SETTLEMENT AND CROSS-LICENSE AGREEMENT January 2, 2007

A.

Idaho Technology and the Utah Research Foundation (collectively hereafter, “Idaho Technology Plaintiffs”) claim to own and/or exclusively license certain patent rights including rights to grant sub-licenses in the fields of Real-Time PCR, Rapid PCR Amplification Methods, and Melting Curve Analysis.

B.

Idaho Technology Plaintiffs allege that Cepheid infringes certain patents, and has filed a lawsuit styled, “Idaho Technology, Inc. and the University of Utah Research Foundation v. Cepheid,” Case No. 2:05CV01063TS, pending in the United States District Court for the District of Utah (the “Utah Litigation”). In the Utah Litigation, Idaho Technology Plaintiffs specifically allege Cepheid’s infringement of U.S. Patent Nos. 6,787,338 and 6,569,627; and claims 76 and 77 of U.S. Patent No. 6,174,670, relative to products including Cepheid’s GeneXpert® and SmartCycler® devices and kits identified as the “IDI-Strep B Test.”

C.

The parties now wish to settle the Utah Litigation, on terms and conditions agreeable to all parties, including the payment by Cepheid of monetary consideration to Idaho Technology and the grant of rights in certain patents and patent applications by Idaho Technology to Cepheid and by Cepheid to Idaho Technology, as specified below.

1.

“Idaho Technology Licensed Patents” shall mean U.S. Patent Nos. 6,787,338; 6,503,720 and 6,303,305, pending U.S. Patent Applications Nos. 10/843,075 and 10/891,161, and all continuations, divisions, CIPs, and respective foreign counterparts thereof. Idaho Technology Licensed Patents shall also include claims 9, 10, 11, 56, 76, 80 and 107 of U.S. Patent No. 6,174,670, claims of

substantially the same scope in foreign counterparts, and claims of continuations, divisions, CIPs, and other patents claiming priority from U.S. Patent No. 6,174,670, but only to the extent necessary to practice claims 9, 10, 11, 56, 76, 80 or 107 of U.S. Patent No. 6,174,670, U.S. Patent Nos. 6,787,338; 6,503,720 and 6,303,305, or pending U.S. Patent Applications Nos. 10/843,075 and 10/891,161.

a.

is primarily intended for use in the automated performance of the polymerase chain reaction (PCR) process;

b.

has one or more positions, each for receiving a single reaction vessel having a reaction volume no larger than 100 microliters, wherein the temperature profile for thermal cycling each reaction can be controlled independently of any other reaction, regardless of whether the reactions are thermal cycled simultaneously, sequentially or otherwise;

c.

for such device or instrument that has more than one reaction vessel, is capable of simultaneously thermal cycling all reaction vessels wherein each vessel is controlled independently of the others during such simultaneous cycling;

d.

may optionally include use of a micro-array of nucleic acid reaction locations within a reaction vessel, wherein the reaction vessel and micro-array are arranged such that each location in the micro-array is exposed to the same, common, reagent environment in the reaction vessel, and wherein the micro-array is located or specifically configured to be located within a reaction vessel that is proprietary to Cepheid;

e.

that but for the license granted in paragraph 4 below, would infringe upon (including contributory infringement) or induce infringement of, one or more of the Idaho Technology Licensed Patents; and

f.

is marketed, distributed, sold, leased or otherwise transferred using trademarks owned by Cepheid.

3.

“Cepheid Licensed Kits” means kits:

c.

wherein such PCR reagents are packaged in or marketed to be used with a reaction vessel proprietary to Cepheid that is configured to be received exclusively in a thermal cycling position of a Cepheid Instrument; and

d.

are marketed, distributed, sold or otherwise transferred (i) exclusively using trademarks owned by Cepheid or (ii) using trademarks owned by Cepheid and trademarks owned by an exclusive Cepheid distributor, provided that (A) Cepheid’s trademarks shall be the primary and dominant marks in terms of size and placement, and (B) the exclusive Cepheid distributor’s trademarks shall be secondary and subordinate in terms of size and placement.

Patents, or (vii) any additional nucleic acid detection method wherein the detection means or use thereof is proprietary to Idaho Technology and that is first filed, first sold, first offered for sale, or for which rights are first acquired by Idaho Technology after the Effective Date.

For the avoidance of doubt, in the practice of the Idaho Technology Licensed Patents, Cepheid’s use of TaqMan® probes, Scorpion® probes, and other detection moieties for which use is not otherwise proprietary to Idaho Technology is specifically included within the Cepheid License.

For purposes of this Agreement, “Affiliate” shall mean any person, firm, business, corporation, limited liability company or other form of legal entity controlled by, under common control with, or controlling, the party. For these purposes, “control” shall refer to the ownership, directly or indirectly, of at least 50% of the voting securities or other ownership interests of a person or entity.

For purposes of this Agreement, “Product Specifications” shall mean the product and software specifications, information and other data disclosed by Cepheid to Idaho Technology, pursuant to the Mutual Non-Disclosure Agreement referenced in paragraph 39 below, through a password-protected electronic data room. The Product Specifications shall be, and hereby are, incorporated by reference as if set forth verbatim herein, and shall be maintained for reference purposes as described in paragraph 39 below. Cepheid represents and warrants that the Product Specifications accurately represent the Cepheid Instruments and Cepheid Licensed Kits as of the date first set forth above.

5.

Cepheid Licensed Patents means and includes: U.S. Patent Nos. 6,713,297; 6,783,934; 6,911,327; and 6,942,971, plus any and all continuations, divisions, CIPs, foreign counterparts and other patents claiming priority from said patents or the applications upon which such patents are based, including pending U.S. Patent Application No. 11/225,247.

6.

“Idaho Technology Products” means a device, instrument or software used, marketed, distributed, sold, leased or otherwise transferred by Idaho Technology that but for the Idaho Technology License below, would infringe (including contributory infringement) or induce infringement of one or more claims of any of the Cepheid Licensed Patents.

7.

Grant by Cepheid – Cepheid hereby grants to Idaho Technology and its Affiliates the world-wide, non-exclusive, fully-paid up, perpetual, royalty-free, non-terminable and irrevocable right and license to make, have made, use, sell, offer to sell, have sold, import, and export Idaho Technology Products pursuant to the Cepheid Licensed Patents (the “Idaho Technology License”). Additionally,

Cepheid releases Idaho Technology for any claims of past infringement of the Cepheid Licensed Patents.

8.

It is the intent of the parties to allow Cepheid to exercise its rights and enjoy the practical benefits of the Cepheid License and covenant not to sue, and for Cepheid’s distributors to distribute and sell as contemplated by the “have sold” rights under the Cepheid License, unhindered by other intellectual property rights that Idaho Technology has the right to license or sublicense. To that end, but only to that end, and without expanding the scope of the Cepheid License or covenant not to sue, Idaho Technology represents and warrants that it does not, as of the date first set forth above, have the power to license or sublicense any other patents or currently pending patent applications that would materially block Cepheid from the exercise of any claim of the Cepheid License (“Idaho Technology Blocking Patents”).

9.

Without expanding the scope of the Cepheid License, Idaho Technology hereby grants to Cepheid, on a world-wide, non-exclusive, fully paid-up, royalty-free basis, a further license and covenant-not-to-sue Cepheid for any such Idaho Technology Blocking Patents, but only insofar as not to materially block Cepheid from the exercise of the Cepheid License (the “Cepheid Additional Licenses”). Further, solely with respect to the sale or other distribution of Cepheid Instruments or Cepheid Licensed Kits by Cepheid’s distributors under the “have sold” rights of the Cepheid License, Idaho Technology hereby covenants not to sue Cepheid’s distributors for infringement of any such Idaho Technology Blocking Patents.

10.

Notwithstanding anything to the contrary in this Agreement, Idaho Technology’s covenants not to sue and any licenses or other rights granted by Idaho Technology under this Agreement (specifically including the covenants not to sue and licenses or rights under paragraphs 4, 9, 12 and 23), shall not extend to, and expressly exclude any right of Cepheid or any third party to make, have made, use, sell, offer to sell, have sold, import, or export, or to recommend to users or prospective users of any Cepheid Instrument or Cepheid Licensed Kits, any of the following items, services or processes: (a) FRET hybridization probe pairs, (b) SYBR® Green I, (c) LCGreen® I, LCGreen® Plus, (d) SimpleProbes®, (e) high resolution melting using a saturation dye and/or an unlabeled probe (as defined in U.S. Patent Application Publication Nos. 2005/0233335 and 2006/0019253), (f) all claims of U.S. Patent No. 6,174,670 not specifically included in the Idaho Technology Licensed Patents, or (g) any additional nucleic acid detection method wherein the detection means or use thereof is proprietary to Idaho Technology and that is first filed, first sold, first offered for sale, or for which rights are first acquired by Idaho Technology after the Effective Date (the “Excluded Matters”).

11.

It is the intent of the parties to allow Idaho Technology to exercise the Idaho Technology License, unhindered by other intellectual property rights that Cepheid has the right to license or sublicense. To that end, but only to that end, and without expanding the scope of the Idaho Technology License, Cepheid represents and warrants that it does not have the power to license or sublicense any other patents or currently pending patent applications that would materially block Idaho Technology from the exercise of the Idaho Technology License (“Cepheid Blocking Patents”).

12.

Without expanding the scope of the Idaho Technology License, Cepheid hereby grants to Idaho Technology on a world-wide, non-exclusive, fully paid-up, royalty-free basis, a further license and covenant-not-to-sue Idaho Technology for any such Cepheid Blocking Patents, but only insofar as not to materially block Idaho Technology from the exercise of any claim of the Idaho Technology License (the “Idaho Technology Additional Licenses”). Further, solely with respect to sales or other distribution by Idaho Technology’s distributors under the “have sold” rights of the Idaho Technology License, Cepheid hereby covenants not to sue Idaho Technology’s distributors for infringement of any such Cepheid Blocking Patents.

13.

Cepheid covenants and agrees that any Cepheid Instruments and any Cepheid Licensed Kits manufactured, marketed, distributed, sold, imported or exported by or for Cepheid under the Cepheid License or any Cepheid Additional Licenses shall be conspicuously marked, labeled and packaged with the following label licenses (and advertised in a consistent manner) to the extent reasonably practical:

b.

For instruments: