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                                                                    EXHIBIT 10.5

                 2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
                                       OF
                                     CEPHEID

      1.    PURPOSES OF THE PLAN

            The purposes of the 2000 Non-Employee Directors' Stock Option Plan
of Cepheid, a California corporation, are: (a) to encourage Nonemployee
Directors to accept or continue their association with the Company; and (b) to
increase the interest of Nonemployee Directors in the Company's operations and
increased profits through participation in the growth in value of the Common
Stock of the Company.

      2.    DEFINITIONS

            As used herein, the following definitions shall apply:

            (a)   "Administrator" shall mean the entity, either the Board or a
committee appointed by the Board, responsible for administering this Plan, as
provided in Section 5.

            (b)   "Affiliate" shall mean a parent or subsidiary corporation as
defined in the applicable provisions of the Code.

            (c)   "Annual Option" shall have the meaning set forth in Section
6(b).

            (d)   "Board" shall mean the Board of Directors of the Company, as
constituted from time to time.

            (e)   "Code" shall mean the Internal Revenue Code of 1986, as
amended.

            (f)   "Common Stock" shall mean the Common Stock of the Company.

            (g)   "Company" shall mean Cepheid, a California corporation.

            (h)   "Director Fee" shall mean the cash amount, if any, a
Nonemployee Director shall be entitled to receive for serving as a director of
the Company in any fiscal year.

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            (i)   "Fair Market Value" shall mean, as of the date in question,
the last transaction price quoted by the NASDAQ National Market System on the
date of grant; provided, however, that if the Common Stock is not traded on such
market system or the foregoing shall otherwise be inappropriate, then the Fair
Market Value shall be determined by the Administrator in good faith at its sole
discretion and on such basis as it shall deem appropriate. Such determination
shall be conclusive and binding on all persons.

            (j)   "Initial Option" shall have the meaning set forth in Section
6(a).

            (k)   "Nonemployee Director" shall mean any person who is a member
of the Board but is not an employee of the Company or any Parent or Subsidiary
of the Company and has not been an employee of the Company or any Parent or
Subsidiary of the Company at any time during the preceding 12 months.

            (l)   "Option" shall mean a stock option granted pursuant to this
Plan.

            (m)   "Option Agreement" shall mean the written agreement described
in Section 6(c) evidencing the grant of an Option to a Nonemployee Director and
containing the terms, conditions and restrictions pertaining to such Option.

            (n)   "Option Shares" shall mean the Shares subject to an Option
granted under this Plan.

            (o)   "Optionee" shall mean a Nonemployee Director who holds an
Option.

            (p)   "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

            (q)   "Plan" shall mean this 1999 Nonemployee Directors Stock Option
Plan of Cepheid, as it may be amended from time to time.

            (r)   "Rule 16b-3" shall mean Rule 16b-3 promulgated by the
Securities and Exchange Commission, or any successor rule thereto.

            (s)   "Section" unless the context clearly indicates otherwise,
shall refer to a Section of this Plan.

            (t)   "Share" shall mean a share of Common Stock, as adjusted in
accordance with Section 7(a).

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            (u)   "Subsidiary" shall mean a "subsidiary corporation" of the
Company, whether now or hereafter existing, within the meaning of Section 424(f)
of the Code, but only for so long as it is a "subsidiary corporation".

      3.    ELIGIBLE PERSONS

            Every person who at the date of grant of an Option is a Nonemployee
Director is eligible to receive Options under this Plan.

      4.    STOCK SUBJECT TO THIS PLAN

            Subject to Section 7(a) of this Plan, the maximum aggregate number
of Shares which may be issued on exercise of Options granted pursuant to this
Plan is 200,000 Shares. The Shares covered by the portion of any grant under the
Plan which expires unexercised shall become available again for grants under the
Plan.

      5.    ADMINISTRATION

            (a)   This Plan shall be administered by the Board, or by a
committee (the "Committee") of at least two Board members to which
administration of the Plan is delegated (in either case, the "Administrator"),
in accordance with the requirements of Rule 16b-3.

            (b)   Subject to the other provisions of this Plan, the
Administrator shall have the authority, in its sole discretion: (i) to determine
the Fair Market Value of the Shares subject to Option; (ii) to interpret this
Plan; (iii) to prescribe, amend and rescind rules and regulations relating to
this Plan; (iv) to defer (with the consent of the Optionee) or accelerate the
exercise date of any Option; (v) to authorize any person to execute on behalf of
the Company any instrument evidencing the grant of an Option; and (vi) to make
all other determinations deemed necessary or advisable for the administration of
this Plan. The Administrator may delegate nondiscretionary administrative duties
to such employees of the Company as it deems proper.

            (c)   All questions of interpretation, implementation and
application of this Plan shall be determined by the Administrator. Such
determination shall be final and binding on all persons.

      6.    GRANT OF OPTIONS

            (a)   Grant for Initial Election or Appointment to Board. Subject to
the terms and conditions of this Plan, if any person who is not an officer or
employee of the Company is first elected or appointed as a member of the Board
and is otherwise

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considered a "Nonemployee Director" as defined herein, then the Company shall
grant to such Nonemployee Director on such day an Option to purchase 15,000
Shares ("Initial Option") at an exercise price equal to the Fair Market Value of
such Shares on the date of such Initial Option grant, subject to the limitation
of Section 7(i).

            (b)   Grant for Re-election to Board. Subject to the terms and
conditions of this Plan, on the date of the first meeting of the Board
immediately following each annual meeting of stockholders of the Company (even
if held on the same day as the meeting of stockholders) the Company shall grant
to each Nonemployee Director then in office for longer than six months, an
Option to purchase 5,000 shares (the "Annual Option") at an exercise price equal
to the Fair Market Value of such Shares.

            (c)   No Option shall be granted under this Plan after ten years
from the date of adoption of this Plan by the Board. Each Option shall be
evidenced by a written Option Agreement, in form and substance satisfactory to
the Company, executed by the Company and the Optionee. Failure by the Company,
the Nonemployee Director, or both to execute an Option Agreement shall not
invalidate the granting of an Option; however, the Option may not be exercised
until the Option Agreement has been executed by both parties.

      7.    TERMS AND CONDITIONS OF OPTIONS

            Each Option granted under this Plan shall be subject to the terms
and conditions set forth in this Section 7.

            (a)   Changes in Capital Structure. Subject to subsection 7(b), if
the Common Stock is changed by reason of a stock split, reverse stock split,
stock dividend, or recapitalization, or converted into or exchanged for other
securities as a result of a merger, consolidation, or reorganization,
appropriate adjustments shall be made in: (i) the number and class of shares of
Common Stock subject to this Plan and each Option outstanding under this Plan;
and (ii) the exercise price of each outstanding Option; provided, however, that
the Company shall not be required to issue fractional shares as a result of any
such adjustment. Each such adjustment shall be subject to approval by the
Administrator in its sole discretion.

            (b)   Time of Option Exercise. Subject to the other provisions of
this Plan, each Option shall be for a term of ten years. Each Option shall be
exercisable in full on the date of grant. At the discretion of the
Administrator, the Company shall have a right of repurchase of Option Shares.
The Administrator shall have the discretion to specify the times at which such
right of repurchase shall lapse; provided, however, that

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the right of repurchase must lapse at the rate of at least 20% per year over
five years from the date the option was granted.

            (c)   Limitation on Other Grants. The Administrator shall have no
discretion to grant Options under this Plan other than as set forth in Sections
6(a) and 6(b).

            (d)   Nonassignability of Option Rights. No Option shall be
assignable or otherwise transferable by the Optionee, except by will or the laws
of descent and distribution. During the life of an Optionee, an Option shall be
exercisable only by the Optionee.

            (e)   Payment. Except as provided below, payment in full, in cash,
shall be made for all Option Shares purchased at the time written notice of
exercise of an Option is given to the Company, and proceeds of any payment shall
constitute general funds of the Company. Payment may also be made pursuant to a
cashless exercise/sale procedure. At the time an Option is granted or exercised,
the Administrator, in its absolute discretion, may authorize any one or more of
the following additional methods of payment: (i) acceptance of the Optionee's
full recourse promissory note for all or part of the Option price, less any par
value per share, which must be paid in cash, payable on such terms and bearing
such interest rate as determined by the Administrator (but in no event less than
the minimum interest rate specified under the Code at which no additional
interest on debt instruments of such type would be imputed), which promissory
note may be either secured or unsecured in such manner as the Administrator
shall approve (including, without limitation, by a security interest in the
Shares); (ii) delivery by the Optionee of Common Stock already owned by the
Optionee for all or part of the Option price, provided the Fair Market Value of
such Common Stock is equal on the date of exercise to the Option price, or such
portion thereof as the Optionee is authorized to pay by delivery of such stock;
provided, however, that if an Optionee has exercised any portion of any Option
granted by the Company by delivery of Common Stock, the Optionee may not, within
six months following such exercise, exercise any Option granted under this Plan
by delivery of Common Stock; and (iii) any other consideration and method of
payment to the extent permitted under the California Corporations Code.

            (f)   Termination as Director. Unless determined otherwise by the
Administrator in its absolute discretion, to the extent not already expired or
exercised, an Option shall terminate at the earlier of: (i) the expiration of
the term of the Option; or (ii) three months after the last day served by the
Optionee as a director of the Company; provided, that an Option shall be
exercisable after the date of termination of service as a director only to the
extent exercisable on the date of termination; and provided further,

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that if termination of service as a director is due to the Optionee's death or
"disability" (as determined in accordance with Section 22(e)(3) of the Code),
the Optionee, or the Optionee's personal representative (or any other person who
acquires the Option from the Optionee by will or the applicable laws of descent
and distribution), may at any time within 12 months after the termination of
service as a director (or such lesser period as is specified in the Option
Agreement but in no event after the expiration of the term of the Option),
exercise the rights to the extent they were exercisable on the date of the
termination.

            (g)   Withholding and Employment Taxes. At the time of exercise of
an Option (or at such later time(s) as the Administrator may prescribe), the
Optionee shall remit to the Company in cash all applicable federal and state
withholding and employment taxes. If authorized by the Administrator in its sole
discretion, an Optionee shall be permitted to elect, by means of a form of
election to be prescribed by the Administrator, to have shares of Common Stock
which are acquired upon exercise of the Option withheld by the Company or to
tender to the Company other shares of Common Stock or other securities of the
Company owned by the Optionee on the date of determination of the amount of tax
to be withheld as a result of the exercise of such Option (the "Tax Date") to
pay the amount of withholding taxes due. Any securities so withheld or tendered
shall be valued by the Company as of the Tax Date.

            (h)   Option Term. Each Option shall expire ten years after the date
of grant.

            (i)   Exercise Price. The exercise price of any Option granted to
any person who owns, directly or by attribution under the Code currently Section
424(d), stock possessing more than ten percent of the total combined voting
power of all classes of stock of the Company or of any Affiliate (a "Ten Percent
Stockholder") shall in no event be less than 110% of the fair market value
(determined in accordance with 2(i) of the stock covered by the Option at the
time the Option is granted.

      8.    MANNER OF EXERCISE

            (a)   An Optionee wishing to exercise an Option shall give written
notice to the Company at its principal executive office, to the attention of the
officer of the Company designated by the Administrator, accompanied by payment
of the exercise price as provided in Section 7(e) and, if required, by payment
of any federal or state withholding or employment taxes required to be withheld
due to exercise of the Option. The date the Company receives written notice of
an exercise accompanied by payment of the exercise price and any required
federal or state withholding or employment taxes will

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be considered as the date such Option was exercised. Unless otherwise provided
by the Administrator, Options may be exercised only twice in any calendar year.

            (b)   Promptly after the date an Option is exercised, the Company
shall, without stock issue or transfer taxes to the optionee or other person
entitled to exercise the Option, deliver to the Optionee or such other person a
certificate or certificates for the requisite number of shares of Common Stock.
An Optionee or transferee of an Optionee shall not have any privileges as a
stockholder with respect to any Common Stock covered by the Option until the
date of issuance of a stock certificate.

      9.    NO RIGHT TO DIRECTORSHIP

            Neither this Plan nor any Option shall confer upon any Optionee any
right with respect to continuation of the Optionee's membership on the Board or
shall interfere in any way with provisions in the Company's Certificate of
Incorporation, as amended, and Bylaws, as amended, relating to the election,
appointment, terms of office, and removal of members of the Board.

      10.   FINANCIAL INFORMATION

            The Company shall provide to each Optionee during the period the
Optionee holds an outstanding Option a copy of the financial statements of the
Company as prepared either by the Company or independent certified public
accountants of the Company. Such financial statements shall be delivered as soon
as practicable following the end of the Company's fiscal year during the period
Options are outstanding.

      11.   LEGAL REQUIREMENTS

            The Company shall not be obligated to offer or sell any Shares upon
exercise of any Option unless the Shares are at that time effectively registered
or exempt from registration under the federal securities laws and the offer and
sale of the Shares are otherwise in compliance with all applicable securities
laws and the regulations of any stock exchange on which the Company's securities
may then be listed. The Company shall have no obligation to register the Shares
covered by this Plan under the federal securities laws or take any other steps
as may be necessary to enable the Shares covered by this Plan to be offered and
sold under federal or other securities laws. Upon exercising all or any portion
of an Option, an Optionee may be required to furnish representations or
undertakings deemed appropriate by the Company to enable the offer and sale of
the Shares or subsequent transfers of any interest in the Shares to comply with
applicable securities laws. Certificates evidencing Shares acquired upon
exercise of Options shall

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bear any legend required by, or useful for purposes of compliance with,
applicable securities laws, this Plan or the Option Agreements.

      12.   AMENDMENTS TO PLAN

            The Board may amend this Plan at any time. Without the consent of an
optionee, no amendment may adversely affect outstanding Options. No amendment
shall require stockholder approval unless:

            (a)   stockholder approval is required to meet the exemptions
provided by Rule 16b-3, or any successor rule thereto or under applicable state
statutes; or

            (b)   the Board otherwise concludes that stockholder approval is
advisable.

      13.   STOCKHOLDER APPROVAL; TERM

            This Plan shall become effective upon adoption by the Board of
Directors; provided, however, that no Option shall be exercisable unless and
until written consent of holders of a majority of the outstanding shares of
capital stock of the Company, or approval by holders of a majority of shares of
capital stock of the Company present, or represented, and entitled to vote at a
validly called stockholders' meeting (or such greater number as may be required
by law or applicable governmental regulations or orders) is obtained within 12
months after adoption by the Board. This Plan shall terminate ten years after
adoption by the Board unless terminated earlier by the Board. The Board may
terminate this Plan at any time without stockholder approval. No Options shall
be granted after termination of this Plan, but termination shall not affect
rights and obligations under then-outstanding Options.

               Adopted by the Board of Directors:  March 17, 2000

               Approved by the Stockholders:  _______, 2000

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                                                                    EXHIBIT 10.6

                                    CEPHEID
                            INDEMNIFICATION AGREEMENT

      THIS INDEMNIFICATION AGREEMENT (the "AGREEMENT") is made as of this ____
day of March, 2000, by and between Cepheid, a California corporation (the
"Company"), and ________________, a [DIRECTOR/OFFICER] of the Company (the
"INDEMNITEE").

                                    RECITALS

      A.    The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors and officers of corporations unless
they are protected by comprehensive liability insurance or indemnification, due
to increased exposure to litigation costs and risks resulting from their service
to such corporations, and due to the fact that the exposure frequently bears no
reasonable relationship to the compensation of such directors or officers.

      B.    The statutes and judicial decisions regarding the duties of
directors and officers are often difficult to apply, ambiguous, or conflicting,
and therefore fail to provide such directors and officers with adequate,
reliable knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take.

      C.    Plaintiffs often seek damages in such large amounts and the costs of
litigation may be so enormous (whether or not the case is meritorious), that the
defense and/or settlement of such litigation is beyond the personal resources of
directors and officers.

      D.    The Company believes that it is unfair for its directors and
officers to assume the risk of huge judgments and other expenses which may occur
in cases in which the director or officer received no personal profit and in
cases where the director or officer was not culpable.

      E.    The Company recognizes that the issues in controversy in litigation
against a director or officer of a corporation such as the Company are often
related to the knowledge, motives, and intent of such director or officer, that
he or she is usually the only witness with knowledge of the essential facts and
exculpating circumstances regarding such matters and that the long period of
time which usually elapses before the trial or other disposition of such
litigation often extends beyond the time that the director or officer can
reasonably recall such matters and may extend beyond the normal time for
retirement for such director or officer with the result that he or she, after
retirement or in the event of death, his or her spouse, heirs, executors or
administrators, may be faced with

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limited ability and undue hardship in maintaining an adequate defense, which may
discourage such a director or officer from serving in that position.

      F.    Based upon their experience as business managers, the Board of
Directors of the Company (the "BOARD") has concluded that, to retain and attract
talented and experienced individuals to serve as directors and officers of the
Company and to encourage such individuals to take the business risks necessary
for the success of the Company, it is necessary for the Company to contractually
indemnify its directors and officers, and to assume for itself maximum liability
for expenses and damages in connection with claims against such directors and
officers in connection with their service to the Company, and has further
concluded that the failure to provide such contractual indemnification could
result in great harm to the Company and the Company's shareholders.

      G.    Section 317 of the California Corporations Code (the "CODE"), under
which the Company is organized ("SECTION 317"), empowers the Company to
indemnify persons who serve, at the request of the Company, as the directors,
officers, employees or agents of other corporations or enterprises, and
expressly provides that the indemnification provided by Section 317 is not
exclusive.

      H.    The Company is investigating obtaining director's and officer's
liability insurance ("D&O INSURANCE"). The Company believes that the interests
of the Company's shareholders would best be served by a combination of such
insurance as the Company may obtain in the future pursuant to the Company's
obligations hereunder and the indemnification by the Company of the directors
and officers of the Company.

      I.    The Company desires and has requested the Indemnitee to serve or
continue to serve as a director of the Company free from undue concern for
claims for damages arising out of or related to such services to the Company.

      J.    The Indemnitee is willing to serve, or to continue to serve, the
Company, provided that he or she is furnished the indemnity provided for herein.

      THE PARTIES AGREE AS FOLLOWS:

      1.    DEFINITIONS. As used herein, the following terms shall have the
following meanings:

            1.1   "AGENT" of the Company shall mean any person who is or was a
director, officer, employee or other agent of the Company or a Subsidiary (as
defined below); or is or was serving at the request of, for the convenience of,
or to represent the interests of the Company or a Subsidiary as a director,
officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other

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enterprise; or was a director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor corporation of the Company or a
Subsidiary or was a director, officer, employee or agent of another enterprise
at the request of, for the convenience of, or to represent the interests of such
predecessor corporation.

            1.2   "EXPENSES" shall mean all direct and indirect costs of any
type or nature whatsoever (including, without limitation, all attorneys' fees
and related disbursements, other out of pocket costs and reasonable compensation
for time spent by the Indemnitee for which he or she is not otherwise
compensated by the Company or any third party) actually and reasonably incurred
by the Indemnitee in connection with either the investigation, defense or appeal
of a proceeding or establishing or enforcing a right to indemnification under
this Agreement, Section 317 or otherwise; provided, however, that expenses shall
not include any judgments, fines, ERISA excise taxes or penalties or amounts
paid in settlement of a proceeding.

            1.3   "PROCEEDING" shall mean any threatened, pending, or completed
action, suit or other proceeding, whether civil, criminal, administrative,
investigative or any other type whatsoever.

            1.4   "SUBSIDIARY" shall mean any corporation of which more than 50%
of the outstanding voting securities is owned directly or indirectly by the
Company, by the Company and one or more other subsidiaries, or by one or more
other subsidiaries.

      2.    AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or continue
to serve as a director and/or officer of the Company, at its will, so long as
the Indemnitee is duly appointed or elected and qualified in accordance with the
applicable provisions of the by laws of the Company or until such time as the
Indemnitee tenders his/her resignation in writing.

      3.    FUTURE LIABILITY INSURANCE. The Company hereby covenants and agrees
that the Company shall use its reasonable best efforts consistent with prudent
business practice to obtain and maintain in full force and effect D&O Insurance
in reasonable amounts from established and reputable insurers. The parties
acknowledge that such insurance may not be available at an acceptable price or
at all.

      4.    MANDATORY INDEMNIFICATION.

            4.1   THIRD PARTY ACTIONS. If the Indemnitee is a person who was or
is a party or is threatened to be made a party to any Proceeding (other than an
action by or in the right of the Company) by reason of the fact that the
Indemnitee is or was an Agent of the Company, or by reason of anything done or
not done by the Indemnitee in any such capacity, the Company shall indemnify the
Indemnitee against any and all Expenses and liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA

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excise taxes or penalties, and amounts paid in settlement) actually and
reasonably incurred by the Indemnitee in connection with the investigation,
defense, settlement or appeal of such proceeding if the Indemnitee acted in good
faith and in a manner the Indemnitee reasonably believed to be in or not opposed
to the best interests of the Company, and, with respect to any criminal
proceeding, had no reasonable cause to believe his conduct was unlawful.

            4.2   DERIVATIVE ACTIONS. If the Indemnitee is a person who was or
is a party or is threatened to be made a party to any Proceeding by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that the Indemnitee is or was an Agent of the Company, or by reason of anything
done or not done by the Indemnitee in any such capacity, the Company shall
indemnify the Indemnitee against any amounts paid in settlement of any such
proceeding and all Expenses actually and reasonably incurred by the Indemnitee
in connection with the investigation, defense, settlement, or appeal of such
proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company; except that no indemnification under this subsection shall be made in
respect of any claim, issue or matter as to which such person shall have been
finally adjudged to be liable to the Company by a court of competent
jurisdiction due to willful misconduct of a culpable nature in the performance
of a duty to the Company unless and only to the extent that the court in which
such proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such amounts which the
court shall deem proper.

            4.3   ACTIONS WHERE INDEMNITEE IS DECEASED. If the Indemnitee is a
person who was or is a party or is threatened to be made a party to any
Proceeding by reason of the fact that the Indemnitee is or was an Agent of the
Company, or by reason of anything done or not done by the Indemnitee in any such
capacity, the Company shall indemnify the Indemnitee against any and all
Expenses and liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes and penalties, and amounts paid in
settlement) actually and reasonably incurred by or for the Indemnitee in
connection with the investigation, defense, settlement or appeal of such
proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, prior to, during the pendency or after completion of such
proceeding Indemnitee is deceased, except that in a proceeding by or in the
right of the Company no indemnification shall be due under the provisions of
this subsection in respect of any claim, issue or matter as to which such person
shall have been finally adjudged to be liable to the Company, by a court of
competent jurisdiction, due to willful misconduct of a culpable nature in the
performance of his duty to the Company, unless and only to the extent that the
court in which such proceeding was brought shall determine upon

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application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such amounts which the court shall deem proper.

            4.4   PAYMENTS FROM D&O INSURANCE. Notwithstanding the foregoing,
the Company shall not be obligated to indemnify the Indemnitee for Expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by D&O Insurance.

      5.    PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts
paid in settlement) incurred by the Indemnitee in the investigation, defense,
settlement or appeal of a proceeding but not entitled, however, to
indemnification for all of the total amount thereof, the Company shall
nevertheless indemnify the Indemnitee for that portion thereof to which the
Indemnitee is entitled.

      6.    MANDATORY ADVANCEMENT OF EXPENSES. Subject to Section 10.1 below,
the Company shall advance all Expenses incurred by the Indemnitee in connection
with the investigation, defense, settlement or appeal of any proceeding to which
the Indemnitee is a party or is threatened to be made a party by reason of the
fact that the Indemnitee is or was an Agent of the Company. Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined pursuant to Section 8 hereof that the Indemnitee
is not entitled to be indemnified by the Company as authorized hereby, and such
undertaking should be deemed to satisfy the requirements of Section 317(f) of
the Code. The advances to be made hereunder shall be paid by the Company to the
Indemnitee within 20 days following delivery of a written request therefor by
the Indemnitee to the Company.

      7.    NOTICE AND OTHER INDEMNIFICATION PROCEDURES.

            7.1   COMMENCEMENT OF PROCEEDING. Promptly after receipt by the
Indemnitee of notice of the commencement of, or the threat of commencement of,
any Proceeding, the Indemnitee shall, if the Indemnitee believes that
indemnification with respect thereto may be sought from the Company under this
Agreement, notify the Company of the commencement or threat of commencement
thereof.

            7.2   NOTICE TO INSURERS. If, at the time of the receipt of a notice
of the commencement of a Proceeding pursuant to Section 7.1 hereof, the Company
has D&O Insurance in effect, the Company shall give prompt notice of the
commencement of such Proceeding to the insurers in accordance with the
procedures set forth in the respective

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policies. The Company shall thereafter take all necessary or desirable action to
cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as
a result of such Proceeding in accordance with the terms of such policies.

            7.3   ASSUMPTION OF DEFENSE. If the Company shall be obligated to
pay the Expenses of any Proceeding against the Indemnitee, the Company, if
appropriate, shall be entitled to assume the defense of such Proceeding, with
counsel approved by the Indemnitee, upon the delivery to the Indemnitee of
written notice of its election so to do. After delivery of such notice, approval
of such counsel by the Indemnitee and the retention of such counsel by the
Company, the Company will not be liable to the Indemnitee under this Agreement
for any fees of counsel subsequently incurred by the Indemnitee with respect to
the same Proceeding, provided that: (i) the Indemnitee shall have the right to
employ his counsel in any such Proceeding at the Indemnitee's expense; and (ii)
if (A) the employment of counsel by the Indemnitee has been previously
authorized by the Company, (B) the Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and the Indemnitee
in the conduct of any such defense or (C) the Company shall not, in fact, have
employed counsel to assume the defense of such Proceeding, the fees and expenses
of Indemnitee's counsel shall be at the expense of the Company.

      8.    DETERMINATION OF RIGHT TO INDEMNIFICATION.

            8.1   APPEAL OF PROCEEDING. To the extent the Indemnitee has been
successful on the merits or otherwise in defense of any Proceeding referred to
in Sections 4.1, 4.2, or 4.3 of this Agreement or in the defense of any claim,
issue or matter described therein, the Company shall indemnify the Indemnitee
against Expenses actually and reasonably incurred by him/her in connection with
the investigation, defense, or appeal of such Proceeding.

            8.2   NO INDEMNIFICATION. In the event that Section 8.1 is
inapplicable, the Company shall also indemnify the Indemnitee unless, and only
to the extent that, the Company shall prove by clear and convincing evidence to
a forum listed in Section 8.3 below that the Indemnitee has not met the
applicable standard of conduct required to entitle the Indemnitee to such
indemnification.

            8.3   SELECTION OF FORUM. The Indemnitee shall be entitled to select
the forum in which the validity of the Company's claim under Section 8.2 hereof
that the Indemnitee is not entitled to indemnification will be heard from among
the following:

                  (a)   A quorum of the Board consisting of directors who are
not parties to the proceeding for which indemnification is being sought;

                  (b)   The shareholders of the Company;

                                       6
<PAGE>   7

                  (c)   Legal counsel selected by the Indemnitee, and reasonably
approved by the Board, which counsel shall make such determination in a written
opinion; or

                  (d)   A panel of three arbitrators, one of whom is selected by
the Company, another of whom is selected by the Indemnitee and the last of whom
is selected by the first two arbitrators so selected.

            8.4   SUBMISSION OF CLAIM. As soon as practicable, and in no event
later than 30 days after written notice of the Indemnitee's choice of forum
pursuant to Section 8.3 above, the Company shall, at its own expense, submit to
the selected forum in such manner as the Indemnitee or the Indemnitee's counsel
may reasonably request, its claim that the Indemnitee is not entitled to
indemnification; and the Company shall act in the utmost good faith to assure
the Indemnitee a complete opportunity to defend against such claim.

            8.5   BINDING JUDGMENT. If the forum listed in Section 8.3 hereof
selected by Indemnitee determines that Indemnitee is entitled to indemnification
with respect to a specific Proceeding, such determination shall be final and
binding on the Company. If the forum listed in Section 8.3 hereof selected by
Indemnitee determines that Indemnitee is not entitled to indemnification with
respect to a specific Proceeding, the Indemnitee shall have the right to apply
to the court in which that Proceeding is or was pending or any other court of
competent jurisdiction, for the purpose of enforcing the Indemnitee's right to
indemnification pursuant to this Agreement.

            8.6   INTERPRETATION OF AGREEMENT. Notwithstanding any other
provision in this Agreement to the contrary, the Company shall indemnify the
Indemnitee against all Expenses incurred by the Indemnitee in connection with
any Proceeding under this Section 8 involving the Indemnitee and against all
Expenses incurred by the Indemnitee in connection with any other Proceeding
between the Company and the Indemnitee involving the interpretation or
enforcement of the rights of the Indemnitee under this Agreement unless a court
of competent jurisdiction finds that each of the claims and/or defenses of the
Indemnitee in any such Proceeding was frivolous or made in bad faith.

      9.    LIMITATION OF ACTIONS AND RELEASE OF CLAIMS. No Proceeding shall be
brought and no cause of action shall be asserted by or on behalf of the Company
or any Subsidiary against the Indemnitee, Indemnitee's spouse, heirs, estate,
executors or administrators after the expiration of one year from the act or
omission of the Indemnitee upon which such Proceeding is based; however, in a
case where the Indemnitee fraudulently conceals the facts underlying such cause
of action, no Proceeding shall be brought and no cause of action shall be
asserted after the expiration of one year from the earlier of: (i) the date the
Company or any Subsidiary of the Company discovers such

                                       7
<PAGE>   8

facts; or (ii) the date the Company or any Subsidiary of the Company could have
discovered such facts by the exercise of reasonable diligence. Any claim or
cause of action of the Company or any Subsidiary of the Company, including
claims predicated upon the negligent act or omission of the Indemnitee, shall be
extinguished and deemed released unless asserted by filing of a legal action
within such period. This Section 9 shall not apply to any cause of action which
has accrued on the date hereof and of which the Indemnitee is aware on the date
hereof, but as to which the Company has no actual knowledge apart from the
Indemnitee's knowledge.

      10.   EXCEPTIONS. Any other provisions herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

            10.1  CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
expenses to the Indemnitee with respect to Proceedings or claims initiated or
brought voluntarily by the Indemnitee and not by way of defense, except with
respect to Proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise as
required under Section 317 but such indemnification or advancement of Expenses
may be provided by the Company in specific cases if the Board finds it to be
appropriate; or

            10.2  LACK OF GOOD FAITH. To indemnify the Indemnitee for any
Expenses incurred by the Indemnitee with respect to any Proceeding instituted by
the Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such Proceeding was made in bad faith or was frivolous; or

            10.3  UNAUTHORIZED SETTLEMENTS. To indemnify the Indemnitee under
this Agreement for any amounts paid in settlement of a Proceeding effected
within seven calendar days after delivery by the Indemnitee to the Company of
the notice provided for in Section 7.1 hereof, unless the Company consents to
such settlement.

      11.   NON-EXCLUSIVITY. The provisions for indemnification and advancement
of Expenses set forth in this Agreement shall not be deemed exclusive of any
other rights which the Indemnitee may have under any provision of law, the
Company's Articles of Incorporation or Bylaws, the vote of the Company's
shareholders or disinterested directors, other agreements, or otherwise, both as
to action in Indemnitee's official capacity and to action in another capacity
while occupying the position as an Agent of the Company, and the Indemnitee's
rights hereunder shall continue after the Indemnitee has ceased acting as an
Agent of the Company and shall inure to the benefit of the heirs, executors and
administrators of the Indemnitee.

                                       8
<PAGE>   9

      12.   INTERPRETATION OF AGREEMENT. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.

      13.   SEVERABILITY. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever: (i)
the validity, legality and enforceability of the remaining provisions of the
Agreement (including without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 12 hereof.

      14.   MODIFICATION AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.

      15.   SUCCESSORS AND ASSIGNS. The terms of this Agreement shall bind, and
shall inure to the benefit of, the successors and assigns of the parties hereto.

      16.   NOTICE. All notices, requests, demand and other communications under
this Agreement shall be in writing and shall be deemed duly given: (i) if
delivered by hand and receipted for by the party addressee; or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Address for notice to either party are as shown on the
signature pages of this Agreement, or as subsequently modified by written
notice.

      17.   GOVERNING LAW. This Agreement shall be governed exclusively by and
construed according to the laws of the State of California, as applied to
contracts between California residents entered into and to be performed entirely
within California.

      18.   CONSENT TO JURISDICTION. The Company and the Indemnitee each hereby
irrevocably consent to the jurisdiction of the state and federal courts in the
State of California for all purposes in connection with any action or proceeding
which arises out of or relates to this Agreement and agree that any action
instituted under this Agreement shall be brought only in the state or federal
courts in the State of California.

                                       9
<PAGE>   10

      IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity
Agreement effective as of the date first above written.

                                      CEPHEID

                                      By:
                                          -----------------------------------
                                      Name:
                                            ---------------------------------
                                      Title:
                                            ---------------------------------

                                      INDEMNITEE:

                                      -----------------------------------
                                      [NAME OF OFFICER/DIRECTOR]

                                       10

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