Document:

Exhibit 10.24

 

License Agreement

between

CEPHEID AND INFECTIO DIAGNOSTIC (I.D.I.) INC.

 

THIS AGREEMENT (“Agreement”) is made as of the 4th
day of November, 2003 (the “Effective Date”) and is by and between Cepheid, a
California corporation with its principal place of business at 904 Caribbean
Drive, Sunnyvale, CA 94089 (“Cepheid”) and Infectio Diagnostic (I.D.I.) Inc., a
corporation incorporated under the laws of the Province of Quebec with its
principal place of business at 2050 Rene Levesque Blvd. West, Suite 400,
Sainte-Foy, Quebec, Canada G1V 2K8 (“IDI”). 
Cepheid and IDI are sometimes referred to herein individually as a
“Party,” and collectively as the “Parties.”

 

RECITALS

 

A.            The Parties have previously entered
into several agreements, including agreements related to the formation and
operation of the Aridia joint venture, which agreements are terminated
concurrently with the execution of this Agreement

 

B.            Cepheid develops, manufactures and
markets analytical instruments and other proprietary technology designed for
nucleic acid based analysis.

 

C.            IDI has developed certain
proprietary technology with respect to assays that may be used with Cepheid’s
analytical instruments.

 

D.            Cepheid and IDI desire that IDI
license Cepheid certain rights to its proprietary technology, subject to and in
accordance with the terms and conditions of this Agreement.

 

Now, therefore, the Parties, in
consideration of the mutual obligations hereinafter set forth and intending to
be legally bound, hereby agree as follows:

 

1.             Definitions. Unless otherwise
specifically provided herein, the following terms shall have the following
meanings:

 

1.1.          “Affiliate” of a Party or other person or entity means any
corporation, firm, partnership or other entity, whether de jure or
de facto, which directly or indirectly controls, is controlled by or
is under common control with such Party or other person or entity to the extent
of more than fifty percent of the equity having the power to vote on or direct
the affairs of the entity, or such lesser percentage which is the maximum
allowed to be controlled by a foreign corporation in a particular jurisdiction.

 

1.2.          “Cepheid Intellectual Property” means all Intellectual
Property Rights that are owned, either partially or wholly, by Cepheid, or are
licensed to and sub-licensable by, or otherwise controlled by, Cepheid, and
which are related to GeneXpert Instrument, GeneXpert Cartridge, Smart Cycler
Instruments and disposables. 

 

1.3.          “Cepheid Sourced Products” means Target Assays that are
designed, developed, manufactured and sold by Cepheid pursuant to the license
from IDI set forth in Section 2.1 that but for such license grant from IDI
would infringe valid claims of IDI’s Intellectual Property Rights.

 

1.4.          “Confidential Information” means confidential knowledge,
Know-how, practices, processes, products, materials, equipment or information
that a receiving Party has a reasonable basis to believe is confidential to the
disclosing Party or is treated by the disclosing Party as confidential.  Notwithstanding the above, Confidential
Information will not include, and nothing in Section 8 will in any way
restrict the rights of either Party to use, disclose or otherwise deal with,
any information which:

 

 

The symbol [***] is used to
indicate that a portion of the exhibit has been omitted and filed seperately
with the commission.  Confidential
treatment has been requested with respect to the omitted portion.

 

 

(a)           can be demonstrated to have been in
the public domain as of the date of this Agreement or thereafter comes into the
public domain through no act of the receiving Party; or

 

(b)           can be demonstrated to have been
independently known to the receiving Party prior to the receipt thereof as
evidenced by written record or is made available to the receiving Party as a
matter of lawful right by a Third Party; or

 

(c)           can be demonstrated to have been
rightfully received by the receiving Party from a Third Party who did not
require the receiving Party to hold it in confidence or limit its use, or on
the basis of a restriction that has lapsed, and who did not acquire it,
directly or indirectly, from the other Party to this Agreement under a
continuing obligation of confidentiality; or

 

(d)           can be demonstrated to have been
independently conceived, invented or acquired by employees or agents of the
receiving Party who have not been personally exposed to relevant Confidential
Information of the other Party as evidenced by written record.

 

1.5.          “GeneXpert Instrument” means Cepheid’s family of
instruments which incorporate GeneXpert Cartridges to carry out integrated
sample preparation, molecular amplification, and detection methods and which
are manufactured and sold by Cepheid. 

 

1.6.          “GeneXpert Cartridge” means a closed or substantially
closed device that contains, among other things, pelletized or dried reagents  intended for  single or multiple use sample preparation and nucleic acid
analysis and that is suitable for insertion into, or use as a part of, a
GeneXpert Instrument.

 

1.7.          “IDI Intellectual Property” means all Intellectual Property
Rights that are owned, either partially or wholly, by IDI, or are licensed to
and sub-licensable by, or otherwise controlled by, IDI and which is related to
Target Assays and IDI Materials. 

 

1.8.          “IDI Materials” means IDI produced probes, primers, for the
Target Assays, and related components that IDI may supply to Cepheid pursuant
to this Agreement.

 

1.9.          “Intellectual Property Rights” means all intellectual
property rights worldwide arising under statutory provision or common or civil
law, whether or not registered, which may be granted or recognized under
Canadian or foreign legislation, including, without limitation, all (1)
patents, patent applications and patent rights; (2) rights associated with
works of authorship including copyrights, copyright applications, copyright
registrations, mask works, mask work applications and mask work registrations;
(3) rights relating to the protection of trade secrets and Confidential
Information; (4) any right analogous to those specifically set forth in this
definition and any other proprietary rights relating to intellectual property
(other than trademark, trade dress, or service mark rights); (5) divisions,
continuations, continuations-in-part, renewals, reissues, re-examinations, continuing
prosecution, and extensions of the foregoing existing at a time in question, or
thereafter filed, issued or acquired; and (6) Know-how, including rights in any
application thereof.

 

1.10.         “Know-how” means confidential and/or proprietary technical
information, techniques, processes, methods, data, assays, substances and
materials, and other information in a Party’s possession that is not generally
available to the public.

 

1.11.        “Manufacturing Cost” means the fully-burdened manufacturing
cost of the IDI Materials as determined using IDI’s customary practices and
procedures and, to the extent applicable, in accordance with Generally Accepted
Accounting Principles in Canada (“GAAP”), including the following: direct
material cost, material overhead cost, direct labor cost, fixed manufacturing
overhead cost, variable manufacturing overhead cost, cost of quality control
and product testing, manufacturing variance cost and other costs that may be
properly attributed and documented to inventory as manufacturing costs pursuant
to GAAP, but excluding royalties or similar consideration paid to Third Parties
for rights to Intellectual Property Rights, including up-front payments for
such rights, even if any such royalties or other payments are included in fully
burdened manufacturing cost in accordance with a Party’s customary practices
and

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

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procedures and, to the extent applicable, GAAP).  In determining Manufacturing Cost, IDI shall
take into account, in accordance with GAAP to the extent applicable and in accordance
with IDI’s normal and customary practices and procedures, including without
limitation consideration of risks and uncertainties associated with projections
related to the products in question, projections of sales of such products for
at least a twelve month period made in good faith by IDI in accordance with its
normal and customary procedures. 
Manufacturing Cost of IDI Materials will be established and
reestablished based upon projections for a period of not less than the next
upcoming twelve month period, may be changed no more frequently than quarterly
(and any new Manufacturing Cost will be effective only as of the first day of a
quarter), and any new Manufacturing Cost of products will not be applied except
upon a minimum of sixty (60) days prior notice from IDI to Cepheid.

 

1.12.        “Net Sales” means the gross invoice sales price for Cepheid
Sourced Products that are covered by a valid claim of an IDI patent licensed
under this Agreement, and that are sold by Cepheid, its Affiliates and its or their
sub-distributors to end users, less: trade, cash and quantity discounts
documented, if any, actually allowed, other allowances actually applied,
amounts refunded for faulty or defective product, returns, rejections, account
receivables remained unpaid determined and applied in accordance with Cepheid’s
normal and customary policies and procedures (and to the extent applicable,
United States GAAP), freight, insurance and other transportation costs,
tariffs, duties, sales tax, and similar governmental charges (except income
taxes) paid with respect to the Cepheid Sourced Products sold.  

 

1.13.        “Regulatory Authority” means any applicable supra-national,
federal, national, regional, state, provincial or local regulatory agencies,
departments, bureaus, commissions, councils or other government entities
regulating or otherwise exercising authority with respect to a product.

 

1.14.        “Smart Cycler Instruments” means the Smart Cycler® I and II
Systems instruments manufactured and sold by Cepheid that are used to perform
Real Time PCR, and the Smart Cycler Reaction Tubes and Software to be used with
such Smart Cycler Systems, including any improvements thereof and any new
generation of the Smart Cycler Instruments, which instruments do not include
integrated sample preparation.

 

1.15.        “Target Assays” means the assays for identified infectious
disease targets and more fully set forth in Exhibit A.  Target Assays include Cepheid Sourced
Products.

 

1.16.        “Third Party” means a person or entity that is not a Party
to this Agreement.

 

2.             License Grant; Technology Transfer

 

2.1.          License to Cepheid to Cepheid
Sourced Products.

 

2.1.1.       Nonexclusive License. 
IDI hereby grants to Cepheid a nonexclusive, nontransferable (subject to
12.7), worldwide, license under IDI’s Intellectual Property Rights to develop,
have developed, register, make, have made, use, offer for sale, have sold,
import and sell Cepheid Sourced Products for sale and use in connection with
the GeneXpert® Instruments.  

 

2.1.2.       Sublicenses. 
Cepheid may only sublicense the license rights granted by IDI to Cepheid
to its Affiliates as expressly set forth in Section 2.1.1. and in accordance
with the terms and conditions hereof.

 

2.2.          Technology Transfer. 
Within ten (10) days of the Effective Date, IDI will provide Cepheid
with all background information IDI considers useful to enable Cepheid to
exercise the license rights granted in Section 2.1 above.  

 

2.3.          Regulatory Matters. 
Cepheid will be responsible, at its sole cost and expense, for obtaining
and maintaining any and all necessary regulatory approvals, and for maintaining
any claim files and submitting

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

3

 

reports, as may be imposed or
required by any Regulatory Authority in connection with its products. Subject
to the confidentiality provisions of Section 8, in cases where files or
documentation of one Party is required to support a regulatory filing of the
other Party, the Party in possession of the required files or documentation
will cooperate with the other Party to a commercially reasonable degree in
compiling and submitting complete applications for regulatory approval.

 

3.             Royalties; Transfer Fees.

 

3.1.          Royalties. 
In consideration for the license rights granted pursuant to
Section 2.1, Cepheid shall pay running royalties equal to [***] percent
([***]%) of Net Sales.

 

3.2.          Royalty Stacking. 
In cases in which Cepheid is required to take additional Third Party
licenses, relating to Targets or sequences, in order to practice under IDI’s
Intellectual Property Rights in the manufacture and sale of any Cepheid Sourced
Product, [***]% of any royalties payable by Cepheid under such Third Party
licenses shall be deductible from the royalties due to IDI pursuant to Section
3.1 for sales of the Cepheid Sourced Product for which the Third Party license
is required.  The maximum royalty to be
deductible under this mechanism shall be [***]%.  Cepheid shall promptly inform IDI of any additional Third Party
license relating to Targets or sequences along with a copy of any such
license.  

 

3.3.          Minimum Royalties.  
Beginning with the date of the first sale of a Cepheid Source Product in
the ordinary course of business in any country by Cepheid or an Affiliate of
Cepheid or sub-distributor of Cepheid or of a Cepheid Affiliate (the “First
Commercial Sale”) under this license and for a period of twenty-four (24)
months following the First Commercial Sale, Cepheid shall pay to IDI a minimum
royalty of [***] per twelve (12) month period of commercialization.  Royalties due from Cepheid to IDI based on
the sale of any and all Cepheid Sourced Products sold under this license
pursuant to Section 3.1 above shall be applicable towards these minimum
royalties until such minimum royalties are exhausted. 

 

3.4.          Supply of IDI Materials. 
If Cepheid requires IDI Materials in order to manufacture the Cepheid
Sourced Products in accordance with the license granted to Cepheid in Section
2.1, and if IDI agrees to provide such materials, IDI and Cepheid shall use
good faith efforts to negotiate the terms and conditions of a supply agreement
under which such materials will be provided to Cepheid; provided, however, that
in no event shall Cepheid be required to pay a fee for such materials that
exceeds IDI’s Manufacturing Cost plus [***] percent ([***]%).

 

3.5.          Target Assay Design and Development
Records.  Subject to the confidentiality provisions of
Section 8, in the event that Cepheid desires access to IDI’s design and
development records for any Target Assays or any other documents related to
Target Assays that are not required for Cepheid to exercise the license rights
set forth in Section 2.1 above, IDI will provide Cepheid with access to such
files upon Cepheid’s payment to IDI of $[***] per Target Assay file.  

 

4.             Payments.

 

4.1.          Payment Terms. 
Cepheid will pay all earned royalties owed to IDI pursuant to Section
3.1 within forty-five (45) days after the end of the preceding calendar
quarter.  Except as expressly specified
in this Agreement or as otherwise agreed to in writing by the Parties, Cepheid
will pay any other fees, expenses or other charges payable to IDI hereunder
within forty-five (45) days following the date of receipt of IDI’s invoice
therefore.  Cepheid will pay all amounts
due under this Agreement in immediately available funds and U.S. currency, free
of any currency controls or other restrictions by wire transfer to an account
of IDI in accordance with instructions provided by IDI.  The royalty on sales in currencies other
than U.S. Dollars shall be calculated using the appropriate foreign exchange
rate for such currency quoted by the Bank of America (San Francisco) foreign
exchange desk, on the close of business on the last banking day of each
calendar quarter.  

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

4

 

4.2.          Taxes. 
All amounts payable by a Party under this Agreement to the other Party
are net amounts and are payable in full, without deduction for taxes or duties
of any kind.  The Parties will be
responsible for, and will promptly pay, all taxes and duties of any kind
(including, but not limited to, sales, use and withholding taxes) associated
with their receipt of license rights, products, or services under this
Agreement, except for taxes based on the other Party’s net income.  

 

5.             Reports; Records.

 

5.1.          Reports. 
Cepheid will provide quarterly reports and payment of all royalties due
to IDI within forty-five (45) days of the end of each calendar quarter.  For purposes of accounting and computing
royalties, sales of Cepheid Sourced Products by Cepheid to a Cepheid Affiliate
for resale shall not be deemed a sale, but sales of such products by such
Affiliates shall be treated as a sale by Cepheid.  

 

5.2.          Records; Audit.  Using a Party’s customary
practices and procedures in accordance with applicable GAAP, each Party,
including Cepheid’s Affiliates and sub-distributors, will keep and maintain
proper and complete records and books of account sufficient in detail to enable
the verification of monies spent and received by each Party, and Manufacturing
Cost of and subject royalties paid by each Party, in connection with each
Party’s obligations under this Agreement. 
Without limiting the foregoing, such records will show the manufacture,
sale, use, and other disposition of products sold or otherwise disposed of
under the licenses herein granted.  Such
records will include general ledger records showing cash receipts and expenses,
and records which include production records, customers, serial numbers and
related information in sufficient detail to enable the royalties payable
hereunder to be determined.  The books
and records will be retained for a period of at least 6 years after the end of
the period for which such books and records pertain. Each Party will have the
right from time to time (not to exceed once per calendar year) during normal
business hours and upon five (5) business days prior written notice, to inspect
in confidence, or have an agent, accountant or other representative inspect in
confidence, such books and records of the other Party.  The Party initiating the inspection will
bear the costs thereof unless the inspection reveals a discrepancy unfavorable
to that Party of at least five percent (5%), in which case the other Party will
pay the costs of the inspection.  If the
inspection results in a final determination that amounts have been overstated
or understated, the applicable amount will be refunded or paid promptly by the
appropriate Party. The inspecting Party will treat all information learned in
the course of any audit or inspection as Confidential Information, and will
maintain such Confidential Information in strict confidence, except to the extent
necessary for the Party to reveal such information in order to enforce its
rights under this Agreement or if disclosure is required by law as provided for
in Section 8.6. Any public accounting firm shall sign a customary
confidentiality agreement as a condition precedent to their inspection, and
shall report to the inspecting Party only its conclusion with such other
information at the firm deems necessary by way of explanation.

 

6.             General Intellectual Property 

 

6.1.          Ownership of Intellectual Property.

 

6.1.1.       Cepheid Intellectual Property. 
All rights, title and interest in and to Cepheid Intellectual Property,
whether patentable or copyrightable or not, will belong to and be retained by
Cepheid.  All right, title and interest
in and to any improvements, or new inventions that practice IDI Intellectual
Property, that are discovered or developed by Cepheid (“Cepheid Developed
Inventions”) shall be owned by Cepheid. 
Cepheid will license the Cepheid Developed Inventions to IDI under terms
to be negotiated by the Parties in good faith. Cepheid shall use the Cepheid
Developed Inventions strictly with the GeneXpert Instrument, or with the Smart
Cycler Instrument, as per the terms of 12.16.

 

6.1.2.       IDI Intellectual Property. 
All rights, title and interest in and to IDI Intellectual Property,
whether patentable or copyrightable or not, will belong to and be retained by
IDI.

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

5

 

6.2.          Patent Filings. 
IDI will be responsible for, and will bear all costs and expenses in
connection with, preparing, filing, prosecuting, maintaining and extending
patent applications for the IDI Intellectual Property including the decision
not to file or maintain patent protection. 
Cepheid will be responsible for, and will bear all costs and expenses in
connection with, preparing, filing, prosecuting, maintaining and extending
patent applications for the Cepheid Developed Inventions and Cepheid
Intellectual Property. All patent application for the Cepheid Developed
Inventions shall first be submitted to IDI’S prior written consent, which will
not be unreasonably withheld or delayed.

 

6.3.          Interfering Third Party
Intellectual Property.  Subject to Section 11.4.2 and Section 11.5,
and any other indemnifications that the Parties have provided to each other, if
a Party believes that any activities within the scope of this Agreement
infringe any Intellectual Property Rights of a Third Party (“Third Party
Intellectual Property”) or that a Third Party is infringing IDI’s Intellectual
Property Rights, that Party will promptly notify the other Party, and the
Parties will seek to agree upon the appropriate solution thereof, provided,
however, that IDI shall control all aspects of any solutions (e.g., litigation,
license negotiations, or settlement) with respect to any claims against Third
Parties regarding infringement of IDI’s Intellectual Property and to any claims
that the IDI Materials provided to Cepheid by IDI or their usage infringes the
rights of a Third Party, and Cepheid shall control all aspect of any solutions
(e.g., litigation, license negotiations, or settlement) with respect to any
claims that any Cepheid Developed Invention infringes the rights of a Third
Party and to any claims against Third Parties regarding infringement of
Cepheid’s Intellectual Property.  The
Parties agree to collaborate with each other in the implementation of any
solutions chosen by one Party.

 

6.4.          Branding, Trademarks
and Non-Proprietary Names.  

 

6.4.1.       Products Labeling.  Cepheid Sourced Products will be labeled as
Cepheid products developed by and under license from IDI for use with the
GeneXpert Instrument. All representations of IDI’s Marks that Cepheid intends
to apply in the labeling will first be submitted to IDI for written approval
(which will not be unreasonably withheld or delayed) of design, color and other
details.  

 

6.4.2.       Trademark Licenses.  IDI hereby grants to Cepheid a non-exclusive
right and restricted license to use the marks, trade names (including without
limitation “IDI”) and logos (collectively, “Marks”) that IDI may employ from time
to time with respect to the Cepheid Sourced Products in connection with
Cepheid’s distribution of Cepheid Sourced Products.  Except as set forth in this Section 6.4, nothing contained
in this Agreement will grant to Cepheid any right, title or interest in IDI’s
Marks. Cepheid acknowledges and agrees that IDI owns the IDI Marks and that any
and all goodwill and other proprietary rights that are created by or that
result from Cepheid’s use of an IDI Mark hereunder inure solely to the benefit
of IDI.   IDI hereby agrees to defend and indemnify Cepheid and to hold it
harmless against claims by a Third Party that the use by Cepheid of IDI’s Marks
in a manner expressly authorized by IDI in writing infringes intellectual
property rights of such Third Party.

 

6.5.          Reserved Rights.  No license or other right is granted or is
to be construed as being granted hereunder by one Party to the other Party,
whether implied, or by estoppel, to any Intellectual Property Rights, or to
trademark, trade dress, or service mark rights, or any other intellectual
property rights, owned, used, licensed to, or otherwise controlled by, a Party,
except as expressly set forth herein.

 

7.             Royalties to Third
Parties

 

7.1.          Royalty Payments to
Third Parties.  Cepheid shall be
responsible for payment of royalties to any Third Parties with respect Third
Party intellectual property required for the manufacture, use, or sale of
Cepheid Sourced Products.

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

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8.             Confidentiality

 

8.1.          Non-Disclosure;
Non-Use.  Because Cepheid and IDI
will be cooperating with each other under this Agreement, each has and may
reveal Confidential Information to the other. 
The Parties agree, by using the same degree of care as each uses for its
own information of like importance, but not less than a reasonable degree of
care, to hold in confidence any Confidential Information disclosed by the other
Party hereunder, and not to disclose any Confidential Information of the other
Party to any Third Party or, except as provided below, to any Affiliate, and
not to use any Confidential Information disclosed by the other Party under the
Aridia Agreements and hereunder for any purpose other than carrying out its
obligations under this Agreement, without the express written consent of the
other Party.  Each Party will disclose
Confidential Information only to its employees or agents who have a need to
know same for such purpose.  With
respect to any Confidential Information that has been or is revealed by a Party
to the other Party, the confidentiality and non-use requirements of this
Section  8 will remain in force for a period of 5 years after the
expiration or termination of this Agreement.

 

Notwithstanding the
foregoing, each Party may disclose the existence or details of this Agreement 

 

(i)            to Third Parties in
the context of a proposed financing, as long as the Third Party subscribes to
confidentiality obligations similar to those provided hereunder;

 

(ii)           to Third Parties in the
context of any due diligence conducted by a Third Party on the affairs of one
of the Parties, as long as the Third Party subscribes to confidentiality
obligations similar to those provided hereunder.

 

8.2.          Responsibility over
Employees and Agents.  Each Party
will assume individual responsibility for the actions and omissions of its
respective employees, agents and assigns, and to inform same of the
responsibilities for confidentiality and non use under this Agreement, and to
obtain their agreement to be bound in the same manner that the Party is bound.

 

8.3.          Affiliates.
Nothing herein will be construed as preventing either Party from disclosing any
information to an Affiliate of IDI or Cepheid for the purpose of carrying out
its obligations under this Agreement, provided such Affiliate has undertaken a
similar obligation of confidentiality and non-use with respect to the
Confidential Information.

 

8.4.          Bankruptcy. All
Confidential Information disclosed by one Party to the other will remain the
intellectual property of the disclosing Party. 
A bankrupt or insolvent Party will, to the extent permitted by law, take
all steps necessary or desirable to maintain the confidentiality of the other
Party’s Confidential Information and to ensure that any court or other tribunal
maintain such information in confidence in accordance with the terms of this
Agreement. In the event that a court or other legal or administrative tribunal,
directly or through an appointed master, trustee or receiver, assumes partial
or complete control over the assets of a Party based on the insolvency or
bankruptcy of such Party, the bankrupt or insolvent Party will promptly notify
the court or other tribunal:

 

8.4.1.       that Confidential Information received from the
other Party under this Agreement remains the property of the other Party; and,

 

8.4.2.       of the confidentiality and non use obligations
under this Agreement.

 

8.5.          Compliance with
Statutory Requirements. Nothing in this Agreement will be construed as
preventing or in any way inhibiting either Party from complying with statutory
or regulatory requirements, including those having to do with financial
reporting and those governing the development, manufacture, use, sale, or other
distribution, of products in any manner that it reasonably deems appropriate,
including, for example, by disclosing to regulatory authorities Confidential
Information or other information received from a Party or Third Parties.  However, the Parties will take reasonable
measures to assure that no

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

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unauthorized use or disclosure is made by persons or entities to whom
access to such information is granted under this Section 8.5.

 

8.6.          Compelled Disclosure.
In the event that a Party (“Disclosing Party”) is legally compelled (by
deposition, interrogatory, request for documents, subpoena, civil investigation
demand or similar process) to disclose any Confidential Information, the
Disclosing Party will provide prompt prior written notice of such compulsion to
the other Party, so that the other Party may seek a protective order or other
appropriate remedy or, if appropriate, waive compliance with the terms of this
Agreement.  In the event that such
protective order or other remedy is not obtained, the Disclosing Party will
disclose only that portion of Confidential Information that it is advised by
opinion of counsel is legally required to be disclosed, or else stand liable
for contempt or suffer other censure or penalty, and will exercise its
reasonable best efforts to obtain reliable assurance that confidential
treatment required hereby will be accorded to such Confidential Information;
and the Disclosing Party will not be liable for such disclosure unless such
disclosure was caused by or resulted from a previous disclosure by the
Disclosing Party not permitted by this Agreement.

 

8.7.          Termination.  Upon expiration or termination of this
Agreement, the recipient Party shall return all Confidential Information of the
Disclosing Party and copies, extracts, references and summaries thereof (in
whatever form) to the Disclosing Party; provided, however, that the recipient
Party may retain one copy of such Confidential Information in a secure location
for the purposes of verifying its compliance under this Section 8.

 

9.             Term and Termination

 

9.1.          Term.  Unless earlier terminated in accordance with
this Section 9, this Agreement will commence on the Effective Date and will
remain in effect until the last patent on IDI’s Intellectual Property licensed
hereunder expires.

 

9.2.          Termination.

 

9.2.1.       Termination for Failure to Commercialize
Target Assays.  Either Party may
terminate this Agreement if Cepheid has not commercialized any Cepheid Sourced
Product by [***].

 

9.2.2.       Termination in Event of Bankruptcy or
Insolvency.  This Agreement may be
terminated by either Party, in the event the other Party files in any court or
agency under any statute or regulation of any state or country, a petition in
bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee of the other Party or of its assets, or if the other Party
proposes a written agreement of composition or extension of its debts, or if
the other Party will be served with an involuntary petition against it, filed
in any insolvency proceeding, and the petition is not stayed or dismissed
within 60 days after the filing thereof, or if the other Party will propose or
be a Party to any dissolution or liquidation, or if the other Party will
discontinue its business activities completely or with respect to its business
activities which are the subject matter of this Agreement, or if the other
Party will make an assignment for the benefit of creditors; or 

 

9.2.3.       Termination for Material Breach.  This Agreement may be terminated by either
Party upon any material breach of this Agreement by the other Party; except
that the Party alleging such breach must first give the other Party written
notice thereof, which notice must state the nature of the breach in reasonable
detail and the other Party must have failed to cure such alleged breach within
45 days after receipt of the notice.

 

9.3.          Survival of
Obligations and Certain Rights.  

 

9.3.1.       Upon any termination of this Agreement, by
expiration of the term or otherwise, neither Party will be relieved of any
obligations incurred prior to such termination.  Despite any

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

8

 

termination of this Agreement, the obligations of the
Parties under Section 1 (to extent that a definition is required to interpret
an operative section of this Agreement), Sections 4, 5, 6, 7, 8, 9.3, 10, 11,
and 12 and to the extent applicable, the Exhibits to this Agreement, as well as
any other provisions that by their nature are intended to survive any
termination, will survive and continue to be enforceable.   

 

9.4.    Upon any termination of this Agreement
pursuant to Section 9, Cepheid shall within 30 days of the Effective Date of
such termination notify IDI in writing of the amount of Cepheid Sourced Product
which Cepheid, its Affiliates and sub-licensees then have completed on hand,
the sale of which would, but for the termination, be subject to royalties, and
Cepheid, its Affiliates and sub-licensees shall thereupon be permitted during the
6 months following such termination to sell that amount of Cepheid Sourced
Products, provided that Cepheid shall pay the aggregate royalty thereon at the
conclusion of the earlier of the last such sale or such six-month period.
Except as provided above, all sub-licensees granted by Cepheid shall forthwith
terminate upon the termination of this Agreement.

 

10.          Representations,
Warranties and Covenants; Disclaimers

 

10.1.        Representations and
Warranties of Both Parties.  Each
Party represents, warrants and covenants to the other Party that: 

 

10.1.1.     It has the corporate power
and authority and legal right to enter into this Agreement and to perform its
obligations hereunder;

 

10.1.2.     the execution and delivery of this Agreement and
the performance of the transactions contemplated thereby have been duly authorized by all
necessary corporate action of the Party;

 

10.1.3.     the execution and delivery of this Agreement and
the performance by the Party of any of its obligations under this Agreement do
not and will not: conflict with, or constitute a breach or violation of, any
other contractual obligation to which it is a party, any judgment of any court
or governmental body applicable to the Party or its properties, or, to the
Party’s knowledge, any
statute, decree, order, rule or regulation of any court or governmental agency
or body applicable to the Party or its properties, or require any consent or
approval of any governmental authority or other person; 

 

10.1.4.     each Party will, to the best of its knowledge without
undertaking a special investigation, disclose to the other Party any material
adverse proceedings, claims or actions that arise that would materially
interfere with that Party’s performance of its obligations under this
Agreement.; and

 

10.1.5.     it shall comply with any applicable laws and
regulations related to the subject matter of this Agreement and its performance
hereunder.

 

10.2.        IDI Representations and
Warranties.    IDI represents and
warrants that it has to the best of its knowledge all rights, including any
licenses from any Third Parties that are necessary, to grant the licenses IDI
grants to Cepheid in Section 2.1 of this Agreement..  Nothwithstanding the preceding sentence, Cepheid acknowledges
that it is not receiving any rights under this Agreement in regard to patents
owned [***].

 

10.3.        Disclaimers.  EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY SET
FORTH IN THIS AGREEMENT, NOTHING CONTAINED IN THIS AGREEMENT WILL BE CONSTRUED
AS:

 

10.3.1.     A WARRANTY OR REPRESENTATION BY EITHER PARTY AS TO
THE VALIDITY, ENFORCEABILITY, OR SCOPE OF ANY PATENT;

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

 

9

 

10.3.2.     A WARRANTY OR REPRESENTATION THAT ANY MANUFACTURE,
SALE, OFFER FOR SALE, LEASE, IMPORT, USE OR OTHER DISPOSITION OF ANY PRODUCTS
HEREUNDER WILL BE FREE FROM INFRINGEMENT OF PATENT, COPYRIGHT OR OTHER
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES;

 

10.3.3.     A WARRANTY OR REPRESENTATION BY EITHER PARTY WITH
RESPECT TO THEIR ENFORCEMENT OF ANY PATENT INCLUDING WITHOUT LIMITATION THE
PROSECUTION, DEFENSE OR CONDUCT OF ANY ACTION OR SUIT CONCERNING INFRINGEMENT
OF ANY SUCH PATENT;

 

10.3.4.     A WARRANTY OR REPRESENTATION BY EITHER PARTY WITH
RESPECT TO ANY PATENTS NOT LICENSED HEREUNDER BY A PARTY TO THE OTHER PARTY

 

10.3.5.     CONFERRING ANY RIGHT TO USE IN ADVERTISING,
PUBLICITY, OR OTHERWISE, ANY TRADEMARK, TRADE NAME OR NAMES, OR ANY
CONTRACTION, ABBREVIATION OR SIMULATION THEREOF, OF EITHER PARTY;

 

10.3.6.     AN OBLIGATION UPON EITHER PARTY TO MAKE ANY
DETERMINATION AS TO THE APPLICABILITY OF ANY OF ITS PATENTS TO ANY PRODUCT OR
SERVICE;

 

10.3.7.     A WARRANTY OR REPRESENTATION BY EITHER PARTY WITH
RESPECT TO THE MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, OF ANY
PRODUCTS HEREUNDER.

 

11.          Indemnification;
Limitation of Liability

 

11.1.        General Statement
Regarding Indemnity.  For purposes
of clarification, it is noted that the Parties intend that Sections 11.2 and
11.3 of this Agreement set forth the Parties’ indemnification agreements other
than those relating to intellectual property, that Sections 11.4 and 11.5 set
forth the Parties indemnification agreements relating to intellectual property,
and that the indemnifications set forth below are intended to be afforded
notwithstanding any warranty limitations set forth in Section 10. For
purposes of this Section 11, “Liabilities” shall mean any and all claims made
by, or judgment, damage, liability, loss, cost or other expense, including
reasonable legal fees and expenses resulting from any claims made by or
proceedings brought by, any Third Party against a Party as set forth in this
Section 11.

 

11.2.        Cepheid’s General
Indemnity.  Subject to the
limitations set forth below in this Section 11, Cepheid will defend,
indemnify and hold harmless IDI and its Affiliates against any Liabilities
resulting from any claims made by or proceedings brought by, any Third Party or
Affiliate of Cepheid against IDI or any of IDI’s Affiliates to the extent that
the claim or Liabilities arises from the following:

 

11.2.1.     Cepheid’s negligence or willful misconduct, except
to the extent caused by the negligence or willful misconduct of IDI; or

 

11.2.2.     Cepheid’s breach of this Agreement, including
without limitation any warranty of Cepheid set forth in Section 10.

 

11.3.        IDI’s General Indemnity.  Subject to the limitations set forth below
in this Section 11, and excluding claims as to which Cepheid indemnifies
IDI pursuant to Section 11.2, IDI will defend, indemnify and hold harmless
Cepheid and its Affiliates against any Liabilities resulting from any and all
claims made by or proceedings brought by, any Third Party or Affiliate of IDI
against Cepheid or any of Cepheid’s Affiliates to the extent that the claim or
Liabilities arises from the following: 

 

11.3.1.     IDI’s negligence or willful misconduct; or, 

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

10

 

11.3.2.     IDI’s breach of this Agreement, including without
limitation any warranty of IDI set forth in Section 10.

 

11.4.        IDI Intellectual
Property Release and Indemnity.

 

11.4.1.     Subject to the restrictions set forth in this
Section 11.4, and provided the IDI Released Parties (as defined below)
comply with their obligations in Section 11.6, 11.7, and 11.8, IDI agrees,
for itself and its Affiliates, to defend Cepheid, its Affiliates and their
distributors and end-user customers who purchase Cepheid Sourced Products
(individually, a “IDI Released Party,” collectively “IDI Released Parties”)
from any claim, demand or cause of action in, and to indemnify and hold
harmless the IDI Released Parties from and against any Liabilities resulting
from, any legal action or proceeding brought by a Third Party against a IDI
Released Party to the extent that such action or proceeding is based on a claim
that (i) the manufacture and sale of the Cepheid Sourced Products by Cepheid
pursuant to this Agreement infringes any Third Party Intellectual Property
Rights; (ii) the use by Cepheid in accordance with the terms of this Agreement
of IDI Materials supplied by IDI to Cepheid pursuant to this Agreement
infringes any Third Party Intellectual Property Rights; or (iii) the use by a
purchaser of Cepheid Sourced Products for their intended purpose infringes any
Third Party Intellectual Property Rights.

 

11.4.2.     Remedy for Infringement, Rights of IDI,
Exceptions.  If any IDI Materials or any portion thereof are subject
to a suit or other legal proceeding claiming that the IDI Materials or such
portion infringes a Third Party’s Intellectual Property Right for which IDI has
provided an indemnity under Section 11.4.1, or in IDI’s opinion is (are)
likely to become subject of such a claim, IDI shall use its best efforts to
procure for the IDI Released Party the right to continue using the IDI
Materials or such portion.  IDI shall
have no liability or obligation hereunder for any infringement based upon: the
use of IDI Materials in combination with any product not provided by IDI or
intended for use with IDI Materials except as contemplated by this Agreement,
or based upon any modification to IDI Materials made by the IDI Released Party
or its Affiliates or a Third Party except as contemplated by this Agreement, if
such claim would not have occurred but for such combination or modification.

 

11.4.3.     Exclusive Intellectual Property Liability of
IDI.  THE FOREGOING STATES THE
ENTIRE LIABILITY OF IDI, AND THE EXCLUSIVE REMEDY OF THE RELEASED PARTIES, FOR
ANY INFRINGEMENT OR CLAIMED INFRINGEMENT OF PATENT, COPYRIGHT, TRADE SECRET OR
ANY OTHER INTELLECTUAL PROPERTY RIGHT.

 

11.5.        Cepheid Intellectual
Property Release and Indemnity.

 

11.5.1.     Subject to the restrictions set forth in this
Section 11.5, and provided the Cepheid Released Parties (as defined below)
comply with their obligations in Sections 11.6, 11.7, and 11.8, Cepheid agrees,
for itself and its Affiliates, to defend IDI, its Affiliates, and their end
user customers who purchased Target Assays (individually, a “Cepheid Released
Party”, collectively “Cepheid Released Parties”) from any claim, demand or
cause of action in, and to indemnify and hold harmless the Cepheid Released
Parties from and against any Liabilities resulting from, any legal action or
proceeding brought by a Third Party against a Cepheid Released Party to the
extent that such action or proceeding is based on a claim that (i) the Dry Down
Process, or (ii) the manufacture, sale or use of Target Assays in a dried-down
or pelletized form as a result of the Dry Down Process (which claim shall be based
upon the fact that such manufacture, sale or use involves Target Assays in such
dried down form, in and of itself), infringes any Third Party Intellectual
Property Rights.

 

11.5.2.     Exclusive Intellectual Property Liability of
Cepheid.  THE FOREGOING STATES THE
ENTIRE LIABILITY OF CEPHEID, AND THE EXCLUSIVE REMEDY OF THE CEPHEID RELEASED
PARTIES, FOR ANY INFRINGEMENT OR CLAIMED INFRINGEMENT OF

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

11

 

PATENT, COPYRIGHT, TRADE SECRET OR ANY OTHER
INTELLECTUAL PROPERTY RIGHT.

 

11.6.        Notice; Choice of
Attorney.  A Party that intends to
claim indemnification under this Section 11 (the “Indemnitee”) will
promptly notify the other Party (the “Indemnitor”) of any Liabilities in
respect of which the Indemnitee intends to claim indemnification.  The Indemnitor, after it determines that
indemnification is required of it, will assume the defense and settlement
thereof with counsel of its choice, reasonably satisfactory to the other
Party.  An Indemnitee will have the
right to retain its own counsel, with the reasonable fees and expenses to be
paid by the Indemnitor if Indemnitor does not assume the defense or if
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential differing interests between
such Indemnitee and any other Party represented by counsel.  The Indemnitee’s failure to deliver notice
to the Indemnitor within a reasonable time after the commencement of any such
action, if prejudicial to Indemnitor’s ability to defend the action, will
relieve the Indemnitor of any liability to the Indemnitee under this
Section 11, but the omission to deliver notice to the Indemnitor will not
relieve it of any liability that it may have to any Indemnitee otherwise than
under this Section 11.

 

11.7.        Consent Required.  The indemnity provisions in this
Section 11 will not apply to amounts paid in settlement of any Liabilities
if the settlement is effected without the consent of the Indemnitor. In
addition, neither Party shall enter into any settlement or otherwise resolve
any infringement matter in a manner that would adversely impact the business of
the other Party or in any manner limit the other Party’s rights without such
Party’s prior written consent.

 

11.8.        Cooperation.  The Indemnitee under this Section 11, its
employees and agents, will cooperate fully with the Indemnitor and its legal
representatives in the investigations of any action, claim or liability covered
by this indemnification.  In the event
that each Party claims indemnity from the other and one Party is finally held
liable to indemnify the other, the Indemnitor will additionally be liable to
pay the reasonable legal costs and attorneys’ fees incurred by the Indemnitee
in establishing its claim for indemnity.

 

11.9.        LIMITATION OF LIABILITY.  NOTWITHSTANDING ANYTHING CONTAINED IN THIS
AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL CEPHEID OR IDI BE LIABLE TO THE
OTHER, WHETHER IN CONTRACT, TORT, WARRANTY, OR UNDER ANY STATUTE (INCLUDING
WITHOUT LIMITATION ANY TRADE PRACTICE, UNFAIR COMPETITION OR OTHER STATUTE OF
SIMILAR IMPORT) OR ON ANY OTHER BASIS, FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL, DAMAGES OF THE OTHER, OR FOR MULTIPLE OR PUNITIVE DAMAGES, WHETHER OR
NOT FORESEEABLE AND WHETHER OR NOT THE OTHER IS ADVISED OF THE POSSIBILITY OF
DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SUCH DAMAGES ARISING FROM OR
RELATED TO LOSS OF USE, LOSS OF DATA, FAILURE OR INTERRUPTION IN THE OPERATION
OF ANY EQUIPMENT, DELAY IN REPAIR OR REPLACEMENT, OR LOSS OF OPPORTUNITY OR
GOODWILL.  THE PARTIES AGREE THAT THE
DAMAGES INDEMNIFIED UNDER SECTIONS 11.4 AND 11.5  SHALL NOT BE DEEMED INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
SPECIAL DAMAGES, OR MULTIPLE OR PUNITIVE DAMAGES.

 

12.          General Provisions

 

12.1.        Force Majeure.  Except as may be herein otherwise
specifically provided, neither Party shall be liable to the other for loss,
injury, delay, expenses, damages, or other casualty suffered or incurred by the
other Party due to a delay in performing or the failure to perform obligations
hereunder as result of trade disputes, strikes, riots, storms, earthquakes,
fires, acts of God or government or any cause (whether similar or dissimilar to
the foregoing), including but not limited to any shortages of power that is not
caused by the fault or inaction of the Party seeking to be excused from
performance, beyond the reasonable control of the Party, provided, however,
that such Party shall have given the other Party prompt notice in writing of
the occurrence of any such events or causes, and of their discontinuance, and

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

12

 

diligently seeks to perform at the earliest reasonable opportunity; and
further provided that this Section 12.1 shall not apply to any obligation
to pay money hereunder.  Any mandate
from a governmental authority regarding pricing for any Cepheid Sourced Products
shall be considered a force majeure event. If requested by either Party, the
Parties will discuss what, if any, modification of the terms of this Agreement
may be required in order to arrive at an equitable solution should performance
be materially delayed or prevented by events of force majeure as set forth in
this Section 12.1, but neither Party shall have an obligation to amend
this Agreement.

 

12.2.        Publicity.  Neither Party nor any of its Affiliates will
originate any news or any other public disclosure relating to this Agreement
without the prior written approval of the other Party.  A Party may issue a press release as soon as
feasible after the Effective Date, wherein the text of such press release shall
be agreed to by the other Party.

 

12.3.        Governing Law.  This Agreement shall be governed by,
constructed, performed, and enforced in accordance with the laws of the
province of Ontario, Canada, without regard to its conflicts of law principles.  The Parties hereby specifically exclude the
application of The Convention for the International Sales of Goods. 

 

12.4.        Severability. If a
court or an arbitrator of competent jurisdiction holds any provision of this
Agreement to be illegal, unenforceable, or invalid, in whole or in part for any
reason, that provision will be deemed severed from the rest of the Agreement,
and the validity and enforceability of the remaining provisions, or portions
thereof, will not be affected.

 

12.5.        Entire Agreement.
This Agreement and any exhibits and schedules referred to in this Agreement
constitute the final, complete, and exclusive statement of the terms of the
agreement between the Parties pertaining to the subject matter of this
Agreement and supersede all prior and contemporaneous understandings or
agreements of the Parties as to such subject matter, including, but not limted
to,  the Letter Agreement dated February
21, 2003 .  No Party has been induced to
enter into this Agreement by, nor is any Party relying on, any representation
or warranty outside those expressly set forth in this Agreement.

 

12.6.        Modification of
Agreement.  No terms or conditions
of this Agreement will be varied or modified by any prior or subsequent
statement, conduct or act of either of the Parties, except that the Parties may
supplement, amend, or modify this Agreement by written instruments specifically
referring to, and executed in the same manner as, this Agreement. 

 

12.7.        Assignment.  Neither Party has the power to assign nor
may assign this Agreement nor any interest hereunder without the prior written
consent of the other Party, except that without obtaining the consent of the
other Party either Party may assign this Agreement or any of its rights or
obligations to (i) any Affiliate of such Party, (ii) any Third Party with which
it may merge or consolidate or who acquires more than fifty percent (50%) of
its outstanding voting securities, or (iii) provided that prior to the
effective date of assignment the prospective assignee agrees with the
non-assigning Party in writing to be subject to and bound by, and to perform,
all of the assignor’s obligations and covenants in this Agreement, to any Third
Party to which it may transfer all or substantially all of its assets and/or
rights to which this Agreement relates. 
Any unauthorized assignment will be void and of no force and
effect.  Whether or not a Party consents
to any transfer or assignment by the other Party, no transfer or assignment of
this Agreement shall relieve the assignor from, and the assignor shall remain
fully and primarily liable for, the liabilities, obligations and covenants of
the assignor under this Agreement. 
Subject to the foregoing, the rights and liabilities of the Parties will
bind and inure to the benefit of their respective successors and assigns.

 

12.8.        Relationship.  Nothing contained in this Agreement will be
construed to make the Parties partners, joint venturers, principles, agents or
employees of the other.  Neither Party
will have the right, power, or authority, express or implied, to bind the other
Party. 

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

13

 

12.9.        Waiver. No waiver
of a breach, failure of any condition, or any right or remedy, contained in or
granted by the provisions of this Agreement will be effective unless it is in
writing and signed by the Party waiving the breach, failure, right or
remedy.  No waiver of any breach,
failure, right or remedy will be deemed a waiver of any other breach, failure,
right or remedy, whether or not similar, nor will any waiver constitute a
continuing waiver unless the writing so specifies.

 

12.10.      Counterparts.  This Agreement may be executed in any number
of counterparts, and each counterpart will be deemed an original instrument,
but all counterparts together will constitute but one agreement.

 

12.11.      No Limitations on
Business, Etc.  Except as expressly
set forth in this Agreement, nothing in this Agreement shall be deemed to
restrict either IDI’s or Cepheid’s freedom and right to manufacture and sell
products to whomever they chose, or to engage others to do so or to contract
with other manufacturers and suppliers for the procurement of products of any
kind or description, subject to obtaining required Intellectual Property
Rights.  Except as otherwise provided in
this Agreement or another written agreement between the Parties, each Party
shall have absolute discretion in determining and conducting its promotional,
sales, marketing and distribution activities.

 

12.12.      Counting Days.  Unless otherwise specified, “days” will be
considered calendar days.  Calendar days
will be counted by excluding the first day and including the last day, unless
the last day is a Saturday, Sunday, or a legal holiday recognized in Canada and
in the State of California and then it will be excluded.  “Business days” will exclude Saturdays, Sundays,
and all legal holidays recognized in the Provinces of Ontario and Quebec,
Canada and in the State of California.

 

12.13.      Notices.

 

12.13.1.   Sufficient Notice. All notices, requests,
demands, or other communications under this Agreement will be in writing.
Notice will be sufficiently given for all purposes as follows:

 

(A)    when personally delivered
to the recipient, notice is effective on delivery;

 

(B)     when mailed certified mail,
return receipt requested, notice is effective on receipt, if delivery is
confirmed by a return receipt;

 

(C)     when delivered by Federal
Express/Airborne/United Parcel Service/DHL WorldWide, or United States Express
Mail, charges prepaid or charged to the sender’s account, notice is effective
on delivery, if delivery is confirmed by the delivery service; and

 

(D)    when sent by telex or fax
to the telex or fax number shown below, or if such telex or fax number is
inoperative, the last telex or fax number of the recipient known to the Party
giving notice, notice is effective on receipt, provided that

 

(1)     a duplicate copy of the
notice is promptly given by first-class or certified mail or by overnight
delivery, or

 

(2)     the fax is acknowledged as
received by the receiving Party’s fax machine.

 

Any notice given by telex or fax will be deemed received on the next
business day if it is received after 5:00 p.m. (recipient’s time) or on a
non-business day.

 

12.13.2.   Notice Refused, Unclaimed, or
Undeliverable. Any
correctly addressed notice that is refused, unclaimed, or undeliverable because
of an act or omission of the Party to be notified will

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

14

 

be deemed
effective as of the first date that said notice was refused, unclaimed, or
deemed undeliverable by the postal authorities, messenger, or overnight
delivery service.

 

12.13.3.   Addresses. Addresses for purpose of giving
notice are as set forth immediately below, or such other addresses as may be
designated in writing by the Parties from time to time during the term of this
Agreement:

 

	
  If to Cepheid:

  	
  Cepheid

  
	
   

  	
  904 Caribbean Drive

  
	
   

  	
  Sunnyvale, CA 94089

  
	
   

  	
  FAX No.: 408-435-9342

  
	
   

  	
  Attn.: Chief Executive Officer

  
	
   

  	
   

  
	
  If to IDI:

  	
  Infectio Diagnostic (I.D.I.) Inc.

  
	
   

  	
  2050 Rene Levesque Blvd. West, Suite 400

  
	
   

  	
  Sainte-Foy, Quebec

  
	
   

  	
  Canada G1V 2K8

  
	
   

  	
  FAX No.: 418-681-5254

  
	
   

  	
  Attn.: Chief Executive Officer

  

 

12.13.4.   Late Payment. 
If payment due a Party is not received by the due date, the Party to
whom payment is due may assess and the other Party agrees to pay a late payment
charge at the rate of 1% per month (12% per year) or the maximum legal rate,
whichever is less, of the amount due from the due date to the date of payment.

 

12.14.      Costs.  Except as otherwise expressly set forth in
this Agreement, Cepheid and IDI shall each be solely responsible for and bear
all of its own respective expenses, including, without limitation, expenses of legal
counsel, accountants and other advisors, incurred at any time in connection
with negotiating, pursuing or consummating this Agreement, and the transactions
contemplated by this Agreement or any such other agreements.

 

12.15.      Dispute Resolution. Any controversy, claim or dispute arising out of or relating to
this Agreement, including without limitation, the construction, interpretation,
validity, enforcement, performance, lack or failure of performance or breach of
this Agreement, or the rights, duties or liabilities of a Party under this
Agreement, that cannot be resolved by agreement of the divisions in
charge of the transaction involved of the Parties within  45 days of the matter being raised, and
either Party wishes to pursue the matter, the controversy, claim or dispute
shall be settled in accordance with Exhibit B.

 

12.16.      Continuation After
Acquisition or Breach.  In the event
that (i) this Agreement is terminated in accordance with Sections 9.2.2 (due to
the insolvency or bankruptcy of IDI), or in accordance with Section 9.2.3 (as a
result of IDI’s material uncured breach of its obligations under this
Agreement); or (ii) IDI is acquired by a third party and such third party fails
to fulfill the obligations set forth in this Agreement, Cepheid shall be
entitled to continue exercising its rights under the license set forth in
Section 2.1 and IDI shall automatically grant Cepheid a nonexclusive,
nontransferable, worldwide, license under IDI’s Intellectual Property Rights to
develop, have developed, register, make, have made, use, offer for sale, have
sold, import and sell Cepheid Sourced Products for sale and use in connection
with the Smart Cycler Instruments.  The
royalties due to be paid to IDI by Cepheid for the sale of such Cepheid Sourced
Products shall be as outlined in 3.1 and 3.2.

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

15

 

The
Parties, through their authorized officers, have executed this Agreement as of
the Effective Date.

 

	
  CEPHEID

  	
  INFECTIO DIAGNOSTIC
  (I.D.I.) INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date Signed:

  	
   

  	
   

  	
  Date Signed:

  	
   

  	
   

  
											

 

 

The symbol [***] is used to indicate that a portion of the exhibit has
been omitted and filed seperately with the commission.  Confidential treatment has been requested
with respect to the omitted portion.

 

16

 

Exhibit A

 

Target
Assays

 

 

	
  Organism or Syndrome

  	
   

  
	
   

  	
   

  
	
  Group B Streptococci

  	
   

  
	
   

  	
   

  
	
  MRSA
  (Méthicillin Resistant

  Staphylococcus Aureus)

  	
   

  
	
   

  	
   

  
	
  VRE
  (Vancomycin Resistant

  Enterococci)

  	
   

  

 

 

Exhibit B

 

Mediation

 

1.             The Parties shall
attempt to resolve any dispute arising out of relating to this Agreement
promptly by negotiation between executives who have authority to settle the
controversy.

 

2.             If the Parties do not
resolve the dispute within 45 days of undertaking negotiation thereof, either
Party may refer the Dispute for mediation by JAMS or its successor by providing
to JAMS and the other Party a written request for mediation, setting forth the
details of the dispute and the relief requested.  Each Party must then participate in the mediation in good faith
and share equally in its costs.  The
mediation will be conducted in accordance with JAMS mediation rules and
procedures by: (i) a mediator agreed by the Parties selected from JAMS’ panel
of neutrals; or (ii) if the Parties do not agree on a mediator, a mediator
nominated by JAMS.  All offers,
promises, conduct and statements, whether oral or written, made in the course
of the mediation by any of the Parties, their agents, employees, experts and
attorneys, and by the mediator and any JAMS employees, are confidential,
privileged and inadmissible for any purpose, in any litigation or other
proceeding involving the Parties, provided that evidence that is otherwise
admissible or discoverable shall not be rendered inadmissible or
non-discoverable as a result of its use in the mediation. The mediation shall
take place in New York, New York, United States of America.

 

3.             If the dispute has
not been resolved by non-binding means as provided herein within 90 days of the
initiation of such procedure, either Party may pursue available remedies,
including litigation.

 

4.             Notwithstanding the
foregoing, each Party shall have right before or during negotiation or
mediation to seek and obtain from the appropriate court provisional remedies
such as attachment, preliminary injunction, replevin, etc., to avoid
irreparable harm, maintain the status quo or preserve the subject matter of the
negotiations or mediation.Exhibit 10.25

 

Distribution Agreement

between

CEPHEID AND INFECTIO DIAGNOSTIC (I.D.I.) INC.

 

 

THIS AGREEMENT (“Agreement”) is made as of the 4th
day of November, 2003 (the “Effective Date”) and is by and between Cepheid, a
California corporation with its principal place of business at 904 Caribbean
Drive, Sunnyvale, CA 94089 (“Cepheid”) and Infectio Diagnostic (I.D.I.) Inc., a
corporation incorporated under the laws of the Province of Quebec with its
principal place of business at 2050 Rene Levesque Blvd. West, Suite 400,
Sainte-Foy, Quebec, Canada G1V 2K8 (“IDI”). 
Cepheid and IDI are sometimes referred to herein individually as a
“Party,” and collectively as the “Parties.”

 

RECITALS

 

A.            The Parties have previously entered
into several agreements, including agreements related to the formation and
operation of the Aridia joint venture, which agreements are terminated
concurrently with the execution of this Agreement.

 

B.            Cepheid develops, manufactures and
markets analytical instruments designed for nucleic acid based analysis.

 

C.            IDI develops, manufactures and
markets certain assays that may be used with certain Cepheid analytical
instruments.

 

D.            Cepheid and IDI desire that Cepheid
appoint IDI as a distributor of Cepheid instruments, subject to and in accordance
with the terms and conditions of this Agreement.

 

Now, therefore, the Parties, in
consideration of the mutual obligations hereinafter set forth and intending to
be legally bound, hereby agree as follows:

 

1.             Definitions. Unless otherwise
specifically provided herein, the following terms shall have the following
meanings:

 

1.1.          “Affiliate” of a Party or other person or entity means any
corporation, firm, partnership or other entity, whether de jure or
de facto, which directly or indirectly controls, is controlled by or
is under common control with such Party or other person or entity to the extent
of more than fifty percent of the equity having the power to vote on or direct
the affairs of the entity, or such lesser percentage which is the maximum allowed
to be controlled by a foreign corporation in a particular jurisdiction.

 

1.2.          “Cepheid Intellectual Property” means all Intellectual
Property Rights that are owned, either partially or wholly, by Cepheid, or are
licensed to and sub-licensable by, or otherwise controlled by, Cepheid that are
related to the Smart Cycler Instruments, including any Cepheid Smart Cycler
Software.

 

1.3.          “Confidential Information” means confidential knowledge,
Know-how, practices, processes, products, materials, equipment or information
that a receiving Party has a reasonable basis to believe is confidential to the
disclosing Party or is treated by the disclosing Party as confidential.  Notwithstanding the above, Confidential
Information will not include, and nothing in Section 8 will in any way
restrict the rights of either Party to use, disclose or otherwise deal with,
any information which:

 

(a)           can be demonstrated to have been in
the public domain as of the date of this Agreement or thereafter comes into the
public domain through no act of the receiving Party; or

 

(b)           can be demonstrated to have been
independently known to the receiving Party prior to the receipt thereof as
evidenced by written record, or is made available to the receiving Party as a
matter of lawful right by a Third Party; or

 

 

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 portion.

 

 

(c)           can be demonstrated to have been
rightfully received by the receiving Party from a Third Party who did not
require the receiving Party to hold it in confidence or limit its use, or on
the basis of a restriction that has lapsed, and who did not acquire it,
directly or indirectly, from the other Party to this Agreement under a
continuing obligation of confidentiality; or

 

(d)           can be demonstrated to have been
independently conceived, invented or acquired by employees or agents of the
receiving Party who have not been personally exposed to relevant Confidential
Information of the other Party as evidenced by written record.

 

1.4.          “Custom Software” means a software package, designed to be
used in conjunction with Cepheid software, and configured specifically for
interpretation only of IDI Assays. This software would operate with the Cepheid
Smart Cycler Software through an interface.

 

1.5.          “IDI Intellectual Property” means all Intellectual Property
Rights that are owned, either partially or wholly, by IDI, or are licensed to
and sub-licensable by, or otherwise controlled by, IDI related to IDI Assays. 

 

1.6.          “Intellectual Property Rights” means all intellectual
property rights worldwide arising under statutory provision or common or civil
law, whether or not registered, which may be granted or recognized under
Canadian or foreign legislation, including, without limitation, all (1)
patents, patent applications and patent rights; (2) rights associated with
works of authorship including copyrights, copyright applications, copyright
registrations, mask works, mask work applications and mask work registrations;
(3) rights relating to the protection of trade secrets and confidential
information; (4) any right analogous to those specifically set forth in this
definition and any other proprietary rights relating to intellectual property
(other than trademark, trade dress, or service mark rights); (5) divisions,
continuations, continuations-in-part, renewals, reissues, re-examinations,
continuing prosecution, and extensions of the foregoing existing at a time in
question, or thereafter filed, issued or acquired; and (6) Know-how, including
rights in any application thereof.

 

1.7.          “Know-how” means confidential and/or proprietary technical
information, techniques, processes, methods, data, assays, substances and
materials, and other information in a Party’s possession that is not generally
available to the public.

 

1.8.          “Manufacturing Cost” means the fully-burdened manufacturing
cost of Smart Cycler Instruments as determined using Cepheid’s customary practices
and procedures and, to the extent applicable, in accordance with Generally
Accepted Accounting Principles in the United States (“GAAP”), including the
following: direct material cost, material overhead cost, direct labor cost,
fixed manufacturing overhead cost, variable manufacturing overhead cost, cost
of quality control and product testing, manufacturing variance cost and other
costs that may be properly attributed and documented to inventory as
manufacturing costs pursuant to GAAP, but excluding royalties or similar
consideration paid to Third Parties for rights to Intellectual Property Rights,
including up-front payments for such rights, even if any such royalties or
other payments are included in fully burdened manufacturing cost in accordance
with a Party’s customary practices and procedures and, to the extent
applicable, GAAP).  In determining
Manufacturing Cost, Cepheid shall take into account, in accordance with GAAP to
the extent applicable and in accordance with Cepheid’s normal and customary
practices and procedures, including without limitation consideration of risks
and uncertainties associated with projections related to the products in
question, projections of sales of such products for at least a twelve month
period made in good faith by Cepheid in accordance with its normal and
customary procedures.  Manufacturing
Cost of Smart Cycler Instruments will be established and reestablished based
upon projections for a period of not less than the next upcoming twelve month
period, may be changed no more frequently than quarterly (and any new
Manufacturing Cost will be effective only as of the first day of a quarter),
and any new Manufacturing Cost of products will not be applied except upon a
minimum of sixty (60) days prior notice from Cepheid to IDI.

 

1.9.          “Regulatory Authority” means any applicable
supra-national, federal, national, regional, state, provincial or local
regulatory agencies, departments, bureaus, commissions, councils or other
government entities regulating or otherwise exercising authority with respect
to a product.

 

 

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 portion.

 

2

 

1.10.        “Smart Cycler Instruments” means the Smart Cycler® I and II
Systems instruments manufactured and sold by Cepheid that are used to perform
Real Time PCR, the Smart Cycler Reaction Tubes to be used with such Smart
Cycler Systems, the Cepheid Smart Cycler Software and any improvements thereof
and any new generation of the Smart Cycler Instruments, which instruments do
not include integrated sample preparation.

 

1.11.        “IDI Assays” means the assays for identified infectious
disease targets developed, manufactured and marketed by IDI or marketed by its
designee.  

 

1.12.        “Third Party” means a person or entity that is not a Party
to this Agreement.

 

2.             Distribution; License Grants

 

2.1.          Distribution of Smart Cycler
Instruments.

 

2.1.1.       [***] Distribution Right. Cepheid hereby appoints IDI to
act as its [***] distributor
of Smart Cycler Instruments solely for use with IDI Assays.  IDI covenants and agrees that it will not
apply, sell, offer to sell, or cause to be sold, assays of Third Parties for
use with the Smart Cycler Instrument.

 

2.1.2.       Subdistributors. 
In exercising its function as distributor of Smart Cycler Instruments in
accordance with Section 2.1.1, IDI may appoint such sub-distributors as it
determines appropriate for the effective distribution of Smart Cycler
Instruments, subject to Cepheid’s prior written consent, which will not be
unreasonably withheld or delayed.  

 

2.2.          Promotion and Sales of Smart Cycler
Instruments.  IDI will use commercially reasonable efforts
to promote the distribution of Smart Cycler Instruments.

 

2.2.1.       Label and Use Restrictions. 
IDI will comply with label and use restrictions as advised by Cepheid.

 

2.2.2.       Cepheid Materials. 
IDI will promote and sell Smart Cycler Instruments in accordance with
the terms of Cepheid’s licenses related to such instruments as Cepheid shall
advise IDI.

 

2.2.3.       Promotional Materials. 
IDI will be responsible, at its own cost, for production of brochures,
data sheets and other promotional materials for Smart Cycler Instruments to be
used in connection with its distribution activities.  Such materials will comply with labeling requirements required
under applicable Cepheid license agreements as advised by Cepheid. IDI shall
provide copies to Cepheid of all advertising materials and shall not use same
without Cepheid’s prior written consent, which shall not be unreasonably
withheld.  

 

2.3.          Regulatory Matters. 
Each of the Parties will be responsible, at its sole cost and expense,
for obtaining and maintaining any and all necessary regulatory approvals, and
for maintaining any claim files and submitting reports, as may be imposed or
required by any Regulatory Authority in connection with its products.  Cepheid will provide IDI with information
regarding the Smart Cycler Instruments which is required for IDI’s regulatory
filings for its products. Subject to the confidentiality provisions of Section
8, in cases where files or documentation of one Party is required to support a
regulatory filing of the other Party, the Party in possession of the required
files or documentation will cooperate with the other Party to a commercially
reasonable degree in compiling and submitting complete applications for
regulatory approval.

 

3.             Development of Custom Software.

 

3.1.          Development of Custom Software. 
If IDI desires that Custom Software be created for use on the Smart
Cycler Instruments, IDI shall provide Cepheid with written notice.   Such written notice shall include

 

 

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 portion.

 

3

 

a statement of specifications of sufficient detail to enable
Cepheid to determine Cepheid’s interest to create such Custom Software on
behalf if IDI.  Cepheid shall have 10
days upon receipt of IDI’s written notice to notify in writing IDI of its interest
to create Custom Software.  In such case,
the Parties will have 20 days from receipt by IDI of Cepheid’s notice to
conclude an agreement.  In such
instance, IDI shall reimburse Cepheid for its actual costs of developing such
software.  If Cepheid does not notify
IDI within 10 days or notifies IDI in writing that it is not interested in
developing the Custom Software for IDI, then IDI may contract with a Third
Party to develop such software so long as access to and modification of
proprietary Cepheid code is not required to develop the Custom Software.  If access to and modification of proprietary
Cepheid code is required to develop the Custom Software, then the parties will
discuss in good faith how such proprietary Cepheid code will be made available
to the Third Party.

 

3.2.          Ownership of the Custom Software.  
IDI will own all right, title, and interest in any proprietary
algorithms or copywritable forms of the Custom Software developed, and all
Intellectual Property Rights therein, whether such software is developed by
Cepheid or a Third Party provided, however, that the Parties will negotiate in
good faith the authorization for Cepheid to use such proprietary algorithms or
copywritable forms.

 

4.             Sales Process; Prices.

 

4.1.          Sales Process. 
IDI shall order Smart Cycler Instruments by submitting written purchase
orders to Cepheid.  IDI will endeavor to
specify delivery dates at least thirty (30) days from the date of the purchase
order.  All purchase orders shall be
accepted by Cepheid and no purchase orders shall be modified or cancelled except
upon the written agreement of both Parties

 

4.2.          Prices. 
Cepheid will transfer the Smart Cycler Instruments to IDI at the
following pricing:  For annual orders of
1 — 199 Smart Cycler Instruments, the transfer price will be Cepheid’s
Manufacturing Cost plus [***] percent
([***]%).  For annual orders of [***] Smart Cycler Instruments or more,
the transfer price will be Cepheid’s Manufacturing Cost plus [***] percent ([***]%).  At the beginning of each year, IDI will provide to Cepheid a
purchase order for the number of units IDI expects to need for the upcoming
year and the transfer price will be initially based on the number of units
contained in such purchase order.  If
actual annual shipments and invoices result in an annual unit total and
transfer price formula that is different than that applied to IDI’s purchases
during the year, then IDI will pay to Cepheid the difference, or Cepheid will
pay to IDI the difference, in accordance with the applicable transfer price
based on the number of units actually ordered by IDI during the year.  If Cepheid transfers, or agrees to transfer,
Smart Cycler Instruments to a Third Party distributor at more favorable prices
than the prices at which similar quantities of such instruments are transferred
to IDI during the term of this Agreement, Cepheid will promptly offer such more
favorable pricing terms to IDI.  IDI may
accept such more favorable pricing terms, but only so long as IDI agrees to
accept the terms and conditions under which such more favorable pricing terms
were granted or offered to the Third Party and such more favorable pricing
terms extend only for so long and in such markets as they are in effect for
such Third Party.  Notwithstanding the
foregoing, in the event that Cepheid has received, or shall receive,
substantial other non-monetary consideration, such as intellectual property,
distribution, or other rights, as a part of the consideration for its granting
of such license to a Third Party distributor, then such consideration must be
taken into account in determining whether or not the Third Party has been
granted more favorable pricing than IDI.

 

4.3.          Delivery Terms. 
All orders placed by IDI shall be shipped ExWorks (Incoterms 2000) which
means that IDI shall be responsible for all transportation and insurance
expenses from Cepheid’s warehouse to IDI’s designated location.

 

4.4.          Third Party
Royalties.  Cepheid
shall be responsible for obtaining and/or maintaining necessary licenses from
Applied BioSystems, Lawrence Livermore National Laboratories and any other
third parties whose Intellectual Property Rights are needed in connection with
the manufacturing and sale of Smart Cycler Instruments; provided, however that
IDI will reimburse Cepheid for any royalties owed to such parties in connection
with IDI’s use, sale, or distribution of such instruments.

 

 

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 portion.

 

4

 

5.             Payments; Records.

 

5.1.          Invoicing & Payment Terms. Cepheid shall issue invoices
to IDI, consistent with the then-current prices set forth above in
Section 4.2 for the Smart Cycler Instruments, and for reimbursement of
third party royalty payments in accordance with Section 4.3, and IDI shall pay
Cepheid within forty-five (45)  days
of the date of receipt of such invoice. 
IDI will pay all amounts due under this Agreement in immediately
available funds and U.S. currency, free of any currency controls or other
restrictions.  

 

5.2.          Taxes.  All amounts payable by a Party under this
Agreement to the other Party are net amounts and are payable in full, without
deduction for taxes or duties of any kind. 
The Parties will be responsible for, and will promptly pay, all taxes
and duties of any kind (including, but not limited to, sales, use and
withholding taxes) associated with their receipt of license rights, products,
or services under this Agreement, except for taxes based on the other Party’s
net income.

 

5.3.          Records, Reports;
Audit.  Using IDI’s customary
practices and procedures, IDI will keep and maintain proper and complete
records and books of accounts related to IDI’s distribution of the Smart Cycler
Instruments.  Within 30 days of the
close of each calendar quarter, IDI shall provide to Cepheid an accounting of
total sales, as well as the average end-user sales price, of Smart Cycler
Instruments. The books and records will be retained for a period of at least 6
years after the end of the period for which such books and records pertain.
Cepheid will have the right from time to time (not to exceed once per calendar
year) during normal business hours and 5 business days prior written notice, to
inspect in confidencethrough an agent, accountant or other representative
acceptable to IDI such books and records of IDI.  Cepheid will bear the costs thereof unless the inspection reveals
a discrepancy unfavorable to Cepheid of at least five percent (5%), in which
case IDI will pay the costs of the inspection. 
If the inspection results in a final determination that amounts have
been overstated or understated, the applicable amount  will be refunded or paid promptly by IDI.  Cepheid will treat all information learned
in the course of any audit or inspection as Confidential Information, and will
maintain such Confidential Information in strict confidence, except to the
extent necessary for Cepheid to reveal such information in order to enforce its
rights under this Agreement or if disclosure is required by law as provided for
in Section 8.6.  Any public accounting
firm shall sign a customary confidentiality agreement as a condition precedent
to their inspection, and shall report to Cepheid only its conclusion with such
other information at the firm deems necessary by way of explanation.

 

IDI shall have the
right from time to time (not to exceed once per calendar year) during normal
business hours and upon 5 business days prior written notice to have an agent
or accountant inspect in confidence any agreement that Cepheid may have with a
Third Party distributor regarding the Smart Cycler Instruments in order to
review compliance by Cepheid with the principle of non-discrimination or any
license agreements to which Cepheid is a party and which is required in
connection with the manufacturing and sale of Smart Cycler Instruments as well
as any books and records related thereof. 
IDI shall bear any costs associated with such agent or accountant
carrying out the inspection.

 

6.             Customer Support; Training

 

6.1.          Customer Support.  IDI will be responsible for providing all
necessary pre and post sales support for the Smart Cycler Instruments,
including sales, professional, technical and customer service support, to end
users of the Smart Cycler Instruments. 
Upon IDI’s request, Cepheid will use commercially reasonable efforts to
provide IDI with all reasonably necessary second level assistance in providing
such support to end users.  

 

6.2.          Training.  Cepheid will use commercially reasonable
efforts to provide IDI with sales and technical training in order for IDI to
effectively use and distribute the Smart Cycler Instruments.  Cepheid shall determine the content and
availability of training courses.  It is
expected that most training courses will be held at Cepheid’s headquarters in
Sunnyvale, California.  IDI shall bear
all responsibility for the travel, lodging, food, and other expenses of its
employees in connection with such training courses.

 

 

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 portion.

 

5

 

7.             General Intellectual Property 

 

7.1.          Ownership of
Intellectual Property.

 

7.1.1.       Cepheid Intellectual Property.  All rights, title and interest in and to
Cepheid Intellectual Property, whether patentable or copyrightable or not, will
belong to and be retained by Cepheid.

 

7.1.2.       IDI Intellectual Property. All rights,
title and interest in and to IDI Intellectual Property, whether patentable or
copyrightable or not, will belong to and be retained by IDI. 

 

7.2.          Branding, Trademarks
and Non-Proprietary Names.  

 

7.2.1.       Smart Cycler Instrument Labeling.  IDI will not remove or obscure any Cepheid
Marks on or in the Smart Cycler Instruments as delivered to IDI, and will not
attach any additional trademarks, logos or trade designations on or to the
Smart Cycler Instruments. Upon request by IDI, Cepheid may add the Marks
(defined below in Section 7.2.2) of IDI to the Smart Cycler Instruments,
provided that Cepheid is clearly indicated as the manufacturer of such
instruments and the instruments contain such other information as Cepheid indicates.  

 

7.2.2.       Trademark Licenses.  Cepheid hereby grants to IDI a non-exclusive
right and license to use the marks, trade names and logos that Cepheid may
employ from time to time with respect to Smart Cycler Instruments
(collectively, “Marks”) in connection with IDI’s promotion and distribution of
Smart Cycler Instruments.  Any such use
of a Cepheid Mark by IDI must be in accordance with applicable law and
Cepheid’s then-current trademark usage guidelines.  Except as set forth in this Section 7.2, nothing contained in
this Agreement will grant to IDI any right, title or interest in Cepheid’s
Marks.  IDI acknowledges and agrees that
Cepheid owns the Cepheid Marks and that any and all goodwill and other
proprietary rights that are created by or that result from IDI’s use of a
Cepheid Mark hereunder inure solely to the benefit of Cepheid.  Cepheid
hereby agrees to defend and indemnify IDI and to hold it harmless against
claims by a Third Party that the use by IDI of Cepheid’s Marks in a manner
expressly authorized by Cepheid in writing infringes intellectual property
rights of such Third Party.  

 

7.3.          Reserved Rights.  No license or other right is granted or is
to be construed as being granted hereunder by one Party to the other Party,
whether implied, or by estoppel, to any Intellectual Property Rights, or to
trademark, trade dress, or service mark rights, or any other intellectual
property rights, owned, used, licensed to, or otherwise controlled by, a Party,
except as expressly set forth herein.

 

8.             Confidentiality

 

8.1.          Non-Disclosure;
Non-Use.  Because Cepheid and IDI
will be cooperating with each other under this Agreement, each has and may
reveal Confidential Information to the other. 
The Parties agree, by using the same degree of care as each uses for its
own information of like importance, but not less than a reasonable degree of
care, to hold in confidence any Confidential Information disclosed by the other
Party hereunder, and not to disclose any Confidential Information of the other
Party to any Third Party or, except as provided below, to any Affiliate, and
not to use any Confidential Information disclosed by the other Party under the
Aridia Agreements and hereunder for any purpose other than carrying out its
obligations under this Agreement, without the express written consent of the
other Party.  Each Party will disclose
Confidential Information only to its employees or agents who have a need to
know same for such purpose.  With
respect to any Confidential Information that has been or is revealed by a Party
to the other Party, the confidentiality and non-use requirements of this
Section 8 will remain in force for a period of  5 years after the expiration or termination of this Agreement.

 

Not withstanding
the foregoing, each party may disclose the existence or details of this
Agreement

 

 

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 portion.

 

6

 

(i)    to Third parties in the
context of a proposed financing, as long as the Third Party subscribes to
confidentiality obligations similar to those hereunder;

 

(ii)    to Third Parties in the
context of any due diligence conducted by a Third party on the affairs of one
of the Parties, as long as the Third Party subscribes to confidentiality
obligations similar to those hereunder.

 

8.2.          Responsibility over
Employees and Agents.  Each Party
will assume individual responsibility for the actions and omissions of its
respective employees, agents and assigns, and to inform same of the
responsibilities for confidentiality and non use under this Agreement, and to
obtain their agreement to be bound in the same manner that the Party is bound.

 

8.3.          Affiliates.
Nothing herein will be construed as preventing either Party from disclosing any
information to an Affiliate of IDI or Cepheid for the purpose of carrying out
its obligations under this Agreement, provided such Affiliate has undertaken a
similar obligation of confidentiality and non-use with respect to the
Confidential Information.

 

8.4.          Bankruptcy. All
Confidential Information disclosed by one Party to the other will remain the
intellectual property of the disclosing Party. 
A bankrupt or insolvent Party will, to the extent permitted by law, take
all steps necessary or desirable to maintain the confidentiality of the other
Party’s Confidential Information and to ensure that any court or other tribunal
maintain such information in confidence in accordance with the terms of this
Agreement. In the event that a court or other legal or administrative tribunal,
directly or through an appointed master, trustee or receiver, assumes partial
or complete control over the assets of a Party based on the insolvency or
bankruptcy of such Party, the bankrupt or insolvent Party will promptly notify
the court or other tribunal:

 

8.4.1.       that Confidential Information received from the
other Party under this Agreement remains the property of the other Party; and,

 

8.4.2.       of the confidentiality and non use obligations
under this Agreement.

 

8.5.          Compliance with
Statutory Requirements. Nothing in this Agreement will be construed as
preventing or in any way inhibiting either Party from complying with statutory
or regulatory requirements, including those having to do with financial
reporting and those governing the development, manufacture, use, sale, or other
distribution, of products in any manner that it reasonably deems appropriate,
including, for example, by disclosing to regulatory authorities Confidential
Information or other information received from a Party or Third Parties.  However, the Parties will take reasonable
measures to assure that no unauthorized use or disclosure is made by persons or
entities to whom access to such information is granted under this
Section 8.5.

 

8.6.          Compelled Disclosure.
In the event that a Party (“Disclosing Party”) is legally compelled (by
deposition, interrogatory, request for documents, subpoena, civil investigation
demand or similar process) to disclose any Confidential Information, the
Disclosing Party will provide prompt prior written notice of such compulsion to
the other Party, so that the other Party may seek a protective order or other
appropriate remedy or, if appropriate, waive compliance with the terms of this
Agreement.  In the event that such
protective order or other remedy is not obtained, the Disclosing Party will
disclose only that portion of Confidential Information that it is advised by
opinion of counsel is legally required to be disclosed, or else stand liable
for contempt or suffer other censure or penalty, and will exercise its
reasonable best efforts to obtain reliable assurance that confidential
treatment required hereby will be accorded to such Confidential Information;
and the Disclosing Party will not be liable for such disclosure unless such
disclosure was caused by or resulted from a previous disclosure by the
Disclosing Party not permitted by this Agreement.

 

 

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 portion.

 

7

 

8.7.          Termination.  Upon expiration or termination of this
Agreement, the recipient Party shall return all Confidential Information of the
disclosing Party and copies, extracts, references and summaries thereof (in
whatever form) to the disclosing Party; provided, however, that the recipient
Party may retain one copy of such Confidential Information in a secure location
for the purposes of verifying its compliance under this Section 8.

 

9.             Term and Termination

 

9.1.          Term.  Unless this Agreement is earlier terminated
as set forth in Section 9, this Agreement will have a term of [***] years (the
“Initial Term”) from the date of the last signature of this Agreement.
Following the Initial Term, the Agreement will automatically renew for
additional [***] year terms (each a “Renewal Term”) unless a Party provides the
other Party with written notice sixty (60) days prior to a Renewal Term that it
does not wish to renew the Agreement.

 

9.2.          Termination.

 

9.2.1.       Termination in Event of Bankruptcy or
Insolvency.  This Agreement may be
terminated by either Party, in the event the other Party files in any court or
agency under any statute or regulation of any state or country, a petition in
bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee of the other Party or of its assets, or if the other Party
proposes a written agreement of composition or extension of its debts, or if
the other Party will be served with an involuntary petition against it, filed
in any insolvency proceeding, and the petition is not stayed or dismissed
within 60 days after the filing thereof, or if the other Party will propose or
be a Party to any dissolution or liquidation, or if the other Party will make
an assignment for the benefit of creditors; or 

 

9.2.2.       Termination for Material Breach.  This Agreement may be terminated by either
Party upon any material breach of this Agreement by the other Party; except
that the Party alleging such breach must first give the other Party written
notice thereof, which notice must state the nature of the breach in reasonable
detail and the other Party must have failed to cure such alleged breach  45 days after receipt of the notice.

 

9.3.          Survival of
Obligations and Certain Rights.  

 

9.3.1.       Upon any termination of this Agreement, by
expiration of the term or otherwise, neither Party will be relieved of any
obligations incurred prior to such termination.  Despite any termination of this Agreement, Sections 1 (to extent
that a definition is required to interpret an operative section of this Agreement),
Sections 5, 7, 8, 9.3, 10, 11, and 12, and to the extent applicable, the
Exhibits to this Agreement, as well as any other provisions that by their
nature are intended to survive any termination, will survive and continue to be
enforceable.

 

9.3.2.       IDI shall be permitted to sell any Smart Cycler
Instruments it has on hand after the termination of this Agreement.

 

10.          Representations, Warranties and Covenants;
Disclaimers

 

10.1.        Representations and
Warranties of Both Parties.  Each
Party represents, warrants and covenants to the other Party that: 

 

10.1.1.     It has the corporate power and authority and legal
right to enter into this Agreement and to perform its obligations hereunder;

 

10.1.2.     the execution and delivery of this Agreement and
the performance of the transactions contemplated thereby have been duly
authorized by all necessary corporate action of the Party;

 

 

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 portion.

 

8

 

10.1.3.     the execution and delivery of this Agreement and
the performance by the Party of any of its obligations under this Agreement do
not and will not: conflict with, or constitute a breach or violation of, any
other contractual obligation to which it is a party, any judgment of any court
or governmental body applicable to the Party or its properties, or, to the
Party’s knowledge, any statute, decree, order, rule or regulation of any court
or governmental agency or body applicable to the Party or its properties, or
require any consent or approval of any governmental authority or other person; 

 

10.1.4.     each Party will, to the best of its knowledge
without undertaking a special investigation, disclose to the other Party any
material adverse proceedings, claims or actions that arise that would
materially interfere with that Party’s performance of its obligations under
this Agreement and

 

10.1.5.     it shall comply with any applicable laws and
regulations related to the subject matter of this Agreement and its performance
hereunder.

 

10.2.        Additional
Representations and Warranties of Cepheid. Cepheid represents and warrants
that to the best of its knowledge it has all rights and licenses from Applied Biosystems, Lawrence
Livermore National Laboratories and any other third parties whose Intellectual
Property Rights are currently needed in connection with the manufacturing and
sale of Cepheid Instruments under this Agreement, and Cepheid will use
commercially reasonable efforts to respect its obligations under these license
agreements, to obtain any additional license agreements that may be required,
and to ensure that these agreements will remain in force to allow IDI to
exercise and benefit from all rights granted to IDI under this agreement. 

 

10.3.        Disclaimers.  EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY SET
FORTH IN THIS AGREEMENT, NOTHING CONTAINED IN THIS AGREEMENT WILL BE CONSTRUED
AS:

 

10.3.1.     A WARRANTY OR REPRESENTATION BY EITHER PARTY AS TO
THE VALIDITY, ENFORCEABILITY, OR SCOPE OF ANY PATENT;

 

10.3.2.     A WARRANTY OR REPRESENTATION THAT ANY MANUFACTURE,
SALE, OFFER FOR SALE, LEASE, IMPORT, USE OR OTHER DISPOSITION OF ANY PRODUCTS
HEREUNDER WILL BE FREE FROM INFRINGEMENT OF PATENT, COPYRIGHT OR OTHER
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES;

 

10.3.3.     A WARRANTY OR REPRESENTATION BY EITHER PARTY WITH
RESPECT TO THEIR ENFORCEMENT OF ANY PATENT INCLUDING WITHOUT LIMITATION THE
PROSECUTION, DEFENSE OR CONDUCT OF ANY ACTION OR SUIT CONCERNING INFRINGEMENT
OF ANY SUCH PATENT;

 

10.3.4.     CONFERRING ANY RIGHT TO USE IN ADVERTISING,
PUBLICITY, OR OTHERWISE, ANY TRADEMARK, TRADE NAME OR NAMES, OR ANY
CONTRACTION, ABBREVIATION OR SIMULATION THEREOF, OF EITHER PARTY;

 

10.3.5.     AN OBLIGATION UPON EITHER PARTY TO MAKE ANY
DETERMINATION AS TO THE APPLICABILITY OF ANY OF ITS PATENTS TO ANY PRODUCT OR
SERVICE;

 

10.3.6.     AN ADMISSION BY EITHER PARTY THAT ANY OF ITS
PRODUCTS INFRINGE ANY PATENTS OF THE OTHER PARTY; OR

 

 

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 portion.

 

9

 

10.3.7.     A WARRANTY OR REPRESENTATION BY EITHER PARTY WITH
RESPECT TO THE MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, OF ANY
PRODUCTS HEREUNDER.

 

11.          Indemnification; Limitation of Liability

 

11.1.        General Statement
Regarding Indemnity.  For purposes
of clarification, it is noted that the Parties intend that Sections 11.2 and
11.3 of this Agreement set forth the Parties’ indemnification agreements other
than those relating to intellectual property, that Section 11.4 sets forth the
Parties’ indemnification agreements relating to intellectual property, and that
the indemnifications set forth below are intended to be afforded
notwithstanding any warranty limitations set forth in Section 10. For
purposes of this Section 11, “Liabilities” shall mean any and all claims made
by, or judgment, damage, liability, loss, cost or other expense, including
reasonable legal fees and expenses resulting from any claims made by or
proceedings brought by, any Third Party against a Party as set forth in this Section
11.

 

11.2.        Cepheid’s General
Indemnity.  Subject to the
limitations set forth below in this Section 11, Cepheid will defend,
indemnify and hold harmless IDI and its Affiliates against any Liabilities
resulting from any claims made by or proceedings brought by, any Third Party or
Affiliate of Cepheid against IDI or any of IDI’s Affiliates to the extent that
the claim or Liabilities arises from the following:

 

11.2.1.     Cepheid’s negligence or willful misconduct in
connection with its activities under this Agreement, except to the extent
caused by the negligence or willful misconduct of IDI; or

 

11.2.2.     Cepheid’s breach of this Agreement, including
without limitation any representation and warranty of Cepheid set forth in
Section 10.

 

11.3.        IDI’s General Indemnity.  Subject to the limitations set forth below
in this Section 11, and excluding claims as to which Cepheid indemnifies
IDI pursuant to Section 11.2, IDI will defend, indemnify and hold harmless
Cepheid and its Affiliates against any Liabilities resulting from any and all
claims made by or proceedings brought by, any Third Party or Affiliate of IDI
against Cepheid or any of Cepheid’s Affiliates to the extent that the claim or
Liabilities arises from the following: 

 

11.3.1.     IDI’s negligence or willful misconduct in
connection with its activities under this Agreement, including the negligence
or willful misconduct of IDI or any sub-distributor engaged by IDI, in the
storage, handling or distribution of Smart Cycler Instruments; or, 

 

11.3.2.     IDI’s breach of this Agreement, including without
limitation any representation and warranty of IDI set forth in Section 10.

 

11.4.        Cepheid Intellectual
Property Release and Indemnity.

 

11.4.1.     Subject to the restrictions set forth in this
Section 11.4, and provided the Cepheid Released Parties (as defined below)
comply with their obligations in Sections 11.5, 11.6 and 11.7, Cepheid agrees,
for itself and its Affiliates, to defend IDI, its Affiliates, and their
distributors, and their end user customers who purchased Smart Cycler
Instruments (individually, a “Cepheid Released Party”, collectively “Cepheid
Released Parties”) from any claim, demand or cause of action in, and to
indemnify and hold harmless the Cepheid Released Parties from and against any
Liabilities resulting from, any legal action or proceeding brought by a Third
Party against a Cepheid Released Party to the extent that such action or
proceeding is based on a claim that (i) the sale of the Smart Cycler
Instruments by IDI pursuant to the this Agreement infringes any Third Party
Intellectual Property Rights; or (ii) the use by a purchaser of Smart Cycler
Instruments for their intended purpose infringes any Third Party Intellectual
Property Rights.

 

 

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 portion.

 

10

 

11.4.2.     Remedy for Infringement, Rights of Cepheid, Exceptions.  If any Smart Cycler Instrument or any
portion thereof is subject to a suit or other legal proceeding claiming that
the Smart Cycler Instrument, or its usage, infringes a Third Party’s
Intellectual Property Right that Cepheid indemnifies Cepheid Released Parties
for under Section 11.4.1, or in Cepheid’s opinion is (are) likely to
become subject of such a claim, Cepheid shall, at its option, do one of the
following : (a) procure for IDI the right to continue using the Smart Cycler
Instruments; or (b) replace or modify the Smart Cycler Instruments so that they
become non-infringing; or (c) substitute for the infringing Smart Cycler
Instruments other suitable, non-infringing Smart Cycler Instruments.  Cepheid shall have no liability or
obligation hereunder for any infringement based upon: the use of Smart Cycler
Instruments in combination with any materials not provided by Cepheid or
intended for use with Smart Cycler Instruments, except as contemplated by this
Agreement, or based upon any modification to Smart Cycler Instruments made by
IDI or a Third Party except as contemplated by this Agreement, if such claim
would not have occurred but for such combination or modification.

 

11.4.3.     Exclusive Intellectual Property Liability of
Cepheid.  THE FOREGOING STATES THE
ENTIRE LIABILITY OF CEPHEID, AND THE EXCLUSIVE REMEDY OF THE CEPHEID RELEASED
PARTIES, FOR ANY INFRINGEMENT OR CLAIMED INFRINGEMENT OF PATENT, COPYRIGHT,
TRADE SECRET OR ANY OTHER INTELLECTUAL PROPERTY RIGHT.

 

11.5.        Notice; Choice of
Attorney. A Party that intends to claim indemnification under this
Section 11 (the “Indemnitee”) will promptly notify the other Party (the
“Indemnitor”) of any Liabilities in respect of which the Indemnitee intends to
claim indemnification.  The Indemnitor,
after it determines that indemnification is required of it, will assume the
defense and settlement thereof with counsel of its choice, reasonably
satisfactory to the other Party.  An
Indemnitee will have the right to retain its own counsel, with the reasonable
fees and expenses to be paid by the Indemnitor if Indemnitor does not assume
the defense or if representation of such Indemnitee by the counsel retained by
the Indemnitor would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other Party represented by
counsel.  The Indemnitee’s failure to
deliver notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to Indemnitor’s ability to
defend the action, will relieve the Indemnitor of any liability to the
Indemnitee under this Section 11, but the omission to deliver notice to
the Indemnitor will not relieve it of any liability that it may have to any
Indemnitee otherwise than under this Section 11.

 

11.6.        Consent Required.  The indemnity provisions in this
Section 11 will not apply to amounts paid in settlement of any Liabilities
if the settlement is effected without the consent of the Indemnitor. In
addition, neither Party shall enter into any settlement or otherwise resolve
any infringement matter in a manner that would adversely impact the business of
the other Party or in any manner limit the other Party’s rights without such
Party’s prior written consent.

 

11.7.        Cooperation.  The Indemnitee under this Section 11,
its employees and agents, will cooperate fully with the Indemnitor and its
legal representatives in the investigations of any action, claim or liability
covered by this indemnification.  In the
event that each Party claims indemnity from the other and one Party is finally
held liable to indemnify the other, the Indemnitor will additionally be liable
to pay the reasonable legal costs and attorneys’ fees incurred by the
Indemnitee in establishing its claim for indemnity.

 

11.8.        LIMITATION OF LIABILITY.  NOTWITHSTANDING ANYTHING CONTAINED IN THIS
AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL CEPHEID OR IDI BE LIABLE TO THE
OTHER, WHETHER IN CONTRACT, TORT, WARRANTY, OR UNDER ANY STATUTE (INCLUDING
WITHOUT LIMITATION ANY TRADE PRACTICE, UNFAIR COMPETITION OR OTHER STATUTE OF
SIMILAR IMPORT) OR ON ANY OTHER BASIS, FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL, DAMAGES OF THE OTHER, OR FOR MULTIPLE OR PUNITIVE DAMAGES, WHETHER OR
NOT FORESEEABLE AND WHETHER OR NOT THE OTHER IS ADVISED OF THE POSSIBILITY OF
DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SUCH DAMAGES ARISING FROM OR

 

 

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 portion.

 

11

 

RELATED TO LOSS OF USE, LOSS OF DATA, FAILURE OR INTERRUPTION IN THE
OPERATION OF ANY EQUIPMENT, DELAY IN REPAIR OR REPLACEMENT, OR LOSS OF
OPPORTUNITY OR GOODWILL.  THE PARTIES
AGREE THAT THE DAMAGES INDEMNIFIED UNDER SECTION 11  SHALL NOT BE DEEMED
INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES, OR MULTIPLE OR PUNITIVE
DAMAGES.

 

12.          General Provisions

 

12.1.        Force Majeure.  Except as may be herein otherwise
specifically provided, neither Party shall be liable to the other for loss,
injury, delay, expenses, damages, or other casualty suffered or incurred by the
other Party due to a delay in performing or the failure to perform obligations
hereunder as result of trade disputes, strikes, riots, storms, earthquakes,
fires, acts of God or government or any cause (whether similar or dissimilar to
the foregoing), including but not limited to any shortages of power that is not
caused by the fault or inaction of the Party seeking to be excused from
performance, beyond the reasonable control of the Party, provided, however,
that such Party shall have given the other Party prompt notice in writing of
the occurrence of any such events or causes, and of their discontinuance, and
diligently seeks to perform at the earliest reasonable opportunity; and further
provided that this Section 12.1 shall not apply to any obligation to pay
money hereunder.  If requested by either
Party, the Parties will discuss what, if any, modification of the terms of this
Agreement may be required in order to arrive at an equitable solution should
performance be materially delayed or prevented by events of force majeure as
set forth in this Section 12.1, but neither Party shall have an obligation
to amend this Agreement.

 

12.2.        Publicity.  Neither Party nor any of its Affiliates will
originate any news or any other public disclosure relating to this Agreement
without the prior written approval of the other Party.  A Party may issue a press release as soon as
feasible after the Effective Date, wherein the text of such press release shall
be agreed to by the other Party.

 

12.3.        Governing Law.  This Agreement shall be governed by,
constructed, performed, and enforced in accordance with the laws of Ontario,
Canada, without regard to its conflicts of law principles.  The Parties hereby specifically exclude the
application of The Convention for the International Sale of Goods.  

 

12.4.        Severability. If a
court or an arbitrator of competent jurisdiction holds any provision of this
Agreement to be illegal, unenforceable, or invalid, in whole or in part for any
reason, that provision will be deemed severed from the rest of the Agreement,
and the validity and enforceability of the remaining provisions, or portions
thereof, will not be affected.

 

12.5.        Entire Agreement.
This Agreement and any exhibits and schedules referred to in this Agreement
constitute the final, complete, and exclusive statement of the terms of the
agreement between the Parties pertaining to the subject matter of this
Agreement and supersede all prior and contemporaneous understandings or
agreements of the Parties as to such subject matter, including, but not
limited, to the Letter Agreement dated February 21, 2003.  No Party has been induced to enter into this
Agreement by, nor is any Party relying on, any representation or warranty
outside those expressly set forth in this Agreement.

 

12.6.        Modification of
Agreement.  No terms or conditions
of this Agreement will be varied or modified by any prior or subsequent statement,
conduct or act of either of the Parties, except that the Parties may
supplement, amend, or modify this Agreement by written instruments specifically
referring to, and executed in the same manner as, this Agreement. 

 

12.7.        Assignment.  Neither Party has the power to assign nor
may assign this Agreement nor any interest hereunder without the prior written
consent of the other Party, except that without obtaining the consent of the
other Party either Party may assign this Agreement or any of its rights or
obligations to (i) any Affiliate of such Party, (ii) any Third Party with which
it may merge or consolidate or who acquires more than fifty percent (50%) of
its outstanding voting securities, or (iii) provided that prior to the
effective

 

 

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 portion.

 

12

 

date of assignment the prospective assignee agrees with the
non-assigning Party in writing to be subject to and bound by, and to perform,
all of the assignor’s obligations and covenants in this Agreement, to any Third
Party to which it may transfer all or substantially all of its assets and/or
rights to which this Agreement relates. 
Any unauthorized assignment will be void and of no force and
effect.  Whether or not a Party consents
to any transfer or assignment by the other Party, no transfer or assignment of
this Agreement shall relieve the assignor from, and the assignor shall remain
fully and primarily liable for, the liabilities, obligations and covenants of
the assignor under this Agreement. 
Subject to the foregoing, the rights and liabilities of the Parties will
bind and inure to the benefit of their respective successors and assigns.

 

12.8.        Relationship.  Nothing contained in this Agreement will be
construed to make the Parties partners, joint venturers, principles, agents or
employees of the other.  Neither Party
will have the right, power, or authority, express or implied, to bind the other
Party. 

 

12.9.        Waiver. No waiver
of a breach, failure of any condition, or any right or remedy, contained in or
granted by the provisions of this Agreement will be effective unless it is in
writing and signed by the Party waiving the breach, failure, right or
remedy.  No waiver of any breach,
failure, right or remedy will be deemed a waiver of any other breach, failure,
right or remedy, whether or not similar, nor will any waiver constitute a
continuing waiver unless the writing so specifies.

 

12.10.      Counterparts.  This Agreement may be executed in any number
of counterparts, and each counterpart will be deemed an original instrument,
but all counterparts together will constitute but one agreement.

 

12.11.      No Limitations on
Business, Etc.  Except as expressly
set forth in this Agreement, nothing in this Agreement shall be deemed to
restrict either IDI’s or Cepheid’s freedom and right to manufacture and sell
products to whomever they chose, or to engage others to do so or to contract
with other manufacturers and suppliers for the procurement of products of any
kind or description, subject to obtaining required Intellectual Property
Rights.  Except as otherwise provided in
this Agreement, or another written agreement between the Parties, each Party
shall have absolute discretion in determining and conducting its promotional,
sales, marketing and distribution activities.

 

12.12.      Counting Days.  Unless otherwise specified, “days” will be
considered calendar days.  Calendar days
will be counted by excluding the first day and including the last day, unless
the last day is a Saturday, Sunday, or a legal holiday recognized in the State
of California and then it will be excluded. 
“Business days” will exclude Saturdays, Sundays, and all legal holidays
recognized in the Provinces of Ontario and Quebec, Canada and in the State of
California.

 

12.13.      Notices.

 

12.13.1.   Sufficient Notice. All notices, requests,
demands, or other communications under this Agreement will be in writing.
Notice will be sufficiently given for all purposes as follows:

 

(A)    when personally delivered
to the recipient, notice is effective on delivery;

 

(B)     when mailed certified mail,
return receipt requested, notice is effective on receipt, if delivery is
confirmed by a return receipt;

 

(C)     when delivered by Federal
Express/Airborne/United Parcel Service/DHL WorldWide, or United States Express
Mail, charges prepaid or charged to the sender’s account, notice is effective
on delivery, if delivery is confirmed by the delivery service; and

 

 

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 portion.

 

13

 

(D)    when sent by telex or fax
to the telex or fax number shown below, or if such telex or fax number is
inoperative, the last telex or fax number of the recipient known to the Party
giving notice, notice is effective on receipt, provided that

 

(1)     a duplicate copy of the
notice is promptly given by first-class or certified mail or by overnight
delivery, or

 

(2)     the fax is acknowledged as
received by the receiving Party’s fax machine.

 

Any notice given by telex or fax will be deemed received on the next
business day if it is received after 5:00 p.m. (recipient’s time) or on a
non-business day.

 

12.13.2.   Notice Refused, Unclaimed, or
Undeliverable. Any
correctly addressed notice that is refused, unclaimed, or undeliverable because
of an act or omission of the Party to be notified will be deemed effective as
of the first date that said notice was refused, unclaimed, or deemed
undeliverable by the postal authorities, messenger, or overnight delivery
service.

 

12.13.3.   Addresses. Addresses for purpose of giving
notice are as set forth immediately below, or such other addresses as may be
designated in writing by the Parties from time to time during the term of this
Agreement:

 

	
  If to Cepheid:

  	
  Cepheid

  
	
   

  	
  904 Caribbean Drive

  
	
   

  	
  Sunnyvale, CA 94089

  
	
   

  	
  FAX No.: 408-435-9342

  
	
   

  	
  Attn.: Chief Executive Officer

  
	
   

  	
   

  
	
  If to IDI:

  	
  Infectio Diagnostic (I.D.I.) Inc.

  
	
   

  	
  2050 Rene Levesque Blvd. West, Suite 400

  
	
   

  	
  Sainte-Foy, Quebec

  
	
   

  	
  Canada G1V 2K8

  
	
   

  	
  FAX No.: 418-681-5254

  
	
   

  	
  Attn.: Chief Executive Officer

  

 

12.13.4.   Late Payment. 
If payment due a Party is not received by the due date, the Party to
whom payment is due may assess and the other Party agrees to pay a late payment
charge at the rate of 1% per month (12% per year) or the maximum legal rate,
whichever is less, of the amount due from the due date to the date of payment.

 

12.14.      Costs.  Except as otherwise expressly set forth in
this Agreement, Cepheid and IDI shall each be solely responsible for and bear
all of its own respective expenses, including, without limitation, expenses of
legal counsel, accountants and other advisors, incurred at any time in
connection with negotiating, pursuing or consummating this Agreement, and the
transactions contemplated by this Agreement or any such other agreements.

 

12.15.      Dispute Resolution. Any controversy, claim or dispute arising out of or relating to
this Agreement, including without limitation, the construction, interpretation,
validity, enforcement, performance, lack or failure of performance or breach of
this Agreement, or the rights, duties or liabilities of a Party under this
Agreement, that cannot be resolved by agreement of the divisions in
charge of the transaction involved of the Parties within fifteen (15) days of
the matter being raised, and either Party wishes to pursue the matter, the
controversy, claim or dispute shall be settled in accordance with
Exhibit A.

 

 

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 portion.

 

14

 

The
Parties, through their authorized officers, have executed this Agreement as of
the Effective Date.

 

	
  CEPHEID

  	
  INFECTIO DIAGNOSTIC
  (I.D.I.) INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date Signed:

  	
   

  	
   

  	
  Date Signed:

  	
   

  	
   

  
												

 

 

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 portion.

 

15

 

Exhibit A

 

Mediation

 

 

1.             The Parties shall
attempt to resolve any dispute arising out of relating to this Agreement
promptly by negotiation between executives who have authority to settle the
controversy.

 

2.             If the Parties do not
resolve the dispute within 45 days of undertaking negotiation thereof, either
Party may refer the Dispute for mediation by JAMS or its successor by providing
to JAMS and the other Party a written request for mediation, setting forth the
details of the dispute and the relief requested.  Each Party must then participate in the mediation in good faith
and share equally in its costs.  The
mediation will be conducted in accordance with JAMS mediation rules and
procedures by: (i) a mediator agreed by the Parties selected from JAMS’ panel
of neutrals; or (ii) if the Parties do not agree on a mediator, a mediator
nominated by JAMS.  All offers,
promises, conduct and statements, whether oral or written, made in the course
of the mediation by any of the Parties, their agents, employees, experts and
attorneys, and by the mediator and any JAMS employees, are confidential,
privileged and inadmissible for any purpose, in any litigation or other
proceeding involving the Parties, provided that evidence that is otherwise
admissible or discoverable shall not be rendered inadmissible or
non-discoverable as a result of its use in the mediation.  The mediation shall take place in New York,
New York, United States of America.

 

3.             If the dispute has
not been resolved by non-binding means as provided herein within 90 days of the
initiation of such procedure, either Party may pursue available remedies,
including litigation.

 

4.             Notwithstanding the
foregoing, each Party shall have right before or during negotiation or
mediation to seek and obtain from the appropriate court provisional remedies
such as attachment, preliminary injunction, replevin, etc., to avoid
irreparable harm, maintain the status quo or preserve the subject matter of the
negotiations or mediation.

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