Align Technology, the inventor of Invisalign®, announced that it has signed a Binding Settlement Term Sheet with OrthoClear, OrthoClear Holdings, and OrthoClear Pakistan Pvt., to end all pending litigation between the parties and execute a formal settlement agreement within 15 days.

Upon the earlier of the closing of the formal settlement agreement or October 12, 2006, OrthoClear will consent to the entry of an Exclusion Order by the International Trade Commission (ITC). The Binding Settlement Term Sheet includes the following terms:

• OrthoClear will stop accepting new patient cases for treatment;

• OrthoClear will consent to the entry of an exclusion order by the United States International Trade Commission (ITC), enforced by the United States Customs Service, which prevents OrthoClear from importing its dental aligner products into the US either directly or through a third party;

• OrthoClear and Zia Chishti, its CEO, and Charlie Wen, its President, will transfer and assign to Align all intellectual property rights with application to the treatment of malocclusion;

• OrthoClear principals Zia Chishti, Charlie Wen, Peter Riepenhausen, and Christopher Kawaja will sign 5-year, global noncompete agreements in the field of removable aligner therapy products and in the related software market;

• OrthoClear employees Joe Breeland and Jeff Tunnell will sign 5-year US non-compete agreements prohibiting their personal participation in the removable aligner therapy product and related software market;

• Align will make Invisalign treatment available to OrthoClear patients in the US, Canada, and Hong Kong at no charge from Align;

• the parties will dismiss all pending litigation against each other and release all related claims; and

• Align will make a one-time cash payment of $10 million to OrthoClear Holdings.   

“This resolution achieves all of Align’s litigation objectives and allows us to fully focus the company’s energies and resources on providing innovative products and excellent service to Invisalign customers,” says Thomas M. Prescott, president and CEO of Align. “We are particularly committed to helping OrthoClear patients and their doctors minimize disruptions in their treatment by getting started with Invisalign.”

Align will pay OrthoClear an additional $10 million if, at or prior to the Closing of the formal settlement agreement, OrthoClear obtains requisite approval from its shareholders to discontinue all design, manufacture, marketing, and sales of removable dental aligners worldwide. If at the closing OrthoClear does not have the requisite shareholder approval, Align will place $10 million in escrow for a period of 30 days. If OrthoClear obtains and certifies the requisite shareholder approval on or prior to the 30th day, the escrowed amount plus accrued interest will be released to OrthoClear. If OrthoClear does not certify that it has shareholder approval by the 30th day, all escrowed funds will be returned
to Align and Align shall have no further payment obligation.

The Binding Settlement Term Sheet is the result of a settlement conference mandated and supervised by an administrative law judge as part of pre-trial proceedings in the ITC action against OrthoClear. There has been no finding of wrongdoing by any party or by Joe Breeland, Zia Chishti, Christopher Kawaja, Ross Miller, Peter Riepenhausen, Jeff Tunnell, or Charlie Wen.

[www.prnewswire.com, September 28, 2006]