Exhibit 10.2

 

 

Exhibit A

Robert Koska Offer letter

 

 

Change of Control Retention and Severance Agreement

 

 

This Change of Control Retention and Severance Agreement (the “Agreement”) is
made and entered into as of                    [hire date]   , 2004 (the
“Effective Date”), by and between Cepheid and Robert Koska (the “Executive”). 
Capitalized terms used in this Agreement shall have the meanings set forth in
Section 3 below.

 

1.                                       Purpose.  The purpose of this Agreement
is to encourage Executive to remain in the employ of the Company and to continue
to devote Executive’s full attention to the success of the Company in the event
of a Change of Control, as such term is defined in Section 3 of this Agreement.

 

2.                                       Termination Upon Change of Control.  In
the event of Executive’s Termination Upon a Change of Control, Executive shall
receive the following payments and benefits:

 

2.1                                 Accrued Salary and Vacation, and Benefits. 
Executive shall receive all salary and accrued vacation (less applicable
withholding) earned through Executive’s termination date, and the benefits, if
any, under Company benefit plans to which Executive may be entitled pursuant to
the terms of such plans.

 

2.2                                 Stock Award Acceleration.  Provided that
Executive complies with Section 5 below, all outstanding stock options granted
and restricted stock issued by the Company to Executive prior to the Change of
Control shall become fully vested and exercisable immediately prior to the
effective date of the Termination Upon a Change of Control.

 

2.3                                 Cash Severance Payment.  Provided that
Executive complies with Section 5 below, Executive shall receive a lump sum cash
payment in an amount equal to fifteen (15) months of Executive’s effective base
salary (less applicable withholding), paid within ten (10) business days of the
effective date of the Termination Upon a Change of Control.

 

3.                                       Definitions.  Capitalized terms used in
this Agreement shall have the meanings set forth in this Section 3.

 

3.1                                 “Cause” means Executive’s (a) failure to
perform any reasonable and lawful duty of Executive’s position or failure to
follow the lawful written directions of the Chief Executive Officer; (b)
commission of an act that constitutes misconduct and is injurious to the Company
or any subsidiary; (c) conviction of, or pleading “guilty” or “no contest” to, a
felony under the laws of the United States or any state thereof; (d) committing
an act of fraud against, or the misappropriation of property belonging to, the
Company or any subsidiary; (e) commission of an act of dishonesty in connection
with Executive’s responsibilities as an employee and affecting the business or
affairs of the Company; (f) breach of any confidentiality, proprietary
information or other agreement between Executive and the Company or any
subsidiary; or (g) failure or refusal to carry out the reasonable directives of
the Company.

 

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3.2                                 “Change of Control” means (a) any “person”
(as such term is used in Sections 13(d) and 14(d) 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; (b) the Company is party to a merger or consolidation
which results in the 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 or another entity)
at least fifty (50%) percent of the combined voting power of the voting
securities of the Company or such surviving or other entity outstanding
immediately after such merger or consolidation; (c) the sale or disposition of
all or substantially all of the Company’s assets (or consummation of any
transaction having similar effect); or (d) the dissolution or liquidation of the
Company.

 

3.3                                 “Company” means Cepheid and any successor or
assign to substantially all the business and/or assets of Cepheid.

 

3.4                                 “Diminution of Responsibilities” means the
occurrence of any of the following conditions, without Executive’s consent: (a)
a significant diminution in the nature or scope of Executive’s authority, title,
function or duties from Executive’s authority, title, function or duties in
effect immediately preceding any Change of Control; (b) a ten percent (10%)
reduction in Executive’s base salary or a twenty-five percent (25%) reduction in
Executive’s target bonus opportunity, if any, in effect immediately preceding
any Change of Control (in either case, unless such reduction is part of a
Company officer-wide program to reduce expenses); (c) the Company’s requiring
Executive to be based at any office or location more than 50 miles from the
office where Executive was employed immediately preceding the Change of Control;
(d) any material breach of the terms of this Agreement by the Company; or (e)
failure of any successor or assignee to the Company to assume this Agreement.

 

3.5                                 “Termination Upon Change of Control” means:

 

(a)                                  any involuntary termination of the
employment of Executive by the Company without Cause within twelve (12) months
following a Change of Control; or

 

(b)                                 any resignation by Executive based on a
Diminution of Responsibilities where (i) such Diminution of Responsibilities
occurs within twelve (12) months following the Change of Control, and (ii) such
resignation occurs within ninety (90) days following such Diminution of
Responsibilities.

 

4.                                       Federal Excise Tax.  If the payments
and benefits provided for in this Agreement constitute “parachute payments”
within the meaning of the Internal Revenue Code of 1986, as amended (the
“Code”), but for this Section 4, would be subject to the excise tax imposed by
Section 4999 of the Code, then the payments and benefits under this Agreement
will be payable, at Executive’s election, either in full or in such lesser
amount as would result, after taking into account the applicable federal, state
and local income taxes and excise tax imposed by Section 4999 of the Code, in
Executive’s receipt on an after-tax basis of the greatest amount of benefits.

 

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5.                                       Release of Claims.  The Company may
condition the payments and benefits set forth in Sections 2.2 and 2.3 of this
Agreement upon the delivery by Executive of a signed release of claims in a form
satisfactory to the Company.

 

6.                                       Agreement Not to Solicit.  If Company
performs its obligations to deliver the severance compensation set forth in
Sections 2.2 and 2.3 of this Agreement, then for a period of one (1) year after
Executive’s termination of employment, Executive will not solicit any employee
of the Company to discontinue that person’s employment relationship with
the Company.

 

7.                                       Arbitration.  Any claim, dispute or
controversy arising out of this Agreement, the interpretation, validity or
enforceability of this Agreement or the alleged breach thereof shall be
submitted by the parties to binding arbitration by the American Arbitration
Association.  The site of the arbitration proceeding shall be in Santa Clara
County, California, or another location mutually agreed to by the parties.

 

8.                                       Conflict in Benefits; Effect of
Agreement.  This Agreement shall supersede all prior arrangements, whether
written or oral, and understandings regarding severance compensation following a
Change of Control and shall be the exclusive agreement for the determination of
any severance compensation due upon Executive’s termination of employment upon a
Change of Control.

 

9.                                       Miscellaneous.

 

9.1                                 Successors of the Company.  The Company will
require any successor or assign (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, expressly, absolutely and unconditionally to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession or
assignment had taken place.

 

9.2                                 NO EMPLOYMENT AGREEMENT.  THIS AGREEMENT
DOES NOT ALTER EXECUTIVE’S AT-WILL EMPLOYMENT STATUS OR OBLIGATE THE COMPANY TO
CONTINUE TO EMPLOY EXECUTIVE FOR ANY SPECIFIC PERIOD OF TIME, OR IN ANY SPECIFIC
ROLE OR GEOGRAPHIC LOCATION.

 

9.3                                 Modification of Agreement.  This Agreement
may be modified, amended or superceded only by a written agreement signed by
Executive and the Chief Executive Officer.

 

9.4                                 Governing Law.  This Agreement shall be
interpreted in accordance with and governed by the laws of the State of
California.

 

EXECUTIVE

CEPHEID

 

 

 

 

 

 

By:

 

 

ROBERT KOSKA

 

 

NAME:

JOHN L. BISHOP

 

 

Title:

Chief Executive Officer

 

 

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