EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT is entered into on December 14, 2007 by
and between KENNETH B. AROLA (the “
Executive ”)
and Align Technology, Inc., a Delaware corporation (the
“
Company ”).
1.
Duties and Scope of Employment .
(a)
Position .
For the term of the Executive’s employment under this
Agreement (“
Employment ”),
the Company agrees to employ the Executive in the position of Vice
President, Finance and Chief Financial Officer .
The Executive shall report to the Chief Executive Officer (the
“
CEO ”).
The Executive accepts such employment and agrees to discharge all
of the duties normally associated with said position, and to
faithfully and to the best of Executive’s abilities perform
such other services consistent with Executive’s position as
Vice President, Finance and Chief Financial Officer as may from
time to time be assigned to Executive by the CEO.
(b)
Obligations to the Company .
During the term of the Executive’s Employment, the Executive
shall devote Executive’s full business efforts and time to
the Company. The Executive agrees not to actively engage in any
other employment, occupation or consulting activity for any direct
or indirect remuneration without the prior approval of the CEO,
provided, however, that the Executive may, without the approval of
the CEO, serve in any capacity with any civic, educational or
charitable organization. The Executive may own, as a passive
investor, no more than one percent (1%) of any class of the
outstanding securities of any publicly traded
corporation.
(c)
No Conflicting Obligations .
The Executive represents and warrants to the Company that Executive
is under no obligations or commitments, whether contractual or
otherwise, that are inconsistent with Executive’s obligations
under this Agreement. The Executive represents and warrants that
the Executive will not use or disclose, in connection with the
Executive’s employment by the Company, any trade secrets or
other proprietary information or intellectual property in which the
Executive or any other person has any right, title or interest and
that the Executive’s employment by the Company as
contemplated by this Agreement will not infringe or violate the
rights of any other person or entity. The Executive represents and
warrants to the Company that the Executive has returned all
property and confidential information belonging to any prior
employers.
(d)
Commencement Date
. The
Executive commenced full-time employment in the position set forth
in Section 1 (a) above, effective December 14, 2007.
2.
Cash and Incentive Compensation .
(a)
Salary .
The Company shall pay the Executive as compensation for the
Executive’s services a base salary at a gross annual rate of
$275,000 payable in accordance with the Company’s standard
payroll schedule. The compensation specified in this Subsection
(a), together with any adjustments by the Company from time to
time, is referred to in this Agreement as “Base
Salary.”
(b)
Target Bonus .
The Executive shall be eligible to participate in an annual bonus
program that will provide the Executive with an opportunity to earn
a potential annual bonus equal to 60% of the Executive’s Base
Salary. The amount of the bonus shall be based upon the performance
of the Executive, as set by the individual performance objectives
described in this Subsection, and the Company in each calendar
year, and shall be paid by no later than January 31 of the
following year, contingent on the Executive remaining employed by
the Company as of such date. The Executive’s individual
performance objectives and those of the Company’s shall be
set by the CEO after consultation with the Executive by no later
than March 31, of each calendar year. Any bonus awarded or paid to
the Executive will be subject to the discretion of the
Board.
(c)
Incentive Awards .
The Executive shall be eligible for an annual incentive stock
option grant and/or restricted stock unit award subject to the
approval of the Board in
all respects, including the terms described herein
.
The per share exercise price of the option will be equal to the per
share fair market value of the common stock on the date of grant,
as determined by the Board of Directors. The term of such option
shall be ten (10) years, subject to earlier expiration in the event
of the termination of the Executive’s Employment. The
Executive shall vest in accordance with the vesting provisions
approved by the Compensation Committee of the Board of Directors,
which vesting is currently 25% of the option shares after the first
twelve (12) months of continuous service and shall vest in the
remaining option shares in equal monthly installments over the next
three (3) years of continuous service. Each restricted stock unit
award currently vests 25% on the one year anniversary of the date
of grant with 25% vesting yearly thereafter .
The grant of each such option and/or restricted stock unit shall be
subject to the other terms and conditions set forth in the
Company’s 2005 Incentive Plan and in the Company’s
standard form of stock option agreement and restricted stock unit
agreement, as applicable.
3.
Vacation and Executive Benefits .
During the term of the Executive’s Employment, the Executive
shall be eligible to
accrue 17
days vacation per year
on
a pro-rata basis throughout the year ,
in accordance with the Company’s standard policy for senior
management, including
provisions with respect to maximum accrual, as
it may be amended from time to time. During the term of the
Executive’s Employment, the Executive shall be
eligible
to participate in any employee benefit plans maintained by the
Company for senior management, subject in each case to the
generally applicable terms and conditions of
the plan in question and to the determinations of any person or
committee administering such plan ,
and to the right of the Company to make changes in such plans from
time to time .
4.
Business Expenses .
During the term of the Executive’s Employment, the Executive
shall be authorized to incur necessary and reasonable travel,
entertainment and other business expenses in connection with her
duties hereunder. The Company shall reimburse the Executive for
such expenses upon presentation of an itemized account and
appropriate supporting documentation, all in accordance with the
Company’s generally applicable policies.
5.
Term of Employment .
(a)
Basic Rule .
The Company agrees to continue the Executive’s Employment,
and the Executive agrees to remain in Employment with the Company,
from the commencement date set forth in Section 1(d) until the date
when the Executive’s Employment terminates pursuant to
Subsection (b) below. The Executive’s Employment with the
Company shall be “at will,” and either the Executive or
the Company may terminate the Executive’s Employment at any
time, for any reason, with or without Cause. Any contrary
representations, which may have been made to the Executive shall be
superseded by this Agreement. This Agreement shall constitute the
full and complete agreement between the Executive and the Company
on the “at will” nature of the Executive’s
Employment, which may only be changed in an express written
agreement signed by the Executive and a duly authorized officer of
the Company.
(b)
Termination .
The Company may terminate the Executive’s Employment at any
time and for any reason (or no reason), and with or without Cause,
by giving the Executive notice in writing. The Executive may
terminate the Executive’s Employment by giving the Company
fourteen (14) days advance notice in writing. The Executive’s
Employment shall terminate automatically in the event of
Executive’s death or Permanent Disability. For purposes of
this Agreement, “Permanent Disability” shall mean that
the Executive has become so physically or mentally disabled as to
be incapable of satisfactorily performing the essential
functions of Executive’s position and duties
under this Agreement for a period of one hundred eighty (180)
consecutive calendar days .
(c)
Rights Upon Termination .
Except as expressly provided in Section 6, upon the termination of
the Executive’s Employment pursuant to this Section 5, the
Executive shall only be entitled to the compensation, benefits and
reimbursements described in Sections 2, 3 and 4 for the period
preceding the effective date of the termination. The payments under
this Agreement shall fully discharge all responsibilities of the
Company to the Executive.
(d)
Termination of Agreement .
The termination of this Agreement shall not limit or otherwise
affect any of the Executive’s obligations under Section
7.
6.
Termination Benefits .
(a)
General Release
Agreement .
Any other provision of this Agreement notwithstanding, Subsections
(b), (c) or (d) below
shall not apply unless the Executive (i) has ,
within the time prescribed by the Company, executed
a General
Release Agreement in
a form prescribed by the Company by
which the Executive waives and releases with irrevocable
effect all
known and unknown claims that the Executive may then have against
the Company or persons affiliated with the Company
which
are waivable under applicable law ,
and (ii) pursuant
to such General Release Agreement has
agreed not to prosecute any legal action or other proceeding based
upon any of such claims
. to
the full extent permissible under applicable law, and (iii)
pursuant to such General Release Agreement has acknowledged
Executive’s continuing obligations under this Agreement and
the Proprietary Information and Inventions Agreement referenced
below.
(b)
Termination without Cause .
If, during the term of this Agreement, and not in connection with a
Change of Control as addressed in Subsection (c) below, the Company
terminates Executive’s
Employment
without
Cause or the Executive resigns for Good Reason, then:
(i)
as of the date of termination of Employment, Executive
shall immediately conditionally
vest
in an additional number of shares under all outstanding options and
restricted stock units as if the Executive had performed twelve
(12) additional months of service ,
subject to Executive’s execution of the General Release
Agreement described above with irrevocable effect and suspension of
exercise rights with respect to such conditionally vested shares
until such execution ;
(ii)
the Company shall pay the Executive, in a lump sum upon the
effectiveness of the General Release to be executed by Executive in
accordance with Section 6(a) above, an amount equal to: (x) the
then current year’s Target Bonus prorated for the number of
days of Executive is employed in said year; (y) one year’s
Base Salary; and (z) the greater of the then current year’s
Target Bonus or the actual prior year’s bonus. The
Executive’s Base Salary shall be paid at the rate in effect
at the time of the termination of Employment.
(c)
Upon a Change of Control .
In the event of the occurrence of a Change in Control while the
Executive is employed by the Company:
(i)
the Executive shall immediately vest in an additional number of
shares under all outstanding options and restricted stock units as
if the Executive had performed twelve (12) additional months of
service; and
(ii)
if within twelve (12) months following the occurrence of the Change
of Control, one of the following events occurs:
(A)
the Executive’s employment is terminated by the Company
without Cause; or
(B)
the Executive resigns for Good Reason
then
the Executive shall immediately
conditionally
vest
as to all shares under all outstanding options and restricted
stock units ,
subject to Executive’s execution of the General Release
Agreement described above with irrevocable effect and
suspension of exercise rights with respect to such
conditionally vested shares until such execution,
and
the Company sha
