Document:

exv10w26

 

Exhibit 10.26

January 31, 2006

James J. Herrmann

428 Hillside Avenue

Elmhurst, IL 60126

Dear Jim:

Third Wave Technologies, Inc. (TWT) and you have mutually agreed to terminate your employment
effective March 16, 2006. Between now and March 16, 2006, you will remain available to assist TWT
with its February earnings call, its 10-K filing and as otherwise needed. In consideration for
your agreement to the terms of the attached Agreement, TWT will pay you severance pay at your
current salary level through December 31, 2006. In addition, you will receive a supplemental
transition payment and an amended stock option grant. Details regarding these items are fully set
forth in the attached Agreement. If you agree to its terms after you have read and considered the
Agreement that follows, please sign it in the space provided at the end of the Agreement and return
it to TWT. Please note that Section 13 of the Agreement requires you to represent that, between the
time you receive this Agreement and up until the time you sign this Agreement and as part of this
Agreement, you have not and agree that you will not (1) violate your confidentiality obligations
described in Section 9 of this Agreement, (2) made or make disparaging comments or remarks about
TWT or about any of the Releasees as described in Section 10 of the Agreement, or (3) discussed or
disclosed the existence or terms of this Agreement with any person except for your immediate family
members, personal attorney, or financial advisor consulted in connection with a review of the
Agreement, as described in Section 11. Also, the Agreement will be null and void if any
handwritten changes are made to it. If you have any questions about this or any other provision,
please call me at 608-273-8933.

 

 

James J.
Herrmann

January 31, 2006

Page 2 of  8

AGREEMENT

     1.      
Termination Date. During the week of January 30,
2006, TWT plans to announce that you
will be leaving the Company. Your employment with TWT will be terminated effective March 16, 2006
(“termination date”). You agree that you will continue serving as TWT’s principal financial officer
through the end of business March 16, 2006 (the “Transition Period”), and that, without limiting
the foregoing, you will participate in TWT’s earnings call tentatively scheduled for February 24,
2006 and if completed, sign required lawful and appropriate SEC filings up through and including
TWT’s 2005 financial results by March 15, 2006. Effective March 16, 2006, you will cease serving
as TWT’s principal financial officer. You will be available during the Transition Period to
assist in preparation for the February earnings call and SEC filings. You will be available in
your office or on the phone on an as-needed basis. You will receive your regular salary during the
Transition Period.

     2.       Severance Pay and Transition Pay. If you agree to the terms described in this
letter (the “Agreement”), and if you have satisfied all of your obligations hereunder, TWT will pay
you severance pay at your current salary level through December 31, 2006. Subject to Section 8
below, severance payments will be made on TWT’s regular payroll dates. The period during which you
continue to receive severance payments is the “Payment Period.” Each severance payment will be
subject to deductions for income and payroll taxes. In addition, on March 16, 2006, TWT will pay
you 50% of your total remaining PTO balance.

     On the condition that you give continued assistance and cooperation, in TWT’s sole discretion,
throughout the Transition Period and continued cooperation during the Payment Period, TWT will also
pay you a supplemental transition payment of $25,000, less applicable taxes, and it will be payable
on January 15, 2007.

     3.       Indemnification. To the fullest extent permitted by applicable law and as
provided for in the Company’s articles of incorporation and bylaws in effect as of the date of this
Agreement, the Company will, during and after termination of employment, indemnify Employee
(including providing advancement of expenses) for any judgments, fines, amounts paid in settlement
and reasonable expenses, including attorneys’ fees, incurred by Employee in connection with the
defense of any lawsuit or other claim or investigation to which Employee is made, or threatened to
be made, a party or witness by reason of being or having been an officer, director or employee of
the Company or any of its subsidiaries or affiliates as defined under the Securities and Exchange
Act of 1934 (“Affiliates”) or a fiduciary of any of their benefit plans, provided, however, that
the foregoing does not apply to any claim made in connection with the enforcement or breach of this
Agreement.

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

 

 

James J.
Herrmann

January 31, 2006

Page 3 of  8

coverage after the Employee’s employment terminates) at least as favorable to the Employee as
policies covering the Company’s Board of Directors.

     5.       Stock Options. If you agree to the terms described in this Agreement, and if you
have satisfied all of your obligations hereunder on March 17, 2006, TWT will amend your current
stock option grant. Specifically, you will return your initial vested grant of 175,000 stock
options. Your unvested stock options will return to the stock option pool on the Termination Date.
TWT will then issue you 43,750 stock options, which will be priced as of the termination date, and
this grant will vest immediately. You agree not to trade in TWT stock for 90 days after March 16,
2006. You will have two years from your termination date to exercise
the 43,750 stock options.

     6.       Letter of Reference. At your request, TWT will provide you with a positive letter
of reference. Individuals who identify themselves as your prospective employers will be directed
to Kevin Conroy, President and Chief Executive Officer of TWT, or Lander Brown, Human Resources.
TWT acknowledges that you are free to pursue alternate employment following the announcement date,
as long as obligations to TWT are fully met during the transition period.

     7.       Health and Dental Insurance/Death Benefit. Your COBRA continuation rights with
respect to health and dental insurance will begin on March 16, 2006. TWT will pay the premiums for
your health and dental insurance coverage from March 16, 2006 through December 31, 2006. You are
responsible for paying the premiums for any health and dental insurance coverage after December 31,
2006, whether through TWT’s group health and dental policy pursuant to COBRA continuation rights or
through any other employer or individual plan. In the event you secure alternative employment that
provides health and dental insurance coverage, you will notify TWT, and TWT’s obligations under
this Section 7 will cease. TWT will not be responsible for any lapse in COBRA coverage. In the
event of your death, TWT will pay any remaining severance and supplemental transition payments
during the period covered by this agreement.

     8.       Release of Claims. In exchange for the payments and other consideration described
in this Agreement, you agree—for yourself, your heirs, your beneficiaries and all other
representatives—to waive and release and, with this Agreement, you do waive and release all past
or present claims of any nature against TWT arising on or before the time that you sign this
Agreement. This means, for example, that you are giving up any claims related in any way
to your employment by TWT, the decision to terminate and the termination of your employment, and
your compensation and benefits. Further, you agree not to institute or cause to be instituted in
any state or federal court any such action or claim. This waiver and release of claims applies to
any claims against TWT or anyone associated with or representing TWT—including, but not limited
to, its officers, directors, partners, employees, attorneys, or agents (the “Releasees”).

              a.       Claims Released. The claims you are waiving in exchange for the Payment and other
consideration described in this Agreement include, but are not limited to, claims under federal,
state or local law including but not limited to, the Civil Rights Act of 1964, as amended; the
Americans with Disabilities Act; the Wisconsin Fair Employment Practices Act and if applicable, the
Age Discrimination in Employment Act,

 

 

James J.
Herrmann

January 31, 2006

Page 4 of  8

for discrimination of any kind, tort, breach of contract, wrongful discharge, lost wages,
compensatory damages, punitive damages, attorneys’ fees, and all other claims of any type or
nature, whether known or unknown, anticipated or unanticipated matured or unmatured, direct or
indirect. Other claims you are waiving are those that relate to ownership of any intellectual
property or trade secrets developed during the term of your employment. You acknowledge your lab
books and those of individuals who have worked for or with you are complete and you acknowledge
that all intellectual property and trade secrets conceived or developed by you during the term of
your employment are solely the property of TWT. This Release does not apply to a claim for
benefits under any applicable workers’ compensation law.

              b.       Your Representation and Waiver. You represent that you have not filed and will not
file any such action or claim in any court or before any state, federal or other governmental
agency. You forever waive any right to recover money damages or any other form of relief for any
and all claims waived under this Agreement. You further agree to waive your rights to and not
accept any benefits which might be conferred upon you in any administrative court or other legal
proceeding concerning any claim released by this Section 8. You understand and agree that this
release forever bars you from suing, arbitrating or otherwise asserting a claim against TWT on any
released claim.

              c.       ADEA Release and Waiver. In exchange for the amounts paid to you under this
Agreement, you specifically waive any claims you may have under the Age Discrimination in
Employment Act of 1967, the Older Workers Benefit Protection Act, or any similar law. You are not
waiving any rights or claims that may arise after the date of this Agreement. You further
acknowledge that you have been advised by this writing (i) to consult with an attorney prior to
executing this Agreement; (ii) that you have up to twenty-one (21) days to review this Agreement
and to decide whether to accept it; (iii) that you have seven (7) days after signing it to cancel
and revoke this Agreement; and (iv) that this Agreement will not become effective until the
seven-day time period has passed. If you give notice of revocation before the end of the seven (7)
day period, this Agreement will become null and void. TWT is not required to provide any portion
of the Payment described in the Agreement before the seven-day time period has passed.

              d.       Consideration for the Release of Claims. You acknowledge that the Payment and any
other consideration TWT has agreed to give under this Agreement are benefits to which you would not
have been entitled if you did not sign this Agreement and that TWT has agreed to provide the
consideration only if you sign this Agreement and give up the claims described in it.

     9.       Your Continuing Obligations.

              a.       Your Employee Agreement with Respect to Confidential Information, Invention Assignment and
Arbitration (“Confidential Information Agreement”) with TWT dated October 18, 2004 is hereby
incorporated by reference and any provision of the Confidential Information Agreement not
superceded by a specific provision of this Separation Agreement shall remain in effect and be
binding on you. A copy is included with this letter Agreement.

 

 

James J.
Herrmann

January 31, 2006

Page 5 of  8

              b.       Confidentiality: You acknowledge and agree that while employed at TWT you have
been privy to substantial confidential business and technology information relating to TWT and its
business as well as current and potential business partners and third parties in both commercial as
well as academic organizations, some of which is extremely sensitive and proprietary. You
expressly covenant as follows:

             (i)       You agree that you have not and will not disclose to others or use any Trade
Secret owned or possessed by TWT or any other Releasee, or that any Trade Secret that was
created by you or anyone related to TWT, or was disclosed to you, whether you have such
Trade Secret in your memory or embodied in writing or other physical form, for as long as
the information remains a Trade Secret. “Trade Secret” means all information which derives
independent economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means, by other persons who can obtain economic or
personal value from its disclosure or use and is subject to TWT’s or any other Releasee’s
efforts to maintain its secrecy that are reasonable under the circumstances.

             (ii)       In addition to the foregoing, you agree not disclose or use for (2) years
following your termination date any Confidential Information which is possessed by or
developed for TWT which relates to TWT’s or its customers’ existing or potential business
or technology, and either was created by you or was disclosed to you. Confidential
Information is information or technology, product development plans or strategies, market
adoption plans and business plans that are generally not known to the public and which
information or technology TWT seeks to protect from disclosure to its existing or potential
competitors or others, including, without limitation, for example: non-public business
plans, strategies, existing or proposed bids, costs, technical and engineering
developments, existing or proposed research or development projects, financial or business
projections, marketing plans, investments, negotiation strategies, and information received
by TWT from others which TWT has an obligation to treat as confidential.

                          You understand your obligations under this Section apply to, and are intended to
prevent, the direct or indirect disclosure of Confidential Information to others where such
disclosure of Confidential Information would reasonably be considered to be useful to TWT’s
competitors or to a third party to become a competitor based in whole or in part on such
disclosure of Confidential Information.

             (iii )       You acknowledge that in the event that you violate paragraphs (i) and/or (ii)
above, it will be difficult if not impossible to determine the damages caused by such
violation(s). You further agree that damages for any such violation(s) will be inadequate
and will not give full sufficient relief to TWT, and that a breach of this Section will
constitute irreparable harm to TWT. Therefore, you agree that in the event of any
violation of any covenant contained in this Section, TWT shall be entitled to injunctive
relief against the continued violation thereof in any court (federal or state) located in
Dane County, Wisconsin.

 

 

James J.
Herrmann

January 31, 2006

Page 6 of  8

        Such remedy, however, shall be cumulative and nonexclusive and shall be in addition to
any other remedy to which TWT may be entitled.

     10.       Non-Disparagement. You agree that after March 16, 2006, you will cease contact
with TWT customers and you will not contact TWT personnel regarding TWT business, unless at the
request of TWT. You also agree that you will refrain from making disparaging comments or remarks
about TWT or about or to any of the Releasees, except that you may provide truthful information
about TWT or the Releasees to the extent required by law. TWT likewise agrees that it
will refrain from making disparaging comments or remarks about you, except that it may provide
truthful information about you to the extent required by law.

     11.       Non-Disclosure. You agree not to disclose, directly or indirectly, the existence
or terms of this Agreement to any person except for your immediate family members, attorney, or
financial advisor consulted in connection with review of this Agreement. You assure us that no
family member, attorney, or financial advisor will disclose the terms of this Agreement to any
other person except as required by law.

     12.       Solicitation of Employees and Third Parties. You acknowledge and agree to
continue complying with provision six (6) of your Confidential Information Agreement, dated October
18, 2004, regarding non-solicitation of employees. In addition, you shall not, prior to the
expiration of one year following December 31, 2006, solicit, encourage or otherwise aid any
employee of TWT to leave TWT for the purpose of becoming associated in any manner whatsoever with
any business with which you intend to be or are then associated in any manner whatsoever. You
further agree you shall not, prior to the expiration of one (1) year following December 31, 2006,
solicit, encourage or otherwise induce any suppliers, collaborators, customers or third parties in
the United States, with whom you have established a relationship during your employment with TWT,
to discontinue their relationship(s) with TWT.

     13.       Representations and Warranties. You represent and warrant that: (i) up until the
time you sign this Agreement, you have not violated your legal obligations relating to TWT or the
confidentiality obligations described above, made disparaging comments or remarks about TWT or
about any of the Releasees as described above, or discussed or disclosed the existence or terms of
this Agreement as described above; (ii) you are not aware of any actual, alleged or suspected
accounting issues, violations, or improprieties relating to TWT that could have a material adverse
effect on TWT other than as disclosed in writing to TWT as of the date of this Agreement; and (iii)
you are not aware of any actual, alleged or suspected (x) violation of any law, rule or regulation
(including without limitation securities laws, rules or regulations, the Sarbanes-Oxley Act, or any
regulation promulgated thereunder), (y) violation of any applicable securities exchange listing
requirement, or (z) violation of any TWT rule, regulation, policy or code (including without
limitation the TWT Code of Business Conduct), by TWT or any of its directors, officers, employees
or representatives that could have a material adverse effect on TWT. Any exceptions to this
representation must be disclosed by you in writing to TWT on or before the final execution of this
Agreement with sufficient detail to allow TWT to fully understand such action. In addition, you
agree that if you become aware

 

 

James J.
Herrmann

January 31, 2006

Page 7 of  8

during the Transition Period or the Payment Period of any matter described this Section, you
will immediately report such matter to an executive officer of TWT.

     In the event that TWT finds that the any representation or warranty set forth in the previous
paragraph is inaccurate or untrue, or if you materially violate the provisions of this
Agreement or your Confidential Information Agreement, you agree that TWT will be entitled to
immediately stop paying the severance and insurance premium payments and revoke any other benefits
received under this Agreement or to which you are otherwise entitled under this Agreement, and TWT
will have no further obligation to continue any payments. In addition, should TWT determine that a
material violation of this Agreement or your Confidential Information Agreement has occurred, TWT
will be entitled to a complete recovery of all severance and insurance previously made during the
Payment Period. If TWT suspects a violation based on the representations and warranties set forth
in the previous paragraph or if you materially violate the provisions of your Agreement or
Confidential Information Agreement, TWT will notify you and the termination of severance and other
benefits associated with your transition will occur on the 5th business day after
notification. Finally, at any time, TWT may pursue whatever other legal remedies are
available to it including, but not limited to, the right to seek temporary and permanent
injunctions, which you agree are appropriate additional remedies to prevent irreparable harm to the
Company in the event of a breach of this Agreement or your
Confidential Information Agreement.

     14.       Acceptance Procedures. TWT wishes to ensure that you voluntarily agree to the
terms contained in this document and do so only after you fully understand them. Accordingly, the
following procedures will apply:

              a.       You may accept this document’s terms by signing and dating it and returning the
signed and dated document so that it is postmarked or faxed to TWT on or before the twenty
first (21st) day following your receipt of this document. The signed and dated document
must be directed to Katie Zingg, Director of Human Resources, in an envelope marked
“Personal and Confidential” at Third Wave Technologies, Inc., 502 South Rosa Road, Madison,
WI 53719.

              b.       You will have seven (7) calendar days from the date you sign this Agreement in
which to withdraw or revoke your acceptance (the “Revocation Period”). If you choose to
revoke your acceptance, you must do so in writing, and the written notice must be received
before the end of the first regular business day following the Revocation Period by Katie
Zingg, Director of Human Resources, in an envelope marked “Personal and Confidential” at
Third Wave Technologies, Inc., 502 South Rosa Road, Madison, WI 53719. In the event you
take any steps to revoke your acceptance during the revocation period, this Agreement shall
be null and void.

              c.       TWT encourages you to review this document with an attorney prior to signing it.

 

 

James J.
Herrmann

January 31, 2006

Page 8 of  8

     15.       Miscellaneous. Should you accept this Agreement, its terms will be governed by
the following:

              a.       This document constitutes the complete understanding between you and TWT concerning all
matters affecting your employment with TWT and the termination of that employment. If you accept
this Agreement, it supersedes all prior agreements, understandings and practices concerning such
matters, including, but not limited to, your Employment Agreement, any TWT personnel documents,
handbooks, or policies and any prior customs or practices of TWT.

              b.       Nothing in the releases contained in this Agreement should be construed as an admission of
wrongdoing or liability on the part of either TWT or you. Both of us deny any liability to the
other.

              c.       Any action to enforce this agreement must be brought in a court (federal or state) located
in Dane County, Wisconsin. This Agreement and its interpretation will be governed and construed in
accordance with the laws of Wisconsin and will be binding upon the parties to the Agreement and
their respective successors and assigns.

              d.       Each provision of this Agreement is severable and intended to be construed independently.
The unenforceability of any provision shall not affect the validity or enforceability of any other
provision.

              e.       You represent and warrant that you have read and understand all terms of this Agreement,
executed knowingly and voluntarily with full knowledge of its significance and with the intent to
be bound by it. You represent and warrant that you have been or have the opportunity to be
represented by legal counsel of your choice in connection with this agreement who has explained it
and advised that it is a legally binding contract. This Agreement contains the entire Agreement
between TWT and you and the terms of the Agreement cannot be modified except in writing signed by
both TWT and you.

	 	 	 	 	 
	 	Very truly yours,

THIRD WAVE TECHNOLOGIES

 	 
	 	By:  	/s/ Kevin T. Conroy
 	 
	 	 	Kevin T. Conroy 	 
	 	 	President & Chief Executive Officer 	 
	 

I agree with and accept the terms contained in this document and agree to be bound by them.

	 	 	 	 	 
	 	 	 
	Dated this 31st day of January, 2006. 	/s/ James Herrmann
 	 
	 	James Herrmannexv10w29

 

Exhibit 10.29

Third Wave Technologies, Inc. Long Term Incentive Plan No. 3

 

1.    Plan Objective

       The Third Wave Technologies, Inc. Long Term Incentive Plan (referred to as the “Plan”) is
designed to encourage results-oriented actions on the part of members of the executive management
team and other key employees of Third Wave Technologies, Inc. (the “Company”). The Plan is
intended to align closely financial rewards for the employees with the achievement of specific
performance objectives by the Company. The Plan, as amended and restated effective as of January
1, 2006, provides as follows:

2.    Eligibility

       Members of the executive management team of the Company (“Tier 1 Employees”) and other
key employees of the Company (“Tier 2 Employees”) are eligible to participate in the Plan. The
Administrator (as defined in Section 3 below) shall select the Tier 1 Employees and Tier 2
Employees who may participate in the Plan (a “Participant”).

3.    Administration

       (a)    The Plan shall be administered by the Compensation Committee of the Company’s Board
of Directors (the “Administrator”). The Administrator may delegate its authority to administer the
Plan to an individual or committee. The term “Administrator” shall mean the Compensation Committee
or such individual or committee to which authority has been delegated.

       (b)    The Administrator shall have full power and authority to establish the rules and
regulations relating to the Plan, to interpret the Plan and those rules and regulations, to select
each Participant for the Plan, to determine the Participant’s target award, performance goals and
final award, to make all factual and other determinations in connection with the Plan, and to take
all other actions necessary or appropriate for the proper administration of the Plan, including the
delegation of such authority or power, where appropriate. The Administrator may adjust the
performance goals to take into account corporate transactions that take into account new revenue
associated with mergers and/or acquisitions or other corporate transactions in an equitable manner
that does not make it more difficult for the Company to achieve the original performance goals.

       (c)    All powers of the Administrator shall be executed in its sole discretion, in the best
interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and
need not be uniform as to similarly situated individuals. The Administrator’s administration of
the Plan, including all such rules and regulations, interpretations, selections, determinations,
approvals, decisions, delegations, amendments, terminations, and other actions, shall be final and
binding upon the Company and all employees of the Company, including each Participant and his or
her respective beneficiary(ies).

-1-

 

4.    Target Awards and Performance Goals

       (a)    The Administrator shall establish for each Participant who completes and returns an
enrollment agreement, in a form designated by the Administrator, a target award that shall be
payable if and to the extent the Company attains the performance goals set by the Administrator for
a specified performance period. The executed enrollment agreement shall constitute a Participant’s
consent to be subject to the terms of the Plan and to be bound by the authority of the
Administrator as set forth in Section 3.

             (i)    Unless the Administrator determines otherwise, the target award for a Participant who is a
Tier 1 Employee shall be an amount equal to four times the highest annual incentive target amount
established for the Participant during the performance period under the Company’s annual incentive
plan applicable to the Participant.

             (ii)    Unless the Administrator determines otherwise, the target award for a Participant who is
a Tier 2 Employee shall be an amount equal to three times the highest annual incentive target
amount established for the Participant during the performance period under the Company’s annual
incentive plan applicable to the Participant.

       (b)    The Administrator shall establish the performance goals and related calculation matrices
for each performance period and shall promptly provide this information to each Participant who is
eligible for an award for that performance period. The performance goals are attached as Exhibit A
and are hereby fully incorporated into and shall be considered as part of this Plan. Unless the
Administrator determines otherwise, the performance goals shall be based upon (i) the Company’s
total shareholder return ranking as compared to its peer group, (ii) the Company’s stock price
growth, and (iii) the growth in the Company’s Clinical Molecular Diagnostics revenue. The
Administrator may adjust the performance goals as it deems appropriate to take into account
corporate transactions or other extraordinary events that occur during the performance period.

       (c)    For the purposes of subsection (b), the Administrator shall have the discretion to
determine which companies are included in the peer group. The Administrator may adjust the peer
group from time to time as it deems appropriate, including by adding, deleting, or replacing
companies, to take into account mergers and other changes in the companies comprising the peer
group.

       (d)    Unless the Administrator determines otherwise, the performance period shall be the
three-year period beginning on January 1, 2006 and ending on December 31, 2008.

5.    Calculation of Incentive Awards

       (a)    At the end of the performance period, the Administrator shall determine for each
participant whether and to what extent the performance goals have been met and the percentage of
the target award that is earned. The Administrator shall rely upon the audited financial
statements of the Company and its subsidiaries to determine whether and to what extent the
performance goals are met.

-2-

 

       (b)    The Administrator shall compute each Participant’s award for the performance period based
upon the Company’s achievement of the performance goals and the matrices set forth on Exhibit A.
On or around March 15 of the year following the end of the applicable performance period, the
Company shall credit each Participant’s award to a book account established for the Participant.
All amounts credited to a Participant’s book account shall be administered according to the vesting
provisions of Section 6 below.

       (c)    Participants must be employed on the last day of the applicable performance period to be
eligible for an incentive award under the Plan, except as described below or except as the
Administrator may otherwise determine.

             (i)    The beneficiary(ies) of a Participant who dies during the performance period shall receive
a prorated award based upon the Company’s performance at the end of such performance period. The
prorated award shall be calculated from the commencement of the performance period, or, if
applicable, such later date on which the Participant became eligible to participate for the
performance period as established by the Administrator, to the date of the Participant’s death.
The Company shall pay the prorated award to the beneficiary(ies) after end of the performance
period pursuant to Section 8 below.

             (ii)    Participants who retire on or after their normal retirement age (as defined below) during
the performance period shall receive a prorated award based upon the Company’s performance at the
end of such performance period. The prorated award shall be calculated from the commencement of
the performance period, or, if applicable, such later date on which the Participant became eligible
to participate for the performance period as established by the Administrator, to the date of the
Participant’s normal retirement. The Company shall pay the prorated award to the Participant after
the end of the performance period pursuant to Section 8 below. For purposes of this Plan, “normal
retirement age” is age 65, or, if the Participant has at least five years of service, age 55.

             (iii)    Participants who become disabled (as defined below) during the performance period shall
receive a prorated award based upon the Company’s performance at the end of such performance
period. The prorated award shall be calculated from the commencement of the performance period,
or, if applicable, such later date on which the Participant became eligible to participate for the
performance period as established by the Administrator, to the date the Participant is disabled.
The Company shall pay the prorated award to the Participant after the end of the performance period
pursuant to Section 8 below. For purposes of this Plan, “disabled” means eligible for long-term
disability benefits as determined under a Company-sponsored disability plan.

             (iv)    Upon a Change in Control (as defined below) of the Company during the performance period,
(A) all performance goals pertaining to awards during such performance period shall be deemed to
have been met 100 percent as of the effective date of the Change in Control, (B) Tier 1
Participants shall be deemed to have immediately earned 100% of the maximum award for such
performance period (such that the amount payable under the Plan pursuant to this Section 5(c)(iv)
to a Tier 1 Participant is 200% of his or her target award or eight times the highest annual
incentive target amount established for the Participant during the performance period under the
Company’s annual incentive plan applicable to the Participant),

-3-

 

(C) Tier 2 Participants shall be deemed to have immediately earned 50 percent of the maximum
award for such performance period (such that the amount payable under the Plan pursuant to this
Section 5(c)(iv) to a Tier 2 Participant is 100% of his or her target award or three times the
highest annual incentive target amount established for the Participant during the performance
period under the Company’s annual incentive plan applicable to the Participant), and (D) a
Participant’s award under this Section 5(c)(iv) shall vest and be paid as described in Section
6(d); provided, however, that if the Change of Control is an acquisition or merger and such
transaction occurs for less than $200 million in total value, the Company shall not have been
deemed to have met 100 percent of the performance goals, rather the performance goals shall be
measured by the Matrix in Exhibit A as reconfigured to take into account a shortened period within
which to achieve such targets by reducing the TWT Stock Price Column and 2008 Clinical Revenue
Targets on a straight-line method based on the percentage of the performance period that has
occurred. For example, if 1/2 of the performance period has expired, then the Stock Price and
Clinical Revenue targets shall be revised based on 1/2 of the expected growth. The Company shall
credit a Participant’s award under this Section 5(c)(iv) to a book account established for the
Participant as soon as practicable after the Change of Control.

For purposes of the Plan, the term “Change in Control” shall mean, and shall be deemed to have
occurred if, (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) or group acting in concert, other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company acting in such capacity
or a corporation owned directly or indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company, becomes the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing more than 50 percent of the total voting power represented by the Company’s then
outstanding voting securities; (ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the Company and any new director
whose election by the Board of Directors or nomination for election by the Company’s stockholders
was approved by a vote of at least two thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority thereof; (iii)
consummation of a merger or consolidation of the Company with any other corporation other than a
merger or consolidation which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 80 percent of the total voting
power represented by the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; (iv) the stockholders of the Company approve a plan
of complete liquidation of the Company; or (v) the Company consummates a sale or disposition of (in
one transaction or a series of related transactions) all or substantially all of its assets.

       (d)    In the event this Plan is terminated or suspended before the last day of the performance
period, Participants who are employed by the Company on the day of such termination shall receive
an award based upon the Company’s performance through the end of such performance period as if no
such termination had occurred. The award shall be calculated from the commencement of the
performance period, or, if applicable, such later date on which the Participant became eligible to
participate for the performance period as established by the

-4-

 

Administrator, to the end of the performance period. The Company shall credit the award to a
book account established for the Participant as soon as practicable after the end of the
performance period. Awards made pursuant to this subsection shall vest and be paid in accordance
with the terms of the Plan as though the Plan had not been terminated or suspended.

       (e)    The Administrator may establish appropriate terms and conditions to accommodate newly
hired and transferred employees. For example, upon a Participant’s being designated to participate
in the Plan, the Administrator may establish, in its discretion, the effective commencement date
for such Participant for the performance period that has commenced but not then ended, and if such
effective commencement date is established as a date later than the commencement of the performance
period, any award for the performance period may be prorated based on such later effective
commencement date. Absent any action to the contrary, new employees that become Participants shall
be entitled to a commencement date effective as of the beginning of the performance period.

6.    Vesting of Incentive Awards

       (a)    If a Participant earns an award as described in Section 5 for the performance period,
except as provided below in this Section 6, 25 percent of the award shall vest on the last day of
the performance period, 50 percent of the award shall vest on the last day of the year following
the end of such performance period, and the remaining 25 percent of the award shall vest on the
last day of the second year following the end of such performance period, provided the Participant
continues to be employed by the Company or an affiliate through such applicable vesting date.

       (b)    If a Participant retires at or after his or her normal retirement age, becomes disabled,
or dies while employed by the Company, the Participant’s award shall be fully vested at the end of
the performance period or at the time such event occurs, whichever is later.

       (c)    Unless otherwise specified elsewhere in this Plan or any valid employment or other
agreement between the Participant and the Company, if a Participant’s employment with the Company
and its affiliates terminates for any reason, any unvested award shall be forfeited to the Company
as of his or her termination date.

       (d)    In the event of a Change in Control during the performance period, Participants who are
employed by the Company on the effective date of the Change in Control shall be eligible to
receive, and shall be deemed vested in, the award payout determined under Section 5(c)(iv) for the
performance period, as follows: (A) 50 percent of the award payout shall be deemed vested and
shall be paid upon the effective date of the Change in Control, and (B) 50 percent of the award
payout shall be deemed vested and shall be paid on the earlier of (x) six months after the
effective date of the Change in Control, or (y) the date on which such portion of the award would
have vested in the absence of a Change in Control pursuant to Section 6(a) or (b) above.

Notwithstanding (B) above, distribution to a Participant who is (I) a Key Employee and (II) incurs
a separation from service (within the meaning of section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”)) on account of termination by the Company without Cause or resignation by
the Participant for Good Reason prior to the applicable date under (x) or

-5-

 

(y) above, shall be postponed to a date that is not less than 6 months following the Participant’s
separation date. A Participant who is not a Key Employee who incurs a separation from service
(within the meaning of section 409A of the Code) on account of termination by the Company without
Cause or resignation by the Participant for Good Reason prior to the applicable date under (x) or
(y) above, shall be deemed vested and paid on the earlier of the dates described in (x) and (y)
without regard to the Participant’s separation from service. If any Participant incurs a
separation from service within the meaning of section 409A of the Code) for any reason other than
termination by the Company without Cause or resignation by the Participant for Good Reason prior to
the applicable date under (x) or (y) above, any unvested award shall be forfeited to the Company as
of the Participant’s separation date.

For purposes of the Plan, the term “Cause” shall mean any of the following grounds for termination
of the Participant’s employment:

             (i)     any willful refusal to perform essential job duties which continues for more than ten (10)
days after notice from the Company;

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

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

             (iv)     the Participant is convicted of a felony;

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

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

             (vii)    any material breach by the Employee of his or her employment or non-compete agreements,
if any exist.

For purposes of the Plan, the term “Good Reason” shall mean, and shall be deemed to have the
meaning set forth in any valid employment agreement being Participant and Company.

For purposes of the Plan, the term “Key Employee” shall mean (i) officers of the Company
having annual compensation greater than $130,000 (adjusted for inflation and limited to 50
employees), (ii) five percent owners, and (iii) one percent owners having annual compensation
greater than $150,000, all as determined by the Committee in a manner consistent with the
regulations issues under section 409A of the Code.

       (e)    Notwithstanding (a) above, if a Participant earns an award as described in Section 5 for
the performance period, and thereafter there is a Change in Control, Participants who are employed
by the Company on the effective date of the Change in Control shall be eligible to

-6-

 

receive, and shall be deemed vested in, the unvested portion of the award as of the effective
date of the Change in Control as follows: (A) 50 percent of such unvested portion of the award
shall be deemed immediately vested and shall be paid on the effective date of the Change in
Control, and (B) 50 percent of the award payout shall be deemed vested and shall be paid on
the earlier of (x) six months after the effective date of the Change in Control, or (y) the date on
which such portion of the award would have vested in the absence of a Change in Control pursuant to
Section 6(a) or (b) above.

     Notwithstanding (B) above, distribution to a Participant who is (I) a Key Employee and (II) incurs
a separation from service (within the meaning of section 409A of the Code) on account of
termination by the Company without Cause or resignation by the Participant for Good Reason prior to
the applicable date under (x) or (y) above, shall be postponed to a date that is not less than 6
months following the Participant’s separation date. A Participant who is not a Key Employee who
incurs a separation from service (within the meaning of section 409A of the Code) on account of
termination by the Company without Cause or resignation by the Participant for Good Reason prior to
the applicable date under (x) or (y) above, shall be deemed vested and paid on the earlier of the
dates described in (x) and (y) without regard to the Participant’s separation from service. If any
Participant incurs a separation from service within the meaning of section 409A of the Code) for
any reason other than termination by the Company without Cause or resignation by the Participant
for Good Reason prior to the applicable date under (x) or (y) above, any unvested award shall be
forfeited to the Company as of the Participant’s separation date.

       (f)    A transfer of employment between the Company and an affiliate shall not be considered a
termination of employment for purposes of the Plan.

       (g)    The Administrator reserves the right to accelerate vesting whenever the Administrator
deems such action appropriate.

       (h)    Prior to a Change in Control, the Company shall deposit in a separate bank account
sufficient funds to cover both the vested and unvested cumulative award amounts so that funding of
vested awards can take place upon the Change in Control closing.

       (i)    In the event of a Change in Control whereby the Company’s Compensation Committee of the
Board of Directors no longer exists, the Administrator shall be deemed to be the individual who at
the time of the Change of Control are the Company’s General Counsel and principal financial
officer.

7.    Changes to Performance Goals and Target Awards

     At any time prior to the final determination of awards pursuant to Section 5, the
Administrator may adjust the performance goals and target awards to reflect a change in corporate
capitalization (such as a stock split or stock dividend), or a corporate transaction (such as a
merger, consolidation, separation, reorganization, or partial or complete liquidation), or to
reflect equitably the occurrence of any extraordinary event, any change in applicable accounting
rules or principles, any change in the Company’s method of accounting, any change in applicable
law, any change due to any merger, consolidation, acquisition, reorganization, stock split, stock

-7-

 

dividend, combination of shares, or other changes in the Company’s corporate structure or
shares, or any other change of a similar nature.

8.    Payment of Awards

       (a)    Unless determined otherwise by the Administrator, a Participant may elect, in the
manner specified by the Administrator, to receive payment of his or her award in (i) cash, (ii)
shares of the Company’s common stock valued as of the day that is five business days before the
date of distribution, or (iii) a combination. Except as provided in subsection (b), payment shall
be made as soon as administratively possible following the vesting of an award. Participants who
elect to take a distribution of their award in the form of the Company’s stock, rather than in
cash, shall receive a 10 percent increase in the number of shares of the Company’s stock otherwise
to be distributed. The distribution of the Company’s stock shall be made in accordance with the
Third Wave Technologies, Inc. 2000 Stock Plan, pursuant to Section 11 of such plan, or the
comparable provisions of any successor stock plan adopted by the Company.

       (b)    Unless the Administrator determines otherwise, a Participant who is eligible to
participate in the Company’s deferred compensation program, if one exists, may make an irrevocable
written election to defer all or any part of the payment of such award pursuant to a separate
deferred compensation arrangement sponsored by the Company.

       (c)    Subject to applicable state law and the notification to, or consent of, a Participant’s
spouse, as required, each Participant may designate a beneficiary or beneficiaries (which
beneficiary may be an entity other than a natural person) to receive any payments which are to be
made following the Participant’s death. Such designation may be changed or canceled at any time
without the consent of any such beneficiary but again subject to applicable state law and the
notification to, or consent of, a Participant’s spouse, as required. Any such designation, change,
or cancellation must be made on a form approved by the Administrator and shall not be effective
until received by the Administrator or its designee. If no beneficiary has been named, or the
designated beneficiary or beneficiaries shall have predeceased the Participant, the beneficiary
shall be the Participant’s surviving spouse or, if none, the Participant’s estate. If a
Participant designates more than one beneficiary, the interests of such beneficiaries shall be paid
in equal shares, unless the Participant has specifically designated otherwise.

9.    Amendments and Termination

     The Company may at any time amend, suspend, or terminate the Plan or any portion thereof;
provided that no amendment that would adversely affect the rights of a Participant may take effect
without such Participant’s prior written consent. Notwithstanding the foregoing, the Company shall
have the right to modify the terms of the Plan as may be necessary or desirable to comply with
applicable laws.

10.    Miscellaneous Provisions

       (a)    Neither the establishment of this Plan, nor any action taken hereunder, shall be
construed as giving any Participant any right to be retained in the employ of the Company or any of
its subsidiaries. Nothing in the Plan, and no action taken pursuant to the Plan, shall affect the

-8-

 

right of the Company or a subsidiary to terminate a Participant’s employment at any time and
for any or no reason. The Company is under no obligation to continue the Plan. Notwithstanding
the foregoing, the Company acknowledges that certain Participants may have separate employment or
other agreements with the Company and those agreements may include terms and conditions affecting
the terms and conditions of awards that may be made under this Plan.

       (b)    A Participant’s right and interest under the Plan may not be assigned or transferred,
except as provided in Section 5(c)(i) of the Plan upon death, and any attempted assignment or
transfer shall be null and void and shall extinguish, in the Company’s sole discretion, the
Company’s obligation under the Plan to pay award(s) with respect to the Participant. The Company’s
obligations under the Plan may be assigned to any corporation which acquires all or substantially
all of the Company’s assets or any corporation into which the Company may be merged or
consolidated.

       (c)    The Plan shall be unfunded. The Company shall not be required to establish any special or
separate fund, or to make any other segregation of assets, to assure payment of awards. The
Company’s obligations hereunder shall constitute a general, unsecured obligation of the Company,
and awards shall be paid solely from the Company’s general assets. No Participant shall have any
right to any specific assets of the Company.

       (d)    The Company shall have the right to deduct from awards any and all federal, state, and
local taxes or other amounts required by law to be withheld.

       (e)    The Company’s obligation to pay compensation as herein provided is subject to any
applicable orders, rules, or regulations of any government agency or office having authority to
regulate the payment of wages, salaries, and other forms of compensation.

       (f)    The validity, construction, interpretation, and effect of the Plan shall exclusively be
governed by and determined in accordance with the laws of the State of Wisconsin.

-9-

 

Exhibit A

Third Wave Long Term Incentive Matrix — 3 (1/1/06 — 12/31/08)

Payout as a Percent of Target (Target = 4x target bonus for Tier 1; 3x target bonus for Tier
2)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TWT Stock Price
	 	 	>=$9	 	 	 	25	%	 	 	35	%	 	 	40	%	 	 	45	%	 	 	50	%	 	 	62.5	%	 	 	75	%	 	 	87.5	%	 	 	100	%
	 
	 	$	7-8.99	 	 	 	12.5	%	 	 	20	%	 	 	25	%	 	 	32.5	%	 	 	40	%	 	 	50	%	 	 	62.5	%	 	 	75	%	 	 	87.5	%
	 
	 	$	5-6.99	 	 	 	0	%	 	 	5	%	 	 	10	%	 	 	17.5	%	 	 	25	%	 	 	32.5	%	 	 	40	%	 	 	50	%	 	 	62.5	%
	 
	 	$	3-4.99	 	 	 	0	%	 	 	0	%	 	 	0	%	 	 	5	%	 	 	10	%	 	 	17.5	%	 	 	25	%	 	 	35	%	 	 	45	%
	2008 Clinical Revenue ($M)	 	 	<$34	 	 	$	36.5	 	 	$	39	 	 	$	41.5	 	 	$	44	 	 	$	46.5	 	 	$	49	 	 	$	51.5	 	 	$	54	 
	CAGR
	 	 	 	 	 	 	<12.5	%	 	 	15.2	%	 	 	17.7	%	 	 	20.2	%	 	 	22.6	%	 	 	24.8	%	 	 	27.0	%	 	 	29.2	%	 	 	31.2	%

3
Year Compounded Annual Growth Rate (CAGR)

For Clinical Molecular Diagnostics Revenue

Third Wave Long Term Incentive Matrix — 3 (1/1/06 — 12/31/08)

Payout as a Percent of Target (Target = 4x target bonus for Tier 1; 3x target bonus for Tier
2)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3 Year
Quartile Ranking
Total Shareholder
Return vs. Peer
Group
	 	1st Quartile	 	 	25	%	 	 	35	%	 	 	40	%	 	 	45	%	 	 	50	%	 	 	62.5	%	 	 	75	%	 	 	87.5	%	 	 	100	%
	 
	 	2nd Quartile	 	 	12.5	%	 	 	20	%	 	 	25	%	 	 	32.5	%	 	 	40	%	 	 	50	%	 	 	62.5	%	 	 	75	%	 	 	87.5	%
	 
	 	3rd Quartile	 	 	0	%	 	 	5	%	 	 	10	%	 	 	17.5	%	 	 	25	%	 	 	32.5	%	 	 	40	%	 	 	50	%	 	 	62.5	%
	 
	 	4th Quartile	 	 	0	%	 	 	0	%	 	 	0	%	 	 	5	%	 	 	10	%	 	 	17.5	%	 	 	25	%	 	 	35	%	 	 	45	%
	2008 Clinical Revenue ($M)	 	 	<$34	 	 	$	36.5	 	 	$	39	 	 	$	41.5	 	 	$	44	 	 	$	46.5	 	 	$	49	 	 	$	51.5	 	 	$	54	 
	CAGR	 	 	<12.5	%	 	 	15.2	%	 	 	17.7	%	 	 	20.2	%	 	 	22.6	%	 	 	24.8	%	 	 	27.0	%	 	 	29.2	%	 	 	31.2	%

3 Year Compounded Annual Growth Rate (CAGR)

For Clinical Molecular Diagnostics Revenue

-1-

 

	•	 	CAGR for three-year period calculated on 2005 clinical revenue of $23.9M.

	•	 	Peer group is targeted at 8 companies which would include GenProbe, Digene, Celera, Ventana, BioRad, Abbott,
Roche, Bayer

Total payout equals the combined total of the two matrix charts above. Maximum payout after
properly combining the two matrix charts equals 200% of target award.

-2-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]