Document:

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 April 1, 2005 (the “Effective Date”), by and between
Cepheid and William McMillan (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 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 the 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.

        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.

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.

 

 

	 	 	 
	EXECUTIVE

	 	CEPHEID
	 
	 	 
	 /s/ William McMillan

	 	By:  /s/ John L. Bishop
	 
	 	 
	William McMillan

	 	Name: John L. Bishop
	 
	 	 
	

	 	Title: Chief Executive Officer

[Signature Page to Amended and Restated Change of Control Retention and Severance Agreement]<PAGE>

                                                                   EXHIBIT 10.18

                          K.R.M. PETROLEUM CORPORATION

                      NONSTATUTORY STOCK OPTION AGREEMENT

OPTION NO.: 3

OPTIONEE: Charles E. Drimal, Jr.

DATE OF GRANT: May 16, 1989

OPTION PRICE: $1.00

COVERED SHARES: 523,125

         1.      Definitions. All terms used in this Agreement shall have the
meanings set forth below:

                 (a)      "Agreement" means this Nonstatutory Stock Option
Agreement.

                 (b)      "Change in Control" means the acquisition of 51% or
more of the outstanding voting capital stock of the Corporation by any company
or other person or group of companies or other persons acting in concert, or
the merger or consolidation of the Corporation with, or the acquisition of a
majority of the assets of the Corporation by, any of such persons.

                 (c)      "Code" means the Internal Revenue Code of 1986, as
amended.

                 (d)      "Common Stock" means the common stock, par value
$0.10 per share, of the Corporation.

                 (e)      "Corporation" means K.R.M. Petroleum Corporation, a
Delaware corporation, and any successor thereto.

                 (f)      "Covered Shares" means the number of Shares set forth
on page 1 of this Agreement.

                 (g)      "Date of Exercise" means the date on which the
Corporation receives notice of the exercise of the Option in accordance with
the terms of Article 4.

<PAGE>
                          K.R.M. PETROLEUM CORPORATION

                      NONSTATUTORY STOCK OPTION AGREEMENT

OPTION NO.:   4

OPTIONEE:        Charles E. Drimal, Jr.

DATE OF GRANT: May 16, 1989

OPTION PRICE: $1.25

COVERED SHARES: 174,375

         1.      Definitions. All terms used in this Agreement shall have the
meanings set forth below:

                 (a)      "Agreement" means this Nonstatutory Stock Option
Agreement.

                 (b)      "Change in Control" means the acquisition of 51% or
more of the outstanding voting capital stock of the Corporation by any company
or other person or group of companies or other persons acting in concert, or
the merger or consolidation of the Corporation with, or the acquisition of a
majority of the assets of the Corporation by, any of such persons.

                 (c)      "Code" means the Internal Revenue Code of 1986, as
amended.

                 (d)      "Common Stock" means the common stock, par value
$0.10 per share, of the Corporation.

                 (e)      "Corporation" means K.R.M. Petroleum Corporation, a
Delaware corporation, and any successor thereto.

                 (f)      "Covered Shares" means the number of Shares set forth
on page 1 of this Agreement.

                 (g)      "Date of Exercise" means the date on which the
Corporation receives notice of the exercise of the Option in accordance with
the terms of Article 4.
<PAGE>
                          K.R.M. PETROLEUM CORPORATION

                      NONSTATUTORY STOCK OPTION AGREEMENT

OPTION NO.:      5

OPTIONEE:        Beverly A. Cummings

DATE OF GRANT: May 16, 1989

OPTION PRICE: $1.00

COVERED SHARES: 52,500

         1.      Definitions. All terms used in this Agreement shall have the
meanings set forth below:

                 (a)      "Agreement" means this Nonstatutory Stock Option
Agreement.

                 (b)      "Change in Control" means the acquisition of 51% or
more of the outstanding voting capital stock of the Corporation by any company
or other person or group of companies or other persons acting in concert, or
the merger or consolidation of the Corporation with, or the acquisition of a
majority of the assets of the Corporation by, any of such persons.

                 (c)      "Code" means the Internal Revenue Code of 1986, as
amended.

                 (d)      "Common Stock" means the common stock, par value $0.10
per share, of the Corporation.

                 (e)      "Corporation" means K.R.M. Petroleum Corporation, a
Delaware corporation, and any successor thereto.

                 (f)      "Covered Shares" means the number of Shares set forth
on page 1 of this Agreement.

                 (g)      "Date of Exercise" means the date on which the
Corporation receives notice of the exercise of the Option in accordance with
the terms of Article 4.
<PAGE>
                          K.R.M. PETROLEUM CORPORATION

                      NONSTATUTORY STOCK OPTION AGREEMENT

OPTION NO.: 6

OPTIONEE:        Beverly A. Cummings

DATE OF GRANT:   May 16, 1989

OPTION PRICE: $1.25

COVERED SHARES: 17,500

         1.      Definitions. All terms used in this Agreement shall have the
meanings set forth below:

                 (a)      "Agreement" means this Nonstatutory Stock Option
Agreement.

                 (b)      "Change in Control" means the acquisition of 51% or
more of the outstanding voting capital stock of the Corporation by any company
or other person or group of companies or other persons acting in concert, or
the merger or consolidation of the Corporation with, or the acquisition of a
majority of the assets of the Corporation by, any of such persons.

                 (c)      "Code" means the Internal Revenue Code of 1986, as
amended.

                 (d)      "Common Stock" means the common stock, par value
$0.10 per share, of the Corporation.

                 (e)      "Corporation" means K.R.M. Petroleum Corporation, a
Delaware corporation, and any successor thereto.

                 (f)      "Covered Shares" means the number of Shares set forth
on page 1 of this Agreement.

                 (g)      "Date of Exercise" means the date on which the
Corporation receives notice of the exercise of the Option in accordance with
the terms of Article 4.
<PAGE>
                                                                               2

                 (h)      "Date of Grant" means the date on which the option is
granted.

                 (i)      "Fair Market Value" of a Share means the amount equal
to the fair market value of a Share as determined by the Board pursuant to a
reasonable method adopted in good faith for such purpose.

                 (j)      "Option" means the option to purchase the Covered
Shares granted pursuant to this Agreement.

                 (k)      "Option Period" means the period during which the
option may be exercised.

                 (l)      "Option Price" means the price per Share at which the
Option may be exercised, as set forth on page 1 of this Agreement.

                 (m)      "Optionee" means the individual to whom the Option is
granted.

                 (n)      "Securities Act" means the Securities Act of 1933, as
amended.

                 (o)      "Share" means a share of authorized but unissued or
reacquired Common Stock.

                 (p)      "Subsidiary" means a corporation at least 50% of the
total combined voting power of all classes of stock of which is owned by the
Corporation, either directly or through one or more other Subsidiaries.

         2.      Grant of Option.  Subject to the terms and conditions of this
Agreement, the Corporation hereby grants to the Optionee an Option to purchase
the Covered Shares from the Corporation at the Option Price, as the same may be
adjusted from time to time pursuant to the terms of Article 6.

         3.      Terms of the Option.

                 (a)      Type of Option. The Option is intended to be a
nonstatutory stock option, and is not an incentive stock option within the
meaning of section 422A of the Code.

                 (b) Option Period. The Option may be exercised with respect to
full Shares (and no fractional Shares shall be issued) as follows:
<PAGE>
                                                                               3

                           (i)     the Option shall not be exercisable until one
year after the Date of Grant;

                          (ii)     the Option shall be exercisable with respect
to 20% of the Covered Shares beginning one year after the Date of Grant;

                         (iii)     the Option shall be exercisable with respect
to a cumulative maximum of 40% of the Covered Shares beginning two years after
the Date of Grant;

                          (iv)     the Option shall be exercisable with respect
to a cumulative maximum of 60% of the Covered Shares beginning three years after
the Date of Grant;

                           (v)     the Option shall be exercisable with respect
to a cumulative maximum of 80% of the Covered Shares beginning four years after
the Date of Grant; and

                          (vi)    the Option shall be fully exercisable
beginning five years after the Date of Grant.

                 (c)      Notwithstanding anything to the contrary contained
herein, the Option shall expire at the earlier of (i) three months after
termination of the Optionee's employment with the Corporation or its Subsidiary
for any reason except death or disability or (ii) one year after termination of
the Optionee's employment with the Corporation or its Subsidiary by reason of
death or disability.

                 (d)      Nontransferability. The Optionee may not assign or
transfer the option other than by will or by the laws of descent and
distribution. The Option may be exercised, during the Optionee's lifetime, only
by the Optionee.  To the extent the Option is exercisable at the time of the
Optionee's death, it is exercisable by the person designated by will or
entitled by the laws of descent and distribution, upon such death, to any
remaining rights arising out of the Option. The Option is not subject, in whole
or in part, to attachment, execution or levy of any kind.

                 (e)      Payment upon Change in Control. Upon a Change in
Control, the Corporation shall pay the Optionee in complete cancellation of the
Option an amount of cash equal to the product of (i) the excess of (A) the Fair
Market Value of a Share on the date of such Change in Control over (B) the
Option Price times (ii) the number of Shares with respect to which the Option
is then outstanding and has not terminated, whether or not the Option is then
exercisable with respect to such Shares.
<PAGE>
                                                                               4

         4.      Exercise.

                 (a)      Notice. The Option shall be exercised, in whole or in
part, by the delivery to the Corporation of written notice of such exercise, in
such form as the Corporation may from time to time prescribe, accompanied by:
(i) full payment of the Option Price with respect to that portion of the Option
being exercised and (ii) full payment of any amounts required to be withheld
pursuant to applicable income tax laws in connection with such exercise. The
date of delivery of such notice shall be the Date of Exercise of such Option.
Until the Corporation notifies the Optionee to the contrary, the form attached
to this Agreement as Exhibit A shall be used to exercise the Option.

                 (b)      Payment of the Option Price and Withholding. Upon
exercise of the Option, in whole or in part, the Optionee shall pay the Option
Price and satisfy any applicable income tax withholding requirements in cash.

                 (c)      Effect. The exercise, in whole or in part, of the
Option shall cause a reduction in the number of unexercised Covered Shares
equal to the number of Shares with respect to which the Option is exercised.

         5.      Restrictions on Exercise and upon Shares Issued upon Exercise.
Notwithstanding any other provision of this Agreement, the Optionee agrees, for
himself and his successors, that the Option may not be exercised at any time
that the Corporation does not have in effect a registration statement under the
Securities Act relating to the offer of Common Stock to the Optionee, unless
the Optionee furnishes to the Corporation an opinion of counsel reasonably
satisfactory to the Corporation to the effect that such registration is not
required, or unless the Corporation agrees to permit such exercise. The
Optionee further agrees, for himself and his successors, that (i) upon the
issuance of any Shares upon the exercise of the Option, he will, upon the
request of the Corporation, agree in writing that he is acquiring such Shares
for investment only and not with a view to resale, and (ii) that he will not
sell, pledge or otherwise dispose of such Shares so issued unless and until:

                 (a)      the Corporation is furnished with an opinion of
counsel to the effect that registration of such Shares is not required by the
Securities Act or by the rules and regulations thereunder;
<PAGE>
                                                                               5

                 (b)      the staff of the Securities and Exchange Commission
has issued a "no-action" letter with respect to such disposition; or

                 (C)      such registration or notification as is, in the
opinion of counsel for the Corporation, required for the lawful disposition of
such Shares has been filed by the Corporation and has become effective;
provided, however, that the Corporation is not obligated hereby to file any
such registration or notification.

The Optionee further agrees that the Corporation may place a legend embodying
such restriction on the certificates evidencing such Shares.

         6.      Capital Adjustments. The number of Shares subject to the
Option and the Option Price shall be subject to such adjustment, if any, as the
Corporation in its sole discretion deems appropriate to reflect such events as
stock dividends, stock splits, recapitalizations, mergers, consolidations or
reorganizations of or by the Corporation.

         7.      Rights as Shareholder. The Optionee shall have no rights as a
shareholder with respect to any Shares subject to the Option until and unless a
certificate or certificates representing such Shares are issued to the Optionee
pursuant to this Agreement. Except as the Corporation may determine, no
adjustment shall be made for dividends or other rights for which the record
date is prior to the issuance of such certificate or certificates.

         8.      Employment. Neither the granting of the Option evidenced by
this Agreement nor any term or provision of this Agreement shall constitute or
be evidence of any understanding, express or implied, on the part of the
Corporation to employ the Optionee for any period.

         9.      Governing Law. This Agreement shall be governed, construed and
administered in accordance with the laws of the State of Delaware.
<PAGE>
                                                                               6

                 IN WITNESS WHEREOF, the Corporation has caused this Agreement
to be signed on its behalf effective as of the Date of Grant.

ATTEST:

                                            K.R.M. PETROLEUM CORPORATION

[ILLEGIBLE]                                 By: /s/ BEVERLY A. CUMMINGS
-------------------------------------          --------------------------------
Accepted and agreed to as of the Date of Grant.

                                 [ILLEGIBLE]
                     -----------------------------------
                                  Optionee
<PAGE>
                                   EXHIBIT A

                               EXERCISE OF OPTION

Secretary
K.R.M. Petroleum Corporation

         The undersigned optionee under the Nonstatutory Stock Option Agreement
identified as Option No._____ (the "Agreement"), hereby irrevocably elects to
exercise the Option granted in the Agreement to purchase _____ shares of common
voting stock of K.R.M. Petroleum Corporation, $0.10 par value, and herewith
makes payment of $ ________ in cash in payment of the option price in respect
of such exercise.

                                              ---------------------------------
                                                  (Signature of Optionee)

Date Received by K.R.M. Petroleum Corporation:
                                              ---------------------------------

                                  Received by:
                                              ---------------------------------

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