Exhibit
10.3


 


EXACT SCIENCES CORPORATION


 


Incentive Stock Option Agreement


Terms and Conditions


 


1.             Grant
Under Plan.  This
option is granted pursuant to and is governed by the Company’s 2000 Stock
Option and Incentive Plan (the “Plan”) and, unless the context otherwise
requires, terms used herein shall have the same meaning as in the Plan.  Determinations made in connection with this
option pursuant to the Plan shall be governed by the Plan as it exists on the
Grant Date.


 


2.             Grant
as Incentive Stock Option.  This option is intended to qualify as an incentive stock option
under Section 422 of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder (the “Code”).


 


3.             Vesting
of Option if Employment Continues.  All of the Option Shares initially shall be
unvested shares.  For so long as the
Employee remains continuously employed by the Company the Option Shares shall
become vested according to the schedule set forth below and the Employee may
exercise this option as to any vested shares:


 


 


	
  Vesting Date

  	
   

  	
   

  	
   

  	
  Number of
  Vested Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  One year from the Vesting Start Date

  	
   

  	
  -

  	
   

  	
  25% of the Option Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  On the 1st day of each subsequent one
  month period following one year from the vesting start date.

  	
   

  	
  -

  	
   

  	
  2.083% of the Option Shares

  



 


Notwithstanding the foregoing, the Board may, in its
discretion, accelerate the date that any installment of this option becomes
exercisable.  The foregoing rights are
cumulative and (subject to Sections 4 or 5 hereof if the Employee ceases to be
employed by the Company) may be exercised only before the date which is ten
years from the date of this option grant.


 


4.             Termination
of Employment.


 


(a)           Termination
Other Than for Cause. 
If the Employee ceases to be employed by the Company, other than by
reason of death or disability as defined in Section 5 or termination for
Cause as defined in Section 4(c), no further installments of this option shall
become exercisable, and this option shall expire (may no longer be


 

















 


exercised) after the passage of three months from the
Employee’s last day of employment, but in no event later than the scheduled
expiration date.  For purposes hereof,
employment shall not be considered as having terminated during any  leave
of absence if such leave of absence has been approved in writing by the Company
and if such written approval contractually obligates the Company to continue
the employment of the Employee after the approved period of absence; in the
event of such an approved leave of absence, vesting of this option shall be suspended
(and the period of the leave of absence shall be added to all vesting dates)
unless otherwise provided in the Company’s written approval of the leave of
absence.  For purposes hereof,
employment shall include a consulting arrangement between the Employee and the
Company that immediately follows termination of employment, but only if so
stated in a written consulting agreement executed by the Company that
specifically refers to this option. 
This option shall not be affected by any change of employment within or
among the Company and its Subsidiaries so long as the Employee continuously
remains an employee of the Company or any Subsidiary (as defined in the Plan).


 


(b)           Termination
for Cause.  If the
employment of the Employee is terminated for Cause (as defined in Section
4(c)), this option shall expire (that is, may no longer be exercised) upon the
Employee’s receipt of written notice of such termination and shall thereafter
not be exercisable to any extent whatsoever.


 


(c)           Definition
of Cause.  “Cause”
shall mean conduct involving one or more of the following: (i) the
substantial and continuing failure of the Employee, after notice thereof, to
render services to the Company in accordance with the terms or requirements of
his or her employment; (ii) disloyalty, gross negligence, willful
misconduct, dishonesty, fraud or breach of fiduciary duty to the Company;  (iii) deliberate disregard of the rules
or policies of the Company, or breach of an employment or other agreement with
the Company, which results in direct or indirect loss, damage or injury to the
Company; (iv) the unauthorized disclosure of any trade secret or
confidential information of the Company; or (v) the commission of an act
which constitutes unfair competition with the Company or which induces any
customer or supplier to breach a contract with the Company.


 


5.             Death;
Disability.


 


(a)           Death.  If the Employee dies while in the employ of
the Company, this option may be exercised, to the extent otherwise exercisable
on the date of his or her death, by the Employee’s estate, personal
representative or beneficiary to whom this option has been transferred pursuant
to Section 9, only at any time within 180 days after the date of
death, but not later than the scheduled expiration date.


 


(b)           Disability.  If the Employee ceases to be employed by the
Company by reason of his or her disability, this option may be exercised, to
the extent otherwise exercisable on the date of cessation of employment, only
at any time within 180 days after such cessation of employment, but not
later than the scheduled expiration date. 
For


 


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purposes hereof, “disability” means “permanent
and total disability” as defined in Section 22(e)(3) of the Code.


 


6.             Partial
Exercise.  This
option may be exercised in part at any time and from time to time within the
above limits, except that this option may not be exercised for a fraction of a
share.


 


7.             Payment
of Exercise Price.


 


(a)           Payment
Options.  The
exercise price shall be paid by one or any combination of the following forms
of payment that are applicable to this option, as indicated on the cover page
hereof:


 


(i)                                    in cash, or by
check payable to the order of the Company;


 


(ii)                                if
the Common Stock is then traded on a national securities exchange or on the
Nasdaq National Market (or successor trading system), delivery of an
irrevocable and unconditional undertaking, satisfactory in form and substance
to the Company, by a creditworthy broker to deliver promptly to the Company sufficient
funds to pay the exercise price, or delivery by the Employee to the Company of
a copy of irrevocable and unconditional instructions, satisfactory in form and
substance to the Company, to a creditworthy broker to deliver promptly to the
Company cash or a check sufficient to pay the exercise price;


 


(iii)                            subject
to Section 7(b) below, if the Common Stock is then traded on a national
securities exchange or on the Nasdaq National Market (or successor trading
system), by delivery of shares of Common Stock owned by the Employee having a
fair market value equal as of the date of exercise to the option price; or


 


(iv)                               any
combination of (i), (ii) and (iii) above.


 


In the case of (iii)
above, fair market value as of the date of exercise shall be determined as of
the last business day for which such prices or quotes are available prior to
the date of exercise and shall mean (x) the last reported sale price (on
that date) 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 (y) the last reported sale price (on that
date) of the Common Stock on the Nasdaq National Market (or successor trading
system), if the Common Stock is not then traded on a national securities
exchange.


 


(b)           Limitations
on Payment by Delivery of Common Stock.  If Section 7(a)(iii) is applicable, and if
the Employee delivers Common Stock held by the Employee (“Old Stock”) to
the Company in full or partial payment of the exercise price and the Old


 


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Stock so delivered is subject to restrictions or
limitations imposed by agreement between the Employee and the Company, an
equivalent number of Option Shares shall be subject to all restrictions and
limitations applicable to the Old Stock to the extent that the Employee paid
for the Option Shares by delivery of Old Stock, in addition to any restrictions
or limitations imposed by this Agreement. 
Notwithstanding the foregoing, the Employee may not pay any part of the
exercise price hereof by transferring Common Stock to the Company unless such
Common Stock has been owned by the Employee free of any substantial risk of
forfeiture for at least six months.


 


8.             Method
of Exercising Option. 
Subject to the terms and conditions of this Agreement, this option may
be exercised by written notice to the Company at its principal executive
office, or to such transfer agent as the Company shall designate.  Such notice shall state the election to exercise
this option and the number of Option Shares for which it is being exercised and
shall be signed by the person or persons so exercising this option.  Such notice shall be accompanied by payment
of the full purchase price of such shares, and the Company shall deliver a
certificate or certificates representing such shares as soon as practicable
after the notice shall be received. 
Such certificate or certificates shall be registered in the name of the
person or persons so exercising this option (or, if this option shall be
exercised by the Employee and if the Employee shall so request in the notice
exercising this option, shall be registered in the name of the Employee and
another person jointly, with right of survivorship). In the event this option
shall be exercised, pursuant to Section 5 hereof, by any person or persons
other than the Employee, such notice shall be accompanied by appropriate proof
of the right of such person or persons to exercise this option.


 


9.             Option
Not Transferable. 
This option is not transferable or assignable except by will or by the
laws of descent and distribution. 
During the Employee’s lifetime only the Employee can exercise this
option.


 


10.          No
Obligation to Exercise Option.  The grant and acceptance of this option imposes no obligation on
the Employee to exercise it.


 


11.          No
Obligation to Continue Employment.  Neither the Plan, this Agreement, nor the
grant of this option imposes any obligation on the Company to continue the
employment of the Employee.


 


12.          No
Rights as Stockholder until Exercise.  The Employee shall have no rights as a
stockholder with respect to the Option Shares until such time as the Employee
has exercised this option by delivering a notice of exercise and has paid in
full the purchase price for the shares so exercised in accordance with
Section 8.  Except as is expressly
provided in the Plan with respect to certain changes in the capitalization of
the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to such date of exercise.


 


13.          Capital
Changes and Business Successions.  The Plan contains provisions covering the
treatment of options in a number of contingencies such as stock splits and
mergers.  Provisions in the Plan for
adjustment with respect to stock subject to options and the related


 


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provisions with respect
to successors to the business of the Company are hereby made applicable
hereunder and are incorporated herein by reference.


 


14.          Withholding
Taxes.  If the
Company in its discretion determines that it is obligated to withhold any tax
in connection with the exercise of this option, or in connection with the
transfer of, or the lapse of restrictions on, any Common Stock or other
property acquired pursuant to this option, the Employee hereby agrees that the
Company may withhold from the Employee’s wages or other remuneration the
appropriate amount of tax.  At the
discretion of the Company, the amount required to be withheld may be withheld
in cash from such wages or other remuneration or in kind from the Common Stock
or other property otherwise deliverable to the Employee on exercise of this
option.  The Employee further agrees
that, if the Company does not withhold an amount from the Employee’s wages or
other remuneration sufficient to satisfy the withholding obligation of the
Company, the Employee will make reimbursement on demand, in cash, for the
amount underwithheld.


 


15.          Early
Disposition.  The
Employee agrees to notify the Company in writing immediately after the Employee
transfers any Option Shares, if such transfer occurs on or before the later of
(a) the date that is two years after the date of this Agreement or
(b) the date that is one year after the date on which the Employee
acquired such Option Shares.  The
Employee also agrees to provide the Company with any information concerning any
such transfer required by the Company for tax purposes.


 


16.          Lock-up
Agreement. The Employee agrees that in the event that the
Company effects an underwritten public offering of Common Stock registered
under the Securities Act, the Option Shares may not be sold, offered for sale
or otherwise disposed of, directly or indirectly, without the prior written
consent of the managing underwriter(s) of the offering, for such period of time
after the execution of an underwriting agreement in connection with such
offering that all of the Company’s then directors and executive officers agree
to be similarly bound.


 


17.          Provision
of Documentation to Employee.  By signing this Agreement the Employee acknowledges receipt of a
copy of this Agreement and a copy of the Plan.


 


18.          Compliance
with Securities Act. 
The Company shall not be obligated to sell or issue any Common Stock or
other securities pursuant to the exercise of this option unless the shares of
Common Stock or other securities with respect to which this option is being
exercised are at that time effectively registered or exempt from registration
under the Securities Act of 1933, as amended, and applicable state securities
laws.  In the event shares or other
securities shall be issued which shall not be so registered, the Employee
hereby represents, warrants and agrees that he will receive such shares or
other securities for investment and not with a view to their resale or
distribution, and will execute an appropriate investment letter satisfactory to
the Company and its counsel.


 


19.          Amendment
of Option.  The
Board may amend, modify or terminate this option including, but not limited to,
substituting therefor another option of the same or a different type and
changing the date of exercise or realization, provided that, the
Employee’s consent to such


 


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action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Employee.


 


20.          Miscellaneous.


 


(a)           Notices.  All notices hereunder shall be in writing
and shall be deemed given when sent by certified or registered mail, postage
prepaid, return receipt requested, if to the Employee, to the address set forth
on the Cover Sheet or at the address shown on the records of the Company, and
if to the Company, to the Company’s principal executive offices, attention of
the Corporate Secretary.


 


(b)           Entire
Agreement.  This
Agreement constitutes the entire agreement between the parties relative to the
subject matter hereof, and supersedes all proposals, written or oral, and all
other communications between the parties relating to the subject matter of this
Agreement.


 


(c)           Fractional
Shares.  If this
option becomes exercisable for a fraction of a share because of the adjustment
provisions contained in the Plan, such fraction shall be rounded down to the
nearest whole share.


 


(d)           Severability.  The invalidity, illegality or
unenforceability of any provision of this Agreement shall in no way affect the
validity, legality or enforceability of any other provision.


 


(e)           Successors
and Assigns.  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, subject to the limitations set
forth in Section 9 hereof.


 


(f)            Governing
Law.  This
Agreement shall be governed by and interpreted in accordance with the laws of
the Delaware, without giving effect to the principles of the conflicts of laws
thereof.


 


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