Exhibit 4.2


 


Warrant
No. W-2


 


THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT BE
ACQUIRED UPON EXERCISE HEREUNDER, SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN
CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.


 


COMMON STOCK PURCHASE WARRANT


 


To Purchase Shares of Common
Stock of


 


EXACT
SCIENCES CORPORATION


 


THIS COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received, MAYO
Foundation for Medical Education and Research (“Mayo”, and together with
any other registered holder(s) hereunder, the “Holder”), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, to subscribe for and purchase from EXACT
Sciences Corporation, a Delaware corporation (the “Company”), up to Two
Hundred Fifty Thousand (250,000) shares (the “Warrant Shares”) of Common
Stock, par value $0.01 per share, of the Company (the “Common Stock”).  The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).


 


Section 1.               License
Agreement.  This Warrant is being
issued in connection with that certain License Agreement (the “License
Agreement”), dated June 11, 2009, between the Company and Mayo, as
consideration for the Know-How (as defined in the License Agreement) as
services provided to the Company thereunder.


 


Section 2.               Exercise.


 


a)             Exercise of
Warrant.


 


i.              Vesting. 
The Warrant Shares shall vest, and the Holder shall be entitled to
exercise this Warrant with respect to such Warrant Shares, according to the
following schedule (in each case subject to share adjustment pursuant to Section 3):  (A) 62,500 Warrant Shares shall vest on
the first anniversary of the date hereof; (B) 62,500 Warrant Shares shall
vest on the second anniversary of the date hereof; (C) 62,500 Warrant
Shares shall vest on the third anniversary of the date hereof; and (D) 62,500
Warrant Shares shall vest on the fourth anniversary of the date hereof, with
each such vesting date becoming the “Initial Exercise Date” for such
Warrant Shares vesting on such date. 
Once the Warrant Shares have vested pursuant to this Section 2(a)(i),
the Holder may exercise this 


 

















 


Warrant with respect to such Warrant Shares
at any time on or after the Initial Exercise Date for such Warrant Shares up
until the close of business on the six-year anniversary of such Initial
Exercise Date (each such six-year anniversary date being a “Termination Date”)
but not thereafter.  This Warrant shall
become void and shall cease to be exercisable following the Termination Date
for the Warrant Shares vesting on the fourth anniversary of the date hereof, or
June 11, 2019 (such date, subject to adjustment pursuant to Section 3(b),
the “Final Termination Date”).  As
used in this Warrant, the terms “Initial Exercise Date” and “Termination Date”
shall mean the Initial Exercise Date and Termination Dates, respectively, as
may be applicable to each of the four vesting dates for the Warrant Shares.


 


ii.             Exercise. 
Subject to compliance with applicable securities laws, exercise of the
purchase rights represented by this Warrant may be made, in whole or in part,
at any time or times on or after the applicable Initial Exercise Date and on or
before the applicable Termination Date by delivery to the Company of a duly
executed facsimile copy of the Notice of Exercise Form annexed hereto (or
such other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder appearing on the
books of the Company); provided, however, within five Trading
Days (as defined below) of the date said Notice of Exercise is delivered to the
Company, if this Warrant is exercised in full, the Holder shall have
surrendered this Warrant to the Company and the Company shall have received
payment of the aggregate Exercise Price of the Warrant Shares thereby purchased
by wire transfer or cashier’s check drawn on a United States bank.  Notwithstanding anything herein to the
contrary, the Holder shall not be required to physically surrender this Warrant
to the Company until the Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full.  Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable number of
Warrant Shares purchased.  The Holder and
the Company shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. 
The Company shall deliver any objection to any Notice of Exercise Form within
five Business Days (as defined below) of receipt of such notice.  In the event of any dispute or discrepancy,
the records of the Company shall be controlling and determinative in the
absence of manifest error.  The Holder
and any assignee, by acceptance of this Warrant, acknowledge and agree that, by
reason of the provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares available for
purchase hereunder at any given time may be less than the amount stated on the
face hereof.  As used in this Warrant, “Trading
Day” means a day on which the Common Stock is traded on one of the
following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Nasdaq Capital Market, the American
Stock Exchange, the New York Stock Exchange, the Nasdaq Global Market, the
Nasdaq Global Select Market or the OTC Bulletin Board (each, a “Trading
Market”).  If for any period prior to
the Final Termination Date the Common Stock ceases to trade on a Trading
Market, the term “Business Day”, meaning any day other than a Saturday,
Sunday or legal holiday, shall replace the term “Trading Day” in this Warrant
for such period.


 


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b)            Exercise Price.  The per share exercise price of the Common
Stock under this Warrant shall be $1.90, subject to adjustment hereunder (the “Exercise
Price”).


 


c)             Cashless
Exercise.  This Warrant may also be
exercised at any time in whole or in part by means of a “cashless exercise” in
which the Holder shall be entitled to receive a certificate for the number of
Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where:


 


(A)                              = the VWAP on
the Trading Day immediately preceding the date of such election;


 


(B)                                = the Exercise
Price of this Warrant, as adjusted; and


 


(X)                               = the number of
Warrant Shares for which the cashless exercise is elected that are issuable
upon exercise of this Warrant in accordance with the terms of this Warrant by
means of a cash exercise rather than a cashless exercise.


 


For the purposes of this Section 2(c),
“VWAP” means, for any date, the price determined by the first of the
following clauses that applies:  (i) if
the Common Stock is then listed or quoted on a Trading Market, the daily volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time); (ii) if the Common Stock is not then quoted for trading on a
Trading Market and if prices for the Common Stock are then reported in the “Pink
Sheets” published by Pink Sheets, LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported; or (iii) in all other cases, the
fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith and paid for by the Company and reasonably
acceptable to the Holder.


 


d)            Mechanics
of Exercise.


 


i.              Authorization of Warrant Shares.  The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by
this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously with such
issue).


 


ii.             Delivery of Certificates Upon
Exercise.  Certificates for shares
purchased hereunder shall be transmitted by the transfer agent of the Company
to the Holder by crediting the account of the Holder’s prime broker with the
Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”)
system if the Company is a participant in such system, and otherwise by
physical delivery to the address specified by the Holder in the Notice of
Exercise within three Trading Days from the delivery to the Company of the
Notice of Exercise Form, surrender of this Warrant (if required) and payment of
the aggregate Exercise Price as set forth above (“Warrant Share Delivery
Date”).  This Warrant shall be deemed
to have been exercised on the date the Exercise Price is received by the
Company.  The Warrant Shares shall be
deemed to have been 


 


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issued, and Holder or any
other person so designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date the Warrant
has been exercised by payment to the Company of the Exercise Price.


 


iii.            Restrictive Legend. The
Holder understands that unless Warrant Shares may be sold pursuant to Rule 144
under the Securities Act or another exemption from registration under the
Securities Act without any restriction as to the number of securities as of a
particular date that can then be immediately sold, the Warrant Shares may bear
a restrictive legend in substantially the form included on this Warrant (and a
stop-transfer order may be placed against transfer of the certificates for such
securities).


 


iv.            Delivery of New Warrants Upon
Exercise.  If this Warrant shall have
been exercised in part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of the certificate
or certificates representing Warrant Shares, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.


 


v.             No Fractional Shares or Scrip.  No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which Holder
would otherwise be entitled to purchase upon such exercise, the Company shall
pay a cash adjustment in respect of such final fraction in an amount equal to
such fraction multiplied by the Exercise Price.


 


Section 3.               Certain Adjustments.


 


a)             Stock Dividends and Splits.  If the Company, at any time while this Warrant
is outstanding:  (A) pays a stock
dividend or otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company pursuant to this Warrant or the
other Warrants), (B) subdivides outstanding shares of Common Stock into a
larger number of shares, (C) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues
by reclassification of shares of the Common Stock any shares of capital stock
of the Company, then in each case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted.  Any adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.


 


b)            Sale of Assets and Mergers.  Upon the sale by the Company of all or
substantially all of its assets, or the merger or consolidation of the Company
with or into another entity in a transaction where the shares of Common Stock
outstanding immediately prior to the closing of 


 


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such merger or consolidation
represent or are converted into or exchanged for shares that represent less
than a majority of the shares of capital stock of the resulting or surviving
entity outstanding immediately after the closing of such merger or
consolidation (each, a “Business Event”), this Warrant shall be deemed
exercised pursuant to a cashless exercise, with VWAP meaning the fair market
value of a share of Common Stock based on such Business Event, and with all
unvested Warrant Shares vested and exercisable as part of such cashless
exercise.


 


c)             Calculations.  All calculations under this Section 3
shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be.  For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of
a given date shall be the sum of the number of shares of Common Stock
(excluding treasury shares, if any) issued and outstanding.


 


Section 4.               Transfer of Warrant.


 


a)             Transferability.  Subject to the Securities Act and any other
restrictions set forth herein, this Warrant and all rights hereunder are
transferable (but only with all related obligations) with the prior written
consent of the Company and upon surrender of the Warrant with a properly
executed assignment, reasonably satisfactory to the Company, at the principal
office of the Company or such other office or agency as the Company may
designate.  Each Holder (i) acknowledges
that this Warrant and the Warrant Shares have not been registered under the
Securities Act, and (ii) agrees not to sell, pledge, distribute, offer for
sale, transfer or otherwise dispose of this Warrant or any Warrant Shares in
the absence of (A) an effective registration statement under the
Securities Act as to this Warrant or the Warrant Shares and registration or
qualification of this Warrant or the Warrant Shares under any applicable blue
sky or state securities law then in effect, or (B) an opinion of counsel,
reasonably satisfactory to the Company, that such registration and
qualification are not required.


 


b)            New Warrants.  This Warrant may be divided or combined with
other Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or
attorney.  Subject to compliance with Section 4(a),
as to any transfer which may be involved in such division or combination, the
Company shall execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with such notice.


 


c)             Warrant Register.  The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other purposes,
absent actual notice to the contrary.


 


Section 5.               Notice of Certain Events.  In case at any time or from time to time:


 


a)             the
Company shall take a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or 


 


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other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any
other securities or property, or to receive any other right;


 


b)            the
Company shall declare a dividend (or any other distribution) on the shares of
Common Stock or other equity interests, if any, of the Company;


 


c)             the
Company shall authorize the granting to the holders of the shares of Common
Stock or other equity interests, if any, of the Company of rights or warrants
to subscribe for or purchase any equity interests of any class or of any other
rights or warrants;


 


d)            there
shall be any reclassification of the shares of Common Stock or other equity
interests, if any, of the Company, or any consolidation or merger to which the
Company is a party and for which approval of any holders of shares of Common
Stock of the Company is required, or any sale or other disposition of all or
substantially all of the assets of the Company; or


 


e)             of
the voluntary or involuntary dissolution, liquidation or winding up of the
Company;


 


then the Company shall mail
to Holder at the last address of the Holder appearing on the books of the
Company, as promptly as possible but in any event at least twenty days prior to
the applicable date hereinafter specified, a notice stating (i) the date
on which a record is to be taken for the purpose of such dividend, distribution
or rights or warrants or, if a record is not to be taken, the date as of which
the holders of shares of Common Stock of record to be entitled to such
dividend, distribution or rights are to be determined, (ii) the date of
the distribution, together with a description of the property to be
distributed, (iii) the date of such issuance, together with a description
of the security so issued and the consideration received by the Company
therefor, and (iv) the date on which such reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding up is expected to
become effective, the time, if any such time is to be fixed, as of which the
holders of record of Common Stock (or other securities) shall be entitled to
exchange their shares of Common Stock (or other securities) for the securities
or other property deliverable upon such reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding up, and a
description in reasonable detail of the transaction.  Such notice shall be mailed at least twenty
days prior to the date or expected date therein specified.


 


Section 6.               Miscellaneous.


 


a)             No Rights as Stockholder Until
Exercise.  This Warrant does not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company prior to the exercise hereof. 
Upon the surrender of this Warrant and the payment of the aggregate
Exercise Price (or by means of a cashless exercise), the Warrant Shares so
purchased shall be and be deemed to be issued to such Holder as the record
owner of such shares as of the close of business on the later of the date of
such surrender or payment.


 


b)            Loss, Theft, Destruction or
Mutilation of Warrant.  The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, 


 


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and in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to it (which,
in the case of the Warrant, shall not include the posting of any bond), and
upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such Warrant or
stock certificate.


 


c)             Business Days.  If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall
not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.


 


d)            Authorized Shares.


 


The Company covenants that
during the period the Warrant is outstanding, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant.  The Company further
covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.  The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation.


 


Except and to the extent as
waived or consented to by the Holder, the Company shall not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant
against impairment.  Without limiting the
generality of the foregoing, the Company will (a) not increase the par
value of any Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant, and (c) use commercially reasonable efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.


 


Before taking any action
which would result in an adjustment in the number of Warrant Shares for which
this Warrant is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction
thereof.


 


e)             Governing Law.  This Warrant shall be governed by and
construed in accordance with Delaware law without regard for its conflicts of
law principals.


 


f)             Nonwaiver and Expenses.  No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate as a waiver
of such right or otherwise 


 


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prejudice Holder’s rights,
powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Final Termination Date. 
If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover
any costs and expenses including, but not limited to, reasonable attorneys’
fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.


 


g)            Notices.  Any notice, request or other document
required or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of the License
Agreement.


 


h)            Successors and Assigns.  Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder.  The
provisions of this Warrant are intended to be for the benefit of all Holders from
time to time of this Warrant and shall be enforceable by any such Holder or
holder of Warrant Shares.


 


i)              Amendment.  This Warrant may be modified or amended or
the provisions hereof waived with the written consent of the Company and the
Holder.


 


j)              Severability.  Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.


 


k)             Headings.  The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.


 


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IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officer thereunto duly
authorized.


 


Dated:  June 11, 2009


 


	
   

  	
  EXACT SCIENCES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kevin T. Conroy

  
	
   

  	
   

  	
  Name:

  	
  Kevin
  T. Conroy

  
	
   

  	
   

  	
  Title:

  	
  CEO
  and President

  



 


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NOTICE OF EXERCISE


 


TO:         EXACT Sciences Corporation


 


(1)                                  The undersigned
hereby elects to purchase
            
Warrant Shares of the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the exercise price, together with all
applicable transfer taxes, if any, in accordance with paragraph (2) below.


 


(2)                                  Payment shall
take the form of (check applicable box):


 


o            $                                    
in lawful money of the United States; or


 


o            the cancellation of such number of Warrant Shares as
is necessary, in accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection 2(c).


 


(3)                                  Please issue a
certificate or certificates representing said Warrant Shares in the name of the
undersigned or in such other name as is specified below:


 


 


The Warrant Shares shall be
delivered to the following: