UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549

FORM 10-K

ý	
 	
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	

For the fiscal year ended: December 31, 2009	

o	
 	
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
Commission file number 000-32179

EXACT SCIENCES CORPORATION
 (Exact name of registrant as specified in its charter)

DELAWARE 
(State or other jurisdiction of
incorporation or organization)	 	02-0478229 
(IRS Employer
Identification No.)	

441 Charmany Drive, Madison, WI 
(Address of principal executive offices)	
 	
53719 
(Zip Code)	
Registrant's telephone number, including area code: (608) 284-5700
Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $.01 Par Value	 	The NASDAQ Stock Market LLC	
Securities registered pursuant to Section 12(g) of the Act:
 None
        Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o     No  ý
        Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o     No  ý
        Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý     No  o
        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  o     No  o
        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o
        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o	 	Accelerated filer  ý	 	Non-accelerated filer  o
 (Do not check if a
smaller reporting company)	 	Smaller reporting company  o	
        Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  o     No  ý
        The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, as of the last business day of the Registrant's most recently completed second fiscal quarter was approximately $87,355,000 (based on the closing price of the Registrant's Common Stock on June 30, 2009 of $2.65 per share).
        The number of shares outstanding of the Registrant's $.01 par value Common Stock as of March 11, 2010 was 35,832,021.
DOCUMENT INCORPORATED BY REFERENCE
        The registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days after the end of the fiscal year ended December 31, 2009. Portions of such proxy statement are incorporated by reference into Part III of this Form 10-K.

Table of Contents

 EXACT SCIENCES CORPORATION
ANNUAL REPORT ON FORM 10-K
YEAR ENDED DECEMBER 31, 2009

TABLE OF CONTENTS

 	 	 	 	Page No.	 	
Part I	 	 	 	 	 	 	
Item 1.	 	Business	 	 	1	 	
Item 1A.	 	Risk Factors	 	 	7	 	
Item 1B.	 	Unresolved Staff Comments	 	 	13	 	
Item 2.	 	Properties	 	 	13	 	
Item 3.	 	Legal Proceedings	 	 	13	 	
Item 4.	 	Reserved	 	 	13	 	
Part II	 	 	 	 	 	 	
Item 5.	 	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	 	 	13	 	
Item 6.	 	Selected Financial Data	 	 	14	 	
Item 7.	 	Management's Discussion and Analysis of Financial Condition and Results of Operations	 	 	16	 	
Item 7A.	 	Quantitative and Qualitative Disclosures about Market Risk	 	 	26	 	
Item 8.	 	Financial Statements and Supplementary Data	 	 	27	 	
Item 9.	 	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	 	 	67	 	
Item 9A.	 	Controls and Procedures	 	 	67	 	
Item 9B.	 	Other Information	 	 	68	 	
Part III	 	 	
68	 	
Part IV	 	 	 	 	 	 	
Item 15.	 	Exhibits and Financial Statement Schedules	 	 	68	 	
SIGNATURES	 	 	
69	 	
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 PART I
         This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange and Exchange Act of 1934, as amended, that are intended to be covered by the "safe harbor" created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as "believe," "expect," "may," "will," "should," "could," "seek," "intend," "plan," "estimate," "anticipate" or other comparable terms. Forward-looking statements in this Annual Report on Form 10-K may address the following subjects among others: statements regarding the sufficiency of our capital resources, expected operating losses, expected license fee revenues, expected research and development expenses, expected general and administrative expenses and our expectations concerning our business strategy. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, as a result of various factors including those risks and uncertainties described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections of this report. We urge you to consider those risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward -looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Item 1.    Business
Overview
        Exact Sciences Corporation is a molecular diagnostics company focused on the early detection and prevention of colorectal cancer. We have exclusive intellectual property protecting our non-invasive, molecular screening technology for the detection of colorectal cancer.
        Our primary goal is to become the market leader for a patient-friendly diagnostic screening product for the early detection of colorectal pre-cancer and cancer. Our strategic roadmap to achieve this goal includes the following key components:
•
develop and refine our non-invasive stool-based (sDNA) colorectal pre-cancer and cancer screening test; 

•
advance our product through U.S. Food and Drug Administration, or FDA, clinical trials; 

•
secure insurance coverage and reimbursement for our product; and 

•
commercialize an FDA-cleared product that detects colorectal pre-cancer and cancer.
        Our current focus is on the commercial development and seeking U.S. Food and Drug Administration (FDA) clearance and approval of our stool-based DNA (sDNA) colorectal cancer screening product. We believe obtaining FDA approval is critical to building broad demand and successful commercialization for our sDNA colorectal cancer screening technologies. As part of our product development efforts, we are exploring the marker combinations and platform requirements necessary for optimal performance of our technology based on market need. Objectives around performance, throughput and cost are among the elements that will need to be met in the design and development of a commercial product based on our technology.
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        Colorectal cancer is the third leading cause of cancer death overall, the second leading cause of death from cancers that affect both men and women in the United States, and the leading cause of cancer death among non-smokers. Patients who are diagnosed early in the progression of the disease—with pre-cancerous lesions or polyps, or early-stage cancer—are more likely to have a complete recovery and to be treated less expensively. Accordingly, the American Cancer Society, or ACS, recommends that all people age 50 and older undergo regular colorectal cancer screening. Of the more than 89 million people in the United States for whom routine colorectal cancer screening is recommended, only 25 percent have been screened according to current guidelines. It is estimated that about one-half of those who should be, have never been screened at all. We believe that this large population of unscreened and inadequately screened patients represents an opportunity to reduce colorectal cancers deaths and the health care costs associated with colorectal cancer.
        Professional colorectal cancer screening guidelines in the United States, including those of the ACS, the American College of Gastroenterology, and the American Gastroenterological Association, recommend regular screening by a variety of methods. Historically, these recommendations consisted of colonoscopy, flexible sigmoidoscopy and fecal occult blood testing, or FOBT, as well as combinations of some of these methods. On March 5, 2008, the ACS and the U.S. Multi-Society Task Force on Colorectal Cancer, or MSTF-CRC, a consortium of several organizations that includes representatives of the American College of Gastroenterology, American Gastroenterological Association, American Society for Gastrointestinal Endoscopy and the American College of Physicians/Society of Internal Medicine, announced that non-invasive, sDNA screening technology is included in the updated national colorectal cancer screening guidelines as a screening option for the detection of colorectal cancer in average risk, asymptomatic individuals age 50 and older.
        Our product includes DNA markers, which in published studies have been shown to be associated with colorectal cancer. These markers include the aberrant methylation of the Vimentin gene promoter region, which we refer to as Vimentin. We have exclusive rights to the Vimentin technology through our license agreement with Case Western Reserve University. Our test also will include a fecal immunochemical test, or FIT. This immunoassay will increase sensitivity without affecting specificity, improving the overall sensitivity of our test.
Background
        It is widely accepted that colorectal cancer is among the most preventable, yet least prevented cancers. Colorectal cancer typically takes up to 15 years to progress from a pre-cancerous lesion to metastatic cancer and death. However, it is the second-leading cause of cancer death in the United States, killing almost 50,000 people each year.
        Medical experts believe that many colorectal cancer deaths can be avoided. These deaths occur needlessly because people are not screened for colorectal cancer at all, or they are screened using ineffective methods, often outside the recommended screening interval. As a result, the cancer is either not detected at all or it is detected at a later stage, when the five-year survival rate falls below 50%. The number of people who die annually from the disease has remained materially unchanged during the last 20 years, despite the availability of multiple colorectal cancer screening options, all of which we believe fail to effectively meet the needs of patients, doctors and payors.
        There is a significant unmet clinical need related to the diagnosis of colorectal cancer. Only 25 percent of those who should be screened for colorectal cancer are screened according to current guidelines. Half of those age 50 years and older have not been screened at all. Poor compliance has meant that nearly two-thirds of colon cancer diagnoses are made in the disease's late stages. The five-year survival rates for stages 3 and 4 are 54 percent and 8 percent, respectively.
        Detection of pre-cancerous adenomas and colorectal cancer in its earliest stages increases the likelihood of survival and reduces the significant cost associated with treating late-stage colorectal
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cancer. Accordingly, the ACS recommends that the more than 89 million Americans age 50 and above undergo regular colorectal cancer screening with the methods endorsed by the ACS.
        The competitive advantages of sDNA-based screening provide a massive market opportunity. Assuming a 30-percent test adoption rate and a three-year screening interval, the potential U.S. market for sDNA screening is $1.2 billion. The total available U.S. market is more than $5 billion which is approximately 89 million people to be screened every three years.
Our Solution
        Our screening test includes proprietary and patented methods that isolate and analyze the trace amounts of human DNA that are shed into stool every day from the exfoliation of cells that line the colon. When colorectal cancer is present, a minute portion of the total isolated human DNA will often represent DNA shed from cancerous or pre-cancerous lesions. Once the human DNA in the sample is isolated, sDNA-based detection looks for specific mutations and other abnormalities in that DNA known to be associated with colorectal cancer. Our test will also detect blood in stool, utilizing a Fecal Immunochemical Test (FIT). A "positive" result from sDNA detection or a positive FIT result does not necessarily mean that a patient has colorectal cancer. A "positive" result means that one or more of the genetic markers that can be associated with colorectal cancer has been identified. Under these circumstances, the clinical protocol is for the patient to obtain a colonoscopy for confirmation.
        We believe that sDNA-based screening in the general population offers an opportunity to increase screening rates, decrease deaths and lower health care costs from colorectal cancer. We believe that our proprietary methods and technologies have several advantages over other screening options that may lead to decreased mortality associated with colorectal cancer.
        The benefits of sDNA-based screening are clear.
•
It detects both pre-cancers and cancers, and we are targeting sensitivities greater than 50 percent and 85 percent, respectively. 

•
sDNA-based screening is non-invasive and requires no bowel preparation or dietary restriction like other methods. 

•
The sample for sDNA-based screening can be collected easily at home and shipped to the laboratory, where the testing would be conducted. 

•
sDNA-based screening also is affordable, particularly compared to colonoscopy.
        Of those people for whom screening is recommended, many reject the option of colonoscopy which, while accurate as a means of detecting colorectal cancer, is invasive and requires a bowel preparation. In addition, many FOBT screening tests require unpleasant stool sampling and stool manipulation by the patient, and certain FOBT screening tests also require dietary modifications.
Reimbursement
        We are continuing to work to obtain national coverage for sDNA colorectal cancer screening technologies from Medicare and positive coverage decisions from major national and regional managed care organizations and insurance carriers, and self-insured employer groups.
        Twelve states and the District of Columbia have legislative mandates requiring that available colorectal cancer screening options offered by certain categories of insurers in these states must include all tests identified in the current ACS screening guidelines, which include sDNA screening. These states include Alaska, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Missouri, Nevada, New Jersey, North Carolina, and Rhode Island. Additionally, in the second half of 2008, CIGNA, one of the nation's largest insurers, included sDNA screening among its nationwide covered benefits. While we
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view inclusion of sDNA screening for colorectal cancer in the state mandates and the positive coverage decision by CIGNA as important first steps in securing wide-spread coverage for stool-based DNA screening for colorectal cancer from private insurance carriers, we believe that obtaining a positive national coverage decision from the Center for Medicare and Medicaid (CMS) for our sDNA screening product will be a necessary element in achieving any material commercial success.
Competition
        There are a number of established primary screening methods that are recommended for colorectal cancer. All of the colorectal cancer detection methods in use today are constrained by some combination of poor sensitivity, poor compliance and cost. Colonoscopy remains the most widely used and is considered the 'gold standard' method that is most widely practiced as a primary colorectal cancer screen. However, colonoscopy is uncomfortable and expensive and suffers from a high rate of non-compliance. Following colonoscopy, the next most widely used method of colorectal cancer screening is FOBT or a newer version of FOBT called Fecal Immunochemical Testing (FIT). Fecal blood testing suffers from poor sensitivity, including 50 percent detection rates for cancer and 12 percent detection rates for pre-cancers. Recently, CT colonography (also called virtual colonoscopy) has emerged as an option. CT colonography requires a bowel preparation (as does colonoscopy) and consists of a radiological examination of the colon. CT colonography was recently rejected for reimbursement by the Centers for Medicare and Medicaid (CMS). Another potential alternative method is blood-based DNA testing. The principle disadvantage of blood DNA testing is poor sensitivity for cancer and an inability to detect pre-cancerous lesions. Data from a clinical trial of one blood-based DNA test was released in early 2010. It demonstrated only 50 percent sensitivity across all stages of cancer.
        We are aware of three companies, Epigenomics, OncoMethylome Sciences and Gene News, developing screening tests for the detection of colorectal cancer. Additionally, Quest Diagnostics and Abbott Diagnostics have sublicensed technology from Epigenomics and are offering versions of the Epigenomics test to customers as lab developed tests (LDT) and as CE marked kits, respectively. Epigenomics is headquartered in Berlin, Germany and has a U.S. location in Seattle, Washington. OncoMethylome Sciences has several offices located in Belgium and U.S. offices in North Carolina. Gene News is located in Ontario, Canada.
Research and Development
        Our current focus is on the commercial development and seeking U.S. Food and Drug Administration (FDA) clearance and approval of our sDNA colorectal cancer screening product. Accordingly, research and development costs account for a substantial portion of our operating expenses. Our research and development expenses were $4.2 million, $2.0 million and $4.9 million for the years ended December 31, 2009, 2008 and 2007, respectively.
Government Regulation
        Certain of our activities are subject to regulatory oversight by the FDA under provisions of the Federal Food, Drug, and Cosmetic Act and regulations thereunder, including regulations governing the development, marketing, labeling, promotion, manufacturing and export of certain technologies. Failure to comply with applicable requirements can lead to sanctions, including withdrawal of products from the market, recalls, refusal to authorize government contracts, product seizures, civil money penalties, injunctions and criminal prosecution.
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U.S. Food and Drug Administration
        The Food, Drug and Cosmetic Act requires that medical devices introduced to the U.S. market, unless otherwise exempted, be subject to either a premarket notification clearance, known as a 510(k), or a premarket approval, known as a PMA. Our current focus is on the commercial development and seeking FDA clearance and approval of our sDNA colorectal cancer screening product. The 510(k) process means that the FDA will not require a PMA, a generally but not necessarily more time-consuming and costlier process than the 510(k) process, because the FDA finds that either (a) our product is substantially similar to a legally marketed product (a "predicate device") or (b) in the absence of a predicate device that the FDA concludes that our product may use a process known as a de novo classification, which is reserved for low-risk products; however, the 510(k) process still involves substantial costs and time and may have to be repeated for any number of reasons, including but not limited to, the FDA's discretion or if the product is modified during the process. The PMA process, which is necessary when a device cannot be cleared through the 510(k) process, involves providing extensive data to the FDA to allow the FDA to find that the device is safe and effective for its intended use, which may also include providing additional data and updates to the FDA, the convening of expert panels, inspection of manufacturing facilities, and new or supplemented PMAs if the product is modified during the process. Even if granted, a 510(k) or PMA approval may place substantial restrictions on how our device is marketed or sold, and the FDA will continue to place considerable restrictions on our products, including but not limited to registering manufacturing facilities, listing the products with the FDA, complying with labeling, and meeting reporting requirements. We believe that the studies required in connection with any approval or clearance of our technology, regardless of whether the regulatory pathway is the 510(k) process or a PMA, will be material in cost and time-intensive. There can be no assurance that FDA will ultimately approve any 510(k) request or approve any PMA submitted by us in a timely manner or at all.
Other Regulations
        We are also subject to U.S. and state laws and regulations regarding the operation of clinical laboratories. Federal CLIA requirements and laws of certain other states impose certification requirements for clinical laboratories, and establish standards for quality assurance and quality control, among other things. Clinical laboratories are subject to inspection by regulators, and to sanctions for failing to comply with applicable requirements. Sanctions available under CLIA include prohibiting a laboratory from running tests, requiring a laboratory to implement a corrective plan, and imposing civil monetary penalties. If we fail to meet any applicable requirements of CLIA or state law, it could adversely affect any future CMS consideration of any of our technologies, prevent its approval entirely, and/or interrupt the commercial sale of any products and otherwise cause us to incur significant expense.
        In addition, the specimen transport and storage containers that are used in connection with certain of our products are deemed to be Class I medical devices regulated by the FDA. Once a physician orders a test, the patient will need to receive a specimen container to collect and transport the patient's stool sample. Under 21 CFR Sec. 864.3250, specimen transport and storage containers generally have been exempt from the FDA's premarket notification requirement and much of the Quality System Regulation. However, there can be no assurance that the FDA will consider our products' collection containers to be exempt from the premarket notification requirement or the majority of the Quality System Regulation requirements. Moreover, we believe that if the collection kit becomes part of a cleared or approved device, the FDA will seek to include the container in the premarket clearance or approval requirement as part of the sDNA test system.
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Intellectual Property
        Our intellectual property portfolio positions us as the leading player in the sDNA market. Our patent estate broadly protects our position in the market, including the platform technology, methods and biomarkers. In 2009, we expanded our intellectual property estate through our collaboration with the Mayo Clinic as well as by licensing Invader detection chemistry from Hologic, which we plan to incorporate into our test. Previously we licensed Case Western's important Vimentin DNA methylation marker, as well as on an exclusive basis, Johns Hopkins' digital PCR technologies for colon cancer detection.
        Our success depends to a significant degree upon our ability to protect our technologies through patent coverage. As of December 31, 2009, we owned 14 issued patents and 9 pending applications in the United States, and 51 issued patents and 11 pending patent applications in foreign jurisdictions. In addition, as part of the Genzyme transaction, we received an exclusive license back from Genzyme Corporation in the fields of colorectal cancer screening and stool-based detection of any disease or condition to the 25 patents issued and 9 pending patent applications in the U.S., and 33 patents issued and 15 pending patent applications in foreign jurisdictions sold to Genzyme.
        Each of our patents generally has a term of 20 years from its respective priority filing date. Consequently, our first patents are set to expire in 2016.
Genzyme Transaction
        On January 27, 2009, we entered into a strategic transaction with Genzyme Corporation. As a result of the Genzyme transaction, we assigned certain aspects of our intellectual property applicable to the fields of prenatal and reproductive health to Genzyme. We also granted Genzyme a license to use and sublicense some of our remaining intellectual property in fields other than colorectal cancer detection and stool-based disease detection. With respect to the assigned intellectual property, Genzyme granted us a license to use and sublicense such intellectual property in the fields of colorectal cancer detection and stool-based detection of any disease or condition. Accordingly, we retained our rights in both the assigned and licensed intellectual property in the fields of colorectal cancer detection and stool-based disease detection. In addition, we and Genzyme each granted to the other a license to use and sublicense any improvements we or Genzyme make to the intellectual property. Genzyme agreed to pay a double-digit royalty to us on income received by Genzyme as a result of any licenses or sublicenses to third parties of the assigned or licensed intellectual property.
Employees
        As of December 31, 2009, we had nineteen full-time employees. None of our employees are represented by a labor union. We consider our relationship with our employees to be good.
Available Information
        We were incorporated in the State of Delaware on February 10, 1995. Our executive offices are located at 441 Charmany Drive, Madison, Wisconsin 53719. Our telephone number is 608-284-5700. Our Internet website address is http://www.exactsciences.com . Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through the investor relations page of our internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.
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Item 1A.    Risk Factors
        We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. This discussion highlights some of the risks which may affect future operating results. These are the risks and uncertainties we believe are most important for you to consider. We cannot be certain that we will successfully address these risks. If we are unable to address these risks, our business may not grow, our stock price may suffer and/or we may be unable to stay in business. Additional risks and uncertainties not presently known to us, which we currently deem immaterial or which are similar to those faced by other companies in our industry or business in general, may also impair our business operations.
We may never successfully commercialize any of our technologies or become profitable.
        We have incurred losses since we were formed and have had only modest product and royalty fee revenues since the commercial launch of PreGen-Plus in August 2003. From our date of inception on February 10, 1995 through December 31, 2009, we have accumulated a total deficit of approximately $181.6 million. We expect that our losses will continue for at least the next several years and we will be required to invest significant additional funds toward development of our colorectal cancer screening technology. If our revenue does not grow significantly, we will not be profitable. We cannot be certain that the revenue from the sale of any of our technologies will be sufficient to make us profitable.
        Our future revenues will depend on our ability to successfully commercialize an FDA-approved product for stool-based DNA colorectal cancer screening. Our ability to successfully commercialize our technologies may be affected by the following factors:
•
the scope of and progress made in our research and development activities; 

•
our ability to successfully execute on a clinical trial; 

•
threats posed by competing technologies; 

•
acceptance, endorsement and formal policy approval of stool-based DNA screening reimbursement by Medicare and other third-party payors; 

•
our ability to commercialize our test through primary care physician awareness and consumer education and outreach.
        Many of these factors are outside our control and, accordingly, we cannot assure you that one or more of the foregoing will occur in the near term, or at all. Failure to achieve one or more of the foregoing events could negatively impact the successful commercialization of stool-based DNA testing services or products utilizing our intellectual property and impair our ability to generate revenues and achieve profitability.
We will need additional capital to execute our business plan, and we may be unable to raise additional capital on acceptable terms.
        Following the closing of our strategic transaction with Genzyme in January 2009, we have resumed our efforts to develop an FDA-approved in vitro diagnostic test for stool-based DNA colorectal cancer screening. The FDA approval path for our colorectal cancer screening technology is likely to take significant time and require significant research, development and clinical study expenditures.
        Although we believe we have sufficient capital to fund our operations for at least the next twelve months, we do not have sufficient capital to fully fund the commercial development of our stool-based DNA technology and related FDA submission and commercialization efforts. We do not expect that product royalty payments or milestone payments from LabCorp will materially supplement our liquidity position in the next twelve months, if at all. If we are unable to obtain needed financing on acceptable
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terms, we may not be able to implement our business plan which could have a material adverse effect on our business, financial condition and results of operations. If we raise additional funds through the sale of equity, convertible debt or other equity-linked securities, our shareholders' percentage ownership in us will be reduced. In addition, these transactions may dilute the value of our outstanding stock. We may issue securities that have rights, preferences and privileges senior to our common stock. If we raise additional funds through collaborations or licensing arrangements, we may relinquish rights to certain of our technologies or products, or grant licenses to third parties on terms that are unfavorable to us. Even if we successfully raise sufficient funds to continue our operations to fund the development, FDA submission, and commercialization of our technology, including an FDA-approved in vitro diagnostic test for stool-based DNA colorectal cancer screening, we cannot assure you that our business will ever generate sufficient cash flow from operations to become profitable.
If Medicare and other third-party payors, including managed care organizations, do not issue positive policy decisions approving reimbursement for our stool-based DNA colorectal cancer screening technology, the commercial success of products utilizing our technologies would be compromised.
        Successful commercialization of a stool-based DNA screening product will depend, in large part, on the availability of adequate reimbursement from government insurance plans, managed care organizations and private insurance plans. There is significant uncertainty concerning third-party reimbursement for the use of tests incorporating new technology. Reimbursement of stool-based DNA colorectal cancer screening by a third-party payor may depend on a number of factors, including a payor's determination that tests using our technologies are: sensitive for colorectal cancer; not experimental or investigational; approved by the major guidelines organizations; reliable, safe and effective; medically necessary; appropriate for the specific patient and cost-effective.
        If we are unable to obtain positive policy decisions from third-party payors, including managed care organizations, approving reimbursement for stool-based DNA testing services or products at adequate levels, the commercial success of stool-based DNA screening for colorectal cancer would be compromised and our revenues would be significantly limited.
Other companies may develop and market novel or improved methods for detecting colorectal cancer, which may make our technologies less competitive, or even obsolete.
        The market for colorectal cancer screening is large, approximating 89 million Americans age 50 and above, of which we believe approximately one-half fail to strictly follow the ACS's screening guidelines for colorectal cancer. As a result, the colorectal cancer screening market has attracted competitors, some of which have significantly greater resources than we have. Currently, we face competition from procedure-based detection technologies such as flexible sigmoidoscopy, colonoscopy and virtual colonoscopy, a procedure in which a radiologist views the inside of the colon through a scanner, as well as from existing guaic-based FOBT, and improved screening tests such as immunochemical FOBT. In addition, some companies and institutions are developing serum-based tests, or screening tests based on the detection of proteins, nucleic acids or the presence of fragments of mutated genes in the blood that are produced by colon cancer. For example, it is our understanding that Epigenomics AG has completed a large multi-center study to demonstrate the performance of its blood-based screening test for colorectal cancer. Additionally, we understand OncoMethylome Sciences is in the process of enrolling patients for a large blood-based colorectal cancer screening trial. These and other companies may also be working on additional methods of detecting colon cancer that have not yet been announced. We may be unable to compete effectively against these competitors either because their test is superior or because they may have more expertise, experience, financial resources and stronger business relationships.
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Our business would suffer if we are unable to license certain technologies or obtain raw materials and components or if certain of our licenses were terminated.
        Any future commercialization of our stool-based DNA screening technology may require that we license certain third-party intellectual property. There can be no assurance that we can obtain these licenses on acceptable terms, if at all. Furthermore, there can be no assurance that any current contractual arrangements between us and third parties or between our strategic partners and other third parties, will be continued, or not breached or terminated early, or that we will be able to enter into any future relationships necessary to the continued commercial sale of any stool-based DNA testing services or products utilizing our technologies, or necessary to our realization of material revenues. For example, we have an exclusive license from Case Western Reserve University, or Case Western, for the use of the Vimentin gene in the field of colorectal cancer testing, pursuant to which we are permitted to sublicense such rights to others. If Case Western were to terminate this agreement as a result of a breach by us or otherwise, we would lose our ability to offer any test or testing service based on the Vimentin gene, including the right to develop an FDA-approved colorectal cancer screening product using the Vimentin gene, which would materially harm our business. Any failure to obtain necessary technologies or raw materials could require any stool-based DNA testing services or products utilizing our technologies to be re-configured which could halt such service or product entirely, negatively impact its commercial sale and increase the associated costs, any one of which could materially harm our business and adversely affect our future revenues.
If our clinical studies do not prove the reliability, effectiveness and superiority of stool-based DNA testing, we may experience reluctance or refusal on the part of physicians to order, and third-party payors to pay for, tests based on our technologies.
        If the results of our research and clinical studies and our sales and marketing activities relating to communication of these results, do not convince thought-leading gastroenterologists, guidelines organizations, primary care physicians, third-party payors and patients that tests using our technologies are reliable, effective and superior to existing screening methods, including Hemoccult II, Hemoccult Sensa and immunochemical FOBT, we may experience reluctance or refusal on the part of physicians to order, and third-party payors to pay for tests using our technologies, which could prevent us from successfully commercializing our technologies.
We expect to rely on third parties to conduct any future studies of our technologies that may be required by the FDA, and those third parties may not perform satisfactorily.
        We do not have the ability to independently conduct clinical or other studies that may be required to obtain clearance for our DNA-based colorectal screening technology with the FDA. Accordingly, we expect to rely on third parties such as contract research organizations, medical institutions and clinical investigators to conduct any such studies. Our reliance on these third parties for clinical development activities will reduce our control over these activities. Accordingly, these third-party contractors may not complete activities on schedule, or may not conduct studies in accordance with regulatory requirements or our study design. Our reliance on third parties that we do not control does not relieve us of our requirement to prepare, and ensure our compliance with, various procedures required under good clinical practices, even though third-party contract research organizations have prepared and are complying with their own, comparable procedures. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if the third parties need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our studies may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for our technologies.
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We may experience limits on our revenue if only a small number of people decide to be screened for colorectal cancer using our technologies.
        Even if our technologies are superior to other colorectal cancer screening options, adequate third-party reimbursement is obtained and we convince medical practitioners to order tests using our technologies, only a small number of people may decide to be screened for colorectal cancer. Despite the availability of current colorectal cancer screening methods as well as the recommendations of the ACS that all Americans age 50 and above be screened for colorectal cancer, a majority of these individuals do not complete a colorectal cancer screening test. Use of a stool-based DNA colorectal cancer screening will require people to collect a stool sample, which some people may be reluctant to do. If only a small portion of the recommended population is regularly screened for colorectal cancer or decides to utilize colorectal cancer screening tests using our technologies, we will, despite our efforts, experience limits on our revenue and our business would be materially harmed.
We may be subject to substantial costs and liability or be prevented from licensing our technologies for cancer detection as a result of litigation or other proceedings relating to patent rights.
        Third parties may assert infringement or other intellectual property claims against our licensors, our licensees, our suppliers, our strategic partners, or us. We pursue a patent strategy that we believe provides us with a competitive advantage in the non-invasive early detection of colorectal cancer and is designed to maximize our patent protection against third parties in the U.S. and, potentially, in certain foreign countries. We have filed patent applications that we believe cover methods we have designed to help detect colorectal cancer and other cancers. In order to protect or enforce our patent rights, we may have to initiate actions against third parties. Any actions regarding patents could be costly and time-consuming, and divert our management and key personnel from our business. Additionally, such actions could result in challenges to the validity or applicability of our patents. Because the U.S. Patent & Trademark Office maintains patent applications in secrecy until a patent application publishes or the patent is issued, others may have filed patent applications covering technology used by us or our partners. Additionally, there may be third-party patents, patent applications and other intellectual property relevant to our technologies that may block or compete with our technologies. Even if third-party claims are without merit, defending a lawsuit may result in substantial expense to us and may divert the attention of management and key personnel. In addition, we cannot provide assurance that we would prevail in any such suits or that the damages or other remedies, if any, awarded against us would not be substantial. Claims of intellectual property infringement may require that we, or our strategic partners, enter into royalty or license agreements with third parties that may not be available on acceptable terms, if at all. These claims may also result in injunctions against the further development and commercial sale of services or products containing our technologies, which would have a material adverse affect on our business, financial condition and results of operations.
        Also, patents and applications owned by us may become the subject of interference proceedings in the U.S. Patent and Trademark Office to determine priority of invention, which could result in substantial cost to us, as well as a possible adverse decision as to the priority of invention of the patent or patent application involved. An adverse decision in an interference proceeding may result in the loss of rights under a patent or patent application subject to such a proceeding.
If we are unable to protect our intellectual property effectively, we may be unable to prevent third parties from using our intellectual property, which would impair our competitive advantage.
        We rely on patent protection as well as a combination of trademark, copyright and trade secret protection, and other contractual restrictions to protect our proprietary technologies, all of which provide limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. If we fail to protect our intellectual property, we will be unable to prevent third parties from using our technologies and they will be able to compete more effectively against us.
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        We cannot assure you that any of our currently pending or future patent applications will result in issued patents, and we cannot predict how long it will take for such patents to be issued. Further, we cannot assure you that other parties will not challenge any patents issued to us, or that courts or regulatory agencies will hold our patents to be valid or enforceable. We have in the past been the subject of opposition proceedings relating to our patents. We cannot guarantee you that we will be successful in defending challenges made in connection with our patents and patent applications. Any successful third-party challenge to our patents could result in co-ownership of such patents with a third party or the unenforceability or invalidity of such patents.
        In addition to our patents, we rely on contractual restrictions to protect our proprietary technology. We require our employees and third parties to sign confidentiality agreements and employees to sign agreements assigning to us all intellectual property arising from their work for us. Nevertheless, we cannot guarantee that these measures will be effective in protecting our intellectual property rights.
        We cannot guarantee that the patents issued to us will be broad enough to provide any meaningful protection nor can we assure you that one of our competitors may not develop more effective technologies, designs or methods to test for colorectal cancer or any other common cancer without infringing our intellectual property rights or that one of our competitors might not design around our proprietary technologies.
If we or our partners fail to comply with regulatory requirements, we may be subject to stringent penalties and our business may be materially adversely affected.
        The marketing and sale of stool-based DNA colorectal cancer screening services or products containing our technologies are subject to various state, federal and foreign regulations. We cannot assure you that we or our strategic partners will be able to comply with applicable regulations and regulatory guidelines. If we or our partners fail to comply with any such applicable regulations and guidelines, we could incur significant liability and/or our partners could be forced to cease offering such services or products in certain jurisdictions.
        Moreover, healthcare policy has been a subject of extensive discussion in the executive and legislative branches of the federal and many state governments. Development of the existing commercialization strategy for stool-based DNA colorectal cancer screening has been based on existing healthcare policies. We cannot predict what additional changes, if any, will be proposed or adopted or the effect that such proposals or adoption may have on our business, financial condition and results of operations.
The success of our business and business strategy will be substantially dependent upon the efforts of our senior management team.
        Our success will depend largely on the skills, experience and performance of key members of our senior management team. Effective April 2, 2009, Kevin T. Conroy was appointed as our new President and Chief Executive Officer. Similarly, Effective April 2, 2009, Maneesh Arora was appointed as our new Chief Financial Officer. On August 1, 2009, Dr. Graham Lidgard was hired as Chief Science Officer. Messrs. Conroy, Arora, and Dr. Lidgard are critical to directing and managing our growth and development in the future. Our success will be substantially dependent upon our senior management team's ability to gain proficiency in leading our company, implement or adapt our corporate strategies and initiatives, and develop key professional relationships, including relationships with our key collaborators and business partners. The efforts of each of these persons will be critical to us as we continue to develop our technologies and work towards the commercialization of an FDA-approved product. If we were to lose any of these key employees, we may experience difficulties in competing effectively, developing our technologies and implementing our business strategies.
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If we lose the support of our key scientific collaborators, it may be difficult to establish tests using our technologies as a standard of care for colorectal cancer screening, which may limit our revenue growth and profitability.
        We have established relationships with leading scientists at important research and academic institutions, such as Mayo Clinic, Case Western Reserve University, and The John Hopkins University, that we believe are key to establishing tests using our technologies as a standard of care for colorectal cancer screening. If our collaborators determine that colorectal cancer screening tests using our technologies are not appropriate options for colorectal cancer screening, or superior to available colorectal cancer screening tests, or that alternative technologies would be more effective in the early detection of colorectal cancer, we would encounter significant difficulty establishing tests using our technologies as a standard of care for colorectal cancer screening, which would limit our revenue growth and profitability.
Product liability suits against us could result in expensive and time-consuming litigation, payment of substantial damages and increases in our insurance rates.
        The sale and use of products or services based on our technologies, or activities related to our research and clinical studies, could lead to the filing of product liability claims if someone were to allege that one of our products contained a design or manufacturing defect which resulted in the failure to detect the disease for which it was designed. A product liability claim could result in substantial damages and be costly and time consuming to defend, either of which could materially harm our business or financial condition. We cannot assure you that our product liability insurance would protect our assets from the financial impact of defending a product liability claim. Any product liability claim brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing insurance coverage in the future.
Certain provisions of our charter, by-laws and Delaware law may make it difficult for you to change our management and may also make a takeover difficult.
        Our corporate documents and Delaware law contain provisions that limit the ability of stockholders to change our management and may also enable our management to resist a takeover. These provisions include a staggered board of directors, limitations on persons authorized to call a special meeting of stockholders and advance notice procedures required for stockholders to make nominations of candidates for election as directors or to bring matters before an annual meeting of stockholders. These provisions might discourage, delay or prevent a change of control in our management. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors and cause us to take other corporate actions. In addition, the existence of these provisions, together with Delaware law, might hinder or delay an attempted takeover other than through negotiations with our board of directors.
Our stock price may be volatile.
        The market price of our common stock has fluctuated widely. Consequently, the current market price of our common stock may not be indicative of future market prices and we may be unable to sustain or increase the value of an investment in our common stock.
        Factors that may affect our stock price include the various risks identified in this "Item 1A. Risk Factors".
        Because we are a company with no significant operating revenue, any one of these factors may be deemed material.
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        Sharp drops in the market price of our common stock expose us to securities class-action litigation. Such litigation could result in substantial expenses and a diversion of management's attention and resources, which would seriously harm our business, financial condition, and results of operations.
Item 1B.    Unresolved Staff Comments
        None.
Item 2.    Properties
        As of December 31, 2009, we occupied approximately 12,250 square feet of space in our headquarters located in Madison, Wisconsin under a lease which expires in October 2014. These facilities are adequate to meet our space requirements with respect to the development of an FDA-approved product for colorectal cancer screening.
Item 3.    Legal Proceedings
        From time to time we are a party to various legal proceedings arising in the ordinary course of our business. We are not currently a party to any pending litigation that we believe is likely to have a material adverse effect on our business operations or financial condition.
Item 4.    Reserved
PART II
Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
        Our common stock is currently listed on the NASDAQ Capital Market under the symbol "EXAS." The following table provides, for the periods indicated, the high and low sales prices per share as reported on the NASDAQ Global Market, the market on which our common stock was previously listed until November 27, 2008, and on the NASDAQ Capital Market on and after November 28, 2008.

 	 	High	 	Low	 	
2009	 	 	 	 	 	 	 	
First quarter	 	$	1.80	 	$	0.53	 	
Second quarter	 	 	2.98	 	 	0.96	 	
Third quarter	 	 	3.15	 	 	1.95	 	
Fourth quarter	 	 	3.40	 	 	2.32	 	
2008	 	 	 	 	 	 	 	
First quarter	 	$	4.25	 	$	1.70	 	
Second quarter	 	 	3.00	 	 	1.73	 	
Third quarter	 	 	1.79	 	 	0.70	 	
Fourth quarter	 	 	1.05	 	 	0.22	 	
        As of December 31, 2009, there were 35,523,140 shares of our common stock outstanding held by approximately 86 holders of record.
        We have never paid any cash dividends on our capital stock and do not plan to pay any cash dividends in the foreseeable future.
        On April 24, 2009, we issued 30,000 shares of our common stock to XMS Capital Partners, LLC ("XMS"), for partial consideration for services rendered to us under a financial advisor agreement with XMS. These shares were issued upon the exemption from the registration provisions of the Securities
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Act of 1933 provided for by Section 4(2) thereof for transactions not involving a public offering. Use of this exemption is based on the following facts:
•
Neither we nor any person acting on our behalf solicited any offer to buy or sell securities by any form of general solicitation or advertising. 

•
At the time of the purchase, XMS was an accredited investor, as defined in Rule 501(a) of the Securities Act. 

•
XMS has had access to information regarding us and is knowledgeable about us and our business affairs. 

•
All shares issued to XMS were issued with a restrictive legend and may only be disposed of pursuant to an effective registration or exemption from registration in compliance with federal and state securities laws.
Item 6.    Selected Financial Data
        The selected historical financial data set forth below as of December 31, 2009 and for the year then ended are derived from our financial statements, which have been audited by Grant Thornton LLP, an independent registered public accounting firm and which are included elsewhere in this Form 10-K. The selected historical financial data set forth below as of December 31, 2008 and for the years ended December 31, 2008 and 2007 are derived from our financial statements, which have been audited by Ernst & Young LLP, an independent registered public accounting firm and which are included elsewhere in this Form 10-K. The selected historical balance sheet financial data as of December 31, 2007, 2006 and 2005 and statements of operations data for the years ended December 31, 2006 and 2005 are derived from our audited financial statements not included elsewhere in this Form 10-K.
        The selected historical financial data should be read in conjunction with, and are qualified by reference to "Management's Discussion and Analysis of Financial Condition and Results of
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Operations", our financial statements and notes thereto and the report of independent registered public accountants included elsewhere in this Form 10-K.

 	 	Year Ended December 31,	 	
 	 	2009	 	2008	 	2007	 	2006	 	2005	 	
 	 	(in thousands, except per share data)	 	
Consolidated Statements of Operations Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Product royalty fees	 	$	25	 	$	(2,234	)	$	(1,137	)	$	179	 	$	206	 	
 	 	License fees	 	 	4,733	 	 	1,351	 	 	2,857	 	 	4,363	 	 	3,828	 	
 	 	Product	 	 	—	 	 	16	 	 	78	 	 	208	 	 	216	 	
 	 	 	 	 	 	 	 	 	 	 	 	
	 	 	4,758	 	 	(867	)	 	1,798	 	 	4,750	 	 	4,250	 	
 	Cost of revenue	 	 	20	 	 	1	 	 	49	 	 	809	 	 	566	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Gross profit (loss)	 	 	4,738	 	 	(868	)	 	1,749	 	 	3,941	 	 	3,684	 	
 	Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Research and development(1)	 	 	4,213	 	 	2,034	 	 	4,887	 	 	6,735	 	 	7,956	 	
 	 	General and administrative(1)	 	 	9,549	 	 	6,469	 	 	7,541	 	 	6,910	 	 	5,497	 	
 	 	Sales and marketing(1)	 	 	226	 	 	—	 	 	991	 	 	3,792	 	 	5,239	 	
 	 	Restructuring(1)	 	 	(3	)	 	602	 	 	1,177	 	 	671	 	 	626	 	
 	 	 	 	 	 	 	 	 	 	 	 	
	 	 	13,985	 	 	9,105	 	 	14,596	 	 	18,108	 	 	19,318	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Loss from operations	 	 	(9,247	)	 	(9,973	)	 	(12,847	)	 	(14,167	)	 	(15,634	)	
 	Investment income	 	 	119	 	 	232	 	 	888	 	 	1,252	 	 	1,114	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Net loss	 	$	(9,128	)	$	(9,741	)	$	(11,959	)	$	(12,915	)	$	(14,520	)	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Net loss per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Basic and diluted	 	$	(0.28	)	$	(0.36	)	$	(0.44	)	$	(0.49	)	$	(0.55	)	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Weighted average common shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Basic and diluted	 	 	32,791	 	 	27,212	 	 	26,945	 	 	26,509	 	 	26,270	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash and cash equivalents	 	$	21,924	 	$	4,937	 	$	4,486	 	$	4,831	 	$	11,987	 	
 	Marketable securities	 	 	2,404	 	 	—	 	 	8,101	 	 	16,244	 	 	21,112	 	
 	Total assets	 	 	25,770	 	 	5,898	 	 	14,595	 	 	23,868	 	 	37,845	 	
 	Total liabilities	 	 	19,676	 	 	8,331	 	 	8,307	 	 	8,910	 	 	13,224	 	
 	Stockholders' equity (defecit)	 	 	6,094	 	 	(2,433	)	 	6,288	 	 	14,958	 	 	24,621	 	

(1)
Non-cash stock-based compensation expense included in these amounts is as follows:

 	 	2009	 	2008	 	2007	 	2006	 	2005	 	
Research and development	 	$	319	 	$	89	 	$	541	 	$	653	 	$	113	 	
Sales and marketing	 	 	4	 	 	—	 	 	202	 	 	956	 	 	152	 	
General and administrative	 	 	2,308	 	 	918	 	 	1,889	 	 	1,397	 	 	240	 	
Restructuring	 	 	—	 	 	3	 	 	174	 	 	—	 	 	—	 	
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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations
         The information contained in this section has been derived from our consolidated financial statements and should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Overview
        Exact Sciences Corporation is a molecular diagnostics company focused on the early detection and prevention of colorectal cancer. We have exclusive intellectual property protecting our non-invasive, molecular screening technology for the detection of colorectal cancer. Our primary goal is to become the market leader for a patient-friendly diagnostic screening product for the early detection of colorectal pre-cancer and cancer.
        Our current focus is on the commercial development and seeking U.S. Food and Drug Administration (FDA) clearance and approval of our stool-based DNA, or sDNA, colorectal cancer screening product. We believe obtaining FDA approval is critical to building broad demand and successful commercialization for our sDNA colorectal cancer screening technologies.
        It is widely accepted that colorectal cancer is among the most preventable, yet least prevented cancers. Colorectal cancer typically takes up to 15 years to progress from a pre-cancerous lesion to metastatic cancer and death. However, it is the second-leading cause of cancer death in the United States, killing almost 50,000 people each year.
        Our sDNA, screening test is designed to detect pre-cancerous lesions or polyps, and each of the four stages of colorectal cancer. Pre-cancerous polyps are present in approximately 5 percent of the population over 50 years of age in the United States.
        There is a significant unmet clinical need related to the diagnosis of colorectal cancer. Only 25 percent of those who should be screened for colorectal cancer are screened according to current guidelines. Half of those age 50 years and older have not been screened at all.
        Poor compliance has meant that nearly two-thirds of colon cancer diagnoses are made in the disease's late stages. The five-year survival rates for stages 3 and 4 are 54 percent and 8 percent, respectively.
        Our sDNA screening test can detect pre-cancers and cancers early, and is expected to be a powerful, preventive tool. By detecting pre-cancers and cancers early with the sDNA-based test, affected patients can be referred to colonoscopy, during which the polyp or lesion can be removed. The sDNA screening model has the potential to significantly reduce colorectal cancer deaths. The earlier the pre-cancer or cancer can be detected, the greater the reduction in mortality.
        The competitive landscape is favorable to sDNA-based screening. All of the colorectal cancer detection methods in use today are constrained by some combination of poor sensitivity, poor compliance and cost. Colonoscopy is uncomfortable and expensive. Fifty-five percent of the patients who responded to one recent study said that colonoscopy was very unacceptable or unacceptable. Fecal blood testing suffers from poor sensitivity, including 50 percent detection rates for cancer and 12 percent detection rates for pre-cancers. Blood-based DNA testing also is disadvantaged by its sensitivity. Data from a clinical trial of one blood-based test was released earlier this year. It demonstrated only 50 percent sensitivity across all stages of cancer.
        The competitive advantages of sDNA-based screening provide a massive market opportunity. Assuming a 30-percent test adoption rate and a three-year screening interval, the potential U.S. market for sDNA screening is $1.2 billion. The total available U.S. market is more than $5 billion.
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        The benefits of sDNA-based screening are clear. It detects both pre-cancers and cancers, at target sensitivities greater than 50 percent and 85 percent, respectively. sDNA-based screening is non-invasive and requires no bowel preparation or dietary restriction like other methods. The sample for sDNA-based screening can be collected easily at home and mailed to the appropriate laboratory, where the testing would be conducted. sDNA-based screening also is affordable, particularly relative to colonoscopy.
        Our intellectual property portfolio positions us as the leading player in the sDNA market. Our patent estate broadly protects our position in the market, including the platform technology, methods and biomarkers. In 2009 we expanded our intellectual property estate through our collaboration with the Mayo Clinic. We had previously licensed on an exclusive basis Johns Hopkins' digital PCR technologies for colon cancer detection, as well as Case Western's important Vimentin DNA methylation marker. In 2009, we also licensed the Hologic Inc.'s Invader detection chemistry, which we plan to incorporate into our test.
        We have generated limited operating revenues since inception and, as of December 31, 2009, we had an accumulated deficit of approximately $181.6 million. Losses have historically resulted from costs incurred in conjunction with research, development and clinical study initiatives; salaries and benefits associated with the hiring of personnel; the initiation of marketing programs; and prior to August 31, 2007, the build-out of our sales infrastructure to support the commercialization of sDNA screening. We expect to continue to incur losses for the next several years, and it is possible we may never achieve profitability.
Management
        During 2009 we assembled a new management team with significant experience in molecular oncology diagnostics.
        Kevin T. Conroy was elected a member of our board of directors in March 2009 and appointed our President and Chief Executive Officer in April 2009. Maneesh Arora was appointed as our Senior Vice President and Chief Financial Officer in April 2009. Mr. Conroy and Mr. Arora previously served as Chief Executive Officer and Chief Financial Officer, respectively, at Third Wave Technologies, Inc., a leading molecular diagnostics company which was acquired for $581 million by Hologic, Inc. in June 2008.
        In August 2009, we hired Dr. Graham Lidgard as senior vice president and chief science officer. Dr Lidgard brings more than 3 decades of clinical diagnostic experience to Exact. His experience covers both immunoassay and molecular diagnostics, from pioneering chemiluminescent magnetic particle immunoassay at Ciba Corning, to leading the research and development for the Procleix HIV/HCV blood screening assays, the APTIMA Combo 2 STD assays and the TIGRIS automated nucleic acid Instrument at Gen-Probe.
        In August 2009, we entered into a new employment agreement with Dr. Barry Berger as our senior vice president and chief medical officer. Dr. Berger is Board Certified in Anatomic Clinical and Cytologic Pathology and has a visiting teaching appoint at Brigham and Women's Hospital (Boston, MA) and Harvard Medical School. He joined Exact in 1999 as VP of Laboratory Medicine following a long career as the Director of Pathology and Laboratory Medicine for a million member MCO, Harvard Pilgrim Healthcare (Boston, MA).
Financial Overview
Revenue
        Our revenue is comprised of the amortization of up-front license fees for the licensing of certain patent rights to LabCorp and Genzyme and product royalty fees on tests sold by LabCorp utilizing our
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technology. We expect that product royalty fees for the full year 2010 will be consistent with amounts recorded in 2009. We expect that license fee revenue resulting from the amortization of the up-front license payment from LabCorp and Genzyme in 2010 will be higher than amounts recorded in 2009 as a result of a full year of revenue from the Genzyme transaction and from the expected receipt of holdback amounts from Genzyme during 2010.
Our Cost Structure
        Our general and administrative expenses have consisted primarily of non-research personnel salaries, office expenses, professional fees and, non-cash stock-based compensation. Effective August 31, 2007, we eliminated our sales and marketing functions and therefore, did not incur any sales and marketing expenses in 2008. We incurred sales and marketing expenses of $0.2 million in 2009 as a result of increased sales and marketing activities in support of developing an FDA-approved in vitro diagnostic test for the early detection and prevention of colon cancer.
Critical Accounting Policies and Estimates
        Management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, certain third party royalty obligations, and intangible assets. We base our estimates on historical experience and on various other factors that are believed to be appropriate under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
        While our significant accounting policies are more fully described in note 2 to our consolidated financial statements included in this report, we believe that that the following accounting policies and judgments are most critical to aid in fully understanding and evaluating our reported financial results.
Revenue Recognition.
        License fees.     License fees for the licensing of product rights on initiation of strategic agreements are recorded as deferred revenue upon receipt and recognized as revenue on a straight-line basis over the license period. On June 27, 2007, we entered into an amendment to our exclusive license agreement with LabCorp, which, among other modifications to the terms of the license, extended the exclusive license period of the license with LabCorp from August 2008 through December 2010. Accordingly, we are amortizing the remaining deferred revenue balance at the time of the amendment ($4.7 million) on a straight-line basis over the remaining exclusive license period, which ends in December 2010.
        In connection with our January 2009 strategic transaction with Genzyme, Genzyme agreed to pay us a total of $18.5 million, of which $16.65 million was paid at closing and $1.85 million is subject to a holdback by Genzyme to satisfy certain potential indemnification obligations in exchange for the assignment and licensing of certain intellectual property to Genzyme. Our on-going performance obligations to Genzyme under the Collaboration, License and Purchase Agreement (the "CLP Agreement"), as described below, including our obligation to deliver certain intellectual property improvements to Genzyme during the initial five-year collaboration period, were deemed to be undelivered elements of the CLP Agreement on the date of closing. Accordingly, we deferred the initial
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$16.65 million in cash received at closing and are amortizing that up-front payment on a straight line basis into revenue over the initial five-year collaboration period ending in January 2014. Receipt of any holdback amounts, as defined below, will similarly be deferred and amortized on a straight line basis into revenue over the remaining term of the collaboration at the time of receipt.
        In addition, Genzyme paid $2.00 per share for the 3,000,000 shares of our common stock purchased on January 27, 2009, representing a premium of $0.51 per share above the closing price of our common stock on that date of $1.49 per share. The aggregate premium paid by Genzyme over the closing price of our common stock on the date of the transaction of $1.53 million is deemed to be a part of the total consideration for the CLP Agreement. Accordingly, we deferred the aggregate $1.53 million premium and are amortizing that amount on a straight line basis into revenue over the initial five-year collaboration period ending in January 2014. We recognized approximately $3.4 million in license fee revenue in connection with the amortization of the up-front payments from Genzyme during the year ended December 31, 2009.
        Other revenue.     Revenue from milestone and other performance-based payments is recognized as revenue when the milestone or performance is achieved and collection of the receivable is estimable and probable based on specific agreements and circumstances.
        Stock-Based Compensation.     In accordance with GAAP, all share-based payments to employees, including grants of employee stock options and shares purchased under an employee stock purchase plan (if certain parameters are not met), are recognized in the consolidated financial statements based on their fair values. The following assumptions are used in determining the fair value of stock option grants:
•
Valuation and Recognition —The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The estimated fair value of employee stock options is recognized to expense using the straight-line method over the vesting period. 

•
Expected Term —The Company uses the simplified calculation of expected term, described in the SEC's Staff Accounting Bulletin 107 and 110, as the Company does not currently have sufficient historical exercise data on which to base an estimate of expected term. Using this method, the expected term is determined using the average of the vesting period and the contractual life of the stock options granted. 

•
Expected Volatility —Expected volatility is based on the Company's historical stock volatility data over the expected term of the awards. 

•
Risk-Free Interest Rate —The Company bases the risk-free interest rate used in the Black-Scholes valuation method on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term. 

•
Forfeitures —The Company records stock-based compensation expense only for those awards that are expected to vest. No forfeiture rate was utilized for awards granted prior to 2009 due to the monthly vesting terms of the options granted in that timeframe. Because of the vesting terms, the Company was, in effect, recording stock-based compensation only for those awards that were vesting and expected to vest and a forfeiture rate was not necessary. Awards granted in 2009 that vest annually are all expected to vest and no forfeiture rate was utilized.
Critical Accounting Estimate—Third-Party Royalty Obligation
        Pursuant to the terms of the agreement the Company has with LabCorp, we agreed to reimburse LabCorp $3.5 million for certain third party royalty payments. As of December 31, 2009 we had paid $2.5 million in payments to LabCorp. We will be required to pay at a maximum the remaining $1.0 million balance in January of 2011. Based on anticipated sales volumes of ColoSure, as of
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December 31, 2009, we accrued a total of $988,000 related to the total potential remaining $1.0 million obligation to LabCorp. We recorded charges of $13,000 and $2.25 million during the years ended December 31, 2009 and 2008, respectively, in connection with this third-party royalty obligation. These charges were recorded under the caption "Product royalty fees" in our consolidated statements of operations. Future increases in this obligation, to the extent necessary, will continue to be recorded as charges to the product royalty revenue line item of our consolidated statements of operations.
Recent Accounting Pronouncements
        In June 2009, the Financial Accounting Standards Board ("FASB") issued FASB Accounting Standards Codification 105, "Generally Accepted Accounting Principles." FASB ASC 105 approved the FASB Accounting Standards Codification ("ASC") as the source of authoritative nongovernmental GAAP. All existing accounting standards have been superseded and all other accounting literature not included in the FASB ASC will be considered non-authoritative. FASB ASC 105 is effective for financial statements issued for interim or annual periods ending after September 15, 2009. Accordingly, all references to accounting standards have been conformed to the new ASC hierarchy.
        On April 9, 2009, the FASB issued FASB ASC 825 "Financial Instruments" and FASB ASC 270 "Interim Reporting." FASB ASC 825 requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FASB ASC 825 also amends FASB ASC 270, "Interim Reporting", to require those disclosures in summarized financial information at interim reporting periods. The adoption of this accounting pronouncement did not have a material effect on the determination or reporting of our financial results.
        On May 28, 2009, the FASB issued FASB ASC 855, "Subsequent Events" ("FASB ASC 855"). FASB ASC 855 establishes principles and requirements for subsequent events, in particular: (i) the period after the balance sheet date during which management of a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (ii) the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements; and (iii) the disclosures that an entity shall make about events or transactions that occurred after the balance sheet date. The adoption of this accounting pronouncement did not have a material effect on the determination or reporting of our financial results.
        In September 2009, the EITF issued their final consensus for Revenue Arrangements with Multiple Deliverables , as codified in ASC 605, Revenue Recognition. When vendor specific objective evidence or third party evidence of selling price for deliverables in an arrangement cannot be determined, ASC 605 will require the Company to develop a best estimate of the selling price to separate deliverables and allocate arrangement consideration using the relative selling price method. Additionally, this guidance eliminates the residual method of allocation. The new guidance is effective for fiscal years beginning after June 15, 2010. The adoption of this accounting pronouncement is not expected to have a material effect on the determination or reporting of our financial results.
Results of Operations
Comparison of the years ended December 31, 2009 and 2008
        Revenue.     Total revenue increased to $4.8 million for the year ended December 31, 2009 from $(0.9) million for the year ended December 31, 2008. Total revenue is primarily composed of the amortization of up-front technology license fee payments associated with our amended license agreement with LabCorp and our collaboration, license and purchase agreement with Genzyme. The unamortized LabCorp up-front payment is being amortized on a straight-line basis over the remaining exclusive license period, which ends in December 2010. The unamortized Genzyme up-front payment is being amortized on a straight-line basis over the initial Genzyme collaboration period, which ends in
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January 2014. Revenues also include royalties on LabCorp's sales of PreGen-Plus and ColoSure and sales of Effipure units to LabCorp as well as charges for our third-party royalty reimbursement obligation to LabCorp which are recorded as reductions to revenue under financial accounting guidance. Effective June 1, 2008, LabCorp stopped offering PreGen-Plus and informed us that it had discontinued its use of Effipure.
        The increase in total revenue for the year ended December 31, 2009 when compared to the same period of 2008 was primarily the result of an increase in license fee revenue of $3.4 million resulting from the Genzyme strategic transaction.
        In addition, product royalty fees were approximately $2.3 million higher for the year ended December 31, 2009 when compared to the year ended December 31, 2008 due primarily to charges of $2.25 million recorded during 2008 in the product royalty revenue line item of our consolidated statements of operations in connection with our third-party royalty reimbursement obligation to LabCorp. These charges to product royalty revenue resulted in negative product royalty revenue for the year ended December 31, 2008. We recorded charges of $13,000 during the year ended December 31, 2009 in the product royalty revenue line item of our consolidated statements of operations in connection with our third-party royalty reimbursement obligation to LabCorp.
        Research and development expenses.     Research and development expenses increased to $4.2 million for the year ended December 31, 2009 from $2.0 million for the year ended December 31, 2008. The increase was primarily the result of increased research and development activities in support of our efforts to develop an FDA-approved in vitro diagnostic test for the early detection and prevention of colon cancer. The increase in research and development expenses for the year ended December 31, 2009, as compared to the year ended December 31, 2008, included increases of $1.9 million in licensing costs of which $1.8 million was non-cash stock-based expenses related to common stock warrants issued to the Mayo Clinic Foundation, $0.6 million in personnel related expenses and $0.2 million in research collaboration expenses which were partially offset by a decrease in other research and development expenses of $0.5 million.
        General and administrative expenses.     General and administrative expenses increased to $9.5 million for the year ended December 31, 2009, compared to $6.5 million for the year ended December 31, 2008. This increase was primarily the result of $1.9 million in transaction costs related to the Genzyme strategic transaction in January 2009, including $1.1 million in legal, audit, and investment banking fees as well as approximately $0.8 million in retention bonus payments made to employees pursuant to board-approved retention agreements. The overall increase was also due to an increase in non-cash stock-based compensation expense of $1.4 million in 2009 compared to 2008, as well as an increase of $1.7 million in salary, benefit and other costs due to $0.8 million in severance payments for our former chief executive officer and chief financial officer and increased headcount during the year ended December 31, 2009, as compared to the same period of 2008. These increases in general and administrative expenses for the year ended December 31, 2009 were partially offset by decreases of $1.5 million in legal and professional fees, and $0.5 million other general and administrative costs.
        Sales and marketing expenses.     Sales and marketing expenses increased to $0.2 million for the year ended December 31, 2009 from none in 2008 as a result of increased sales and marketing efforts and activities in support of developing an FDA-approved in vitro diagnostic test for the early detection and prevention of colon cancer.
        Interest income.     Interest income decreased to $0.1 million for the year ended December 31, 2009 from $0.2 million for the year ended December 31, 2008. This decrease was due to less favorable interest rates for cash, cash equivalents and marketable securities balances held during the year ended December 31, 2009 as compared to the same period of 2008.
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Comparison of the years ended December 31, 2008 and 2007
        Revenue.     Total revenue decreased to $(0.9) million for the year ended December 31, 2008 from $1.8 million for the year ended December 31, 2007.
        The decrease in total revenue was primarily the result of a decrease of approximately $1.5 million in license fee revenue resulting from the June 2007 extension of the exclusive period under our license agreement with LabCorp from August 2008 to December 2010. As a result of this extension, the remaining unamortized up-front license fees that LabCorp previously paid to us are being recognized over a longer period of time, resulting in lower non-cash license fee amortization as compared to prior periods.
        A $1.1 million increase in negative product royalty revenue due to our third-party royalty reimbursement obligation to LabCorp also contributed to the decline in revenues.
        Research and development expenses.     Research and development expenses decreased to $2.0 million for the year ended December 31, 2008 from $4.9 million for the year ended December 31, 2007. The decrease was primarily the result of the continuing effect of the cost reduction plans undertaken in 2007 and 2008 described below. The decrease in research and development expenses, included decreases of $1.1 million in licensing costs, $0.7 million in lab-related operating expenses, $0.6 million in personnel-related expenses, and $0.5 million in non-cash stock-based expenses.
        General and administrative expenses.     General and administrative expenses decreased to $6.5 million for the year ended December 31, 2008, compared to $7.5 million for the year ended December 31, 2007. This decrease was due to a decrease in non-cash stock-based compensation expense of $0.9 million as well as a decrease of $0.9 million in salary, benefit and other costs due to lower general and administrative headcount. The decrease in non-cash stock-based compensation was due primarily to the non-recurrence of one-time non-cash stock-based compensation charges of $0.7 million taken in the third quarter of 2007 related to the acceleration and the extension of the expiration date of certain stock options held by Don M. Hardison, our former President and Chief Executive Officer, pursuant to a separation agreement between us and Mr. Hardison in connection with his resignation in August 2007. These decreases in general and administrative expenses for the year ended December 31, 2008 were partially offset by an increase of $0.8 million in professional fees in connection with our strategic review process, our reimbursement efforts with CMS and our regulatory efforts with the FDA.
        Sales and marketing expenses.     Sales and marketing expenses decreased to $0 for the year ended December 31, 2008, compared to $1.0 million for the year ended December 31, 2007 as a result of the elimination of our sales and marketing functions effective August 31, 2007, as described under the heading "2007 Restructuring" below.
        2008 Restructuring.     In July 2008, we took actions to reduce our cost structure to help preserve our cash resources, which we refer to as the 2008 Restructuring. These actions included suspending the clinical validation study of our Version 2 technology, eliminating eight positions, or 67% of our staff, and seeking the re-negotiation of certain fixed commitments. In connection with the 2008 Restructuring and our cost reduction efforts, in December 2008, we entered into a sublease agreement, with QTEROS, Inc. to sublease to QTEROS the majority of the remaining space at our former corporate headquarters in Marlborough, Massachusetts.
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        In connection with the 2008 Restructuring, we recorded restructuring charges of approximately $0.5 million during the three months ended September 30, 2008, including $0.2 million in one-time termination benefits arising under retention and severance agreements with terminated employees and $0.3 million resulting from the write-off of leasehold improvements abandoned by us in connection with the reduction in force. Our decision to eliminate 67% of our workforce as part of the 2008 Restructuring was deemed to be an impairment indicator under financial accounting standards. As a result of performing the impairment evaluations, non-cash asset impairment charges of $0.3 million were recorded to adjust the carrying value of the related leasehold improvements to their net realizable value.
        Amounts remaining in the 2008 Restructuring accrual at December 31, 2009, which are expected to be paid out in cash through July 2010, are recorded under the caption "Accrued expenses" in our consolidated balance sheets. The following table summarizes changes made to the restructuring accrual during the year ended December 31, 2009 relating to the 2008 Restructuring. Amounts included in the table are in thousands.

Type of Liability 	 	Balance,
December 31,
2008	 	Charges	 	Cash
Payments	 	Non-cash
Write-offs	 	Balance,
December 31,
2009	 	
Employee separation costs	 	$	16	 	$	(2	)	$	(14	)	$	—	 	$	—	 	
Facility consolidation costs	 	 	165	 	 	(1	)	 	(91	)	 	—	 	 	73	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Total	 	$	181	 	$	(3	)	$	(105	)	$	—	 	$	73	 	
 	 	 	 	 	 	 	 	 	 	 	 	
        2007 Restructuring.     In July 2007, we initiated cost reduction plans and reduced our workforce and other operating expenses, which we refer to as the 2007 Restructuring, to help preserve our cash resources. As part of the 2007 Restructuring, we eliminated our sales and marketing functions, terminated six employees, and subleased a portion of our leased space at our corporate headquarters. In connection with the 2007 Restructuring, we recorded restructuring charges of approximately $0.8 million during the three months ended September 30, 2007, related to one-time termination benefits arising under retention and severance agreements with terminated employees, including $0.6 million in severance and related benefit costs which were paid in cash through May 2008, and $0.2 million in non-cash stock-based compensation charges associated with extending the period of exercise for vested stock option awards for terminated employees.
        In addition, during the fourth quarter of 2007, we entered into a sublease agreement, which we refer to as the 2007 Sublease Agreement with INTRINSIX Corporation, or INTRISIX, to sublease to the INTRINSIX approximately 11,834 square feet of rentable area in our corporate headquarters. Amounts remaining in the 2007 Restructuring accrual at December 31, 2009, which are expected to be paid out through July, 2010, are recorded under the caption "Accrued expenses" in our condensed consolidated balance sheets. The following table summarizes the 2007 Restructuring activities during the year ended December 31, 2009. Amounts included in the table are in thousands.

Type of Liability 	 	Balance,
December 31,
2008	 	Charges	 	Cash
Payments	 	Non-cash
Write-offs	 	Balance,
December 31,
2009	 	
Employee separation costs	 	$	—	 	$	—	 	$	—	 	$	—	 	$	—	 	
Facility consolidation costs	 	 	161	 	 	—	 	 	(94	)	 	—	 	 	67	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Total	 	$	161	 	$	—	 	$	(94	)	$	—	 	$	67	 	
 	 	 	 	 	 	 	 	 	 	 	 	
        The charges outlined in the table above exclude $0.2 million in non-cash stock-based compensation expense recorded in connection with the stock option modifications discussed above.
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        Interest income.     Interest income decreased to $0.2 million for the year ended December 31, 2008 from $0.9 million for the year ended December 31, 2007. This decrease was due to lower average cash, cash equivalents and marketable securities balances held during the year ended December 31, 2008 as compared to the same period of 2007, as well as less favorable interest rates on investments held during the year ended December 31, 2008 as compared to the same period of 2007.
Liquidity and Capital Resources
        We have financed our operations since inception primarily through private and public offerings of our equity securities, cash received from LabCorp in connection with our license agreement, and cash received in January 2009 from Genzyme in connection with the Genzyme strategic transaction. As of December 31, 2009, we had approximately $21.9 million in unrestricted cash and cash equivalents and $0.5 million in restricted cash, which has been pledged as collateral for an outstanding letter of credit.
        All of our investments in marketable securities are comprised of fixed income investments and all are deemed available-for-sale. The objectives of this portfolio are to provide liquidity and safety of principal while striving to achieve the highest rate of return, consistent with these two objectives. Our investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. As of December 31, 2009 we had approximately $2.4 million in marketable securities.
        Net cash used in operating activities was $12.6 million, $7.9 million, and $8.8 million for the years ended December 31, 2009, 2008 and 2007, respectively. The principal use of cash in operating activities for each of the years ended December 31, 2009, 2008 and 2007 was to fund our net loss. The increase in net cash used in operating activities for the year ended December 31, 2009 as compared to the year ended December 31, 2008 was due to increased research and development activities and to $2.5 million paid to LabCorp related to our third party royalty obligation. The decrease for the year ended December 31, 2008 as compared to the year ended December 31, 2007, was primarily due to decreases in research and development and sales and marketing spending as a result of multiple restructuring and cost reduction actions taken during 2008 and 2007. Cash flows from operations can vary significantly due to various factors, including changes in our operations, prepaid expenses, accounts payable and accrued expenses.
        Net cash used in investing activities was $2.9 million for the year ended December 31, 2009. Net cash provided by investing activities was $8.2 million and $8.0 million for the years ended December 31, 2008 and 2007, respectively. The increase in cash used in investing activities for the year ended December 31, 2009 when compared to the same periods in 2008 and 2007 was the result of purchases of marketable securities being greater than maturities of marketable securities during the year. Excluding the impact of purchases and maturities of marketable securities, net cash used in investing activities was $0.5 million for the year ended December 31, 2009, net cash provided by investing activities was $0.2 million for the year ended December 31, 2008, and net cash used in investing activities was $0.1 million for the year ended December 31, 2007. Purchases of property and equipment of approximately $0.5 million during the year ended December 31, 2009 were significantly higher than purchases of property and equipment for the years ended December 31, 2008 and 2007 as a result of increased research and development activities combined with the cost reduction efforts undertaken in 2008 and 2007. Net cash provided by investing activities for the year ended December 31, 2008 was primarily the result of cash receipts from sales of fully depreciated equipment in connection with our 2008 sublease agreement.
        Net cash provided by financing activities was $32.5 million, $0.1 million and $0.4 million for the years ended December 31, 2009, 2008 and 2007, respectively. The increase in cash provided by financing activities for the year ended December 31, 2009 was primarily related to proceeds of
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$22.7 million from the Genzyme strategic transaction, $8.1 million from the sale of common stock, $1.0 million from long term debt, and $0.7 million from exercise of common stock options.
        We expect that cash and cash equivalents on hand at December 31, 2009, will be sufficient to fund our current operations for at least the next twelve months, based on current operating plans. However, since we have no current sources of material ongoing revenue, we will need to raise additional capital to fully fund our current strategic plan, the centerpiece of which is the commercialization of our sDNA technology through completion of the development of an FDA-approved in vitro diagnostic test for sDNA colorectal pre-cancer and cancer screening. If we are unable to obtain sufficient additional funds to enable us to fund our operations through the completion of such plan, our results of operations and financial condition would be materially adversely affected and we may be required to delay the implementation of our plan and otherwise scale back our operations. Even if we successfully raise sufficient funds to complete our plan, we cannot assure you that our business will ever generate sufficient cash flow from operations to become profitable.
        The table below reflects our estimated fixed obligations and commitments as of December 31, 2009:

 	 	 	 	Payments Due by Period	 	
Description 	 	Total	 	Less Than
One Year	 	1 - 3 Years	 	3 - 5 Years	 	More Than
5 Years	 	
 	 	(in Thousands)	 	
Long-term debt obligations(2)	 	$	1,157	 	$	—	 	$	—	 	$	270	 	$	887	 	
Obligations under license and collaborative agreements(1)	 	 	3,871	 	 	542	 	 	1,537	 	 	196	 	 	1,596	 	
Operating lease obligations	 	 	1,938	 	 	866	 	 	831	 	 	241	 	 	—	 	
Severance obligations	 	 	10	 	 	10	 	 	—	 	 	—	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	6,976	 	$	1,418	 	$	2,368	 	$	707	 	$	2,483	 	

(1)
We have entered into several license and collaborative agreements with Johns Hopkins University, the Mayo Foundation, Genzyme, and Hologic, Inc. See Note 10 to our consolidated financial statements included elsewhere in this report for further information.

(2)
Includes expected interest payments related to long-term debt obligations.
        Commitments under license agreements generally expire concurrent with the expiration of the intellectual property licensed from the third party. Operating leases reflect remaining obligations associated with leased facilities in Marlborough, Massachusetts and our headquarters in Madison, Wisconsin.
        Severance obligations represent remaining commitments to personnel terminated in connection with the change in management team in March of 2009.
Net Operating Loss Carryforwards
        As of December 31, 2009, we had federal and state net operating loss and research tax carryforwards of approximately $142.3 million and $3.4 million, respectively. The net operating loss and tax credit carryforwards will expire beginning 2015 through 2029, if not utilized. The Internal Revenue Code and applicable state laws impose substantial restrictions on a corporation's utilization of net operating loss and tax credit carryforwards if an ownership change is deemed to have occurred.
        A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before we are able to realize their benefit, or that future deductibility is uncertain. In general, companies that have a history of operating losses are faced with a difficult burden of proof on
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their ability to generate sufficient future income in order to realize the benefit of the deferred tax assets. We have recorded a valuation against our deferred tax assets based on our history of losses. The deferred tax assets are still available for us to use in the future to offset taxable income, which would result in the recognition of tax benefit and a reduction to our effective tax rate.
Off-Balance Sheet Arrangements
        As of December 31, 2009, we had no off-balance sheet arrangements.
Item 7A.    Quantitative and Qualitative Disclosures about Market Risk
        Our exposure to market risk is principally confined to our cash, cash equivalents and marketable securities. We invest our cash, cash equivalents and marketable securities in securities of the U.S. governments and its agencies and in investment-grade, highly liquid investments consisting of commercial paper, bank certificates of deposit and corporate bonds, all of which are currently invested in the U.S. and, as of December 31, 2009, were classified as available-for-sale. We held no investments at December 31, 2008. We place our cash equivalents and marketable securities with high-quality financial institutions, limit the amount of credit exposure to any one institution and have established investment guidelines relative to diversification and maturities designed to maintain safety and liquidity. We have no investments denominated in foreign country currencies and therefore are not presently subject to foreign exchange risk.
        Based on a hypothetical ten percent adverse movement in interest rates, the potential losses in future earnings, fair value of risk-sensitive financial instruments, and cash flows are immaterial, although the actual effects may differ materially from the hypothetical analysis.
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Item 8.    Financial Statements and Supplementary Data
EXACT SCIENCES CORPORATION
Index to Financial Statements

 	 	Page	 	
Reports of Independent Registered Public Accounting Firms	 	 	28	 	
Consolidated Balance Sheets as of December 31, 2009 and 2008	 	 	
31	 	
Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007	 	 	
32	 	
Consolidated Statements of Stockholders' (Deficit) Equity for the Years Ended December 31, 2009, 2008 and 2007	 	 	
33	 	
Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007	 	 	
34	 	
Notes to Consolidated Financial Statements	 	 	
35	 	
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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Exact Sciences Corporation
        We have audited the accompanying consolidated balance sheet of Exact Sciences Corporation (a Delaware Corporation) (the Company) as of December 31, 2009, and the related consolidated statements of operations, stockholders' (deficit) equity, and cash flows for the year ended December 31, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2009, and the results of their operations and their cash flows for the year ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.
        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 12, 2010 expressed an unqualified opinion thereon.
/s/ Grant Thornton LLP
Madison, Wisconsin
March 12, 2010
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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Exact Sciences Corporation
        We have audited Exact Sciences Corporation's (a Delaware Corporation) (the Company) internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.
        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
        In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by COSO.
        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of December 31, 2009 and for the year ended December 31, 2009 and our report dated March 12, 2010 expressed an unqualified opinion on those consolidated financial statements.
/s/ Grant Thornton LLP
Madison, Wisconsin
March 12, 2010
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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of Exact Sciences Corporation:
        We have audited the accompanying consolidated balance sheets of Exact Sciences Corporation as of December 31, 2008, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for each of the two years in the period ended December 31, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Exact Sciences Corporation at December 31, 2008 and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
March 31, 2009
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EXACT SCIENCES CORPORATION

Consolidated Balance Sheets

(Amounts in thousands, except share data)

 	 	December 31,
2009	 	December 31,
2008	 	
 ASSETS	 	 	 	 	 	 	 	
Current Assets:	 	 	 	 	 	 	 	
 	 Cash and cash equivalents	 	$	21,924	 	$	4,937	 	
 	Marketable securities	 	 	2,404	 	 	—	 	
 	 Prepaid expenses and other current assets	 	 	484	 	 	190	 	
 	Short term restricted cash	 	 	500	 	 	—	 	
 	 	 	 	 	 	
 	 	 Total current assets	 	 	25,312	 	 	5,127	 	
Property and Equipment, at cost:	 	 	 	 	 	 	 	
 	 Laboratory equipment	 	 	492	 	 	174	 	
 	Office and computer equipment	 	 	90	 	 	13	 	
 	 Leasehold improvements	 	 	12	 	 	—	 	
 	Furniture and fixtures	 	 	20	 	 	—	 	
 	 	 	 	 	 	
	 	 	614	 	 	187	 	
 	Less—Accumulated depreciation and amortization	 	 	(156	)	 	(111	)	
 	 	 	 	 	 	
	 	 	458	 	 	76	 	
Patent costs, net of accumulated amortization of $2,820 at December 31, 2008	 	 	—	 	 	95	 	
 Long term restricted cash	 	 	—	 	 	600	 	
 	 	 	 	 	 	
	 	$	25,770	 	$	5,898	 	
 	 	 	 	 	 	
 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY	 	 	 	 	 	 	 	
Current Liabilities:	 	 	 	 	 	 	 	
 	 Accounts payable	 	$	155	 	$	683	 	
 	Accrued expenses	 	 	1,385	 	 	1,498	 	
 	 Third party royalty obligation, current portion	 	 	—	 	 	1,500	 	
 	Deferred license fees, current portion	 	 	4,986	 	 	1,350	 	
 	 	 	 	 	 	
 	 	 Total current liabilities	 	 	6,526	 	 	5,031	 	
Third party royalty obligation, less current portion	 	 	988	 	 	1,950	 	
 Long term debt	 	 	1,000	 	 	—	 	
Long term accrued interest	 	 	1	 	 	—	 	
 Deferred license fees, less current portion	 	 	11,161	 	 	1,350	 	
Commitments and contingencies	 	 	 	 	 	 	 	
 Stockholders' (Deficit) Equity:	 	 	 	 	 	 	 	
 	Preferred stock, $0.01 par value
Authorized—5,000,000 shares
Issued and outstanding—none at December 31, 2009 and 2008	 	 	—	 	 	—	 	
 	 Common stock, $0.01 par value
Authorized—100,000,000 shares	 	 	 	 	 	 	 	
 	 	 Issued and outstanding—35,523,140 and 27,522,931 shares at December 31, 2009 and 2008, respectively	 	 	355	 	 	275	 	
 	Additional paid-in capital	 	 	187,333	 	 	169,854	 	
 	 Treasury stock, at cost,	 	 	 	 	 	 	 	
 	 	 Outstanding—none and 85,550 shares at December 31, 2009 and 2008, respectively	 	 	—	 	 	(97	)	
 	Other comprehensive loss	 	 	(1	)	 	—	 	
 	 Accumulated deficit	 	 	(181,593	)	 	(172,465	)	
 	 	 	 	 	 	
 	 	Total stockholders' (deficit) equity	 	 	6,094	 	 	(2,433	)	
 	 	 	 	 	 	
	 	$	25,770	 	$	5,898	 	
 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
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EXACT SCIENCES CORPORATION

Consolidated Statements of Operations

(Amounts in thousands, except per share data)

 	 	Year Ended December 31,	 	
 	 	2009	 	2008	 	2007	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	
 	Product royalty fees	 	$	25	 	$	(2,234	)	$	(1,137	)	
 	License fees	 	 	4,733	 	 	1,351	 	 	2,857	 	
 	Product	 	 	—	 	 	16	 	 	78	 	
 	 	 	 	 	 	 	 	
	 	 	4,758	 	 	(867	)	 	1,798	 	
Cost of revenue:	 	 	 	 	 	 	 	 	 	 	
 	Product royalty fees	 	 	20	 	 	1	 	 	4	 	
 	Product	 	 	—	 	 	—	 	 	45	 	
 	 	 	 	 	 	 	 	
	 	 	20	 	 	1	 	 	49	 	
 	 	 	 	 	 	 	 	
Gross profit (loss)	 	 	4,738	 	 	(868	)	 	1,749	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	
 	Research and development	 	 	4,213	 	 	2,034	 	 	4,887	 	
 	General and administrative	 	 	9,549	 	 	6,469	 	 	7,541	 	
 	Sales and marketing	 	 	226	 	 	—	 	 	991	 	
 	Restructuring	 	 	(3	)	 	602	 	 	1,177	 	
 	 	 	 	 	 	 	 	
	 	 	13,985	 	 	9,105	 	 	14,596	 	
 	 	 	 	 	 	 	 	
 	 	Loss from operations	 	 	(9,247	)	 	(9,973	)	 	(12,847	)	
Investment income	 	 	
119	 	 	
232	 	 	
888	 	
 	 	 	 	 	 	 	 	
 	 	Net loss	 	$	(9,128	)	$	(9,741	)	$	(11,959	)	
 	 	 	 	 	 	 	 	
Net loss per share—basic and diluted	 	$	(0.28	)	$	(0.36	)	$	(0.44	)	
 	 	 	 	 	 	 	 	
Weighted average common shares outstanding—basic and diluted	 	 	32,791	 	 	27,212	 	 	26,945	 	
 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
32

EXACT SCIENCES CORPORATION
Consolidated Statements of Stockholders' (Deficit) Equity
(Amounts in thousands, except share data)

 	 	Common Stock	 	 	 	Treasury Stock	 	 	 	 	 	 	 	 	 	
 			 	 			 	 	 	 	 	Total
Stockholders'
(Deficit)
Equity	 	Other
Comprehensive
(Loss)
Income	 	
 	 	Number of
Shares	 	$0.01
Par Value	 	Additional
Paid In
Capital	 	Number of
Shares	 	Value	 	Other
Comprehensive
Income (Loss)	 	Accumulated
Deficit					 	
Balance, January 1, 2007	 	 	26,863,363	 	$	269	 	$	165,545	 	 	85,550	 	$	(97	)	$	6	 	$	(150,765	)	$	14,958	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of shares under stock purchase plan	 	 	16,987	 	 	—	 	 	27	 	 	—	 	 	—	 	 	—	 	 	—	 	 	27	 	$	—	 	
Issuance of restricted common stock to collaborators in lieu of cash	 	 	156,675	 	 	2	 	 	464	 	 	—	 	 	—	 	 	—	 	 	—	 	 	466	 	 	 	 	
Exercise of common stock options	 	 	88,237	 	 	1	 	 	258	 	 	—	 	 	—	 	 	—	 	 	—	 	 	259	 	 	—	 	
Issuance of common stock to fund the Company's 2006 401(k) match	 	 	34,030	 	 	—	 	 	102	 	 	—	 	 	—	 	 	—	 	 	—	 	 	102	 	 	—	 	
Compensation expense related to issuance of stock options and restricted stock awards	 	 	66,249	 	 	1	 	 	1,565	 	 	—	 	 	—	 	 	—	 	 	—	 	 	1,566	 	 	—	 	
Compensation expense related to stock option modifications (Note 9)	 	 	—	 	 	—	 	 	852	 	 	—	 	 	—	 	 	—	 	 	—	 	 	852	 	 	 	 	
Net loss	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(11,959	)	 	(11,959	)	 	(11,959	)	
Other comprehensive income	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	17	 	 	—	 	 	17	 	 	17	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive loss	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	(11,942	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2007	 	 	27,225,541	 	$	273	 	$	168,813	 	 	85,550	 	$	(97	)	$	23	 	$	(162,724	)	$	6,288	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Exercise of common stock options	 	 	5,979	 	 	—	 	 	7	 	 	—	 	 	—	 	 	—	 	 	—	 	 	7	 	 	—	 	
Issuance of common stock to fund the Company's 2007 401(k) match	 	 	27,660	 	 	—	 	 	59	 	 	—	 	 	—	 	 	—	 	 	—	 	 	59	 	 	—	 	
Compensation expense related to issuance of stock options and restricted stock awards	 	 	263,751	 	 	2	 	 	972	 	 	—	 	 	—	 	 	—	 	 	—	 	 	974	 	 	—	 	
Compensation expense related to stock option modifications (Note 9)	 	 	—	 	 	—	 	 	3	 	 	—	 	 	—	 	 	—	 	 	—	 	 	3	 	 	—	 	
Net loss	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(9,741	)	 	(9,741	)	 	(9,741	)	
Other comprehensive income	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(23	)	 	—	 	 	(23	)	 	(23	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive loss	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	(9,764	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2008	 	 	27,522,931	 	$	275	 	$	169,854	 	 	85,550	 	$	(97	)	$	—	 	$	(172,465	)	$	(2,433	)	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of common stock related to the Genzyme Transaction (Note 3)	 	 	3,000,000	 	 	30	 	 	4,440	 	 	—	 	 	—	 	 	—	 	 	—	 	 	4,470	 	 	—	 	
Issuance of common stock in private placement	 	 	4,315,792	 	 	43	 	 	8,019	 	 	—	 	 	—	 	 	—	 	 	—	 	 	8,062	 	 	—	 	
Exercise of common stock options	 	 	380,355	 	 	4	 	 	728	 	 	—	 	 	—	 	 	—	 	 	—	 	 	732	 	 	—	 	
Issuance of common stock to fund the Company's 2008 401(k) match	 	 	24,430	 	 	—	 	 	32	 	 	—	 	 	—	 	 	—	 	 	—	 	 	32	 	 	—	 	
Compensation expense related to issuance of stock options and restricted stock awards	 	 	365,182	 	 	4	 	 	1,422	 	 	—	 	 	—	 	 	—	 	 	—	 	 	1,426	 	 	—	 	
Compensation expense related to stock option modifications (Note 9)	 	 	—	 	 	—	 	 	1,155	 	 	—	 	 	—	 	 	—	 	 	—	 	 	1,155	 	 	—	 	
Expense related to warrants (Note 4)	 	 	—	 	 	—	 	 	1,779	 	 	—	 	 	—	 	 	—	 	 	—	 	 	1,779	 	 	—	 	
Treasury share retirement	 	 	(85,550	)	 	(1	)	 	(96	)	 	(85,550	)	 	97	 	 	—	 	 	—	 	 	—	 	 	—	 	
Net loss	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(9,128	)	 	(9,128	)	 	(9,128	)	
Unrealized loss on available-for-sale investments	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(1	)	 	—	 	 	(1	)	 	(1	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive loss	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	(9,129	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2009	 	 	35,523,140	 	$	355	 	$	187,333	 	 	—	 	$	—	 	$	(1	)	$	(181,593	)	$	6,094	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
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EXACT SCIENCES CORPORATION

Consolidated Statements of Cash Flows

(Amounts in thousands)

 	 	Year Ended December 31,	 	
 	 	2009	 	2008	 	2007	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	 	 	
 	Net loss	 	$	(9,128	)	$	(9,741	)	$	(11,959	)	
 	 	Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	 	 	 	 	 	 	 	
 	 	 	Depreciation and write-offs of fixed assets	 	 	80	 	 	189	 	 	228	 	
 	 	 	Restructuring	 	 	—	 	 	66	 	 	85	 	
 	 	 	Amortization and write-offs of patents	 	 	95	 	 	437	 	 	385	 	
 	 	 	Stock-based compensation	 	 	2,631	 	 	1,010	 	 	2,806	 	
 	 	 	Warrant licensing expense	 	 	1,779	 	 	—	 	 	—	 	
 	 	Changes in assets and liabilities:	 	 	 	 	 	 	 	 	 	 	
 	 	 	Amortization of deferred license fees	 	 	(4,733	)	 	(1,351	)	 	(2,857	)	
 	 	 	Prepaid expenses and other current assets	 	 	(294	)	 	85	 	 	111	 	
 	 	 	Accounts payable	 	 	(528	)	 	438	 	 	87	 	
 	 	 	Accrued expenses	 	 	(81	)	 	(1,287	)	 	1,147	 	
 	 	 	Accrued interest	 	 	1	 	 	—	 	 	—	 	
 	 	 	Third party royalty obligation	 	 	(2,462	)	 	2,250	 	 	1,200	 	
 	 	 	 	 	 	 	 	
 	 	 	 	Net cash used in operating activities	 	 	(12,640	)	 	(7,904	)	 	(8,767	)	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	 	 	
 	Purchases of marketable securities	 	 	(18,879	)	 	(3,458	)	 	(20,686	)	
 	Maturities of marketable securities	 	 	16,474	 	 	11,536	 	 	28,846	 	
 	Purchases of property and equipment	 	 	(462	)	 	(4	)	 	(78	)	
 	Proceeds from sales of fixed assets	 	 	—	 	 	274	 	 	8	 	
 	Increase in patent costs and other assets	 	 	—	 	 	(100	)	 	(54	)	
 	 	 	 	 	 	 	 	
 	 	 	 	Net cash provided by (used in) investing activities	 	 	(2,867	)	 	8,248	 	 	8,036	 	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	 	 	
 	Proceeds from Genzyme Collaboration, License and Purchase Agreement	 	 	16,650	 	 	—	 	 	—	 	
 	Proceeds from sale of common stock to Genzyme	 	 	6,000	 	 	—	 	 	—	 	
 	Proceeds from sale of common stock, net of issuance costs	 	 	8,062	 	 	—	 	 	—	 	
 	Proceeds from exercise of common stock options and stock purchase plan	 	 	732	 	 	7	 	 	286	 	
 	Decrease in restricted cash	 	 	100	 	 	100	 	 	100	 	
 	Payment for repurchase of stock options	 	 	(50	)	 	—	 	 	—	 	
 	Proceeds from long term debt	 	 	1,000	 	 	—	 	 	—	 	
 	 	 	 	 	 	 	 	
 	 	 	 	Net cash provided by financing activities	 	 	32,494	 	 	107	 	 	386	 	
 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	 	 	16,987	 	 	451	 	 	(345	)	
Cash and cash equivalents, beginning of period	 	 	4,937	 	 	4,486	 	 	4,831	 	
 	 	 	 	 	 	 	 	
Cash and cash equivalents, end of period	 	$	21,924	 	$	4,937	 	$	4,486	 	
 	 	 	 	 	 	 	 	
Supplemental disclosure of non-cash investing and financing activities:	 	 	 	 	 	 	 	 	 	 	
 	Unrealized loss on available-for-sale investments	 	$	(1	)	$	—	 	$	—	 	
 	 	 	 	 	 	 	 	
Retirement of 85,550 treasury shares of common stock	 	$	97	 	$	—	 	$	—	 	
 	 	 	 	 	 	 	 	
 	Issuance of 24,430, 27,660, and 34,030 shares of common stock to fund the Company's 401(k) matching contribution for 2008, 2007, and 2006, respectively	 	$	32	 	$	59	 	$	102	 	
 	 	 	 	 	 	 	 	
 	Issuance of 156,675 shares of restricted common stock to collaborators in lieu of cash payments	 	$	—	 	$	—	 	$	466	 	
 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of these consolidated financial statements.
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EXACT SCIENCES CORPORATION

Notes to Consolidated Financial Statements
(1) ORGANIZATION
        Exact Sciences Corporation ("Exact" or the "Company") was incorporated in February 1995. Exact is a molecular diagnostics company focused on the early detection and prevention of colorectal cancer. The Company's non-invasive stool-based DNA (sDNA) screening technology includes proprietary and patented methods that isolate and analyze human DNA present in stool to screen for the presence of colorectal pre-cancer and cancer.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
        The accompanying consolidated financial statements include the accounts of the Company's wholly-owned subsidiary, Exact Sciences Securities Corporation, a Massachusetts securities corporation. All significant intercompany transactions and balances have been eliminated in consolidation. On September 16, 2009 the Company dissolved Exact Sciences Securities Corporation and all intercompany transactions and balances were permanently eliminated.
Use of Estimates
        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
        The Company considers all highly-liquid investments with maturities of 90 days or less at the time of acquisition to be cash equivalents. Cash equivalents primarily consist of money market funds.
Restricted Cash
        At December 31, 2009 and 2008, approximately $0.5 million and $0.6 million, respectively, of the Company's cash has been pledged as collateral for an outstanding letter of credit in connection with the lease for the Company's facility in Marlborough, Massachusetts.
Marketable Securities
        Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Marketable equity securities and debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive income. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method. Such amortization is included in investment income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification
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Notes to Consolidated Financial Statements (Continued)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

method. Interest and dividends on securities classified as available-for-sale are included in investment income.
        At December 31, 2009, the Company's investments were comprised of fixed income investments and all were deemed available-for-sale. At December 31, 2008, the Company held no marketable securities. The objectives of the Company's investment strategy are to provide liquidity and safety of principal while striving to achieve the highest rate of return consistent with these two objectives. The Company's investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. Realized gains for the year ended December 31, 2009 were $6,380. There were no realized gains or losses on the sale of available-for-sale securities during the year ended December 31, 2008. Unrealized losses on investments recorded in other comprehensive income for the year ended December 31, 2009 were $543. There were no unrealized gains or losses during the year ended December 31, 2008.
Property and Equipment
        Property and equipment are stated at cost and depreciated using the straight-line method over the assets' estimated useful lives. Maintenance and repairs are expensed when incurred; additions and improvements are capitalized. The estimated useful lives of fixed assets are as follows:

Asset Classification 	 	Estimated
Useful Life	
Laboratory equipment	 	3 - 5 years	
Office and computer equipment	 	3 years	
Leasehold improvements	 	Lesser of the remaining
lease term or useful life	
Furniture and fixtures	 	3 years	
Patent Costs
        Patent costs, which have historically consisted of related legal fees, are capitalized as incurred, only if the Company determines that there is some probable future economic benefit derived from the transaction. The capitalized patents are amortized beginning when patents are approved over an estimated useful life of five years. Capitalized patent costs are expensed upon disapproval, upon a decision by the Company to no longer pursue the patent or when the related intellectual property is either sold or deemed to be no longer of value to the Company. The Company determined that all patent costs incurred during the twelve months ended December 31, 2009 should be expensed and not capitalized as the future economic benefit derived from the transactions was indeterminate.
        As more fully described in Note 3 below, in connection with the Genzyme strategic transaction with Genzyme on January 27, 2009, the Company wrote off the remaining unamortized capitalized patent costs at that time. There are no capitalized patent costs recorded in the Company's financial statements as of December 31, 2009.
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Notes to Consolidated Financial Statements (Continued)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
        The following table summarizes activity with respect to the Company's capitalized patents for the years ended December 31, 2009, 2008 and 2007. Amounts included in the table are in thousands.

Balance, January 1, 2007	 	$	763	 	
 	Patent costs capitalized	 	 	54	 	
 	Amortization of patents	 	 	(148	)	
 	Write-offs of patents	 	 	(237	)	
 	 	 	 	
Balance, December 31, 2007	 	 	
432	 	
 	Patent costs capitalized	 	 	100	 	
 	Amortization of patents	 	 	(72	)	
 	Write-offs of patents	 	 	(365	)	
 	 	 	 	
Balance, December 31, 2008	 	 	
95	 	
 	Patent costs capitalized	 	 	—	 	
 	Amortization of patents	 	 	—	 	
 	Write-offs of patents	 	 	(95	)	
 	 	 	 	
Balance, December 31, 2009	 	
$	
—	 	
 	 	 	 	
Net Loss Per Share
        Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period. Basic and diluted net loss per share is the same because all outstanding common stock equivalents have been excluded, as they are anti-dilutive as a result of the Company's losses.
        The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses for each period:

 	 	2009	 	2008	 	2007	 	
Shares issuable upon exercise of stock options	 	 	5,952,019	 	 	3,703,899	 	 	3,996,688	 	
Shares issuable upon exercise of outstanding warrants	 	 	1,250,000	 	 	—	 	 	1,000,000	 	
 	 	 	 	 	 	 	 	
	 	 	7,202,019	 	 	3,703,899	 	 	4,996,688	 	
 	 	 	 	 	 	 	 	
Accounting for Stock-Based Compensation
        In accordance with GAAP, the Company requires all share-based payments to employees, including grants of employee stock options and shares purchased under an employee stock purchase plan (if certain parameters are not met), to be recognized in the financial statements based on their fair values.
Revenue Recognition
        License fees.     License fees for the licensing of product rights are recorded as deferred revenue upon receipt of cash and recognized as revenue on a straight-line basis over the license period. On
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
June 27, 2007, the Company entered into an amendment to its exclusive license agreement with LabCorp (the "Second Amendment") that, among other modifications to the terms of the license, extended the exclusive license period from August 2008 to December 2010, subject to carve-outs for certain named organizations. Accordingly, the Company amortizes the remaining deferred revenue balance resulting from its license agreement with LabCorp at the time of the Second Amendment ($4.7 million) on a straight-line basis over the remaining exclusive license period, which ends in December 2010.
        As more fully described in Note 3 below, in connection with our transaction with Genzyme, Genzyme agreed to pay us a total of $18.5 million, of which $16.65 million was paid on January 27, 2009 and $1.85 million is subject to a holdback by Genzyme to satisfy certain potential indemnification obligations in exchange for the assignment and licensing of certain intellectual property to Genzyme. The Company's on-going performance obligations to Genzyme under the Collaboration, License and Purchase Agreement (the "CLP Agreement"), as described below, including its obligation to deliver through licenses certain intellectual property improvements to Genzyme during the initial five-year collaboration period, were deemed to be undelivered elements of the CLP Agreement on the date of closing. Accordingly, the Company deferred the initial $16.65 million in cash received at closing and will amortize that up-front payment on a straight line basis into revenue over the initial five-year collaboration period ending in January 2014. Receipt of any holdback amounts will similarly be deferred and amortized on a straight line basis into revenue over the remaining term of the collaboration at the time of receipt.
        In addition, Genzyme paid $2.00 per share for the 3,000,000 shares of common stock purchased from the Company on January 27, 2009, representing a premium of $0.51 per share above the closing price of the Company's common stock on that date of $1.49 per share. The aggregate premium paid by Genzyme over the closing price of the Company's common stock on the date of the transaction of $1.53 million is deemed to be a part of the total consideration for the CLP Agreement. Accordingly, the Company deferred the aggregate $1.53 million premium and will amortize that amount on a straight line basis into revenue over the initial five-year collaboration period ending in January 2014. The Company recognized approximately $3.4 million in license fee revenue in connection with the amortization of the up-front payments from Genzyme during the year ended December 31, 2009.
        Product royalty fees.     The Company has licensed certain of its technologies, including improvements to such technologies, on an exclusive basis through December 2010 to LabCorp. LabCorp developed and commercially offered PreGen-Plus, a non-invasive stool-based DNA colorectal cancer screening service for the average-risk population based on the Company's Version 1 technology, from August 2003 through June 2008. In June 2008, LabCorp stopped offering PreGen-Plus. On July 14, 2008, LabCorp began to commercially offer ColoSure, its next generation non-invasive, stool-based DNA testing service for the detection of colorectal cancer in the average-risk population, which is based on certain of the Company's intellectual property. The Company is entitled to the same royalty and milestone structure on any sales of ColoSure as it was entitled to on sales of PreGen-Plus.
        Prior to the effective date of the Second Amendment, the Company's product royalty fees were based on a specified contractual percentage of LabCorp's cash receipts from performing PreGen-Plus tests. Accordingly, the Company recorded product royalty fees based on this specified percentage of LabCorp's cash receipts, as reported to the Company each month by LabCorp. Subsequent to the effective date of the Second Amendment, the Company's product royalty fees are based on a specified
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Notes to Consolidated Financial Statements (Continued)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

contractual percentage of LabCorp's net revenues from sales of PreGen-Plus through June 1, 2008, when LabCorp stopped offering PreGen-Plus, and from sales of ColoSure from and after July 2008. Accordingly, subsequent to the effective date of the Second Amendment, the Company records product royalty fees based on the specified contractual percentage of LabCorp's net revenues from its sales of such colorectal cancer screening tests, as reported to the Company each month by LabCorp. The current royalty rate is subject to an increase in the event that LabCorp achieves a specified significant threshold of annual net revenues from the sales of such colorectal cancer screening tests.
        Additionally, pursuant to the Second Amendment, the Company is potentially obligated to reimburse LabCorp for certain third-party royalty payments, as described in Note 5 below. To the extent the Company incurs liabilities in connection with this provision of the Second Amendment, the accretion of such liabilities will be recorded as a reduction in the product royalty fee line item in the Company's condensed consolidated statements of operations.
        Product revenue —For the years ended December 31, 2008 and December 31, 2007, product revenue from the sale of certain components of the Company's Effipure™ technology to LabCorp was recognized upon transfer of the components provided that title passed, the price was fixed or determinable and collection of the receivable was probable. LabCorp has indicated that Effipure is not used as a component in LabCorp's ColoSure offering and the Company therefore does not expect to record product revenue in connection with Effipure sales in future periods.
        Other revenue —Revenue from milestone and other performance-based payments will be recognized as revenue when the milestone or performance is achieved and collection of the receivable is estimable and probable based on specific agreements and circumstances.
Advertising Costs
        The Company expenses the costs of media advertising at the time the advertising takes place. The Company expensed approximately $9,800, none, and $0.1 million of media advertising during the years ended December 31, 2009, 2008 and 2007, respectively.
Comprehensive Loss
        Comprehensive loss consists of net loss and the change in unrealized gains and losses on marketable securities. Comprehensive loss for the years ended December 31, 2009, 2008, and 2007 was as follows:

 	 	December 31,	 	
(In Thousands) 	 	2009	 	2008	 	2007	 	
Net loss	 	$	(9,128	)	$	(9,741	)	$	(11,959	)	
Unrealized gain (loss) on marketable securities	 	$	(1	)	$	(23	)	$	17	 	
 	 	 	 	 	 	 	 	
Comprehensive loss	 	$	(9,129	)	$	(9,764	)	$	(11,942	)	
 	 	 	 	 	 	 	 	
Fair Value Measurements
        In September 2006, the FASB issued authoritative guidance which clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. This guidance was adopted in 2009 for non-financial assets and liabilities. Under the standard, fair value measurements are separately disclosed by level within the fair value hierarchy. The fair value hierarchy established and prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
        The three levels of the fair value hierarchy established are as follows:

Level 1	 	Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis	

Level 2	
 	
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.	

Level 3	
 	
Unobservable inputs that reflect the Company's assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.	
        The following table presents the Company's fair value measurements as of December 31, 2009 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Amounts in the table are in thousands.

 	 	 	 	Fair Value Measurement at December 31, 2009 Using:	 	
Description 	 	Fair Value at
December 31, 2009	 	Quoted Prices in Active
Markets for Identical Assets
(Level 1)	 	Significant Other
Observable Inputs
(Level 2)	 	Significant Unobservable
Inputs
(Level 3)	 	
Cash equivalents	 	$	21,924	 	$	21,924	 	$	—	 	$	—	 	
Available-for-sale marketable securities	 	 	2,404	 	 	650	 	 	1,754	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	
Total	 	$	24,328	 	$	22,574	 	$	1,754	 	$	—	 	

														
 	 	 	 	Fair Value Measurement at December 31, 2008 Using:	 	
Description 	 	Fair Value at
December 31, 2008	 	Quoted Prices in Active
Markets for Identical Assets
(Level 1)	 	Significant Other
Observable Inputs
(Level 2)	 	Significant Unobservable
Inputs
(Level 3)	 	
Cash equivalents	 	$	4,937	 	$	4,937	 	$	—	 	$	—	 	
 	 	 	 	 	 	 	 	 	 	
Total	 	$	4,937	 	$	4,937	 	$	—	 	$	—	 	
 	 	 	 	 	 	 	 	 	 	
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Notes to Consolidated Financial Statements (Continued)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk
        In accordance with GAAP, the Company requires disclosure of any significant off-balance-sheet risk and credit risk concentration. The Company has no significant off-balance-sheet risk, such as foreign exchange contracts or other hedging arrangements. Financial instruments that subject the Company to credit risk consist of cash, cash equivalents and marketable securities. The Company has cash and cash equivalents deposited in financial institutions in which the balances exceed the federal government agency (FDIC) insured limit of $250,000. The Company has not experienced any losses in such accounts and management believes it is not exposed to any significant credit risk.
Recent Accounting Pronouncements
        In June 2009, the Financial Accounting Standards Board ("FASB") issued FASB Accounting Standards Codification 105, "Generally Accepted Accounting Principles." FASB ASC 105 approved the FASB Accounting Standards Codification ("ASC") as the source of authoritative non-governmental GAAP. All existing accounting standards have been superseded and all other accounting literature not included in the FASB ASC will be considered non-authoritative. FASB ASC 105 is effective for financial statements issued for interim or annual periods ending after September 15, 2009. Accordingly, all references to accounting standards have been conformed to the new ASC hierarchy.
        On April 9, 2009, the FASB issued FASB ASC 825 "Financial Instruments" and FASB ASC 270 "Interim Reporting." FASB ASC 825 requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FASB ASC 825 also amends FASB ASC 270, "Interim Reporting", to require those disclosures in summarized financial information at interim reporting periods. This guidance was adopted on January 1, 2009 for non-financial assets and liabilities. The adoption of this accounting pronouncement did not have a material effect on the determination or reporting of our financial results.
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
        On May 28, 2009, the FASB issued FASB ASC 855, "Subsequent Events" ("FASB ASC 855"). FASB ASC 855 establishes principles and requirements for subsequent events, in particular: (i) the period after the balance sheet date during which management of a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (ii) the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements; and (iii) the disclosures that an entity shall make about events or transactions that occurred after the balance sheet date. The adoption of this accounting pronouncement did not have a material effect on the determination or reporting of our financial results.
        In September 2009, the EITF issued their final consensus for Revenue Arrangements with Multiple Deliverables , as codified in ASC 605, Revenue Recognition. When vendor specific objective evidence or third party evidence of selling price for deliverables in an arrangement cannot be determined, ASC 605 will require the Company to develop a best estimate of the selling price to separate deliverables and allocate arrangement consideration using the relative selling price method. Additionally, this guidance eliminates the residual method of allocation. The new guidance is effective for fiscal years beginning after June 15, 2010. The adoption of this accounting pronouncement is not expected to have a material effect on the determination or reporting of our financial results.
Reclassifications
        Certain prior year amounts have been reclassified to conform to the current year presentation in the footnotes.
(3) GENZYME STRATEGIC TRANSACTION
Transaction summary
        On January 27, 2009, the Company entered into a Collaboration, License and Purchase Agreement (the "CLP Agreement") with Genzyme Corporation ("Genzyme"). Pursuant to the CLP Agreement, the Company (i) assigned to Genzyme all of its intellectual property applicable to the fields of prenatal and reproductive health (the "Transferred Intellectual Property"), (ii) granted Genzyme an irrevocable, perpetual, exclusive, worldwide, fully-paid, royalty-free license to use and sublicense all of the Company's remaining intellectual property (the "Retained Intellectual Property") in the fields of prenatal and reproductive health (the "Genzyme Core Field"), and (iii) granted Genzyme an irrevocable, perpetual, non-exclusive, worldwide, fully-paid, royalty-free license to use and sublicense the Retained Intellectual Property in all fields other than the Genzyme Core Field and other than colorectal cancer detection and stool-based disease detection (the "Company Field"). Following the Genzyme Transaction, Exact retains rights in its intellectual property to pursue only the fields of colorectal cancer detection and stool-based detection of any disease or condition. As part of the transaction on January 27, 2009, the Company entered into an Assignment, Sublicense, Consent and Eighth Amendment (the "JHU Amendment") to License Agreement with Genzyme and The Johns Hopkins University ("JHU") (collectively, with the licenses and assignment described herein, the "Genzyme Strategic Transaction"), whereby the Company assigned its rights under the license agreement between the Company and JHU dated March 25, 2003, as amended (the "JHU Agreement") to Genzyme. Pursuant to the JHU Amendment, Genzyme sublicensed to the Company the intellectual property subject to the JHU Agreement for colorectal cancer detection and stool-based
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Notes to Consolidated Financial Statements (Continued)
(3) GENZYME STRATEGIC TRANSACTION (Continued)

disease detection, including the BEAMing technology for the detection of colorectal cancer. Under the JHU Amendment, the Company and Genzyme will share in the royalty and annual payment obligations to JHU.
        Also as part of the Genzyme Strategic Transaction, the Company entered into an Amended and Restated License Agreement (the "Restated License") with Genzyme on January 27, 2009, which amends and restates the License Agreement between the parties dated March 25, 1999, effective as of January 27, 2009. Pursuant to the Restated License, Genzyme granted to the Company a non-exclusive license to use technology related to the use of certain genes, specifically APC and p53, and methodologies related thereto. In exchange for the license, which continues until the expiration of the last to expire licensed patent, the Company has agreed to pay Genzyme royalties based on net revenues received from performing tests that incorporate the licensed technology and sales of reagents and diagnostic test kits that incorporate the licensed technology, as well as certain minimum royalties, milestone payments and maintenance fees.
        Pursuant to the Genzyme Strategic Transaction, Genzyme agreed to pay an aggregate of $18.5 million to the Company, of which $16.65 million was paid at closing and $1.85 million (the "Holdback Amount") is subject to a holdback by Genzyme to satisfy certain potential indemnification obligations of the Company. Subject to the terms and conditions of the CLP Agreement, one-half of the Holdback Amount will be released to the Company in January 2010 and one-half will be released in July 2010. Genzyme also agreed to pay a double-digit royalty to the Company on income received by Genzyme as a result of any licenses or sublicenses to third parties of the Transferred Intellectual Property or the Retained Intellectual Property in any field other than the Genzyme Core Field or the Company Field.
        The Company's on-going performance obligations to Genzyme under the CLP, including the obligation to deliver certain intellectual property improvements to Genzyme during the initial five year collaboration period, were deemed to be undelivered elements of the CLP Agreement on the date of closing. Accordingly, the Company deferred the initial $16.65 million in cash received at closing and is amortizing that up-front payment on a straight line basis into the License Fee Revenue line item in its statements of operations over the initial five year collaboration period. Receipt of any Holdback Amounts will similarly be deferred and amortized on a straight line basis into the License Fee Revenue line item in the Company's statements of operations over the remaining term of the collaboration at the time of receipt.
        In addition, the Company entered into a Common Stock Subscription Agreement with Genzyme (the "Purchase Agreement") on January 27, 2009, which provided for the private issuance and sale to Genzyme of 3,000,000 shares (the "Shares") of the Company's common stock, $0.01 par value per share ("Common Stock"), at a per share price of $2.00, for an aggregate purchase price of $6.0 million. The price paid by Genzyme for the Shares represented a premium of $0.51 per share above the closing price of the Company's common stock on that date of $1.49 per share. The aggregate premium paid by Genzyme over the closing price of the Company's common stock on the date of the transaction of $1.53 million is included as a part of the total consideration for the CLP. Accordingly, the Company deferred the aggregate $1.53 million premium and is amortizing that amount on a straight line basis into the License Fee Revenue line item in the Company's statements of operations over the initial five-year collaboration period. The Company recognized $3.4 million in license fee revenue in
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Notes to Consolidated Financial Statements (Continued)
(3) GENZYME STRATEGIC TRANSACTION (Continued)

connection with the amortization of the up-front payments from Genzyme during the year ended December 31, 2009.
(4) MAYO LICENSING AGREEMENT
Overview
        On June 11, 2009, the Company entered into a license agreement (the "License Agreement") with MAYO Foundation for Medical Education and Research ("MAYO"). Under the License Agreement, MAYO granted the Company an exclusive, worldwide license within the field (the "Field") of stool or blood based cancer diagnostics and screening (excluding a specified proteomic target) (the "Proteomic Target") with regard to certain MAYO patents, and a non-exclusive worldwide license within the Field with regard to certain MAYO know-how. The License Agreement grants the Company an option to include the Proteomic Target within the Field upon written notice by the Company to MAYO during the first year of the term. The licensed patents cover advances in sample processing, analytical testing and data analysis associated with non-invasive, stool-based DNA screening for colorectal cancer. Under the License Agreement, the Company assumes the obligation and expense of prosecuting and maintaining the licensed patents and is obligated to make commercially reasonable efforts to bring products covered by the licenses to market. Pursuant to the License Agreement, the Company granted MAYO two common stock purchase warrants with an exercise price of $1.90 per share covering 1,000,000 and 250,000 shares of common stock, respectively. The Company will also make payments to MAYO for up-front fees, fees once certain milestones are reached by the Company, and other payments as outlined in the agreement. In addition to the license to intellectual property owned by MAYO, the Company will receive product development and research and development efforts from MAYO personnel. The Company determined that the payments made for intellectual property should not be capitalized as the future economic benefit derived from the transactions is uncertain. The Company is also liable to make royalty payments to MAYO on potential future net sales of any products developed from the licensed technology.
Warrants
        The warrants granted to MAYO were valued based on a Black-Scholes pricing model at the date of the grant. The warrants were granted with an exercise price of $1.90 per share of common stock. The grant to purchase 1,000,000 shares was immediately exercisable and the grant to purchase 250,000 shares vests and becomes exercisable over a four year period. The total value of the warrants was calculated to be $2.1 million and a non-cash charge of $1.7 million was recognized as research and development expense in the second quarter of 2009 and the remaining $0.4 million non-cash charge will be recognized straight-line over the four year vesting period. The assumptions for the Black-Scholes pricing model are represented in the table below.
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(4) MAYO LICENSING AGREEMENT (Continued)
        Assumptions for Black-Scholes Pricing Model:

Exercise Price	 	$	1.90	 	
Stock Price	 	$	1.99	 	
Volatility	 	 	86.30	%	
Life of warrant (in years)	 	 	10	 	
Treasury rate	 	 	3.88	%	
Yield	 	 	0	%	
Fair value per warrant	 	$	1.72	 	
Royalty Payments
        The Company will make royalty payments to MAYO based on a percentage of net sales of products developed from the licensed technology starting in the third year of the agreement. Minimum royalty payments will be $10,000 in 2012 and $25,000 per year thereafter.
Other Payments
        Other payments under the MAYO agreement include an upfront payment of $80,000, a milestone payment of $250,000 on the commencement of patient enrollment in a human cancer screening clinical, and a $500,000 payment upon FDA approval of the Company's cancer screening test. The upfront payment of $80,000 was made in the third quarter of 2009 and expensed to research and development in the second quarter of 2009. It is uncertain as to when the FDA trial will begin and when the FDA will approve the Company's cancer screening test, therefore, the $250,000 and $500,000 milestone payments have not been recorded as a liability. The Company will periodically evaluate the status of the FDA trial. In addition, the Company will pay a minimum of $371,142 to MAYO over the next 5 months for research and development efforts. The Company had $162,809 accrued at December 31, 2009 for services performed in 2009.
(5) LABCORP STRATEGIC ALLIANCE AGREEMENT
        On June 26, 2002, the Company entered into a license agreement (subsequently amended on January 19, 2004, June 27, 2007, August 31, 2007, and March 17, 2008) with LabCorp for an exclusive, strategic alliance between the parties to commercialize LabCorp's proprietary, non-invasive DNA-based technologies for the early detection of colorectal cancer in the average-risk population. Pursuant to the amended agreement, the Company exclusively licensed to LabCorp all U.S. and Canadian patents and patent applications owned by the Company relating to its stool-based colorectal cancer screening technology initially through August 2008, followed by a non-exclusive license for the life of the patents. In return for the license, LabCorp agreed to pay the Company certain up-front, milestone and performance-based payments, and a per-test royalty fee. LabCorp made an initial payment of $15 million upon the signing of the agreement, and a second payment of $15 million was made in August 2003 upon the commercial launch of PreGen-Plus. In addition to certain royalty fees, under the amended license agreement, the Company may also be eligible for certain milestone payments from LabCorp as described below.
        In conjunction with the strategic alliance, in June 2002, the Company issued to LabCorp a warrant (the "LabCorp Warrant") to purchase 1,000,000 shares of its common stock, exercisable over a
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(5) LABCORP STRATEGIC ALLIANCE AGREEMENT (Continued)

three-year period at an exercise price of $16.09 per share. The Company assigned a value to the warrant of $6.6 million under the Black-Scholes option-pricing model which has been recorded as a reduction in the initial up-front deferred license fee of $15 million. The Company is amortizing the first two payments totaling $30 million, net of the $6.6 million value of the warrant, as license fee revenue over the exclusive license period described below.
        At the time of issuance, the LabCorp Warrant had an expiration date of June 26, 2005. On June 24, 2005, the Company entered into an amendment to the LabCorp Warrant to extend the expiration date of the LabCorp Warrant to August 13, 2008, which was the expiration date of the exclusive period at the time of the extension. All other terms of the LabCorp Warrant were unaffected. The Company assigned a value to the LabCorp Warrant extension of $0.6 million using the Black-Scholes option pricing model. The Company recorded the cost of the LabCorp Warrant extension as a one-time, non-cash reduction in license fee revenue of $0.6 million in the quarter ended June 30, 2005. The LabCorp Warrant expired unexercised on August 13, 2008.
        Second Amendment to LabCorp License Agreement     On June 27, 2007, the Company entered into the Second Amendment with LabCorp. The Second Amendment modified LabCorp's exclusive rights to the Company's DNA technology for colorectal cancer screening to permit the Company to license its technology to select third-party organizations and commercial service laboratories, subject to LabCorp's preferential pricing terms, and to extend LabCorp's modified exclusive period under the Second Amendment until December 31, 2010. Additionally, the Second Amendment clarifies the rights and obligations with respect to the Company's second-generation stool-based DNA screening technology for colorectal cancer screening ("Version 2").
        The Second Amendment also revised the milestone and royalty obligations of LabCorp. The milestones were revised to eliminate milestone payments aggregating $15 million based upon stool-based colorectal cancer screening being included as standard of care and certain policy-level reimbursement approvals. As revised under the Second Amendment, the Company may be eligible for up to an aggregate of $40 million in milestone payments, all of which relate to the achievement of significant sales thresholds. Royalties due to the Company under the Second Amendment are equal to 15% of LabCorp's net revenues from tests performed using the Company's DNA technology licensed under the Second Amendment, and could increase to 17% if LabCorp achieves a significant annual ColoSure net revenue threshold. LabCorp also retains certain pricing protections over third-party organizations and commercial service laboratories to whom the Company may license its DNA technology for colorectal cancer screening.
        The Second Amendment also eliminated an approximate $3.0 million contingent liability of the Company to LabCorp resulting from a historical third-party royalty obligation of LabCorp.
        Pursuant to the terms of the Second Amendment, the Company became obligated to reimburse LabCorp for certain third-party royalty payments if LabCorp's third-party royalty rate is greater than a specified royalty rate during the measuring period. The Company's obligation to pay LabCorp pursuant to this provision of the Second Amendment is based on LabCorp's sales volumes of colorectal cancer screening tests using the Company's technology during three separate measurement periods. A significant increase in such sales volumes during any measurement period, as compared to historical PreGen-Plus sales volumes, could reduce the Company's potential obligation during any measurement period, while test volumes consistent with historical PreGen-Plus sales levels could result in aggregate
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Notes to Consolidated Financial Statements (Continued)
(5) LABCORP STRATEGIC ALLIANCE AGREEMENT (Continued)

payments to LabCorp totaling up to $3.5 million during the measurement periods. Until LabCorp's sales of colorectal cancer screening tests using the Company's technology increase to a level that would reduce this potential maximum obligation, if ever, the Company will record its estimated obligation under this provision of the Second Amendment as a reduction in the product royalty fee line item in its consolidated statements of operations. Based on anticipated sales volumes of ColoSure, as of December 31, 2009, the Company had accrued a total of $988,000 related to the total potential remaining $1.0 million obligation to LabCorp. The Company recorded charges of $13,000 and $2.25 million during the years ended December 31, 2009 and 2008, respectively, in connection with this third-party royalty obligation. These charges were recorded under the caption "Product royalty fees" in the Company's consolidated statements of operations. Future increases in this obligation, to the extent necessary, will continue to be recorded as charges to the product royalty revenue line item of the Company's consolidated statements of operations. During 2009, the Company made payments of $2.5 million to LabCorp.
        In addition, as a result of extending the exclusive license period from August 2008 to December 2010, the amortization of the remaining deferred revenue as of the date of the Second Amendment ($4.7 million) related to up-front technology license fees received from LabCorp is amortized on a straight line basis over the extended exclusive license period beginning in the quarter ended September 30, 2007. Additionally, pursuant to the Second Amendment, the Company could be obligated to reimburse LabCorp for certain costs related to Effipure, up to a maximum of $0.3 million during the term of the exclusive period. The Company recorded a liability of $45,000 pursuant to this provision of the Second Amendment during the year ended December 31, 2007 under the caption "Cost of product revenue" in its consolidated statements of operations.
        The Second Amendment also provided LabCorp with termination rights if stool-based colorectal cancer screening is not accepted as standard of care in the near term (i.e. included in screening guidelines of the American Cancer Society or the American Gastroenterological Association), if the Company's Version 2 technology is not commercially launched in the near term, or if the Company's Version 2 technology does not attain certain sensitivity and specificity thresholds during technology validation.
        Third Amendment to LabCorp License Agreement     On August 31, 2007, the Company entered into a Third Amendment (the "Third Amendment") to its exclusive license agreement with LabCorp that, among other things, added a potential $2.5 million milestone payment for which the Company may be eligible. The milestone obligation is based upon policy-level reimbursement approval from Medicare at a specified minimum reimbursement rate, inclusion of stool-based DNA screening in clinical practice guidelines and the achievement of certain increases in sales levels of PreGen-Plus over a defined measuring period. In addition, the Third Amendment provided that LabCorp will assume sole responsibility, at its expense, for all commercial activities related to LabCorp's stool-based DNA testing service. In accordance with the foregoing, LabCorp also agreed to offer at-will employment to certain former personnel of the Company.
        Fourth Amendment to LabCorp License Agreement     On March 17, 2008, the Company entered into the fourth amendment (the "Fourth Amendment") to its exclusive license agreement with LabCorp. Among other things, the Fourth Amendment further clarified certain license rights of the parties, amended LabCorp's termination rights relating to the failure to launch the Company's Version 2 technology and restricted certain of the Company's termination rights in the event the FDA limits
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Notes to Consolidated Financial Statements (Continued)
(5) LABCORP STRATEGIC ALLIANCE AGREEMENT (Continued)

LabCorp's ability to market products that incorporate technology licensed to LabCorp under the amended license agreement. In addition, the Fourth Amendment eliminated certain of the Company's termination rights for a specified period of time during which LabCorp is not marketing any stool-based DNA test for colorectal cancer as a result of preparing for a commercial launch of a stool-based DNA test for colorectal cancer based on the Company's Version 2 technology.
(6) RESTRUCTURING
        On July 16, 2008, the Company implemented certain cost reduction initiatives, including the suspension of the clinical validation study for its Version 2 technology and the elimination of eight positions, or 67% of the Company's workforce (the "2008 Restructuring"), in connection with the Company's revised corporate strategy at the time of reducing costs to better preserve existing cash.
        In connection with the 2008 Restructuring, the Company recorded restructuring charges of approximately $0.5 million during the three months ended September 30, 2008, including $0.2 million in one-time termination benefits arising under retention and severance agreements with terminated employees and $0.3 million resulting from the write-off of leasehold improvements abandoned by the Company in connection with the reduction in force. The Company's decision to eliminate 67% of its workforce was deemed to be an impairment indicator. As a result of performing the impairment evaluations, non-cash asset impairment charges of $0.3 million were recorded to adjust the carrying value of the related leasehold improvements to their net realizable value.
        In addition, in connection with the 2008 Restructuring, the Company accelerated the vesting of 15,523 shares under terminated employees' previously unvested stock options, with a weighted average exercise price of $2.65 per share, and extended the expiration date of all the terminated employees' outstanding options as of their date of termination, covering an aggregate of 181,828 shares with a weighted average exercise price of $4.50 per share, through August 1, 2009. Due to the nature of the transaction, the Company recorded one-time non-cash stock-based compensation charges of approximately $3,000 in the "Restructuring" line item of the Company's condensed consolidated statements of operations during the quarter ended September 30, 2008.
        During the fourth quarter of 2008, the Company entered into a sublease agreement (the "2008 Sublease Agreement") with QTEROS, Inc. ("QTEROS") to sublease to QTEROS approximately 25,537 square feet of rentable area in the Company's corporate headquarters. The term of the 2008 Sublease Agreement, which commenced on December 9, 2008, is 20 months with a base rent of $625,657 per year. Pursuant to the 2008 Sublease Agreement, QTEROS has no rights to renew or extend the 2008 Sublease Agreement. Under the terms of the 2008 Sublease Agreement, QTEROS is required to pay its pro rata share of any increases in building operating expenses and real estate taxes and to provide a security deposit in the form of an irrevocable, standby letter of credit from a national commercial bank reasonably acceptable to the Company in the amount of approximately $52,000 naming the Company as beneficiary. The 2008 Sublease Agreement provides for the Company's employees to continue to occupy approximately 1,100 square feet in the premises subleased to QTEROS.
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Notes to Consolidated Financial Statements (Continued)
(6) RESTRUCTURING (Continued)
        In connection with the 2008 Sublease Agreement, the Company also recorded the following restructuring charges during the fourth quarter of 2008 (included opposite the caption "Facility consolidation costs" in the table below): approximately $0.1 million in future cash payments related to the difference between the Company's committed lease payments and the estimated sublease rental income under the 2008 Sublease Agreement; approximately $0.1 million in one-time real estate transaction and laboratory decommissioning fees; and approximately $0.1 million of non-cash charges related to the write-off of leasehold improvements abandoned by the Company in connection with the 2008 Sublease Agreement. These charges were offset by cash receipts of approximately $0.3 million received in connection with sales of fully depreciated fixed assets upon commencement of the 2008 Sublease Agreement. During the quarter ended March 31, 2009, certain of the cost estimates related to the 2008 Restructuring were adjusted, resulting in a credit of approximately $3,000 to the restructuring line item in the Company's consolidated statements of operations.
        Amounts remaining in the 2008 Restructuring accrual at December 31, 2009, which are expected to be paid out in cash through July 2010, are recorded under the caption "Accrued expenses" in the Company's consolidated balance sheets. The following table summarizes changes made to the restructuring accrual during the twelve months ended December 31, 2009 relating to the 2008 Restructuring. Amounts included in the table are in thousands.

Type of Liability 	 	Balance,
December 31,
2008	 	Charges	 	Cash
Payments	 	Non-cash
Write-offs	 	Balance,
December 31,
2009	 	
Employee separation costs	 	$	16	 	$	(2	)	$	(14	)	$	—	 	$	—	 	
Facility consolidation costs	 	 	165	 	 	(1	)	 	(91	)	 	—	 	 	73	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Total	 	$	181	 	$	(3	)	$	(105	)	$	—	 	$	73	 	
 	 	 	 	 	 	 	 	 	 	 	 	
        The following table summarizes changes made to the restructuring accrual during the twelve months ended December 31, 2008 relating to the 2008 Restructuring. Amounts included in the table are in thousands.

Type of Liability 	 	Balance,
December 31,
2007	 	Charges	 	Cash
Payments	 	Non-cash
Write-offs	 	Balance,
December 31,
2008	 	
Employee separation costs	 	$	—	 	$	266	 	$	(247	)	$	(3	)	$	16	 	
Facility consolidation costs	 	 	—	 	 	343	 	 	(112	)	 	(66)	(1)	 	165	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Total	 	$	—	 	$	609	 	$	(359	)	$	(69	)	$	181	 	

(1)
Amount is net of approximately $274,000 in cash received from sales of fully depreciated assets in connection with the Company's exit of certain space in its Marlborough, Massachusetts facility.
2007 Restructuring
        During the third quarter of 2007, in connection with the Third Amendment to the LabCorp agreement, the Company notified six employees of their termination from the Company (the "2007 Restructuring"). The 2007 Restructuring was principally designed to eliminate the Company's sales and marketing functions to reduce costs and help preserve the Company's cash resources. In connection
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Notes to Consolidated Financial Statements (Continued)
(6) RESTRUCTURING (Continued)

with the 2007 Restructuring, the Company recorded restructuring charges of approximately $0.8 million during the three months ended September 30, 2007, primarily related to one-time termination benefits arising under retention and severance agreements with terminated employees.
        Amounts remaining in the 2007 Restructuring accrual at December 31, 2009, which are expected to be paid out through July 2010, are recorded under the caption "Accrued expenses" in the Company's condensed consolidated balance sheets. The following table summarizes the 2007 Restructuring activities during the twelve months ended December 31, 2009. Amounts included in the table are in thousands.

Type of Liability 	 	Balance,
December 31,
2008	 	Charges	 	Cash
Payments	 	Non-cash
Write-offs	 	Balance,
December 31,
2009	 	
Employee separation costs	 	$	—	 	$	—	 	$	—	 	$	—	 	$	—	 	
Facility consolidation costs	 	 	161	 	 	—	 	 	(94	)	 	—	 	 	67	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Total	 	$	161	 	$	—	 	$	(94	)	$	—	 	$	67	 	
 	 	 	 	 	 	 	 	 	 	 	 	
        The following table summarizes the 2007 Restructuring activities during the twelve months ended December 31, 2008. Amounts included in the table are in thousands.

Type of Liability 	 	Balance,
December 31,
2007	 	Charges	 	Cash
Payments	 	Non-cash
Write-offs	 	Balance,
December 31,
2008	 	
Employee separation costs	 	$	224	 	$	(7	)	$	(217	)	$	—	 	$	—	 	
Facility consolidation costs	 	 	268	 	 	—	 	 	(107	)	 	—	 	 	161	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Total	 	$	492	 	$	(7	)	$	(324	)	$	—	 	$	161	 	
 	 	 	 	 	 	 	 	 	 	 	 	
(7) EMPLOYMENT ARRANGEMENTS
        On April 18, 2008, the Company entered into amended and restated employee retention agreements (the "Agreements") with certain employees, including Jeffrey R. Luber, the Company's President and Chief Executive Officer, and Charles R. Carelli, Jr., the Company's Senior Vice President, Chief Financial Officer, Treasurer and Secretary. The Agreements superseded and replaced the prior employee retention agreements entered into between the Company and Messrs. Luber and Carelli on October 23, 2006.
        Jeffrey R. Luber agreed to resign as the Company's President and Chief Executive Officer and as a director on the Company's Board of Directors, in each case effective April 2, 2009. In addition, Charles R. Carelli, Jr. agreed to resign as our Chief Financial Officer, effective April 2, 2009. Messrs. Conroy and Arora were employed by the Company as Vice Presidents until April 2, 2009, when Messrs. Luber and Carelli's departures became effective. In connection with their departure from the Company, Messrs. Luber and Carelli were entitled to receive severance benefits pursuant to their previously disclosed retention agreements, including salary continuation of $472,500 and $287,500, which is equal to eighteen months and fifteen months, respectively, of their base salaries as of the date of termination. On March 31, 2009, the Company entered into release agreements with Messrs. Luber and Carelli that provided, in exchange for a general release in favor of the Company, for the accelerated payment of the salary continuation obligations on March 31, 2009. In addition, the release
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Notes to Consolidated Financial Statements (Continued)
(7) EMPLOYMENT ARRANGEMENTS (Continued)

agreements also provided for the repurchase by the Company of options held by Messrs. Luber and Carelli for an aggregate of 895,000 shares of common stock, in lieu of accelerated vesting and an extension of the option exercise period arising from the prior retention agreements. The Company paid Messrs. Luber and Carelli approximately $39,000 and $11,000, respectively, to repurchase Mr. Luber's options to purchase 620,000 shares and Mr. Carelli's options to purchase 275,000 shares. The purchase price of the outstanding options represented a 75 percent discount from the estimated fair value of the vested options as of March 31, 2009. Messrs. Luber and Carelli retained the balance of their existing options, which will remain exercisable for two years following, and will be subject to nine months acceleration of vesting upon, the termination of their respective employment with the Company.
        On March 18, 2009, the Company's Board of Directors appointed Kevin T. Conroy as President and Chief Executive Officer of the Company, effective April 2, 2009. Also on March 18, 2009, based on the recommendation of the Corporate Governance and Nominating Committee, the Board of Directors elected Mr. Conroy to the Board. In connection with his appointment, Mr. Conroy entered into an employment agreement with the Company on March 18, 2009 (the "Conroy Agreement"). Under the terms of the Conroy Agreement, Mr. Conroy will serve as President and Chief Executive Officer of the Company, receive a base salary of $340,000 and is eligible to earn up to 50% of his base salary in annual bonuses, with the exact amount of any such bonus to be determined by the Compensation Committee. Pursuant to the Conroy Agreement, Mr. Conroy was granted options to purchase 2.5 million shares of the common stock of the Company, par value $0.01 per share (the "Common Stock"), at a price equal to the closing price of the Common Stock on the NASDAQ Capital Market on March 18, 2009. Twenty-five percent (25%) of the shares underlying the stock options will become exercisable on the one-year anniversary of the date of grant, with the remainder vesting quarterly over the subsequent three years.
        On March 18, 2009, the Company's Board of Directors appointed Maneesh Arora as Senior Vice President and Chief Financial Officer of the Company, effective April 2, 2009. In connection with his appointment, Mr. Arora entered into an employment agreement with the Company on March 18, 2009 (the "Arora Agreement"). Under the terms of the Arora Agreement, Mr. Arora will serve as Senior Vice President and Chief Financial Officer of the Company, receive a base salary of $240,000 and is eligible to earn up to 40% of his base salary in annual bonuses, with the exact amount of any such bonus to be determined by the Compensation Committee. Pursuant to the Arora Agreement, Mr. Arora was granted options to purchase 1.25 million shares of Common Stock, at a price equal to the closing price of the Common Stock on the NASDAQ Capital Market on March 18, 2009. Twenty-five percent (25%) of the shares underlying the stock options will become exercisable on the one-year anniversary of the date of grant, with the remainder vesting quarterly over the subsequent three years.
(8) ISSUANCES OF COMMON STOCK
        On March 24, 2003, the Company entered into a license agreement, subsequently amended on November 17, 2004, May 11, 2006, March 19, 2007, October 17, 2008, October 30, 2008, and again on January 27, 2009, with Johns Hopkins University ("JHU") for an exclusive long-term license to certain patents relating to the digital-PCR technology developed by Dr. Bert Vogelstein's laboratory at the Johns Hopkins Kimmel Cancer Center. Pursuant to the terms of this amended license agreement, the Company has agreed to pay JHU a license fee based on a percentage of the Company's net revenues,
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Notes to Consolidated Financial Statements (Continued)
(8) ISSUANCES OF COMMON STOCK (Continued)

including an annual minimum license fee of approximately $0.1 million, over the life of the licensed patents, or 2023.
        On March 22, 2007, pursuant to the March 19, 2007 Amendment to the license agreement between the Company and JHU, the Company issued to JHU 56,675 unregistered shares of the Company's common stock, $.01 par value per share (the "Common Stock") as payment for the minimum license fee obligation due for the six month period ended December 31, 2006. The Company recorded a non-recurring non-cash stock-based compensation charge of approximately $0.2 million in its consolidated statements of operations during the quarter ended December 31, 2006 in connection with the Common Stock issuance.
        On June 14, 2007, pursuant to the terms of a Manufacturing and Supply Agreement by and between Oncomethylome Sciences S.A. ("OMS") and the Company dated June 8, 2007, the Company issued to OMS 100,000 shares of the Company's Common Stock. The Company recorded a non-recurring non-cash stock-based compensation charge of approximately $0.3 million in its consolidated statements of operations during the quarter ended June 30, 2007 in connection with the Common Stock issuance.
        On June 11, 2009, the Company completed a private placement transaction pursuant to which the Company sold 4,315,792 shares of common stock at a per share price of $1.90 for net proceeds of $8.1 million after issuance costs $0.1 million. Management intends to use the proceeds to fund future research and development efforts.
(9) STOCK-BASED COMPENSATION
Stock-Based Compensation Plans
        The Company maintains the 1995 Stock Option Plan ("1995 Option Plan"), the 2000 Stock Option and Incentive Plan ("2000 Option Plan") and the 2000 Employee Stock Purchase Plan.
        1995 Option Plan     Under the 1995 Option Plan, the Company's board of directors could grant incentive and non-qualified stock options to purchase an aggregate of up to 3,987,500 shares of common stock to employees, directors and consultants of the Company. The exercise price of each option is determined by the board of directors. Incentive stock options may not be less than the fair market value of the stock on the date of grant, as defined by the board of directors. Options granted under the 1995 Option Plan vest over a three to five year period and expire 10 years from the grant date.
        The 1995 Option Plan was terminated on January 31, 2001, the effective date of the Company's registration statement in connection with its initial public offering. Options granted prior to the date of termination remained outstanding and could be exercised in accordance with their terms. At December 31, 2009, no options to purchase shares were outstanding under the 1995 Option Plan.
        2000 Option Plan     The Company adopted the 2000 Option Plan on October 17, 2000. At December 31, 2009, a total of 8,416,005 shares of common stock have been authorized and reserved for issuance under the 2000 Option Plan. The 2000 Option Plan will expire on October 17, 2010 and after such date no further awards may be granted under the plan. Under the terms of the 2000 Option Plan, the Company is authorized to grant incentive stock options, as defined under the Internal Revenue Code, non-qualified options, restricted stock awards and other stock awards to employees, officers,
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Notes to Consolidated Financial Statements (Continued)
(9) STOCK-BASED COMPENSATION (Continued)

directors, consultants and advisors. Options granted under the 2000 Option Plan expire ten years from the date of grant. Grants made from the 2000 Option Plan generally vest over a period of three to four years.
        The 2000 Option Plan is administered by the compensation committee of the Company's board of directors, which selects the individuals to whom equity-based awards will be granted and determines the option exercise price and other terms of each award, subject to the provisions of the 2000 Option Plan. The 2000 Option Plan provides that upon an acquisition of the Company, all options to purchase common stock will accelerate by a period of one year. In addition, upon the termination of an employee without cause or for good reason prior to the first anniversary of the completion of the acquisition, all options then outstanding under the 2000 Option Plan held by that employee will immediately become exercisable. At December 31, 2009, options to purchase 5,952,019 shares were outstanding under the 2000 Option Plan and 2,463,986 shares were available for future grant under the 2000 Option Plan.
        2000 Employee Stock Purchase Plan     The 2000 Employee Stock Purchase Plan (the "2000 Purchase Plan") was initially adopted by the Company in October 2000, and subsequently amended and restated. The 2000 Purchase Plan provides participating employees the right to purchase common stock at a discount through a series of offering periods. The 2000 Purchase Plan will expire on October 31, 2010. At December 31, 2009, the 2000 Purchase Plan had available an aggregate of 720,780 shares of common stock for purchase by participating employees.
        The compensation committee of the Company's board of directors administers the 2000 Purchase Plan. Generally, all employees whose customary employment is more than 20 hours per week and for more than five months in any calendar year are eligible to participate in the 2000 Purchase Plan. Participating employees authorize an amount, between 1% and 15% of the employee's compensation, to be deducted from the employee's pay during the offering period. On the last day of the offering period, the employee is deemed to have exercised the option, at the option exercise price, to the extent of accumulated payroll deductions. Under the terms of the 2000 Purchase Plan, the option exercise price is an amount equal to 85% of the fair market value, as defined under the 2000 Purchase Plan and no employee can purchase more than $25,000 of the Company common stock under the 2000 Purchase Plan in any calendar year. Rights granted under the 2000 Purchase Plan terminate upon an employee's voluntary withdrawal from the 2000 Purchase Plan at any time or upon termination of employment. The Company issued the following shares of common stock under the 2000 Purchase Plan for the year ended December 31, 2007. No shares were issued under the 2000 Purchase Plan in 2008 and 2009.

Offering period ended 	 	Number of Shares	 	Price per Share	 	
January 31, 2007	 	 	9,055	 	$	1.61	 	
July 31, 2007	 	 	7,932	 	$	1.61	 	
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Notes to Consolidated Financial Statements (Continued)
(9) STOCK-BASED COMPENSATION (Continued)
Stock-Based Compensation Expense
        The Company recorded approximately $2.6 million in stock-based compensation during the year ended December 31, 2009, in connection with the amortization of restricted common stock awards and stock options granted to employees, non-employee directors and non-employee consultants as well as the modification of certain stock options and restricted stock awards. The Company recorded $1.0 million in stock-based compensation during the year ended December 31, 2008 in connection with the amortization of awards of common stock, restricted common stock and stock options granted to employees, non-employee directors and non-employee consultants. The Company recorded approximately $2.8 million in stock-based compensation during the year ended December 31, 2007 in connection with the amortization of awards of common stock, restricted common stock and stock options granted to employees, non-employee directors and non-employee consultants, as well as restricted common stock issued to collaborators, the modification of certain stock options. Non-cash stock-based compensation expense by department for the years ended December 31, 2009, 2008, and 2007 are as follows. Amounts included in the table are in thousands.

 	 	December 31,	 	
 	 	2009	 	2008	 	2007	 	
Research and development	 	$	319	 	$	89	 	$	541	 	
General and administrative	 	 	2,308	 	 	918	 	 	1,889	 	
Sales and marketing	 	 	4	 	 	—	 	 	202	 	
Restructuring	 	 	—	 	 	3	 	 	174	 	
Determining Fair Value
        Valuation and Recognition —The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model based on the assumptions in the table below. The estimated fair value of employee stock options is recognized to expense using the straight-line method over the vesting period.
        Expected Term —The Company uses the simplified calculation of expected term, described in the SEC's Staff Accounting Bulletins 107 and 110, as the Company does not currently have sufficient historical exercise data on which to base an estimate of expected term. Using this method, the expected term is determined using the average of the vesting period and the contractual life of the stock options granted.
        Expected Volatility —Expected volatility is based on the Company's historical stock volatility data over the expected term of the awards.
        Risk-Free Interest Rate —The Company bases the risk-free interest rate used in the Black-Scholes valuation method on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term.
        Forfeitures —The Company records stock-based compensation expense only for those awards that are expected to vest. No forfeiture rate was utilized for awards granted prior to 2009 due to the monthly vesting terms of the options granted in that timeframe. Because of the vesting terms, the Company was, in effect, recording stock-based compensation only for those awards that were vesting
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Notes to Consolidated Financial Statements (Continued)
(9) STOCK-BASED COMPENSATION (Continued)

and expected to vest and a forfeiture rate was not necessary. Awards granted in 2009 that vest annually are all expected to vest and no forfeiture rate was utilized.
        The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model based on the assumptions in the following table.

 	 	December 31,	 	
 	 	2009	 	2008	 	2007	 	
Option Plan Shares	 	 	 	 	 	 	 	 	 	 	
 	Risk-free interest rates	 	 	1.76% - 2.69%	 	 	2.80% - 3.02%	 	 	4.04% - 4.60%	 	
 	Expected term (in years)	 	 	6	 	 	6	 	 	6	 	
 	Expected volatility	 	 	85 - 92%	 	 	70% - 75%	 	 	70%	 	
 	Dividend yield	 	 	0%	 	 	0%	 	 	0%	 	
 	Weighted average fair value per share of options granted during the period	 	$	0.89	 	$	1.08	 	$	1.87	 	
ESPP Shares	 	 	 	 	 	 	 	 	 	 	
 	Risk-free interest rates	 	 	 	(1)	 	 	(1)	 	5.10% - 5.17%	 	
 	Expected term (in years)	 	 	 	(1)	 	 	(1)	 	0.5 - 2	 	
 	Expected volatility	 	 	 	(1)	 	 	(1)	 	70%	 	
 	Dividend yield	 	 	 	(1)	 	 	(1)	 	0%	 	
 	Weighted average fair value per share of stock purchase rights granted during the period	 	 	 	(1)	 	 	(1)	 	$1.08	 	

(1)
The Company did not issue stock purchase rights under its 2000 Purchase Plan during the period indicated.
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(9) STOCK-BASED COMPENSATION (Continued)

Stock Option and Restricted Stock Activity
        A summary of stock option and restricted stock activity under the 1995 Option Plan and the 2000 Option Plan during the years ended 2009, 2008 and 2007 is as follows:

Options and Restricted Stock 	 	Shares	 	Weighted
Average
Exercise
Price	 	Weighted
Average
Remaining
Contractual
Term (Years)	 	Aggregate
Intrinsic
Value(1)	 	
(Aggregate intrinsic value in thousands)	 	
Outstanding, January 1, 2007	 	 	4,125,940	 	$	5.69	 	 	 	 	 	 	 	
 	Granted	 	 	1,362,000	 	 	2.66	 	 	 	 	 	 	 	
 	Exercised	 	 	(154,486	)	 	1.68	 	 	 	 	 	 	 	
 	Cancelled	 	 	(1,336,766	)	 	5.48	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Outstanding, December 31, 2007	 	 	3,996,688	 	 	4.88	 	 	 	 	 	 	 	
 	Granted	 	 	
818,600	 	 	
1.18	 	 	 	 	 	 	 	
 	Exercised	 	 	(84,730	)	 	0.08	 	 	 	 	 	 	 	
 	Cancelled	 	 	(1,026,659	)	 	5.54	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Outstanding, December 31, 2008	 	 	3,703,899	 	 	3.99	 	 	 	 	 	 	 	
 	Granted	 	 	
5,271,127	 	 	
1.09	 	 	 	 	 	 	 	
 	Exercised	 	 	(890,536	)	 	0.82	 	 	 	 	 	 	 	
 	Cancelled	 	 	(2,132,471	)	 	4.95	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Outstanding, December 31, 2009	 	 	5,952,019	 	$	1.75	 	 	8.6	 	$	11,667	 	
 	 	 	 	 	 	 	 	 	 	
Exercisable, December 31, 2009	 	 	
995,351	 	
$	
4.52	 	 	
5.1	 	
$	
770	 	
 	 	 	 	 	 	 	 	 	 	
Vested and expected to vest, December 31, 2009	 	 	
5,952,019	 	
$	
1.75	 	 	
8.6	 	
$	
11,667	 	

(1)
The aggregate intrinsic value of options outstanding at December 31, 2009 is calculated as the difference between the exercise price of the underlying options and the market price of the Company's common stock for the 5,583,331 options that had exercise prices that were lower than the $3.39 market price of our common stock at December 31, 2009. The aggregate intrinsic value of options exercisable at December 31, 2009 is calculated as the difference between the exercise price of the underlying options and the market price of the Company's common stock for the 626,663 options that had exercise prices that were lower than the $3.39 market price of our common stock at December 31, 2009. The total intrinsic value of options exercised during the years ended December 31, 2009, 2008 and 2007 was $0.2 million, $4,000, and $0.1 million, respectively, determined as of the date of exercise.
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Notes to Consolidated Financial Statements (Continued)
(9) STOCK-BASED COMPENSATION (Continued)

        The following table summarizes the non-vested shares under the Plans:

Options and Restricted Stock 	 	Shares	 	Weighted
Average
Grant Date
Fair Value	 	
Outstanding, January 1, 2007	 	 	778,336	 	$	1.02	 	
 	Granted	 	 	1,362,000	 	 	1.96	 	
 	Vested	 	 	(897,580	)	 	1.46	 	
 	Cancelled	 	 	(373,402	)	 	1.50	 	
 	 	 	 	 	 	
Outstanding, December 31, 2007	 	 	869,354	 	 	1.82	 	
 	Granted	 	 	
818,600	 	 	
0.90	 	
 	Vested	 	 	(642,509	)	 	1.51	 	
 	Cancelled	 	 	(181,680	)	 	1.45	 	
 	 	 	 	 	 	
Outstanding, December 31, 2008	 	 	863,765	 	 	1.25	 	
 	Granted	 	 	
5,271,127	 	 	
0.89	 	
 	Vested	 	 	(859,942	)	 	0.99	 	
 	Cancelled	 	 	(318,282	)	 	1.55	 	
 	 	 	 	 	 	
Outstanding, December 31, 2009	 	 	4,956,668	 	$	0.89	 	
 	 	 	 	 	 	
        The tables above includes outstanding restricted stock awards of 40,000, 185,000 and 18,751 shares as of December 31, 2009, 2008, and 2007, respectively. The Company granted 411,128, 245,000 and 85,000 restricted stock awards during the years ended December 31, 2009, 2008, and 2007, respectively. Restricted common stock awards that vested and were no longer subject to restriction during the years ended December 31, 2009, 2008, and 2007 were 510,182, 78,751, and 66,249, respectively.
        As of December 31, 2009, there was approximately $3.7 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all equity compensation plans. Total unrecognized compensation cost will be adjusted for future changes in forfeitures. The Company expects to recognize that cost over a weighted average period of 3.2 years.
        The Company received approximately $0.7 million, $7,000, and $0.3 million from stock option exercises during the years ended December 31, 2009, 2008 and 2007, respectively. During the years ended December 31, 2009, 2008 and 2007, zero, zero, and 16,987 shares, respectively, of common stock were issued under the Company's 2000 Purchase Plan resulting in proceeds to the Company of $0, $0, and $27,000, respectively.
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(9) STOCK-BASED COMPENSATION (Continued)
        The following table summarizes information relating to currently outstanding and exercisable stock options as of December 31, 2009:

 	 	Outstanding	 	Exercisable	 	
Exercise Price 	 	Number of
Options	 	Weighted
Average
Remaining
Contractual
Life (Years)	 	Weighted
Average
Exercise
Price	 	Number of
Options	 	Weighted
Average
Exercise
Price	 	
$0.00 - $  1.00	 	 	3,865,000	 	 	9.2	 	$	0.82	 	 	75,000	 	$	0.71	 	
$1.01 - $  2.00	 	 	548,331	 	 	7.3	 	$	1.58	 	 	164,580	 	$	1.83	 	
$2.01 - $  2.50	 	 	170,000	 	 	6.5	 	$	2.17	 	 	150,000	 	$	2.17	 	
$2.51 - $  3.00	 	 	1,000,000	 	 	9.0	 	$	2.86	 	 	237,083	 	$	2.85	 	
$3.01 - $  4.00	 	 	60,000	 	 	5.0	 	$	3.61	 	 	60,000	 	$	3.61	 	
$4.01 - $  5.00	 	 	95,000	 	 	4.7	 	$	4.83	 	 	95,000	 	$	4.83	 	
$5.01 - $  7.00	 	 	15,000	 	 	3.1	 	$	6.78	 	 	15,000	 	$	6.78	 	
$7.01 - $  9.00	 	 	34,688	 	 	3.1	 	$	7.63	 	 	34,688	 	$	7.63	 	
$9.01 - $14.33	 	 	164,000	 	 	2.6	 	$	12.79	 	 	164,000	 	$	12.79	 	
 	 	 	 	 	 	 	 	 	 	 	 	
	 	 	5,952,019	 	 	8.55	 	$	1.75	 	 	995,351	 	$	4.52	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Option Modifications
        2007 Modifications     In August 2007, in connection with the 2007 Restructuring (See Note 6) and the resignation of Don M. Hardison as the Company's President and Chief Executive Officer, the Company's board of directors approved the following stock option modifications:
•
On August 31, 2007, the effective date of Mr. Hardison's resignation from the Company, the Company accelerated the vesting of 216,251 shares under Mr. Hardison's previously unvested stock options, with a weighted average exercise price of $2.94 per share, and extended the expiration date of all of Mr. Hardison's outstanding options, covering an aggregate of 1,025,560 shares, through August 31, 2009. Prior to August 31, 2009, Mr. Hardison is prohibited from selling any of the shares of common stock obtained upon the exercise of any accelerated stock options. As a result of these modifications, the Company recorded one-time stock-based compensation charges of approximately $0.7 million in the "General and Administrative" line item of the Company's consolidated statements of operations during the quarter ended September 30, 2007 in accordance with financial accounting standards. 

•
On August 31, 2007, the Company extended by nine months the expiration date of stock options to purchase 726,052 shares, with a weighted average exercise price of $6.41 per share, held by employees that were terminated as a part of the 2007 Restructuring. Stock options subject to the extension now expire on August 31, 2008. The Company did not continue to vest stock options in connection with this modification beyond the employees' termination date and did not accelerate vesting of any options prior to the termination date. In accordance with financial accounting standards, the Company recorded one-time non-cash stock-based compensation charges of $0.2 million in the "Restructuring" line item of the Company's consolidated statements of operations during the quarter ended September 30, 2007 in connection with these modifications.
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Notes to Consolidated Financial Statements (Continued)
(9) STOCK-BASED COMPENSATION (Continued)
        2008 Modifications     In connection with the 2008 Restructuring (See Note 6), the Company accelerated the vesting of 15,523 shares under terminated employees' previously unvested stock options, with a weighted average exercise price of $2.65 per share, and extended the expiration date of all the terminated employees' outstanding options as of their date of termination, covering an aggregate of 181,828 shares with a weighted average exercise price of $4.50, through August 1, 2009. Pursuant to financial accounting standards, the Company recorded one-time stock-based compensation charges of approximately $3,000 in the "Restructuring" line item of the Company's consolidated statements of operations during the quarter ended September 30, 2008.
        2009 Modifications     In connection with the March 18, 2009 resignation of Jeffrey R. Luber as the Company's President and Chief Executive Officer and Charles R. Carelli, Jr. as the Company's Chief Financial Officer, the Company's board of directors approved the following stock option modifications: On April 2, 2009, the effective date of Mr. Luber's resignation from the Company, the Company accelerated the vesting of 114,896 shares under Mr. Luber's previously unvested stock options, with a fair value of the share price on the original grant date. On April 2, 2009, the effective date of Mr. Carelli's resignation from the Company, the Company accelerated the vesting of 70,556 shares under Mr. Carelli's previously unvested stock options, with a fair value of the share price on the original grant date. As a result of these modifications, the Company recorded one-time non-cash stock-based compensation expense of approximately $0.3 million during the quarter ended March 31, 2009. In addition, the Company repurchased 804,026 shares for $50,000.
        During 2009, the restriction for all 445,181 shares of the Board of Directors Restricted Stock Award grants was lifted. The restriction for the awards was lifted before their one year term which is considered a modification under financial accounting standards. The Company recognized the incremental fair value on the date the restriction was lifted, thus resulting in approximately $0.9 million of non-cash stock-based compensation expense related to the modification.
Shares Reserved for Issuance
        The Company has reserved the following shares of its authorized common shares to be issued upon exercise or issuance of shares related to its employee stock purchase and stock option plans, including all outstanding stock option grants noted above at December 31, 2009:

Shares reserved for issuance 	 	 	 	
2000 Option Plan	 	 	8,416,005	 	
2000 Purchase Plan	 	 	720,780	 	
 	 	 	 	
	 	 	9,136,785	 	
 	 	 	 	
(10) COMMITMENTS AND CONTINGENCIES
Operating Leases
        During November 2009, the Company entered into a five year lease for a 17,500 sq. ft. laboratory office facility in Madison, Wisconsin. The Company also leases space at a facility in Marlborough, Massachusetts. This operating lease for the facility in Massachusetts expires in July 2010. These leases
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(10) COMMITMENTS AND CONTINGENCIES (Continued)

contain periodic rent escalation adjustments. Future minimum payments under operating leases as of December 31, 2009 are as follows. Amounts included in the table are in thousands.

Year Ending December 31,	 	 	 	 	
 	2010	 	$	866	 	
 	2011	 	 	270	 	
 	2012	 	 	277	 	
 	2013	 	 	284	 	
 	2014	 	 	241	 	
 	Thereafter	 	 	—	 	
 	 	 	 	
 	 	Total lease obligations	 	$	1,938	 	
 	 	 	 	
        Rent expense included in the accompanying consolidated statements of operations was approximately $0.2 million, $0.6 million, and $1.0 million for the years ended December 31, 2009, 2008 and 2007, respectively.
        During the fourth quarter of 2007, the Company entered into a sublease agreement (the "2007 Sublease Agreement") with INTRINSIX, Inc. ("INSTRINSIX") to sublease approximately 11,834 square feet of rentable area in the Company's Marlborough facility. The term of the 2007 Sublease Agreement, which commenced on December 15, 2007, is 32 months. The Company expects to receive approximately $0.7 million in sublease payments over the life of the 2007 Sublease Agreement. Pursuant to the Sublease Agreement, INTRINSIX has no rights to renew or extend the 2007 Sublease Agreement. Under the terms of the 2007 Sublease Agreement, INTRINSIX was required to provide a security deposit of $35,000 and will be required to pay its pro rata share of any increases in building operating expenses and real estate taxes.
        During the fourth quarter of 2008, the Company entered into the 2008 Sublease Agreement with QTEROS to sublease to QTEROS approximately 25,537 square feet of rentable area in the Company's Marlborough facility. The term of the 2008 Sublease Agreement, which commenced on December 9, 2008, is 20 months with a base rent of $625,657 per year. The Company expects to receive approximately $1.0 million in sublease payments over the life of the 2008 Sublease Agreement. Pursuant to the 2008 Sublease Agreement, QTEROS has no rights to renew or extend the 2008 Sublease Agreement. Under the terms of the 2008 Sublease Agreement, QTEROS will be required to pay its pro rata share of any increases in building operating expenses and real estate taxes and to provide a security deposit in the form of an irrevocable, standby letter of credit from a national commercial bank reasonably acceptable to the Company in the amount of approximately $52,000 naming the Company as beneficiary.
        During the fourth quarter of 2009, the Company entered into a sublease agreement (the "2009 Sublease Agreement") with Aldevron Madison to sublease approximately 5,086 square feet of rentable area in the Company's Madison facility. The term of the 2009 Sublease Agreement, which commenced on November 1, 2009, is 36 months. The Company expects to receive approximately $0.2 million in sublease payments over the life of the 2009 Sublease Agreement. Pursuant to the Sublease Agreement, Aldevron has no rights to renew or extend the 2009 Sublease Agreement. Under the terms of the 2009 Sublease Agreement, Aldevron is required to provide a security deposit of $6,000 and will be required to pay its pro rata share of any increases in building operating expenses and real estate taxes. Future
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(10) COMMITMENTS AND CONTINGENCIES (Continued)

sublease receipts under sublease agreements as of December 31, 2009 are as follows. Amounts included in the table are in thousands.

Year ending December 31,	 	 	 	 	
 	2010	 	$	597	 	
 	2011	 	 	79	 	
 	2012	 	 	67	 	
 	2013	 	 	—	 	
 	2014	 	 	—	 	
 	Thereafter	 	 	—	 	
 	 	 	 	
	 	$	743	 	
 	 	 	 	
Licensing and Research Agreements
        The Company licenses, on a non-exclusive basis, certain technologies that are, or may be, incorporated into its technology under several license agreements. Generally, the license agreements require the Company to pay royalties based on net revenues received using the technologies, and may require minimum royalty amounts or maintenance fees. On March 24, 2003, the Company entered into a license agreement, subsequently amended on November 17, 2004, May 11, 2006, March 19, 2007, October 17, 2008, October 30, 2008, and again on January 27, 2009 with Johns Hopkins University ("JHU") for an exclusive long-term license to certain patents for use in colorectal cancer detection in stool relating to the digital-PCR technology developed by Dr. Bert Vogelstein's laboratory at the Johns Hopkins Kimmel Cancer Center. Pursuant to the terms of this license agreement, and subsequent to the closing of the Genzyme strategic transaction (See Note 3), the Company has agreed to pay JHU a license fee based on a percentage of the Company's net revenues, including an annual minimum license fee of approximately $0.1 million, over the life of the licensed patents, or 2023.
        On June 11, 2009 the Company entered into a patent licensing agreement with the MAYO Foundation for Medical Education and Research (Mayo) primarily for the rights to certain patented intellectual property owned by Mayo. Pursuant to the terms of this licensing agreement, the Company made an up-front payment of $80,000 on July 12, 2009. The Company has agreed to pay Mayo a royalty fee based on a percentage of the Company's net sales of licensed products. The Company is also required to pay minimum annual royalty fees of $10,000 on June 12, 2012 and $25,000 on June 12, 2013 and each year thereafter. The Company granted Mayo a warrant to purchase 1,000,000 shares of common stock at $1.90 per share which vested immediately. The expense related to those warrants is recognized and recorded as research and development expense in 2009. The Company also granted a warrant to purchase 250,000 shares of common stock at $1.90 per share which vest over a four year period. The related expense will be recognized and recorded over a four year period as research and development expense. At the commencement of patient enrollment in the human cancer screening clinical trial the Company must pay MAYO $250,000 in milestone fees and upon U.S. Food and Drug Administration (FDA) approval the Company must pay MAYO $500,000 in milestone fees.
        On October 14, 2009, the Company entered into a technology license agreement with Hologic, Inc. (Hologic). Under the license agreement, Hologic granted the Company an exclusive, worldwide license within the field of human stool based colorectal cancer and pre-cancer detection or identification with regard to certain Hologic patents and improvements. Pursuant to the terms of this license agreement,
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(10) COMMITMENTS AND CONTINGENCIES (Continued)

the Company paid an up-front payment of $50,000. The Company is required to pay Hologic a royalty fee based on a percentage of the Company's net sales of the licensed products. The Company also agreed to pay $100,000 upon commencement of an FDA clinical trial for a licensed product and an additional $100,000 at the time of final FDA pre-market approval or clearance for a licensed product.
        The Company has recorded research and development expense associated with license agreements of $1.9 million, $(0.2) million, and $1.2 million, respectively, for the years ended December 31, 2009, 2008 and 2007. Future minimum payments due under the Company's technology licenses as of December 31, 2009 are as follows. Amounts included in the table are in thousands.

Year ending December 31,	 	 	 	 	
 	2010	 	$	171	 	
 	2011	 	 	171	 	
 	2012	 	 	181	 	
 	2013	 	 	196	 	
 	2014	 	 	196	 	
 	Thereafter	 	 	1,596	 	
 	 	 	 	
	 	$	2,511	 	
 	 	 	 	
        The Company has also entered into several clinical research agreements, under which it is obligated to fund certain research activities for purposes of technology development. As of December 31, 2009 and 2008, the Company had no outstanding sample collection commitments. The Company has recorded research and development expense associated with clinical research agreements of approximately $0.5 million, $20,000, and $0.2 million, respectively, for the years ended December 31, 2009, 2008 and 2007. As of December 31, 2009, the Company's remaining obligation under these agreements was approximately $0.4 million, which is expected to be paid during 2010.
Third Party Royalty Obligation
        Under the terms of the Company's amended license agreement with LabCorp, the Company is potentially liable to reimburse LabCorp for a certain third-party royalty payment made by LabCorp in connection with its sales of PreGen-Plus and ColoSure. The Company's potential liability at December 31, 2009 of $1.0 million is described in Note 5 above. The Company's estimate of this obligation of $988,000 is recorded in the Company's consolidated balance sheets under the caption "Third party royalty obligation".
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(11) ACCRUED EXPENSES
        Accrued expenses at December 31, 2009 and 2008 consisted of the following. Amounts included in the table are in thousands.

 	 	December 31,	 	
 	 	2009	 	2008	 	
Compensation	 	$	460	 	$	32	 	
Research and trial related expenses	 	 	238	 	 	80	 	
Professional fees	 	 	153	 	 	382	 	
Occupancy costs	 	 	153	 	 	270	 	
Restructuring	 	 	140	 	 	342	 	
Licenses	 	 	131	 	 	151	 	
Other	 	 	110	 	 	70	 	
Commercial operating expenses	 	 	—	 	 	171	 	
 	 	 	 	 	 	
	 	$	1,385	 	$	1,498	 	
 	 	 	 	 	 	
(12) LONG TERM DEBT
        During November 2009, the Company entered into a loan agreement with the Wisconsin Department of Commerce pursuant to which the Wisconsin Department of Commerce agreed to lend up to $1 million to the Company subject to the Company's satisfaction of certain conditions. The Company received the $1 million in December 2009. The terms of the loan are such that portions of the loan become forgivable if the Company meets certain job creation requirements. If the Company creates 100 full time positions as of June 30, 2015, the principal shall be reduced at the rate of $5,405 for each new position created. If the Company has created 185 new full-time positions, the full amount of principal shall be reduced. The loan bears an interest rate of 2%, which is subject to an increase to 4% if the Company does not meet certain job creation requirements. Both principal and interest payments under the loan agreement are deferred for five years. Based on the Company's estimation of the loan obligation, the table below represents the future principal obligations:

Year ending December 31,	 	 	 	 	
 	2010	 	$	—	 	
 	2011	 	 	—	 	
 	2012	 	 	—	 	
 	2013	 	 	—	 	
 	2014	 	 	—	 	
 	Thereafter	 	 	1,000	 	
 	 	 	 	
	 	$	1,000	 	
 	 	 	 	
(13) EMPLOYEE BENEFIT PLAN
        The Company maintains a qualified 401(k) retirement savings plan (the "401(k) Plan") covering all employees. Under the terms of the 401(k) Plan, participants may elect to defer a portion of their compensation into the 401(k) Plan, subject to certain limitations. Company matching contributions may
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Notes to Consolidated Financial Statements (Continued)
(13) EMPLOYEE BENEFIT PLAN (Continued)

be made at the discretion of the Board of Directors. There were no discretionary contributions made by the Company to the 401(k) Plan from its inception through December 31, 2004.
        The Company's Board of Directors approved 401(k) Plan matching contributions for 2008 and 2007 in the form of Company common stock equal to 50% of each participant's elective deferrals. The Company's Board of Directors approved 401(k) Plan matching contributions for 2009 in the form of Company common stock equal to 100% up to 6% of the participant's salary for that year. The Company recorded compensation expense of approximately $0.1 million, $34,000, and $0.1 million, respectively, in the consolidated statements of operations for the years ended December 31, 2009, 2008 and 2007 in connection with 401(k) Plan matching contributions.
(14) INCOME TAXES
        Under financial accounting standards, deferred tax assets or liabilities are computed based on the differences between the financial statement and income tax bases of assets and liabilities using the enacted tax rates. Deferred income tax expense or benefit represents the change in the deferred tax assets or liabilities from period to period. At December 31, 2009, the Company had federal and state net operating loss and research tax credit carryforwards of approximately $142.3 million and $3.4 million respectively, for financial reporting purposes, which may be used to offset future taxable income. The federal and state carryforwards expire beginning 2015 through 2029 and are subject to review and possible adjustment by the Internal Revenue Service. In the event of a change of ownership, the federal and state net operating loss and research and development tax credit carryforwards may be subject to annual limitations provided by the Internal Revenue Code and similar state provisions.
        As of December 31, 2009 and 2008, the Company had $5.3 million in excess tax benefit stock option deductions. The excess tax benefit arising from these deductions is credited to additional paid in capital as the benefit is realized.
        The Company has calculated a current alternative minimum tax (AMT) liability of $0.1 million for the year ended December 31, 2009. There were no current tax liabilities for the year ended December 31, 2008.
        The components of the net deferred tax asset with the approximate income tax effect of each type of carryforward, credit and temporary differences are as follows. Amounts included in the table are in thousands.

 	 	December 31,	 	
 	 	2009	 	2008	 	
Deferred tax assets:	 	 	 	 	 	 	 	
 	Operating loss carryforwards	 	$	54,276	 	$	55,922	 	
 	Tax credit carryforwards	 	 	3,459	 	 	3,286	 	
 	Deferred revenue	 	 	6,396	 	 	1,070	 	
 	Other temporary differences	 	 	2,777	 	 	2,970	 	
 	 	 	 	 	 	
Tax assets before valuation allowance	 	 	66,908	 	 	63,248	 	
Less—Valuation allowance	 	 	(66,908	)	 	(63,248	)	
 	 	 	 	 	 	
Net deferred taxes	 	$	—	 	$	—	 	
 	 	 	 	 	 	
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(14) INCOME TAXES (Continued)
        A valuation allowance to reduce the deferred tax assets is reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has incurred significant losses since its existence and due to the uncertainty of the amount and timing of future taxable income, management has determined that a $66.9 million and $63.2 million valuation allowance at December 31, 2009 and 2008 is necessary to reduce the tax assets to the amount that is more likely than not to be realized. The change in valuation allowance for the current year is $3.7 million.
        The effective tax rate differs from the statutory tax rate due to the following:

 	 	December 31,	 	
 	 	2009	 	2008	 	2007	 	
U.S. Federal statutory rate	 	 	34.0	%	 	34.0	%	 	34.0	%	
State taxes	 	 	5.6	 	 	5.6	 	 	5.6	 	
Research and development tax credit	 	 	0.9	 	 	0.6	 	 	0.8	 	
AMT Tax	 	 	(1.0	)	 	—	 	 	—	 	
AMT Credit	 	 	1.0	 	 	—	 	 	—	 	
Stock-based compensation expense	 	 	(1.0	)	 	(2.2	)	 	(5.6	)	
Other adjustments	 	 	—	 	 	2.4	 	 	(5.1	)	
Valuation allowance	 	 	(40.5	)	 	(40.4	)	 	(29.7	)	
 	 	 	 	 	 	 	 	
Effective tax rate	 	 	-1.0	%	 	0.0	%	 	0.0	%	
 	 	 	 	 	 	 	 	
        In June 2006, the FASB issued guidance that clarifies the accounting for uncertainty in income taxes recognized in an entity's financial statements, and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Additionally, the FASB provided guidance on subsequent derecognition of tax positions, financial statement classification, recognition of interest and penalties, accounting in interim periods, and disclosure and transition requirements. The Company adopted these provisions on January 1, 2007. As required by the new guidance issued by the FASB, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. At the adoption date, the Company applied this guidance to all tax positions for which the statute of limitations remained open. The amount of unrecognized tax benefits as of January 1, 2007 was none. There have been no changes in unrecognized tax benefits since January 1, 2007, nor are there any tax positions where it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the 12 months following December 31, 2009.
        As of December 31, 2009, due to the carryforward of unutilized net operating losses and research and development credits, the Company is subject to U.S. Federal income tax examinations for the tax years 1995 through 2009, and to state income tax examinations for the tax years 1995 through 2009. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the years ended December 31, 2009, 2008 and 2007.
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EXACT SCIENCES CORPORATION
Notes to Consolidated Financial Statements (Continued)
(15) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
        The following table sets forth unaudited quarterly statement of operations data for each of the eight quarters ended December 31, 2009. In the opinion of management, this information has been prepared on the same basis as the audited financial statements appearing elsewhere in this Form 10-K, and all necessary adjustments, consisting only of normal recurring adjustments, have been included in the amounts stated below to present fairly the unaudited quarterly results of operations. The quarterly data should be read in conjunction with our audited financial statements and the notes to the financial statements appearing elsewhere in this Form 10-K.

 	 	Quarter Ended	 	
 	 	March 31,	 	June 30,	 	September 30,	 	December 31,	 	
 	 	(Amounts in thousands, except per share data)	 	
2009	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue	 	$	1,000	 	$	1,258	 	$	1,256	 	$	1,244	 	
Cost of revenue	 	 	—	 	 	8	 	 	5	 	 	7	 	
Research and development	 	 	108	 	 	2,015	 	 	837	 	 	1,253	 	
General and administrative	 	 	4,768	 	 	1,638	 	 	1,478	 	 	1,665	 	
Sales and marketing	 	 	—	 	 	40	 	 	12	 	 	174	 	
Restructuring	 	 	(3	)	 	—	 	 	—	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	
Loss from operations	 	 	(3,873	)	 	(2,443	)	 	(1,076	)	 	(1,855	)	
Interest income	 	 	34	 	 	49	 	 	35	 	 	1	 	
 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(3,839	)	$	(2,394	)	$	(1,041	)	$	(1,854	)	
 	 	 	 	 	 	 	 	 	 	
Net loss per share—basic and diluted	 	$	(0.13	)	$	(0.08	)	$	(0.03	)	$	(0.05	)	
 	 	 	 	 	 	 	 	 	 	
Weighted average common shares	 	 	 	 	 	 	 	 	 	 	 	 	 	
outstanding—basic and diluted	 	 	30,230	 	 	31,283	 	 	34,932	 	 	35,429	 	
 	 	 	 	 	 	 	 	 	 	
2008	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue	 	$	51	 	$	(146	)	$	(663	)	$	(109	)	
Cost of revenue	 	 	1	 	 	—	 	 	—	 	 	—	 	
Research and development	 	 	859	 	 	528	 	 	577	 	 	70	 	
Sales and marketing	 	 	—	 	 	—	 	 	—	 	 	—	 	
General and administrative	 	 	1,835	 	 	1,495	 	 	1,271	 	 	1,868	 	
Restructuring	 	 	(2	)	 	(5	)	 	539	 	 	70	 	
 	 	 	 	 	 	 	 	 	 	
Loss from operations	 	 	(2,642	)	 	(2,164	)	 	(3,050	)	 	(2,117	)	
Interest income	 	 	124	 	 	64	 	 	36	 	 	8	 	
 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(2,518	)	$	(2,100	)	$	(3,014	)	$	(2,109	)	
 	 	 	 	 	 	 	 	 	 	
Net loss per share—basic and diluted	 	$	(0.09	)	$	(0.08	)	$	(0.11	)	$	(0.08	)	
 	 	 	 	 	 	 	 	 	 	
Weighted average common shares	 	 	 	 	 	 	 	 	 	 	 	 	 	
outstanding—basic and diluted	 	 	27,145	 	 	27,175	 	 	27,233	 	 	27,296	 	
 	 	 	 	 	 	 	 	 	 	
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Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
        There have been no disagreements with accountants on accounting or financial disclosure matters.
Item 9A.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
        We maintain controls and procedures designed to ensure that we are able to collect the information we are required to disclose in the reports we file with the SEC, and to process, summarize and disclose this information within the time periods specified in the rules of the SEC. Based on an evaluation of the Company's disclosure controls and procedures as defined in 13a—15e as of the end of the period covered by this report conducted by the Company's management, with the participation of the Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective to enable the Company to record, process, summarize and report the information it is required to disclose in the reports it files with the SEC within the required time periods.
Changes in Internal Control Over Financial Reporting
        Management, together with our CEO and CFO, evaluated the changes in our internal control over financial reporting during the quarter ended September 30, 2009, and noted the following significant changes.
•
In the quarter ended September 30, 2009, we began implementing "NetSuite," financial reporting software. During the quarter ended December 31, 2009, this system was fully implemented and operating effectively. With this implementation, our management ensures that our key controls are mapped to applicable NetSuite controls, and as appropriate, maintains and evaluates controls over the flow of information to and from NetSuite. 

•
In the quarter ended September 30, 2009, we began implementing additional review procedures over monthly and quarterly financial reporting packages that will increase the operating effectiveness of the Company's internal control structure.
        We determined that there were no other changes in our internal control over financial reporting during the quarter ended December 31, 2009, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management's Report on Internal Control over Financial Reporting.
        Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company's internal control over financial reporting is designed to provide reasonable assurance to the Company's management and board of directors regarding the preparation and fair presentation of published financial statements in accordance with generally accepted accounting principles.
        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
        Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on our assessment, we believe that, as of December 31, 2009, the Company's internal control over financial reporting was effective based on those criteria.
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        Our independent registered public accounting firm, Grant Thornton LLP, has issued an audit report on the effectiveness of our internal control over financial reporting, which is included herein.
Item 9B.    Other Information
        None.

 PART III
        Items 10 through 14 are incorporated by reference to the following sections of our Proxy Statement for the Annual Meeting of Stockholders to be held on July 26, 2010: Proposal 1—Election of Directors, Occupations of Directors, The Nominees for Director and Officers , Securities Ownership of Certain Beneficial Owners and Management, Corporate Governance Principles and Board Matters, The Board of Directors and Its Committees, Compensation and Other Information Concerning Directors and Officers, Section 16(a) Beneficial Ownership Reporting Compliance, Compensation and Other Information Concerning Directors and Officers, Equity Compensation Plan Information, Certain Relationships and Related Transactions and Independent Registered Public Accounting Firm and Ratification of Appointment of Independent Registered Public Accounting Firm.

 PART IV
Item 15.    Exhibits and Financial Statement Schedules
(a)
The following documents are filed as part of this Form 10-K:

(1)
Financial Statements (see "Financial Statements and Supplementary Data" at Item 8 and incorporated herein by reference).

(2)
Financial Statement Schedules (Schedules to the Financial Statements have been omitted because the information required to be set forth therein is not applicable or is shown in the accompanying Financial Statements or notes thereto).

(3)
Exhibits (The exhibits required to be filed as a part of this Report are listed in the Exhibit Index).
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 SIGNATURES
        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 	 	EXACT SCIENCES CORPORATION	

Date: March 12, 2010	
 	
By:	
 	
/s/ KEVIN T. CONROY

Kevin T. Conroy
 President & Chief Executive Officer	

 POWER OF ATTORNEY AND SIGNATURES
        We, the undersigned officers and directors of Exact Sciences Corporation, hereby severally constitute and appoint Kevin T. Conroy our true and lawful attorney, with full power to him to sign for us and in our names in the capacities indicated below, any amendments to this Annual Report on Form 10-K, and generally to do all things in our names and on our behalf in such capacities to enable Exact Sciences Corporation to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all the requirements of the Securities Exchange Commission.
        Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name 	 	Title 	 	Date 	

 	

 	
/s/ KEVIN T. CONROY

Kevin T. Conroy	 	President and Chief Executive Officer
(Principal Executive Officer)	 	March 12, 2010	

/s/ MANEESH K. ARORA

Maneesh K. Arora	
 	
Senior Vice President, Chief Financial
Officer and Secretary (Principal
Financial Officer and Principal
Accounting Officer)	
 	
March 12, 2009	

/s/ PATRICK J. ZENNER

Patrick J. Zenner	
 	
Chairman of the Board	
 	
March 12, 2010	

/s/ SALLY W. CRAWFORD

Sally W. Crawford	
 	
Director	
 	
March 12, 2010	

/s/ EDWIN M. KANIA, JR.

Edwin M. Kania, Jr.	
 	
Director	
 	
March 12, 2010	
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Name 	 	Title 	 	Date 	

 	

 	
/s/ CONNIE MACK, III

Connie Mack, III	 	Director	 	March 12, 2010	

/s/ KATHERINE NAPIER

Katherine Napier	
 	
Director	
 	
March 12, 2010	

/s/ JAMES CONNELLY

James Connelly	
 	
Director	
 	
March 12, 2010	
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 Exhibit Index to Annual Report on Form 10-K

Exhibit Number	 	Description	
 	3.1	 	Sixth Amended and Restated Certificate of Incorporation of the Registrant (previously filed as Exhibit 3.3 to our Registration Statement on Form S-1 (File No. 333-48812), which is incorporated herein by reference)	
 	  	 	 	
 	3.2	 	Amended and Restated By-Laws of the Registrant (previously filed as Exhibit 3.1 to our Report on Form 10-Q filed on May 15, 2005, which is incorporated herein by reference)	
 	  	 	 	
 	4.1	 	Specimen certificate representing the Registrant's Common Stock (previously filed as Exhibit 4.1 to our Registration Statement on Form S-1 (File No. 333-48812), which is incorporated herein by reference)	
 	  	 	 	
 	4.2	 	Warrant No. W-1 issued to MAYO Foundation for Medical and Educational Research dated June 11, 2009 (previously filed as Exhibit 4.1 to our Report on Form 10-Q filed on August 13, 2009, which is incorporated herein by reference)	
 	  	 	 	
 	4.3	 	Warrant No. W-2 issued to MAYO Foundation for Medical and Educational Research dated June 11, 2009 (previously filed as Exhibit 4.2 to our Report on Form 10-Q filed on August 13, 2009, which is incorporated herein by reference)	
 	  	 	 	
 	10.1	*	1995 Stock Option Plan (previously filed as Exhibit 10.1 to our Registration Statement on Form S-1 (File No. 333-48812), which is incorporated herein by reference)	
 	  	 	 	
 	10.2	*	2000 Stock Option and Incentive Plan (previously filed as Exhibit 10.2 to our Annual Report on Form 10-K filed for the period ended December 31, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.3	*	Sixth Amended and Restated Registration Rights Agreement between the Registrant and the parties named therein dated as of April 7, 2000 (previously filed as Exhibit 10.4 to our Registration Statement on Form S-1 (File No. 333-48812), which is incorporated herein by reference)	
 	  	 	 	
 	10.4	 	License Agreement between the Registrant and Genzyme Corporation dated as of March 25,1999 (previously filed as Exhibit 10.6 to our Annual Report on Form 10-K for the period ended December 31, 2006, which is incorporated herein by reference)	
 	  	 	 	
 	10.5	 	Form of Consulting Agreement by and between the Registrant and certain members of the scientific advisory board (previously filed as Exhibit 10.16 to our Registration Statement on Form S-1 (File No. 333-48812), which is incorporated herein by reference)	
 	  	 	 	
 	10.6	**	Agreement between the Registrant and Laboratory Corporation of America Holdings, Inc. dated June 26, 2002 (previously filed as Exhibit 10.10 to our Annual Report on Form 10-K for the period ended December 31, 2007, which is incorporated herein by reference)	
 	  	 	 	
 	10.7	 	Lease Agreement, dated January 23, 2003, between Marlborough Campus Limited Partnership and the Registrant, as amended (previously filed as Exhibit 10.11 to our Annual Report on Form 10-K for the period ended December 31, 2007, which is incorporated herein by reference)	
 	  	 	 	
 	10.8	**	Exclusive License Agreement between Matrix Technologies Corporation, d/b/a Apogent Discoveries, and the Registrant dated as of November 26, 2002 (previously filed as Exhibit 10.12 to our Annual Report on Form 10-K for the period ended December 31, 2007, which is incorporated herein by reference)	
 		 	 	
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Exhibit Number	 	Description	
 	10.9	**	First Amendment to License Agreement by and between the Registrant and Laboratory Corporation of America Holdings, Inc. dated January 19, 2004 (previously filed as Exhibit 10.12 to our Annual Report on Form 10-K filed for the period ended December 31, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.10	**	Sublicense Agreement between the Registrant and Beckman Coulter dated July 28, 2003 (previously filed as Exhibit 10.13 to our Annual Report on Form 10-K filed for the period ended December 31, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.11	*	Form of Incentive Stock Option Agreement (previously filed as Exhibit 10.14 to our Annual Report on Form 10-K filed for the period ended December 31, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.12	*	Form of Non-Qualified Stock Option Agreement (previously filed as Exhibit 10.1 to our Report on Form 10-Q filed on November 4, 2004, which is incorporated herein by reference)	
 	  	 	 	
 	10.13	+*	The Registrant's 2000 Employee Stock Purchase Plan	
 	  	 	 	
 	10.14	*	Amended and Restated Employee Retention Agreement between the Registrant and Jeffrey R. Luber dated April 18, 2008 (previously filed as Exhibit 10.1 to our Report on Form 8-K filed on April 22, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.15	*	Amended and Restated Employee Retention Agreement between the Registrant and Charles R. Carelli, Jr. dated April 18, 2008 (previously filed as Exhibit 10.2 to our Report on Form 8-K filed on April 22, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.16	**	Second Amendment to Agreement between the Registrant and Laboratory Corporation of America Holdings, dated as of June 27, 2007 (previously filed as Exhibit 10.1 to our Report on Form 8-K filed on July 3, 2007, which is incorporated herein by reference)	
 	  	 	 	
 	10.17	+*	Non-Employee Director Compensation Policy	
 	  	 	 	
 	10.18	*	Executive Incentive Plan (previously filed as Exhibit 10.2 to our Report on Form 8-K filed on August 15, 2007, which is incorporated herein by reference)	
 	  	 	 	
 	10.19	**	Third Amendment to Agreement between the Registrant and Laboratory Corporation of America Holdings, dated as of August 31, 2007 (previously filed as Exhibit 10.1 to our Report on Form 8-K filed on September 7, 2007, which is incorporated herein by reference)	
 	  	 	 	
 	10.20	 	Sublease Agreement between the Registrant and INTRINSIX Corp., dated as of November 20, 2007 (previously filed as Exhibit 10.1 to our Report on Form 8-K filed on November 21, 2007, which is incorporated herein by reference)	
 	  	 	 	
 	10.21	 	Form of Restricted Stock Award Agreement (previously filed as Exhibit 10.29 to our Annual Report on Form 10-K for the period ended December 31, 2007, which is incorporated herein by reference)	
 	  	 	 	
 	10.22	**	Fourth Amendment to Agreement between the Registrant and Laboratory Corporation of America Holdings, dated as of March 17, 2008 (previously filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on May 9, 2008, which is incorporated herein by reference)	
 		 	 	
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Exhibit Number	 	Description	
 	10.23	**	License Agreement between the Registrant and Case Western Reserve University, dated as of July 18, 2005, as amended (previously filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on August 8, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.24	**	Amended and Restated License Agreement between The Johns Hopkins University and the Registrant, dated as of March 25, 2003, as amended (previously filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on November 7, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.25	 	Sublease Agreement by and between the Registrant and QTEROS, Inc., dated as of December 9, 2008 (previously filed as Exhibit 10.1 to our Report on Form 8-K filed on December 15, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.26	**	Collaboration, License and Purchase Agreement between Genzyme Corporation and the Registrant, dated January 27, 2009 (previously filed as Exhibit 10.1 to our Report on Form 8-K filed on January 28, 2009, which is incorporated herein by reference)	
 	  	 	 	
 	10.27	**	Assignment, Sublicense, Consent and Eighth Amendment to License Agreement among the Registrant, Genzyme Corporation and The Johns Hopkins University, dated January 27, 2009 (previously filed as Exhibit 10.2 to our Report on Form 8-K filed on January 28, 2009, which is incorporated herein by reference)	
 	  	 	 	
 	10.28	**	Amended and Restated License Agreement between Genzyme Corporation and the Registrant, dated January 27, 2009 (previously filed as Exhibit 10.3 to our Report on Form 8-K filed on January 28, 2009, which is incorporated herein by reference)	
 	  	 	 	
 	10.29	 	Common Stock Subscription Agreement between the Registrant and Genzyme Corporation, dated January 27, 2009 (previously filed as Exhibit 10.4 to our Report on Form 8-K filed on January 28, 2009, which is incorporated herein by reference)	
 	  	 	 	
 	10.30	**	Seventh Amendment to License Agreement between the Registrant and The Johns Hopkins University, dated as of December 15, 2008 (previously filed as Exhibit 10.33 to our Annual Report on Form 10-K filed for the period ended December 31, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.31	*	Employment Agreement by and between Kevin T. Conroy and the Registrant, dated as of March 18, 2009 (previously filed as Exhibit 10.1 to our Report on Form 8-K filed on March 18, 2009, which is incorporated herein by reference)	
 	  	 	 	
 	10.32	*	Employment Agreement by and between Maneesh Arora and the Registrant, dated as of March 18, 2009 (previously filed as Exhibit 10.2 to our Report on Form 8-K filed on March 18, 2009, which is incorporated herein by reference)	
 	  	 	 	
 	10.33	*	Release Agreement between Jeffrey R. Luber and the Registrant, dated as of March 31, 2009 (previously filed as Exhibit 10.36 to our Annual Report on Form 10-K filed for the period ended December 31, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.34	*	Release Agreement between Charles R. Carelli, Jr. and the Registrant, dated as of March 31, 2009 (previously filed as Exhibit 10.37 to our Annual Report on Form 10-K filed for the period ended December 31, 2008, which is incorporated herein by reference)	
 	  	 	 	
 	10.35	*	Employment Agreement by and between Graham Lidgard and the Registrant, dated as of August 1, 2009 (previously filed as Exhibit 10 to our Report on Form 10-Q filed on November 12, 2009, which is incorporated herein by reference)	
 		 	 	
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Exhibit Number	 	Description	
 	10.36	+*	Employment Agreement by and between Dr. Barry Berger and the Registrant, dated as of August 1, 2009	
 	  	 	 	
 	10.37	**	License Agreement by and between MAYO Foundation for Medical and Educational Research and the Registrant, dated June 11, 2009 (previously filed as Exhibit 10.2 to our Report on Form 10-Q filed on August 13, 2009, which is incorporated herein by reference)	
 	  	 	 	
 	10.38	 	Form of Securities Purchase Agreement, dated June 11, 2009 (previously filed as Exhibit 10 to our Report on Form 8-K filed on June 12, 2009, which is incorporated herein by reference)	
 	  	 	 	
 	10.39	+**	Technology License Agreement by and between Hologic, Inc., Third Wave Technologies, Inc., and the Registrant, dated as of October 14, 2009	
 	  	 	 	
 	10.40	+	Loan Agreement, dated November 10, 2009, between the Wisconsin Department of Commerce and the Registrant	
 	  	 	 	
 	10.41	+	Lease Agreement, dated November 10, 2009, between University Research Park Incorporated and the Registrant	
 	  	 	 	
 	21.1	 	Subsidiaries of the Registrant (previously filed as Exhibit 21.1 to our Registration Statement on Form S-1 (File No. 333-48812), which is incorporated herein by reference)	
 	  	 	 	
 	23.1	+	Consent of Grant Thornton LLP	
 	  	 	 	
 	23.2	+	Consent of Ernst & Young LLP	
 	  	 	 	
 	24.1	 	Power of Attorney (included on signature page)	
 	  	 	 	
 	31.1	+	Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934	
 	  	 	 	
 	31.2	+	Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934	
 	  	 	 	
 	32	+	Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	

*
Indicates a management contract or any compensatory plan, contract or arrangement.

**
Confidential Treatment requested for certain portions of this Agreement.

+
Filed herewith.
74

Exhibit 10.13
 
EXACT SCIENCES CORPORATION
 
2000 EMPLOYEE STOCK PURCHASE PLAN
 
Article 1 - Purpose .
 
This 2000 Employee Stock Purchase Plan (the “Plan”) is intended to encourage stock ownership by all eligible employees of EXACT Sciences Corporation (the “Company”), a Delaware corporation, and its participating subsidiaries (as defined in Article 17) so that they may share in the growth of the Company by acquiring or increasing their proprietary interest in the Company.  The Plan is designed to encourage eligible employees to remain in the employ of the Company and its participating subsidiaries.  The Plan is intended to constitute an “employee stock purchase plan” within the meaning of Section 423(b) of the Internal Revenue Code of 1986, as amended (the “Code”).
 
Article 2 - Administration of the Plan .
 
The Plan may be administered by a committee appointed by the Board of Directors of the Company (the “Committee”).  The Committee shall consist of not less than two members of the Company’s Board of Directors.  The Board of Directors may from time to time remove members from, or add members to, the Committee.  Vacancies on the Committee, howsoever caused, shall be filled by the Board of Directors.  The Committee may select one of its members as Chairman, and shall hold meetings at such times and places as it may determine.  Acts by a majority of the Committee, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee.
 
The interpretation and construction by the Committee of any provisions of the Plan or of any option granted under it shall be final, unless otherwise determined by the Board of Directors.  The Committee may from time to time adopt such rules and regulations for carrying out the Plan as it may deem best, provided that any such rules and regulations shall be applied on a uniform basis to all employees under the Plan.  No member of the Board of Directors or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it.
 
In the event the Board of Directors fails to appoint or refrains from appointing a Committee, the Board of Directors shall have all power and authority to administer the Plan.  In such event, the word “Committee” wherever used herein shall be deemed to mean the Board of Directors.
 
Article 3 - Eligible Employees .
 
All employees of the Company or any of its participating subsidiaries whose customary employment is more than 20 hours per week and for more than five months in any calendar year shall be eligible to receive options under the Plan to purchase common stock of the Company,

 
and all eligible employees shall have the same rights and privileges hereunder.  Persons who are eligible employees on the first business day of any Offering Period (as defined in Article 5) shall receive their options as of such day.  Persons who become eligible employees after any date on which options are granted under the Plan shall be granted options on the first day of the next succeeding Offering Period on which options are granted to eligible employees under the Plan.  In no event, however, may an employee be granted an option if such employee, immediately after the option was granted, would be treated as owning stock possessing five percent or more of the total combined voting power or value of all classes of stock of the Company or of any parent corporation or subsidiary corporation, as the terms “parent corporation” and “subsidiary corporation” are defined in Section 424(e) and (f) of the Code.  For purposes of determining stock ownership under this paragraph, the rules of Section 424(d) of the Code shall apply, and stock which the employee may purchase under outstanding options shall be treated as stock owned by the employee.
 
Article 4 - Stock Subject to the Plan .
 
The stock subject to the options under the Plan shall be shares of the Company’s authorized but unissued common stock, par value $.01 per share (the “Common Stock”), or shares of Common Stock reacquired by the Company, including shares purchased in the open market.  The aggregate number of shares which may be issued pursuant to the Plan is 300,000 subject to adjustment as provided in Article 12.  If any option granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the unpurchased shares subject thereto shall again be available under the Plan.
 
Beginning February 1, 2002 and each February 1 thereafter (each, an “Adjustment Date”), the number of shares which may be issued pursuant to the Plan shall automatically increase by such number of shares as is equal to the greater of (i) 0.75% of the number of shares of Common Stock outstanding on the immediately preceding December 31, and (ii) the number of shares of Common Stock that has been made subject to options under the Plan during the year immediately preceding such Adjustment Date; provided, however, that the Board may provide for a lesser number of shares on any Adjustment Date by designating such lesser number by resolution adopted on or before such Adjustment Date; and provided further, however that the cumulative number of additional shares that may be issued pursuant to the Plan as a result of increases on all Adjustment Dates taken together may not exceed 1,000,000 shares (such number to be subject to adjustment in accordance with Article 12 below).
 
Article 5 - Offering Period and Stock Options .
 
Offering Periods under the Plan shall consist of twenty-four month periods commencing on November 1 and May 1 of each calendar year (“ Offering Periods ”).  The Company will designate one or more dates within each Offering Period on which shares of Common Stock may be purchased by participants in an Offering Period (“Exercise Date(s)”).  Unless and until otherwise determined by the Committee, there shall be four Exercise Dates occurring on each April 30 and October 31 (or, if such date is not a business day, the first business day thereafter) within each such Offering Period; provided, that for the Offering Period commencing on
 
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November 1, 2009, the Exercise Dates shall be April 30, 2010 and October 31, 2010; provided, further, that for the Offering Period commencing on May 1, 2010, the sole Exercise Date shall be October 31, 2010.  On the first business day at the beginning of each Offering Period, the Company will grant to each eligible employee who is then a participant in the Plan an option to purchase shares on the Exercise Dates, at the Option Price hereinafter provided for, a maximum of 10,000 shares, on condition that such employee remains eligible to participate in the Plan on the Exercise Date.  If the participant’s accumulated payroll deductions on the last date of the Offering Period would enable the participant to purchase more than the maximum number of shares provided herein except for the share limitation set forth herein, the excess of the amount of the accumulated payroll deductions over the aggregate purchase price of the maximum number of shares that may be purchased in accordance with this Article 5 shall be promptly refunded to the participant by the Company, without interest.  The participant shall be entitled to exercise the option so granted only to the extent of the participant’s accumulated payroll deductions on the Exercise Date.  The Option Price per share for each Exercise Date within an Offering Period shall be the lesser of (i) 85% of the average market price of the Common Stock on the first business day of the Offering Period and (ii) 85% of the average market price of the Common Stock on the applicable Exercise Date, in either event rounded up to the nearest cent. The foregoing limitation on the number of shares subject to option and the Option Price shall be subject to adjustment as provided in Article 12.
 
Unless a participant files a new authorization or withdraws from the Plan, the deductions and purchases under the authorization the participant has on file under the Plan will continue from one Offering Period to succeeding (but not overlapping) Offering Periods as long as the Plan remains in effect.  Notwithstanding any of the foregoing, if the average market price of the Common Stock on an Exercise Date is less than or equal to the average market price of the Common Stock on the first business day of the Offering Period to which such Exercise Date relates, all participants shall be automatically withdrawn from such Offering Period immediately after the acquisition of shares of Common Stock for such Exercise Date and automatically enrolled in the immediately following Offering Period as of the first day thereof.
 
For purposes of the Plan, the term “average market price” on any date means (i) the average (on that date) of the high and low prices of the Common Stock on the principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; or (ii) the last reported sale price (on that date) of the Common Stock on the NASDAQ National Market, if the Common Stock is not then traded on a national securities exchange; or (iii) the average of the closing bid and asked prices last quoted (on that date) by an established quotation service for over-the-counter securities, if the Common Stock is not reported on the NASDAQ National Market; or (iv) if the Common Stock is not publicly traded, the fair market value of the Common Stock as determined by the Committee after taking into consideration all factors which it deems appropriate, including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm’s length.
 
For purposes of the Plan, the term “business day” means a day on which there is trading on the NASDAQ National Market or the aforementioned national securities exchange, whichever is applicable pursuant to the preceding paragraph; and if neither is applicable, a day that is not a Saturday, Sunday or legal holiday in State of Wisconsin.
 
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No employee shall be granted an option which permits the employee’s right to purchase stock under the Plan, and under all other Section 423(b) employee stock purchase plans of the Company and any parent or subsidiary corporations, to accrue at a rate which exceeds $25,000 of fair market value of such stock (determined on the date or dates that options on such stock were granted) for each calendar year in which such option is outstanding at any time.  The purpose of the limitation in the preceding sentence is to comply with Section 423(b)(8) of the Code.  If the participant’s accumulated payroll deductions on any Exercise Date would otherwise enable the participant to purchase Common Stock in excess of the Section 423(b)(8) limitation described in this paragraph, the excess of the amount of the accumulated payroll deductions over the aggregate purchase price of the shares actually purchased shall be promptly refunded to the participant by the Company, without interest.
 
Article 6 - Exercise of Option .
 
Each eligible employee who continues to be a participant in the Plan on an Exercise Date within an Offering Period shall be deemed to have exercised his or her option on such date and shall be deemed to have purchased from the Company such number of full shares of Common Stock reserved for the purpose of the Plan as the participant’s accumulated payroll deductions on such date will pay for at the Option Price, subject to the 10,000 maximum share limit of the option and the Section 423(b)(8) limitation described in Article 5.  If the individual is not a participant on an Exercise Date, then he or she shall not be entitled to exercise his or her option.  Only full shares of Common Stock may be purchased under the Plan.  Unused payroll deductions remaining in a participant’s account at the end of either an Exercise Date or an Offering Period, by reason of the inability to purchase a fractional share, shall be carried forward to the next Exercise Date or Offering Period.
 
Article 7 - Authorization for Entering the Plan .
 
An employee may elect to enter the Plan by filling out, signing and delivering to the Company an authorization:
 
A.            Stating the percentage to be deducted regularly from the employee’s pay;
 
B.            Authorizing the purchase of stock for the employee in each Offering Period in accordance with the terms of the Plan; and
 
C.            Specifying the exact name or names in which stock purchased for the employee is to be issued as provided under Article 11 hereof.
 
Such authorization must be received by the Company at least ten days before the first day of the next Offering Period and shall take effect only if the employee is an eligible employee on the first business day of such Offering Period.
 
An employee cannot participate in more than one Offering Period at any time.
 
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Unless a participant files a new authorization or withdraws from the Plan, the deductions and purchases under the authorization the participant has on file under the Plan will continue from one Offering Period to succeeding (but not overlapping) Offering Periods as long as the Plan remains in effect.
 
The Company will accumulate and hold for each participant’s account the amounts deducted from his or her pay.  No interest will be paid on these amounts.
 
Article 8 - Maximum Amount of Payroll Deductions .
 
An employee may authorize payroll deductions in an amount (expressed as a whole percentage) not less than one percent (1%) but not more than fifteen percent (15%) of the employee’s total compensation, including base pay or salary and any overtime, bonuses or commissions.
 
Article 9 - Change in Payroll Deductions .
 
Deductions may not be increased or decreased during a Offering Period.  However, a participant may withdraw in full from the Plan.
 
Article 10 - Withdrawal from the Plan .
 
A participant may withdraw from the Plan (in whole but not in part) at any time prior to the last day of an Offering Period by delivering a withdrawal notice to the Company.
 
To re-enter the Plan, an employee who has previously withdrawn must file a new authorization at least ten days before the first day of the next Offering Period in which he or she wishes to participate.  The employee’s re-entry into the Plan becomes effective at the beginning of such Offering Period, provided that he or she is an eligible employee on the first business day of the Offering Period.
 
Article 11 - Issuance of Stock .
 
Certificates for stock issued to participants shall be delivered as soon as practicable after each Exercise Date by the Company’s transfer agent.
 
Stock purchased under the Plan shall be issued only in the name of the participant, or if the participant’s authorization so specifies, in the name of the participant and another person of legal age as joint tenants with rights of survivorship.
 
Article 12 - Adjustments .
 
Upon the happening of any of the following described events, a participant’s rights under options granted under the Plan shall be adjusted as hereinafter provided:
 
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A.            In the event that the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if, upon a reorganization, split-up, liquidation, recapitalization or the like of the Company, the shares of Common Stock shall be exchanged for other securities of the Company, each participant shall be entitled, subject to the conditions herein stated, to purchase such number of shares of Common Stock or amount of other securities of the Company as were exchangeable for the number of shares of Common Stock that such participant would have been entitled to purchase except for such action, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or exchange; and
 
B.            In the event the Company shall issue any of its shares as a stock dividend upon or with respect to the shares of stock of the class which shall at the time be subject to option hereunder, each participant upon exercising such an option shall be entitled to receive (for the purchase price paid upon such exercise) the shares as to which the participant is exercising his or her option and, in addition thereto (at no additional cost), such number of shares of the class or classes in which such stock dividend or dividends were declared or paid, and such amount of cash in lieu of fractional shares, as is equal to the number of shares thereof and the amount of cash in lieu of fractional shares, respectively, which the participant would have received if the participant had been the holder of the shares as to which the participant is exercising his or her option at all times between the date of the granting of such option and the date of its exercise.
 
Upon the happening of any of the foregoing events, the class and aggregate number of shares set forth in Article 4 hereof which are subject to options which have been or may be granted under the Plan and the limitations set forth in the second paragraph of Article 5 shall also be appropriately adjusted to reflect the events specified in paragraphs A and B above.  Notwithstanding the foregoing, any adjustments made pursuant to paragraphs A or B shall be made only after the Committee, based on advice of counsel for the Company, determines whether such adjustments would constitute a “modification” (as that term is defined in Section 424 of the Code).  If the Committee determines that such adjustments would constitute a modification, it may refrain from making such adjustments.
 
If the Company is to be consolidated with or acquired by another entity in a merger, a sale of all or substantially all of the Company’s assets or otherwise (an “Acquisition”), the Committee or the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor Board”) shall, with respect to options then outstanding under the Plan, either (i) make appropriate provision for the continuation of such options by arranging for the substitution on an equitable basis for the shares then subject to such options either (a) the consideration payable with respect to the outstanding shares of the Common Stock in connection with the Acquisition, (b) shares of stock of the successor corporation, or a parent or subsidiary of such corporation, or (c) such other securities as the Successor Board deems appropriate, the fair market value of which shall not materially exceed the fair market value of the shares of Common Stock subject to such options immediately preceding the Acquisition; or (ii) terminate each participant’s options in exchange for a cash payment equal to the excess of (a) the fair market value on the date of the Acquisition, of the number of shares of Common Stock that the participant’s accumulated payroll deductions as of the date of the Acquisition could purchase, at
 
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an option price determined with reference only to the first business day of the applicable Offering Period and subject to the maximum share limitation set forth in Article 5 hereof, Code Section 423(b)(8) and fractional-share limitations on the amount of stock a participant would be entitled to purchase, over (b) the result of multiplying such number of shares by such option price.
 
The Committee or Successor Board shall determine the adjustments to be made under this Article 12, and its determination shall be conclusive.
 
Article 13 - No Transfer or Assignment of Employee’s Rights .
 
An option granted under the Plan may not be transferred or assigned, except by will or the laws of descent and distribution, and shall be exercised, during the participant’s lifetime, only by the participant.
 
Article 14 - Termination of Employee’s Rights .
 
Whenever a participant ceases to be an eligible employee because of retirement, voluntary or involuntary termination, resignation, layoff, discharge, death or for any other reason, his or her rights under the Plan shall immediately terminate, and the Company shall promptly refund, without interest, the entire balance of his or her payroll deduction account under the Plan.  Notwithstanding the foregoing, eligible employment shall be treated as continuing intact while a participant is on military leave, sick leave or other bona fide leave of absence, for up to 90 days, or for so long as the participant’s right to re-employment is guaranteed either by statute or by contract, if longer than 90 days.
 
Article 15 - Termination and Amendments to Plan .
 
Unless terminated sooner as provided below, the Plan shall terminate on October  31, 2010.  The Plan may be terminated at any time by the Company’s Board of Directors but such termination shall not affect options then outstanding under the Plan.  It will terminate in any case when all or substantially all of the unissued shares of stock reserved for the purposes of the Plan have been purchased.  If at any time shares of stock reserved for the purpose of the Plan remain available for purchase but not in sufficient number to satisfy all then unfilled purchase requirements, the available shares shall be apportioned among participants in proportion to the amount of payroll deductions accumulated on behalf of each participant that would otherwise be used to purchase stock, and the Plan shall terminate.  Upon such termination or any other termination of the Plan, all payroll deductions not used to purchase stock will be refunded, without interest.
 
The Committee or the Board of Directors may from time to time adopt amendments to the Plan provided that, without the approval of the stockholders of the Company, no amendment may (i) increase the number of shares that may be issued under the Plan; (ii) change the class of employees eligible to receive options under the Plan, if such action would be treated as the adoption of a new plan for purposes of Section 423(b) of the Code; or (iii) cause Rule 16b-3 under the Securities Exchange Act of 1934 to become inapplicable to the Plan.
 
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Article 16 - Limits on Sale of Stock Purchased under the Plan .
 
The Plan is intended to provide shares of Common Stock for investment and not for resale.  The Company does not, however, intend to restrict or influence any employee in the conduct of his or her own affairs.  An employee may, therefore, sell stock purchased under the Plan at any time the employee chooses, subject to compliance with any applicable federal or state securities laws and subject to any restrictions imposed under Article 21 to ensure that tax withholding obligations are satisfied.  THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE STOCK.
 
Article 17 - Participating Subsidiaries .
 
The term “participating subsidiary” shall mean any present or future subsidiary of the Company, as that term is defined in Section 424(f) of the Code, which is designated from time to time by the Board of Directors to participate in the Plan.  The Board of Directors shall have the power to make such designation before or after the Plan is approved by the stockholders.
 
Article 18 - Optionees Not Stockholders .
 
Neither the granting of an option to an employee nor the deductions from his or her pay shall constitute such employee a stockholder of the shares covered by an option until such shares have been actually purchased by the employee.
 
Article 19 - Application of Funds .
 
The proceeds received by the Company from the sale of Common Stock pursuant to options granted under the Plan will be used for general corporate purposes.
 
Article 20 - Notice to Company of Disqualifying Disposition .
 
By electing to participate in the Plan, each participant agrees to notify the Company in writing immediately after the participant transfers Common Stock acquired under the Plan, if such transfer occurs within two years after the first business day of the Offering Period in which such Common Stock was acquired.  Each participant further agrees to provide any information about such a transfer as may be requested by the Company or any subsidiary corporation in order to assist it in complying with the tax laws.  Such dispositions generally are treated as “disqualifying dispositions” under Sections 421 and 424 of the Code, which have certain tax consequences to participants and to the Company and its participating subsidiaries.
 
Article 21 - Withholding of Additional Income Taxes .
 
By electing to participate in the Plan, each participant acknowledges that the Company and its participating subsidiaries are required to withhold taxes with respect to the amounts deducted from the participant’s compensation and accumulated for the benefit of the participant under the Plan, and each participant agrees that the Company and its participating subsidiaries
 
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may deduct additional amounts from the participant’s compensation, when amounts are added to the participant’s account, used to purchase Common Stock or refunded, in order to satisfy such withholding obligations.  Each participant further acknowledges that when Common Stock is purchased under the Plan the Company and its participating subsidiaries may be required to withhold taxes with respect to all or a portion of the difference between the fair market value of the Common Stock purchased and its purchase price, and each participant agrees that such taxes may be withheld from compensation otherwise payable to such participant.  It is intended that tax withholding will be accomplished in such a manner that the full amount of payroll deductions elected by the participant under Article 7 will be used to purchase Common Stock.  However, if amounts sufficient to satisfy applicable tax withholding obligations have not been withheld from compensation otherwise payable to any participant, then, notwithstanding any other provision of the Plan, the Company may withhold such taxes from the participant’s accumulated payroll deductions and apply the net amount to the purchase of Common Stock, unless the participant pays to the Company, prior to the exercise date, an amount sufficient to satisfy such withholding obligations.  Each participant further acknowledges that the Company and its participating subsidiaries may be required to withhold taxes in connection with the disposition of stock acquired under the Plan and agrees that the Company or any participating subsidiary may take whatever action it considers appropriate to satisfy such withholding requirements, including deducting from compensation otherwise payable to such participant an amount sufficient to satisfy such withholding requirements or conditioning any disposition of Common Stock by the participant upon the payment to the Company or such subsidiary of an amount sufficient to satisfy such withholding requirements.
 
Article 22 - Governmental Regulations .
 
The Company’s obligation to sell and deliver shares of Common Stock under the Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such shares.
 
Government regulations may impose reporting or other obligations on the Company with respect to the Plan.  For example, the Company may be required to identify shares of Common Stock issued under the Plan on its stock ownership records and send tax information statements to employees and former employees who transfer title to such shares.
 
Article 23 - Governing Law .
 
The validity and construction of the Plan shall be governed by the laws of Delaware, without giving effect to the principles of conflicts of law thereof.
 
Article 24 - Approval of Board of Directors and Stockholders of the Company .
 
The Plan was adopted by the Board of Directors on October 17, 2000 and was approved by the stockholders of the Company on October 17, 2000.
 
The Plan was amended by the Committee, without stockholder approval pursuant to Article 15 hereof, on July 22, 2003 and on October 15, 2009.
 
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Exhibit 10.17
 
EXACT Sciences Corporation
 
Non-Employee Director Compensation Policy
 
The purpose of this Non-Employee Director Compensation Policy of Exact Sciences Corporation, a Delaware corporation (the “Company”), is to provide a total compensation package that enables the Company to attract and retain, on a long-term basis, high caliber directors who are not employees or officers of the Company or its Subsidiaries.  For purposes of this policy, non-employee directors shall include any director serving as an executive officer on an interim basis at the request of the Company’s Board of Directors (the “Board”).
 
In furtherance of this purpose stated above, all non-employee directors shall be paid stock compensation for services provided to the Company as set forth below:
 
On the date of each annual meeting of the Company’s stockholders, each non-employee director who is continuing as a director following such annual meeting shall be granted an annual retainer in common stock of the Company (“Director Stock”) having a value as set forth below as measured by the closing sale price of the Company’s common stock on the date of grant:

 	 	Annual Retainer
($ value of Restricted
Stock)	 	
Chairman of the Board	 	$	52,500	 	
Chairman of a Committee	 	$	50,000	 	
Director	 	$	40,000	 	
 
Upon his or her initial election to the board (or the first trading day thereafter if the date of election is not a trading day), a new director shall be granted $25,000 worth of Director Stock as measured by the closing sale price of the Company’s common stock on the date of grant.
 
All Director Stock granted pursuant to this Director Compensation Policy shall be deemed fully-vested immediately upon grant.
 
The foregoing compensation is in addition to reimbursement of all out-of-pocket expenses incurred by directors in attending meetings of the Board.
 
Adopted Effective October 14, 2009

Exhibit 10.36
 
EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into effective as of the 1st day of August, 2009, by and between Barry Berger, M.D. (“Employee”) and EXACT Sciences Corporation, a Delaware corporation (the “Company”).
 
WHEREAS , the Company currently employs Employee as its Senior Vice President, Chief Medical Officer;
 
WHEREAS, the Company and Employee are parties to that that certain Employee Retention Agreement dated April 28, 2008 (the “Retention Agreement”) and that certain Employee Noncompetition Agreement dated April 2, 1999 (the “Noncompetition Agreement”); and
 
WHEREAS, the Company and Employee desire to enter into this Agreement, among other reasons, to provide for certain new and/or modified severance, change of control, bonus, long-term incentive, expense reimbursement and other benefits for Employee, to modify Employee’s noncompetition, non-solicitation and other obligations to the Company, and to terminate the Retention Agreement and the Noncompetition Agreement, which are intended to be replaced by this Agreement.
 
NOW, THEREFORE , in consideration of the mutual covenants and conditions hereinafter set forth, and other good and valuable consideration, receipt of which is hereby acknowledged, the parties agree as follows:
 
1.              Employment .  The Company hereby agrees to employ Employee as the Company’s Senior Vice President, Chief Medical Officer, and Employee hereby agrees to serve the Company in such position, subject to the terms and provisions of this Agreement subject to the authority and direction of the Board of Directors of the Company.  Employee agrees (a) to devote his full-time professional efforts, attention and energies to the business of the Company, and (b) shall faithfully and to the best of his ability perform his duties hereunder.  Employee may serve as a director or committee member of other corporations, charitable organizations and trade associations (provided that the Company is notified in advance of all such positions) and may otherwise engage in charitable and community activities, deliver lectures and fulfill speaking engagements, and manage personal investments, but only if such services and activities do not interfere with the performance of his duties and responsibilities under this Agreement.
 
2.                                        Term of Employment.   Employee’s employment (the “Employment Term”) will continue until terminated as provided in Section 6 below.
 
3.                                        Compensation . During the Employment Term, Employee shall receive the following compensation.
 
3.1            Base Salary . Employee’s annual base salary on the date of this Agreement is $230,000, payable in accordance with the normal payroll practices of the Company (“Base Salary”). Employee’s Base Salary will be subject to annual review by the Chief Executive Officer (“CEO”), the Compensation Committee and the Board of Directors of the Company. During the Employment Term, on each anniversary date of this Agreement, the Company shall review the Base Salary amount to determine any increases. In no event shall the Base Salary be less than the Base Salary amount for the immediately preceding twelve (12) month period other than as permitted in Section 6.1(c) hereunder.
 
3.2            Annual Bonus Compensation . Employee shall be eligible to receive an annual cash bonus as determined by the Company’s Chief Executive Officer and the Compensation

 
Committee each calendar year. Employee’s target annual bonus percentage that he is eligible to earn for each calendar year shall be forty percent (40%) of his Base Salary as of January 1 of the applicable new calendar year. Any such bonus shall be based upon the achievement of goals determined by the Compensation Committee after consultation with the CEO, shall be paid no later than March 15 following the end of each calendar year, and except as set forth in Section 7 hereof, Employee shall not be entitled to receive an annual bonus for any calendar year (including the bonus referenced above) unless he remains employed with the Company through December 31 of the applicable calendar year; provided, however, that if Employee is terminated with Cause or resigns without Good Reason, no bonus will be due.
 
3.3            Long Term Incentive Plan . The Company shall implement a Long Term Incentive Plan (“LTIP”) as soon as reasonably practicable.  Employee’s benefits under the LTIP shall be determined pursuant to the terms of the LTIP, and such benefits may not be terminated or diminished without the approval of either the Compensation Committee or the Board of Directors.  Without limiting the foregoing, subject to the following paragraph, the LTIP shall provide for a cash payout to Employee upon a Change of Control (as defined in Section 7.2(a)) as follows:  (a) One-half percent (0.5%) of the equity value of any Change of Control transaction having an equity value between One Hundred Million Dollars ($100,000,000) and Five Hundred Million Dollars ($500,000,000); (b) for Change of Control transactions having an equity value between Five Hundred Million Dollars ($500,000,000) and One Billion Dollars ($1,000,000,000), the cash payout to Employee would be equal to the amount calculated in (a) above plus one-quarter percent (0.25%) for each incremental Fifty Million Dollars ($50,000,000) in equity value over Five Hundred Million Dollars ($500,000,000); (c) for Change of Control transactions having an equity value between One Billion Dollars ($1,000,000,000) and Two Billion Dollars ($2,000,000,000), the cash payout to Employee would be equal to the amounts calculated in (a) and (b) above plus one-eighth percent (0.125%) for each incremental Fifty Million Dollars ($50,000,000) in equity value over One Billion Dollars ($1,000,000,000); and (d) for Change of Control transactions having an equity value greater than Two Billion Dollars ($2,000,000,000), there would be no further increase in the cash payout to Employee beyond that calculated under subsections (a), (b) and (c).  For example, in connection with a Change of Control transaction having an equity value of (i) $600,000,000, Employee would receive a cash payout of $2,750,000 ($2,500,000 + $125,000 + $125,000) and (ii) $1,100,000,000, Employee would receive a cash payout of $3,875,000 ($3,750,000 + $62,500 + $62,500).
 
The Compensation Committee is currently contemplating implementing a separate LTIP which may be in addition to, or in substitution of, the LTIP described in the preceding paragraph relating to a Change of Control.  The separate LTIP, if adopted, would provide for payments based upon the achievement of certain value-creation milestones, to be defined by the Compensation Committee.  Employee’s benefits under such separate LTIP would be determined by the Compensation Committee, provided, however, Employee’s benefits would be initially established at the same level as the Company’s Chief Financial Officer and Chief Scientific Officer.  Employee’s benefits under such separate LTIP would not be terminated or diminished without the approval of either the Compensation Committee or the Board of Directors.  Employee agrees that if such separate LTIP is implemented, the Company may elect not to proceed with, or may elect to terminate, the LTIP described in the preceding paragraph without liability to Employee with respect thereto.
 
3.4            Equity Incentives and Other Long Term Compensation .  The Board of Directors, upon the recommendation of the Compensation Committee, or the Compensation Committee, may grant Employee from time to time options to purchase shares of the Company’s common stock, and/or other equity awards including without limitation restricted stock, both as a reward
 
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for past individual and corporate performance, and as an incentive for future performance.  Such options and/or other awards, if awarded, will be pursuant to the Company’s then current stock option plan.
 
4.                                        Benefits .
 
4.1            Benefits . Employee will be entitled to participate in the sick leave, insurance (including medical, life and long-term disability), profit-sharing, retirement, and other benefit programs that are generally provided to employees of the Company similarly situated, all in accordance with the rules and policies of the Company as to such matters and the plans established therefore.
 
4.2            Vacation and Personal Time . The Company will provide Employee with four (4) weeks of paid vacation each calendar year Employee is employed by the Company, in accordance with Company policy. The foregoing vacation days shall be in addition to standard paid holiday days for employees of the Company.
 
4.3            Indemnification . To the fullest extent permitted by applicable law and as provided for in the Company’s articles of incorporation and bylaws the Company will, during and after termination of employment, indemnify Employee (including providing advancement of expenses) for any judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys’ fees, incurred by Employee in connection with the defense of any lawsuit or other claim or investigation to which Employee is made, or threatened to be made, a party or witness by reason of being or having been an officer, director or employee of the Company or any of its subsidiaries or affiliates as deemed under the Securities Exchange Act of 1934 (“Affiliates”) or a fiduciary of any of their benefit plans.
 
4.4            Liability Insurance . Both during and after termination (for any reason) of Employee’s employment, the Company shall cause Employee to be covered under a directors and officers’ liability insurance policy for his acts (or non-acts) as an officer of the Company or any of its Affiliates. Such policy shall be maintained by the Company, at its expense in an amount and on terms (including the time period of coverage after the Employee’s employment terminates) at least as favorable to the Employee as policies covering the Company’s other members of its Board of Directors.
 
5.                                        Business Expenses . Upon submission of a satisfactory accounting by Employee, consistent with the policies of the Company, the Company will reimburse Employee for any reasonable and necessary out-of-pocket expenses incurred by Employee in the furtherance of the business of the Company.  Without limiting the foregoing, the Company will reimburse Employee for reasonable and necessary out-of-pocket expenses associated with travel between Employee’s residence in Massachusetts and the Company’s office in Wisconsin.
 
6.                                        Termination .
 
6.1            By Employee .
 
(a)            Without Good Reason. Employee may terminate his employment pursuant to this Agreement at any time without Good Reason (as defined below) with at least thirty (30) business days’ written notice (the “Employee Notice Period”) to the Company. Upon termination by Employee under this section, the Company may, in its sole discretion and at any time during the Employee Notice Period, suspend
 
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Employee’s duties for the remainder of the Employee Notice Period, as long as the Company continues to pay compensation to Employee, including benefits, throughout the Employee Notice Period.
 
(b)            With Good Reason. Employee may terminate his employment pursuant to this Agreement with Good Reason (as defined below) at any time within ninety (90) days after the occurrence of an event constituting Good Reason.
 
(c)            Good Reason. “Good Reason” shall mean any of the following: (i) Employee’s Base Salary is reduced (x) in a manner that is not applied proportionately to other senior executive officers of the Company or (y) by more than thirty percent (30%) of Employee’s then current Base Salary; (ii) Employee’s duties, authority or responsibilities are materially reduced or are materially inconsistent with the scope of authority, duties and responsibilities of Employee’s position; (iii) the occurrence of a material breach by the Company of any of its obligations to Employee under this Agreement or (iv) the Company materially violates or continues to materially violate any law or regulation contrary to the written advice of Employee and the Company’s outside counsel to the Board of Directors and the Company fails to rectify such violation within thirty (30) days of the written advice that such violations are taking place or (v) Employee is required to relocate his place of employment with the Company outside a radius of twenty-five (25) miles of his Notice Address.
 
6.2            By the Company .
 
(a)            With Cause. The Company may terminate Employee’s employment pursuant to this Agreement for Cause, as defined below, immediately upon written notice to Employee.
 
(b)            “Cause” shall mean any of the following:

(i)	any willful failure or refusal to perform the Employee’s duties which continues for more than ten (10) days after written notice from the Company, specifically identifying the manner in which the Company believed the Employee had failed or refused to perform his duties;	
 	 	
(ii)	the commission of any fraud or embezzlement by the Employee in connection with the Employee’s duties or committed in the course of Employee’s employment;	
 	 	
(iii)	any gross negligence or willful misconduct of the Employee with regard to the Company or any of its subsidiaries resulting in a material economic loss to the Company;	
 	 	
(iv)	a conviction of, or plea of guilty or nolo contendere to, a felony or other crime involving moral turpitude,	
 	 	
(v)	the Employee is convicted of a misdemeanor the circumstances of which involve fraud, dishonesty or moral turpitude and which is substantially related to the circumstances of Employee’s job with the Company;	
 
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(vi)	any willful and material violation by the Employee of any statutory or common law duty of loyalty to the Company or any of its subsidiaries resulting in a material economic loss; or	
 	 	
(vii)	any material breach by the Employee of this Agreement or any of the agreements referenced in Section 8 of this Agreement.	
 
(c)            Without Cause .  Subject to Section 7.1, the Company may terminate Employee’s employment pursuant to this Agreement without Cause upon at least thirty days’ written notice (“Company Notice Period”) to Employee.  Upon any termination by the Company under this Section 6.2(c), the Company may, in its sole discretion and at any time during the Company Notice Period, suspend Employee’s duties for the remainder of the Company Notice Period, as long as the Company continues to pay compensation to Employee, including benefits, throughout the Company Notice Period.
 
6.3            Death or Disability . Notwithstanding Section 2, in the event of the death or disability of Employee during the Employment Term, (i) Employee’s employment and this Agreement shall immediately and automatically terminate, (ii) the Company shall pay Employee (or in the case of death, employee’s designated beneficiary) Base Salary and accrued but unpaid bonuses, in each case up to the date of termination, and (iii) all equity awards granted to Employee, whether stock options or stock purchase rights under the Company’s equity compensation plan, or other equity awards, that are unvested at the time of termination shall immediately become fully vested and exercisable upon such termination. Neither Employee, his beneficiary nor estate shall be entitled to any severance benefits set forth in Section 7 if terminated pursuant to this section. In the event of the disability of Employee, the parties agree to comply with applicable federal and state law.
 
6.4            Survival. The Confidential Information Agreement described in Section 8 hereof and attached hereto as Schedule A shall survive the termination of this Agreement.
 
7.                                        Severance and Other Rights Relating to Termination and Change of Control.
 
7.1            Termination of Agreement Pursuant to Section 6.l(b) or 6.2(c) . If the Employee terminates his employment for Good Reason pursuant to Section 6.1(b), or the Company terminates Employee’s employment without Cause pursuant to Section 6.2(c), subject to the conditions described in Section 7.3 below, the Company will provide Employee the following payments and other benefits:

(a)	(i) salary continuation for a period of fifteen (15) months at Employee’s then current Base Salary, which shall commence on the first payroll date which is on or immediately follows the 30 th  day following the termination of Employee’s employment, (ii) any accrued but unpaid Base Salary as of the termination date; and (iii) any accrued but unpaid bonus, including without limitation any performance-based bonus, as of the termination date, all on the same terms and at the same times as would have applied had Employee’s employment not terminated; provided, that if at the end of the applicable period within which Employee’s employment was terminated a target bonus, or any other performance-based bonus, is paid to other senior executives, a pro-rata target or other performance-based bonus shall also be paid to Employee at the same time but no later than March 15 of the following year.	
 
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(b)                                  If Employee elects COBRA coverage for health and/or dental insurance in a timely manner, the Company shall pay the monthly premium payments for such timely elected coverage (consistent with what was in place at the date of termination) when each premium is due until the earlier of: (i) (12) twelve months from the date of termination; (ii) the date Employee obtains new employment which offers health and/or dental insurance that is reasonably comparable to that offered by the Company; or (iii) the date COBRA continuation coverage would otherwise terminate in accordance with the provisions of COBRA. Thereafter, health and dental insurance coverage shall be continued only to the extent required by COBRA and only to the extent Employee timely pays the premium payments himself.
 
(c)                                   Within thirty (30) days of the effective date of termination, the Company shall pay Employee Ten Thousand Dollars ($10,000) towards the cost of an outplacement consulting package for Employee.
 
(d)                                  The vesting of the then unvested equity awards granted to Employee, whether stock options, restricted stock or stock purchase rights under the Company’s equity compensation plan, or other equity awards, shall immediately accelerate by a period of 12 months upon such termination or resignation. Employee will be entitled to exercise such equity awards in accordance with Section 7.6.
 
7.2                                  Change of Control . The Board of Directors of the Company has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (defined in Section 7.2(a) below). The Board believes it is imperative to diminish the inevitable distraction of the Employee by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Employee’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Employee with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Employee will be satisfied and which are competitive with those of other similarly-situated companies. Therefore, in order to accomplish these objectives, the Board has caused the Company to include the provisions set forth in this Section 7.2.
 
(a)                                   Change of Control. “Change of Control” shall mean, and shall be deemed to have occurred if, on or after the date of this Agreement, (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) or group acting in concert, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company acting in such capacity or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company’s then outstanding Voting Securities, (ii) during any 12-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was
 
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 	previously so approved, cease for any reason to constitute a majority thereof, (iii) the consummation of a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the sale or disposition by the Company of (in one transaction or a series of related transactions) all or substantially all of the Company’s assets.	
 	 	
(b)	Acceleration of Vesting of Equity Awards. Subject to Employee’s agreement to remain employed by the Company (or any successor), if requested, for a period of at least six (6) months following such Change of Control at his then current base salary, one hundred percent (100%) of the then unvested equity awards granted to Employee, whether stock options, restricted stock or stock purchase rights under the Company’s equity compensation plan, or other equity awards, shall immediately become fully vested and exercisable upon a Change of Control .  Employee will be entitled to exercise such vested equity awards in accordance with the applicable grant agreements.	
 	 	
(c)	LTIP Awards. Any awards granted to Employee under the LTIP as of the effective date of the Change of Control shall be treated as described in the LTIP.  Without limiting the foregoing, the existing LTIP provides (or shall be deemed to provide) that if, in anticipation or contemplation of a pending or potential Change of Control or while a potential Change of Control is under consideration or being negotiated by the Company’s board of directors, the Employee terminates his employment for Good Reason pursuant to Section 6.1(b) or the Company terminates Employee’s employment without Cause pursuant to Section 6.2(c), Employee shall be deemed to remain an employee for purposes of the LTIP as of the effective date of such Change of Control and shall receive a full payout under the LTIP as described in Section 3.3 of this Agreement as though he remained an employee of the Company as of the effective date of such Change of Control.	
 	 	
(d)	If, within twelve (12) months before the effective date of a Change of Control, the Employee terminates his employment for Good Reason pursuant to Section 6.1(b) or the Company terminates Employee’s employment without Cause pursuant to Section 6.2(c), or, if Employee remains employed with the Company on the effective date of a Change of Control, subject to the conditions described in Section 7.3 below, the Employee shall receive a single lump-sum payment on the effective date of such Change of Control equal to eighteen (18) months (or, in the event of a Change of Control transaction occurring on or prior to September 1, 2010, which has an equity value of less than $100 million, fifteen (15) months) at Employee’s then current Base Salary and pro-rata target bonus through the effective date of the Change of Control; provided, however, that any payments previously made by the Company to Employee in connection with a termination occurring within twelve (12) months before the effective date of such Change of Control pursuant to Section 7.1(a) of this Agreement shall be credited against the lump-sum payment due Employee pursuant to this Section 7.2(d).	
 
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7.3            Conditions Precedent to Payment of Severance . The Company’s obligations to Employee described in Sections 7.1 and 7.2 are contingent on Employee’s delivery to the Company of a signed waiver and release in a form reasonably satisfactory to the Company of all claims he may have against the Company, and his not revoking such release within 21 days after his date of termination. Moreover, the Employee’s rights to receive ongoing payments and benefits pursuant to Sections 7.1 and 7.2 (including, without limitation, the right to ongoing payments under the Company’s equity plans and LTIPs) are conditioned on the Employee’s ongoing compliance with his obligations as described in Section 8 hereof.  Any cessation by the Company of any such payments and benefits shall be in addition to, and not in lieu of, any and all other remedies available to the Company for Employee’s breach of his obligations described in Section 8 hereof.
 
7.4            No Severance Benefits . Employee is not entitled to any severance benefits if this Agreement is terminated pursuant to Sections 6.1(a) or 6.2(a) of this Agreement; provided however, Employee shall be entitled to (i) Base Salary prorated through the effective date of such termination; (ii) Bonuses which have been earned and for which the payment date occurs prior to the effective date of such termination; and (iii) medical coverage and other benefits required by law and plans (as provided in Section 7.5, below).
 
7.5            Benefits Required by Law and Plans: Vacation Time Pay . In the event of the termination of Employee’s employment, Employee will be entitled to medical and other insurance coverage, if any, as is required by law and, to the extent not inconsistent with this Agreement, to receive such additional benefits as Employee may be entitled under the express terms of applicable benefit plans (other than bonus or severance plans) of the Company, its subsidiaries and Affiliates.
 
7.6            Exercise Period of Equity Awards after Termination . Unless it would subject the Employee to adverse tax consequences under Section 885 of the American Jobs Creation Act of 2004, Pub. Law No. 108-357, 118 Stat. 1418 (the Act), which added § 409A to the Internal Revenue Code, notwithstanding anything contained herein or in the equity grant agreements to the contrary, in the event of the termination of Employee’s employment with the Company, Employee’s vested equity awards shall be open for exercise until the earlier of (i) two (2) years from the date of termination or (ii) the latest date on which those equity awards expire or are eligible to be exercised under the grant agreements, determined without regard to such termination or resignation; provided further that such extended exercise period shall not apply in the event the Employee resigns without Good Reason or is terminated by the Company for Cause, in which case, the exercise periods shall continue to be governed by the terms of the grant agreements.
 
7.7            409A Compliance .  Notwithstanding anything in this Section 7 to the contrary, to the extent that any payments under this Section 7 are considered deferred compensation subject to Section 409A of the Internal Revenue Code, such payments shall not be paid for six months following the Employee’s separation from service (if, and only to the extent, applicable and required for compliance with Section 409A).  To the extent that any payment is delayed pursuant to this subsection, it shall be paid on the first day after the end of such required period.
 
8.                                        Restrictions .
 
8.1            The Confidential Information Agreement . Employee will enter into and comply with the terms of the Employee Confidentiality and Assignment Agreement in substantially the form attached hereto as Exhibit A (the “Confidential Information Agreement”).
 
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8.2            Agreement Not to Compete . In consideration for all of the payments and benefits that may become due to Employee under this Agreement, Employee agrees that during Employee’s employment by the Company and for a period of eighteen (18) months after termination of his employment for any reason, he will not, directly or indirectly, without the Company’s prior written consent, (a) perform for a Competing Entity in any Restricted Area any of the same services or substantially the same services that he performed for the Company; (b) in any Restricted Area, advise, assist, participate in, perform services for, or consult with a Competing Entity regarding the management, operations, business or financial strategy, marketing or sales functions or products or product development (including without limitation clinical trials) of the Competing Entity (the activities in clauses (a) and (b) collectively are, the “Restricted Activities”); or (c) solicit or divert the business of any Restricted Customer by offering competitive products or services to such Restricted Customer to the detriment of the Company. Employee acknowledges that in his position with the Company he has had and will have access to knowledge of confidential information about all aspects of the Company that would be of significant value to the Company’s competitors.
 
8.3            Additional Definitions .
 
(a)            “Customer” means any individual or entity for whom the Company has provided services or products or made a proposal to perform services or provide products.
 
(b)            “Restricted Customer” means any Customer with whom/which Employee had contact on behalf of the Company during the 12 months preceding the end, for whatever reason, of his employment.
 
(c)            “Competing Entity” means any business entity engaged in the development, design, manufacture, marketing, distribution or sale of molecular diagnostic products.
 
(d)            “Restricted Area” means any geographic location where if Employee were to perform any Restricted Activities for a Competing Entity in such a location, the effect of such performance would be competitive to the Company.
 
8.4            Reasonable Restrictions On Competition Are Necessary .  Employee acknowledges that reasonable restrictions on competition are necessary to protect the interests of the Company. Employee also acknowledges that he has certain skills necessary to the success of the Company, and that the Company has provided and will provide to him certain confidential information that it would not otherwise provide because he has agreed not to compete with the business of the Company as set forth in this Agreement.
 
8.5            Restrictions Against Solicitations . Employee further covenants and agrees that during Employee’s employment by the Company and for a period of eighteen (18) months following the termination of his employment with the Company for any reason, he will not, except with the prior consent of the Company’s Chief Executive Officer, directly or indirectly, solicit or hire, or encourage the solicitation or hiring of, any person who is an employee of the Company for any position as an employee, independent contractor, consultant or otherwise, provided that the foregoing shall not prevent Employee from serving as a reference.
 
8.6            Affiliates . For purposes of this Section 8, the term “Company” will be deemed to include the Company and its Affiliates.
 
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8.7            Ability to Obtain Other Employment . Employee hereby represents that his experience and capabilities are such that in the event his employment with the Company is terminated, he will be able to obtain employment if he so chooses during the period of noncompetition following the termination of employment described above without violating the terms of this Agreement, and that the enforcement of this Agreement by injunction, as described below, will not prevent him from becoming so employed.  To assist Employee in obtaining subsequent employment, the Company agrees to respond within 3 business days to any request of Employee as to whether a new position would be viewed by the Company as violation of the restrictions in this Agreement.
 
8.8            Injunctive Relief . Employee understands and agrees that if he violates any provision of this Section 8, then in any suit that the Company may bring for that violation, an order may be made enjoining him from such violation, and an order to that effect may be made pending litigation or as a final determination of the litigation. Employee further agrees that the Company’s application for an injunction will be without prejudice to any other right of action that may accrue to the Company by reason of the breach of this Section 8.
 
8.9            Severability . In case any provisions (or portions thereof) contained in this Agreement shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.  If, moreover, any one or more of the provisions contained in this Section 8 shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.
 
8.10          Section 8 Survives Termination . The provisions of this Section 8 will survive termination of this Agreement and the termination of the Employee’s employment. Employee understands that his obligations under this Section 8 will continue in accordance with its express terms regardless of any changes in title, position, duties, salary, compensation or benefits or other terms and conditions of employment.  The Company will have the right to assign Employee’s obligations under this Section 8 to its affiliates, successors and assigns.  Employee expressly consents to be bound by the provisions of this Section 8 for the benefit of the Company or any parent, subsidiary or affiliate to whose employ Employee may be transferred without the necessity that this Agreement be re-executed at the time of such transfer.
 
9.              Arbitration . Unless other arrangements are agreed to by Employee and the Company, any disputes arising under or in connection with this Agreement, other than a dispute in which the primary relief sought is an equitable remedy such as an injunction, will be resolved by binding arbitration to be conducted pursuant to the Agreement for Arbitration Procedure of Certain Employment Disputes attached as Exhibit B hereof.
 
10.            Assignments: Transfers: Effect of Merger . No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation, or pursuant to the sale or transfer of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company. This Agreement will not be terminated by any merger, consolidation or transfer of assets of the Company referred to above. In the event of any such merger, consolidation or transfer of assets, the provisions of this Agreement will be binding upon the surviving or resulting corporation or the person or entity to which such assets are transferred. The Company agrees that concurrently with any merger, consolidation or transfer of assets referred to above,
 
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it will cause any successor or transferee unconditionally to assume, either contractually or as a matter of law, all of the obligations of the Company hereunder in a writing promptly delivered to the Employee. This Agreement will inure to the benefit of, and be enforceable by or against, Employee or Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, designees and legatees. None of Employee’s rights or obligations under this Agreement may be assigned or transferred by Employee other than Employee’s rights to compensation and benefits, which may be transferred only by will or operation of law. If Employee should die while any amounts or benefits have been accrued by Employee but not yet paid as of the date of Employee’s death and which would be payable to Employee hereunder had Employee continued to live, all such amounts and benefits unless otherwise provided herein will be paid or provided in accordance with the terms of this Agreement to such person or persons appointed in writing by Employee to receive such amounts or, if no such person is so appointed, to Employee’s estate.
 
11.            No Set-off. No Mitigation Required . Except as expressly provided otherwise in this Agreement, the obligation of the Company to make any payments provided for hereunder and otherwise to perform its obligations hereunder will not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Employee or others. In no event will Employee be obligated to seek other employment or take other action by way of mitigation of the amounts payable to Employee under any of the provisions of this Agreement, and such amounts will not be reduced (except as otherwise specifically provided herein) whether or not Employee obtains other employment.
 
12.            Taxes . The Company shall have the right to deduct from any payments made pursuant to this Agreement any and all federal, state, and local taxes or other amounts required by law to be withheld.
 
13.            409A Compliance .  The intent of Employee and the Company is that the severance and other benefits payable to Employee under this Agreement not be deemed “deferred compensation” under, or otherwise fail to comply with, Section 409A of the Internal Revenue Code.  Employee and the Company agree to use reasonable best efforts to amend the terms of this Agreement from time to time as may be necessary to avoid the imposition of penalties or additional taxes under Section 409A of the Internal Revenue Code; provided, however, any such amendment will provide Employee substantially equivalent economic payments and benefits as set forth herein and will not in the aggregate, materially increase the cost to, or liability of, the Company hereunder.
 
14.            Miscellaneous . No amendment, modification or waiver of any provisions of this Agreement or consent to any departure thereof shall be effective unless in writing signed by the party against whom it is sought to be enforced. This Agreement contains the entire Agreement that exists between Employee and the Company with respect to the subjects herein contained and replaces and supersedes all prior agreements, oral or written, between the Company and Employee with respect to the subjects herein contained, including without limitation the Retention Agreement and the Noncompetition Agreement, each of which are hereby terminated as of the effective date of this Agreement.  Nothing herein shall affect any terms in the Confidential Information Agreement, the Agreement for Arbitration Procedure of Certain Employment Disputes, the LTIP, and any stock plans or agreements between Employee and the Company now and hereafter in effect from time to time (except as and to the extent expressly provided herein). If any provision of this Agreement is held for any reason to be unenforceable, the remainder of this Agreement shall remain in full force and effect. Each section is intended to be a severable and independent section within this Agreement. The headings in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. This Agreement is made in the State of Wisconsin and shall be governed by and construed in accordance with the laws of said State.
 
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This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. All notices and all other communications provided for in this Agreement shall be in writing and shall be considered duly given upon personal delivery, delivery by nationally reputable overnight courier, or on the third business day after mailing from within the United States by first class certified or registered mail, return receipt requested, postage prepaid, all addressed to the address set forth below each party’s signature. Any party may change its address by furnishing notice of its new address to the other party in writing in accordance herewith, except that any notice of change of address shall be effective only upon receipt.
 
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The parties hereto have executed this Employment Agreement as of the date first written above.

 	/s/ Barry Berger M.D.	
 	Barry Berger, M.D. (“Employee”)	
 	 	 	
 	 	Notice Address:	
 	 	40 Cedar Road	
 	 	Chestnut Hill, MA 02467	
 	 	
 	EXACT Sciences Corporation (“Company”)	
 	 	 	
 	By:	/s/	Kevin T. Conroy	
 	 	 	Kevin T. Conroy	
 	 	 	President and Chief Executive Officer	
 	 	 	 	
 	 	 	Notice Address:	
 	 	 	441 Charmany Drive	
 	 	 	Madison, WI 53719	
 
[Signature Page to Berger Employment Agreement]

 
EXHIBIT B
 
Agreement for Arbitration Procedure of Certain Employment Disputes
 
[attached]
 
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EXACT SCIENCES CORPORATION
 
AGREEMENT FOR ARBITRATION PROCEDURES OF
CERTAIN EMPLOYMENT DISPUTES
 
This Agreement for Arbitration Procedure of Certain Employment Disputes (this “Agreement”) is made effective as of August 1, 2009 by and between EXACT Sciences Corporation., a Delaware corporation, its subsidiaries, affiliates, successors and assigns (together, the “Company”) and the Company employee signing below (the “Employee”).  This Agreement is intended to make available a means for the resolution of certain employment disputes between the Company and the Employee that is:  (1) timely; (2) fair; (3) cost effective; (4) created by the parties; (5) responsive to the parties; (6) marked by maximum decision-maker expertise in employment matters; and (7) a source of finality for all involved.
 
Now therefore, in consideration of the foregoing, the mutual covenants and conditions hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
 
1.   Initial Conflict Resolution .  The Employee agrees to use and exhaust the internal complaint procedures of the Company, with respect to any claim or controversy that is subject to this Agreement before taking any other action hereunder.  The Employee also agrees that in the event s/he is unsatisfied with a resolution under the Company’s internal procedures, prior to arbitration and if requested by the Company, the parties will submit their dispute to a neutral mediator to help them negotiate resolution of their dispute.  The parties acknowledge that mediation is a non-binding procedure, but agree that any agreement reached and documented during mediation is binding on the parties and can be enforced by the courts without arbitration.
 
2.   Arbitration .  The Employee and the Company agree that they will submit to private, final, and binding arbitration any of the following claims or controversies against the Company or any of its employees, officers, directors, or shareholders:  (i) any dispute respecting the terms of the Employee’s Employment Agreement with the Company (“Employment Agreement”); (ii) any dispute respecting the terms of the Employee’s Employee Confidentiality and Assignment Agreement (the “Confidential Information Agreement”); (the Employment Agreement and the Confidential Information Agreement shall be referred to collectively herein as the “Agreements”); (iii) any dispute arising out of the Employee’s employment or the cessation thereof; or (iv) any complaint or charge the Employee makes alleging a violation by the Company of state, federal, or local law concerning Employee’s status with the Company or his/her cessation of employment.  Any question of arbitrability under this Agreement shall also be subject to arbitration.  The binding nature of this Agreement shall survive the termination of the Employee’s employment with the Company for any reason.

(a)	The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16, and judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof.	
 	 	
(b)	The arbitration shall be administered by JAMS or, if the parties agree in writing, be privately administered.  In either case, the arbitration shall be conducted in accordance with the rules of JAMS, which will be made available by the Company upon request.  In the event that any provision of such rules shall conflict with the language of any of the Agreements or this Arbitration Agreement, the Agreements and this Arbitration Agreement shall prevail.	
 
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3.  Exclusions from Arbitration .  Notwithstanding the foregoing, the parties agree that each shall have the right to commence a legal action in court for (i) the purposes of obtaining temporary and/or preliminary injunctive relief that shall remain in effect until such time as the arbitrator has rendered a decision regarding the underlying merits of the claims relating to such matter for which injunctive relief was sought and (ii) the purpose of protecting the Company’s intellectual property, including, but not limited to, patents, copyrights and trademarks.  With regard to any court action commenced by either party, whether pursuant to this Paragraph 3 or not, both parties agree to submit to personal jurisdiction in the federal or state court located in Dane County, Wisconsin and not to contest venue in such courts.
 
4.  Arbitration Procedure .  The place of the arbitration shall be in Dane County, Wisconsin.  The parties have the right to be represented by counsel in any arbitration proceeding conducted pursuant to this Agreement.

(a)	Selection of the Arbitrator .  Arbitration shall be by a single arbitrator who will be selected utilizing the alternative striking method from a list of five (5) neutral arbitrators with experience in employment disputes provided by JAMS or, if the parties choose private arbitration, from a list provided by the State Bar of Wisconsin or other local law association.  The party initiating the arbitration has the right to make the first strike.	
 	 	
(b)	Arbitrator’s Powers .  The arbitrator can only exercise the powers authorized by this Arbitration Agreement and can neither add to nor delete from the provisions of this Arbitration Agreement.  At the commencement of the arbitration, the parties shall state the issue(s) to be submitted to the arbitrator.  The arbitrator can decide only the dispute submitted to him or her.  Any other dispute is outside the scope of the arbitrator’s jurisdiction and any award involving such dispute is subject to a motion to vacate.  The arbitrator must decide any dispute according to the governing principles of law and equity.  Nothing in this paragraph, however, shall be construed to limit the arbitrator’s authority to award remedies or relief available to a party under applicable law.	
 	 	
(c)	Discovery .  The parties may engage in pre-hearing discovery that shall be governed by the Federal Rules of Civil Procedure.  All discovery must be completed on or before sixty (60) calendar days before the hearing date, or as otherwise agreed to by the parties and approved by the arbitrator.	
 	 	
(d)	Evidence .  The Federal Rules of Evidence shall govern and be applicable to the arbitration proceeding.  Depositions for testimony may be used in accordance with the Federal Rules of Civil Procedure.	
 	 	
(e)	Motions .  The parties may submit, pursuant to the Federal Rules of Civil Procedure, motions, including, but not limited to, procedural motions and dispositive motions (including, but not limited to, motions to dismiss and motions for summary judgment) for determination by the arbitrator.  The arbitrator shall, at the request of either party, issue a written decision regarding any such motion setting forth the factual and legal reasons supporting the decision.	
 	 	
(f)	Post-Hearing Brief .  In lieu of closing argument, each party shall have the right to present a post-hearing brief.	
 	 	
(g)	Decision of the Arbitrator .  The arbitrator shall issue a written opinion and award, which the arbitrator must sign and date setting forth the factual and legal reasons supporting each part of the opinion.  The arbitrator’s opinion and award must decide all issues submitted.	
 
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(h)	Available Remedies .  The arbitrator is authorized to fashion remedies that make the prevailing party whole for demonstrated losses incurred.  The arbitrator may not, however, award consequential, punitive, or liquidated damages unless an applicable statute permits or requires such damages to be awarded.	
 
5.  Waiver of Jury Trial .  The parties recognize, understand and agree that by entering into this Agreement, both are waiving any and all rights to a trial by jury.  Furthermore, the Employee understands that s/he is encouraged to have this  Agreement reviewed by an attorney before signing it.
 
6.  Arbitration Fees .  The party initiating arbitration shall pay a filing fee of $250 and the Company shall be responsible for the entire remaining balance of the Arbitrator’s fees.  If the Employee prevails in the arbitration, he or she shall be entitled to recoup any filing fee paid by Employee.  Unless the recovery of attorney’s fees and costs by either party from the other is afforded under applicable federal or state law as a remedy relating to the dispute, controversy or claim being resolved by the arbitration and is, in fact, ordered by the Arbitrator to be paid by one party to the other, each party shall bear his/her/its own attorneys’ fees and costs.
 
7.  Time Limit for Filing Complaints .  Any claim subject to this Agreement shall be submitted to arbitration within 300 days of the event giving rise to the claim or shall be waived.  In the case of continuing violations under state or federal civil rights laws, the 300 day timeline shall begin to run on the date of the latest alleged violation.
 
8.  Choice of Law .  The arbitrator shall apply applicable federal law and the law of the State of Wisconsin, without reference to its conflicts of laws principles, to any matter arbitrated.
 
9.  Severability .  The provisions of this Agreement are severable and should be construed independently.  The invalidity or unenforceability of any provision of this Agreement shall not affect the other provisions.  Moreover, if one or more of the provisions of this Agreement shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable at law, such provision or provisions shall be construed by the appropriate judicial body by limiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear.  The language of all parts of this Agreement shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either of the parties.
 
10.  Modifications .  No change or modification to this Agreement shall be valid unless it is made in writing and signed by the Employee and the Company.

 	 	
 	Employee	

 	EXACT Sciences Corporation.	

 	By:	 	
 	Title:	 	
 
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Exhibit 10.39
 
CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR SUCH PORTIONS.  ASTERISKS DENOTE OMISSIONS.
 
TECHNOLOGY LICENSE AGREEMENT
 
This TECHNOLOGY LICENSE AGREEMENT (the “ Agreement ”) is entered into by and between EXACT Sciences Corporation (“ ESC ”), with its principal place of business at 505 S. Rosa Rd., Suite 123 Madison, Wisconsin (“ ESC ”) and Hologic, Inc., with its principal place of business at 35 Crosby Drive, Bedford, MA 01730 and Third Wave Technologies, Inc., a wholly-owned subsidiary of Hologic with its principal place of business at Madison, Wisconsin.  Hologic, Inc. and Third Wave Technologies, Inc. shall hereinafter be referred to collectively (or separately as the context requires) as “ Hologic ”).  Hereinafter ESC and Hologic may separately be referred to as a “ Party ” or collectively referred to as the “Parties”.
 
RECITALS
 
WHEREAS , Hologic owns or controls all right, title and interest in and to, or has the right to sublicense, certain patents and patent applications the claims of which are directed to aspects nucleic acid amplification and detection, including Hologic’s technology commonly referred to as Invader, InvaderPlus and qInvader (the “Invader Detection Technology” as defined below);
 
WHEREAS , ESC is interested in acquiring a license from Hologic under certain of Hologic’s patents for the purpose of developing and commercializing an in vitro diagnostic colorectal cancer screening test;
 
WHEREAS , ESC may improve the licensed technology and grant back to Hologic such improvements as described herein;
 
WHEREAS , Hologic is willing to grant such license to ESC upon the terms and conditions set forth below; and
 
NOW THEREFORE , for and in consideration of the covenants and undertakings hereinafter set forth, ESC and Hologic hereby agree as follows:
 
1.                                       Definitions
 
For the purpose of this Agreement, and solely for that purpose, the terms set forth herein shall be defined as follows:
 
1.1                                “ Affiliate ” means any corporation, company, partnership, joint venture and/or firm which controls, is controlled by, or is under common control with a party hereto.  For purposes of this definition, “control” shall mean (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares entitled to vote for the election of directors; or (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities.
 
1.2                                “ Colorectal Cancer Diagnostic Field ” means any clinical diagnostic purpose relating to colorectal cancer, including cancer diagnosis, treatment, monitoring, or staging.

 
1.3                                “ Colorectal Cancer Screening Field ” the detection or identification of colorectal cancer and pre-cancers (e.g., pre-cursor lesions and polyps) in a human biological sample (excluding human stool samples), in a screening population.
 
1.4                                “ Cleavase Enzyme ” means any cleavage enzyme to the extent actually supplied by Hologic or its designee to ESC under a Supply Agreement.  For clarity, the Cleavase Enzyme comprises a FEN endonuclease enzyme that is used in the Invader Detection Technology.
 
1.5                                “ Field ” means the detection or identification of colorectal cancer and pre-cancers (e.g., pre-cursor lesions and polyps) in human stool samples in a screening population.  For avoidance of doubt, this field excludes diagnostic tests directed to guiding chemotherapy, staging or monitoring of colorectal cancer.
 
1.6                                “ Diagnostic Services ” means a testing service to provide to a Person data, results or interpretations for purposes of therapy or diagnosis of a human being, including clinical laboratory services, whether or not a fee is charged for such services.
 
1.7                                “ Distributors ” means the distributors performing a bona fide distribution function to which ESC or any of its Affiliates grants the right to Sell Licensed Products.  ESC’s Affiliates shall not be deemed to be “Distributors” for purposes of this Agreement.
 
1.8                                “ Effective Date ” means the final execution date of this agreement.
 
1.9                                “ End User ” means the customer, including doctors, hospitals, testing and research institutions, clinical or other testing laboratories which perform Diagnostic Services or testing using a Licensed Product.
 
1.10                         “ Europe ” means the countries comprising all European Union Member States plus Switzerland, Norway, Liechtenstein and Iceland.
 
1.11                         “ Hologic Patent Rights ” means the U.S. patent and patent applications set forth in Appendix A, divisionals, continuations, continuation-in-part applications, of the foregoing, U.S. patents issuing from the foregoing applications, U.S. patents resulting from reissues or reexaminations thereof, and extensions thereof, and foreign patents and patent applications claiming priority to the foregoing U.S. patent applications.  For the sake of clarity, the Invader Creator Software is to be considered part of the Hologic Patent Rights.
 
1.12                         “ Hologic Improvements ” means any and all issued claims in patents to inventions made during the Term claiming an invention which is an improvement, modification, enhancement, or adaptation of a Cleavase Enzyme or the Invader Detection Technology that are useful for practicing the Hologic Patent Rights.
 
1.13                         “ Invader Creator Software ” means Hologic’s software used in the design of nucleic acid amplification and assays for the Invader Detection Technology.
 
1.14                         “ Invader Detection Technology ” means a biochemical linear signal-amplification system for direct detection or quantification of a nucleic acid that is dependent upon coordinate action of at least an Invader probe, a primary probe, and a Cleavase enzyme that
 
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cleaves an overlap region formed when an Invader probe and a Primary probe hybridize to the nucleic acid.  For clarity, the “Invader” reaction generally denotes the isothermal version of the system; the “InvaderPlus” reaction generally denotes a PCR reaction followed by an isothermal Invader reaction; and “qInvader” generally denotes the assay in which the PCR reaction and the Invader reaction occur simultaneously during a PCR temperature cycle.
 
1.15                         “ Licensed Product ” means any product (i) designed and used to perform the Invader Detection Technology; (ii) the manufacture, use, importation, offer for Sale, Sale or promotion of which would, but for the licenses and rights granted herein, infringe a Valid Claim of the Hologic Patent Rights.
 
1.16                         “Person” means a natural person, a corporation, a partnership, a trust, a joint venture, any governmental authority or any other entity or organization
 
1.17                         “ Reagent Agreement Plan ” or “ RAP ” means a program (whether known as a Reagent Agreement Plan, Reagent Rental Plan or other successor or similar plan) for the Sale of one or more Licensed Products in conjunction with the supply of an instrument whereby the price for such Licensed Product includes, all or a part of, the acquisition cost or leasing cost of an instrument, all or a part of, the cost of servicing such instrument, interest charged for the financing of such instrument and/or other items of cost recovery in connection with the supply of such instrument.
 
1.18                         “ Rest of World ” or “ RoW ” means all countries of the world except Europe and the United States.
 
1.19                         “ Royalty Payment Period ” means the period beginning on the Effective Date and ending on the expiration of the current calendar quarter and each calendar quarterly period thereafter.
 
1.20                         “ Sale ” means the act of transferring title to a product by selling, leasing or otherwise placing such product into the channels of commerce or distributing (including by means of Reagent Agreement Plans, if applicable) such product.
 
1.21                         “ Sell ” means to make or cause to be made a Sale.
 
1.22                         “ Sold ” means to have made or caused to be made a Sale.
 
1.23                         “ Term ” shall have the meaning assigned to it in Section 6.1 below
 
1.24                         “ Territory ” means Worldwide.
 
1.25                         “ Third Party ” means any Person that is neither a Party to this Agreement nor an Affiliate of a Party to this Agreement.
 
1.26                         “ United States ” or “ U.S. ” or “ USA ” means the United States of America, its territories and possessions, including the Commonwealth of Puerto Rico.
 
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1.27                         “ Valid Claim ” means the claim of an issued patent which (a) has not expired, (b) has not been disclaimed, or (c) has not been revoked, held invalid or otherwise declared unenforceable by a tribunal of competent jurisdiction over such claim in such country from which no further appeal may be taken.  Whether a patent claim is a Valid Claim shall be determined on a country-by-country basis.
 
1.28                         “ Worldwide ” means Europe, the United States, and Rest of World.
 
2.                                       License.  Improvements and Enzyme Supply
 
2.1                                Licensed Patents .  Subject to the terms and conditions of this Agreement, including the limitations set forth in Section 2.3 and the payment provisions set forth in Article 5, Hologic hereby grants to ESC and its Affiliates an exclusive, worldwide, royalty-bearing license in the Field, under the Hologic Patent Rights and Hologic Improvements for the Term:
 
(a)                                  To manufacture, have manufactured, import, have imported, use, Sell, offer for Sale and have Sold, Licensed Products and to convey to End Users the right to use the Licensed Product in accordance with the label license provided with the purchase of such Licensed Products as set forth in Article 7 below (the “ Label License ”);
 
(b)                                  To practice internally for research, development, improvement and quality control and quality assurance of Licensed Products;
 
(c)                                   To provide Diagnostic Services, namely operating a Clinical Laboratory Improvement Amendments (CLIA) compliant lab that provides test results to physicians for a colorectal screening test utilizing the Licensed Product.
 
Subject to the terms and conditions of this Agreement, Hologic further grants ESC a limited, nonexclusive, royalty-bearing, worldwide license under the Hologic Patent Rights and Hologic Improvements in the Colorectal Cancer Screening Field (“Colorectal Screening License”).  Subject to the terms and conditions of this Agreement Hologic also grants ESC a non-exclusive, royalty-bearing, worldwide license under the Hologic Patent Rights and Hologic Improvements in the Colorectal Cancer Diagnostic Field (“Colorectal Diagnostic License”).
 
Hologic also grants ESC the option of converting the non-exclusive Colorectal Screening License to an exclusive, worldwide, royalty-bearing license, under the Hologic Patent Rights (“Exclusive Option”).  This Exclusive Option shall vest to ESC upon commercialization of a Licensed Product developed under this Agreement but shall only be exercisable for a period of four (4) years from the execution date of this Agreement.  If ESC elects to exercise the Exclusive Option, the resulting exclusive license (“Exclusive Colorectal Screening License”) shall be subject to the same terms, conditions, and limitations as set forth under this Agreement, except that such Exclusive Colorectal Screening License shall remain in effect for two (2) years from the date of the exercise of the Exclusive Option and then shall revert back to a non-exclusive Colorectal Screening License at the end of such two year period.
 
2.2                                Invader Creator Software License .  Hologic grants ESC an end-user license to the Invader Creator Software, allowing ESC to run the software on its own servers.  This license is
 
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personal to ESC and its Affiliates.  Any future Hologic or ESC improvements to the Invader Creator Software will be shared with the other party.
 
2.3                                License Limitations .  Notwithstanding Section 2.1 or any other term or condition of this Agreement, ESC understands and agrees that the licenses set forth in this Agreement to ESC and its Affiliates shall not include the right to:
 
(a)                                  grant sublicenses or to convey any implied licenses, except to the limited extent expressly provided in Sections 2.1 and in Article 7;
 
(b)                                  have made Cleavase Enzyme, except as otherwise provided for ill the agreement between ESC and Hologic for the supply of Cleavase Enzyme.
 
The licenses granted by Hologic herein to ESC and its Affiliates may be used solely for the purposes expressed in this Article 2.  Nothing in this Agreement shall be construed to confer any rights upon ESC by implication, estoppel or otherwise beyond the express licenses granted by Hologic or as to any technology or patent rights of Hologic or an Affiliate other than the Hologic Patent Rights.
 
2.4                                ESC Improvements .  ESC shall retain all intellectual property rights (and all other right, title and interest) in any and all improvements made during the Term that it develops and obtains a patent thereon, to the Cleavase Enzyme or the Invader Detection Technology (“ESC Improvements”); provided that Hologic shall be entitled to a royally-free, non-exclusive and (non-sublicensable) license to use Improvements outside the Field.  For purpose of clarity, this license-back to Hologic does not include any underlying third party or pre-existing ESC intellectual property or the combination of other technologies with the Cleavase Enzyme or Invader Detection Technology.  ESC shall promptly disclose on Hologic’s request in writing to Hologic all ESC Improvements during the Term that relate to the subject matter disclosed and/or claimed in the Hologic Patent Rights.
 
2.5                                Enzyme Supply .  As further consideration of entering into the Agreement, the Parties mutually agree to enter into an enzyme supply arrangement (“Supply Agreement”) for Hologic’s Cleavase Enzyme, on a [***]  The Supply Agreement will include a supply failure provision to allow ESC to manufacture its own Cleavase Enzyme in the event that Hologic or its successor fails to supply Cleavase Enzyme to ESC.
 
3.                                       ESC Obligations Relating to Commercialization
 
3.1                                Diligence Requirements .  ESC shall use commercially reasonable efforts to develop Licensed Products and to introduce Licensed Products into the commercial market.  Specifically, ESC shall fulfill the following obligations:
 
(a)                                  Within two (2) year and six months of the effective date of the Agreement, ESC shall initiate Clinical Trials of a Licensed Product.
 
(b)                                  Within three (3) years and six months of the effective date of the Agreement, ESC shall submit a Licensed Product for FDA review.
 
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(c)                                   Within four (4) years and six months of the effective date of the Agreement, ESC shall commercialize a Licensed Product.
 
If Hologic determines that ESC has not fulfilled its obligations under Section 3.1, Hologic shall furnish ESC with written notice of the determination.  Within sixty (60) days after receipt of the notice, ESC shall either (i) fulfill the relevant obligation or (ii) negotiate with Hologic a mutually acceptable schedule of revised diligence obligations, failing which Hologic may, immediately upon further written notice to ESC, seek termination of this Agreement as provided for in Section 6.2 of this Agreement.
 
4.                                       Net Sales
 
4.1                                Calculation of Net Sales .  Subject to Section 4.3, Net Sales with respect to the Sale of Licensed Products by ESC, its Affiliates or Distributors (“ ESC Seller ”) to End Users shall mean the gross invoice price to End Users for such Licensed Products, less (a) deductions for allowances, discounts, including cash discounts, and returns all to the extent customarily given in the trade by the ESC Seller (except that discounts, credits or similar allowances provided to purchasers of Licensed Products in consideration of the purchaser’s agreement to purchase non-Licensed Products shall not be deducted), and (b) sales taxes, and duties and transportation, if separately stated on the invoice.  For avoidance of doubt, kits or components sold by ESC such as instruments, sample collection devices, and sample preparation reagents will not be included in the definition of Net Sales or used to calculate the royalty owing to Hologic unless such kit or component is covered by a Valid Claim of a Licensed Patent.
 
4.2                                Distributor Net Sales .  In the event Licensed Products are Sold to Distributors and ESC cannot obtain accurate and complete End-User Sales figures for such Licensed Products, then ESC may use the gross invoice price to such Distributors, less the allowable adjustments as set forth in 4.1 above applicable to such Distributors, multiplied by 1.67 as the Net Sales for such Licensed Products.
 
4.3                                RAP Sales .  In the case of the Sale under a Reagent Agreement Plan of a Licensed Product, the Net Sales of such Licensed Product shall be reduced by a percentage (“ RAP Deduction ”) to allow for (a) deduction of instrument charges included in such Net Sales, (b) charges as interest for the financing of instruments supplied, and (c) the cost of instrument service.
 
4.4                                Interaffiliate Transfers .  If ESC transfers any Licensed Products to an Affiliate which becomes the End User, for purposes other than internal research and development of a Licensed Product, then the Net Sales of such Licensed Products shall be determined based on the average Selling price of such Licensed Product to all Third Party End Users during the Royalty Payment Period or, if no average Selling price of such Licensed Product is available for such period, at a reasonable value based upon the average Selling prices of other products available in the marketplace similar to such Licensed Product.
 
5.                                       Consideration.  Reporting and Payment
 
5.1                                Fees .  In consideration of the licenses granted in Article 2 of this Agreement, ESC shall provide to Hologic the following:
 
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(a)                                  Within ten (10) business days of the Effective Date, a cash payment of Fifty Thousand Dollars ($50,000).
 
(b)                                  Within ten (10) business days of the commencement of a U.S. Food and Drug Administration (“ FDA ”) clinical trial for a Licensed Product, a cash payment of One Hundred Thousand Dollars ($100,000)).
 
(c)                                   Within ten (10) business days of final FDA pre-market approval or clearance for a Licensed Product, a cash payment of One Hundred Thousand Dollars ($100,000).
 
5.2                                Royalty .
 
In consideration of the licenses granted in Article 2 of this Agreement, ESC shall account to and pay to Hologic for each Royalty Payment Period during the term of this Agreement a royalty equal [***] of the Net Sales of Licensed Products Sold in the Territory.
 
5.3                                Reporting and Payment .
 
(a)                                  With respect to the royalties required pursuant to Sections 5.2, ESC shall, within sixty (60) days after the close of each Royalty Payment Period, provide to Hologic an account of all Net Sales of such Licensed Products in the Territory, and of the royalty due pursuant to Section 5.2 in respect of the preceding Royalty Payment Period.  Simultaneously, when it delivers such account, ESC shall make payment of the royalty amount.
 
(b)                                  The royalties due by ESC to Hologic pursuant to Section 5.2 on the Net Sales by ESC and its Affiliates of all Licensed Products Sold shall be paid in U.S. Dollars and shall be converted by ESC from the currency in which the Sales were made, based on the applicable rate of exchange as quoted by Reuters for the last business day of the applicable Royalty Payment Period.  If Reuters does not publish any such rate, a comparable publication shall be agreed upon from time to time by the Parties, and with respect to each country for which such rate is not published by Reuters or in a comparable publication, the Parties shall use the applicable rate for such date as published by the appropriate governmental agency in such country.
 
5.4                                Books and Records .
 
(a)                                  ESC shall keep a complete and accurate set of books and records relating to the quantity of Licensed Products shipped by or for ESC and its Affiliates and the Sales of Licensed Products by ESC and its Affiliates (including books and records pertaining to ESC’s and its Affiliates’ Distributor Sales as retained by ESC and its Affiliates).  Such books and records shall contain sufficient detail to substantiate the computation of the Net Sales of Licensed Products and the amount of royalties payable under this Article 5 as well as all other information in the statements of account provided for in Section 5.3 above, and shall be maintained by ESC for a period of not less than three (3) years from the date of such Sales.
 
(b)                                  Hologic shall be entitled, upon thirty (30) days notice to ESC, to have such books and records audited by an independent certified public accounting firm retained by Hologic and reasonably acceptable to ESC (which acceptance shall not be unreasonably
 
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withheld), provided that any such audit occurs during ESC’s normal business hours not more than once in any calendar year.  Hologic also shall be entitled to have the books and records of each of ESC’s Affiliates relating to the quantity of Licensed Products shipped by or for such Affiliate and such Affiliate’s Sales of audited, upon reasonable notice to such Affiliate, by an independent certified public accounting firm retained by Hologic and reasonably acceptable to such Affiliate (which acceptance shall not be unreasonably withheld), provided that any such audit occurs during such Affiliate’s normal business hours not more than once in any calendar year.  ESC shall cause each such Affiliate to comply with any such audit request by Hologic.
 
(c)                                   Hologic agrees that all audited information shall be confidential to ESC and ESC’s Affiliates.  Any Person conducting an audit on behalf of Hologic will be required to protect the confidentiality of such information by executing an appropriate confidentiality agreement and shall provide to Hologic a report only of the ultimate conclusions resulting from such audit.  Except as provided below, ESC shall pay promptly to Hologic the amount of any royalties which are determined by such an audit to be outstanding, along with interest accrued up to and including the date of payment as provided in Section 5.5 below.  The costs of such an audit shall be borne by Hologic; provided, however, that, if such audit determines that the royalties paid by ESC for any audited Royalty Payment Period were at least five percent (5%) less than the royalties otherwise due and payable, then ESC shall reimburse Hologic for the costs of such audit.  If such audit determines that ESC bas overpaid the amount of royalties otherwise due and payable for the audited Royalty Payment Period, then Hologic shall credit the amount of such overpayment to ESC against future royalties payable by ESC.
 
5.5                                Past Due Payments .  If ESC fails to pay any amount specified under this Agreement after the due date thereof, the amount owed shall bear an interest of one percent (1%) per month 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 made.
 
5.6                                No Multiple Royalties .  At no time shall more than one royalty be payable by ESC upon the Sale of anyone Licensed Product by ESC or its Affiliates, regardless of whether the manufacture, use and/or Sale of such Licensed Product would infringe more than one Valid Claim of one or more the Licensed Patents regardless of whether such product qualifies as an “Licensed Product” for purposes of this Agreement under more than one of the criteria for designating a product to be a “Licensed Product” as provided in Article 1 above.
 
6.                                       Term and Termination
 
6.1                                Upon the execution of this Agreement by the Parties, the license under this Agreement shall commence on the Effective Date and, unless terminated sooner as provided herein below or by mutual agreement, shall remain in effect until the last of Hologic’s Patent Rights have expired.
 
6.2                                Failures by either Party to this Agreement to comply with any of the obligations and conditions contained herein including, bur not limited to, non-payment of royalties or other monies to be paid, shall entitle the other Party to give the Party in default written notice requiring it to cure such default.  If the default is not cured within sixty (60) days after receipt of such
 
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notice, the notifying Party shall be entitled, without prejudice to any of its other rights conferred on it by this Agreement, to terminate the entire Agreement by giving notice to take effect immediately.  In the event ESC fails to make full payment or, as the case may be any installment, of the Fee as set forth in Section 5.1, which failure remains uncured for sixty (60) days, Hologic may immediately terminate this Agreement and all sums due including any unpaid portion of the Fee as set forth in Section 5.1 shall be immediately due and payable along with Interest as defined herein.
 
6.3                                Either Party may terminate this Agreement upon thirty (30) days written notice if, at any time, the other Party shall file a petition in bankruptcy or insolvency before the courts or apply for an arrangement or for the appointment of a receiver or trustee for all of its assets or any part thereof, or if the other Party proposes a written agreement of composition or extension of its debts or if the other Party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within sixty (60) days after its filing, or if the other Party shall propose or be a Party to any dissolution or liquidation, or if the other Party shall make an assignment for the benefit of creditors.
 
6.4                                ESC shall have the right to terminate this Agreement at any time for any reason upon ninety (90) days prior written notice to Hologic.
 
6.5                                Termination of this Agreement for any reason shall be without prejudice to any other remedies to which either Party is or thereafter becomes entitled hereunder and shall not affect any obligations or rights accrued before termination hereunder, provided however, that ESC shall be obligated to make all payments required by Section 5. regardless of the date of any such termination.
 
6.6                                The following provisions shall survive the expiration or termination of this Agreement:  Article 5, Section 6.5, and Articles 9, 10, 11, 12, 13, and 14.
 
7.                                       Labeling
 
7.1                                ESC’s right to sublicense under the grant of Section 2.1 is limited to the right to convey use rights, only to End Users, and only through the Sale of Licensed Products.  ESC agrees that it shall mark conspicuously all Licensed Products made by or for it, and shall cause each of its Affiliates to mark or have marked conspicuously all Licensed Products with the following legend or such alternative legend as shall be mutually agreed to by the Parties.  ESC shall include the following notices or labels on all Licensed Products:
 
THE PURCHASE OF THIS PRODUCT GRANTS THE PURCHASER RIGHTS UNDER CERTAIN HOLOGIC PATENTS TO USE IT SOLELY FOR PROVIDING HUMAN IN VITRO DIAGNOSTIC SERVICES.  NO GENERAL PATENT OR OTHER LICENSE OF ANY KIND OTHER THAN THIS SPECIFIC RIGHT OF USE FROM PURCHASE IS GRANTED HEREBY.
 
7.2                                Maintenance of Label Licenses by Distributors .  ESC agrees to use its reasonable efforts to ensure that the ESC Distributors maintain on all Licensed Products Sold by such Distributors the legend provided for in this Article 7.
 
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7.3                                  Misuse by End-Users of Licensed Products .  In the event that Hologic becomes aware that any End-User of any Licensed Product is misusing the purchased Licensed Product in violation of the applicable Label License on such Licensed Product and is thereby infringing the Licensed Patents, Hologic may provide evidence of such misuse to ESC.  Upon receipt of such evidence, ESC shall notify such End-User of the End-User’s misuse and shall use its reasonable efforts to obtain a written assurance from such End-User that the End-User shall not engage in such misuse in the future.  If the End-User refuses to provide such written assurance, then ESC shall cease, to the extent permitted by any applicable law or statute, the Sale to such End-User of the Licensed Product which was being misused until such time as the End-User provides such written assurance.  If, notwithstanding the End-User’s provision of such written assurance, the End-User persists in misusing the Licensed Product, then ESC shall discontinue, to the extent permitted by any applicable law or statute, the Sale to such End-User of such Licensed Product.
 
7.4                                  Additional Label Licenses .  In addition to the legend provided for in Section 7.1 above, Hologic or ESC may request additional or revised legends on Licensed Products made by or for ESC or its Affiliates.  The Parties shall negotiate in good faith concerning the need for and/or the Content of any such additional legends.
 
8.                                       Warranties and Disclaimer
 
8.1                                  ESC warranty .  ESC represents and warrants that all persons employed by, or serving as consultants to, ESC who shall have access to Hologic Patent Rights shall have executed a written agreement requiring each such person to assign to ESC all of such person’s right, title and interest in and to any intellectual property rights in improvements prior to having access to Hologic Patent Rights.  In addition, ESC represents and warrants that the ESC Improvements identified in Section 2.4 of this Agreement will remain free and clear of all liens, claims, encumbrances or demands of third parties, including my claims by third parties of any right, title or interest in or to such improvements, and will not during the Term assign, license or transfer, any of its rights, title or interest in such improvements to a third party, and will not during the Term enter into any agreement in Conflict with this Agreement
 
8.2                                  DISCLAIMER .  EXCEPT AS EXPRESSLY PROVIDED HEREIN:  (i) ESC AGREES THAT THE HOLOGIC LICENSE TO ESC TO THE HOLOGIC PATENT RIGHTS ARE GRANTED “AS IS,” AND (ii) NEITHER PARTY, NOR THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES MAKE ANY REPRESENTATIONS OR EXTEND ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, TITLE, VALIDITY OF PATENT RIGHTS CLAMS, ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE.
 
9.                                       Confidentiality-Publicity
 
9.1                                  Each Party agrees that any financial, legal or business information or any technical information disclosed to it (the “ Receiving Party ”) by the other (the “ Disclosing Party ”) in connection with this Agreement shall be considered confidential and proprietary and
 
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the Receiving Party shall not disclose same to any third party and shall hold it in confidence for a period of five (5) years and will not use it other than as permitted under this Agreement provided, however, that any information, know-how or data which is orally disclosed to the Receiving Party shall not be considered confidential and proprietary unless such oral disclosure is reduced to writing and given to the Receiving Party in written form within thirty (30) days after oral disclosure thereof.  Such confidential and proprietary information shall include marketing and sales information, commercialization plans and strategies, research and development work plans, and technical information such as patent applications, inventions, trade secrets, systems, methods, apparatus, designs, tangible material, organisms and products and derivatives thereof.
 
9.2                                  The above obligations of confidentiality shall not be applicable to the extent:
 
(a)                                   such information is general public knowledge or, after disclosure hereunder, becomes general or public knowledge through no fault of the Receiving Party; or
 
(b)                                  such information can be shown by the Receiving Party by its written records to have been in its possession prior to receipt thereof hereunder; or
 
(c)                                   such information is received by the Receiving Party from any third party for use or disclosure by the Receiving Party without any obligation to the Disclosing Party provided, however, that information received by the Receiving Party from any third party funded by the Disclosing Party (e.g. consultants, subcontractors, etc.) shall not be released from confidentiality under this exception; or
 
(d)                                  the disclosure of such information is required or desirable to comply with or fulfill governmental requirements, submissions to governmental bodies, or the securing of regulatory approvals.
 
Neither Party nor any of its Affiliates shall make any public announcement of this Agreement or any of its terms without the prior written consent of the other Party, except that a Party may disclose such information as may have entered into the public domain through no fault of the receiving Party or as required by any applicable law or regulation based upon the written advice of counsel and then only with prior notice to the other Party as far in advance as reasonably possible and with reasonable consideration to the advice of the other Party as to how such disclosure could be modified to conform with applicable laws and regulations and still protect the confidentiality interests of the affected Party.  The Parties further agree that in the event that any Party wishes to prepare and publicly disseminate a press release announcing the grant of rights referenced herein, such Party shall provide the other Party a written draft of such release at least fifteen (15) days prior to the intended date of release, and the other Party shall have the right to make reasonable modifications to such press release during such fifteen (15) day review period.
 
10.                                PATENT RIGHTS
 
10.1                            Responsibility .  Hologic shall he responsible at its sole expense and discretion for the preparation, filing, prosecution and maintenance of all patent applications and patents within the Hologic Patent Rights, using legal counsel of Hologic’s choice.  Hologic shall have no
 
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obligation whatsoever to prepare, file, prosecute, or maintain any patent application or patent within the Hologic Patent Rights.
 
11.                                INFRINGEMENT
 
11.1                            Notice .  ESC shall inform Hologic promptly in writing of any alleged or threatened third party infringement of the Hologic Patent Rights by a third party and of any available evidence thereof.
 
11.2                            Legal Action .  Hologic shall have the sole right but not the obligation, and without ESC’s consent (i) to bring suit or any other necessary and appropriate legal action at Hologic’s own expense, joining ESC as a party, if so required by law, to terminate or prevent infringement or potential infringement of any patent claim included with the Hologic Patent Rights, and (ii) to negotiate with the alleged infringer and to effect such settlement as deemed proper.  In any infringement suit that Hologic may institute to enforce the Hologic Patent Rights, ESC shall, at the request and expense of Hologic, co-operate reasonably in all respects.
 
12.                                PRODUCT LIABILITY
 
12.1                            ESC Indemnity .  ESC shall indemnify, hold harmless and defend Hologic, its directors, officers, employees and Affiliates, against all liabilities, Losses, expenses or damages (including reasonable attorneys’ fees) incurred by or imposed upon Hologic in connection with any claims, suits, actions, demands, proceedings, causes of action or judgments (collectively “Claims”) to the extent that such Claims concern any Licensed Product made, used, sold or imported pursuant to any right or license granted under this Agreement; provided that Hologic gives ESC prompt written notice of any such Claims, reasonable information and assistance in connection with ESC’s defense of such Claims, and authority to defend any such Claims.  However, ESC shall not settle such Claims without Hologic’s prior written consent, such consent shall not be unreasonably withheld or delayed.  It is agreed and understood that Hologic, at its own expense, has the right to retain its own counsel in any such matters.
 
12.2                            Insurance .  No less than thirty (30) days before the earlier date upon which ESC (i) initiates testing of Licensed Products in a clinical trial involving human subjects or (ii) makes a first commercial use or sale of any Licensed Product, ESC shall obtain commercial, general liability insurance, including product liability insurance.  Such insurance shall be written by a reputable Insurance company authorized to do business in the Commonwealth of Massachusetts, shall list Hologic as an additional named insured thereunder, shall be endorsed to include product liability coverage and shall require thirty (30) days written notice to be given to Hologic prior to any cancellation or material change thereof.  The limits of such insurance shall not be less than One Million Dollars ($1,000,000) per occurrence with an aggregate of Three Million Dollars ($3,000.000) for personal injury including death; and One Million Dollars ($1,000,000) per occurrence with an aggregate of Three Million Dollars ($3,000,000) for property damage.  ESC shall provide Hologic with Certificates of Insurance evidencing the same prior to initiation of the clinical trial or first commercial use or sale.  ESC’s policies shall provide primary coverage for Hologic, and any policies owned by Hologic shall be considered excess coverage for Hologic.  ESC shall maintain such commercial general liability insurance during the period that any
 
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Licensed Product or Licensed Process is being used, distributed or sold and for six (6) years thereafter.
 
13.                                Miscellaneous
 
13.1                            Assignment .  Neither party may assign this Agreement, or any rights or obligations hereunder, whether by operation of law or otherwise, except with the express written consent of the other party.  Notwithstanding the preceding sentence, either party may, in its sole discretion, delegate or assign any of its rights or obligations under this Agreement to any of its Affiliates or in connection with a merger, consolidation or sale of all or substantially all of its assets (or a its entire product line relating to colorectal cancer screening) or equity interests.  Any attempted assignment by either party in violation of this Section shall be void.  This Agreement contains the entire agreement of the Parties concerning its subject matter and supersedes all previous agreements or understandings, whether written or oral, with respect to such subject matter.
 
13.2                            Amendment or Modification .  No amendment waiver, alteration, modification of any of the provisions or alterations of this Agreement shall be binding upon either Party unless in writing and duly signed by the Parties.  This Agreement (including Appendix A, which is incorporated herein by reference) constitutes the complete and exclusive statement of the agreement between the parties, and supersedes all prior agreements, proposals, negotiations and communications between the parties, both oral and written, regarding the subject matter hereof.
 
13.3                            Titles .  All titles and captions in this Agreement are for convenience only and shall not be interpreted as having any substantive meaning.
 
13.4                            Severability .  If any provision of this Agreement is held to be illegal, invalid or unenforceable in a final, unappealable order or judgment or under any present or future law (such provision to be hereinafter referred to as an “ Invalid Provision ”), then such Invalid Provision shall be severed from this Agreement and shall be rendered inoperative.  The Parties shall promptly negotiate in good faith a lawful, valid and enforceable provision that is as similar in terms to such Invalid Provision as may be possible while giving effect to the future benefits and burdens accruing to the Parties hereunder; and the remaining provisions of this Agreement shall remain binding on the Parties hereto.  It is expressly agreed by the Parties that amounts previously paid by one Party to the other Party under this Agreement shall not be recoverable to the paying Party as part of the replacement of an Invalid Provision unless this Agreement is invalidated within one (1) year from the Effective Date.
 
13.5                            No Waiver of Rights .  No failure or delay on the part of either Party in the exercise of any power or right hereunder shall operate as a waiver thereof.  No single or partial exercise of any right or power hereunder shall operate as a waiver of such right or of any other right or power.  The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other or subsequent breach hereunder.
 
13.6                            Usage .  Wherever any provision of this Agreement uses the term “including” (or “includes”), such term shall be deemed to mean “including without limitation” and “including but not limited to” (or “includes without limitation” and “includes but is not limited to”).  Except
 
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where the context otherwise requires, wherever used, the singular shall include the plural and the word “or” is used in the inclusive sense.
 
13.7                            This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to conflict of laws principles, and as necessary the laws of the United States of America.  Each party agrees that venue for any dispute arising under this Agreement shall be Boston, Massachusetts, and waives any objection it has or may have in the future with respect to such venue.
 
13.8                            Independent Contractors .  The party’s agree that, in the performance of this Agreement they are and shall be independent contractors.  Nothing herein shall be construed to constitute either party as the agent of the other party for any purpose whatsoever, and neither party shall bind or attempt to bind the other party to any contract or the performance of any obligation or represent to any third party that it has any right to enter into any binding obligation on the other party’s behalf.
 
13.9                            Patent Markup .  ESC shall apply the patent marking notices required by the law of any country where Licensed Products are made, used, sold or imported.
 
13.10                      Drafting .  Each party represents that it participated equally with the other in the drafting of this Agreement This Agreement shall be interpreted without regard to any principle of construction regarding the drafting, authorship or revision thereof.
 
13.11                      Counterparts .  This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
 
14.                                Notices
 
Any notice required or permitted to be given under this Agreement shall be considered properly given, upon receipt, if sent by registered mail or personal courier delivery to the respective address of each Party as follows:

If to ESC:	Exact Sciences Corp.	
 	Madison, WI	
 	Fax:  (608) 284-5701	
 	Attention:  Kevin T. Conroy, President and CEO	
 	 	
If to Hologic:	Hologic, Inc.	
 	250 Campus Drive	
 	Marlborough, MA	
 	Attention:  General Counsel, Legal Department	
 
IN WITNESS WHEREOF , the Parties hereto have caused this Agreement to be executed by their duly authorized officers effective as of the Effective Date.
 
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HOLOGIC, INC.	EXACT SCIENCES CORPORATION	
 	 	
By:	 	 	By:	 	
 	 	
Title:  Sr. VP GM Diagnostics	Title:  President & Chief Executive Officer	
 	 	
Date:  10/14/09	Date:  10/14/09	

THIRD WAVE TECHNOLOGIES, INC.

By:	 	 	
 	
Title:  President	
 	
Date:  10/14/09	
 
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Exhibit 10.40
 
CONTRACT #WDF FY09-19453
 
LOAN
AGREEMENT
BETWEEN THE
WISCONSIN DEPARTMENT OF COMMERCE
AND
EXACT SCIENCES CORPORATION
 
This Agreement is entered into by and between the Wisconsin Department of Commerce (“Department”) and Exact Sciences Corporation, (“Borrower”).
 
WITNESSETH
 
WHEREAS , the Board is authorized to award loan funds, for the purpose of economic development pursuant to Section 560.61 Wis. Stats.; and
 
WHEREAS , on June 16, 2009, the Board, relying upon representations in the Borrower’s Application, agreed to lend up to One Million and 00/100 Dollars ($1,000,000.00) to the Borrower to be utilized in accordance with the terms and conditions of this Agreement.
 
NOW, THEREFORE , for valid consideration, the receipt of which is hereby acknowledged, and in consideration for the promises and covenants in this Agreement, the Department and Borrower agree as follows:
 
1.                                        DISBURSEMENT OF LOAN PROCEEDS. Loan disbursements to the Borrower hereunder for Eligible Project Costs (defined in Exhibit A) shall be made on a periodic basis upon the Department’s receipt and approval of a completed Request for Disbursement Form (attached as Exhibit C) and required supporting documentation.
 
a) Prior to the disbursement of any Loan funds, the Borrower shall execute and deliver to the Department:
 
(i) A borrowing resolution.
(ii) A written Affirmative Action Plan in form and substance reasonably acceptable to the Department.
(iii) All other documents that reasonably may be required by the Department to effect the terms and conditions of this Agreement.
 
b) Disbursements by the Department to the Company shall be made after a nonrefundable origination fee of $20,000.00, two (2.0) percent of the award amount, is paid to the Department.
 
2.                                        BORROWER’S LOAN PAYMENTS. This Loan shall be repaid in accordance with the terms of the Promissory Note (Attached as Exhibit D).
 
3.                                        TAXES AND FEES. Except as otherwise provided in this Agreement, the Borrower shall keep the Collateral free and clear of all judgments, levies, liens, security interests and encumbrances and shall pay all federal, state and local fees, assessments and taxes which may be assessed upon the ownership, possession or use of the Collateral.

 
4.                                        INSURANCE. The Borrower covenants that it will maintain insurance in such amounts and against such liabilities and hazards as customarily is maintained by other companies operating similar businesses.
 
5.                                        “EVENT OF DEFAULT” DEFINED. The occurrence of any one or more of the following events shall constitute an “Event of Default” for the purposes of this Agreement:
 
a) The Borrower’s failure to pay, within ten (10) calendar days of the due date, any of the principal payments or interest due under the Promissory Note (Attached as Exhibit D);
 
b) The Borrower’s failure to comply with or perform any of its obligations under this Agreement; provided that the Borrower’s failure to comply with the terms and conditions of Exhibit A, Section 3. a) hereunder shall not be considered an “Event of Default”.
 
c) Any assignment for the benefit of the Borrower’s creditors or commission of any other act amounting to a business failure;
 
d) The filing, by or against the Borrower, of a petition under any chapter of the U.S. Bankruptcy Code or for the appointment of a receiver;
 
e) Any default or breach of the Borrower’s obligations under the terms and conditions of its loan agreements, leases, or financing arrangements with other creditors;
 
f) Any material misrepresentation with respect to the Borrower’s warranties and representations under this Agreement or the Application; or
 
g) Any other action or omission by the Borrower, which in the Department’s reasonable discretion, jeopardizes the Borrower’s ability to fulfill its obligations under this Agreement or otherwise causes the Department to deem itself insecure.
 
6.                                        REMEDIES IN EVENT OF DEFAULT.
 
a) Upon the occurrence of any Event of Default, the Department shall send a written notice of default to the Borrower, setting forth with reasonable specificity the nature of the default. If the Borrower fails to cure the default to the reasonable satisfaction of the Department within ten (10) calendar days, the Department may, without further written notice to the Borrower, declare the Borrower in default, terminate this Agreement effective immediately, and accelerate the principal balance, accrued interest, and other amounts owed by the Borrower hereunder.
 
b) Upon the termination of this Agreement:
 
(i) The Borrower shall be liable for the full unpaid principal balance together with interest at the annual rate of twelve (12) percent from the date of the Event of Default to the date the Borrower’s obligations hereunder are paid in full.
(ii) Subject to the rights of other creditors, the Department shall be entitled to exercise any and all remedies available to the Department under this Agreement, related loan documents, and applicable laws.
 
c) In addition to the rights and remedies available to the Department at law, in equity, or in bankruptcy, the Department shall be entitled to recover from the Borrower an amount
 
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equal to the sum of:
 
(i) The unpaid principal balance, accrued interest, and other amounts owed by the Borrower hereunder;
(ii) All court costs and reasonable attorney’s fees incurred by the Department in the enforcement of its rights and remedies under this Agreement, including all costs incurred in foreclosing upon, repossessing, storing, repairing, selling, leasing or otherwise disposing of the Collateral; and
(iii) Any other damages arising from the Borrower’s default.
 
d) The Department’s foreclosure upon, repossession of, and subsequent sale, lease, or disposition of the Collateral shall not affect the Department’s right to recover from the Borrower any and all damages caused by the Borrower’s breach of this Agreement. The Department’s rights and remedies hereunder shall be cumulative, not exclusive, and shall be in addition to all other rights and remedies available at law, in equity or in bankruptcy.
 
7.                                        BORROWER’S WARRANTIES AND REPRESENTATIONS. To induce the Department to enter into this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Borrower hereby warrants and represents that:
 
a) The Borrower is duly organized, validly existing, and authorized to engage in business in the State of Wisconsin.
 
b) The Borrower is qualified to engage in business in every jurisdiction where the nature of its business makes such qualification necessary;
 
c) The Borrower is in compliance with all laws, regulations, ordinances and orders of public authorities applicable to it, the violation of which would have a material and adverse effect on the Borrower’s financial ability to comply with this Agreement;
 
d) The Borrower is unaware of any conditions which could subject it to any damages, penalties or clean-up costs under any federal or state environmental laws which would have a material and adverse effect on the Borrower’s financial ability to comply with this Agreement;
 
e) This Agreement is valid and enforceable in accordance with its terms against the Borrower, subject only to applicable bankruptcy, insolvency, reorganization or other similar laws affecting generally the enforceability of the rights of creditors;
 
f) The Borrower is financially solvent and able to comply with all of the terms and conditions set forth in the Agreement and is not in default under the terms and conditions of any loan agreements, leases, or financing arrangements with the Borrower’s other creditors;
 
g) The financial statements and other information provided by the Borrower to the Department are complete and accurate in accordance with Generally Accepted Accounting Principles, and may be relied upon by the Department in deciding whether to enter into this Agreement with the Borrower;
 
h) The Borrower has private Project funds as identified in Exhibit A to fund all other costs relating to the Project;
 
i) In making these warranties and representations, the Borrower has not relied upon any information furnished by the Department.
 
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j) The Borrower’s warranties and representations herein are true and accurate as of the date of this Agreement, and shall survive the execution thereof;
 
8.                                        BORROWER COVENANTS.
 
a) Deliverables. The Borrower shall comply with the terms and conditions set forth in Exhibit A Section 3. of this agreement. Should the Borrower fail to meet the terms and conditions set forth in Exhibit A it may be subject to penalties outlined in Exhibit A.
 
b) Reporting. The Borrower shall provide the Department with reports, utilizing forms provided by the Department, as well as interim and/or fiscal year end financial statements in accordance with Exhibit B-1 and B-2.
 
c) Inspection.
 
(i) The Department and its respective agents, shall, at any reasonable time and upon 48 hours notice, have the right to enter upon the Borrower’s premises to inspect the Project.
(ii) The Borrower shall produce for the Department’s inspection, examination, auditing and copying, upon reasonable advance notice, any and all records which relate to this Agreement.
 
d) Nondiscrimination in Employment. During the Term of this Agreement, the Borrower shall not discriminate against any employee or applicant for employment because of age, race, religion, color, handicap, sex, physical condition, developmental disability as defined in sec. 51.01 (5) Stats., sexual orientation or national origin. This provision shall include, but not be limited to, the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. Except with respect to sexual orientation, the Borrower further agrees to take affirmative action to ensure equal employment opportunities. The Borrower agrees to post in conspicuous places, available for employees and applicants for employment, notices to be provided by the contracting officer setting forth the provisions of the nondiscrimination clause.
 
e) Notification of Position Openings. In accordance with sec. 106.16, Stats., the Borrower shall, for a period of one year from the Effective Date, provide the Wisconsin Department of Workforce Development, local Job Service offices, and the area Workforce Development Board with prior written notice of any new or vacant Full-Time Positions that are related to the Project.
 
f) Consolidation or Merger. During the term of this Agreement, the Borrower shall not consolidate or merge with or into any other corporation or business entity without providing prior written notice to the Department.
 
g) Relocation of Operations. In accordance with §560.075(2), the Borrower shall not relocate the Project, or any Full-Time Positions related thereto, outside of Wisconsin for a minimum of five years from the date of the award.
 
9.                                        WISCONSIN OPEN RECORDS LAW. Subject to the following terms, the Department shall safeguard all of the financial statements provided to them by the Borrower:
 
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a) Except as otherwise required or provided by court order, legal process or applicable Wisconsin law including, without limitation, the Wisconsin Open Records Law, sec. 19.31, Stats., et seq, the Department shall not reveal or disclose any financial information and documents provided by the Borrower to any non-government person or entity without the prior written consent of the Borrower.
 
b) If the Borrower believes or contends that any financial statements provided hereunder qualify as “trade secrets” exempt from disclosure under the Wisconsin Open Records Law, the Borrower shall:
 
(i) Fill out a standard trade secrets designation form to be provided by the Department, designating specific information or documents as “ trade secrets” and agreeing to defend and indemnify the Department, and to hold them harmless in the event of any future open records request asking for copies of such documents; and
(ii) Provide the Department with two copies of such information — a clean copy and a copy with the “trade secret” information redacted—for the Department’s files.
 
10.                                  ENTIRE AGREEMENT. This Agreement and the accompanying loan documents, Promissory Note, Guaranties, and exhibits contain the entire Agreement of the parties concerning the Borrower’s obligations under the terms and conditions of this Agreement. This Agreement may not be amended, modified or altered except in writing signed by the Borrower and the Department.
 
11.                                  CHOICE OF LAW. THIS AGREEMENT IS AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF WISCONSIN. If any provisions of the Agreement shall be prohibited by or invalid under Wisconsin law, such provisions shall be ineffective only to the extent of such prohibition or invalidity, without affecting the validity or enforceability of the remaining provisions thereof.
 
12.                                  VENUE; JURISDICTION. Any judicial action relating to the construction, interpretation, or enforcement of this Agreement, or the recovery of any principal, accrued interest, court costs, attorney’s fees and other amounts owed hereunder, shall be brought and venued in the U.S. District Court for the Western District of Wisconsin or the Dane County Circuit Court in Madison, Wisconsin.
 
THE BORROWER HEREBY CONSENTS TO PERSONAL JURISDICTION IN THOSE WISCONSIN COURTS, AND WAIVES ANY DEFENSES THAT THE BORROWER OTHERWISE MIGHT HAVE RELATING THERETO.
 
13. WAIVER OF RIGHT TO JURY TRIAL. THE BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY JUDICIAL ACTION OR PROCEEDING THAT MAY ARISE BY AND BETWEEN THE DEPARTMENT AND THE BORROWER CONCERNING THE CONSTRUCTION, INTERPRETATION OR ENFORCEMENT OF THIS AGREEMENT, OR THE RECOVERY OF ANY PRINCIPAL, ACCRUED INTEREST, COURT COSTS, ATTORNEY’S FEES AND OTHER AMOUNTS THAT MAY BE OWED BY THE BORROWER HEREUNDER .
 
14. MISCELLANEOUS.
 
a) Severability. The invalidity of any provision of this Agreement shall not affect the
 
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validity of the remaining provisions, which shall remain in full force and effect to govern the parties’ relationship.
 
b) Department Not A Joint Venturer Or Partner. The Department shall not, under any circumstances, be considered or represented to be a partner or joint venturer of the Borrower or any beneficiary thereof.
 
c) Documents. All documents required to be delivered contemporaneously with the execution and delivery of this Agreement are expressly made a part of this Agreement as though completely herein, and all references to this Agreement herein shall be deemed to refer to and include all such documents.
 
d) Agreement Controlling. In the event of any conflict or inconsistency between the Agreement and the exhibits hereto, the terms of this Agreement shall control.
 
15.                                  CAPTIONS. The captions in this Agreement are for convenience of reference only and shall not define or limit any of the terms and conditions set forth herein.
 
16.                                  AUTHORITY TO SIGN DOCUMENT. The person(s) signing this Agreement on behalf of the Borrower certifies and attests that the Borrower’s respective Articles of Organization, Articles of Incorporation, By Laws, Member’s Agreement, Charter, Partnership Agreement, Corporate or other Resolutions, and/or other related documents give full and complete authority to bind the Borrower, on whose behalf they are executing this document. Borrower assumes full responsibility and holds the Department harmless for any and all payments made or any other actions taken by Department in reliance upon the above representation. Further, Borrower agrees to indemnify Department against any and all claims, demands, losses, costs, damages or expenses suffered or incurred by Department resulting from or arising out of any such payment or other action, including reasonable attorneys’ fees and legal expenses. The Borrower has read, fully understands, and agrees to all of the terms and conditions in this Agreement and the related loan documents;
 
IN WITNESS WHEREOF , the Department and the Borrower have executed and delivered this Agreement effective the date set forth next to the Department’s signature below.
 
WISCONSIN DEPARTMENT OF COMMERCE

By:	/s/ Mary Gage	 	 	
Mary Gage, Bureau Director	 	Date   November 10, 2009	
 
EXACT SCIENCES CORPORATION

By:	/s/ Kevin T. Conroy	 	 	
Kevin T. Conroy, President & CEO	 	Date   November 10, 2009	
 
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EXHIBIT A
(PROJECT DESCRIPTION/DELIVERABLES)
Wisconsin Development Fund
Contact:# WDF FY09-19453
 
1.                                        PROJECT SUMMARY:
 
EXACT Sciences Corp. (Nasdaq: EXAS) is a molecular diagnostics company focused on colorectal cancer. The company has exclusive intellectual property protecting its non-invasive, molecular screening technology for the detection of colorectal cancer. Stool-based DNA technology is included in the colorectal cancer screening guidelines of the American Cancer Society and the U.S. Multi-Society Task Force on Colorectal Cancer.
 
EXACT Sciences Corporation is requesting financial assistance from the Wisconsin Development Fund. The funds will be used by the company for working capital and equipment to relocate the company headquarters and establish lab operations in Madison, WI. The company expects to create up to 187 full-time positions within five years.
 
2.                                        ELIGIBLE PROJECT COSTS:
 
Eligible Project Costs are as follows:

 	 	 	 	SOURCES	 	 	 	
Code	 	USES	 	State	 	Federal	 	Investors	 	TOTAL	 	
 	 	Working Capital	 	 	 	 	 	 	 	 	 	
TOTAL	 	 	 	$1 million	 	TBD	 	$20-30 million	 	$30 million	 	
 
Project costs will be incurred between 5/18/2009 and 6/30/2011.
 
3.                                        DELIVERABLES:
 
a) Create One Hundred Eighty Five (185) new full-time positions with an average wage of $60.00 per hour in Madison, Wisconsin by June 30, 2015.
 
b) Job Penalty (Interest Escalation). If the Department, in its reasonable discretion, determines that the Borrower has failed to create at least 68 new Full-Time Positions in accordance with Paragraph 3. a) of this Exhibit A, then for each new Full-Time position less than 185 that the Borrower fails to keep, create or maintain, whichever the case may be, the annual interest rate charged on the Department’s loan hereunder shall be increased retroactive to the date of disbursement, 2.16 basis points within thirty (30) days of the Department’s determination of nonperformance. For the purposes of this Agreement the term “basis point” shall mean one-hundredth of one percent. The maximum penalty under this section shall be four (4.0) percent.
 
c) The Borrower agreeing that the majority of research to be performed under this Project shall be conducted in Wisconsin to the extent practical and commercially justified.
 
d) The Borrower agreeing that the product or products developed as a result of this Project shall be produced or cause to be produced in Wisconsin to the extent practical and commercially justified.
 
4.                                        COLLATERAL: Full faith and credit of the Borrower
 
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EXHIBIT B-1
REPORTING
Wisconsin Development Fund
Contact:# WDF FY09-19453
 
1.                                        REPORTING REQUIREMENT. The Borrower shall provide the Department with reports, utilizing forms provided by the Department, as well as interim and/or fiscal year end financial statements in accordance with the following table, or as otherwise requested by the Department:
 
REPORTING REQUIREMENTS

 	 	Documentation Required	 	 	 	
 	 	 	 	Financial Statements	 	 	 	
Period	 	 	 	Interim	 	Fiscal Year	 	Due	 	
Covered	 	Report	 	As of:	 	Ended:	 	Date	 	
5/18/2009 – 12/31/2009	 	Annual	 	 	 	12/31/2009	 	3/31/2010	 	
1/1/2010 – 12/31/2010	 	Annual	 	 	 	12/31/2010	 	3/31/2011	 	
1/1/2011 – 12/31/2011	 	Annual	 	 	 	12/31/2011	 	3/31/2012	 	
1/1/2012 – 12/31/2012	 	Annual	 	 	 	12/31/2012	 	3/31/2013	 	
1/1/2013 – 12/31/2013	 	Annual	 	 	 	12/31/2013	 	3/31/2014	 	
1/1/2014 – 12/31/2014	 	Annual	 	 	 	12/31/2014	 	3/31/2015	 	
1/1/2015 – 12/31/2015	 	Annual	 	 	 	12/31/2015	 	3/31/2016	 	
1/1/2016 – 12/31/2016	 	Annual	 	 	 	12/31/2016	 	3/31/2017	 	
1/1/2017 – 12/31/2017	 	Annual	 	 	 	12/31/2017	 	3/31/2018	 	
1/1/2018 – 12/31/2018	 	Annual	 	 	 	12/31/2018	 	3/31/2019	 	
 
2.                                        PROJECT RECORDS. The Borrower shall prepare, keep and maintain such records as may be reasonably required by the Department to show:
 
a) The number of Employees Created or Maintained by the Borrower pursuant to this Agreement.
 
b) The amount and disposition of funds provided and disbursed under this Agreement; and
 
c) The total cost of the Project.
 
3.                                        FINANCIAL RECORDS. All of the Borrower’s financial records shall be prepared, kept and maintained in accordance with Generally Accepted Accounting Principles. The Borrower shall provide such records to the Department during the Term of the Agreement as may be requested. Such materials shall be retained by the Borrower for a period of at least three (3) years after the Project End Date.
 
a) The financial statements and other information provided by the Borrower to the Department are complete and accurate in accordance with Generally Accepted Accounting Principles, and may be relied upon by the Department in deciding whether to enter into this Agreement with the Borrower;
 
4.                                        AUDIT REPORT. Within (90) days after the Project End Date, or upon the request of the
 
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Department, the Borrower shall provide the Department with an audited financial report, in form and substance reasonably satisfactory to the Department, documenting that the funds were expended in accordance with this Agreement.
 
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EXHIBIT D
PROMISSORY NOTE
 
Amount: $1,000,000.00
 
FOR VALID CONSIDERATION , the receipt and sufficiency of which are hereby acknowledged, and in consideration for the terms and conditions set forth in the Wisconsin Development Fund Agreement between the Wisconsin Department of Commerce (“Department”) and Exact Sciences Corporation (“Borrower”) also identified as Contract #WDF FY09-19453, the Borrower promises to pay the Department the principal sum of One Million and 00/100 Dollars ($1,000,000.00), or so much thereof as may be advanced by the Department, together with interest, in accordance with the terms and conditions hereinafter set forth.
 
1.                                        DEFINITIONS. Terms used in this Promissory Note shall have the same meanings as in the Agreement.
 
2.                                        INTEREST RATE. Except as otherwise provided herein, this Promissory Note shall bear interest on the unpaid principal balance at the annual rate of Two (2) percent, from the date of actual disbursement of the funds, or any portion thereof, to the Borrower until this Promissory Note is paid in full. Interest shall be computed based upon a 365-day year.
 
3.                                        TERM. The term of this Note shall commence on the Effective Date with all principal, accrued interest and other amounts owed hereunder being due and payable not later than October 1, 2019.
 
4.                                        DEFERRAL PERIOD. The Borrower’s payments of principal and interest hereunder shall be deferred until October 31, 2014. All interest from the date of the Department’s first disbursement shall be paid in accordance with the terms of Paragraph 5.
 
5.                                        PAYMENT. Commencing on November 1, 2014 and continuing on the first day of each consecutive month thereafter through and including September 1, 2019, the Borrower shall pay this Promissory Note in 59 equal monthly installments of $19,280.00 each; followed by a final installment on October 1, 2019 which shall include all remaining principal, accrued interest and other amounts owed by the Borrower hereunder. Payments shall be applied first to interest accrued to date of receipt, and the balance, if any, to principal.
 
6.                                        PERFORMANCE BASED REDUCTIONS IN PRINCIPAL. Provided the Borrower can document the creation of a minimum of 100 new, Full-Time positions, as of June 30, 2015, and subject to the Borrower’s strict compliance with the terms and conditions of the Agreement, it is understood and agreed that the principal balance owed by the Borrower hereunder shall be eligible for forgiveness. The principal balance shall be subject to forgiveness at a rate equal to $5,405.00 for each position retained and created. Said forgiveness shall be retroactive to the date of the award with a maximum forgiveness of $1,000,000.00 plus any accrued interest.
 
7.                                        BORROWER OBLIGATIONS IF TECHNOLOGY IS NOT COMMERCIALIZED: If the Borrower determines it cannot successfully market any products resulting from the pursuit of activities defined in Exhibit A of the Agreement, within the first five years from the loan closing, then the Borrower shall sell the equipment and the Department will receive all proceeds, and will assign all proprietary rights to the Intellectual Property, and at which time the Borrower may request formal forgiveness of the remaining amount outstanding due to the Department, and shall provide the Department with evidence supporting such request. Based upon the

 
satisfactory review of such evidence, the Department, in its sole discretion, may forgive the balance of this Promissory Note.
 
8.                                        TERMS OF PAYMENT.
 
a) Time shall be of the essence as to the Borrower’s payment of all principal, accrued interest, and other amounts owed hereunder, which shall be delivered to the Department at the following address, or such other place or places as the Department may designate, prior to the close of business on the due dates set forth above:
 
State of Wisconsin
Dept. of Commerce - Administrative
P.O. Box 78257
Milwaukee, WI 53293-0257
Attn: Contract WDF FY09-19453
 
b) If the Borrower fails to pay any amounts owed within ten (10) calendar days of the date when due, then, from the date of default until such delinquent payment is paid in full, the Borrower shall pay the Department interest on the delinquent payment at an annual rate of twelve (12) percent. The accrual and collection of such interest shall be in addition to and not in lieu of any other rights and remedies that the Department may have under the Agreement, the Promissory Note, other loan documents, and applicable federal and state laws.
 
c) The Borrower shall bear the entire risk of loss, theft, damage, destruction, or seizure of the Collateral. The Borrower shall be obligated to pay the principal, interest, and other amounts owed hereunder even if the Borrower is unable to use the Collateral or any portion thereof, because of loss, theft, damage, destruction, seizure, nonrepair, lack of maintenance, or any other reason.
 
d) All principal payments, interest and other amounts owed hereunder shall be paid by the Borrower regardless of any set off, counterclaim, recoupment, defense, or other rights which the Borrower may have against the Department, the sellers of the Collateral, the contractors and subcontractors involved in making improvements to the Collateral, or any other party.
 
9.                                        “ EVENT OF DEFAULT” DEFINED. The term “Event of Default” shall have the meaning set forth in the Agreement.
 
10.                                  REMEDIES IN EVENT OF DEFAULT. Upon the occurrence of an Event of Default, the Department shall have the remedies set forth in the Agreement.
 
11.                                  NO PREPAYMENT PENALTY. The Borrower shall have the right to prepay this Promissory Note, in whole or in part, at any time without penalty.
 
12.                                  CHOICE OF LAW. THIS PROMISSORY NOTE IS AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF WISCONSIN. If any provisions of this Promissory Note shall be prohibited by or invalid under Wisconsin law, such provisions shall be ineffective only to the extent of such prohibition or invalidity, without affecting the validity or enforceability of the remaining provisions thereof.
 
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13.                                  VENUE; JURISDICTION . Any judicial action relating to the construction, interpretation, or enforcement of this Promissory Note, or the recovery of any principal, accrued interest, court costs, attorney’s fees and other amounts owed hereunder, shall be brought and venued in the U.S. District Court for the Western District of Wisconsin or the Dane County Circuit Court in Madison, Wisconsin.
 
THE BORROWER HEREBY CONSENTS TO PERSONAL JURISDICTION IN THOSE WISCONSIN COURTS, AND WAIVES ANY DEFENSES THAT MAKER OTHERWISE MIGHT HAVE RELATING THERETO.
 
14.                                  CAPTIONS. The captions in this Promissory Note are for convenience of reference only and shall not define or limit any of the terms and conditions set forth herein.
 
15.                                  WAIVER. The Department’s failure to declare this Promissory Note in default or to otherwise enforce any of their respective rights or remedies shall not be deemed a waiver of its right to declare this Promissory Note in default and enforce its rights and remedies upon the occurrence of a future Event of Default. Nor shall the Department’s receipt and acceptance of any payment on this Promissory Note after the occurrence of an Event of Default constitute or be construed as a waiver of the default or the Department’s rights and remedies as a result of that default. No covenant, condition, or provision of this Promissory Note may be waived except with the Department’s express written consent.
 
16.                                  AGREEMENT INCORPORATED BY REFERENCE. This Promissory Note is subject to all of the terms, conditions, covenants and promises set forth in the Agreement which is hereby incorporated by reference as if fully set forth herein.
 
17.                                  AUTHORITY TO SIGN DOCUMENT. The person(s) signing this Promissory Note on behalf of the Borrower certifies and attests that the Borrower’s respective Articles of Organization, Articles of Incorporation, By Laws, Member’s Agreement, Charter, Partnership Agreement, Corporate or other Resolutions, and/or other related documents give full and complete authority to bind the Borrower, on whose behalf they are executing this document. Borrower assumes full responsibility and holds the Department harmless for any and all payments made or any other actions taken by Department in reliance upon the above representation. Further, Borrower agrees to indemnify Department against any and all claims, demands, losses, costs, damages or expenses suffered or incurred by Department resulting from or arising out of any such payment or other action, including reasonable attorneys’ fees and legal expenses.
 
IN WITNESS WHEREOF, the undersigned Borrower has executed and delivered this Promissory Note as of the dates set forth below.
 
EXACT SCIENCES CORPORATION

By:	 	
Kevin T. Conroy, President & CEO	Date	
 
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Exhibit 10.41
 
LEASE AGREEMENT

LANDLORD:	UNIVERSITY RESEARCH PARK, INCORPORATED	
 	 	
TENANT:	EXACT SCIENCES CORPORATION	
 	 	
PROPERTY:	441 Charmany Drive, 2nd Floor	
 	Madison, Wisconsin 53719	
 	 	
DATE:	November 1, 2009	

 
UNIVERSITY RESEARCH PARK
 
LEASE AGREEMENT
 
This Lease is made by and between University Research Park, Incorporated, a Wisconsin non-stock corporation (hereinafter referred to as “Landlord”), and Exact Sciences Corporation, a Delaware corporation (hereinafter referred to as “Tenant”), as of November 1, 2009.
 
W I T N E S S E T H :
 
IT IS HEREBY AGREED, by and between the parties hereto, in consideration of the covenants and agreements set forth in this Lease, as follows:
 
1.  PREMISES AND TERM
 
1.1.         Leased Premises .  Landlord hereby leases to Tenant and Tenant hereby leases from Landlord on the terms and provisions and subject to the conditions hereinafter set forth in this Lease, the following described premises:
 
The second floor of the building (the “Building”) located at 441 Charmany Drive, Madison, Dane County, Wisconsin, consisting of approximately 17,500 rentable square feet of space (herein referred to as the “Leased Premises”) and all Common Area (defined below) situated upon the property described in Exhibit A attached hereto (the Property described in Exhibit A is referred to herein as the “Landlord’s Property”). The location of the Leased Premises on the Landlord’s Property is indicated on the map attached hereto as Exhibit B-1, and the floor plan attached hereto as Exhibit B-2.
 
1.2.         Term of Lease .  The term of this Lease (“the Term”) shall begin on November 1, 2009 (“the Commencement Date”) and, unless otherwise terminated in accordance with the terms of this Lease, shall end at midnight on October 31, 2014 and, as applicable, shall include the Extended Term (as hereinafter defined).  In addition, Tenant shall have one (1) option to extend the Term for a period of five (5) years (the “Extended Term”).  If Tenant exercises its option, the resulting Extended Term shall begin upon the expiration of the original Term, and all terms, covenants and provisions of this Lease shall apply during the Extended Term with the exception that (i) Tenant shall not have any further option to extend the Term; and (ii) base rent shall be due and payable as provided in Section 2.1 below.  If Tenant elects to exercise its option to extend, provided this Lease is in full force and effect and Tenant has performed all of the terms, covenants and provisions hereof on Tenant’s part to be performed, Tenant shall do so only by giving Landlord notice in writing of its intention to exercise its option to extend not later than six (6) months prior to the expiration of the original Term.  If at any time during the Term, Tenant vacates the Leased Premises, Tenant shall automatically forfeit its option to extend the Term as more particularly described herein.
 
1.3.         Condition of Leased Premises .  Landlord shall deliver, and Tenant shall accept the Leased Premises in AS-IS, WHERE-IS condition without any representations and/or warranties with respect to said condition.  Notwithstanding the foregoing, Landlord shall service,
 
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as necessary, as of the Commencement Date, the roof of the Building and the HVAC system, electrical and plumbing systems exclusively serving the Leased Premises so that same shall be in good order, condition and repair as of the Commencement Date.  In addition, in order to separate the Leased Premises from other tenant spaces located within the Building, Landlord shall: (i) install locks on the doors located at the top of the east and west stairwells serving the Leased Premises on or before the Commencement Date; and (ii) install three (3) additional doors in the lobby located on the first floor of the Building on or before the date that is three (3) months after the Commencement Date.
 
1.4.         Security Deposit .  Tenant shall pay to Landlord upon execution of this Lease the sum of Twenty-One Thousand Eight Hundred Seventy-Five and No/100 Dollars ($21,875.00) as security for the performance of the obligations hereof by Tenant, payable in the form of cash or equivalent.  This security deposit shall be returned to Tenant within thirty (30) days following the termination of this Lease, less any amount appropriately applied by Landlord to cure a Tenant default.
 
2.  RENT
 
2.1.         Base Rent .  Tenant shall pay to Landlord at its office in Madison, Wisconsin, or such other place as Landlord may designate in writing, and without any deduction or offset whatsoever, as base rent, the following amounts in advance on or before the first day of each calendar month during the period indicated:

 	 	Rent per
Square Foot*	 	Annual
Amount	 	Monthly
Amount	 	
11/01/09 – 10/31/10	 	$	15.00	 	$	262,500.00	 	$	21,875.00	 	
11/01/10 – 10/31/11	 	$	15.38	 	$	269,062.50	 	$	22,421.88	 	
11/01/11 – 10/31/12	 	$	15.76	 	$	275,789.06	 	$	22,982.42	 	
11/01/12 – 10/31/13	 	$	16.15	 	$	282,683.79	 	$	23,556.98	 	
11/01/13 – 10/31/14	 	$	16.56	 	$	289,750.88	 	$	24,145.91	 	

*The base rent listed above reflects annual increases of two and one-half percent (2.5%) annually.  The first such annual increase shall occur on November 1, 2010 and shall occur annually on each November 1 thereafter occurring during the Term, including without limitation, the Extended Term, if applicable.  If, during the Term,  Landlord and Tenant agree to an expansion of the Leased Premises, the base rent  per square foot due and payable with respect to such expansion of the Leased Premises shall be at the same rate as the base rent per square foot then due and payable under this Lease.
 
If the Term does not commence on the first day of a calendar month, the base rent for such fractional month shall be computed pro rata on the basis of thirty (30) days per month and paid to Landlord on the first day of the next succeeding calendar month along with the rent for such succeeding month.
 
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2.2.         Additional Rent .  During the Term, in addition to base rent, Tenant shall pay as part of the consideration for this Lease and as additional rent, hereinafter designated “additional rent,” all additional amounts hereinafter provided for and the same shall be payable upon Landlord’s demand except as otherwise expressly provided, including, but not limited to Tenant’s Proportionate Share, as defined in Section 5.6. of real estate taxes, Common Area charges, and Tenant’s Proportionate Share of Landlord’s insurance and utilities.  Landlord reserves the right to deviate from the estimates so that the amounts due as additional rent for the Leased Premises are consistent with the amounts due as additional rent as determined by the more detailed provisions pertaining thereto within this Lease.  Consistent with the forgoing, Tenant agrees to pay those amounts, if any, in excess of the estimates set forth above.
 
2.3.         Past Due Rent .  If Tenant shall fail to pay when due any base rent or additional rent, and such amount shall not be paid within ten (10) days after the date when due, such unpaid amounts shall bear interest from the due date thereof to the date of payment at the rate of ten percent (10%) per annum or the prime interest rate then charged by the U.S. Bank National Association or its successors or assigns, whichever is greater.
 
2.4.         Real Estate Taxes .  Landlord shall pay all general taxes on Landlord’s Property, including all general real estate taxes, personal property taxes on Landlord’s personal property located at Landlord’s Property and installments for special assessments arising during the Term.  Tenant agrees to reimburse Landlord for Tenant’s Proportionate Share of such taxes and assessments.
 
Tenant’s obligation for each tax described in this section shall be further prorated for the first year of this Lease between Landlord and Tenant as of the Commencement Date of this Lease. Tenant’s obligation for each tax described in this section shall be further prorated for the last year of the Term as of the last day of the Term.
 
Tenant shall, upon notice from Landlord, pay in escrow to Landlord one-twelfth (1/12) its Proportionate Share of the estimated annual real estate taxes, personal property taxes and installments for special assessments for Landlord’s Property on the first day of each month after such request, provided, however, that if the sum of such installments shall be less than the total amount of Tenant’s Proportionate Share of such taxes, Tenant shall pay such deficiency at least ten (10) days in advance of the due date of such taxes, taking into account any installment payment arrangements offered by the taxing authority without the imposition of any finance charge, penalty or other cost.  Tenant’s escrow payment shall be applied by Landlord to the payment of the taxes on the Landlord’s Property.  At the termination of this Lease, Tenant shall promptly pay Landlord for Tenant’s Proportionate Share of the estimated taxes based upon that portion of the termination year that exceeds the amount of tax payments from Tenant then held in escrow.  Such estimate shall be based upon the taxes for the preceding year.  Any payment by Tenant in excess of its Proportionate Share of taxes for any tax year shall be refunded to Tenant within ninety (90) days after the expiration of such tax year.
 
For the purpose of this Section 2.4, Tenant’s Proportionate Share shall be calculated by dividing the rentable square footage of the Leased Premises by the rentable square footage of all buildings located from time to time on Landlord’s Property.
 
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3.  INSTALLATIONS, REPAIRS AND
MAINTENANCE OF LEASED PREMISES
 
3.1.         Maintenance by Tenant .  Tenant shall at all times keep the Leased Premises and all partitions, doors, fixtures, equipment and appurtenances thereof (including but not limited to electrical, lighting, HVAC, and plumbing equipment, lines and fixtures servicing only the Leased Premises) in good order, condition and repair, reasonable wear and tear excepted. If Tenant refuses or neglects to repair property as required hereunder and to the reasonable satisfaction of Landlord as soon as reasonably possible after written demand, Landlord may make such repairs without liability to Tenant for any loss or damage that may accrue to Tenant’s property or to Tenant’s business by reason thereof and upon completion thereof, Tenant shall pay Landlord’s costs for making such repairs plus twenty percent (20%) for overhead, upon presentation of bill therefor, as additional rent. When used in this section, the term “repairs” shall include replacements and renewals when necessary and all such repairs shall be equal in quality and class of original work.
 
3.2.         Maintenance by Landlord .  Landlord shall keep foundations, exterior walls, roof and all other interior and exterior structural members of the Leased Premises and all Common Areas including, shared use equipment and any electrical, HVAC, and plumbing lines and equipment not exclusively servicing the Leased Premises (all of which shall be considered as part of the Common Areas) in good repair and shall have access to the Leased Premises for such purpose, but Landlord shall not be required to make any such repairs which become necessary or desirable by reason of the negligence of Tenant, its agents, servants, employees or customers.  Landlord shall enter into service contracts on all heating, ventilating and air conditioning units, including but not limited to changing filters, checking belts and oiling of units.  Tenant shall pay its Proportionate Share of the cost of such contracts as a Common Area charge pursuant to Section 5.5.
 
3.3.         Signs .  Upon completion of the multi-tenant monument sign located immediately adjacent to the Building (the “Monument Sign”), Tenant shall, subject to the terms and conditions of this Section 3.3, have the right to install its sign panel on the Monument Sign in the location designated by Landlord.  Landlord shall make available suite number signage and lobby directory signage.  All exterior signs to be installed by Tenant shall be approved in advance in writing by the Design Review Board appointed by the Board of Regents of the University of Wisconsin System. All signs to be installed by Landlord shall be approved in advance in writing by the Design Review Board.
 
Tenant shall remove all signs installed by Tenant at the termination of this Lease. Such installations and removals shall be made in such a manner as to avoid injury, defacement or any other damages to the buildings and improvements. The cost of repairing any damage to the building caused by the installation, removal, or maintenance of the sign shall be borne by the Tenant.
 
The cost of all signs, other than those furnished by Landlord, including the installation, maintenance, and removal thereof, shall be the responsibility of the Tenant.
 
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3.4.         Alterations, Changes and Installations by Tenant .  Tenant shall not make or cause to be made any alterations, additions or improvements (collectively, “Alterations”) to the Leased Premises, or cause to be installed any fixtures, interior or exterior lighting, plumbing equipment or mechanical equipment within the Leased Premises or any Common Areas without the prior written consent of Landlord, not to be unreasonably withheld, conditioned or delayed.  Any such Alterations shall be made by Tenant, at Tenant’s sole cost and expense, using a competitive bid process.  With respect to the making of any such Alterations, Tenant, at Tenant’s sole cost and expense, shall hire a general contractor, which general contractor shall be subject to Landlord’s approval, not to be unreasonably withheld, conditioned or delayed.
 
3.5.         Fixtures and Equipment .  Subject to Section 3.4, Tenant may, at its own expense, furnish and install such business and trade fixtures in and on the Leased Premises as may be necessary or desirable for Tenant’s business. Upon expiration of this Lease, Tenant may remove such business and trade fixtures provided that Tenant shall promptly repair any damage caused by their removal.  Landlord and Tenant acknowledge that all business and trade fixtures located within the Leased Premises prior to the Commencement Date that are not installed by Tenant are the property of the Landlord.  Tenant may, at its own expense, install equipment within the Leased Premises and such equipment shall remain the property of Tenant and shall be removed by Tenant upon the termination of this Lease.
 
3.6.         Liens and Obligations .  Tenant agrees not to create or to permit others to create any lien or obligations against Landlord or the Leased Premises in making alterations, repairs or in installing materials, fixtures or equipment.  If a lien or obligation is claimed against Landlord or the Leased Premises, Tenant shall either (a) provide Landlord with a bond in the amount of that claim, or (b) cause that claim to be released.  Tenant further agrees to hold Landlord harmless from all claims and demands by any third party in any manner connected with such alterations, repairs or installations or with Tenant’s occupancy for such purpose.  Tenant shall comply with all laws and all directions, rules and regulations of all governmental regulatory bodies or officials having jurisdiction over such alterations, repairs or installations, except that Tenant shall not be required to comply with any laws, regulations or orders by governmental authority necessitating structural alterations, changes, repairs or additions, unless made necessary by the act or work performed by Tenant, in which case Tenant shall so comply, at its own expense, after first procuring the written consent of Landlord.
 
4.  CONDUCT OF BUSINESS
 
4.1.         Business Use .  It is understood and agreed that the Leased Premises shall be used and occupied by Tenant for general office, laboratory, and storage purposes. Tenant shall not use the Leased Premises for any use not identified as a permitted use by any zoning ordinance or other governmental regulation relating to the Leased Premises or approved as a conditional use by the governmental bodies having zoning authority. No use shall be permitted, or acts done, which will cause a cancellation of any insurance policy covering the Leased Premises. Tenant shall not sell, permit to be kept, used or sold in or about the Leased Premises any article which may be prohibited by the standard form of fire insurance policy. In the event Tenant’s use of the Leased Premises results in an increase in the cost of any insurance relating to the Landlord’s Property, Tenant shall pay such additional cost to Landlord upon demand. Tenant shall comply with all applicable laws, ordinances, regulations, and/or deed and plat restrictions affecting the
 
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use and occupancy of the Leased Premises. Tenant shall not commit, or permit to be committed, any waste or nuisance on the Leased Premises.
 
4.2.         Utility Charges .  Landlord shall furnish to the Leased Premises heat, gas, sewer, electricity and other utilities.  Tenant shall be solely responsible for and promptly pay all charges for heat, water, gas, sewer, electricity or any other utility used or consumed in the Leased Premises, including supplemental heating. In the event utilities are not separately metered, Tenant shall pay Tenant’s Proportionate Share of utility costs for the Leased Premises.  For the purpose of this Section 4.2., Tenant’s Proportionate Share shall be calculated by dividing the rentable square footage of the Leased Premises by the rentable square footage of the building in which the Leased Premises is located or another appropriate allocation method which fairly allocates utility costs between tenants in the building based on differing usage, e.g. laboratory versus office use.  In addition, during those portions of the Term in which the first floor of the Building (the “First Floor”) is leased to EMD Chemicals Inc. (“EMD”) but is not occupied, Landlord and Tenant hereby acknowledge and agree that (i) Landlord shall have the right to allocate the utility costs of the Building as Landlord deems reasonably appropriate based upon those portions of the Building that are then-currently occupied; and (ii) in no event shall the utility costs allocated to the unoccupied portion of the First Floor exceed $1.25 per square foot per annum.  In no event shall Landlord be liable for an interruption or failure in the supply of any such utilities to the Leased Premises.
 
4.3.         Taxes on Leasehold .  Tenant shall be responsible for and shall pay before delinquency all municipal, county, state, or other taxes assessed during the Term against any leasehold interest or personal property of any kind, owned by or placed in, upon or about Leased Premises by Tenant.
 
4.4.         Assignment or Subletting .  Tenant shall have the right to assign this Lease to (a) any affiliate of Tenant; (b) to the entity resulting from any corporate reorganization to which Tenant is a party; (c) any entity resulting from a merger; or (d) to an entity purchasing substantially all of the assets of Tenant, provided such an assignment shall not release Tenant from the covenant to pay rent or any other covenant owed by Tenant to Landlord under this Lease.  Except as provided in (a), (b), (c) and (d) preceding, Tenant agrees not to sell, assign, mortgage, pledge or in any manner transfer this Lease or any estate or interest thereunder and not to sublet the Leased Premises or any part or parts thereof without the prior written consent of Landlord in each instance which consent shall not be unreasonably withheld, conditioned or delayed.  Notwithstanding anything to the contrary set forth herein, Landlord hereby grants its consent to a sublease (the “Aldevron Sublease”) of all or any portion of the Leased Premises by Tenant, as sublessor, to Aldevron LLC, as sublessee.  Landlord’s consent to the Aldevron Sublease does not constitute a consent to any subsequent subletting or assignment and does not relieve Tenant or any person claiming under or through Tenant of the obligation to obtain the consent of Landlord with respect to any future assignment or sublease.  One hundred percent (100%) of any consideration paid to Tenant for a sublease or assignment that exceeds the amount Tenant must pay Landlord under this Lease (the “Excess Consideration”) shall be paid to Landlord.  Where a part of the Leased Premises is subleased or assigned, there shall be a prorating of the rent payable under this Lease and the rent payable under the assignment or the sublease to determine whether Excess Consideration is payable to Landlord.  Excess Consideration shall exclude reasonable leasing commissions paid by Tenant, payments
 
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attributable to the amortization of the cost of Tenant improvements made to the Leased Premises at Tenant’s cost for the assignee or subtenant, and other reasonable, actual cash out-of-pocket costs paid by Tenant, such as attorneys’ fees directly related to Tenant’s obtaining an assignee or sublease.  Tenant shall pay this Excess Consideration to Landlord at the end of each calendar year during which Tenant collects any Excess Consideration.  Each payment shall be sent with a detailed statement showing the total consideration paid by the subtenant or assignee and any exclusions from consideration permitted by this section.
 
Consent by Landlord to one assignment of this Lease or to one licensing or subletting of the Leased Premises shall not be a waiver of Landlord’s rights hereunder as to subsequent assignment or subletting, or act to release any guaranty of this Lease, Landlord’s rights to assign this Lease are and shall remain unqualified.  Furthermore, Landlord’s consent to any assignment or sublease shall not, in the absence of language to the contrary contained within said assignment or sublease, release Tenant from the covenant to pay rent or any other covenant owed by Tenant to Landlord under this Lease.
 
4.5.         Corporate Ownership .  If the Tenant is a corporation and if at any time during the Term any part or all of the corporate shares of said corporation shall be transferred by sale, assignment, operation or law or other disposition (except transfers by gift, bequest or inheritance) so that the result of such transfer would be the loss of voting control of said corporation by the person or persons owning a majority of said corporate shares at the date of this Lease, the Tenant shall notify the Landlord in writing of such changes in voting control and Landlord may terminate this Lease by giving Tenant written notice of such termination within ninety (90) days after receipt of Tenant’s notice. This section, however, shall not apply if on the date this Lease is executed the Tenant is a corporation, the outstanding common stock of which is listed on a recognized security exchange, or if at least eighty percent (80%) of the Tenant’s stock is owned by another corporation, the common stock of which is so listed.
 
4.6.         Rules and Regulations .  The rules and regulations appended to this Lease as Exhibit C are hereby made a part of this Lease.  The rules and regulations adopted by the Landlord shall be in writing and provided to Tenant in order to be effective.  Tenant agrees to comply with and observe the rules and regulations. Tenant’s failure to keep and observe said rules and regulations shall constitute a breach of the terms of this Lease in the manner as if the same were contained herein as covenants. Landlord reserves the right from time to time to amend or supplement said rules and regulations and to adopt and promulgate additional rules and regulations applicable to Leased Premises, and the property described in Exhibit A, provided that such additional rules and regulations apply equally to all lessees with the project and do not unreasonably interfere with Tenant’s use and enjoyment of the Leased Premises. Any such additional rules and regulations, and amendments and supplements, if any, shall be given to Tenant in writing, and Tenant agrees thereupon to comply with and observe all such rules and regulations and amendments thereto and supplements thereof.
 
4.7.         Surrender .  On the last day of the Term, including any option term, or upon the sooner termination thereof, Tenant shall peaceably and quietly surrender the Leased Premises and all improvements thereon in the same condition as at the commencement of this Lease, in good order, condition and repair, fire and other unavoidable casualty, and reasonable wear and tear excepted. All alterations, additions, and improvements other than business and trade fixtures
 
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which may be made or installed by either Landlord or Tenant upon the Leased Premises or in common areas including business and trade fixtures installed by Tenant pursuant to Section 3.5, shall remain the property of Landlord and shall remain upon and be surrendered without disturbance, molestation or injury at the termination of the Term, whether by the elapse of time or otherwise, all without compensation or credit to Tenant. Tenant shall remove all equipment and personal property and shall repair any damage occasioned by such removal.  Any personal property not removed by Tenant shall be deemed abandoned and shall become the property of Landlord; provided, that the Landlord shall have the option to effect said removals and Tenant shall pay Landlord, on demand, the cost of removal thereof, with interest at the rate of ten (10%) percent per annum from the date of such removal by Landlord, or the prime interest rate established by U.S. Bank National Association or its successors or assigns, whichever is higher.
 
The delivery to Landlord at the place then fixed for the payment of rent of the keys to the Leased Premises shall constitute surrender of the premises by Tenant and acceptance of the keys by Landlord shall constitute acceptance by Landlord of such surrender. Such acceptance by Landlord shall not constitute a waiver of any rights to recover damages under terms of this Lease. This method of surrender shall not be exclusive and shall be in addition to all other methods of surrender.
 
Anything in this section to the contrary notwithstanding, at any termination of this Lease, Landlord shall have a lien upon all of the property of Tenant then located in or upon the Leased Premises to secure the payment of any amounts due from Tenant to Landlord by reason of this Lease or to secure the payment of damages, and Landlord may retain possession of such property until payment in full of said amounts. Said lien shall not be defeated by placing such property in storage. If Tenant has not redeemed said property within ninety (90) days after the termination of said Lease, Landlord may sell such property at public or private sale without further notice to Tenant, and shall apply in a reasonable manner determined by Landlord the proceeds of sale to reduce the amounts then owed from Tenant to Landlord.
 
5.  COMMON USE AREAS AND FACILITIES
 
5.1.         Common Area .  As used herein, “Common Area” shall include those improvements on and all areas within Landlord’s Property which are designed for common use and benefit, exclusive of space in buildings (or any additional buildings) designed for rental to tenants as the same may exist from time to time. Landlord reserves the right to change building perimeters, add additional buildings, drives, or other structures and to make other changes desired, provided that reasonable access to and use of the Leased Premises is provided and Landlord uses reasonable measures to minimize any disruption or interruption to the conduct of Tenant’s business operations at the Premises.
 
5.2.         Use of Common Area .  Landlord hereby grants to Tenant, its employees, agents, customers and invitees, the nonexclusive right during the Term to use the Common Areas and all equipment and fixtures therein as the same may exist from time to time, such use to be in common with Landlord and all tenants of Landlord from time to time, its and their employees, agents, customers and invitees, except when the same are being repaired.
 
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5.3.         Operation and Maintenance .  The Common Area shall at all times be subject to the exclusive control and management of Landlord and Landlord shall manage, operate, repair and maintain the Common Area and its facilities in a clean and sightly condition. The manner in which such area and facilities shall be maintained and the expenditures therefor shall be at the Landlord’s sole discretion.  Landlord reserves the right to add and remove equipment and fixtures from the Common Areas in its sole discretion.
 
5.4.         Preventing Public Rights .  If Landlord deems it necessary in order to prevent the acquisition of special rights, Landlord may from time to time close all or any portion of the Common Area or take such action as shall be reasonably appropriate for that purpose.
 
5.5.         Charge for Common Area and Facilities .  During the Term, Tenant shall pay to Landlord an annual charge which shall be Tenant’s Proportionate Share of the Landlord’s actual cost of operating, repairing, and maintaining the Common Area and other facilities which shall include, but shall not be limited to common conference rooms, kitchen areas, hallways and lobbies, driveways, parking areas, landscaped and vacant areas, area-ways, walks, curbs, corridors, gardens, sanitary and storm sewers, signs, public facilities such as washrooms, drinking fountains, toilets, the cost of operating, repairing, lighting, heating, air conditioning, cleaning, painting, removing of snow, ice and debris, policing and inspecting, insurance for hazards and other risks, maintenance including but not limited to such repair of paving, curbs, walkways, driveways, landscaping and drainage and lighting facilities as may be necessary from time to time to keep the same in good condition and repair, a reasonable allowance for the depreciation of maintenance equipment, a reasonable allowance for Landlord’s overhead costs in conjunction with the foregoing, and all costs and expenses other than those of a capital nature, but excluding legal fees recovered by Tenant from Landlord in any litigation relating to this Lease. Landlord reserves the right to charge separate and reasonable user fees for certain equipment and fixtures located in the Common Areas.  Landlord shall provide Tenant with an itemized statement of Common Area costs and user fees.
 
Tenant shall have the right, upon not less than ten business days notice, to audit Landlord’s records regarding the Common Area Costs provided (i) the audit is conducted at Landlord’s home office during Landlord’s normal business hours; and (ii) the audit is done at Tenant’s sole cost and expense.  Tenant shall deliver to Landlord a copy of the results of the audit within ten days of its receipt by Tenant.
 
5.6.         Formula For Proportionate Share .  The annual charge for Common Area maintenance and facilities shall be computed on the basis of twelve (12) consecutive calendar months commencing and ending on dates designated by the Landlord and shall be paid in advance in monthly installments on the first day of each calendar month in an amount estimated by Landlord. Within sixty (60) days after the end of each such twelve (12) month period, Landlord shall determine and furnish to Tenant a computation of the actual amount charged for such period; and the amounts so estimated and paid during such period shall be adjusted promptly (including adjustments on a pro rata basis for any partial such period at either end of the Term) by one party’s paying to the other whatever amount is necessary to effectuate such adjustment.  Tenant, at Tenant’s sole cost and expense, shall have the right to conduct an audit of Common Area maintenance and facilities charges.  Any such audit shall be limited to the current year and the two (2) previous years.  In the event the audit reveals a discrepancy, Landlord and
 
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Tenant shall work together diligently to resolve such discrepancy in a timely and equitable manner.
 
The Tenant’s Proportionate Share of the Landlord’s actual costs defined in this Article which are applicable to all tenants occupying space on Landlord’s Property shall be that proportion which the rentable area in the Leased Premises bears to the total rentable area in the buildings located from time to time on the Landlord’s Property.  If Landlord restricts use of certain Common Areas or equipment and fixtures within Common Areas to Tenant’s dwelling or buildings in which such Common Areas are located, the expenses of such Common Areas shall be allocated among tenants of that particular building or buildings, not all buildings on Landlord’s Property.  In that case, Tenant’s Proportionate Share shall be that portion which the rentable area in the Leased Premises bears to the total rentable area in the building or buildings to which the costs being allocated apply.
 
5.7.         Basis For Changes .  Changes in any particular floor area occurring during any calendar month shall be effective on the first day of the next succeeding calendar month and the amounts of any floor area in effect for the whole of any year shall be the average of the total amounts in effect on the first day of each calendar month in such year.
 
5.8.         Hazardous Materials .  Landlord represents and warrants that, as of Commencement Date there are no Hazardous Materials (as hereinafter defined) present in the Leased Premises or in, on or under Landlord’s Property.  Landlord agrees that the remediation, removal or neutralization, if and to the extent required by Environmental Regulations (as hereinafter defined), of any Hazardous Materials in the Leased Premises or in, on or under the Landlord’s Property shall be done by Landlord, at its sole cost and expense, if such Hazardous Materials discovered were not introduced in the Leased Premises or in, on or under the Landlord’s Property by Tenant, its agents, employees or contractors.  Tenant agrees that the remediation, removal or neutralization, if and to the extent required by Environmental Regulations, of any Hazardous Materials in the Leased Premises or in, on or under the Landlord’s Property shall be done by Tenant, at its sole cost and expense, if such Hazardous Materials discovered were introduced in the Leased Premises or in, on or under the Landlord’s Property by Tenant, its agents, employees or contractors.  “Hazardous Materials” shall mean (i) any waste, material or substance (whether in the form of a liquid, a solid, or a gas and whether or not air-borne) which is deemed to be a pollutant or a contaminant, or to be hazardous, toxic, ignitable, reactive, infectious, explosive, corrosive, dangerous, harmful or injurious to public health or to the environment, and which is now or becomes regulated in the future by or under the authority of any applicable local, state or federal laws, judgments, ordinances, orders, rules, regulations, codes or other governmental restrictions or requirements, any amendments or successor(s) thereto, replacements thereof or publications promulgated pursuant thereto, relating to environmental quality, health, safety, contamination and clean-up (collectively “Environmental Regulations”, and individually, “Environmental Regulation”); (ii) petroleum; (iii) asbestos and asbestos containing materials; (iv) any polychlorinated biphenyl; and (v) any radioactive material. Landlord and Tenant each agree that neither Landlord nor Tenant shall cause any Hazardous Materials to exist on, or to escape, seep, leak, spill or be discharged, emitted or released from Landlord’s Property during the Term in violation of any applicable Environmental Regulation.
 
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5.9.         Landlord’s Indemnity.   Landlord hereby indemnifies Tenant, its successors and assigns, and their respective agents, contractors, employees, members, partners, officers, and directors (“Tenant Indemnified Parties”), and agrees to hold Tenant Indemnified Parties harmless from and against any and all losses, liabilities, damages, injuries, penalties, fines, costs, expenses and claims of any and every kind whatsoever, including reasonable attorney’s fees and costs (collectively “Environmental Liabilities”) paid, incurred or suffered by, or asserted against, Tenant Indemnified Parties with respect to, or as a direct or indirect result of, the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission or release from Landlord’s Property of any Hazardous Materials which was brought in to Landlord’s Property by Landlord, its agents, employees, or their respective predecessors-in-interest, or caused by breach by Landlord, its agents, employees or their respective predecessors-in-interest of any Environmental Regulation to which Landlord is subject, and/or which was located upon the Leased Premises or Landlord’s Property prior to the Commencement Date.  This indemnity shall survive the termination of this Lease.
 
5.10.       Tenant’s Indemnity.  Tenant hereby indemnifies Landlord, its successors and assigns, and their respective agents, contractors, employees, members, partners, officers, and directors (“Landlord Indemnified Parties”), and agrees to hold Landlord Indemnified Parties harmless from and against any and all Environmental Liabilities paid, incurred or suffered by, or asserted against, Landlord Indemnified Parties with respect to, or as a direct or indirect result of, the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission or release from the Leased Premises or Landlord’s Property of any Hazardous Materials which was brought in to the Leased Premises or Landlord’s Property by Tenant, its agents or employees, or caused by breach by Tenant of any Environmental Regulation to which Tenant is subject.  This indemnity shall survive the termination of this Lease.
 
5.11.       Remediation.   In the event Hazardous Materials are or become present at Landlord’s Property as the result of any cause whatsoever (other than Hazardous Material which were brought in to the Leased Premises by Tenant, its agents, employees or invitees), and such presence of Hazardous Materials renders the Leased Premises Unusable (as hereinafter defined), then all rent shall be abated with respect to the portion of the Leased Premises so damaged until such time as the portion(s) of the Leased Premises so damaged are no longer rendered Unusable.  For the purpose of this subsection, “Unusable” means that the Tenant does not have access to all or any portion of the Leased Premises because of the enforcement of any Environmental Regulation or the need to use all or any portion of the Leased Premises for remediation of any Hazardous Materials, or because the use of the Leased Premises would represent a risk to the health or safety of Tenant, Tenant’s employees, agents or invitees.
 
6. INSURANCE
 
6.1.         Casualty Insurance .  Landlord shall at all times during the Term keep all improvements which are now or hereafter located on the Landlord’s Property insured against loss or damage by fire and the extended coverage hazards at full insurance value with loss payable to Landlord, Landlord’s mortgagee and such other parties as Landlord may designate, as their interests may appear.
 
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Tenant agrees to reimburse Landlord for Tenant’s Proportionate Share of the cost of such insurance. Tenant’s Proportionate Share under this Section 6.1 shall be that proportion which the rentable area in the Leased Premises bears to the total rentable area in the buildings located from time to time on the Landlord’s Property.  Each month Tenant shall pay to Landlord an amount equal to one-twelfth (1/12) of its Proportionate Share of the estimated annual casualty insurance premium. Upon Landlord’s receipt of any premium notice, Tenant shall upon demand make up any deficiency to the extent of its Proportionate Share of the estimated annual casualty insurance premium.
 
6.2.         Public Liability Insurance .  Landlord shall at all times during the Term keep in full force and effect a policy of public liability and property damage insurance with respect to the Landlord’s Property and all business operated thereon, with limits of public liability not less than One Million and No/100 ($1,000,000.00) Dollars for injury or death in any one occurrence, and property damage liability insurance in the amount of One Hundred Thousand and No/100 ($100,000.00) Dollars. The policies shall name Landlord, Tenant and Landlord’s mortgagees as co-insureds as their interests may appear. Upon written request by Tenant, Landlord shall provide the Tenant with evidence of such insurance, including identification of the Tenant as a co-insured. Landlord may from time to time during the Term increase the above stated coverage in its discretion. Tenant shall reimburse Landlord for its Proportionate Share of the cost of such insurance in the same manner as provided in Section 6.1 regarding casualty insurance.
 
6.3.         Tenant’s Contents .  Tenant shall be responsible for obtaining such insurance as it may deem advisable for all property located in the Leased Premises and in common areas. It is understood that the insurance carried by Landlord does not cover the risk of loss or damage to Tenant’s property. Tenant waives any claim against Landlord and shall save Landlord harmless from any claim for loss or damage to contents, merchandise, fixtures, equipment or work done by Tenant regardless of the cause of any such damage or loss.
 
6.4.         Increase in Fire Insurance .  Tenant agrees that it will not keep or use, in or upon the Leased Premises any article which may be prohibited by the standard form fire insurance policy. If Tenant’s use or occupancy causes any increase in premiums for fire or casualty insurance on the Landlord’s Property, or the Leased Premises, or any part thereof, above the rate of the least hazardous type of occupancy legally permitted in the Leased Premises, Tenant shall pay the additional premium on such insurance. No part of such additional premium resulting from the use or occupancy of another tenant shall be charged to Tenant under Sections 6.1 and/or 6.2 of this Lease. The Tenant shall also pay in such event any additional premium on any rent insurance policy that may be carried by the Landlord for its protection against rent loss through fire or other casualty. Bills for such additional premiums shall be rendered by Landlord to Tenant at such times as Landlord may elect, and shall be due and payable by Tenant when rendered, and the amount thereof shall be deemed to be, and be paid as, additional rent.
 
6.5.         Hold Harmless .  Landlord shall not be liable for any loss, injury, death, or damage to persons or property which at any time may be suffered or sustained by Tenant or by any person whosoever may at any time be using or occupying or visiting the Landlord’s Property or be in, on, or about the same, whether such loss, injury, death, or damage shall be caused by or in any way result from or arise out of any act, omission, or negligence of Tenant or of any occupant, subtenant, visitor, or user of any portion of the Landlord’s Property, or shall result
 
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from or be caused by any other matter or thing whether of the same kind as or of a different kind than the matters or things above set forth, and Tenant shall indemnify Landlord against all claims, liability, loss or damage whatsoever on account of any such loss, injury, death, or damage. Tenant shall indemnify Landlord against all claims, liability, loss or damage arising by reason of the negligence or misconduct of Tenant, its agents or employees. Tenant hereby waives all claims against Landlord for damages to the building and improvements that are now on or hereafter placed or built on the Landlord’s Property and to the property of Tenant in, on, or about the Landlord’s Property, and for injuries to persons or property in or about the Landlord’s Property, from any cause arising at any time. The preceding sentences shall not apply to loss, injury, death, or damage arising by reason of the negligence or misconduct of Landlord, its agents, or employees.
 
6.6.         Waiver of Subrogation .  Landlord and Tenant hereby release each other from any and all liability or responsibility to the other (or to anyone claiming through or under them by way of subrogation or otherwise) for any loss or damage to property caused by fire or any of the extended coverage or supplementary insurance contract casualties, even if such fire or other casualty shall have been caused by the fault or negligence of the party or anyone for whom such party may be responsible, provided, however, that this release shall be applicable and in force and effect only in respect to loss or damage occurring during such time as the releaser’s policies shall contain a clause or endorsement to the effect that any such release shall not adversely affect or impair or prejudice the right of the releaser to recover thereunder. Landlord and Tenant each agree that their policies will include such a clause or endorsement so long as the same is obtainable and if not obtainable, shall so advise the other in writing and such notice shall release both parties from the obligation to obtain such a clause or endorsement.
 
7.  DESTRUCTION OF LEASED PREMISES
 
7.1.         Destruction of Leased Premises .  If the building which includes the Leased Premises is damaged or partially destroyed by fire or other casualty to the extent of less than one-quarter (1/4) of the then cost of replacement thereof above foundation, the same shall be repaired as quickly as is practicable, by Landlord, except that the obligation of Landlord to rebuild shall be limited to repairing or rebuilding of Landlord’s improvements. If the building, which includes the Leased Premises is so destroyed or damaged to the extent of one-quarter (1/4) or more of the then replacement cost thereof, then either (i) Landlord may elect not to repair or rebuild by giving notice in writing terminating this Lease, or (ii) Tenant may elect to terminate this Lease in which either event this Lease shall be terminated as of the date of such notice.
 
7.2.         Rebuilding by Landlord .  If Landlord shall undertake to restore or repair the building which includes the Leased Premises, it shall initiate and pursue the necessary work with all reasonable dispatch, in a manner consistent with sound construction methods.
 
7.3.         Abatement of Rent Upon Destruction of Premises .  If such damage or partial destruction renders the Leased Premises wholly untenantable, the base rent shall abate until the Leased Premises have been restored and rendered tenantable. If such damage or partial destruction renders the Leased Premises untenantable only in part, the base rent shall abate proportionately as to the portion of the Leased Premises rendered untenantable. Rent shall not
 
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abate under this section if the damage or destruction is caused by the negligence or misconduct of Tenant, its agents, employees, customers or invitees.
 
8.  EFFECT OF CONDEMNATION
 
8.1.         Total Condemnation .  In the event that the Leased Premises or such part of the Leased Premises as will render the remainder untenantable, shall be appropriated or taken under the power of eminent domain by any public or quasi-public authority, this Lease shall terminate and expire as of the date of taking.
 
8.2.         Partial Condemnation .  In the event of any other partial condemnation, Tenant shall have the option of terminating this Lease on the effective date of such condemnation by written notice to Landlord prior to such effective date, unless Landlord shall provide to Tenant within a reasonable time after such effective date reasonably comparable space to that taken.  For purposes of this Section, reasonably comparable space shall mean space which is in the same general area as that condemned, is in a similar type of building and contains a similar floor plan, and is leased on similar economic and other terms as this Lease.
 
8.3.         Landlord’s Damages .  In the event of any condemnation or taking, whether whole or partial, the Tenant shall not be entitled to any part of the award paid for such condemnation and Landlord is to receive the full amount of such award. The Tenant hereby expressly waives any rights or claim to any part thereof.
 
8.4.         Tenant’s Damages .  Although all damages in the event of any condemnation are to belong to the Landlord whether such damages are awarded as compensation for diminution in value of the leasehold or to the fee of the Leased Premises, Tenant shall have the right to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant’s own right on account of any and all damage to Tenant’s business by reason of the condemnation, and for or on account of any cost or loss to which Tenant might be put in removing Tenant’s property.
 
9.  REMEDIES
 
9.1.         Events of Default by Tenant .  Upon the failure by Tenant to pay rent when due, Landlord may terminate this Lease or Tenant’s right to use and occupy the Leased Premises by ten (10) days’ written notice to Tenant unless Tenant within such ten (10) days pays all rent due. Upon the happening of any one or more of the following events: (a) the levying of a writ of execution or attachment on or against the property of Tenant; (b) the taking of any action for the voluntary dissolution of Tenant; (c) the commencement of a mechanic’s lien foreclosure action against Tenant as a result of a mechanic’s lien or claim therefor against the land or building of which the Leased Premises are a part; (d) the failure of Tenant to perform any other of the terms, provisions, and covenants of this Lease, Landlord may terminate this Lease or Tenant’s right to use and occupy the Leased Premises by thirty (30) days’ written notice to Tenant unless Tenant, within such thirty (30) day period, cures the specified default or, if the default is of a character which cannot be cured within thirty (30) days, the Tenant commences and diligently pursues the cure of such default within thirty (30) days.
 
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9.2.         Re-Entry by Landlord .  Upon such termination of the Lease or termination of Tenant’s right to use and occupy the Leased Premises as aforesaid, or if Tenant at any time during the Term vacates the Leased Premises or ceases operating said business in the entire or any appreciable part of the Leased Premises, except for causes beyond its control, Landlord may reenter the Leased Premises.
 
9.3.         Right to Relet .  Should Landlord elect to reenter, as herein provided, or should it take possession pursuant to legal proceedings or pursuant to any notice provided for by law, it may either terminate this Lease or it may from time to time without terminating this Lease, make such alterations and repairs as may be necessary in order to relet the Leased Premises, and relet the Leased Premises or any part thereof for such term or terms (which may be for a term extending beyond the Term) and at such rental or rentals upon such other terms and conditions as Landlord in its sole discretion may deem advisable upon each such reletting. All rentals received by the Landlord from such reletting shall be applied, first, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of any costs of such alterations and repairs; third, to the payment of rent due and unpaid future rent as the same may become due and payable hereunder. If such rentals received from such reletting during the month be less than that to be paid during that month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such deficiency shall be calculated and paid monthly. No such re-entry or taking possession of said Leased Premises by Landlord shall be construed as an election in its part to terminate this Lease unless a written notice of such intention be given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any such reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach. Should Landlord at any time reenter or terminate this Lease for any breach, in addition to any other remedies it may have, it may recover from Tenant all damages it may incur by reason of such breach, including the cost of recovering the Leased Premises and reasonable attorney’s fees. All which amounts shall be immediately due and payable from Tenant to Landlord.
 
9.4.         Parties May Remedy Defaults .  In the event of any breach hereunder by either party, and in lieu of Landlord’s terminating this Lease as herein provided, Landlord or Tenant respectively may immediately or at any time thereafter, after having given the other party the requisite notice to correct the same and that time for such correction having elapsed, cure such breach for the account and at the expense of the other party. If Landlord or Tenant at any time, by reason of such breach, is compelled to pay, or elects to pay, any sum of money or do any act which will require the payment of any sum of money, or incurs any expense, including reasonable attorney’s fees, in instituting or prosecuting any action or proceeding to enforce such party’s rights hereunder, the sum or sums so paid or incurred by such party, if paid or incurred by Landlord, shall be deemed to be additional rent hereunder and shall be due from Tenant to Landlord on the first day of the month following the payment of such respective sums, and if paid or incurred by Tenant, shall be due and payable by Landlord on demand with interest at the rate provided in Section 4.7 hereof. This option is given to the parties is intended for their protection and its existence shall not release the parties from the obligation to perform the terms and covenants herein provided to be performed by the respective parties or deprive Landlord of any legal rights which it may have by reason of any default of Tenant.
 
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9.5.         Landlord’s Remedies:  Liquidated Damages .  In the event that at any time, whether before or after the commencement of the Term hereof, a bankruptcy petition shall be filed by Tenant or against Tenant and Tenant shall thereafter be adjudicated a bankrupt, or such petition shall be approved by the court, in any court or pursuant to any statute either of the United States or of any State, whether in bankruptcy, insolvency, for reorganization under Chapter XI or XIII of the Bankruptcy Act or under any other provisions of the Bankruptcy Act, or under the provisions of any law of like impact, for the appointment of a receiver or trustee of Tenant or for the property of Tenant, or if Tenant shall make an assignment of Tenant’s property for the benefit of its creditors, or if proceedings are instituted in a court of competent jurisdiction for the reorganization, liquidation or involuntary dissolution of Tenant, then immediately upon the happening of any such event, and without any entry or other act by Landlord, this Lease and the Term and estate hereby granted (whether or not the Term shall therefore have commenced) shall expire, terminate and come to an end in the same manner and with the same force and effect as if the date of such occurrence were the date hereinbefore fixed for the expiration of the Term hereof. In the event of the termination of the Term hereof by the happening of any such event, Landlord shall forthwith upon such termination, and any other provisions of this Lease to the contrary notwithstanding, become entitled to recover as and for liquidated damages caused by such breach of the provisions of this Lease an amount equal to the difference between the then cash value of the rent reserved hereunder for the unexpired portion of the demised Term and the then cash rental value of the Leased Premises for such unexpired portion of the Term hereby demised unless the statute which governs or shall govern the proceeding in which such damages are to be provided limits or shall be entitled to prove as and for liquidated damages an amount equal to that allowed by or under such statute. The provision of this section shall be without prejudice to Landlord’s right to prove in full damages for rent accrued prior to the termination of this Lease but not paid. This provision of this Lease shall be without prejudice of any rights given Landlord by any pertinent statute to prove any amounts allowed thereby. In making such computation, the then cash rental value of the Leased Premises shall be deemed prima facie to be the rent realized upon any reletting, if such reletting can be accomplished by Landlord within a reasonable time after such a termination of this Lease.
 
9.6.         Expenses of Landlord .  Upon the occurrence of an event of default by Tenant, notwithstanding anything herein to the contrary and whether or not Landlord terminates this Lease, Tenant shall promptly, upon request, reimburse Landlord for all costs and expenses reasonably incurred in enforcing this Lease, including reasonable attorneys’ fees.
 
9.7.         Waiver of Redemption .  Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant’s being evicted or dispossessed for any cause, or in the event of Landlord’s obtaining possession of the Leased Premises, by reason for the violation by Tenant of any of the covenants or conditions of this Lease, or otherwise.
 
9.8.         Defaults of Landlord .  Should Landlord be in default under the terms of this Lease, Landlord shall cure such default within thirty (30) days after written notice of such default from Tenant, or in the event such default is of such a character as to require more than thirty (30) days to cure, Landlord shall use due diligence to cure such default.
 
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9.9.         Rights Cumulative .  All rights and remedies of Landlord and Tenant herein enumerated shall be cumulative and none shall exclude any other right or remedy allowed by law, and said rights and remedies may be exercised and enforced concurrently and whenever and as often as occasion therefor arises.
 
10.  MISCELLANEOUS
 
10.1.       Subordination .  At Landlord’s option, this Lease shall be subordinated to any existing mortgages covering the Leased Premises, any extension or renewal thereof, or to any new mortgages which may be placed thereon from time to time, provided, however, anything to the contrary contained herein notwithstanding, every such mortgage shall contain a provision that the mortgagee shall recognize the validity of this Lease in the event of foreclosure of the Landlord’s interest so long as Tenant shall not be in default under the terms of this Lease. Tenant shall execute whatever instruments may be required to effect such subordination.
 
10.2.       Sale of Property .  Landlord shall have the right at any time to sell, transfer or convey its interest in all or any portion(s) of Landlord’s Property, improvements and buildings of which the Leased Premises are a part to any person, firm or corporation whatsoever, and upon any such sale, transfer or conveyances, Landlord shall cease to be liable under any covenant, condition or obligation imposed upon it by this Lease, or any of the terms and provisions thereof; provided, however, that any such sale, transfer or conveyance shall be subject to this Lease and that all of the Landlord’s covenants and obligations contained herein shall be binding upon the subsequent owner or owners thereof; and provided further that such transferee from Landlord shall in writing assume the obligations of Landlord hereunder.
 
10.3.       Offset Statement .  Within ten (10) days after request therefor by Landlord, or in the event that upon any sale, assignment or hypothecation of the Leased Premises and/or all or any portion(s) of the Landlord’s Property by Landlord an offset statement shall be required by Tenant; Tenant agrees to deliver in recordable form a certificate to any proposed mortgagee or purchaser, or to Landlord, certifying (if such be the case) that this Lease is in full force and effect and that there are no defenses or offsets thereto, or stating those claimed by Tenant.
 
10.4.       Attornment .  Tenant shall, in the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power or sale under any mortgage made by the Landlord covering the Leased Premises, attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Landlord under this Lease.
 
10.5.       Recording .  Tenant shall not record this Lease without the written consent of Landlord; however, upon the request of either party hereto the other party shall join in the execution of memorandum or so called “short form” of this Lease for the purpose of recordation. Said memorandum or short form of this Lease shall describe the parties, the Leased Premises and the Term and shall incorporate this Lease by reference.
 
10.6.       Excavations .  In case any excavation shall be made for buildings or improvements or for any other purpose upon the land adjacent to or near the Leased Premises, Tenant will afford to Landlord, or the person or persons, firms or corporations causing or making such excavation, license to enter upon the Leased Premises for the purpose of doing such work
 
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as Landlord or such person or persons, firms or corporations shall deem to be necessary to preserve the walls or structures of the building from injury, and to protect the building by proper securing of foundations. Insofar as Landlord may have control over the same, all such work shall be done in a manner as will not materially interfere with the operation of Tenant’s business in the Leased Premises.
 
10.7.       Access to Leased Premises .  Tenant shall permit Landlord, its agents and employees, upon reasonable prior notice, to enter the Leased Premises at all reasonable times, for the purpose of making repairs, additions or alterations to the building in which the Leased Premises are located, or for the purpose of inspecting (including without limitation inspections for determining the compliance by any laboratory and animal operations with minimum health and safety requirements or standards) or for the purpose of posting notices of availability for rent without any rebate or abatement of rent and without any liability for any loss of occupation or quiet enjoyment of the Leased Premises.  For purposes of this section, the standards set forth in the Guide for the Care and Use of Laboratory Animals (which outlines the rules and regulations of the Animal Welfare Act and the Public Health Service Policy on Human Care and Use of Laboratory Animals) shall constitute such minimum standards.  In addition, upon the request of Landlord, Tenant will promptly, within ten (10) days of Landlord’s request, furnish to Landlord copies of all reports, filings and records required to be maintained by Tenant with respect to hazardous materials located or used in the Leased Premises, including all “Material Safety Data Sheets.”  The exercise by Landlord of any of its rights under this provision shall not be deemed an eviction or disturbance of Tenant’s use and possession of the Leased Premises.
 
10.8.       Quiet Enjoyment .  If and so long as Tenant pays the rent reserved by this Lease and performs and observes all of the covenants and provisions hereof, Tenant shall quietly enjoy the Leased Premises, subject, however, to the terms of this Lease.
 
10.9.       Notices .  Any notice required or permitted under this Lease shall be deemed sufficiently given or served if sent by certified mail to Tenant at the address of the Leased Premises, and to Landlord at its office or such other place as it may designate in writing, and either party may by like written notice at any time and from time to time designate a different address to which notices shall subsequently be sent. Notices given in accordance with these provisions shall be deemed received when mailed.
 
10.10.     Holding Over .  In the event Tenant remains in possession of the Leased Premises after the expiration of this Lease and without the execution of a new Lease, it shall be deemed to be occupying said Leased Premises as a Tenant from month-to-month, subject to all conditions, provisions and obligations of this Lease insofar as the same are applicable to a month-to-month tenancy. Nothing in this section shall operate to preclude Landlord from removing Tenant from the Leased Premises upon the expiration of this Lease.
 
10.11.     Consents by Landlord .  Whenever under this Lease provision is made for Tenant securing the written consent or approval of Landlord, such consent or approval will not be unreasonably withheld.
 
10.12.     Successors and Assigns .  The terms, covenants and conditions hereof shall be binding upon and inure to the successors in interest and assigns of the parties hereto.
 
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10.13.     Governmental Regulations .  Tenant shall, at Tenant’s sole cost and expense, materially comply with all of the requirements of all city, county, municipal, state, federal and other applicable governmental authorities, now in force, or which may hereafter be in force, pertaining to signs, installations, repairs and business operations in the Leased Premises and shall faithfully observe all statutes now in force or which may hereafter be in force.  At any time during the Term that Tenant is required to obtain a license from any local, state or federal regulatory body, for the use of hazardous materials, Tenant shall notify Landlord of the existence of such license and provide Landlord with a copy of such license.  Upon termination of this Lease and prior to vacation of the Leased Premises, Tenant shall fully comply with all terms of such license and to the extent applicable, obtain a closure letter or similar written confirmation of compliance with all license terms and provide a copy of such letter or confirmation to Landlord.
 
10.14.     Certain Expenses of Landlord .  Any out-of-pocket expenses reasonably incurred by Landlord for purposes of considering or acting upon any request for consent or waiver under, or modification of, any of the provisions of this Lease, including reasonable attorney’s fees, shall be promptly reimbursed by Tenant upon Landlord’s request.
 
10.15.     Force Majeure .  In the event that either Landlord or Tenant shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason of strikes, lock outs, labor disputes, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war or other reason of a like nature not attributable to the negligence or fault of the party delayed in performing work or doing acts required under the terms of this Lease, then performance of such act shall be excused for the period of the unavoidable delay and the period for the performance of any such act shall be extended for an equivalent period. Provided, however, that this provision shall not operate to excuse Tenant from the timely payment of rent and other payments required by the terms of this Lease.
 
10.16.     General .  Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent or of partnership or of joint venture or of any association between Landlord and Tenant, it being expressly understood and agreed that neither the method of computation of rent nor any other provisions contained in this Lease nor any acts of the parties hereto shall be deemed to create any relationship between Landlord and Tenant other than the relationship of landlord and tenant. No waiver of any default of Tenant or Landlord hereunder shall be implied from any omission by Landlord or Tenant any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated. One or more waivers of any covenant, term or condition of this Lease by Landlord or Tenant shall not be construed as a waiver of a subsequent breach of the same covenant, term or conditions. The consent or approval by Landlord to or of any act by Tenant requiring the Landlord’s consent or approval shall not be deemed to waive or render unnecessary Landlord’s consent or approval to or of any subsequent similar act by Tenant. The invalidity or unenforceability of any provision hereof shall not affect or impair any provision. The plural sense where there is more than one tenant and to either corporations, associations, partnership or individuals, male or females, shall in all instances be assumed as though in each case fully expressed. The laws of the State of Wisconsin shall govern the validity, performance and enforcement of this Lease. The submission of this Lease for
 
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examination does not constitute a reservation of or option for the Leased Premises and this Lease becomes effective as a Lease only upon execution and delivery thereof by Landlord and by Tenant. The headings contained herein are for convenience only and do not define, limit or construe the contents of the provisions hereof. All negotiations, representations and understandings between the parties are incorporated herein and may be modified or altered only by agreement in writing between the parties.
 
10.17.     Broker .  Landlord and Tenant represent to each other that no broker or person is entitled to any commission by reason of the negotiation and execution of this Lease other than Siegel-Gallagher, Inc. (“Broker”), and Landlord agrees that Landlord shall be solely responsible for the fees and commissions of the Brokers pursuant to separate agreement(s).  Landlord and Tenant agree to indemnify, defend and hold each other harmless against any and all claims by any other person for brokerage commissions or fees arising out of any conversation, negotiations or other dealings held by the other party with any other broker regarding this Lease.
 
10.18.     Landlord’s Contingency .  Notwithstanding anything to the contrary set forth herein, Landlord and Tenant hereby acknowledge and agree that (i) as of the date of this Lease, the Leased Premises are leased to EMD; and (ii) Landlord’s obligations under this Lease are contingent upon Landlord entering into a lease amendment with EMD wherein EMD agrees to release its rights with respect to the Leased Premises (the “EMD Amendment”).  In the event EMD fails to execute the EMD Amendment, Landlord shall so notify Tenant in writing, and this Lease shall automatically terminate as of the date seven (7) days after the date upon which Landlord so notifies Tenant.  Landlord and Tenant further acknowledge and agree that Landlord shall have no liability to Tenant in the event this Lease is terminated by Landlord pursuant to this Section 10.18.  Landlord shall use good faith efforts and due diligence to cause the full execution of the EMD Amendment.
 
10.19.  Attachments .  The following are attached hereto and made a part hereof with the same force and effect as if set forth in full herein:

(a)	Exhibit A:	Legal Description of Landlord’s Property.	
(b)	Exhibit B-1:	Location of Leased Premises.	
(c)	Exhibit B- 2:	Floor Plan.	
(d)	Exhibit C:	Rules and Regulations.	
 
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease and affixed their respective seals as of the day, month and year set forth below.

LANDLORD:	 	TENANT:	
UNIVERSITY RESEARCH PARK,	 	EXACT SCIENCES CORPORATION	
INCORPORATED	 	 	 	
 	 	 	 	 	
By:	/s/ Mark D. Bugher	 	By:	/s/ Kevin T. Conroy	
 	Mark D. Bugher	 	Name:	Kevin T. Conroy	
 	Assistant Secretary/Treasurer	 	Title:	Pres. / CEO	
 	 	 	 	 	
Date:	11/10/2009	 	Date:	11/10/2009	
 
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EXHIBIT C
 
RULES AND REGULATIONS
 
The Premises shall be a smoke-free environment.  No smoking shall be permitted anywhere in the building or in or around the main entrance (fronting Science Drive) to the building.
 
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 EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
        We have issued our reports dated March 12, 2010, with respect to the consolidated financial statements, and internal control over financial reporting included in the Annual Report of Exact Sciences Corporation on Form 10-K for the year ended December 31, 2009. We hereby consent to the incorporation by reference of said reports in the Registration Statements of Exact Sciences Corporation on Forms S-3 (File No. 333-147511, effective November 19, 2007; and File No. 333-108679, effective September 11, 2003) and on Forms S-8 (File No. 333-164467, effective January 22, 2010; File No. 333-158307, effective March 31, 2009; File No. 333-141323, effective March 15, 2007; File No. 333-123584, effective March 25, 2005; File No. 333-107840, effective August 11, 2003; and File No. 333-54618, effective January 30, 2001).
/s/ Grant Thornton LLP
Madison, Wisconsin
March 12, 2010

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EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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 EXHIBIT 23.2
Consent of Independent Registered Public Accounting Firm
        We consent to the incorporation by reference in the following Registration Statements:
(1)
Registration Statements (Forms S-3 No. 333-108679 and No. 333-147511) of Exact Sciences Corporation, and

(2)
Registration Statements (Forms S-8 No. 333-54618, No. 333-107840, No. 333-123584, No. 333-141323, No. 333-158307 and No. 333-164467) pertaining to the 2000 Stock Option and Incentive Plan of Exact Sciences Corporation;
of our report dated March 31, 2009, with respect to the consolidated financial statements of Exact Sciences Corporation included in this Annual Report (Form 10-K), for the year ended December 31, 2009.
/s/ Ernst & Young LLP
Boston, Massachusetts
March 12, 2010

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EXHIBIT 23.2

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 EXHIBIT 31.1
CERTIFICATION
I, Kevin T. Conroy, certify that:
1.
I have reviewed this annual report on Form 10-K of Exact Sciences Corporation;

2.
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

d)
Disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: March 12, 2010	 	/s/ KEVIN T. CONROY

Kevin T. Conroy
 President and Chief Executive Officer	

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EXHIBIT 31.1
CERTIFICATION

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 EXHIBIT 31.2
CERTIFICATION
I, Maneesh K. Arora, certify that:
1.
I have reviewed this annual report on Form 10-K of Exact Sciences Corporation;

2.
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

d)
Disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: March 12, 2010	 	/s/ MANEESH K. ARORA

Maneesh K. Arora
 Senior Vice President, Chief Financial Officer,
and Secretary	

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EXHIBIT 31.2
CERTIFICATION

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 EXHIBIT 32
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
        In connection with the Annual Report on Form 10-K of Exact Sciences Corporation (the "Company") for the year ended December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Kevin T. Conroy, President and Chief Executive Officer of the Company and Maneesh K. Arora, Senior Vice President, Chief Financial Officer, and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to our knowledge that:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d), of the Securities Exchange Act of 1934; and

2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 12, 2010	 	 	 	/s/ KEVIN T. CONROY

Kevin T. Conroy
 President and Chief Executive Officer	

Dated: March 12, 2010	

 	
/s/ MANEESH K. ARORA

Maneesh K. Arora
 Senior Vice President, Chief Financial Officer,
and Secretary	

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EXHIBIT 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002