Exhibit 10.1

[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.

 

CONFIDENTIAL SETTLEMENT AGREEMENT

This CONFIDENTIAL SETTLEMENT AGREEMENT (the “Agreement”) is entered into
effective the 24th day of September 2012 (the “Effective Date”), by and between
Abaxis, Inc., a California corporation with its principal place of business at
3240 Whipple Road, Union City, California 94587 (“Abaxis”), and Cepheid, a
California corporation with its principal place of business at 904 Caribbean
Drive, Sunnyvale, California 94089 (“Cepheid”). Abaxis and Cepheid are
hereinafter referred to respectively as a “Party” and collectively as the
“Parties.”

WHEREAS, Abaxis and Cepheid are parties to a lawsuit captioned Abaxis, Inc. v.
Cepheid, Case No. 5:10-cv-02840-LHK, currently pending in the United States
District Court for the Northern District of California (“the Litigation”);

WHEREAS, the Parties wish to compromise and settle the Litigation and other
possible claims on the terms and conditions stated herein; and

WHEREAS, the Parties enter into this Agreement in consideration of the mutual
covenants and promises set forth herein.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties agree as follows:

  1.         Definitions

 

  1.1. “Abaxis Patents” means U.S. Patent No. 5,413,732, entitled “Reagent
Compositions for Analytical Testing,” U.S. Patent No. 5,624,597, entitled
“Reagent Compositions for Analytical Testing,” U.S. Patent No. 5,776,563,
entitled “Dried Chemical Compositions,” U.S. Patent No. 6,251,684, entitled
“Dried Chemical Compositions,” U.S. Patent No. 5,998,031, entitled “Dried
Chemical Compositions,” and any and all continuations, continuations-in-part,
reissues, reexaminations, supplemental examinations, divisionals, foreign
counterparts, and extensions thereof, any other patent that Abaxis could have
asserted against Cepheid prior to the Effective Date, and any continuation,
continuation-in-part, reissue, reexamination, supplemental examination,
divisional, foreign counterpart, or extension of such any other patent, or any
patent or patent application claiming the benefit of priority of any of the
foregoing.

 

  1.2. “Released Products” means any past, present, or future product made,
used, sold, offered for sale, leased, and/or imported into the United States or
any other country by or for Cepheid and/or its Affiliates.

 

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[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.

 

 

 

  1.3. “Affiliate” means (i) any company, corporation or other business entity
that now or hereafter is directly or indirectly controlled by, under common
control with, or that controls the subject Party, where control means direct or
indirect ownership of fifty percent (50%) or more of the voting shares or other
comparable voting interests, or the right to exercise fifty percent (50%) or
more of the voting shares or other comparable voting interests, or (ii) any
company, corporation or other business entity that is spun off from a Party or
spun off or consolidated from any entities controlled by a Party under
subsection (i) herein and is then controlled, either directly or indirectly, by
the Party, through ownership or control of fifty percent (50%) or more of the
voting shares or other comparable voting interests. The aforementioned company,
corporation or other business entity shall be deemed to be an Affiliate of the
Party only so long as such a direct or indirect control exists between the Party
and such company, corporation or other business entity.

 

  1.4. “Cepheid and/or its Affiliates,” “Cepheid or its Affiliates,” and
“Cepheid and its Affiliates” means Cepheid and/or any company, corporation or
business entity that meets the definition of Affiliate in Section 1.3 with
respect to Cepheid.

 

  1.5. “Released Claims” means any and all of the following: claims,
liabilities, suits, rights, demands, actions, obligations, debts, accounts,
bonds, damages, expenses, fees, losses, royalties and causes of action of any
and every kind, nature and character, known or unknown, accrued or unaccrued,
legal, equitable or other which Abaxis and/or its Affiliates may now have, has
ever had, or may have hereafter against Cepheid, its Affiliates, or any of their
respective direct or indirect customers, employees, users, licensees,
distributors, retailers, or direct and indirect suppliers, arising from or in
any way connected with, or that could have been asserted in the Litigation.
Notwithstanding the preceding sentence, “Released Claims” shall not include any
claim arising under Article 5 of this Agreement.

 

  1.6. [***]

  2.        Payment and Settlement of Litigation

 

  2.1. Payment. In consideration of the releases and covenants granted in
Sections 3 and 4 below and the dismissal with prejudice by Abaxis of all claims
asserted against Cepheid in the Litigation as provided in Section 2.2 below, and
subject to the other terms and conditions of this Agreement, Cepheid will pay
Abaxis 17.25 Million US Dollars. Within five (5) calendar days after the
Effective Date, the entire payment amount will be deposited by Cepheid into an
escrow account in accordance with instructions provided by Abaxis.

 

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[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.

 

 

 

  2.2. Dismissal with Prejudice. Contemporaneously with the execution of this
Agreement, counsel for the Parties shall cause to be filed in the Litigation a
Stipulation of Dismissal with Prejudice in the form of Exhibit A attached
hereto.

 

  2.3. Fees and Expenses. Each Party shall pay its own attorneys’ fees and costs
incurred in connection with the Litigation and this Agreement.

  3.        Release

 

  3.1. Subject to the terms and conditions of this Agreement, including payment
in full by Cepheid of the consideration in Section 2.1, Abaxis, for itself, its
Affiliates, and their respective officers, directors, shareholders, employees,
agents, representatives, and attorneys, hereby fully and finally releases,
acquits, waives, and forever discharges Cepheid, its Affiliates, and their
respective officers, directors, shareholders, direct and indirect customers,
users, licensees, distributors, retailers, or direct and indirect suppliers,
employees, agents, representatives, and attorneys from all Released Claims.

 

  3.2. Subject to the terms and conditions of this Agreement, Cepheid, for
itself, its Affiliates, and their respective officers, directors, shareholders,
employees, agents, representatives, and attorneys, fully and finally releases,
acquits, waives, and forever discharges Abaxis, its Affiliates, and their
respective officers, directors, shareholders, customers, employees, agents,
representatives, and attorneys from all of Cepheid’s claims, suits, demands,
damages, liabilities, actions, and causes of action of any and every kind and
nature, whether known or unknown, suspected or unsuspected, now existing or
heretofore arising from or in any way connected with the Litigation, but
excluding any claim arising from breach under Article 5 of this Agreement.

 

  3.3. Cepheid and Abaxis each represents, warrants and agrees to the other that
they have been fully advised by their attorneys regarding the contents of
Section 1542 of the Civil Code of California and expressly waive any rights they
might otherwise have under that Section. Section 1542 reads as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

  3.4. Nothing in the releases contained herein shall operate to bar or limit
any claim for breach or enforcement of this Agreement.

 

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[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.

 

 

 

  3.5. Cepheid and Abaxis expressly agree and acknowledge that by entering into
this Agreement neither Abaxis nor Cepheid admits any liability, wrongdoing, or
the truth of any allegation contained in any claim, defense, argument, or
counterclaim alleged in the Litigation. Notwithstanding the foregoing, and
except in defense of itself or any other Protected Entities (defined in
Section 4.1), Cepheid hereby agrees not to challenge in any manner or otherwise
support any third party in the challenge of any Abaxis Patents, including any
claim of invalidity of any Abaxis Patents. Neither this Agreement nor any
release nor other provision in this Agreement may be construed or used as
evidence of, or an admission of, any issues or facts at issue in the Litigation,
or any other admission of wrongdoing, liability, or violation of law whatsoever.

  4.        Covenant Not to Sue

 

  4.1. Covenant Not to Sue[***]. Subject to the payment of the consideration
provided for in Section 2.1, Abaxis[***] hereby grants [***] the following
worldwide, fully paid-up, irrevocable, perpetual release and covenant not to sue
or bring any judicial, quasi-judicial, or regulatory claim or proceeding, or
initiate or pursue any investigation, against or involving, Cepheid, its
Affiliates, or their respective direct or indirect customers, users, licensees,
officers, directors, employees, agents, representatives, distributors,
retailers, or direct and indirect suppliers (collectively the “Protected
Entities”) on any Released Claim with respect to Released Products. [***]

 

  4.2. Covenants Transfer. The Covenant Not to Sue granted under this Agreement
in Section 4.1 above are intended to and shall run with the Abaxis Patents
[***].

 

  4.3 Downstream Covenant. The Covenant Not to Sue provided in Section 4.1 shall
be deemed to apply to the Protected Entities to the extent that any Protected
Entities sell, offer for sale, manufacture, use, or import Released Products.

  5.        Confidentiality and Publicity

 

  5.1. Each Party agrees not to disclose the terms or conditions of this
Agreement except:

 

  5.1.1. with the express written consent of the other Party obtained in advance
of the disclosure, which consent shall not be unreasonably withheld;

 

  5.1.2. in response to a discovery request in a lawsuit or administrative
proceeding, after the other Party has been given reasonable notice and an
opportunity to object, and the disclosing Party shall provide reasonable
assistance to prevent or limit the disclosure at the objecting Party’s cost;

 

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[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.

 

 

 

  5.1.3. pursuant to, and to the degree required by, applicable law or
regulation (including without limitation in connection with public filings with
the Securities and Exchange Commission), or pursuant to, and to the degree
required by, the rules of a recognized stock exchange as determined by a Party
in good faith;

 

  5.1.4. to those persons with a need to know for purposes of indemnification
and/or contribution or to those persons with a need to know in order to provide
the Parties with corporate, financial, legal, contract, insurance, loan, audit,
or similar business related information and services, and who have also agreed
in writing to maintain such information as strictly confidential, or who have a
legal obligation to maintain such information as strictly confidential; or

 

  5.1.5. with respect to information that has been made public under any of the
foregoing exceptions, or can be clearly inferred from such information that has
been made public.

 

  5.2. A Party acting under the provisions of Section 5.1.2, 5.1.3, 5.1.4, or
5.15 shall disclose no more than what is necessary to be disclosed and shall
otherwise use commercially reasonable efforts to redact (e.g., for a public
disclosure required to comply with SEC regulations) or withhold all other
information about the terms and conditions of this Agreement.

 

  5.3. The Stipulated Amended Protective Order entered in the Litigation by the
Court on February 13, 2012 shall continue in full force and effect in perpetuity
in accordance with Sections 4 (Duration) and 13 (Final Disposition) of that
Order, except that the Court shall retain jurisdiction to enforce the terms of
the Order for five years after the Effective Date of this Agreement.
Notwithstanding the first sentence of Section 7.1 of the License Agreement of
September 30, 2005 between the Parties, all confidentiality obligations under
Article 7 of that License Agreement shall continue in force for a period of five
(5) years following the Effective Date of this Agreement.

 

  5.4. Publicity. After this Agreement has been fully executed by the Parties,
they may issue a joint press release, subject to prior written approval by both
Parties, which shall include the following language: “Cepheid and Abaxis have
reached a settlement of the patent lawsuit captioned Abaxis, Inc. v Cepheid,
Case No. 5:10-cv-02840-LHK in the Northern District of California relating to
Abaxis’ Orbos® technology. The terms of the settlement are confidential.”

 

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[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.

 

 

 

  5.5. Non-Disparagement. Neither Party shall comment publicly about the merits
or strength of the case of either Party in the Litigation, the appropriateness
of the terms of this Settlement Agreement, or otherwise disparage the other
Party.

 

  5.6. Notice. Each Party shall notify the other Party promptly upon discovery
of any unauthorized use or disclosure in violation of this Article 5.

  6.         Representations and Warranties

 

  6.1. Abaxis and Cepheid each represents and warrants to the other that: (i) it
has the requisite power and authority to enter into this Agreement; (ii) it has
duly executed and delivered this Agreement; (iii) this Agreement constitutes its
valid and binding obligation enforceable against it, in accordance with the
terms of this Agreement; and (iv) it has not assigned or otherwise transferred,
either in whole or in part, any claim released in this Agreement.

 

  6.2. Abaxis hereby represents and warrants to Cepheid that it owns all right,
title, and interest in the Abaxis Patents[***].

  7.         Term

 

  7.1. This Agreement shall commence on the Effective Date and continue
thereafter in full force and effect in perpetuity.

  8.         Notice, Right to Cure, and Termination

 

  8.1. In the event that a Party (the “Complaining Party”) considers that the
other Party hereto (the “Allegedly Breaching Party”) has breached a term or
provision of this Agreement, the Complaining Party shall give written notice to
the Allegedly Breaching Party describing the nature of the breach in reasonable
detail. The Allegedly Breaching Party shall then have thirty (30) calendar days
to cure the alleged breach.

 

  8.2. The provisions of Section 8.1 shall be followed by the Parties prior to
the initiation of any suit or legal proceeding relating to this Agreement,
including any suit or legal proceeding to enforce the terms of this Agreement,
except that each Party may seek injunctive relief at any time from a Court of
competent jurisdiction to enforce the terms of this Agreement.

 

  8.3. All notices, requests, or demands hereunder shall be made to the
following representatives of the Parties by FedEx or comparable courier service
and also to the facsimile numbers set forth below, unless another address or
facsimile number is specified hereafter in writing by a Party. Notice shall be
effective upon receipt.

 

6

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[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.

 

 

 

If to Cepheid:

 

Attn: General Counsel

Cepheid

904 Caribbean Drive

Sunnyvale, California 94089

Fax: 408-541-6439

  

If to Abaxis:

 

Attn: Chief Executive Officer

Abaxis, Inc.

3240 Whipple Road

Union City, California 94587

Fax: 510-441-6150

  9.         Other/General

 

  9.1. [***]

 

  9.2. Each Party shall be responsible for its own tax reporting regarding this
Agreement.

 

  9.3. Assignment. Except as otherwise expressly provided under this Agreement
neither this Agreement nor any right or obligation hereunder may be assigned or
otherwise transferred (whether voluntarily, by operation of law or otherwise),
without the prior express written consent of the other Party; provided, however,
that either Party may, without such consent, assign this Agreement and its
rights and obligations hereunder in connection with the transfer or sale of all
or substantially all of its business, or in the event of its merger,
consolidation, change in control or similar transaction. Any permitted assignee
shall assume all rights and obligations of its assignor under this Agreement.
Any purported assignment or transfer in violation of this Section 9.3 shall be
null and void. This Agreement is binding on and inures to the benefit of the
Parties and their permitted successors and assigns. All rights, releases, and
covenants contained herein shall run with the Abaxis Patents and shall be
binding on any successors-in-interest or assigns thereof.

 

  9.4. Nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, employer-employee, or joint venture relationship between
the Parties. No Party shall incur any debts or make any commitments for the
other. There is no fiduciary duty or special relationship of any kind between
the Parties to this Agreement. Each Party expressly disclaims any reliance on
any act, word or deed of the other Party in entering into this Agreement.

 

  9.5. This Agreement constitutes the entire agreement of the Parties with
respect to the subject matter hereof and supersedes all prior representations,
discussions, negotiations, agreements, and understandings, whether written or
oral, with respect thereto.

 

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[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.

 

 

 

  9.6. This Agreement may not be amended unless the amendment is in writing and
signed by an authorized representative of each Party.

 

  9.7. This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, and all of
which counterparts taken together shall constitute one and the same instrument.
Facsimile or pdf signatures shall be deemed original signatures.

 

  9.8. The section headings contained in this Agreement are for convenience only
and shall not in any way affect the meaning or interpretation of the provisions
hereof.

 

  9.9. This Agreement was jointly drafted by the Parties and the language of all
parts of this Agreement shall in all cases be construed as a whole according to
its meaning and not strictly for or against any of the Parties.

 

  9.10. This Agreement and matters connected with the performance thereof shall
be construed, interpreted, applied and governed by the laws of the State of
California without regard to the conflict of law principles thereof.

 

  9.11. Any action brought by either Party that arises out of or relates to this
Agreement, and specifically including any future attempt to enforce the terms of
this Agreement, shall be filed in the U.S. District Court for the Northern
District of California to the extent it has subject matter jurisdiction, or
otherwise in the California Superior Court for the County of Santa Clara.

 

  9.12. Except for claims arising out of Article 5 of this Agreement, neither
Party shall be liable to the other Party or any other person or entity (under
contract, strict liability, negligence, or other theory) for special, indirect,
exemplary, incidental, or consequential damages, including lost profits,
opportunities or savings, arising out of or related to the subject matter of
this Agreement.

 

  9.13. If any portion of this Agreement is found to be invalid, illegal, or
unenforceable for any reason, the remainder of the Agreement shall continue in
force and, if needed, the Parties or a court of competent jurisdiction specified
in Section 9.11 above shall substitute suitable provisions having like economic
effect and intent.

 

  9.14. The Parties agree to execute and deliver any additional papers,
documents, and other assurances and take all actions reasonably necessary to
carry out the intent of this Agreement.

 

  9.15. Nothing in this Agreement nor any act required to be performed pursuant
to this Agreement is intended to constitute, cause or effect any waiver (in
whole or in part) of any attorney-client privilege or work product protection.

 

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[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.

 

 

 

 

 

(Signature page follows)

 

9

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[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.

 

 

 

 

IN WITNESS WHEREOF, the Parties have hereunto signed their names on the dates
indicated.

 

 

 

 

Abaxis, Inc.

 

By: /s/ Kenneth Aron

 

Name: Kenneth Aron

 

Title: CTO

 

Date:9/24/2012

  

Cepheid

 

By: /s/ John L. Bishop

 

Name: John L. Bishop

 

Title: CEO

 

Date: 9/24/12

  

 

10

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[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.

 

 

 

 

Exhibit A

The filed stipulation shall state: “Pursuant to Federal Rule of Civil Procedure
41(a)(1)(A)(ii), the parties voluntarily dismiss all claims and counterclaims in
this action with prejudice.”

 

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