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EXHIBIT 10.18
THIRD WAVE TECHNOLOGIES, INC. LONG TERM INCENTIVE PLAN NO. 2
1. PLAN OBJECTIVE
The Third Wave Technologies, Inc. Long Term Incentive Plan
(referred
to as the "Plan") is designed to encourage
results-oriented actions on the part
of members of the executive management team
and other key employees of Third
Wave Technologies, Inc. (the "Company").
The Plan is intended to align closely
financial rewards for the employees with
the achievement of specific performance
objectives by the Company. The Plan, as
amended and restated effective as of
January 1, 2005, provides as follows:
2. ELIGIBILITY
Members of
the executive management team of the Company ("Tier 1
Employees") and other key employees of the
Company ("Tier 2 Employees") are
eligible to participate in the Plan. The
Administrator (as defined in Section 3
below) shall select the Tier 1 Employees
and Tier 2 Employees who may
participate in the Plan (a
"Participant").
3. ADMINISTRATION
(a) The
Plan shall be administered by the Compensation Committee of the
Company's Board of Directors (the
"Administrator"). The Administrator may
delegate its authority to administer the
Plan to an individual or committee. The
term "Administrator" shall mean the
Compensation Committee or such individual or
committee to which authority has been
delegated.
(b) The
Administrator shall have full power and authority to establish
the
rules and regulations relating to the Plan,
to interpret the Plan and those
rules and regulations, to select each
Participant for the Plan, to determine the
Participant's target award, performance
goals and final award, to make all
factual and other determinations in
connection with the Plan, and to take all
other actions necessary or appropriate for
the proper administration of the
Plan, including the delegation of such
authority or power, where appropriate.
The Administrator may adjust the
performance goals to take into account
corporate transactions that take into
account new revenue associated with
mergers and/or acquisitions or other
corporate transactions in an equitable
manner that does not make it more difficult
for the Company to achieve the
original performance goals.
(c) All
powers of the Administrator shall be executed in its sole
discretion, in the best interest of the
Company, not as a fiduciary, and in
keeping with the objectives of the Plan and
need not be uniform as to similarly
situated individuals. The Administrator's
administration of the Plan, including
all such rules and regulations,
interpretations, selections, determinations,
approvals, decisions, delegations,
amendments, terminations, and other actions,
shall be final and binding upon the Company
and all employees of the Company,
including each Participant and his or her
respective beneficiary(ies).
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4. TARGET AWARDS AND
PERFORMANCE GOALS
(a) The
Administrator shall establish for each Participant who
completes
and returns an enrollment agreement, in a
form designated by the Administrator,
a target award that shall be payable if and
to the extent the Company attains
the performance goals set by the
Administrator for a specified performance
period. The executed enrollment agreement
shall constitute a Participant's
consent to be subject to the terms of the
Plan and to be bound by the authority
of the Administrator as set forth in
Section 3.
(i) Unless the Administrator determines otherwise, the target
award
for a Participant who is a Tier 1 Employee
shall be an amount equal to four
times the highest annual incentive target
amount established for the Participant
during the performance period under the
Company's annual incentive plan
applicable to the Participant.
(ii) Unless the
Administrator determines otherwise, the target
award for a Participant who is a Tier 2
Employee shall be an amount equal to
three times the highest annual incentive
target amount established for the
Participant during the performance period
under the Company's annual incentive
plan applicable to the Participant.
(b)
The
Administrator shall establish the performance goals and related
calculation matrices for each performance
period and shall promptly provide this
information to each Participant who is
eligible for an award for that
performance period. The performance goals
are attached as Exhibit A and are
hereby fully incorporated into and shall be
considered as part of this Plan.
Unless the Administrator determines
otherwise, the performance goals shall be
based upon (i) the Company's total
shareholder return ranking as compared to its
peer group, (ii) the Company's stock price
growth, and (iii) the growth in the
Company's Clinical Molecular Diagnostics
revenue. The Administrator may adjust
the performance goals as it deems
appropriate to take into account corporate
transactions or other extraordinary events
that occur during the performance
period.
(c)
For the purposes
of subsection (b), the Administrator shall have the
discretion to determine which companies are
included in the peer group. The
Administrator may adjust the peer group
from time to time as it deems
appropriate, including by adding, deleting,
or replacing companies, to take into
account mergers and other changes in the
companies comprising the peer group.
(d)
Unless the
Administrator determines otherwise, each performance
period shall be a three-year period
beginning on January 1, 2005 and ending on
December 31, 2008.
5. CALCULATION OF
INCENTIVE AWARDS
(a)
At the end of
the performance period, the Administrator shall
determine for each participant whether and
to what extent the performance goals
have been met and the percentage of the
target award that is earned. The
Administrator shall rely upon the audited
financial statements of the Company
and its subsidiaries to determine whether
and to what extent the performance
goals are met.
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(b)
The
Administrator shall compute each Participant's award for the
performance period based upon the Company's
achievement of the performance goals
and the matrices set forth on Exhibit A. On
or around March 15 of the year
following the end of the applicable
performance period, the Company shall credit
each Participant's award to a book account
established for the Participant. All
amounts credited to a Participant's book
account shall be administered according
to the vesting provisions of Section 6
below.
(c)
Participants
must be employed on the last day of the applicable
performance period to be eligible for an
incentive award under the Plan, except
as described below or except as the
Administrator may otherwise determine.
(i) The
beneficiary(ies) of a Participant who dies during a
performance period shall receive a prorated
award based upon the Company's
performance at the end of such performance
period. The prorated award shall be
calculated from the commencement of the
performance period, or, if applicable,
such later date on which the Participant
became eligible to participate for the
performance period as established by the
Administrator, to the date of the
Participant's death. The Company shall pay
the prorated award to the
beneficiary(ies) after end of the
performance period pursuant to Section 8
below.
(ii) Participants who
retire on or after their normal retirement
age (as defined below) during the
performance period shall receive a prorated
award based upon the Company's performance
at the end of such performance
period. The prorated award shall be
calculated from the commencement of the
performance period, or, if applicable, such
later date on which the Participant
became eligible to participate for the
performance period as established by the
Administrator, to the date of the
Participant's normal retirement. The Company
shall pay the prorated award to the
Participant after the end of the performance
period pursuant to Section 8 below. For
purposes of this Plan, "normal
retirement age" is age 65, or, if the
Participant has at least five years of
service, age 55.
(iii) Participants who become disabled (as defined below) during
the
performance period shall receive a prorated
award based upon the Company's
performance at the end of such performance
period. The prorated award shall be
calculated from the commencement of the
performance period, or, if applicable,
such later date on which the Participant
became eligible to participate for the
performance period as established by the
Administrator, to the date the
Participant is disabled. The Company shall
pay the prorated award to the
Participant after the end of the
performance period pursuant to Section 8 below.
For purposes of this Plan, "disabled" means
eligible for long-term disability
benefits as determined under a
Company-sponsored disability plan.
(iv) Upon a Change in
Control (as defined below) of the Company
during the performance period, all
performance goals pertaining to awards during
such performance period shall be deemed to
have been met 100 percent as of the
effective date of the Change in Control and
the maximum award for such
performance period shall be deemed
immediately earned, and such maximum award
shall vest and be paid as described in
Section 6(d); provided, however, that if
the Change of Control is an acquisition or
merger and such transaction occurs
for less than $200 million in total value,
the Company shall not have been
deemed to have met 100 percent as of the
performance goals, rather the
performance goals shall be measured by the
Matrix in Exhibit
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A as reconfigured to take into account a
shortened period within which to
achieve such targets by reducing the TWT
Stock Price Column and 2007 Clinical
Revenue Targets on a straight-line method
based on the percentage of the
performance period that has occurred. For
example, if 1/2 of the performance
period has expired, then the Stock Price
and Clinical Revenue targets shall be
revised based on 1/2 of the expected
growth. The Company shall credit the
maximum award to a book account established
for the Participant as soon as
practicable after the Change of
Control.
For purposes of the Plan, the term "Change
in Control" shall mean, and shall be
deemed to have occurred if, (i) any
"person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) or group
acting in concert, other than a trustee or
other fiduciary holding securities
under an employee benefit plan of the
Company acting in such capacity or a
corporation owned directly or indirectly by
the stockholders of the Company in
substantially the same proportions as their
ownership of stock of the Company,
becomes the "beneficial owner" (as defined
in Rule 13d-3 under said Act),
directly or indirectly, of securities of
the Company representing more than 50
percent of the total voting power
represented by the Company's then outstanding
voting securities; (ii) during any period
of two consecutive years, individuals
who at the beginning of
