Document:

Exhibit 10.22

 

 

REAL-TIME INSTRUMENT PATENT LICENSE
AGREEMENT

 

This Agreement, effective April 5, 2004
(the “Effective
Date”), is made by and between Applera Corporation, a corporation of
the State of Delaware, through its Applied Biosystems Group, having an office
at 850 Lincoln Centre Drive, Foster City, California 94404 and Celera
Diagnostics, LLC, an indirectly wholly owned subsidiary of the Applera
Corporation (“Applera”),
and Cepheid, a corporation of the State of California having an office at 904
Caribbean Drive, Sunnyvale, California 94089 (“Licensee”) (each of Applera and
Licensee, a “Party”
and, collectively, the “Parties”).

 

Whereas, Applera owns Japanese Patent No. JP 3136129, European
Patent No. EP 0 872 562 Bl, and patents and applications that claim
priority of United States application Serial No. 08/968,208, all
describing and claiming automated thermal cycling apparatus capable of
performing nucleic acid amplification and detecting that amplification in real
time, and apparatus claims in corresponding counterpart patent applications in
other countries.

 

Whereas, Applera owns U.S. Patent No. 5,656,493, describing and
claiming an amplification system comprising polymerase chain reaction (“PCR”)
reagents and a thermal cycler programmed to carry out a PCR protocol.

 

Whereas, Licensee and Applera are parties to a Thermal Cycler Supplier
Agreement having an effective date of April 15, 200.0 (the “TCSA”),
under which Licensee has been granted certain limited license rights in certain
fields under certain identified patents and patent applications claiming
methods and apparatus for nucleic acid amplification, including the PCR
process, but not including real-time thermal cycling apparatus rights that are
the subject of this Agreement.

 

Whereas, Licensee has requested rights in all fields under the Applera
real-time thermal cycling apparatus patent rights, and rights only in the human
in vitro diagnostic field under the
Applera amplification system rights, and Applera has agreed to grant those
rights.

 

NOW, THEREFORE, the Parties agree as follows:

 

1.             Definitions

 

For the purpose of this Agreement terms when used herein with initial
capital letters shall have the meanings set forth below or as otherwise defined
in this Agreement. Except where the context otherwise requires, wherever used,
the singular form of such defined terms shall, include the plural.

 

1.1           “AB/Cepheid
Limited-Royalty Collaboration Agreement” means the Collaboration
Agreement between APPLIED BIOSYSTEMS AND CEPHEID, effective October 11, 2002
(the “Collaboration
Agreement”).

 

1.2           “Affiliate”
of a party to this Agreement shall mean an organization: a) whose voting stock
is controlled or owned directly or indirectly to the extent of fifty percent
(50%) or more by the party; b) which directly or indirectly owns or controls
fifty percent (50%) or more of 

 

[***] indicates material that has been omitted
pursuant to a request for confidential treatment. The omitted material has been
filed separately with the Securities and Exchange Commission.

 

 

the voting
stock of the party; c) whose majority ownership is directly or indirectly
common to that of the party; or d) defined under a), b), or c) above except the
amount of said ownership is less than fifty percent (50%) but that amount is
the maximum amount permitted by law and Licensee has effective control.

 

1.3           “Amplification System
Patent Rights” shall mean U.S. Patent No. 5,656,493, which
describes and claims an amplification system comprising PCR reagents and a
thermal cycler programmed to carry out a PCR protocol. Amplification System,
Patent Rights include rights only under the identified Applera patent. They do
not include rights, expressly or by implication, under any other Applera or any
Roche patent or application, or to any patent claim to reagents, apparatus, or
an amplification process, even if that process is a result of the natural and
intended operation of the amplification system.

 

1.4           “Fields”
shall mean research, and all applied fields other than human in vitro diagnostic applications for the clinical management
of patients, which are specifically excluded.

 

1.5           “HIVD Field”
shall mean the field of human in vitro
diagnostic applications for the clinical management of patients, excluding any
human in vitro diagnostic applications for the
clinical management of patients involving the detection, quantitation,
genotyping or characterization of human immunodeficiency virus (“HIV”) or
hepatitis C virus (“HCV”).

 

1.6           “Licensed Real-Time
Thermal Cycler” shall mean a Real-Time Thermal Cycler as defined
below, where the system or its manufacture, importation, offer for sale, sale
or use would, except for the rights granted under this Agreement, infringe at
least one Valid Claim within the Real-Time Apparatus Patent Rights.

 

1.7           “Molecular Diagnostics
Products” shall mean any products intended or used for the
amplification, detection, quantification, extraction or sequencing of nucleic
acid for human in vitro diagnostic purposes for
the clinical management of patients.

 

1.8           “Net Sales Price”
for apparatus distributed under this Agreement shall refer to the sales price
charged to unrelated Third-Party end users as to whom the price is not affected
by any other purchase, by any other dealing or by any special course of
dealing, and shall mean the gross invoice price to such an end user less the
following deductions where applicable: (i) discount allowed and taken, in
amounts customary, in the trade, and (ii) sales and/or use taxes and/or
duties for particular sales. No allowance or deduction shall be made for
commissions or collections, by whatever name known. Instruments subject to this
Agreement shall be separately invoiced items.

 

For distributions other than sales described by the preceding
paragraph, including any sale, loan, lease, consignment, gift or other
distribution (i) to an end user that is Licensee itself, an Affiliate or a
distributor, (ii) to an end user that enjoys a special course of dealing
with Licensee, or its Affiliates or distributors, or (iii) is under a
reagent rental agreement or other arrangement that is not a sale to an
unrelated Third-Party end user as to whom the price is unaffected by other
purchase, dealing or special course of dealing, the Net Sales Price shall be
determined by reference to the Net Sales Price which would be applicable in an
arm’s length sale 

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

2

 

to a similarly situated unrelated Third-Party end user as to whom the
price is not affected by any other purchase, by any other dealing or by any
special course of dealing.

 

In all cases, Net Sales Price shall be calculated on the basis of sales
or transfers to end users by Licensee, its Affiliate or a distributor of
either, as the case may be. In the event Licensee is unable to account for
end-user sales by any distributor, the Net Sales Price shall be calculated as
the price to the final distributor multiplied by [***], which factor represents
a [***] margin on sales to end users by the distributor.

 

For the avoidance of doubt, the Net Sales Price for Real-Time Thermal
Cyclers shall include the gross invoice price for all modules, components,
computer hardware and software for such Real-Time Thermal Cyclers whether the
same are sold together with or separately from such Real-Time Thermal Cyclers.

 

1.9           “Real-Time Apparatus
Patent Rights” shall mean (a) Applera’s Japanese Patent No. JP
3136129, European Patent No. EP 0 872 562 Bl; and claims in Applera’s
patents and applications that claim priority of United States patent
application Serial No. 08/968,208; and

 

(a)           each
patent claim to an apparatus or to a method of using that apparatus now or
hereafter owned by Applera; provided that such claim would be infringed by the
manufacture, use (in the manner used as of the Effective Date as evidenced by
Licensee’s product literature attached as Exhibit 2 to this Agreement) or
sale of any Cepheid Smart Cycler, GeneXpert or I-CORE- module-containing
product that had been commercially sold by Licensee as of the Effective Date of
this Agreement, as evidenced by Licensee’s product literature attached as Exhibit 2
to this Agreement. No other patent claims are included, whether expressly or by
implication, within the definition of Real-Time Apparatus Rights or
Amplification System Patent Rights. Notwithstanding anything herein to the
contrary, the term Real-Time Apparatus Patent Rights does not include any
patent or patent claim that claims a real-time process, reagent or method.

 

1.10         “Real-Time Thermal
Cycler” shall mean an instrument, whether in single or multiple
modules, that includes a Thermal Cycler or Temperature Cycling Instrument as
defined below and a detector which can be used to detect a fluorescence optical
signal while the Thermal Cycler is in operation and without opening the vessel(s) in
which amplification is occurring. For the purposes of this Agreement, Real-Time
Thermal Cyclers are limited to the following products: Cepheid Smart Cycler,
GeneXpert and any Cepheid Thermal Cycler containing one or more I-CORE modules
(as those modules are defined in Exhibit 1), and are further limited to
thermal cyclers with a capacity of no more than five hundred (500) reaction
aliquots, vessels or tubes that can be thermally cycled at one time. For
avoidance of doubt a Real-Time Thermal Cycler does not include disposable test
cartridges or reaction tubes for containing reagents that are to be used with
such Real-Time Thermal Cyclers.

 

1.11         “Temperature Cycling
Instrument” shall mean an instrument, whether in single or multiple
modules, that includes a Thermal Cycler and additional structure for performing
one or more other functions.

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

3

 

1.12         “Thermal Cycler”
shall mean an instrument, whether in single or multiple modules, that is
capable in itself of automatically performing thermal cycling of samples in the
PCR process.

 

1.13         “Territory”
shall mean the world.

 

1.14         “Third Party”
shall mean a party other than one of the Parties to this Agreement.

 

1.15         “Valid Claim”
shall mean a patent claim which has not been held invalid or permanently
unenforceable by a decision of a court or administrative tribunal from which no
appeal has or can be taken, or a pending claim of a patent application.

 

2.            Grant

 

2.1           Upon
the terms and subject to the exceptions and conditions of this Agreement,
Applera hereby grants to Licensee under the Real-Time Apparatus Patent Rights a
personal, non-transferable, royalty-bearing, non-exclusive license in the
Fields and in the HIVD Field, in the Territory, to make (but not have made),
use and import Licensed Real-Time Thermal Cyclers, and to offer to sell, and
sell the same to end users solely under Licensee’s name and trademarks but not
otherwise to manufacture for, or sell or distribute to or for, thermal cycler
instrument suppliers,

 

2.2           Upon
the terms and subject to the exceptions and conditions of this Agreement,
Applera grants to Licensee under the Real-Time Apparatus Patent Rights a
personal, non-transferable, royalty-bearing, non-exclusive license in the
Fields and in the HIVD Field, in the Territory, to make (but not have made),
use and import add-on and substitute components, modules, computer hardware and
software for Licensed Real-Time Thermal Cyclers, and to offer to sell, sell and
distribute the same only to end-user owners of Licensed Real-Time Thermal
Cyclers purchased from Licensee.

 

2.3           Upon
the terms and subject to the exceptions and conditions of this Agreement,
Applera grants to Licensee under the Amplification System Patent Rights a
personal, non-transferable, royalty-bearing, non-exclusive right to convey to
end-user customers (including Licensee itself) of Licensee’s Licensed Real-Time
Thermal Cyclers a non-exclusive license to use such Licensed Real-Time Thermal
Cyclers in the HIVD Field in the Territory.

 

2.4           The
grants under Sections 2.1, 2.2 and 2.3 include no right, immunity,
authorization or license, either expressly or by implication, under any patent
or patent application other than the Real-Time Apparatus Patent Rights and the
Amplification System Patent Rights. Without limiting the foregoing, no license
is granted pursuant to this Agreement under any patent claim or patent
application claim to a real-time process, reagent or method. Notwithstanding
the rights granted in Sections 2.1, 2.2, and 2.3, the Licensee, its Affiliate,
or distributor may not make, use, offer to sell, import, or sell a Licensed
Real Time Thermal Cycler for use with Molecular Diagnostics Products for HIV or
HCV infection, including any analyte specific reagent products.

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

4

 

2.5           Rights
granted to Licensee under this Agreement are personal to Licensee alone.
Licensee shall have no right to sublicense, assign or otherwise transfer or
share its rights hereunder, except as permitted under Section 9.1 of this
Agreement.

 

2.6           Notwithstanding
the prohibition of Section 2.5, Licensee’s rights to sell to end users
under the grants of Sections 2.1 and 2.2, and to convey rights to end-user
customers under the grant of Section 2.3, include the right to sell
through Affiliates and distributors, as long as Licensee reports and pays under
this Agreement on their behalf.

 

2.7           Restriction
on Distributors and Affiliates.  Licensee shall not make any arrangements or
agreements with any Third Party to distribute or co-market Real-Time Thermal
Cyclers if such Third Party or its affiliates had, individually or in
aggregate, worldwide sales of Molecular Diagnostics Products manufactured by
such Third Party or its affiliates which exceeded [***] in calendar year 2003.

 

3.            Fees, Royalties, Records
and Reports

 

3.1           In
consideration of the licenses and rights granted under Article 2, Licensee
shall pay to Applera:

 

(a)           a
non-refundable license issuance fee of eleven million five hundred thousand
dollars (US$ 11,500,000), not creditable against royalties, with said license
issuance fee to be paid according to the following schedule:  [***] upon execution of this Agreement, with
subsequent payments of [***] due on the first business day of each calendar quarter
thereafter, beginning with the next immediate quarter, until the remaining
balance of [***] is paid. For the avoidance of doubt, the calendar quarters
begin on the first day of the following months: January, April, July and
October;

 

(b)           for
each Cepheid GeneXpert® Module (as “GeneXpert® Module” is defined in the
Collaboration Agreement) that is a Licensed Real-Time Thermal Cycler and
that is delivered or invoiced after the issuance of a United States patent that
claims priority of United States patent application Serial No. 08/968,208
to Northrup Grumman or any other third party for delivery to and use solely by
the United States Postal Service (“USPS”) with Cartridges (as the term “Cartridges”
is defined in the Collaboration Agreement) supplied to Cepheid pursuant to the
Distribution Agreement dated March 28, 2003 between Applera and Cepheid as
part of a Bio-Threat Agent Detection System (as the term “Bio-Threat Agent
Detection System” is defined in the Collaboration Agreement) pursuant to the
prime contract existing as of the date of this Agreement between Northrup
Grumman and the USPS for the supply of Bio-Threat Agent Detection Systems with
respect to which Cepheid is a subcontractor, including any modules or
components of any such GeneXpert Module, including without limitation software,
[***] of Net Sales Price for each such Licensed Real-Time Thermal Cycler; and
for all other Licensed Real-Time Thermal Cyclers:  (i) [***] of Net Sales Price for each
Licensed Real-Time Thermal Cycler distributed prior to the issuance of any of
Applera’s patents that claim priority of U.S. application Serial No. 08/968,208
and that cover such Licensed Real-Time Thermal Cycler; and (ii) following
the issuance of any such patents, [***] of Net Sales Price;

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

5

 

(c)           unless
exempted from royalty under Section 3.1(d), for each component or module
(including, without limitation, computer hardware and software) of a Cepheid
GeneXpert® Module (as “GeneXpert® Module” is defined in the Collaboration
Agreement) that is a Licensed Real-Time Thermal Cycler and that is
delivered or invoiced after the issuance of a United States patent that claims
priority of United States patent application Serial No. 08/968,208 to
Northrup Grumman or any other third party for delivery to and use solely by the
USPS with Cartridges (as the term “Cartridges” is defined in the Collaboration
Agreement) supplied to Cepheid pursuant to the Distribution Agreement dated March 28,
2003 between Applera and Cepheid as part of a Bio-Threat Agent Detection System
(as the term “Bio-Threat Agent Detection System” is defined in the
Collaboration Agreement) pursuant to the prime contract existing as of the date
of this Agreement between Northrup Grumman and the USPS for the supply of
Bio-Threat Agent Detection Systems with respect to which Cepheid is a
subcontractor, [***] of Net Sales Price for each such component or module; and
for all other components or modules (including, without limitation, computer
hardware and software) for Licensed Real-Time Thermal Cyclers:  (i) [***] of Net Sales Price for each
such component or module delivered or invoiced prior to the issuance of any of
Applera’s patents and applications that claim priority of U.S. application
Serial No. 08/968,208 and which cover such Licensed Real-Time Thermal
Cycler; and (ii) following such issuance, [***] of Net Sales Price for
each such component or module delivered or invoiced following the issuance of
any of Applera’s patents and applications that claim priority of U.S.
application Serial No. 08/968,208 and which cover such Licensed Real-Time
Thermal Cycler; and

 

(d)           repair,
not amounting to reconstruction, of a Licensed Real-Time Thermal Cycler for
which a royalty already has been paid under this Agreement, including
replacement of components by identical components shall not be subject to
royalty hereunder unless the component itself would directly infringe the
Amplification System Patent Rights or the Real-Time Apparatus Patent Rights.

 

3.2           Royalties
that are expressed as a percentage (but not flat fee royalties) of Net Sales
Price (as defined in the TCSA) and that are paid by Licensee to Applera for
Licensee’s sales of royalty bearing products under the TCSA shall be deductible
against royalties due for the same sales of royalty bearing products under
Sections 3.1(b) and (c) of this Agreement.

 

3.3          All
amounts payable hereunder shall be payable in United States dollars. Sales in
other countries shall be converted to U.S. dollars based on the New York rate
of exchange as quoted in the Wall Street Journal for the last business day of
the applicable quarter. If not so published, the Parties may agree on a
substitute publication. In the event there is no comparable publication, the
applicable rate for such date by the appropriate governmental agency in such
country shall apply.

 

3.4           Licensee
shall keep, and shall require its pertinent Affiliates and (when Licensee is
reasonably able to do so shall require it distributors) to keep (and make
available for audit as set forth below), full, true and accurate records, in
accordance with Generally Accepted Accounting Principles, detailing all
information necessary to show the amount payable to Applera under this
Agreement and to demonstrate Licensee’s (and its Affiliates’ and distributors’)
compliance with its obligations under this Agreement. Such books and the
supporting data shall be made available during normal business hours, for three
(3) years following the end of the 

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

6

 

calendar
year to which they pertain (and access shall not be denied thereafter, if
reasonably available), to the inspection of an independent auditor retained by
Applera. If in dispute, such records shall be kept until the dispute is
settled. Inspection shall be at Applera’s expense, unless the auditor concludes
that the amount payable that is stated in a report is understated by five
percent (5%) or more, in which case expenses shall be paid by Licensee.

 

3.5           Licensee
shall within thirty (30) days after the first of January, April, July and October deliver
to Applera a true and accurate royalty report. This report shall detail (i) Licensee’s
(and its Affiliates’ and distributors’ when applicable) sales or other transfer
on a country-by-country basis of products that are subject to royalties
hereunder; (ii) the Net Sales Price; and (iii) Licensee’s calculation
of its royalty obligations consistent with this Agreement. Such report shall
also give such other details of the business conducted by Licensee in each
country during the preceding three (3) calendar months as are pertinent to
accounting for royalty obligations under this Agreement, and shall be in
accordance with, and include all information specified in, the royalty report
form attached hereto as Appendix A.

 

The correctness and completeness of each report shall be attested to in
writing by the responsible financial officer of Licensee or by Licensee’s
external auditor.

 

3.6           Simultaneously
with the delivery of each royalty report described in Section 3.5 above,
Licensee shall pay to Applera the monies then due under this Agreement for the
period covered by the report. Each report and payment shall be sent by the due
date to the following address:

 

Applied
Biosystems

850 Lincoln Centre Drive

Foster City, California, 94404 U.S.A. 

Attention: Director of Licensing

 

with
a copy to

 

Celera
Diagnostics

1401 Harbor Bay Parkway

Alameda, California, 94502 U.S.A

Attention: Vice President, Business Development

 

or to any address that Applera may advise in
writing.

 

3.7           If
Licensee shall fail to pay any amount owing under this Agreement by the due
date, the amount owed shall bear interest at [***] over the Citibank NA base
lending rate (“prime rate”) from the due date until paid, provided, however,
that if this interest rate is held to be unenforceable for any reason, the
interest rate shall be the maximum rate allowed by law at the time the payment
is due.

 

3.8           Failure
of Licensee to pay any amount specified under this Agreement within thirty (30)
days after the due date will give Applera the right to terminate under Section 6.7.

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

7

 

4.            Settlement

 

4.1           The
Parties have been engaged in a dispute regarding the patentability or validity,
as the case may be, of the Real-Time Apparatus Patent Rights, including
Licensee’s opposition to European Patent No. EP 0 872 562 B1. In
settlement of that dispute, the Parties agree as follows: (i) Licensee
will withdraw its opposition to said European Patent and will not oppose said
patent, directly or indirectly; (ii) upon the Effective Date of this
Agreement, Licensee shall pay to Applera the sum of [***]; and (iii) upon
its receipt of said payment, Applera agrees that all Real-Time Thermal Cyclers
delivered or invoiced by Licensee and its Affiliates (including Real-Time
Thermal Cyclers delivered to themselves for use) prior to the Effective Date of
this Agreement shall be considered to have been licensed under the grants of
Sections 2.1, 2.2 and 2.3.

 

5.            License Notice

 

5.1           Licensee
agrees to include prominently in the front of the user’s manual for each
Licensed Real-Time Thermal Cycler, and for no other Thermal Cycler or
Temperature Cycling Instrument, a Notice as specified from time to time by
Applera. Unless and until Applera reasonably instructs differently, the Notice
shall be:

 

NOTICE TO PURCHASER

 

This real-time thermal cycler is licensed for use in research,
diagnostics (except in diagnosis and monitoring of HIV and HCV infections) and
all other applied fields under Applera’s European Patent No. EP 0 872 562,
Japanese Patent No. JP 3136129 and patents pending.

 

No rights are conveyed expressly, by implication or estoppel to any
patents on real-time methods, including but not limited to 5’ nuclease assays,
or to any patent claiming a reagent or kit.

 

Applied Biosystems does not guarantee the performance of this
instrument or endorse its use in any application.

 

6.            Term and Termination

 

6.1           This
Agreement, unless sooner terminated, shall continue until the expiration of the
last-to-expire of the patents under which rights are granted in this Agreement.

 

6.2           This
Agreement shall terminate upon a holding of invalidity or unenforceability of
all patent claims licensed hereunder by a final court decision from which no
appeal is or can be taken.

 

6.3           Licensee
may terminate this Agreement for any reason by giving written notice to Applera
and ceasing to label, advertise or promote its Real-Time Thermal Cyclers as
Licensed Real-Time Thermal Cyclers. Such termination shall be effective ninety
(90) days after said notice or cessation, whichever is later. Upon such
termination, any outstanding balance of the 

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

8

 

license
issuance fee (for which the payment obligation has not already accrued) payable
under Section 3.1(a) of this Agreement shall be cancelled.

 

6.4           The
decision of a Court or Administrative body finding Applera liable or culpable
due to Licensee’s manufacture of Licensed Real-Time Thermal Cyclers or
components thereof covered by this Agreement or due to the sale or distribution
of such Licensed Real-Time Thermal Cyclers or components thereof by Licensee,
an Affiliate or a distributor shall give Applera the right to terminate
immediately upon notice, the licenses granted under this agreement in the
country(s) under the jurisdiction of the above Court or Administrative
body that issued the finding.

 

6.5           This
Agreement shall terminate immediately upon (i) an adjudication of Licensee
as bankrupt or insolvent, or Licensee’s admission in writing of its inability
to pay its obligations as they mature; (ii) an assignment by Licensee for
the benefit of creditors; (iii) the appointment of, or Licensee’s applying
for or consenting to the appointment of, a receiver, trustee or similar officer
for a substantial part of its property; (iv) the institution of or any act
of Licensee instituting any bankruptcy, insolvency arrangement, or similar
proceeding; (v) the issuance or levy of any judgment, writ, warrant or
attachment or execution or similar process against a substantial party of the
property of Licensee; or (vi) loss of Licensee’s federal or state
licenses, permits or accreditation necessary for distribution of Licensed
Real-Time Thermal Cyclers.

 

6.6           Except
as permitted under Section 9.1 of this Agreement, Applera may terminate
this Agreement immediately on notice upon any change in the ownership or
control of Licensee or of its assets. For such purposes, a “change in ownership
or control” shall mean that [***] or more of the voting stock of Licensee becomes
subject to the ownership or control of a person or entity, or any related group
of persons or entities acting in concert, which persons(s) or entity(ies)
did not own or control such portion of voting stock on the Effective Date
hereof. Applera shall have the same right to terminate upon any transfer of
[***] or more of the assets of Licensee.

 

6.7           Upon
any breach of or default under a material term (including without limitation
any payment obligation) under this Agreement by Licensee, Applera may terminate
this Agreement upon [***] days’ written notice. Notwithstanding the foregoing,
Applera will not terminate this Agreement if, during the [***] day notice
period, Licensee fully cures such breach or default to Applera’s reasonable
satisfaction.

 

6.8           Upon
expiration or termination of this Agreement, all licenses granted to Licensee
shall terminate. Licensee’s obligations under Article 3 with respect to
sale or royalty obligations accruing prior to termination or expiration shall
survive termination or expiration. Termination of this Agreement for any reason
shall be without prejudice to any rights that shall have accrued to the benefit
of a Party prior to or on account of such termination or expiration. All
remedies provided hereunder or elsewhere are cumulative. Section 7.2, Section 7.3
and Articles 8, 10 and 11 of this Agreement shall survive the termination or
expiration of this Agreement for any reason.

 

[***] indicates material that has been omitted
pursuant to a request for confidential treatment. The omitted material has been
filed separately with the Securities and Exchange Commission.

 

9

 

7.             Confidentiality –
Publicity

 

7.1           Unless
and until ABI reasonably instructs differently, in advertisements, catalogs,
brochures, sales literature and promotional literature for Licensed Real-Time
Thermal Cyclers, Licensee, Affiliates and distributors shall state the
following prominently in type and location:

 

Cepheid’s [Real-time thermal cycler model(s)] (is a) (are) licensed
real-time thermal cycler(s) under Applera’s European Patent No. EP 0
872 562, Japanese Patent No. JP 3136129 and patents pending.

 

Such notice may also include the clause “for all
fields including human in vitro
diagnostics except for diagnosis and monitoring of HIV and HCV infections” or
the clause “for human in vitro
diagnostics except for diagnosis and monitoring of HIV and HCV infections” at
Cepheid’s option.

 

7.2           With
respect to Licensee’s distribution of any written information to Third Parties,
including but not limited to advertising, brochures, catalogs, promotional and
sales material, and public relations material, Applera shall have the right to
prescribe changes regarding references to, or descriptions of:  Applera, Applied Biosystems, the patents
under which rights are granted in this Agreement or this Agreement. Licensee
agrees to comply with Applera’s reasonable prescriptions.

 

7.3           Except
as provided in Sections 7.1 and 7.2, Licensee shall, to the extent reasonably
practicable, maintain the confidentiality of the provisions of this Agreement
and shall refrain from disclosing the terms of this Agreement without the prior
written consent of Applera, except to the extent Licensee concludes in good
faith that such disclosure is required under applicable law or regulation in
which case Applera shall be notified in advance. Should Licensee conclude in
good faith that such disclosure is in fact required, Licensee shall notify
Applera in writing thirty (30) days or, in the case of a court order, as soon
as reasonably possible before such disclosure is made to permit Applera to
comment upon or object to the disclosure, or to redact the disclosure copy of
the Agreement.

 

8.             Compliance and Quality

 

8.1           In
the exercise of any and all rights and in performance hereunder, it shall be
the duty of Licensee, not Applera, to comply fully with all applicable laws,
regulations and ordinances and to obtain and keep in effect licenses, permits
and other governmental approvals (federal, state or local) necessary or
appropriate to carry on activities hereunder.

 

8.2           Applera
does not approve or endorse any Real-Time Thermal Cycler of Licensee in any way
or for any purpose, including real-time PCR. Quality and quality control with
respect to suitability for real-time PCR, according to standards and
requirements that may exist in the marketplace from time to time, are the sole
responsibility of Licensee.

 

9.             Assignment

 

9.1           This
Agreement (and the licenses granted hereunder) is personal in nature. This
Agreement and the rights hereunder are non-delegable and non-assignable by the
Licensee. 

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

10

 

Without
limiting the foregoing, this Agreement cannot be assumed or assumed and
assigned by a trustee or debtor-in-possession in bankruptcy as set forth in Section 365(c)(1) of
the United States Bankruptcy Code or any similar provisions of state or federal
law. This Agreement shall not be assigned by Licensee (including without
limitation by any attempted assignment or transfer that would arise from a sale
or transfer of Licensee’s business or assets or acquisition of all of the
equity or Licensee) except as permitted under this Section 9.1. Any such,
assignment or attempted assignment (except as permitted under this Section 9.1)
shall be void ab initio and result in the
immediate and automatic termination of this Agreement without any requirement
or notice or other action by ABI. Notwithstanding the foregoing, Licensee may
assign the Agreement to the purchaser of substantially all of the equity or
assets of Licensee, but only under the following conditions:

 

(a)           Licensee
must be in good standing under this Agreement;

 

(b)           if
such assignee or its affiliates had, individually or in aggregate, worldwide
sales of Molecular Diagnostics Products manufactured by such Third Party or
affiliates which exceeded [***] in calendar year 2003, Licensee must obtain the
prior written consent of Applera, the granting of which shall be at the sole discretion
of Applera;

 

(c)           the
assignee shall accept in writing the provisions of this Agreement and agree to
be bound by them; and,

 

(d)           within
thirty days of such assignment, assignee shall pay to Applera an assignment
fee, not creditable against any remaining balance of the issuance fee due under
Section 3.1 (a), to be determined according to the following schedule:

 

	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
  [***]

  	
   

  	
  [***]

  

 

9.2           Applera
may assign all or any part of its rights and obligations under this Agreement
at any time without the consent of Licensee. Licensee agrees to execute such
further acknowledgements or other instruments as Applera may reasonably request
in connection with such assignment.

 

10.          Warranties, Negation of
Warranties and Indemnity

 

10.1         Except as
provided in Paragraph 10.4, nothing in this Agreement shall be construed
as:  a) a warranty or representation by
Applera as to the validity or scope of any patent; b) a warranty or
representation that making, using or selling any Real-Time Thermal Cyclers or
any components, modules, computer hardware or software thereof or the practice
under the Real-Time Apparatus Patent Rights or Amplification System Patent Rights
is or will be free from infringement of patents of Third Parties; c) an
obligation on the part of Applera to sue Third Parties for infringement; d)
except as expressly set forth herein, conferring the right to use in
advertising, publicity or otherwise, in any form, the name of, or any trademark
or trade name of, Applera or any of its affiliates; e) conferring by
implication, estoppel or otherwise any license, immunity or right under any
patent owned by or licensed to Applera other than those specified, regardless
of whether such patent is dominant or subordinate to the patents under which
rights are granted in this Agreement; f) an obligation to furnish any know-how;
or g) creating any agency, partnership, joint venture or similar relationship
between Applera and Licensee.

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

11

 

10.2         APPLERA
MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR NON-INFRINGEMENT.

 

10.3         Licensee
agrees to take all reasonable precautions to prevent death, personal injury,
illness and property damage from the use of Licensed Real-Time Thermal Cyclers.
Licensee shall assume full responsibility for its operation under the patents
under which rights are granted in this Agreement, the manufacture of Licensed
Real-Time Thermal Cyclers and the use thereof and shall defend, indemnify and
hold Applera harmless from and against all liability, demands, damages,
expenses (including attorneys’ fees) and losses for death, personal injury,
illness, property damage or any other injury or damage, including any damages
or expenses arising in connection with state or federal regulatory action, in
view of the use by Licensee, its officers, directors, agents and employees of
the Real-Time Apparatus Patent Rights, the Amplification System Patent Rights
and the manufacture and use of Licensed Real-Time Thermal Cyclers except that
Licensee shall not be liable to Applera for injury or damage arising solely
because of Applera’s negligence.

 

10.4         Applera
represents and warrants to Cepheid that Applera is the sole and exclusive owner
of all right, title and interest in the Amplification System Patent Rights and
Real-Time Apparatus Patent Rights (the collective set of rights hereinafter
known as “Applera
Owned Patent Rights”), and such Applera Owned Patent Rights are not
subject to any encumbrance, lien or claim of ownership by any Third Party that
would encumber the rights granted to Cepheid in this Agreement.

 

11.          General

 

11.1         If after
execution of this Agreement, Applera grants a license to any Third Party, other
than Roche or a collaboration partner (including, without limitation, any party
to an agreement with Applera entailing collaborative research, development or
manufacturing) of substantially the same scope and encompassing the same fields
as the license granted to Licensee herein but under more favorable royalty
rates (expressed as a percentage of the Net Sales Price of such other licensee’s
royalty-bearing products) than those given to Licensee under this Agreement
then: Applera shall promptly notify Licensee of such more favorable royalty
rates, and Licensee shall have the right and option to substitute such more
favorable royalty rates that are expressed as percentages of Net Sales Price
(such more favorable royalty rate, the “Substituted Royalty Rate”) for
the royalty rates contained herein; provided that Licensee accepts all other
terms and conditions (whether more or less favorable to Licensee) of such
agreement with such Third Party (such new agreement with Licensee on the same
terms and conditions, mutatis mutandum,
as apply to such Third Party, referred to hereafter as the “Substituted Agreement”).
For the avoidance of doubt, the determination as to whether or not a
royalty-rate offered to such Third Party is more favorable than the royalty
rates under this Agreement is [***]; and in no event shall Licensee be [***] or
[***]. If Licensee accepts a Substituted Agreement, such Substituted Agreement
shall be effective as of the date of execution of such other Third Party
license agreement; and shall not affect any of Licensee's obligations
(including, without limitation, payment obligations) that have accrued prior to
such date. Notwithstanding the foregoing, this Section 11.1 and Licensee's
right to obtain the benefit of a Substituted Royalty Rate shall not apply with
respect to any licenses wherein (i) [***], as a part of the consideration for
its or their granting of such license to a Third Party; or (ii) [***].

 

11.2         This
Agreement, together with the Nondisclosure Agreement entered into by the
Parties on June 4, 2004, constitutes the entire agreement between the
Parties as to the subject matter hereof, and supersedes all prior negotiations,
representations, agreements and understandings. This Agreement may be modified
or amended only by written agreement, executed by the authorized
representatives of each of the Parties.

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

12

 

11.3         Any notice
required or permitted to be given by this Agreement shall be given by postpaid,
first class, registered or certified mail, or by overnight courier or
facsimile, properly addressed to the other party at the respective address as
shown below:

 

If to Applera:

 

Applied Biosystems

850 Lincoln Centre Drive

Foster City, California, U.S.A. 94404 

Attention:  Director of Licensing

 

If to Licensee:

 

Cepheid

904 Caribbean Drive

Sunnyvale, CA 94089

Attention:  Vice President, Business
Development

 

Either party may change its address by providing notice to the other. A
notice shall be deemed given four (4) full business days after the day of
mailing, or one full day after the date of delivery to the courier, or the date
of facsimile transmission, as the case may be.

 

11.4         This
Agreement shall be deemed made in the State of California, and it shall be
construed and enforced in accordance with the law of the State of California.
The Parties agree that the exclusive jurisdiction and venue for any dispute or
controversy arising from this Agreement shall be in the state or federal courts
in California.

 

11.5         If any
provision hereof should be held invalid, illegal or unenforceable in any
respect, then, to the fullest extent permitted by applicable law:  (a) all other provisions hereof shall
remain in full force and effect and shall be liberally construed in order to
carry out the intent of the Parties as nearly as may be possible, and (b) the
Parties agree to negotiate in good faith a provision, in replacement of the
provision held invalid, illegal or unenforceable, that is consistent with
applicable law and accomplishes, as nearly as possible, the original intention
of the Parties with respect thereto. To the fullest extent permitted by
applicable law, each Party hereby waives any provision of law that would render
any provision hereof prohibited or unenforceable in any respect.

 

11.6         Except
where the context otherwise requires, wherever used, the singular shall include
the plural and the word “or” is used in the inclusive sense. The captions and
headings of this Agreement are for convenience of reference only and in no way
define, describe, extend or limit the scope or intent of this Agreement or the
intent of any provision contained in this Agreement. Each Party hereto and its
counsel have participated fully in the review and negotiation of this
Agreement. Both Parties have participated equally in the formation of this
Agreement; the language of this Agreement shall not be presumptively construed
against either Party.

 

11.7         It is
expressly agreed that the Parties, shall be independent contractors and that
the relationship between the Parties shall not constitute a partnership, joint
venture or agency.

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

13

 

11.8         Notwithstanding
anything herein to the contrary, nothing in this Agreement shall preclude
either Party from seeking interim or provisional relief, in the form of a
temporary restraining order, preliminary injunction or other interim equitable
relief as necessary to protect the interests of such Party.

 

11.9         The waiver
by either Party hereto of any right hereunder or the failure to perform or a
breach by the other Party shall not be deemed a waiver of any other right
hereunder or of any other breach or failure by said other Party whether of a similar
nature or otherwise.

 

11.10       This
Agreement may be executed (including via facsimile) in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

11.11       The representations,
warranties, covenants, rights and obligations set forth in this Agreement are
for the sole benefit of the Parties and their successors and permitted assigns,
and they shall not be construed as conferring any rights on any Third Party.

 

IN WITNESS WHEREOF, The
Parties hereto have duly executed this Agreement on the date(s) indicated
below.

 

 

	
  APPLERA

  	
   

  	
  CEPHEID

  	
   

  	 

	
   

  	
   

  	
   

  	
  (LICENSEE)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
        6/4/04

  	
   

  	
  By:

  	
       /s/
  Joseph H. Smith

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
        /s/
  Paul Grossman

  	
   

  	
  Title:

  	
     Sr. Vice
  Predident

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
       June 4,
  2004

  
									

 

PAUL D. GROSSMAN, Ph.D. 

VICE PRESIDENT 

INTELLECTUAL PROPERTY 

APPLIED BIOSYSTEMS GROUP 

ASSISTANT SECRETARY

APPLERA CORPORATION

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

14

 

APPENDIX A

 

Summary Royalty/Fee Report

REAL-TIME
INSTRUMENT PATENT LICENSE AGREEMENT

 

for
the Period:
                    
to
                    
for Sales in the country of

 

Licensee: Cepheid    Effective Date:
April 5, 2004    Royalty/Fee Rate: [***] NSP

 

o Check here if
there were no sales for this period.

 

	
  Real-Time

  TC/Module/Add - On

  Model or Part No.

  	
   

  	
  No. Sold

  	
   

  	
  Gross

  Invoice Price

  (US$)

  	
   

  	
  Deductions Allowed

  (US$) (explain)

  	
   

  	
  Net Sales

  Price

  (US$)

  	
   

  	
  Royalty Rate

  ([***] NSP)

  	
   

  	
  Gross Royalty

  Due (US$)

  	
   

  	
  Royalty ($)

  Paid on Same

  Sale per TCSA

  	
   

  	
  Net Royalty

  Due

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Total Net Royalty Due

  	
   

  	
   

  

 

I
hereby certify the information set forth above is correct and complete with
respect to the amounts due under this License Agreement.

 

	
  By

  	
   

  	
   

  	
  Title

  	
   

  	
   

  	
  Date

  	
   

  

 

	
  Name (please print)

  	
   

  	
   

  	
   

  	
   

  

 

Applera Corporation Send report to: 
Director of Licensing, Applied Biosystems, 850 Lincoln Centre Drive,
Foster City, CA 94404 USA

 

[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.

 

15

 

EXHIBITS

 

Attached are (i) a definition and set of
prospective general specifications for a Cepheid Real-Time Thermal Cycler
containing one or more I-CORE modules (Exhibit 1)
and (ii) product descriptions, features and specifications for the Cepheid
Smart Cycler and Cepheid GeneXpert (Exhibit 2a/2b),
both as of the Effective Date of this Agreement.

 

[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.

 

16

 

Exhibit 1: Definition and set of prospective general
specifications for a Cepheid Real-Time Thermal Cycler containing one or more
I-CORE modules

 

The instruments are those containing one or more
I-COREÔ modules. An
I-CORE module is comprised of (1) a single site, discrete, individually
controllable heater sleeve containing a heating element and designed to accept
a disposable reaction tube or cartridge, (2) an integrated cooling
mechanism (e.g. a fan) that enables passage of ambient or cooled air across the
heater sleeve, and (3) optical blocks containing solid state components
that enable optical interrogation of the reaction solution in the reaction tube
or cartridge.

 

In a single site configuration comprised or a single
I-CORE module, the I-CORE module will contain all of the elements listed above.

 

In a multi-site configuration comprised of multiple
I-CORE modules, each I-CORE module:

 

(a)           will contain a single site, discrete, individually
controllable heater sleeve containing a heating element and designed to accept
a disposable reaction tube or cartridge.

 

(b)           may or may not contain an integrated cooling mechanism. If an
integrated cooling mechanism is not included, each I-CORE reaction site will be
cooled by the passage of ambient or cooled air coming from an external source
passing across the heater sleeve.

 

(c)           may or may not contain optical blocks. If optical blocks are
not included, the instrument will be optically “blind”, that is, it will not be
capable of optical interrogation, or optical interrogation will occur on a
separate module.

 

[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.

 

17

 

Exhibit 2a

 

Smart
Cycler II

 

[images
of Smart Cycler II and Technician]

 

 cycle
smarter

 

Real-time PCR with the Smart Cycler II

 

The
Smart Cycler II is built with sixteen modular I-CORE ® (Intelligent
Cooling/heating Optical Reaction) modules.  Each independent module must
maintain tight temperature specifications, established with National Institute
of Standards Technology (NIST)-traceable standards.  Consistent results
are obtained by measuring the cycle threshold (Ct), the first cycle in which there
is significant increase in fluorescence above the background, and which
correlates to the log-linear phase of PCR amplification.

 

Real-time detection .  Combine amplification and detection in one
step.  Fluorescence is measured in real time as PCR products are
generated.

 

Flexible .  Assay optimization is easy and expedited with
the ability to run a different protocol in each of the sixteen sites
simultaneously.  The ability for multiple operators to use the system
concurrently gives new meaning to the term multi-tasking.

 

Fast .  Results are available in as little as 20 minutes due to very
rapid, accurate heating and cooling cycles.

 

Four-channel optics .  Develop multiplex assays with the ability to
detect fluorescent signal in four distinct channels.

 

Expandable .  Link up to six processing blocks for
cost-effective system expansion.

 

The
following text is associated with a graphic depicting the Structure of the
Smart Cycler II:

 

Smart Cycler reaction tubes

 

·
Closed tube assays reduce potential for amplicon contamination

 

· Thin
walled polypropylene construction allows rapid hearing and cooling

 

·
Designed to maximize dye excitation and detection of fluorescent emission

 

I-CORE Modules

 

· Each
module is an independently-controlled thermal cycler fluorometer

 

·
Solid state, non-moving parts for robust performance

 

·
Incorporates four-channel optical detection

 

[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.

 

 

Optical
blocks

 

·   High-intensity LEDs, silicon
photodetectors, and multiple filters aflow simultaneous exitation and detection
of four different special bands

 

Smart
Cycler System

 

· 
Starter system includes one processing block, manual, computer and
accessory kit

·  Expand by linking up to six processing blocks
to one computer system

 

[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.

 

 

Performance you can rely on

 

Four
optical channels

 

The Smart Cycler II System’s
optics allow the measurement of fluorescence in four channels at the same
time.  High intensity LEDs and optical filters are optimized for spectral
separation.  The instrument’s calibration allows use of FAM or SYBR ® Green in Channel 1, Cy3 or TET in Channel 2, Texas Red (TxR) in
Channel 3, and Cy5 in Channel 4.

 

Multiplex
capability

 

Multiplex assays allow the
detection of several targets within a single sample.  The use of multiple
fluorescent dyes permits detection of signal in up to four channels at one time
on the Smart Cycler system.

 

Various detection
chemistries can be used with the Smart Cycler optics, including TaqMan ® and Molecular Beacons probes, AmplifluorTM and ScorpionTM primers, and
intercalating dyes such as SYBR ® Green.

 

Sensitivity

 

Assay sensitivity on the
Smart Cycler platform is affected by many factors, including the quality of
template preparation, primer and probe design, and optimization of PCR
conditions.  Quantitative low copy detection is illustrated with an
orthopox assay.

 

[associated
graphics omitted]

 

Instrument
precision

 

Reproducible data is
achieved through the Smart Cycler’s robust optical, heating and cooling
elements.

 

	
  Run #

  	
   

  	
  N

  	
   

  	
  Mean Ct

  	
   

  	
  SD

  	
   

  	
  %CV

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  32

  	
   

  	
  33.2

  	
   

  	
  0.14

  	
   

  	
  0.43

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  32

  	
   

  	
  33.2

  	
   

  	
  0.13

  	
   

  	
  0.39

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  32

  	
   

  	
  33.3

  	
   

  	
  0.17

  	
   

  	
  0.51

  	
  %

  

 

 

	
  Total mean (n = 96)

  	
  33.2

  
	
  Total SD (n = 96)

  	
  0.16

  

 

Precision
data:  Neisseria ganarrahoeae assay at 5000 copies.

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

 

Dynamic
range

 

The Smart Cycler system
allows detection over a broad range of target concentration.  A linear
standard curve can be created from a serial dilution, allowing the
determination of an unknown sample concentration.

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

 

Five steps
to real-time PCR

 

1.  Click “Create Run”

 

2.  Enter run name

 

3.  Select dye set &
tube size

 

4.  Select reaction
sites & protocols

 

5.  Click “Start Run”

 

[screen
shot omitted]

 

. . . with ease of analysis

 

Display
options

 

Define and view:

 

· 
Protocol definitions

 

·  Data
analysis settings including primary curve or second derivative analysis

 

·  Fluorescence
and temperature data graphs

 

Data
management

 

With
advanced Smart Cycler Software version 2.0:

 

· 
Manage runs with controlled ramp rates

 

·  Automatically
advance to next stage after crossing threshold

 

·  Define
default data analysis and data access

 

·  Compare
runs or import a standard curve

 

·  Save
graphs as JPEG files

 

·  Automatically export and/or back up data

 

[screen shot omitted]

 

[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.

 

 

Specifications

 

Optics*

 

Dye detection limit < 2
nM for FAM/Cy3/TxR/Cy5

Optical channel
characterization:

 

	
  Channel

  	
   

  	
  1

  	
   

  	
  3

  	
   

  	
  3

  	
   

  	
  4

  	
   

  
	
  Excitation (nm)

  	
   

  	
  450-495

  	
   

  	
  500-550

  	
   

  	
  565-590

  	
   

  	
  630-650

  	
   

  
	
  Emission (nm)

  	
   

  	
  510-527

  	
   

  	
  565-590

  	
   

  	
  606-650

  	
   

  	
  670-750

  	
   

  
	
  Simplex Dyes

  	
   

  	
  FAM

  SYBR [R] Green

  	
   

  	
  Cy3, TET

  	
   

  	
  TxR, ROX

  	
   

  	
  Cy5

  	
   

  
	
  Multiplex Dyes

  	
   

  	
  FAM

  	
   

  	
  Cy3

  	
   

  	
  TxR

  	
   

  	
  Cy5

  	
   

  

 

Reaction
site thermal controls*

 

Solid
state heater and forced-air cooling at each site

Reaction
chamber thermistors calibrated to ± 0.50 °C using National Institute of
Standards and Technology (NIST)-traceable standards

16 independently-controlled
reaction sites per processing block

 

Reaction
tubes

 

Single-use disposable tubes

Polypropylene construction

25- and 100 μL volumes

No-leak closures

 

User
interface

 

Real-time display of growth
curves and temperature profiles

Define threshold settings,
protocols, and graph formats

Specify ramp rates for
thermal cycling and melt functions

Automatically advance to the
next PCR stage after crossing a user-defined threshold

Compare runs in real time

Save and import standard
curves

Customize melt curve peak
analysis

 

Data
analysis

 

Qualitative or quantitative
analysis

Primary growth curve or
second derivative analysis

Melt analysis using
intercalating dyes or Molecular Beacons probes

Multiplexing with internal
controls

Export data into Microsoft
Excel

Export graphs as JPEGs

Administrative defined data
access capabilities

 

* Covered
by issued or pending patents

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

 

Performance
parameters

 

Heating ramp rates (max):

10
oC/sec from 50 oC to 95 oC

Cooling ramp rates (max):

2.5
oC/sec from 95 oC to 50 oC

Temperature duration
accuracy:

±
1.0 sec from programmed time

Temperature accuracy:

±
0.5 oC from 60 oC to 95 oC

Melt curve programmable ramp
rates:

0.1
oC/sec to 1.0 oC/sec

 

Physical
dimensions

 

Processing block:  12”
2 x 12” h x 10” l, 22 lbs

As little as 2.5 linear feet
of bench space

Smart
Cycler II TD travel case:  24” w x 20” h x 25.5” l,

total weight with processing block, computer & accessories 74 lbs

 

Power
requirements

 

100-240 VAC, 50-60 Hz, 350
Watts

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

 

Smart
Cycler Software 2.0

 

Performing
real-time PCR just got easier

 

Smart Cycler Software 2.0
incorporates new features to streamline your real-time PCR protocols, analysis,
data access, and display.  Whether you have one experimental protocol or
many, real-time PCR is only a few easy steps away.

 

The Smart Cycler Software
allows each of the system’s sixteen reaction sites to run independently. 
The ability for multiple users to concurrently use the instrument and perform
rapid assay optimization creates invaluable time savings.  Smart Cycler
Software 2.0 provides the unique ability to automatically stop each site after
the cycle threshold, or transition to a melt analysis in order to obtain the
same concentration or purity of product.

 

New
features

 

Flexibility

 

Automatically move to the
next PCR stage after crossing a user-defined threshold

Copy an experimental run
setup for use in running routine assays

Define ramp rates for each
step of a protocol

 

Data
display

 

Monitor two experimental
runs simultaneously

Overlay growth curves from
different runs for easy comparison

Import and save a standard
curve into an experimental run

 

Customized
analysis

 

Create system analysis
defaults for use in each new run

Customize parameters of melt
curve analysis

Easily adjust threshold on
graph to appropriate level for dataset

 

Data
management

 

Export graph data

Export Graphs and screens as
JPEG files

Print graphs and associated
experimental results table

Program automatic export of
runs and/or backup of database

Create user-defined access
to protocols, graphs and data

 

Operating
systems

 

Windows 98 second edition,
or Windows 2000, SP2

 

To order

 

Part no.
900-0082, Software upgrade kit:   Smart Cycler Software 2.0 CD, Smart Cycler II User Manual

 

[screen
shot omitted]

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

 

Specifications

 

I-CORE Optical system*

 

Dye detection limit < 2
nM for FAM/Cy3/TxR/Cy5

Optical channel characterization:

 

	
  Channel

  	
   

  	
  1

  	
   

  	
  3

  	
   

  	
  3

  	
   

  	
  4

  	
   

  
	
  Excitation (nm)

  	
   

  	
  450-495

  	
   

  	
  500-550

  	
   

  	
  565-590

  	
   

  	
  630-650

  	
   

  
	
  Emission (nm)

  	
   

  	
  510-527

  	
   

  	
  565-590

  	
   

  	
  606-650

  	
   

  	
  670-750

  	
   

  
	
  Simplex Dyes

  	
   

  	
  FAM

  SYBR [R] Green

  	
   

  	
  Cy3, TET

  	
   

  	
  TxR, ROX

  	
   

  	
  Cy5

  	
   

  
	
  Multiplex Dyes

  	
   

  	
  FAM

  	
   

  	
  Cy3

  	
   

  	
  TxR

  	
   

  	
  Cy5

  	
   

  

 

Reaction
site thermal controls*

 

Solid
state heater and forced-air cooling at each site

Reaction
chamber thermistors calibrated to ± 0.50 °C using National Institute of
Standards and Technology (NIST)-traceable standards

16 independently-controlled
reaction sites per processing block

 

Reaction
tubes

 

Single-use disposable tubes

Polypropylene construction

25- and 100 μL volumes

No-leak closures

 

User
interface

 

Real-time display of growth
curves and temperature profiles

Define threshold settings,
protocols, and graph formats

Specify ramp rates for
thermal cycling and melt functions

Automatically advance to the
next PCR stage after crossing a user-defined threshold

Compare runs in real time

Save and import standard
curves

Customize melt curve peak
analysis

 

Data
analysis

 

Qualitative or quantitative
analysis

Primary growth curve or
second derivative analysis

Melt analysis using
intercalating dyes or Molecular Beacons probes

Multiplexing with internal
controls

Export data into Microsoft
Excel

Export graphs as JPEGs

Create user-defined access
to protocols, graphs and data

 

* Covered
by issued or pending patents

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

 

Characteristic
assay performance

 

M13mp18 assay

Cycles to detection (10 8
molecules) = 13.9

Time to detection = 9.5
minutes

Cycles to detection (100
molecules) = 34.3

Time to detection = 22
minutes

 

Xyella
fastidiosa assay

Cycles to detection (3 x 10 6
cells) = 17.1

Time to detection = 13
minutes

 

Bacillus
anthracis assay

Cycles to detection (100 pg
DNA) = 21.1

Time to detection = 13
minutes

Cycles to detection (0.1 pg
DNA) = 31.5

Time to detection = 19
minutes

 

Performance
parameters

 

Heating ramp rates (max):

10 oC/sec from 50 oC to 95
oC

Cooling ramp rates (max):

2.5 oC/sec from 95 oC to 50
oC

Temperature duration
accuracy:

± 1.0 sec from programmed
time

Temperature accuracy:

± 0.5 oC from 60 oC to 95 oC

Melt curve programmable ramp
rates:

0.1 oC/sec to 1.0 oC/sec

 

Physical
dimensions

 

Processing block:  12”
2 x 12” h x 10” l, 22 lbs

As little as 2.5 linear feet
of bench space

Smart
Cycler II TD travel case:  24” w x 20” h x 25.5” l,

total
weight with processing block, computer & accessories 74 lbs

 

Power
requirements

 

100-240 VAC, 50-60 Hz, 350
Watts

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

 

The Smart
Cycler* II System

 

Cepheid’s real-time PCR
instrument incorporates advanced optics allowing more dye choices for use with
real-time PCR.  The Smart Cycler’s four optical channels have optimized
spectral separation providing sensitive identification of positive or negative
results and precise quantitation.  The instrument’s optics allow
application to the rapidly evolving needs of a molecular biology lab using
detection methods including Molecular Beacons and TaqMan [R] probes, AmplifluorTM and ScorpionTM primers, and intercalating dyes such
as SYBR ® Green.

 

At the core of the Smart
Cycler System are sixteen I-CORE ® (Intelligent
Cooling/heating Optical REaction) modules, incorporating state-of-the-art
microelectronic and optical design.  Each independently programmable
I-CORE module performs four-color, real-time fluorometric detection.

 

Reaction
tubes

 

Samples are amplified and
measured in the Smart Cycler’s proprietary, sealable reaction tubes, which are
designed to optimize rapid thermal transfer and optical sensitivity, as well as
to reduce the possibility of amplicon contamination.  The tubes are
available in 25 μL or 100 μL volumes.

 

Smart
Cycler Software 2.0

 

The system software enables
one or more operators to define and simultaneously carry out separate
experiments, each with a unique set of cycling protocols, threshold criteria,
and data analysis.  Additionally, thermal and optical data can be
monitored in real-time and graphs of temperature, growth, and melt curves are
displayed during data collection.  Advanced features include automatically
moving to the next PCR stage after crossing a user-defined threshold, importing
and saving a standard curve in an experimental run, and programming automatic
backup or export of runs and database.

 

System
configurations

 

The Smart Cycler II Starter
System includes all equipment and software needed to obtain rapid, real-time
PCR assay results.  The system includes a Smart Cycler II processing
block, desktop computer, CDRW drive and flat panel monitor, Smart Cycler
Software version 2.0, operator’s manual, and accessory kit.  The accessory
kit features a mini-centrifuge, tube racks, and a cooling rack specifically
designed to accommodate Smart Cycler reaction tubes.  A laptop
configuration is also available.

 

A truly transportable system
is available with the Smart Cycler II TD System, designed to hold the complete
system, including processing block, laptop computer and accessories.  The
rugged case has wheels and a retractable handle allowing real-time PCR to be
performed when and where it’s needed.

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

 

	
  North
  American

  Part Number

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  
	
  SC2000N1-1

  	
   

  	
  Smart Cycler II Starter
  System (processing block, manual, accessory kit, and desktop computer with
  flat-panel monitor)

  
	
   

  	
   

  	
   

  
	
  SC2000N2-1

  	
   

  	
  Smart Cycler II TD Starter
  System (processing block, manual, accessory kit, and laptop computer and
  rugged travel case)

  
	
   

  	
   

  	
   

  
	
  SC2000N3-1

  	
   

  	
  Smart Cycler II add-on
  processing block

  
	
   

  	
   

  	
   

  
	
  SC2000N4-1

  	
   

  	
  Smart Cycler II Laptop
  Starter System (processing block, manual, accessory kit, and laptop computer)

  
	
   

  	
   

  	
   

  
	
  900-0028

  	
   

  	
  Cooling block

  
	
   

  	
   

  	
   

  
	
  900-0020

  	
   

  	
  Mini-centrifuge (U.S.)

  
	
   

  	
   

  	
   

  
	
  700-0630

  	
   

  	
  Mini-centrifuge (Canada)

  
	
   

  	
   

  	
   

  
	
  900-0027

  	
   

  	
  Tube racks, 4-pack

  
	
   

  	
   

  	
   

  
	
  900-0023

  	
   

  	
  Smart Cycler reaction
  tubes, 100 μL, qty 1000

  
	
   

  	
   

  	
   

  
	
  900-0022

  	
   

  	
  Smart Cycler reaction
  tubes, 25 μL, qty 1000

  
	
   

  	
   

  	
   

  
	
  900-0004

  	
   

  	
  Smart Cycler reaction
  tubes, 100 μL, qty 50

  
	
   

  	
   

  	
   

  
	
  900-0003

  	
   

  	
  Smart Cycler reaction
  tubes, 25 μL, qty 50

  

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

 

Exhibit 2b

 

The GeneXpert ® System utilizes polymerase chain reaction (PCR) and real-time PCR to
amplify and detect target nucleic acid.  The system is the first to fully
automate and integrate all the steps required for PCR-based testing: 
sample preparation, amplification and detection.  Designed to simplify
hands-on preparation, the system provides PCR test results from a raw sample,
enabling time-critical tests.  The GeneXpert module forms the core of the
Biohazard Detection System deployed nationwide by the United States Postal
Service for anthrax testing in mail sorting facilities.  An expanded menu
of tests is currently in development.

 

The GeneXpert System is a
random access instrument integrating real-time amplification and detection
features seen in the SmartCycler System, but delivering results from
unprocessed samples.  The I-CORE module is the common technology link
between the SmartCycler and GeneXpert, performing real-time amplification and
detection.  The GeneXpert automates sample preparation, integrating the
complex steps of nucleic acid extraction in the microfluidic cartridges.

 

Each GeneXpert module also
incorporates a syringe drive, rotary drive and a ultrasonic driver.  The
driver delivers ultrasonic energy necessary to lyse the raw specimen and
release nucleic acids contained within, while the combination of the syringe
drive and rotary drive moves liquid between cartridge chambers in order to
wash, purify and concentrate these nucleic acids.  After the automated extraction
is complete, the nucleic acid concentrate is moved into the cartridge reaction
chamber where amplification and detection takes place.

 

The GeneXpert ® System is the world’s first and only real-time PCR instrument which
combines fully integrated sample prep with the amplification and detection
process.  The cornerstone of the GeneXpert testing process are Cepheid’s
patented, self-contained, single use cartridges.  This ground-breaking
technology allows laboratory and non-laboratory personnel to conduct
sophisticated molecular-based testing in a wide range of environments –
including hospitals, research laboratories, physician offices, public health
clinics or factories.

 

Most DNA analysis and
detection procedures start with nucleic acids that have been extracted or
removed from the sample.  In many cases, samples are complex in
composition (whole blood, human cells or tissue, swabs) and the associated
sample preparation protocols are complex and time-consuming.  In addition,
many real world applications involve detection of a very small number of
pathogens or target genes in a large volume of sample

 

Cepheid’s cartridges are
designed to handle a variety of volumes, which provides the ability to obtain
higher concentrations of starting target materials in the cartridge. 
Concentration and purification of the target nucleic acids in a sample and
removal of extraneous materials further increases the sensitivity of the
resulting test.

 

The following text is
associated with a graphic depicting the Structure of the GeneXpert System:

 

Processing
changers – contain
reagents, filters, and capture technologies necessary to extract, purify, and
amplify target nucleic acids

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

 

Optical
windows – enable real
time optical detection

 

Reaction
tube – thin chamber
enables very rapid thermal cycling

 

Valve – enables fluid transfer from changer to
chamber; may contain nucleic acids lysis and filtration components

 

[pictures of GeneXpert
System and module omitted]

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.Exhibit 10.23

 

REAL-TIME
INSTRUMENT PATENT LICENSE AGREEMENT

 

First
Amendment

 

This Amendment, effective June 27,  2006, is
made by and between Applera Corporation, a corporation of the State of
Delaware, through its Applied Biosystems Group, having an office at 850 Lincoln
Centre Drive, Foster City, California 94404 and Celera Diagnostics, LLC, an
indirectly wholly owned subsidiary of the Applera Corporation (“Applera”), and Cepheid, a corporation of
the State of California having an office at 904 Caribbean Drive, Sunnyvale,
California 94089 (“Licensee”) (each
of Applera and Licensee, a “Party” and, collectively, the “Parties”). This
Amendment is the first amendment to the Real-Time Instrument Patent License
Agreement between the Parties having the Effective
Date of April 5, 2004 (hereinafter “the 2004 Agreement”).

 

Whereas, Licensee would like to expand the scope of its license to
include the fields of HIV and HCV; and

 

Whereas, Applera has agreed to expand that scope.

 

Now therefore, the Parties agree as follows:

 

1.               Paragraph 1.5 of the 2004 Agreement is hereby
deleted in its entirety, and is replaced by the following:

 

1.5        “HIVD Field” shall mean the field of human in
vitro diagnostic applications for the clinical management of
patients.

 

2.               Paragraph 2.4 of the 2004 Agreement is hereby
deleted in its entirety, and is replaced by the following:

 

2.4.     The grants under Sections 2.1, 2.2 and 2.3 include no right, immunity,
authorization or license, either expressly or by implication, under any patent
or patent application other than the Real-Time Apparatus Patent Rights and the
Amplification System Patent Rights. Without limiting the foregoing, no license
is granted pursuant to this Agreement under any patent claim or patent
application claim to a real-time process, reagent or method.

 

3.              In Paragraph 5.1 of the 2004 Agreement, the “NOTICE
TO PURCHASER” is hereby deleted and replaced by the following notice:

 

NOTICE TO PURCHASER

 

This real-time thermal cycler is
licensed for use in research, diagnostics and all other applied fields under
Applera’s U.S. Patent

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

1

 

 

No. 6,814,934, European Patent
No. EP 0 872 562, Japanese Patent No. JP 3136129 and patents pending.

 

No rights are conveyed expressly,
by implication or estoppel to any patents on real-time methods, including but
not limited to 5’ nuclease assays, or to any patent claiming a reagent or kit.

 

Applied Biosystems does not
guarantee the performance of this instrument or endorse its use in any
application.

 

4.               Paragraph 7.1 of the 2004 Agreement is hereby
deleted in its entirety, and is replaced by the following:

 

7.1        Unless and until Applera reasonably instructs differently, in advertisements,
catalogs, brochures, sales literature and promotional literature for Licensed
Real-Time Thermal Cyclers, Licensee, Affiliates and distributors shall state
the following prominently in type and location:

 

Cepheid’s [Real-time thermal cycler model(s)] (is a)
(are) licensed real-time thermal cycler(s) under Applera’s U.S. Patent No. 6,814,934,
European Patent No. EP 0 872 562, Japanese Patent No. JP 3136129 and
patents pending.

 

Such notice may also include the clause “for all
fields including human in vitro diagnostics” or the clause “for human in vitro
diagnostics” at Cepheid’s option.

 

5.              This Amendment shall have retroactive effect
as to all instruments previously licensed under the 2004 Agreement, and Applera
agrees that Licensee may replace the previous “NOTICE TO PURCHASER” with the
notice provided in Paragraph 3 of this Amendment.

 

6.              In consideration for the rights granted in
this Amendment, Licensee shall pay [***] to
Applera within 15 days of the effective date of this Amendment.

 

7.              Except as expressly amended herein, all terms
and conditions of the 2004 Agreement remain in full force and effect.

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

2

 

 

IN WITNESS WHEREOF, the Parties hereto have duly
executed this Agreement on the date(s) indicated below.

 

	
  APPLERA

  	
   

  	
  CEPHEID

  
	
   

  	
   

  	
  (LICENSEE)

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
    Joseph H. Smith

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  Sr. Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
							

 

[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.

 

3

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