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                                                                    EXHIBIT 10.5

                         THIRD WAVE TECHNOLOGIES, INC.
                        1999 INCENTIVE STOCK OPTION PLAN

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1.   Purpose. The purpose of the Third Wave Technologies, Inc. 1999 Incentive
     Stock Option Plan (the "Plan") is to encourage certain employees of Third
     Wave Technologies, Inc. (the "Corporation") to acquire or increase their
     stock ownership in the Corporation, to provide an incentive to such
     employees to promote the financial success of the Corporation, and to
     enable the Corporation to attract and retain personnel necessary for
     continued growth and profitability.

2.   Effective Date and Term of Plan. The Plan shall become effective on the
     date adopted by the Board of Directors of the Corporation ("Board of
     Directors") and shall continue for a period of ten years unless sooner
     terminated as provided in Paragraph 17.

3.   Approval of Shareholders. The Plan is subject to the approval of
     shareholders of majority of all of the outstanding voting shares of the
     Corporation. If it is not so approved on or before one year after the date
     of adoption of the Plan by the Board of Directors, the Plan shall not come
     into effect and any options granted pursuant to the Plan shall be deemed
     canceled. No option may be exercised prior to approval of the Plan by the
     shareholders.

4.   Stock Subject to Plan. Only Common Stock, with $1.00 par value per share,
     of the Corporation ("Common Stock") may be issued pursuant to options
     granted under this Plan. The maximum number of shares of Common Stock that
     may be issued pursuant to the exercise of options granted under the Plan
     ("Options") is Four Hundred Fifty-nine (459) shares of Common Stock, less
     the number of shares of Common Stock that may be issued pursuant to the
     Third Wave Technologies, Inc. 1999 Nonqualified Stock Option Plan
     effective as of the date of this Plan, subject to any adjustments provided
     in Paragraph 16. If any Options expire or terminate for any reason without
     having been exercised in full, the unpurchased shares subject thereto
     shall again be available for further grants under the Plan.

5.   Administration. The Plan shall be administered by the committee described
     in Paragraph 6 (the "Committee"). Subject to the express provisions of the
     Plan, the Committee shall have complete authority in its discretion, to
     determine those employees ("Participants") to whom Options shall be
     granted, the option price, the option periods and the number of shares to
     be subject to each Option. Subject to the express provisions of the Plan,
     the Committee shall also have the authority in its discretion to prescribe
     the time or times at which Options may be exercised, the limitations upon
     the exercise of Options (including limitations effective upon death,
     disability, or termination of employment of any Participant) and the
     restrictions, if any, to be imposed upon the transferability of shares
     acquired upon exercise of Options. In making such determinations, the
     Committee may take into account the nature of the services rendered by the
     respective Participants, their present and potential contributions to the
     success of the Corporation, and such other factors as the Committee in its
     discretion shall deem relevant. Subject to the express provisions of the
     Plan, the Committee shall also have complete authority to interpret the
     Plan, to prescribe, amend and rescind rules and regulations relating to
     the Plan, to determine the terms and provisions of the respective option
     agreements (which need not be identical), to determine whether the shares
     delivered upon exercise of Options will be treasury shares or will be
     authorized but previously unissued shares and to make all other
     determinations necessary or advisable for the

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     administration of the Plan. The Committee's determination on the matters
     referred to in this paragraph shall be conclusive.

6.   Committee. The Committee shall consist of not less than two members of the
     Board of Directors, each of whom shall be (i) a "non-employee director" as
     that term is defined in Rule 16b-3 promulgated under the Securities and
     Exchange Act of 1934, as amended (the "Exchange Act"), and (ii) an
     "outside director" within the meaning of Section 162(m) of the Internal
     Revenue Code of 1986, as amended (the "Code"). The Committee shall be
     appointed from time to time by the Board of Directors, which may from time
     to time appoint members of the Committee in substitution for members
     previously appointed and may fill vacancies, however caused, in the
     Committee. A majority of its members shall constitute a quorum. All
     determinations of the Committee shall be made by a majority of its
     members. Any decision or determination reduced to writing and signed by
     all of the members shall be fully as effective as if it had been made by a
     majority vote at a meeting duly called and held. The Committee may hold
     meetings by use of conference telephone or similar communications
     equipment by which all persons participating in the meeting can hear each
     other.

7.   Eligibility. An Option may be granted under the Plan to any employee of
     the Corporation, and of its present and future subsidiaries, as defined in
     Section 424(f) of the Code ("Subsidiaries"). The foregoing
     nonwithstanding, members of the Committee shall not, while serving as
     members of the Committee, be eligible to receive Options.

8.   Option Price. The option price per share will be determined by the
     Committee at the time each Option is granted, but shall not be less than
     100% of the fair market value, as determined by the Committee, of a share
     of Common Stock on the date of grant. If such Option is granted to a
     person who owns, directly or indirectly, stock possessing more than 10% of
     the total combined voting power of all classes of stock of the Corporation
     on the date of the grant, the option price per share shall not be less
     than 110% of its fair market value.

9.   Option Periods. The term of each Option will be for such period not
     exceeding ten years from the date of grant, as the Committee shall
     determine; provided, however, that if such Option is granted to a person
     who owns, directly or indirectly, stock possessing more than 10% of the
     total combined voting power of all classes of stock of the Corporation on
     the date of the grant, the term of such Option shall not exceed five years
     from the date of grant. An Option shall be considered granted on the date
     the Committee acts to grant the Option or such later date as the Committee
     shall specify. Each Option shall be subject to earlier termination as
     described under Paragraphs 13 and 17.

10.  Exercise of Options. Subject to the restrictions in Paragraph 13 and in
     the agreement referred to in Paragraph 14, each Option may be exercised at
     any time during the option period for such Option by written notice
     delivered to an officer of the Corporation, stating the number of shares
     with respect to which the Option is being exercised.

11.  Payment for Option. Within five (5) business days following the date of
     exercise, the Participant shall make full payment of the option price (i)
     in cash; (ii) with the consent of the Committee, by tendering previously
     acquired shares of Common Stock which on the date of tender (A) have a
     fair market value, as determined by the Committee equal to the aggregate
     option price and (B) in the case of shares acquired by previous exercise
     of an option, have been owned by the Participant for more than six months;
     or (iii) any combination of (i) and (ii). Shares of Common Stock tendered
     shall be duly endorsed in blank or accompanied by



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     stock powers duly endorsed in blank. Upon receipt of the payment of the
     entire option price for the shares so purchased, certificates for such
     shares shall be delivered to the Participant. The transferability of such
     shares shall be subject to the restrictions contained in the Shareholder
     Agreement in the form attached hereto and made part hereof as Exhibit A, or
     as otherwise may be required by the Committee from time to time, and the
     Participant agrees to execute such documents as may be required by the
     Corporation to become an "Agreeing Shareholder" as such term is defined in
     the Shareholder Agreement.

12.  Maximum Per Participant. The aggregate fair market value, as determined by
     the Committee, of the stock for which options held by a Participant are
     exercisable for the first time under the Plan or other options granted to
     the Participant under any plan of the Corporation or any Subsidiary during
     any calendar year shall not exceed $100,000. For purposes of this
     paragraph, the fair market value of stock subject to an Option or other
     Incentive Stock Option shall be determined as of the date the Option or
     other Incentive Stock Option, as the case may be, is granted.

13.  Termination of Employment. Except as hereinafter provided, no Option may be
     exercised later than three months after a Participant terminates his
     employment with the Corporation or its Subsidiaries, as the case may be. If
     termination of employment results from the deliberate, willful or gross
     misconduct of a Participant, then the Option may not be exercised and all
     of the Participant's rights in the Option shall be forfeited upon
     termination. If termination of employment results from the disability of a
     Participant within the meaning of Section 22(e)(3) of the Code, as amended,
     any Option may be exercised at any time within twelve months after such
     termination of employment, but in no event beyond the option period. If
     termination of employment results from the death of a Participant, the
     personal representative of the Participant's estates, or a person who by
     bequest, inheritance, or otherwise by reason of the Participant's death,
     acquired the right to exercise the Option, may exercise any Option at any
     time within three years after the death of such Participant, but in no
     event beyond the option period. The Committee may impose additional
     restrictions upon the exercise of Options after termination of employment,
     including prohibition of such exercise.

14.  Agreements. Options granted pursuant to the Plan shall be evidenced by a
     stock option agreement in the form attached hereto as Exhibit B, or as
     otherwise may be required by the Committee from time to time, except that
     in the case of a "Key Employee", as defined in Paragraph 17 below, the
     stock option agreement will include such different or additional terms as
     are required by Paragraph 17 below and the 1999 Investment Agreement, also
     as defined in Paragraph 17 below.

15.  Nontransferability of Options. Options under the Plan are not transferable
     by a Participant other than by will or the laws of descent or distribution,
     and may be exercised during the lifetime of a Participant only by such
     Participant.

16.  Adjustment of Number of Shares. In the event of any change in the
     outstanding Common Stock of the Corporation by reason of stock dividends,
     recapitalizations, reorganizations, mergers, consolidations, split-ups,
     combinations or exchanges of shares and the like, the Committee shall,
     consistent with such change, appropriately adjust the number and kind of
     shares which thereafter may be optioned and sold under the Plan, the number
     and kind of shares under option in outstanding and sold under the Plan, the
     number and kind of shares under option in outstanding stock option
     agreements and the purchase price per share thereof. The determination of
     the Committee as to any such adjustment shall be final and conclusive. No
     adjustment or substitution provided for in this paragraph shall require the


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     Corporation in any stock option agreement to sell a fractional share and
     the total substitution or adjustment with respect to each stock option
     agreement shall be limited accordingly.

17.  Change in Control. In the case of a Key Employee, as the term is defined in
     the Investment Agreement dated as of July 21, 1999, by and among the
     Corporation and Schroeder Ventures International Life Sciences Fund II et
     al (the "1999 Investment Agreement"), the terms of his or her stock option
     agreement shall further provide that in the event of an Adjustment to the
     Applicable Conversion Value pursuant to Sections 5.5(a) or 5.5(e) of
     Article III of the Corporation's Amended and Restated Articles of
     Incorporation (the "Articles"), but not an Adjustment to the Applicable
     Conversion Value as a result of a Below Projection Liquidity Event pursuant
     to section 5.5(h) of Article III of the Articles, all rights of the holder
     of the Option shall automatically terminate and holder of the Option shall
     automatically forfeit such Option to the Corporation and, to the extent
     such Option has been previously exercised, the holder shall automatically
     forfeit any such shares received upon such prior exercise, provided that in
     such event the Corporation shall reimburse the holder thereof for all
     consideration previously paid to the Corporation upon the exercise of such
     Option.

18.  Amendment, Suspension or Termination. The Board of Directors, without
     further approval of the shareholders, may from time to time amend, suspend
     or terminate the Plan in such respects as the Board may deem advisable;
     provided, however, that no amendment shall become effective without prior
     approval of the shareholders which would (i) increase the aggregate number
     of shares which may be issued pursuant to Options granted under the Plan,
     except as permitted under Paragraph 16; (ii) permit the granting of options
     to anyone other than an employee of the Corporation or a Subsidiary or to a
     member of the Committee; (iii) decrease the minimum option prices; (iv)
     increase the maximum option periods; (v) increase the maximum per
     Participant set in Paragraph 12; or (vi) extend the term of the Plan. No
     amendment shall, without the Participant's consent, alter or impair any of
     the rights or obligations under any Option theretofore granted to the
     Participant.

Dated this 7th day of October, 1999.

THIRD WAVE TECHNOLOGIES, INC.

By:
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     Lance Fors, President and
     Chief Executive Officer

Attest:
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          David C. Sneider,
          Chief Financial Officer


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