EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT is entered into on December 14, 2007 by and between
XXXXXXX
X. XXXXX (the “Executive”)
and
Align Technology, Inc., a Delaware corporation (the “Company”).
1. Duties
and Scope of Employment.
(a) Position.
For the
term of the Executive’s employment under this Agreement (“Employment”),
the
Company agrees to employ the Executive in the position of Vice President,
Finance and Chief Financial Officer.
The
Executive shall report to the Chief Executive Officer (the “CEO”).
The
Executive accepts such employment and agrees to discharge all of the duties
normally associated with said position, and to faithfully and to the best
of
Executive’s abilities perform such other services consistent with Executive’s
position as Vice President, Finance and Chief Financial Officer as may from
time
to time be assigned to Executive by the CEO.
(b) Obligations
to the Company.
During
the term of the Executive’s Employment, the Executive shall devote Executive’s
full business efforts and time to the Company. The Executive agrees not to
actively engage in any other employment, occupation or consulting activity
for
any direct or indirect remuneration without the prior approval of the CEO,
provided, however, that the Executive may, without the approval of the CEO,
serve in any capacity with any civic, educational or charitable organization.
The Executive may own, as a passive investor, no more than one percent (1%)
of
any class of the outstanding securities of any publicly traded
corporation.
(c) No
Conflicting Obligations.
The
Executive represents and warrants to the Company that Executive is under
no
obligations or commitments, whether contractual or otherwise, that are
inconsistent with Executive’s obligations under this Agreement. The Executive
represents and warrants that the Executive will not use or disclose, in
connection with the Executive’s employment by the Company, any trade secrets or
other proprietary information or intellectual property in which the Executive
or
any other person has any right, title or interest and that the Executive’s
employment by the Company as contemplated by this Agreement will not infringe
or
violate the rights of any other person or entity. The Executive represents
and
warrants to the Company that the Executive has returned all property and
confidential information belonging to any prior employers.
(d) Commencement
Date.
The
Executive commenced full-time employment in the position set forth in Section
1
(a) above, effective December 14, 2007.
2. Cash
and Incentive Compensation.
(a) Salary.
The
Company shall pay the Executive as compensation for the Executive’s services a
base salary at a gross annual rate of $275,000 payable in accordance with
the
Company’s standard payroll schedule. The compensation specified in this
Subsection (a), together with any adjustments by the Company from time to
time,
is referred to in this Agreement as “Base Salary.”
(b) Target
Bonus.
The
Executive shall be eligible to participate in an annual bonus program that
will
provide the Executive with an opportunity to earn a potential annual bonus
equal
to 60% of the Executive’s Base Salary. The amount of the bonus shall be based
upon the performance of the Executive, as set by the individual performance
objectives described in this Subsection, and the Company in each calendar
year,
and shall be paid by no later than January 31 of the following year, contingent
on the Executive remaining employed by the Company as of such date. The
Executive’s individual performance objectives and those of the Company’s shall
be set by the CEO after consultation with the Executive by no later than
March
31, of each calendar year. Any bonus awarded or paid to the Executive will
be
subject to the discretion of the Board.
(c) Incentive
Awards.
The
Executive shall be eligible for an annual incentive stock option grant and/or
restricted stock unit award subject to the approval of the Board
in all
respects, including the terms described herein.
The per
share exercise price of the option will be equal to the per share fair market
value of the common stock on the date of grant, as determined by the Board
of
Directors. The term of such option shall be ten (10) years, subject to earlier
expiration in the event of the termination of the Executive’s Employment. The
Executive shall vest in accordance with the vesting provisions approved by
the
Compensation Committee of the Board of Directors, which vesting is currently
25%
of the option shares after the first twelve (12) months of continuous service
and shall vest in the remaining option shares in equal monthly installments
over
the next three (3) years of continuous service. Each restricted stock unit
award
currently vests 25% on the one year anniversary of the date of grant with
25%
vesting yearly thereafter.
The
grant of each such option and/or restricted stock unit shall be subject to
the
other terms and conditions set forth in the Company’s 2005 Incentive Plan and in
the Company’s standard form of stock option agreement and restricted stock unit
agreement, as applicable.
3. Vacation
and Executive Benefits.
During
the term of the Executive’s Employment, the Executive shall be eligible
to
accrue
17 days
vacation per year
on a
pro-rata basis throughout the year,
in
accordance with the Company’s standard policy for senior management,
including
provisions with respect to maximum accrual, as
it may
be amended from time to time. During the term of the Executive’s Employment, the
Executive shall be
eligible
to participate in any employee benefit plans maintained by the Company for
senior management, subject in each case to the generally applicable terms
and
conditions of
the
plan in question and to the determinations of any person or committee
administering such plan,
and to
the right of the Company to make changes in such plans from time to
time.
4. Business
Expenses.
During
the term of the Executive’s Employment, the Executive shall be authorized to
incur necessary and reasonable travel, entertainment and other business expenses
in connection with her duties hereunder. The Company shall reimburse the
Executive for such expenses upon presentation of an itemized account and
appropriate supporting documentation, all in accordance with the Company’s
generally applicable policies.
5. Term
of Employment.
(a) Basic
Rule.
The
Company agrees to continue the Executive’s Employment, and the Executive agrees
to remain in Employment with the Company, from the commencement date set
forth
in Section 1(d) until the date when the Executive’s Employment terminates
pursuant to Subsection (b) below. The Executive’s Employment with the Company
shall be “at will,” and either the Executive or the Company may terminate the
Executive’s Employment at any time, for any reason, with or without Cause. Any
contrary representations, which may have been made to the Executive shall
be
superseded by this Agreement. This Agreement shall constitute the full and
complete agreement between the Executive and the Company on the “at will” nature
of the Executive’s Employment, which may only be changed in an express written
agreement signed by the Executive and a duly authorized officer of the
Company.
(b) Termination.
The
Company may terminate the Executive’s Employment at any time and for any reason
(or no reason), and with or without Cause, by giving the Executive notice
in
writing. The Executive may terminate the Executive’s Employment by giving the
Company fourteen (14) days advance notice in writing. The Executive’s Employment
shall terminate automatically in the event of Executive’s death or Permanent
Disability. For purposes of this Agreement, “Permanent Disability” shall mean
that the Executive has become so physically or mentally disabled as to be
incapable of satisfactorily performing the essential
functions of Executive’s position and duties
under this Agreement for a period of one hundred eighty (180) consecutive
calendar days.
(c) Rights
Upon Termination.
Except
as expressly provided in Section 6, upon the termination of the Executive’s
Employment pursuant to this Section 5, the Executive shall only be entitled
to
the compensation, benefits and reimbursements described in Sections 2, 3
and 4
for the period preceding the effective date of the termination. The payments
under this Agreement shall fully discharge all responsibilities of the Company
to the Executive.
(d) Termination
of Agreement.
The
termination of this Agreement shall not limit or otherwise affect any of
the
Executive’s obligations under Section 7.
6. Termination
Benefits.
(a) General
Release
Agreement.
Any
other provision of this Agreement notwithstanding, Subsections (b), (c) or
(d)
below
shall not apply unless the Executive (i) has,
within
the time prescribed by the Company,
executed
a General
Release Agreement
in a
form prescribed by the Company by
which
the Executive waives and releases with irrevocable effect
all
known and unknown claims that the Executive may then have against the Company
or
persons affiliated with the Company
which
are waivable under applicable law,
and
(ii) pursuant
to such General Release Agreement has
agreed not to prosecute any legal action or other proceeding based upon any
of
such claims.
to the
full extent permissible under applicable law, and (iii) pursuant to such
General
Release Agreement has acknowledged Executive’s continuing obligations under this
Agreement and the Proprietary Information and Inventions Agreement referenced
below.
(b) Termination
without Cause.
If,
during the term of this Agreement, and not in connection with a Change of
Control as addressed in Subsection (c) below, the Company terminates
Executive’s
Employment
without
Cause or the Executive resigns for Good Reason, then:
(i) as
of the
date of termination of Employment,
Executive shall immediately conditionally
vest
in
an additional number of shares under all outstanding options and restricted
stock units as if the Executive had performed twelve (12) additional months
of
service,
subject
to Executive’s execution of the General Release Agreement described above with
irrevocable effect and suspension of exercise rights with respect to such
conditionally vested shares until such execution;
(ii) the
Company shall pay the Executive, in a lump sum upon the effectiveness of
the
General Release to be executed by Executive in accordance with Section 6(a)
above, an amount equal to: (x) the then current year’s Target Bonus prorated for
the number of days of Executive is employed in said year; (y) one year’s Base
Salary; and (z) the greater of the then current year’s Target Bonus or the
actual prior year’s bonus. The Executive’s Base Salary shall be paid at the rate
in effect at the time of the termination of Employment.
(c) Upon
a
Change of Control.
In the
event of the occurrence of a Change in Control while the Executive is employed
by the Company:
(i) the
Executive shall immediately vest in an additional number of shares under
all
outstanding options and restricted stock units as if the Executive had performed
twelve (12) additional months of service; and
(ii) if
within
twelve (12) months following the occurrence of the Change of Control, one
of the
following events occurs:
(A)
the
Executive’s employment is terminated by the Company without Cause; or
(B)
the
Executive resigns for Good Reason
then
the
Executive shall immediately
conditionally
vest
as
to all shares under all outstanding options and restricted stock
units,
subject
to Executive’s execution of the General Release Agreement described above with
irrevocable effect and suspension of exercise rights with respect to such
conditionally vested shares until such execution,
and the
Company shall pay the Executive, in a lump sum, an amount equal to: (i) the
then
current year’s Target Bonus prorated for the number of days of Executive is
employed in said year; (ii) one year’s Base Salary; and (iii) the greater of the
then current year’s Target Bonus or the actual prior year’s bonus. The
Executive’s Base Salary shall be paid at the rate in effect at the time of the
termination of Employment.
(d) Health
Insurance.
If
Subsection (b) or (c) above applies, and if the Executive elects to continue
the
Executive’s health insurance coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”) following the termination of
Employment, then the Company shall pay the Executive’s monthly premium under
COBRA
for
COBRA
coverage for the Executive until
the
earliest of (i) 12 months following the termination of the Executive’s
Employment, or (ii) the date upon which the Executive commences employment
with
an
entity other than the Company.
(e) Definition
of “Cause.”
For
all
purposes under this Agreement, “Cause” shall mean any of the
following:
(i) Unauthorized
use or disclosure of the confidential information or trade secrets of the
Company;
(ii) Any
breach of this Agreement or the Employee Proprietary Information and Inventions
Agreement between the Executive and the Company;
(iii) Conviction
of, or a plea of “guilty” or “no contest” to, a felony under the laws of the
United States or any state thereof;
(iv) Misappropriation
of the assets of the Company or any act of fraud or embezzlement by Executive,
or any act of dishonesty by Executive in connection with the performance
of her
duties for the Company that adversely affects the business or affairs of
the
Company;
(v) Intentional
misconduct; or
(vi) the
Executive’s failure to satisfactorily perform the Executive’s duties after
having received written notice of such failure and at least thirty (30) days
to
cure such failure.
The
foregoing shall not be deemed an exclusive list of all acts or omissions
that
the Company may consider as grounds for the termination of the Executive’s
Employment.
(f) Definition
of “Good Reason.”
For
all
purposes under this Agreement, subject to the notice and cure period described
below, the Executive’s resignation for “Good Reason” shall mean the Executive’s
resignation upon written notice to the Company delivered within ninety (90)
days
after the occurrence of any one or more of the following events and with
an
effective date within such ninety- (90-) day period:
(i) The
Executive’s position, authority or responsibilities being
significantly
reduced;
(ii) The
Executive being asked to relocate the Executive’s principal place of employment
such that the Executive’s commuting distance from the Executive’s residence
prior to such relocation is increased by over thirty-five (35)
miles;
(iii) The
Executive’s annual Base Salary or bonus being materially reduced; or
(iv) The
Executive’s benefits being materially reduced.
The
Executive shall provide written notice to the Company at least thirty (30)
days
prior to the effective date of Executive’s resignation, identifying the event or
events Executive claims constitute Good Reason and describing in reasonable
detail the fact supporting the claim. The Company shall have at least thirty
(30) days to take action to remedy the condition claimed by the Executive
as
Good Reason, but shall have no obligation to take such action. In the event
the
Company remedies the condition then Good Reason shall be deemed not to exist.
At
the expiration of the remedial period and prior to the effective date of
Executive’s resignation, Executive shall provide written notice to the Company,
stating whether Executive (A) withdraws Executive’s resignation based on the
Company’s remedy of the condition, (B) chooses to resign anyway notwithstanding
such remedy, or (C) claims the condition has not been remedied and chooses
to
resign based on a claim of Good Reason. In the absence of such notice,
Executives resignation shall become effective and Executive shall be deemed
to
have resigned without Good Reason.
(g) Definition
of “Change of Control.”
For
all
purposes under this Agreement, “Change of Control” shall mean any of the
following:
(i) a
sale of
all or substantially all of the assets of the Company;
(ii) the
acquisition of more than fifty percent (50%) of the common stock of the Company
(with all classes or series thereof treated as a single class) by any person
or
group of persons;
(iii) a
reorganization of the Company wherein the holders of common stock of the
Company
receive stock in another company (other than a subsidiary of the Company),
a
merger of the Company with another company wherein there is a fifty percent
(50%) or greater change in the ownership of the common stock of the Company
as a
result of such merger, or any other transaction in which the Company (other
than
as the parent corporation) is consolidated for federal income tax purposes
or is
eligible to be consolidated for federal income tax purposes with another
corporation; or
(iv) in
the
event that the common stock is traded on an established securities market,
a
public announcement that any person has acquired or has the right to acquire
beneficial ownership of more than fifty percent (50%) of the then-outstanding
common stock and for this purpose the terms “person” and “beneficial ownership”
shall have the meanings provided in Section 13(d) of the Securities and Exchange
Act of 1934 or related rules promulgated by the Securities and Exchange
Commission, or the commencement of or public announcement of an intention
to
make a tender offer or exchange offer for more than fifty percent (50%) of
the
then outstanding Common Stock.
(h) Section
409A.
Notwithstanding anything to the contrary in this Agreement, any cash severance
payments otherwise due to Executive pursuant to this Section 6 or otherwise
on
or within the six-month period following Executive’s termination will accrue
during such six-month period and will become payable in a lump sum payment
on
the date six (6) months and one (1) day following the date of Executive’s
termination, provided, that such cash severance payments will be paid earlier,
at the times and on the terms set forth in the applicable provisions of this
Section 6, if the Company reasonably determines that the imposition of
additional tax under Section 409A of the Internal Revenue Code of 1986, as
amended (“Code
Section 409A”),
will
not apply to an earlier payment of such cash severance payments. In addition,
this Agreement will be deemed amended to the extent necessary to avoid
imposition of any additional tax or income recognition prior to actual payment
to Executive under Code Section 409A and any temporary, proposed or final
Treasury Regulations and guidance promulgated thereunder and the parties
agree
to cooperate with each other and to take reasonably necessary steps in this
regard.
7. Non-Solicitation
and Non-Disclosure.
(a) Non-Solicitation.
During
the period commencing on the date of this Agreement and continuing until
the
first anniversary of the date when the Executive’s Employment terminated for any
reason, the Executive shall not directly or indirectly, personally or through
others, solicit or attempt to solicit (on the Executive’s own behalf or on
behalf of any other person or entity) the employment of any employee of the
Company or any of the Company’s affiliates.
(b) Proprietary
Information.
As a
condition of employment, the Executive has previoulsy entered into a Proprietary
Information and Inventions Agreement with the Company, which is incorporated
herein by reference.
8. Successors.
(a) Company’s
Successors.
This
Agreement shall be binding upon any successor (whether direct or indirect
and
whether by purchase, lease, merger, consolidation, liquidation or otherwise)
to
all or substantially all of the Company’s business and/or assets. For all
purposes under this Agreement, the term “Company” shall include any successor to
the Company’s business and/or assets which becomes bound by this
Agreement.
(b) Executive’s
Successors.
This
Agreement and all rights of the Executive hereunder shall inure to the benefit
of, and be enforceable by, the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
9. Miscellaneous
Provisions.
(a) Notice.
Notices
and all other communications contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered or
when
mailed by overnight courier, U.S. registered or certified mail, return receipt
requested and postage prepaid. In the case of the Executive, mailed notices
shall be addressed to the Executive at the home address which the Executive
most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all
notices
shall be directed to the attention of its Secretary.
(b) Modifications
and Waivers.
No
provision of this Agreement shall be modified, waived or discharged unless
the
modification, waiver or discharge is agreed to in writing and signed by the
Executive and by an authorized officer of the Company (other than the
Executive). No waiver by either party of any breach of, or of compliance
with,
any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(c) Whole
Agreement.
No
other agreements, representations or understandings (whether oral or written)
which are not expressly set forth in this Agreement have been made or entered
into by either party with respect to the subject matter of this Agreement.
This
Agreement and the Proprietary Information and Inventions Agreement contain
the
entire understanding of the parties with respect to the subject matter
hereof.
(d) Withholding
Taxes.
All
payments made under this Agreement shall be subject to reduction to reflect
taxes or other charges required to be withheld by law.
(e) Choice
of Law.
The
validity, interpretation, construction and performance of this Agreement
shall
be governed by the laws of the State of California without applications of
its
provisions with respect to
choice
of law,
except
for the Arbitration provision in paragraph 11, below, which is governed by
the
Federal Arbitration Act, 9 U.S.C. § 1 et
seq.
(f) Severability.
The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(g) Arbitration.
Each
party agrees that any and all disputes which arise out of or relate to the
Executive’s employment, the termination of the Executive’s employment, or the
terms of this Agreement shall be resolved through final and binding arbitration.
Such arbitration shall be in lieu of any trial before a judge and/or jury,
and
the Executive and Company expressly waive all rights to have such disputes
resolved via trial before a judge and/or jury. Such disputes shall include,
without limitation, claims for breach of contract or of the covenant of good
faith and fair dealing, claims of discrimination, claims under any federal,
state or local law or regulation now in existence or hereinafter enacted
and as
amended from time to time concerning in any way the subject of the Executive’s
employment with the Company or its termination. Nothing
in this Agreement shall prohibit any party from seeking provisional remedies
in
court in aid of arbitration including temporary restraining orders, preliminary
injunctions and other provisional remedies pursuant to California Code of
Civil
Procedure section 1281.8 (or any successor statutes) and/or applicable federal
law. Likewise, nothing in this Agreement shall should be interpreted as
restricting or prohibiting Employee from filing a charge or complaint with
a
federal, state, or local governmental or administrative agency charged with
investigating and/or prosecuting charges or complaints under any applicable
federal, state or municipal law or regulation. Claims or disputes arising
under
any law that permits resort to an administrative or governmental agency
notwithstanding an agreement to arbitrate those claims may be brought before
that agency as permitted by applicable law, including, without limitation,
claims or charges brought before the National Labor Relations Board, the
U.S.
Equal Employment Opportunity Commission, the United States Department of
Labor,
the California Workers' Compensation Appeals Board, and the California
Employment Development Department. Nothing in this Agreement shall be deemed
to
preclude a party from bringing an administrative claim before any agency
in
order to fulfill the party's obligation to exhaust administrative remedies
before making a claim in arbitration
This
arbitration section of the Agreement shall be exclusively governed by and
construed and enforced pursuant to the substantive and procedural provisions
of
the Federal Arbitration Act, 9 U.S.C. § 1 (“FAA”), and not individual state
substantive and procedural laws regarding enforcement of arbitration agreements.
A neutral arbitrator shall be selected by mutual agreement of the parties
from
the then-available arbitrators associated with ADR Services, Judicate West,
ARC
or such other arbitration service that the parties may mutually agree upon.
If,
for any reason, the parties are unable to mutually agree upon the selection
of
an arbitrator, either party may apply to a court of competent jurisdiction
for
appointment of a neutral arbitrator. The court shall then appoint a retired
judge to serve as the arbitrator, who shall act under this Policy with the
same
force and effect as if the parties had selected the arbitrator by mutual
agreement.The
arbitrator shall allow the parties to take discovery and bring motions as
authorized by the
forum
state's procedural rules,
or any
other discovery required by applicable law in arbitration proceedings,
including, but not limited to, discovery available under the applicable state
and/or federal arbitration statutes. Also, to the extent that anything in
this
arbitration section conflicts with any arbitration procedures required by
applicable law, the arbitration procedures required by applicable law shall
govern.
Arbitration
will be conducted in Santa Xxxxx County, California or, if the Executive
does
not reside within 100 miles of Santa Xxxxx County at the time the dispute
arises, then the arbitration may take place in the largest metropolitan area
within 50 miles of the Executive’s place of residence when the dispute
arises.
During
the course of the arbitration, the Executive and the Company will each bear
equally the arbitrator’s fee and any other type of expense or cost of
arbitration, unless applicable law requires otherwise, and each shall bear
their
own respective attorneys’ fees incurred in connection with the arbitration. The
arbitrator will not have authority to award attorneys’ fees unless a statute or
contract at issue in the dispute authorizes the award of attorneys’ fees to the
prevailing party. In such case, the arbitrator shall have the authority to
make
an award of attorneys’ fees as required or permitted by the applicable statute
or contract. If there is a dispute as to whether the Executive or the Company
is
the prevailing party in the arbitration, the arbitrator will decide this
issue.
The
arbitrator shall issue a written award that sets forth the essential findings
of
fact and conclusions of law on which the award is based. The arbitrator shall
have the authority to award any relief authorized by law in connection with
the
asserted claims or disputes. The arbitrator’s award shall be subject to
correction, confirmation, or vacation, as provided by applicable law setting
forth the standard of judicial review of arbitration awards. Judgment upon
the
arbitrator’s award may be entered in any court having jurisdiction
thereof.
(h) No
Assignment.
This
Agreement and all rights and obligations of the Executive hereunder are personal
to the Executive and may not be transferred or assigned by the Executive
at any
time. The Company may assign its rights under this Agreement to any entity
that
assumes the Company’s obligations hereunder in connection with any sale or
transfer of all or a substantial portion of the Company’s assets to such
entity.
(i) Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
[The
remainder of this page intentionally left blank.]
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/
Xxxxxxx X. Xxxxx
XXXXXXX
X. XXXXX
ALIGN
TECHNOLOGY, INC.
/s/
Xxxxxx X. Xxxxxxxx
By:
Xxxxxx X. Xxxxxxxx
Title:
President and CEO
