UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement.
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material under Rule 14a-12
Third Wave Technologies, Inc.Section 240.14a-12
THIRD WAVE TECHNOLOGIES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange
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fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
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(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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THIRD WAVE TECHNOLOGIES, INC.
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2003------------
NOTICE OF 2006 ANNUAL MEETING OF SHAREHOLDERSSTOCKHOLDERS
TO BE HELD JUNE 10, 2003
---------------------13, 2006
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To our Shareholders:Stockholders:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholdersstockholders of Third
Wave Technologies, Inc., a Delaware corporation (the "Company"), will be held at
the offices of the Company, 502 South Rosa Road, Madison, Wisconsin 53719 on
June 10, 200313, 2006, at 9:00 a.m., local time, for the following purposes:
(1)- To elect threetwo directors each to serve for a term of three years expiring
uponat the 20062009 annual meeting of shareholdersstockholders or until their
successors arehis successor is
elected and qualified;
(2)- To ratify the appointment of Ernst & YoungGrant Thornton LLP as the independent
auditorsregistered public accounting firm of the Company for the year ending
December 31, 2003;2006; and
(3)- To transact any other business whichthat is properly presented at the
meeting.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice. Only shareholdersstockholders of record at the close of
business on April 18, 200314, 2006, are entitled to notice of and to vote at this
meeting.
All shareholdersstockholders are invited to attend the meeting in person. However, to
assure your representation at the meeting, you are urged to sign and return the
enclosed proxy as promptly as possible in the postage prepaid envelope enclosed
for that purpose. Any shareholderstockholder entitled to vote and attending the meeting may
vote in person even if a proxy is returned.
By Order of the Board of Directors,
/s/ LANCE FORS, PH.D
Lance Fors, Ph.D
Chairman of the BoardKEVIN T. CONROY
KEVIN T. CONROY
President and Chief Executive Officer
April 25, 2003May 5, 2006
THIRD WAVE TECHNOLOGIES, INC.
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PROXY STATEMENT FOR THE
20032006 ANNUAL MEETING OF THE SHAREHOLDERS
JUNE 10, 2003
---------------------STOCKHOLDERS
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of Third Wave Technologies, Inc.
(the "Company", "us", "we", "our" or "our""Third Wave") for use at the annual meeting
of shareholdersstockholders to be held on Tuesday, June 10, 200313, 2006, at 9:00 a.m., local time,
or at any adjournment or adjournments thereof, for the purposes set forth herein
and in the accompanying notice of annual meeting of shareholders.stockholders. The annual
meeting will be held at the principal executive offices of the Company at 502
South Rosa Road, Madison, Wisconsin 53719. The telephone number at that location
is (608) 273-8933.
These proxy solicitation materials are being mailed on or about April 25,
2003May 5,
2006, to all shareholdersstockholders entitled to vote at the meeting.
RECORD DATE
ShareholdersStockholders of record at the close of business on April 18, 2003,14, 2006, the
record date for the meeting, are entitled to notice of and to vote at the
meeting. At the record date, 39,578,77441,404,827 shares of the Company's common stock
were issued and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a duly
executed proxy bearing a later date, by attending the shareholderstockholder meeting and
voting in person, or by delivering to the Secretary of the Company, at the
Company's principal executive offices, a written notice of revocation.
VOTING AND SOLICITATION
Each shareholderstockholder is entitled to one vote for each share held as of the
record date for the meeting. Shareholders will not be entitled to cumulate their
votes in the election of directors.
The cost of soliciting proxies will be borne by the Company. The Company
expects to reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and employees, without additional compensation, personally
or by telephone, telegram,e-mail, facsimile or other means of communication. We have
engaged Georgeson & Co. to assist us in distributing materials for a fee
estimated at $5,000, plus reimbursement of out-of-pocket expenses.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Votes castThe presence, either in person or by proxy, or in personof the holders of a majority of
the total outstanding shares of common stock as of the record date will
constitute a quorum at the annual meeting. Abstaining votes and broker non-votes
are counted for purposes of establishing a quorum. A broker non-vote occurs when
a nominee holding shares for a beneficial owner does not vote on a particular
matter because the nominee has not received instructions from the beneficial
owner and does not have discretionary voting power for that particular item.
In the election of directors, the two director nominees receiving the most
affirmative votes of the shares of common stock present or represented and
entitled to vote at the meeting will be tabulated by
the inspectorelected as directors. The affirmative
vote of elections appointed for the meeting and will determine whether
a quorum is present.
We need a majority of the shares of common stock issuedpresent or represented and
outstanding onentitled to vote is required to ratify the record date present,selection of Grant Thornton LLP as
the independent public accounting firm to audit the financial statements of the
Company.
An abstaining vote in person or by proxy, to have a quorum to allow us to
hold the annual meeting. Shares that are voted "For", "Against" or "Abstain"
with respect to any matter are treated as being present at the meeting.
In the election of directors you can withhold youris not counted and
therefore has no effect on the election; however, an abstaining vote foron all
other proposals will have the same effect as a negative vote on the proposal. A
broker non-vote on any nominee.
Withheld votes will be excluded entirely from the vote onproposal, including the election of directors, and will have no effect on the outcome. On the ratification of the
appointment of Ernst & Young LLP, you can vote to "abstain". If you vote to
"abstain", your vote will have the effect of a vote against the ratification.
If you hold shares through a broker, follow the voting instructions you
receive from your broker. If you do not submit voting instructions with respect
to a matter and your broker does not vote your shares on that matter (so-called
"broker non-votes"), your shares will not
be countedincluded in determiningthe tabulation of the voting results and therefore does not
affect the outcome of the vote on that matter.vote.
Any proxy that is returned using the form of proxy enclosed and whichthat is not
marked as to a particular item will be voted for the election of the three
nominees
named in this proxy statement, for the ratification of the appointment of the
independent auditors, as the case may be, with respect to the items not marked,
and as the proxy holders deem advisable on other matters that may come before
the meeting, as the case may be, with respect to
the items not marked.meeting.
DEADLINE FOR RECEIPT OF SHAREHOLDERSTOCKHOLDER PROPOSALS
Proposals of shareholders that areTo have a proposal intended to be presented by those
shareholders at the Company's annual meetingAnnual Meeting of
Stockholders to be held in 20042007 be considered for inclusion in the Company's
proxy statement and form of proxy relating to that meeting, a stockholder must
be
submitteddeliver written notice of such proposal in writing to the Secretary of the
Company no later than January 7, 2007.
In addition, the bylaws provide that if a stockholder desires to submit a
proposal for consideration at the Company's executive
offices and received2007 Annual Meeting of Stockholders, or to
nominate persons for election as director at that meeting, or both, the
stockholder must deliver written notice of such proposal or nomination in
writing in the form specified by the bylaws to the Secretary of the Company no
later than December 26, 2003 in order
that those proposals mayJanuary 7, 2007 or such proposal will be considered for possible inclusionuntimely. The
bylaws further provide that the presiding officer of the meeting shall refuse to
acknowledge any untimely proposal or nomination. Additionally, under applicable
SEC rules the persons named in the proxy statement relating to that meeting.
In addition,and form of proxy for the
by-laws2007 Annual Meeting of the Company provide that any shareholder
entitledStockholders would have discretionary authority to vote
may nominate persons for election as directors or propose
business to be brought before a meeting, or both, only if the shareholder has
given timely notice in proper written form of the shareholder's intent to make aon any such untimely nomination or propose business. To be timely, the shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company not less than 120 days in advance of the first anniversary date of
mailing of the Company's proxy statement released to shareholders in connection
with the previous year's annual meeting of shareholders, unless no annual
meeting was held in the previous year or the date of the annual meeting has been
changed by more than 30 days from the date contemplated at the time of the
previous year's proxy statement, in which case, to be timely such notice must be
so received a reasonable time before the solicitation is made. The by-laws
contain provisions regarding information that must be set forth in the
shareholder's notice in order for it to be in proper form.
PROPOSAL NO. 1proposal.
ELECTION OF DIRECTORS
The Company's board of directors currently consists of nine persons,seven members and is
divided into three classes serving terms of three years. ShareholdersStockholders elect one
class of directors at each annual meeting. ThreeTwo directors are to be elected at
this annual meeting each to hold office until the 20062009 annual meeting of shareholdersstockholders
or until a successor has been duly elected and qualified. The other
classesboard of directors
will be electedhas nominated Gordon Brunner and Lawrence Murphy for re-election as directors.
Mr. Neis, whose term as director expires at the Company's annual meetingsmeeting, has chosen not
to stand for re-election after twelve years of shareholdersservice as a director and the
board has decided not to be held in 2004 and 2005.fill this position at this time.
If any of the nomineesa nominee for director at the annual meeting becomes unavailable or
declines to serve as a director at the time of the annual meeting, the proxy
holders will vote the proxies in their discretion for any nominee who is
designated by the current board of directors to fill the vacancy. We do notMr. Brunner
and Mr. Murphy each have indicated their continued willingness and desire to
serve as directors and we have no reason to expect any of the nomineesthat either nominee will be
unable to be unavailable to serve.serve as a director if so elected.
The names of the three nominees for election to the board of directors at the
annual meeting, and the other members of the board of directors, their ages as
of the record date for the meeting, and certain information about them are set
forth below.
The names of the current
directors with unexpired terms, their ages as of the record date, and certain
information about them are also stated below.
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NOMINEES FOR ELECTION AT THE ANNUAL MEETING FORDIRECTORS - TERMS ENDING IN 2006
NAME AGE PRINCIPAL OCCUPATION
- ---- --- ---------------------------------------------------------------
John Neis(1)(2)(3)........................ 47 Senior Partner, Venture Investors
Management LLC
Sam Eletr, Ph.D. ......................... 64Gordon F. Brunner(1) 67 Retired; Former Chairman and CEO of Applied
Biosystems.
Gordon F. Brunner......................... 64 Partner, Living Longer Proactive Health;
retired Senior Vice President,
(3)(4)................. Chief Technology Officer, and member of
the Board of Directors of Procter &
Gamble Co.Company; Partner, Cincinnati
Living Longer ProActive Health Center
Lawrence Murphy(1)(2).... 63 Independent Business Consultant, former
executive vice president and secretary
of Core Industries, Inc.
John Neis(1)(2).......... 50 Senior Partner, Venture Investors LLC
2
DIRECTORS CONTINUING IN OFFICE - TERMS ENDING IN 20042007
NAME AGE PRINCIPAL OCCUPATION
- ---- --- --------------------
Lance Fors, Ph.D.......................... 45 Chairman of the Board,Kevin T. Conroy.......... 40 President and Chief Executive Officer,
Third Wave Technologies, Inc.
David A. Thompson(3)...................... 61Thompson(1)(3).. 64 Retired; Former Senior Vice President &
President, &
President, Diagnostic Division, Abbott
Laboratories
Kenneth R. McGuire........................ 61 Chief Executive Officer, Burbank Group of
Companies
DIRECTORS CONTINUING IN OFFICE - TERMS ENDING IN 20052008
NAME AGE PRINCIPAL OCCUPATION
- ---- --- --------------------
Tom Daniel(1)(2)(3)....................... 38James Connelly(2)(4)..... 59 Partner, Schroder Ventures
G. Steven Burrill(2)...................... 58 Chief Executive Officer, BurrillFoley & Company
Lloyd M. Smith, Ph.D.(1)Lardner
Lionel Sterling(2)(3)............... 48 Kellett Professor of Chemistry, University
of Wisconsin and Member, Scientific
Advisory Board, Third Wave Technologies,.... 68 President, Equity Resources, Inc.
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(1) Member of the compensation committee
(2) Member of the audit committee
(3) Member of the nominating and governance committee
There are no family relationships among any(4) Member of the directors or executive
officers of the Company.innovation and technology committee
NOMINEES FOR ELECTION AT THE ANNUAL MEETING FOR TERMS ENDING IN 2006
John Neis has served as one of our directors since August 1994. Mr. Neis is
Senior Partner of Venture Investors Management LLC, a firm that is the manager
and general partner of Madison, Wisconsin-based venture capital management
funds. He also serves on the Advisory Board of the Weinert Applied Ventures
Program at the University of Wisconsin. Mr. Neis received a B.S. in finance from
the University of Utah and an M.S. in business from the University of Wisconsin,
and is a Chartered Financial Analyst.2009
Gordon F. Brunner has served as one of our directorsa director since January 2003. Mr. Brunner
is currently a partner with Living Longer Proactive Health and was
senior vice president, chief technology officer, head of worldwide research and
development, andserved as Chief Technology Officer as well as a member of the board of directors
of the Procter & Gamble Co.Company, until his retirement after 40 years of service.
He has more than 40 years'extensive experience leveraging innovative technology platforms to the
pharmaceutical, over-the-counter and consumer markets. He earnedreceived a B.S. degree
in biochemical engineering from the University of Wisconsin-Madison and an
M.B.A. degree from Xavier University. 3
Sam Eletr, Ph.D.Mr. Brunner is a partner in the Cincinnati
Living Longer ProActive Health Center and serves as a director of one other
public company, Scotts Miracle-Gro Corporation, as well as privately-held Iams
Imaging and Beverage Holdings, LLC. He also serves on the boards for Christ
Hospital (Cincinnati, Ohio), the Wisconsin Alumni Research Foundation and Xavier
University.
Lawrence Murphy was appointed to the Third Wave board of directors in
January 2006. Mr. Murphy, an independent business consultant, brings to Third
Wave's board more than 30 years of business experience in strategic
partnerships, mergers and acquisitions, operations, finance, law and
administration. He has served as one of our directors since June 2002. Dr.
Eletr co-founded Applied Biosystems,the lead business advisor on significant
transactions for his clients, including Jabil Circuit Inc. and, a publicly-held
(NYSE) global electronics manufacturing service company with more than $7
billion in revenue. Mr. Murphy served as its Chairmanexecutive vice president and Chief
Executive Officer. Prior to founding Applied Biosytems, Dr. Eletr managed the
analytical and medical instruments group at Hewlett-Packard Co.'s corporate
research laboratories. Dr. Eletr most recently co-founded and served as chairman
and chief executive officersecretary
of Lynx TherapeuticsCore Industries, Inc., a publicly traded
genomics company.publicly-held (NYSE) diversified manufacturer, from
1981 until its sale in 1997. He earned an M.A.was a practicing attorney and certified public
accountant before joining Core Industries. He received a B.S. degree in
physics and a Ph.D. in biophysical
chemistry, both ataccounting from the University of California-Berkeley.Detroit Mercy and a J.D., cum laude, from
Wayne State University Law School. Mr. Murphy serves as a director of one other
public company, Jabil Circuit, Inc.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
NOMINEES SET FORTH ABOVE.NOMINEES.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE ANNUAL MEETING
Lance Fors, Ph.D., our founder and ChairmanJames Connelly was appointed to the Third Wave board of directors in July
2005. Mr. Connelly is a partner in the Foley & Lardner law firm, where he served
as founding chairman of the Board,health law practice. He brings to Third Wave more
than 25 years of experience providing strategic business and legal advice to
large health care networks, clinics and laboratories. He also has advised a
number of emerging biotechnology and life sciences companies. Mr. Connelly
earned his bachelor's degree from Marquette University and his law degree from
the Georgetown University Law Center. He has served as a director and chairman
of the board of numerous privately-held businesses and currently serves on the
board of trustees of Ripon College.
3
Kevin Conroy has served as our President and Chief Executive Officer and as
one of our directors since our inceptionDecember 2005. Mr. Conroy joined Third Wave as Vice
President of Legal Affairs in 1993. Dr. Fors receivedJuly 2004 and served as General Counsel from
October 2004 to December 2005. Prior to joining Third Wave, Mr. Conroy worked
for GE Healthcare, where he oversaw the development and management of its
information technologies group intellectual property portfolio, and developed
and executed litigation, licensing, and corporate product acquisition legal
strategies. Before joining GE, Mr. Conroy was an intellectual property litigator
at two Chicago law firms, McDermott Will & Emery, and Pattishall, McAuliffe,
Newbury, Hilliard and Geraldson, where he was a partner. He earned his Ph.D.B.S. in
molecular biologyelectrical engineering at Michigan State University and his J.D. from the
California
InstituteUniversity of TechnologyMichigan.
Lionel Sterling was appointed to the Third Wave board of directors in
1990. Dr. ForsAugust 2004. Mr. Sterling is president of Equity Resources, Inc., a private
investment firm. He previously co-founded and served as managing partner of the
private investment firm Whitehead/Sterling. Mr. Sterling serves on a number of
corporate and philanthropic boards. He most recently served on the Board of I-
STAT Corporation. He also has over twenty yearsserved as chairman of researchthe Board of Directors of
Rayovac Corporation, Executive Vice President and development experienceDirector of United Brands
Company, and is the inventor on 19 issuedSector Executive and pending patents in
the areaChief Financial Officer of DNAAmerican Can
Company. He also held various investment and RNA sequence analysis.financial positions at Donaldson,
Lufkin & Jenrette Inc. and ITT Corporation. Mr. Sterling holds an M.B.A. from
New York University.
David A. Thompson, Chairman and Lead Independent Director, has served as
one of our directors since August 1997.1997 and as Chairman and Lead Independent
Director since 2005. Mr. Thompson retired from Abbott Laboratories in 1995,
where he worked for overmore than 30 years. He held several corporate officer
positions with Abbott Laboratories, including: Senior Vice President & President
Diagnostic Division 1983-1995, Vice President Human Resources 1982-1983, Vice
President Corporate Materials Management 1981-1982 and Vice President Operations
1974-1981. Mr. Thompson currently serves on the board of directors of St. Jude Medical
Inc., a medical device company.
Kenneth R. McGuire has served as one of our directors since October 1998.
In 1986, Mr. McGuire founded the first of the Burbank Group of Companies,
manufacturers of commercial aircraft noise suppression equipment. He has served
as Chief Executive Officer of the member companies of the Burbank Group since
their respective inceptions. Mr. McGuire receivedcompany and Fovi Optics, Inc, a B.S. from the United States
Naval Academy and a J.D. from Columbia University.
Tom Daniel has served as one of our directors since October 1999. He is
General Partner with Schroder Ventures Life Sciences, a venture capital
investment firm, where he has focused on life science investments in the United
States and Europe since 1998. From 1995 to 1998, Mr. Daniel was an associate
with Domain Associates, a United States venture capital firm focused on the life
sciences. Before Domain, Mr. Daniel worked for Charles River Ventures, a United
States venture capital firm focused on biotechnology investments. Mr. Daniel is
a director of Oxagen and Solexa and is responsible for investments in Cellzome,
Sunesis and a number of other private and public companies. Mr. Daniel received
an M.B.A. from Harvard Business School, was a member of a genetics research team
at the University of North Carolina, Chapel Hill from 1983-1984, and has an M.A.
in Biological Sciences from Oxford University.
G. Steven Burrill has served as one of our directors since October 1998.
Mr. Burrill is Chief Executive Officer of Burrill & Company, a Life Sciences
Private Merchant Bank which he founded in 1994. Prior to founding Burrill &
Company, Mr. Burrill was a partner of Ernst & Young from 1977 through 1993. Mr.
Burrill is a director of DepoMed, Galapagos Genomics, and Targacept. He
currently serves as Board Chairman for Paradigm Genetics and Pyxis Genomics. Mr.
Burrill received a B.B.A. from the University of Wisconsin, Madison.
Lloyd M. Smith, Ph.D. has served as one of our directors since our
formation and also serves on our scientific advisory board. Dr. Smith is Kellett
Professor of Chemistry and Director of the Genome Center at the University of
Wisconsin, Madison. Dr. Smith was the primary inventor of automated DNA sequence
analysis. Dr. Smith regularly consults and advises us in our research and
development efforts. He is chair of the scientific advisory boards of ProCognia
Ltd. and GenTel Corporation and a member of the scientific advisory board of
Curagen Corporation.
VOTE REQUIRED
Directors are elected by a plurality of the votes cast. Shares represented
by executed proxies will be voted, if authority to do so is not withheld, for
the election of the three nominees. Votes withheld from any director will have
no effect on the outcome.
4
privately held business.
BOARD MEETINGS,OF DIRECTORS AND COMMITTEES AND DIRECTOR COMPENSATION
The board of directors heldprovides oversight with respect to the Company's
strategic direction and significant corporate policies. Of the seven directors,
all but Mr. Conroy are "independent" as such term is defined in the listing
standards of the Nasdaq Stock Market.
The board of directors has four standing committees: a totalcompensation
committee, an audit committee, a nominating and governance committee, and an
innovation and technology committee. From time to time, the board has created
various ad hoc committees for special purposes.
The board of six meetingsdirectors met eight times during 20022005 and all directors
attended at least 75% of the total number of meetings of the board and
committees of the board on which the director served during 2002.2005. The board held
a total of four executive sessions during 2005. The Company encourages but does
not require its directors to attend the annual meeting of stockholders. One
director attended the 2005 annual meeting of stockholders.
Stockholders may contact our board of directors, hasan individual director, or
a specified board committee or group, by writing to them at the following
address:
c/o Corporate Secretary
Third Wave Technologies
502 S. Rosa Road
Madison, WI 53719
The Corporate Secretary will have discretion to determine whether a
communication is proper for submission to the intended recipient. Communications
that raise personal grievances, are solicitations, do not relate to the Company
or that are frivolous are presumptively inappropriate for delivery. For further
detail on the procedures for contacting our board of directors, please visit the
corporate governance section of our website www.twt.com.
4
COMPENSATION COMMITTEE
Gordon Brunner, Lawrence Murphy, John Neis and David Thompson currently
serve on the compensation committee. Each member of the compensation committee
an audit committee and
a nominating committee. From time to time,is "independent" as such term is defined in the board has created various ad hoc
committees for special purposes.
The compensation committee consistslisting standards of Messrs. Smith, Neis and Daniel.the Nasdaq
Stock Market. The compensation committee makes recommendations to the board of
directors regarding our employee benefit plans and the compensation of our
officers. The compensation committee heldmet three times during 2005. The
compensation committee operates under a total of four meetings during 2002.Compensation Committee Charter, which is
available at the Company's website www.twt.com.
AUDIT COMMITTEE
The audit committee consistsrecommends to the board the appointment of Messrs.our
independent auditors, directs the scope of the audit of our financial statements
and other services provided by our independent auditors, reviews the accounting
principles and procedures to be used for financial statements and reviews the
results of the audit. The audit committee also is responsible for the pre-
approval of all services provided by our independent auditors.
James Connelly, Lawrence Murphy, John Neis Burrill and Daniel.Lionel Sterling currently
serve on the audit committee. Each member of the audit committee is
"independent" as such term is defined in the listing standards of the National AssociationNasdaq
Stock Market. Mr. Sterling, Mr. Neis and Mr. Murphy are each considered an
"audit committee financial expert" as such term is defined by the rules of the
Securities Dealers.and Exchange Commission in Item 401(h)(1) of Regulation S-K. The
audit committee makes
recommendations tooperates under an Audit Committee Charter, which is available at
the boardCompany's website www.twt.com and a copy of directors regarding the selection of independent
auditors, reviews the scope of audit and other services by our independent
auditors, reviews the accounting principles and auditing practices and
procedures to be used for our financial statements and reviews the results of
those audits.which is attached hereto as
Annex A. Information regarding the functions performed by the audit committee
and the number of meetings held during 20022005 is set forth in the "Report of the
Audit Committee",Committee," included in this proxy statement.
NOMINATING AND GOVERNANCE COMMITTEE
The nominating committee consists of Messrs. Daniel, Neis, Smith and Thompson. The nominatinggovernance committee evaluates and recommends candidates
for election or appointment to the board of directors. The nominating and
governance committee held
four meetings in 2002.has not established any specific minimum qualifications
that any candidate for director must meet, but considers a wide array of
factors, including the candidate's knowledge of our industry, the candidate's
educational and professional experience as well the candidate's reputation. The
nominating and governance committee met three times in 2005. The nominating and
governance committee operates under a Nominating and Governance Committee
Charter, which is available at the Company's website www.twt.com.
Gordon Brunner, Lionel Sterling and David Thompson currently serve on the
nominating and governance committee. Each member of the nominating and
governance committee is "independent" as such term is defined in the listing
standards of the Nasdaq Stock Market.
The nominating and governance committee will consider director candidates
recommended by shareholders.stockholders. Recommendations may be sent to John
Comerford, Vice President, General Counsel andCorporate Secretary,
502 South Rosa Road, Madison, Wisconsin 53719. Any recommendation submitted by a
stockholder must include the name and address of the stockholder, any
arrangements between the stockholder and the candidate pursuant to which the
candidate is being nominated, and any information that would be required under
the rules of the Securities and Exchange Commission to be included in the proxy
statement had the candidate been nominated by the board of directors. The
nominating and governance committee will apply the same standards in considering
candidates submitted by stockholders as it applies to other candidates.
INNOVATION AND TECHNOLOGY COMMITTEE
The innovation and technology committee assists the board in providing
counsel to the Company's senior management on strategic management of basic
technology, innovation, medical affairs, and regulatory issues including the
portfolio of development projects, management and tracking systems for critical
projects, technology development and acquisition plans, and technical personnel
development. The committee also assists the board and the company in interfacing
with appropriate advisory and thought leader interactions.
5
Gordon Brunner and James Connelly currently serve on the innovation and
technology committee. The board of directors has determined that each member of
the innovation and technology committee is "independent" as such term is defined
in the listing standards of the Nasdaq Stock Market.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the compensation committee is currently, or has ever
been at any time since our formation, an officer or employee of the Company or
any of its subsidiaries. No memberNone of the compensation committeeour executive officers serves as a member of
the board of directors or compensation committee of any entity that itself has
one ofor more officers serving as a member of our board of directors or
compensation committee. None of the members of Third Wave's compensation
committee serves as an executive officer of any entity that has one or more of
our officers serving as a member the board of directors or compensation
committee.
DIRECTOR COMPENSATION
Upon initial election, our non-employee directors receive a stock option
grant of 30,00045,000 options. The exercise price of these options is determined byequal to the
fair
market valueclosing price of the companyCompany's common stock onfrom the date of grant.last business day prior to
the grant date. Following the third year ofafter initial election, our non-employeenon-
employee directors receive an annual grant of 10,00015,000 options. OptionsOne-third of the
initial options vest at 25% per yearon each of the first three anniversary dates of the grant
and the annual option grants vest in full on the first anniversary date of the option grant
and acceleratedate; provided, the options vest in full upon a change of control consistent with the terms
outlined in the company's stock option grant agreements.control.
Our non-employee directors receive an annual retainer of $12,000,$40,000, a board
meeting fee of $1,500 for regularly scheduled board meetings physically attended
and a board$500 for each meeting attended by teleconference. Committee chairs receive
an additional annual retainer of $7,500 and directors who hold committee
meeting participation feepositions receive an additional annual retainer of $500$5,000 for each committee
participation. Our chairman and lead independent director, Mr. Thompson,
receives an additional $15,000 per meeting.year for serving in such position. Our
directors are reimbursed for allreasonable director-related expenses incurred as a
result of providing service to the companyCompany or at the company'sCompany's request.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF AUDITORSINDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The audit committee and the board of directors has based on the determination of the audit
committee, appointed Ernst & YoungGrant Thornton
LLP as the independent auditorsregistered public accounting firm of the Company for the
current fiscal year ending December 31, 2003.2006.
In May 2005 and after evaluating several independent accounting firms, the
audit committee and the board of directors appointed Grant Thornton LLP as the
Company's independent registered public accounting firm for the 2005 fiscal
year. In connection with this action, on May 31, 2005, Third Wave dismissed
Ernst & Young LLP as its independent registered public accounting firm for the
2005 fiscal year. During Third Wave's two most recent fiscal years, the opinion
of Ernst & Young LLP did not contain an adverse opinion or disclaimer of opinion
and was not qualified or modified as to uncertainty, audit scope, or accounting
principles. The decision to change accounting firms was approved by Third Wave's
audit committee and board of directors.
During each of the two fiscal years ended December 31, 2003 and 2004, and
in the subsequent interim period, there were no disagreements with Ernst & Young
LLP on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Ernst & Young LLP, would have audited the Company's financial statements sincecaused it to make reference
thereto in its inception.
5reports for those periods.
6
FEES PAID OR DUE TO ERNST & YOUNG LLP
Audit Fees. The aggregatetable below shows the total fees for professional services renderedbilled by Ernst & Young LLP for its
services in connection with their 2002 annual2005 and 2004.
2005 2004
------- --------
Audit Fees(1)........................................... $22,910 $488,800
Audit-Related Fees(2)................................... 9,100 1,500
Tax Fees(3)............................................. 12,133 32,895
All Other Fees.......................................... 0 0
------- --------
Total................................................... $44,143 $523,195
======= ========
- --------
(1) 2004 Audit Fees consist of the aggregate fees billed for professional
services rendered for the audit of the Company's 2004 financial statements
and reviews of the financial statements included in ourthe Company's
Quarterly Reports on Form 10-Q for 2002 were approximately
$261,500.
Financial Information Systems Designsuch year and Implementation Fees. The Company
did not engageservices that are
normally provided by the independent public accounting firm in connection
with statutory and regulatory filings or engagements. These fees included
fees billed for review and evaluation of the Company's internal control
over financial reporting and attest services relating thereto. 2005 Audit
fees consist of fees billed for review of the financial statements
included in the Company's Quarterly Report on Form 10-Q for the first
quarter of 2005 and for review of the Company's Form 10-K for 2005
required to obtain Ernst & Young LLPLLP's consent to undertake any financial information systems
design and implementation work during 2002.
All Other Fees. Theinclude its 2004 audit
report in such filing.
(2) Audit-related fees consisted of the aggregate fees billed for assurance
and related services that are reasonably related to the performance of the
audit or review of the Company's consolidated financial statements and are
not reported under "Audit Fees."
(3) Tax fees principally included review of and consultation regarding the
Company's federal, state and foreign tax returns and tax planning.
FEES PAID OR DUE TO GRANT THORNTON LLP
The table below shows the total fees billed by Grant Thornton LLP for its
services in 2005. Grant Thornton did not provide any services in 2004.
2005
--------
Audit Fees(1).................................................. $194,225
Audit-Related Fees(2).......................................... 13,896
Tax Fees(3).................................................... 8,256
All Other Fees................................................. --
--------
Total.......................................................... $216,377
========
- --------
(1) Audit Fees consist of the aggregate fees billed for professional services
rendered for the audit of the Company's annual financial statements and
reviews of the financial statements included in the Company's Quarterly
Reports on Form 10-Q and services that are normally provided by the
independent public accounting firm in connection with statutory and
regulatory filings or engagements. These fees included fees billed for
review and evaluation of the Company's internal control over financial
reporting and attest services relating thereto.
(2) Audit-related fees consisted of the aggregate fees billed for assurance
and related services that are reasonably related to the performance of the
audit or review of the Company's consolidated financial statements and are
not reported under "Audit Fees."
(3) Tax fees principally included review of and consultation regarding the
Company's federal, state and foreign tax returns and tax planning.
The audit committee has considered whether the provision of the non-audit
services described above is compatible with maintaining the independence of
Grant Thornton LLP and determined that such services are compatible with
maintaining such independence.
7
The audit committee has adopted a policy that requires pre-approval by the
audit committee of all services to be provided by the Company's independent
registered public accounting firm. The audit committee has approved the
provision of audit services by Grant Thornton LLP for fiscal year 2006 in
accordance with that policy. All other services renderedto be provided by Ernst & Young LLP in 2002 was approximately $51,020, consistingthe Company's
independent auditor must be specifically pre-approved by the audit committee or
a designated member of the audit related
services of approximately $15,145 and non-audit services of approximately
$35,875. Audit related services generally include fees for accounting
consultations and registration statements.committee.
Representatives of Ernst & YoungGrant Thornton LLP are expected to be present at the
annual meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions. If
shareholdersstockholders fail to ratify the selection of Grant Thornton LLP as the
independent registered public accounting firm for 2006, the audit committee and
the board of directors will reconsider whether or not to retain that firm. Even if the
selection is ratified, the audit committee and the board may, in their
discretion, may direct the appointment of a different independent auditorsregistered public
accounting firm at any time during the year.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNGGRANT THORNTON LLP AS THE COMPANY'S
INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2003.
VOTE REQUIRED
The ratification of the appointment of Ernst & Young LLP requires the
affirmative vote of a majority of the shares of common stock represented at the
annual meeting and entitled to vote thereon.
6
2006.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by us during 2000,
20012005,
2004 and 20022003 to our chief executive officer, and our next four most highly
compensated other executive officers who received salary compensation of more
than $100,000 during 20022005, any person who served as chief executive officer
during 2005 and any other executive officer who would be included by virtue of
the foregoing criteria but for the fact that individual was not serving as an
executive officer at the end of the 2005 fiscal year (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION SECURITIES
----------------------------------------------------------- UNDERLYING ALL OTHER
NAME PRINCIPAL POSITION(S) YEAR SALARY($) BONUS($)(1) OPTIONS/SARS(#) COMPENSATION($)
- ---- --------------------- ---- --------- --------------------- --------------- ---------------
Dr. Lance Fors.........Kevin T. Conroy(2)...... President, Chief 2002 $398,239 $150,000 291,000 $ 2,826(2)2005 $254,248 -- 315,000 $36,702(3)
Executive Officer 2001 $384,790 $0 141,480
Chairman,2004 $139,662 $ 90,000 295,000 $13,842(4)
and Director
2000 $317,513 $166,600 693,600
John J. Puisis(1)......Maneesh Arora(5)........ Chief Financial 2005 $312,673 -- 60,000 $20,263(6)
Officer 2004 $278,134 $ 75,000 68,333 $28,887(7)
2003 $206,739 $110,000 350,000 $26,819(8)
Ivan Trifunovich........ Senior Vice 2002 $253,380 $150,000 145,000 $20,705(2)
President 2005 $297,319 -- 75,000 $ 6,300(9)
2004 $269,972 $106,000 32,000 $ 6,500(9)
2003 $263,693 $ 85,750 -- $ 6,000(9)
Lander Brown(10)........ Former, Vice 2005 $241,091 $155,927(11) 65,000 $23,766(12)
President Human 2004 $ 18,667 $ 69,390 200,000 --
Resources &
Administration
James Herrmann(13)...... Former Vice 2005 $218,623 $100,000(14) 165,000 $48,229(15)
President, Finance 2004 $ 67,604 $ 45,000 175,000 --
John Puisis............. Former President, 2005 $522,315 -- 300,000 $35,334(16)
Chief 2001 $ 65,587 $2,111,864 275,000 $ 4,924(2)
FinancialExecutive 2004 $440,305 $286,000 29,333 $20,987(17)
Officer Chief Operating
Officer
Dr. Bruce Neri......... Senior Vice 2002 $247,549 $75,000 145,000
President, Research 2001 $221,987 $0 59,400
& Development 2000 $193,734 $68,750 62,400
Ivan Trifunovich(3).... Senior Vice 2002 $260,713 $0 100,000
President & 2001 $ 0 $0 210,000
General Manager,
Genomics Business
Unit
John Comerford(4)...... Vice President, 2002 $209,879 $15,000 140,000
General Counsel & 2001 $200,461 0 81,000
Secretary 2000 $ 53,539 $21,678 39,600and Director 2003 $349,798 $200,000 480,000 $24,246(18)
- -----------------------
(1) Reflects total bonus earned in applicable year.
(2) Mr. PuisisConroy joined usthe Company in September 2001.
(2) ConsistsJuly 2004.
8
(3) Represents payment of relocation$30,402 for commuting expenses paid by us.
(3)and a Company
matching contribution to a 401(k) plan of $6,300.
(4) Represents payment of $12,026 for commuting expenses a Company matching
contribution to a 401(k) plan of $1,816.
(5) Mr. TrifunovichArora joined usthe Company in January 2003.
(6) Represents payment of $13,947 for commuting expenses and a Company
matching contribution to a 401(k) plan of $6,316.
(7) Represents payment of $22,387 for commuting expenses and a Company
matching contribution to a 401(k) plan of $6,500.
(8) Represents payment of $21,437 for commuting expenses and a Company
matching contribution to a 401(k) plan of $5,382.
(9) Represents a Company matching contribution to a 401(k) plan.
(10) Mr. Brown joined the Company in December 2001.
(4)2004.
(11) Includes a signing bonus of $77,527.
(12) Represents payment of $19,925 for commuting expenses and a Company
matching contribution to a 401(k) plan of $3,841.
(13) Mr. ComerfordHerrmann joined usthe company in September 2000.October 2004.
(14) Represents a signing bonus.
(15) Represents payment of $41,929 for commuting expenses and a Company
matching contribution to a 401(k) plan of $6,300.
(16) Represents payment of $29,034 for commuting expenses and a Company
matching contribution to a 401(k) plan of $6,300.
(17) Represents payment of $14,487 for commuting expenses and a Company
matching contribution to a 401(k) plan of $6,500.
(18) Represents payment of $18,246 for commuting expenses and a Company
matching contribution to a 401(k) plan of $6,000.
OPTION GRANTS IN 20022005
The following table sets forth information relating to stock options
granted during 20022005 to the Named Executive Officers. In accordance with the
rules of the Securities and Exchange Commission, also shown below is the
potential realizable value overduring the term of the option (the period from the
grant date to the expiration date) based on assumed rates of stock appreciation
of 5% and 10%, compounded annually.
These amounts are mandated by the Securities
and Exchange Commission and do not represent our estimate of
7
future stock price. Actual gains, if any, on stock option exercises will depend
on the future performance of our common stock.
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS -----------------------------------------------------VALUE AT ASSUMED
-------------------------------------------------- ANNUAL RATES OF
PERCENT OF POTENTIAL REALIZABLE VALUE ATSTOCK
NUMBER OF TOTAL ASSUMED ANNUAL RATES OFPRICE APPRECIATION
SECURITIES OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------------------------------
NAME GRANTED(#)(1) 2002(2)2005(2) SHARE($) DATE 5%($) 10%($)
- ---- ------------- ------------ --------- ---------- ------------- -------------------- ---------
Dr. Lance Fors....... 291,000 12.61 2.13 6/Kevin T. Conroy............ 65,000 2.6% 4.23 04/29/2015 172,915 483,199
250,000 9.9% 2.82 12/2012 389,808 987,84929/2015 443,371 1,123,588
Maneesh Arora.............. 60,000 2.4% 4.23 04/29/2015 159,613 404,492
Ivan Trifunovich........... 75,000 3.0% 4.23 04/29/2015 199,517 505,615
Lander Brown............... 65,000 2.6% 4.23 04/29/2015 172,915 483,199
James J. Herrmann.......... 65,000 2.6% 4.23 04/29/2015 172,915 483,199
100,000 4.0% 4.65 08/01/2015 292,436 741,090
John J. Puisis....... 145,000 6.28 2.13 6/12/2012 194,234 492,227
Dr. Bruce Neri....... 145,000 6.28 2.13 6/12/2012 194,234 492,227
Ivan Trifunovich..... 100,000 4.33 2.13 6/12/2012 133,955 339,467
John Comerford....... 140,000 6.07 2.13 6/12/2012 187,536 475,254Puisis............. 300,000 11.9% 4.23 04/29/2015 798,067 2,022,459
- -----------------------
(1) For each of the Named Executive Officers, 25% of the options vest on each
of the first four anniversaries of the grant date.date provided the options
vest in full upon a change of control.
9
(2) WeDuring 2005, we granted options to purchase a total of 2,307,9502,521,790 shares of
common stock
during 2002.stock.
AGGREGATE OPTION EXERCISES IN 20022005 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information for the Named Executive Officers
relating to option exercises in 20022005 and the number and value of securities
underlying exercisable and unexercisable options held at December 31, 2002:2005:
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 200231,2005 DECEMBER 31, 2002(1)2005($)(1)
ACQUIRED ON VALUE --------------------------- ----------------------------------------------------- --------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------------------- ----------- ------------- ----------- -------------
Dr. Lance Fors.......Kevin T. Conroy.......... 0 0 601,770 674,310 99,792 119,310
John Puisis..........130,000 480,000 0 40,000
Maneesh Arora............ 0 0 275,000 145,000 59,450
Dr. Bruce Neri.......192,083 286,250 29,750 29,750
Ivan Trifunovich......... 0 0 181,650 214,750 184,800 59,450
Ivan Trifunovich.....293,000 124,000 63,750 21,250
Lander Brown............. 0 0 52,500 257,500 41,000
John Comerford.......0 65,000 0 0
48,750 211,850 57,400James Herrmann........... 0 0 175,000 165,000 0 0
John J. Puisis........... 0 0 1,229,333 0 204,450 0
- -----------------------
(1) Value of unexercised in-the-money options are based on a value of $2.54$2.98
per share, the fair market value of our common stock on December 31, 2002.2005.
Amounts reflected are based on the value of $2.54$2.98 per share, minus the per
share exercise price, multiplied by the number of shares underlying the
option.
LONG-TERM INCENTIVE PLAN -- AWARDS IN FISCAL YEAR 2005
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS(1)
PERFORMANCE --------------------------------------
NAME PERIOD THRESHOLD ($) TARGET ($) MAXIMUM ($)
- ---- ----------- ------------- ---------- -----------
Kevin T. Conroy........................... 2005-2007 -- 750,000 1,500,000
Maneesh Arora............................. 2005-2007 -- 464,000 928,000
Ivan Trifunovich.......................... 2005-2007 -- 371,000 742,000
Lander Brown(2)........................... 2005-2007 -- -- --
James J. Hermann(2)....................... 2005-2007 -- -- --
John J. Puisis(2)......................... 2005-2007 -- -- --
- --------
(1) The target payout amount for each officer equals four times the highest
annual incentive award target established for the participant during the
performance period. As a result, the target payout amounts may increase in
the future based upon the annual incentive award targets established for
2006 and 2007. The maximum payout is equal to two times the target payout
amount.
(2) Although awards were made to Mr. Brown, Mr. Herrmann and Mr. Puisis in
2005, such awards were forfeited in connection with the termination of
their employment with Third Wave.
During 2005, the board granted contingent long term performance awards
under the Company's Long Term Incentive Plan No. 2 to select employees covering
the 2005-2007 period to provide a continued emphasis on specified financial
performance goals which the board considers to be important contributors to
long-term stockholder value. The cash awards will be payable only if the Company
achieves specified goals over the performance period for the following three
measurements: the Company's total shareholder return ranking as compared to its
peer group, the Company's stock price growth and the growth in the Company's
clinical molecular diagnostics revenue.
Twenty-five percent of an award vests on the day it is earned (the last day
of the performance period), fifty percent on the first anniversary of such date
and the remaining twenty-five percent on the second anniversary of such date,
provided the participant continues to be employed by the Company through the
applicable vesting date. If a participant retires at or after his or her normal
retirement age, becomes disabled, or dies while employed by the
10
Company, the participant's award fully vests at the end of the performance
period or at the time such event occurs, whichever is later. Unless otherwise
specified in an employment or other agreement between the participant and Third
Wave, if a participant's employment with Third Wave terminates for any other
reason, any unvested portion of any award is forfeited. In the event of a change
of control of the Company during the performance period, all outstanding awards
would be deemed earned and become vested as described below under "Employment
Contracts and Change-in-Control Arrangements."
The Company also has a Long Term Incentive Plan No. 1 covering the 2004-
2006 period and a Long Term Incentive Plan No. 3 covering the 2006-2008 period.
The terms of all of the Company's long term incentive plans are the same other
than the performance targets and performance periods.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
We haveCONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
Mr. Conroy and the Company entered into an amended employment agreement with Mr. Puisis thatin
December of 2005 which provides for an initial base salary of $225,000$375,000 and a
target bonus opportunity equal to 50% of Mr. Conroy's base salary, with the
exact amount to be determined by the Compensation Committee. Under his
agreement, Mr. Conroy participates in our long term incentive plans,
participates in the benefits programs generally provided to our similarly
situated employees, receives four weeks of paid vacation each calendar year, is
entitled to reimbursement for up to $60,000 in relocation expenses and
reasonable and necessary out-of-pocket business expenses and was granted 250,000
incentive stock options with an exercise price of $2.82 and a term of 10 years.
Under his agreement, Mr. Conroy would, upon termination without "cause" or
resignation for "good reason," receive (1) severance pay for a period of 18
months at his then current base salary; provided that if termination occurs
within twelve months before or after a change in control severance would be
payable for 24 months, (2) any accrued but unpaid base salary and annual
incentive bonus as of no less than
22.5%the termination date, (3) the pro rata portion of base salary. The agreementtarget
annual incentive bonus, provided that an annual incentive bonus is paid to other
senior executives of the Company at the end of the applicable year, (4) if
termination occurs within one year following a change in control, the pro rata
portion of the target annual incentive bonus, regardless of whether or not an
annual incentive bonus is paid to other senior executives of the Company, (5) a
pro rata portion of any long term incentive plan awards that are earned based on
the satisfaction of performance targets set forth in such plans and without the
requirement of continued employment, and (6) accelerated vesting of fifty
percent (50%) of then unvested stock options. Any payments due Mr. Conroy as a
result of a change in control would be grossed-up so that the net amount
retained by him, after deduction of any parachute payment excise taxes, would
equal the amounts payable as described above. Additionally, in the event a
change in control occurs within 12 months after Mr. Conroy's termination without
"cause" or resignation for an initial option grant"good reason," any long term incentive plan awards
made to Mr. Puisis and forConroy would become payable as described below notwithstanding such
termination of employment as if Mr. Conroy were employed as of the one-time sign-on bonus to Mr. Puisis (the "Sign-on Bonus")
listed under "Summary Compensation Table" to partially compensate Mr. Puisis for
certain moneys losteffective
date of the change in control. Further, upon Mr. Puisis beginning employment with us. Mr. Puisis'
employment may be terminated by either us or Mr. Puisis at any time, except that
(i) if we terminate Mr. Puisis for "cause" (as defined in the employment
agreement) or Mr. Puisis voluntarily terminates his employmenttermination other than for
"good reason" (as defined in the employment agreement) after the first twelve
months but within the first twenty-four months, Mr. Puisis must repay to us
$700,000 of the Sign-on Bonus and (ii) if we terminate Mr. Puisis other thantermination
for "cause" or resignation without "good reason," all vested options would
become open for exercise until the earlier of (1) two years from termination and
(2) expiration notwithstanding such termination of employment. The agreement
also prohibits Mr. Puisis voluntarily terminatesConroy from engaging in certain activities involving
competition with us for an 18-month period following termination of his
employment with the Company.
In May 2005, the Company entered in to an employment agreement with Maneesh
Arora under which Mr. Arora is being paid a salary of $265,000 and has a target
annual incentive bonus opportunity equal to 40% of such base salary. Under his
agreement, Mr. Arora would, upon termination without "cause" or resignation for
"good reason",
Mr. Puisis wouldreason," receive (1) a lump sum severance paymentamount equal to one year's base salary,
and(2) if termination occurs within one year following a pro-ratedchange in control, the pro
rata portion of histhe target annual incentive bonus, (3) twelve months of health
insurance premiums, (4) $10,000 of outplacement consulting fees and continued coverage(5) earned
but unpaid bonuses. Additionally, in the event a change in control occurs within
12 months after Mr. Arora's termination without "cause" or resignation for one year under our health and other welfare benefit plans. The"good
reason," any long term incentive plan awards made to Mr. Arora would become
payable as described below notwithstanding such termination of employment agreement withas if
Mr. Puisis defines "good reason" to include (i) Dr. Fors
voluntarily ceasing to be the CEO or ChairmanArora were employed as of the 8
boardeffective date of directors within eighteen months of the beginning of Mr. Puisis'
employment and (ii) a resignation by Mr. Puisis following a "change of control"
(as defined in the employment agreement), but not earlier than six months after the change in control. The
agreement also prohibits Mr. Arora from engaging in certain activities involving
competition with us for an 12-month period following termination of his
employment with the Company.
The Company's long term incentive plans provide for deemed satisfaction of
performance goals and accelerated vesting in the event of a change of control of
the Company during a performance period as follows.
11
With respect to Long-Term Incentive Plan No. 1, in connection with any change in
control all performance goals would be deemed satisfied and all Named Executive
Officers would be deemed to have immediately earned the maximum payout due for
all long term incentive awards granted to the Named Executive Officer. With
respect to Long-Term Incentive Plan No. 2 and Long-Term Incentive Plan No. 3, in
connection with change in control, all performance goals would be deemed
satisfied and all Named Executive Officers would be deemed to have immediately
earned the maximum payout due for all long term incentive awards granted to the
Named Executive Officer, unless the change in control is an acquisition or
merger for less than $200 million in total value, in which case all performance
goals would be deemed satisfied only to the extent the performance targets are
satisfied as of the date of the change in control after taking into account on a
straight-line basis the shortened time period within which to achieve such
performance goals.
Mr. Puisis, our former President and Chief Executive Officer, resigned on
December 14, 2005. In connection with Mr. Puisis' resignation, he and the
Company entered into a severance agreement under which he is entitled to the
following severance benefits: (1) an amount equal to $880,000 in cash, $220,000
of which was paid up front and the remainder of which is payable in 18 monthly
installments, (2) $33,572 in cash payable in 12 monthly installments and (3) up
to $15,000 in outplacement consulting services. In addition, under his severance
agreement all previously granted, but unvested, stock options became immediately
vested and open for exercise until expiration notwithstanding termination of
employment.
Mr. Herrmann, our former Vice President of Finance, resigned on March 16,
2006. In connection with Mr. Herrmann's resignation, he and the Company entered
into a severance agreement under which he is entitled to the following severance
benefits: (1) severance pay at his current salary level of $225,000 through
December 31, 2006, (2) a supplemental transition payment of $25,000, less
applicable taxes, payable on January 15, 2007 and (3) in exchange for the return
of his vested option to purchase 175,000 shares of our common stock, an option
grant on March 16, 2006 to purchase 43,750 shares of our common stock.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes the number of outstanding options granted to
employees, directors and directors,consultants, as well as the number of securities
remaining available for future issuance, under our compensation plans as of
December 31, 2002.2005.
NUMBER OF
SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
NUMBER OF SECURITIES WEIGHTED AVERAGE UNDER EQUITY
TO BE ISSUED UPON EXERCISE PRICE COMPENSATION PLANS
EXERCISE OF OUT- OF OUTSTANDING (EXCLUDING SECURITIES
STANDING OPTIONS, OPTION WARRANTS REFLECTED IN THE
PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS FIRST COLUMN)
- ------------- -------------------- --------------------------------- ---------------------
Equity compensation plans approved by
security holders......................... 6,140,859 $5.35 2,801,587
Equity compensation plans not approved by
security holders.........................EQUITY COMPENSATION PLANS APPROVED BY
SECURITY HOLDERS
Incentive Stock Plans............... 9,101,298 $ 4.34 1,914,539
Employee Stock Purchase Plan........ Not Applicable(1) Not Applicable(1) 431,114
Total............................... 9,101,298 $ 4.34 2,345,653
EQUITY COMPENSATION PLANS NOT APPROVED
BY SECURITY HOLDERS
None................................ 0 0 0
Total...................................... 6,140,859 $5.35 2,801,587---------------- ----------------- ---------
NET TOTAL............................. 9,101,248 $ 4.34 2,345,653
================ ================= ========= ===== ==========
- --------
(1) The Company maintains an Employee Stock Purchase Plan that permits
employees to have payroll deductions made to purchase shares of Common
Stock during specified purchase periods. The purchase price is the lower
of 85% of (1) the fair market value per share of Common Stock on the first
business day of the purchase period and (2) the fair market value per
share of Common Stock on the last business day of the purchase period.
12
Consequently, the price at which shares will be purchased for the purchase
period currently in effect and future purchase periods is not known.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report is provided to shareholdersstockholders by the compensation
committee of the board of directors:
The compensation committee of the board of directors, which is composed of
three non-employee directors, is responsible for the administration ofadministers the Company's compensation programs.
These programs include base salary for executive officers and both annual and
long-termlong term incentive compensation programs. The Company's compensation programs
are designed to provide a competitive level of total compensation and include
incentive and equity ownership opportunities linked to the Company's performance
and shareholderstockholder return.
Compensation Philosophy. The Company's overall executive compensation
philosophy is based on a series of guiding principles derived from the Company's
values, business strategy and management requirements. These principles are
summarized as follows:
- Provideprovide competitive levels of total compensation whichthat will enable the
Company to attract and retain the best possible executive talent;
- Motivatemotivate executives to achieve optimum performance for the Company;
- Alignalign the financial interest of executives and shareholdersstockholders through
equity-based plans; and
- Provideprovide a total compensation program that recognizes individual
contributions as well as overall business results.
Compensation Program. The compensation committee is responsible for
reviewingreviews and recommendingrecommends to
the board the compensation and benefits of all officers of the Company and
establishes and reviews general policies relating to compensation and benefits
of employees of the Company. The compensation committee is also responsible for the administration ofadministers the
Company's 2000 Stock Plan.Plan and its long term incentive plans. There are two major
components to the Company's executive compensation:
- base salary and potential annual cash bonus, as well asand
- potential long-termlong term compensation in the form of stock options.options and long
term incentive plans.
The compensation committee considers the total current and potential long-termlong
term compensation of each executive officer in establishing each element of
compensation.
1.
Base Salary. In setting compensation levels for executive officers, the
compensation committee reviews competitive information to
compensation levels for comparable positions at
biotechnology and
9
high technology companies. In addition, the compensation
committee may, from time to time, hire compensation and benefit consultants to
assist in developing and reviewing overall salary strategies. Individual
executive officer base compensation may vary based on time in position,
assessment of individual performance, salary relative to internal and external
fairness and the critical nature of the position relative to the success of the
Company.
2.Annual Incentive Awards. The Company establishes both corporate and
individual goals and performance measures consistent with factors necessary to
achieve strategic business objectives. Annual incentive awards paid to Company
employees, including the executive officers, are determined based on a
combination of the achievement of the predetermined corporate and individual
performance goals and measures. The annual incentive awards are designed to
drive individual and Company performance to enhance stockholder value.
Long-Term Incentives. The Company's 2000 Stock Plan provides for the
issuance of stock options to officers and employees of the Company to purchase
shares of the Company's common stock at an exercise price equal to the fair
market value of such stock on the date of grant. Stock options are granted to
the Company's executive officers and other employees both as a reward for past
individual and corporate performance and as an incentive for future performance.
The compensation committee believes that stock-based performance compensation
arrangements are essential in aligning the interests of management andwith the
shareholdersstockholders in enhancing the value of the Company's equity.
3.13
In January 2004, the Company established a long term incentive plan
designed to encourage results-oriented actions on the part of executive officers
and other key employees of the Company. A second long term incentive plan was
established in February 2005 and a third long term incentive plan was
established in February 2006. Each of the plans covers a three-year performance
period. Plan awards will become payable if and to the extent the Company attains
the performance goals set by the committee for the relevant performance period.
The plans are intended to align closely the financial rewards for executive
officers and key employees with the interests of stockholders and the
achievement of specific performance objectives of the Company. The plans are
administered by the compensation committee, which establishes the term of the
plans, performance goals, target awards, performance measurement criteria and
calculation of awards. The plans are also designed to reduce reliance on stock
option grants as the sole source of long term incentive compensation.
Benefits. The Company provides benefits to the Named Executive Officers
that are generally available to all employees of the Company. The amount of
executive level benefits and perquisites, as determined in accordance with the
rules of the Securities and Exchange Commission relating to executive
compensation, did not exceed 10% of total salary and bonus for the calendar year
20022005 for any executive officer.
Chief Executive Officer Compensation. In connection with his promotion to
President and Chief Executive Officer in December 2005, Mr. Conroy and the
Company entered into an amended employment agreement which provides an initial
base salary of $375,000 and a target bonus opportunity equal up to 50% of base
salary. Under the agreement Mr. Conroy received 250,000 stock options, with an
exercise price of $2.82 and a term of 10 years. In determining Mr. Conroy's
compensation, the board considered Mr. Conroy's responsibilities and duties,
value and contributions to the Company and compensation levels for chief
executive officers of other companies of comparable size and complexity in the
Company's industry. The total compensation of Mr. Conroy is consistent with the
Company's overall executive compensation philosophy as described above.
Section 162(m) of the Internal Revenue Code Limitations on Executive
Compensation. Section 162(m) of the United States Internal Revenue Code may
limit the Company's ability to deduct for United States federal income tax
purposes compensation in excess of $1,000,000 paid to the Company's chief
executive officer and its four other highest paid executive officers in any one
fiscal year. No executive officer of the Company received any such compensation
in excess of this limit during fiscal 2002.
The total compensation of Dr. Fors, the Company's Chief Executive Officer,
is consistent with the Company's overall executive compensation philosophy as
described above, and the compensation of Dr. Fors was based on the factors
described above.2005.
It is the opinion of the compensation committee that the aforementioned
compensation policies and structures provide the necessary discipline to
properly align the Company's corporate economic performance and the interest of
the Company's shareholdersstockholders with progressive, balanced and competitive executive
total compensation practices in an equitable manner.
The foregoing report shall not be "soliciting material" or to be "filed"
with the Securities and Exchange Commission, nor shall such information be
incorporated by reference into any future filing under this Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent the Company specifically incorporates it by reference into such
filing.
Respectfully submitted,
The compensation committee of the board
of directors
Lloyd Smith, Ph.D.
Tom DanielGordon Brunner
Lawrence Murphy
John Neis
David Thompson
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company as of April 25, 2003 are set forth below:
Lance Fors, Ph.D. (45), our founder and Chairman of the Board,Kevin Conroy, (40) has served as our President and Chief Executive Officer
and as one of our directors since our
inceptionDecember 2005. Mr. Conroy joined Third Wave as
Vice President of Legal Affairs in 1993. Dr. Fors receivedJuly 2004 and served as General Counsel from
October 2004 to December 2005. Prior to joining Third Wave, Mr. Conroy worked
for GE Healthcare, where he oversaw the development and management of its
information technologies group intellectual property portfolio, and developed
and executed litigation, licensing, and corporate product acquisition legal
strategies. Before joining GE, Mr. Conroy was an intellectual property litigator
at two Chicago law firms, McDermott Will & Emery, and Pattishall, McAuliffe,
Newbury, Hilliard and Geraldson, where he was a partner.
14
He earned his Ph.D.B.A. in molecular biologyelectrical engineering at Michigan State University and
his J.D. from the California InstituteUniversity of Technology in 1990. Dr. Fors has over twenty years of
10
research and development experience and is the inventor on 19 issued and pending
patents in the area of DNA and RNA sequence analysis.
John J. Puisis (43)Michigan.
Maneesh Arora, (37) has served as our Senior Vice President, Chief Financial Officer since September 2001. In January
2003,2006. Mr. Puisis was also
assigned the title and duties of Chief Operating Officer. From 1996 until he
joined the Company, Mr. Puisis held senior management positions at the Spencer
Stuart and Egon Zehnder executive recruitment firms, specializing in recruiting
for the biotechnology and pharmaceutical industries. From 1989 to 1996, Mr.
Puisis held key financial executive positions at DEKALB Genetics and Kraft
Foods. Prior to 1989, Mr. Puisis held various positions at several large public
accounting firms. Mr. Puisis earned an M.B.A. from Northwestern University and a
B.A. in accounting from Northern Illinois University. He is a certified public
accountant.
Bruce Neri, Ph.D. (56)Arora joined us in July 1996January 2003 as Vice PresidentDirector of Research
and DevelopmentStrategy and was
promoted to Vice President of Marketing and Strategy in October 2003. In March
2004, he took on the role of Senior Vice President of Research and
Development in July 1997. From 1991 until joining us, Dr. Neri was Vice
President of DNA probe development at Becton, Dickinson and Company.Commercial Operations.
Prior to 1991, Dr. Neri directed Researchjoining Third Wave, Mr. Arora was Director of Corporate Strategy and
DevelopmentNew Ventures for Ondeo Nalco, a $3-billion subsidiary of Suez, a global provider
of industrial services. Previous to that, he spent nine years at Gene-Trak Systems, Angenics,
Inc., Instrumentation LaboratoriesKraft Foods in
a number of key roles of increasing responsibility in finance, marketing and
Abbott Laboratories. Dr. Neri issales. Mr. Arora received his M.B.A. in management and strategy from the inventor on ten United States patents, with an additional 19 pending in the areaKellogg
Graduate School of human in-vitro diagnostic products,Management and over 60 publications. Dr. Neri
received ahis B.A. in chemistry from Cornell College and a Ph.D. in analytical
chemistryeconomics from the University of
Arizona.Chicago.
Ivan D. Trifunovich, Ph.D. (39), (42) joined us as Senior Vice President and
General Manager of our Genomics business unit in
December 2001. From 1999 until
joining us, Dr. Trifunovich was, successively,previously held successive positions as Vice
President of e-Business and Vice President of Research Strategy and Operations
at Pharmacia Corp. Prior to 1999,joining Pharmacia, Dr. Trifunovich was a Director of
New Product Marketing at Johnson & Johnson, Inc. From 1992 to 1997,He began his career at Bristol-
Meyers Squibb, Inc. as a bench scientist, where he held several positions of
increasing responsibility. Dr. Trifunovich held various positions at
Bristol-Meyers Squibb, Inc. Dr. Trifunovich earnedreceived his Ph.D. in organic
chemistry at UCLA and hisan M.B.A. at the University of Pennsylvania's Wharton
School of Business. He is the holder of ten10 U.S. patents.
Cindy S. Ahn, (33) joined us in April 2006 as Vice President, Legal and
General Counsel. Prior to joining Third Wave, Ms. Ahn was a partner in the
intellectual property litigation department at the Chicago office of Kirkland &
Ellis LLP. Ms. Ahn also practiced intellectual property law at Finnegan,
Henderson, Farabow, Garrett & Dunner in Washington, D.C. Ms. Ahn earned her B.S.
in biology at University of Illinois at Urbana-Champaign and her J.D. at
American University, Washington College of Law.
John ComerfordBellano, (37) joined us in February 2005 as Regional Vice President of
Sales from Roche Diagnostics. He was promoted to Vice President Sales in January
2006. Mr. Bellano joined Roche in early 2000, where he became one of four
regional business managers for its molecular business in the United States. As a
regional business manager, he hired and developed a sales team of 11
representatives with revenues of more than $50 million. His sales organization
regularly exceeded its goals. Mr. Bellano has also managed multi-million dollar
territories for Abbott Laboratories and Sanofi Diagnostics Pasteur, where he was
responsible for infectious disease products in the northeastern United States.
Jorge A. Garces, (34) was appointed Vice President of Product and Platform
Development in April 2006. He joined Third Wave as Executive Director of
Clinical Development in October 2005. Prior to joining Third Wave, Dr. Garces
served as Director of Molecular R&D at Genzyme Genetics, where he oversaw the
technology and product development activities of laboratory staff in New York,
Los Angeles, and Westborough, MA. Before joining Genzyme, Dr. Garces worked as
an associate product manager and R&D scientist at Athena Diagnostics and served
as a database curator for Proteome, Inc. He earned his B.A. in biology from
Brooklyn College and his Ph.D. in Cell and Molecular Biology from the City
University of New York. Dr. Garces completed his post-doctoral training at the
University of Massachusetts Medical School.
Greg Hamilton, (36) joined us in February 2005 as Executive Director,
Planning and Administration and was promoted to Vice President of Finance in
January 2006. Mr. Hamilton joined the Company from Leo Burnett USA, where he
served first as controller of its U.S. subsidiaries and then successively as
vice president and chief financial officer of three of its business units. Prior
to joining Leo Burnett USA, Mr. Hamilton was an auditor and consultant at the
Arthur Andersen and Accenture firms. He earned a master's of business
administration degree from the University of Chicago's Graduate School of
Business and a bachelor's degree in finance from Purdue University.
Rodman P. Hise, (40) joined us in September 2000May 2001 as Manager of Corporate
Communications. He was appointed Director of Corporate Communications and
investor relations in April 2004 and Vice President, General
CounselCorporate Affairs in
October 2005. Before joining Third Wave, Mr. Hise established the in-house
survey research division of a public relations firm, conducting research and
Secretary. From 1998 until joining us,providing communications counsel to the Minnesota Twins Baseball Club, a major
midwestern health care system and other corporate clients. He spent more than a
decade serving local, state
15
and federal elected officials, including Governor Tommy G. Thompson of
Wisconsin, for whom he was press secretary. Mr. Comerford was Corporate
General Counsel and Secretary at Lunar Corporation,Hise earned a publicly-traded medical
device company. From 1990 to 1997, Mr. Comerford was Associate Resident Counsel
at National Presto Industries, Inc. Prior to 1990, Mr. Comerford was a Staff
Attorney at Fort Howard Corporation. Mr. Comerford received a J.D.bachelor's degree
in communication studies from Marquettethe University and a B.A. in business administration from St. Norbert
College.of Iowa.
REPORT OF THE AUDIT COMMITTEE
The audit committee oversees the Company's financial reporting process on
behalf of the board of directors. The audit committee is governed by a written
charter approved by the board of directors.directors a copy of which is available on our
Website at www.twt.com and attached hereto as Annex A. Management has the
primary responsibility for the financial statements and the reporting process
including the systems of internal controls. In fulfilling its oversight
responsibilities, the audit committee reviewed with management the audited
financial statements in the Company's Annual Report on Form 10-K, the unaudited
financial statements in Quarterly Reports on Form 10-Q, and financial result
press releases with management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial statements.
The audit committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles generally accepted in the United
States, their judgments as to the quality, not just the acceptability, of the
Company's accounting principles and such other matters as are required to be
discussed with the audit committee under auditing standards generally accepted
in the United States. In addition, the audit committee has discussed with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 and the audit committee has discussed with the
independent auditors the auditors' independence from management 11
and the Company
including the matters in the written disclosures required by the Independence
Standards Board Standard No. 1 and considered the compatibility of non-audit
services with the auditors' independence.
The audit committee discussed with the Company's independent auditors the
overall scope and plans for their audit. The audit committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
audit committee held six meetings in 2002.2005.
In reliance on the reviews and discussions referred to above, the audit
committee recommended to the board of directors (and the board hasof directors
approved) that the audited financial statements for the year ended December 31,
2005 be included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002. The audit committee and the board have also recommended the
selection of the Company's independent auditors.
The foregoing report shall not be "soliciting material" or to be "filed"
with the Securities and Exchange Commission, nor shall such information be
incorporated by reference into any future filing under this Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent the Company specifically incorporates it by reference into such
filing.year.
Respectfully submitted,
The audit committee of the board of
directors
John Neis
G. Steven Burrill
Tom DanielLionel Sterling
James Connelly
Lawrence Murphy
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND MANAGEMENT
The following table shows information known to us with respect to the
beneficial ownership of our common stock as of April 18, 2003March 31, 2006 by:
- each person (or group of affiliated persons) who owns beneficially 5% or
more of our common stock;
- each of our directors;
- each of the Named Executive Officers; and
- all of our directors and executive officers as a group.
16
Except as indicated in the footnotes to this table and subject to community
property laws where applicable, the persons named in the table have sole voting
and investment power with respect to all shares of our common stock shown as
beneficially owned by them. Beneficial ownership and percentage ownership are
determined in accordance with the rules of the Securities and Exchange
Commission.
Addresses for those individuals for which an address is not
otherwise indicated is: c/o Third Wave Technologies, Inc., 502 South Rosa Road,
Madison, Wisconsin 53719.
12
SHARES BENEFICIALLY OWNED
---------------------------------------------AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
----------------------------------------------
SHARES SUBJECT TO
NAME OF BENEFICIAL OWNER TOTAL NUMBERNUMBER(1) OPTIONS PERCENTAGE
- ---------------- ------------------------------------ --------------- ----------------- ----------
5% SHAREHOLDERS:
State of Wisconsin Investment Board(1)................ 5,523,000 0 13.96%
Bank of America Corporation(2)........................ 3,419,450 0 8.64%
NAMED EXECUTIVE OFFICERS AND DIRECTORS:
Lance Fors, Ph.D.(3).................................. 2,507,816 601,770 6.24%Gordon Brunner................................. 55,000 22,500 *
James Connelly................................. 277,500 -- *
Kevin T. Conroy................................ 135,057 130,000 *
Lawrence Murphy................................ 20,000 -- *
John Puisis........................................... 293,698 275,000Neis...................................... 1,886,625(2) 56,100 4.6%
Lionel Sterling................................ 28,500 7,500 *
Bruce Neri, Ph.D...................................... 202,188 181,650David A. Thompson.............................. 119,300 99,300 *
Maneesh Arora.................................. 277,787 259,166 *
Ivan Trifunovich...................................... 52,500 52,500Trifunovich............................... 310,660 301,000 *
John Comerford........................................ 69,824 48,750J. Puisis................................. 1,267,933 1,199,729 3.0%
Lander Brown................................... 25,393 25,000 *
Lloyd M. Smith, Ph.D.(4).............................. 2,043,600 16,800 5.16%
John Neis(5).......................................... 1,837,125 16,800 4.64%
David A. Thompson..................................... 58,800 58,800 *
Tom Daniel(6)......................................... 1,338,426 16,800 3.38%
G. Steven Burrill(7).................................. 1,047,663 16,800 2.65%
Kenneth R. McGuire(2)................................. 3,119,850 16,800 7.88%
Gordon F. Brunner..................................... 6,000 0 *
Sam Eletr............................................. 0 0James J. Herrmann.............................. 53,048 43,750 *
All directors and executive officers as a group
(13(14 persons)............................................ 12,577,490 1,302,470 30.77%................................. 3,158,743 919,395 7.6%
State of Wisconsin Investment Board............ 4,399,000(3) -- 10.6%
Deerfield Group................................ 4,017,665(4) -- 9.7%
Barclays Group................................. 2,202,674(5) -- 5.3%
- -----------------------
* indicates less than 1%
(1) Based on information provided in the Schedule 13G filed by the State of
Wisconsin Investment Board ("SWIB") with the SecuritiesIncludes shares currently owned and Exchange
Commission on February 14, 2003. The address of SWIB is P.O. Box 7842,
Madison, Wisconsin 53707.shares subject to options which are
exercisable within 60 days.
(2) Based on information provided in the Schedule 13G filed by Bank of America
Corporation ("BAC"), NB Holdings Corporation ("NBH"), Bank of America NA
("BA"), BANA #1 LLC ("BANA") and Bank of America Strategic Solutions, Inc.
("BASS") with the Securities and Exchange Commission on February 14, 2003.
The Schedule 13G reports that BANA and BASS have shared voting and
dispositive power with respect to 3,417,450 of those shares, BA has sole
vote and dispositive power with respect to 2,000 of those shares, and BAC
and NBH have shared voting and dispositive power with respect to all
3,419,450 shares. The Schedule 13G reports that the shares reported in the
Schedule are owned by Mr. McGuire and have been pledged by Mr. McGuire to BA
to secure certain obligations under a loan agreement. The address of BAC is
100 N. Tryon Street, Charlotte, NC 28255.
(3) Includes 1,900,800 shares of common stock held in a voting trust for the
benefit of Dr. Fors' family members. Dr. Fors and his wife, Charlotte H.
Selover, are co-trustees of this voting trust.
(4) Includes 148,800 shares of common stock held in a voting trust for the
benefit of Dr. Smith's family members. Dr. Smith is the sole trustee of this
voting trust.
(5) Includes 369,7871,196,550 shares held by Venture Investors of Wisconsin; 269,400445,200
shares held by Venture Investors Early Stage II Limited Partnership;
170,400 shares held by Venture Investors Early Stage Fund III Limited
Partnership.
(6) Includes 774,312 shares owned by Schroder Ventures International Life
Sciences Fund II LPI; 329,524 shares held by Schroder Ventures International
Life Sciences Fund II LPII; 88,630 shares held by Schroder Ventures
International Life Sciences Fund II LPIII; 22,282 shares held by Schroder
Ventures International Life Sciences Fund Group Co-Investments Scheme;
11,842 shares held by Schroder Ventures International Life Sciences Fund II
Strategic Partners LP;(3) Information is as of December 31, 2005 and 25,200 shares held by Schroder Ventures
Investments Limited. Mr. Daniel isbased on a manager of a company that provides
consulting services to Schroder Ventures funds. Mr. Daniel disclaims
beneficial ownership ofSchedule 13G filed
with the shares heldSecurities and Exchange Commission by the 13
various Schroder Venture funds.State of Wisconsin
Investment Board ("SWIB"). The address of Schroder VenturesSWIB is P.O. Box 7842, Madison,
Wisconsin 53707.
(4) Information is as of December 31, 2005 and based on a Schedule 13G filed
with the Securities and Exchange Commission by Deerfield Partners, L.P.
("Partners"), a Delaware limited partnership, Deerfield Capital, L.P., a
Delaware limited partnership ("Capital"), Deerfield International Life Sciences Fund II, LPI, Schroder VenturesLimited,
a British Virgin Islands corporation ("International"), Deerfield
Management Company, L.P., a New York limited partnership ("Management"),
and Arnold Snider ("Snider"). The Schedule 13G reports that Snider has
shared voting and dispositive power with respect to 4,071,665 shares, of
which Capital and Partners have shared voting and dispositive power with
respect to 1,758,959 shares and International Life Sciences Fund
II LPII, and Schroder Ventures International Life Sciences Fund II LPIIIManagement have shared
voting and dispositive power with respect to 2,312,706 shares. The address
of Partners, Capital, Management and Snider is 875780 Third Avenue, 22nd37(th)
Floor, New York, NY 10022-6225.New York 10017. The address of Schroder
Ventures Co-Investment SchemeInternational is 22 Church Street, Hamilton HM 11, Bermuda.c/o
Hemisphere Management (B.V.I.) Limited, Bison Court, Columbus Center, P.O.
Box 3460, Road Town, Tortola, British Virgin Islands.
(5) Information is as of December 31, 2005 and based on a Schedule 13G filed
with the Securities and Exchange Commission by Barclays Global Investors,
NA, Barclays Global Fund Advisors, Barclays Global Investors Japan Trust
and Banking Company, Ltd. and Barclays Global Investors, Ltd.
(collectively, the "Barclays Group"). The Schedule 13G reports that the
Barclays Group has shared voting power with respect to 2,076,886 of these
shares and shared dispositive power with respect to 2,202,674 of these
shares. It does not indicate who has voting power with respect to the
remaining 125,788 shares. The address of Schroder Ventures Investments Limitedthe Barclays Group is P.O. Box 255,
Barfield House, St. Julian's Avenue, St. Peter Port, Guernsey GY1 4ND
Channel Islands, United Kingdom.
(7) Includes 1,020,863 shares held by the Burrill Agbio Capital Fund, LP. Mr.
Burrill is general partner of Burrill Agbio Capital Fund, LP and disclaims
beneficial ownership of these shares except to the extent of his pecuniary
interest in these shares.45 Fremont
Street, San Francisco, California 94105.
17
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and any persons who beneficially own more than ten
percent of our common stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of common
stock. To our knowledge, based solely on review of the copies of such reports
sent to us and written representations that no other reports were required, we
believe that during the year ended December 31, 2002,2005, our directors, officers
and ten percent shareholdersten-percent stockholders complied with their Section 16(a) filing
requirements, except that the initial statement of beneficial ownership for Dr.
Eletr wasMr. Puisis filed late.
SHAREHOLDERone late Form 4 reporting one
transaction.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We were not party to any reportable related party transactions in 2005.
18
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative return
on our common stock against the NASDAQ Stock Market U.S. Index (the "NASDAQ
Index") and a peer group composed of the companies listed below (the "Peer
Group"). The graph assumes a $100 investment on February 9, 2001 (the date of
our initial public offering) in each of our common stock, the NASDAQ Index and
the Peer Group and assumes that all dividends, if paid, were reinvested. This
table does not forecast future performance of our common stock.
(PERFORMANCE GRAPH)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2/9/01 3/31/01 6/30/01 9/30/01 12/31/01 3/12/31/02 6/30/02 9/30/02 12/31/0203 12/30/04 12/31/05
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TWTI 100.00 63.64 93.91 57.45 66.82 30.45 20.36 12.27 24.45 41.36 78.18 27.09
- --------------------------------------------------------------------------------------
NASDAQ 100.00 74.48 87.44 60.66 78.93 74.68 59.22 47.43 54.05 81.08 88.04 89.25
- --------------------------------------------------------------------------------------
Peer Group 100.00 53.61 65.69 37.14 62.56 39.95 28.58 18.98 19.17112.48 111.79 234.39 270.98 310.16
- --------------------------------------------------------------------------------------
14
The Peer Group consists of the following companies: Applera Corporation,
Orchid Biosciences, Inc., Sequenom, Inc., Affymetrix, Inc.Gen-Probe
Incorporated, Celera Diagnostics, LLC, Ventana Medical Systems, Digene, Bio-Rad
Laboratories.
CODE OF BUSINESS CONDUCT
The Company has adopted a Code of Business Conduct (the "Code of Business
Conduct") which applies to all directors, officers and Nanogen, Inc.employees. A copy of the
Code of Business Conduct is available on the Company's website at www.twt.com.
The foregoing graph and accompanying material shall not be "soliciting
material"Company intends to make any disclosures regarding amendments to, or to be "filed" withwaivers
from, the Securities and Exchange Commission, nor
shallCode of Business Conduct required under Form 8-K by posting such
information be incorporated by reference into any future filing under
this Securities Act of 1933, as amended, oron the Securities Exchange Act of 1934,
as amended, except to the extent the Company specifically incorporates it by
reference into such filing.Company's website.
OTHER MATTERS
We know of no other matters to be submitted to the shareholdersstockholders at the
meeting. If any other matters properly come before the shareholdersstockholders at the
meeting, it is the intention of the persons named in the enclosed form of proxy towill vote the shares
they represent as the board of directors may recommend.in their discretion.
By Order of the Board of Directors,
/s/ LANCE FORS, PH.D.
Lance Fors, Ph.D.
Chairman of the BoardKEVIN T. CONROY
Kevin T. Conroy
President and Chief Executive Officer
Dated: April 25, 2003
15May 5, 2006
19
ANNEX A
THIRD WAVE TECHNOLOGIES, INC.
A DELAWARE CORPORATION
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
PURPOSES
The primary purpose of the Audit Committee of the Board of Directors of
Third Wave Technologies, Inc., a Delaware corporation (the "Company"), is to
assist the Company's Board of Directors in fulfilling its oversight
responsibilities with respect to financial reports and other financial
information. In this regard, the Audit Committee is to serve as the independent
and objective body to make such examinations as are necessary to monitor the
Company's financial reporting process and system of internal controls, to
provide the Company's Board of Directors with the results of its examinations
and recommendations derived therefrom, to outline to the Board of Directors
improvements made, or to be made, in financial reporting process and internal
accounting controls, to serve, together with the Company's Board of Directors,
as the ultimate authority to which the independent auditors and the internal
audit function are accountable and have, together with the Company's Board of
Directors, the ultimate authority and responsibility to select, evaluate and,
where appropriate, replace the independent auditors (or to nominate the
independent auditors to be proposed for shareholder approval in any proxy
statement), and to provide to the Board of Directors such additional information
and materials as it may deem necessary to make the Board of Directors aware of
significant financial matters which require the Board of Director's attention.
In addition, the Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board of Directors
may from time to time prescribe.
MEMBERSHIP
The Audit Committee members will be appointed by, and will serve at the
discretion of, the Board of Directors and will consist of at least three members
of the Board of Directors, each of whom: shall meet the applicable independence
and experience requirements of the Securities and Exchange Commission, the
Sarbanes-Oxley Act of 2002 and the Nasdaq Stock Market; provided that the
Company's Board of Directors may, in its discretion, elect to take advantage of
any applicable exceptions from such requirements. Determinations as to whether
any particular director satisfies the requirements for membership on the Audit
Committee will be made by the Company's Board of Directors.
RESPONSIBILITIES
The responsibilities of the Audit Committee shall include:
1. Reviewing the adequacy of this Charter at least annually or at such
other intervals as the Audit Committee or the Company's Board of Directors
determines;
2. Reviewing on a continuing basis the adequacy of the Company's
financial reporting process and system of internal controls;
3. Reviewing on a continuing basis the activities, organizational
structure and qualifications of the Company's internal audit function;
4. Reviewing the independent auditors' proposed audit scope and
approach;
5. Conducting a post-audit review of the financial statements and
audit findings, including any significant suggestions for improvements or
other reports provided to management or the Audit Committee by the
independent auditors and any responses to the same by management, and any
significant difficulties encountered during the course of the audit;
A-1
6. Reviewing any significant disagreement among management, the
independent auditors and internal audit in connection with the preparation
of the financial statements;
7. Reviewing with the independent auditors, internal audit and
management the extent to which changes or improvements in financial or
accounting practices and internal controls, as approved by the Audit
Committee, have been implemented;
8. Reviewing the performance of the independent auditors, who shall be
accountable to the Board of Directors and the Audit Committee;
9. Reviewing and discussing with the independent auditors all
significant relationships that the auditors and their affiliates have with
the Company and its affiliates in order to determine the auditor's
independence; in this regard the Audit Committee shall: (1) request,
receive and review, on a periodic basis, a formal written statement from
the independent auditors delineating all relationships between the Company
and the independent auditors that may reasonably be thought to bear on the
independence of the independent auditors with respect to the Company; (2)
discuss with the independent auditors any disclosed relationship or
services that may impact the objectivity and the independence of the
independent auditors; (3) take, or recommend that the Company's Board of
Directors take, appropriate action to oversee the independence of the
independent auditors;
10. Reviewing and recommending to the Board of Directors the
appointment of independent auditors;
11. Reviewing and recommending to the Company's Board of Directors the
fee arrangements with the independent auditors;
12. Reviewing before release the audited financial statements and
Management's Discussion and Analysis in the Company's annual report on Form
10-K;
13. Reviewing before release the unaudited quarterly operating results
in the Company's quarterly earnings release and the Company's quarterly
financial statements and
14. Management's Discussion and Analysis in the Company's quarterly
reports on Form 10-Q;
15. Reviewing and, if appropriate, approving the provision by the
independent auditors of all auditing services and any non-audit services
and overseeing compliance with the requirements of the Securities and
Exchange Commission for independent auditor's services and disclosure of
audit committee members and activities;
16. Reviewing the independent auditors' judgment about the quality and
appropriateness of accounting principles as applied in financial reporting
and consider and, if appropriate, recommend to the Board significant
changes to auditing and accounting principles and practices as suggested by
the independent auditors, management or internal audit.
17. Overseeing of compliance with the Company's Standards of Business
Conduct and with the Foreign Corrupt Practices Act;
18. Establishing procedures for the receipt, retention and treatment
of complaints received by the Company regarding accounting, internal
accounting controls or auditing matters and for the confidential, anonymous
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters;
19. Reviewing, in conjunction with counsel, any legal matters that
could have a significant impact on the Company's financial statements;
20. Providing oversight and review of the Company's asset management
policies, including an annual review of the Company's investment policies
and performance for cash and short-term investments;
21. If necessary, instituting special investigations and, if
appropriate, hiring special counsel or experts to assist;
22. Reviewing related party transactions for potential conflicts of
interest;
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23. Providing a report in the Company's proxy statement in accordance
with the requirements of Item 306 of Regulations S-K and S-B and Item
7(e)(3) of Schedule 14A; and
24. Performing other oversight functions as requested by the Company's
Board of Directors.
In addition to the above responsibilities, the Audit Committee will
undertake such other duties as the Board of Directors may delegate to it and
will report, at least annually, to the Board of Directors regarding the
Committee's examinations and recommendations.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditors.
MEETINGS
The Audit Committee will meet at least two times each year. The Audit
Committee may establish its own schedule and shall provide such schedule to the
Board of Directors in advance.
The Audit Committee will meet separately with the Company's president and
separately with the Company's chief financial officer at least annually to
review the financial controls of the Company. The Audit Committee will meet
separately with the independent auditors of the Company at such times as it
deems appropriate to review the independent auditor's examination and management
report.
MINUTES
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board of
Directors.
ANNUAL EVALUATIONS
The performance of the Committee shall be evaluated annually by the
Committee members and the entire Board.
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THIRD WAVE TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
THIRD WAVE TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERSSTOCKHOLDERS
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1THE DIRECTOR LISTED
BELOW AND 2 BELOW.
The undersigned shareholderstockholder of Third Wave Technologies, Inc., a Delaware
corporation (the "Company"), hereby acknowledges receipt of the Proxy Statement
of the Company dated April 25, 2003May 5, 2006, and hereby appoints Lance ForsKevin Conroy and John
Comerford, andManeesh
Arora, each of them, proxies and attorneys in fact, with full power to
each of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the Annual Meeting of ShareholdersStockholders of the Company to be held at
the offices of the Company at 9:00 a.m. on Tuesday, June 10, 200313, 2006, and any
adjournment or adjournments thereof, and to vote all shares of common stock of
the Company that the undersigned would be entitled to vote if the undersigned
were present, as follows:
1. The election of the following personsTo elect as directorsa director of the Company each of the nominees listed below,
to serve until their successors shall be duly elected and qualified:for a term expiring at the 2009 Annual Meeting of Stockholders
NAME OF NOMINEE FOR AGAINST
- ------------------------- ------------------------- ------------------------WITHHELD
------------- --- --------
Gordon F. Brunner [ ] [ ]
Sam H. Eletr [ ] [ ]
John NeisLawrence Murphy [ ] [ ]
For, except vote withheld from the following nominee(s):
2. To ratify the appointment of Ernst & YoungGrant Thornton LLP as independent auditorsregistered
public accounting firm of the Company for the fiscal year ending December 31,
2003.2006.
[ ] For [ ] Against [ ] Abstain
3. InThe undersigned shareholder(s) authorize the individuals designated to
vote this proxy, to vote, in their discretion, upon any such other mattersothers (none known at
the time of solicitation of this proxy) which may properly come before the meetingAnnual
Meeting or any adjournmentsadjournment(s) thereof.
The Board of Directors recommends a vote "FOR" each of the proposals.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ] Grant Authority [ ] Withhold Authority
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC INDICATION ABOVE. IN
THE ABSENCE OF SUCH INDICATION, THIS PROXY
20
WILL BE VOTED FOR MANAGEMENT'S SLATE OF DIRECTORS AND FOR ALL OTHER ITEMS SET
FORTH ABOVE AND, IN THE DISCRETION OF THE PROXYHOLDERS, ON ANY OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
DATED:
-------------------------, 2003
- --------------------------------
Signature of Shareholder
- --------------------------------
PLEASE PRINT NAME(S)
- --------------------------------
I plan to attend the meeting: [ ] Yes [ ] No
Taxpayer Identification No. (or Social Security Number):
----------------------
Sign exactly as your name(s) appear(s) on the stock certificate(s). A
corporation is requested to sign its name by its President or other authorized
officer, with the office held designated. Executors, administrators, trustees,
etc., are requested to so indicate when signing. If a stock is registered in two
names, both should sign.
SHAREHOLDERSSTOCKHOLDERS SHOULD SIGN THIS PROXY PROMPTLY AND RETURN IT IN THE ENCLOSED
ENVELOPE. PLEASE RETURN ALL PAGES OF THIS PROXY
PROXY.
Signature: Date: Signature: Date:
------------- -------- ------------ -------