Document:

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                                                                   EXHIBIT 10.18

          THIRD WAVE TECHNOLOGIES, INC. LONG TERM INCENTIVE PLAN NO. 2

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, 2005, 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-
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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, each performance
period shall be a three-year period beginning on January 1, 2005 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-
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      (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 a
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, 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 and the maximum award for such
performance period shall be deemed immediately earned, and such maximum award
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 as of the performance goals, rather the
performance goals shall be measured by the Matrix in Exhibit

                                      -3-
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A as reconfigured to take into account a shortened period within which to
achieve such targets by reducing the TWT Stock Price Column and 2007 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 the
maximum award 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 a performance period, Participants who are employed by the Company on the
day of such termination period 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
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 each performance period that has commenced but not then ended,
and if such effective commencement date is established as a date later than the

                                      -4-
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commencement of a particular pending performance period, any award for that
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
plan period.

6.    VESTING OF INCENTIVE AWARDS

      (a)   If a Participant earns an award as described in Section 5 for a
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 agreement 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 any 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
maximum award payout for each such performance period as follows: (A) fifty
percent (50%) of the maximum award payout shall be deemed vested and shall be
paid upon the effective date of the Change in Control, and (B) fifty percent
(50%) of the maximum award payout shall be deemed vested and shall be paid on
the earliest date at either (x) six (6) months after the effective date of the
Change in Control, (y) upon Participant's termination without Cause, or
resignation for Good Reason (applicable only if "Good Reason" concept is defined
in a valid employment agreement between Company and Participant), occurring
prior to the six (6) month anniversary of the effective date of the Change in
Control, or (z) 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. 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;

                                      -5-
<PAGE>

            (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;

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

            (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.

      (e)   If a Participant earns an award as described in Section 5 for a
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 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) fifty percent (50%) 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) fifty percent (50%) of such unvested portion of the award
shall be deemed vested and shall be paid on the earliest date of (x) six (6)
months after the effective date of the Change in Control, (y) upon the
Participant's termination without Cause, or resignation for Good Reason,
occurring prior to the six (6) month anniversary of the effective date of the
Change in Control, or (z) the date on which such portion of the award would have
vested in the absence of a Change in Control pursuant to Sections 6(a) or 6(b)
above.

      (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

                                      -6-
<PAGE>

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 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.

                                      -7-
<PAGE>

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 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.

                                      -8-
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                                    EXHIBIT A

          THIRD WAVE LONG TERM INCENTIVE MATRIX - 2 (1/1/05 - 12/31/07)

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

<TABLE>
<S>                <C>        <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
                   >$14         25.0%   35.0%   40.0%   45.0%   50.0%   62.5%   75.0%   87.5%   100.0%

TWT STOCK           $11-14      12.5%   20.0%   25.0%   32.5%   40.0%   50.0%   62.5%   75.0%    87.5%
  PRICE
                    $ 8-11       0.0%    5.0%   10.0%   17.5%   25.0%   32.5%   40.0%   50.0%    62.5%

                    $  6-8       0.0%    0.0%    0.0%    5.0%   10.0%   17.5%   25.0%   35.0%    45.0%

2007 CLINICAL                 <$  48   $  48   $52.3   $64.4   $  71   $  80   $89.3   $99.0   $111.0
REVENUE ($M)

CAGR                             <47%   47.3%   51.6%   62.5%   67.8%   74.6%   81.1%   87.5%    94.7%
</TABLE>

                   3 YEAR COMPOUNDED ANNUAL GROWTH RATE (CAGR)
                   FOR CLINICAL MOLECULAR DIAGNOSTICS REVENUE

          THIRD WAVE LONG TERM INCENTIVE MATRIX - 2 (1/1/05 - 12/31/07)

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

<TABLE>
<S>               <C>              <C>      <C>     <C>     <C>     <C>     <C>       <C>     <C>     <C>
                    1(st)            25.0%   35.0%   40.0%   45.0%   50.0%     62.5%   75.0%   87.5%   100.0%
                  Quartile

3 Year Quartile     2(nd)            12.5%   20.0%   25.0%   32.5%   40.0%     50.0%   62.5%   75.0%    87.5%
    Ranking       Quartile
     Total
  Shareholder       3(rd)             0.0%    5.0%   10.0%   17.5%   25.0%     32.5%   40.0%   50.0%    62.5%
Return vs. Peer   Quartile
     Group
                    4(th)             0.0%    0.0%    0.0%    5.0%   10.0%     17.5%   25.0%   35.0%    45.0%
                  Quartile

2007 Clinical                      <$  48   $  48   $52.3   $64.4   $  71   $    80   $89.3   $99.0   $111.0
Revenue ($M)

CAGR                                  <47%   47.3%   51.6%   62.5%   67.8%     74.6%   81.1%   87.5%    94.7%
</TABLE>

                   3 YEAR COMPOUNDED ANNUAL GROWTH RATE (CAGR)
                   FOR CLINICAL MOLECULAR DIAGNOSTICS REVENUE

<PAGE>

-     CAGR for three-year period calculated on 2004 clinical revenue of $15M.

-     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-<PAGE>

                                                                   EXHIBIT 10.20
October 19, 2004

John Comerford
7755 Summerfield Drive
Verona, WI  53593

Dear John:

Third Wave Technologies, Inc. (TWT), is terminating your employment effective
November 1, 2004. In consideration of the services you have provided to TWT
during your employment, your agreement with and commitment to the obligations in
the transition plan in the attached Agreement, and your agreement to the terms
of the attached Agreement, TWT will pay you eight (8) months of severance at a
rate of $18,750 per month. 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 8 of the
Agreement requires you to represent that, 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 5 of this
Agreement, (2) made or make disparaging comments or remarks about TWT or about
any of the Releasees as described in Section 6 of the Agreement, or (3)
discussed or disclosed the terms of this Agreement with any person outside of
TWT Senior Management, except for your immediate family members, personal
attorney, or financial advisor consulted in connection with a review of the
Agreement as described in Section 7 of the Agreement. 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.

<PAGE>

October 19, 2004
John Comerford
Page 2 of 8

                                    AGREEMENT

      1.    TRANSITION PERIOD. You agree that the transition period for your
orderly departure from TWT will commence today, and will conclude November 1,
2004 ("Transition Period"). You agree you will come to the work site as
requested and make yourself available to work during the Transition Period.
During the Transition Period that TWT will make severance payments to you, and
assuming you do not commence a new full-time job, you agree to provide up to
eight (8) hours per week of consulting at the request of Kevin Conroy.

      2.    SEVERANCE PAY. If you agree to the terms described in this letter
(the "Agreement"), and if you have satisfied all of your obligations hereunder
and you have satisfied your obligations during the Transition Period, TWT will
begin paying you, effective November 1, 2004, severance in the pre-tax amount of
$150,000 ($9,375/paycheck * 2 paychecks/month * 8 months) (the "Payment").
Subject to Section 4 and 5 below, this Payment will be payable in installments
on TWT's regular payroll dates until the amount has been paid in full. Each
installment of the Payment will occur in the amount stated above each payroll
period, except that the final installment may be adjusted so that the total
Payment equals $150,000. Each portion of the Payment will be subject to
deductions for income and payroll taxes. The period during which you continue to
receive the Payment is the "Payment Period."

      If you receive compensation from any other employer or if you receive fees
for any consulting services, you are required to notify TWT immediately. Failure
to notify TWT, could jeopardize the benefits received by you in this Agreement
and TWT, in its sole discretion may terminate further Payment and other
considerations immediately. TWT reserves the right to terminate immediately any
future Payments and other considerations following receipt of notice of
compensation from another employer or fees for any consulting services;
provided, however, that in any case, TWT will pay three (3) months severance
payments following your notice, unless fewer than three (3) payments remain due,
in which case TWT will pay you just those remaining. TWT assumes you will
cooperate with John Puisis and others as designated during the transition period
and that you will comply with the terms of your Agreement with TWT. Failure to
comply with the above mentioned could jeopardize the Payment and benefits
received by you in this Agreement.

      If you have not secured a new position by the end of the eight month
Payment Period, provided you have complied with this Agreement, TWT is open to
discussing the possibility of extending the Payment Period.

      You understand that TWT has offered you this Agreement with the intent
that you will not receive unemployment compensation until after the Payment
Period ends and you agree not to apply for unemployment benefits until after the
Payment Period ends. TWT agrees it will not affirmatively challenge your
entitlement to unemployment compensation benefits after the Payment Period ends.

<PAGE>

October 19, 2004
John Comerford
Page 3 of 8

      TWT will, on your termination date, pay you $5,000 for outplacement
services. TWT will payout 100% of your accrued and unused PTO balance.

      3.    SPECIAL EQUITY. TWT will, at its discretion, provide a special
equity privilege whereby if you are deemed by TWT to cooperate and support the
best interests of TWT, then TWT will give you accelerated vesting on select
unvested stock options as identified in the attached Exhibit A, which is
incorporated herein by this reference. Options on the accelerated vesting
schedule, as identified on Exhibit A, will vest 12 months after the termination
date or on November 1, 2005, and may be exercised within two years upon vesting.
Additionally, for stock options already vested on the termination date, TWT will
provide an extended exercise date beyond the ninety (90) day limitation up to
two years from the termination date of November 1, 2004. TWT may revoke extended
exercise provisions provided within this Section at any time at TWT's sole
discretion for your failure, in TWT's sole judgment, to act in accordance with
your obligations hereunder or to act in the best interests of TWT. In the event
of such revocation, you will receive written notice from TWT and you will be
able to exercise only those options that were vested per their original vesting
schedule as of November 1, 2004 provided such exercise is completed within
ninety (90) calendar days of the date of TWT's notice of revocation.

            4.    RELEASE OF CLAIMS. In exchange for the Payment 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. 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 Family Medical Leave
Act, the Americans with Disabilities Act; the Wisconsin Fair Employment
Practices Act and if applicable, the Age Discrimination in Employment Act, 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, 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 if you have lab books that your
notebooks 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.

            b.    Your Representation and Waiver. You represent that you have
not filed 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

<PAGE>

October 19, 2004
John Comerford
Page 4 of 8

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 4. 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;

            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.

      5.    YOUR CONTINUING OBLIGATIONS.

            a.    Your Employee Agreement with Third Wave Technologies, Inc.
With Respect to Confidential Information and Invention Assignment ("Employment
Agreement") dated August 9, 2004 is hereby incorporated by reference and any
provision of said Agreement not superceded by a specific provision of this
Agreement shall remain in effect and be binding on the parties with respect to
your post employment obligations. A copy is included with this letter Agreement.

            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.

<PAGE>

October 19, 2004
John Comerford
Page 5 of 8

            (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 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 damages for the violation of this
      Section entitled "Confidentiality" 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.

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

      6.    NON-DISPARAGEMENT. You 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.

      7.    NON-DISCLOSURE. You agree not to disclose the terms of this
Agreement to any person outside of TWT Senior Management, 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.

      8.    VIOLATION OF THIS AGREEMENT. You represent that up until the time
you sign this Agreement, you have not violated your Employment Agreement, the
confidentiality obligations described in Section 5 above, made disparaging
comments or remarks about TWT or about any of the Releasees as described in
Section 6 above, or discussed or disclosed the existence or terms of this
Agreement as described in Section

<PAGE>

October 19, 2004
John Comerford
Page 6 of 8

7 above. 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 the event that TWT finds that the representation in the previous
sentence is inaccurate or untrue, or if you violate the provisions or your
Employment Agreement or this Agreement hereof, you agree that TWT will be
entitled to immediately stop paying the Payments and revoke any other benefits
received under this Agreement 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 violation of this Agreement or the
Employment Agreement has occurred, TWT will be entitled to a complete recovery
of all Payments previously made during the Payment Period. 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 Employment Agreement.

      9.    NON-SOLICITATION. You acknowledge and confirm that you continue to
be bound by section seven (7) of your Employee Agreement with Third Wave
Technologies, Inc. with Respect to Confidential Information and Invention dated
August 9, 2004 regarding non-solicitation of employees. In addition, you shall
not, prior to the expiration of one (1) year following the end of the Payment
Period, 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
Payment Period solicit, encourage or otherwise induce any suppliers,
collaborators, customers or third parties, with whom TWT has established
relationships to discontinue their relationships with TWT.

      10.   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,

<PAGE>

October 19, 2004
John Comerford
Page 7 of 8

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.

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

            a.    Except as provided in Section 3 above, 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, any TWT personnel documents, handbooks, or policies and any prior customs or
practices of TWT except for your Employment Agreement.

            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.    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

<PAGE>

October 19, 2004
John Comerford
Page 8 of 8

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/ John Puisis
                                             -----------------------------------
                                             John Puisis
                                             President & Chief Executive Officer

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

Dated this 25th day of October, 2004.        /s/ John Comerford
                                             -----------------------------------
                                             John Comerford
<PAGE>

John Comerford
Exhibit A

Total vested options as of termination date = 189,100
Number of options under two-year exercise period = 40,000

<Table>
<Caption>

                  STOCK OPTIONS                     # OPTIONS VESTED              OPTIONS UNDER ACCELERATED VESTING
GRANT DATE          # OPTIONS      GRANT PRICE         ON 11/1/04            GRANT DATE        # OPTIONS      GRANT PRICE
--------------------------------------------------------------------         --------------------------------------------
<S>               <C>              <C>             <C>                       <C>               <C>            <C>
9/11/2000                30,000          $8.78                30,000         9/11/2000                 0            $8.78
10/3/2000                 9,600          $8.78                 9,600         10/3/2000                 0            $8.78
6/12/2001                81,000         $11.00                60,750         6/12/2001                 0           $11.00
6/12/2002               140,000          $2.13                70,000         6/12/2002            10,000            $2.13
7/17/2003                75,000          $4.00                18,750         7/17/2003            30,000            $4.00
2/25/2004                16,500          $3.37                     0         2/25/2004                 0            $3.37
--------------------------------------------------------------------         --------------------------------------------

Totals                  352,100                              189,100                              40,000

</Table>

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