May 31, 2002 – Amended offer

Mr. John R. Sluis
20 Old Orchard Lane
Tonka Bay, Minnesota 55331

 

Dear John,

I am pleased to extend to you an offer letter to become the Vice President of
Finance/Chief Financial Officer of Cepheid (the “Company” or “Cepheid”). We are
assuming that you will commence employment on August 1, 2002. Our offer consists
of the following benefits, terms and conditions:

 1. Position:
    1. Upon commencement of your employment with the Company, you will become
       the Chief Financial Officer of the Company, responsible for leading and
       managing all financial aspects of the Company. You will report directly
       to me.
    2. During the term of your employment, you will devote your full business
       efforts and time to the Company. During the term of your employment,
       without the prior written approval of the Company (which will not be
       unreasonably withheld), you will not render services in any capacity to
       any other person or entity and will not act as a sole proprietor, partner
       or managing member of any other person or entity or as a shareholder
       owning more than one percent of the stock of any other corporation. The
       foregoing, however, will not preclude you from engaging in reasonable
       community, school or charitable activities, or act as a director of any
       private company which does not compete with the Company.
 2. Salary: You will receive a base salary of $8,653.85 per pay period
    (equivalent to $225,000.00 per year), which will be reviewed annually. You
    will be paid bi-weekly, less payroll deductions and required withholdings,
    in accordance with the Company’s regular payroll practices.
 3. Vacation and Employee Benefits: In addition to the company’s ten paid
    holidays, your paid personal time off (PTO) begins to accrue as of the first
    day of your employment. Initially you will accrue PTO at a rate of three
    weeks per year of employment. Your PTO accrual rate will increase by an
    additional five days per year after the completion of your fourth and tenth
    years, respectively. Your PTO, including maximum accrual, will otherwise be
    governed by current company policy.
 4. Business Expenses: During the term of your employment, you will be
    authorized to incur necessary and reasonable travel including entertainment
    and other business expenses in connection with your duties to Cepheid. The
    Company will reimburse you for such expenses upon presentation of an
    itemized account and appropriate supporting documentation, all in accordance
    with the Company’s generally applicable policies.
 5. Temporary Housing/Moving Expenses: Through May 31, 2003, the Company will
    reimburse you for all reasonable commuting expenses between your family
    residence in Minnesota and Cepheid locations in conjunction with Company
    business and provide you with a reasonable rental supplement for temporary
    living arrangements near Cepheid. Should you decide to relocate your family
    to the vicinity of Cepheid, the Company will reimburse you for all
    reasonable and customary moving expenses incurred prior to August 31, 2003.
 6. Stock Options: Subject to approval by the Board of Directors, upon
    commencement of your employment with Cepheid, you will be granted an option
    to purchase 265,000 shares of the Company’s Common Stock at an option price
    equal to the closing price of the Company’s common stock on the date your
    employment commences. The option will be immediately exercisable subject to
    a right of repurchase and will be an incentive stock option to the maximum
    extent permitted by the Internal Revenue Code of 1986, as amended (the
    “Code”). The right of repurchase shall expire with respect to 25% of the
    total number of shares one year after the vesting base date, and with
    respectto an additional 1/48th of the total number of shares at the end of
    each month thereafter; so that the right of repurchase shall have expired
    with respect to all of the shares on and after four years after the vesting
    base date.
 7. No Conflicting Obligations: You represent and warrant to the Company that
    you are under no obligations or commitments, whether contractual or
    otherwise, that are inconsistent with your obligations under this Agreement
    other than those obligations and commitments set forth in the Vysis
    Confidentiality and Noncompetition Agreement to be attached hereto as
    Exhibit A.
 8. Termination Benefits:
    1. For the purposes of this Offer, a termination for “Cause” will mean a
       termination initiated by the Company or a successor for any of the
       following reasons: (i) failure to perform any reasonable and lawful duty
       of your position after being given written notice of such failure and
       fifteen days in which to cure your performance, provided that such notice
       will be required only with respect to the first failure; (ii) an act
       committed by you which constitutes misconduct and which is injurious to
       the Company or any subsidiary or a successor; (iii) your being convicted
       of, or pleading “guilty” or “no contest” to, a felony under the laws of
       the United States or any state thereof; (iv) your committing an act of
       fraud against, or the misappropriation of property belonging to, the
       Company or any subsidiary or a successor; (v) an act of dishonesty
       committed by you in connection with your responsibilities as an employee
       and affecting the business or affairs of the Company; (vi) a breach of
       any confidentiality or proprietary information or other agreement between
       you and the Company or any subsidiary or any successor; or (vii) the
       failure or refusal by you to carry out the reasonable directives of the
       Company, if such failure continues for fifteen days or more after the
       Company has given written notice describing such failure, provided that
       such notice shall be required only with respect to the first failure.
    2. If your employment is terminated by the Company or a successor for
       “Cause” or if you leave voluntarily, you will be paid your base salary
       and all unused and unpaid PTO earned through your date of termination,
       but no other benefits. In such event, all stock vesting and benefits will
       cease on your date of termination and you will be provided with access to
       continued health care pursuant to COBRA for you and your eligible
       dependents for a period of eighteen (18) months after such termination.
    3. If you are involuntarily terminated by the Company without “Cause” or
       “Good Reason” within (12) twelve months of your date of hire, the Company
       will provide you with (i) any accrued base salary, reimbursements, unused
       and unpaid PTO and other benefits earned through your date of termination
       of employment; (ii) a single lump sum severance payment equal to twelve
       (12) months of your current annual base salary; and (iii) access to
       continued health care pursuant to COBRA for you and your eligible
       dependents for a period of eighteen (18) months after such termination.
       In such event, all stock vesting will cease on your date of termination.
    4. If you are involuntarily terminated by the Company without “Cause” or you
       terminate your employment upon written notice to the Chief Executive
       Officer for “Good Reason,” with either such termination occurring within
       one year of a Change of Control, the Company will provide you with (i)
       any accrued base salary, reimbursements, unused and unpaid PTO and other
       benefits earned through your date of termination of employment; (ii) a
       single lump sum severance payment equal to twelve (12) months of your
       current annual base salary; (iii) full immediate acceleration of the
       vesting and exercisability of your outstanding stock options, and (iv)
       access to continued health care pursuant to COBRA for you and your
       eligible dependents paid for by the Company for a period of eighteen (18)
       months after such termination.
    5. “Change of Control” means (i) any “person” of the Securities Exchange Act
       of 1934, as amended, “the Exchange Act”, other than a trustee or other
       fiduciary holding securities of the Company under an employee benefit
       plan of the Company, becomes the “beneficial owner” (as defined in Rule
       13d-3 promulgated under the Exchange Act), directly or indirectly, of
       securities of the Company representing 50% or more of (A) the outstanding
       shares of common stock of the Company or (B) the combined voting power of
       the Company’s then outstanding securities, (ii) the Company is party to a
       merger or consolidation which results in the holders of voting securities
       of the Company outstanding immediately prior thereto failing to continue
       to represent (either by remaining outstanding or by being converted into
       voting securities of the surviving entity) at least 50% of the combined
       voting power of the voting securities of the Company or such surviving
       entity outstanding immediately after such merger or consolidation, (iii)
       the sale or disposition of all or substantially all of the Company’s
       assets (or consummation of any transaction having similar effect, (iv)
       the dissolution or liquidation of the Company.
    6. “Good Reason” means the occurrence of any of the following conditions,
       without your written consent: (i) a significant diminution in the nature
       or scope of your authority, title, function or duties; (ii) a 10 %
       reduction in your base annual salary (unless such reduction is part of an
       officer-wide program to reduce expenses); (iii) any material breach of
       this letter agreement by the Company; (iv) the Company’s requiring you to
       be based at any office or location more than 50 miles from the Company’s
       current headquarters in Sunnyvale, California; or (v) failure of any
       successor to assume this agreement.
    7. If your employment is terminated due to your death or disability, you
       will be paid your base salary and all unused and unpaid PTO earned
       through your date of termination, but no other benefits except benefits
       pursuant to relevant insurance coverage. In such event, all stock vesting
       and benefits will cease on your date of termination. (Under the Company’s
       stock option plan you have six months to exercise vested options after
       termination due to disability, and your representative, heir or devisee
       will have 12 months after termination due to death.)
 9. Miscellaneous:
    1. Benefits: You will be entitled to participate in the Company’s standard
       benefit plans as a full-time employee to the extent set forth in such
       plans.
    2. Proprietary Information: You will be required to sign Cepheid’s standard
       proprietary information and inventions agreement (attached hereto as
       Exhibit B).
    3. Final Agreement: The employment terms in this letter and the proprietary
       information and inventions agreement constitute the complete, final and
       exclusive embodiment of the entire agreement between you and Cepheid with
       respect to the terms and conditions of your employment. These terms
       supersede any other agreements or promises made to you by anyone, whether
       oral or written. This agreement is governed by California law and,
       except, as set forth herein, shall be binding on the Company’s successors
       and assigns.
    4. At-will Employment: California is an “at-will” employment state, and
       Cepheid is an at-will employer. This means that either you or the Company
       or any successor has the right to terminate the employment relationship
       at any time with or without cause. This is the full and final agreement
       between you and the Company or any successor on these terms. Although
       your job duties, title, compensation and benefits, and the personnel
       policies and procedures may change from time-to-time, the at-will nature
       of your employment may only be changed in a document signed by you and
       myself.
    5. Authorization to Work: As required by law, this offer is subject to
       satisfactory proof of your identification and right to work in the United
       States of America.

John, we are very excited about the prospect of you joining the Cepheid team and
look forward to a mutually rewarding relationship. We are convinced that your
experience and capability is an excellent match for both you and Cepheid. This
offer will remain open to you until June 10, 2002. If you wish to accept
employment at Cepheid under the terms described above, please sign, date and
return a copy of this letter to signify your approval.
I look forward to your favorable reply and to a productive and enjoyable working
relationship with you.

Sincerely,

John Bishop
CEO
Cepheid

Accepted:

 

___________________________________ Date: ____________________
John R. Sluis