exv10w01



 





Exhibit 10.01




Amended and Restated Change of Control Retention and Severance Agreement




     This Amended and Restated Change of Control Retention and Severance Agreement (the
"Agreement”) is made and entered into as of October 31, 2006, by and between Cepheid and Humberto
Reyes (the “Executive”) and amends and restates in its entirety any Change of Control Retention and
Severance Agreement by and between Cepheid and Executive existing prior to the date hereof.
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 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 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 eighteen (18) months of
Executive’s effective base salary (less applicable withholding), paid within ten (10) business days
of the effective date of the Termination Upon 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.



     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,

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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.



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.



     9.5 Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter of this Agreement, and supersedes
all prior understandings and agreements, whether oral or written between or among the parties
hereto with respect to the specific subject matter hereof.



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	EXECUTIVE

	 	 	 	CEPHEID	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ HUMBERTO REYES

	 	 	 	By:
	 	/s/ JOHN L. BISHOP	 	 
	 

Humberto Reyes

	 	 	 	Name:
	 	 

John L. Bishop
	 	 
	 

	 	 	 	Title:
	 	Chief Executive Officer	 	 







[Signature Page to Amended and Restated Change of Control Retention And Severance Agreement]