EXELIXIS, INC.
AUDIT COMMITTEE CHARTER

PURPOSE

The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Exelixis, Inc. (the “Company”) is to assist the Board in fulfilling its responsibility to oversee management’s conduct of the Company’s financial reporting process and ensuring the integrity of the Company’s financial statements. Committee members shall be independent and financially literate.

MEMBERSHIP

The Committee shall consist of at least three (3) members of the Board. Each member of the Committee shall meet the requirements of the listing standards of the Nasdaq Stock Market (“Nasdaq”) and Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to audit committee members, as in effect from time to time. Accordingly, all of the members will be directors who:

1. have no relationship to the Company that may interfere with the exercise of their independence from management and the Company and satisfy the independence requirements of Rule 5605(a)(2) of the Nasdaq listing standards and Section 10A(m)(3) of the Exchange Act and the rules and regulations of Nasdaq and the SEC applicable to Committee members as in effect from time to time; and


2. are able to read and understand fundamental financial statements in accordance with Rule 5605(c)(2) of the Nasdaq listing standards.

In addition, at least one member of the Committee will have past employment experience in finance or accounting, or alternatively, have the requisite professional certification in accounting or any other comparable experience or background that results in the individual’s financial sophistication (for purposes of complying with Rule 5605(c)(2) of the Nasdaq listing standards.

The Board shall appoint the members of the Committee and the Chair of the Committee.

AUTHORITY

The Committee shall have the authority to appoint, determine compensation for, at the expense of the Company, retain and oversee the auditors as set forth in Section 10A(m)(2) of the Exchange Act and the rules and regulations of the SEC thereunder.

In addition, the Committee shall have the authority to obtain, at the expense of the Company, advice and assistance from internal or external legal, accounting or other advisors or consultants. Other reasonable expenditures for external resources that the Committee deems necessary or appropriate in the performance of its duties are permitted and shall be paid for by the Company.

The Committee shall be designated as the Company’s Qualified Legal Compliance Committee (the “QLCC”) within the meaning of Rule 205.2(k) of Title 17, Chapter II of the Code of Federal Regulations (the “Rules of Professional Conduct”) and shall have the authority to initiate investigations, to provide notices, including notices to the SEC, to retain experts, to recommend that the Company implement remedial or other appropriate actions and otherwise to carry out its responsibilities as a QLCC. The Committee shall have full access to all books, records, facilities and personnel of the Company as deemed necessary or appropriate by any member of the Committee to discharge his or her responsibilities hereunder. The Committee shall have the authority to require that any of the Company’s personnel, counsel, auditors or investment bankers, or any other consultant or advisor to the Company, attend any meeting of the Committee or meet with any member of the Committee or any of its special legal, accounting or other advisors and consultants.

KEY RESPONSIBILITIES

While the Committee has the responsibilities and powers provided in this Charter, it is not the duty of the Committee to plan or conduct audits, or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles (“GAAP”). Management remains responsible for the preparation, presentation and integrity of the Company’s financial statements and for the appropriateness of the accounting principles and reporting policies that are used by the Company. The independent auditors (the “auditors”) are responsible for auditing the Company’s financial statements and for reviewing the Company’s unaudited interim financial statements. Rather, the Committee’s role is to oversee the Company’s financial reporting process on behalf of the Board, including direct responsibility for the appointment, compensation, retention and oversight of the work of the auditors, who shall report directly and be accountable to the Committee. The Committee recognizes that Company management, as well as the auditors, have more time, knowledge and more detailed information about the Company than do Committee members; consequently, in carrying out its oversight responsibilities, the Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to the auditors’ work.

In general, the common recurring activities of the Committee in carrying out its oversight function are specified below. These functions are set forth as obligations under existing laws, rules and regulations with the understanding that the Committee may diverge from these obligations as consistent with changes in the applicable laws, rules and regulations. In particular, the Committee shall:

• Evaluate the performance of the auditors, assess their qualifications and determine whether to retain or to terminate the existing auditors or to appoint and engage new auditors for the ensuing year. The Committee shall have the ultimate authority and responsibility to appoint and remove, compensate and review the performance of the auditors.
• Meet and review with the auditors all critical accounting policies and practices of the Company, alternative treatments of financial information within GAAP that have been discussed by the auditors with management, and the treatment preferred by the auditors.
• Prepare the report of the Committee required by the rules of the SEC to be included in the Company’s annual proxy statement.
• Meet and review with management and the auditors the results of the annual audit and the audited financial statements to be included in the Company’s Annual Report on Form 10-K and Annual Report to Stockholders, review and consider with the auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC and, based on the discussions with management and the auditors, recommend to the Board whether the audited financial statements should be included in the Company’s Annual Report on Form 10-K.
• Meet and review with management and the auditors the Company’s interim financial results and the unaudited interim financial statements to be included in quarterly filings with the SEC and the matters required to be discussed by the applicable requirements of the PCAOB and the SEC; this review may be conducted by the full Committee or the Chair of the Committee, and shall occur prior to the filing of the Company’s Quarterly Reports on Form 10-Q.
• Review and discuss any earnings press releases (including any presentation of non-GAAP financial information) and, to the extent appropriate, any financial information and earnings guidance provided to analysts and rating agencies.
• Review and discuss with management and the auditors the quality and adequacy of the Company’s internal controls and the attestation of the auditors with respect to those controls required by Section 404 of the Sarbanes-Oxley Act of 2002, and the Committee shall have the further authority to meet with the internal auditors or individuals performing those functions on behalf of the Company. The review shall include any material issues raised by the internal auditors or by any inquiry or investigation by governmental authorities. The Committee shall also review and discuss with the auditors and, if appropriate management any management or internal control letter issued or, to the extent practicable, proposed to be issued by the auditors, as well as management’s response, if any, to such letter and any additional material written communications between the auditors and management.
• On an annual basis:
  1. receive from the auditors a formal written statement delineating all relationships between the auditors and the Company consistent with applicable requirements of the PCAOB;
  2. discuss with the auditors any such disclosed relationships and their impact on the auditor’s independence; and
  3. take appropriate action to oversee the independence of the auditors.
• Determine and approve engagements of the auditors, prior to commencement of such engagements (unless in compliance with exceptions available under applicable laws and rules related to immaterial aggregate amounts of services), to perform:
  1. all proposed audit, review and attest services, including the scope of and plans for the audit, the adequacy of staffing and the compensation to be paid, at the Company’s expense, to the auditors; and
  2. any proposed permissible non-audit services, including the scope of the service and the compensation to be paid therefor.

  These determinations and approvals may be pursuant to pre-approval policies and procedures established by the Committee consistent with applicable laws and rules, including the delegation of pre-approval authority to one or more Committee members so long as any such pre-approval decisions are presented to the full Committee at the next scheduled meeting.

• Review and approve any related person transactions entered into by the Company in accordance with the Company’s Statement of Policy with respect to Related Person Transactions.
• Establish and maintain procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls or auditing matters of the Company, including the establishment of procedures for confidential, anonymous submissions by Company employees with respect to the foregoing matters.
• Oversee management’s identification, assessment and management of the Company’s risks relating to financial reporting or fraud, securities trading and tax matters.
• Review and discuss with management and the auditors any material conflicts or disagreements between management and the auditors regarding financial reporting or accounting practices or policies and resolve any conflicts or disagreements regarding financial reporting.
• Confer with management and the auditors regarding the scope, adequacy and effectiveness of the internal control over financial reporting, including any special audit steps taken in the event of material control deficiencies.
• Carry out the responsibilities of a QLCC as set forth in the Rules of Professional Conduct.
• Review the Company’s tax strategy, the status of any material tax audits and proceedings and any other material tax matters.
• Should the Company consider the use of certain swaps and other derivatives transactions subject to the end-user exception promulgated under the Dodd-Frank Act, approve and periodically review, at least on an annual basis or more often in the event of a change in Company, (i) decisions by the Company and its subsidiaries to enter into such swaps and other derivatives transactions, and (ii) the Company’s overall hedging strategy and any policies and procedures governing the use of swaps, including the Company’s decision to clear or not to clear swaps transactions.
• Periodically review, discuss and assess the Committee’s own performance, including a review of its compliance with this Charter, and report its findings to the Board.
• Review and assess this Charter on an annual basis and recommend any proposed changes to the Board for its consideration.

In addition, as the Committee and the Board deems appropriate, the Committee may identify additional areas of focus and/or perform other activities consistent with this Charter and the Company’s Certificate of Incorporation and Bylaws, each as currently in effect, as well as applicable governing laws or regulations.

MEETINGS

The Committee will hold at least four (4) regular meetings per year and additional regular or special meetings as the Committee deems appropriate. Officers and other employees of the Company may attend these meetings at the invitation of the Committee.

MINUTES AND REPORTS

Minutes of each meeting of the Committee shall be kept and distributed to each member of the Committee and the Secretary of the Company. The Chair of the Committee shall report to the Board from time to time, or whenever so requested by the Board.