UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
report (Date of earliest event reported) December 14, 2007
ALIGN
TECHNOLOGY, INC.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
(State
or
Other Jurisdiction of
Incorporation)
|
0-32259
|
94-3267295
|
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
|
881
Martin Avenue, Santa Clara, California
|
95050
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
(408)
470-1000
(Registrant’s
Telephone Number, Including Area Code)
Not
applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
| ITEM 5.02 |
Departure
of Directors or Certain Officers; Election of Directors; Appointment
of
Certain Officers; Compensatory Arrangements of Certain
Officers
|
(c)
Retirement
Agreement with Eldon M. Bullington
As
previously disclosed in a Form 8-K filed by Align Technology, Inc. (“Align”) on
October 24, 2007 (the “Prior
Form 8-K”),
Eldon
M. Bullington announced his retirement as Vice President, Finance and Chief
Financial Officer, effective December 14, 2007. In connection with Mr.
Bullington’s retirement, Mr. Bullington and Align entered into a retirement
agreement dated December 14, 2007. Pursuant to the Retirement Agreement,
Align
agreed to pay Mr. Bullington his 2007 fiscal year incentive award.
A
copy of
the retirement agreement is attached hereto as Exhibit 10.1 and is incorporated
herein by this reference.
Executive
Employment Agreement with Kenneth B. Arola
As
previously disclosed in the Prior Form 8-K, Kenneth B. Arola, 51, was appointed
as Align’s Vice President, Finance and Chief Financial Officer, effective upon
Mr. Bullington’s retirement on December 14, 2007. Mr. Arola has served as
Align’s vice president of finance and corporate controller since 2005.
Previously, he served for 14 years as Adaptec, Inc.’s vice president of finance.
There are no family relationships between Mr. Arola and any of Align’s directors
or executive officers.
On
the
date of his appointment, Mr. Arola and Align entered into an executive
employment agreement (the “Employment
Agreement”).
The
Employment Agreement provides for a base salary of $275,000 per year and
a
target bonus of 60% of his base salary. The target bonus is contingent upon
the
attainment by Mr. Arola of specified performance objectives and his being
employed by the Company at the time the bonus is paid. If, during the term
of
his employment, and not in connection with a Change of Control (as defined
in
the Employment Agreement), the Company terminates Mr. Arola’s employment without
Cause (as defined in the Employment Agreement) or Mr. Arola resigns for Good
Reason (as defined in the Employment Agreement), then (X) Mr. Arola shall
immediately vest in an additional number of shares under all outstanding
options
as if he had performed additional 12 months of service and (Y) Mr. Arola
will be
entitled to (i) the then current year’s target bonus, prorated for the number of
days Mr. Arola has been employed during the year, (ii) one year’s base salary
and (ii) the greater of the then current year’s target bonus or the actual prior
year’s bonus. In the event of a Change of Control, (i) Mr. Arola will
immediately vest in options representing an additional 12 months of service
and
(ii) if within 12 months of a Change of Control either (a) Mr. Arola’s
employment is terminated without Cause or (b) Mr. Arola resigns for Good
Reason,
Mr. Arola will immediately vest in all outstanding options and be entitled
to
(x) the then current year’s target bonus prorated for the number of days Mr.
Arola has been employed during the year, (y) one year’s base salary and (z) the
greater of the then current year’s target bonus or the actual prior year’s
bonus.
A
copy of
the Employment Agreement is attached hereto as Exhibit 10.2 and is
incorporated herein by this reference.
ITEM
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year
At
a
meeting held on December 14, 2007, Align’s Board of Directors approved and
adopted an amendment to Article VII, Section 1 and Section 4 of Align’s Amended
and Restated Bylaws. In compliance with NASDAQ’s requirement that all listed
securities be eligible to participate in the Direct Registration System no
later
than January 1, 2008, the Amendment allows for the issuance, recordation
and
transfer of Align’s securities by electronic (book-entry) form rather than hold
physical stock certificates. The Amendment took effect upon adoption by the
Board.
The
foregoing description of the Amendment is qualified in its entirety by reference
to the full text of the Amendment, a copy of which is attached hereto as
Exhibit
3.1 and incorporated herein by this reference.
ITEM
9.01 Financial Statements and Exhibits
(d)
Exhibits
|
Exhibit
No.
|
Description
|
|
3.1
|
Amendment
to Amended and Restated Bylaws of Align Technology,
Inc.
|
|
10.1
|
Retirement
Agreement between Eldon M. Bullington and Align Technology, Inc.,
dated
December 14, 2007
|
|
10.2`
|
Executive
Employment Agreement between Kenneth B. Arola and Align Technology,
Inc.,
dated December 14, 2007
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
| Date: December 18, 2007 | ALIGN TECHNOLOGY, INC. | |
| |
|
|
| By: | /s/ Thomas M. Prescott | |
|
Thomas M. Prescott |
||
| President and Chief Executive Officer | ||
INDEX
TO EXHIBITS
|
Exhibit
No.
|
Description
|
|
3.1
|
Amendment
to Amended and Restated Bylaws of Align Technology,
Inc.
|
|
10.1
|
Retirement
Agreement between Eldon M. Bullington and Align Technology, Inc.,
dated
December 14, 2007
|
|
10.2`
|
Executive
Employment Agreement between Kenneth B. Arola and Align Technology,
Inc.,
dated December 14, 2007
|
Exhibit
3.1
AMENDMENT
TO AMENDED AND RESTATED BYLAWS
OF
ALIGN TECHNOLOGY, INC.
That
Article VII, Section 1 of the Company’s Bylaws is amended and restated to read
as follows in its entirety:
Section
1. The
shares of the Corporation shall be represented by certificates, provided
that
the Board of Directors may provide by resolution or resolutions that some
or all
of any or all classes or series of the Corporation’s stock shall be
uncertificated shares. Any such resolution shall not apply to shares represented
by a certificate until such certificate is surrendered to the Corporation.
Every
holder of stock of the Corporation represented by certificates shall be entitled
to have a certificate signed by, or in the name of the Corporation buy the
Chairman or vice-chairperson of the Board of Directors, or the President
or
vice-president and by the Secretary or an assistant secretary of the Corporation
representing the number of shares registered in certificate form. Any or
all of
the signatures on the certificate may be by a 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 person were such officer, transfer
agent or registrar at the date of issue. The Corporation shall not have power
to
issue a certificate in bearer form.
If
the
Corporation shall be authorized to issue more than one class of stock or
more
than one series of any class, and such stock is represented by a certificate,
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 issues to 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 issues
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. If the stock
is
not represented by a certificate, then within a reasonable time after the
issuance or transfer of uncertificated stock, the corporation shall send
to the
registered owner thereof a written notice containing the information required
to
be set forth or stated on certificates pursuant to this Section 1 or 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.
Article
VII, Section 4 of the Company’s Bylaws is amended and restated to read as
follows in its entirety:
Section
4. Transfers.
Stock of
the Corporation shall be transferable in the manner prescribed by law and
in
these Bylaws. Transfers of stock shall be made on the books of the Corporation
only by the record holder of such stock or by his or her attorney lawfully
constituted in writing and, if such stock is certificated, upon the surrender
of
the certificate therefor, which shall be canceled before a new certificate
shall
be issued.
|
Exhibit
10.1
|
EXECUTION
COPY
|
RETIREMENT
&
GENERAL RELEASE AGREEMENT
This
Retirement and General Release Agreement (“Agreement”) is made by and between
Eldon M. Bullington (“Bullington”) and Align Technology, Inc. (“Align”).
Bullington and Align will hereinafter be referred to as the
“Parties.”
R
E C I T A L S
WHEREAS,
Bullington previously notified Align of his intention to retire on December
14,
2007 (the “Retirement Date”); and
WHEREAS,
Align and Bullington (the “Parties”) have agreed on terms and conditions
governing Bullington’s retirement.
NOW,
THEREFORE, for and in consideration of the promises and undertakings described
below, the Parties agree as follows:
A
G R E E M E N T S
| A. |
ALIGN.
|
1. Separation
from Service.
Bullington shall continue to serve as Vice President, Finance and Chief
Financial Officer of Align until December 14, 2007. Bullington’s separation from
employment with Align will be effective at the close of business on
December 14, 2007 (the “Retirement Date”).
On the
Retirement Date, Bullington shall cease performing services for Align, and
after
that date shall not be allowed to act on Align’s behalf.
2. Incentive
Compensation Payments.
On the
Retirement Date, Bullington shall be entitled to the payment of $177,216
(the
“Target Bonus Amount”). This amount shall be paid to Bullington within ten days
of either the Retirement Date or the date of execution of this agreement,
whichever is later. In addition, to the extent the Compensation Committee
of
Align’s Board of Directors approves a performance modifier related to its
executive officer incentive awards of greater than one (1), Align agrees
to
multiply the Target Bonus Amount by the applicable performance modifier and
remit to Bullington any amount greater than the Target Bonus Amount by check
made payable to Eldon Bullington and delivered to Bullington’s home address no
later than January 31, 2008 (the “Additional Bonus Amount”). Each of the Target
Bonus Amount and the Additional Bonus Amount shall be paid less applicable
deductions and withholdings.
| B. |
BULLINGTON.
|
1. General
Release.
In
consideration of the bonus payout described above, Bullington hereby fully
and
forever releases, waives, discharges and promises not to sue or otherwise
institute or cause to be instituted any legal or administrative proceedings
against Align or any of its current and former officers, directors, attorneys,
shareholders, predecessor, successor, affiliated or related companies, agents,
employees and assignees thereof (collectively, the “Company”), with respect to
any and all liabilities, claims, demands, contracts, debts, obligations and
causes of action of any nature, kind, and description, whether in law, equity
or
otherwise, whether or not now known or ascertained, which currently do or
may
exist, including without limitation any matter, cause or claim arising from
or
relating in any way toBullington’s employment with Align or the termination
therefrom, including, but not limited to any claims for unpaid wages, severance,
benefits, penalties, breach of contract, breach of the covenant of good faith
and fair dealing, infliction of emotional distress, misrepresentation, claims
under Title VII of the Civil Rights Act, under the Age Discrimination in
Employment Act, under the California Fair Employment and Housing Act, under
the
California Labor Code, under the Employment Retirement Income and Security
Act
and under any other statutory or common law claims relating to employment
or the
termination thereof,
except
any
claims Bullington may have, which, as a matter of law, are not subject to
waiver, such as:
Page
1
of
5
|
Exhibit
10.1
|
EXECUTION
COPY
|
| a. |
unemployment
insurance benefits pursuant to the terms of applicable
law;
|
| b. |
workers’
compensation insurance benefits pursuant to Division 4 of the California
Labor Code, under the terms of any workers’ compensation insurance policy
or fund of Align;
|
| c. |
continued
participation in certain of Align’s group benefit plans on a temporary
basis pursuant to the federal law known as
COBRA;
|
| d. |
rights
or claims under the Age Discrimination in Employment Act (“ADEA”) that may
arise after the date this Agreement is signed;
|
| e. |
the
right to file an administrative charge with the Equal Employment
Opportunity Commission, the Department of Fair Employment & Housing,
the National Labor Relations Board and any other governmental entity
to
which waiver of the right to file an administrative claim is unlawful;
|
| f. |
claims
for indemnification under California Labor Code section 2802, including,
but not limited to, any claims for indemnification as a result of
any
lawsuits or other actions brought against Bullington and/or the Company
arising out of Bullington’s duties as CFO, to the extent that and limited
to such claims that are based actions that were within the course
and
scope of Bullington’s prior employment with the Company, including without
limitation any litigation filed by Michael Swartzburg.
|
With
regard to Section B.1.e., Bullington understands and agrees that, in the
event
he files an administrative charge, he shall not seek, be entitled to, or
accept
any financial remuneration of any type as a result of the charge. With regard
to
Section B.1.f., Bullington acknowledges that he is presently unaware of any
claims for indemnification that have not already been submitted to the Company.
2. Waiver
- Civil Code Section 1542.
Bullington understands and agrees that Section B.1., above, applies to claims,
known and presently unknown by Bullington; and that this means that if,
hereafter, Bullington discovers facts different from or in addition to those
which Bullington now knows or believes to be true, that the releases, waivers,
discharge and promise not to sue or otherwise institute legal action shall
be
and remain effective in all respects notwithstanding such different or
additional facts or the discovery of such fact. Accordingly, Bullington hereby
agrees that he fully and forever waives any and all rights and benefits
conferred upon his by the provisions of Section 1542 of the Civil Code of
the
State of California which states as follows (parentheticals added):
A
general
release does not extend to claims which the creditor [i.e.,
Bullington] does not know or suspect to exist in his favor at the time of
executing the release, which if known by him or her must have materially
affected his or her settlement with the debtor [i.e.,
the
Company].
Page 2
of
5
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Exhibit
10.1
|
EXECUTION
COPY
|
3. No
Other Pending Claims.
Bullington hereby represents and warrants that he has neither filed nor served
any claim, demand, suit or legal proceeding against the Company.
4. No
Prior Assignments.
Bullington hereby represents and warrants that he has not assigned or
transferred, or purported to assign or transfer, to any third person or entity
any claim, right, liability, demand, obligation, expense, action or causes
of
action being waived or released pursuant to this Agreement.
5. Material
Inducements.
Bullington hereby agrees and acknowledges that the releases, waivers and
promises contained in this Agreement, including the promises of confidentiality
and non-disclosure, are material inducements for the consideration described
in
Section A., above.
6. Agreement
Inures to Align.
Bullington hereby agrees and understands that this Agreement shall bind him,
and
his heirs, executors, administrators and agents thereof and that it inures
to
the benefit of Align and its current and former officers, directors, attorneys,
shareholders, predecessors, successors, affiliated or related companies,
agents,
employees and assignees thereof.
7. Proprietary
Information.
Bullington hereby acknowledges and agrees that (a) he is bound by, and has
continuing obligations under, the Proprietary Information and Inventions
Agreement (“PIIA”) signed by him on October 1, 2002 and the Amended and Restated
Employment Agreement by and between Bullington and Align dated April 5, 2007;
(b) he has returned to Align all items of property paid for and/or provided
by
Align for his use during employment with Align including, but not limited
to,
any laptops, computer and office equipment, software programs, cell phones,
pagers, access cards and keys, credit and calling cards; and (c) he has returned
to Align all documents (electronic and paper) created and received by him
during
his employment with Align, and he has not retained any such documents, except
he
may keep his personal copies of (i) documents evidencing his hire, compensation,
benefits and termination (including this Agreement); (ii) any materials
distributed generally to stockholders of the Company, and (iii) his copy
of the
PIIA. The PIIA is incorporated herein by this reference.
| C. |
ALIGN
AND BULLINGTON.
|
1. Attorneys
Fees and Expenses.
Each
party to this Agreement shall bear their own respective attorneys’ fees and
expenses related to the negotiation of this Agreement, and each agrees to
hold
the other harmless from the payment of all such attorneys’ fees and
expenses.
2. No
Admission.
Nothing
contained in this Agreement shall constitute, be construed or be treated
as an
admission of liability or wrongdoing by Bullington, by Align, or by any current
or former employee, officer or director of Align.
3. Governing
Law.
California law shall govern the construction, interpretation and enforcement
of
this Agreement.
4. Severability.
If any
provision or portion thereof, of this Agreement shall for any reason be held
to
be invalid or unenforceable or to be contrary to public policy or any law,
then
the remainder of the Agreement shall not be affected thereby.
5. Arbitration
of Disputes Arising from Agreement.
Any and
all disputes that arise out or relate to this Agreement or any of the subjects
hereof shall be resolved through final and binding arbitration. Binding
arbitration will be conducted in Santa Clara County in accordance with
California Code of Civil Procedure section 1282, et
seq.,
and
the rules and regulations of the American Arbitration Association then in
effect
for resolution of commercial disputes. Each of the Parties understands and
agrees that arbitration shall be instead of any civil litigation, each waives
its right to a jury trial, and each understands and agrees that the arbitrator’s
decision shall be final and binding to the fullest extent permitted by law
and
enforceable by any court having jurisdiction thereof. Each of the Parties
will
bear their own respective attorneys’ fees and will equally share the cost of
arbitration, although the arbitrator may award the prevailing party his/its
reasonable attorneys’ fees and costs of arbitration except that such fees and
costs may not be recovered by Align that result from Align’s defense against any
claim by Bullington challenging the waiver, release and discharge of rights
under the Age Discrimination in Employment Act.
Page 3
of
5
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Exhibit
10.1
|
EXECUTION
COPY
|
6. Counterpart
Signatures.
Bullington and Align hereby acknowledge that this Agreement may be executed
in
counterpart originals with like effect as if executed in a single original
document.
7. Time
to Consider; Revocation Period; Effective Date.
Bullington understands and agrees that he may have up to a full twenty-one
(21)
days after receipt of this Agreement within which he may review, consider,
and
decide whether or not to sign this Agreement, and, if Bullington has not
taken
that full time period, that he expressly waives the remaining time period
and
will not assert the invalidity of this Agreement or any portion thereof on
this
basis. Bullington further acknowledges and is hereby advised that he should
discuss the terms of this Agreement with an attorney of his choosing at his
sole
expense. Bullington also understands that, for the period of seven (7) days
after the date he signs this Agreement, he may revoke the release of his
claims
under the Age Discrimination in Employment Act (“ADEA”),. Bullington understands
that if he wishes to revoke his release of claims under the ADEA, he must
deliver written notice of revocation, no later than the seventh day after
he
signs this Agreement, to:
Align
Technology, Inc.
Attn.:
Human Resources
881
Martin Ave.
Santa
Clara, CA 95050
Facsimile:
(408) 470-1024
Bullington
further understands that the Effective Date of this General Release will
be the
eighth day after both of the Parties have signed it and it has been delivered
to
Align.
8.
Results
of Negotiation; Knowing and Voluntary Execution.
The
Parties hereby acknowledge that this Agreement is the result of negotiation
between them, that each were represented by an attorney of their own choosing
in
deciding whether or not to sign this Agreement and that each has read and
understands the foregoing Agreement and that each affixes their respective
signature to this Agreement knowingly, voluntarily and without
coercion.
9.
Entire
Agreement; Modification.
The
Parties hereby acknowledge and agree that except for any pre-existing stock,
stock option and/or purchase agreement(s) between Bullington and Align, and
any
amendments and waivers thereto, no promises or representations were or are
made
which do not appear written in this Agreement. The Parties agree that this
Agreement contains the entire agreement by Bullington and Align, and that
neither is relying on any representation or promise that does not appear
in this
Agreement. The Parties further agree that the benefits provided in this
Agreement fully satisfy any obligations Align may have to provide any severance
or other benefits to Bullington under that certain Employment Agreement by
and
between Bullington and Align dated October 1, 2002, including, but not limited
to, the terms of the Amended and Restated Employment Agreement dated April
5,
2007. This Agreement may be changed only by another written agreement signed
by
Bullington and the Chief Executive Officer of Align.
10.
Enforcement
Costs.
If an
action is brought by either party for breach of any provision of this Agreement,
the non-breaching party shall be entitled to recover all reasonable attorneys’
fees and costs in defending or bringing such an action.
Page 4
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5
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Exhibit
10.1
|
EXECUTION
COPY
|
|
ELDON
M.
BULLINGTON
|
||
| |
|
|
| Date: December 14, 2007 | /s/ Eldon M. Bullington | |
|
ALIGN
TECHNOLOGY,
INC.
|
||
| |
|
|
| Date: December 14, 2007 | /s/ Thomas M. Prescott | |
|
By:
Thomas M. Prescott
Title:
President and CEO
|
||
Page 5
of
5
EMPLOYMENT
AGREEMENT
This
EMPLOYMENT AGREEMENT is entered into on December 14, 2007 by and between
KENNETH
B. AROLA (the “Executive”)
and
Align Technology, Inc., a Delaware corporation (the “Company”).
1. Duties
and Scope of Employment.
(a) Position.
For the
term of the Executive’s employment under this Agreement (“Employment”),
the
Company agrees to employ the Executive in the position of Vice President,
Finance and Chief Financial Officer.
The
Executive shall report to the Chief Executive Officer (the “CEO”).
The
Executive accepts such employment and agrees to discharge all of the duties
normally associated with said position, and to faithfully and to the best
of
Executive’s abilities perform such other services consistent with Executive’s
position as Vice President, Finance and Chief Financial Officer as may from
time
to time be assigned to Executive by the CEO.
(b) Obligations
to the Company.
During
the term of the Executive’s Employment, the Executive shall devote Executive’s
full business efforts and time to the Company. The Executive agrees not to
actively engage in any other employment, occupation or consulting activity
for
any direct or indirect remuneration without the prior approval of the CEO,
provided, however, that the Executive may, without the approval of the CEO,
serve in any capacity with any civic, educational or charitable organization.
The Executive may own, as a passive investor, no more than one percent (1%)
of
any class of the outstanding securities of any publicly traded
corporation.
(c) No
Conflicting Obligations.
The
Executive represents and warrants to the Company that Executive is under
no
obligations or commitments, whether contractual or otherwise, that are
inconsistent with Executive’s obligations under this Agreement. The Executive
represents and warrants that the Executive will not use or disclose, in
connection with the Executive’s employment by the Company, any trade secrets or
other proprietary information or intellectual property in which the Executive
or
any other person has any right, title or interest and that the Executive’s
employment by the Company as contemplated by this Agreement will not infringe
or
violate the rights of any other person or entity. The Executive represents
and
warrants to the Company that the Executive has returned all property and
confidential information belonging to any prior employers.
(d) Commencement
Date.
The
Executive commenced full-time employment in the position set forth in Section
1
(a) above, effective December 14, 2007.
2. Cash
and Incentive Compensation.
(a) Salary.
The
Company shall pay the Executive as compensation for the Executive’s services a
base salary at a gross annual rate of $275,000 payable in accordance with
the
Company’s standard payroll schedule. The compensation specified in this
Subsection (a), together with any adjustments by the Company from time to
time,
is referred to in this Agreement as “Base Salary.”
(b) Target
Bonus.
The
Executive shall be eligible to participate in an annual bonus program that
will
provide the Executive with an opportunity to earn a potential annual bonus
equal
to 60% of the Executive’s Base Salary. The amount of the bonus shall be based
upon the performance of the Executive, as set by the individual performance
objectives described in this Subsection, and the Company in each calendar
year,
and shall be paid by no later than January 31 of the following year, contingent
on the Executive remaining employed by the Company as of such date. The
Executive’s individual performance objectives and those of the Company’s shall
be set by the CEO after consultation with the Executive by no later than
March
31, of each calendar year. Any bonus awarded or paid to the Executive will
be
subject to the discretion of the Board.
(c) Incentive
Awards.
The
Executive shall be eligible for an annual incentive stock option grant and/or
restricted stock unit award subject to the approval of the Board
in all
respects, including the terms described herein.
The per
share exercise price of the option will be equal to the per share fair market
value of the common stock on the date of grant, as determined by the Board
of
Directors. The term of such option shall be ten (10) years, subject to earlier
expiration in the event of the termination of the Executive’s Employment. The
Executive shall vest in accordance with the vesting provisions approved by
the
Compensation Committee of the Board of Directors, which vesting is currently
25%
of the option shares after the first twelve (12) months of continuous service
and shall vest in the remaining option shares in equal monthly installments
over
the next three (3) years of continuous service. Each restricted stock unit
award
currently vests 25% on the one year anniversary of the date of grant with
25%
vesting yearly thereafter.
The
grant of each such option and/or restricted stock unit shall be subject to
the
other terms and conditions set forth in the Company’s 2005 Incentive Plan and in
the Company’s standard form of stock option agreement and restricted stock unit
agreement, as applicable.
3. Vacation
and Executive Benefits.
During
the term of the Executive’s Employment, the Executive shall be eligible
to
accrue
17 days
vacation per year
on a
pro-rata basis throughout the year,
in
accordance with the Company’s standard policy for senior management,
including
provisions with respect to maximum accrual, as
it may
be amended from time to time. During the term of the Executive’s Employment, the
Executive shall be
eligible
to participate in any employee benefit plans maintained by the Company for
senior management, subject in each case to the generally applicable terms
and
conditions of
the
plan in question and to the determinations of any person or committee
administering such plan,
and to
the right of the Company to make changes in such plans from time to
time.
4. Business
Expenses.
During
the term of the Executive’s Employment, the Executive shall be authorized to
incur necessary and reasonable travel, entertainment and other business expenses
in connection with her duties hereunder. The Company shall reimburse the
Executive for such expenses upon presentation of an itemized account and
appropriate supporting documentation, all in accordance with the Company’s
generally applicable policies.
5. Term
of Employment.
(a) Basic
Rule.
The
Company agrees to continue the Executive’s Employment, and the Executive agrees
to remain in Employment with the Company, from the commencement date set
forth
in Section 1(d) until the date when the Executive’s Employment terminates
pursuant to Subsection (b) below. The Executive’s Employment with the Company
shall be “at will,” and either the Executive or the Company may terminate the
Executive’s Employment at any time, for any reason, with or without Cause. Any
contrary representations, which may have been made to the Executive shall
be
superseded by this Agreement. This Agreement shall constitute the full and
complete agreement between the Executive and the Company on the “at will” nature
of the Executive’s Employment, which may only be changed in an express written
agreement signed by the Executive and a duly authorized officer of the
Company.
(b) Termination.
The
Company may terminate the Executive’s Employment at any time and for any reason
(or no reason), and with or without Cause, by giving the Executive notice
in
writing. The Executive may terminate the Executive’s Employment by giving the
Company fourteen (14) days advance notice in writing. The Executive’s Employment
shall terminate automatically in the event of Executive’s death or Permanent
Disability. For purposes of this Agreement, “Permanent Disability” shall mean
that the Executive has become so physically or mentally disabled as to be
incapable of satisfactorily performing the essential
functions of Executive’s position and duties
under this Agreement for a period of one hundred eighty (180) consecutive
calendar days.
(c) Rights
Upon Termination.
Except
as expressly provided in Section 6, upon the termination of the Executive’s
Employment pursuant to this Section 5, the Executive shall only be entitled
to
the compensation, benefits and reimbursements described in Sections 2, 3
and 4
for the period preceding the effective date of the termination. The payments
under this Agreement shall fully discharge all responsibilities of the Company
to the Executive.
(d) Termination
of Agreement.
The
termination of this Agreement shall not limit or otherwise affect any of
the
Executive’s obligations under Section 7.
6. Termination
Benefits.
(a) General
Release
Agreement.
Any
other provision of this Agreement notwithstanding, Subsections (b), (c) or
(d)
below
shall not apply unless the Executive (i) has,
within
the time prescribed by the Company,
executed
a General
Release Agreement
in a
form prescribed by the Company by
which
the Executive waives and releases with irrevocable effect
all
known and unknown claims that the Executive may then have against the Company
or
persons affiliated with the Company
which
are waivable under applicable law,
and
(ii) pursuant
to such General Release Agreement has
agreed not to prosecute any legal action or other proceeding based upon any
of
such claims.
to the
full extent permissible under applicable law, and (iii) pursuant to such
General
Release Agreement has acknowledged Executive’s continuing obligations under this
Agreement and the Proprietary Information and Inventions Agreement referenced
below.
(b) Termination
without Cause.
If,
during the term of this Agreement, and not in connection with a Change of
Control as addressed in Subsection (c) below, the Company terminates
Executive’s
Employment
without
Cause or the Executive resigns for Good Reason, then:
(i) as
of the
date of termination of Employment,
Executive shall immediately conditionally
vest
in
an additional number of shares under all outstanding options and restricted
stock units as if the Executive had performed twelve (12) additional months
of
service,
subject
to Executive’s execution of the General Release Agreement described above with
irrevocable effect and suspension of exercise rights with respect to such
conditionally vested shares until such execution;
(ii) the
Company shall pay the Executive, in a lump sum upon the effectiveness of
the
General Release to be executed by Executive in accordance with Section 6(a)
above, an amount equal to: (x) the then current year’s Target Bonus prorated for
the number of days of Executive is employed in said year; (y) one year’s Base
Salary; and (z) the greater of the then current year’s Target Bonus or the
actual prior year’s bonus. The Executive’s Base Salary shall be paid at the rate
in effect at the time of the termination of Employment.
(c) Upon
a
Change of Control.
In the
event of the occurrence of a Change in Control while the Executive is employed
by the Company:
(i) the
Executive shall immediately vest in an additional number of shares under
all
outstanding options and restricted stock units as if the Executive had performed
twelve (12) additional months of service; and
(ii) if
within
twelve (12) months following the occurrence of the Change of Control, one
of the
following events occurs:
(A)
the
Executive’s employment is terminated by the Company without Cause; or
(B)
the
Executive resigns for Good Reason
then
the
Executive shall immediately
conditionally
vest
as
to all shares under all outstanding options and restricted stock
units,
subject
to Executive’s execution of the General Release Agreement described above with
irrevocable effect and suspension of exercise rights with respect to such
conditionally vested shares until such execution,
and the
Company shall pay the Executive, in a lump sum, an amount equal to: (i) the
then
current year’s Target Bonus prorated for the number of days of Executive is
employed in said year; (ii) one year’s Base Salary; and (iii) the greater of the
then current year’s Target Bonus or the actual prior year’s bonus. The
Executive’s Base Salary shall be paid at the rate in effect at the time of the
termination of Employment.
(d) Health
Insurance.
If
Subsection (b) or (c) above applies, and if the Executive elects to continue
the
Executive’s health insurance coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”) following the termination of
Employment, then the Company shall pay the Executive’s monthly premium under
COBRA
for
COBRA
coverage for the Executive until
the
earliest of (i) 12 months following the termination of the Executive’s
Employment, or (ii) the date upon which the Executive commences employment
with
an
entity other than the Company.
(e) Definition
of “Cause.”
For
all
purposes under this Agreement, “Cause” shall mean any of the
following:
(i) Unauthorized
use or disclosure of the confidential information or trade secrets of the
Company;
(ii) Any
breach of this Agreement or the Employee Proprietary Information and Inventions
Agreement between the Executive and the Company;
(iii) Conviction
of, or a plea of “guilty” or “no contest” to, a felony under the laws of the
United States or any state thereof;
(iv) Misappropriation
of the assets of the Company or any act of fraud or embezzlement by Executive,
or any act of dishonesty by Executive in connection with the performance
of her
duties for the Company that adversely affects the business or affairs of
the
Company;
(v) Intentional
misconduct; or
(vi) the
Executive’s failure to satisfactorily perform the Executive’s duties after
having received written notice of such failure and at least thirty (30) days
to
cure such failure.
The
foregoing shall not be deemed an exclusive list of all acts or omissions
that
the Company may consider as grounds for the termination of the Executive’s
Employment.
(f) Definition
of “Good Reason.”
For
all
purposes under this Agreement, subject to the notice and cure period described
below, the Executive’s resignation for “Good Reason” shall mean the Executive’s
resignation upon written notice to the Company delivered within ninety (90)
days
after the occurrence of any one or more of the following events and with
an
effective date within such ninety- (90-) day period:
(i) The
Executive’s position, authority or responsibilities being
significantly
reduced;
(ii) The
Executive being asked to relocate the Executive’s principal place of employment
such that the Executive’s commuting distance from the Executive’s residence
prior to such relocation is increased by over thirty-five (35)
miles;
(iii) The
Executive’s annual Base Salary or bonus being materially reduced; or
(iv) The
Executive’s benefits being materially reduced.
The
Executive shall provide written notice to the Company at least thirty (30)
days
prior to the effective date of Executive’s resignation, identifying the event or
events Executive claims constitute Good Reason and describing in reasonable
detail the fact supporting the claim. The Company shall have at least thirty
(30) days to take action to remedy the condition claimed by the Executive
as
Good Reason, but shall have no obligation to take such action. In the event
the
Company remedies the condition then Good Reason shall be deemed not to exist.
At
the expiration of the remedial period and prior to the effective date of
Executive’s resignation, Executive shall provide written notice to the Company,
stating whether Executive (A) withdraws Executive’s resignation based on the
Company’s remedy of the condition, (B) chooses to resign anyway notwithstanding
such remedy, or (C) claims the condition has not been remedied and chooses
to
resign based on a claim of Good Reason. In the absence of such notice,
Executives resignation shall become effective and Executive shall be deemed
to
have resigned without Good Reason.
(g) Definition
of “Change of Control.”
For
all
purposes under this Agreement, “Change of Control” shall mean any of the
following:
(i) a
sale of
all or substantially all of the assets of the Company;
(ii) the
acquisition of more than fifty percent (50%) of the common stock of the Company
(with all classes or series thereof treated as a single class) by any person
or
group of persons;
(iii) a
reorganization of the Company wherein the holders of common stock of the
Company
receive stock in another company (other than a subsidiary of the Company),
a
merger of the Company with another company wherein there is a fifty percent
(50%) or greater change in the ownership of the common stock of the Company
as a
result of such merger, or any other transaction in which the Company (other
than
as the parent corporation) is consolidated for federal income tax purposes
or is
eligible to be consolidated for federal income tax purposes with another
corporation; or
(iv) in
the
event that the common stock is traded on an established securities market,
a
public announcement that any person has acquired or has the right to acquire
beneficial ownership of more than fifty percent (50%) of the then-outstanding
common stock and for this purpose the terms “person” and “beneficial ownership”
shall have the meanings provided in Section 13(d) of the Securities and Exchange
Act of 1934 or related rules promulgated by the Securities and Exchange
Commission, or the commencement of or public announcement of an intention
to
make a tender offer or exchange offer for more than fifty percent (50%) of
the
then outstanding Common Stock.
(h) Section
409A.
Notwithstanding anything to the contrary in this Agreement, any cash severance
payments otherwise due to Executive pursuant to this Section 6 or otherwise
on
or within the six-month period following Executive’s termination will accrue
during such six-month period and will become payable in a lump sum payment
on
the date six (6) months and one (1) day following the date of Executive’s
termination, provided, that such cash severance payments will be paid earlier,
at the times and on the terms set forth in the applicable provisions of this
Section 6, if the Company reasonably determines that the imposition of
additional tax under Section 409A of the Internal Revenue Code of 1986, as
amended (“Code
Section 409A”),
will
not apply to an earlier payment of such cash severance payments. In addition,
this Agreement will be deemed amended to the extent necessary to avoid
imposition of any additional tax or income recognition prior to actual payment
to Executive under Code Section 409A and any temporary, proposed or final
Treasury Regulations and guidance promulgated thereunder and the parties
agree
to cooperate with each other and to take reasonably necessary steps in this
regard.
7. Non-Solicitation
and Non-Disclosure.
(a) Non-Solicitation.
During
the period commencing on the date of this Agreement and continuing until
the
first anniversary of the date when the Executive’s Employment terminated for any
reason, the Executive shall not directly or indirectly, personally or through
others, solicit or attempt to solicit (on the Executive’s own behalf or on
behalf of any other person or entity) the employment of any employee of the
Company or any of the Company’s affiliates.
(b) Proprietary
Information.
As a
condition of employment, the Executive has previoulsy entered into a Proprietary
Information and Inventions Agreement with the Company, which is incorporated
herein by reference.
8. Successors.
(a) Company’s
Successors.
This
Agreement shall be binding upon any successor (whether direct or indirect
and
whether by purchase, lease, merger, consolidation, liquidation or otherwise)
to
all or substantially all of the Company’s business and/or assets. For all
purposes under this Agreement, the term “Company” shall include any successor to
the Company’s business and/or assets which becomes bound by this
Agreement.
(b) Executive’s
Successors.
This
Agreement and all rights of the Executive hereunder shall inure to the benefit
of, and be enforceable by, the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
9. Miscellaneous
Provisions.
(a) Notice.
Notices
and all other communications contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered or
when
mailed by overnight courier, U.S. registered or certified mail, return receipt
requested and postage prepaid. In the case of the Executive, mailed notices
shall be addressed to the Executive at the home address which the Executive
most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all
notices
shall be directed to the attention of its Secretary.
(b) Modifications
and Waivers.
No
provision of this Agreement shall be modified, waived or discharged unless
the
modification, waiver or discharge is agreed to in writing and signed by the
Executive and by an authorized officer of the Company (other than the
Executive). No waiver by either party of any breach of, or of compliance
with,
any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(c) Whole
Agreement.
No
other agreements, representations or understandings (whether oral or written)
which are not expressly set forth in this Agreement have been made or entered
into by either party with respect to the subject matter of this Agreement.
This
Agreement and the Proprietary Information and Inventions Agreement contain
the
entire understanding of the parties with respect to the subject matter
hereof.
(d) Withholding
Taxes.
All
payments made under this Agreement shall be subject to reduction to reflect
taxes or other charges required to be withheld by law.
(e) Choice
of Law.
The
validity, interpretation, construction and performance of this Agreement
shall
be governed by the laws of the State of California without applications of
its
provisions with respect to
choice
of law,
except
for the Arbitration provision in paragraph 11, below, which is governed by
the
Federal Arbitration Act, 9 U.S.C. § 1 et
seq.
(f) Severability.
The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(g) Arbitration.
Each
party agrees that any and all disputes which arise out of or relate to the
Executive’s employment, the termination of the Executive’s employment, or the
terms of this Agreement shall be resolved through final and binding arbitration.
Such arbitration shall be in lieu of any trial before a judge and/or jury,
and
the Executive and Company expressly waive all rights to have such disputes
resolved via trial before a judge and/or jury. Such disputes shall include,
without limitation, claims for breach of contract or of the covenant of good
faith and fair dealing, claims of discrimination, claims under any federal,
state or local law or regulation now in existence or hereinafter enacted
and as
amended from time to time concerning in any way the subject of the Executive’s
employment with the Company or its termination. Nothing
in this Agreement shall prohibit any party from seeking provisional remedies
in
court in aid of arbitration including temporary restraining orders, preliminary
injunctions and other provisional remedies pursuant to California Code of
Civil
Procedure section 1281.8 (or any successor statutes) and/or applicable federal
law. Likewise, nothing in this Agreement shall should be interpreted as
restricting or prohibiting Employee from filing a charge or complaint with
a
federal, state, or local governmental or administrative agency charged with
investigating and/or prosecuting charges or complaints under any applicable
federal, state or municipal law or regulation. Claims or disputes arising
under
any law that permits resort to an administrative or governmental agency
notwithstanding an agreement to arbitrate those claims may be brought before
that agency as permitted by applicable law, including, without limitation,
claims or charges brought before the National Labor Relations Board, the
U.S.
Equal Employment Opportunity Commission, the United States Department of
Labor,
the California Workers' Compensation Appeals Board, and the California
Employment Development Department. Nothing in this Agreement shall be deemed
to
preclude a party from bringing an administrative claim before any agency
in
order to fulfill the party's obligation to exhaust administrative remedies
before making a claim in arbitration
This
arbitration section of the Agreement shall be exclusively governed by and
construed and enforced pursuant to the substantive and procedural provisions
of
the Federal Arbitration Act, 9 U.S.C. § 1 (“FAA”), and not individual state
substantive and procedural laws regarding enforcement of arbitration agreements.
A neutral arbitrator shall be selected by mutual agreement of the parties
from
the then-available arbitrators associated with ADR Services, Judicate West,
ARC
or such other arbitration service that the parties may mutually agree upon.
If,
for any reason, the parties are unable to mutually agree upon the selection
of
an arbitrator, either party may apply to a court of competent jurisdiction
for
appointment of a neutral arbitrator. The court shall then appoint a retired
judge to serve as the arbitrator, who shall act under this Policy with the
same
force and effect as if the parties had selected the arbitrator by mutual
agreement.The
arbitrator shall allow the parties to take discovery and bring motions as
authorized by the
forum
state's procedural rules,
or any
other discovery required by applicable law in arbitration proceedings,
including, but not limited to, discovery available under the applicable state
and/or federal arbitration statutes. Also, to the extent that anything in
this
arbitration section conflicts with any arbitration procedures required by
applicable law, the arbitration procedures required by applicable law shall
govern.
Arbitration
will be conducted in Santa Clara County, California or, if the Executive
does
not reside within 100 miles of Santa Clara County at the time the dispute
arises, then the arbitration may take place in the largest metropolitan area
within 50 miles of the Executive’s place of residence when the dispute
arises.
During
the course of the arbitration, the Executive and the Company will each bear
equally the arbitrator’s fee and any other type of expense or cost of
arbitration, unless applicable law requires otherwise, and each shall bear
their
own respective attorneys’ fees incurred in connection with the arbitration. The
arbitrator will not have authority to award attorneys’ fees unless a statute or
contract at issue in the dispute authorizes the award of attorneys’ fees to the
prevailing party. In such case, the arbitrator shall have the authority to
make
an award of attorneys’ fees as required or permitted by the applicable statute
or contract. If there is a dispute as to whether the Executive or the Company
is
the prevailing party in the arbitration, the arbitrator will decide this
issue.
The
arbitrator shall issue a written award that sets forth the essential findings
of
fact and conclusions of law on which the award is based. The arbitrator shall
have the authority to award any relief authorized by law in connection with
the
asserted claims or disputes. The arbitrator’s award shall be subject to
correction, confirmation, or vacation, as provided by applicable law setting
forth the standard of judicial review of arbitration awards. Judgment upon
the
arbitrator’s award may be entered in any court having jurisdiction
thereof.
(h) No
Assignment.
This
Agreement and all rights and obligations of the Executive hereunder are personal
to the Executive and may not be transferred or assigned by the Executive
at any
time. The Company may assign its rights under this Agreement to any entity
that
assumes the Company’s obligations hereunder in connection with any sale or
transfer of all or a substantial portion of the Company’s assets to such
entity.
(i) Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
[The
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IN
WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of
the Company by its duly authorized officer, as of the day and year first
above
written.
/s/
Kenneth B. Arola
KENNETH
B. AROLA
ALIGN
TECHNOLOGY, INC.
/s/
Thomas M. Prescott
By:
Thomas M. Prescott
Title:
President and CEO