Exhibit
10.3


 


CONFIDENTIAL TREATMENT REQUESTED BY ALIGN TECHNOLOGY, INC.


 


JOINT DEVELOPMENT, MARKETING


AND SALES AGREEMENT


 


This Joint Development, Marketing and Sales Agreement (the “Agreement”) is made
and entered into as of the “Effective Date” (defined below) by and between
Align Technology, Inc., a Delaware Corporation, having a place of business
at 881 Martin Avenue, Santa Clara, California 95050 (“Align”), and Ormco
Corporation, a Delaware corporation, with offices at 1717 West Collins Avenue,
Orange, California 92867, (“Ormco”,  each a “Party”, together the “Parties”).


 


WHEREAS,
Ormco is engaged in the manufacture, distribution, sale and marketing of
orthodontic products including, among other things, a customized fixed bracket
and wire system and method of placing customized appliances on the teeth of
patients;


 


WHEREAS,
Align is also engaged in the manufacture, distribution, sale and marketing of
an orthodontic product, namely a removable aligner;


 


WHEREAS,
the Parties desire to enter into a business relationship  related to the development, marketing and sale of a
solution for treating malocclusions consisting of the use of both Ormco fixed
customized brackets and wires and Align’s removable aligners; and


 


WHEREAS,
the Parties acknowledge that they must share know-how, sales
resources and information in order to create and market a new joint solution
that would be marketed to dental professionals worldwide and the Parties desire to set
forth the terms on which the Parties shall collaborate in the design,
development, production, marketing and sale of an initial joint solution
product and future joint solutions that the Parties determine to make;


 


NOW
THEREFORE, in consideration of the foregoing, and of the mutual covenants and
promises as set forth herein, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereof agree as follows:


 


1.                                      Definitions.


 


As used herein, the following words or phrases have
the following meanings:


 


1.1           “13D Group” means any group of persons formed for
the purpose of acquiring, holding, voting or disposing of voting securities
which would be required under Section 13(d) of the Exchange Act, and
the rules and regulations promulgated thereunder, to file a statement on
Schedule 13D pursuant to Rule 13d-1(a) or a Schedule 13G pursuant to Rule 13d-1(c) with
the SEC as a “person” within the meaning of Section 13(d)(3) of the
Exchange Act if such group beneficially owned voting securities of the Company
representing more than 5% of any class of voting securities then outstanding.


 


1.2           “Affiliates” shall mean any corporation, company or
other legal entity which controls, is controlled by, or is under common control
with, a Party directly or


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 


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indirectly through one or
more intermediaries, but any such corporation, company or legal entity shall be
deemed to be an Affiliate only as long as such control exists. For purposes of
this definition, “control” means direct or indirect ownership of more than
fifty percent (50%) of (i) the voting power of the shares or other
securities of the corporation or company for election of directors (or other
managing authority) or (ii) interest in the net assets or profit of a
legal entity which is not a corporation or company.


 


1.3           “Align Intellectual Property” means any and all
Intellectual Property owned or controlled by Align or its Affiliates as of the
Effective Date or written, invented, developed or otherwise created thereafter
solely by or on behalf of Align or its Affiliates, or separately acquired by
Align or its Affiliates, and expressly excludes any Ormco Intellectual
Property.


 


1.4           “Align Products” shall mean the systems and
products provided to a dental professional by Align to enable that dental
professional to provide its patients a set of removable aligners designed to
move the teeth of an orthodontic patient to a final occlusion determined by the
patient’s treating dental professional.


 


1.5           “Change in Control” means any of the following: (i) a
merger, consolidation, statutory share exchange or other business combination
or transaction involving a Party where the existing stockholders of the Party
immediately prior to the effective date of such merger, consolidation or other
business combination or transaction own less than 50% of the total voting securities
of the surviving corporation following such merger, consolidation or other
business combination or transaction in equivalent proportions to their
interests prior to such effective date; (ii) any person or 13D Group
becomes a beneficial owner, directly or indirectly, of 50% or more of the
aggregate number of the voting securities of the Party or of properties or
assets constituting 50% or more of the consolidated assets of the Party and its
subsidiaries; (iii) in any case not covered by (ii), the Party issues
securities representing 50% or more of its total voting power, including by way
of a merger or other business combination with the Party or any of its
subsidiaries; or (iii) a sale of all or substantially all the assets of
the Party; provided, however, that a Change in Control shall not be deemed to
occur if a Party that is a wholly-owned subsidiary as of the date hereof
continues to be controlled by the same ultimate parent entity.


 


1.6           “Effective Date” means August 16, 2009.


 


1.7           “Hereof,” “herein, and “hereunder”
when used in this Agreement shall refer to the Agreement as a whole, unless the
context otherwise requires.


 


1.8           “Hybrid Solution(s)” shall mean the use of the
Ormco Product and Align Product in combination to treat malocclusions including
the set-up, the design, and manufacturing of one or more customized fixed
appliances, arch wires, and removable aligners designed for use on the teeth of
an orthodontic patient.


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


1.9           “Intellectual Property” means any or all of the
following and all rights in, arising out of, or associated therewith: (A) all
United States and foreign patents and utility models and applications therefor
and all reissues, divisions, re-examinations, renewals, extensions,
provisionals, continuations and continuations-in-part thereof and equivalent or
similar rights anywhere in the world in inventions and discoveries including
without limitation invention disclosures (“Patents”); (B) all trade
secrets and other rights in know-how and confidential or proprietary
information (including Proprietary Information) (“Trade Secrets”); (C) all
copyrights, copyright registrations and applications therefor and all other
rights corresponding thereto throughout the world (“Copyrights”); (D) trademarks,
service marks, trade dress, company names, brand names, logos, and fictitious
names, together with any and all worldwide vested and/or inchoate rights in and
to any or all of the foregoing (“Trademarks”);(E) utility models
and/or any other form of protection of various forms of intellectual and/or
industrial property recognized anywhere in the world including any and all
rights of domestic and/or foreign priority; and (F) any similar,
corresponding or equivalent rights to any of the foregoing anywhere in the
world, including the right to sue and recover damages for infringements
including, without limitation, any past infringements.


 


1.10         “Joint Development Intellectual Property” means any
and all Intellectual Property written, invented, developed or otherwise created
by Align and Ormco jointly in the course of the Project during the Term of this
Agreement.  Whether Intellectual Property
written, invented, developed or otherwise created in the course of the Project
during the Term of this Agreement is “jointly” written, invented, developed or
otherwise created shall be determined in accordance with the applicable
sections of United States Code Title 35 — Patents, or, with respect to original
works of authorship or rights in semiconductor topology applicable sections of
United States Code Title 17 — Copyrights, regardless of whether the
Intellectual Property is patentable, copyrightable, or eligible for mask work
right protection.  Joint
Development Intellectual Property shall not include any Align Intellectual
Property or Ormco Intellectual Property.


 


1.11         “Ormco Intellectual Property” means any and all
Intellectual Property owned by Ormco or its Affiliates as of the Effective Date
or invented, developed or otherwise created thereafter solely by or on behalf
of Ormco or its Affiliates, or separately acquired by Ormco or its Affiliates,
and expressly excludes any Align Intellectual Property.


 


1.12         “Ormco Products” shall mean the systems and products
provided to a dental professional by Ormco that enables the dental professional
to provide a patient fixed orthodontic appliances, arch wires, and placement
jigs that have been created for use on that particular individual orthodontic
patient.


 


1.13         “Project” means the design, development,
implementation, testing, modification and/or improvement of the Hybrid
Solution, whether products, hardware, software, electronic, mechanical or
otherwise.


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


1.14         “Proprietary Information” means information, data,
know-how, trade secrets or experience whether patentable or not including,
without limitation, all design or manufacturing techniques, operating
instructions, machinery designs, raw materials or products specifications,
drawings, blue prints, all computer programs, source code, algorithms, software
routines, microcode and other similar data and any other technical and
commercial information relating to the research, design, development,
manufacture, assembly, use or sale of orthodontic appliances.


 


1.15         “Regulatory Authorities” shall mean the United States
Food and Drug Administration (“FDA”) and all other governmental or regulatory
authorities existing anywhere in the world having jurisdiction over the
marketing, manufacture and/or commercial sale of the Hybrid Solution or any
component thereof.


 


1.16         “Specifications” means those performance and other
specifications for the operation, form and other material characteristics of a
Hybrid Solution (or portion thereof) as determined by the Parties in accordance
with this Agreement.


 


1.17         “Term” means the period from the Effective Date
through the Termination Date.


 


1.18         “Termination Date” means any date upon which this Agreement
shall terminate in accordance with the terms hereof.


 


2.                                      Steering
Committee.


 


2.1           The Parties will organize the Steering Committee promptly
after the Effective Date of this Agreement. 
The initial membership of the Steering Committee shall be composed of
the President of Ormco, the Vice President of Marketing and Product Development
for Ormco, a member of Ormco’s Product Management Group, a member of Align’s
Sales Management Group, the Vice President of Operations of Align and the Vice
President of Research and Development, and ITG of Align.  The Parties may, from time to time, change or
replace their representative on the Steering Committee with another person
having a similar level of responsibility as the person being replaced.  The Steering Committee shall convene on such
schedule (but not less frequently than monthly) and employ such procedures as
it shall determine from time to time in good faith, and, except as otherwise
specifically required by this Agreement, shall act by unanimous consent.


 


2.2           The Steering Committee will provide general oversight and
coordination of the Parties’ collaboration for the Project, and will be
responsible for overseeing the creation of development and marketing plans and
schedules for the Project, monitoring the Parties’ progress on the development
and marketing of the Hybrid Solutions, and determining the content and
frequency of reports to be generated by the parties.  The Steering Committee may develop and
unanimously agree upon work plans to address all such activities as it
determines, and make amendments thereto, including with respect those terms
relating to the commercialization and marketing of the Hybrid Solution.  


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


Each Party will conduct its
respective activities designated in each such agreed upon work plan in the
manner and on the schedule specified therein.


 


2.3           Contacts.  The
Steering Committee will designate employees at both Ormco and Align who will
serve as (i) the technical persons responsible for facilitating
communications between Align and Ormco regarding the design, development, and
testing of the Hybrid Solutions and all enhancements to it; (ii) persons
with authority to review and approve on behalf of such Party usage of the
Product Tradename (as per Section 10), (iii) the persons responsible
for the development and implementation of all advertising and marketing
initiatives for the Hybrid Solutions, (iv) persons responsible for
coordinating all sales and customer service activities with respect to the
Hybrid Solution, and (v) persons responsible for coordinating all
manufacturing and shipping operations related to the Hybrid Solution.  Each party may request the Steering Committee
to change its respective contacts at any time by providing the Committee with a
written notice requesting the change and explaining the reason for the request.


 


2.4           The Parties will resolve deadlock among the Steering
Committee through the Executive Review procedure described in Section 13.7
below.


 


2.5           Executive Sponsors. Each Party shall appoint a member of
its senior management as an executive sponsor for the Project (“Executive
Sponsor”).  Executive Sponsors will
be responsible for monitoring the Parties’ relationship, conducting periodic
briefings for each other and their management teams, and providing a defined
means of communication with other senior executives. Each Party may change its
Executive Sponsor at any time by written notice to the other Party.


 


3.                                      Joint
Development.


 


3.1           Development of the Product.  Subject to the terms and conditions of this
Agreement, Align and Ormco shall cooperate with and assist each other in the
joint design and development of the Hybrid Solution.  The development of the Hybrid Solution shall
seek to include the functionalities described in Exhibit A attached hereto
and such other Specifications to which the Parties agree.


 


3.2           Any work plan created to develop the Hybrid Solution must
be unanimously approved by the Steering Committee.  As applicable, each work plan shall include,
among other things:


 


(1)           The Specifications
for the Hybrid Solution;


 


(2)           Delivery and
acceptance guidelines for deliverables and product or process identified in the
mutually agreed upon plan, including all Hybrid Solutions prior to any
commercial launch of the same;


 






[*] Confidential treatment requested pursuant
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Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


(3)           Allocation of
responsibility for the actions required for development, implementation,
marketing and support of the of the Hybrid Solutions;


 


(4)           Establishment of the
Parties’ respective corresponding personnel, and other resource commitments to
the development of the Hybrid Solutions; and


 


(5)           Establishment of a
schedule for carrying out the development and marketing activities for such
Hybrid Solutions.


 


The Parties presently
anticipate completing the development of Hybrid Solution 1.0 (as described in Exhibit A
hereto) in time to make the product available for purchase in the [*] calendar
quarter of the year [*], subject to applicable regulatory compliance.


 


3.3           Enhancements to the Product.  No less often than quarterly, the Steering
Committee shall, during the course of its regularly scheduled monthly meetings,
review (and modify as applicable) the Hybrid Solution development road map and
associated work plan.  Ormco and Align
each acknowledge that from time to time it may be advantageous to develop
enhancements to the Hybrid Solutions that incorporate enhancements to the
Parties’ respective product offerings that are components of the Hybrid
Solution.  The Parties shall work
together to agree on the timing, extent or nature of such enhancements and/or
revisions, or on the sharing of expense with respect to such enhancements
and/or revisions.


 


3.4           Costs of Performance. 
Except as otherwise specifically provided in this Agreement, each Party
will bear the costs and expenses of performing its obligations hereunder.


 


3.5           Taxes.  Neither
Party shall be obligated to pay any taxes of the other or any other expenses
for which the other Party is liable to pay under applicable law based upon or
in connection with the transactions contemplated by this Agreement.


 


4.             Costs of Manufacture.  Ormco shall bear all the costs and expenses,
including taxes, related to the manufacture and shipping of the Ormco Product
and Align shall bear all the costs and expenses, including taxes, related to
the manufacture and shipping of the Align Product.


 


5.             No License Fee.  No license fee shall be due by either Align
or Ormco with respect to Align Product or Ormco Product as incorporated into
the Hybrid Solutions as marketed and sold in accordance with this
Agreement.  This Section 5 shall not
apply to any product that is sold by either Align or Ormco independent of the
Hybrid Solution even though the product being sold may be used for the same
purpose as the component supplied by that Party to the Hybrid Solution.


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 
















 


6.             Marketing and Sales.


 


6.1           Terms and Conditions of Sales.  The members of the Steering Committee shall
research and analyze applicable data in order to determine negotiate and to
reach agreement on the following matters as soon and as rapidly as practicable
following the Effective Date within a timeframe as established by the Steering
Committee but no later than [*]: (i) the initial list prices for the
Hybrid Solution (currently contemplated to be between $[*] and $[*]), (ii) the
discounts that will be available to the various sales channels, (iii) the
other terms and conditions of the sales of the Hybrid Solution to third party
dental professionals (it being understood that any software provided to
customer shall be subject to software end user licenses and not subject to
sale), and (iv) the terms and conditions under which the Parties will act
as the distributor of the Hybrid Solution. 
Align and Ormco shall cooperate in the future to establish different
list prices and discounts as needed to address cost changes or market
conditions.  All other terms and
conditions of sales of the Hybrid Solution that are not addressed in the
mutually agreed-to terms shall be set by the Party selling the Hybrid Solution
to the applicable end user.


 


6.2           Changes in Pricing. 
The list price for the Hybrid Solution will be reviewed by the Steering
Committee on an annual basis, or sooner upon the request of a Party hereto.


 


6.3           Marketing Assistance/Assignment of Sales Personnel.  Align and Ormco shall, each at its own
expense, cooperate in marketing and selling the Hybrid Solution.  For each sales lead generated by or becoming
known to a Party hereto, each Party shall, for a preliminary time period to be
agreed upon by the Steering Committee, when requested by the Party identifying
the lead, use its reasonable efforts to provide a sales representative to
assist in pursuing such leads with a view toward generating a sale of the
Hybrid Solution.


 


6.4           Marketing Plan.  The
Parties will jointly develop as soon as practicable a comprehensive marketing
plan and a milestone based program plan for the worldwide introduction of the
Hybrid Solution, which introduction shall consider, among other things, Ormco’s
and Align’s respective manufacturing capacities.  There shall be overall joint cooperation and
review of all proposed promotional and marketing initiatives with respect to
the Hybrid Solution.  Periodic
conferences shall be held among the Align and Ormco marketing personnel
designated by the Steering Committee to review the progress of the advertising
and marketing initiatives implemented pursuant to this Agreement and to discuss
and review in advance any new advertising and marketing strategies with respect
to the Hybrid Solution. The Parties shall make a good faith effort to agree on
any necessary changes to the advertising and marketing strategies developed
under this Agreement.


 


6.5           Sales Efforts.


 


6.5.1        Within [*] days following the Effective Date, the Steering
Committee shall use commercially reasonable efforts to establish mutually 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


agreed upon sales targets
with respect to the Hybrid Solution. Thereafter, on a quarterly basis the
Steering Committee shall review and revise such sales targets.  Each Party shall annually establish sales
goals for its sales representatives for the sale of the Hybrid Solution
consistent with achieving such sales targets.


 


6.5.2        Each Party shall, at its own expense, use its commercially
reasonable efforts to introduce, market, promote and take orders for the Hybrid
Solution worldwide, actively
seek qualified customers for the Hybrid Solution, make regular sales calls to
qualified dental professionals all in an effort to meet and exceed such
mutually agreed upon sales targets.  The
Steering Committee may, from time to time in its discretion, develop sales
procedures for such matters as contact management and enhancement and
coordinated selling activities with respect to the Hybrid Solution.


 


6.5.3        The Parties shall each, at its own cost and expense, provide
its sales professionals with sufficient training, resources and materials to
directly promote and sell the Hybrid Solution to dental professionals.


 


6.5.4        The Parties shall cooperate, each at its own expense, to
develop training materials and programs with respect to the Hybrid Solutions
for use with potential purchasers of the Hybrid Solution, and following such
development shall at its own expense, make such training available to those
potential purchasers.


 


6.6           Non-Competition.


 


6.6.1        During the Term (and during the Non-Renewal Transition Period
solely with respect to restricting the activities of the Electing Party and
such party’s Affiliates, successors or assigns), neither Ormco nor Align (nor
any of their Affiliates, successors or assigns) shall, directly or indirectly,
for itself or on behalf of or in conjunction with any Affiliate, other person,
firm, company, partnership, corporation, business, group, association or other
entity (a “Person”), engage in (or facilitate or provide any cooperation
(including any Intellectual Property) to any other such Person), whether as facilitator,
participant, owner, partner, or joint venturer, independent contractor,
consultant, advisor, sales representative, or in any managerial capacity, in
any business developing or selling a [*] marketed for use to [*].


 


6.6.2        Ormco reserves all rights, for its sole benefit and profit to
sell, make, have made, import, have imported, use, distributed, offer, or offer
to sell (i) removable aligners to dental professionals; provided, however,
it does not market the removable aligners for use in combination with the Ormco
Product to treat an orthodontic patient and (ii) fixed orthodontic 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


appliances as a stand-alone
solution.  Align reserves all rights, for
its sole benefit and profit to sell, make, have made, import, have imported,
use, distributed, offer, or offer to sell (i) fixed orthodontic appliances
to dental professionals; provided, however, it does not market
the fixed orthodontic appliances for use in combination with the Align Product
to treat an orthodontic patient and (ii) removable aligners as a stand-
alone solution. The Parties acknowledge and agree that no license to
Intellectual Property is granted to the other Party pursuant to this Section 6.6.2.


 


6.7           Certifications.  The
Parties shall agree upon any requirements that must be met for a dental
professional to purchase the Hybrid Solution which requirement may include the
requirement for the dental professional to posses certain qualifications or
obtain a certification from Ormco or Align, including without limitation,
receiving appropriate training from Align with respect to the Align Product
features included in the Hybrid Solution. 
The requirements shall be intended to increase the likelihood that the
dental professional’s experience with the Hybrid Solution is positive.


 


6.8           No Marketing Fees. 
It is contemplated that the Parties will share equally in the effort to
advertise, promote and market the Hybrid Solution, with each Party bearing the
cost of their advertising, promotional and marketing efforts (both costs
incurred internally and paid to third parties). 
As a result, unless otherwise expressly agreed upon by the parties in a
separate writing, or determined by the Steering Committee, neither Party will
be required to pay to the other a fee for any advertising, promotion or
marketing services performed by the other Party.


 


6.9           Order Flow and Fulfillment.  Each Party will only sell the Hybrid
Solutions to those dental professionals that (i) have received and are
current in the training and certification contemplated herein, and (ii) are
credit worthy as determined by mutually agreed upon criteria, and in absence of
such mutually agreed upon criteria, as determined, in its reasonable
discretion, by the Party selling the Hybrid Solution.  With respect to Hybrid Solution Version 1.0,
orders for such Hybrid Solution, whether generated by Align or Ormco, shall be
submitted to Ormco for fulfillment. 
Ormco shall process orders for shipment in accordance with commercially
reasonable standards.  Ormco shall submit
invoices to purchasers for products shipped and shall be responsible for
collection of such invoices.  Thereafter,
for other Hybrid Solutions versions, the Parties shall mutually agree upon an
order and fulfillment process, with each of the Parties using commercially reasonable
efforts to timely manufacture, supply and deliver their respective Products for
use in the Hybrid Solution.


 


6.10         Reporting and Revenue Accounting.


 


6.10.1      Each Party shall provide to the other
Party written reports fifteen (15) days following the end of each month
(provided that for those months in which a Party’s fiscal quarter ends the
report shall be, if practicable, provided to that Party 24 hours prior to the
end of its fiscal quarter) that describe for those Hybrid Solutions sold by the
reporting Party during the 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


month: the identity of the
purchasers of the Hybrid Solution, the products sold, quantities purchased,
prices charged and any discounts applied.


 


6.10.2      [*] of the revenue generated from the
sales of the Hybrid Solutions shall be considered the revenue of Ormco and [*]
the revenue of Align for all accounting and other purposes.  The Steering Committee shall determine the
means to be used to calculate the revenue associated with the sale of the
Hybrid Solution after taking into account such items as any applicable sales
and use taxes a Party is required to pay, the gross invoice price of a Hybrid
Solution as packed for shipment and the following items to the extent included
in the gross invoice price: (i) sales or turnover taxes on sales invoices;
(ii) transportation charges and insurance charges on shipments to
customers; and (iii) trade or quantity discounts (but not cash discounts
allowed to customers or agents’ commissions); the handling of credits allowed
for Hybrid Solution Products returned or not accepted by the customer; and such
other factors as the Steering Committee deems appropriate.


 


6.10.3      The report described in Section 6.10.1
shall be accompanied by a check in the amount of [*] of any payments received
during the month being reported for those Hybrid Solutions sold by the Parties
(or if otherwise instructed by a Party, shall be made by wire transfer to an
account designated by that Party in writing from time to time).  With respect to revenue received in a
currency other than U.S. Dollars, unless otherwise agreed upon by the Parties
in writing, all such revenues shall be paid in the currency in which they were
invoiced.


 


During the Term of the
Agreement and for 3 years thereafter, Ormco and Align shall keep accurate
records of its compliance with the payment terms of this Agreement.  Each Party shall have the right, effective
upon thirty (30) days prior written notice, during normal business hours, no
more often than once per calendar year (unless a prior audit reveals a
discrepancy), to have audited the relevant books and records relating to the
other Party’s compliance with such payment terms.  If a Party elects to perform such audit
through its own representatives, then the audited Party may, within thirty (30)
days of receipt of the audit result, dispute the results, in which case the
auditing Party may elect, at its sole discretion, to have the audit performed
by an independent third-party auditor.  The exercise by a Party of any right to audit or the acceptance by
a Party of any report shall be without prejudice to any of the auditing Party’s
rights or remedies.  If it is determined
that the audited Party underreported and thus underpaid or has misrepresented
any payment payable to the other Party by at least ten percent (10%) for the
audited period, then the audited Party shall, in addition to making immediate
payment of the payments due based on the actual and true items, pay all
reasonable out-of-pocket costs 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


and
expenses paid by the auditing Party to the independent auditor.


 


7.             Compliance with Laws and Business Practices.  Any exports, sales, transfers, or any other
disposition of Ormco Products and Align Products, to the extent incorporated in
the Hybrid Solution, are subject to the laws and regulations of the United
States.  Specifically, contracts and
orders placed for the Hybrid Solution may require advance U.S. Government
Export approval or licensing, and, therefore all such contracts and orders are
subject to the receipt of any necessary approvals and licenses.  The Parties shall solicit orders, and each Party
shall process and ship orders, in accordance with all applicable laws and
regulations.


 


8.             Regulatory Approval.  For each country, territory, or other
geographic subdivision into which the Parties agree to sell the Hybrid Solution
(the “Selling Territory”) (i) Ormco shall be responsible for obtaining
from, and maintaining with, any Regulatory Authority having jurisdiction in the
Selling Territory over an Ormco Product the regulatory approval needed to
import, manufacture and sell the Ormco Product in the Selling Territory and
Ormco shall own all such regulatory approvals and (ii) Align shall be
responsible for obtaining from, and maintaining with, any Regulatory Authority
having jurisdiction in the Selling Territory over an Align Product the
regulatory approval needed to import, manufacture and sell the Align Product in
the Selling Territory and Align shall own all such regulatory approvals.  Each Party shall bear the cost of obtaining
the regulatory approvals for which it is responsible.  The responsibility and cost of obtaining any
regulatory approvals needed from a Regulatory Authority in a Selling Territory
to import, manufacture and sell the Hybrid Solution or any component thereof
that are in addition to those needed for the Align and Ormco Product, shall be
equally shared by the Parties.  The
Parties shall jointly own those regulatory approvals.


 


9.             Customer Support.  Each Party shall establish and maintain
support facilities sufficient to provide support for the Hybrid Solutions it
provides to its customers; provided however,
that Ormco shall provide mutually agreed upon back-up support to Align with
respect to the Ormco Product portion of the Hybrid Solution and Align shall
provide mutually agreed upon back-up support to Ormco with respect to the Align
Product portion of the Hybrid Solution. 
The Parties shall maintain the availability of support services for a
period of at least three years after the termination of this Agreement.  The term “support,” for purposes of this Section 9,
means resolving questions relating to, among other things, product delivery,
product use, and clinical support.


 


10.          Intellectual Property Rights.


 


10.1         Tradenames/Trademarks.


 


10.1.1      The Hybrid Solution shall be branded with
one or more Trademarks that are acceptable to both Align and Ormco (the “Product
Tradename”).  The Product Tradename
shall be used by the Parties only 


 






[*] Confidential treatment requested pursuant
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Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


for purposes of marketing
and selling the Hybrid Solution pursuant to this Agreement.  Notwithstanding the foregoing, this Agreement
does not impose any restrictions with respect to Align’s use of the “Invisalign”
Trademark on Align Products for any and all purposes and Ormco’s use of the “Insignia”
Trademark on Ormco Product for any and all purposes. Each Party’s use of the
Product Tradename shall comply with any mutually agreed upon Trademark usage
guidelines.  Each use by one Party of the
Product Tradename shall, when appropriate to protect the Product Tradename, be
accompanied by the appropriate trademark symbol (either “TM” or “®”).  If either Party’s use of the Product
Tradename, does not comply with the then-current Trademark usage policies
agreed upon by the  Parties, such Party
will promptly remedy such deficiencies upon receipt of written notice of such
deficiencies from the other Party.


 


10.1.2      Nothing herein is intended to nor shall
operate to grant to a Party any other right, title or interest in the other
Party’s Trademarks.  All goodwill
resulting from the use of a Party’s Trademark will inure solely to the Party owning
such Trademark.  Neither Party will, at
any time during or after this Agreement, register, attempt to register, claim
any interest in, contest the use of, or otherwise adversely affect the validity
of any of each other’s Trademark (including, without limitation, any act or
assistance to any act, which may infringe or lead to the infringement of any
such marks).


 


10.1.3      Align shall have no interest in any of
Trademarks of Ormco; without limiting the generality of the foregoing clause of
this sentence, Align shall have no rights with respect to the Trademark “Insignia”
and related Trademarks.  Ormco shall have
no interest in any of the Trademarks of Align; without limiting the generality
of the foregoing clause of this sentence, Ormco shall have no rights with
respect to the Trademark “Invisalign” and related Trademarks.


 


10.2         Project Licenses.


 


10.2.1      Subject to the terms and conditions
contained herein, during the Term of this Agreement and any three-year
transition period as described in Section 12.4.3, Align hereby grants to
Ormco a nontransferable, non-sublicensable, non-exclusive license to use the
Align Intellectual Property (excluding Trademarks) solely to the extent as is
required to fulfill its obligations under this Agreement to develop, manufacture,
market the Hybrid Solution (and with respect to any three-year transition
period, solely to the extent required to continue to develop, manufacture,
market, promote, offer to sell and sell the Hybrid Solution during the
transition period).


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


10.2.2      Subject to the terms and conditions
contained herein, during the Term of this Agreement and any three-year
transition period as described in Section 12.4.3, Ormco hereby grants to
Align a nontransferable, non-sublicensable, non-exclusive license to use the
Ormco Intellectual Property (excluding Trademarks) solely to the extent as is
required to fulfill its obligations under this Agreement to develop,
manufacture, and market the Hybrid Solution (and with respect to any three-year
transition period, solely to the extent required to continue to develop,
manufacture, market, promote, offer to sell and sell the Hybrid Solution during
the transition period).


 


10.2.3      Neither Party shall be entitled to use the
Intellectual Property of the other Party to develop, manufacture or market a
product that is not sold or otherwise transferred as a part of the sale of a
Hybrid Solution as permitted under this Agreement.  Each Party hereto acknowledges that the other
has expended considerable time, effort and funds in developing and generating
the Intellectual Property owned by it, and has and will continue to have a
substantial proprietary interest and valuable trade secret therein.


 


10.2.4      Except as expressly provided under this
Agreement, neither Party shall (nor shall they allow any third party to): (i) decompile,
disassemble, reverse engineer or attempt to reconstruct, identify or discover,
by any means whatever, any source code, underlying ideas, underlying user
interface techniques or algorithms of any software provided by a Party hereto
in object code format or disclose any of the foregoing (except to the extent
that such restriction is impermissible under applicable law); (ii) modify,
incorporate into or with other software or documentation, or create a
derivative work of any part of the other Party’s Intellectual Property; or (iii) attempt
to copy, access, or distribute, or circumvent any use restrictions in, any
software constituting the other Party’s Intellectual Property.


 


10.3         Ownership of Intellectual Property.


 


10.3.1      Align Intellectual Property. Subject to
the provisions of Section 10.2, nothing in this Agreement grants to Ormco
any right, title or interest in and to any Align Intellectual Property.  Except for the express licenses to Align
Intellectual Property granted hereunder, Align reserves all rights, not
expressly granted hereunder, in the Align Intellectual Property.


 


10.3.2      Ormco Intellectual Property.  Subject to the provisions of Section 10.2,
nothing in this Agreement grants to Align any right, title or interest in and
any Ormco Intellectual Property.  Except
for the express licenses to Ormco Intellectual Property granted hereunder,
Align reserves all rights, not expressly granted hereunder, in the Ormco
Intellectual Property.


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 
















 


10.3.3     Joint Development Intellectual
Property.  Joint Development Intellectual
Property shall be owned jointly by Ormco and Align, with each of Ormco and
Align (and their respective successors and assigns) holding an undivided
one-half (1/2) unrestricted interest in such Joint Development Intellectual
Property, with no duty of accounting.  
For the avoidance of doubt, any new Intellectual Property conceived of
and developed solely by one party shall be owned solely by that party.


 


10.3.4     Notwithstanding anything to the contrary in
this Agreement, in the event a Party translates into another language (“Translating
Party”) any portion of the other Party’s Intellectual Property (“Material
Owner”), the Translating Party acknowledges and agrees that ownership for
such translated materials (“Translated Materials”) shall belong to the
Material Owner, and accordingly, the Translating Party hereby irrevocably
transfer, assigns and conveys (and agrees to transfer, assign and convey) all
of the Translating Party’s right, title and interest in such Translated
Materials (including copyrights therein) to the Material Owner.


 


10.4        Protection of Intellectual Property.


 


10.4.1     Each of the Parties shall make prompt, full
and complete disclosure to the other of all Joint Development Intellectual
Property it believes may be copyrightable, patentable or of commercial value.


 


10.4.2     With respect to all Joint Development
Intellectual Property believed by either Party to be copyrightable, patentable
or of commercial value, the Parties shall decide jointly whether and where to
apply for copyright, patent or other appropriate forms of Intellectual Property
registration and protection.  To the
extent the Parties agree to register and protect Joint Development Intellectual
Property in a particular jurisdiction, the Parties shall do so at their joint
expense using counsel as mutually agreed.


 


10.4.3     In the event the Parties elect not to
jointly pursue protection of any Joint Development Intellectual Property,
either Party (the “Protection Electing Party”) may seek such protection
in its own name and at its sole expense using counsel of its choice.  As to Joint Development Intellectual Property
with respect to which the Protection Electing Party elects to seek protection,
the non-electing party shall assign its intellectual property rights in and to
such Joint Development Intellectual Property to the Protection Electing Party
and the Protection Electing Party shall grant to the non-electing party a
perpetual, non-revocable, worldwide, royalty free license to use the Joint
Development Intellectual Property (for the avoidance of doubt, such license
shall survive the termination of this 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


Agreement).


 


10.4.4     All expenses of obtaining, renewing and or
maintaining Intellectual Property protection or registration of a Party’s
Intellectual Property shall be borne by such Party, or, in the case of
registration or protection sought jointly for the Joint Development
Intellectual Property, by both Parties sharing equally in such expenses.


 


10.5        Enforcement of Intellectual Property Rights.


 


10.5.1     Align shall be solely responsible for
enforcing any and all Align Intellectual Property in its sole discretion, and
Ormco shall be solely responsible for enforcing any and all Ormco Intellectual
Property in its sole discretion, whether or not such Align Intellectual
Property or Ormco Intellectual Property is incorporated into the Hybrid
Solution.


 


10.5.2     Each Party shall promptly to advise the
other of suspected or known material infringements on any Joint Development
Intellectual Property.


 


10.5.3     The Parties shall consult as to the
appropriate action to be taken with respect to any material infringement of any
Joint Development Intellectual Property. 
If the Parties agree to settle or jointly prosecute any claim for
misappropriation and/or infringement of any Joint Development Intellectual
Property, the Parties shall share equally in the costs and expenses, including
attorney’s fees, incurred in connection with such prosecution and shall share
equally in any settlements or other recoveries thereon.


 


10.5.4     If one of the Parties hereto (“Abstaining
Party”) does not agree to be responsible for its full share of the costs
and expenses of enforcing Joint Development Intellectual Property against a
third party, then the other Party (“Acting Party”) may sue in its own
name and at its sole expense and, in such case, to the extent required under
applicable law, the Abstaining Party shall agree to be joined as a plaintiff
for standing purposes and to cooperate as reasonably requested in such action (subject
to reimbursement for reasonable costs, expenses, and attorneys’ fees
attributable to such cooperation).  In
such event, any recovery shall inure to the Acting Party and not to the
Abstaining Party, whether or not such Abstaining Party is compelled to  joins as a plaintiff as provided herein.


 


10.6        Defense of Intellectual Property.


 


10.6.1     Align shall be solely responsible for
defending any and all claims of third parties against Align Products for
infringement or misappropriation, and Ormco shall be solely responsible for
defending any and all claims of third parties against Ormco Products for
infringement or misappropriation, whether or not the Align Product or Ormco
Product at 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


issue
in any claim is incorporated into the Hybrid Solution.


 


10.6.2     Each Party shall promptly advise the other
Party of claims of infringement brought, or threatened in a writing addressed
to a Party, against any Ormco Product or Align Product used in the Hybrid
Solution.


 


10.6.3     The Parties shall consult as to the
appropriate action to be taken with respect to any third party claims asserting
that the Hybrid Solution infringes or misappropriates a third party’s
Intellectual Property (a “Third Party Claim”).  Any disputes regarding the appropriate action
to be taken in response to the Third Party Claim shall be resolved in
accordance with Section 13.7.  The
Parties shall, if they jointly elect to defend against the Third Party Claim,
share equally in the costs and expenses, including attorney’s fees, incurred in
connection with such defense of the Hybrid Solution (subject to Ormco’s
responsibility for Ormco Products and Align’s responsibility for Align
Products).  Each Party shall bear only
such damages as are awarded against it.


 


10.7        Intellectual Property Marking.  The Parties shall agree in writing to all
Intellectual Property markings to be applied to the Hybrid Solution and Joint
Development Intellectual Property, including Copyright and Patent notices.  The Parties agree that all permitted
distribution and marketing of the Hybrid Solution and Joint Development
Intellectual Property (and copies thereof) shall include such mutually agreed
upon markings.


 


10.8        Confidential Information.


 


10.8.1     Confidential Information.  During the course of this Agreement, a Party
(“Receiving Party”) may be given access to information from the other
Party (“Disclosing Party”) that (i) relates to the other’s past,
present, and future research, development, business activities, products
(including without limitation computer object and source code), services, and
technical knowledge, and (ii) has been identified as confidential or
reasonably deemed to be confidential information given the circumstances of
disclosure (collectively, “Confidential Information”).  Trade Secrets included in the Jointly
Developed Intellectual Property shall be deemed the Confidential Information of
both Parties under this Agreement. 
Notwithstanding, Confidential Information shall exclude information that
the Receiving Party can demonstrate: (i) was independently developed by
the Receiving Party without any use of the Disclosing Party’s Confidential
Information or by the Receiving Party’s employees or other agents (or
independent contractors hired by the Receiving Party) who have not been exposed
to the Disclosing Party’s Confidential Information; (ii) becomes known to
the Receiving Party, without restriction, from a source (other than the
Disclosing Party) that had a right to disclose it without breach of 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


this
Agreement; (iii) was in the public domain at the time it was disclosed or
enters the public domain through no act or omission of the Receiving Party; or (iv) was
rightfully known to the Receiving Party, without restriction, at the time of
disclosure.


 


10.8.2     Confidentiality Obligation.  The Receiving Party shall treat as
confidential all of the Disclosing Party’s Confidential Information and shall
not use such Confidential Information except as may be expressly permitted
under this Agreement.  Without limiting
the foregoing, the Receiving Party shall (i) not disclose or distribute
the Disclosing Party’s Confidential Information to a third party, and (ii) use
at least the same degree of care which it uses to prevent the disclosure of its
own confidential information of like importance, but in no event with less than
reasonable care, to prevent the disclosure of the Disclosing Party’s
Confidential Information.


 


10.8.3     Agreement Terms.  Each Party agrees that the terms and
conditions, but not the existence, of this Agreement shall be treated as the
other’s Confidential Information and that no reference to the terms and
conditions of this Agreement or to activities pertaining thereto may be made in
any form of public or commercial advertising without the prior written consent
of the other Party; provided, however, that each Party may
disclose the terms and conditions of this Agreement: (i) as required by
any court or other governmental body; (ii) as otherwise required by law; (iii) to
legal counsel of the Parties; (iv) in connection with the requirements of
an initial public offering or securities filing; (v) in confidence, to
accountants, banks, and financing sources and their advisors; (vi) in
confidence, in connection with the enforcement of this Agreement or rights
under this Agreement; or (vii) in confidence, in connection with a merger
or acquisition or proposed merger or acquisition, or the like.


 


10.8.4 Remedies.  Unauthorized use by a Party of the other
Party’s Confidential Information will diminish the value of such
information.  Therefore, if a Receiving
Party breaches any of its obligations with respect to confidentiality or use of
the Disclosing Party’s Confidential Information hereunder, the other Disclosing
Party shall be entitled to seek equitable relief to protect its interest
therein, including injunctive relief, as well as money damages.


 


10.8.5 Required
Disclosure.  In the event the Receiving
Party must disclose the Disclosing Party’s Confidential Information pursuant to
the order or requirement of a court, administrative agency, or other
governmental body, to the extent permitted under applicable law, the Receiving
Party shall provide prompt notice thereof to the Disclosing Party and shall use
its reasonable efforts to obtain a protective order or 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


otherwise prevent public
disclosure of such information.


 


11.          Warranties and Limitation of Liability.


 


11.1        Warranty.  Align hereby
warrants to Ormco that under normal use and service, Align Products are free
from defects in design and workmanship. Ormco hereby warrants to Align that
under normal use and service, Ormco Products are free from defects in design
and workmanship.  Each Party warrants to
the other that the products delivered by such Party for use in connection with
the Hybrid Solution will be complete and in conformity with the products
regularly supplied by each to purchasers and lessees of its other or similar
products.


 


11.2        Product Warranty.  The product forming a part of the Hybrid
Solution shall be sold with a warranty to be agreed upon between the Parties
hereto, essentially to the effect that the products will be free from defects in
design, workmanship and material, for ninety (90) days following delivery
(unless otherwise agreed upon by the Parties) and on such other terms and
conditions as are to be agreed upon between the Parties.  Subject to the limitations on warranty contained
in this Agreement, Align shall assume all liability for breach of such warranty
to the extent that a breach of warranty relates solely to Align Products
incorporated into the Hybrid Solution. 
Subject to the limitations on warranty contained in this Agreement,
Ormco shall assume all liability for breach of such warranty to the extent that
such breach relates solely to Ormco Products incorporated into the Hybrid
Solution. Align and Ormco shall jointly and equally assume all liability for
breach of such warranty to the extent that a breach of warranty relates to
matters that are not covered by either of the two preceding sentences.


 


11.3        Limitation on Warranty. 
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN AND EXCEPT FOR WARRANTY
OF TITLE WITH REPSECT TO TANGIBLE ITEMS PROVIDED UNDER THIS AGREEMENT, NEITHER
PARTY MAKES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED TO THE OTHER WITH RESPECT
TO ITS PRODUCTS.  EXCEPT AS OTHERWISE
EXPRESSLY SET FORTH HEREIN, THERE ARE NO WARRANTIES OR ANY AFFIRMATIONS OF FACT
OR PROMISES BY EITHER PARTY HERETO AS TO MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, INFRINGEMENT OR OTHERWISE. 
THE EMPLOYEES OR AGENTS OF NEITHER PARTY HAVE ANY AUTHORITY TO MAKE ANY
WARRANTY OR REPRESENTATION REGARDING THE MANNER OR BENEFITS OF USE OF ANY
PRODUCT OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT.


 


11.4        Limitation of Liability. 
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT,
SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES, OR FOR LOSS
OF PROFITS, REVENUE, OR DATA, WHETHER IN AN ACTION IN CONTRACT, TORT, STRICT
LIABILITY OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF THOSE DAMAGES.


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


11.5        Indemnity.  Upon
request of one Party (“Indemnified Party”), the other Party (“Indemnifying
Party”) shall defend the Indemnified Party, its officers, directors,
employees against, indemnify for and/or settle any third party claims,
liabilities and losses, to the extent that such claims, liabilities and losses
are alleged to arise out of the Indemnifying Party’s illegal or fraudulent acts
related to the performance of this Agreement (except to the extent that such
claims, liabilities and losses are attributable to the Indemnified Party’s own
illegal or fraudulent acts).  Such
indemnification is expressly conditioned upon Indemnified Party promptly
notifying the Indemnifying Party of such third party claims in writing.  The Indemnified Party shall cooperate with
the Indemnifying Party in all reasonable respects in connection with the
defense of any such action and provide the Indemnifying Party the authority to
assume and control the defense thereof, and if it so undertakes, it shall also
undertake all other required steps or proceedings to settle or defend any such
action, including the employment of counsel, and payment of all reasonably
incurred expenses.  The Indemnified Party
shall have the right to employ separate counsel to provide input into the
defense, at the Indemnified Party’s own cost. The Indemnified Party shall not
settle any claim or action under this Section 11.5 without first obtaining
Indemnifying Party’s written permission, which permission shall not be
unreasonably withheld.


 


12.          Term and Termination.


 


12.1        Term.  This Agreement,
unless earlier terminated in accordance with one or more provision of this
Agreement, shall remain in effect during a period commencing with the Effective
Date and ending on December 31, 2017 (the “Initial Term”); provided,
however, the Agreement shall continue to remain in full force and effect
following the end of the Initial Term for two successive two (2) year
terms (the “Renewal Terms”), unless six months prior to the end of the
Initial Term or a Renewal Term one Party provides the other written notice of
its desire to have the Agreement terminate at the end of the Term then in
effect.


 


12.2        Conditions for Termination. 
This Agreement shall terminate upon any of the conditions contained in
this Section 12.2.


 


12.2.1     This Agreement shall terminate upon the
occurrence of a material breach of this Agreement by either Party hereto (a “Termination
for Breach”), provided:


 


12.2.1.a           The breaching Party (the “Breaching
Party”) is given a written notice by the other Party hereto containing a
claim of breach and setting forth the nature of the breach and circumstances
giving rise to such a claim and the other Party (the “Non-Breaching Party”)
does not elect to waive its right to terminate; and


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


12.2.1.b           The Party to whom the written notice
is given fails to remedy such circumstances within sixty (60) days after
receipt of the notice.


 


12.2.2     A Party undergoes a Change in Control (the
“Changed Party”) and, within [*] following such Change in Control, the other
Party (the “Non-Changed Party”) provides written notice of its intent to
terminate the Agreement (a “Change in Control Termination”).


 


12.3        This Agreement shall terminate if any of the following events
occur as to one Party hereto (the “Affected Party”) and the other Party
(the “Non-Affected Party”) does not provide written notice within thirty
(30) days after it becomes aware of such event that it intends to waive
termination of this Agreement: (i) a Party makes an assignment for the
benefit of its creditors, requests or permits a proposal, arrangement or
reorganization under or, as an insolvent debtor, takes the benefit of any
legislation now or hereafter in force for bankrupt or insolvent debtors; (ii) a
receiver or other officer with like powers is appointed for a Party for a
substantial part of its assets; (iii) a lienholder takes possession of a
substantial and material part of a Party’s property; (iv) an order is made
for the winding up, liquidation, revocation, or cancellation of incorporation
of a Party; or (v) a Party ceases carrying on its business as a going
concern (collectively, a “12.3 Termination”).


 


12.4        Effects of Termination/Liability.


 


12.4.1     Except as set forth herein, neither Party shall
be liable to the other for any claims, damages, costs, expenses or other
charges incurred in connection with the entering into, performance, breach,
termination, expiration or non-renewal of this Agreement including but not
limited to, any damages based on injury to reputation or on any loss (or
anticipated loss) of business, sales, profits, earnings or income, in any way
related to expenditures, investments, costs, actions taken or commitments made
or entered into in reliance of or in any way related to the performance of this
Agreement, unless specifically provided for herein.  This Section 12.4.1 shall not apply to
any claims any Party may have against another Party relating to infringement of
such Party’s Intellectual Property.


 


12.4.2     Notwithstanding the Termination Date of
this Agreement, the provisions of Sections 10 (excluding 10.1 and 10.2), 11,
12.4 and 13 shall survive the Termination Date indefinitely, and the provisions
of Section 6.10 shall survive until the third anniversary of the Termination
Date.  Without limiting the generality of
the foregoing sentence, for three years after the Termination Date, each Party
shall continue to use commercially reasonable efforts to supply to the other
Party on reasonable commercial terms such number of the other Party’s Products
as may be required for a Party to fulfill orders for the Hybrid Solution that
were accepted prior to the Termination Date.


 


12.4.3     If only one Party elects to not renew any
Term (the “Electing 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


Party”), then the
other Party (the “Non-Electing Party”) shall have the right to continue
to market, promote, offer to sell and sell the Hybrid Solution under the
Product Tradename for a period of three calendar years following the
Termination Date (in the case of such non-renewal, the “Non-Renewal
Transition Period”).  Similarly, in
the event of a Change of Control Termination, the Non-Changed Party shall have
the right to continue to market, promote, offer to sell and sell the Hybrid
Solution under the Product Tradename for a period of [*] following the Termination
Date (in the case of such Change of Control Termination, the “Change of Control
Transition Period”).  A three-year
transition period shall also apply with respect to a Termination for Breach
and, to the fullest extent possible given the circumstances of the Affected
Party, to a 12.3 Termination.  The
Electing Party, the Changed Party, the Breaching Party, or the Affected Party,
as applicable (the “Non-Transitioning Party”), shall be obligated to
provide the Non-Electing Party, the Non-Changed Party, the Non-Breaching Party,
or the Non-Affected Party, as applicable (the “Transitioning Party”)
when needed, with (and manufacture as needed) such number of the
Non-Transitioning Party’s Products as are required by the Transitioning Party
for orders accepted by the Transitioning Party for the Hybrid Solution during
the three-year transition period.  The
amount to be charged by the Non-Transitioning Party for the Products it
supplies to the Transitioning Party shall be negotiated by the Parties but
shall in no event yield to the Non-Transitioning Party a gross profit per
product with respect to such Products greater than 50% of the average gross
profit per product for such Products over the 12 months preceding the
Termination Date.


 


13.          Miscellaneous Provisions.


 


13.1        Authority; No Conflict. 
This Agreement constitutes the legal, valid and binding obligation of
both Parties.  The Parties have the
absolute and unrestricted right, power, and authority to execute and deliver
this Agreement and to perform all obligations under this Agreement.


 


13.2        Assignment.  Neither
Party shall assign this Agreement or any interest therein or any of the rights
provided herein; provided however, that a Party undergoing a Change in Control
may assign this Agreement without consent in connection with such Change in
Control of such Party (subject to the Non-Changed Party’s right to terminate
under Section 12.2.2) without the prior written consent of the other
Party.  Any assignment or transfer in
contravention of this provision shall be null and void.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective permitted
assigns and successors.  Nothing in this
Agreement shall be interpreted to grant any rights to or permit any party to
grant any rights to any person or entity that is not a party hereto.


 


13.3        Confidentiality.  Each
Party shall ensure that it, its employees and third party agents having access
to any Confidential Information or Proprietary Information of the other Party,
will restrict and control the use, copying, modification, disclosure, transfer,
protection and security of such items, in accordance with these
provisions.  Each Party shall protect the
Confidential Information or Proprietary Information of the other Party with at
least the same standard of care that it uses to protect its own like 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


information.


 


13.4        Nonsolicitation.  The
Parties hereto shall not, at any time during the term this Agreement and for a
period of one year thereafter, directly or indirectly, for itself or for any
other person, firm, corporation, partnership, association or other entity,
solicit the employment of any employee of the other Party, unless such employee
or former employee has not been employed by the other Party, its subsidiaries
or its predecessors in interest, for a period in excess of six months;
provided, however, that the restrictions of this Section 13.3 shall not
apply to any solicitation (or hiring or employment as a result of any
solicitation) that consists of advertising in a newspaper or periodical of general
circulation or through the Internet.


 


13.5        Publicity.  Subject to
each Party’s disclosure obligations imposed by law or regulation or stock
exchange rule or trading market listing requirement, the Parties will
cooperate with each other in the development and distribution of all news
releases and other public information disclosures with respect to this
Agreement, and no Party will make any such news release or public disclosure
without first consulting with the other Parties and receiving their consent
(which shall not be unreasonably withheld, conditioned or delayed), and each of
the Parties shall coordinate with the each other with respect to any such news
release or public disclosure and use reasonable best efforts to obtain
confidential treatment with respect to any commercially-sensitive information
required by law or regulation or stock exchange rule or trading market
listing requirement to be disclosed and to cooperate in seeking confidential
treatment for any such information or other documentation required by law or
regulation to be filed with the Securities and Exchange Commission or other
governmental entity. .


 


13.6        Notices.  All notices
permitted or required hereunder shall be effective: upon receipt if delivered
personally; on the third business after sending if sent via registered or
certified U.S. mail, postage paid, return receipt requested; on the second
business day after sending, charges prepaid for next day delivery, via a
nationally recognized overnight delivery service (Federal Express, DHL and UPS
are acceptable for these purposes); and upon acknowledgment of receipt by the
Party to be charged with notice if sent via any other means.  Notice shall be given to the following
address or to such other address as to which a Party shall give notice:


 


	
   

  	
  If to Align:

  	
  Align Technology, Inc.

  
	
   

  	
   

  	
  881 Martin Avenue

  
	
   

  	
   

  	
  Santa Clara, California 95050

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Ormco:

  	
  Ormco Corporation

  
	
   

  	
   

  	
  1717 W. Collins Ave

  
	
   

  	
   

  	
  Orange, CA 92867

  
	
   

  	
   

  	
  Attention: General Counsel

  



 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


13.7        Dispute Resolution


 


13.7.1     Internal Review.  In the event that a dispute, difference or
question arises pertaining to any matters which are the subject of the Alliance
(“Dispute”), and either Party so requests in writing, prior to the initiation
of any formal legal action, the following dispute resolution shall apply:


 


13.7.2     The Steering Committee will use its good
faith efforts to resolve the Dispute within ten (10) days.  If the Steering Committee is unable to
resolve the Dispute in such period, the Steering Committee will refer the
Dispute to the Executive Sponsors as set forth in Section 13.7.3 below.


 


13.7.3     For all Disputes referred to the Executive
Sponsors from the Steering Committee above, the Executive Sponsors shall use
their good faith efforts to resolve the Dispute within twenty (20) days after
such referral. If the Executive Sponsors are unable to resolve the Dispute in
such period, the Executive Sponsors will refer the Dispute to the Chief
Executive Officers of Ormco and Align as set forth in Section 13.7.4 below


 


13.7.4     For all Disputes referred to the Chief
Executive Officers from the Executive Sponsors above, the Chief Executive
Officers shall use their good faith efforts to resolve the Dispute within
twenty (20) days after such referral.


 


13.7.5     In the event of a Dispute which cannot be
resolved by the Chief Executive Officers, either Party may commence a
non-binding mediation to resolve the Dispute by providing written notice to the
other Party (a “Mediation Notice”) informing the other Party of the dispute and
the issues to be resolved and containing a list of five (5) recommended
individuals to serve as the mediator. 
Within ten (10) business days after the receipt of a Mediation
Notice, the other Party shall respond by written notice to the Party initiating
mediation, providing a list of five (5) recommended individuals to serve
as the mediator and which adds additional issues to be resolved.  The recommended mediators shall be
individuals with experience in the healthcare industry and shall not be any
employee, director, shareholder or agent of either Party or an affiliate of
either Party, or otherwise involved (whether by contract or otherwise) in the
affairs of either Party.  If, within
twenty (20) business days after receipt of the Mediation Notice, the Parties shall
have been unable to agree upon an individual to serve as mediator, or to the
extent the mediator selected by the Parties is unable to resolve the dispute,
the dispute will be settled by final and binding arbitration conducted in the
manner described in subsection 13.8 below. If, within twenty (20) business days
after receipt of the Mediation Notice, the Parties shall have agreed upon an
individual to serve as mediator, the mediator shall conduct a mediation in an
effort to


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 






 












 


resolve
the dispute, employing commercially reasonable procedures selected by the
mediator in consultation with the Parties, completing such mediation no later
than sixty (60) days after engagement.


 


13.8         Arbitration.


 


13.8.1      Any Dispute not timely resolved in
accordance with Section 13.7 herein, shall be finally and exclusively
resolved by arbitration in accordance with the then-prevailing prevailing JAMS
Streamlined Arbitration Rules and Procedures, except as modified herein
(the “Rules”).  If the Dispute (including all claims and
counterclaims) is for $15 million or less, there shall be a single
arbitrator.  The parties shall have ten (10) days from commencement
of the arbitration in accordance with the Rules to agree on a single
arbitrator.  Failing timely agreement, the arbitrator shall be selected by
JAMS.  If the Dispute (including all claims and counterclaims) is for more
than $15 million, there shall be three (3) neutral arbitrators of whom
each of Buyer and Seller shall select one within twenty (20) days of the
commencement of the arbitration. The two arbitrators so appointed shall select
a third arbitrator to serve as chairperson within fourteen (14) days of the
designation of the second of the two initial arbitrators.  If any
arbitrator is not timely appointed, at the request of any party such arbitrator
shall be appointed by JAMS pursuant to the listing, striking and ranking
procedure in the Rules.  All arbitration pursuant to Section 13.8
shall be confidential and shall be treated as compromise and settlement
negotiations, and no oral or documentary representations made by the parties
during such arbitration shall be admissible for any purpose in any subsequent
proceedings.  The arbitral tribunal is not empowered to award damages in
excess of compensatory damages, and each party hereby irrevocably waives any
right to recover punitive, exemplary or similar damages with respect to any
Dispute.  Any arbitration proceedings, decision or award rendered
hereunder and the validity, effect and interpretation of this arbitration
agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.
 The award shall be final and binding upon the parties and shall be the
sole and exclusive remedy between the parties regarding any claims, counterclaims,
issues or accounting presented to the arbitral tribunal.  Judgment upon
any award may be entered in any court having jurisdiction.


 


13.8.2      Without seeking to expand the scope of Section 13.8.1
and for purpose of clarification only, the Parties acknowledge that the
restrictions of Section 13.8.1 do not apply to any claim(s) by one
Party against the other for infringement of one or more claims of a patent
owned or controlled by either Party.  Neither Party will be precluded from
seeking provisional remedies in the courts including, but not limited to,
temporary restraining orders and preliminary injunctions, to protect its rights
and 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


interests,
but such relief will not be sought as a means to avoid or stay arbitration.


 


13.8.3      This Section 13.8 provides the sole
recourse for the settlement of any dispute arising under or in connection with
this Agreement.


 


13.8.4      Any arbitration action shall be brought
only in the city or county in which the corporate headquarters of the defendant
to such action is located.


 


13.9         Costs.  Except as
expressly provided herein, each Party shall bear their own costs in connection
with this Agreement and the Project, including their own costs in preparing for
and participating in the resolution of any dispute under this Agreement, and
the costs of mediator(s) and arbitrator(s) shall be equally divided
between the Parties.


 


13.10       Relationship of the Parties. 
The parties hereto agree that no fiduciary, agency, employment,
partnership, joint venture or franchise relationship is created or shall be
deemed to be created hereunder.  The
parties agree that in performing their responsibilities pursuant to this
Agreement they are in the position of independent contractors.  Neither Party shall have, and neither shall
represent to have, any power, right or authority to bind the other or to assume
or create any obligation or responsibility, express or implied, on behalf of
the other Party or in the other Party’s name, except as herein expressly
permitted.


 


13.11       Events Excusing Performance.  Neither Party shall be liable to the
other Party for failure to perform any of the services required herein in the
event of strikes, lock-outs, acts of God, war, terrorism, earthquakes,
unavailability of supplies or other events over which that Party has no control
for so long as such events continue, and for a reasonable period of time
thereafter.


 


13.12       Entire Agreement. This Agreement (along with the Settlement
Agreement, Stock Purchase Agreement and the non-disclosure letter entered into
among Ormco, Danaher and Company on August 9, 2009) constitutes the entire
agreement and supersedes any prior agreements or understandings between the
Parties hereto regarding the subject matter hereof, and no amendment,
alteration or waiver of this Agreement shall be valid or binding unless made in
writing and signed by both Parties.


 


13.13       Interpretation.  Whenever
the context requires, all words used in the singular number shall be deemed to
include the plural and vice versa. The use of the word “approval” or “consent”
shall mean the prior written approval or prior written consent. The titles of
the Sections of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement. The language in all parts of
this Agreement shall be construed, in all cases, according to the Parties’
intent and the Parties hereto acknowledge that each Party has reviewed and
revised this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against 


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


the drafting Party shall not
be employed in the interpretation of this Agreement.


 


13.14       Governing Law.  This
Agreement shall be governed by, and interpreted and construed in accordance
with the laws of the State of Delaware without regard to conflict of laws
principles.


 


13.15       Further Agreements.  The
Parties shall enter into good faith negotiations for the purposes of executing
and delivering any additional agreement or modifications to this Agreement
necessary for the purposes of carrying on the Project.


 


13.16       Severability.  Any
provision in this Agreement found to be void, voidable or unenforceable shall
not affect the validity or enforceability of any other provision in this
Agreement.  In the event that any
provision of this Agreement shall be declared void, voidable or unenforceable
by a court of competent jurisdiction, said provision shall be deemed to be
amended to provide the Party seeking to enforce this Agreement the greatest
protection available under law.


 


13.17       Signatures.  The
signatories to this Agreement represent and warrant that they are properly
authorized to execute this Agreement on behalf of the respective Party. Each
Party agrees to be bound by its own telecopied or facsimiled signature, and
that it accepts the telecopied or facsimiled signature of the other Party
hereto.


 


13.18       Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument. In the event this Agreement is
translated into another language the English version shall govern.


 


[Signature Pages Follow]


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


IN WITNESS WHEREOF, this Agreement has been
duly executed and delivered by the duly authorized officers of the Parties
hereto as of the date first herein above written.


 


	
   

  	
  ALIGN TECHNOLOGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas M. Prescott

  
	
   

  	
   

  	
  Name:

  	
  Thomas M. Prescott

  
	
   

  	
   

  	
   Title:

  	
  President & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ORMCO CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald L. Tuttle

  
	
   

  	
   

  	
  Name:

  	
  Donald L. Tuttle

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  



 


[Signature Page to Joint
Development, Marketing and Sales Agreement]


 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 

















 


Exhibit A


 


	
  Hybrid
  Solution 1.0:

  	
  The
  initial Hybrid Solution would consist of the following:

  
	
   

  	
   

  
	
   

  	
  ·

  	
  [*]
  treatment of malocclusion with both Ormco Product and Align Product.

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  [*]
  and [*] systems/modalities [*] in [*]

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  [*]
  use and design/manufacturing process [*].

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  [*]
  use and design/manufacturing process [*] receives [*] from [*] in electronic
  form (or the reverse if the patient’s treatment plan [*])

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  The
  timing as to when to [*] during [*] determined by [*], with [*] being
  transferred from [*] to [*] when [*]

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Some
  [*] of [*] between [*] (primarily [*] and [*]) as further developed by the
  Parties

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  [*]
  would be primarily responsible for development of [*].

  
	
   

  	
   

  	
   

  
	
  Hybrid
  Solution 2.0:

  	
  The
  second generation of the Hybrid Solution would consist of the following:

  
	
   

  	
   

  
	
   

  	
  ·

  	
  Provide
  [*] with [*] and [*]

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Ormco
  Product and Align Product used [*].

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Enhanced
  solution that provides [*] for [*] to [*] for [*] or [*]

  



 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 


A-1

















 


	
   

  	
  ·

  	
  Additional
  [*] of [*] used by [*] and [*] of [*] and [*]

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  The
  timing as to when to [*] during [*] determined by [*], with [*] being
  transferred between [*] to [*] when [*] (or the reverse if the patient’s
  treatment plan [*])

  
	
   

  	
   

  	
   

  
	
  Hybrid
  Solution 3.0:

  	
  The
  third generation the Hybrid Solution would consist of the following:

  
	
   

  	
   

  
	
   

  	
  ·

  	
  Provide
  [*] with [*] and [*].

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  The
  ability to [*] for [*]

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  An
  [*] that [*] to provide [*] including [*]

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Ormco
  Product and Align Product, where appropriate, are used [*]

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  The
  timing as to when to [*] during [*] suggested by [*]

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Significant
  [*] of [*] utilized by [*] and [*] (including [*] of [*] and [*])

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Allow
  the [*] to be [*] at [*] (could be [*]).

  



 






[*] Confidential treatment requested pursuant
to a request for confidential treatment filed with the Securities and Exchange
Commission. Omitted portions have been filed separately with the Securities and
Exchange Commission.


 


A-2