8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

October 13, 2009

Date of Report (Date of earliest event reported)

CEPHEID

(Exact name of registrant as specified in its charter)

California	000-30755	77-0441625
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
904 Caribbean Drive, Sunnyvale, CA		94089
(Address of principal executive offices)		(Zip Code)

(408) 541-4191

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2 below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry Into a Material Definitive Agreement.

On October 13, 2009, Cepheid announced that Nicolaas Arnold will join the company as its Executive Vice President, Worldwide Commercial Operations, on or about October 14, 2009. Mr. Arnold’s starting salary will be $325,000 per year and he will be eligible to receive a target annual incentive cash bonus of 40% of his base salary, commencing with calendar year 2010. Pursuant to the terms of his offer letter dated September 18, 2009, filed as exhibit 99.01 hereto, if his employment is terminated without cause within 12 months following his hire date, he will receive (i) a lump sum severance payment equal to 12 months of his then-current base salary, less applicable withholdings, (ii) a lump sum payment in respect of a pro rata portion of his bonus as determined by Cepheid’s Chief Executive Officer, and (iii) reimbursement of COBRA health insurance premiums for 12 months, if he elects to continue COBRA coverage.

In connection with his employment, the Board of Directors of Cepheid has granted to Mr. Arnold an option to purchase 200,000 shares of Cepheid common stock, exercisable at the closing price of Cepheid common stock on the date that his employment starts. This option will become exercisable by Mr. Arnold over four years, with 25% vesting on the one-year anniversary of grant and ratably monthly thereafter, and will expire after seven years from the grant date. This option was granted outside of Cepheid’s 2006 Equity Incentive Plan and is granted as an inducement grant pursuant to Section 5635(c)(4) of the Nasdaq Marketplace Rules. The Non-Plan Stock Option Agreement between Cepheid and Mr. Arnold is filed as exhibit 99.02 hereto.

Cepheid also anticipates that on October 14, 2009, Mr. Arnold will enter into Cepheid’s standard form of Change of Control Retention and Severance Agreement for its executives. Pursuant to this agreement, if Mr. Arnold is terminated by Cepheid without “cause,” or if he resigns following a “diminution of responsibilities,” each as defined in the agreement, within the 12-month period following a change of control of the company, he will be entitled to receive (i) a lump sum severance payment equal to 18 months of his then-current base salary, less applicable withholdings, (ii) 100% of his target incentive cash bonus for the year of termination, and (iii) full vesting acceleration of all of his outstanding equity awards. The receipt of any benefits under either this agreement or under Mr. Arnold’s offer letter are mutually exclusive and conditioned upon his signing a general release of claims in favor of Cepheid.

Item 2.02 Results of Operations and Financial Condition.

The information in this Item 2.02 and Exhibit 99.03 attached hereto are being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Securities Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.

On October 13, 2009, Cepheid included in its press release announcing the hiring of Mr. Arnold its preliminary estimate for revenues expected for the quarter ended September 30, 2009. The press release is attached to this report as Exhibit 99.03.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

Exhibit No.	Exhibit Title
99.01	Offer Letter dated September 18, 2009 from Cepheid to Nicolaas Arnold.
99.02	Non-Plan Stock Option Agreement between Cepheid and Nicolaas Arnold, dated October 14, 2009.
99.03	Press release dated October 13, 2009.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		CEPHEID
Date: October 13, 2009	By:	/S/ JOHN L. BISHOP
		Name: John L. Bishop
		Title: Chief Executive Officer

Exhibit List

Exhibit No.	Exhibit Title
99.01	Offer Letter dated September 18, 2009 from Cepheid to Nicolaas Arnold.
99.02	Non-Plan Stock Option Agreement between Cepheid and Nicolaas Arnold, dated October 14, 2009.
99.03	Press release dated October 13, 2009.

EX-99.01

Exhibit 99.01

September 18, 2009

Nicolaas Arnold

c/o Korn-Ferry International

Re: Offer of Employment by Cepheid

Dear Nico:

I am very pleased to confirm our offer to you of employment with Cepheid (the “Company”). You will report to John Bishop, Chief Executive Officer, in the position of Executive Vice President, Worldwide Commercial Operations. The terms of our offer and the benefits currently provided by the Company are as follows:

1. Starting Salary. Your starting salary will be $325,000.00 per year and will be subject to annual review.

2. Incentive Plan. You will be eligible to receive a target annual incentive cash bonus of 40% of your base salary on an annual basis, commencing with calendar year 2010. Your actual bonus will be determined by the Compensation Committee of the Board based upon achievement of corporate and individual objectives to be agreed upon each year between you and the CEO in advance. The details of the Incentive Plan will be provided to you upon commencement of employment.

3. Separation Benefits. Upon termination of your employment with the Company for any reason, you will receive payment for all unpaid salary, reimbursements and PTO accrued to the date of your termination of employment; and your benefits will be continued under the Company’s then existing benefit plans and policies for so long as provided under the terms of such plans and policies and as required by applicable law; and continued rights to indemnification and defense by the Company and its insurers, subject to the terms of the Company’s insurance and indemnification policies.

Effective on and following your first day of employment, under certain circumstances, you will also be entitled to receive severance benefits as set forth below, provided you sign a valid and binding general release of claims satisfactory to the Company. Payment of your severance benefits shall be subject to deferral as necessary to comply with Section 409A of the Internal Revenue Code (the “Code”). You agree that, except as set forth below, you will not be entitled to any other compensation, award or damages with respect to your employment or termination.

a) In the event of your voluntary termination, or upon a termination by the Company for Cause, you will not be entitled to any cash severance benefits or additional vesting of any outstanding stock options granted or restricted stock issued to you by the Company.

b) In the event of your termination by the Company without Cause within 12 months of your date of hire, provided that you sign a valid and binding general release of claims satisfactory to the Company, (i) you shall receive a single lump sum severance payment equal to twelve months of your then current annual base

Nicolaas Arnold

Employment Offer

Page 2

salary (less applicable deductions and withholdings) payable within ten business days of the effective date of your termination, subject to any deferral of payment under Section 409A of the Code; (ii) you shall be eligible to receive a single lump sum payment in respect of your bonus under the Company’s then-effective Incentive Plan, as determined by the Chief Executive Officer of the Company based upon his assessment of the level of achievement of corporate objectives and your individual objectives as of the date of termination, which bonus shall then be prorated based upon the termination date. This bonus payment, if any, will be payable, less applicable deductions and withholdings, within ten business days of the effective date of your termination and will be subject to any deferral of payment under Section 409A of the Code; (iii) if you choose to continue your health care benefits pursuant to COBRA for you and your eligible dependents, the Company will pay your COBRA premiums for a period of twelve months from the effective date of your termination, provided you or your dependents remain eligible under the provisions of COBRA.

c) Notwithstanding the foregoing, in the event of your Termination Upon a Change of Control (as defined in the Change of Control Retention and Severance Agreement attached as Exhibit A), you will receive the severance and equity acceleration benefits set forth in such agreement in lieu of any severance benefits under this agreement.

d) If your severance and other benefits provided for in this section constitute “parachute payments” within the meaning of Section 280G of the Code and, but for this subsection, would be subject to the excise tax imposed by Section 4999 of the Code, then your severance and other benefits will be payable, at your election, either in full or in such lesser amount as would result, after taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, in your receipt on an after-tax basis of the greatest amount of severance and other benefits.

e) “Cause” means your (a) failure or refusal to perform any reasonable and lawful duty of your position or failure to follow the lawful directions of the Chief Executive Officer after being given written notice of such failure and fifteen days in which to cure your performance, provided that such notice will be required only with respect to the first failure; (b) commission of an act that constitutes misconduct and is injurious to the Company or any subsidiary; (c) conviction of, or pleading “guilty” or “no contest” to, a felony under the laws of the United States or any state thereof; (d) committing an act of fraud against, or the misappropriation of property belonging to, the Company or any subsidiary; (e) commission of an act of dishonesty in connection with your responsibilities as an employee and affecting the business or affairs of the Company; or (f) breach of any confidentiality, proprietary information or other agreement between you and the Company or any subsidiary.

4. Change of Control. The Company will offer you the change of control benefits detailed in Exhibit A effective with your date of hire.

Nicolaas Arnold

Employment Offer

Page 3

5. Moving Expenses. The Company will reimburse your reasonable moving expenses and transportation costs associated with your move to the Sunnyvale, California area, according to the schedule provided in Exhibit B (“Moving Expenses”). Should you voluntarily resign your position with the Company within twelve (12) months of your employment start date or actual move date, whichever is later, you will be required to repay these monies on a pro-rata basis within one month of the date your employment terminates. The Company shall have the right to offset such amounts against other payments due to you that are not wages (e.g., expense reimbursements).

In the event the protections afforded to you in your Change of Control Retention and Severance Agreement or Section 3.b. of this letter are triggered during any period of time in which you may have liability with respect to the repayment of Moving Expenses, you shall not be required to repay the Company for any Moving Expenses paid by the Company to you.

6. Local Living Expenses. Should you choose to commute from the Playa del Rey, California area to your job in Sunnyvale, California, the Company will provide you with a furnished one-bedroom apartment in the Sunnyvale area so long as you remain employed by Cepheid in good standing. In addition, the Company will pay for weekly air transportation for you to return to your home in Playa del Rey, California on the weekends for the same period.

Instead of the housing and payment for weekly air transportation described in the preceding paragraph, you may choose to receive a housing/commuting allowance of $3,500.00 per month (“Housing Allowance”).

As you are aware, the housing and travel provided to you, or the alternative Housing Allowance, will be taxable to you under law.

Should you decide to relocate to the Sunnyvale, California area, the Company will provide you with your choice of the alternatives described in this paragraph 6 during the interim period of your relocation, in addition to the Moving Expenses.

7. Paid Time Off. You will accrue Paid Time Off (PTO) based on an accrual rate of 20 days per calendar year, commencing with your hire date.

8. Benefits. In addition, you will be eligible to participate in regular health insurance, bonus and other employee benefit plans established by the Company for its employees from time to time.

Except as provided below, the Company reserves the right to change or otherwise modify, in its sole discretion, the preceding terms of employment, as well as any of the terms set forth herein at any time in the future.

9. Confidentiality. As an employee of the Company, you will have access to certain confidential information of the Company and you may, during the course of your employment, develop certain information or inventions that will be the property of the Company. To protect the interests of the Company, you will need to sign the Company’s standard “Employee Invention Assignment and Confidentiality Agreement” as a condition of your employment. We wish to impress upon you that we do not want you to, and we hereby direct you not to, bring with you any confidential or proprietary material of any former employer or to

Nicolaas Arnold

Employment Offer

Page 4

violate any other obligations you may have to any former employer. During the period that you render services to the Company, you agree to not engage in any employment, business or activity that is in any way competitive with the business or proposed business of the Company. You will disclose to the Company in writing any other employment, business or activity that you are currently associated with or participate in that competes with the Company. You will not assist any other person or organization in competing with the Company or in preparing to engage in competition with the business or proposed business of the Company. You represent that your signing of this offer letter, agreement(s) concerning stock options granted to you, if any, and the Company’s Employee Invention Assignment and Confidentiality Agreement and your commencement of employment with the Company will not violate any agreement currently in place between yourself and current or past employers.

10. Options. We will recommend to the Board of Directors of the Company that you be granted the opportunity to purchase up to 200,000 shares of Common Stock of the Company at the closing fair market value of the Company’s Common Stock at the end of business on the day the Board of Directors approves your grant, or your first day of employment, whichever is later. The shares you will be given the opportunity to purchase will vest at the rate of twenty-five percent (25%) at the end of your first anniversary with the Company, and an additional 1/48 of the total number of shares per month thereafter, so long as you remain employed by the Company. However, the grant of such options by the Company is subject to the Board of Directors’ approval and this promise to recommend such approval is not a promise of compensation and is not intended to create any obligation on the part of the Company. Further details on this option grant to you will be provided upon approval of such grant by the Board of Directors.

11. At-Will Employment. While we look forward to a long and profitable relationship, should you decide to accept our offer, you will be an at-will employee of the Company, which means the employment relationship can be terminated by either of us for any reason, at any time, with or without prior notice and with or without cause. Any statements or representations to the contrary (and, indeed, any statements contradicting any provision in this letter) should be regarded by you as ineffective. Further, your participation in any stock option or benefit program is not to be regarded as assuring you of continuing employment for any particular period of time. Any modification or change in your at will employment status may only occur by way of a written employment agreement signed by you and the Chief Executive Officer of the Company.

12. Authorization to Work. Please note that because of employer regulations adopted in the Immigration Reform and Control Act of 1986, within three (3) business days of starting your new position you will need to present documentation demonstrating that you have authorization to work in the United States. If you have questions about this requirement, which applies to U.S. citizens and non-U.S. citizens alike, you may contact our personnel office.

13. Insider Trading Policy. Your continued employment is also contingent upon reading and signing the enclosed Insider Trading Policy.

14. Background Check. This offer is contingent upon a successful completion of a background check, including a check of your employment references. This offer can be rescinded based upon data received in the background check.

Nicolaas Arnold

Employment Offer

Page 5

15. Acceptance. This offer will remain open until September 25, 2009. To assist you with your decision, the Company will arrange for a house hunting trip for you and your wife to meet with our relocation consultant. If you decide to accept our offer, and I hope you will, please sign the enclosed copy of this letter in the space indicated and return it to me. Your signature will acknowledge that you have read and understood and agreed to the terms and conditions of this offer letter and the attached documents, if any. Should you have anything else that you wish to discuss, please do not hesitate to call me.

We look forward to the opportunity to welcome you to the Company.

Sincerely,

/S/    LAURIE KING

Laurie King

Senior Vice President, Human Resources

I have read and understood this offer letter and hereby acknowledge, accept and agree to the terms as set forth above and further acknowledge that no other commitments were made to me as part of my employment offer except as specifically set forth herein.

/S/    NICOLAAS ARNOLD	Date signed:
Nicolaas Arnold
10/14/09
Start Date

EX-99.02

Exhibit 99.02

CEPHEID

NON-PLAN STOCK OPTION AGREEMENT

(INDUCEMENT STOCK OPTION AWARD)

This Stock Option Agreement (this “Agreement”) is made and entered into as of the date of grant set forth below (the “Date of Grant”) by and between Cepheid, a California corporation (the “Company”), and the optionee named below (“Optionee”). Capitalized terms not defined herein shall have the meaning ascribed to them in Section 20 or, if not defined therein, in the Company’s 2006 Equity Incentive Plan (the “Plan”).

Optionee:	Nicolaas Arnold
Social Security Number:
Optionee’s Address:
Total Option Shares:	200,000
Exercise Price Per Share:
Date of Grant:	October 14, 2009
First Vesting Date:	October 14, 2010
Expiration Date:	October 13, 2016
Type of Stock Option:	Non-Qualified Stock Option

1. Grant of Option. The Company hereby grants to Optionee an option (this “Option”) to purchase up to the total number of shares of common stock of the Company (“Common Stock”), set forth above (collectively, the “Shares”) at the Exercise Price Per Share set forth above (the “Exercise Price”), subject to all of the terms and conditions of this Agreement.

2. Vesting; Exercise Period.

2.1 Vesting of Shares. This Option shall be exercisable as it vests and shall not be exercisable with respect to any of the Shares until the First Vesting Date. Subject to the terms and conditions of this Agreement, this Option shall vest and become exercisable as to portions of the Shares as follows: If Optionee has continuously provided services to the Company, or any Parent or Subsidiary of the Company from the Date of Grant through and including the First Vesting Date, then on the First Vesting Date, this Option shall become exercisable as to twenty-five percent (25%) of the Shares. This Option shall become exercisable as to an additional 2.08333% of the Shares on each monthly anniversary after the First Vesting Date, provided that Optionee has continuously provided services to the Company, or any Parent or Subsidiary of the Company, at all times during the relevant month; provided, however, that in the event of Optionee’s Termination Upon Change of Control, as defined in Optionee’s Change of Control Agreement with the Company (the “Change of Control Agreement”), the terms of the Change of Control Agreement shall be applicable to and shall govern the vesting and exercise

periods of the Option and shall supersede all provisions to the contrary in this Agreement. Optionee shall in no event be entitled under this Option to purchase a number of shares of the Company’s Common Stock greater than the Total Option Shares set forth above.

2.2 Expiration. This Option shall expire on the Expiration Date set forth above and must be exercised, if at all, on or before the earlier of the Expiration Date or the date on which this Option is earlier terminated in accordance with the provisions of Section 3, provided, however, that this Option will be not be exercisable after the expiration of seven (7) years from the Date of Grant.

3. Termination.

3.1 Termination for Any Reason Except Death, Disability or Cause. If Optionee is Terminated for any reason except Optionee’s death, Disability or Cause, then this Option, to the extent (and only to the extent) that it is vested in accordance with the schedule set forth in Section 2.1 of this Agreement on the date of Termination, may be exercised by Optionee no later than 90 days after the date of Termination, but in any event no later than the Expiration Date.

3.2 Termination Because of Death. If the Optionee is Terminated because of Optionee’s death (or the Optionee dies within three (3) months after a Termination other than for Cause or because of the Optionee’s Disability), then the Option may be exercised only to the extent that such Option would have been exercisable by the Optionee on the Termination Date and must be exercised by the Optionee’s legal representative or authorized assignee no later than twelve (12) months after the Termination Date (or such shorter time period not less than six (6) months or longer time period not exceeding five (5) years as may be determined by the Committee, but in any event no later than the Expiration Date.

3.3 Termination Because of Disability. If the Optionee is Terminated because of Optionee’s Disability, then the Option may be exercised only to the extent that such Option would have been exercisable by the Optionee on the Termination Date and must be exercised by the Optionee (or the Optionee’s legal representative or authorized assignee) no later than six (6) months after the Termination Date, but in any event no later than the Expiration Date.

3.4 Termination for Cause. If Optionee is Terminated for Cause, this Option will expire on the Optionee’s date of Termination, or at such later time and on such conditions as are determined by the Compensation Committee of the Company’s Board of Directors.

3.5 No Obligation to Employ. Nothing in this Agreement shall confer on Optionee any right to continue in the employ of, or other relationship with, the Company or any Parent or Subsidiary of the Company, or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Optionee’s employment or other relationship at any time, with or without Cause.

4. Manner of Exercise.

4.1 Stock Option Exercise Agreement. To exercise this Option, Optionee (or in the case of exercise after Optionee’s death, Optionee’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in the form attached hereto as Exhibit A, or in such other form as may be approved by the Company from time to time (the “Exercise Agreement”), which shall set forth, inter alia, Optionee’s election to exercise this Option, the number of shares being purchased, any restrictions imposed on the Shares and any representations, warranties and agreements regarding Optionee’s investment intent and access to information as may be required by the Company to comply with applicable securities laws. If someone other than Optionee exercises this Option, then such person must submit documentation reasonably acceptable to the Company that such person has the right to exercise this Option.

4.2 Limitations on Exercise. This Option may not be exercised unless such exercise is in compliance with all applicable federal and state securities laws, as they are in effect on the date of exercise. This Option may not be exercised as to fewer than 100 Shares unless it is exercised as to all Shares as to which this Option is then exercisable.

4.3 Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

(a) cash; or

(b) check; or

(c) “same day sale” (as described in Section 12.1(d)(1) of the Plan), subject to the Company’s insider trading policies; or

(d) other method authorized by the Company.

4.4 Tax Withholding. Prior to the issuance of the Shares upon exercise of this Option, Optionee must pay or provide for any applicable federal or state withholding obligations of the Company. If the Committee permits, Optionee may provide for payment of withholding taxes upon exercise of this Option by requesting that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld. In such case, the Company shall issue the net number of Shares to the Optionee by deducting the Shares retained from the Shares issuable upon exercise.

4.5 Issuance of Shares. Provided that the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall issue the Shares registered in the name of Optionee, Optionee’s authorized assignee, or Optionee’s legal representative, and shall deliver certificates representing the Shares with the appropriate legends affixed thereto.

5. Compliance with Laws and Regulations. The exercise of this Option and the issuance and transfer of Shares shall be subject to compliance by the Company and Optionee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s Common Stock may be listed at the time of such issuance or transfer. Optionee understands that the Company is under no obligation to register or qualify the Shares with the Securities and Exchange Commission (“SEC”), any state securities commission or any stock exchange to effect such compliance.

6. Nontransferability of Option. This Option may not be transferred in any manner other than by will or by the laws of descent and distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, successors and assigns of Optionee.

7. Tax Consequences. Set forth below is a brief summary of some of the federal and California tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

7.1 Exercise of Nonqualified Stock Option. There may be a regular federal and California income tax liability upon the exercise of this Option. Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the fair market value of the Shares on the date of exercise over the Exercise Price. The Company will be required to withhold from Optionee’s compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

7.2 Disposition of Shares. If the Shares are held for more than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of an NQSO, any gain realized on disposition of the Shares will be treated as long-term capital gain, as the case may be.

8. Privileges of Stock Ownership. Optionee shall not have any of the rights of a shareholder with respect to any Shares until Optionee exercises this Option and pays the Exercise Price.

9. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or the Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and Optionee.

10. Entire Agreement. This Agreement, the Exercise Agreement and the Change in Control Agreement constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements with respect to such subject matter.

11. Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated above or to such other address as such party may designate in writing from time to time to the Company. All notices shall be deemed to have been given or delivered upon: personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission via electronic means.

12. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Optionee and Optionee’s heirs, executors, administrators, legal representatives, successors and assigns.

13. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without regard to that body of law pertaining to choice of law or conflict of law.

14. Acceptance. Optionee hereby acknowledges receipt of a copy of this Agreement. Optionee has read and understands the terms and provisions thereof, and accepts this Option subject to all the terms and conditions of this Agreement. Optionee acknowledges that there may be adverse tax consequences upon exercise of this Option or disposition of the Shares and that the Company has advised Optionee to consult a tax advisor prior to such exercise or disposition.

15. Modification, Extension or Renewal. The Committee may modify, extend or renew this Option and authorize the grant of new options in substitution therefor, provided that any such action may not, without the written consent of the Optionee, impair any of such Optionee’s rights under this Option. The Committee may reduce the Exercise Price of this Option without the consent of the Optionee affected by a written notice to them; provided, however, that the Exercise Price may not be reduced below 85% of the Fair Market Value of the Shares on the date of grant.

16. Certificates. All certificates for Shares or other securities delivered upon exercise of this Option will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted.

17. Adjustment of Shares. In the event that the number of outstanding shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company without consideration, then the Exercise Price of and the number of Shares subject to this Option will be

proportionately adjusted, subject to any required action by the Board or the Optionee and compliance with applicable securities laws; provided, however, that fractions of a Share will not be issued but will either be replaced by a cash payment equal to the Fair Market Value of such fraction of a Share or will be rounded up to the nearest whole Share, as determined by the Committee.

18. Corporate Transactions.

18.1 Assumption or Replacement of Option by Successor. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, the Option shall be assumed or an equivalent award substituted by the successor corporation (including as a “successor” any purchaser of substantially all of the assets of the Company) or a parent or subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Optionee shall have the right to exercise the Option as to all of the shares of Common Stock covered by the Option, including Shares as to which it would not otherwise be exercisable. If an Option is exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Company shall notify the Optionee that the Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the Option confers the right to purchase or receive, for each share of Common Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the merger or sale of assets was not solely common stock of the successor corporation or its parent entity, the Company may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each share of Common Stock subject to the Option, to be solely common stock of the successor corporation or its parent entity equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

18.2 Other Treatment of Option. Subject to any greater rights granted to the Optionee under the foregoing provisions of this section, in the event of the occurrence of any transaction described in Section 18.1, this Option will be treated as provided in the applicable agreement or plan of merger, consolidation, dissolution, liquidation, or sale of assets.

19. Amendment or Termination of the Agreement. The Board may at any time terminate or amend this Agreement in any respect; provided, however, that the Board will not, without the approval of the Optionee, amend this Agreement in any manner that requires Optionee’s approval.

20. Definitions. As used in this Agreement, the following terms will have the following meanings:

“Board” means the Board of Directors of the Company.

“Cause” has the meaning set forth in the Change of Control Agreement.

“Committee” means the Compensation Committee of the Board.

“Disability” means a disability, whether temporary or permanent, partial or total, as determined by the Committee.

“Exercise Price” means the price at which a holder of an Option may purchase the Shares issuable upon exercise of the Option.

“Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

(a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal;

(b) if such Common Stock is publicly traded but is not quoted on the Nasdaq Stock Market nor listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal; or

(c) if none of the foregoing is applicable, by the Committee in good faith.

“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

“Termination” or “Terminated” means, for purposes of this Agreement with respect to the Optionee, that the Optionee has for any reason ceased to provide services as an employee, officer, director, consultant, independent contractor, or advisor to the Company or a Parent or Subsidiary of the Company. An employee will not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee, provided, that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of the Optionee is on

an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of this Option while on leave from the employ of the Company or a Subsidiary as it may deem appropriate, except that in no event may this Option be exercised after the expiration of the term set forth in this Agreement. The Committee will have sole discretion to determine whether the Optionee has ceased to provide services and the effective date on which the Optionee ceased to provide services (the “Termination Date”).

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in duplicate by its duly authorized representative and Optionee has executed this Agreement in duplicate as of the Date of Grant.

CEPHEID	NICOLAAS ARNOLD, OPTIONEE
By:
	(Signature)
(Please print name)
(Please print title)

EXHIBIT A

NON-PLAN STOCK OPTION EXERCISE AGREEMENT

Exhibit A

CEPHEID

NON-PLAN STOCK OPTION EXERCISE AGREEMENT

I hereby elect to purchase the number of shares of Common Stock of Cepheid (the “Company”) as set forth below:

Optionee	Number of Shares Purchased:
Social Security Number:	Purchase Price per Share:
Address:	Aggregate Purchase Price:
	Date of Option Agreement:
Type of Option: Nonqualified Stock Option	Exact Name of Title to Shares:

1. Delivery of Purchase Price. Optionee hereby delivers to the Company the Aggregate Purchase Price, to the extent permitted in the Option Agreement (the “Option Agreement”) as follows (check as applicable and complete):

¨ in cash (by check) in the amount of $        , receipt of which is acknowledged by the Company;

¨ through a “same-day-sale” commitment, delivered herewith, from Optionee and the FINRA Dealer named therein, in the amount of $        ; or

¨ through a “margin” commitment, delivered herewith from Optionee and the FINRA Dealer named therein, in the amount of $        .

2. Tax Consequences. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE’S PURCHASE OR DISPOSITION OF THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

3. Entire Agreement. The Option Agreement and the Employment Agreement is incorporated herein by reference. This Exercise Agreement, the Option Agreement, and the Employment Agreement constitute the entire agreement and understanding of the parties and supersede in their entirety all prior understandings and agreements of the Company and Optionee with respect to the subject matter hereof, and are governed by California law except for that body of law pertaining to choice of law or conflict of law.

Date:
	Signature of Optionee

Spousal Consent

I acknowledge that I have read the foregoing Non-Plan Stock Option Exercise Agreement (the “Agreement”) and that I know its contents. I hereby consent to and approve all the provisions of the Agreement, and agree that the shares of the Common Stock of Cepheid purchased thereunder (the “Shares”) and any interest I may have in such Shares are subject to all the provisions of the Agreement. I will take no action at any time to hinder operation of the Agreement on these Shares or any interest I may have in or to them.

	Date:
Signature of Optionee’s Spouse
Spouse’s Name - Typed or Printed
Optionee’s Name - Typed or Printed

EX-99.03

Exhibit 99.03

	CONTACTS:
	For Media Inquiries:	For Investor Inquiries:
	Jared Tipton Cepheid Corporate Communications Tel: (408) 400 8377 jared.tipton@cepheid.com	Jacquie Ross Cepheid Investor Relations Tel: (408) 400 8329 investor.relations@cepheid.com

Cepheid

904 Caribbean Drive

Sunnyvale, CA 94089

Telephone: 408.541.4191

Fax: 408.541.4192

CEPHEID EXPANDS LEADERSHIP TEAM WITH APPOINTMENT OF EXECUTIVE

VICE PRESIDENT OF WORLDWIDE COMMERCIAL OPERATIONS

SUNNYVALE, CALIF.—October 13, 2009—Cepheid (Nasdaq: CPHD) today announced that it has appointed Mr. Nicolaas (‘Nico’) Arnold to the position of Executive Vice President of Worldwide Commercial Operations, effective October 14, 2009. The addition of this role expands Cepheid’s marketing and sales leadership, and is expected to accelerate the GeneXpert® System’s current installed base of more than 1,100 systems globally. Mr. Robert Koska, Cepheid’s Senior Vice President of North American Commercial Operations, and Ms. Rika Dutau, Vice President and Managing Director of European Commercial Operations, will continue in their roles, reporting to Mr. Arnold.

Mr. Arnold joins Cepheid from Siemens and, previously, from Diagnostic Products Corporation which was acquired by Siemens in 2006. Building on his academic and early research experience in clinical laboratories, Mr. Arnold brings more than 25 years of global sales and marketing experience in diagnostics to Cepheid. Most recently, Mr. Arnold was Regional Vice President for Siemens Healthcare Diagnostics in Northwest Europe with responsibility for molecular diagnostics, central lab and point of care sales. Previous roles included Managing Director of European sales for Siemens Medical Diagnostics, with responsibility for more than $1 billion in sales annually, and Vice President of Global Marketing and US Sales for Diagnostic Product Corporation, with total revenues in excess of $500 million.

“With the initiation of shipment of our high throughput Infinity-48 System and the continued expansion of our GeneXpert System test menu, Cepheid is well positioned for its next phase of growth. It is in this regard that we are extremely pleased to welcome such an accomplished sales and marketing executive to the Cepheid team,” said John Bishop, Cepheid’s Chief Executive Officer. “We are looking to grow both our domestic and international markets, and this is a timely appointment that further strengthens our sales and marketing capabilities with the objective of establishing the GeneXpert System as the molecular platform of choice.”

In connection with his employment, the Board of Directors of Cepheid has granted Mr. Arnold an option to purchase 200,000 shares of Cepheid common stock at the closing price of Cepheid common stock on the date that his employment starts. This option will become exercisable by Mr. Arnold over four years, with 25% vesting on the one-year anniversary of grant and ratably monthly thereafter, and will expire after seven years from the grant date. This option is granted as an inducement grant pursuant to Section 5635(c)(4) of the Nasdaq Marketplace Rules.

Cepheid Third Quarter Earnings Announcement

In a separate press release, Cepheid also announced today that its Third Quarter Earnings Announcement would take place on Wednesday, October 28, 2009, after the close of the market. While detailed financial results are not yet available, the Company currently expects total revenue for the third quarter to be approximately $41 million, representing a solid performance for the quarter.

In conjunction with the earnings release, the company will host a management presentation at 2 p.m. Pacific Time on Wednesday, October 28, 2009, to discuss the results. To access the live webcast, please visit Cepheid’s website at www.cepheid.com/investors at least 15 minutes before the scheduled start time to download any necessary audio or plug-in software. A replay of the webcast will be available shortly following the call and will remain available for at least 90 days.

Interested participants and investors may also listen to the live teleconference call by dialing (866) 783-2142 (domestic) or (857) 350-1601 (international), and entering participant code 30186203. A replay will be available for seven days beginning at 4 p.m. Pacific Time. Access numbers for this replay are (888) 286-8010 (domestic) and (617) 801-6888 (international), with participant code 49827607.

Forward-Looking Statements

This press release contains forward-looking statements that are not purely historical regarding Cepheid’s or its management’s expectations regarding future revenues and market growth. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from the company’s current expectations. Factors that could cause actual results to differ materially include risks and uncertainties such as those relating to: the fact that Cepheid’s review of its quarterly financial statements is not yet complete, and therefore, final revenues may change as a result; the uncertain impact of the significant global economic downturn on our business, and that of our customers, potential customers and business partners; our success in increasing direct sales and the effectiveness of new sales personnel; the performance and market acceptance of new products; sufficient customer demand; our ability to develop and complete clinical trials successfully in a timely manner for new products; uncertainties related to the FDA regulatory and European regulatory processes; the level of testing at clinical customer sites; changes in the protocols or levels of testing for Healthcare Associated Infections (HAIs); the company’s ability to successfully introduce and sell products in clinical markets other than HAIs; unforeseen development and manufacturing problems; the potential need for additional intellectual property licenses for tests and other products and the terms of such licenses; lengthy sales cycles in certain markets; the company’s reliance on distributors in some regions to market, sell and support its products; the impact of competitive products and pricing; and the company’s ability to manage geographically-dispersed operations. All forward-looking statements and reasons why results might differ included in this release are made as of the date of this press release, based on information currently available to Cepheid, and Cepheid assumes no obligation to update any such forward-looking statement or reasons why results might differ.

About Cepheid

Based in Sunnyvale, Calif., Cepheid (Nasdaq: CPHD) is an on-demand molecular diagnostics company that develops, manufactures, and markets fully-integrated systems and tests for genetic analysis in the clinical, industrial and biothreat markets. The company’s systems enable rapid, sophisticated genetic testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures. The company’s easy-to-use systems integrate a number of complicated and time-intensive steps, including sample preparation, DNA amplification and detection, which enable the analysis of complex biological samples in its proprietary test cartridges. Through its strong molecular biology capabilities, the company is focusing on those applications where rapid molecular testing is particularly important, such as identifying infectious disease and cancer in the clinical market; food, agricultural, and environmental testing in the industrial market; and identifying bio-terrorism agents in the biothreat market. See www.cepheid.com for more information.

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