METHODS, DATA, ASSAYS, SUBSTANCES AND
MATERIALS, AND OTHER INFORMATION IN A PARTY'S POSSESSION THAT IS NOT GENERALLY
AVAILABLE TO THE PUBLIC.
1.11.
"MANUFACTURING COST" MEANS THE FULLY-BURDENED MANUFACTURING COST OF
THE IDI MATERIALS AS DETERMINED USING IDI'S CUSTOMARY PRACTICES AND PROCEDURES
AND, TO THE EXTENT APPLICABLE, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES IN CANADA ("GAAP"), INCLUDING THE FOLLOWING: DIRECT MATERIAL COST,
MATERIAL OVERHEAD COST, DIRECT LABOR COST, FIXED MANUFACTURING OVERHEAD COST,
VARIABLE MANUFACTURING OVERHEAD COST, COST OF QUALITY CONTROL AND PRODUCT
TESTING, MANUFACTURING VARIANCE COST AND OTHER COSTS THAT MAY BE PROPERLY
ATTRIBUTED AND DOCUMENTED TO INVENTORY AS MANUFACTURING COSTS PURSUANT TO GAAP,
BUT EXCLUDING ROYALTIES OR SIMILAR CONSIDERATION PAID TO THIRD PARTIES FOR
RIGHTS TO INTELLECTUAL PROPERTY RIGHTS, INCLUDING UP-FRONT PAYMENTS FOR SUCH
RIGHTS, EVEN IF ANY SUCH ROYALTIES OR OTHER PAYMENTS ARE INCLUDED IN FULLY
BURDENED MANUFACTURING COST IN ACCORDANCE WITH A PARTY'S CUSTOMARY PRACTICES AND
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 omitted portion.
2
PROCEDURES AND, TO THE EXTENT APPLICABLE, GAAP).
IN DETERMINING MANUFACTURING
COST, IDI SHALL TAKE INTO ACCOUNT, IN ACCORDANCE WITH GAAP TO THE EXTENT
APPLICABLE AND IN ACCORDANCE WITH IDI'S NORMAL AND CUSTOMARY PRACTICES AND
PROCEDURES, INCLUDING WITHOUT LIMITATION CONSIDERATION OF RISKS AND
UNCERTAINTIES ASSOCIATED WITH PROJECTIONS RELATED TO THE PRODUCTS IN QUESTION,
PROJECTIONS OF SALES OF SUCH PRODUCTS FOR AT LEAST A TWELVE MONTH PERIOD MADE IN
GOOD FAITH BY IDI IN ACCORDANCE WITH ITS NORMAL AND CUSTOMARY PROCEDURES.
MANUFACTURING COST OF IDI MATERIALS WILL BE ESTABLISHED AND REESTABLISHED BASED
UPON PROJECTIONS FOR A PERIOD OF NOT LESS THAN THE NEXT UPCOMING TWELVE MONTH
PERIOD, MAY BE CHANGED NO MORE FREQUENTLY THAN QUARTERLY (AND ANY NEW
MANUFACTURING COST WILL BE EFFECTIVE ONLY AS OF THE FIRST DAY OF A QUARTER), AND
ANY NEW MANUFACTURING COST OF PRODUCTS WILL NOT BE APPLIED EXCEPT UPON A MINIMUM
OF SIXTY (60) DAYS PRIOR NOTICE FROM IDI TO CEPHEID.
1.12.
"NET SALES" MEANS THE GROSS INVOICE SALES PRICE FOR CEPHEID SOURCED
PRODUCTS THAT ARE COVERED BY A VALID CLAIM OF AN IDI PATENT LICENSED UNDER THIS
AGREEMENT, AND THAT ARE SOLD BY CEPHEID, ITS AFFILIATES AND ITS OR THEIR
SUB-DISTRIBUTORS TO END USERS, LESS: TRADE, CASH AND QUANTITY DISCOUNTS
DOCUMENTED, IF ANY, ACTUALLY ALLOWED, OTHER ALLOWANCES ACTUALLY APPLIED, AMOUNTS
REFUNDED FOR FAULTY OR DEFECTIVE PRODUCT, RETURNS, REJECTIONS, ACCOUNT
RECEIVABLES REMAINED UNPAID DETERMINED AND APPLIED IN ACCORDANCE WITH CEPHEID'S
NORMAL AND CUSTOMARY POLICIES AND PROCEDURES (AND TO THE EXTENT APPLICABLE,
UNITED STATES GAAP), FREIGHT, INSURANCE AND OTHER TRANSPORTATION COSTS, TARIFFS,
DUTIES, SALES TAX, AND SIMILAR GOVERNMENTAL CHARGES (EXCEPT INCOME TAXES) PAID
WITH RESPECT TO THE CEPHEID SOURCED PRODUCTS SOLD.
1.13.
"REGULATORY AUTHORITY" MEANS ANY APPLICABLE SUPRA-NATIONAL,
FEDERAL, NATIONAL, REGIONAL, STATE, PROVINCIAL OR LOCAL REGULATORY AGENCIES,
DEPARTMENTS, BUREAUS, COMMISSIONS, COUNCILS OR OTHER GOVERNMENT ENTITIES
REGULATING OR OTHERWISE EXERCISING AUTHORITY WITH RESPECT TO A PRODUCT.
1.14.
"SMART CYCLER INSTRUMENTS" MEANS THE SMART CYCLER®