e10vq

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GoFKQrVnGM/SaTHxkRLQCAFvPxMn27RnoXm+f+gDvqjLlXjpfqDMkkfRnBEnx0fG ipWao5SDYWdmPEEf8+TFXQ== 0000950137-07-016925.txt : 20071109 0000950137-07-016925.hdr.sgml : 20071109 20071109151500 ACCESSION NUMBER: 0000950137-07-016925 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20070930 FILED AS OF DATE: 20071109 DATE AS OF CHANGE: 20071109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: THIRD WAVE TECHNOLOGIES INC /WI CENTRAL INDEX KEY: 0001120438 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 391791034 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-31745 FILM NUMBER: 071231027 BUSINESS ADDRESS: STREET 1: 502 S ROSA RD CITY: MADISON STATE: WI ZIP: 53719-1256 BUSINESS PHONE: 608-663-7036 MAIL ADDRESS: STREET 1: 502 S. ROSA ROAD CITY: MADISON STATE: WI ZIP: 53719 10-Q 1 c21324e10vq.htm QUARTERLY REPORT e10vq

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD TO

COMMISSION FILE NUMBER: 000-31745

THIRD WAVE TECHNOLOGIES, INC.

(Exact name of Registrant as specified in its charter)


DELAWARE (State or other jurisdiction of incorporation or organization)		39-1791034 (I.R.S. Employer Identification No.)


502 S. ROSA ROAD, MADISON, WI		53719
(Address of principal executive offices)		(Zip Code)

(888) 898-2357
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of Exchange Act. (Check one):

Large Accelerated Filer o Accelerated Filer þ Non-Accelerated Filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

The number of shares outstanding of the registrant’s Common Stock, $.001 par value, as of November 7, 2007, was 43,673,173.

THIRD WAVE TECHNOLOGIES, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED September 30, 2007

TABLE OF CONTENTS


	PAGE NO.
PART I FINANCIAL INFORMATION		3
Item 1. Consolidated Financial Statements		3
Consolidated Balance Sheets (Unaudited) as of September 30, 2007 and December 31, 2006		3
Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2007 and 2006		4
Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2007 and 2006
Notes to Consolidated Financial Statements (Unaudited)		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3. Quantitative and Qualitative Disclosures About Market Risk		20
Item 4. Controls and Procedures		20
PART II OTHER INFORMATION		20
Item 1. Legal Proceedings		20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		21
Item 3. Defaults Upon Senior Securities		21
Item 4. Submission Of Matters To A Vote Of Security Holders		21
Item 5. Other Information		21
Item 6. Exhibits		21
SIGNATURES		22
EXHIBITS		23

PART I — FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
THIRD WAVE TECHNOLOGIES, INC.
Consolidated Balance Sheets (Unaudited)


	September 30, 2007			December 31, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	43,204,188		$	42,428,841
Short-term investments		385,000			1,770,000
Accounts receivable, net of allowance for doubtful accounts of $250,000 and $200,000 at September 30, 2007 and December 31, 2006, respectively		5,153,810			4,756,497
Inventories		4,866,651			3,513,909
Prepaid expenses and other assets		953,940			463,139

Total current assets		54,563,589			52,932,386

Equipment and leasehold improvements:
Machinery and equipment		17,030,791			16,623,560
Leasehold improvements		2,922,220			2,362,676

		19,953,011			18,986,236
Less accumulated depreciation		14,719,803			14,763,932

		5,233,208			4,222,304


Intangible assets, net of accumulated amortization		931,765			2,135,884
Goodwill		489,873			489,873
Capitalized license fees, net of accumulated amortization		3,147,456			2,624,580
Other assets		3,152,171			1,828,949


Total assets	$	67,518,062		$	64,233,976

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,542,852		$	7,095,860
Accrued payroll and related liabilities		2,413,394			3,856,999
Other accrued liabilities		1,204,645			1,446,500
Deferred revenue		—			109,052
Capital lease obligations due within one year		70,759			124,220
Long-term debt due within one year		—			368,269

Total current liabilities		10,231,650			13,000,900

Long-term debt		15,588,508			15,182,478
Deferred revenue — long-term		—			36,330
Capital lease obligations — long-term		54,323			99,446
Other liabilities		5,421,104			4,776,272
Minority interest in subsidiary		386,143			465,134

Shareholders’ equity:
Participating preferred stock, Series A, $.001 par value, 10,000,000 shares authorized, no shares issued and outstanding		—			—
Common stock, $.001 par value, 100,000,000 shares authorized, 43,722,150 shares issued, 43,504,149 shares outstanding at September 30, 2007 and 42,135,713 shares issued and 41,917,713 shares outstanding at December 31, 2006		43,722			42,136
Additional paid-in capital		223,176,620			209,355,204
Unearned stock compensation		—			(6,354	)
Treasury stock at cost, 218,000 shares		(877,159	)		(877,159	)
Foreign currency translation adjustment		143,562			(102,186	)
Accumulated deficit		(186,650,411	)		(177,738,225	)

Total shareholders’ equity		35,836,334			30,673,416

Total liabilities and shareholders’ equity	$	67,518,062		$	64,233,976

See accompanying notes to consolidated financial statements.

THIRD WAVE TECHNOLOGIES, INC.
Consolidated Statements of Operations
(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2006			2007			2006

Revenues:
Clinical product sales	$	6,734,778		$	5,368,470		$	18,963,811		$	15,136,818
Research product sales		1,403,070			1,181,226			3,035,833			5,809,175
License and royalty revenue		19,897			51,827			232,080			106,353
Grant revenue		—			—			—			182,876


Total revenues		8,157,745			6,601,523			22,231,724			21,235,222


Operating expenses:
Cost of goods sold		2,141,198			2,237,106			6,098,633			6,298,027
Research and development		5,811,401			3,451,043			16,134,831			8,785,640
Selling and marketing		2,888,135			2,713,646			8,698,757			8,634,435
General and administrative		4,821,128			3,536,620			11,010,630			11,482,926
Litigation		1,784,324			255,809			3,433,618			1,438,671
Restructuring		—			(180,000	)		—			(180,000	)


Total operating expenses		17,446,186			12,014,224			45,376,469			36,459,699


Loss from operations		(9,288,441	)		(5,412,701	)		(23,144,745	)		(15,224,477	)

Other income (expense):
Interest income		503,010			368,727			1,584,489			1,115,637
Interest expense		(300,168	)		(55,251	)		(896,563	)		(161,433	)
Other		2,485,966			(118,845	)		13,156,726			(98,949	)

Total other income (expense)		2,688,808			194,631			13,844,652			855,255

Loss before minority interest	$	(6,599,633	)	$	(5,218,070	)	$	(9,300,093	)	$	(14,369,222	)

Minority interest in subsidiary		169,170			65,481			387,907			106,327


Net loss	$	(6,430,463	)	$	(5,152,589	)	$	(8,912,186	)	$	(14,262,895	)

Net loss per share — basic and diluted	$	(0.15	)	$	(0.12	)	$	(0.21	)	$	(0.34	)
Weighted average shares outstanding — basic and diluted		42,942,190			41,515,143			42,454,591			41,427,973

See accompanying notes to consolidated financial statements.

THIRD WAVE TECHNOLOGIES, INC.
Consolidated Statements of Cash Flows
(Unaudited)


	Nine Months Ended September 30,
	2007			2006
OPERATING ACTIVITIES:
Net loss	$	(8,912,186	)	$	(14,262,895	)
Adjustments to reconcile net loss to net cash used in operating activities:
Minority interest in net loss of subsidiary		(387,907	)		(106,327	)
Depreciation and amortization		1,283,019			1,230,262
Amortization of intangible assets		1,204,119			1,128,564
Amortization of licensed technology		827,824			939,998
Noncash stock compensation		3,851,638			2,720,817
Interest accretion related to convertible note payable		677,274			—
Impairment charge and loss on disposal of equipment		161,029			28,564
Changes in operating assets and liabilities:
Accounts receivable		(392,523	)		(625,604	)
Inventories		(1,352,995	)		(1,171,114	)
Prepaid expenses and other assets		(1,802,687	)		(333,386	)
Accounts payable		(199,767	)		(1,118,105	)
Accrued expenses and other liabilities		(1,412,104	)		971,293
Deferred revenue		(145,382	)		(89,235	)

Net cash used in operating activities		(6,600,648	)		(10,687,168	)

INVESTING ACTIVITIES:

Purchases of equipment and leasehold improvements		(2,451,933	)		(570,668	)
Proceeds on sale of equipment		1,439			—
Purchases of licensed technology		(912,292	)		(702,274	)
Purchases of short-term investments		(960,000	)		(1,770,000	)
Sales and maturities of short-term investments		2,345,000			11,035,000
Change in restricted cash balance		—			805,184

Net cash provided by (used in) investing activities		(1,977,786	)		8,797,242

FINANCING ACTIVITIES:
Payments on long-term debt		(639,513	)		(282,070	)
Payments on capital lease obligations		(98,584	)		(106,702	)
Proceeds from issuance of common stock, net		4,556,614			729,286
Proceeds from minority equity investment in subsidiary		5,259,058			5,093,973
Repurchase of common stock		(53,492	)		—

Net cash provided by financing activities		9,024,083			5,434,487


Effect of exchange rate changes on cash		329,698			—


Net increase in cash and cash equivalents		775,347			3,544,561


Cash and cash equivalents at beginning of period		42,428,841			27,681,704


Cash and cash equivalents at end of period	$	43,204,188		$	31,226,265

Noncash investing and financing activities:

•		During the nine months ended September 30, 2007, the Company issued 79,441 shares of common stock as partial payment of amounts earned by employees under the 2006 Incentive Plan.

•		During the nine months ended September 30, 2006 the Company entered into capital lease obligations of $58,659.

•		During the nine months ended September 30, 2006 the Company entered into a license agreement under which the Company will pay 1,000,000 Euros over two years. The estimated present value of the license is $1,122,338.

•		During the nine months ended September 30, 2007 the Company entered into a license agreement under which the Company will pay $1,250,000 over time through 2010. The estimated present value of the license is $1,150,700.

See accompanying notes to consolidated financial statements.

THIRD WAVE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2007
(Unaudited)

(1) Basis of Presentation

The accompanying unaudited consolidated financial statements of Third Wave Technologies, Inc. have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of results that may be expected for the year ending December 31, 2007.

The balance sheet at December 31, 2006 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

The accompanying unaudited consolidated financial statements should be read in conjunction with the audited financial statements and footnotes thereto included in our Form 10-K for the fiscal year ended December 31, 2006 filed with the Securities and Exchange Commission (SEC).

(2) Settlement

In September 2004, the Company filed a suit against Stratagene Corporation alleging patent infringement of two patents concerning the Company’s proprietary Invader chemistry. The case was tried before a jury in August 2005, and the jury found that Stratagene willfully infringed the Company’s patents and that the patents were valid and awarded $5.29 million in damages. The Court subsequently tripled that judgment and awarded the Company interest and attorneys fees of $4.2 million. Stratagene appealed the verdict to the Court of Appeals for the Federal Circuit in Washington, D.C.

On January 29, 2007, the Company and Stratagene entered into an out-of-court settlement regarding this litigation. Under the terms of the settlement Stratagene paid the Company $10.75 million in cash to satisfy the outstanding judgment and dropped its appeal in its entirety. The parties also agreed to dismiss all litigation, including the suit filed by Stratagene against Third Wave in the District of Delaware.

(3) Net Loss Per Share

In accordance with GAAP, basic net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the respective periods. Diluted net loss per share takes into account the weighted average shares from options that could potentially dilute basic net income per share in the future. Shares associated with stock options are excluded for the periods presented because they are anti-dilutive.

The following table presents the calculation of basic and diluted net loss per share:


	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30						SEPTEMBER 30
	2007			2006			2007			2006
Numerator:
Net loss	$	(6,430,463	)	$	(5,152,589	)	$	(8,912,186	)	$	(14,262,895	)

Denominator:
Weighted average shares outstanding — basic		42,942,190			41,515,143			42,454,591			41,427,973
Dilutive securities — stock options		N/A			N/A			N/A			N/A


Weighted average shares outstanding — diluted		42,942,190			41,515,143			42,454,591			41,427,973
Basic net loss per share	$	(0.15	)	$	(0.12	)	$	(0.21	)	$	(0.34	)
Diluted net loss per share	$	(0.15	)	$	(0.12	)	$	(0.21	)	$	(0.34	)

(4) Shareholder’s Equity

The Company purchases shares of its common stock to cover employee related taxes withheld on vested restricted shares. During the nine months ended September 30, 2007, the Company repurchased approximately 10,000 shares of its common stock for an aggregate price of approximately $53,000.

The Company has Incentive Stock Option Plans for its employees and Nonqualified Stock Option Plans (collectively, the Plans) for employees and non-employees under which an aggregate of 13,213,183 stock options and stock purchase rights (including restricted stock units (RSUs)) may be granted. Options under the Plans have a maximum life of ten years. Options vest at various intervals, as determined by the compensation committee of the Board of Directors at the date of grant. At September 30, 2007, approximately 2.1 million shares were available for future grant under the Plans.

Stock Options

The following table summarizes the stock option activity under the Plans for the nine months ended September 30, 2007:


						WEIGHTED
				WEIGHTED		AVERAGE		AGGREGATE
	NUMBER OF			AVERAGE		CONTRACTUAL		INTRINSIC
	SHARES			EXERCISE PRICE		LIFE		VALUE
Outstanding at December 31, 2006		7,787,607		$	4.12
Granted		79,829			6.88
Exercised		(1,390,563	)		3.12
Forfeited		(122,388	)		4.95

Outstanding at September 30, 2007		6,354,485		$	4.38		6.0	$	27,128,525
Options exercisable at September 30, 2007		4,977,407		$	4.60		5.4	$	20,187,269

The weighted average fair value of stock options granted in the nine months ended September 30, 2007 and 2006 was $3.97 and $1.90, respectively, using the Black-Scholes option-pricing model.

The calculations were made for the nine months ended September 30, 2007 and 2006 using the following assumptions:


	2007			2006
Expected term (years)		5			5
Risk-free interest rate		4.58	%		4.83	%
Expected volatility		66	%		74	%
Expected dividend yield		0	%		0	%
Forfeiture rate		25	%		25	%

The expected volatility is based on the historical volatility of the Company’s common stock. The Company uses historical option activity to estimate the forfeiture rate, expected term of the options and the option exercise and employee termination behavior. The Company considers all employees to have similar exercise behavior and therefore has not identified separate homogeneous groups for valuation. The expected term of the options represents the period of time the options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual term of the options is based on the U.S. Treasury constant maturity interest rate which has a term that is consistent with the expected life of the stock options.

As of September 30, 2007, there was approximately $2.4 million of total unrecognized compensation cost related to the stock options granted under the Plans. The intrinsic value of the shares acquired upon exercise of stock options in the nine months ended September 30, 2007 and 2006 was $5.4 million and $0.4 million, respectively.

Restricted Stock Units

The Company’s stock plan also permits the granting of restricted stock units to eligible employees and non-employee directors. Restricted stock units are payable in shares of common stock upon vesting. The restricted stock units vest at various intervals as

determined by the compensation committee of the Board of Directors at the date of grant. The following table presents a summary of the Company’s nonvested restricted stock units granted to employees as of September 30, 2007.


	NINE MONTHS ENDED
	SEPTEMBER 30, 2007
	NUMBER			WEIGHTED
	OF			AVERAGE
	SHARES			FAIR VALUE
Nonvested restricted stock units at December 31, 2006		109,079		$	2.84
Granted		557,709			4.78
Vested		(105,880	)		3.24
Forfeited		(12,627	)		2.25

Nonvested restricted stock units at September 30, 2007		548,281		$	4.73

As of September 30, 2007, there was approximately $1.9 million of total unrecognized compensation cost related to the nonvested restricted stock units granted under the plan. The expense is expected to be recognized over the vesting period. Compensation expense related to restricted stock units was approximately $252,000 in the nine months ended September 30, 2007. The aggregate intrinsic value of the restricted stock units outstanding at September 30, 2007 was $4.7 million.

Employee Stock Purchase Plan

The Company also has an Employee Stock Purchase Plan (Purchase Plan) under which an aggregate of 1,256,800 common shares may be issued. All employees are eligible to participate in the Purchase Plan. Eligible employees may make contributions through payroll deductions of up to 10% of their compensation. The price of common stock purchased under the Purchase Plan is 85% of the lower of the fair market value of the common stock at the beginning or end of the offering period. There were 99,697 and 67,267 shares sold to employees in the nine months ended September 30, 2007 and 2006, respectively. At September 30, 2007, approximately 207,000 shares were available for issuance under the Purchase Plan.

Minority Interest

In April 2006, Third Wave Japan, Inc., a formerly wholly-owned subsidiary of the Company (TWT Japan), entered into a Series A Preferred Stock and Warrant Purchase Agreement with Mitsubishi Corporation and CSK Institute for Sustainability, LTD. Under this purchase agreement, Mitsubishi and CSK invested (¥)580 million (approximately $5.1 million) in TWT Japan in exchange for Series A convertible preferred stock of TWT Japan and warrants to purchase TWT Japan common stock. Pursuant to the transaction, Mitsubishi and CSK acquired approximately 17% of TWT Japan prior to the exercise of the warrants or 20% after exercise of the warrants.

On May 31, 2007, TWT Japan entered into a Series A Preferred Stock Purchase Agreement with Mitsubishi, CSK, BML, Inc., Daiichi Pure Chemicals Co., Ltd., Toppan Printing Co., Ltd. and Shimadzu Corporation. Under this purchase agreement, these investors purchased (¥)640.1 million (approximately $5.3 million) of TWT Japan Series A convertible preferred stock, representing approximately 12.9% of TWT Japan’s outstanding shares and approximately 12.4% of its outstanding equity on a fully-diluted basis. As a result of the transaction and the prior investments made by Mitsubishi and CSK in April 2006, outside investors own approximately 27.5% of TWT Japan prior to the exercise of outstanding warrants or 31% after exercise of the warrants. The proceeds from these equity investments are required to be used in the operations of TWT Japan.

At the time of the original investment, minority interest of $704,000 was recorded on the consolidated balance sheet to reflect the share of the net assets of TWT Japan held by minority investors. After the second investment, an additional $210,000 was recorded as minority interest on the consolidated balance sheet to reflect the increased share of the net assets of TWT Japan held by investors. For the nine months ended September 30, 2007, minority interest was reduced by approximately $289,000 for the minority investors’ share of the net losses and change in foreign currency translation adjustments of TWT Japan.

(5) Inventories

Inventories are carried at the lower of cost or market using the first-in, first-out (FIFO) method for determining cost.

Inventories consist of the following:


	SEPTEMBER 30,			DECEMBER 31,
	2007			2006
Raw materials	$	2,510,487		$	2,283,852
Finished goods		2,117,437			1,367,177
Work in process		974,727			517,880
Reserve for excess and obsolete inventory		(736,000	)		(655,000	)

Total inventories	$	4,866,651		$	3,513,909

(6) Stock-based Compensation

Included in operating expenses are the following stock-based compensation charges, net of forfeitures related to terminated employees:


	THREE MONTHS ENDED				NINE MONTHS ENDED
	SEPTEMBER 30,				SEPTEMBER 30,
	2007		2006		2007		2006
Cost of goods sold	$	26,569	$	43,636	$	78,926	$	105,945
Research and development		203,218		155,982		541,393		476,892
Selling and marketing		154,674		183,728		437,100		565,234
General and administrative		2,059,138		551,821		2,794,219		1,572,746

Total stock-based compensation	$	2,443,599	$	935,167	$	3,851,638	$	2,720,817

(7) Comprehensive Loss

The components of comprehensive income (loss) are as follows:


	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2007			2006			2007			2006
Net loss	$	(6,430,463	)	$	(5,152,589	)	$	(8,912,186	)	$	(14,262,895	)
Other comprehensive loss:
Foreign currency translation adjustments		336,083			(114,167	)		245,748			(159,474	)

Comprehensive loss	$	(6,094,380	)	$	(5,266,756	)	$	(8,666,438	)	$	(14,422,369	)

(8) Amortizable Intangible Assets

Amortizable intangible assets consist of the following:


	SEPTEMBER 30, 2007				DECEMBER 31, 2006
	GROSS				GROSS
	CARRYING		ACCUMULATED		CARRYING		ACCUMULATED
	AMOUNT		AMORTIZATION		AMOUNT		AMORTIZATION
Costs of settling patent litigation	$	10,533,248	$	10,524,944	$	10,533,248	$	9,396,380
Technology license		915,828		76,320		915,828		7,632
Trademark		91,583		7,630		91,583		763
Customer agreements		38,000		38,000		38,000		38,000

Total	$	11,578,659	$	10,646,894	$	11,578,659	$	9,442,775

(9) Restructuring and Impairment of Long Lived Assets

During the third quarter of 2002, we announced a restructuring plan designed to simplify product development and manufacturing operations and reduce operating expenses. The restructuring charges recorded were determined based upon plans submitted by the Company’s management and approved by the Board of Directors using information available at the time. The restructuring charge included $2.5 million for the consolidation of facilities, $500,000 for prepayment penalties mainly under capital lease arrangements, an impairment charge of $7.2 million for abandoned leasehold improvements and equipment to be sold and $900,000 of other costs

related to the restructuring. The Company also recorded a $1.1 million charge within cost of goods sold related to inventory that was considered obsolete based upon the restructuring plan.

The facilities charge contained estimates based on the Company’s potential to sublease a portion of its corporate office. The Company has offered the corporate office space for sublease, but has been unable to sublease the space. Accordingly, the Company decreased its estimate of the amount of sublease income it expects to receive. The estimated lease and operating expenses were also reduced, based on a portion of the office space being utilized and revisions to the building lease.

The following table shows the changes in the restructuring accrual since December 31, 2006. The remaining restructuring balance of $0.5 million is for rent payments on a non-cancelable lease, net of estimated sublease income, which will continue to be paid over the lease term through 2011. The current portion of the accrual is included in other accrued liabilities on the balance sheets and the remainder is included in other long-term liabilities.


Accrued restructuring balance at December 31, 2006	$	631,260
Payments made		(97,747	)

Accrued restructuring balance at September 30, 2007	$	533,513

(10) Other Long-term Liabilities

Other long-term liabilities consist of the following items:


	SEPTEMBER 30,		DECEMBER 31,
	2007		2006
License payments	$	1,557,406	$	1,048,260
Long-term Incentive Plan		2,267,601		1,885,989
Restructuring		399,558		505,681
Rent		996,539		1,103,313
Other		200,000		233,029

	$	5,421,104	$	4,776,272

(11) Income Taxes

On July 13, 2006, the Financial Accounting Standards Board (“FASB”) issued Financial Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109”. FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes”, and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under FIN No. 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, FIN No. 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN No. 48 is effective for fiscal years beginning after December 15, 2006.

The Company adopted the provisions of FIN No. 48 on January 1, 2007. The total amount of unrecognized tax benefits as of the date of adoption was not significant. As such, there are no unrecognized tax benefits included in the balance sheet that would, if recognized, affect the effective tax rate.

The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accruals for interest and penalties on the Company’s Balance Sheets at December 31, 2006 and at September 30, 2007, and has not recognized any interest or penalties in the Statement of Operations for the first nine months of 2007.

The Company is subject to taxation in the U.S. and various state jurisdictions. All of the Company’s tax years are subject to examination by the U.S. and state tax authorities due to the carryforward of unutilized net operating losses and research and development credits.

The adoption of FIN No. 48 did not impact the Company’s financial condition, results of operations or cash flows. At September 30, 2007, the Company had deferred tax assets of $63.2 million. The deferred tax assets are primarily composed of federal and state tax net operating loss carryforwards and federal and state research and development credit carryforwards. Due to uncertainties surrounding the Company’s ability to generate future taxable income to realize these assets, a full valuation allowance has been established to offset the Company’s net deferred tax asset. Additionally, the future utilization of the Company’s net operating loss and research and development credit carryforwards to offset future taxable income may be subject to a substantial annual limitation as a result of ownership changes that may have occurred previously or that could occur in the future. Any carryforwards that will expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance. Due to the existence of the valuation allowance, future changes in our unrecognized tax benefits will not impact the Company’s effective tax rate.

(12) Reclassifications

Certain reclassifications have been made to the 2006 financial statements to conform to the 2007 presentation.

THIRD WAVE TECHNOLOGIES, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations as of September 30, 2007 and for the three and nine months ended September 30, 2007 and 2006 should be read in conjunction with our Form 10-K for the fiscal year ended December 31, 2006 filed with the SEC. In this Form 10-Q, the terms “we,” “us,” “our,” “Company,” and “Third Wave” each refer to Third Wave Technologies, Inc. and its subsidiaries. The following discussion of our financial condition and results of our operations should be read in conjunction with our Financial Statements, including the Notes thereto, included elsewhere in this Form 10-Q.

OVERVIEW

Third Wave Technologies, Inc. is a leading molecular diagnostics company. We believe our proprietary Invader chemistry, a novel, molecular chemistry, is easier to use and more accurate than competing technologies. These and other advantages conferred by our chemistry are enabling us to provide clinicians and researchers with superior molecular solutions.

More than 200 clinical laboratory customers are using Third Wave’s molecular diagnostic reagents. Other customers include pharmaceutical and biotechnology companies, academic research centers and major health care providers.

In August 2005, we received clearance from the U.S. Food and Drug Administration (the FDA) for our Invader UGT1A1 Molecular Assay. The Invader UGT1A1 Molecular Assay is cleared for use to identify patients who may be at increased risk of adverse reaction to the chemotherapy drug Camptosar(R) (irinotecan) by detecting and identifying specific mutations in the UGT1A1 gene that have been associated with that risk. Camptosar, marketed in the U.S. by Pfizer, Inc., is used to treat colorectal cancer and was relabeled in 2005 to include dosing recommendations based on a patient’s genetic profile. In December 2006, we submitted a cystic fibrosis product to the FDA. The Company is awaiting FDA clearance for this product.

We also market a growing number of products, including analyte specific reagents (ASRs). These ASRs allow certified clinical reference laboratories to create assays to perform hepatitis C virus genotyping, inherited disorders testing (e.g., Factor V Leiden), and a host of other mutations associated with genetic predispositions and other diseases. We have developed or plan to develop a menu of molecular diagnostic products for clinical applications that include genetic testing, pharmacogenetics, and women’s health. We also have a number of other Invader products including those for research, agricultural and other applications.

The FDA has issued a guidance document regarding the sale of ASRs. This guidance document may negatively impact our ability to continue to successfully market and sell our ASR products.

Currently, one of our key strategic initiatives is the commercialization of our Human Papillomavirus (HPV) offering. In August 2006, we began clinical trials for two HPV premarket approval submissions to the FDA. We expect to spend between $12 million and $17.5 million on these submissions over three years. If for any reason these trials are not successful or are substantially delayed or for any other reason we are unable to successfully commercialize our HPV offering, our business and prospects would likely be materially adversely impacted. Additionally, we anticipate competition in the HPV market as additional large competitors have announced plans to enter the market in the near future. This competition may have a significant impact on the success of our commercialization of our HPV offering.

In January 2007, Digene Corporation initiated legal proceedings against us over our HPV products. See Part II, Item 1 — Legal Proceedings. Should the outcome of this action be unfavorable, the Company’s business, financial condition, results of operations and cash flows could be materially adversely affected.

Our financial results may vary significantly from quarter to quarter due to fluctuations in the demand for our products, timing of new product introductions and deliveries made during the quarter, the timing of research, development and grant revenues and increases in spending, including expenses related to our product development submissions for FDA clearances or approvals and intellectual property litigation.

CRITICAL ACCOUNTING POLICIES

Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. We review the accounting policies we use in reporting our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, inventories, equipment and leasehold improvements and intangible assets. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Results may differ from these estimates due to actual outcomes being different from those on which we based our assumptions. These estimates and judgments are reviewed by management on an ongoing basis, and by the Audit Committee at the end of each quarter prior to the public release of our financial results. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

REVENUE RECOGNITION

Revenue from product sales is recognized upon delivery which is generally when the title passes to the customer, provided that the Company has completed all performance obligations and the customer has accepted the products. Customers have no contractual rights of return or refunds associated with product sales. Consideration received in multiple element arrangements is allocated to the separate units based upon their relative fair values. The multiple element arrangements involve contracts with customers in which the Company is selling reagent products and leasing equipment to the customer for use during the term of the contract. Based upon the guidance in paragraph 9 of EITF No. 00-21 “Revenue Arrangements with Multiple Deliverables”, both the reagents and equipment have value to the customer on a standalone basis, there is objective and reliable evidence of fair value for both the reagents and equipment and there are no rights of return. The Company has sold both the reagents and equipment separately, and therefore is able to determine a fair value for each. The respective fair values are used to allocate the proceeds received to each of the elements for purposes of recognizing revenue.

Grant revenues consist primarily of research grants from agencies of the federal government the revenue from which is recognized as research is performed. Payments received which are related to future performance are deferred and recorded as revenue when earned. Grant payments designated to purchase specific assets to be used in the performance of a contract are recognized as revenue over the shorter of the useful life of the asset acquired or the contract.

License and royalty revenue include amounts earned from third parties for licenses of the Company’s intellectual property and are recognized when earned under the terms of the related agreements. License revenues are generally recognized upon receipt unless the Company has continuing performance obligations, in which case the license revenue is recognized ratably over the period of expected performance.

RESTRUCTURING AND OTHER CHARGES

The restructuring and other charges resulting from the restructuring plan in the third quarter of 2002 have been recorded in accordance with EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”, Staff Accounting Bulletin No. 100, “Restructuring and Impairment Charges,” and Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The restructuring charge was comprised primarily of costs to consolidate facilities, impairment charges for abandoned leasehold improvements and equipment to be sold or abandoned, prepayment penalties related mainly to capital lease obligations on equipment to be sold or abandoned, and other costs related to the restructuring. The remaining accrued restructuring balance is for rent payments on a non-cancelable lease, net of estimated sublease income. In calculating the cost to consolidate the facilities, we estimated the future lease and operating costs to be paid until the leases are terminated and the amount, if any, of sublease receipts for each location. This required us to estimate the timing and costs of each lease to be terminated, the amount of operating costs, and the timing and rate at which we might be able to sublease the site. To form our estimates for these costs, we performed an assessment of the affected facilities and considered the current market conditions for each site. Our assumptions on the lease payments, operating

costs until terminated, and the offsetting sublease receipts may turn out to be incorrect and our actual cost may be materially different from our estimates.

LONG-LIVED ASSETS—IMPAIRMENT

Equipment, leasehold improvements and amortizable identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For assets held and used, if the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. For assets removed from service and held for sale, we estimate the fair market value of such assets and record an adjustment if the fair value less costs to sell is lower than the carrying value.

Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment tests under SFAS No. 142, “Goodwill and Other Intangible Assets.” The annual impairment test was completed in the quarter ended September 30, 2007 and resulted in no impairment.

STOCK-BASED COMPENSATION EXPENSE

We have adopted SFAS No. 123(R) to account for share-based payments to employees. As a result, we recognize expense for all share-based payments to employees, including grants of employee stock options and RSUs, based on their fair values.

INVENTORIES—SLOW MOVING AND OBSOLESCENCE

Significant management judgment is required to determine the reserve for obsolete or excess inventory. Inventory on hand may exceed future demand either because of process improvements or technology advancements, the amount on hand is more than can be used to meet future need, or estimates of shelf lives may change. We currently consider all inventory that we expect will have no activity within one year or within the period defined by the expiration date of the product, as well as any additional specifically identified inventory to be subject to a provision for excess inventory (including inventory that we determine to be obsolete based on criteria such as changing manufacturing processes and technologies). At September 30, 2007, our inventory reserves were approximately $736,000, or 13% of our $5.6 million total gross inventories.

NEW ACCOUNTING PRONOUNCEMENTS

On July 13, 2006, the Financial Accounting Standards Board (FASB) issued Financial Interpretation (FIN) No. 48, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109”. FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes”, and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under FIN No. 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, FIN No. 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN No. 48 is effective for fiscal years beginning after December 15, 2006.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS No. 157). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is evaluating the impact Statement 157 will have on its financial statements.

RESULTS OF OPERATIONS

Three and Nine Months Ended September 30, 2007 and 2006

NET LOSS. Net loss for the three months ended September 30, 2007 was $6.4 million compared to a net loss of $5.2 million for the corresponding period of 2006. Net loss for the nine months ended September 30, 2007 was $8.9 million, compared to a net loss of $14.3 million for the same period in 2006.

REVENUES. Revenues for the three months ended September 30, 2007 of $8.2 million represented an increase of $1.6 million, compared to revenues of $6.6 million for the corresponding period of 2006. Revenues for the nine months ended September 30, 2007 of $22.2 million represented an increase of $1.0 million, compared to revenues of $21.2 million for the corresponding period of 2006. Following is a discussion of changes in revenues:

Clinical molecular diagnostic product revenue increased to $6.7 million in the quarter ended September 30, 2007 from $5.4 million in the quarter ended September 30, 2006. Clinical revenue for the nine months ended September 30, 2007 increased to $19.0 million, compared to $15.1 million in 2006. The increase in revenue is due to an increase in the number of customers buying our product and growth in purchases from current customers.

Research product revenue increased to $1.4 million in the three months ended September 30, 2007 from $1.2 million in the three months ended September 30, 2006. Research product revenue for the nine months ended September 30, 2007 decreased to $3.0 million from $5.8 million in 2006. During the first half of 2006, we received $2.7 million in Japanese research revenue, the last period in which substantial revenue of this type was generated.

In the nine months ended September 30, 2007, we generated $7.3 million, or 33% of our revenue, from sales to a small number of large clinical testing laboratories compared to $6.7 million, or 31% of our revenue, in the same period of 2006.

COST OF GOODS SOLD. Cost of goods sold consists of materials used in the manufacture of product, depreciation on manufacturing capital equipment, salaries and related expenses for management and personnel associated with our manufacturing and quality control departments and amortization of licenses and other intangible assets. For the three months ended September 30, 2007, cost of goods sold decreased slightly to $2.1 million, compared to $2.2 million in the corresponding period of 2006. Cost of goods sold for the nine months ended September 30, 2007 decreased to $6.1 million from $6.3 million in 2006. The decrease in cost of goods sold was due to operational efficiencies.

RESEARCH AND DEVELOPMENT EXPENSES. Our research activities are focused on moving our technology into broader markets. Our development activities are focused on new products to expand our molecular diagnostics menu. Research and development expenses consist primarily of salaries and related personnel costs, material costs for assays and product development, fees paid to consultants, depreciation and facilities costs and other expenses related to the design, development, testing, (including clinical trials to validate the performance of our products) and enhancement of our products, and acquisition of technologies used in our products. Research and development costs are expensed as they are incurred. Research and development expenses for the three months ended September 30, 2007 were $5.8 million, compared to $3.5 million for the three months ended September 30, 2006. In the nine months ended September 30, 2007, research and development expenses increased to $16.1 million from $8.8 million in 2006. The increase in research and development expenses was primarily due to an increase in personnel and product development expense (including clinical trial costs incurred by us in pursuit of FDA premarket approval for our HPV offerings). We will continue to invest in research and development, and expenditures in this area will increase as we expand our product development efforts. In addition, as the Company moves towards consideration of FDA cleared or approved products, there will be increased expenses attributed to these activities.

SELLING AND MARKETING EXPENSES. Selling and marketing expenses consist primarily of salaries and related personnel costs for our sales and marketing management and field sales force, commissions, office support and related costs, and travel and entertainment. Selling and marketing expenses for the three months ended September 30, 2007 were $2.9 million, an increase of $0.2 million, compared to $2.7 million for the corresponding period of 2006. The increase in selling and marketing expenses was due to an increase in consulting expenses, compared to the same period in 2006. Selling and marketing expense for the nine months ended September 30, 2007 increased slightly to $8.7 million compared to $8.6 million for the corresponding period of 2006.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist primarily of salaries and related expenses for executive, finance and other administrative personnel, legal and professional fees, office support and depreciation. General and administrative expenses increased to $4.8 million in the three months ended September 30, 2007, from $3.5 million for

the corresponding period in 2006. The increase in the three month period was due to stock-based compensation expense related to a former executive employment agreement. In the nine months ended September 30, 2007, general and administrative expenses decreased to $11.0 million compared to $11.5 million in 2006. The decrease in general and administrative expense was due to a decrease in personnel related expense, sales tax, consulting and legal fees, offset by an increase in stock-based compensation expense compared to the same period in 2006.

LITIGATION EXPENSE. Litigation expense consists of legal fees and other costs associated with patent infringement and other lawsuits. Litigation expense increased to $1.8 million in the three months ended September 30, 2007 from $0.3 million in the corresponding period in 2006. Litigation expense increased to $3.4 million in the nine months ended September 30, 2007 from $1.4 million in 2006. The increase was the result of the increased litigation activity due to the lawsuit with Digene Corporation. We anticipate litigation expense to increase throughout 2007 due to the lawsuit with Digene (see Part II, Item 1: Legal Proceedings).

INTEREST INCOME. Interest income for the three months ended September 30, 2007 and 2006 was $0.5 million and $0.4 million, respectively. Interest income for the nine months ended September 30, 2007 and 2006 was $1.6 million and $1.1 million, respectively.

INTEREST EXPENSE. Interest expense for the three months ended September 30, 2007 was $0.3 million compared to $55,000 in the corresponding period in 2006. Interest expense for the nine months ended September 30, 2007 was $0.9 million compared to $0.2 million in the corresponding period in 2006. The increase in interest expense was due to the interest accretion on the convertible note payable entered into in December 2006.

OTHER INCOME (EXPENSE). Other income for the three months ended September 30, 2007 was $2.5 million compared to other expense of $0.1 million for the same period in 2006. Other income for the nine months ended September 30, 2007 was $13.2 million compared to other expense of $0.1 million for the same period in 2006. Other income in the three months ended September 30, 2007 included the reversal of long-standing accruals. Other income for the nine month period included $10.75 million from the settlement of patent litigation with Stratagene Corporation.

MINORITY INTEREST. Minority interest for the three months ended September 30, 2007 was $0.2 million compared to $65,000 in 2006. Minority interest for the nine months ended September 30, 2007 was $0.4 million compared to $0.1 million in 2006 . Minority interest represents Third Wave Japan’s minority investors’ share of the equity and earnings of the subsidiary.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have financed our operations primarily through private placements of equity securities, research grants from federal and state government agencies, payments from strategic collaborators, equipment loans, capital leases, product sales, convertible notes and an initial public offering. As of September 30, 2007, we had cash and cash equivalents and short-term investments of $43.6 million.

In April 2006 we raised $5.1 million from the sale of a minority equity investment in our Japan subsidiary. In May 2007 we raised an additional $5.3 million from the sale of additional minority equity investments in our Japan subsidiary The proceeds from these equity investments are required to be used in the operations of our Japan subsidiary.

In December 2006 we sold $20,000,000 (at maturity) of Convertible Senior Subordinated Zero-Coupon Promissory Notes (the “Notes”) to an investor for total proceeds of $14,881,878 (the “Purchase Price”). The Notes will mature on December 19, 2011. The Notes do not bear cash interest but accrue original issue discount on the Purchase Price at the rate of 6.00% per year compounded semiannually (the Purchase Price plus such accrued original issue discount, the “Accreted Value”). So long as the Notes remain outstanding, we may not incur indebtedness other than certain Permitted Indebtedness, as such term is defined in the Notes.

The Notes are convertible at the holder’s option into shares of Third Wave common stock at a rate of 124.01565 shares per $1,000 of principal at maturity ($744 of Purchase Price) or a total of 2,480,313 shares. Pursuant to the securities purchase agreement under which we sold the Notes, in January 2007 we filed a registration statement with the Securities and Exchange Commission covering the resale of the shares of common stock issuable upon conversion of the Notes.

After December 19, 2008, if Third Wave common stock closes above $9.00 (150% of the initial conversion price) for 20 consecutive trading days, we may force the conversion of the Notes so long as there is an effective registration statement covering the Common Stock in place. At any time after December 19, 2009, we may redeem the Notes for an amount equal to their Accreted Value. If either an event of default occurs under the Notes (which would include failure to make any payments due under the Notes and certain defaults under other indebtedness) or a change of control occurs with respect to Third Wave, the holders of the Notes may put the Notes to Third Wave for a purchase price equal to 110% of their Accreted Value.

Net cash used in operations for the nine months ended September 30, 2007 was $6.6 million, compared to $10.7 million in the corresponding period in 2006. The change was primarily due to the proceeds received from the settlement of patent litigation with Stratagene Corporation, offset by increased expenses related to our HPV clinical trial and litigation expenses.

Net cash used in investing activities for the nine months ended September 30, 2007 was $2.0 million, compared to net cash provided of $8.8 million in the corresponding period in 2006. Investing activities included capital expenditures of $2.5 million in the nine months ended September 30, 2007 compared to $0.6 million in 2006. Investing activities in the nine months ended September 30, 2007 and 2006 included the payment on license fee arrangements of $0.9 and $0.7 million, respectively. In addition, investing activities in the nine months ended September 30, 2007 included net proceeds of $1.4 million from the maturity and purchase activity of short-term investments compared to $9.3 million in 2006. Investing activities in the nine months ended September 30, 2006 also included a change in the restricted cash balance of $0.8 million.

Net cash provided by financing activities was $9.0 million in the nine months ended September 30, 2007 compared to $5.4 million in 2006. Cash provided by financing activities in the nine months ended September 30, 2007 consisted of proceeds from the sale of common stock under the Company’s employee stock purchase plan and stock option plans of $4.6 million compared to $0.7 million in the corresponding period of 2006. Financing activities in the nine months ended September 30, 2007 and 2006 also included proceeds from a minority equity investment in our Japan subsidiary of $5.3 million and $5.1 million, respectively. In the nine months ended September 30, 2007, $0.6 million was used to repay debt compared to $0.3 million in 2006. In addition, $100,000 was used for capital lease obligations in the nine months ended September 30, 2007 and 2006.

We believe that current cash reserves together with our ability to generate cash through operations, financing activities and other sources will be sufficient to support short-term and long-term liquidity requirements for current operations (including annual capital expenditures). However, we cannot assure you that our business or operations will not change in a manner that would consume available resources more rapidly than anticipated.

We also cannot assure you that we will not require substantial additional funding before we can achieve profitable operations. Our capital requirements depend on numerous factors, including the following:

	•		our progress with our research and development programs;

	•		the need to pursue FDA clearances or approvals of our products;

	•		our level of success in selling our products and technologies;

	•		our ability to establish and maintain successful collaborative relationships;

	•		the costs we incur in securing intellectual property rights, whether through patents, licenses or otherwise;

	•		the costs we incur in enforcing and defending our patent claims and other intellectual property rights;

	•		the need to respond to competitive pressures;

	•		the possible acquisition of complementary products, businesses or technologies; and

	•		the timing of capital expenditures

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. When used in this Form 10-Q the words “believe,” “anticipates,” “intends,” “plans,” “estimates,” and similar expressions are forward-looking statements. Such forward-looking statements contained in this Form 10-Q are based on current expectations. Forward-looking statements may address the following subjects: results of operations; customer growth and retention; development of technologies; losses or earnings; operating expenses, including, without limitation, marketing expense, litigation expense, and technology and development expense; and revenue growth. We caution investors that there can be no assurance that actual results, outcomes or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, among others, our limited operating history, unpredictability of future revenues and operating results, competitive pressures and also the potential risks and uncertainties discussed in the Risk Factors section of this Form 10-Q and under the heading “Overview” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Form 10-Q and in the “Risk Factors” and Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our annual report on Form 10-K for the fiscal year ended December 31, 2006 filed with the SEC, which factors are specifically incorporated herein by this reference. You should also carefully consider the factors set forth in other reports or documents that we file from time to time with the SEC. Except as required by law, we undertake no obligation to update any forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions, or circumstances on which any such statements are based.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk is currently confined to changes in foreign exchange and interest rates. Our exposure to market risk was discussed in the Quantitative and Qualitative Disclosures About Market Risk section of our annual report on Form 10-K for the fiscal year ended December 31, 2006 filed with the SEC. There have been no material changes to such exposures during the second quarter of 2007.

ITEM 4. CONTROLS AND PROCEDURES

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, the Company’s management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation as of the end of the period covered by this report, of the effectiveness of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report. There have been no significant changes during the period covered by this report in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may be involved in litigation relating to claims arising out of our operations in the usual course of business.

In October 2005, we filed a declaratory judgment suit in the United States District Court for the Western District of Wisconsin against Digene Corporation seeking a ruling that our HPV ASRs do not infringe any valid claims of Digene’s human papillomavirus related patents. In January 2006, we reached an agreement with Digene to dismiss the suit without prejudice. We also agreed that neither party would file a suit against the other relating to the Digene human papillomavirus patents for one year. After this period expired, on January 11, 2007, Digene Corporation filed suit against us in the United States Court for the Western District of Wisconsin. The complaint alleges patent infringement of unidentified claims of a single patent related to HPV type 52 by the Company’s HPV ASR product. We filed our response to Digene’s complaint on February 28, 2007, which, in addition to denying the alleged infringement, also asserted that certain Digene sales practices violate certain anti-trust laws. After conducting a hearing on June 22, 2007, the court

released its claim construction order on July 23, 2007 adopting all of Third Wave’s proposed construction. On July 31, 2007, Digene filed a motion to reconsider the court’s claim construction. On September 26, 2007, the court issued an order denying Digene’s motion for reconsideration in its entirety and upheld the earlier claim construction ruling. In response, in a filing to the court, Digene stated that it “believes it will not be able to sustain its claim of infringement.” On October 19, Digene filed a motion for summary judgment on Third Wave’s antitrust counterclaims and a motion for entry of judgment of non-infringement. Trial on Third Wave’s antitrust claims remains set to begin on February 19, 2008.

While no assurance can be given regarding the outcome of the above matter, based on information currently available, the Company believes that the resolution of this matter will not have a material adverse effect on the financial position or results of future operations of the Company. However, because of the nature and inherent uncertainties of litigation, should the outcome of the action be unfavorable, the Company’s business, financial condition, results of operations and cash flows could be materially adversely affected.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in our Form 10-K for the fiscal year ended December 31, 2006 filed with the SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. — None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES. — None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual Meeting of Stockholders held on July 24, 2007, the following matters were submitted to a vote of security holders:

	1.		the election of Kevin T. Conroy and David A. Thompson to serve as directors with terms ending in 2010, and

	2.		the proposal to ratify the appointment of Grant Thornton LLP as independent registered public accounting firm for the fiscal year ending December 31, 2007.

The nominees for director were elected based upon the following votes:


DIRECTOR	VOTES FOR		VOTES WITHHELD
Kevin T. Conroy		38,555,138		533,935
David A. Thompson		38,552,137		536,936

In addition to Mr. Conroy and Mr. Thompson, the term of office of each of the following directors continued after the meeting: Gordon Brunner, James Connelly, Lawrence Murphy, Kay Napier and Lionel Sterling.

The appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2007 was ratified, as follows:


VOTES FOR	VOTES AGAINST	VOTES ABSTAIN	BROKER NON-VOTES
39,011,113	61,523	16,437	0

ITEM 5. OTHER INFORMATION.

On November 7, 2007, the Company’s board of directors approved an annual increase of 1,000,000 shares under the 2000 Stock Plan for fiscal year 2008.

On November 7, 2007, the employment agreement of Cindy S. Ahn, Vice President and General Counsel, was amended and restated to conform to the employment agreements of the other executive officers of the Company.

On November 7, 2007, the Company entered into an employment agreement with Ivan Trifunovich, Senior Vice President. The terms of the employment agreement conform to the terms contained in the employment agreements of other executive officers of the Company.

ITEM 6. EXHIBITS.

The exhibits required to be filed as a part of this Report are listed in the Exhibit Index.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	THIRD WAVE TECHNOLOGIES, INC.
Date: November 1, 2007	/s/ Kevin T. Conroy
	Kevin T. Conroy,
	Chief Executive Officer


Date: November 1, 2007	/s/ Maneesh K. Arora
	Maneesh K. Arora,
	Chief Financial Officer

EXHIBIT INDEX


EXHIBIT
NO.	DESCRIPTION	INCORPORATED BY REFERENCE TO
10.1	Amended and Restated Employment agreement between Cindy S. Ann and Third Wave Technologies, Inc. dated November 7, 2007

10.2	Employment Agreement between Ivan Trifunovich and Third Wave Technologies, Inc. dated November 7, 2007

10.3	Lease Agreement between Third Wave Technologies, Inc and University Research Park, Inc. dated July 13, 2007	Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2007

31.1	CEO’s Certification Pursuant to Section 302 of the Sarbanes Oxley Act of 2002

31.2	CFO’s Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002

32	CEO and CFO Certification pursuant to 18 U.S.C. Section 1350, of Chapter 63 of Title 18 of the United States Code

EX-10.1 2 c21324exv10w1.htm EXHIBIT 10.1 exv10w1

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of the 7^th day of November 2007, by and between Cindy S. Ahn (“Employee”) and Third Wave Technologies, Inc., a Delaware corporation (the “Company”).

WHEREAS, the Company and the Employee are parties to an Employment Agreement dated as of March 12, 2007;

WHEREAS, the Company and the Employee desire to enter into this Agreement to amend and restate the original Agreement in its entirety and to set forth in this Agreement the conditions under which the Employee is to be employed by the Company.

NOW, THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth, and other good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Employment. The Company hereby agrees to employ Employee as its Vice President, Corporate Secretary and General Counsel and Employee hereby agrees to serve the Company in such position, all subject to the terms and provisions of this Agreement. Employee agrees (a) to devote Employee’s full-time professional efforts, attention and energies to the business of the Company, and (b) to perform such reasonable responsibilities and duties customarily attendant to the position of Vice President and General Counsel. Employee may engage in additional activities in connection with (i) serving on corporate, civic and charitable boards and committees, (ii) delivering lectures and fulfilling speaking engagements, (iii) managing personal investments; and (iv) engaging in charitable activities and community affairs, provided that such activities do not interfere with Employee’s performance of Employee’s duties under this Agreement.

2. Term of Employment. Employee’s employment will continue until terminated as provided in Section 6 below (the “Employment Term”).

3. Compensation. During the Employment Term, Employee shall receive the following compensation.

3.1 Base Salary. Employee’s annual base salary on the date of this Agreement is Two Hundred Twenty Thousand Dollars ($220,000), payable in accordance with the normal payroll practices of the Company (“Base Salary”). Employee’s Base Salary will be subject to annual review by the Compensation Committee and/or the Board of Directors of the Company. During the Employment Term, on or about each anniversary date of this Agreement, the Company shall review the Base Salary amount to determine any increases. In no event shall the Base Salary be less than the Base Salary amount for the immediately preceding twelve (12) month period other than as permitted in Section 6.1(c) hereunder.

Committee (pro-rated, as applicable, for a partial calendar year period), and such percentage shall be subject to modification in the initial or subsequent calendar years in the sole discretion of the CEO and the Compensation Committee. Any such bonus shall be based upon the compensation principles of the Company in effect at the time the CEO determines and the Compensation Committee approves the amount of any bonus to be awarded, and except as expressly set forth in Section 7 hereof, Employee shall not be eligible to receive an annual bonus for any calendar year unless Employee remains employed with the Company through December 31 of the applicable calendar year and through the date on which such bonus is approved by the Compensation Committee, provided, however, that in any event, if Employee is terminated with Cause or resigns without Good Reason, or is given or gives notice of either, no bonus will be due thereafter under any circumstance. For the avoidance of doubt, Employee acknowledges and agrees that it has no contractual right under this Agreement to any annual bonus payment or any target bonus percentage, and that any bonus that is paid to Employee shall be at the sole discretion of the CEO and the Compensation Committee.

3.3 Long Term Incentive Plan. Employee shall participate in the Company’s Long Term Incentive Plans (“LTIPs”) at the level and to the extent determined by the Compensation Committee in its sole discretion. Employee’s benefits under the LTIPs shall be determined pursuant to the terms of the plan documents for such LTIPs.

3.4 Equity Incentives and Other Long Term Compensation. The Company, upon the approval of the Compensation Committee, may grant Employee from time to time options or rights to purchase shares of the Company’s common stock, or other forms of equity, both as a reward for past individual and corporate performance, and as an incentive for future performance. Such options or other rights, if awarded, will be pursuant to the Company’s then current stock plan and in accordance with the Company’s Statement of Policy with Respect to Equity Award Approvals in effect from time to time. All options and other equity rights granted to Employee shall vest in equal installments over the four-year period commencing with the date of grant of such options or rights, subject to the acceleration of vesting (i) as described in Section 6.3 hereof, (ii) as described in Section 7.2(c) hereof, and (iii) as may be set forth in the grant agreements issued by the Company, as amended, provided, that in the event of a conflict between any grant agreement and this Agreement (other than Section 6.3 and Section 7.2(c) of this Agreement), the grant agreement shall control.

4. Benefits.

4.1 Benefits. Employee will be entitled to participate in all benefit programs that are generally provided to similarly situated employees of the Company (such as sick leave, insurance (e.g., medical, life and long-term disability), profit-sharing, retirement, and other benefit programs), in accordance with any plan documents applicable to such benefit programs and all rules and policies of the Company related to such benefit programs. The benefits generally provided to employee and others similarly situated is subject to change from time to time in the Company’s sole discretion.

4.2 Vacation and Personal Time. The Company will provide Employee with four (4) weeks of paid vacation each calendar year Employee is employed by the Company, in accordance with Company policy. Unused vacation in any calendar year is lost at the end of such year and does not rollover to the next year. The foregoing vacation days shall be in addition to standard paid holiday days for employees of the Company.

5. Business Expenses. Upon submission of a satisfactory accounting by Employee, consistent with current policies of the Company (as may be modified by the Company from time to time in its sole discretion), the Company will reimburse Employee for any out-of-pocket expenses reasonably incurred by Employee in the furtherance of the business of the Company.

6. Termination.

6.1 By Employee.

(a) Without Good Reason. Employee may terminate Employee’s employment pursuant to this Agreement at any time without Good Reason (as defined below) with at least sixty (60) business days’ written notice (the “Employee Notice Period”) to the Company. Upon termination by Employee under this section, the Company may, in its sole discretion and at any time during the Employee Notice Period, suspend Employee’s duties for the remainder of the Employee Notice Period, as long as the Company continues to pay compensation to Employee, including benefits, throughout the Employee Notice Period.

(b) With Good Reason. Employee may terminate Employee’s employment pursuant to this Agreement with Good Reason (as defined below) at any time within ninety (90) days after the occurrence of an event constituting Good Reason.

(c) Good Reason. “Good Reason” shall mean any of the following: (i) Employee’s Base Salary is reduced in a manner that is not applied proportionately to other senior executive officers of the Company, provided any such reduction shall not exceed thirty percent (30%) of Employee’s then current Base Salary; or (ii) the occurrence of a material breach by the Company of any of its obligations to Employee under this Agreement, provided the Employee gives the Company written notice of such material breach and thirty (30) days to cure such material breach.

6.2. By the Company.

(a) With Cause. The Company may terminate Employee’s employment pursuant to this Agreement for Cause, as defined below, immediately upon written notice to Employee.

(b) Cause. “Cause” shall mean any of the following:

(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 Employee is convicted of a felony;

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

(iv) 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;

(v) any material breach or violation of the Company’s Code of Business Conduct; or

(vi) any material breach by the Employee of this Agreement or any of the Agreements referenced in Section 8 of this Agreement.

(c) Without Cause. Subject to Section 7.1, the Company may terminate Employee’s employment pursuant to this Agreement without Cause upon at least thirty days’ written notice (“Company Notice Period”) to Employee. Upon any termination by the Company under this Section 6.2(c), the Company may, in its sole discretion and at any time during the Company Notice Period, suspend Employee’s duties for the remainder of the Company Notice Period, as long as the Company continues to pay compensation to Employee, including benefits, throughout the Company Notice Period.

6.3 Death or Disability. In the event of the death or Disability (defined herein) of Employee during the Employment Term, (i) Employee’s employment and this Agreement shall immediately and automatically terminate, (ii) the Company shall pay Employee (or in the case of death, employee’s designated beneficiary) Base Salary and accrued but unpaid bonuses, in each case up to the date of termination, and (iii) all equity awards granted to Employee, whether stock options or stock purchase rights under the Company’s equity compensation plan, or other equity awards, that are unvested at the time of termination shall immediately become fully vested and exercisable upon such termination. Neither Employee, her beneficiary nor estate shall be entitled to any severance benefits set forth in Section 7 if terminated pursuant to this Section 6.3. For purposes of this Agreement, “Disability” shall mean any physical incapacity or mental incompetence as a result of which Employee is unable to perform the essential functions of Employee’s job for an aggregate of more than six (6) months during any twelve-month period. Employee acknowledges and agrees that given the nature of Employee’s position with the Company it would cause the Company to suffer an undue hardship if required to retain Employee beyond the six (6) month period if Employee remains unable to perform the essential functions of Employee’s job, with or without a reasonable accommodation.

6.4 Survival. The agreement described in Section 8 hereof and attached hereto as Schedule A shall survive the termination of this Agreement.

7. Severance and Other Rights Relating to Termination and Change of Control.

conditions described in Section 7.3 below, the Company will provide Employee the following payments and other benefits:

(a) The Company shall immediately pay to Employee a lump-sum amount equal to the sum of (i) six (6) months of Employee’s then current Base Salary, (ii) any accrued but unpaid Base Salary as of the termination date; and (iii) any accrued, earned, awarded and vested, but unpaid, bonus and/or LTIP awards as of the termination date.

(b) If Employee elects COBRA coverage for health and/or dental insurance in a timely manner, the Company shall pay the monthly premium payments for such timely elected coverage when each premium is due until the earlier of: (i) six (6) months from the date of termination; (ii) the date Employee obtains new employment which offers health and/or dental insurance that is reasonably comparable to that offered by the Company; or (iii) the date COBRA continuation coverage would otherwise terminate in accordance with the provisions of COBRA. Thereafter, health and dental insurance coverage shall be continued only to the extent required by COBRA and only to the extent Employee timely pays the premium payments himself.

7.2 Change of Control. The Board of Directors of the Company has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (defined in Section 7.2(a) below). The Board believes it is imperative to diminish the inevitable distraction of the Employee by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Employee’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Employee with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Employee will be satisfied and which are competitive with those of other similarly-situated companies. Therefore, in order to accomplish these objectives, the Board has caused the Company to include the provisions set forth in this Section 7.2.

(a) Change of Control. “Change of Control” shall mean, and shall be deemed to have occurred if, on or after the date of this Agreement, (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% 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) the Company consummates a merger or consolidation 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% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of the Company approve a plan of complete liquidation; 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.

(b) Payments and Termination Date. If, within twelve (12) months after the effective date of a Change of Control, or within six (6) months before the effective date of a Change of Control, Employee terminates Employee’s employment for Good Reason pursuant to Section 6.1(b) or the Company terminates Employee’s employment without Cause pursuant to Section 6.2(c), subject to the conditions described in Section 7.3 below, then (i) Employee shall receive severance pay for a period of twelve (12) months at Employee’s then current Base Salary, (ii) Employee shall be entitled to a pro-rata portion of Employee’s annual bonus if the Change of Control occurs in the last six (6) months of the calendar year, which annual bonus shall be determined, and the pro-rata portion thereof paid, after the end of the calendar year in accordance the Company’s normal practices as applied to other employees who have not terminated their employment with the Company (without the requirement of Employee’s continued employment) and shall be pro-rated to the later of (a) the date of the Change of Control, or (b) the date of such termination of employment (provided that if such termination has not occurred by December 31 of the year in which such Change of Control occurs, no pro-ration of the annual bonus for such calendar year shall be required), (iii) Employee shall be entitled to health and dental COBRA premium payments in accordance with Section 7.1(b) but the period described in subsection (i) thereof shall be extended from six (6) months to twelve (12) months, and (iv) the termination shall be treated for purposes of Sections 7.2(b), (c) and (d) as if it occurred on the later of the effective date of such termination and the effective date of the Change of Control. Any lump-sum severance payment made to the Employee under Section 7.1(a) during the six (6) months before the effective date of a Change of Control shall be credited against the severance payments provided under this Section 7.2(b) on a pro-rata basis.

(c) Acceleration of Vesting of Equity Awards. Vesting of equity awards granted to Employee, whether stock options or stock purchase rights under the Company’s equity compensation plan, shall be accelerated upon any Change of Control to the extent set forth in the applicable grant agreement(s), whether option agreements or restricted stock purchase agreements, between the Company and Employee, provided, however, at a minimum, fifty percent (50%) of the then unvested equity awards granted to Employee shall immediately become fully vested and exercisable upon such Change of Control. Employee will be entitled to exercise such equity awards in accordance with such grant agreements.

(d) LTIP Awards. Any awards granted to Employee under the LTIPs as of the Change of Control shall be treated as described in the LTIPs.

(e) 280G. Payments and benefits that trigger Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), will be reduced to the extent necessary so that no excise tax would be imposed if doing so would result in the employee retaining a larger after-tax amount, taking into account the income, excise and employment taxes imposed on the payments and benefits.

7.3 Conditions Precedent to Payment of Severance. The Company’s obligations to Employee described in Sections 7.1 and 7.2 are contingent on Employee’s delivery to the Company of a signed waiver and release, in a form reasonably satisfactory to the Company, of all claims Employee may have against the Company up to the date of the termination of Employee’s employment with the Company, and (if applicable) Employee’s not revoking such release. Moreover, the Employee’s rights to receive payments and benefits pursuant to Sections 7.1 and 7.2 (including, without limitation, payments under the Company’s equity plans and LTIPs) are conditioned on the Employee’s ongoing compliance with Employee’s obligations as described in Section 8 hereof. Any cessation by the Company of any such payments and benefits shall be in addition to, and not in lieu of, any and all other remedies available to the Company for Employee’s breach of her obligations described in Section 8 hereof.

7.4 No Severance Benefits. Employee is not entitled to any severance benefits if this Agreement is terminated pursuant to Sections 6.1(a) or 6.2(a) of this Agreement; provided however, Employee shall be entitled to (i) Base Salary prorated through the effective date of such termination; (ii) bonuses for which the payment date occurs prior to the effective date of such termination; and (iii) medical coverage and other benefits required by law and plans (as provided in Section 7.5, below).

7.5 Benefits Required by Law and Plans. In the event of the termination of Employee’s employment, Employee will be entitled to medical and other insurance coverage, if any, as is required by law and, to the extent not inconsistent with this Agreement, to receive such additional benefits as Employee may be entitled under the express terms of applicable benefit plans (other than bonus or severance plans) of the Company.

7.6 Six-Month Payment Delay. Notwithstanding the foregoing provisions of this Section 7, the payment of any amount that has become earned and vested upon Employee’s termination of employment shall be delayed until six (6) months following the date of Employee’s termination of employment if and to the extent required by Section 409A of the Code.

8. Restrictions.

8.1 The Confidential Information Agreement. Simultaneously with the execution of this Agreement, Employee will sign the Employee Agreement with Respect to Confidential Information and Invention Assignment attached hereto as Schedule A (the “Confidential Information Agreement”) (provided, however, that if the Employee has previously signed the Confidential Information Agreement, and if the Company chooses to not have the Employee sign a new Confidential Information Agreement in connection with the Employee’s execution of this Agreement, the previously signed Confidential Information Agreement shall be attached hereto as Schedule A).

8.2 Agreement Not to Compete. In consideration for all of the payments and benefits that may be paid or become due to Employee under or in connection with this Agreement, Employee agrees that for a period of twelve (12) months after termination of Employee’s employment for any reason, Employee will not, directly or indirectly, without the Company’s prior written consent, (a) perform for a Competing Entity in any Restricted Area any of the same services or substantially the same services that Employee performed for the Company; (b) in any

Restricted Area, advise, assist, participate in, perform services for, or consult with a Competing Entity regarding the management, operations, business or financial strategy, marketing or sales functions or products of the Competing Entity (the activities in clauses (a) and (b) collectively are, the “Restricted Activities”); or (c) solicit or divert the business of any Restricted Customer; provided, however, if Employee is terminated without Cause pursuant to Section 6.2(c) or if Employee terminates her employment for Good Reason pursuant to Section 6.1(b), and if Employee is not paid severance pursuant to Section 7.2(b) in connection with a termination the occurs in proximity with a Change of Control, then the period set forth in this Section 8.2 shall be reduced to six (6) months after such termination. Employee acknowledges that in Employee’s position with the Company Employee has had and will have access to knowledge of confidential information about all aspects of the Company that would be of significant value to the Company’s competitors.

8.3 Additional Definitions.

(a) Customer. “Customer” means any individual or entity for whom the Company has provided services or products or made a proposal to perform services or provide products.

(b) Restricted Customer. “Restricted Customer” means any Customer with whom/which Employee had contact on behalf of the Company during the twelve (12) months preceding the end, for whatever reason, of Employee’s employment.

(c) Competing Entity. “Competing Entity” means any business entity engaged in the development, design, manufacture, marketing, distribution or sale of molecular diagnostics products.

(d) Restricted Area. “Restricted Area” means (i) any geographic location where if Employee were to perform any Restricted Activities for a Competing Entity in such a location, the effect of such performance would be competitive to the Company, and (ii) any geographic location in which the Employee was assigned or within which the Employee conducted business on behalf of the Company within the twelve (12) months immediately preceding the termination of Employee’s employment with Company.

8.4 Reasonable Restrictions on Competition Are Necessary. Employee acknowledges that reasonable restrictions on competition are necessary to protect the interests of the Company. Employee also acknowledges that Employee has certain skills necessary to the success of the Company, and that the Company has provided and will provide to Employee certain confidential information that it would not otherwise provide because Employee has agreed not to compete with the business of the Company as set forth in this Agreement.

8.5 Restrictions Against Solicitations. Employee further covenants and agrees that during Employee’s employment by the Company and for a period of twelve (12) months following the termination of her employment with the Company for any reason, Employee will not, except with the prior consent of the Company’s Chief Executive Officer, directly or indirectly, solicit or hire, or encourage the solicitation or hiring of, any person who is an employee of the Company for any position as an employee, independent contractor, consultant or otherwise, provided that the foregoing shall not prevent Employee from serving as a reference.

8.6 Affiliates. For purposes of this Section 8, the term “Company” will be deemed to include the Company and its affiliates.

8.7 Ability to Obtain Other Employment. Employee hereby represents that Employee’s experience and capabilities are such that in the event Employee’s employment with the Company is terminated, Employee will be able to obtain employment if Employee so chooses during the period of non-competition following the termination of employment described above without violating the terms of this Agreement, and that the enforcement of this Agreement by injunction, as described below, will not prevent Employee from becoming so employed.

8.8 Injunctive Relief. Employee understands and agrees that if Employee violates any provision of this Section 8, then in any suit that the Company may bring for that violation, an order may be made enjoining Employee from such violation, and an order to that effect may be made pending litigation or as a final determination of the litigation. Employee further agrees that the Company’s application for an injunction will be without prejudice to any other right of action that may accrue to the Company by reason of the breach of this Section 8.

8.9 Section 8 Survives Termination. The provisions of this Section 8 will survive termination of this Agreement.

9. Arbitration. Unless other arrangements are agreed to by Employee and the Company, any disputes arising under or in connection with this Agreement, other than a dispute in which the primary relief sought is an equitable remedy such as an injunction, will be resolved by binding arbitration to be conducted pursuant to the Agreement for Arbitration Procedure of Certain Employment Disputes attached as Schedule B hereof.

10. Assignments; Transfers; Effect of Merger. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation, or pursuant to the sale or transfer of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company. This Agreement will not be terminated by any merger, consolidation or transfer of assets of the Company referred to above. In the event of any such merger, consolidation or transfer of assets, the provisions of this Agreement will be binding upon the surviving or resulting corporation or the person or entity to which such assets are transferred. The Company agrees that concurrently with any merger, consolidation or transfer of assets referred to above, it will cause any successor or transferee unconditionally to assume, either contractually or as a matter of law, all of the obligations of the Company hereunder in a writing promptly delivered to the Employee. This Agreement will inure to the benefit of, and be enforceable by or against, Employee or Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, designees and legatees. None of Employee’s rights or obligations under this Agreement may be assigned or transferred by Employee other than Employee’s rights to compensation and benefits, which may be transferred only by will or operation of law. If Employee should die while any amounts or benefits have been accrued by Employee but not yet paid as of the date of Employee’s death and which would be payable to Employee hereunder had Employee continued to live, all such amounts and benefits unless otherwise provided herein will be paid or provided in accordance with the terms of this Agreement to such person or persons appointed in writing by Employee to receive such amounts or, if no such person is so appointed, to Employee’s estate.

11. Taxes. The Company shall have the right to deduct from any payments made pursuant to this Agreement any and all federal, state, and local taxes or other amounts withheld under applicable law.

12. 409A Compliance. The intent of Employee and the Company is that the severance and other benefits payable to Employee under this Agreement not be deemed “deferred compensation” under, or otherwise fail to comply with, Section 409A of the Code. Employee and the Company agree to use reasonable best efforts to amend the terms of this Agreement from time to time as may be necessary to avoid the imposition of penalties or additional taxes under Section 409A of the Code; provided, however, any such amendment will provide Employee substantially equivalent economic payments and benefits as set forth herein and will not in the aggregate, materially increase the cost to, or liability of, the Company hereunder.

13. Miscellaneous. No amendment, modification or waiver of any provisions of this Agreement or consent to any departure thereof shall be effective unless in writing signed by the party against whom it is sought to be enforced. This Agreement contains the entire Agreement that exists between Employee and the Company with respect to the subjects herein contained and replaces and supercedes all prior agreements, oral or written, between the Company and Employee with respect to the subjects herein contained. Nothing herein shall affect any terms in the Confidential Information Agreement, the Agreement for Arbitration Procedure of Certain Employment Disputes, the LTIPs, and any stock plans or agreements between Employee and the Company now and hereafter in effect from time to time except as, and to the extent, specifically described herein. If any provision of this Agreement is held for any reason to be unenforceable, the remainder of this Agreement shall remain in full force and effect. Each section is intended to be a severable and independent section within this Agreement. The headings in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. This Agreement is made in the State of Wisconsin and shall be governed by and construed in accordance with the laws of said State. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. All notices and all other communications provided for in this Agreement shall be in writing and shall be considered duly given upon personal delivery, delivery by nationally reputable overnight courier, or on the third business day after mailing from within the United States by first class certified or registered mail, return receipt requested, postage prepaid, all addressed to the address set forth below each party’s signature. Any party may change its address by furnishing notice of its new address to the other party in writing in accordance herewith, except that any notice of change of address shall be effective only upon receipt.

The parties hereto have executed this Employment Agreement as of the date first written above.


		/s/ Cindy S. Ahn

		Cindy S. Ahn (“Employee”)

		Third Wave Technologies, Inc. (“Company”)

		By:		/s/ Kevin Conroy

				Kevin Conroy, President and CEO

		Notice Address:
		502 South Rosa Road
		Madison, Wisconsin 53719-1256
		Attn: Chief Executive Officer

EX-10.2 3 c21324exv10w2.htm EXHIBIT 10.2 exv10w2

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of the 7th day of November 2007, by and between Ivan Trifunovich (“Employee”) and Third Wave Technologies, Inc., a Delaware corporation (the “Company”).

WHEREAS, the Company desires to employ Employee as its Senior Vice President and Employee desires to accept such employment pursuant to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth, and other good and valuable consideration, including without limitation a cash payment of Five Hundred Dollars ($500), receipt of which is hereby acknowledged, the parties agree as follows:

1. Employment. The Company hereby agrees to employ Employee as its Senior Vice President and Employee hereby agrees to serve the Company in such position, all subject to the terms and provisions of this Agreement. Employee agrees (a) to devote Employee’s full-time professional efforts, attention and energies to the business of the Company, and (b) to perform such reasonable responsibilities and duties customarily attendant to the position of Senior Vice President. Employee may engage in additional activities in connection with (i) serving on corporate, civic and charitable boards and committees, (ii) delivering lectures and fulfilling speaking engagements, (iii) managing personal investments; and (iv) engaging in charitable activities and community affairs, provided that such activities do not interfere with Employee’s performance of Employee’s duties under this Agreement.

2. Term of Employment. Employee’s employment will continue until terminated as provided in Section 6 below (the “Employment Term”).

3. Compensation. During the Employment Term, Employee shall receive the following compensation.

3.1 Base Salary. Employee’s annual base salary on the date of this Agreement is Two Hundred Seventy Five Thousand Dollars ($275,000), payable in accordance with the normal payroll practices of the Company (“Base Salary”). Employee’s Base Salary will be subject to annual review by the Compensation Committee and/or the Board of Directors of the Company. During the Employment Term, on or about each anniversary date of this Agreement, the Company shall review the Base Salary amount to determine any increases. In no event shall the Base Salary be less than the Base Salary amount for the immediately preceding twelve (12) month period other than as permitted in Section 6.1(c) hereunder.

3.2 Annual Bonus Compensation. Employee shall be eligible to be considered for an annual bonus as may be determined by the Company’s CEO and approved by the Compensation Committee in its and their sole discretion each calendar year. The initial target annual bonus percentage that Employee is eligible to earn for the initial calendar year hereunder is anticipated to be up to an available thirty-five percent (35%) of Employee’s Base Salary, to be awarded in the sole discretion of the Company’s CEO and approved by the Compensation Committee (pro-rated, as applicable, for a partial calendar year period), and such percentage shall be subject to modification in the initial or subsequent calendar years in the sole discretion of the CEO and the Compensation Committee. Any such bonus shall be based upon the compensation principles of the Company in effect at the time the CEO determines and the Compensation Committee

approves the amount of any bonus to be awarded, and except as expressly set forth in Section 7 hereof, Employee shall not be eligible to receive an annual bonus for any calendar year unless Employee remains employed with the Company through December 31 of the applicable calendar year and through the date on which such bonus is approved by the Compensation Committee, provided, however, that in any event, if Employee is terminated with Cause or resigns without Good Reason, or is given or gives notice of either, no bonus will be due thereafter under any circumstance. For the avoidance of doubt, Employee acknowledges and agrees that it has no contractual right under this Agreement to any annual bonus payment or any target bonus percentage, and that any bonus that is paid to Employee shall be at the sole discretion of the CEO and the Compensation Committee.

3.4 Equity Incentives and Other Long Term Compensation. The Company, upon the approval of the Compensation Committee, may grant Employee from time to time options or rights to purchase shares of the Company’s common stock, or other forms of equity, both as a reward for past individual and corporate performance, and as an incentive for future performance. Such options or other rights, if awarded, will be pursuant to the Company’s then current stockplan and in accordance with the Company’s Statement of Policy with Respect to Equity Award Approvals in effect from time to time. All options and other equity rights granted to Employee shall vest in equal installments over the four-year period commencing with the date of grant of such options or rights, subject to the acceleration of vesting (i) as described in Section 6.3 hereof, (ii) as described in Section 7.2(c) hereof, and (iii) as may be set forth in the grant agreements issued by the Company, as amended, provided, that in the event of a conflict between any grant agreement and this Agreement (other than Section 6.3 and Section 7.2(c) of this Agreement), the grant agreement shall control.

4. Benefits.

5. Business Expenses. Upon submission of a satisfactory accounting by Employee, consistent with current policies of the Company (as may be modified by the Company from time to time

in its sole discretion), the Company will reimburse Employee for any out-of-pocket expenses reasonably incurred by Employee in the furtherance of the business of the Company.

6. Termination.

6.1 By Employee.

(a) Without Good Reason. Employee may terminate Employee’s employment pursuant to this Agreement at any time without Good Reason (as defined below) with at least ten (10) business days’ written notice (the “Employee Notice Period”) to the Company. Upon termination by Employee under this section, the Company may, in its sole discretion and at any time during the Employee Notice Period, suspend Employee’s duties for the remainder of the Employee Notice Period, as long as the Company continues to pay compensation to Employee, including benefits, throughout the Employee Notice Period.

6.2. By the Company.

(a) With Cause. The Company may terminate Employee’s employment pursuant to this Agreement for Cause, as defined below, immediately upon written notice to Employee.

(b) Cause. “Cause” shall mean any of the following:

(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 Employee is convicted of a felony;

(iv) 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;

(v) any material breach or violation of the Company’s Code of Business Conduct; or

(vi) any material breach by the Employee of this Agreement or any of the Agreements referenced in Section 8 of this Agreement.

(c) Without Cause. Subject to Section 7.1, the Company may terminate Employee’s employment pursuant to this Agreement without Cause upon at least ten days’ written notice (“Company Notice Period”) to Employee. Upon any termination by the Company under this Section 6.2(c), the Company may, in its sole discretion and at any time during the Company Notice Period, suspend Employee’s duties for the remainder of the Company Notice Period, as long as the Company continues to pay compensation to Employee, including benefits, throughout the Company Notice Period.

6.3 Death or Disability. In the event of the death or Disability (defined herein) of Employee during the Employment Term, (i) Employee’s employment and this Agreement shall immediately and automatically terminate, (ii) the Company shall pay Employee (or in the case of death, employee’s designated beneficiary) Base Salary and accrued but unpaid bonuses, in each case up to the date of termination, and (iii) all equity awards granted to Employee, whether stock options or stock purchase rights under the Company’s equity compensation plan, or other equity awards, that are unvested at the time of termination shall immediately become fully vested and exercisable upon such termination. Neither Employee, his beneficiary nor estate shall be entitled to any severance benefits set forth in Section 7 if terminated pursuant to this Section 6.3. For purposes of this Agreement, “Disability” shall mean any physical incapacity or mental incompetence as a result of which Employee is unable to perform the essential functions of Employee’s job for an aggregate of more than six (6) months during any twelve-month period. Employee acknowledges and agrees that given the nature of Employee’s position with the Company it would cause the Company to suffer an undue hardship if required to retain Employee beyond the six (6) month period if Employee remains unable to perform the essential functions of Employee’s job, with or without a reasonable accommodation.

6.4 Survival. The agreement described in Section 8 hereof and attached hereto as Schedule A shall survive the termination of this Agreement.

7. Severance and Other Rights Relating to Termination and Change of Control.

7.1 Termination of Agreement Pursuant to Section 6.1(b) or 6.2(c). If the Employee terminates Employee’s employment for Good Reason pursuant to Section 6.1(b), or the Company terminates Employee’s employment without Cause pursuant to Section 6.2(c), subject to the conditions described in Section 7.3 below, the Company will provide Employee the following payments and other benefits:

such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of the Company approve a plan of complete liquidation; 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) LTIP Awards. Any awards granted to Employee under the LTIPs as of the Change of Control shall be treated as described in the LTIPs.

8. Restrictions.

functions or products of the Competing Entity (the activities in clauses (a) and (b) collectively are, the “Restricted Activities”); or (c) solicit or divert the business of any Restricted Customer; provided, however, if Employee is terminated without Cause pursuant to Section 6.2(c) or if Employee terminates his or her employment for Good Reason pursuant to Section 6.1(b), and if Employee is not paid severance pursuant to Section 7.2(b) in connection with a termination the occurs in proximity with a Change of Control, then the period set forth in this Section 8.2 shall be reduced to six (6) months after such termination. Employee acknowledges that in Employee’s position with the Company Employee has had and will have access to knowledge of confidential information about all aspects of the Company that would be of significant value to the Company’s competitors.

8.3 Additional Definitions.

(a) Customer. “Customer” means any individual or entity for whom the Company has provided services or products or made a proposal to perform services or provide products.

(c) Competing Entity. “Competing Entity” means any business entity engaged in the development, design, manufacture, marketing, distribution or sale of molecular diagnostics products.

8.5 Restrictions Against Solicitations. Employee further covenants and agrees that during Employee’s employment by the Company and for a period of twelve (12) months following the termination of his employment with the Company for any reason, Employee will not, except with the prior consent of the Company’s Chief Executive Officer, directly or indirectly, solicit or hire, or encourage the solicitation or hiring of, any person who is an employee of the Company for any position as an employee, independent contractor, consultant or otherwise, provided that the foregoing shall not prevent Employee from serving as a reference.

8.6 Affiliates. For purposes of this Section 8, the term “Company” will be deemed to include the Company and its affiliates.

8.9 Section 8 Survives Termination. The provisions of this Section 8 will survive termination of this Agreement.

11. Taxes. The Company shall have the right to deduct from any payments made pursuant to this Agreement any and all federal, state, and local taxes or other amounts withheld under applicable law.

12. 409A Compliance. The intent of Employee and the Company is that the severance and other benefits payable to Employee under this Agreement not be deemed “deferred compensation” under,

or otherwise fail to comply with, Section 409A of the Code. Employee and the Company agree to use reasonable best efforts to amend the terms of this Agreement from time to time as may be necessary to avoid the imposition of penalties or additional taxes under Section 409A of the Code; provided, however, any such amendment will provide Employee substantially equivalent economic payments and benefits as set forth herein and will not in the aggregate, materially increase the cost to, or liability of, the Company hereunder.

[signatures appear on next page]

The parties hereto have executed this Employment Agreement as of the date first written above.


		/s/ Ivan Trifunovich

		Ivan Trifunovich (“Employee”)

		Notice Address:





		Third Wave Technologies, Inc. (“Company”)

		By:		/s/ Kevin Conroy

				Kevin Conroy, President and CEO

		Notice Address:
		502 South Rosa Road
		Madison, Wisconsin 53719-1256
		Attn: Chief Executive Officer

EX-31.1 4 c21324exv31w1.htm CEO CERTIFICATION exv31w1

EXHIBIT 31.1

CERTIFICATION

I, Kevin T. Conroy, Chief Executive Officer of Third Wave Technologies, Inc. (the “registrant”), certify that:

1.		I have reviewed this Quarterly Report on Form 10-Q (the “Report”) of the registrant;

2.		Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3.		Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the Report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

	(b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in the Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by the Report, based on such evaluation; and

	(d)		disclosed in the Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and,

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	(a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and

	(b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2007



	/s/ Kevin T. Conroy
	Kevin T. Conroy,
	Chief Executive Officer

EX-31.2 5 c21324exv31w2.htm CFO CERTIFICATION exv31w2

EXHIBIT 31.2

CERTIFICATION

I, Maneesh K. Arora, Chief Financial Officer of Third Wave Technologies, Inc. (the “registrant”), certify that:

1.		I have reviewed this Quarterly Report on Form 10-Q (the “Report”) of the registrant;

2.		Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3.		Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

	(b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in the Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by the Report, based on such evaluation; and

	(d)		disclosed in the Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and,

	(a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and

	(b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2007



	/s/ Maneesh K. Arora
	Maneesh K. Arora,
	Chief Financial Officer

EX-32 6 c21324exv32.htm SECTION 1350 CERTIFICATIONS exv32

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350,
AS ENACTED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with Third Wave Technologies, Inc. (the “Company) Form 10-Q for the period ended September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Kevin T. Conroy, Chief Executive Officer of the Company, and Maneesh K. Arora, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes Oxley Act of 2002, 18 U.S.C Section 1350, that on the date of this certification:

(1) The Quarterly Report on Form 10-Q (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in this Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



	/s/ Kevin T. Conroy
	Kevin T. Conroy
	Chief Executive Officer November 1, 2007


	/s/ Maneesh K. Arora
	Maneesh K. Arora
	Chief Financial Officer November 1, 2007

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