Q1 2003 10Q Exhibit 10.1





The symbol [***] is used to indicate that a portion of the exhibit has been omitted
and filed seperately with the commission.  Confidential
treatment has been requested with respect to the ommitted portion.


EXHIBIT 10.1



 

 

Cepheid

                  904 Caribbean Drive

                  Sunnyvale, CA 94089


February 21, 2003


 

	
Infectio Diagnostic (I.D.I.) Inc.

   Attn.: Chief Executive Officer

   2050 Rene Levesque Blvd. West

   Ste-Foy, Quebec

   Canada G1V 2K8





Re:  Letter Agreement

Gentlemen:

[***].  [***].  While the parties are concluding their negotiations of the
new Collaboration Agreement, IDI wishes to appoint Cepheid and Cepheid wishes to
accept such appointment to serve as IDI's distributor for a period of [***] for
a Group B Strep Assay ("the Product") for use in the [***] market.
This letter agreement sets forth the terms pursuant to which IDI is making this
appointment. The term of this letter agreement shall be from the date it is
entered into until [***] after the launch date of the Product or June 1, 2003
whichever is earlier (the "Launch Date"). If the actual launch date of
the Product falls on or before the 15th day of the month the Launch
Date will be deemed to be the first day of that month; if the actual launch date
falls after the 15th of the month, the Launch Date will be the first
day of the next succeeding month.

Cepheid shall be IDI's exclusive distributor in the United States of the
Product for a period of [***] years from the Launch Date.    IDI will sell the
Product kits to Cepheid at the following pricing: for the first month following
the Launch Date the transfer price will be a price that is [***]below IDI's
[***] (US Dollars) list price per test for the product; for each month
thereafter the transfer price will be [***] below Cepheid's actual average sales
price per test (in US Dollars) to end users during the preceding month.  Cepheid
will be free to set the resale price for the product in its complete discretion.
If Cepheid's actual average sales price during any month is below [***], per
test the transfer price Cepheid will pay for the Product kits will be [***]
below [***] per test for such month. Following the first six months after the
Launch Date, if Cepheid's actual average sales (in US Dollars) is below [***]
per test, the parties shall confer within ten business days following such month
to determine whether there should be an adjustment in transfer price between the
parties. In no event will any such price adjustment be to a price that is lower
than [***] below [***] per test. 

There will be no minimum sales volume requirement for Cepheid in the first
year of this agreement; however, Cepheid will use commercially reasonable
efforts to maximize market penetration and sales.  For the second year following
the Launch Date, both parties will agree on a minimum sales volume by no later
than twenty days following the end of the fourth quarter following the Launch
Date.  If the parties are not able to agree on the minimum volume for the second
year, the minimum will be established as [***] of the actual sales during the
first full year following the Launch Date.   

Cepheid may maintain exclusive distribution rights following the second
anniversary of the Launch Date if it reaches the minimum volume levels agreed
upon.  Thereafter, the minimum volume for the third and fourth year following
the Launch Date would be determined in the same way as the minimum volume for
the second year following the Launch Date, except that if the parties are not
able to agree on the minimum volume for the third year, the minimum will be
established as [***] of the actual sales for the second year following the
Launch Date, and if the parties are not able to agree on the minimum volume for
the fourth year, the minimum will be established as [***] of the actual sales
for the third year  following the Launch Date.  If Cepheid does not reach the
yearly minimum volume target for the second year (or any subsequent years if
exclusivity is maintained), its distribution rights will become
nonexclusive.

The launch date for the Product targeted to be March 31, 2003, by which time
IDI and Cepheid will have obtained all necessary licenses and other regulatory
approvals, the parties will have agreed on marketing plans, and all marketing
and collateral materials will have been completed. IDI and Cepheid marketing
departments will develop and implement a launch plan as soon as possible which
plan will be completed by March 10, 2003.

The launch of the Product will be for use with the Smart Cycler V1
instrument; the software for launching will be the combined diagnostic and life
science software versions if possible. If the life science software has not been
validated prior to the Launch Date it will be included as soon as thereafter as
possible.  

Cepheid will sell [***] instruments for the period following launch of the
Product until the Product has been [***] as described in the preceding
paragraph. Cepheid will bear the cost associated with upgrading those
instruments to [***] in the United States up to [**] instruments. Thereafter,
Cepheid and IDI will share equally the cost associated with [***] in the United
States. [***].  IDI will be Cepheid's authorized distributor for
such instruments in Canada, and Cepheid will sell such instruments to IDI at
Cepheid's US list price minus [***]. IDI will bear the cost associated with
upgrading those instruments to Smart Cycler V2 in Canada. 

Subject to prior consultation with Cepheid as to the approach to be taken,
IDI, being accountable for the regulatory approvals, will be solely responsible
for the final decisions related to the regulatory status of the Product and its
evolutions.

Subject to prior consultation with IDI, Cepheid will be responsible for
producing product literature and other promotional materials illustrating and
describing the Product, in reasonable quantities, for the U.S. market. 

In exchange for the distribution rights granted by IDI, Cepheid has already
provided upgrades to six Smart Cycler I TM instruments to convert them to
Smart Cycler II TM instruments.  In addition, Cepheid will provide upgrades
for an additional six Smart Cycler I instruments upon IDI's request.

This letter agreement shall be subject to the laws of the Province of
Ontario, Canada, without regard to its conflict of laws rules.

The Board of Directors of Aridia shall ratify this letter agreement. The
parties intend that the subject matter of this letter agreement will be
integrated into the new Collaboration Agreement and subject to the terms and
conditions thereof.
Sincerely,


John Bishop

CEO

Cepheid














The above terms are agreed to:

	
Infectio Diagnostic (I.D.I.) Inc.

	

 

By: 


	
 

Name: 

	

Title: 

	

Date Signed: 






The symbol [***] is used to indicate that a portion of the exhibit has been omitted
and filed seperately with the commission.  Confidential
treatment has been requested with respect to the ommitted portion.