Document:

Q3 2001 10Q Exhibit 10.1

THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS."

PATENT AND TECHNOLOGY LICENSING AND
SUPPLY AGREEMENT

This Agreement, by and between CEPHEID, a California
Corporation having its principal place of business in Sunnyvale, California
(hereinafter "CEPHEID") and ENVIRONMENTAL TECHNOLOGIES GROUP, INC., a
Delaware Corporation with offices located in Baltimore, Maryland (hereinafter
"ETG").

WHEREAS, CEPHEID is the owner of certain patents, patent
applications, inventions, and licenses and possesses certain technical
information and know-how relating to systems for processing polymerase chain
reaction ("PCR") technology and other nucleic acid-based analysis
methods for both integrated military bioagent detection systems and for hand-
held bioagent detection instruments; and

WHEREAS, ETG desires to obtain worldwide licenses with
respect to those patents, patent applications, inventions, licenses, technical
information, and know-how to develop and commercialize bioagent detection
devices and to purchase certain related subsystems, components, and supplies
from CEPHEID;

NOW, THEREFORE, in consideration of the promises and of
the mutual covenants and obligations hereinafter set forth, it is agreed as
follows:

	
DEFINITIONS

	"AAA" means the American
Arbitration Association.
	"Affiliate" means any corporation or
other entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the designated Party
but only for so long as such relationship exists.  For the purposes of this
definition, "control" means i) ownership of at least fifty percent
(50%) of the shares of stock entitled to vote for directors in the case of a
corporation, or of at least fifty percent (50%) of the interests in profits of a
business entity other than a corporation; or ii) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of an individual, corporation, or other legal entity, whether through
the ownership of voting securities, by contract, or otherwise.
	"Agreement" means this Patent and
Technology Licensing and Supply Agreement between CEPHEID
and ETG.
	"Agreement Term" means the term of
this Agreement, which commences
upon the date hereof and will remain in effect until all of the CEPHEID Patent
Rights in any jurisdiction have expired.
	"Amplification/Detection Technology"
means CEPHEID's technologies for facilitating the process of chemically
multiplying the numbers of target sequences of DNA or RNA in order to facilitate
their identification or detection using fluorescent labels or similar
approaches.  Such multiplication of target sequences can be accomplished using
PCR or other nucleic acid amplification methods.  Applicable Cepheid
technologies include, but are not limited to I-CORE Modules, reaction tubes, and
proprietary Reagents.  This CEPHEID Technology is protected by CEPHEID Patents
listed in Schedule A, I. CEPHEID Patent Rights- A. Amplification/Detection Technology.

	"Bioagent" means a
toxic biologic agent used by humans to inflict harm.
	"Budget" means the budgetary and
monetary understanding that is to be negotiated by the Parties within one
hundred twenty (120) days of the signing of the Letter of Intent (signed March
20, 2001), and which is to be updated by the Parties annually.
	"CEPHEID Patent Rights" means those
CEPHEID Patent Rights currently owned by CEPHEID that are listed under that
topic in Schedule A.
	"CEPHEID Technical Information" means
know-how, trade secrets, inventions, data, scientific records, technology and
information relating to the Licensed Products that is now owned by CEPHEID and
which CEPHEID has the right to disclose.
	"CEPHEID Technology" means the
Licensed Patents and CEPHEID Technical Information.  The Technology concerns
CEPHEID's PCR and other nucleic acid amplification related technology,
including, without limitation, sample preparation technology, amplification and
detection technology, reaction tube design, microfluidic systems, rapid lysing,
and nucleic acid extraction and purification.
	"Confidential Information" means any
and all knowledge, know-how, or other information disclosed by either Party to
the other, either orally or in writing, and materials transferred under this
Agreement, if so marked at the time of delivery and, in the case of oral
information, if so designated at the time of delivery and confirmed in writing
by the disclosing party within thirty (30) days after oral disclosure.
Notwithstanding the foregoing, Confidential Information will not include
information or materials that:

	the receiving party can demonstrate by competent,
contemporaneous written records was known to it prior to the date of disclosure
hereunder by the disclosing party; 
	is public knowledge, or becomes public knowledge,
other than by breach of this Agreement by the receiving party or by anyone to
whom the receiving party disclosed such information;
	is lawfully disclosed to the receiving party by a
Third Party who is not obligated to the disclosing party or any other party to
retain such information in confidence; or 
	is independently developed by the receiving party
without knowledge of the information of the disclosing party as demonstrated by
competent, contemporaneous written records.
	is not marked or designated as Confidential
Information. 

Any Confidential Information that is used to develop Inventions will continue to
be the Confidential Information of the disclosing Party and will be governed by
Paragraph 10 of this Agreement.  However, Confidential Information developed or
created by CEPHEID with ETG funds shall be ETG's Confidential
Information.

	"Consumables" means reaction tubes,
cartridges, or other hardware used in conjunction with the Licensed Products to
generate assay results, excluding those supplies defined as Reagents.  Such
consumables are intended to be single use and disposable, unless incorporated
into a flow through device.
	"DP Field" in this Agreement, means
Hand Held Systems for the domestic preparedness and military markets.
	"Dispute" means any disagreement
between the Parties arising out of or in connection with this Agreement.
	"ETG Developments" means any and all
modifications or refinements related to the CEPHEID Technology or any Licensed
Products or their use or the manufacturing processes thereof, that are created,
developed, conceived, or reduced to practice by ETG (or its Affiliates), or by
ETG (or its Affiliates) together with or in conjunction with any other entities
or parties, or by CEPHEID with ETG funding under a specific project requested by
ETG, whether patented or not patented, and which arise after the date of this
Agreement; provided, however, that ETG Developments do not include Joint
Developments.  
	"Fluidics/Lysing Technology" means
CEPHEID's technologies for fluid handling and processing as applied to the
preparation of samples for DNA or RNA based analysis, including filtration,
lysing of cells or cellular organisms, capture and purification of DNA or RNA,
mixing of sample with Reagents, and delivery to a reaction tube or chamber.
Applicable CEPHEID technologies include but are not limited to fluidic
processing blocks, fluidic sample preparation cartridges and cartridge
processing Modules, and ultrasonic lysing Modules.  This technology is protected
by CEPHEID Patents listed in Schedule A, I. CEPHEID Patent Rights- B. Fluidics
&/or Lysing Technology.
	"Fully Burdened Cepheid Product Cost"
means CEPHEID's cost of goods to produce I-CORE modules, I-CORE reaction tubes,
disposable fluidic sample preparation cartridges, fluidic processing blocks,
ultrasonic lysing modules, and/or other applicable subsystems or consumables to
be sold to ETG under the terms of this Agreement.    Such costs will be defined
as Cepheid's direct purchased material and direct production labor costs,
together with the associated direct overheads for purchased material and direct
production labor in the manufacture of a product, in so far as these costs would
be capitalisable into inventory under US GAAP.  However, it does not include
Selling, General and Administrative (S, G&A) overhead costs nor does it
include engineering or development costs, direct or otherwise, that are not
directly related to the production of the product concerned.
	"Fully Burdened ETG Product Cost" is defined as
ETG's direct purchased material and direct production labor costs, together with
the associated direct overheads for purchased material and direct production
labor in the manufacture of a product, in so far as these costs would be
capitalisable into inventory under US GAAP.  However, it does not include
Selling, General and Administrative (S, G&A) overhead costs nor does it
include engineering or development costs, direct or otherwise, that are not
directly related to the production of the product concerned.
	"Fully Burdened RD&E Costs" means costs for CEPHEID research,
development, and engineering (RD&E) support, corresponding to fully burdened
RD&E costs which shall be comprised of direct RD&E costs, RD&E
overhead, and direct costs and allocated overhead associated with constructing
and delivering any prototype Modules or Consumables required by ETG.  Fully
Burdened RD&E Costs will be estimated in terms of average cost per Full Time
Equivalent (FTE) and will be established in accordance with the Budget

	 "Hand-Held System" means
[***]
	[***]
	"I-CORE Module" means a CEPHEID
proprietary nucleic acid amplification Module comprised of (1) a single site,
discrete, individually controllable heater sleeve containing a heater element
and designed to accept a disposable reaction tube or cartridge, (2) an
integrated cooling mechanism, such as a fan, that enables passage of ambient or
cooled air across the heater sleeve, and (3) optical blocks containing solid
state components that enable optical interrogation of the reaction solution in
the reaction tube or cartridge, as it may be modified and improved from time to
time.
	"Integrated Military Bioagent Detection
System" means a system comprised of distinct component parts, each
capable of carrying out a specific phase of a complete field-based, non-
laboratory-based analysis for the presence of Bioagents, with component parts
that include, but are not limited to, sample collection (usually air samples)
component, nucleic acid-based analysis component (identifier), and reporter/data
transmitter component.  Although the components could operate independently, the
system is designed to operate in an integrated fashion.

	[***]
	"Joint Developments" means any and
all modifications or refinements related to any Licensed Products or their use
or the manufacturing processes thereof, that are created, developed, conceived,
or reduced to practice by ETG and CEPHEID, together, after the date of this
Agreement.   Modifications, refinements, or any other developments that are
funded solely by ETG shall not be considered Joint Developments, but shall be
considered ETG Developments as defined in Paragraph 1.15.
	"JPO" means the United States
Government's Joint Program Office for Biological Defense.
	"Letter of Intent" means the document
signed by the Parties on March 20, 2001, relating to the terms of this
Agreement.  This Agreement supercedes the Letter of Intent in its entirety.
	"Licensed Fields" means the DP Field
and the Military Field, as licensed under Section 2 of this Agreement.
	"Licensed Patents" means the CEPHEID
Patent Rights listed in Schedule A.
	"Licensed Product(s)" means any
product that, in whole or part (a) is made using, or that uses or embodies,
CEPHEID Technical Information; or (b) is covered by, a Valid Claim of an
unexpired Licensed Patent.  For the purposes of this
definition, a Product is "covered by" a Valid Claim of a Patent if,
but for this Agreement, its manufacture, use, or sale would infringe a Valid Claim.

	"Military Field" means Integrated Military Bioagent
Detection Systems for use by governmental military customers only for the
detection of Bioagents, excluding Hand-Held Systems.

	"Modules" means a subsystem or subcomponent designed for
incorporation into a system or instrument and capable of carrying out a
particular designated function; however, modules are not capable of independent
function, but operate only in conjunction with other subsystems or
subcomponents.
	[***]

	"Net Sales" means the total consideration, whether in
dollars or otherwise, paid on sales of a Licensed Product by ETG or its
Affiliates to unrelated Third Parties in bona fide arms length transactions,
less the following deductions, in each case related specifically to the Licensed
Product: (1) trade, distribution, cash and quantity discounts and sales
commissions; (2) taxes on sales, such as sales or use taxes to the extent added
to the sales price and set forth separately as such in the total amount
invoiced; (3) freight, insurance and other transportation charges to the extent
added to the sales price and set forth separately as such in the total amount
invoiced; and (4) amounts repaid or credited by reason of rejections, defects or
returns or because of retroactive price reductions, chargebacks or rebates under
government programs.  Net Sales shall also include the fair market value of non-
monetary consideration received by ETG or its Affiliates with respect to sales
by them of the Licensed Products to unrelated Third Parties.

	"Parties" shall mean CEPHEID and ETG and their Affiliates
and Successors.

	"Patent" means valid and enforceable letters patent, patent
applications, and all related continuations, continuations-in-part,
reexaminations, divisions, reissues, extensions, patents of addition, or
inventor's certificates, and all foreign counterparts thereof.
	"PCR" means DNA and RNA
replication through polymerase chain reactions.

	"Reagents" means enzymes, nucleic probes, nucleic acid primers,
and other biological components, fluorescent labels, buffers, and other
chemicals that are used for carrying out a nucleic acid amplification and
detection reaction in the CEPHEID technology.  Such Reagents may or may not be
single use, and may be presented in a variety of formulations and mixtures
including, but not limited to, liquid, surface, immobilized, or dried.

	"Running
Royalty" means any payment regarding sale of Licensed
Products that is directly or indirectly affected by the volume of such sales,
whether in a linear or stepped fashion.

	"Successor" means a successor or assignee of a Party in
accordance with Paragraph 15.1 of this Agreement.

	"Territory" means all countries of the world.

	"Third Party" means any individual, estate, trust,
partnership, joint venture, association, firm, corporation, company, or other
entity, other than the Parties to this Agreement.
	[***]

	"Valid Claim" means any claim contained in any patent
application or in any issued and unexpired patent included within the Licensed
Patents which has not been abandoned or held unenforceable by a court or other
governmental agency of competent jurisdiction, and which has not been disclaimed
or admitted to be invalid or unenforceable.

	  GRANT OF LICENSES

	Licenses to ETG.  In consideration of
the Royalties and other consideration provided under this Agreement in Section
5, and subject to the limitations set forth in Paragraph 2.2 and the other terms
and conditions of this Agreement:

	CEPHEID grants to ETG and its Affiliates and their
Successors the exclusive worldwide right and license, under the Licensed Patents
and CEPHEID Technical Information, to manufacture, have made, use, develop,
sell, and have sold Licensed Products within the DP Field in the Territory
during the Agreement Term.  
	CEPHEID grants to ETG and its Affiliates and their
Successors the non-exclusive worldwide right and license, under the Licensed
Patents and CEPHEID Technical Information, to manufacture, have made, use,
develop, sell, and have sold Licensed Products within the Military Field in the
Territory during the Agreement Term.
	No licenses or rights to any intellectual property or
to any patents other than those specified in the above Paragraphs 2.1.1 and
2.1.2 are granted or conferred to ETG by CEPHEID under this Agreement.

	Exclusions and Limitations on ETG's
License.

	The Smart Cycler, Smart Cycler TD, and Smart Cycler
XC, current Cepheid products, are excluded from the licenses granted in this
Agreement.  This exclusion does not prohibit in any way the use of the CEPHEID
Technology by ETG in accordance with the remainder of this Agreement.
	The license in Paragraph 2.1, above does not include
the right to make or have made any Modules or Consumables or components thereof
that are part of the Licensed Products that are based on, embody, or incorporate
the Cepheid Technology that CEPHEID decides, in its discretion, to make or have
made.
	CEPHEID will retain sole rights to manufacture, or
have manufactured, sell, have sold, develop, and use the I-CORE Module, I-CORE
Module derivatives, fluidic cartridge processing Modules and Consumables that
are based on the Cepheid Technology, even if such Modules or Consumables
contain, include, or embody ETG Developments or Joint Developments; provided,
however, that, in the DP Field, CEPHEID will sell and have sold such products
only to ETG.  For any Modules or Consumables containing, including, or embodying
ETG Developments, CEPHEID will sell and have sold such products only to ETG in
the DP and Military Fields. CEPHEID will sell Modules and Consumables to ETG
under this Paragraph 2.2.3 for CEPHEID's Fully Burdened Cepheid Product Cost
plus a % mark-up, dependent upon the field, as specified in Paragraph 5.5. 
	Notwithstanding anything to the contrary in this
Agreement, if ETG desires to manufacture any Module and/or Consumable that is
based, in whole or part, on the
CEPHEID Technology, it may do so only if CEPHEID, in its sole discretion,
authorizes ETG, in writing, to do so.  In this case, ETG will pay to CEPHEID a
royalty on net end-user sales equivalent to the rates owed to CEPHEID (as per
Paragraph 5.5) as if the product had been manufactured by CEPHEID.
	The rights and licenses granted pursuant to Paragraph
2.1.1 shall be subject to the right of CEPHEID to conduct research and
development activities using the CEPHEID Technology, including the Licensed
Patents and the CEPHEID Technical Information.

2.2.6CEPHEID and ETG agree that ETG will
manufacture and integrate or have manufactured or integrated on its behalf in
its sole discretion  the Hand-Held Systems and the Integrated Military Bioagent
Detection Systems for the DP and Military Fields.

2.2.7Should CEPHEID ever stop production or be
unable to meet the production needs of ETG of the Modules and/or Consumables
within ninety (90) days of any reasonable request, CEPHEID grants ETG the right
to manufacture the Modules and/or Consumables for the DP and Military Fields; provided, however, that, in the case of I-Core Modules, the
parties must first negotiate a mutually-satisfactory sublicense of any necessary
patents or technology.

	Assignments and Sublicenses.  ETG and/or
Cepheid may not Sublicense or assign, in whole or part, any of its license
rights under this Agreement except as provided in Paragraph 14.1 of this
Agreement.
	Licenses and Grants to CEPHEID.

	ETG Developments.  ETG hereby grants to CEPHEID
a non-exclusive, perpetual, worldwide license to CEPHEID under ETG Developments
(including without limitation any ETG-developed Licensed Products), to sell and
have sold any Licensed Products outside the Licensed Fields.

	If such Licensed Products contain ETG Developments,
CEPHEID will pay to ETG a royalty, to be negotiated between the parties but not
to exceed [***] of Net Sales.
	Notwithstanding Paragraph 2.4.1.A of this Agreement,
if such Licensed Products are manufactured by ETG, they will be transferred to
CEPHEID for a mutually-agreeable price but not to exceed Fully Burdened ETG
Product Cost plus [***].
	Regarding ETG Developments, CEPHEID may sell, and have
sold Licensed Products that are not manufactured by or on behalf of ETG only if
the Parties reach an agreement as to the appropriate Royalty.  Cepheid will
provide ETG written notice prior to utilizing any ETG Developments.

	Joint Developments.  Except as otherwise
specified in this Agreement, ETG and CEPHEID each hereby grant to one another
non-exclusive, perpetual, royalty-free worldwide licenses to use, have use,
sell, have sold, and exploit the Joint Developments.  ETG's licenses under this
Section 2.4.2 shall only apply to the DP and Military Fields and CEPHEID's
licenses under this Section 2.4.2 shall only apply to fields other than the DP
and Military Fields.

	  DEVELOPMENT RESPONSIBILITIES

	ETG Responsibilities

	ETG will, in addition to the CEPHEID
Technology to be licensed under this Agreement, also obtain whatever licenses
are necessary from Applied Biosystems and/or Hoffman La-Roche, or otherwise to
fully carry out its responsibilities under this Agreement.  When necessary,
CEPHEID will provide reasonable support to ETG in obtaining these additional
licenses.  This Agreement will be voidable in the event the Parties conclude
that ETG is unable to execute all necessary licenses; provided however, that
CEPHEID will have the option to "step in" and provide a source for
necessary Reagents if ETG is unable to obtain licenses or make other
arrangements for Reagents with reasonable terms for the required Reagents.  The
supply of Reagents by CEPHEID to ETG, if required, shall be the subject of a
separate agreement, to be negotiated, as required, between the Parties.
	ETG will use its best efforts to develop, manufacture, market and sell
products that include the CEPHEID Technology in the DP Field.  [***].

	[***]
	ETG will diligently market the CEPHEID Technology in the domestic and
international Military Field.
	ETG will use its best efforts, as appropriate, to submit proposals that
include the CEPHEID Technology for the [***]and any other future military
development and/or production contracts in which the CEPHEID Technology is
applicable, subject to any limitations of the license(s) and/or customer and
program requirements.
	ETG will purchase Modules and Consumables from CEPHEID as required to
develop, manufacture and sell DP Hand-Held Systems or other systems developed by
ETG under this Agreement.
	ETG will develop or have developed on its behalf at its sole discretion PCR
primers, enzymes, fluorescent tags, and other Reagents for DP and Military
Fields or call upon CEPHEID to provide these services if the economics,
including license terms, are more favorable to the Parties.  The supply of
Reagents by CEPHEID to ETG, if required, shall be the subject of a separate
agreement, to be negotiated as required between the Parties.  If Reagent
development services were to be provided by CEPHEID on behalf of ETG, such
services would be subject to funding from ETG as described in 3.1.9.
	ETG will participate at its own cost in a continuing dialog and consultation
with CEPHEID on any changes/improvements to the I-CORE technology and associated
disposables.
	ETG will fund agreed research, development, engineering, and other work to
be carried out by CEPHEID under the direction and specification of ETG, at rates
equivalent to CEPHEID'S Fully Burdened RD&E Costs and according to the
Budget to be developed by CEPHEID and ETG.  If the Parties cannot reach
agreement on the Budget, this Agreement is void.
	ETG will provide to CEPHEID access to all data, information, and records
relating to the performance of the CEPHEID Technology and the Licensed Products,
, including without limitation results of any research, development, or field
trials, subject to export, government security, or other legal
restrictions.

	CEPHEID Responsibilities

	CEPHEID will provide reasonable technical
support to ETG, at ETG's cost, consistent with the Budget, in the following
technical areas: I-CORE Module, flow through fluidics, disposable sample
processing systems, primer performance, and other detector/identifier technology
as necessary to enable the design and integration of the applicable CEPHEID
Technology into ETG Licensed Products, in whole or part, under this Agreement.
In cases where CEPHEID and ETG agree, in their mutual discretion, that ETG
should manufacture a specific Module or Consumable employing the CEPHEID
Technology, CEPHEID will provide to ETG the drawings, manufacturing processes,
and other documentation in CEPHEID's possession, or in the possession of
Cepheid's subcontractors or vendors, necessary to manufacture the key CEPHEID
Technology-related components of the Hand-Held Systems and Integrated Military
Bioagent Detection Systems.  CEPHEID will provide the above-described technical
support by making its technical personnel available in Sunnyvale, CA, to assist
the transition of the CEPHEID Technology to ETG.  ETG shall pay CEPHEID for such
technical support on an full time employee (FTE) basis and according to the
Budget, defined in Section 5.4, developed by CEPHEID and ETG.
	CEPHEID will participate at its own cost within
reasonable commercial standards, during the term of this Agreement, in a
continuing dialogue and consultation with ETG on changes/improvements to the I-
CORE technology and associated disposables.
	CEPHEID will supply I-CORE Modules, I-CORE reaction
tubes, disposable fluidic sample prep cartridges, and/or other applicable
Modules or Consumables to ETG at transfer prices as described in the Payments
& Royalties Section of this Agreement, as long as they are appropriate for
Licensed Products developed by ETG under this Agreement.  Except where CEPHEID
has applicable pre-existing or parallel Reagent formulations, ETG will be
responsible for the development, stabilization, and supply of Reagents for
loading by CEPHEID into the reaction tubes or disposable cartridges,
providing that such Reagents are compatible with the CEPHEID components and are
developed according to CEPHEID specifications.
	CEPHIED will provide to ETG access to and use of all
data, information, and records relating to the performance of the CEPHEID
Technology applicable to the endeavors contemplated under this Agreement, the
Licensed Products, and related systems, including without limitation results of
any research, development, or field trials, subject to export, government
security, or other legal restrictions.   Where
appropriate ETG will support trial work by direct participation.

	 ATTRIBUTION

	Attribution.  ETG shall make
appropriate reference in all labeling and printed materials to any contribution
by CEPHEID or the CEPHEID Technology to the Licensed Products.

	
PAYMENTS AND ROYALTIES

	Upfront Payment.  In
consideration of the exclusive license for the DP Field granted to ETG by
CEPHEID:

	ETG will pay to CEPHEID an upfront non-refundable
license fee payment of [***] payable upon signing of this Agreement.  The
license fee will cover the following CEPHEID PCR-related technology components
and must be taken in total:

A.A license to CEPHEID's technologies for reactor
tube(s) design [***];

B.[***]; and

C.[***]

5.1.2In consideration for this payment, Cepheid
shall provide at a minimum the information and documentation listed in Schedule
B.

	Minimum Royalty Payments. ETG will
begin paying to CEPHEID minimum royalty payments to retain the exclusivity of
its license in the DP Field according to the following schedule.  Minimum
royalty payments are creditable against payments due to CEPHEID only in the
preceding 12 month period to which they apply: 

	[***]
	[***]
	[***]
	[***]
	[***]

If such payments are not made, then the CEPHEID
license in the DP Field shall revert from an exclusive to a non-exclusive
license.

	ETG Research and Support.  ETG will pay
CEPHEID at CEPHEID's Fully Burdened RD&E Costs, as set forth in the Budget,
for CEPHEID's support for:

	Transfer to ETG of existing applicable CEPHEID
Technology covered in this Agreement, not to exceed [***], as defined in
the Budget developed in accordance with Section 5.4, unless agreed upon in
writing by both the President of ETG and the President of CEPHEID. 
	Consultation to ETG for adaptation of existing
technology covered in this Agreement.
	Modification of existing technology or development of
new technology as required under this Agreement.

	Budget for Support Activities.  Within
one hundred twenty (120)days of the execution of the Letter of Intent (March 20,
2001), a Budget is to be developed and agreed upon by the parties outlining ETG
requirements in the above-specified areas, as well as a budget for funding to
cover CEPHEID's support activities.  This Agreement will be void should the
parties be unable to mutually agree to the Budget.
	Transfer Prices and Running Royalties.

5.5.1For sales in the DP Field:

A. ETG shall pay CEPHEID'S Fully Burdened Cepheid
Product Cost plus [***] for all subsystems, Modules, and Consumables
supplied to ETG by CEPHEID.  If Reagents are supplied by CEPHEID to ETG, such
supply shall occur under a separate agreement, to be negotiated between the
Parties.  Should this transfer pricing increase more than two times the prior
year's Consumer Price Index (CPI), the parties will reevaluate this pricing
formula and confirm the parties' mutually agreement to this Section.

B. ETG will also pay CEPHEID Running Royalties on Net
Sales of Licensed Products at one of the following rates determined by the
CEPHEID Technology incorporated in the Hand-Held System(s):

5.5.1B.1Amplification/Detection Technology
only:[***]; or

5.5.1.B.2Integrated with Fluidics &/or Lysing
Technology:[***].

In the DP Field, the Running Royalty shall be payable
on Net Sales of the Hand-Held System, including all accessories needed to
operate the Licensed Products and Consumables (except independently packaged
Reagents) sold with the Licensed Products.

5.5.2 For sales in the Military Field:

A. ETG shall pay CEPHEID'S Fully Burdened Cepheid
Product Cost plus [***] for all subsystems, Modules, and Consumables
supplied to ETG by CEPHEID. Should this transfer pricing increase more than two
times the prior year's Consumer Price Index (CPI), the parties will reevaluate
this pricing formula and confirm the parties' mutually agreement to this
Section.

B. ETG will pay to CEPHEID Running Royalties on the
Net Sales price of all nucleic acid-based analysis components (identifiers) and
related sample processing components in the Integrated Military Bioagent
Detection Systems that are sold by ETG and that incorporate the CEPHEID
Technology.  Royalty rates will be based on one of the following rates,
determined by the CEPHEID Technology integrated into the Licensed Product:

5.5.2.B.1 Amplification/Detection Technology
only:[***]; or 

5.5.2.B.2 Integrated with Fluidics &/or Lysing
Technology:[***].

If the nucleic acid-based analysis component
(identifier) or any other component of an Integrated Military Bioagent Detection
System that contains CEPHEID Technology is invoiced separately to the end-user,
then the Running Royalty shall be applied to the invoiced price of the
applicable components.  If the Integrated Military Bioagent Detection System is
invoiced in its entirety to the end-user, then the Parties will agree upon a
formula for allocating a portion of the total Net Sales of each Integrated
Military Bioagent Detection System corresponding to the number and nature of
components containing CEPHEID Technology, and the Running Royalty shall be
applied against such allocated portion of the total Net Sales. 

C. As the Military Field opportunities become better
defined with regards to customer and program requirements, CEPHEID and ETG may
adopt a mutually acceptable alternative compensation formula.

	  REPORTS AND PAYMENTS

	Royalty Reports.  Reports, accompanied
by statements of minimum Royalties and running Royalties due, under Section 5 of
this Agreement, shall be furnished to CEPHEID by ETG within forty-five (45) days
after the completion of each calendar quarter.  Such reports shall show gross
sales of each Licensed Product, the deducted amounts used to calculate Net
Sales, in accordance with Paragraph 1.35, and the Royalties due for the
preceding fiscal quarter.  Such reports shall also show calculations for all
minimum Royalties and running Royalties due.  Such reports shall also provide
sales and sales price information for sales of Licensed Products to the U.S.
Government such that CEPHEID can compile progress and royalty reports due under
the Lawrence Livermore National Laboratory License.
	Invoices.  Invoices shall reasonably
reflect the Fully Burdened Cepheid Product Cost or Fully Burdened ETG Product
Cost, as appropriate, for which a cost plus percentage payment is due.

	Records and Inspection.    

	ETG shall keep accurate records of account on behalf
of itself and its Affiliates, Successors, Sublicensees, and sellers, for the
purposes of compliance with its obligations hereunder, and shall maintain them
for at least 5 years from the date of their creation.  ETG shall permit its
records to be inspected and arrange for such inspection of the records of its
Affiliates, Successors, Sublicensees, and sellers during normal business hours
by independent certified public accountants to inspect and verify the accuracy
of ETG payments.  Such inspection shall be upon reasonable notice.  If the
inspection reveals an underpayment of greater than 5% between the payments owed
to CEPHEID under this Agreement and the payments actually paid by ETG to
CEPHEID, ETG will promptly pay CEPHEID's costs of conducting the inspection,
along with the amount of the discrepancy.  If no such underpayment is found, or
if that underpayment is 5% or less, the cost of inspection shall be borne by
CEPHEID.
	CEPHEID shall keep accurate records of account on
behalf of itself and its Affiliates, Successors, Sublicensees, and sellers, for
the purposes of compliance with its obligations hereunder, and shall maintain
them for at least 5 years from the date of their creation.  CEPHEID shall permit
its records to be inspected and arrange for such inspection of the records of
its Affiliates, Successors, Sublicensees, and sellers during normal business
hours by independent certified public accountants to inspect and verify the
accuracy of CEPHEID's Fully Burdened Cepheid Product Costs that are used as a
basis for establishing the transfer prices of Modules and Consumables sold to
ETG and to verify and/or identify any utilization of ETG Developments.  Such
inspection shall be upon reasonable notice.  If the inspection reveals an
overpayment of greater than 5% between the transfer prices to be charged by
CEPHEID under this Agreement and the transfer prices actually paid by ETG to
CEPHEID, CEPHEID will promptly pay ETG's costs of conducting the inspection,
along with the amount of the overpayment.  If no such overpayment is found, or
if that overpayment is 5% or less, the cost of inspection shall be borne by
ETG.

	Payments. Payments, other than Royalty
payments, shall be payable in United States currency within 45 days of its
receipt of the invoices specified in Paragraph 6.2, along with its cooperation
in any audits requested under Paragraph 6.3.  Royalty payments shall be paid
with the Royalty reports described in Section 6.1. The dollar volume represented
by sales in countries foreign to the United States shall be calculated using the
average of the daily exchange rate published by the Wall Street Journal for the
country in question during the fiscal quarter for which a report is required.
Payments of Running Royalties shall be made within 45 days of the end of each
fiscal quarter during which the Running Royalties apply.  A failure to make
payments in accordance with this Paragraph 6.4 will be considered a material
breach of this Agreement.
	Currency.  In the event
consideration or Running Royalties are due for sales in a country where by
reason of currency regulations of any kind or taxes of any kind it is impossible
to make royalty payments for such country's sales in accordance with Paragraph
6.4, said Running Royalties shall be deposited in whatever currency is allowable
for the benefit or credit of CEPHEID in an accredited bank of that country as
mutually agreed to by the Parties.

	Taxes.  All taxes with no right of offset required to be
withheld from royalty payments hereunder shall be deducted by ETG from said
payments and evidence of such payment or withholding shall be delivered to
CEPHEID at the time the accounting for such royalty payment is made to
CEPHEID.

	  INTELLECTUAL PROPERTY

	Each party retains ownership of its
own intellectual property developed prior to the date of this Agreement.
	Any intellectual property developed solely by either
party during the term of this Agreement will be solely owned by that developing
party; however, subject to the licenses and limitations set forth in Section 2
of this Agreement.
	Any Joint Developments will be jointly owned by the
parties and may be used without restriction by either party, consistent with the
provisions of Paragraph 2.4.2 of this Agreement.  The Parties will implement
steps with respect to Joint IP reasonably appropriate to facilitate its
protection, use and appropriate exploitation by the parties.
	CEPHEID Patent Rights.  CEPHEID will at
all times own and be responsible for and fully maintain the CEPHEID Patent
rights, except as set forth in Sections 7.5 and 7.6.
	Failure to Prosecute or Maintain.  If
CEPHEID fails to, or elects not to, prosecute any application or patent in the
CEPHEID Patent rights, CEPHEID will, within a reasonable time after making such
election, notify ETG and ETG will have the right, at its expense, to pursue such
filing, prosecution and maintenance.  Regardless of whether CEPHEID or ETG
prosecutes a Patent right hereunder, ETG will retain the same rights in the
Licensed Field as it would have been entitled to under this Agreement if CEPHEID
had controlled the prosecution. Should the parties determine that only ETG
would benefit in the prosecution and/or maintenance of any particular Patent
rights under this paragraph, ETG shall be fully responsible for the associated
costs; otherwise, ETG shall charge back any and all expenditures to Cepheid,
initially by crediting ETG for Royalties as defined in Section 5.
	Failure to Seek Protection or Maintain.
If CEPHEID decides not to seek patent protection in a particular country or
other jurisdiction in the Territory, or to not maintain patent protection on any
of the CEPHEID Patent rights in any country or other jurisdiction in the
Territory where such CEPHEID Patent rights exist, CEPHEID will notify ETG of
such decision in writing within a reasonable time after the decision is made.
ETG will then have the right, at ETG option and expense, to file, prosecute, and
maintain any such patent applications and patents.  With respect to any such
prosecution, ETG will retain the same rights in the Licensed Fields as it would
have been entitled to under this Agreement if CEPHEID had controlled the
prosecution.  Should the parties determine that only ETG  would benefit in the
protection and/or maintenance of any particular Patent rights under this
paragraph, ETG shall be fully responsible for the associated costs; otherwise,
ETG shall charge back any and all expenditures to Cepheid, initially by
crediting ETG for Royalties as defined in Section 5.
	ETG Developments.  ETG will have the
right, but not the obligation, to file, prosecute and maintain any Patent Rights
which claim ETG Developments, at its cost and expense.  If ETG fails to, or
elects not to, prosecute any Patent rights which claim ETG Developments, ETG
will, within a reasonable time after making such election, notify CEPHEID and
CEPHEID will have the right to pursue such filing, prosecution, and maintenance,
at CEPHEID's cost and expense.  Regardless of whether CEPHEID or ETG prosecutes
a Patent right in any ETG Improvement hereunder, CEPHEID will retain the same
rights outside the Licensed Fields as it would have been entitled to under this
Agreement if ETG had controlled the prosecution.

	  WARRANTIES

	CEPHEID Representations and
Warranties.  CEPHEID warrants and represents that as of the effective
date of this Agreement:

(a)It has the appropriate rights to license or, as
appropriate, sublicense such rights to ETG.

(b)It has identified all PCR-related patents and
patent applications for which Cepheid has rights to license and/or sublicense in
Schedule A.

(c)It has the right to grant this license
to the Licensed Patents.

(d)Except as set forth hereunder, it has neither
executed agreements nor granted rights in conflict with the rights and license
granted hereunder.

(e)There are no current or pending Patent Office
or court proceedings in which the ownership, inventorship, validity,
patentability or enforceability of any of the Licensed Patents is being
contested.

(f)This Agreement has been authorized by all
requisite corporate action of CEPHEID and the Agreement constitutes a valid and
binding obligation of CEPHEID and is enforceable against CEPHEID in accordance
with its terms.

(g)CEPHEID SHALL PROVIDE ETG ITS STANDARD
COMMERCIAL WARRANTY AS PROVIDED TO THIRD PARTY CUSTOMERS FOR ALL MODULES AND
CONSUMABLE SOLD TO ETG UNDER THE TERMS OF THIS AGREEMENT.

(h)EXCEPT AS PROVIDED FOR ABOVE, CEPHEID HEREBY
DISCLAIMS ANY WARRANTIES, WHETHER EXPRESS OR IMPLIED, OF ANY KIND REGARDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, WITH RESPECT
TO THE LICENSED PRODUCT, OR THAT THE LICENSED PRODUCT CAN BE SUCCESSFULLY
DEVELOPED BY USE OF THE LICENSED PATENTS OR KNOW-HOW.  IN NO EVENT SHALL CEPHEID
BE LIABLE TO ETG FOR ANY SPECIAL, INCIDENTAL INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING WITHOUT LIMITATION LOSS OF USE OR LOSS OF PROFITS) ARISING DIRECTLY
OR INDIRECTLY OUT OF THIS AGREEMENT, INCLUDING ITS PERFORMANCE OR ANY BREACH,
DELAY, OR DEFAULT.  THIS LIMITATION SHALL APPLY WHETHER A CLAIM ARISES IN
CONTRACT, TORT, OR STRICT LIABILITY.  

	ETG Representations and Warranties.
ETG warrants and represents that, as of the effective date of this Agreement, to
the best of its knowledge:

(a)  Except as set forth hereunder, it has neither
executed agreements nor granted rights in conflict with the rights and licenses
granted hereunder.

(b)  This Agreement has been authorized by all
requisite corporate action of ETG and the Agreement constitutes a valid and
binding obligation of ETG and is enforceable against ETG in accordance with its
terms.

(c)ETG SHALL PROVIDE CEPHEID ITS STANDARD COMMERCIAL WARRANTY AS PROVIDED
TO THIRD PARTY CUSTOMERS FOR ALL COMPONENTS AND INSTRUMENTS SOLD TO CEPHEID
UNDER THE TERMS OF THIS AGREEMENT.

(d)EXCEPT AS PROVIDED FOR ABOVE, ETG HEREBY
DISCLAIMS ANY WARRANTIES, WHETHER EXPRESS OR IMPLIED, OF ANY KIND REGARDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, WITH RESPECT
TO COMPONENTS, INSTRUMENTS, OR LICENSED PRODUCTS, OR THAT THE ETG DEVELOPMENTS
CAN BE SUCCESSFULLY DEVELOPED BY USE OF THE LICENSED PATENTS OR KNOW-HOW.  IN NO
EVENT SHALL ETG BE LIABLE TO CEPHEID FOR ANY SPECIAL, INCIDENTAL INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION LOSS OF USE OR LOSS OF
PROFITS) ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, INCLUDING ITS
PERFORMANCE OR ANY BREACH, DELAY, OR DEFAULT.  THIS LIMITATION SHALL APPLY
WHETHER A CLAIM ARISES IN CONTRACT, TORT, OR STRICT LIABILITY.  

	  PATENT INDEMNIFICATION

	If the Owner of a patent or copyright
or trademark sues ETG alleging that the Licensed Products delivered under this
Agreement or ETG's use of the Licensed Products infringe a patent or copyright
identified in Schedule A and if ETG gives prompt notice of the suit, CEPHEID
will defend the suit, provided that ETG gives CEPHEID reasonable cooperation in
the defense of the suit.
	In any suit CEPHEID defends under paragraph 9.1,
CEPHEID may control the defense, will pay all litigation costs including
incurred attorney fees, and will indemnify ETG for all damages awarded by a
court or any settlement payments approved by CEPHEID.  
	In any suit CEPHEID defends under paragraph 9.1, if
ETG is enjoined by court order or by settlement approved by CEPHEID from using
the CEPHEID Technology and Licensed Products as sold by CEPHEID, CEPHEID shall,
at no cost to ETG and as mutually agreed to in writing between the Parties, (a)
procure for ETG the right to continue using the Licensed Products, (b) replace
or modify the Licensed Products to avoid infringement, or (c) repossess the
Licensed Products in exchange for a full refund of the Licensed Products. 

	 CONFIDENTIALITY

	No Use.  The receiving party will not
use Confidential Information of the disclosing party except for the purposes
expressly set forth in this Agreement.
	Nondisclosure. The receiving party will not
disclose Confidential Information to others (except to its employees,
consultants, agents, and potential and actual collaboration partners,
distributors and contract manufacturers, who reasonably require same for the
purposes of this Agreement and who are bound to the receiving party by like
obligations as to confidentiality) without the express written permission of the
disclosing party.
	Authorized Disclosure.  The receiving party
may disclose Confidential Information to the extent such disclosure is
reasonably required by law or judicial order; provided, however, that the party
required to make such disclosure shall seek confidential treatment of the
Confidential Information to the fullest extent possible and shall give the other
party prompt written notice thereof and opportunity to seek protective treatment
of the Confidential Information.
	Regulatory Disclosures.  The confidentiality
obligations in this Section 10 shall not apply to the extent that the
Confidential Information or information created pursuant to this Agreement is a
necessary or appropriate part of the information and data submitted for purposes
of regulatory approval (including, but not limited to export) of the Licensed
Product; provided, however, that to the extent practicable such submissions
shall be made on a confidential basis.  Such a regulatory disclosure shall in no
way be interpreted as a public disclosure.
	Confidentiality Term.  The confidentiality and
non-use obligations under this Section 10 shall extend for the term of this
Agreement and five years thereafter.
	Publications.  Subject to prior written
approval by ETG for all publications and releases, CEPHEID may use the ETG and
its Affiliates, including Smiths Group, names and logos in publications and
press releases on the collaboration.
	Affiliates.  Nothing in this Section 10 or
this Agreement shall be construed to prevent either Party from disclosing to its
Affiliated Companies Confidential Information obtained from the other Party
during this Agreement, provided that such Confidential Information is used in a
manner consistent with this Agreement, and further provided that said Affiliated
Companies are bound by a like confidentiality obligation with respect to such
Confidential Information.

	  TERM

The term of this Agreement shall be for
the Agreement Term, unless earlier terminated pursuant to Section 13 of this
Agreement.

	  INDEMNIFICATION

	ETG Indemnification.  ETG shall
indemnify, defend, and hold CEPHEID and its current, past, and future Affiliates
and their Successors and their respective directors, officers, employees,
representative and agents harmless from and against any and all liabilities,
claims, demands, costs, expenses, judgments or settlements (including legal
expenses and attorneys' fees) which arise out of or result from the use,
testing, manufacture, recall, processing, commercializing, promoting, packaging,
labeling, sale, or distribution of Licensed Product by or on behalf of, or as a
result of the activities of, ETG or its Affiliates, Successors, Sublicensees,
sellers, or agents.

12.2CEPHEID Indemnification. In
addition to that set forth in Section 9, CEPHEID shall indemnify, defend, and
hold ETG and its current, past, and future Affiliates and their Successors and
their respective directors, officers, employees, representative and agents
harmless from and against any and all liabilities, claims, demands, costs,
expenses, judgments or settlements (including legal expenses and attorneys'
fees) which arise out of or result from any third party claims of patent,
license or intellectual property rights infringement or other violations against
the CEPHEID technology or other information provided by CEPHEID to ETG under
this Agreement or as a result of the activities of CEPHEID or its Affiliates,
Successors, Sublicensees, sellers, or agents.

	Notice.  The parties shall give each
other prompt notice in writing, in the manner set forth in Paragraph 16.6 below,
of any claim or demand made against them that may be covered by this Section 12.
Except as defined in Section 9, the parties shall have the right to participate,
at its own expense, in the defense of any such claim or demand to the extent it
so desires.
	Insurance.  Each party warrants that it
has and will maintain during the term of this Agreement and for five (5) years
thereafter product liability and general liability insurance in commercially
reasonable amounts customary for similarly situated companies and sufficient to
support its indemnification obligations under this Agreement.  The parties will
give each other reasonable prior written notice of any cancellation or failure
to renew such insurance.  Such insurance will be placed with insurers having a
Best or Standard and Poors rating of "A" or better.  Upon request by
the other party, ETG or CEPHEID shall promptly provide a customary certificate
of insurance, evidencing the coverage required by this Paragraph 12.3.

	 TERMINATION

	This agreement shall terminate with 30
days notice from either party if any of the following occurs:

	A Purchase Order for the sale of a Hand-
Held System using the Cepheid Technology is not issued within three years of the
date of the Letter of Intent (March 20, 2001); or

13.1.2  The Parties mutually agree, in
writing, that all or specified licenses granted by this Agreement shall
terminate.

13.1.3  The Agreement may also be terminated if there has
been a material breach of this Agreement by either party.  If CEPHEID or ETG is
in material default of any obligations hereunder, the non-defaulting party may
give written notice to the defaulting party of its intention to terminate this
Agreement, and this Agreement shall terminate sixty (60) days after the giving
of such notice unless during such sixty (60) day period a cure for the default
has commenced to the reasonable satisfaction of the non-defaulting party.

	In the event of a termination by ETG, except
if termination is due to a material breach by Cepheid, CEPHEID shall have the
option to retain access to the Hand-Held Systems developed under this Agreement,
for sale into any markets, under terms and conditions to be reasonably agreed
upon by the Parties, but in no event to exceed the costs and Running Royalties
established under this Agreement.  Should ETG terminate this Agreement due to a
material breach by Cepheid, ETG shall have the ability to continue to sell any
remaining inventory of Hand-Held Systems and/or components until the inventory
is exhausted under the terms and conditions of this Agreement.
	Rights Upon Termination.  Upon
termination of this Agreement, all rights and obligations of the Parties shall
cease with respect thereto, except (a) for any payments and Running Royalties
under Sections 5 and 6 of this Agreement which have accrued to the date of
termination, including a pro-rata share of such payments and Running Royalties,
if applicable; and (b) any obligations set forth in this Agreement that
specifically survive termination.
	Inventories.  After the effective date
of termination, Licensed Product that ETG has on hand as of the date of
termination may be sold, provided that any applicable payment or royalty under
this Agreement is paid to CEPHEID.

	  ASSIGNMENT

	This Agreement shall not be assigned
by either Party without the prior written consent of the other Party, except
that either Party may assign this Agreement, in whole or in part, to an
Affiliate of such Party or to the successor (including the surviving company in
any consolidation, reorganization, or merger) or assignee of all or
substantially all of its business ("Successor").  This Agreement will
be binding upon any permitted Successor of either Party.  No assignment shall
have the effect of relieving any Party to this Agreement of any of its
obligations hereunder.

	  DISPUTE RESOLUTION

	Resolution by Party Representatives.
In the event of any Dispute, either Party may, by written notice to the other,
refer such Dispute to the officers designated below for attempted good faith
negotiations within 30 days after such notice is received, as may be extended by
mutual written agreement of both officers for up to 90 days:

For CEPHEID:Chris McReynolds, VP of Marketing and
Business Development

For ETG:Jill McClune Myrick, Contracts
Manager

	Arbitration.  Except as provided in
Paragraph 15.1, and except for the right of either Party to apply to a court of
competent jurisdiction for a temporary restraining order to preserve the status
quo or prevent irreparable harm, any and all Disputes shall be finally
determined by arbitration in accordance with then existing commercial rules of
the AAA.  Title 9, "Arbitration," of the California Code of Civil
Procedure (CCP), including without limitation the provisions of CCP Section
1283.05 shall apply.  Unless the Parties agree in writing to one arbitrator, the
arbitration panel shall be composed of three (3) arbitrators, one of whom will
be named by each Party.  The third arbitrator, who shall act as chairman, shall
be determined by the arbitrators named by each Party or, if they cannot agree in
30 days from date of the later-designated arbitrator's appointment, by the AAA.
The arbitrators shall meet and decide in Santa Clara County, California.  The
arbitrators shall decide each issue presented to them by a majority vote, and
their decisions shall be final and conclusive and binding upon the Parties.  The
amount of the costs of any such arbitration and by whom they shall be paid will
be determined as part of the arbitration.  The agreement regarding dispute
resolution set forth in this Section 16 shall be final and enforceable and
judgment upon any award rendered by the arbiters may be entered in any court
having jurisdiction.

	  MISCELLANEOUS

	Applicable Law.  This Agreement shall
be construed under and governed by the laws of the State of California,
regardless of the choice of law principles of that state or any other
jurisdiction.
	Complete Agreement; Modification.  This
Agreement sets forth the entire agreement and understanding between the Parties
as to the subject matter hereof and has priority over all documents, verbal
consents or understandings made between CEPHEID and ETG before the conclusion of
this Agreement with respect to matters hereof.  None of the terms of this
Agreement shall be amended or modified except in writing signed by the Parties
hereto.  Any waiver by any Party hereto of a breach of any provisions of this
Agreement shall not be implied and shall not be valid unless such waiver is
recited in writing and signed by such Party.  Failure of any Party to require,
in one or more instances, performance by the other Party in strict accordance
with the terms and conditions of this Agreement shall not be deemed a waiver or
relinquishment of the future performance of any such terms or conditions or of
any other terms and conditions of this Agreement.  A waiver by either Party of
any term or condition of this Agreement shall not be deemed or construed to be a
waiver of such term or condition for any other term.  All rights, remedies,
undertakings, obligations and agreements contained in this Agreement shall be
cumulative and none of them shall be a limitation of any other remedy, right,
undertaking, obligation or agreement of either Party.
	Relationship of the Parties.  For all
purposes of this Agreement, CEPHEID and ETG shall be deemed to be independent
contractors and anything in this Agreement to the contrary notwithstanding,
nothing herein shall be deemed to constitute CEPHEID and ETG as partners, joint
venturers, co-owners, an association or any entity separate and apart from each
Party itself, nor shall this Agreement constitute any Party hereto an employee
or agent, legal or otherwise, of the other Party for any purposes whatsoever.
Neither Party is authorized to make any statements or representations on behalf
of the other Party or in any way obligate the other Party, except as expressly
authorized in writing by the other Party.  Anything in this Agreement to the
contrary notwithstanding, no Party hereto shall assume nor shall be liable for
any liabilities or obligations of the other Party, whether past, present or
future.
	Severability.  If any provision of this
Agreement is held by a court of competent jurisdiction to be invalid or
unenforceable, it shall be modified, if possible, to the minimum extent
necessary to make it valid and enforceable or, if such modification is not
possible, it shall be stricken and the remaining provisions shall remain in full
force and effect; provided, however, that if a provision is stricken so as to
significantly alter the economic arrangements of this Agreement, the Party
adversely affected may terminate this Agreement, as well as any related
agreements (including without limitation any agreements concerning the Licensed
Products), upon 90 days' prior written notice to the other Party.
	Publicity.  CEPHEID and ETG shall agree
to the text of an initial announcement of this Agreement to the public, and
shall not publicly disclose any further details of the Agreement without mutual
written consent.
	Notice.  Any notice required or
provided for by the terms of this Agreement shall be in writing and sent by
registered or certified mail, postage prepaid, or by telex or facsimile and
confirmed by registered or certified mail addressed to the Parties at the
following addresses:

 

 

 

To ETG:Richard R. Thomas,
President

ENVIRONMENTAL TECHNOLOGIES 

GROUP, INC.

1400 Taylor Avenue

Baltimore, MD 21234

To CEPHEID:Kurt Petersen, President

CEPHEID

1190 Borregas Avenue

Sunnyvale, California 94089

	Survival.  All obligations of Paragraphs
8.1(g) and (h), 8.2 (c) and (d), 9, 10.1 - 10.7, 12.1 - 12.3, 13.2 - 13.3, 15.1
- 15.2, and 16.1 - 16.7 shall survive the Agreement Term or the termination, for
any reason, of this Agreement.

IN WITNESS WHEREOF, the Parties have
executed this Agreement as of the day and year written below.

ENVIRONMENTAL TECHNOLOGIES GROUP, INC

BY:  Jill Mclune Myrick

TITLE:  Senior Contract Manager

 

CEPHEID

BY:  Thomas
Gutshall

TITLE:  Chief Executive Officer

DATE: August 9, 2001

SCHEDULE A

I.CEPHEID Patent Rights.

	Amplification/Detection Technology

	
TITLE
	
US
SERIAL#
	
FILED
	
STATUS

[***]

 

	Fluidics and/or Lysing Technology

	
TITLE
	
US
SERIAL#
	
FILED
	
STATUS

[***]

SCHEDULE B

MINIMUM DOCUMENTATION SUPPLIED TO ETG
BY CEPHEID

1. A copy of all patents and patent applications
listed in Schedule A.

2. A copy of all patents resulting from
applications listed in Schedule A.

3. All drawings, specifications, and processes
related to the following: I-CORE module, other PCR technology applicable to the
DP and military markets, and all sample processing technology (including, but
not limited [***] 

4. Government and Cepheid test reports of relevant
Cepheid technology including, but not limited to, [***]

5. Component vendor
list.

THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS."Q3 2001 10Q Exhibit 10.2

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

August 9, 2001

 

Mr. Thomas L. Gutshall

   Chairman and CEO

    Cepheid

   1190 Borregas Avenue

   Sunnyvale, CA 94089-1302

RE:Modification and Restatement of January 10, 2000 Letter
Agreement

Dear Mr. Gutshall:

This serves to confirm the mutually agreed modification and restatement of
our letter agreement dated January 10, 2000 (the "Distribution Agreement"). The
Distribution Agreement between Cepheid ("SUPPLIER") and Fisher Scientific
Company L.L.C. ("FISHER") concerns the SmartCyclerTM System, accessories
and reaction tubes developed by and made by or for SUPPLIER. 

	In Paragraph 1, in the sixth line, the parenthetical "(the `Field')" is
deleted.
	Paragraph 2 of the Distribution Agreement is deleted in its entirety and
replaced as follows:

Distribution Rights. SUPPLIER grants to FISHER the right to distribute
the Products and designates FISHER as an authorized distributor of the Products
as outlined in this Paragraph 2:

	Geographic Scope. FISHER is hereby designated an authorized
distributor of the Products within the United States and the territory of Puerto
Rico.

	Market Scope. FISHER is hereby designated an authorized distributor
of the Products in the life science research market (the "Field"). Specifically
included within the Field are research activities in the biotech,
pharmaceutical, scientific, and university/educational industries. Specifically
excluded from the Field are human and veterinary diagnostics (including
applications subject to regulatory labeling including "For Investigational Use
Only" or "For Research Use Only"), environmental testing, quality assurance and
control testing, identity and forensic testing, and testing for biothreat
agents.

	Supplier's Reserved Rights. Notwithstanding any rights granted to
FISHER hereunder, including exclusive rights, SUPPLIER reserves the right to:
(i) sell directly to the end user customers listed in Exhibit B to the
Distribution Agreement; and (ii) make OEM sales of thermal cyclers, accessories
and/or reaction tubes similar to Products which SUPPLIER may sell and ship to a
firm for resale under that firm's label. 

	Term. The distribution rights granted to FISHER pursuant to
Paragraphs 2(a) through 2(c) above shall continue through and including May 31,
2004. 

	Exclusivity. Subject to the provisions of Paragraphs 2(a) through
2(c) above, SUPPLIER hereby designates FISHER as SUPPLIER's exclusive
distributor of the Products through and including May 31, 2002. During any
period of FISHER's exclusivity hereunder, SUPPLIER shall: (i) refer all
inquiries regarding the purchase of Products within the Field to FISHER; and,
(ii) not appoint any other person or entity as an authorized distributor of the
Products within the Field. Nothing in the prior sentence is in derogation of
SUPPLIER's rights under paragraph (c) above. 

	Extension of Exclusivity. In the event that FISHER purchases (deemed
to be the issuance of a purchase order for which delivery is completed within 30
days) from SUPPLIER between June 1, 2001 and May 31, 2002 at least [***] (not
including the [***] units under purchase order # PR3206412 dated July 12, 2001)
SmartCyclerTM units (a unit defined as the total number of 16-site
SmartCyclerTM processing blocks, either as part of a Starter System or as
Add-On Blocks), FISHER's exclusive distributor status granted by Paragraph 2(e)
above shall continue through and including May 31, 2003. In the event that
FISHER purchases from SUPPLIER between June 1, 2002 and May 31, 2003 at least
[***] SmartCyclerTM units, FISHER's exclusive distributor status granted by
Paragraph 2(e) above shall continue through and including May 31, 2004. 

	Exclusive Source. During any period of time that the exclusivity
provisions of Paragraph 2(e) and 2(f) are in effect, FISHER will use SUPPLIER as
its exclusive supplier of systems capable of performing thermal cycling with
real-time optical detection.

	Sales Reporting. FISHER shall provide SUPPLIER within 30 days after
the first day of each March, June, September and December a true and accurate
accounting report of Products (including units sold and selling price) sold
during the preceding 3 months in sufficient detail, as mutually agreed, for
SUPPLIER to use for royalty reporting and sales compensation purposes. In
addition, FISHER shall provide to SUPPLIER on a weekly basis an updated customer
and contact list solely for SUPPLIER to use in monitoring sales and
administering warranty and customer service. 

	Forecasts. Within one week of signing this addendum, FISHER shall
provide SUPPLIER with one-year monthly purchase and sales forecasts that will be
updated on a monthly basis during the first week of each month. In order to
assist Cepheid with manufacturing planning, FISHER shall also within the first
week of each month provide SUPPLIER with a purchase projection for the next
three (3) month period. While the one year forecast will not be binding in
total, the three month projections shall constitute a purchase commitment by
FISHER for such period. Such three (3) month purchase projection/commitment
shall be updated monthly, taking into account FISHER's sales experience and
inventory levels over the previous month.

	The first two sentences of Paragraph 3 of the Distribution Agreement are
deleted in their entirely and replaced as follows:

The Product list prices, discounts and transfer prices to FISHER shall be as
listed in Exhibit A. Prices shall be firm through December 31, 2001. Cepheid has
the right to change the discount listed in Exhibit A; however, Cepheid's current
intention is to maintain the discount for so long as FISHER is performing all of
its responsibilities under the Distribution Agreement, including its Marketing
Support responsibilities under Exhibit C, to the satisfaction of Cepheid.

	Paragraph 5 of the Distribution Agreement is deleted in its entirety and
replaced as follows:

Shipping. SUPPLIER will ship all SmartCyclerTM System Products
(systems, accessories and reaction tubes) FOB Sunnyvale, CA to FISHER's
distribution center in Santa Clara, CA (freight collect) or to such other
address as Fisher may reasonably designate. SUPPLIER shall follow FISHER's
routing guide in the shipment of Products, and all products shall be shipped
within thirty (30) days of order receipt.

	Paragraph 7 of the Distribution Agreement is deleted in its entirety and
replaced as follows:

Marketing Support. SUPPLIER and FISHER shall each provide Marketing
Support, as described in Exhibit C.

	Paragraph 8 of the Distribution Agreement is deleted in its entirety and
replaced as follows:

Term. The term of this Agreement shall be from the date of mutual
execution through and including May 31, 2004. Thereafter, the Agreement shall
remain in force for successive six month periods, unless either party gives
written notice of non-renewal to the other at least sixty (60) days prior to the
then current expiration date.

	Paragraph 12 of the Distribution Agreement is deleted in its entirety and
replaced as follows:

Public Announcements. Neither SUPPLIER nor FISHER shall issue or cause
to be issued any press release or public announcement or otherwise disclose or
discuss the relationship between SUPPLER and FISHER, the existence of this
Agreement or the transactions contemplated hereby (a) except as and to the
extent that FISHER and SUPPLIER jointly agree in writing and (b) except as may
be required by applicable law, court process or Nasdaq/NYSE regulation. Each
party shall make reasonable efforts to inform the other prior to any authorized
public announcement or disclosure.

	A new Paragraph 13 is inserted into the Distribution Agreement as
follows:

Non-Hire Agreement. Both parties agree that, during the term of this
Agreement and for one year after termination for any reason, neither party will
hire nor attempt to hire one another's employees (or any person who was employed
by the other within the past one year) without the prior written consent of the
other party. Notwithstanding the foregoing, in the event that a court of
competent jurisdiction shall declare the agreement represented by the foregoing
sentence to be unenforceable, and one party employs, directly or indirectly, or
retains in a consulting or other capacity, any person employed by the other
party within the previous one (1) year, the hiring party shall compensate other
party for such employment at a fee of $30,000 per person, which each party
acknowledges and agrees is fair and just compensation and does not constitute
punitive or liquidated damages.

Except as expressly stated herein, the terms and provisions of the
Distribution Agreement remain in full force and effect. 

 

 

 

 

 

Please signify your acceptance and agreement on behalf of Cepheid to the
above-stated modification and restatement of our January 10, 2000 letter
agreement by counter-signing this letter on behalf of Cepheid where indicated
below. 

Very truly yours,

/s/J. Bradley Mahood

J. Bradley Mahood

Vice President Strategic Sourcing

 

 

AGREED AND ACCEPTED: 

Cepheid

 

 

By:_/s/Thomas Gutshall

Name: Thomas Gutshall

Title: Chief Executive Officer

Date: August 9, 2001

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

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