Document:

Exhibit 4.01

	
  CUSIP NO. 52517PJ93

  	
   

  	
   

  
	
  ISIN NO.
  US52517PJ934

  	
   

  	
   

  
	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT: $5,000,000

  
	
  No. R-1

  	
   

  	
   

  

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES I

PRINCIPAL PROTECTED GLOBAL CASH BASKET
FX-LINKED NOTE
DUE DECEMBER 27, 2007

THIS
NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF THE
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE
COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.

UNLESS
AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM (A
“CERTIFICATED NOTE”), THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.

 

 

 

LEHMAN BROTHERS HOLDINGS
INC., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the “Company,” which term includes any successor
corporation under the Indenture referred to on the reverse hereof), for value
received, hereby promises to pay to CEDE & Co., or registered assigns,
on the Maturity Date, an amount equal to the Redemption Amount. The Notes do
not bear interest. No payments on the Notes will be made until the Maturity
Date.

The “Maturity Date” is December 27,
2007, or if such day is not a Business Day, on the next following Business Day.

The Redemption Amount,
for each $1 principal amount of the Notes represented hereby, is the amount
equal to the sum of (a) $1 plus (b) the
Additional Amount.

The “Additional Amount”,
for each $1 principal amount of the Notes represented hereby will be (subject
to the occurrence of a Disruption Event) the greater of (i) zero and (ii) 131%
times the Basket Value.

The
“Reference Currencies” are the Canadian Dollar (CAD), Chinese Renminbi (CNY),
Euro (EUR), Japanese Yen (JPY), Mexican Peso (MXN), Singapore Dollar (SGD) and
the U.S. Dollar (USD).

The “Basket Value” equals
the sum of:

(i) a quotient, the numerator of which
is 0.22312 and the denominator of which is the
Settlement Rate for CAD plus

(ii) a quotient, the numerator of which
is 1.60058 and the denominator of which is the
Settlement Rate for CNY plus

(iii) a quotient, the numerator of which
is 0.11928 and the denominator of which is the
Settlement Rate for EUR plus

(iv) a quotient, the numerator of which
is 22.98600 and the denominator of which is the
Settlement Rate for JPY plus

(v) a quotient, the numerator of which
is 1.72350 and the denominator of which is the
Settlement Rate for MXN plus

(vii) a quotient, the numerator of which
is 0.15936 and the denominator of which is the Settlement
Rate for SGD plus

(viii) a quotient, the numerator of
which is -1.0000 and the denominator of which is the
Settlement Rate for USD.

The “Settlement Rate” for
each Reference Currency is the Reference Exchange Rate on the Valuation Date,
observed as per the Settlement Rate Option (subject to the occurrence of a
Price Source Unavailability Event).

The “Reference Exchange Rates” are the spot exchange
rates for each of the Reference Currencies quoted against the U.S. dollar
expressed as number of currency units per USD 1.

 

 2
 

 

 

The “Settlement
Rate Option” for each Reference Currency (other than USD) is as follows:

	
  Reference Currency

  	
   

  	
  Settlement Rate Option

  	
   

  	
  Principal Financial

  Center

  
	
  CAD

  	
   

  	
  The Canadian Dollar/U.S. Dollar official fixing
  rate, expressed as the amount of Canadian Dollars per one U.S. Dollar, for
  settlement in one business day reported by the Federal Reserve Bank of New
  York which appears on Reuters Screen 1FED to the right of the caption “CAD”
  at approximately 10.00 a.m. New York time, on the Valuation Date.

  	
   

  	
  Toronto

  
	
  CNY

  	
   

  	
  The Chinese
  Renminbi/U.S. Dollar official fixing rate, expressed as the amount of Chinese
  Renminbi per one U.S. Dollar, for settlement in two business days reported by
  The State Administration of Foreign Exchange of the People’s Republic of
  China, Beijing, which appears on the Reuters Screen SAEC Page opposite
  the symbol “USDCNY=“ at approximately 5:00 p.m., Beijing time, on the
  Valuation Date.

  	
   

  	
  Beijing

  
	
  EUR

  	
   

  	
  The U.S. Dollar/Euro
  official fixing rate, expressed as the amount of U.S. Dollars per one Euro,
  for settlement in two business days reported by the Federal Reserve Bank of
  New York which appears on Reuters Screen 1FED to the right of the caption
  “EUR” at approximately 10.00 a.m., New York time, on the Valuation Date.

  	
   

  	
  TARGET

  
	
  JPY

  	
   

  	
  The Yen/U.S. Dollar
  official fixing rate, expressed as the amount of Japanese Yen per one U.S.
  Dollar, for settlement in two business days reported by the Federal Reserve
  Bank of New York which appears on Reuters Screen 1FED to the right of the
  caption “JPY” at approximately 10.00 a.m., New York time, on the
  Valuation Date.

  	
   

  	
  Tokyo

  
	
  MXN

  	
   

  	
  The Mexican Peso/U.S.
  Dollar fixing rate, expressed as the amount of Mexican Pesos per one U.S.
  Dollar, for settlement in two business days reported by Banco de Mexico which
  appears on Reuters Screen MEX01 Page under the heading “USDMXNFIX=“, at
  the close of business in Mexico City on the Valuation Date.

  	
   

  	
  Mexico
  City

  
	
  SGD

  	
   

  	
  The Singapore
  Dollar/U.S. Dollar spot rate at 11:00 a.m., Singapore time, expressed as
  the amount of Singapore Dollar per one U.S. Dollar, for settlement in
  two business days, reported by the Association of Banks in Singapore which
  appears on the Reuters Page ABSIRFIX01 to the right of the caption
  “Spot” under the column “SGD” at approximately 11:30 a.m., Singapore
  time, on the Valuation Date.

  	
   

  	
  Singapore

  

 

The term “business day” solely as used in any
Settlement Rate Option described above shall mean any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive
order to close (including for dealings in foreign exchange in accordance with
the practice of the foreign exchange market) in the Principal Financial Center
for both (a) the Reference Currency and (b) the currency against
which the Reference Currency is quoted (the “base currency”) in accordance with
the Reference Exchange Rate specified in the applicable pricing supplement, in
each case as specified for the applicable Reference Currency or base currency
in the table below; provided that where Euro is either the Reference Currency
or the base currency, “business day” for Euro as the Reference Currency or the
base currency shall mean any day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is open.

The screen or time of observation indicated in
relation to any Settlement Rate Option above shall be deemed to refer to such
screen or time of observation as modified or amended from time to time, or to
any substitute screen thereto.

 

 3
 

 

 

The “Valuation Date” is December 19, 2007 or, if
such day is not a Valuation Business Day, the immediately preceding Valuation
Business day.

A “Valuation Business Day”
means, with respect to each Reference Currency, any day, other than a Saturday
or Sunday, that is neither a legal holiday nor a day on which commercial banks
are authorized or required by law, regulation or executive order to close
(including for dealings in foreign exchange in accordance with the practice of
the foreign exchange market) in the city or jurisdiction indicated in the table
below:

	
  Reference Currency

  	
   

  	
   

  	
   

  	
  Valuation Business Day

  	
   

  	
   

  
	
  CAD

  	
   

  	
  New York

  
	
  CNY

  	
   

  	
  Beijing

  
	
  EUR

  	
   

  	
  New York

  
	
  JPY

  	
   

  	
  New York

  
	
  MXN

  	
   

  	
  Mexico City

  
	
  SGD

  	
   

  	
  Singapore

  

 

A “Business Day”, notwithstanding any provision in the
Indenture, is any day that is not is not a Saturday or Sunday and that is not a
day on which banking institutions in New York City generally are authorized or
obligated by law or executive order to be closed.

Upon the occurrence of a Disruption Event with
respect to any Reference Currency on any day during the term of the notes, the
Calculation Agent shall determine the Additional Amount payable on the Maturity
Date in good faith and in a commercially reasonable manner.

A “Disruption Event” means any of the following
events (other than a Price Source Unavailability Event), as determined in good
faith by the Calculation Agent:

(A)                              the occurrence and/or existence of an event on any
day that has the effect of preventing or making impossible the delivery of USD
from accounts inside the country for which a Reference Currency is the lawful
currency (such jurisdiction with respect to such Reference Currency, the “Reference
Currency Jurisdiction”) to accounts outside that Reference Currency
Jurisdiction;

(B)                                the occurrence of any event causing the Reference
Exchange Rate for any Reference Currency to be split into dual or multiple currency
exchange rates; or

(C)                                the occurrence and/or existence of any event (other
than those set forth in (A) or (B) above or those constituting a
Price Source Unavailability Event) with respect to any Reference Currency that
prevents or makes impossible (x) the Calculation Agent’s ability to
calculate the Additional Amount, (y) the fulfilment of the Company’s
obligations under the notes, or (z) the ability of the Company or any of
its affiliates through which the Company hedges its position under the notes to
hedge such position or to unwind all or a material portion of such hedge.

 

 4
 

 

 

Upon the occurrence of a Price Source Unavailability
Event with respect to a Reference Currency, the Settlement Rate for the
affected Reference Currency will be determined in accordance with the Fallback
Rate Observation Methodology.

A “Price Source
Unavailability Event” means, as determined in good faith by the Calculation
Agent, the Settlement Rate being unavailable for a Reference Currency, or the
occurrence of an event (other than an event constituting a Disruption Event)
that generally makes it impossible to obtain the Settlement Rate for a
Reference Currency, on the relevant Valuation Date.

The “Fallback Rate
Observation Methodology” means that the Settlement Rate in respect of a
Reference Currency will equal the noon buying rate in New York for cable
transfers in foreign currencies as announced by the Federal Reserve Bank of New
York for customs purposes (the “Noon Buying Rate”) on the relevant Valuation
Date. If the Noon Buying Rate is not announced on that date, the Settlement
Rate for a Reference Currency will be calculated on the basis of the arithmetic
mean of the applicable spot quotations received by the Calculation Agent at
approximately 10:00 a.m., New York City time, on the Valuation Business
Day next succeeding the Valuation Date for the purchase or sale for deposits in
the Reference Currency by the New York offices of three leading banks engaged
in the interbank market (selected in the sole discretion of the Calculation
Agent) (the “Reference Banks”). If fewer than three Reference Banks provide
spot quotations then the Settlement Rate for such Reference Currency will be
determined by the Calculation Agent in good faith and in a commercially
reasonable manner.

Except as provided below,
the Redemption Amount may, at the option of the Company, be made by check
mailed to the person entitled thereto at such person’s address as it appears on
the registry books of the Company.

Payment of the Redemption
Amount will be made in immediately available funds upon surrender of this Note
at the corporate trust office or agency of the Trustee (or any duly appointed
Paying Agent) maintained for that purpose in the Borough of Manhattan, New York
City (the “Corporate Trust Office”), provided that this Note is presented to
the Trustee (or any such Paying Agent) in time for the Trustee (or any such
Paying Agent) to make such payments in such funds in accordance with its normal
procedures.

The Company will pay any
administrative costs imposed by banks in making payments in immediately
available funds, but any tax, assessment or governmental charge imposed upon
payments hereunder, including, without limitation, any withholding tax, will be
borne by the Holder hereof.

References herein to “USD”,
“U.S. dollars” or “U.S.$” or “$” are to the coin or currency of the United
States as at the time of payment is legal tender for the payment of public and
private debts.

REFERENCE
IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE
HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS
IF SET FORTH AT THIS PLACE.

This Note shall not be
valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been signed by the Trustee under the
Indenture.

 

 5
 

 

 

IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has
caused this instrument to be signed by its Chairman of the Board, its
President, its Vice Chairman, its Chief Financial Officer, one of its Vice
Presidents or its Treasurer, by manual or facsimile signature under its
corporate seal, attested by its Secretary or one of its Assistant Secretaries
by manual or facsimile signature.

Dated:  June 26, 2006

	
  

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
  [SEAL]

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

This is one of the
Securities of the series designated herein referred to in the within-mentioned
Indenture.

	
  CITIBANK, N.A.

  	
   

  
	
  as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  
				

 

 6

 

 

[REVERSE
OF NOTE]

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES I
PRINCIPAL PROTECTED GLOBAL CASH BASKET
FX-LINKED NOTE
DUE DECEMBER 27, 2007

Section 1.
General. This Note is one of a duly authorized series of Notes of the
Company designated as the Medium-Term Notes, Series I, Principal Protected
Global Cash Basket FX-Linked Note (herein called the “Notes”). The Notes are one of an indefinite
number of series of debt securities of the Company (collectively, the “Securities”)
issued or issuable under and pursuant to an indenture dated as of September 1,
1987, as amended and supplemented (the “Indenture”), duly executed and
delivered by the Company and Citibank, N.A., as Trustee (herein called the “Trustee”),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Securities. The separate series of Securities may be issued in various
aggregate principal amounts, may mature at different times, may bear interest
(if any) at different rates, may be subject to different redemption provisions
or repurchase rights (if any), may be subject to different sinking, purchase or
analogous funds (if any), may be subject to different covenants and Events of
Default and may otherwise vary as in the Indenture provided.

Section 2.
Principal Amount for Indenture Purposes. For the purpose of determining
whether Holders of the requisite amount of Notes of this series outstanding
under the Indenture have made a demand, given a notice or waiver or taken any
other action, the principal amount of this Note will be deemed to be the
principal amount of this Note then outstanding.

Section 3.
Modification and Waivers. The Indenture contains provisions permitting
the Company and the Trustee, with the consent of the Holders of not less than
66-2/3% in aggregate principal amount of each series of the Securities at
the time Outstanding to be affected, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of all such series; provided, however, that no such supplemental
indenture shall, among other things, (i) change the fixed maturity of any
Security, or reduce the Redemption Amount or the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium or other amount payable on redemption, or make the Redemption Amount or
the principal amount thereof, premium or other amount payable, if any, or
interest thereon payable in any coin or currency other than that hereinabove
provided, without the consent of the Holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected. It is also
provided in the Indenture that, prior to any declaration accelerating the maturity
of any series of Securities, the holders of a majority in aggregate principal
amount of the Securities of such series Outstanding may on behalf of the
holders of all the Securities of such series waive any past

 

 

 

default or Event of
Default under the Indenture with respect to such series and its consequences,
except a default in the payment of interest, if any, on the Redemption Amount
or the principal amount, or premium, if any, on any of the Securities of such
series, or in the payment of any sinking fund installment or analogous
obligation with respect to Securities of such series. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future holders and owners of this Note and any Notes of
this series which may be issued in exchange or substitution herefor,
irrespective of whether or not any notation thereof is made upon this Note or
such other Notes of this series.

Section 4.
Obligations Unconditional. No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
Redemption Amount or the principal amount on this Note at the place, at the
respective times, at the rate, and in the coin or currency herein prescribed.

Section 5.
Defeasance. The Indenture contains provisions for the discharge of the
Indenture and defeasance at any time of the indebtedness on this Note upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Note.

Section 6.
Authorized Form and Denominations. The Notes of this series are
issuable in registered form, without coupons. Each Note will be issued
initially as either a Global Security or a Certificated Note, at the option of
the Company, in denominations of $1,000 or whole multiples of $1,000, either at
the office or agency to be designated and maintained by the Company for such
purpose in the Borough of Manhattan, New York City, pursuant to the provisions
of the Indenture or at any of such other offices or agencies as may be
designated and maintained by the Company for such purpose pursuant to the
provisions of the Indenture, and in the manner and subject to the limitations
provided in the Indenture, but without the payment of any service charge,
except for any tax or other governmental charges imposed in connection
therewith. Notes of this series are exchangeable for a like aggregate principal
amount of Notes of this series of a different authorized denomination, except
that Global Securities will not be exchangeable for Certificated Notes of this
series.

Section 7.
Registration of Transfer. As provided in the Indenture and subject to
certain limitations as therein set forth, the transfer of this Note is
registrable in the Security Register, upon surrender of this Note for
registration of transfer, at the Corporate Trust Office or agency in a Place of
Payment for this Note, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar
requiring such written instrument of transfer duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more
new Notes of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

If
at any time the Depository notifies the Company that it is unwilling or unable
to continue as Depository or if at any time the Depository shall no longer be
eligible under the Indenture, the Company shall appoint a successor Depository.
If a successor Depository for the Notes of this series is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware of
such ineligibility, the Company will issue, and the Trustee will authenticate
and deliver, Notes of this series in definitive form in an aggregate principal
amount equal to the principal amount of this Note.

 

 

 

No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith.

Prior
to due presentment of this Note for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the person in
whose name this Note is registered as the owner hereof for all purposes, and
neither the Company nor the Trustee nor any agent of the Company or of the
Trustee shall be affected by any notice to the contrary.

Section 8.
Events of Default. If an Event of Default with respect to Notes of this
series shall occur and be continuing, the amount declared due and payable upon
any acceleration of the Notes will be determined by the Calculation Agent and
will equal the Redemption Amount calculated as though the maturity of the Notes
were the date of early repayment in the manner and with the effect provided in
the Indenture. The amount payable to the Holder hereof upon any acceleration
permitted under the Indenture will be equal to the Redemption Amount calculated
as though the date to which the maturity has been accelerated were the Maturity
Date as determined by the Calculation Agent.

Section 9.
No Recourse Against Certain Persons. No recourse for the payment of the
Redemption Amount or for any claim based hereon or otherwise in respect hereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in the Indenture or any Indenture supplemental thereto or in any Note,
or because of the creation of any indebtedness represented thereby, shall be
had against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

Section 10.
Defined Terms. All terms used but not defined in this Note are used
herein as defined in the Indenture.

Section 11.
GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.Exhibit 10.1

EMPLOYMENT
AGREEMENT

This AGREEMENT (the “Agreement”) is made as of June 27,
2006 (the “Effective Date”), by and between EXACT Sciences Corporation, a
Delaware corporation with its headquarters located at 100 Campus Drive,
Marlborough, Massachusetts 01752 (the “Employer”), and Don M. Hardison (the “Executive”).
In consideration of the mutual covenants contained in this Agreement, the
Employer and the Executive agree as follows:

1.             Employment. The Employer agrees to employ the
Executive and the Executive agrees to be employed by the Employer on the terms
and conditions set forth in this Agreement.

2.             Capacity. The Executive shall serve as the
President and Chief Executive Officer of the Employer and shall continue to
serve as a member of the Board of Directors, subject to election by the
shareholders of the Employer. The Executive shall also serve the Employer in
such other or additional offices as the Executive may be requested to serve by
the Board of Directors. In such capacity or capacities, the Executive shall
perform such services and duties in connection with the business, affairs and
operations of the Employer as may be assigned or delegated to the Executive
from time to time by or under the authority of the Board of Directors.

3.             Term. Subject to the provisions of Section 6,
the term of employment pursuant to this Agreement (the “Term”) shall be two (2) years
from the Effective Date and shall be renewed automatically for periods of one (1) year
commencing at the second anniversary of the Effective Date and on each
subsequent anniversary thereafter, unless either the Executive or the Employer
gives written notice to the other not less than sixty (60) days prior to the
date of any such anniversary of such party’s election not to extend the Term.

4.             Compensation and Benefits. The regular
compensation and benefits payable to the Executive under this Agreement shall
be as follows:

(a)           Salary. For
all services rendered by the Executive under this Agreement, the Employer shall
pay the Executive a salary (the “Salary”) at the annual rate of Three Hundred
Fifty Five Thousand Dollars ($355,000), subject to adjustment from time to time
in the discretion of the Board of Directors or the Compensation Committee of
the Board of Directors (the “Compensation Committee”). The Salary shall be
payable in periodic installments in accordance with the Employer’s usual
practice for its senior executives.

(b)           Executive
Incentive Plan. The Executive shall be entitled to participate in the
Employer’s Executive Incentive Plan, as may be amended from time to time by the
Board of Directors or the Compensation Committee.

(c)           Retention Bonus.
The Executive shall be entitled to a retention bonus (a “Retention Bonus”) in
the amount of Two Hundred Thousand Dollars ($200,000) on each of January 1,
2007 and January 1, 2008, provided the Executive continues to be employed
by the Employer as its President and Chief Executive Officer on such date. The
Retention Bonus shall be payable to the Executive in a lump sum payment on the
Employer’s next regular payroll date following the date on which the Retention
Bonus was earned. The total unpaid Retention Bonus 

 

amount shall
be accelerated and payable to the Executive upon the occurrence of (i) the
sale by the Employer of all or substantially all of its assets, (ii) the
merger or consolidation of the Employer with or into another entity in a
transaction where the shares of the Employer’s capital stock outstanding
immediately prior to the closing of 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, (iii) a
vote by the Employer’s Board of Directors or stockholders to commence with the
liquidation, dissolution or winding up of the Employer, or (iv) the
termination of the Executive’s employment by the Employer without Cause (as
defined in Section 6(a)); provided, in any case, that the Executive
continues to be employed by the Employer as its President and Chief Executive
Officer immediately prior to occurrence of such event.

(d)           Regular Benefits.
The Executive shall also be entitled to participate in any qualified retirement
plans, deferred compensation plans, supplemental retirement plans, stock option and incentive
plans, stock purchase plans, medical insurance plans, life insurance plans,
disability income plans, retirement plans, vacation plans, expense
reimbursement plans and other benefit plans which the Employer may from time to
time have in effect for all or most of its senior executives. Such
participation shall be subject to the terms of the applicable plan documents,
generally applicable policies of the Employer, applicable law and the
discretion of the Board of Directors, the Compensation Committee or any
administrative or other committee provided for in or contemplated by any such
plan. Nothing contained in this Agreement shall be construed to create any
obligation on the part of the Employer to establish any such plan or to
maintain the effectiveness of any such plan which may be in effect from time to
time.

(e)           Reimbursement of
Business Expenses. The Employer shall reimburse the Executive for all
reasonable expenses incurred by him in performing services during the Term, in
accordance with the Employer’s policies and procedures for its senior executive
officers, as in effect from time to time.

(f)            Taxation of
Payments and Benefits. The Employer shall undertake to make deductions,
withholdings and tax reports with respect to payments and benefits under this
Agreement to the extent that it reasonably and in good faith believes that it
is required to make such deductions, withholdings and tax reports. Payments
under this Agreement shall be in amounts net of any such deductions or
withholdings. Nothing in this Agreement shall be construed to require the
Employer to make any payments to compensate the Executive for any adverse tax
effect associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.

(g)           Exclusivity of
Salary and Benefits. The Executive shall not be entitled to any payments or
benefits other than those provided under this Agreement or as otherwise
approved by the Compensation Committee of the Board of Directors.

5.             Extent of Service. During the Executive’s
employment under this Agreement, the Executive shall, subject to the direction
and supervision of the Board of Directors, devote the Executive’s full business
time, best efforts and business judgment, skill and knowledge to the
advancement of the Employer’s interests and to the discharge of the Executive’s
duties and 

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responsibilities under this Agreement. The Executive
shall not engage in any other business activity, except as may be approved by
the Board of Directors;  provided that nothing in this
Agreement shall be construed as preventing the Executive from:

(a)           investing the
Executive’s assets in any company or other entity in a manner not prohibited by
that certain Employee Non-competition Agreement dated May 5, 2000, between
the Executive and the Employer (the “Noncompetition Agreement”) and in such
form or manner as shall not require any material activities on the Executive’s
part in connection with the operations or affairs of the companies or other
entities in which such investments are made; or

(b)           engaging in
religious, charitable or other community or non-profit activities that do not
impair the Executive’s ability to fulfill the Executive’s duties and
responsibilities under this Agreement.

6.             Termination. Notwithstanding the provisions of Section 3,
the Executive’s employment under this Agreement shall terminate under the
following circumstances set forth in this Section 6.

(a)           Termination by
the Employer for Cause. The Executive’s employment under this Agreement may
be terminated for Cause without further liability on the part of the Employer
effective immediately upon a vote of the Board of Directors and written notice
to the Executive. Only the following shall constitute “Cause” for such
termination:

(i)            any act, whether or not involving
the Employer or any affiliate of the Employer, of fraud or gross misconduct,
the latter of which shall be considered to include any act of a sexual nature
that would be expected to be offensive to a reasonable employee;

(ii)           dishonest statements or acts of the
Executive with respect to the Employer or any affiliate of the Employer;

(iii)          the commission by the Executive of (A) a
felony or (B) any misdemeanor involving moral turpitude, deceit,
dishonesty or fraud;

(iv)          gross negligence, willful misconduct
or insubordination of the Executive with respect to the Employer or any
affiliate of the Employer; or

(v)           a breach by the Executive of any of
the Executive’s obligations under this Agreement.

(b)           Termination by
the Employer Without Cause. Subject to the payment of Termination Benefits
pursuant to Section 7(b), the Executive’s employment under this Agreement
may be terminated by the Employer without cause upon written notice to the
Executive.

(c)           Death. The
Executive’s employment with the Employer shall terminate upon his death.

 3
 

 

 

(d)           Disability. If
the Executive shall be disabled so as to be unable to perform the essential
functions of the Executive’s then existing position or positions under this
Agreement with or without reasonable accommodation, the Board of Directors may
remove the Executive from any responsibilities and/or reassign the Executive to
another position with the Employer for the remainder of the Term or during the
period of such disability. Notwithstanding any such removal or reassignment,
the Executive shall continue to receive the Executive’s full Salary (less any
disability pay or sick pay benefits to which the Executive may be entitled
under the Employer’s policies) and benefits under Section 4 of this
Agreement (except to the extent that the Executive may be ineligible for one or
more such benefits under applicable plan terms) for a period of time equal to
the lesser of (i) twelve (12) months; or (ii) the remainder of the
Term, and the Executive’s employment may be terminated by the Employer at any
time thereafter. If any question shall arise as to whether during any period
the Executive is disabled so as to be unable to perform the essential functions
of the Executive’s then existing position or positions with or without
reasonable accommodation, the Executive may, and at the request of the Employer
shall, submit to the Employer a certification in reasonable detail by a
physician selected by the Employer to whom the Executive or the Executive’s
guardian has no reasonable objection as to whether the Executive is so disabled
or how long such disability is expected to continue, and such certification
shall for the purposes of this Agreement be conclusive of the issue. The Executive
shall cooperate with any reasonable request of the physician in connection with
such certification. If such question shall arise and the Executive shall fail
to submit such certification, the Employer’s determination of such issue shall
be binding on the Executive. Nothing in this Section 6(e) shall be
construed to waive the Executive’s rights, if any, under existing law
including, without limitation, the Family and Medical Leave Act of 1993, 29
U.S.C. §2601 et seq. and the
Americans with Disabilities Act, 42 U.S.C. §12101 et seq.

7.             Compensation Upon Termination.

(a)           Termination
Generally. If the Executive’s employment with the Employer is terminated
for any reason during the Term, the Employer shall pay or provide to the
Executive (or to his authorized representative or estate) any earned but unpaid
base salary, incentive compensation earned but not yet paid, unpaid expense
reimbursements, accrued but unused vacation and any vested benefits the
Executive may have under any employee benefit plan of the Employer (the “Accrued
Benefit”). Notwithstanding anything herein to the contrary, any Retention Bonus
amounts shall only be payable if the requirements of Section 4(c) are
satisfied.

(b)           Termination by
the Employer Without Cause. In the event of termination of the Executive’s employment with
the Employer pursuant to Section 6(b) above and subject to the
Executive’s agreement to a release of any and all legal claims in a form
satisfactory to the Employer, the Employer shall provide to the Executive the following
termination benefits (“Termination Benefits”):

(i)            continuation of the Executive’s
Salary at the rate then in effect pursuant to Section 4(a); and

(ii)           continuation of group health plan
benefits to the extent authorized by and consistent with 29 U.S.C. § 1161 et seq. (commonly known as “COBRA”),
subject to payment of premiums by the Executive at the active employee’s rate.

 4
 

 

 

The Termination Benefits set forth in (i) and (ii) above shall continue effective for twelve
(12) months after the date of termination (the “Termination Benefits Period”);
provided, however, that the Termination Benefits set forth in (ii) above
shall terminate on the earlier of (i) the Termination Benefits Period and (ii) the
date the Executive becomes eligible to receive health plan benefits from
another source. The Employer’s liability for Salary continuation pursuant to Section 7(b)(i) shall
be reduced by the amount of any severance pay due or otherwise paid to the
Executive pursuant to the Severance Agreement dated January 4, 2001,
between the Executive and the Employer or any other severance pay plan or stay
bonus plan of the Employer. Notwithstanding the foregoing, nothing in this Section 7(b) shall
be construed to affect the Executive’s right to receive COBRA continuation entirely
at the Executive’s own cost to the extent that the Executive may continue to be
entitled to COBRA continuation after the Executive’s right to cost sharing
under Section 7(b)(ii) ceases. In the event of the Executive’s death
during the Termination Benefits Period, the Termination Benefits shall be
payable to the Executive’s heirs.

(c)           Termination by
the Employer with Cause. If the Executive’s employment is terminated by the
Employer with Cause under Section 6(a), the Employer shall have no further
obligation to the Executive other than payment of his Accrued Benefit.

(d)           Section 409A
of the Code. Notwithstanding anything herein to the contrary, if at the
time of the Executive’s termination of employment with the Employer, the
Executive is a “specified employee” within the meaning of Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations
promulgated thereunder, and the Employer notifies the Executive that, based on
the advice of counsel, the deferral of the commencement of any severance
benefits set forth in this Section 7 is necessary in order to comply with Section 409A
of the Code, then the Employer shall defer the commencement of the severance
benefits (without any reduction) by a period of at least six months after the
Executive’s termination of employment and any payments so deferred shall earn
interest calculated at the prime rate of interest reported by The Wall Street
Journal as of the date of termination. Any severance benefits that would have
been paid during such six-month period but for the provisions of the preceding
sentence shall be paid in a lump sum to the Executive six (6) months and
one (1) day after the Executive’s termination of employment. The
provisions of this Section 7(d) shall apply only to the extent
required to avoid the Executive’s incurrence of any accelerated or additional
tax under Section 409A of the Code.

8.             Confidential Information, Noncompetition and
Cooperation. The Noncompetition Agreement and the Employee Non-Disclosure
and Developments Agreement dated May 5, 2006, between the Executive and
the Employer (the “Non-Disclosure Agreement”) shall continue in full force and
effect and are hereby incorporated herein by reference. The Executive
understands and agrees that his obligations under the Noncompetition Agreement and Non-Disclosure Agreement will
continue in accordance with the express terms of those agreements regardless of
any changes in the Executive’s title, position, duties, Salary, compensation or
benefits or other terms and conditions of employment. The Executive agrees and confirms that any
violation whatsoever of the provisions of the Noncompetition Agreement or the
Non-Disclosure Agreement will constitute a material breach of this Agreement.

 5
 

 

 

9.             Arbitration of Disputes.  Any controversy or claim arising out of or
relating to this Agreement or the breach hereof or otherwise arising out of the
Executive’s employment or the termination of that employment (including,
without limitation, any claims of unlawful employment discrimination whether
based on age or otherwise) shall, to the fullest extent permitted by law, be
settled by arbitration in any forum and form agreed upon by the parties or, in
the absence of such an agreement, under the auspices of the American Arbitration
Association (“AAA”) in Boston, Massachusetts in accordance with the Employment
Dispute Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. In the event that any
person or entity other than the Executive or the Employer may be a party with
regard to any such controversy or claim, such controversy or claim shall be
submitted to arbitration subject to such other person or entity’s agreement. Judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. This Section 9 shall be specifically enforceable.
Notwithstanding the foregoing, this Section 9 shall not preclude either
party from pursuing a court action for the sole purpose of obtaining a
temporary restraining order or a preliminary injunction in circumstances in
which such relief is appropriate; provided that any other relief shall be pursued through an
arbitration proceeding pursuant to this Section 9.

10.           Consent to Jurisdiction. To the
extent that any court action is permitted consistent with or to enforce Section 9
of this Agreement, the parties hereby consent to the jurisdiction of the
Superior Court of the Commonwealth of Massachusetts and the United States
District Court for the District of Massachusetts. Accordingly, with respect to
any such court action, the Executive (a) submits to the personal
jurisdiction of such courts; (b) consents to service of process; and (c) waives
any other requirement (whether imposed by statute, rule of court, or
otherwise) or any objective he may have with respect to personal jurisdiction
or service of process.

11.           Integration. This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements between the parties
with respect to any related subject matter, excluding the Noncompetition
Agreement and the Non-Disclosure Agreement which, pursuant to Section 8,
are incorporated herein by reference and shall continue in full force and effect in accordance with their terms.

12.           Assignment; Successors and
Assigns, etc. Neither the Employer nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party; provided that the Employer will have the right to assign this
Agreement to its affiliates, successors and assigns and the Executive does
hereby expressly consent to be bound by the provisions of this Agreement for
the benefit of the Employer or any affiliate, successor and assign to whose
employ the Executive may be transferred without the necessity that this
Agreement be resigned at the time of such transfer. This Agreement shall
inure to the benefit of and be binding upon the Employer and the Executive,
their respective successors, executors, administrators, heirs and permitted
assigns.

13.           Enforceability. If any portion
or provision of this Agreement (including, without limitation, any portion or
provision of any section of this Agreement) shall to any extent be declared
illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as 

 6
 

 

to which it is so declared illegal or unenforceable,
shall not be affected thereby, and each portion and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law.

14.           Waiver. No waiver of any
provision hereof shall be effective unless made in writing and signed by the
waiving party. The failure of any party to require the performance of any term
or obligation of this Agreement, or the waiver by any party of any breach of
this Agreement, shall not prevent any subsequent enforcement of such term or
obligation or be deemed a waiver of any subsequent breach.

15.           Notices. Any notices,
requests, demands and other communications provided for by this Agreement shall
be sufficient if in writing and delivered in person or sent by a nationally
recognized overnight courier service or by registered or certified mail,
postage prepaid, return receipt requested, to the Executive at the last address
the Executive has filed in writing with the Employer or, in the case of the
Employer, at its main offices, attention of the Chief Executive Officer, and
shall be effective on the date of delivery in person or by courier or three (3) days
after the date mailed.

16.           Amendment. This Agreement may
be amended or modified only by a written instrument signed by the Executive and
by a duly authorized representative of the Employer.

17.           Governing Law. This is a
Massachusetts contract and shall be construed under and be governed in all
respects by the laws of the Commonwealth of Massachusetts, without giving
effect to the conflict of laws principles of such Commonwealth. With respect to
any disputes concerning federal law, such disputes shall be determined in
accordance with the law as it would be interpreted and applied by the United
States Court of Appeals for the First Circuit.

18.           Counterparts. This Agreement
may be executed in any number of counterparts, each of which when so executed
and delivered shall be taken to be an original; but such counterparts shall
together constitute one and the same document.

[Signature
Page Follows]

 7

 

IN WITNESS WHEREOF, this
Agreement has been executed as a sealed instrument by the Employer, by its duly
authorized officer, and by the Executive, as of the Effective Date.

	
  EXECUTIVE

  	
  EMPLOYER

  	 

	
   

  	
   

  	
   

  
	
   

  	
  EXACT Sciences Corporation

  	 

	
   

  	
   

  	
   

  	 

	
  /s/ Don M. Hardison

  	
   

  	
  By :

  	
  /s/ Jeffrey R. Luber 

  	 

	
  Don M. Hardison

  	
  Name:

  	
  Jeffrey R. Luber

  	 

	
   

  	
  Title:

  	
  Vice President, Chief Financial Officer,Treasurer,

  General Counsel, and Secretary

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