Document:

Exhibit 10.3

 

Exhibit 10.3

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED
UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER,
SALE OR TRANSFER.

AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS MUST RELY ON THEIR OWN
ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED.

SO LONG AS ANY OF THE SENIOR NOTES (AS DEFINED HEREIN) REMAIN OUTSTANDING EACH HOLDER OF THIS
WARRANT COVENANTS AND AGREES BY ACCEPTANCE OF THIS WARRANT THAT (I) THE COMPANY WILL NOT MAKE (AND
THE HOLDER HEREOF SHALL NOT BE ENTITLED TO RECEIVE) ANY CASH PAYMENT UNDER OR IN RESPECT OF THIS
WARRANT OTHER THAN A REDEMPTION PAYMENT IN CONNECTION WITH A MAJOR TRANSACTION PURSUANT TO SECTION
5 HEREOF IN THE EVENT THE HOLDER OF THE SENIOR NOTES DOES NOT ELECT TO REQUIRE THE REDEMPTION OF
THE SENIOR NOTES IN RESPECT OF SUCH MAJOR TRANSACTION (A “PERMITTED REDEMPTION PAYMENT”) AND (II)
THIS WARRANT MAY NOT BE AMENDED WITHOUT THE CONSENT OF THE CURRENT HOLDER OF THE SENIOR NOTES,
(III) THIS WARRANT AND THE PAYMENTS OF ANY AMOUNTS IN RESPECT HEREOF (OTHER THAN A PERMITTED
REDEMPTION PAYMENT) ARE EXPRESSLY SUBORDINATED AND JUNIOR TO THE SENIOR NOTES AND (IV) IT WILL NOT
ASSERT ANY CLAIMS OR CAUSES OF ACTION AGAINST THE COMPANY THAT WOULD REQUIRE THE PAYMENT BY THE
COMPANY TO THE HOLDER HEREOF OF ANY AMOUNT OTHER THAT A PERMITTED REDEMPTION PAYMENT.

	 	 	 
	Warrant to Purchase
	 	 
	 

	1,119,855 shares

	 	Warrant Number 2

Warrant to Purchase Common Stock

of

THIRD WAVE TECHNOLOGIES, INC.

THIS CERTIFIES that DEERFIELD PRIVATE DESIGN INTERNATIONAL, L.P. or any subsequent holder hereof
(“Holder”) has the right to purchase from THIRD WAVE TECHNOLOGIES, INC., a Delaware corporation,
(the “Company”), ONE MILLION ONE HUNDRED NINETEEN THOUSAND EIGHT HUNDRED FIFTY-FIVE (1,119,855)
fully paid and nonassessable shares, of the Company’s common stock, $0.001 par value per share
(“Common Stock”), subject to adjustment as provided herein, at a price equal to the Exercise Price
as defined in Section 3 below, at any time during the Term (as defined below).

Holder agrees with the Company that this Warrant to Purchase Common Stock of the Company (this
“Warrant” or this “Agreement”) is issued and all rights hereunder shall be held subject to all of
the conditions, limitations and provisions set forth herein.

1. Date of Issuance and Term.

This Warrant shall be deemed to be issued on December 10, 2007 (“Date of Issuance”). The term of
this Warrant begins on the Date of Issuance and ends at 5:00 p.m., New York City time, on the date
that is five (5) years after the Date of Issuance (the “Term”). This Warrant was issued in
conjunction with that certain Facility Agreement (the “Facility Agreement”) and the Registration
Rights Agreement (“Registration Rights Agreement”) by and between the Company and Deerfield Private
Design International, L.P. and certain other parties, each dated December 10, 2007, entered into in
conjunction herewith.

Notwithstanding anything herein to the contrary, the Company shall not issue to the Holder, and the
Holder may not acquire, a number of shares of Common Stock upon exercise of this Warrant to the
extent that, upon such exercise, the number of shares of Common Stock then beneficially owned by
the Holder and its Affiliates and any other persons or entities whose beneficial ownership of
Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”) (including shares held by any “group” of which the Holder
is a member, but excluding shares beneficially owned by virtue of the ownership of securities or
rights to acquire securities that have limitations on the right to convert, exercise or purchase
similar to the limitation set forth herein) would exceed 9.98% of the total number of shares of
Common Stock of the Company then issued and outstanding. For purposes hereof, “group” has the
meaning set forth in Section 13(d) of the Exchange Act and applicable regulations of the Securities
and Exchange Commission (the “SEC”), and the percentage held by the Holder shall be determined in a
manner consistent with the provisions of Section 13(d) of the Exchange Act. Upon the written
request of the Holder, the Company

 

 

shall, within two (2) Trading Days confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding.

“Affiliate” means any person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a person or entity, as
such terms are used in and construed under Rule 144 under the Securities Act of 1933, as amended
(the “Securities Act”). With respect to a Holder of Warrants, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager as such Holder will
be deemed to be an Affiliate of such Holder.

“Holder” means Deerfield Private Design International, L.P. and any transferee or assignee pursuant
to the terms of this Warrant.

2. Exercise.

(a) Manner of Exercise. During the Term, this Warrant may be Exercised as to all or any lesser
number of full shares of Common Stock covered hereby (the “Warrant Shares” or the “Shares”) upon
surrender of this Warrant, with the Exercise Form attached hereto as Exhibit A (the
“Exercise Form”) duly completed and executed, together with the full Exercise Price (as defined
below, which may be satisfied by a Cash Exercise or a Cashless Exercise, as each is defined below)
for each share of Common Stock as to which this Warrant is Exercised, at the office of the Company,
Third Wave Technologies, Inc., 502 S. Rosa Road, Madison, WI 53719; Phone: (888) 898-2357, Fax:
(608) 663-7037, or at such other office or agency as the Company may designate in writing, by
overnight mail, with an advance copy of the Exercise Form sent to the Company and its transfer
agent (“Transfer Agent”) by facsimile (such surrender and payment of the Exercise Price hereinafter
called the “Exercise” of this Warrant).

(b) Date of Exercise. The “Date of Exercise” of the Warrant shall be defined as the date that the
Exercise Form attached hereto as Exhibit A, completed and executed, is sent by facsimile to
the Company, provided that the original Warrant and Exercise Form are received by the Company and
the Exercise Price is satisfied, each as soon as practicable and in any event within two (2)
business days thereafter. Alternatively, the Date of Exercise shall be defined as the date the
original Exercise Form is received by the Company and the Exercise Price is paid, if Holder has not
sent advance notice by facsimile. Upon delivery of the duly completed and executed Exercise Form to
the Company by facsimile or otherwise, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect to which this Warrant has been
Exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or
the date of delivery of the certificates evidencing such Warrant Shares as the case may be.

(c) Delivery of Common Stock Upon Exercise. Within three (3) business days after any Date of
Exercise (the “Delivery Period”), the Company shall issue and deliver (or cause its Transfer Agent
so to issue and deliver) in accordance with the terms hereof to or upon the order of the Holder
that number of shares of Common Stock (“Exercise Shares”) for the portion of this Warrant Exercised
as shall be determined in accordance herewith. Upon the Exercise of this Warrant or any part
thereof, the Company shall, at its own cost and expense, take all necessary action, including
obtaining and delivering, an opinion of counsel to assure that the Transfer Agent shall issue stock
certificates in the name of Holder (or its nominee) or such other persons as designated by Holder
and in such denominations to be specified in the Exercise Form representing the number of shares of
Common Stock issuable upon such Exercise. Holder may not revoke its Exercise or alter its
designations following delivery of the Exercise Notice except as otherwise expressly provided
herein. The Company warrants that no instructions other than these instructions have been or will
be given to the Transfer Agent and that, unless waived by the Holder, this Warrant and the Exercise
Shares will be free-trading, and freely transferable, and will not contain a legend restricting the
resale or transferability of the Exercise Shares if the Unrestricted Conditions (as defined below)
are met.

(d) Delivery Failure. In addition to any other remedies which may be available to the Holder, in
the event that the Company fails to use its best efforts to effect delivery of the Exercise Shares
by the end of the Delivery Period (a “Delivery Failure”), the Holder will be entitled prior to
delivery of the Exercise Shares to revoke all or part of the relevant Exercise Form by delivery of
a notice to such effect to the Company whereupon the Company and the Holder shall each be restored
to their respective positions immediately prior to the delivery of such notice, except that the
liquidated damages described herein shall be payable through the date notice of revocation or
rescission is given to the Company.

(e) Legends.

(i) Restrictive Legend. The Holder understands that until such time as this Warrant and the
Exercise Shares have been registered under the Securities Act as contemplated by the Registration
Rights Agreement or otherwise may be sold pursuant to Rule 144 or Rule 144(k) under the Securities
Act or an exemption from registration under the Securities Act without any restriction as to the
number of securities as of a particular date that can then be immediately sold, this Warrant and
the Exercise Shares may bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for such securities):

	 	 	“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR PURSUANT TO AN EXEMPTION FROM

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	 	 	REGISTRATION UNDER SAID ACT INCLUDING, WITHOUT LIMITATION, PURSUANT TO RULES 144 OR 144A
UNDER SAID ACT OR PURSUANT TO A PRIVATE SALE EFFECTED UNDER APPLICABLE FORMAL OR INFORMAL
SEC INTERPRETATION OR GUIDANCE, SUCH AS A SO-CALLED “4(1) AND A HALF” SALE.”
	 
	 	 	“THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF
DECEMBER 10, 2007, AS AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND A CERTAIN HOLDER OF
ITS OUTSTANDING SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.”

(ii) Removal of Restrictive Legends. This Warrant and certificates evidencing the Exercise
Shares shall not be required to contain any legend restricting the transfer thereof (including the
legend set forth above in subsection 2(e)(i)): (A) while a registration statement (including a
Registration Statement, as defined in the Registration Rights Agreement) covering the sale or
resale of such security is effective under the Securities Act, or (B) following any sale of such
Warrant and/or Exercise Shares pursuant to Rule 144, or (C) if such Warrant and/or Exercise Shares
are eligible for sale under Rule 144(k), or (D) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and pronouncements issued by
the staff of the SEC) (collectively, the “Unrestricted Conditions”). Subject to Section 2(e)(iii),
the Company shall use best efforts to take all actions necessary to effect the issuance of this
Warrant and Exercise Shares without a restrictive legend or removal of the legend hereunder. If
the Unrestricted Conditions are met at the time of issuance of this Warrant and/or Exercise Shares,
then such Warrant and/or Exercise Shares shall be issued free of all legends. The Company agrees
that following the Effective Date or at such time as the Unrestricted Conditions are met or such
legend is otherwise no longer required under this Section 2(e), it will, no later than three (3)
Trading Days following the delivery (the “Unlegended Shares Delivery Deadline”) by the Holder to
the Company or the Transfer Agent of this Warrant and a certificate representing Exercise Shares,
as applicable, issued with a restrictive legend (such third Trading Day, the “Legend Removal
Date”), deliver or cause to be delivered to such Holder this Warrant and/or a certificate (or
electronic transfer) representing such shares that is free from all restrictive legends. For
purposes hereof, “Effective Date” shall mean the date that the Registration Statement that the
Company is required to file pursuant to the Registration Rights Agreement has been declared
effective by the SEC.

(iii) Sale of Unlegended Shares. Holder agrees that the removal of the restrictive legend
from this Warrant and any certificates representing Exercise Shares as set forth in Section 2(e)(i)
above is predicated upon the Company’s reliance that the Holder will sell this Warrant and/or any
Exercise Shares pursuant to either the registration requirements of the Securities Act, including
any applicable prospectus delivery requirements, or an exemption therefrom, and that if such
securities are sold pursuant to a Registration Statement, they will be sold in compliance with the
plan of distribution set forth therein.

(f) Cancellation of Warrant. This Warrant shall be canceled upon the full Exercise of this Warrant,
and, as soon as practical after the Date of Exercise, Holder shall be entitled to receive Common
Stock for the number of shares purchased upon such Exercise of this Warrant, and if this Warrant is
not Exercised in full, Holder shall be entitled to receive a new Warrant (containing terms
identical to this Warrant) representing any unexercised portion of this Warrant in addition to such
Common Stock.

(g) Holder of Record. Except as set forth in Sections 5(a) and 5(j) hereof, nothing in this Warrant
shall be construed as conferring upon Holder any rights as a stockholder of the Company.

(h) Delivery of Electronic Shares. In lieu of delivering physical certificates representing the
Common Stock issuable upon Exercise or legend removal, provided the Company’s Transfer Agent is
participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”)
program and provided further that the Holder provides the Transfer Agent with information required
in order to issue shares of Common Stock to the Holder electronically, upon written request of the
Holder, the Company shall use its best efforts to cause its Transfer Agent to electronically
transmit the Common Stock issuable upon Exercise to the Holder by crediting the account of the
Holder’s prime broker with DTC through its Deposit Withdrawal Agent Commission (DWAC) system. The
time periods for delivery and penalties described herein shall apply to the electronic transmittals
described herein. Any delivery not effected by electronic transmission shall be effected by
delivery of physical certificates.

(i) Buy-In. In addition to any other rights available to the Holder, if the Company fails to
cause its Transfer Agent to transmit to the Holder a certificate or certificates, or electronic
shares through DWAC, representing the Exercise Shares pursuant to an Exercise on or before the
Delivery Period, and if after such date the Holder is required by its broker to purchase (in an
open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the Exercise Shares which the
Holder was entitled to receive upon such Exercise (a “Buy-In”), then the Company shall (1) pay in
cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Exercise Shares that the Company was required to deliver to the
Holder in connection with the Exercise not later than the expiration of the Delivery Period, times
(B) the price at which the sell order giving rise to such purchase obligation was executed, and (2)
at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of
Exercise Shares for which such Exercise was not honored or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely complied with its
Exercise and delivery obligations under Section 2(c). For example, if the Holder purchases Common
Stock having a total purchase

3

 

price of $11,000 to cover a Buy-In with respect to an attempted Exercise to cover the sale of
Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the amounts payable to the
Holder in respect of the Buy-In, together with applicable confirmations and other evidence
reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock upon Exercise of the Warrant as
required pursuant to the terms hereof.

3. Payment of Warrant Exercise Price.

(a) Exercise Price. The Exercise Price (“Exercise Price”) shall initially equal $8.36 per share
subject to adjustment pursuant to the terms hereof, including but not limited to Section 5 below.

Payment of the Exercise Price may be made by either of the following, or a combination thereof, at
the election of Holder:

(i) Cash Exercise: The Holder may exercise this Warrant in cash, bank or cashier’s check or wire
transfer (a “Cash Exercise”); or

(ii) Cashless Exercise: The Holder, at its option, may exercise this Warrant in a cashless exercise
transaction. In order to effect a Cashless Exercise, the Holder shall surrender this Warrant at the
principal office of the Company together with notice of cashless election, in which event the
Company shall issue Holder a number of shares of Common Stock computed using the following formula
(a “Cashless Exercise”):

X = Y (A-B)/A

where: X = the number of shares of Common Stock to be issued to Holder.

	 	 	Y = the number of shares of Common Stock for which this Warrant is being Exercised.
	 
	 	 	A = the Market Price of one (1) share of Common Stock (for purposes of this Section 3(ii),
where “Market Price,” as of any date, means the Volume Weighted Average Price (as defined
herein) of the Company’s Common Stock during the ten (10) consecutive Trading Day period
immediately preceding the date in question.
	 
	 	 	B = the Exercise Price.
	 
	 	 	As used herein, the “Volume Weighted Average Price” for any security as of any date means the
volume weighted average sale price on The NASDAQ Global Market (“NASDAQ”) as reported by, or
based upon data reported by, Bloomberg Financial Markets or an equivalent, reliable reporting
service mutually acceptable to and hereafter designated by holders of a majority in interest of
the Warrants and the Company (“Bloomberg”) or, if NASDAQ is not the principal trading market
for such security, the volume weighted average sale price of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by
Bloomberg, or, if no volume weighted average sale price is reported for such security, then the
last closing trade price of such security as reported by Bloomberg, or, if no last closing
trade price is reported for such security by Bloomberg, the average of the bid prices of any
market makers for such security that are listed in the over the counter market by the National
Association of Securities Dealers or in the “pink sheets” by the National Quotation Bureau,
Inc. If the Volume Weighted Average Price cannot be calculated for such security on such date
in the manner provided above, the volume weighted average price shall be the fair market value
as mutually determined by the Company and the Holders of a majority in interest of the Warrants
being Exercised for which the calculation of the volume weighted average price is required in
order to determine the Exercise Price of such Warrants. “Trading Day” shall mean any day on
which the Common Sock is traded for any period on NASDAQ, or on the principal securities
exchange or other securities market on which the Common Stock is then being traded.

For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended, understood and
acknowledged that the Common Stock issuable upon Exercise of this Warrant in a cashless Exercise
transaction shall be deemed to have been acquired at the time this Warrant was issued. Moreover, it
is intended, understood and acknowledged that the holding period for the Common Stock issuable upon
Exercise of this Warrant in a cashless Exercise transaction shall be deemed to have commenced on
the date this Warrant was issued.

( b) Dispute Resolution. In the case of a dispute as to the determination of the closing
price or the Volume Weighted Average Price of the Company’s Common Stock or the arithmetic
calculation of the Exercise Price, Market Price or any Redemption Price, the Company shall submit
the disputed determinations or arithmetic calculations via facsimile within two (2) business days
of receipt, or deemed receipt, of the Exercise Notice or Redemption Notice, or other event giving
rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable
to agree upon such determination or calculation within two (2) business days of such disputed
determination or arithmetic calculation being submitted to the Holder, then the Company shall,
within two (2) business days submit via facsimile (i) the disputed determination of the closing
price or the Volume Weighted Average Price of the Company’s Common Stock to an independent,
reputable investment bank selected by the Company and approved by the Holder, which approval shall
not be unreasonably withheld or (ii) the disputed arithmetic calculation of the Exercise Price,
Market Price or any Major Transaction Warrant Redemption Price to the Company’s independent,
outside accountant. The Company shall cause the investment

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bank or the accountant, as the case may be, to perform the determinations or calculations and
notify the Company and the Holder of the results no later than five (5) business days from the time
it receives the disputed determinations or calculations. If the determination or calculation of
such investment bank or accountant is equal to the determination or calculation of the Company,
then the expenses of the investment bank or accountant shall be borne by the Holder. Otherwise such
expenses shall be borne by the Company. Such investment bank’s or accountant’s determination or
calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

4. Transfer and Registration.

(a) Transfer Rights. Subject to the provisions of Section 8 of this Warrant, this Warrant may be
transferred on the books of the Company, in whole or in part, in person or by attorney, upon
surrender of this Warrant properly completed and endorsed. This Warrant shall be canceled upon such
surrender and, as soon as practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant transferred, and
Holder shall be entitled to receive a new Warrant as to the portion hereof retained.

(b) Registrable Securities. The Common Stock issuable upon the Exercise of this Warrant have
registration rights pursuant to the Registration Rights Agreement.

5. Anti-Dilution Adjustments; Additional Adjustments; Purchase Rights.

(a) Participation. The Holder, as the holder of this Warrant, shall be entitled to receive such
dividends paid and distributions of any kind made to the holders of Common Stock of the Company to
the same extent as if the Holder had Exercised this Warrant into Common Stock (without regard to
any limitations on exercise herein or elsewhere and without regard to whether or not a sufficient
number of shares are authorized and reserved to effect any such exercise and issuance) and had held
such shares of Common Stock on the record date for such dividends and distributions. Payments under
the preceding sentence shall be made concurrently with the dividend or distribution to the holders
of Common Stock.

(b) Recapitalization or Reclassification. If the Company shall at any time effect a
recapitalization, reclassification or other similar transaction of such character that the shares
of Common Stock shall be changed into or become exchangeable for a larger or smaller number of
shares, then upon the effective date thereof, the number of shares of Common Stock which Holder
shall be entitled to purchase upon Exercise of this Warrant shall be increased or decreased, as the
case may be, in direct proportion to the increase or decrease in the number of shares of Common
Stock by reason of such recapitalization, reclassification or similar transaction, and the Exercise
Price shall be, in the case of an increase in the number of shares, proportionally decreased and,
in the case of decrease in the number of shares, proportionally increased. The Company shall give
Holder the same notice it provides to holders of Common Stock of any transaction described in this
Section 5(b).

(c) Rights Upon Major Transaction.

(i) Major Transaction. In the event that a Major Transaction (as defined below) occurs, the Holder,
at its option, may require the Company to redeem the Holder’s outstanding Warrants in accordance
with Section 5(c)(iii) below. Otherwise, a Major Transaction shall be treated as an Assumption (as
defined below) in accordance with Section 5(c)(ii) below unless the Holder waives its rights under
this Section 5(c) with respect to that Major Transaction. Each of the following events shall
constitute a “Major Transaction”:

(A) a consolidation, merger, exchange of shares, recapitalization, reorganization, business
combination or other similar event, (1) following which the holders of Common Stock immediately
preceding such consolidation, merger, exchange, recapitalization, reorganization, combination or
event either (a) no longer hold a majority of the shares of Common Stock or (b) no longer have the
ability to elect a majority of the board of directors of the Company or (2) as a result of which
shares of Common Stock shall be changed into (or the shares of Common Stock become entitled to
receive) the same or a different number of shares of the same or another class or classes of stock
or securities of another entity (collectively, a “Change of Control Transaction”);

(B) the sale or transfer of significant assets of the Company, which shall for purposes of this
subsection (B) mean a sale or transfer of assets in one transaction or a series of related
transactions for a purchase price of more than $75,000,000 or a sale or transfer of more than 48%
of the Company’s assets in one transaction or a series of related transactions;

(C) a purchase, tender or exchange offer made to the holders of outstanding shares of Common Stock,
such that following such purchase, tender or exchange offer a Change of Control Transaction shall
have occurred;

(D) the liquidation, bankruptcy, insolvency, dissolution or winding-up (or the occurrence of any
analogous proceeding) affecting the Company; or

(E) the shares of Common Stock cease to be listed, traded or publicly quoted on the NASDAQ Global
Market and are not promptly re-listed or requoted on either the New York Stock Exchange, the
American Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Capital Market.

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(ii) Assumption. The Company shall not enter into or be party to a Major Transaction (not including
one defined in subsection (i)(E) above, to which this subsection (ii) shall be inapplicable) unless
(i) any Person purchasing the Company’s assets or Common Stock, or any successor entity resulting
from such Major Transaction (in each case, a “Successor Entity”), assumes in writing all of the
obligations of the Company under this Warrant, the Facility Agreement and the Registration Rights
Agreement in accordance with the provisions of this Section 5(c)(ii) pursuant to written
agreements in form and substance satisfactory to the Holder and approved by the Holder prior to
such Major Transaction, including agreements to deliver to each holder of Warrants in exchange for
such Warrants a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to the Warrants, including, without limitation, representing the
appropriate number of shares of the Successor Entity, having similar exercise rights as the
Warrants (including but not limited to a similar Exercise Price and similar Exercise Price
adjustment provisions based on the price per share or conversion ratio to be received by the
holders of Common Stock in the Major Transaction) and similar registration rights as provided by
the Registration Rights Agreement, satisfactory to the Holder and (ii) any Successor Entity
(including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or
listed for trading on an Eligible Market. Upon the occurrence of any Major Transaction, any
Successor Entity shall succeed to, and be substituted for (so that from and after the date of such
Major Transaction, the provisions of this Warrant and the Registration Rights Agreement referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the Company under this Warrant with
the same effect as if such Successor Entity had been named as the Company herein. Upon consummation
of the Major Transaction, the Successor Entity shall deliver to the Holder confirmation that there
shall be issued upon exercise or redemption of this Warrant at any time after the consummation of
the Major Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or
other property) issuable upon the exercise of the Warrants prior to such Major Transaction, such
shares of publicly traded common stock (or their equivalent) of the Successor Entity, as adjusted
in accordance with the provisions of this Warrant. The provisions of this Section shall apply
similarly and equally to successive Major Transactions and shall be applied without regard to any
limitations on the exercise of this Warrant other than any applicable beneficial ownership
limitations. Any assumption of Company obligations under this paragraph shall be referred to
herein as an “Assumption”. Notwithstanding anything in this Section 5(c)(ii) to the contrary, (i)
the Holder shall not have any rights under this Section 5(c)(ii) with respect to any Major
Transaction that is structured as a transaction in connection with which the Company or its
stockholders receive all cash and (ii) in the case of any Major Transaction that provides for the
payment of both cash and securities to the Company and its stockholders, the Holder shall only have
rights under this Section 5(c)(ii) with respect to the percentage of Warrants then owned by the
Holder equal to the percentage of the consideration represented by the non-cash portion of the
consideration.

(iii) Notice; Major Transaction Redemption Right. At least thirty (30) days prior to the
consummation of any Major Transaction, but, in any event, on the first to occur of (x) the date of
the public announcement of such Major Transaction if such announcement is made before 4:00 p.m.,
New York City time, or (y) the day following the public announcement of such Major Transaction if
such announcement is made on and after 4:00 p.m., New York City time, the Company shall deliver
written notice thereof via facsimile and overnight courier to the Holder (a “Major Transaction
Notice”). At any time during the period beginning after the Holder’s receipt of a Major Transaction
Notice and ending five (5) Trading Days prior to the consummation of such Major Transaction, the
Holder may require the Company to redeem (a “Redemption Upon Major Transaction”) all or any portion
of this Warrant by delivering written notice thereof (“Major Transaction Redemption Notice”) to the
Company, which Major Transaction Redemption Notice shall indicate the portion of the principal
amount (the “Redemption Principal Amount”) of the Warrant that the Holder is electing to have
redeemed. The portion of this Warrant subject to redemption pursuant to this Section 5(c)(iii)
shall be redeemed by the Company in cash at a price (the “Major Transaction Warrant Redemption
Price”) equal to the calculation of the “Intrinsic Value” as determined in accordance with Schedule
I hereto of the remaining outstanding portion of the Warrant.

(iv) Escrow; Payment of Major Transaction Warrant Redemption Price. Following the receipt of a
Major Transaction Redemption Notice from the Holder, the Company shall not effect a Major
Transaction unless it shall first place into an escrow account with an independent escrow agent, at
least three (3) business days prior to the closing date of the Major Transaction (the “Major
Transaction Escrow Deadline”), an amount equal to the Major Transaction Warrant Redemption Price.
Concurrently upon closing of any Major Transaction, the Company shall pay or shall instruct the
escrow agent to pay the Major Transaction Warrant Redemption Price to the Holder. For purposes of
determining the amount required to be placed in escrow pursuant to the provisions of this
subsection (iv) and without affecting the amount of the actual Major Transaction Warrant Redemption
Price, the calculation of the price referred to in clause (1) of the first column of Schedule 1
hereto with respect to Stock Price shall be determined based on the Closing Market Price (as
defined herein) of the Common Stock on the Trading Day immediately preceding the date that the
funds are deposited with the escrow agent.

(v) Injunction. Following the receipt of a Major Transaction Redemption Notice from the Holder, in
the event that the Company attempts to consummate a Major Transaction without placing the Major
Transaction Warrant Redemption Price in escrow in accordance with subsection (iv) above or without
payment of the Major Transaction Warrant Redemption Price to the Holder upon consummation of such
Major Transaction, the Holder shall have the right to apply for an injunction in any state or
federal courts sitting in the City of New York, borough of Manhattan to prevent the closing of such
Major Transaction until the Major Transaction Redemption Price is paid to the Holder, in full.

Redemptions required by this Section 5(c) shall be made in accordance with the provisions of
Section 12 and shall have priority to payments to holders of Common Stock in connection with a
Major Transaction. To the extent redemptions required by this

6

 

Section 5(c)(iii) are deemed or determined by a court of competent jurisdiction to be prepayments of the
Warrant by the Company, such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding anything to the contrary in this Section 5, until the Major Transaction Redemption
Price is paid in full, this Warrant may be exercised, in whole or in part, by the Holder into
shares of Common Stock, or in the event the Exercise Date is after the consummation of the Major
Transaction, shares of publicly traded common stock (or their equivalent) of the Successor Entity
pursuant to Section 5(c). The parties hereto agree that in the event of the Company’s redemption of
any portion of the Warrant under this Section 5(c), the Holder’s damages would be uncertain and
difficult to estimate because of the parties’ inability to predict future interest rates and the
uncertainty of the availability of a suitable substitute investment opportunity for the Holder.
Accordingly, any redemption premium due under this Section 5(c) is intended by the parties to be,
and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment
opportunity and not as a penalty.

For purposes hereof:

“Eligible Market” means the over the counter Bulletin Board, the New York Stock Exchange, Inc., the
NYSE Arca, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market or
the American Stock Exchange.

“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is quoted or listed on an Eligible
Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity
with the largest public market capitalization as of the date of consummation of a Major
Transaction.

“Person” means an individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.

(d) Exercise Price Adjusted. As used in this Warrant, the term “Exercise Price” shall mean the
purchase price per share specified in Section 3 of this Warrant, until the occurrence of an event
stated in this Section 5 or otherwise set forth in this Warrant, and thereafter shall mean said
price as adjusted from time to time in accordance with the provisions of said subsection. No such
adjustment under this Section 5 shall be made unless such adjustment would change the Exercise
Price at the time by $.01 or more; provided, however, that all adjustments not so made shall be
deferred and made when the aggregate thereof would change the Exercise Price at the time by $.01 or
more. No adjustment made pursuant to any provision of this Section 5 shall have the net effect of
increasing the Exercise Price in relation to the split adjusted and distribution adjusted price of
the Common Stock. Notwithstanding anything to the contrary in this Warrant, so long as any of the
Company’s Convertible Senior Subordinated Zero-Coupon Promissory Notes issued in December 2006 (the
“Senior Notes”) continue to remain outstanding, if any adjustment to the Exercise Price pursuant to
Section 5 or otherwise set forth in this Warrant would otherwise result in an Exercise Price of
less than $6.00, then the Exercise Price shall be adjusted to $6.00; provided, however, the
foregoing limitation on adjustments to the Exercise Price shall not apply to adjustments pursuant
to Section 5(b) hereof.

(e) Adjustments: Additional Shares, Securities or Assets. In the event that at any time, as a
result of an adjustment made pursuant to this Section 5 or otherwise, Holder shall, upon Exercise
of this Warrant, become entitled to receive shares and/or other securities or assets (other than
Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets; and thereafter the
number of such shares and/or other securities or assets shall be subject to adjustment from time to
time in a manner and upon terms as nearly equivalent as practicable to the provisions of this
Section 5.

(f) Adjustment of Exercise Price upon Issuance of Common Stock, Options, Convertible Securities,
Etc. Subject to the limitations contained in Section 5(d) hereof (i) If at any time after the Date
of Issuance for so long as any Warrants are outstanding, the Company (A) issues or sells any Common
Stock, Convertible Securities, warrants, or Options or (B) directly or indirectly effectively
reduces the conversion, exercise or exchange price for any Convertible Securities or Options which
are currently outstanding, at or to an effective Per Share Selling Price (as defined below) which
is less than the greater of (I) the closing sale price per share of the Common Stock on the
Eligible Market which the Common Stock is traded on the Trading Day immediately preceding such
issue or sale (“Fair Market Price”), or (II) the Exercise Price, then in each such case the
Exercise Price in effect immediately prior to such issue or sale date, as applicable, shall be
automatically reduced effective concurrently with such issue or sale to an amount determined by
multiplying the Exercise Price then in effect by a fraction, (x) the numerator of which shall be
the sum of (1) the number of shares of Common Stock outstanding immediately prior to such issue or
sale, plus (2) the number of shares of Common Stock which the aggregate consideration received by
the Company for such additional shares would purchase at such Fair Market Price or Exercise Price,
as the case may be, and (y) the denominator of which shall be the number of shares of Common Stock
of the Company outstanding immediately after such issue or sale. The foregoing provision shall not
apply to any issuances or sales of Common Stock, Convertible Securities or Options (i) pursuant to
any Convertible Securities or Options currently outstanding on the date hereof in accordance with
the terms of such Convertible Securities in effect on the date hereof provided that such securities
have not been amended since the date hereof to directly or indirectly effectively reduce the
conversion, exercise or exchange price for any Convertible Securities or Options which are
currently outstanding, or (ii) to the extent that the total number of shares of Common Stock and
the shares underlying all Convertible Securities and Options so issued in any 12 month period does
not exceed an amount equal to 15% of the number of shares of Common Stock issued and outstanding as
of the first day of such 12 month period, subject to appropriate adjustment to reflect any stock
splits, recapitalizations, reclassifications or other similar events occurring after the Date of
Issuance.

7

 

For the purposes of the foregoing adjustments, in the case of the issuance of any Convertible
Securities or Options, the maximum number of shares of Common Stock issuable upon exercise,
exchange or conversion of such Convertible Securities or Options shall be deemed to be outstanding,
provided that no further adjustment shall be made upon the actual issuance of Common Stock upon
exercise, exchange or conversion of such Convertible Securities or Options, and provided further
that to the extent such Convertible Securities or Options expire or terminate unconverted or
unexercised, then at such time the Exercise Price shall be readjusted as if such portion of such
Convertible Securities or Options had not been issued.

For purposes of this Section 5(f), if an event occurs that triggers more than one of the above
adjustment provisions, then only one adjustment shall be made and the calculation method which
yields the greatest downward adjustment in the Exercise Price shall be used.

For purposes of determining the adjusted Exercise Price under this Section 5(f), the following
shall be applicable:

(i) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of
entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or
in Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the issue or sale of the Common
Stock deemed to have been issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of subscription or purchase, as
the case may be.

(ii) Other Events. If any event occurs of the type contemplated by the provisions of this Section
5(f) but not expressly provided for by such provisions (including, without limitation, the granting
of stock appreciation rights, phantom stock rights or other rights with equity features), then the
Company’s Board of Directors will make an appropriate adjustment in the Exercise Price so as to
protect the rights of the Holder under this Warrant; provided that no such adjustment will increase
the Exercise Price as otherwise determined pursuant to this Section 5(f).

For purposes hereof:

“Convertible Securities” means any stock or securities (other than Options) directly or indirectly
convertible into or exercisable or exchangeable for Common Stock.

“Options” means any rights, warrants or options to subscribe for or purchase Common Stock or
Convertible Securities.

“Per Share Selling Price” shall include the amount actually paid by third parties for each
share of Common Stock in a sale or issuance by the Company. A sale of shares of Common Stock shall
include the sale or issuance of Convertible Securities or Options, and in such circumstances the
Per Share Selling Price of the Common Stock covered thereby shall also include the exercise,
exchange or conversion price thereof (in addition to the consideration received by the Company upon
such sale or issuance). In case of any such security issued in a transaction in which the purchase
price or the conversion, exchange or exercise price is directly or indirectly subject to adjustment
or reset based on a future date, future trading prices of the Common Stock, specified or contingent
events directly or indirectly related to the business of the Company or the market for the Common
Stock, or otherwise (but excluding standard stock split anti-dilution provisions or
weighted-average anti-dilution provisions similar to that set forth herein, provided that any
actual reduction of such price under any such security pursuant to such weighted-average
anti-dilution provision shall be included and cause an adjustment hereunder), the Per Share Selling
Price shall be deemed to be the lowest conversion, exchange, exercise or reset price at which such
securities are converted, exchanged, exercised or reset or might have been converted, exchanged,
exercised or reset, or the lowest adjustment, as the case may be, over the life of such securities.
If shares are issued for a consideration other than cash, the Per Share Selling Price shall be the
fair value of such consideration as determined in good faith by independent certified public
accountants mutually acceptable to the Company and the Holder. In the event the Company directly
or indirectly effectively reduces the conversion, exercise or exchange price for any Convertible
Securities or Options which are currently outstanding, then the Per Share Selling Price shall equal
such effectively reduced conversion, exercise or exchange price .

(g) Subsequent Rights Offerings. Subject to the limitations contained in Section 5(d) hereof,
if the Company, at any time prior to the date that all of the Warrants have been Exercised,
redeemed or otherwise satisfied in accordance with their terms, shall issue rights, options or
warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or
purchase shares of Common Stock at a price per share (the “Base Rights Offering Price”) that is
lower than the Volume Weighted Average Price on the record date referenced below, then the Exercise
Price then in effect shall be reduced to the Base Rights Offering Price. Such adjustment shall be
made whenever such rights or warrants are issued, and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such rights, options or
warrants. No adjustment shall be made hereunder if such adjustment would result in an increase of
the Exercise Price then in effect.

(h) Additional Adjustment to Exercise Price. If on the 18 month anniversary of the Date of
Issuance, the Applicable Market Price is less than $6.00 per share, the Exercise Price shall be
reduced to $6.00. For purposes hereof “Applicable Market Price” means the average closing price of
the Common Stock on NASDAQ, or, if NASDAQ is not the principal trading market for the Common Stock,
the principal securities exchange or other securities market on which the Common Stock is then
being traded, for the 10 Trading Days
immediately preceding the 18 month anniversary of the Date of Issuance. The provisions of this
subsection (h) shall be appropriately adjusted to reflect stock splits, recapitalizations,
reclassifications or other similar events.

8

 

(i) Notice of Adjustments. Whenever the Exercise Price is adjusted pursuant to the terms of this
Warrant, the Company shall promptly mail to the Holder a notice (an “Exercise Price Adjustment
Notice”) setting forth the Exercise Price after such adjustment and setting forth a statement of
the facts requiring such adjustment. The Company shall, upon the written request at any time of the
Holder, furnish to such Holder a like Warrant setting forth (i) such adjustment or readjustment,
(ii) the Exercise Price at the time in effect and (iii) the number of shares of Common Stock and
the amount, if any, of other securities or property which at the time would be received upon
Exercise of the Warrant. For purposes of clarification, whether or not the Company provides an
Exercise Price Adjustment Notice pursuant to this Section 5(i), upon the occurrence of any event
that leads to an adjustment of the Exercise Price, the Holders are entitled to receive a number of
Exercise Shares based upon the new Exercise Price, as adjusted, for exercises occurring on or after
the date of such adjustment, regardless of whether a Holder accurately refers to the adjusted
Exercise Price in the Exercise Form.

(j) Purchase Rights. In addition to any other adjustments described herein, if at any time the
Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any class of shares of
Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the proportionate number of shares of Common Stock acquirable upon
complete exercise of this Warrant (without regard to any limitations on the exercise of this
Warrant) immediately before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

6. Fractional Interests.

No fractional shares or scrip representing fractional shares shall be issuable upon the Exercise of
this Warrant, but on Exercise of this Warrant, Holder may purchase only a whole number of shares of
Common Stock. If, on Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall
be disregarded and the number of shares of Common Stock issuable upon Exercise shall be the next
higher number of shares.

7. Reservation of Shares.

From and after the date hereof, the Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted therefor as herein
above provided) as shall be sufficient for the Exercise of this Warrant and payment of the Exercise
Price. If at any time the number of shares of Common Stock authorized and reserved for issuance is
below the number of shares sufficient for the Exercise of this Warrant (a “Share Authorization
Failure”) (based on the Exercise Price in effect from time to time), the Company will promptly take
all corporate action necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of stockholders to authorize additional shares to
meet the Company’s obligations under this Section 7, in the case of an insufficient number of
authorized shares, and using its best efforts to obtain stockholder approval of an increase in such
authorized number of shares. The Company covenants and agrees that upon the Exercise of this
Warrant, all shares of Common Stock issuable upon such Exercise shall be duly and validly issued,
fully paid and nonassessable and not subject to preemptive rights, rights of first refusal or
similar rights granted or provided by the Company to any person or entity.

8. Restrictions on Transfer.

(a) Registration or Exemption Required. Subject to the representations and warranties of the Holder
set forth in Section ___of the Facility Agreement, this Warrant has been issued in a transaction
exempt from the registration requirements of the Securities Act by virtue of Regulation D and
exempt from state registration under applicable state laws. The Warrant and the Common Stock
issuable upon the Exercise of this Warrant may not be pledged, transferred, sold or assigned except
pursuant to an effective registration statement or an exemption to the registration requirements of
the Securities Act and applicable state laws including, without limitation, a so-called “4(1) and a
half” transaction.

(b) Assignment. Subject to Section 8(a), the Holder may sell, transfer, assign, pledge or otherwise
dispose of this Warrant, in whole or in part. Holder shall deliver a written notice to Company,
substantially in the form of the Assignment attached hereto as Exhibit B, indicating the
person or persons to whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within three (3) business days
(the “Transfer Delivery Period”), and shall deliver to the assignee(s) designated by Holder a
Warrant or Warrants of like tenor and terms for the appropriate number of shares. This Warrant and
the rights evidenced hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of all
Holders from time to time of this Warrant, and shall be enforceable by any such Holder. For
avoidance of doubt, in the event Holder notifies the Company that such sale or transfer is a so
called “4(1) and half” transaction, the parties hereto agree that a legal opinion from outside
counsel for the Holder delivered to counsel
for the Company substantially in the form attached hereto as Exhibit C shall be the only
requirement to satisfy an exemption from registration under the Securities Act to effectuate such
“4(1) and half” transaction.

9

 

9. Noncircumvention. The Company hereby covenants and agrees that the Company will not, by
amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of
assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, and will at all times in good faith carry out all the provisions of this
Warrant and take all action as may be reasonably required to protect the rights of the Holder.
Without limiting the generality of the foregoing, the Company (i) shall not increase the par value
of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price
then in effect, and (ii) shall take all such actions as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant.

10. Events of Failure; Definition of Black Scholes Value.

(a) Definition.

The occurrence of each of the following shall be considered to be an “Event of Failure.”

	 	 	(i) A Delivery Failure occurs, where a “Delivery Failure” shall be deemed to have
occurred if the Company fails to use its best efforts to deliver Exercise Shares to
the Holder within any applicable Delivery Period;
	 
	 	 	(ii) A Legend Removal Failure occurs, where a “Legend Removal Failure” shall be
deemed to have occurred if the Company fails to use its best efforts to issue this
Warrant and/or Exercise Shares without a restrictive legend, or fails to use its best
efforts to remove a restrictive legend, when and as required under Section 2(e)
hereof;
	 
	 	 	(iii) a Transfer Delivery Failure occurs, where a “Transfer Delivery Failure” shall
be deemed to have occurred if the Company fails to use its best efforts to deliver a
Warrant within any applicable Transfer Delivery Period; and
	 
	 	 	(iv) a Registration Failure (as defined below).

For purpose hereof, “Registration Failure” means that (A) the Company fails to file with the SEC on
or before the Filing Deadline (as defined in the Registration Rights Agreement) any Registration
Statement required to be filed pursuant to Section 2(a) of the Registration Rights Agreement, or
(B) the Company fails to use its best efforts to obtain effectiveness with the SEC, prior to the
Registration Deadline (as defined in the Registration Rights Agreement), and, if such Registration
Statement is not so filed prior to the Registration Deadline, as soon as possible thereafter, of
any Registration Statement (as defined in the Registration Rights Agreement) that is required to be
filed pursuant to Section 2(a) of the Registration Rights Agreement, or fails to use best efforts
to keep such Registration Statement current and effective as required in Section 3 of the
Registration Rights Agreement, (C) the Company fails to file any amendment to the Registration
Statement, or any additional Registration Statement required to be filed pursuant to Section 3(b)
of the Registration Rights Agreement within twenty (20) days of the applicable Registration Trigger
Date (as defined in the Registration Rights Agreement), or fails to use its best efforts to cause
such amendment and/or new Registration Statement to become effective as soon as practicable
thereafter, or (iv) any Registration Statement required to be filed under the Registration Rights
Agreement, after its initial effectiveness and during the Registration Period (as defined in the
Registration Rights Agreement), lapses in effect or sales of all of the Registrable Securities (as
defined in the Registration Rights Agreement) cannot otherwise be made thereunder (whether by
reason of the Company’s failure to amend or supplement the prospectus included therein in
accordance with the Registration Rights Agreement, the Company’s failure to file and use best
efforts to obtain effectiveness with the SEC of an additional Registration Statement or amended
Registration Statement required pursuant to Section 3 of the Registration Rights Agreement or
otherwise), or (D) the Company fails to provide a commercially reasonable written response to any
comments to any Registration Statement submitted by the SEC within twenty (20) days of the date
that such SEC comments are received by the Company.

(b) Failure Payments; Black-Scholes Determination. The Company understands that any Event of
Failure (as defined above) could result in economic loss to the Holder. In the event that any Event
of Failure occurs, as compensation to the Holder for such loss, the Company agrees to pay (as
liquidated damages and not as a penalty) to the Holder an amount payable (i) in cash, if the Senior
Notes are no longer outstanding, or (ii) if any of the Senior Notes are outstanding, in shares of
Common Stock that are valued for these purposes at 95% of the Volume Weighted Average Price on the
date of such calculation (“Failure Payments”), in each case, equal to 18% per annum (or the maximum
rate permitted by applicable law, whichever is less) of the Black-Scholes value (as determined
below) of the remaining unexercised portion of this Warrant on the date of such Event of Failure
(as recalculated on the first business day of each month thereafter for as long as Failure Payments
shall continue to accrue), which shall accrue daily from the date of such Event of Failure until
the Event of Failure is cured, accruing daily and compounded monthly, provided, however, in the
event the Failure Payments are paid in shares of Common Stock, the Holder shall receive up to such
amount of shares of Common Stock such that Holder and its Affiliates and any other persons or
entities whose beneficial ownership of Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act (including shares held by any “group” of which the
Holder is a member, but excluding shares beneficially owned by virtue of the ownership of
securities or rights to acquire securities that have limitations on the right to convert, exercise
or purchase similar to the limitation set forth herein) shall not collectively beneficially own
greater than 9.98% of the total number of shares of the Common Stock then issued and outstanding.
For purposes of clarification, it is
agreed and understood that Failure Payments shall continue to accrue following any Event of Default
until the applicable Default Amount is paid in full.

10

 

Notwithstanding the above, in the event that the Company (i) has, by the Filing Deadline (as
defined the Registration Rights Agreement) filed a Registration Statement (as defined in the
Registration Rights Agreement) covering the number of shares required by the Registration Rights
Agreement, and (ii) has responded in writing to any comments to the Registration Statement that the
Company has received from the SEC, within seven (7) Business Days of such receipt, and nevertheless
the SEC has not declared effective a Registration Statement covering the full number of Warrant
Shares issuable upon exercise of the Warrants by the Registration Deadline (as defined in the
Registration Rights Agreement) then, the Failure Payments attributable to such late Registration
Effectiveness (if any, recognizing that no such Failure Payments shall be due if the Company used
its best efforts to obtain effectiveness with the SEC prior to the Registration Deadline) shall be
reduced from 18% to 15% (calculated as set forth above). The Company shall pay any payments
incurred under this Section in cash or cash equivalent upon demand or, if not demanded sooner,
within five business (5) days of the end of each calendar month. Failure Payments are in addition
to any Shares that the Holder is entitled to receive upon Exercise of this Warrant.

For purposes hereof, the “Black-Scholes” value of a Warrant shall be determined by use of the Black
Scholes Option Pricing Model using the criteria set forth on Schedule 1 hereto.

(c) Payment of Accrued Failure Payments. The accrued Failure Payments for each Event of Failure
shall be paid in immediately available funds on or before the fifth (5th) day of each month
following a month in which Failure Payments accrued. Except as provided in Section 11 hereof,
Failure Payments shall be the Company’s sole and exclusive liability and the Holder’s sole and
exclusive remedy, with respect to such Event of Failure. Notwithstanding the above, if a
particular Event of Failure results in an Event of Default pursuant to Section 11 hereof, then the
Failure Payment, for that Event of Failure only, shall be considered to have been satisfied upon
payment to the Holder of an amount equal to the greater of (i) the Failure Payment, or (ii) the
Default Amount, payable in accordance with Section 11, and, except as provided in Section 11
hereof, the payment by the Company of such greater amount shall constitute the Holder’s sole and
exclusive remedy, and the Company’s sole and exclusive liability, with respect to such Event of
Failure.

(d) Maximum Interest Rate. Nothing contained herein or in any document referred to herein or
delivered in connection herewith shall be deemed to establish or require the payment of a rate of
interest or other charges in excess of the maximum permitted by applicable law. In the event that
the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against amounts owed by the
Company to the Holder and thus refunded to the Company.

11. Default and Redemption.

(a) Events Of Default. Each of the following events shall be considered to be an “Event of
Default,” unless waived by the Holder:

(i) Registration Failure. A Registration Failure occurs and remains uncured for a period of more
than forty five (45) days;

(ii) Delivery Failure. A Delivery Failure (as defined above) occurs and remains uncured for a
period of more than twenty (20) days; or at any time, the Company announces or states in writing
that it will not honor its obligations to issue shares of Common Stock to the Holder upon Exercise
by the Holder of the Exercise rights of the Holder in accordance with the terms of this Warrant;

(iii) Legend Removal Failure. A Legend Removal Failure (as defined above) occurs and remains
uncured for a period of twenty (20) days; and

(iv) Corporate Existence; Major Transaction. The Company has effected a Major Transaction without
paying the Major Transaction Warrant Redemption Price to the Holder pursuant to Section 5(c)(iii)
or, if the Holder did not elect a Redemption Upon Major Transaction, the Company has failed to meet
the Assumption requirements of Section 5(c)(iii) prior to effecting a Major Transaction.

(b) Mandatory Redemption.

(i) Mandatory Redemption Amount. If any Events of Default shall occur then, unless waived by the
Holder, upon the occurrence and during the continuation of any Event of Default, at the option of
the Holder, such option exercisable through the delivery of written notice to the Company by such
Holder (the “Default Notice”), the outstanding amount of this Warrant shall be immediately redeemed
by the Company and the Company shall pay to the Holder (a “Mandatory Redemption”), in full
satisfaction of its obligations hereunder, an amount (A) in cash, if the Senior Notes are no longer
outstanding, or (B) if any of the Senior Notes are outstanding, in shares of Common Stock (the
“Mandatory Redemption Amount” or the “Default Amount”), in each case, equal to the greater of (1)
the Black-Scholes value (as determined in accordance with Section 10(b)) of the remaining
unexercised portion of this Warrant on the date of such Default Notice and (2) the Black-Scholes
value (also as determined in accordance with Section 10(b)) of the remaining unexercised portion of
this Warrant on the Trading Day immediately preceding the date that the Mandatory Redemption Amount
is paid to the Holder, provided, however, in the event the Mandatory Redemption Amount is paid in
shares of Common Stock, Holder shall receive up to such amount of shares of Common Stock such that
Holder and its Affiliates and any other persons or entities whose
beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section
13(d) of the Exchange Act (including shares held by any “group” of which the Holder is a member,
but excluding shares beneficially owned by virtue of ownership of securities or rights to acquire
securities that have limitations on the right to convert, exercise or purchase

11

 

similar to the
limitation set forth herein) shall not collectively beneficially own greater than 9.98% of the
total number of shares of Common Stock then issued and outstanding.

The Mandatory Redemption Amount shall be payable, in cash or cash equivalent, within five (5)
business days of the Date of the applicable Default Notice.

(ii) Liquidated Damages. The parties hereto acknowledge and agree that the sums payable as Failure
Payments or pursuant to a Mandatory Redemption shall give rise to liquidated damages and not
penalties. The parties further acknowledge that (i) the amount of loss or damages likely to be
incurred by the Holder is incapable or is difficult to precisely estimate, (ii) the amounts
specified bear a reasonable proportion and are not plainly or grossly disproportionate to the
probable loss likely to be incurred by the Holder, and (iii) the parties are sophisticated business
parties and have been represented by sophisticated and able legal and financial counsel and
negotiated this Agreement at arm’s length.

The Default Amount, together with all other amounts payable hereunder, shall immediately become due
and payable, all without demand, presentment or notice, all of which hereby are expressly waived,
together with all costs, including, without limitation, legal fees and expenses, of collection, and
the Holder shall be entitled to exercise all other rights and remedies available at law or in
equity.

(c) Posting Of Bond. In the event that any Event of Default occurs hereunder, the Company may not
raise as a legal defense (in any Lawsuit, as defined below, or otherwise) or justification to such
Event of Default any claim that such Holder or any one associated or affiliated with such Holder
has been engaged in any violation of law, unless the Company has posted a surety bond (a “Surety
Bond”) for the benefit of such Holder in the amount of 130% of the aggregate Surety Bond Value (as
defined below) of all of the Holder’s Warrants (the “Bond Amount”), which Surety Bond shall remain
in effect until the completion of litigation of the dispute and the proceeds of which shall be
payable to such Holder to the extent Holder obtains judgment.

For purposes hereof, a “Lawsuit” shall mean any lawsuit, arbitration or other dispute resolution
filed by either party herein pertaining to any of this Warrant, the Facility Agreement and the
Registration Rights Agreement.

“Surety Bond Value,” for the Warrants shall mean 130% of the of the Black-Scholes value of the
remaining unexercised portion of this Warrant on the Trading Day immediately preceding the date
that such bond goes into effect).

(d) Injunction And Posting Of Bond. In the event that the Event of Default referred to in
subsection (c) above pertains to the Company’s failure to deliver unlegended shares of Common Stock
to the Holder pursuant to a Warrant Exercise, legend removal request, or otherwise, the Company may
not refuse such unlegended share delivery based on any claim that such Holder or any one associated
or affiliated with such Holder has been engaged in any violation of law, unless an injunction from
a court, on prior notice to Holder, restraining and or enjoining Exercise of all or part of said
Warrant shall have been sought and obtained by the Company and the Company has posted a Surety Bond
for the benefit of such Holder in the amount of the Bond Amount, which Surety Bond shall remain in
effect until the completion of litigation of the dispute and the proceeds of which shall be payable
to such Holder to the extent Holder obtains judgment.

(e) Remedies, Other Obligations, Breaches And Injunctive Relief. The remedies provided in this
Warrant shall be cumulative and in addition to all other remedies available under this Warrant, the
Facility Agreement and the Registration Rights Agreement, at law or in equity (including a decree
of specific performance and/or other injunctive relief). The Company acknowledges that a breach by
it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at
law for any such breach may be inadequate. The Company therefore agrees that, in the event of any
such breach or threatened breach, the Holder of this Warrant shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach, without the necessity of showing
economic loss and without any bond or other security being required.

(f) Limitation on Issuance of Common Stock. Notwithstanding anything herein to the contrary, in no
event shall the number of shares of Common Stock issuable pursuant to this Warrant exceed 20% of
the total number of shares of Common Stock issued and outstanding on the Date of Issuance. The
restriction contained in the immediately preceding sentence shall be appropriately adjusted to
reflect any stock splits, reclassifications, recapitalizations or like events.

Section 12. Holder’s Redemptions.

(a) Mechanics of Holder’s Redemptions. In the event that the Holder has sent a Default Notice or a
Major Transaction Redemption Notice to the Company pursuant to Section 5(c) or a Default Notice
pursuant to Section 11(b)(i), respectively (each, a “Redemption Notice”), the Holder shall promptly
submit this Warrant to the Company. If the Holder has submitted a Major Transaction Redemption
Notice in accordance with Section 5(c)(iii), the Company shall deliver the applicable Major
Transaction Redemption Price to the Holder concurrently with the consummation of such Major
Transaction. In the event that the Company does not pay the applicable Major Transaction Warrant
Redemption Price to the Holder within the time period required, at any time thereafter and until
the Company pays such unpaid Major Transaction Warrant Redemption Price in full, the Holder shall
have the option, in lieu of redemption, to require the Company to promptly return to the Holder all
or any portion of this Warrant that was submitted for redemption and for which the applicable Major
Transaction Warrant Redemption Price (together with any late charges thereon) has not been paid.
Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall be null and
void with respect to

12

 

such Redemption Principal Amount, (y) the Company shall immediately return
this Warrant, or issue a new Warrant to the Holder representing the portion of this Warrant that
was submitted for redemption and (z) the Exercise Price of this Warrant or such new Warrant shall
be adjusted to the lesser of (A) the Exercise Price as in effect on the date on which the
applicable Redemption Notice is voided and (B) subject to the limitations contained in Section 5(d)
hereof, the lowest closing price for the Common Stock on NASDAQ, or, if NASDAQ is not the principal
trading market for the Common Stock, the principal securities exchange or other securities market
on which the Common Stock is then being traded, during the period beginning on and including the
date on which the applicable Redemption Notice is delivered to the Company and ending on and
including the date on which the applicable Redemption Notice is voided. The Holder’s delivery of a
notice voiding a Redemption Notice and exercise of its rights following such notice shall not
affect the Company’s obligations to make any payments of Failure Payments which have accrued prior
to the date of such notice with respect to the Warrant subject to such notice.

13. Benefits of this Warrant.

Nothing in this Warrant shall be construed to confer upon any person other than the Company and
Holder any legal or equitable right, remedy or claim under this Warrant and this Warrant shall be
for the sole and exclusive benefit of the Company and Holder.

14. Governing Law.

All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by law. The parties hereby waive all rights to a trial by
jury. If either party shall commence an action or proceeding to enforce any provisions of this
Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

15. Loss of Warrant.

Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of indemnity or security reasonably
satisfactory to the Company, and upon surrender and cancellation of this Warrant, if mutilated, the
Company shall execute and deliver a new Warrant of like tenor and date.

16. Notice or Demands.

Notices or demands pursuant to this Warrant to be given or made by Holder to or on the Company
shall be sufficiently given or made if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed, until another address is designated in writing by the
Company, to the address set forth in Section 2(a) above. Notices or demands pursuant to this
Warrant to be given or made by the Company to or on Holder shall be sufficiently given or made if
sent by certified or registered mail, return receipt requested, postage prepaid, and addressed, to
the address of Holder set forth in the Company’s records, until another address is designated in
writing by Holder.

IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the 10th day of
December, 2007.

	 	 	 
	THIRD WAVE TECHNOLOGIES, INC.
	 
	 	 
	By:

	 	/s/ Kevin Conroy
	 

	 	 
	Print Name:

	 	Kevin Conroy
	Title:

	 	President and CEO

13

 

EXHIBIT A

EXERCISE FORM FOR WARRANT

TO: THIRD WAVE TECHNOLOGIES, INC.

The undersigned hereby irrevocably Exercises the right to purchase             of
the shares of Common Stock (the “Common Stock”) of THIRD WAVE TECHNOLOGIES, INC., a Delaware
corporation (the “Company”), evidenced by the attached warrant (the “Warrant”), and herewith makes
payment of the Exercise Price with respect to such shares in full, all in accordance with the
conditions and provisions of said Warrant.

1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of any of the Common
Stock obtained on Exercise of the Warrant, except in accordance with the provisions of Section 8(a)
of the Warrant.

2. The undersigned requests that any stock certificates for such shares be issued free of any
restrictive legend, if appropriate, and a warrant representing any unexercised portion hereof be
issued, pursuant to the Warrant in the name of the undersigned and delivered to the undersigned at
the address set forth below.

3. The undersigned is exercising the attached Warrant pursuant to:

 ̈ Cash Exercise       ̈ Cashless Exercise

Dated:                               

 

Signature

 

Print Name

 

Address

NOTICE

The signature to the foregoing Exercise Form must correspond to the name as written upon the face
of the attached Warrant in every particular, without alteration or enlargement or any change
whatsoever.

 

 

EXHIBIT B

ASSIGNMENT

(To be executed by the registered holder

desiring to transfer the Warrant)

FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the “Warrant”) hereby sells,
assigns and transfers unto the person or persons below named the right to purchase
            
shares of the Common Stock of THIRD WAVE TECHNOLOGIES, INC., a Delaware corporation,
evidenced by the attached Warrant and does hereby irrevocably constitute and appoint 
 attorney to transfer the said Warrant on the books of the Company, with full power of
substitution in the premises.

	 	 	 	 	 
	Dated:
	 	 	 	 
	 	 	 
	 	 
	 

	 	 	 	Signature
	 
	 	 	 	 
	Fill in for new registration of Warrant:	 	 
	 
	 	 	 	 
	 	 	 
	Name	 	 
	 
	 	 	 	 
	 	 	 
	Address	 	 
	 
	 	 	 	 
	 	 	 
	Please print name and address
of assignee

(including zip code number)	 	 

NOTICE

The signature to the foregoing Assignment must correspond to the name as written upon the face of
the attached Warrant in every particular, without alteration or enlargement or any change
whatsoever.

 

 

EXHIBIT C

FORM OF OPINION

______, 20__

[___________]

Re: Third Wave Technologies, Inc. (the “Company”)

Dear Sir:

[______]
(“[______]”) intends to transfer ______ Warrants (the “Warrants”) of
the Company to ______ (“______”) without registration under the Securities Act of
1933, as amended (the “Securities Act”). In connection therewith, we have examined and
relied upon the truth of representations contained in an Investor Representation Letter
attached hereto and have examined such other documents and issues of law as we have
deemed relevant.

Based on and subject to the foregoing, we are of the opinion that the transfer of the
Warrants by ______ to
______ may be effected without registration under the Securities
Act, provided, however, that the Warrants to be transferred to ______
contain a legend restricting its transferability pursuant to the Securities Act and that
transfer of the Warrants is subject to a stop order.

The
foregoing opinion is furnished only to ______ and may not be used, circulated,
quoted or otherwise referred to or relied upon by you for any purposes other than the
purpose for which furnished or by any other person for any purpose, without our prior
written consent.

Very truly yours,

 

 

[FORM OF INVESTOR REPRESENTATION LETTER]

_____, 20__

[_________________]

Gentlemen:

______
(“______”) has agreed to purchase
______ Warrants (the “Warrants”) of Third Wave
Technologies, Inc. (the “Company”) from [______] (“[______]”). We understand that the
Warrants are “restricted securities.” We represent and
warrant that ______ is a sophisticated
institutional investor that would qualify as an “Accredited Investor” as defined in Rule 501 of
Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).

______
represents and warrants as of the date hereof as follows:

	 	 	1. That it is acquiring the Warrants and the shares of common stock, $0.001 par value per
share underlying such Warrants (the “Exercise Shares”) solely for its account for investment
and not with a view to or for sale or distribution of said Warrants or Exercise Shares or any
part thereof. ______ also represents that the entire legal and beneficial interests of the
Warrants and Exercise Shares ______ is acquiring is being acquired for, and will be held
for, its account only;
	 
	 	 	2. That the Warrants and the Exercise Shares have not been registered under the Securities
Act on the basis that no distribution or public offering of the stock of the Company is to be
effected. ______ realizes that the basis for the exemption may not be present if,
notwithstanding its representations, ______ has a present intention of acquiring the
securities for a fixed or determinable period in the future, selling (in connection with a
distribution or otherwise), granting any participation in, or otherwise distributing the
securities. ______ has no such present intention;
	 
	 	 	3. That the Warrants and the Exercise Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such registration is
available. ______ recognizes that the Company has no obligation to register the Warrants,
or to comply with any exemption from such registration;
	 
	 	 	4. That neither the Warrants nor the Exercise Shares may be sold pursuant to Rule 144
adopted under the Securities Act unless certain conditions are met, including, among other
things, the existence of a public market for the shares, the availability of certain current
public information about Company, the resale following the required holding period under Rule
144 and the number of shares being sold during any three month period not exceeding specified
limitations;
	 
	 	 	5. That it will not make any disposition of all or any part of the Warrants or Exercise
Shares in any event unless and until:

	(i)	 	The Company shall have received a letter secured by
______ from the Securities and
Exchange Commission stating that no action will be recommended to the Securities and Exchange
Commission with respect to the proposed disposition;

	(ii)	 	There is then in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with said registration
statement; or

	(iii)	 	______ shall have notified the Company of the proposed disposition and, in the case of a
sale or transfer in a so called “4(1) and a half” transaction, shall have furnished counsel to
the Company with an opinion of counsel, reasonably satisfactory to counsel to the Company.

We acknowledge that the Company will place stop orders with respect to the Warrants and the
Warrants, and if a registration statement is not effective, the Exercise Shares shall bear the
following restrictive legend:

	 	 	“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT INCLUDING, WITHOUT LIMITATION, PURSUANT TO RULES 144 OR

 

 

	 	 	144A UNDER SAID ACT OR PURSUANT TO A PRIVATE SALE EFFECTED UNDER APPLICABLE FORMAL OR
INFORMAL SEC INTERPRETATION OR GUIDANCE, SUCH AS A SO-CALLED “4(1) AND A HALF” SALE.”
	 
	 	 	“THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF
DECEMBER ___, 2007, AS AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN HOLDERS OF
ITS OUTSTANDING SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.”

At any
time and from time to time after the date hereof, ______ shall, without further
consideration, execute and deliver to [______] or the Company such other instruments or documents
and shall take such other actions as they may reasonably request to carry out the transactions
contemplated hereby.

Very truly yours,

 

 

Schedule 1

Calculation of Intrinsic Value and Black-Scholes Value

	 	 	 	 	 	 	 
	 	 	Calculation of Intrinsic Value	 	 	 	Calculation of Black-Scholes
	 	 	Under Section 5(c)(iii)	 	 	 	Under Section 10(b) or 11(b)
	 
	 	 	 	 	 	 
	Intrinsic Value

	 	The excess of the Stock Price
minus the then Exercise Price
at the time of calculation.
For avoidance of doubt, the
Intrinsic Value shall never
be less than zero.
	 	Remaining Term
	 	Number of calendar days
from date of the Event of
Failure until the last date
on which the Warrant may be
exercised.
	 
	 	 	 	 	 	 
	Stock Price

	 	The greater of (1) the
closing price of the Common
Stock on NASDAQ, or, if that
is not the principal trading
market for the Common Stock,
such principal market on
which the Common Stock is
traded or listed (the
“Closing Market Price”) on
the trading day immediately
preceding the date on which a
Major Transaction is
consummated, (2) the first
Closing Market Price
following the first public
announcement of a Major
Transaction, (3) the Volume
Weighted Average Price as of
the date immediately
preceding the first public
announcement of the Major
Transaction or (4) the per
share value of the
consideration to be received
by the Company and/or
stockholders in a Major
Transaction.
	 	Interest Rate

Volatility

Stock Price

Dividends
	 	A risk-free interest rate
corresponding to the US$
LIBOR/Swap rate for a
period equal to the
Remaining Term.

42%

The volume Weighted Average
Price on the date of such
calculation.

Zero.Exhibit 10.4

 

Exhibit 10.4

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of December 10, 2007, by and between
THIRD WAVE TECHNOLOGIES, INC., a Delaware corporation (the “Company”), and DEERFIELD PRIVATE DESIGN
FUND, L.P. (“Deerfield Private Design Fund”) and DEERFIELD PRIVATE DESIGN INTERNATIONAL, L.P.
(“Deerfield Private Design International and together with Deerfield Private Design, the “Buyer”).

WHEREAS:

A. In connection with the Facility Agreement by and between the parties hereto of even date
herewith (the “Facility Agreement”), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Buyer Warrants in the amount described in
the Facility Agreement, where each of the Warrants is exercisable into shares of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), upon the terms and
conditions and subject to the limitations and conditions set forth in the Warrants, all subject to
the terms and conditions of the Facility Agreement; and

B. To induce the Buyer to execute and deliver the Facility Agreement, the Company has agreed to
provide certain registration rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the “Securities Act”), and
applicable state securities laws,

NOW, THEREFORE, In consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Buyer hereby agree as follows:

1. DEFINITIONS.

a. As used in this Agreement, the following terms shall have the following meanings:

(i) “Buyer” means the purchaser of Warrants pursuant to the Facility Agreement specified on the
signature page hereof, and any transferee or assignee who agrees to become bound by the provisions
of this Agreement in accordance with Section 10 hereof.

(ii) “Filing Deadline,” for each Registration Statement required to be filed hereunder, shall mean
a date that is thirty (30) calendar days following the date the Warrants are issued.

(iii) “Registration Deadline” shall mean the earlier of (i) the date that is ninety (90) days after
the date that the Registration Statement is actually filed or (ii) the date that is ninety (90)
days after the Filing Deadline.

(iv) “Warrant(s)” means the warrants issued by the Company pursuant to the Facility Agreement.

(v) “Register,” “Registered,” and “Registration” refer to a registration effected by preparing and
filing a Registration Statement or Statements in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing for offering securities on a
continuous basis, and the declaration or ordering of effectiveness of such Registration Statement
by the United States Securities and Exchange Commission (the “SEC”).

(vi) “Registrable Securities,” for a given Registration, means (a) any shares of Common Stock (the
“Warrant Shares”) issued or issuable upon exercise of or otherwise pursuant to the Warrants, (b)
any shares of capital stock issued or issuable as a dividend on or in exchange for or otherwise
with respect to any of the foregoing, (c) any additional shares of Common Stock issuable in
connection with any anti-dilution provisions in the Warrants (without giving effect to any
limitations on exercise set forth in the Warrants), (d) any other warrants or shares of common
stock issued pursuant to the terms of the Facility Agreement, the Warrants or this Registration
Rights Agreement, and (e) any securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the foregoing.

 

 

(vii) “Registration Statement(s)” means a registration statement(s) of the Company under the
Securities Act required to be filed hereunder.

(viii) “Person” means and includes any natural person, individual, partnership, joint venture,
corporation, trust, limited liability company, limited company, joint stock company, unincorporated
organization, government entity or any political subdivision or agency thereof, or any other
entity.

2. REGISTRATION.

a. MANDATORY REGISTRATION. Following the issuance of the Warrants pursuant to the Facility
Agreement, the Company shall prepare, and, on or prior to the applicable Filing Deadline (as
defined above) file with the SEC a Registration Statement (the “Mandatory Registration Statement”)
on Form S-3 (or, if Form S-3 is not then available, on such form of Registration Statement as is
then available to effect a registration of the Registrable Securities) covering the resale of the
Registrable Securities issued on the applicable Issuance Date (as defined below) which Registration
Statement, to the extent allowable under the Securities Act and the rules and regulations
promulgated thereunder (including Rule 416), shall state that such Registration Statement also
covers such indeterminate number of additional shares of Common Stock as may become issuable upon
exercise of or otherwise pursuant to the Warrants to prevent dilution resulting from stock splits,
stock dividends or similar transactions. The number of shares of Common Stock initially included in
such Registration Statement shall be no less than the aggregate number of Warrant Shares that are
then issuable upon exercise of or otherwise pursuant to the Warrants issued on the Issuance Date
(as defined herein), without regard to any limitation on the Buyer’s ability to exercise the
Warrants, respectively. The Company acknowledges that the number of shares initially included in
the Registration Statement represents a good faith estimate of the maximum number of shares
issuable upon exercise of or otherwise pursuant to the Warrants issued on the Issuance Date and
shall be amended if not sufficient. The Registration Statement (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall be provided to (and
subject to the reasonable approval of) the Buyer and its counsel prior to its filing or other
submission.

b. PIGGY-BACK REGISTRATIONS. If at any time prior to the expiration of the Registration Period (as
hereinafter defined) the Company shall determine to file with the SEC a Registration Statement
relating to an offering for its own account or the account of others under the Securities Act of
any of its equity securities (other than on Form S-4 or Form S-8 or their then equivalents relating
to equity securities to be issued solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with stock option or other employee benefit
plans), the Company shall send to Buyer written notice of such determination and, if within fifteen
(15) days after the effective date of such notice, the Buyer shall so request in writing, the
Company shall include in such Registration Statement all or any part of the Registrable Securities
the Buyer requests to be registered, except that if, in connection with any underwritten public
offering for the account of the Company, the managing underwriter(s) thereof shall impose a
limitation on the number of Registrable Securities which may be included in the Registration
Statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then the Company shall be obligated to
include in such Registration Statement only such limited portion of the Registrable Securities with
respect to which the Buyer has requested inclusion hereunder as the underwriter shall permit;

PROVIDED, HOWEVER, that the Company shall not exclude any Registrable Securities unless the Company
has first excluded all outstanding securities, the holders of which are not entitled by contract to
inclusion of such securities in such Registration Statement or are not entitled to pro rata
inclusion with the Registrable Securities; and

PROVIDED, FURTHER, HOWEVER, that, after giving effect to the immediately preceding proviso, any
exclusion of Registrable Securities shall be made pro rata with holders of other securities having
the contractual right to include such securities in the Registration Statement other than holders
of securities entitled to inclusion of their securities in such Registration Statement by reason of
demand registration rights. No right to registration of Registrable Securities under this Section
2(b) shall be construed to limit any registration required under Section 2(a) hereof. If an
offering in connection with which the Buyer is entitled to registration under this Section 2(b) is
an underwritten offering, then the Buyer shall, unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of

2

 

this Agreement, on the same terms and conditions as other shares of Common Stock included in such
underwritten offering. Notwithstanding anything to the contrary set forth herein, the registration
rights of the Buyer pursuant to this Section 2(b) shall only be available in the event the Company
fails to timely file, obtain effectiveness or maintain effectiveness of any Registration Statement
to be filed pursuant to Section 2(a) in accordance with the terms of this Agreement.

3. OBLIGATIONS OF THE COMPANY. In connection with the registration of the Registrable Securities,
the Company shall have the following obligations:

a. The Company shall prepare promptly, and file with the SEC as soon as practicable after the date
that the Warrants are issued under the Facility Agreement (the “Issuance Date”) (but no later than
the Filing Deadline), a Registration Statement with respect to the number of Registrable Securities
provided in Section 2(a), and thereafter use its best efforts to cause each such Registration
Statement relating to Registrable Securities to become effective as soon as possible after such
filing, and in any event no later than the Registration Deadline, and shall keep the Registration
Statement current and effective pursuant to Rule 415 at all times until such date as is the earlier
of (i) the date on which all of the Registrable Securities for such Registration Statement have
been sold and (ii) the date on which all of the Registrable Securities for such Registration
Statement (in the opinion of counsel to the Buyer or other counsel proposed by the Company and
reasonably acceptable to the Buyer) may be immediately sold to the public without registration or
restriction (including without limitation as to volume by each holder thereof) under the Securities
Act (the “Registration Period”), which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or necessary to make
the statements therein not misleading.

b. The Company shall prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to keep the Registration Statement current and
effective at all times during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by the Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof as set forth in the Registration Statement. In the event that on any
Trading Day (as defined below) (the “Registration Trigger Date”) the number of shares available
under the Registration Statements filed pursuant to this Agreement is insufficient to cover all of
the Registrable Securities issued or issuable upon exercise of or otherwise pursuant to the
Warrants, without giving effect to any limitations on the Buyer’ ability to exercise the Warrants,
the Company shall amend the Registration Statements, or file a new Registration Statement (on the
short form available therefore, if applicable), or both, so as to cover the total number of
Registrable Securities so issued or issuable (without giving effect to any limitations on exercise
contained in the Warrants or limitations on conversion or exercise) as of the Registration Trigger
Date as soon as practicable, but in any event within twenty (20) days after the Registration
Trigger Date (based on the Exercise Price (as defined in the Warrants) of the Warrants, and other
relevant factors on which the Company reasonably elects to rely). The Company shall use its best
efforts to cause such amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof. “Trading Day” shall mean any day on which the Common
Sock is traded for any period on the NASDAQ Global Market, or on the principal securities exchange
or other securities market on which the Common Stock is then being traded.

c. The Company shall furnish to the Buyer and its legal counsel (i) promptly after the same is
prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of the
Registration Statement and any amendment thereto, each preliminary prospectus and prospectus and
each amendment or supplement thereto, and, in the case of a Registration Statement referred to in
Section 2(a), each letter written by or on behalf of the Company to the SEC or the staff of the
SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to
such Registration Statement (other than any portion of any thereof which contains information for
which the Company has sought confidential treatment), and (ii) such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such
other documents as the Buyer may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by the Buyer. The Company will immediately notify the Buyer by
facsimile of the effectiveness of each Registration Statement or any post-effective amendment. The
Company will promptly respond to any and all comments received from the SEC, with a view towards
causing each Registration Statement or any amendment thereto to be declared effective by the

3

 

SEC as soon as practicable and shall file an acceleration request as soon as practicable, but no
later than three (3) business days, following the resolution or clearance of all SEC comments or,
if applicable, following notification by the SEC that any such Registration Statement or any
amendment thereto will not be subject to review.

d. The Company shall use best efforts to (i) register and qualify the Registrable Securities
covered by the Registration Statements under such other securities or “blue sky” laws of such
jurisdictions in the United States as the Buyer shall reasonably request, (ii) prepare and file in
those jurisdictions such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the Registrable Securities for
sale in such jurisdictions; provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction.

e. As promptly as practicable after becoming aware of such event, the Company shall notify the
Buyer of the happening of any event, of which the Company has knowledge, as a result of which the
prospectus included in the Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue statement or omission,
and deliver such number of copies of such supplement or amendment to the Buyer as the Buyer may
reasonably request.

f. The Company shall use its best efforts to prevent the issuance of any stop order or other
suspension of effectiveness of the Registration Statement, and, if such an order is issued, to
obtain the withdrawal of such order at the earliest possible moment and to notify the Buyer who
holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing
underwriters) of the issuance of such order and the resolution thereof.

g. The Company shall permit a single firm of counsel designated by the Buyer to review such
Registration Statement and all amendments and supplements thereto (as well as all requests for
acceleration or effectiveness thereof), at Buyer’s own cost, a reasonable period of time prior to
their filing with the SEC (not less than five (5) business days but not more then eight (8)
business days) and not file any document in a form to which such counsel reasonably objects and
will not request acceleration of such Registration Statement without prior notice to such counsel.

h. The Company shall hold in confidence and not make any disclosure of information concerning the
Buyer provided to the Company unless (i) disclosure of such information is necessary to comply with
federal or state securities laws or rules of any securities exchange or trading market on
which the Company’s securities are then listed or traded, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii)
the release of such information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such information concerning the
Buyer is sought in or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Buyer prior to making such disclosure, and allow the Buyer, at its
expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.

i. The Company shall use its best efforts to cause all the Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on which securities of the same
class or series issued by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, and, if listed on a national
exchange, to arrange for at least two market makers to register with the National Association of
Securities Dealers, Inc. (“NASD”) as such with respect to such Registrable Securities.

j. The Company shall provide a transfer agent and registrar, which may be a single entity, for the
Registrable Securities not later than the effective date of the Registration Statement.

4

 

k. The Company shall cooperate with the Buyer who holds Registrable Securities being offered and
the managing underwriter or underwriters with respect to a Registration Statement, if any, to
facilitate the timely preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be offered pursuant to such Registration Statement
and enable such certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Buyer may reasonably request and registered in
such names as the managing underwriter or underwriters, if any, or the Buyer may request, and,
within three (3) business days after a Registration Statement which includes Registrable Securities
is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected
by the Company to deliver, to the transfer agent for the Registrable Securities (with copies to the
Buyer) an appropriate instruction and an opinion of such counsel in the form required by the
transfer agent in order to issue the Registrable Securities free of restrictive legends.

l. At the request of the Buyer, the Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration Statement and any
prospectus used in connection with the Registration Statement as may be necessary in order to
change the plan of distribution set forth in such Registration Statement.

m. The Company shall not, and shall not agree to, allow the holders of any securities of the
Company to include any of their securities in a Registration Statement under Section 2(a) hereof or
any amendment or supplement thereto under Section 3(b) hereof without the consent of the Buyer. In
addition, the Company shall not offer any securities for its own account or the account of others
in a Registration Statement under Section 2(a) hereof or any amendment or supplement thereto under
Section 3(b) hereof without the consent of the Buyer.

n. The Company shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Buyer of Registrable Securities pursuant to a Registration Statement.

o. The Company shall comply with all applicable laws related to a Registration Statement and
offering and sale of securities and all applicable rules and regulations of governmental
authorities in connection therewith (including without limitation the Securities Act and the
Exchange Act and the rules and regulations promulgated by the SEC).

p. NASD Rule 2710 Filing; Broker Compensation. If required by the National Association of
Securities Dealers, Inc. Corporate Financing Department, the Company shall promptly effect a filing
with the NASD pursuant to NASD Rule 2710 with respect to the public offering contemplated by
resales of securities under the Registration Statement (an “Issuer Filing”), and pay the filing fee
required by such Issuer Filing. The Company shall use commercially reasonable efforts to pursue the
Issuer Filing until the NASD issues a letter confirming that it does not object to the terms of the
offering contemplated by the Registration Statement.

q. Notwithstanding anything to the contrary herein, at any time after the Registration Statement
has been declared effective by the SEC, the Company may delay or suspend the effectiveness of any
Registration Statement or the use of any prospectus forming a part of the Registration Statement
due to the non-disclosure of material, non-public information concerning Company the disclosure of
which at the time is not in its best interest, in the good faith opinion of the Company (a “Grace
Period”); provided, that the Company shall promptly notify the Buyer and the Deerfield Entities in
writing of the existence of a Grace Period in conformity with the provisions of this Section 3(q)
and the date on which the Grace Period will begin (such notice, a “Commencement Notice”); and,
provided further, that no Grace Period shall exceed 60 days, and such Grace Periods shall not
exceed an aggregate total of 60 days during any 360 day period. For purposes of determining the
length of a Grace Period above, the Grace Period shall begin on and include the date specified by
the Company in the Commencement Notice and shall end on and include the date the Buyer receives
written notice of the termination of the Grace Period by the Company (which notice may be contained
in the Commencement Notice). The provisions of Section 3(e) hereof shall not be applicable during
any Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by Section
3(e) with respect to the information giving rise thereto unless such material, non-public
information is no longer applicable.

4. OBLIGATIONS OF THE BUYER. In connection with the registration of the Registrable Securities, the
Buyer shall have the following obligations:

a. It shall be a condition precedent to the obligations of the Company to complete the registration
pursuant to this

5

 

Agreement with respect to the Registrable Securities of the Buyer that the Buyer shall furnish to
the Company such information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and shall execute such documents
in connection with such registration as the Company may reasonably request. At least five (5)
business days prior to the first anticipated filing date of the Registration Statement, the Company
shall notify the Buyer of the information the Company requires from each Buyer.

b. The Buyer, by the Buyer’s acceptance of the Registrable Securities, agrees to cooperate with the
Company as reasonably requested by the Company in connection with the preparation and filing of a
Registration Statement hereunder, unless the Buyer has notified the Company in writing of the
Buyer’s election to exclude all of the Buyer’s Registrable Securities from such Registration
Statement.

c. In the event of an underwritten offering pursuant to Section 2(b) in which any Registrable
Securities are to be included, the Buyer agrees to enter into and perform the Buyer’s obligations
under an underwriting agreement, in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, with the managing underwriter of such
offering and take such other actions as are reasonably required in order to expedite or facilitate
the disposition of the Registrable Securities, unless the Buyer has notified the Company in writing
of the Buyer’s election to exclude all of the Buyer’s Registrable Securities from such Registration
Statement.

d. The Buyer agrees that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 3(e) or 3(f), the Buyer will immediately discontinue disposition
of Registrable Securities pursuant to the Registration Statement covering such Registrable
Securities until the Buyer’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(e) or 3(f) and, if so directed by the Company, the Buyer shall deliver to
the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Buyer’s possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.

e. The Buyer agrees that it will not effect any disposition or other transfer of the Registrable
Securities that would constitute a sale within the meaning of the Securities Act other than
transactions exempt from the registration requirements of the Securities Act or pursuant to, and as
contemplated in, the Registration Statement, and that it will promptly notify the Company of any
material changes in the information set forth in the Registration Statement regarding the Buyer or
its plan of distribution.

5. REGISTRATION FAILURE. In the event of a Registration Failure (as defined in the Warrants), as
the exclusive monetary remedy therefore, the Buyer shall be entitled to Failure Payments (as
defined in the Warrants) and such other rights as set forth in the Warrants.

6. EXPENSES OF REGISTRATION. All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and qualification fees,
printers and accounting fees, and the fees and disbursements of counsel for the Company (but not
including fees and disbursements of counsel for the Buyer) shall be borne by the Company.

7. INDEMNIFICATION. In the event any Registrable Securities are included in a Registration
Statement under this Agreement:

a. The Company will indemnify, hold harmless and defend (i) the Buyer, (ii) the directors,
officers, partners, managers, members, employees, agents and each person who controls any Buyer
within the meaning of the Securities Act or the Exchange Act, if any, (iii) any underwriter (as
defined in the Securities Act) for the Buyer in connection with an underwritten offering pursuant
to Section 2(b) hereof, and (iv) the directors, officers, partners, employees and each person who
controls any such underwriter within the meaning of the Securities Act or the Exchange Act, if any
(each, a “Non-Company Indemnified Person”), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or inquiries by any
regulatory or self-regulatory organization, whether commenced or threatened, in respect thereof,
“Claims”) to which any of them may become subject insofar as such Claims arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a

6

 

material fact required to be stated or necessary to make the statements therein not misleading;
(ii) any untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein
any material fact necessary to make the statements made therein, in light of the circumstances
under which the statements therein were made, not misleading; or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, “Violations”). The Company shall reimburse the Non-Company Indemnified Person,
promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or
other reasonable expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement
contained in this Section 7(a) (A) shall not apply to a Claim arising out of or based upon a
Violation to the extent that such Violation occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Non-Company Indemnified Person for use in
connection with the preparation of such Registration Statement or any such amendment thereof or
supplement thereto. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Non-Company Indemnified Person and shall survive the
transfer of the Registrable Securities by the Buyer pursuant to Section 10; (B) with respect to any
preliminary prospectus, shall not inure to the benefit of any such Person from whom the Person
asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to
the benefit of any Person controlling such Person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company pursuant to Section 3(d),
and the Non-Company Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a violation and such Non Company Indemnified Person,
notwithstanding such advice, used it or failed to deliver the correct prospectus as required by the
Securities Act and such correct prospectus was timely made available pursuant to Section 3(d); (C)
shall not be available to the extent such Claim is based on a failure of the Non-Company
Indemnified Person to deliver or to cause to be delivered the prospectus made available by the
Company, including a corrected prospectus, if such prospectus or corrected prospectus was timely
made available by the Company pursuant to Section 3(d); and (D) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld or delayed.

b. The Buyer will indemnify, hold harmless and defend (i) the Company, and (ii) the directors,
officers, partners, managers, members, employees, or agents of the Company, if any (each, a
“Company Indemnified Person”), against any Claims to which any of them may become subject insofar
as such Claims arise out of or are based upon any Violation which occurs due to the inclusion by
the Company in a Registration Statement of false or misleading information about the Buyer, where
such information was furnished in writing to the Company by the Buyer expressly for the purpose of
inclusion in such Registration Statement. The Buyer shall reimburse the Company Indemnified Person,
promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or
other reasonable expenses incurred by them in connection with investigating or defending any such
Claim, provided however, that the indemnity agreement contained in this Section 7(b) and the
agreement with respect to contribution contained in Section 8 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written consent of the
Buyer which consent shall not be unreasonably withheld or delayed; provided, further, however, that
the Buyer shall be liable under this Section 7(b) for only that amount of a Claim as does not
exceed the net amount of proceeds received by Buyer as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Company Indemnified Person.
Notwithstanding anything to the contrary contained herein, the indemnification agreement contained
in this Section 7(b) with respect to any preliminary prospectus shall not inure to the benefit of
any Company Indemnified Person if the untrue statement or omission of material fact contained in
the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or
supplemented.

c. Promptly after receipt by a Non-Company Indemnified Person or a Company Indemnified Person (each
an “Indemnified Person”) under this Section 7 of notice of the commencement of any action
(including any governmental action), such Indemnified Person shall, if a Claim in respect thereof
is to be made against the

7

 

Company, the Buyer or the Deerfield Entities (each an “Indemnifying Person”) under this Section 7,
deliver to the Indemnifying Person a written notice of the commencement thereof enclosing a copy of
all relevant documents, including all papers served and claims made, but the failure to deliver
written notice to the Indemnifying Person within a reasonable time of the commencement of any such
action shall not relieve the Indemnifying Person of any liability to the Indemnified Person under
this Section 7, except to the extent that the Indemnifying Person is actually prejudiced in its
ability to defend such action. The indemnification required by this Section 7 shall be made by
periodic payments of the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.

d. In the event a Claim is made against an Indemnified Person and it shall notify the applicable
Indemnifying Person of the commencement thereof as provided by Section 7(c), such Indemnifying
Person shall be entitled to participate in, and provided such Claim is solely for money damages and
does not seek an injunction or other equitable relief against the Indemnified Person and is not a
criminal or regulatory action, to assume the defense of, such Claim with counsel reasonably
satisfactory to such Indemnified Person, and after notice from such Indemnifying Person to such
Indemnified Person of such Indemnifying Person’s election so to assume the defense thereof and the
failure by such Indemnified Person to object to such counsel within ten (10) business days
following its receipt of such notice, such Indemnifying Person shall not be liable to such
Indemnified Person for legal or other expenses related to such Claim incurred after such notice of
election to assume such defense except as provided below and except for the reasonable costs of
investigating, monitoring or cooperating in such defense subsequently incurred by such Indemnified
Person reasonably necessary in connection with the defense thereof. Such Indemnified Person shall
have the right to employ its counsel in any such Claim, but the reasonable fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless:

(i) the engagement of counsel by such Indemnified Person at the expense of the applicable
Indemnifying Person has been authorized in writing by such Indemnifying Person;

(ii) such Indemnified Person shall have reasonably concluded in its good faith (which conclusion
shall be determinative unless a court determines that such conclusion was not reached reasonably
and in good faith) that there is or may be a conflict of interest between the applicable
Indemnifying Person and such Indemnified Person in the conduct of the defense of such Claim or that
there are or may be one or more different or additional defenses, claims, counterclaims, or causes
of action available to such Indemnified Person (it being agreed that in any case referred to in
this clause (ii) such Indemnifying Person shall not have the right to direct the defense of such
Claim on behalf of the Indemnified Person);

(iii) the applicable Indemnifying Person shall not have engaged counsel reasonably acceptable to
the Indemnified Person, to assume the defense of such Claim within a reasonable time after notice
of the commencement thereof, provided however, this clause shall not be deemed to constitute a
waiver of any conflict of interest that may arise with respect to any such counsel); or

(iv) any counsel engaged by the applicable Indemnifying Person shall fail to timely commence or
diligently conduct the defense of such Claim and such failure has materially prejudiced (or, in the
reasonable judgment of the Indemnified Person, is in danger of materially prejudicing) the outcome
of such Claim;

In each instance of (i) through (iv) above, the reasonable fees and expenses of counsel for such
Indemnified Person shall be at the expense of such Indemnifying Person. Only one counsel shall be
retained by all Indemnified Persons with respect to any Claim, unless counsel for any Indemnified
Person reasonably concludes in good faith (which conclusion shall be determinative unless a court
determines that such conclusion was not reached reasonably and in good faith) that there is or may
be a conflict of interest between such Indemnified Person and one or more other Indemnified Persons
in the conduct of the defense of such Claim or that there are or may be one or more different or
additional defenses, claims, counterclaims, or causes or action available to such Indemnified
Person.

8. CONTRIBUTION. To the extent any indemnification by the Company or the Buyer is prohibited or
limited by law, each of the Company and the Buyer agrees to make the maximum contribution with
respect to any amounts for which it would otherwise be liable under Section 7 to the fullest extent
permitted by law, based upon a comparative fault standard; provided, however, that (i) no Person
that is guilty of fraudulent misrepresentation (within the meaning Section 11(f) of the Securities
Act) in connection with such sale shall be entitled to contribution from any

8

 

Person who was not guilty of fraudulent misrepresentation; and (ii) contribution by the Buyer of
Registrable Securities shall be limited in amount to the net amount of proceeds received by the
Buyer from the sale of such Registrable Securities pursuant to such Registration Statement.

9. REPORTS UNDER THE 1934 ACT. With a view to making available to the Buyer the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that
may at any time permit the Buyer to sell securities of the Company to the public without
registration the Company agrees to:

a. make and keep public information available, as those terms are understood and defined in Rule
144;

b. file with the SEC in a timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act so long as the Company remains subject to such
requirements and the filing of such reports and other documents is required for the applicable
provisions of Rule 144; and

c. furnish to the Buyer so long as the Buyer owns Registrable Securities, promptly upon request,
(i) a written statement by the Company that it has complied with the reporting requirements of the
Securities Act and the Exchange Act as required for applicable provisions of Rule 144, (ii) a copy
of the most recent annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably requested to permit
the Buyers to sell such securities pursuant to Rule 144 without registration.

10. ASSIGNMENT OF REGISTRATION RIGHTS. The rights under this Agreement shall be automatically
assignable by the Buyers to any transferee of all or any portion of the Registrable Securities if:
(i) the Buyer agrees in writing with the transferee or assignee to assign such rights, and a copy
of such agreement is furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment, furnished with written
notice of (a) the name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned, and (iii) at or before
the time the Company receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing with the Company to be bound by all of the provisions
contained herein. In the event that the Buyer transfers all or any portion of its Registrable
Securities pursuant to this Section, Buyer shall promptly notify the Company in writing of such
transfer, and the Company shall thereafter have at least ten (10) days to file any amendments or
supplements necessary to keep the Registration Statement current and effective pursuant to Rule
415, and the commencement date of any Event of Failure (as defined in the Warrants) or Event of
Default (as defined in the Warrants) under the Warrants caused thereby will be extended by ten (10)
days.

11. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company and the Buyer (to the
extent such Buyer still owns Registrable Securities). Any amendment or waiver effected in
accordance with this Section 11 shall be binding upon the Buyer and the Company.

12. MISCELLANEOUS.

a. A person or entity is deemed to be a holder of Registrable Securities whenever such person or
entity owns of record or beneficially through a “street name” holder such Registrable Securities.
If the Company receives conflicting instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such Registrable Securities.

b. Any notices required or permitted to be given under the terms hereof shall be sent by certified
or registered mail (return receipt requested) or delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile and shall be effective five days after being
placed in the mail, if mailed by regular United States mail, or upon receipt, if delivered
personally or by courier (including a recognized overnight delivery service) or by facsimile, in
each case addressed to a party. The addresses for such communications shall be:

If to the Company:

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Third Wave Technologies, Inc.

502 S. Rosa Road

Madison, Wisconsin 53719

Fax: (608) 663-7037

Attn: Kevin Conroy

With copy to:

Kennedy Covington Lobdell & Hickman, L.L.P.

4350 Lassiter at North Hills Avenue

Suite 300

Raleigh, North Carolina 27609

Fax: (919) 516-2028

Attn: D. Scott Coward. Esq.

If to a Buyer:

c/o Deerfield Capital, L.P.

780 Third Avenue, 37th Floor

New York, New York 10017

Fax: (212) 599-1248

Attn: Alexander Karnal

With a copy to:

Katten Muchin Rosenman LLP

575 Madison Avenue

New York, New York 10022

Fax: (212) 940-8776

Attn: Mark I. Fisher, Esq.

         Elliot Press, Esq.

Each party shall provide notice to the other party of any change in address.

c. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay
by a party in exercising such right or remedy, shall not operate as a waiver thereof.

d. Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced in accordance with
the internal laws of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall
be commenced exclusively in the state and federal courts sitting in the City of New York. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by law. The parties hereby waive all rights to a trial by
jury. If either party shall commence an action or proceeding to enforce any provisions of the this
Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution

10

 

of such action or proceeding.

e. This Agreement, the Warrants and the Facility Agreement (including all schedules and exhibits
thereto) constitute the entire agreement among the parties hereto with respect to the subject
matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement, the Warrants and the
Facility Agreement supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.

f. Subject to the requirements of Section 10 hereof, this Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto.

g. The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

h. This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this Agreement.

i. Each party shall do and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

j. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable
harm to the Buyer by vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for breach of its obligations
hereunder will be inadequate and agrees, in the event of a breach or threatened breach by the
Company of any of the provisions hereunder, that the Buyer shall be entitled, in addition to all
other available remedies in law or in equity, to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the terms and provisions
hereof, without the necessity of showing economic loss and without any bond or other security being
required.

k. The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.

l. In the event that any provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed inoperative to the extent
that it may conflict therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision hereof.

m. In the event a Buyer shall sell or otherwise transfer any of such holder’s Registrable
Securities, each transferee shall be allocated a pro rata portion of the number of Registrable
Securities included in a Registration Statement for such transferor.

n. There shall be no oral modifications or amendments to this Agreement. This Agreement may be
modified or amended only in writing.

[Remainder of page left intentionally blank]

[Signature page follows]

11

 

IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly
executed as of the 10th day of December, 2007.

	 	 	 	 	 	 	 
	COMPANY:
	 	BUYER:
	THIRD WAVE TECHNOLOGIES, INC.
	 	DEERFIELD PRIVATE DESIGN FUND, L.P.
	 
	 	 	 	 	 	 
	By:

	 	/s/ Kevin Conroy
	 	By:
	 	/s/ James Flynn
	 

	 	 
	 	 	 	 
	 

	 	Name: Kevin Conroy
	 	 	 	Name: James Flynn
	 

	 	Title: President and CEO
	 	 	 	Title: General Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	DEERFIELD PRIVATE DESIGN INTERNATIONAL, L.P.
	 
	 	 	 	 	 	 
	 	 	 	 	By:

	 	/s/ James Flynn
	 	 	 	 	 

	 	 
	 	 	 	 	 

	 	Name: James Flynn
	 	 	 	 	 

	 	Title: General Partner

12

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