
     if applicable), including balance sheet and related statements of income
     and cash flows accompanied by a report detailing any material contingencies
     (including the commencement of any material litigation by or against
     Borrower) or any other occurrence that could reasonably be expected to have
     a Material Adverse Effect, all certified by Borrower's Chief Executive
     Officer or Chief Financial Officer to be true and correct in all material
     respects;

          (b)  as soon as practicable (and in any event within ninety (90) days)
     after the end of each fiscal year, unqualified audited financial statements
     as of the end of such year (prepared on a consolidated and consolidating
     basis, if applicable), including balance sheet and related statements of
     income and cash flows, and setting forth in comparative form the
     corresponding figures for the preceding fiscal year, certified by a firm of
     independent certified public accountants selected by Borrower and
     reasonably acceptable to Lender, accompanied by any management report from
     such accountants;

          (c)  promptly after the sending or filing thereof, as the case may be,
     copies of any proxy statements, financial statements or reports which
     Borrower has made available to its shareholders and copies of any regular,
     periodic and special reports or registration statements which Borrower
     files with the Securities and Exchange Commission or any governmental
     authority which may be substituted therefor, or any national securities
     exchange; and

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                                     -10-



<PAGE>
 
          (d)  promptly, any additional information, financial or otherwise
     (including, but not limited, to tax returns and names of principal
     creditors) as Lender reasonably believes necessary to evaluate Borrower's
     continuing ability to meet its financial obligations.

     6.2  Borrower shall permit any authorized representative of Lender and its
attorneys and accountants on reasonable notice to inspect, examine and make
copies and abstracts of the books of account and records of Borrower at
reasonable times during normal business hours provided, that not more than two
such inspections or examinations shall take place in any calendar year except
upon the occurrence and continuation of an Event of Default. In addition, such
representative of Lender and its attorneys and accountants shall have the right
to meet with management and officers of the Company to discuss such books of
account and records.

     6.3  Borrower will from time to time execute, deliver and file, alone or
with Lender, any financing statements, security agreements or other documents;
procure any instruments or documents as may be reasonably requested by Lender;
and take all further action that may be necessary or desirable, or that Lender
may reasonably request, to confirm, perfect, preserve and protect the security
interests intended to be granted hereby, and in addition, and for such purposes
only, Borrower hereby authorizes Lender to execute and deliver on behalf of
Borrower and to file such financing statements, security agreement and other
documents without the signature of Borrower either in Lender's name or in the
name of Borrower as agent and attorney-in-fact for Borrower. The parties agree
that a carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed in any appropriate office
in lieu thereof.

     6.4  Borrower shall protect and defend Borrower's title as well as the
interest of the Lender against all persons claiming any interest adverse to
Borrower or Lender and shall at all times keep the Collateral free and clear
from any legal process, liens or encumbrances whatsoever (except any placed
thereon by Lender and other Permitted Liens) and shall give Lender immediate
written notice thereof.

     6.5  Without Lender's prior written consent, such consent to be given no
later than four (4) days after Lender receives notice by Borrower, Borrower
shall not, outside the ordinary course of business, but not to exceed $250,000,
(a) grant any material extension of the time of payment of any of the
Receivables, (b) to any material extent, compromise, compound or settle the same
for less than the full amount thereof, (c) release, wholly or partly, any person
liable for the payment thereof, or allow any credit or discount whatsoever
thereon other than trade discounts granted in the ordinary course of business of
Borrower.

     6.6  Borrower shall maintain and protect its properties, assets and
facilities, including without limitation, its Equipment and Fixtures, in good
order and working repair and condition (taking into consideration ordinary wear
and tear) and from time to time make or cause to be made all necessary and
proper repairs, renewals and replacements thereto and shall competently manage
and care for its property in accordance with prudent industry practices.

     6.7  Borrower shall not merge with and into any other entity; or sell or
convey all or substantially all of its assets or stock to any other person or
entity without notifying Lender a minimum of twenty (20) days prior to the
closing date and requesting Lender's consent to the assignment of all of
Borrower's Secured Obligations hereunder to the successor entity in form

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                                      -11-

<PAGE>
 
and substance satisfactory to Lender. In the event Lender does not consent to
such assignment the parties agree Borrower shall prepay the Loan in accordance
with Section 2.6 hereof. Notwithstanding the foregoing, Lender hereby consents
to any Merger in which the surviving entity has cash and marketable securities
of at least ten (10) times the remaining Loan payments and Lender shall not
unreasonably withhold its consent to a Merger in other cases.

     For purposes of this Agreement, a "Merger" shall mean any consolidation or
merger of the Borrower with or into any other corporation or entity, any sale or
conveyance of an or substantially all of the assets or stock of the Borrower by
or to any other person or entity in which Borrower is not the surviving entity.

     6.8   Borrower shall not, without the prior written consent of Lender, such
consent not to be unreasonably withheld, declare or pay any cash dividend or
make a distribution on any class of stock, other than pursuant to employee
repurchase plans upon an employee's death or termination of employment or
transfer, sell, lease, lend or in any other manner convey any equitable,
beneficial or legal interest in any material portion of the assets of Borrower
(except inventory sold in the normal course of business).

     6.9   Upon the request of Lender, Borrower shall, during business hours,
make the Inventory and Equipment available to Lender for inspection at the place
where it is normally located and shall make Borrower's log and maintenance
records pertaining to the Inventory and Equipment available to Lender for
inspection. Borrower shall take all action necessary to maintain such logs and
maintenance records in a correct and complete fashion.

     6.10  Borrower covenants and agrees to pay when due, all taxes, fees or
other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower, Lender or the
Collateral or upon Borrower's ownership, possession, use, operation or
disposition thereof or upon Borrower's rents, receipts or earnings arising
therefrom. Borrower shall file on or before the due date therefor all personal
property tax returns in respect of the Collateral. Notwithstanding the
foregoing, Borrower may contest, in good faith and by appropriate proceedings,
taxes for which Borrower maintains adequate reserves therefor.

     6.11  Borrower shall not relocate any item of the Collateral (other than
sale of inventory in the ordinary course of business) except: (i) with prior
written notice of the Lender not to be unreasonably withheld; and (ii) if such
relocation shall be within the continental United States. If permitted to
relocate Collateral pursuant to the foregoing sentence, unless otherwise agreed
in writing by Lender, Borrower shall first (a) cause to be filed and/or
delivered to the Lender all Uniform Commercial Code financing statements,
certificates or other documents or instruments necessary to continue in effect
the perfected security interest of the Lender in the Collateral, and (b) have
given the Lender no less than fifteen (15) days prior written notice of such
relocation.

     6.12  Borrower shall not incur any indebtedness senior to Lender's position
without the prior written consent of Lender.

SECTION 7. CONDITIONS PRECEDENT TO LOAN

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                                      -12-

<PAGE>
 
     
     The obligation of Lender to fund the Loan on each Advance Date shall be 
subject to Lender's discretion and satisfactory completion of its due diligence 
and approval process, and satisfaction by Borrower or waiver by Lender, in 
Lender's reasonable discretion, of the following conditions:

     7.1  Document Delivery. Borrower, on prior to the Closing Date, shall have 
delivered to Lender the following:

          (a)  executed originals of the Agreement, the Warrant Agreement, and
     any documents reasonably required by Lender to effectuate the liens of
     Lender, with respect to all Collateral;

          (b)  certified copy of resolutions of Borrower's board of directors
     evidencing approval of the borrowing and other transactions evidenced by
     the Loans Documents;

          (c)  certified copies of the Certificate of Incorporation and the 
     Bylaws of Borrower, as amended through the Closing Date;

          (d)  certificate of good standing for Borrower from its state of
     incorporation and similar certificates from all other jurisdictions in
     which it does business and where the failure to be qualified would have a
     Material Adverse Effect;

          (e)  payment of the Facility Fee less transaction and due diligence 
     expenses (not to exceed $7,500) shall be applied to the Facility Fee; and 

          (f)  such other documents as Lender may reasonably request.

     7.3  Advance Request.

          (a)  During Draw Period, Borrower, on or prior to each Advance Date, 
     shall have delivered to Lender the following:

               (i)    a minimum of five (5) business days prior to the Advance 
          Date, written notice in the form of an Advance Request, or as
          otherwise specified by Lender from time to time, specifying amount of
          such Advance and wire transfer instructions;

               (ii)   executed original of the Note(s); and 

               (iii)  such other documents as Lender may reasonably request.

          (b)  During Extended Draw Period, Borrower on or prior to each Advance
     Date, shall have delivered to Lender the following:

               (i)    a minimum of five (5) business days to the Advance Date, 
          written notice in the form of an Advance Request, or as otherwise
          specified by Lender from time to time, specifying amount of such
          Advance and wire instructions;

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                                     -13-

<PAGE>
 
          (ii)  executed original of the Note(s);

          (iii) a Warrant Agreement executed in accordance with Section 2.8
          herein, and in a form substantially identical to the Warrant Agreement
          attached hereto as Exhibit C, and

          (iv)  such other documents as Lender may reasonably request.

     7.4  Perfection of Security Interests. Borrower shall have taken or caused 
to be taken such actions reasonably requested by Lender to grant Lender a first 
priority perfected security interest in the Collateral. Such actions shall 
include, without limitation, the delivery to Lender of all appropriate 
financing statements, executed by Borrower, as to the Collateral granted by 
Borrower for all jurisdictions as may be necessary or desirable to perfect the 
security interest of Lender in such Collateral

     7.5  Absence of Events of Defaults. As of the Closing Date or the Advance 
Date, no fact or condition exists that would (or would, with the passage of 
time, the giving of notice, or both) constitute an Event of Default under this 
Agreement or any of the Loan Documents.

     7.6  Material Adverse Effect. As of the Closing Date or the Advance Date, 
no event which has had or could reasonably be expected to have a Material 
Adverse Effect has occurred and is continuing.

SECTION 8. ASSIGNMENT BY LENDER

     8.1  Borrower acknowledges and understands that Lender may sell and assign 
all or a part of its interest hereunder and under the Note(s) and Loan Documents
to any person or entity (an "Assignee"). After such assignment the term Lender 
shall mean such Assignee, and such Assignee shall be vested with all rights, 
powers and remedies of Lender hereunder with respect to the interest so
assigned; but with respect to any such interest not so transferred, the Lender
shall retain all rights, powers and remedies hereby given. No such assignment by
Lender shall relieve Borrower of any of its obligations hereunder. Borrower
shall acknowledge such assignment or assignments as shall be designated by
written notice given by Lender to Borrower. The Lender agrees that in the event
of any transfer by it of the Note(s), it will endorse thereon a notation as to
the portion of the principal of the Note(s) which shall have been paid at the
time of such transfer and as to the date to which interest shall have been last
paid thereon.

SECTION 9. DEFAULT

     The occurrence of any one or more of the following events (herein called 
"Events of Default") shall constitute a default hereunder and under the Note(s):

     9.1  The Borrower defaults in the payment of any principal or interest 
payable under the Note(s) and such default continues for more than five (5) days
after the due date thereof;

     9.2  The Borrower defaults in the payment or performance of any other 
covenant or obligation of the Borrower hereunder or under the Note(s) or any 
other Loan Documents for more than ten (10) days after the Lender has given 
notice of such default to the Borrower;

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                                     -14-

<PAGE>
 
     9.3  Any representation or warranty as of the date made herein by the
Borrower shall prove to have been false or misleading in any material respect;

     9.4  The making of an assignment by Borrower for the benefit of its
creditors or the admission by Borrower in writing of its inability to pay its
debts as they become due, or the insolvency of Borrower, or the filing by
Borrower of a voluntary petition in bankruptcy, or the adjudication of Borrower
as a bankrupt, or the filing by Borrower of any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law or
regulation, or the filing of any answer by Borrower admitting, or the failure by
Borrower to deny, the material allegations of a petition filed against it for
any such relief, or the seeking or consenting by Borrower to, or acquiescence by
Borrower in, the appointment of any trustee, receiver or liquidator of Borrower
or of all or any substantial part of the properties of Borrower, or the
inability of Borrower to pay its debts when due, or the commission by Borrower
of any act of bankruptcy as defined in the Federal Bankruptcy Act, as amended;

     9.5  The failure by Borrower, within sixty (60) days after the commencement
of any proceeding against Borrower seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, to obtain the dismissal of such
proceeding or, within sixty (60) days after the appointment, without the written
consent or acquiescence of Lender, of any trustee, receiver or liquidator of
Borrower or of all or any substantial part of the properties of Borrower, to
vacate such appointment;

     9.6  The default by Borrower under any other notes or other agreement
for borrowed money, lease or other agreement between Borrower and Lender; or

     9.7  The occurrence of any default under any lease or other agreement or
obligation of Borrower involving an amount in excess of $100,000.00 or having a
Material Adverse Effect; or the entry of any judgment against Borrower involving
an award in excess of $100,000.00 that would have a Material Adverse Effect,
that has not been bonded or stayed on appeal within thirty (30) days.

SECTION 10. REMEDIES

     Upon the occurrence and continuation hereof of any one or more Events of
Default, Lender, at its option, may declare the Note(s) to be accelerated and
immediately due and payable, (provided, that upon the occurrence of an Event of
Default of the type described in 9.4 or 9.5, the Note(s) and all other Secured
Obligations shall automatically be accelerated and made due and payable without
any further act) whereupon the unpaid principal of and accrued interest on such
Note shall become immediately due and payable, and shall thereafter bear
interest at the Default Rate and calculated in accordance with Section 2.2.
Lender may exercise all rights and remedies with respect to the Collateral
granted pursuant hereto for such Note(s), or otherwise available to it under
applicable law, including the right to release, hold or otherwise dispose of all
or any part of the Collateral and the right to utilize, process and commingle
the Collateral.

     Upon the happening and during the continuance of any Event of Default,
Lender may then, or at any time thereafter and from time to time, apply,
collect, sell in one or more sales,

Blanket Loan and Security Agr.


                                     -15-



<PAGE>
 
lease or otherwise dispose of, any or all of the Collateral, in its then
condition or following any commercially reasonably preparation or processing, in
such order as Lender may elect, and any such sale may be made either at public
or private sale at its place of business or elsewhere. Borrower agrees that any
such public or private sale may occur upon five (5) calendar day's notice to
Borrower. Lender may require Borrower to assemble the Collateral and make it
available to Lender at a place designated by Lender which is reasonably
convenient to Lender and Borrower. The proceeds of any sale, disposition or
other realization upon all or any part of the collateral shall be distributed by
Lender in the following order of priorities:

     First, to Lender in an amount sufficient to pay in full Lender's reasonable
     costs and professionals' and advisors' fees and expenses;

     Second, to Lender in an amount equal to the then unpaid amount of the
     Secured Obligations in such order and priority as Lender may choose in its
     sole discretion; and

     Finally, upon payment in full of all of the Secured Obligations, to
     Borrower or its representatives or as a court of competent jurisdiction may
     direct.

The Lender shall return to the Borrower any surplus Collateral remaining after
payment of all Secured Obligations.

SECTION 11. MISCELLANEOUS

     11.1   Borrower shall remain liable to Lender for any unpaid Secured
Obligations, advances, costs, charges and expenses, together with interest
thereon and shall pay the same immediately to Lender at Lender's offices.

     11.2   The powers conferred upon Lender by this Agreement are solely to
protect its interest in the Collateral and shall not impose any duty upon Lender
to exercise any such powers.

     11.3   This is a continuing Agreement and the grant of a security interest
hereunder shall remain in full force and effect and all the rights, powers and
remedies of Lender hereunder shall continue to exist until the Secured
Obligations are paid in full as the same become due and payable. When Borrower
has paid in full all Secured Obligations, Lender will, promptly but in no event
later than ten (10) days, upon request of Borrower, execute a written
termination Statement, reassigning to Borrower, without recourse, the Collateral
and all rights conveyed hereby and return possession (if Lender has possession)
of the Collateral to Borrower. The rights, powers and remedies of Lender
hereunder shall be in addition to all rights, powers and remedies given by
statute or rule of law and are cumulative. The exercise of any one or more of
the rights, powers and remedies provided herein shall not be construed as a
waiver of any other rights, powers and remedies of Lender. Furthermore,
regardless of whether or not the UCC is in effect in the jurisdiction where such
rights, powers and remedies are asserted, Lender shall have the rights, powers
and remedies of a secured party under the UCC.

     11.4   Upon payment in full of all Secured Obligations, the Lender shall
cancel the Note(s), this Agreement and all UCC financing statements, if any, and
shall promptly deliver all such canceled documents to the Borrower.

Blanket Loan and Security Agr.
                                     -16-

<PAGE>
 
          11.5 GOVERNING LAW. This Agreement, the Note(s) and the other Loan
Documents have been negotiated and delivered to Lender in the State of Illinois
and shall not become effective until accepted by Lender in the State of
Illinois. Payment to Lender by Borrower of the Secured Obligations is due in the
State of Illinois. This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of Illinois excluding conflict
of laws principles that would cause the application of laws of any other
jurisdiction.

          11.6 CONSENT TO JURISDICTION AND VENUE. All judicial proceedings
arising in or under or related to this Agreement, the Note or any of the other
Loan Documents may be brought in any state or federal court of competent
jurisdiction located in the State of Illinois. By execution and delivery of this
Agreement, each party hereto generally and unconditionally: (a) consents to
personal jurisdiction in Cook County, State of Illinois; (b) waives any
objection as to jurisdiction or venue in the aforesaid courts; and (d)
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement, the Note(s) and the other Loan Documents. Service of
process on any party hereto in any action arising out of or relating to this
Agreement shall be effective if given in accordance with the requirements for
notice set forth in Section 11.8 below and shall be deemed effective and
received as set forth in Section 11.8 below. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of either party to bring proceedings in the courts of any other
jurisdiction.

          11.7 Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

          11.8 Except as otherwise provided herein, all notices and service of
process required, contemplated, or permitted to have been validly served, or
hereunder shall be in writing and shall be deemed given or delivered upon the
earlier of: (i) the first business day after transmission by facsimile or hand
delivery or deposit with an overnight express service or overnight mail delivery
service; or (ii) or three (3) calendar days after mailed, postage prepaid, in
each case, and shall be addressed to the designated recipient, as follows:

          (a)  If to Lender:
               ------------

                                COMDISCO, INC.
                               Legal Department
                          Attention: General Counsel
                             6111 North River Road
                           Rosemont, Illinois 60018
                            Facsimile: 847.518.5088
                          Telephone: 847.518.698.3000

               With Copys to:
               -------------

                                COMDISCO, INC.
                         Attention: Comdisco Ventures
                             6111 North River Road
                           Rosemont, Illinois 60018

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                                      -17-

<PAGE>
 
                            Facsimile: 847.518.5465
                          Telephone: 847.518.698.3000
                                      and


                               Comdisco Ventures
                            Attention: Glen Howard
                   3000 Sand Hill Road, Bldg. 1, Suite 155
                            Menlo Park, CA 94025
                            Facsimile: 650.854.4026
                            Telephone: 650.854.9484


         (b)   If to Borrower:
               --------------

                    ALIGN TECHNOLOGY INC. 442 Potrero Avenue
                              Sunnyvale, CA 94086
                         Attention:__________________
                           Facsimile: (408) 738-7150
                           Telephone (408) 738-1500


               With a Copy to:
               --------------

                         ____________________________
                         ____________________________
                         ____________________________
                         Attention:__________________
                         Facsimile:__________________
                         Telephone:__________________

or to such other address as each party may designate for itself by like notice.

          11.9      Lender and Borrower acknowledge that there are no agreements
or understandings, written or oral, between Lender and Borrower with respect to
the Loan, other than as set forth herein, in the Note(s) and the other Loan
Documents and that this Agreement, the Note(s) and the other Loan Documents
contain the entire agreement between Lender and Borrower with respect thereto.
None of the terms of this Agreement, the Note(s) and the other Loan Documents
may be amended except by an instrument executed by each of the parties hereto.

          11.10     No omission, or delay, by Lender at any time to enforce any
right or remedy reserved to it, or to require performance of any of the terms,
covenants or provisions hereof by Borrower at any time designated, shall be a
waiver of any such right or remedy to which Lender is entitled, nor shall it in
any way affect the right of Lender to enforce such provisions thereafter.

          11.11     All agreements, representations and warranties contained in
this Agreement or the Note, or in any Loan Documents delivered pursuant hereto
or in connection herewith shall be for the benefit of Lender and any Assignee
and shall survive the execution and delivery of this Agreement or the Note and
the expiration or other termination of this Agreement or the Note.

Blanket Loan and Security Agr.

                                      -18-

<PAGE>
 
          11.12  This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.

          11.13  CONFIDENTIALITY. Lender acknowledges that certain items of
Collateral, including, but not limited to trade secrets, source codes, customer
lists and certain other items of intellectual Property, and any Financial
Statements provided pursuant to Section 6 hereof, constitute proprietary and
confidential information of the Borrower (the "Confidential Information").
Accordingly, lender agrees that any Confidential Information it may obtain in
the course of acquiring, perfecting or foreclosing on the Collateral or
otherwise provided under this Agreement, provided such Confidential Information
is marked as confidential by Borrower at the time of disclosure or is oral
information which is confirmed in writing and marked as confidential with thirty
(30) days following disclosure, shall be received in the strictest confidence
and will not be disclosed to any other person or entity in any manner
whatsoever, in whole or in part, without the prior written consent of the
Borrower, unless and until Lender has acquired indefeasible title thereto.

          11.14  This Agreement shall be binding upon, and shall inure to the
benefit of, Borrower and its permitted assigns (if any). Borrower shall not
assign its obligations under this Agreement, the Note(s) or any of the other
Loan Documents without Lender's express written consent and any such attempted
assignment shall be void and of no effect. Any assignment by Borrower in
connection with a "Merger" (as defined below) shall be subject to Lender's prior
consent. Any consent granted by Lender shall be conditioned upon such surviving
entity or transferee assuming Borrower's Secured Obligations hereunder pursuant
to assignment documents reasonably acceptable to Lender. If Lender reasonably
withholds its consent to such assignment in connection with a Merger, the
outstanding principal and accrued and unpaid interest shall be prepaid in whole
in accordance with Section 2.6 hereof.

          For purposes of this Agreement, a "Merger" shall mean any
consolidation or merger of the Borrower with or into any other corporation or
entity, any sale or conveyance of an or substantially all of the assets or stock
of the Borrower by or to any other person or entity in which Borrower is not the
surviving entity.

          IN WITNESS WHEREOF, the Borrower and the Lender have duly executed and
delivered this Agreement as of the day and year first above written.

                              BORROWER: ALIGN TECHNOLOGY INC.


                                   By:    /s/ Muhammed Ziaullah K. Chishti   
                                          ------------------------------------
                                   Title:         CEO
                                          ------------------------------------ 
                                   Date:          4/16/99
                                          ------------------------------------ 

Blanket Loan and Security Agr.

                                      -19-

<PAGE>
 
ACCEPTED IN ROSEMONT, ILLINOIS:
------------------------------

                    LENDER:   COMDISCO, INC.


                         By:    ____________________________

                         Title: ____________________________

                         Date:  ____________________________

                                     -20-

<PAGE>
 
                                   EXHIBIT A
                            SECURED PROMISSORY NOTE

     $_______________                           Date:________________

                                                Due: ________________

FOR VALUE RECEIVED, Align Technology Incorporated a Delaware corporation (the
"Borrower") hereby promises to pay to the order of Comdisco, Inc., a Delaware
corporation (the "Lender") at P.O. Box 91744, Chicago, IL 60693 or such other
place of payment as the holder of this Secured Promissory Note (this "Note") may
specify from time to time in writing, in lawful money of the United States of
America, the principal amount of ___________ and 00/l00 Dollars ($___________)
together with interest at twelve percent (12.0%) per annum from the date of this
Note to maturity of each installment on the principal hereof remaining from time
to time unpaid, such principal and interest to be paid in 36 equal monthly
installments of $___________ each, commencing ____________ and on the same day
of each month thereafter to and including ___________, such installments to be
applied first to accrued and unpaid interest and the balance to unpaid
principal. Interest shall be computed on the basis of a year consisting of
twelve months of thirty days each.

This Note is the Note referred to in, and is executed and delivered in
connection with, that certain Loan and Security Agreement of dated as of April
12 1999 herewith by and between Borrower and Lender (as the same may from time
to time be amended, modified or supplemented in accordance with its terms, the
"Loan Agreement"), and is entitled to the benefit and security of the Loan
Agreement and the other Loan Documents (as defined in the Loan Agreement), to
which reference is made for a statement of all of the terms and conditions
thereof. All terms defined in the Loan Agreement shall have the same definitions
when used herein, unless otherwise defined herein.

The Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest and any other notice as permitted under the UCC or
any applicable law.

This Note has been delivered to Lender and is payable in the State of Illinois,
and shall not become effective until accepted by Lender in the State of
Illinois. This Note shall be governed by and construed and enforced in
accordance with, the laws of the State of Illinois, excluding any conflicts of
law rules or principles that would cause the application of the laws of any
other jurisdiction.

          BORROWER:             ALIGN TECHNOLOGY INC.
                                442 Potrero Ave.
                                Sunnyvale, CA 94086


                                Signature:  ____________________________

                                Print Name: ____________________________

                                Title:      ____________________________

 

<PAGE>
 
                                   EXHIBIT B
                                ADVANCE REQUEST


                                                         Date: _________________

To Lender:     Comdisco, Inc.
               % Comdisco Ventures
               3000 Sand Hill Road
               Menlo Park, CA 94025
               Attention: Vika Tonga
               Facsimile (650) 854-4026

Borrower hereby requests from Comdisco, Inc. ("Lender") an Advance in the amount
of $_______________ under that Loan and Security Agreement between Borrower and 
Lender dated April 12, 1999 (the "Agreement").

     Please:
     ------

     (a)       Issue a check payable to Borrower      ____________

                                      or

     (b)       Wire Funds to Borrower's account       ____________

               Bank:               ______________________________________
               Address:            ______________________________________
                                   ______________________________________
               ABA Number:         ______________________________________
               Account Number:     ______________________________________
               Account Name:       ______________________________________

Borrower hereby affirms that all Representations and Warranties of Borrower set 
forth in Section 4 and all Conditions Precedent to Loan set forth in Section 7
of the Agreement remain true and correct in all material respects as of the date
hereof.


     Executed this ____ day of __________, 1999 by:

                    BORROWER:     ALIGN TECHNOLOGY INC.

                         BY:      ________________________

                         TITLE:   ________________________

                         PRINT:   ________________________

Blanket Loan and Security Agr.
                                     -21-



<PAGE>
 
                                                                   EXHIBIT 10.10

                            SECURED PROMISSORY NOTE

     $5,000,000.00                              Date: April 12, 2000

                                                Due:  April 1, 2003

FOR VALUE RECEIVED, Align Technology, Incorporated a Delaware corporation (the
"Borrower") hereby promises to pay to the order of Comdisco, Inc., a Delaware
corporation (the "Lender") at P.O. Box 91744, Chicago, IL 60693 or such other
place of payment as the holder of this Secured Promissory Note (this "Note") may
specify from time to time in writing, in lawful money of the United States of
America, the principal amount of Five Million and 00/100 Dollars ($5,000,000.00)
together with interest at twelve percent (12.0%) per annum from the date of this
Note to maturity of each installment on the principal hereof remaining from time
to time unpaid, such principal and interest to be paid in 36 equal monthly
installments of $164,468.65 each, commencing May 1, 2000 and on the same day of
each month thereafter to and including April 1, 2003, such installments to be
applied first to accrued and unpaid interest and the balance to unpaid
principal. Interest shall be computed on the basis of a year consisting of
twelve months of thirty days each.

This Note is the Note referred to in, and is executed and delivered in
connection with, that certain Loan and Security
 Agreement dated as of April 12,
1999 herewith by and between Borrower and Lender (as the same may from time to
time be amended, modified or supplemented in accordance with its terms, the
"Loan Agreement"), and is entitled to the benefit and security of the Loan
Agreement and the other Loan Documents (as defined in the Loan Agreement), to
which reference is made for a statement of all of the terms and conditions
thereof. All terms defined in the Loan Agreement shall have the same definitions
when used herein, unless otherwise defined herein.

The Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest and any other notice as permitted under the UCC or
any applicable law.

<PAGE>
 
This Note has been delivered to Lender and is payable in the State of Illinois,
and shall not become effective until accepted by Lender in the State of
Illinois. This Note shall be governed by and construed and enforced in
accordance with, the laws of the State of Illinois, excluding any conflicts of
law rules or principles that would cause the application of the laws of any
other jurisdiction.


          BORROWER:               ALIGN TECHNOLOGY INC.
                                  442 Potrero Ave.
                                  Sunnyvale, CA 94086
                                  
                                  Signature: /s/ Muhammad Ziaullah K. Chishti
                                            ------------------------------------
                                  
                                  Print Name: Muhammad Ziaullah K. Chishti
                                             -----------------------------------
                                  
                                  Title:      CEO
                                         ---------------------------------------



<PAGE>
 
                                                                   EXHIBIT 10.13


                            ALIGN TECHNOLOGY, INC.

                           2001 STOCK INCENTIVE PLAN
                           -------------------------

                                  ARTICLE ONE

                              GENERAL PROVISIONS
                              ------------------

     I.   PURPOSE OF THE PLAN

          This 2001 Stock Incentive Plan is intended to promote the interests of
Align Technology, Inc., a Delaware corporation, by providing eligible persons in
the Corporation's service with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to remain in such service.

          Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.

     II.  STRUCTURE OF THE PLAN

          A.   The Plan shall be divided into five separate equity incentives
programs:

               .  the Discretionary Option Grant Program under which eligible
     persons may, at the discretion of the Plan Administrator, be granted
     options to purchase shares of Common Stock,

               .  the Salary Investment Option Grant Program under which
     eligible employees may elect to have a portion of their base salary
     invested each year in special option grants,

               .  the Stock Issuance Program under which eligible persons may,
     at the discretion of the Plan Administrator, be issued shares of Common
     Stock directly, either through the immediate purchase of such shares
 or as
     a bonus for services rendered the Corporation (or any Parent or
     Subsidiary),

               .  the Automatic Option Grant Program under which eligible non-
     employee Board members shall automatically receive option grants at
     designated intervals over their period of continued Board service, and

               .  the Director Fee Option Grant Program under which non-employee
     Board members may elect to have all or any portion of their annual retainer
     fee otherwise payable in cash applied to a special stock option grant.

<PAGE>
 
          B.   The provisions of Articles One and Seven shall apply to all
equity programs under the Plan and shall govern the interests of all persons
under the Plan.

     III. ADMINISTRATION OF THE PLAN

          A.   The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders. Administration of the Discretionary Option Grant
and Stock Issuance Programs with respect to all other persons eligible to
participate in those programs may, at the Board's discretion, be vested in the
Primary Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons. However, any
discretionary option grants or stock issuances for members of the Primary
Committee must be authorized by a disinterested majority of the Board.

          B.   Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.

          C.   Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Discretionary Option Grant and
Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of those programs and any outstanding options
or stock issuances thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or
any stock option or stock issuance thereunder.

          D.   The Primary Committee shall have the sole and exclusive authority
to determine which Section 16 Insiders and other highly compensated Employees
shall be eligible for participation in the Salary Investment Option Grant
Program for one or more calendar years. However, all option grants under the
Salary Investment Option Grant Program shall be made in accordance with the
express terms of that program, and the Primary Committee shall not exercise any
discretionary functions with respect to the option grants made under that
program.

          E.   Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.

                                       2

<PAGE>
 
          F.   Administration of the Automatic Option Grant and Director Fee
Option Grant Programs shall be self-executing in accordance with the terms of
those programs, and no Plan Administrator shall exercise any discretionary
functions with respect to any option grants or stock issuances made under those
programs.

     IV.  ELIGIBILITY

          A.   The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs are as follows:

               (i)      Employees,

               (ii)     non-employee members of the Board or the board of
     directors of any Parent or Subsidiary, and

               (iii)    consultants and other independent advisors who provide
     services to the Corporation (or any Parent or Subsidiary).

          B.   Only Employees who are Section 16 Insiders or other highly
compensated individuals shall be eligible to participate in the Salary
Investment Option Grant Program.

          C.   Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine,
(i) with respect to the option grants under the Discretionary Option Grant
Program, which eligible persons are to receive such grants, the time or times
when those grants are to be made, the number of shares to be covered by each
such grant, the status of the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive such issuances, the time or times when the issuances are
to be made, the number of shares to be issued to each Participant, the vesting
schedule (if any) applicable to the issued shares and the consideration for such
shares.

          D.   The Plan Administrator shall have the absolute discretion either
to grant options in accordance with the Discretionary Option Grant Program or to
effect stock issuances in accordance with the Stock Issuance Program.

          E.   The individuals who shall be eligible to participate in the
Automatic Option Grant Program shall be limited to (i) those individuals who
first become non-employee Board members on or after the Underwriting Date,
whether through appointment by the Board or election by the Corporation's
stockholders, and (ii) those individuals who continue to serve as non-employee
Board members at one or more Annual Stockholders Meetings held after the
Underwriting Date. A non-employee Board member who has previously been in the
employ of the Corporation (or any Parent or Subsidiary) shall not be eligible to
receive an option grant

                                       3

<PAGE>
 
under the Automatic Option Grant Program at the time he or she first becomes a
non-employee Board member, but shall be eligible to receive periodic option
grants under the Automatic Option Grant Program while he or she continues to
serve as a non-employee Board member.

          F.   All non-employee Board members shall be eligible to participate
in the Director Fee Option Grant Program.

     V.   STOCK SUBJECT TO THE PLAN

          A.   The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The number of shares of Common Stock initially
reserved for issuance over the term of the Plan shall not exceed eleven million 
seventy-four thousand one hundred twenty-nine (11,074,129) shares. Such reserve
shall consist of (i) the number of shares estimated to remain available for
issuance, as of the Plan Effective Date, under the Predecessor Plan as last
approved by the Corporation's stockholders, including the shares subject to
outstanding options under the Predecessor Plan, (ii) plus an additional increase
of approximately eight million eight hundred thousand (8,800,000) shares to be
approved by the Corporation's stockholders prior to the Underwriting Date.

          B.   The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of January each
calendar year during the term of the Plan, beginning with calendar year 2002, by
an amount equal to five percent (5%) of the total number of shares of Common
Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed
three million (3,000,000) shares.

          C.   No one person participating in the Plan may receive stock
options, separately exercisable stock appreciation rights and direct stock
issuances for more than three million (3,000,000) shares of Common Stock in the
aggregate per calendar year.

          D.   Shares of Common Stock subject to outstanding options (including
options transferred to this Plan from the Predecessor Plan) shall be available
for subsequent issuance under the Plan to the extent (i) those options expire or
terminate for any reason prior to exercise in full or (ii) the options are
cancelled in accordance with the cancellation-regrant provisions of Article Two.
Unvested shares issued under the Plan and subsequently cancelled or repurchased
by the Corporation, at the original issue price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants or direct stock issuances under the Plan. However, should the exercise
price of an option under the Plan be paid with shares of Common Stock or should
shares of Common Stock otherwise issuable under the Plan be withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection with
the exercise of an option or the vesting of a stock issuance under the Plan,
then the number of shares of Common Stock available for issuance under the Plan
shall be reduced by the gross number of shares for which the option is exercised
or which vest under the stock issuance, and not by the net number of shares of
Common Stock issued to the holder of such option or stock

                                       4

<PAGE>
 
issuance. Shares of Common Stock underlying one or more stock appreciation
rights exercised under Section IV of Article Two, Section III of Article Three,
Section II of Article Five or Section III of Article Six of the Plan shall not
be available for subsequent issuance under the Plan.

          E.   If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made by the Plan Administrator to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one person may be granted stock options, separately
exercisable stock appreciation rights and direct stock issuances under the Plan
per calendar year, (iii) the number and/or class of securities for which grants
are subsequently to be made under the Automatic Option Grant Program to new and
continuing non-employee Board members, (iv) the number and/or class of
securities and the exercise price per share in effect under each outstanding
option under the Plan, (v) the number and/or class of securities and exercise
price per share in effect under each outstanding option transferred to this Plan
from the Predecessor Plan and (vi) the maximum number and/or class of securities
by which the share reserve is to increase automatically each calendar year
pursuant to the provisions of Section V.B of this Article One. Such adjustments
to the outstanding options are to be effected in a manner which shall preclude
the enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.

                                       5

<PAGE>
 
                                  ARTICLE TWO

                      DISCRETIONARY OPTION GRANT PROGRAM
                      ----------------------------------

     I.   OPTION TERMS

          Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
                                    --------                                  
shall comply with the terms specified below.  Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

          A.   Exercise Price.
               -------------- 

               1.  The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the option grant date.

               2.  The exercise price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section I of Article Seven
and the documents evidencing the option, be payable in one or more of the forms
specified below:

                   (i)    cash or check made payable to the Corporation,

                   (ii)   shares of Common Stock held for the requisite period
     necessary to avoid a charge to the Corporation's earnings for financial
     reporting purposes and valued at Fair Market Value on the Exercise Date, or

                   (iii)  to the extent the option is exercised for vested
     shares, through a special sale and remittance procedure pursuant to which
     the Optionee shall concurrently provide irrevocable instructions to (a) a
     Corporation-designated brokerage firm to effect the immediate sale of the
     purchased shares and remit to the Corporation, out of the sale proceeds
     available on the settlement date, sufficient funds to cover the aggregate
     exercise price payable for the purchased shares plus all applicable
     Federal, state and local income and employment taxes required to be
     withheld by the Corporation by reason of such exercise and (b) the
     Corporation to deliver the certificates for the purchased shares directly
     to such brokerage firm in order to complete the sale.

          Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

                                       6

<PAGE>
 
          B.   Exercise and Term of Options.  Each option shall be exercisable 
               ----------------------------   
at such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.

          C.   Effect of Termination of Service.
               -------------------------------- 

               1.  The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:

                   (i)    Any option outstanding at the time of the Optionee's
     cessation of Service for any reason shall remain exercisable for such
     period of time thereafter as shall be determined by the Plan Administrator
     and set forth in the documents evidencing the option, but no such option
     shall be exercisable after the expiration of the option term.

                   (ii)   Any option held by the Optionee at the time of death
     and exercisable in whole or in part at that time may be subsequently
     exercised by the personal representative of the Optionee's estate or by the
     person or persons to whom the option is transferred pursuant to the
     Optionee's will or the laws of inheritance or by the Optionee's designated
     beneficiary or beneficiaries of that option.

                   (iii)  Should the Optionee's Service be terminated for
     Misconduct or should the Optionee otherwise engage in Misconduct while
     holding one or more outstanding options under this Article Two, then all
     those options shall terminate immediately and cease to be outstanding.

                   (iv)   During the applicable post-Service exercise period,
     the option may not be exercised in the aggregate for more than the number
     of vested shares for which the option is exercisable on the date of the
     Optionee's cessation of Service. Upon the expiration of the applicable
     exercise period or (if earlier) upon the expiration of the option term, the
     option shall terminate and cease to be outstanding for any vested shares
     for which the option has not been exercised. However, the option shall,
     immediately upon the Optionee's cessation of Service, terminate and cease
     to be outstanding to the extent the option is not otherwise at that time
     exercisable for vested shares.

          2.   The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:

                   (i)    extend the period of time for which the option is to
     remain exercisable following the Optionee's cessation of Service from the
     limited exercise period otherwise in effect for that option to such greater
     period of time as the Plan Administrator shall deem appropriate, but in no
     event beyond the expiration of the option term, and/or

                                       7

<PAGE>
 
                   (ii)   permit the option to be exercised, during the
     applicable post-Service exercise period, not only with respect to the
     number of vested shares of Common Stock for which such option is
     exercisable at the time of the Optionee's cessation of Service but also
     with respect to one or more additional installments in which the Optionee
     would have vested had the Optionee continued in Service.

          D.   Stockholder Rights.  The holder of an option shall have no
               ------------------   
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

          E.   Repurchase Rights.  The Plan Administrator shall have the 
               ----------------- 
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.

          F.   Limited Transferability of Options.  During the lifetime of the
               ----------------------------------      
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or the laws of inheritance
following the Optionee's death. Non-Statutory Options shall be subject to the
same restriction, except that a Non-Statutory Option may be assigned in whole or
in part during the Optionee's lifetime to one or more members of the Optionee's
family or to a trust established exclusively for one or more such family members
or to Optionee's former spouse, to the extent such assignment is in connection
with the Optionee's estate plan or pursuant to a domestic relations order. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate.
Notwithstanding the foregoing, the Optionee may also designate one or more
persons as the beneficiary or beneficiaries of his or her outstanding options
under this Article Two, and those options shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries
upon the Optionee's death while holding those options. Such beneficiary or
beneficiaries shall take the transferred options subject to all the terms and
conditions of the applicable agreement evidencing each such transferred option,
including (without limitation) the limited time period during which the option
may be exercised following the Optionee's death.

     II.  INCENTIVE OPTIONS

          The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Seven shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.
                            ---                                            

                                       8

<PAGE>
 
          A.   Eligibility.  Incentive Options may only be granted to Employees.
               -----------                                                      

          B.   Dollar Limitation.  The aggregate Fair Market Value of the 
               ----------------- 
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

          C.   10% Stockholder.  If any Employee to whom an Incentive Option 
               ---------------
is granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.

     III. CORPORATE TRANSACTION/CHANGE IN CONTROL

          A.   In the event of any Corporate Transaction, each outstanding
option under the Discretionary Option Grant Program shall automatically
accelerate so that each such option shall, immediately prior to the effective
date of that Corporate Transaction, become exercisable for all the shares of
Common Stock at the time subject to such option and may be exercised for any or
all of those shares as fully vested shares of Common Stock. However, an
outstanding option shall not become exercisable on such an accelerated basis if
and to the extent: (i) such option is, in connection with the Corporate
Transaction, to be assumed by the successor corporation (or parent thereof) or
(ii) such option is to be replaced with a cash incentive program of the
successor corporation which preserves the spread existing at the time of the
Corporate Transaction on any shares for which the option is not otherwise at
that time exercisable and provides for subsequent payout of that spread in
accordance with the same exercise/vesting schedule applicable to those option
shares or (iii) the acceleration of such option is subject to other limitations
imposed by the Plan Administrator at the time of the option grant.

          B.   All outstanding repurchase rights under the Discretionary Option
Grant Program shall automatically terminate, and the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
of any Corporate Transaction, except to the extent: (i) those repurchase rights
are to be assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.

          C.   Immediately following the consummation of the Corporate
Transaction, all outstanding options under the Discretionary Option Grant
Program shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation (or parent thereof).

                                       9

<PAGE>
 
          D.   Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments to reflect such Corporate Transaction shall also be made
to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
--------
the same, (ii) the maximum number and/or class of securities available for
issuance over the remaining term of the Plan and (iii) the maximum number and/or
class of securities for which any one person may be granted stock options,
separately exercisable stock appreciation rights and direct stock issuances
under the Plan per calendar year and (iv) the maximum number and/or class of
securities by which the share reserve is to increase automatically each calendar
year. To the extent the actual holders of the Corporation's outstanding Common
Stock receive cash consideration for their Common Stock in consummation of the
Corporate Transaction, the successor corporation may, in connection with the
assumption of the outstanding options under the Discretionary Option Grant
Program, substitute one or more shares of its own common stock with a fair
market value equivalent to the cash consideration paid per share of Common Stock
in such Corporate Transaction.

          E.   The Plan Administrator shall have the discretionary authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall, immediately prior to the effective date of
such Corporate Transaction, become exercisable for all the shares of Common
Stock at the time subject to those options and may be exercised for any or all
of those shares as fully vested shares of Common Stock, whether or not those
options are to be assumed in the Corporate Transaction. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more of
the Corporation's repurchase rights under the Discretionary Option Grant Program
so that those rights shall not be assignable in connection with such Corporate
Transaction and shall accordingly terminate upon the consummation of such
Corporate Transaction, and the shares subject to those terminated rights shall
thereupon vest in full.

          F.   The Plan Administrator shall have full power and authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall become exercisable for all the shares of
Common Stock at the time subject to those options in the event the Optionee's
Service is subsequently terminated by reason of an Involuntary Termination
within a designated period (not to exceed eighteen (18) months) following the
effective date of any Corporate Transaction in which those options are assumed
and do not otherwise accelerate. In addition, the Plan Administrator may
structure one or more of the Corporation's repurchase rights so that those
rights shall immediately terminate with respect to any shares held by the
Optionee at the time of his or her Involuntary Termination, and the shares
subject to those terminated repurchase rights shall accordingly vest in full at
that time.

                                       10

<PAGE>
 
          G.   The Plan Administrator shall have the discretionary authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall, immediately prior to the effective date of
a Change in Control, become exercisable for all the shares of Common Stock at
the time subject to those options and may be exercised for any or all of those
shares as fully vested shares of Common Stock. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more of
the Corporation's repurchase rights under the Discretionary Option Grant Program
so that those rights shall terminate automatically upon the consummation of such
Change in Control, and the shares subject to those terminated rights shall
thereupon vest in full. Alternatively, the Plan Administrator may condition the
automatic acceleration of one or more outstanding options under the
Discretionary Option Grant Program and the termination of one or more of the
Corporation's outstanding repurchase rights under such program upon the
subsequent termination of the Optionee's Service by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of such Change in Control.

          H.   The portion of any Incentive Option accelerated in connection
with a Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a
Nonstatutory Option under the Federal tax laws.

          I.   The outstanding options shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

     IV.  CANCELLATION AND REGRANT OF OPTIONS

          The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Discretionary Option
Grant Program (including outstanding options incorporated from the Predecessor
Plan) and to grant in substitution new options covering the same or a different
number of shares of Common Stock but with an exercise price per share based on
the Fair Market Value per share of Common Stock on the new grant date.

     V.   STOCK APPRECIATION RIGHTS

          A.   The Plan Administrator shall have full power and authority to
grant to selected Optionees tandem stock appreciation rights and/or limited
stock appreciation rights.

          B.   The following terms shall govern the grant and exercise of tandem
stock appreciation rights:

                   (i)    One or more Optionees may be granted the right,
     exercisable upon such terms as the Plan Administrator may establish, to
     elect between the exercise of the underlying option for shares of Common
     Stock and

                                       11

<PAGE>
 
     the surrender of that option in exchange for a distribution from the
     Corporation in an amount equal to the excess of (a) the Fair Market Value
     (on the option surrender date) of the number of shares in which the
     Optionee is at the time vested under the surrendered option (or surrendered
     portion thereof) over (b) the aggregate exercise price payable for such
     shares.

                   (ii)   No such option surrender shall be effective unless it
     is approved by the Plan Administrator, either at the time of the actual
     option surrender or at any earlier time. If the surrender is so approved,
     then the distribution to which the Optionee shall be entitled may be made
     in shares of Common Stock valued at Fair Market Value on the option
     surrender date, in cash, or partly in shares and partly in cash, as the
     Plan Administrator shall in its sole discretion deem appropriate.

                   (iii)  If the surrender of an option is not approved by the
     Plan Administrator, then the Optionee shall retain whatever rights the
     Optionee had under the surrendered option (or surrendered portion thereof)
     on the option surrender date and may exercise such rights at any time prior
     to the later of (a) five (5) business days after the receipt of the
            -----                
     rejection notice or (b) the last day on which the option is otherwise
     exercisable in accordance with the terms of the documents evidencing such
     option, but in no event may such rights be exercised more than ten (10)
     years after the option grant date.

          C.   The following terms shall govern the grant and exercise of
limited stock appreciation rights:

                   (i)    One or more Section 16 Insiders may be granted limited
     stock appreciation rights with respect to their outstanding options.

                   (ii)   Upon the occurrence of a Hostile Take-Over, each
     individual holding one or more options with such a limited stock
     appreciation right shall have the unconditional right (exercisable for a
     thirty (30)-day period following such Hostile Take-Over) to surrender each
     such option to the Corporation. In return for the surrendered option, the
     Optionee shall receive a cash distribution from the Corporation in an
     amount equal to the excess of (A) the Take-Over Price of the shares of
     Common Stock at the time subject to such option (whether or not the option
     is otherwise at that time vested and exercisable for those shares) over (B)
     the aggregate exercise price payable for those shares. Such cash
     distribution shall be paid within five (5) days following the option
     surrender date.

                   (iii)  At the time such limited stock appreciation right is
     granted, the Plan Administrator shall pre-approve any subsequent exercise
     of that right in accordance with the terms of this Paragraph C.
     Accordingly, no further approval of the Plan Administrator or the Board
     shall be required at the time of the actual option surrender and cash
     distribution.

                                       12

<PAGE>
 
                                 ARTICLE THREE

                    SALARY INVESTMENT OPTION GRANT PROGRAM
                    --------------------------------------

     I.   OPTION GRANTS

          The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years (if any) for which the Salary Investment
Option Grant Program is to be in effect and to select the Section 16 Insiders
and other highly compensated Employees eligible to participate in the Salary
Investment Option Grant Program for such calendar year or years.  Each selected
individual who elects to participate in the Salary Investment Option Grant
Program must, prior to the start of each calendar year of participation, file
with the Plan Administrator (or its designate) an irrevocable authorization
directing the Corporation to reduce his or her base salary for that calendar
year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more than
Fifty Thousand Dollars ($50,000.00).   Each individual who files such a timely
authorization shall automatically be granted an option under the Salary
Investment Option Grant Program on the first trading day in January of the
calendar year for which the salary reduction is to be in effect.

     II.  OPTION TERMS

          Each option shall be a Non-Statutory Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however,
                                                          --------          
that each such document shall comply with the terms specified below.

          A.   Exercise Price.
               -------------- 

               1.  The exercise price per share shall be thirty-three and one-
third percent (33-1/3%) of the Fair Market Value per share of Common Stock on
the option grant date.

               2.  The exercise price shall become immediately due upon exercise
of the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the extent
the sale and remittance procedure specified thereunder is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.

          B.   Number of Option Shares.  The number of shares of Common Stock 
               -----------------------     
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):

               X = A / (B x 66-2/3%), where

               X is the number of option shares,

                                       13

<PAGE>
 
               A is the dollar amount by which the Optionee's base salary is to
          be reduced for the calendar year pursuant to his or her election under
          the Salary Investment Option Grant Program, and

               B is the Fair Market Value per share of Common Stock on the
          option grant date.

          C.   Exercise and Term of Options.  The option shall become
               ----------------------------    
exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee's completion of each calendar month of Service in the calendar
year for which the salary reduction is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.

          D.   Effect of Termination of Service.  Should the Optionee cease
               --------------------------------             
Service for any reason while holding one or more options under this Article
Three, then each such option shall remain exercisable, for any or all of the
shares for which the option is exercisable at the time of such cessation of
Service, until the earlier of (i) the expiration of the ten (10)-year option
                   -------   
term or (ii) the expiration of the three (3)-year period measured from the date
of such cessation of Service. Should the Optionee die while holding one or more
options under this Article Three, then each such option may be exercised, for
any or all of the shares for which the option is exercisable at the time of the
Optionee's cessation of Service (less any shares subsequently purchased by
Optionee prior to death), by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the Optionee's will or the laws of inheritance or by the designated beneficiary
or beneficiaries of the option. Such right of exercise shall lapse, and the
option shall terminate, upon the earlier of (i) the expiration of the ten (10)-
                                 ------- 
year option term or (ii) the three (3)-year period measured from the date of the
Optionee's cessation of Service. However, the option shall, immediately upon the
Optionee's cessation of Service for any reason, terminate and cease to remain
outstanding with respect to any and all shares of Common Stock for which the
option is not otherwise at that time exercisable.

     III. CORPORATE TRANSACTION/ CHANGE IN CONTROL/ HOSTILE TAKE-OVER

          A.   In the event of any Corporate Transaction while the Optionee
remains in Service, each outstanding option held by such Optionee under this
Salary Investment Option Grant Program shall automatically accelerate so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully vested shares of Common Stock. Each such outstanding option shall
terminate immediately following the Corporate Transaction, except to the extent
assumed by the successor corporation (or parent thereof) in such Corporate
Transaction. Any option so assumed shall remain exercisable for the fully vested
shares until the earlier of (i) the expiration of the ten (10)-year option 
                 -------                                           
term or (ii) the expiration of the three (3)-year period measured from the date
of the Optionee's cessation of Service.

                                       14

<PAGE>
 
          B.   In the event of a Change in Control while the Optionee remains in
Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Change in Control,
become exercisable for all the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully vested
shares of Common Stock. The option shall remain so exercisable until the
earliest to occur of (i) the expiration of the ten (10)-year option term, (ii)
--------                                                                       
the expiration of the three (3)-year period measured from the date of the
Optionee's cessation of Service, (iii) the termination of the option in
connection with a Corporate Transaction or (iv) the surrender of the option in
connection with a Hostile Take-Over.

          C.   Upon the occurrence of a Hostile Take-Over while the Optionee
remains in Service, such Optionee shall have a thirty (30)-day period in which
to surrender to the Corporation each outstanding option held by him or her under
the Salary Investment Option Grant Program. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to the surrendered option (whether or not the option is otherwise at the
time exercisable for those shares) over (ii) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid within five (5)
days following the surrender of the option to the Corporation. The Primary
Committee shall, at the time the option with such limited stock appreciation
right is granted under the Salary Investment Option Grant Program, pre-approve
any subsequent exercise of that right in accordance with the terms of this
Paragraph C. Accordingly, no further approval of the Primary Committee or the
Board shall be required at the time of the actual option surrender and cash
distribution.

          D.   Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
                                     --------  
payable for such securities shall remain the same. To the extent the actual
holders of the Corporation's outstanding Common Stock receive cash consideration
for their Common Stock in consummation of the Corporate Transaction, the
successor corporation may, in connection with the assumption of the outstanding
options under the Salary Investment Option Grant Program, substitute one or more
shares of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Corporate Transaction.

          E.   The grant of options under the Salary Investment Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

                                       15

<PAGE>
 
     IV.  REMAINING TERMS

          The remaining terms of each option granted under the Salary Investment
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.

                                       16

<PAGE>
 
                                 ARTICLE FOUR

                             STOCK ISSUANCE PROGRAM
                             ----------------------

     I.   STOCK ISSUANCE TERMS

          Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below.  Shares of Common Stock may also be
issued under the Stock Issuance Program pursuant to share right awards which
entitle the recipients to receive those shares upon the attainment of designated
performance goals or the completion of specified Service requirements.

          A.   Purchase Price.
               -------------- 

               1.  The purchase price per share shall be fixed by the Plan
Administrator, but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the issuance date.

               2.  Subject to the provisions of Section I of Article Seven,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance :

                   (i)    cash or check made payable to the Corporation, or

                   (ii)   past services rendered to the Corporation (or any
     Parent or Subsidiary).

          B.   Vesting Provisions.
               ------------------ 

               1.  Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program shall be
determined by the Plan Administrator and incorporated into the Stock Issuance
Agreement. Shares of Common Stock may also be issued under the Stock Issuance
Program pursuant to share right awards which entitle the recipients to receive
those shares upon the attainment of designated performance goals or the
satisfaction of specified Service requirements.

               2.  Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or

                                       17

<PAGE>
 
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the same
vesting requirements applicable to the Participant's unvested shares of Common
Stock and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.

               3.  The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.

               4.  Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to the surrendered shares.

               5.  The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock which
would otherwise occur upon the cessation of the Participant's Service or the 
non-attainment of the performance objectives applicable to those shares. Such
waiver shall result in the immediate vesting of the Participant's interest in
the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.

               6.  Outstanding share right awards under the Stock Issuance
Program shall automatically terminate, and no shares of Common Stock shall
actually be issued in satisfaction of those awards, if the performance goals or
Service requirements established for such awards are not attained or satisfied.
The Plan Administrator, however, shall have the discretionary authority to issue
shares of Common Stock under one or more outstanding share right awards as to
which the designated performance goals or Service requirements have not been
attained or satisfied.

     II.  CORPORATE TRANSACTION/CHANGE IN CONTROL

          A.   All of the Corporation's outstanding repurchase rights under the
Stock Issuance Program shall terminate automatically, and all the shares of
Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Corporate Transaction, except to the extent (i) those
repurchase rights are to be assigned to the successor corporation (or parent
thereof) in connection with such Corporate Transaction or (ii) such accelerated
vesting is precluded by other limitations imposed in the Stock Issuance
Agreement.

                                       18

<PAGE>
 
          B.   The Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation's repurchase rights under the Stock
Issuance Program so that those rights shall automatically terminate in whole or
in part, and the shares of Common Stock subject to those terminated rights shall
immediately vest, in the event the Participant's Service should subsequently
terminate by reason of an Involuntary Termination within a designated period
(not to exceed eighteen (18) months) following the effective date of any
Corporate Transaction in which those repurchase rights are assigned to the
successor corporation (or parent thereof).

          C.   The Plan Administrator shall also have the discretionary
authority to structure one or more of the Corporation's repurchase rights under
the Stock Issuance Program so that those rights shall automatically terminate in
whole or in part, and the shares of Common Stock subject to those terminated
rights shall immediately vest, either upon the occurrence of a Change in Control
or upon the subsequent termination of the Participant's Service by reason of an
Involuntary Termination within a designated period (not to exceed eighteen (18)
months) following the effective date of that Change in Control.

     III. SHARE ESCROW/LEGENDS

          Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.

                                       19

<PAGE>
 
                                 ARTICLE FIVE

                        AUTOMATIC OPTION GRANT PROGRAM
                        ------------------------------

     I.   OPTION TERMS

          A.   Grant Dates.  Option grants shall be made on the dates specified
               -----------    
below:

               1.  Each individual who is first elected or appointed as a non-
employee Board member at any time on or after the Underwriting Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase thirty two thousand (32,000) shares of Common
Stock, provided that individual has not previously been in the employ of the
Corporation or any Parent or Subsidiary.

               2.  On the date of each Annual Stockholders Meeting held after
the Underwriting Date, each individual who is to continue to serve as a non-
employee Board member, whether or not that individual is standing for re-
election to the Board at that particular Annual Meeting, shall automatically be
granted a Non-Statutory Option to purchase eight thousand (8,000) shares of
Common Stock, provided such individual has served as a non-employee Board member
for at least six (6) months. There shall be no limit on the number of such eight
thousand (8,000)-share option grants any one non-employee Board member may
receive over his or her period of Board service, and non-employee Board members
who have previously been in the employ of the Corporation (or any Parent or
Subsidiary) or who have otherwise received one or more stock option grants from
the Corporation prior to the Underwriting Date shall be eligible to receive one
or more such annual option grants over their period of continued Board service.

          B.   Exercise Price.
               -------------- 

               1.  The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.

               2.  The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

          C.   Option Term.  Each option shall have a term of ten (10) years
               -----------
measured from the option grant date.

          D.   Exercise and Vesting of Options.  Each option shall be
               -------------------------------               
immediately exercisable for any or all of the option shares. However, any
unvested shares purchased under the option shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's cessation
of Board service prior to vesting in those shares. The shares subject to each
initial thirty two thousand (32,000) -share grant shall vest, and the
Corporation's

                                       20

<PAGE>
 
repurchase right shall lapse, in a series of four (4) successive equal annual
installments upon the Optionee's completion of each year of service as a Board
member over the four (4)-year period measured from the option grant date. The
shares subject to each annual eight thousand (8,000)-share option grant shall
vest in one installment upon the Optionee's completion of the one (1)-year
period of service measured from the grant date.

          E.   Limited Transferability of Options.  Each option under this
               ----------------------------------          
Article Five may be assigned in whole or in part during the Optionee's lifetime
to one or more members of the Optionee's family or to a trust established
exclusively for one or more such family members or to Optionee's former spouse,
to the extent such assignment is in connection with the Optionee's estate plan
or pursuant to a domestic relations order. The assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate. The Optionee may also designate one
or more persons as the beneficiary or beneficiaries of his or her outstanding
options under this Article Five, and those options shall, in accordance with
such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Optionee's death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all
the terms and conditions of the applicable agreement evidencing each such
transferred option, including (without limitation) the limited time period
during which the option may be exercised following the Optionee's death.

          F.   Termination of Board Service.  The following provisions shall
               ----------------------------          
govern the exercise of any options held by the Optionee at the time the Optionee
ceases to serve as a Board member:

                   (i)    The Optionee (or, in the event of Optionee's death,
     the personal representative of the Optionee's estate or the person or
     persons to whom the option is transferred pursuant to the Optionee's will
     or the laws of inheritance or the designated beneficiary or beneficiaries
     of such option) shall have a twelve (12)-month period following the date of
     such cessation of Board service in which to exercise each such option.

                   (ii)   During the twelve (12)-month exercise period, the
     option may not be exercised in the aggregate for more than the number of
     vested shares of Common Stock for which the option is exercisable at the
     time of the Optionee's cessation of Board service.

                   (iii)  Should the Optionee cease to serve as a Board member
     by reason of death or Permanent Disability, then all shares at the time
     subject to the option shall immediately vest so that such option may,
     during the twelve (12)-month exercise period following such cessation of
     Board service, be exercised for any or all of those shares as fully vested
     shares of Common Stock.

                                       21

<PAGE>
 
                   (iv)   In no event shall the option remain exercisable after
     the expiration of the option term. Upon the expiration of the twelve (12)-
     month exercise period or (if earlier) upon the expiration of the option
     term, the option shall terminate and cease to be outstanding for any vested
     shares for which the option has not been exercised. However, the option
     shall, immediately upon the Optionee's cessation of Board service for any
     reason other than death or Permanent Disability, terminate and cease to be
     outstanding to the extent the option is not otherwise at that time
     exercisable for vested shares.

     II.  CORPORATE TRANSACTION/ CHANGE IN CONTROL/ HOSTILE TAKE-OVER

          A.   In the event of a Corporate Transaction while the Optionee
remains a Board member, the shares of Common Stock at the time subject to each
outstanding option held by such Optionee under this Automatic Option Grant
Program but not otherwise vested shall automatically vest in full so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all the option shares as fully vested shares
of Common Stock and may be exercised for any or all of those vested shares.
Immediately following the consummation of the Corporate Transaction, each
automatic option grant shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).

          B.   In the event of a Change in Control while the Optionee remains a
Board member, the shares of Common Stock at the time subject to each outstanding
option held by such Optionee under this Automatic Option Grant Program but not
otherwise vested shall automatically vest in full so that each such option
shall, immediately prior to the effective date of the Change in Control, become
exercisable for all the option shares as fully vested shares of Common Stock and
may be exercised for any or all of those vested shares. Each such option shall
remain exercisable for such fully vested option shares until the expiration or
sooner termination of the option term or the surrender of the option in
connection with a Hostile Take-Over.

          C.   All outstanding repurchase rights under this under this Automatic
Option Grant Program shall automatically terminate, and the shares of Common
Stock subject to those terminated rights shall immediately vest in full, in the
event of any Corporate Transaction or Change in Control.

          D.   Upon the occurrence of a Hostile Take-Over while the Optionee
remains a Board member, such Optionee shall have a thirty (30)-day period in
which to surrender to the Corporation each of his or her outstanding options
under this Automatic Option Grant Program. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is otherwise at
the time vested in those

                                       22

<PAGE>
 
shares) over (ii) the aggregate exercise price payable for such shares.  Such
cash distribution shall be paid within five (5) days following the surrender of
the option to the Corporation.  No approval or consent of the Board or any Plan
Administrator shall be required at the time of the actual option surrender and
cash distribution.

          E.   Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
                                     -------- 
payable for such securities shall remain the same. To the extent the actual
holders of the Corporation's outstanding Common Stock receive cash consideration
for their Common Stock in consummation of the Corporate Transaction, the
successor corporation may, in connection with the assumption of the outstanding
options under the Automatic Option Grant Program, substitute one or more shares
of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Corporate Transaction.

          F.   The grant of options under the Automatic Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.

     III. REMAINING TERMS

          The remaining terms of each option granted under the Automatic Option
Grant Program shall be the same as the terms in effect for option grants made
under the Discretionary Option Grant Program.

                                       23

<PAGE>
 
                                  ARTICLE SIX

                       DIRECTOR FEE OPTION GRANT PROGRAM
                       ---------------------------------

     I.   OPTION GRANTS

          The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years for which the Director Fee Option Grant
Program is to be in effect.  For each such calendar year the program is in
effect, each non-employee Board member may irrevocably elect to apply all or any
portion of the annual retainer fee otherwise payable in cash for his or her
service on the Board for that year to the acquisition of a special option grant
under this Director Fee Option Grant Program.  Such election must be filed with
the Corporation's Chief Financial Officer prior to the first day of the calendar
year for which the annual retainer fee which is the subject of that election is
otherwise payable.  Each non-employee Board member who files such a timely
election shall automatically be granted an option under this Director Fee Option
Grant Program on the first trading day in January in the calendar year for which
the retainer fee election is in effect.

     II.  OPTION TERMS

          Each option shall be a Non-Statutory Option governed by the terms and
conditions specified below.

          A.   Exercise Price.
               -------------- 

               1.  The exercise price per share shall be thirty-three and one-
third percent (33-1/3%) of the Fair Market Value per share of Common Stock on
the option grant date.

               2.  The exercise price shall become immediately due upon exercise
of the option and shall be payable in one or more of the alternative forms
authorized under the Discretionary Option Grant Program. Except to the extent
the sale and remittance procedure specified thereunder is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.

          B.   Number of Option Shares.  The number of shares of Common Stock 
               -----------------------                   
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):

               X = A / (B x 66-2/3%), where

               X is the number of option shares,

               A is the portion of the annual retainer fee subject to the non-
          employee Board member's election under this Director Fee Option Grant
          Program, and

                                       24

<PAGE>
 
               B is the Fair Market Value per share of Common Stock on the
          option grant date.

          C.   Exercise and Term of Options.  The option shall become 
               ----------------------------           
exercisable in a series of twelve (12) equal monthly installments upon the
Optionee's completion of each calendar month of Board service during the
calendar year for which the retainer fee election is in effect. Each option
shall have a maximum term of ten (10) years measured from the option grant date.

          D.   Limited Transferability of Options.  Each option under this
               ----------------------------------          
Article Six may be assigned in whole or in part during the Optionee's lifetime
to one or more members of the Optionee's family or to a trust established
exclusively for one or more such family members or to Optionee's former spouse,
to the extent such assignment is in connection with Optionee's estate plan or
pursuant to a domestic relations order. The assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate. The Optionee may also designate one
or more persons as the beneficiary or beneficiaries of his or her outstanding
options under this Article Six, and those options shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries
upon the Optionee's death while holding those options. Such beneficiary or
beneficiaries shall take the transferred options subject to all the terms and
conditions of the applicable agreement evidencing each such transferred option,
including (without limitation) the limited time period during which the option
may be exercised following the Optionee's death.

          E.   Termination of Board Service.  Should the Optionee cease Board
               ----------------------------            
service for any reason (other than death or Permanent Disability) while holding
one or more options under this Director Fee Option Grant Program, then each such
option shall remain exercisable, for any or all of the shares for which the
option is exercisable at the time of such cessation of Board service, until the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the
-------   
expiration of the three (3)-year period measured from the date of such cessation
of Board service. However, each option held by the Optionee under this Director
Fee Option Grant Program at the time of his or her cessation of Board service
shall immediately terminate and cease to remain outstanding with respect to any
and all shares of Common Stock for which the option is not otherwise at that
time exercisable.

          F.   Death or Permanent Disability.  Should the Optionee's service 
               -----------------------------                          
as a Board member cease by reason of death or Permanent Disability, then each
option held by such Optionee under this Director Fee Option Grant Program shall
immediately become exercisable for all the shares of Common Stock at the time
subject to that option, and the option may be exercised for any or all of those
shares as fully vested shares until the earlier of (i) the expiration of the ten
                                        -------    
(10)-year option term or (ii) the expiration of the three (3)-year period
measured from 

                                       25

<PAGE>
 
the date of such cessation of Board service. To the extent such option is held
by the Optionee at the time of his or death, that option may be exercised by the
personal representative of the Optionee's estate or by the person or persons to
whom the option is transferred pursuant to the Optionee's will or the laws of
inheritance or by the designated beneficiary or beneficiaries of such option.

               Should the Optionee die after cessation of Board service but
while holding one or more options under this Director Fee Option Grant Program,
then each such option may be exercised, for any or all of the shares for which
the option is exercisable at the time of the Optionee's cessation of Board
service (less any shares subsequently purchased by Optionee prior to death), by
the personal representative of the Optionee's estate or by the person or persons
to whom the option is transferred pursuant to the Optionee's will or the laws of
inheritance or by the designated beneficiary or beneficiaries of such option.
Such right of exercise shall lapse, and the option shall terminate, upon the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the three
-------                                                                         
(3)-year period measured from the date of the Optionee's cessation of Board
service.

     III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

          A.   In the event of any Corporate Transaction while the Optionee
remains a Board member, each outstanding option held by such Optionee under this
Director Fee Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully vested shares of Common Stock. Each such outstanding option shall
terminate immediately following the Corporate Transaction, except to the extent
assumed by the successor corporation (or parent thereof) in such Corporate
Transaction. Any option so assumed and shall remain exercisable for the fully
vested shares until the earliest to occur of (i) the expiration of the ten (10)-
                        --------  
year option term, (ii) the expiration of the three (3)-year period measured from
the date of the Optionee's cessation of Board service or (iii) the surrender of
the option in connection with a Hostile Take-Over.

          B.   In the event of a Change in Control while the Optionee remains a
Board member, each outstanding option held by such Optionee under this Director
Fee Option Grant Program shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the Change in Control, become
exercisable for all the shares of Common Stock at the time subject to such
option and may be exercised for any or all of those shares as fully vested
shares of Common Stock. The option shall remain so exercisable until the
earliest to occur of (i) the expiration of the ten (10)-year option term, (ii)
--------                                                                      
the expiration of the three (3)-year period measured from the date of the
Optionee's cessation of Board service, (iii) the termination of the option in
connection with a Corporate Transaction or (iv) the surrender of the option in
connection with a Hostile Take-Over.

                                       26

<PAGE>
 
          C.   Upon the occurrence of a Hostile Take-Over while the Optionee
remains a Board member, such Optionee shall have a thirty (30)-day period in
which to surrender to the Corporation each outstanding option held by him or her
under the Director Fee Option Grant Program. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to each surrendered option (whether or not the option is otherwise at
the time exercisable for those shares) over (ii) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid within five (5)
days following the surrender of the option to the Corporation. No approval or
consent of the Board or any Plan Administrator shall be required at the time of
the actual option surrender and cash distribution.

          D.   Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
                                     -------- 
payable for such securities shall remain the same. To the extent the actual
holders of the Corporation's outstanding Common Stock receive cash consideration
for their Common Stock in consummation of the Corporate Transaction, the
successor corporation may, in connection with the assumption of the outstanding
options under the Director Fee Option Grant Program, substitute one or more
shares of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Corporate Transaction.

          E.   The grant of options under the Director Fee Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.

     IV.  REMAINING TERMS

          The remaining terms of each option granted under this Director Fee
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.

                                       27

<PAGE>
 
                                 ARTICLE SEVEN

                                 MISCELLANEOUS
                                 -------------

     I.   FINANCING

          The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering a
full-recourse, interest-bearing promissory note payable in one or more
installments.  The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion.  In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares (less the par value of
such shares) plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.

     II.  TAX WITHHOLDING

          A.   The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options or the issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable Federal, state and
local income and employment tax withholding requirements.

          B.   The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan (other than the options granted or the shares issued under the Automatic
Option Grant or Director Fee Option Grant Program) with the right to use shares
of Common Stock in satisfaction of all or part of the Withholding Taxes to which
such holders may become subject in connection with the exercise of their options
or the vesting of their shares. Such right may be provided to any such holder in
either or both of the following formats:

               Stock Withholding:  The election to have the Corporation
               -----------------                  
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by the
holder.

               Stock Delivery:  The election to deliver to the Corporation, at 
               --------------                                 
the time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Withholding
Taxes) with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by the
holder.

                                       28

<PAGE>
 
     III. EFFECTIVE DATE AND TERM OF THE PLAN

          A.   The Plan shall become effective immediately on the Plan Effective
Date. However, the Salary Investment Option Grant Program and the Director Fee
Option Grant Program shall not be implemented until such time as the Primary
Committee may deem appropriate. Options may be granted under the Discretionary
Option Grant at any time on or after the Plan Effective Date, and the initial
option grants under the Automatic Option Grant Program shall also be made on the
Plan Effective Date to any non-employee Board members eligible for such grants
at that time. However, no options granted under the Plan may be exercised, and
no shares shall be issued under the Plan, until the Plan is approved by the
Corporation's stockholders. If such stockholder approval is not obtained within
twelve (12) months after the Plan Effective Date, then all options previously
granted under this Plan shall terminate and cease to be outstanding, and no
further options shall be granted and no shares shall be issued under the Plan.

          B.   The Plan shall serve as the successor to the Predecessor Plan,
and no further option grants or direct stock issuances shall be made under the
Predecessor Plan after the Plan Effective Date. All options outstanding under
the Predecessor Plan on the Plan Effective Date shall be transferred to the Plan
at that time and shall be treated as outstanding options under the Plan.
However, each outstanding option so transferred shall continue to be governed
solely by the terms of the documents evidencing such option, and no provision of
the Plan shall be deemed to affect or otherwise modify the rights or obligations
of the holders of such transferred options with respect to their acquisition of
shares of Common Stock.

          C.   One or more provisions of the Plan, including (without
limitation) the option/vesting acceleration provisions of Article Two relating
to Corporate Transactions and Changes in Control, may, in the Plan
Administrator's discretion, be extended to one or more options incorporated from
the Predecessor Plan which do not otherwise contain such provisions.

          D.   The Plan shall terminate upon the earliest to occur of (i)
                                                 --------   
December 31, 2010, (ii) the date on which all shares available for issuance
under the Plan shall have been issued as fully vested shares or (iii) the
termination of all outstanding options in connection with a Corporate
Transaction. Should the Plan terminate on December 31, 2010, then all option
grants and unvested stock issuances outstanding at that time shall continue to
have force and effect in accordance with the provisions of the documents
evidencing such grants or issuances.

     IV.  AMENDMENT OF THE PLAN

          A.   The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect the rights and obligations with respect
to stock options or unvested stock issuances at the time outstanding under the
Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.

                                       29

<PAGE>
 
          B.   Options to purchase shares of Common Stock may be granted under
the Discretionary Option Grant and Salary Investment Option Grant Programs and
shares of Common Stock may be issued under the Stock Issuance Program that are
in each instance in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under those programs
shall be held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.

     V.   USE OF PROCEEDS

          Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.

     VI.  REGULATORY APPROVALS

          A.   The implementation of the Plan, the granting of any stock option
under the Plan and the issuance of any shares of Common Stock (i) upon the
exercise of any granted option or (ii) under the Stock Issuance Program shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.

          B.   No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.

     VII. NO EMPLOYMENT/SERVICE RIGHTS

          Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.

                                       30

<PAGE>
 
                                   APPENDIX
                                   ---------

          The following definitions shall be in effect under the Plan:

          A.   Automatic Option Grant Program shall mean the automatic option 
               ------------------------------                                
grant program in effect under Article Five of the Plan.

          B.   Board shall mean the Corporation's Board of Directors.
               -----                                                 

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

                   (i)    the acquisition, directly or indirectly by any person
     or related group of persons (other than the Corporation or a person that
     directly or indirectly controls, is controlled by, or is under common
     control with, the Corporation), of beneficial ownership (within the meaning
     of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
     percent (50%) of the total combined voting power of the Corporation's
     outstanding securities pursuant to a tender or exchange offer made directly
     to the Corporation's stockholders, or

                   (ii)   a change in the composition of the Board over a period
     of thirty-six (36) consecutive months or less such that a majority of the
     Board members ceases, by reason of one or more contested elections for
     Board membership, to be comprised of individuals who either (A) have been
     Board members continuously since the beginning of such period or (B) have
     been elected or nominated for election as Board members during such period
     by at least a majority of the Board members described in clause (A) who
     were still in office at the time the Board approved such election or
     nomination.

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

          E.   Common Stock shall mean the Corporation's common stock.
               ------------                                           

          F.   Corporate Transaction shall mean either of the following
               ---------------------                       
stockholder-approved transactions to which the Corporation is a party:

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

                                      A-1

<PAGE>
 
                   (ii)   the sale, transfer or other disposition of all or
     substantially all of the Corporation's assets in complete liquidation or
     dissolution of the Corporation.

          G.   Corporation shall mean Align Technology, Inc., a Delaware 
               -----------                                               
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Align Technology, Inc. which shall by appropriate
action adopt the Plan.

          H.   Director Fee Option Grant Program shall mean the special stock
               ---------------------------------                
option grant in effect for non-employee Board members under Article Six of the
Plan.

          I.   Discretionary Option Grant Program shall mean the discretionary
               ----------------------------------    
option grant program in effect under Article Two of the Plan.

          J.   Employee shall mean an individual who is in the employ of the
               --------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

          K.   Exercise Date shall mean the date on which the Corporation shall
               -------------                        
have received written notice of the option exercise.

          L.   Fair Market Value per share of Common Stock on any relevant date
               -----------------                                 
shall be determined in accordance with the following provisions:

                   (i)    If the Common Stock is at the time traded on the
     Nasdaq National Market, then the Fair Market Value shall be the closing
     selling price per share of Common Stock on the date in question, as such
     price is reported by the National Association of Securities Dealers on the
     Nasdaq National Market and published in The Wall Street Journal. If there
                                             -----------------------  
     is no closing selling price for the Common Stock on the date in question,
     then the Fair Market Value shall be the closing selling price on the last
     preceding date for which such quotation exists.

                   (ii)   If the Common Stock is at the time listed on any Stock
     Exchange, then the Fair Market Value shall be the closing selling price per
     share of Common Stock on the date in question on the Stock Exchange
     determined by the Plan Administrator to be the primary market for the
     Common Stock, as such price is officially quoted in the composite tape of
     transactions on such exchange and published in The Wall Street Journal. If
                                                    -----------------------
     there is no closing selling price for the Common Stock on the date in
     question, then the Fair Market Value shall be the closing selling price on
     the last preceding date for which such quotation exists.

                   (iii)  For purposes of any option grants made on the
     Underwriting Date, the Fair Market Value shall be deemed to be equal to the
     price per share at which the Common Stock is to be sold in the initial
     public offering pursuant to the Underwriting Agreement.

                                      A-2

<PAGE>
 
          M.   Hostile Take-Over shall mean the acquisition, directly or
               -----------------                            
indirectly, by any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept.

          N.   Incentive Option shall mean an option which satisfies the 
               ----------------         
requirements of Code Section 422.
 
          O.   Involuntary Termination shall mean the termination of the Service
               -----------------------                
of any individual which occurs by reason of:

                   (i)    such individual's involuntary dismissal or discharge
     by the Corporation for reasons other than Misconduct, or

                   (ii)   such individual's voluntary resignation following (A)
     a change in his or her position with the Corporation which materially
     reduces his or her duties and responsibilities or the level of management
     to which he or she reports, (B) a reduction in his or her level of
     compensation (including base salary, fringe benefits and target bonus under
     any corporate-performance based bonus or incentive programs) by more than
     fifteen percent (15%) or (C) a relocation of such individual's place of
     employment by more than fifty (50) miles, provided and only if such change,
     reduction or relocation is effected by the Corporation without the
     individual's consent.

          P.   Misconduct shall mean the commission of any act of fraud,
               ----------                              
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not in any way preclude or restrict the right of the Corporation (or any
Parent or Subsidiary) to discharge or dismiss any Optionee, Participant or other
person in the Service of the Corporation (or any Parent or Subsidiary) for any
other acts or omissions, but such other acts or omissions shall not be deemed,
for purposes of the Plan, to constitute grounds for termination for Misconduct.

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

          R.   Non-Statutory Option shall mean an option not intended to 
               --------------------                    
satisfy the requirements of Code Section 422.

          S.   Optionee shall mean any person to whom an option is granted under
               -------- 
the Discretionary Option Grant, Salary Investment Option Grant, Automatic Option
Grant or Director Fee Option Grant Program.

                                      A-3

<PAGE>
 
          T.   Parent shall mean any corporation (other than the Corporation) 
               ------                                          
in an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

          U.   Participant shall mean any person who is issued shares of Common
               -----------                                            
Stock under the Stock Issuance Program.

          V.   Permanent Disability or Permanently Disabled shall mean the
               --------------------------------------------            
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for purposes of the Automatic Option Grant
and Director Fee Option Grant Programs, Permanent Disability or Permanently
Disabled shall mean the inability of the non-employee Board member to perform
his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.

          W.   Plan shall mean the Corporation's 2001 Stock Incentive Plan, as
               ----
set forth in this document.

          X.   Plan Administrator shall mean the particular entity, whether 
               ------------------  
the Primary Committee, the Board or the Secondary Committee, which is authorized
to administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction.

          Y.   Plan Effective Date shall mean the date the Plan shall become
               -------------------            
effective and shall be coincident with the Underwriting Date.

          Z.   Predecessor Plan shall mean the Corporation's 1997 Equity
               ----------------          
Incentive Plan as in effect immediately prior to the Plan Effective Date
hereunder.

          AA.  Primary Committee shall mean the committee of two (2) or more 
               -----------------         
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders and to administer the Salary Investment Option Grant Program solely
with respect to the selection of the eligible individuals who may participate in
such program.

          BB.  Salary Investment Option Grant Program shall mean the salary
               --------------------------------------       
investment option grant program in effect under Article Three of the Plan.

          CC.  Secondary Committee shall mean a committee of one or more Board
               -------------------              
members appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to eligible persons other than Section 16
Insiders.

                                      A-4

<PAGE>
 
          DD.  Section 16 Insider shall mean an officer or director of the
               ------------------                      
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

          EE.  Service shall mean the performance of services for the
               ------- 
Corporation (or any Parent or Subsidiary) by a person in the capacity of an
Employee, a non-employee member of the board of directors or a consultant or
independent advisor, except to the extent otherwise specifically provided in the
documents evidencing the option grant or stock issuance.

          FF.  Stock Exchange shall mean either the American Stock Exchange or
               --------------                         
the New York Stock Exchange.

          GG.  Stock Issuance Agreement shall mean the agreement entered into by
               ------------------------      
the Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

          HH.  Stock Issuance Program shall mean the stock issuance program in
               ----------------------              
effect under Article Four of the Plan.

          II.  Subsidiary shall mean any corporation (other than the
               ----------                      
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

          JJ.  Take-Over Price shall mean the greater of (i) the Fair Market
               ---------------                -------      
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.

          KK.  10% Stockholder shall mean the owner of stock (as determined
               ---------------             
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

          LL.  Underwriting Agreement shall mean the agreement between the
               ----------------------                  
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

          MM.  Underwriting Date shall mean the date on which the Underwriting
               -----------------                     
Agreement is executed and priced in connection with an initial public offering
of the Common Stock.

          NN.  Withholding Taxes shall mean the Federal, state and local income
               -----------------                
and employment withholding taxes to which the holder of Non-Statutory Options or
unvested shares of Common Stock may become subject in connection with the
exercise of those options or the vesting of those shares.

                                      A-5



<PAGE>
 
                                                                   EXHIBIT 10.14

                            ALIGN TECHNOLOGY, INC.

                         EMPLOYEE STOCK PURCHASE PLAN
                         ----------------------------


     I.   PURPOSE OF THE PLAN

          This Employee Stock Purchase Plan is intended to promote the interests
of Align Technology, Inc., a Delaware corporation, by providing eligible
employees with the opportunity to acquire a proprietary interest in the
Corporation through participation in a payroll deduction-based employee stock
purchase plan designed to qualify under Section 423 of the Code.

          Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.

     II.  ADMINISTRATION OF THE PLAN

          The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423.  Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.

     III. STOCK SUBJECT TO PLAN

          A.   The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The number of shares of Common Stock
initially reserved for issuance
 over the term of the Plan shall be limited to 
one million five hundred thousand (1,500,000) shares.

          B.   The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of January each
calendar year during the term of the Plan, beginning with calendar year 2001, by
an amount equal to three percent (3%) of the total number of shares of Common
Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed
1,000,000 shares.

          C.   Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date, (iii) the maximum number and class of
securities purchasable in total by all Participants on any one Purchase Date,
(iv) the maximum number

<PAGE>
 
and/or class of securities by which the share reserve is to increase
automatically each calendar year pursuant to the provisions of Section III.B of
this Article One and (v) the number and class of securities and the price per
share in effect under each outstanding purchase right in order to prevent the
dilution or enlargement of benefits thereunder.

     IV.  OFFERING PERIODS

          A.   Shares of Common Stock shall be offered for purchase under the
Plan through a series of overlapping offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.

          B.   Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan Administrator prior to the
start date of such offering period. Offering periods shall commence at semi-
annual intervals on the first business day of February and August each year over
the term of the Plan. Accordingly, two (2) separate offering periods shall
commence in each calendar year the Plan remains in existence. However, the
initial offering period shall commence at the Effective Time and terminate on
the last business day in January 2003.

          C.   Each offering period shall consist of a series of one or more
successive Purchase Intervals. Purchase Intervals shall run from the first
business day in February to the last business day in July each year and from the
first business day in August each year to the last business day in January in
the following year. However, the first Purchase Interval in effect under the
initial offering period shall commence at the Effective Time and terminate on
the last business day in July 2001.

          D.   Should the Fair Market Value per share of Common Stock on any
Purchase Date within a particular offering period be less than the Fair Market
Value per share of Common Stock on the start date of that offering period, then
the individuals participating in such offering period shall, immediately after
the purchase of shares of Common Stock on their behalf on such Purchase Date, be
transferred from that offering period and automatically enrolled in the next
offering period commencing after such Purchase Date.

     V.   ELIGIBILITY

          A.   Each individual who is an Eligible Employee on the start date of
any offering period under the Plan may enter that offering period on such start
date. However, an Eligible Employees may participate in only one offering period
at a time. For the initial offering period commencing at the Effective Time,
each individual who is an Eligible Employee at that time shall automatically be
enrolled as a Participant with a contribution rate equal to fifteen percent
(15%) of his or her Cash Earnings.

                                       2.

<PAGE>
 
          B.   Except as otherwise provided in Sections IV.D and V.A above, an
Eligible Employee must, in order to participate in the Plan for a particular
offering period, complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before the start date of that offering period.

     VI.  PAYROLL DEDUCTIONS

          A.  The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock during an offering period may be any
multiple of one percent (1%) of the Cash Earnings paid to the Participant during
each Purchase Interval within that offering period, up to a maximum of fifteen
percent (15%). The deduction rate so authorized shall continue in effect
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:

               (i)   The Participant may, at any time during the offering
     period, reduce his or her rate of payroll deduction (or to the extent
     applicable, the percentage of Cash Earnings to serve as his or her lump sum
     contribution for the initial Purchase Interval of the first offering
     period) to become effective as soon as possible after filing the
     appropriate form with the Plan Administrator. The Participant may not,
     however, effect more than one (1) such reduction per Purchase Interval.

               (ii)  The Participant may, prior to the commencement of any new
     Purchase Interval within the offering period, increase the rate of his or
     her payroll deduction by filing the appropriate form with the Plan
     Administrator. The new rate (which may not exceed the fifteen percent (15%)
     maximum) shall become effective on the start date of the first Purchase
     Interval following the filing of such form.

          B.   Payroll deductions shall begin on the first pay day
administratively feasible following the start date of the offering period and
shall (unless sooner terminated by the Participant) continue through the pay day
ending with or immediately prior to the last day of that offering period. The
amounts so collected shall be credited to the Participant's book account under
the Plan, but no interest shall be paid on the balance from time to time
outstanding in such account. The amounts collected from the Participant shall
not be required to be held in any segregated account or trust fund and may be
commingled with the general assets of the Corporation and used for general
corporate purposes.

          C.   For the initial Purchase Interval of the first offering period
under the Plan, no payroll deductions shall be required of the Participant until
such time as the Participant affirmatively elects to commence such payroll
deductions following his or her receipt of the 1993 Act prospectus for the Plan.
In the absence of such payroll deductions, the Participant will

                                       3.

<PAGE>
 
be required to contribute the applicable percentage of his or her Cash Earnings
to the Plan in a lump sum payment immediately prior to the close of that
Purchase Interval should the Participant elect to have shares of Common Stock
purchased on his or her behalf on the Purchase Date for that initial Purchase
Interval.

          D.   Payroll deductions shall automatically cease upon the termination
of the Participant's purchase right in accordance with the provisions of the
Plan.

          E.   The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.

     VII. PURCHASE RIGHTS

          A.   Grant of Purchase Rights.  A Participant shall be granted a
               ------------------------ 
separate purchase right for each offering period in which he or she is enrolled.
The purchase right shall be granted on the start date of the offering period and
shall provide the Participant with the right to purchase shares of Common Stock,
in a series of successive installments during that offering period, upon the
terms set forth below. The Participant shall execute a stock purchase agreement
embodying such terms and such other provisions (not inconsistent with the Plan)
as the Plan Administrator may deem advisable.

          Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Corporation
or any Corporate Affiliate.

          B.   Exercise of the Purchase Right. Each purchase right shall be
               ------------------------------  
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant on each such Purchase Date. The purchase shall be
effected by applying the Participant's payroll deductions (or, to the extent
applicable, his or her lump sum contribution) for the Purchase Interval ending
on such Purchase Date to the purchase of whole shares of Common Stock at the
purchase price in effect for the Participant for that Purchase Date.

          C.   Purchase Price.  The purchase price per share at which Common
               -------------- 
Stock will be purchased on the Participant's behalf on each Purchase Date within
the particular offering period in which he or she is enrolled shall be equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the start date of that offering period or (ii) the Fair Market
Value per share of Common Stock on that Purchase Date.

                                       4.

<PAGE>
 
          D.   Number of Purchasable Shares. The number of shares of Common
               ----------------------------    
Stock purchasable by a Participant on each Purchase Date during the particular
offering period in which he or she is enrolled shall be the number of whole
shares obtained by dividing the amount collected from the Participant through
payroll deductions during the Purchase Interval ending with that Purchase Date
(or, to the extent applicable, his or her lump sum contribution for that
Purchase Interval) by the purchase price in effect for the Participant for that
Purchase Date. However, the maximum number of shares of Common Stock purchasable
per Participant on any one Purchase Date shall not exceed 2,500 shares, subject
to periodic adjustments in the event of certain changes in the Corporation's
capitalization. In addition, the maximum number of shares of Common Stock
purchasable in total by all Participants in the Plan on any one Purchase Date
shall not exceed 125,000 shares, subject to periodic adjustments in the event of
certain changes in the Corporation's capitalization. However, the Plan
Administrator shall have the discretionary authority, exercisable prior to the
start of any offering period under the Plan, to increase or decrease the
limitations to be in effect for the number of shares purchasable per Participant
and in total by all Participants enrolled in that particular offering period on
each Purchase Date which occurs during that offering period.

          E.   Excess Payroll Deductions.  Any payroll deductions not applied to
               -------------------------
the purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable per Participant or in
total by all Participants on the Purchase Date shall be promptly refunded.

          F.   Termination of Purchase Right.  The following provisions shall
               -----------------------------   
govern the termination of outstanding purchase rights:

               (i)   A Participant may, at any time prior to the next scheduled
     Purchase Date in the offering period in which he or she is enrolled,
     terminate his or her outstanding purchase right by filing the appropriate
     form with the Plan Administrator (or its designate), and no further payroll
     deductions shall be collected from the Participant with respect to the
     terminated purchase right. Any payroll deductions collected during the
     Purchase Interval in which such termination occurs shall, at the
     Participant's election, be immediately refunded or held for the purchase of
     shares on the next Purchase Date. If no such election is made at the time
     such purchase right is terminated, then the payroll deductions collected
     with respect to the terminated right shall be refunded as soon as possible.

               (ii)  The termination of such purchase right shall be
     irrevocable, and the Participant may not subsequently rejoin the offering
     period for which the terminated purchase right was granted. In order to
     resume participation in any subsequent offering period, such individual
     must re-enroll in the Plan (by making a timely filing of the prescribed
     enrollment forms) on or before the start date of that offering period.

                                       5.

<PAGE>
 
               (iii) Should the Participant cease to remain an Eligible Employee
     for any reason (including death, disability or change in status) while his
     or her purchase right remains outstanding, then that purchase right shall
     immediately terminate, and all of the Participant's payroll deductions for
     the Purchase Interval in which the purchase right so terminates shall be
     immediately refunded. However, should the Participant cease to remain in
     active service by reason of an approved unpaid leave of absence, then the
     Participant shall have the right, exercisable up until the last business
     day of the Purchase Interval in which such leave commences, to (a) withdraw
     all the payroll deductions collected to date on his or her behalf for that
     Purchase Interval or (b) have such funds held for the purchase of shares on
     his or her behalf on the next scheduled Purchase Date. In no event,
     however, shall any further payroll deductions be collected on the
     Participant's behalf during such leave. Upon the Participant's return to
     active service (x) within ninety (90) days following the commencement of
     such leave or (y) prior to the expiration of any longer period for which
     such Participant's right to reemployment with the Corporation is guaranteed
     by statute or contract, his or her payroll deductions under the Plan shall
     automatically resume at the rate in effect at the time the leave began,
     unless the Participant withdraws from the Plan prior to his or her return.
     An individual who returns to active employment following a leave of absence
     that exceeds in duration the applicable (x) or (y) time period will be
     treated as a new Employee for purposes of subsequent participation in the
     Plan and must accordingly re-enroll in the Plan (by making a timely filing
     of the prescribed enrollment forms) on or before the start date of any
     subsequent offering period in which he or she wishes to participate.

          G.   Change in Control.  Each outstanding purchase right shall
               -----------------         
automatically be exercised, immediately prior to the effective date of any
Change in Control, by applying the payroll deductions of each Participant for
the Purchase Interval in which such Change in Control occurs to the purchase of
whole shares of Common Stock at a purchase price per share equal to eighty-five
percent (85%) of the lower of (i) the Fair Market Value per share of Common
Stock on the start date of the offering period in which such individual is
enrolled at the time of such Change in Control or (ii) the Fair Market Value per
share of Common Stock immediately prior to the effective date of such Change in
Control. However, the applicable limitation on the number of shares of Common
Stock purchasable per Participant shall continue to apply to any such purchase,
but not the limitation applicable to the maximum number of shares of Common
Stock purchasable in total by all Participants on any one Purchase Date.

          The Corporation shall use its best efforts to provide at least ten
(10) days' prior written notice of the occurrence of any Change in Control, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Change in Control.

                                       6.

<PAGE>
 
          H.   Proration of Purchase Rights.  Should the total number of shares
               ----------------------------    
of Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.

            I.   Assignability.  The purchase right shall be exercisable only by
                 -------------    
the Participant and shall not be assignable or transferable by the Participant.

            J.   Stockholder Rights.  A Participant shall have no stockholder
                 ------------------    
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.

     VIII.  ACCRUAL LIMITATIONS

            A.   No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423)) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000.00) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value per share on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.

            B.   For purposes of applying such accrual limitations to the
purchase rights granted under the Plan, the following provisions shall be in
effect:

                 (i)    The right to acquire Common Stock under each outstanding
     purchase right shall accrue in a series of installments on each successive
     Purchase Date during the offering period in which such right remains
     outstanding.

                 (ii)   No right to acquire Common Stock under any outstanding
     purchase right shall accrue to the extent the Participant has already
     accrued in the same calendar year the right to acquire Common Stock under
     one or more other purchase rights at a rate equal to Twenty-Five Thousand
     Dollars ($25,000.00) worth of Common Stock (determined on the basis of the
     Fair Market Value per share on the date or dates of grant) for each
     calendar year such rights were at any time outstanding.

            C.   If by reason of such accrual limitations, any purchase right of
a Participant does not accrue for a particular Purchase Interval, then the
payroll deductions that the Participant made during that Purchase Interval with
respect to such purchase right shall be promptly refunded.

                                       7.

<PAGE>
 
          D.   In the event there is any conflict between the provisions of
this Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.

     IX.  EFFECTIVE DATE AND TERM OF THE PLAN

          A.   The Plan was adopted by the Board on August 24, 2000, and shall
become effective at the Effective Time, provided no purchase rights granted
under the Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until (i) the Plan shall have been approved by the stockholders of
the Corporation and (ii) the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any stock exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock is listed for trading and all other applicable requirements
established by law or regulation. In the event such stockholder approval is not
obtained, or such compliance is not effected, within twelve (12) months after
the date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect, and all sums collected from Participants during
the initial offering period hereunder shall be refunded.

          B.   Unless sooner terminated by the Board, the Plan shall terminate
upon the earliest of (i) the last business day in January 2011, (ii) the date on
which all shares available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (iii) the date on which
all purchase rights are exercised in connection with a Change in Control. No
further purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.

     X.   AMENDMENT OF THE PLAN

          A.   The Board may alter, amend, suspend or terminate the Plan at any
time to become effective immediately following the close of any Purchase
Interval. However, the Plan may be amended or terminated immediately upon Board
action, if and to the extent necessary to assure that the Corporation will not
recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Common Stock offered for purchase under the Plan,
should the financial accounting rules applicable to the Plan at the Effective
Time be subsequently revised so as to require the Corporation to recognize
compensation expense in the absence of such amendment or termination.

          B.   In no event may the Board effect any of the following amendments
or revisions to the Plan without the approval of the Corporation's stockholders:
(i) increase the number of shares of Common Stock issuable under the Plan,
except for permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify the eligibility requirements for participation in
the Plan.

                                       8.

<PAGE>
 
     XI.  GENERAL PROVISIONS

          A.   All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation; however, each Plan Participant shall bear all
costs and expenses incurred by such individual in the sale or other disposition
of any shares purchased under the Plan.

          B.   Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.

          C.   The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.

                                       9.

<PAGE>
 
                                  Schedule A

                         Corporations Participating in
                         Employee Stock Purchase Plan
                           As of the Effective Time
                           ------------------------
                                        
                            Align Technology, Inc.


<PAGE>
 
                                   APPENDIX
                                   --------

          The following definitions shall be in effect under the Plan:

          A.   Board shall mean the Corporation's Board of Directors.
               -----                                                 

          B.   Cash Earnings shall mean (i) the regular base salary paid to a
               -------------    
Participant by one or more Participating Companies during such individual's
period of participation in one or more offering periods under the Plan plus (ii)
all overtime payments, bonuses, commissions, profit-sharing distributions or
other incentive-type payments received during such period. Such Cash Earnings
shall be calculated before deduction of (A) any income or employment tax
withholdings or (B) any contributions made by the Participant to any Code
Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit
program now or hereafter established by the Corporation or any Corporate
Affiliate. However, Cash Earnings shall not include any contributions made by
the Corporation or any Corporate Affiliate on the Participant's behalf to any
employee benefit or welfare plan now or hereafter established (other than Code
Section 401(k) or Code Section 125 contributions deducted from such Cash
Earnings).

          C.   Change in Control shall mean a change in ownership of the
               ----------------- 
Corporation pursuant to any of the following transactions:

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

               (ii)  the sale, transfer or other disposition of all or
     substantially all of the assets of the Corporation in complete liquidation
     or dissolution of the Corporation, or

               (iii) the acquisition, directly or indirectly, by a person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by or is under common control with the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders.

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

          E.   Common Stock shall mean the Corporation's common stock.
               ------------                                           

                                     A-1.

<PAGE>
 
          F.   Corporate Affiliate shall mean any parent or subsidiary
               -------------------
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.

          G.   Corporation shall mean Align Technology, Inc., a Delaware
               -----------     
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Align Technology, Inc. that shall by appropriate
action adopt the Plan.

          H.   Effective Time shall mean the time at which the Underwriting
               --------------    
Agreement is executed and the Common Stock priced for the initial public
offering of such Common Stock. Any Corporate Affiliate that becomes a
Participating Corporation after such Effective Time shall designate a subsequent
Effective Time with respect to its employee-Participants.

          I.   Eligible Employee shall mean any person who is employed by a
               -----------------    
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section 3401
(a).

          J.   Fair Market Value per share of Common Stock on any relevant date
               -----------------  
shall be determined in accordance with the following provisions:

               (i)   If the Common Stock is at the time traded on the Nasdaq
     National Market, then the Fair Market Value shall be the closing selling
     price per share of Common Stock on the date in question, as such price is
     reported by the National Association of Securities Dealers on the Nasdaq
     National Market and published in The Wall Street Journal. If there is no
                                      -----------------------  
     closing selling price for the Common Stock on the date in question, then
     the Fair Market Value shall be the closing selling price on the last
     preceding date for which such quotation exists.

               (ii)  If the Common Stock is at the time listed on any Stock
     Exchange, then the Fair Market Value shall be the closing selling price per
     share of Common Stock on the date in question on the Stock Exchange
     determined by the Plan Administrator to be the primary market for the
     Common Stock, as such price is officially quoted in the composite tape of
     transactions on such exchange and published in The Wall Street Journal. If
                                                    -----------------------  
     there is no closing selling price for the Common Stock on the date in
     question, then the Fair Market Value shall be the closing selling price on
     the last preceding date for which such quotation exists.

               (iii) For purposes of the initial offering period that begins at
     the Effective Time, the Fair Market Value shall be deemed to be equal to
     the price per share at which the Common Stock is sold in the initial public
     offering pursuant to the Underwriting Agreement.

          K.   1933 Act shall mean the Securities Act of 1933, as amended.
               --------                                                   

                                     A-2.

<PAGE>
 
          L.   Participant shall mean any Eligible Employee of a Participating
               -----------      
Corporation who is actively participating in the Plan.

          M.   Participating Corporation shall mean the Corporation and such
              -------------------------   
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan are listed in attached Schedule A.

          N.   Plan shall mean the Corporation's 2001 Employee Stock Purchase
               ---- 
Plan, as set forth in this document.

          O.   Plan Administrator shall mean the committee of two (2) or more
               ------------------
Board members appointed by the Board to administer the Plan.

          P.   Purchase Date shall mean the last business day of each Purchase
               -------------       
Interval. The initial Purchase Date shall be July 31, 2001.

          Q.   Purchase Interval shall mean each successive six (6)-month period
               -----------------  
within a particular offering period at the end of which there shall be purchased
shares of Common Stock on behalf of each Participant.

          R.   Stock Exchange shall mean either the American Stock Exchange or
               --------------   
the New York Stock Exchange.

          S.   Underwriting Agreement shall mean the agreement between the
               ----------------------      
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

                                     A-3.



<PAGE>
 
                                                                 
                                                              EXHIBIT 21.1     
 

<TABLE>   
<CAPTION>
Subsidiaries of Registrant
--------------------------       ---
<S>                              <C>
Align Technology Europe Limited
</TABLE>
    





<PAGE>
 
                                                                   EXHIBIT 23.1
 
                      CONSENT OF INDEPENDENT ACCOUNTANTS
 
   We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated August 18, 2000, except as to Note 11, as to which the date
is December  , 2000 relating to the consolidated financial statements of Align
Technology, Inc., which appears in such Registration Statement. We also
consent to the reference to us under the heading "Experts" in such
Registration Statement.
 
 
San Jose, California
December 28, 2000