Document:

Exhibit 10.1

 

 

BUCKEYE
PARTNERS, L.P.

 

 

ANNUAL
INCENTIVE COMPENSATION PLAN

 

 

ANNUAL
INCENTIVE COMPENSATION PLAN

 

Buckeye Partners, L.P., a Delaware limited partnership, hereby
establishes the Buckeye Partners, L.P. Annual Incentive Compensation Plan, effective
as of January 1, 2009.  The Plan
permits annual cash awards to Employees, based on the achievement of
pre-established Performance Goals.  The
Plan will remain in effect until terminated as herein provided.

 

ARTICLE
I.  PLAN PURPOSES

 

The purposes of the Plan are to (a) provide incentives to achieve
annual goals established for the Participants and the Partnership that are
considered important for organizational success; and (b) reward
performance with pay that varies in relation to the extent to which the
pre-established performance goals are achieved.

 

ARTICLE
II.  DEFINITIONS

 

The terms defined in this Article II shall, for all purposes of
this Plan, have the meanings herein specified, unless the context expressly, or
by necessary implication, requires otherwise:

 

2.01         “Actual Award”
shall mean the actual dollar amount paid to a Participant pursuant to the Plan.

 

2.02         “Administrator”
shall mean the Committee; provided, however, that the Chief Executive Officer
of the General Partner or his designee (the “CEO”) shall be the Administrator
with respect to certain responsibilities as more particularly set forth on Exhibit A.

 

2.03         “Affiliate” will have the meaning ascribed to such term in Rule 12b-2
of the General Rules under the Securities Exchange Act of 1934, as
amended.  Any reference to an Affiliate
in this Plan shall include an Affiliate of the Partnership or the General
Partner, as applicable, including Buckeye Pipe Line Services Company.

 

2.04         “Base Salary”
shall mean, as to any specific Performance Period, the actual base salary paid
by the Partnership or Affiliate to a Participant as an Employee at the end of
the Performance Period.  Base Salary (a) shall
not be reduced by the amount, if any, of any salary reduction contributions
made to any salary reduction plan or tax-qualified retirement plan; and (b) shall
be calculated exclusive of any payments under this Plan or other incentive
plans, programs or arrangements, bonus payments, overtime, severance payments,
or other special awards.

 

2.05         “Board”
shall mean the Board of Directors of the General Partner.

 

 

2.06         “Business
Unit” shall mean the Pipeline Operations, Terminalling and Storage,
Natural Gas Storage, Energy Services, Buckeye Gulf Coast Operations, or any
other business unit as determined by the Administrator in its sole discretion.

 

2.07         “Code”
shall mean the Internal Revenue Code of 1986, as amended.  Reference in the Plan to any section of the
Code shall be deemed to include any amendment or successor provisions to such
section and any regulations under such section.

 

2.08         “Committee”
shall mean the Compensation Committee of the Board, or such other committee as
determined by the Board.

 

2.09         “Employee”
shall mean a regular full-time salaried exempt employee of the Partnership,
General Partner or Affiliate.

 

2.10         “Executive
Officers” shall mean the executive officers of the Partnership,
General Partner or Affiliate as defined in Rule 3b-7 of the Exchange Act
and as determined by the Administrator in its sole discretion.

 

2.11         “Financial Performance
Goals” shall mean Performance Goals based upon achievement of
certain financial criteria established by the Administrator in its sole
discretion.  The Financial Performance
Goals may be based on one or more financial criteria, including, but not
limited to, the following: EBITDA, unit price, earnings per unit, net earnings,
operating earnings, total capital spending, maintenance capital spending,
return on assets, total unit holder return, return on equity, growth in assets,
cash flow, market share, distribution growth, distributable cash flow, relative
performance to a comparison group, or strategic business criteria, including,
but not limited to, meeting specified revenue goals, business expansion goals,
cost targets or goals relating to acquisitions or divestitures.

 

2.12         “General
Partner” means Buckeye GP LLC, a Delaware limited liability company,
and any successor thereto.

 

2.13         “Individual
Performance Goals” shall mean Performance Goals based on the
attainment of individual business objectives and/or personal performance
objectives.  Individual Performance Goals
may include personal performance objectives and measures such as teamwork,
interpersonal skills, communication skills, employee development, project
management skills, and leadership, or individual business objectives such as
performance versus budget and attainment of safety, operational incident and
environmental goals.  The Individual
Performance Goals will be established by the Administrator in its sole
discretion or an immediate supervisor of a Participant to whom the
Administrator delegates such authority.

 

2.14         “Participant”
shall mean an Employee approved for participation in the Plan by the
Administrator.  Participants shall be
divided into Tiers as determined by the

 

 

Administrator in its sole discretion and as set forth on Exhibit B.  Any Employee who is a participant in an
annual incentive or bonus plan for Lodi Gas Services, L.L.C. shall not be a
Participant in this Plan or entitled to any benefit herein.

 

2.15         “Partnership”
means Buckeye Partners, L.P., a Delaware limited partnership, and any successor
thereto.

 

2.16         “Performance
Goals” shall mean the Financial Performance Goals and Individual
Performance Goals applicable to each Participant, against which a Participant’s
performance shall be measured to determine if an Actual Award may be payable
under the Plan.

 

2.17         “Performance
Period” shall mean the Plan Year during which time the performance
of Participants shall be measured.

 

2.18         “Plan”
shall mean the Buckeye Partners, L.P. Annual Incentive Compensation Plan, or if
hereafter amended or supplemented, as so amended or supplemented.

 

2.19         “Plan Year”
shall mean the calendar year.

 

2.20         “Target Award
Level” shall mean the target incentive amount that may be paid to a
Participant, which is intended to reward performance at a certain established
targeted level based on the achievement of Performance Goals for the
Performance Period.

 

2.21         “Tier”
shall mean the category in which a Participant is placed for purposes of establishing
Target Award Levels and Performance Goals, as determined by the Administrator
in its sole discretion and as set forth on Exhibit B and Exhibit C.

 

ARTICLE
III.  CONSTRUCTION

 

3.01         Gender and Number.  The masculine pronoun whenever used in the
Plan shall include the feminine, and the feminine pronoun whenever used in the
Plan shall include the masculine, in each case as the context or facts may
require. Whenever any words are used herein in the singular, they shall be
construed as if they were also used in the plural in all cases where the
context so applies.

 

3.02         Captions.  The captions to the articles and sections of
this Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.

 

3.03         Severability.  In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

 

 

3.04         Controlling Law.  The Plan and all related documents shall be
governed by and construed in accordance with the laws of the State of Delaware,
without regard to the conflict of law principles of any state.  Any persons or companies who now are or shall
subsequently become parties to the Plan shall be deemed to consent to this
provision.

 

3.05         No Right to Employment.  This Plan does not confer nor shall it be
construed as creating an express or implied contract of employment between any
Participant and the Partnership, General Partner or Affiliate or other party.
Nothing in the Plan shall interfere with or limit in any way the right of the
Partnership, General Partner or Affiliate to terminate any Participant’s
employment at any time, nor confer upon any Employee any right to continue in
the employment of the Partnership, General Partner or Affiliate.

 

ARTICLE
IV.  ELIGIBILITY AND PARTICIPATION

 

4.01         Eligibility.  In order to be eligible to participate in the
Plan for a Performance Period, except as set forth in Section 4.03, an
individual must be (a) an Employee; (b) hired before the commencement
of the last quarter of the Performance Period; (c) employed on the last
day of the Plan Year and (d) employed on the date an Actual Award is paid
as set forth herein.

 

4.02         No Right to
Participation.  No Employee shall
have a right to participate in the Plan, regardless of prior participation in
the Plan.

 

4.03         Status Change During
Performance Period.  Unless otherwise
determined by the Administrator in its sole discretion, a Participant will
forfeit his or her right to an Actual Award if the Participant is not employed
on the date an Actual Award is paid pursuant to Section 6.01.  Notwithstanding the foregoing, in the event a
Participant is employed for at least six (6) months during a Performance
Period, and the Participant dies, becomes disabled, or retires, the
Administrator, in its sole discretion, may grant a pro-rata award to such
Participant.

 

ARTICLE
V.  DETERMINATION OF AWARDS

 

5.01         Timing of
Establishment of Performance Goals. 
For each Performance Period, the Administrator shall establish
Performance Goals.  Performance Goals
will be allocated between Financial Performance Goals and Individual Performance
Goals so that the total allocation is one hundred percent (100%).  This allocation may change each Plan Year as
determined by the Administrator in its sole discretion.  The Individual Performance Goals and
Financial Performance Goals may change each Plan Year as determined by the
Administrator in its sole discretion.

 

 

5.02         Target Award Level.
For each Performance Period, the Administrator shall establish a Target Award
Level for Participants that corresponds to the achievement of the Performance
Goals for the applicable Performance Period. 
Guidelines for Target Award Levels for Participants are set forth on Exhibit B
but the Administrator in its sole discretion may change the Target Award Levels
for Participants for each Performance Period. 
The established Target Award Level may vary for each Participant and
need not by uniform among each Tier.

 

5.03         Establishment of
Performance Goals.  Target Award
Levels and Performance Goals, including allocation between Financial
Performance Goals and Individual Performance Goals, will be established by the
Administrator in its sole discretion based on the principles set forth in Exhibit C.

 

5.04         Establishment of
Target Award Level for Marketing/Commercial Participants.  A high degree of flexibility is appropriate
in establishing Target Award Levels for Participants who are involved in
marketing or commercial activities.  As a
result, for each Performance Period, the CEO may recommend to the Administrator
a Target Award Level that will represent a bonus opportunity for such
Participants in excess of the guidelines set forth on this Exhibit B.  Actual Awards will be made from this
additional Target Award Level at the end of a Performance Period only in the
event the Administrator determines that a Participant has achieved results that
have had a positive, material impact on the financial performance of a Business
Unit, or the Partnership on a consolidated basis.

 

5.05         Calculation of Actual
Awards. For each Performance Period, the Administrator shall calculate an
Actual Award based on the performance of the Business Unit or Partnership, as
applicable, compared against the Financial Performance Goals and the Individual
Performance Goals of the Participant. 
The Administrator shall have sole discretion in establishing the amount
or percentage of a Participant’s Actual Award relative to the Target Award
Level based on the level of achievement of the Performance Goals for the
Performance Period.  Notwithstanding the
foregoing, the Administrator may establish minimum levels of achievement for
Performance Goals, below which no Participant shall receive an Actual Award.

 

5.06         Changes in Performance
Goals. Each Participant’s Actual Award shall be based on the Target Award
Levels established by the Administrator pursuant to Section 5.02, provided
that the Administrator may adjust Performance Goals to take into account
extraordinary or unanticipated circumstances or events.

 

5.07         Award Adjustments.  Actual Awards shall be discretionary, and no
Participant shall be entitled to an Actual Award under the Plan.  The Administrator shall have the sole
discretion to increase, reduce or eliminate the amount of a Participant’s
Actual Award otherwise payable under the Plan.

 

 

ARTICLE
VI.  PAYMENT OF ACTUAL AWARDS

 

6.01         Timing and Form of
Payment.  No Participant shall be
vested in Actual Awards, nor Actual Awards made, prior to the end of the
applicable Performance Period.  A
Participant’s Actual Award shall be paid in cash as soon as practicable after
the end of the Performance Period.  To
the extent a Participant has a “legally binding right” (within the meaning of
Code Section 409A) to his Actual Award, such Actual Award shall be paid in
cash as soon as practicable after, and no later than, March 15th following the end of the calendar year in
which the Award is no longer subject to a “substantial risk of forfeiture”
(within the meaning of Code Section 409A).

 

ARTICLE
VII.  ADMINISTRATION

 

7.01         Administrator
Authority.  The Plan shall be
administered by the Administrator, which, in addition to the other powers set
forth herein, shall have the full power, subject to, and within the limits of
the Plan, to:

 

(a) make all determinations and
interpretations and approve all rules as may be necessary or advisable for
the administration of the Plan, including, but not limited to, those necessary
to resolve any ambiguities with respect to any of the terms and provisions of
the Plan;

 

(b) exercise all powers and perform such
acts in connection with the Plan as are deemed necessary or appropriate to
promote the best interests of the Partnership, General Partner or Affiliate;

 

(c) determine the size and types of
Target Award Levels and Actual Awards;

 

(d) determine the terms and conditions of
Target Award Levels and Actual Awards in a manner consistent with the Plan;

 

(e) construe and interpret the Plan and
any agreement or instrument entered into under the Plan;

 

(f) establish, amend or waive rules and
regulations for the Plan’s administration; and

 

(g) subject to the provisions of Article V,
amend the terms and conditions of any outstanding Target Award Levels to the
extent such terms and conditions are within the sole discretion of the
Administrator as provided in the Plan.

 

 

7.02         Authorized Agents.
The Administrator may authorize any officer of the General Partner to execute
and deliver documents on behalf of the Administrator, including administrative
guidelines for this Plan.

 

7.03         Binding Decisions.  All determinations and decisions of the
Administrator as to any disputed question arising under the Plan, including
questions of construction and interpretation, shall be final, binding and
conclusive upon all parties.

 

ARTICLE
VIII.  AMENDMENT AND TERMINATION

 

8.01         The Administrator may amend,
suspend, or terminate the Plan or any portion thereof at any time.

 

ARTICLE
IX. MISCELLANEOUS

 

9.01         Nontransferability.  No right or interest of any Participant in
the Plan shall be assignable or transferable, or subject to any lien, directly,
by operation of law or otherwise, including, but not limited to, execution,
levy, garnishment, attachment, pledge and bankruptcy.

 

9.02         Tax Withholding.  The Partnership, the General Partner or
Affiliates, as applicable, shall have the right to deduct from all payments
under the Plan any foreign, federal, state or local income or other taxes
required by law to be withheld with respect to such payments.

 

9.03         Non-Uniform
Determinations.  The Administrator’s
determinations under the Plan (including without limitation, determinations of
the persons to receive Awards, the form, amount, and timing of such payments,
the terms and provisions of such payments, and the agreement evidencing same)
need not be uniform and may be made selectively among persons who receive, or are
eligible to receive, Actual Awards under the Plan, whether or not such persons
are similarly situated.

 

9.04         No Fund.  The Partnership shall have no obligation to
reserve or otherwise fund in advance any amounts which are or may in the future
become payable under this Plan. Any funds, which the Partnership acting in its
sole discretion determines to reserve for future payments under this Plan, may
be commingled with other funds of the Partnership and need not in any way be
segregated from other assets or funds held by the Partnership.

 

9.05         Successors.  All obligations of the Partnership under the
Plan shall be binding upon and inure to the benefit of any successor of the
Partnership, whether the existence of such successor is the result of a direct
or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Partnership.

 

 

9.06         Other Plans.  Nothing contained in this Plan shall prevent
the Administrator or the Board from adopting other or additional compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.

 

 

EXHIBIT A

 

Identity of Administrator

 

	
   

  	
   

  	
  Compensation Committee

  	
   

  	
  CEO

  	
   

  
	
  Subject-Matter Responsibilities

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Target Award Levels

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive Officers

  	
   

  	
  X

  	
   

  	
   

  	
   

  
	
  Other Participants

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Financial Goals

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive Officers

  	
   

  	
  X

  	
   

  	
   

  	
   

  
	
  Other Participants

  	
   

  	
  X

  	
   

  	
   

  	
   

  
	
  Individual Goals

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive Officers

  	
   

  	
  X

  	
   

  	
   

  	
   

  
	
  Other Participants

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Actual Financial Awards

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive Officers

  	
   

  	
  X

  	
   

  	
   

  	
   

  
	
  Other Participants

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Actual Individual Awards

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive Officers

  	
   

  	
  X

  	
   

  	
   

  	
   

  
	
  Other Participants

  	
   

  	
   

  	
   

  	
  X

  	
   

  

 

 

EXHIBIT B

 

Target
Award Levels

 

A Target Award Level shall be determined for each Participant, based on
the percentage of a Participant’s Base Salary, which a Participant has the
opportunity to earn as an Actual Award for each Performance Period.  A Participant’s Target Award Level shall be
determined by the Administrator in its sole discretion based on a Participant’s
responsibility level or the position or positions held during the Performance
Period.  In establishing Target Award
Levels, the following guidelines shall apply, although the Administrator shall
have the sole discretion to establish different Target Award Levels for
individual Participants, or groups of Participants, within and among tiers:

 

(1)           Tier
I Participant (Executive Officers specified by the Committee): Target Award
Level shall be based on 100% of Base Salary.

 

(2)           Tier
II Participant (Executive Officers other than Tier I Participants): Target
Award Level shall be based on 50% of Base Salary.

 

(3)           Tier
III Participant (Grade 18 and higher other than the Executive Officers): Target
Award Level shall be based on 50% of Base Salary.

 

(4)           Tier
IV Participant (Grade 17): Target Award Level shall be based on 30% of Base
Salary.

 

(5)           Tier
V Participant (Grade 15 and 16): Target Award Level shall be based on 20% of
Base Salary.

 

(6)           Tier
VI Participant (Grade 12, 13 and 14): Target Award Level shall be based on 15%
of Base Salary.

 

(7)           Tier
VII Participant (All other eligible Employees): Target Award Level shall be
based on 10% of Base Salary.

 

If any Participant holds more than one position during the Performance
Period, then the Administrator may designate different Target Award Levels with
respect to each position and the Actual Award will be pro-rated to reflect (to
the nearest semi-monthly increment) the period during which such Participant
had each Target Award Level.

 

 

EXHIBIT C

 

Establishment
of Performance Goals

 

The Administrator shall establish Target Award Levels on behalf of its
respective Participants based on their Tier and the applicable Performance
Goals as set forth in the table below.  A
Participant earns an Actual Award for a Performance Period based on the level
of achievement of the Performance Goals established by the Administrator
allocated between Financial Performance Goals and Individual Performance Goals
as set forth in the table below.  The
Financial Performance Goals will be measured against the financial performance
of a Participant’s Business Unit within the Partnership and/or the Partnership
on a consolidated basis.  The
Administrator in its sole discretion shall select the applicable Financial
Performance Goals and Individual Performance Goals for the respective
Performance Period from the table below.

 

	
  Participant

  Tier

  	
   

  	
  Financial Performance Goals

  	
   

  	
  Individuals Performance

  Goals

  	
   

  	
  Allocation of

  Performance Goals to

  Target Award Level

  	
   

  	
  Allocation of Financial

  Performance Goals

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier I

  	
   

  	
  To
  be determined by the Committee.

  	
   

  	
  To
  be determined by the Committee.

  	
   

  	
  75%
  based on Financial Performance Goals

  

  25% based on Individual Performance Goals

  

  Bonus will be adjusted based on performance relative to Performance Goal
  targets

  	
   

  	
  Tier
  I Participant Financial Performance Goals shall be measured 100% against
  financial performance of the Partnership, as a consolidated entity (the
  “Consolidated Entity”).

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier II

  	
   

  	
  To
  be determined by the Committee.

  	
   

  	
  To
  be determined by the Committee.

  	
   

  	
  75%
  based on Financial Performance Goals

  

  25% based on Individual Performance Goals

  

  Bonus will be adjusted based

  	
   

  	
  Depending
  upon the Participant’s primary job responsibilities, Tier II Participant
  Financial Performance Goals shall be measured 100% against the financial
  performance of the Consolidated Entity, or 75% against the financial
  performance

  

 

 

	
  Participant

  Tier

  	
   

  	
  Financial Performance Goals

  	
   

  	
  Individuals Performance

  Goals

  	
   

  	
  Allocation of

  Performance Goals to

  Target Award Level

  	
   

  	
  Allocation of Financial

  Performance Goals

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  on
  performance relative to Performance Goal targets

  	
   

  	
  of
  the Participant’s Business Unit and 25% against the financial performance of
  the Consolidated Entity.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier III

  	
   

  	
  To
  be determined by the Committee.

  	
   

  	
  To
  be determined by the CEO.

  	
   

  	
  75%
  based on Financial Performance Goals

  

  25% based on Individual Performance Goals

  

  Bonus will be adjusted based on performance relative to Performance Goal
  targets

  	
   

  	
  Depending
  upon the Participant’s primary job responsibilities, Tier III Participant
  Financial Performance Goals shall be measured 100% against the financial
  performance of the Consolidated Entity, or 75% against the financial
  performance of the Participant’s Business Unit and 25% against the financial
  performance of the Consolidated Entity.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier IV

  	
   

  	
  To
  be determined by the Committee.

  	
   

  	
  To
  be determined by the CEO.

  	
   

  	
  50%
  based on Financial Performance Goals

  

  50% based on Individual Performance Goals

  

  Bonus will be adjusted based on performance relative to Performance Goal
  targets

  	
   

  	
  Depending
  upon the Participant’s primary job responsibilities, Tier IV Participant
  Financial Performance Goals shall be measured 100% against the financial
  performance of the Consolidated Entity, or 75% against the financial
  performance of the Participant’s Business Unit and 25% against the financial
  performance of the Consolidated Entity.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier V

  	
   

  	
  To
  be determined by the Committee.

  	
   

  	
  To
  be determined by the CEO.

  	
   

  	
  50%
  based on Financial Performance Goals

  

  50% based on Individual 

  	
   

  	
  Depending
  upon the Participant’s primary job responsibilities, Tier V Participant
  Financial Performance Goals shall be measured 100%

  

 

 

	
  Participant

  Tier

  	
   

  	
  Financial Performance Goals

  	
   

  	
  Individuals Performance

  Goals

  	
   

  	
  Allocation of

  Performance Goals to

  Target Award Level

  	
   

  	
  Allocation of Financial

  Performance Goals

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Performance
  Goals

  

  Bonus will be adjusted based
  on performance relative to Performance Goal targets

  	
   

  	
  against
  the financial performance of the Consolidated Entity, or 75% against the
  financial performance of the Participant’s Business Unit and 25% against the
  financial performance of the Consolidated Entity.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier VI

  	
   

  	
  To
  be determined by the Committee.

  	
   

  	
  To
  be determined by the CEO.

  	
   

  	
  50%
  based on Financial Performance Goals

  

  50% based on Individual Performance Goals

  

  Bonus will be adjusted based on performance relative to Performance Goal
  targets

  	
   

  	
  Depending
  upon the Participant’s primary job responsibilities, Tier VI Participant
  Financial Performance Goals shall be measured 100% against the financial
  performance of the Consolidated Entity, or 75% against the financial
  performance of the Partnership’s Business Unit and 25% against the financial
  performance of the Consolidated Entity.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tier VII

  	
   

  	
  To
  be determined by the Committee.

  	
   

  	
  To
  be determined by the CEO.

  	
   

  	
  50%
  based on Financial Performance Goals

  

  50% based on Individual Performance Goals

  

  Bonus will be adjusted based on performance relative to Performance Goal
  targets

  	
   

  	
  Depending
  upon the Participant’s primary job responsibilities, Tier VII Participant
  Financial Performance Goals shall be measured 100% against the financial
  performance of the Consolidated Entity, or 75% against the financial
  performance of the Participant’s Business Unit and 25% against the financial
  performance of the Consolidated Entity.Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

 THIS EMPLOYMENT AGREEMENT
(“Agreement”) is entered into effective as of the 18th day of March, 2009, by
and between Kevin T. Conroy (“Employee”) and EXACT Sciences Corporation, a
Delaware corporation (the “Company”).

 

WHEREAS, the
Company desires to employ Employee as its President and Chief Executive Officer
and Employee desires to accept such employment pursuant to the terms and
conditions set forth in this Agreement.

 

NOW, THEREFORE,
in consideration of the mutual covenants and conditions hereinafter set forth,
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:

 

1.             Employment.

 

1.1           President
and Chief Executive Officer.  The
Company hereby agrees to employ Employee as (i) a Vice President between
the date of this Agreement and April 1, 2009, and (ii) as the
Company’s President and Chief Executive Officer thereafter, effective April 2,
2009, and Employee hereby agrees to serve the Company in such positions, all
subject to the terms and provisions of this Agreement subject to the authority
and direction of the Board of Directors of the Company.  Employee agrees (a) to devote his
full-time professional efforts, attention and energies to the business of the
Company, and (b) shall faithfully and to the best of his ability perform
his duties hereunder.  Employee may serve
as a director of the Wisconsin Technology Council and as a director or
committee member of other corporations, charitable organizations and trade associations
(provided that the Company is notified in advance of all such other positions)
and may otherwise engage in charitable and community activities, deliver
lectures and fulfill speaking engagements, and manage personal investments, but
only if such services and activities do not interfere with the performance of
his duties and responsibilities under this Agreement.

 

1.2           Director.  On the effective date of this Agreement, the
Company shall appoint the Employee to its Board of Directors, in accordance
with applicable law and the Company’s Bylaws. 
Upon any termination of Employee’s employment with the Company, or upon
the request of the Board of Directors in connection with any Change of Control,
Employee shall resign any and all positions on the Company’s Board of
Directors.

 

2.             Term of Employment.  Employee’s employment (the “Employment Term”)
will continue until terminated as provided in Section 6 below.

 

3.             Compensation. During the Employment Term,
Employee shall receive the following compensation.

 

3.1           Base
Salary. Employee’s annual base salary on the date of this Agreement is
$340,000, payable in accordance with the normal payroll practices of the
Company (“Base Salary”). Employee’s Base Salary will be subject to annual
review by the Compensation Committee and the Board of Directors of the Company.
During the Employment Term, on each anniversary date of this Agreement, the
Company shall review the Base Salary amount to determine any increases. In no
event shall the Base Salary be less than the Base Salary amount for the
immediately preceding twelve (12) month period other than as permitted in Section 6.1(c) hereunder.

 

1

 

3.2           Annual
Bonus Compensation. Employee shall be eligible to receive an annual cash
bonus as determined by the Company’s Compensation Committee each calendar year.
Employee’s target annual bonus percentage that he is eligible to earn for each
calendar year shall be fifty percent (50%) of his Base Salary as of January 1
of the applicable new calendar year. Any such bonus shall be based upon the
achievement of goals determined by the Compensation Committee after
consultation with the Employee, shall be paid no later than March 15
following the end of each calendar year, and except as set forth in Section 7
hereof, Employee shall not be entitled to receive an annual bonus for any
calendar year (including the bonus referenced above) unless he remains employed
with the Company through December 31 of the applicable calendar year;
provided, however, that if Employee is terminated with Cause or resigns without
Good Reason, no bonus will be due.

 

3.3           Long Term
Incentive Plan. The Company shall implement a Long Term Incentive Plan
(“LTIP”) as soon as reasonably practicable. 
Employee’s benefits under the LTIP shall be determined pursuant to the
terms of the LTIP, and such benefits may not be terminated or diminished
without the written consent of the Employee. 
Without limiting the foregoing, the LTIP shall provide for a cash payout
to Employee upon a Change of Control (as defined in Section 7.2(a)) as
follows: (a) One percent (1%) of the equity value of any Change of Control
transaction having an equity value between One Hundred Million Dollars
($100,000,000) and Five Hundred Million Dollars ($500,000,000); (b) for
Change of Control transactions having an equity value between Five Hundred
Million Dollars ($500,000,000) and One Billion Dollars ($1,000,000,000), the
cash payout to Employee would be equal to the amount calculated in (a) above
plus one-half percent (0.5%) for each incremental Fifty Million Dollars
($50,000,000) in equity value over Five Hundred Million Dollars ($500,000,000);
(c) for Change of Control transactions having an equity value between One
Billion Dollars ($1,000,000,000) and Two Billion Dollars ($2,000,000,000), the
cash payout to Employee would be equal to the amounts calculated in (a) and
(b) above plus one-quarter percent (0.25%) for each incremental Fifty
Million Dollars ($50,000,000) in equity value over One Billion Dollars ($1,000,000,000);
and (d) for Change of Control transactions having an equity value greater
than Two Billion Dollars ($2,000,000,000), there would be no further increase
in the cash payout to Employee beyond that calculated under subsections (a), (b)
and (c).  For example, in connection with
a Change of Control transaction having an equity value of (i) $600,000,000,
Employee would receive a cash payout of $5,500,000 ($5,000,000 + $250,000 +
$250,000) and (ii) $1,100,000,000, Employee would receive a cash payout of
$7,750,000 ($7,500,000 + $125,000 + $125,000).

 

3.4           Equity Incentives
and Other Long Term Compensation. 
The Board of Directors, upon the recommendation of the Compensation
Committee, or the Compensation Committee, may grant Employee from time to time
options to purchase shares of the Company’s common stock, and/or other equity
awards including without limitation restricted stock, both as a reward for past
individual and corporate performance, and as an incentive for future
performance.  Such options and/or other
awards, if awarded, will be pursuant to the Company’s then current stock option
plan.  Employee will receive an initial
stock option grant of Two Million Five Hundred Thousand (2,500,000) shares of
the Company’s common stock pursuant to the Company’s stock option plan upon
commencement of employment.  Such stock
option shall qualify as an incentive stock option to the maximum amount
permissible by law.  The price of the
stock option grant will be not greater than the fair market value per share on
the date of grant and will have a term of ten years.  Twenty five percent (25%) of the shares
underlying such options shall vest on the first anniversary of the date of
grant and the balance shall vest in equal quarterly installments over the
remaining three-year period, subject to the acceleration of vesting (i) as
described in Section 6.3 hereof, (ii) as described in Section 7.1(d) and
7.2(b) hereof, and (iii) as may be set forth in the

 

2

 

grant
agreements issued by the Company, as amended, provided, that in the event of a
conflict between any grant agreement and this Agreement, this Agreement shall
control.

 

4.             Benefits.

 

4.1           Benefits.
Employee will be entitled to participate in the sick leave, insurance
(including medical, life and long-term disability), profit-sharing, retirement,
and other benefit programs that are generally provided to employees of the
Company similarly situated, all in accordance with the rules and policies
of the Company as to such matters and the plans established therefore.

 

4.2           Vacation
and Personal Time. The Company will provide Employee with four (4) weeks
of paid vacation each calendar year Employee is employed by the Company, in
accordance with Company policy. The foregoing vacation days shall be in
addition to standard paid holiday days for employees of the Company.

 

4.3           Indemnification.
To the fullest extent permitted by applicable law and as provided for in the
Company’s articles of incorporation and bylaws the Company will, during and
after termination of employment, indemnify Employee (including providing
advancement of expenses) for any judgments, fines, amounts paid in settlement
and reasonable expenses, including attorneys’ fees, incurred by Employee in
connection with the defense of any lawsuit or other claim or investigation to
which Employee is made, or threatened to be made, a party or witness by reason
of being or having been an officer, director or employee of the Company or any
of its subsidiaries or affiliates as deemed under the Securities Exchange Act
of 1934 (“Affiliates”) or a fiduciary of any of their benefit plans.

 

4.4           Liability
Insurance. Both during and after termination (for any reason) of Employee’s
employment, the Company shall cause Employee to be covered under a directors
and officers’ liability insurance policy for his acts (or non-acts) as an
officer or director of the Company or any of its Affiliates. Such policy shall
be maintained by the Company, at its expense in an amount and on terms (including
the time period of coverage after the Employee’s employment terminates) at
least as favorable to the Employee as policies covering the Company’s other
members of its Board of Directors.

 

5.             Business Expenses. Upon submission of a
satisfactory accounting by Employee, consistent with the policies of the
Company, the Company will reimburse Employee for any reasonable and necessary
out-of-pocket expenses incurred by Employee in the furtherance of the business
of the Company.

 

6.             Termination.

 

6.1           By
Employee.

 

(a)                                  Without Good Reason. Employee may terminate
his employment pursuant to this Agreement at any time without Good Reason (as
defined below) with at least thirty (30) business days’ written notice (the
“Employee Notice Period”) to the Company. Upon termination by Employee under
this section, the Company may, in its sole discretion and at any time during
the Employee Notice Period, suspend Employee’s duties for the remainder of the
Employee Notice Period, as long as the Company continues to pay compensation to
Employee, including benefits, throughout the Employee Notice Period.

 

3

 

(b)                                 With Good Reason. Employee may terminate his
employment pursuant to this Agreement with Good Reason (as defined below) at any
time within ninety (90) days after the occurrence of an event constituting Good
Reason.

 

(c)                                  Good Reason. “Good Reason” shall mean any of
the following: (i) Employee’s Base Salary is reduced (x) in a manner
that is not applied proportionately to other senior executive officers of the
Company or (y) by more than thirty percent (30%) of Employee’s then
current Base Salary; (ii) Employee’s duties, authority or responsibilities
are materially reduced or are materially inconsistent with the scope of
authority, duties and responsibilities of Employee’s position; (iii) the
occurrence of a material breach by the Company of any of its obligations to
Employee under this Agreement; (iv) the Company materially violates or
continues to materially violate any law or regulation contrary to the written
advice of Employee and the Company’s outside counsel to the Board of Directors
and the Company fails to rectify such violation within thirty (30) days of the
written advice that such violations are taking place or (v) Employee is
not nominated for election as a member of the Company’s Board of Directors at
any Company annual meeting or other stockholder meeting at which Company
directors are elected.

 

6.2           By the Company.

 

(a)                                  With Cause. The Company may terminate
Employee’s employment pursuant to this Agreement for Cause, as defined below,
immediately upon written notice to Employee.

 

(b)                                 “Cause” shall mean any of the following:

 

(i)                                     any willful failure or refusal to perform the
Employee’s duties which continues for more than ten (10) days after
written notice from the Company, specifically identifying the manner in which
the Company believed the Employee had failed or refused to perform his duties;

 

(ii)                                  the commission of any fraud or embezzlement
by the Employee in connection with the Employee’s duties or committed in the
course of Employee’s employment;

 

(iii)                               any gross negligence or willful misconduct of the Employee with regard
to the Company or any of its subsidiaries resulting in a material economic loss
to the Company;

 

(iv)                              a conviction of, or plea of guilty or nolo contendere to, a
felony or other crime involving moral turpitude,

 

(v)                                 the Employee is convicted of a misdemeanor
the circumstances of which involve fraud, dishonesty or moral turpitude and
which is substantially related to the circumstances of Employee’s job with the
Company;

 

(vi)                              any willful and material violation by the Employee of any statutory or
common law duty of loyalty to the Company or any of its subsidiaries resulting
in a material economic loss; or

 

4

 

(vii)                           any material breach by the Employee of this Agreement or any of the
agreements referenced in Section 8 of this Agreement.

 

(c)                                  Without Cause. 
Subject to Section 7.1, the Company may terminate Employee’s
employment pursuant to this Agreement without Cause upon at least thirty days’
written notice (“Company Notice Period”) to Employee.  Upon any termination by the Company under
this Section 6.2(c), the Company may, in its sole discretion and at any time
during the Company Notice Period, suspend Employee’s duties for the remainder
of the Company Notice Period, as long as the Company continues to pay
compensation to Employee, including benefits, throughout the Company Notice
Period.

 

6.3           Death
or Disability. Notwithstanding
Section 2, in the event of the death or disability of Employee during the
Employment Term, (i) Employee’s employment and this Agreement shall
immediately and automatically terminate, (ii) the Company shall pay Employee
(or in the case of death, employee’s designated beneficiary) Base Salary and
accrued but unpaid bonuses, in each case up to the date of termination, and (iii) all
equity awards granted to Employee, whether stock options or stock purchase
rights under the Company’s equity compensation plan, or other equity awards,
that are unvested at the time of termination shall immediately become fully
vested and exercisable upon such termination. Neither Employee, his beneficiary nor estate shall be entitled to any
severance benefits set forth in Section 7 if terminated pursuant to this
section. In the event of the disability of Employee, the parties agree to
comply with applicable federal and state law.

 

6.4           Survival.
The Confidential Information Agreement described in Section 8 hereof and
attached hereto as Schedule A shall survive the termination of this Agreement.

 

7.             Severance and Other Rights Relating to Termination
and Change of Control.

 

7.1           Termination
of Agreement Pursuant to Section 6.l(b) or 6.2(c). If the
Employee terminates his employment for Good Reason pursuant to Section 6.1(b),
or the Company terminates Employee’s employment without Cause pursuant to Section 6.2(c),
subject to the conditions described in Section 7.3 below, the Company will
provide Employee the following payments and other benefits:

 

(a)                                  (i) salary continuation for a period of
eighteen (18) months at Employee’s then current Base Salary, which shall
commence on the first payroll date which is on or immediately follows the 30th day following the termination of
Employee’s employment, (ii) any accrued but unpaid Base Salary as of the
termination date; and (iii) any accrued but unpaid bonus, including
without limitation any performance-based bonus, as of the termination date, all
on the same terms and at the same times as would have applied had Employee’s
employment not terminated; provided, that if at the end of the applicable
period within which Employee’s employment was terminated a target bonus, or any
other performance-based bonus, is paid to other senior executives, a pro-rata
target or other performance-based bonus shall also be paid to Employee at the
same time but no later than March 15 of the following year.

 

(b)                                 If Employee elects COBRA coverage for health
and/or dental insurance in a timely manner, the Company shall pay the monthly
premium payments for such timely elected coverage (consistent with what was in
place at the date of

 

5

 

termination) when each premium is due until the earlier of: (i) (12)
twelve months from the date of termination; (ii) the date Employee obtains
new employment which offers health and/or dental insurance that is reasonably
comparable to that offered by the Company; or (iii) the date COBRA
continuation coverage would otherwise terminate in accordance with the
provisions of COBRA. Thereafter, health and dental insurance coverage shall be
continued only to the extent required by COBRA and only to the extent Employee
timely pays the premium payments himself.

 

(c)                                  Within thirty (30) days of the effective date
of termination, the Company shall pay Employee Ten Thousand Dollars ($10,000)
towards the cost of an outplacement consulting package for Employee.

 

(d)                                 The vesting of the then unvested equity
awards granted to Employee, whether stock options, restricted stock or stock
purchase rights under the Company’s equity compensation plan, or other equity
awards, shall immediately accelerate by a period of 12 months upon such
termination or resignation. Employee will be entitled to exercise such equity
awards in accordance with Section 7.6.

 

7.2           Change
of Control. The Board of Directors of the Company has determined that it is
in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (defined in Section 7.2(a) below).
The Board believes it is imperative to diminish the inevitable distraction of
the Employee by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the Employee’s full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Employee with compensation
and benefits arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Employee will be satisfied and
which are competitive with those of other similarly-situated companies.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to include the provisions set forth in this Section 7.2.

 

(a)                                  Change of Control. “Change of Control” shall
mean, and shall be deemed to have occurred if, on or after the date of this
Agreement, (i) any “person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) or group acting in
concert, other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a corporation
owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing more than 50%
of the total voting power represented by the Company’s then outstanding Voting
Securities, (ii) during any 12-month period, individuals who at the
beginning of such period constitute the Board of Directors of the Company and
any new director whose election by the Board of Directors or nomination for
election by the Company’s stockholders was approved by a vote of at least two
thirds (2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof, (iii) the
consummation of a merger or consolidation of the Company with any other

 

6

 

corporation other than a merger or consolidation which would result in
the Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the sale or disposition by the Company of (in one
transaction or a series of related transactions) all or substantially all of
the Company’s assets.

 

(b)                                 Acceleration of Vesting of Equity
Awards.  Subject to Employee’s agreement
to remain employed by the Company (or any successor), if requested, for a
period of at least six (6) months following such Change of Control at his
then current base salary, one hundred percent (100%) of the then
unvested equity awards granted to Employee, whether stock options, restricted
stock or stock purchase rights under the Company’s equity compensation plan, or
other equity awards, shall immediately become fully vested and exercisable upon
a Change of Control.  Employee will be entitled to exercise such
vested equity awards in accordance with the applicable grant agreements.

 

(c)                                  LTIP Awards. Any awards granted to Employee
under the LTIP as of the effective date of the Change of Control shall be
treated as described in the LTIP. 
Without limiting the foregoing, the LTIP shall provide that if, in
anticipation or contemplation of a pending or potential Change of Control or
while a potential Change of Control is under consideration or being negotiated
by the Company’s board of directors, the Employee terminates his employment for
Good Reason pursuant to Section 6.1(b) or the Company terminates
Employee’s employment without Cause pursuant to Section 6.2(c), Employee
shall be deemed to remain an employee for purposes of the LTIP as of the
effective date of such Change of Control and shall receive a full payout under
the LTIP as described in Section 3.3 of this Agreement as though he
remained an employee of the Company as of the effective date of such Change of
Control.

 

(d)                                 If, within twelve (12) months before the
effective date of a Change of Control, the Employee terminates his employment
for Good Reason pursuant to Section 6.1(b) or the Company terminates
Employee’s employment without Cause pursuant to Section 6.2(c), or, if
Employee remains employed with the Company on the effective date of a Change of
Control, subject to the conditions described in Section 7.3 below, the
Employee shall receive a single lump-sum payment on the effective date of such
Change of Control equal to twenty-four (24) months (or, in the event of a
Change of Control transaction occurring on or prior to April 18, 2010,
which has an equity value of less than $100 million, eighteen (18) months) at
Employee’s then current Base Salary and pro-rata target bonus through the
effective date of the Change of Control; provided, however, that any payments
previously made by the Company to Employee in connection with a termination
occurring within twelve (12) months before the effective date of such Change of
Control pursuant to Section 7.1(a) of this Agreement shall be
credited against the lump-sum payment due Employee pursuant to this Section 7.2(d).

 

(e)                                  Parachute Gross-up.  Any payments due Employee as a result of a
change in control shall be adjusted as provided in Exhibit B attached to
this Agreement; provided, however, that the parties hereto anticipate (to the
fullest extent

 

7

 

permissible by law) that the value of Employee’s non-compete and
non-solicitation obligations set forth in Section 8 of this Agreement
would result in a determination by the “Accountants” (as defined in Exhibit B),
in accordance with subsection (b) of Exhibit B, that the payments to
be made by Company to Employee pursuant to this Section 7.2 would not be
subject to the “Excise Tax” (as defined in Exhibit B).

 

7.3           Conditions
Precedent to Payment of Severance. The Company’s obligations to Employee
described in Sections 7.1 and 7.2 are contingent on Employee’s (i) resignation
from the Board of Directors if required in accordance with Section 1.2 and
(ii) delivery to the Company of a signed waiver and release in a form
reasonably satisfactory to the Company of all claims he may have against the
Company, and his not revoking such release within 21 days after his date of
termination. Moreover,
the Employee’s rights to receive ongoing payments and benefits pursuant to
Sections 7.1 and 7.2 (including, without limitation, the right to ongoing
payments under the Company’s equity plans and LTIPs) are conditioned on the
Employee’s ongoing compliance with his obligations as described in Section 8
hereof.  Any cessation by the Company of any such payments and
benefits shall be in addition to, and not in lieu of, any and all other
remedies available to the Company for Employee’s breach of his obligations
described in Section 8 hereof.

 

7.4           No
Severance Benefits. Employee is not entitled to any severance benefits if
this Agreement is terminated pursuant to Sections 6.1(a) or 6.2(a) of
this Agreement; provided however, Employee shall be entitled to (i) Base Salary
prorated through the effective date of such termination; (ii) Bonuses
which have been earned and for which the payment date occurs prior to the
effective date of such termination; and (iii) medical coverage and other
benefits required by law and plans (as provided in Section 7.5, below).

 

7.5           Benefits
Required by Law and Plans: Vacation Time Pay. In the event of the
termination of Employee’s employment, Employee will be entitled to medical and
other insurance coverage, if any, as is required by law and, to the extent not
inconsistent with this Agreement, to receive such additional benefits as
Employee may be entitled under the express terms of applicable benefit plans
(other than bonus or severance plans) of the Company, its subsidiaries and
Affiliates.

 

7.6           Exercise
Period of Equity Awards after Termination. Unless it would subject the
Employee to adverse tax consequences under Section 885 of the American
Jobs Creation Act of 2004, Pub. Law No. 108-357, 118 Stat. 1418 (the Act),
which added § 409A to the Internal Revenue Code, notwithstanding anything
contained herein or in the equity grant agreements to the contrary, in the
event of the termination of Employee’s employment with the Company, Employee’s
vested equity awards shall be open for exercise until the earlier of (i) two
(2) years from the date of termination or (ii) the latest date on
which those equity awards expire or are eligible to be exercised under the
grant agreements, determined without regard to such termination or resignation;
provided further that such extended exercise period shall not apply in the
event the Employee resigns without Good Reason or is terminated by the Company
for Cause, in which case, the exercise periods shall continue to be governed by
the terms of the grant agreements.

 

7.7           409A Compliance.  Notwithstanding anything in this Section 7
to the contrary, to the extent that any payments under this Section 7 are
considered deferred compensation subject to Section 409A of the Internal Revenue
Code, such payments shall not be paid for six months following the Employee’s
separation from service (if, and only to the extent, applicable and

 

8

 

required
for compliance with Section 409A). 
To the extent that any payment is delayed pursuant to this subsection,
it shall be paid on the first day after the end of such required period.

 

8.             Restrictions.

 

8.1           The
Confidential Information Agreement. Employee will enter into and comply
with the terms of the Employee Confidentiality and Assignment Agreement in
substantially the form attached hereto as Schedule A (the “Confidential
Information Agreement”).

 

8.2           Agreement
Not to Compete. In consideration for all of the payments and benefits that
may become due to Employee under this Agreement, Employee agrees that for a
period of eighteen (18) months after termination of his employment for any
reason, he will not, directly or indirectly, without the Company’s prior
written consent, (a) perform for a Competing Entity in any Restricted Area
any of the same services or substantially the same services that he performed
for the Company; (b) in any Restricted Area, advise, assist, participate
in, perform services for, or consult with a Competing Entity regarding the
management, operations, business or financial strategy, marketing or sales
functions or products of the Competing Entity (the activities in clauses (a) and
(b) collectively are, the “Restricted Activities”); or (c) solicit or
divert the business of any Restricted Customer by offering competitive products
or services to such Restricted Customer to the detriment of the Company.
Employee acknowledges that in his position with the Company he has had and will
have access to knowledge of confidential information about all aspects of the Company
that would be of significant value to the Company’s competitors.

 

8.3           Additional
Definitions.

 

(a)                                  “Customer” means any individual or entity for
whom the Company has provided services or products or made a proposal to
perform services or provide products.

 

(b)                                 “Restricted Customer” means any Customer with
whom/which Employee had contact on behalf of the Company during the 12 months
preceding the end, for whatever reason, of his employment.

 

(c)                                  “Competing Entity” means any business entity
engaged in the development, design, manufacture, marketing, distribution or
sale of molecular diagnostic products.

 

(d)                                 “Restricted Area” means any geographic
location where if Employee were to perform any Restricted Activities for a
Competing Entity in such a location, the effect of such performance would be
competitive to the Company.

 

8.4           Reasonable
Restrictions On Competition Are Necessary. 
Employee acknowledges that reasonable restrictions on competition are
necessary to protect the interests of the Company. Employee also acknowledges
that he has certain skills necessary to the success of the Company, and that
the Company has provided and will provide to him certain confidential
information that it would not otherwise provide because he has agreed not to
compete with the business of the Company as set forth in this Agreement.

 

8.5           Restrictions
Against Solicitations. Employee further covenants and agrees that during
Employee’s employment by the Company and for a period of eighteen (18) months
following the termination of his employment with the Company for any reason, he
will not, except with the prior consent of the Company’s Chief Executive
Officer, directly or indirectly, solicit or hire, or encourage the solicitation
or hiring of, any person who is an employee of the

 

9

 

Company for any position as an employee, independent contractor,
consultant or otherwise, provided that the foregoing shall not prevent Employee
from serving as a reference.

 

8.6           Affiliates.
For purposes of this Section 8, the term “Company” will be deemed to
include the Company and its Affiliates.

 

8.7           Ability
to Obtain Other Employment. Employee hereby represents that his experience
and capabilities are such that in the event his employment with the Company is
terminated, he will be able to obtain employment if he so chooses during the
period of noncompetition following the termination of employment described
above without violating the terms of this Agreement, and that the enforcement
of this Agreement by injunction, as described below, will not prevent him from
becoming so employed.  To assist Employee
in obtaining subsequent employment, the Company agrees to respond within 3
business days to any request of Employee as to whether a new position would be
viewed by the Company as violation of the restrictions in this Agreement.

 

8.8           Injunctive
Relief. Employee understands and agrees that if he violates any provision
of this Section 8, then in any suit that the Company may bring for that
violation, an order may be made enjoining him from such violation, and an order
to that effect may be made pending litigation or as a final determination of
the litigation. Employee further agrees that the Company’s application for an
injunction will be without prejudice to any other right of action that may
accrue to the Company by reason of the breach of this Section 8.

 

8.9           Severability.
In case any provisions (or portions thereof) contained in this Agreement shall,
for any reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.  If, moreover, any one or more of the
provisions contained in this Section 8 shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.

 

8.10         Section 8 Survives Termination. The provisions of this Section 8 will
survive termination of this
Agreement and the termination of the Employee’s employment. Employee understands
that his obligations under this Section 8 will continue in accordance with
its express terms regardless of any changes in title, position, duties, salary,
compensation or benefits or other terms and conditions of employment.  The Company will have the right to assign
Employee’s obligations under this Section 8 to its affiliates, successors
and assigns.  Employee expressly consents
to be bound by the provisions of this Section 8 for the benefit of the
Company or any parent, subsidiary or affiliate to whose employ Employee may be
transferred without the necessity that this Agreement be re-executed at the
time of such transfer.

 

9.             Arbitration. Unless other arrangements are agreed
to by Employee and the Company, any disputes arising under or in connection
with this Agreement, other than a dispute in which the primary relief sought is
an equitable remedy such as an injunction, will be resolved by binding
arbitration to be conducted pursuant to the Agreement for Arbitration Procedure
of Certain Employment Disputes attached as Exhibit C hereof.

 

10.           Assignments: Transfers: Effect of Merger. No rights
or obligations of the Company under this Agreement may be assigned or
transferred by the Company except that such rights or obligations may be
assigned or transferred pursuant to a merger or consolidation, or pursuant to
the sale or transfer of all

 

10

 

or substantially all of the
assets of the Company, provided that the assignee or transferee is the
successor to all or substantially all of the assets of the Company. This
Agreement will not be terminated by any merger, consolidation or transfer of
assets of the Company referred to above. In the event of any such merger,
consolidation or transfer of assets, the provisions of this Agreement will be
binding upon the surviving or resulting corporation or the person or entity to
which such assets are transferred. The Company agrees that concurrently with
any merger, consolidation or transfer of assets referred to above, it will
cause any successor or transferee unconditionally to assume, either
contractually or as a matter of law, all of the obligations of the Company
hereunder in a writing promptly delivered to the Employee. This Agreement will
inure to the benefit of, and be enforceable by or against, Employee or
Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, designees and legatees. None of Employee’s
rights or obligations under this Agreement may be assigned or transferred by
Employee other than Employee’s rights to compensation and benefits, which may
be transferred only by will or operation of law. If Employee should die while
any amounts or benefits have been accrued by Employee but not yet paid as of
the date of Employee’s death and which would be payable to Employee hereunder
had Employee continued to live, all such amounts and benefits unless otherwise
provided herein will be paid or provided in accordance with the terms of this
Agreement to such person or persons appointed in writing by Employee to receive
such amounts or, if no such person is so appointed, to Employee’s estate.

 

11.           No Set-off. No Mitigation Required. Except as
expressly provided otherwise in this Agreement, the obligation of the Company
to make any payments provided for hereunder and otherwise to perform its
obligations hereunder will not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against Employee or others. In no event will Employee be obligated to seek
other employment or take other action by way of mitigation of the amounts
payable to Employee under any of the provisions of this Agreement, and such
amounts will not be reduced (except as otherwise specifically provided herein)
whether or not Employee obtains other employment.

 

12.           Taxes. The Company shall have the right to deduct
from any payments made pursuant to this Agreement any and all federal, state,
and local taxes or other amounts required by law to be withheld.

 

13.           409A Compliance.  The intent of Employee and the Company is
that the severance and other benefits payable to Employee under this Agreement
not be deemed “deferred compensation” under, or otherwise fail to comply with, Section 409A
of the Internal Revenue Code.  Employee
and the Company agree to use reasonable best efforts to amend the terms of this
Agreement from time to time as may be necessary to avoid the imposition of
penalties or additional taxes under Section 409A of the Internal Revenue
Code; provided, however, any such amendment will provide Employee substantially
equivalent economic payments and benefits as set forth herein and will not in
the aggregate, materially increase the cost to, or liability of, the Company
hereunder.

 

14.           Miscellaneous. No amendment, modification or waiver
of any provisions of this Agreement or consent to any departure thereof shall
be effective unless in writing signed by the party against whom it is sought to
be enforced. This Agreement contains the entire Agreement that exists between
Employee and the Company with respect to the subjects herein contained and
replaces and supersedes all prior agreements, oral or written, between the
Company and Employee with respect to the subjects herein contained. Nothing
herein shall affect any terms in the Confidential Information Agreement, the Agreement
for Arbitration Procedure of Certain Employment Disputes, the LTIP, and any stock plans or agreements
between Employee and the Company now and hereafter in effect from time to time
(except as and to the extent expressly provided herein). If any provision of
this Agreement is held for any reason to be unenforceable, the remainder of
this Agreement shall remain in full force and effect. Each section is intended
to be a severable and independent section within this Agreement. The headings

 

11

 

in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement. This Agreement is made in the
State of Wisconsin and shall be governed by and construed in accordance with
the laws of said State.

 

This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. All notices and all other communications provided for in this
Agreement shall be in writing and shall be considered duly given upon personal
delivery, delivery by nationally reputable overnight courier, or on the third
business day after mailing from within the United States by first class
certified or registered mail, return receipt requested, postage prepaid, all
addressed to the address set forth below each party’s signature. Any party may
change its address by furnishing notice of its new address to the other party
in writing in accordance herewith, except that any notice of change of address
shall be effective only upon receipt.

 

12

 

The
parties hereto have executed this Employment Agreement as of the date first
written above.

 

 

	
   

  	
  /s/
  Kevin T. Conroy

  
	
   

  	
  Kevin
  T. Conroy (“Employee”)

  
	
   

  	
   

  
	
  Notice
  Address:

  	
   

  
	
  5759
  Ballina Parkway

  	
   

  
	
  Madison,
  WI 53711

  	
   

  
	
   

  	
  EXACT
  Sciences Corporation (“Company”)

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Patrick
  J. Zenner

  
	
   

  	
   Patrick J.
  Zenner

  
	
   

  	
   Chairman of
  the Board of Directors

  
	
   

  	
   

  
	
  Notice
  Address:

  	
   

  
	
  100
  Campus Drive

  	
   

  
	
  Marlborough,
  MA 01752

  	
   

  

 

13

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