Exhibit 10.4

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is entered into effective as of
May 5, 2008 by and between THOMAS M. PRESCOTT (the “Executive”) and Align
Technology, Inc., a Delaware corporation (the “Company”). This Agreement
supersedes and replaces in its entirety that certain Amended and Restated
Employment Agreement dated April 5, 2007 between the Executive and the Company.

 

WHEREAS, the Company and Executive (the “Parties”) have previously entered into
an Amended and Restated Employment Agreement dated as of April 5, 2007 (the
“Prior Employment Agreement”) pursuant to which the Parties agreed to certain
terms and conditions related to Executive’s employment with the Company and
certain other related matters.

 

WHEREAS, in connection with the adoption of Rule 409A of the Internal Revenue
Code of 1986, as amended (“Code Section 409A”), the Parties wish to amend the
Prior Employment Agreement to, among other things, comply with Code
Section 409A.

 

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 PRESIDENT AND CHIEF EXECUTIVE OFFICER.    EXECUTIVE SHALL
DILIGENTLY, IN GOOD FAITH AND TO THE BEST OF HIS ABILITIES PERFORM ALL DUTIES
INDIDENT TO THIS POSITION AND AS ARE DETERMINED AND ASSIGNED TO HIM FROM TIME TO
TIME BY THE BOARD OF DIRECTORS OF THE COMPANY (THE “BOARD”).

 

(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 BOARD, PROVIDED, HOWEVER, THAT
THE EXECUTIVE MAY, WITHOUT THE APPROVAL OF THE BOARD, 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.

 

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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 $518,400,
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 100% 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 VESTING COMMENCEMENT DATE 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.

 

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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 EXECUTIVE’S EMPLOYMENT IS TERMINATED FOR ANY REASON OTHER THAN
CAUSE, THEN 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:  (I) THE THEN CURRENT YEAR’S TARGET
BONUS PRORATED FOR THE NUMBER OF DAYS OF EXECUTIVE IS EMPLOYED IN SAID YEAR;
(II) TWENTY-FOUR (24) MONTHS’ BASE SALARY; AND (III) THE GREATER OF ONE HUNDRED
FIFTY PERCENT (150%) 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.

 

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(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 AS
TO ALL SHARES UNDER ALL OUTSTANDING OPTIONS AND RESTRICTED STOCK UNITS; 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, SUBJECT TO EXECUTIVE’S EXECUTION OF THE GENERAL RELEASE AGREEMENT
DESCRIBED ABOVE WITH IRREVOCABLE EFFECT, 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) TWENTY-FOUR (24) MONTHS’ BASE SALARY; AND (III) THE GREATER OF ONE HUNDRED
FIFTY PERCENT (150%) 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) EIGHTEEN (18) 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;

 

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(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;

 

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(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 ENTERED INTO A PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
WITH THE COMPANY, DATED MARCH 27, 2002, WHICH IS INCORPORATED HEREIN BY
REFERENCE.

 

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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.

 

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(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.

 

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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.

 

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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/ Thomas M. Prescott

 

 

 

THOMAS M. PRESCOTT

 

 

 

 

 

ALIGN TECHNOLOGY, INC.

 

 

 

/s/ Roger E. George

 

By: Roger E. George

 

Title:

Vice President, Legal and Corporate Affairs,

 

 

General Counsel and Corporate Secretary

 

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