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Registration No. 333-41663
As filed with the Securities and Exchange Commission on May 19, 1998
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
---------------------------
HYSEQ, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S><C>
NEVADA 36-3855489
(State or other Jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
670 ALMANOR AVENUE (408) 524-8100
SUNNYVALE, CALIFORNIA 94086 (Telephone number, including
(Address, Including Zip Code, of area code, of registrant's
registrant's principal executive offices) principal executive offices)
</TABLE>
HYSEQ, INC. EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plan)
MR. LEWIS S. GRUBER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
HYSEQ, INC.
670 ALMANOR AVENUE
SUNNYVALE, CALIFORNIA 94086
(Name, address, including zip code and telephone number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price per aggregate offering Amount of
to be registered(1) registered(2) share(3) price(3) registration fee(3)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share 50,000 $13.125 $656,250 $194
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests pursuant
to the employee benefit plan described herein.
(2) This Registration Statement includes any additional shares of the
registrant's Common Stock that may be issued pursuant to antidilution provisions
contained in the plan.
(3) Pursuant to Rule 457(h), the registration fee was computed on the basis of
the average of the high and low prices of the registrant's Common Stock on the
NASDAQ National Market on May 18, 1998.
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PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have heretofore been filed by Hyseq,
Inc. (the "Company") with the Securities and Exchange Commission (the
"Commission"), are incorporated by reference in this Registration Statement,
except to the extent that any statement or information therein is modified,
superseded or replaced by a statement or information contained in any other
subsequently filed document incorporated herein by reference:
i. the Company's prospectus dated August 7, 1997 filed pursuant to
Rule 424(b) of the Securities Act of 1933 included as part of the
Company's Registration Statement on Form S-1 (No. 333-29091);
ii. the Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
iii. the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998; and
iv. the description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, dated July 23,
1997.
All documents filed by the Company or the plans pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof, and prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be a part hereof from
the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Nevada General Corporation Law, the Company's
Articles and By-Laws provide that officers and directors of the Company shall
not be personally liable for monetary
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damages to the Company for certain breaches of their fiduciary duty as
directors, unless they violated their duty of loyalty to the Company or its
stockholders, acted in bad faith, knowingly or intentionally violated the law,
authorized illegal dividends or redemptions, or derived an improper personal
benefit from their action as directors. This provision would have no effect on
the availability of equitable remedies or nonmonetary relief, such as an
injunction or rescission for breach of the duty of care. Directors will,
however, no longer be liable for monetary damages arising from decisions
involving violations of the duty of care which could be deemed grossly
negligent.
The By-Laws provide that directors of the Company shall be indemnified
by the Company to the fullest extent authorized by Nevada law, as it now exists
or may in the future be amended, against all expenses and liabilities reasonably
incurred in connection with service for or on behalf of the Company. The By-Laws
also authorize the Company to enter into one or more agreements with any person
which provide for indemnification greater or different from that provided in the
Articles. The Company has entered into indemnification agreements with all
current officers and members of the Board of Directors. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Exhibit Index which is incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
i. To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933 (the "Securities Act");
ii. To reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement;
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iii. To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
Provided however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the registration statement
is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are
incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act
and each filing of the plans' annual report pursuant to
Section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement shall be deemed to be
a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to officers, directors, and
controlling persons of the registrant pursuant to the
registrant's certificate of incorporation or by-laws, or
otherwise, the registrant has been advised that in the opinion
of the Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with
the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
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SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Sunnyvale, State of California, on the 18th day
of May, 1998.
Hyseq, Inc.
By: /s/ Lewis S. Gruber
-------------------------------------
Lewis S. Gruber
President and Chief Executive Officer
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POWER OF ATTORNEY
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Lewis S. Gruber and Christopher R. Wolf,
and each of them singly, his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities (including his capacity as a director
and/or officer of Hyseq, Inc.) to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned have executed this power of
attorney on the 18th day of May, 1998.
/s/ Robert D. Weist /s/ Lewis S. Gruber
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Robert D. Weist Lewis S. Gruber
/s/ Christopher R. Wolf /s/ Radomir B. Crkvenjakov
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Christopher R. Wolf Radomir B. Crkvenjakov, Ph.D.
/s/ Radoje T. Drmanac /s/ Greta E. Marshall
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Radoje T. Drmanac, Ph.D. Greta E. Marshall
/s/ Raymond F. Baddour /s/ Kenneth D. Noonan
- ------------------------------ ----------------------------
Raymond F. Baddour, Ph.D. Kenneth D. Noonan, Ph.D.
/s/ Thomas N. McCarter III
- ------------------------------
Thomas N. McCarter III
6
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Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in their
respective capacities on this 18th day of May, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Robert D. Weist
- -------------------------------------
Robert D. Weist Chairman of the Board of Directors
/s/ Lewis S. Gruber
- -------------------------------------
Lewis S. Gruber President and Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Christopher R. Wolf
- -------------------------------------
Christopher R. Wolf Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ Radoje T. Drmanac
- -------------------------------------
Radoje T. Drmanac, Ph.D. Co-Senior Vice President for Research and Director
/s/ Radomir B. Crkvenjakov
- -------------------------------------
Radomir B. Crkvenjakov, Ph.D. Co-Senior Vice President for Research and Director
/s/ Raymond F. Baddour
- -------------------------------------
Raymond F. Baddour, Ph.D. Director
/s/ Greta E. Marshall
- -------------------------------------
Greta E. Marshall Director
/s/ Thomas N. McCarter III
- -------------------------------------
Thomas N. McCarter III Director
/s/ Kenneth D. Noonan
- -------------------------------------
Kenneth D. Noonan, Ph.D. Director
</TABLE>
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THE PLAN. Pursuant to the requirements of the Securities Act of 1933, the
Hyseq, Inc. Employee Stock Purchase Plan has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunnyvale, State of California, on the 18th day of
May, 1998.
Hyseq, Inc.
By: /s/ Lewis S. Gruber
----------------------------
On Behalf of the Committee
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
----- ----------------------
4.1 Certificate of Incorporation of Hyseq, Inc. as
amended to date*
4.2 By-Laws of Hyseq, Inc., as amended to date*
4.3 Hyseq, Inc. Employee Stock Purchase Plan
5 Opinion of Sachnoff & Weaver, Ltd.
23 Consent of Ernst & Young LLP, Independent Auditors
24 Powers of Attorney (contained on the page prior to
the signature page hereto)
- ------------------------------
* Filed as an exhibit to the Company's Registration Statement on Form
S-1, Registration Statement No. 333-29091, declared effective by the
Securities and Exchange Commission on August 7, 1997, and incorporated
herein by reference.
<PAGE> 1
EXHIBIT 4.3
HYSEQ, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
The purpose of the Hyseq, Inc. Employee Stock Purchase Plan is to provide
eligible Employees of Hyseq, Inc. and its Affiliates with an opportunity to
acquire a proprietary interest in the Company through the purchase of Common
Stock of the Company on a payroll deduction basis. It is believed that
participation in the ownership of the Company will be to the mutual benefit of
the eligible Employees and the Company. It is intended that this Plan shall
constitute an "employee stock purchase plan" with in the meaning of Section 423
of the Internal Revenue Code of 1986, as amended. The provisions of the Plan
shall, accordingly, be construed so as to extend and limit participation in a
manner consistent with the requirements of Code Section 423.
2. DEFINITIONS
Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Plan, have the following meanings. Wherever
appropriate, words used in the singular shall be deemed to include the plural
and vice versa, and the masculine gender shall be deemed to include the feminine
gender.
(a) ACCOUNT means the funds accumulated with respect to an Employee as a
result of deductions from his paycheck for the purpose of purchasing Common
Stock under the Plan. The funds allocated to an Employee's Account shall
remain the property of the Employee at all times prior to the purchase of
the Common Stock, but may be commingled with the assets of the Company and
used for general corporate purposes. No interest shall be paid or accrued
on any funds accumulated in the Accounts of Employees.
(b) AFFILIATE means a corporation, as defined in Section 424(f) of the
Code, that is a parent or subsidiary of the Company, direct or indirect.
(c) BOARD means the Board of Directors of the Company.
(d) CODE means the Internal Revenue Code of 1986, as amended.
(e) COMMITTEE means the committee to which the Board delegates the power
to act under or pursuant to the provisions of the Plan, or the Board if no
committee is selected.
(f) COMMON STOCK means the shares of common stock of the Company, $.001
par value.
(g) COMPANY means Hyseq, Inc., a Nevada corporation, and any corporate
successor to all or substantially all of the assets or voting stock of the
Company.
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(h) COMPENSATION means the compensation paid to an Employee by the Company
during a payroll period for federal income tax purposes, as reported on an
Employee's Form W-2 (or comparable reporting form) for income tax
withholding purposes.
(i) EFFECTIVE DATE means the date the Plan is adopted by, and made
effective by, the Board, subject to the limitations of Section 16.
(j) EMPLOYEE means any person who is employed by the Company or an
Affiliate on a regular full-time basis. A person shall be considered
employed on a regular full-time basis if he is customarily employed for
more than twenty (20) hours per week.
(k) OFFERING DATE means the date on which the Committee grants Employees
the option to purchase shares of Common Stock.
(l) OFFERING PERIOD means the period between the Offering Date and the
Purchase Date.
(m) PURCHASE DATE means the date on which the Committee purchases the
shares of Common Stock, which date shall be the last day of an Offering
Period.
(n) PARTICIPANT means an Employee who elects to participate in the Plan.
(o) PLAN means the Hyseq, Inc. Employee Stock Purchase Plan.
3. ELIGIBILITY
All Employees of the Company and, if designated by the Board, any
Affiliate, who are employed by the Company and/or such designated Affiliate
shall be eligible to participate in the Plan on the first Offering Date
coincident with or next following the Employee's completion of ninety (90)
continuous days of employment.
4. ADMINISTRATION
The Plan shall be administered by the Committee, which shall consist of
not less than two (2) members of the Board. Subject to the provisions of the
Plan, the Committee shall be vested with full authority to make, administer,
and interpret such rules and regulations as it deems necessary to administer
the Plan, and any determination, decision, or action of the Committee in
connection with the construction, interpretation, administration, and
application of the Plan shall be final, conclusive, and binding upon all
Participants and any and all persons claiming under or through any Participant.
Notwithstanding anything to the contrary in the Plan, the Committee shall have
the discretion to modify the terms of the Plan with respect to Participants who
reside outside of the United States or who are employed by a subsidiary of the
Company that has been formed under the laws of any foreign country, if such
modification is necessary in order to conform such terms to the requirements of
local laws.
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5. STOCK
(a) The Common Stock to be sold to Participants under the Plan may, at the
election of the Company, be either treasury shares, shares acquired on the
open market, and/or shares originally issued for such purpose. The
aggregate number of shares of Common Stock that shall be made available for
purchase under the Plan shall not exceed fifty thousand (50,000) shares,
subject to adjustment upon changes in capitalization of the Company as
provided in subparagraph (b) below. In the event any purchase right granted
under the Plan expires or terminates for any reason without having been
exercised in full or ceases for any reason to be exercisable in whole or
in part, the unpurchased shares subject thereto will again be available for
purchase by Employees upon the exercise of purchase rights. If the total
number of shares that otherwise would have been acquired under the Plan on
any Purchase Date exceeds the number of shares of Common Stock then
available under the Plan, the Company shall make a pro rata allocation of
the shares remaining available in as nearly a uniform manner as shall be
practicable and as it shall determine to be equitable. In such event, the
payroll deductions to be made pursuant to the Participants' authorizations
shall be reduced accordingly, or refunded to the Participants, as the case
may be, and the Company shall give written notice of such reduction or
refund to each affected Participant.
(b) Appropriate adjustments in the aggregate number of shares of Common
Stock that shall be made available for purchase under the Plan shall be
made to give effect to any mergers, consolidations, acquisitions,
reorganizations, stock splits, stock dividends, or other relevant changes
in the capitalization of the Company occurring the after the Effective
Date. The establishment of the Plan shall not affect in any way the right
or power of the Company or to make adjustments, reclassifications,
reorganizations, or changes in its capital or business structure or to
merge, consolidate, dissolve, liquidate, sell, or otherwise transfer all
or any part of its business or assets. Adjustments under this Section 5
shall be made in the sole discretion of the Committee, and its decision
shall be binding and conclusive.
(c) A Participant shall not have any interest in shares covered by his
authorized payroll deduction until shares of Common Stock are acquired for
his Account.
6. PARTICIPATION
(a) Each Employee may become a Participant in the Plan by authorizing a
payroll deduction on a form provided by the Committee. Such authorization
shall become effective on the next Offering Date following the delivery of
the authorization form to the Committee; provided, (i) that the Employee is
eligible under Section 3 to participate in the Plan on such Offering Date
and (ii) that if the authorization form is delivered to the Committee less
than fifteen (15) days prior to an Offering Date, it shall become effective
on the first Offering Date that is fifteen (15) or more days following
delivery of the authorization form to the Committee.
(b) At the time an Employee files his authorization for a payroll
deduction, he shall elect to have deductions made from each paycheck that
he receives, such deductions to
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continue until the Participant withdraws from the Plan or otherwise
becomes ineligible to participate in the Plan. Authorized payroll
deductions shall be for a minimum of one percent (1%) and a maximum of
ten percent (10%) of the Participant's Compensation. The deduction rate
so authorized shall continue in effect through the Offering Period and
each succeeding Offering Period. A Participant may increase the rate of
his payroll deduction effective as of any subsequent Offering Date by
filing a new authorization form with the Company fifteen (15) or more
days prior to the next Offering Date. A Participant may, at any time
during any Offering Period, reduce his rate of payroll deduction by
filing a new authorization form with the Company, which shall become
effective as soon as practicable after it is filed.
(c) All Compensation deductions made for a Participant shall be credited
to his Account. Except as may otherwise be provided by the Committee under
Section 4, a Participant may not make any separate cash payment into his
Account.
7. PURCHASE OF SHARES
(a) On the Offering Date when a Participant's authorization form for a
deduction becomes effective, and on each succeeding Offering Date
thereafter, he shall be deemed to have been granted an option to purchase
as many full shares of Common Stock as he will be able to purchase with the
Compensation deductions credited to his Account during the payroll periods
within the applicable Offering Period for which the Compensation deductions
are made. In addition to the foregoing, any cash dividends paid on shares
of Common Stock held in his Account shall be added to the Account, and
used to purchase Common Stock as otherwise provided herein.
(b) The purchase price for the shares of Common Stock to be purchased with
payroll deductions from the Participant shall be equal to the lesser of
ninety-five percent (95%) (or such other amount as the Committee shall
authorize, but in no event less than eighty-five percent (85%)) of (i) the
"fair market value" of a share of Common Stock on the Offering Date or (ii)
the "fair market value" of a share on the Purchase Date. Fair market value
shall be defined as the closing bid price of the Common Stock on the
largest national securities exchange on which such Common Stock is listed
at the time the Common Stock is to be valued. If the Common Stock is not
then listed on any such exchange, the fair market value shall be the
closing sales price if such is reported or otherwise the mean between the
closing "Bid" and the closing "Ask" prices, if any, as reported in the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") for the date of valuation, or if none, on the most recent trade
date thirty (30) days or less prior to the date of valuation for which such
quotations are reported. If the Common Stock is not then listed on any such
exchange or quoted in NASDAQ, the fair market value shall be the mean
between the average of the "Bid" and the average of the "Ask" prices, if
any, as reported in the National Daily Quotation Service for the date of
valuation, or, if none, for the most recent trade date thirty (30) days or
less prior to the date of valuation for which such quotations are reported.
If the fair market value cannot be determined under the preceding three
sentences, it shall be determined in good faith by the Committee.
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8. TIME OF PURCHASE
From time to time, the Committee shall grant to each Participant an option
to purchase shares of Common Stock in an amount equal to the number of shares of
Common Stock that the accumulated payroll deductions to be credited to his
Account during the Offering Period may purchase at the applicable purchase
price. Each Offering Period shall be for a specified period of time to be fixed
by the Committee and shall be for no less than one month and no more than
twenty-seven (27) months' duration. Each Participant who elects to purchase
shares of Common Stock hereunder shall be deemed to have exercised his option
automatically on such date of purchase. Administrative and commission costs on
purchases shall be paid by the Company. The Committee shall cause to be
delivered periodically to each Participant a statement showing the aggregate
number of shares of Common Stock in his Account, the number of shares of Common
Stock purchased for him in the preceding Offering Period, his aggregate
Compensation deductions for the preceding Offering Period, the price per share
paid of the shares of Common Stock purchased for him during the preceding
Offering Period, and the amount of cash, if any, remaining in his Account at the
end of the preceding Offering Period.
A Participant may request delivery to him of the cash in his Account or of
the shares of Common Stock held in his Account at any time (subject to any
limitations imposed by Section 16(b) of the Securities Exchange Act of 1934),
and the delivery thereof shall be made at such regular time as the Company or
its transfer agent shall determine. If such delivery is required at a time other
than the normal transfer date set by the Company or its transfer agent, the
Participant requesting such transfer shall pay the costs thereof. All of the
cash deposits in his Account shall be paid to him promptly after receipt of
notice of withdrawal, without interest. Shares of Common Stock to be delivered
to a Participant under the Plan shall be registered in the name of the
Participant or, if the Participant so directs in writing to the Committee, in
the name of the Participant and such person(s) as may be designated by the
Participant, to the extent permitted by applicable law, and delivered to the
Participant as soon as practicable after the request for a withdrawal. If a
Participant wishes to sell the shares of Common Stock in his Account, he may
notify the Committee to sell the same, in lieu of a distribution of such shares,
in which event all commission costs incurred in connection with the sale of the
shares of Common Stock shall be borne by the Participant. The Company shall pay
administrative costs associated therewith other than costs arising from a sale
occurring at a time different from the prearranged dates set by the Company or
its transfer agent for making such sales.
9. CESSATION OF PARTICIPATION
A Participant may cease participation in the Plan at any time by
notifying the Committee in writing of his intent to cease his participation. If
such notice is received by the Committee the Company shall distribute to the
Participant all of his accumulated payroll deductions, without interest. If any
Participant ceases participation in the Plan, no further Compensation deductions
shall be made on his behalf after the effective date of his cessation, except in
accordance with a new authorization form filed with the Committee as provided in
Section 6. Upon ceasing participation in the Plan, a Participant shall not be
permitted to reenter the Plan until six (6) months have elapsed from the date
his cessation becomes effective.
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10. INELIGIBILITY
An Employee must be employed by the Company or an Affiliate on the Purchase
Date in order to participate in the purchase for that Offering Period. If an
option expires without first having been exercised, all funds credited to the
Participant's Account shall be refunded without interest. If a Participant
becomes ineligible to participate in the Plan at any time, all Compensation
deductions made on behalf of the Participant that have not been used to purchase
shares of Common Stock shall be paid to the Participant within sixty (60) days
after the Committee determines that the Participant is not eligible to
participate in the Plan.
11. DESIGNATION OF BENEFICIARY
A Participant may file a written designation of a beneficiary who shall
receive any shares of Common Stock (or remaining Compensation deductions)
credited to the Participant's Account under the Plan in the event of such
Participant's death prior to delivery to him of the certificates for such
shares (or remaining Compensation deductions). The designation of a beneficiary
may be changed by the Participant at any time by written notice given in
accordance with rules and procedures established by the Committee. Upon the
death of a Participant, and upon receipt by the Company of proof of the identity
and existence, at the Participant's death, of a beneficiary validly designated
by him under the Plan, the Company shall deliver such shares of Common Stock (or
remaining Compensation deductions) to such beneficiary. In the event of the
death of the Participant, and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such Participant's death, the
Company shall deliver such shares (or remaining Compensation deductions) to the
executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed, the Company, in its sole
discretion, may deliver such shares (or remaining Compensation deductions) to
the Participant's spouse or to any one or more dependents or relatives of the
Participant, or to such other person or persons as the Company may designate on
behalf of the estate of such deceased Participant.
12. TRANSFERABILITY
Neither Compensation deductions nor Plan contributions credited to a
Participant's Account nor any rights with regard to Plan participation or the
right to purchase shares of Common Stock under the Plan may be assigned,
transferred, pledged, or otherwise disposed of in any way by a Participant other
than by will or the laws of descent and distribution; provided, however, that
shares of Common Stock purchased on behalf of a Participant and left in his
Account shall be subject to his absolute control. Any attempted assignment,
transfer, pledge, or other disposition shall be void and without effect.
13. AMENDMENT OR TERMINATION
The Board may, without further action on the part of the stockholders of
the Company, at any time amend the Plan in any respect, or terminate the Plan,
except that it may not:
(a) Permit the sale of more shares of Common Stock than are authorized
under Section 5;
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(b) Change the class of Affiliates whose Employees are eligible to
participate in the Plan; or
(c) Effect a change inconsistent with Section 423 of the Code or the
regulations issued thereunder.
14. NOTICES
All notices or other communications by a Participant under or in connection
with the Plan shall be deemed to have been duly given when received in writing
by the Chief Financial Officer of the Company or when received in the form
specified by the Committee at the location and by the person designated by the
Committee for the receipt thereof.
15. LIMITATIONS
Notwithstanding any other provisions of the Plan:
(a) The Company intends that this Plan shall constitute an employee stock
purchase plan within the meaning of Section 423 of the Code. Any provisions
required to be included in the Plan under said Section, and under
regulations issued thereunder, are hereby included as though set forth in
the Plan at length.
(b) No Employee shall be entitled to participate in the Plan if,
immediately after the grant of an option hereunder, the Employee would own
stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or an Affiliate. For
purposes of this Section 15, stock ownership shall be determined under the
rules of Section 424(d) of the Code and stock that the Employee may
purchase under outstanding options shall be treated as stock owned by the
Employee.
(c) No Employee shall be permitted to purchase Common Stock hereunder if
his right and option to purchase Common Stock under this Plan and under all
other employee stock purchase plans (as defined in Section 423 of the
Code) of the Company or any Affiliates would result in an entitlement to
purchase Common Stock in any one (1) calendar year in excess of a fair
market value of $25,000 (determined at the time of grant).
(d) All Employees shall have the same rights and privileges under the
Plan, except that the amount of Common Stock that may be purchased pursuant
to the Plan shall bear a uniform relationship to an Employee's
Compensation. All rules and determinations of the Committee shall be
uniformly and consistently applied to all persons in similar circumstances.
(e) Nothing in the Plan shall confer upon any Employee the right to
continue in the employment of the Company or any Affiliate or affect the
right that the Company or any Affiliate may have to terminate the
employment of such Employee.
7
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(f) No Participant shall have any right as a stockholder unless and until
certificates for shares of Common Stock are issued to him or allocated to
his Account.
(g) If under any provision of the Plan that requires a computation of the
number of shares of Common Stock to be purchased, the number so computed is
not a whole number of shares of Common Stock, such number of shares of
Common Stock shall be rounded down to the next whole number.
(h) The Plan is intended to provide shares of Common Stock for investment
and not for resale. The Company does not, however, intend to restrict or
influence any Participant in the conduct of his own affairs. A Participant,
therefore, may sell shares of Common Stock purchased under the Plan at any
time he chooses, subject to compliance with any applicable federal or state
securities laws or any applicable Company restriction or blackout periods;
provided, however, that because of certain federal tax requirements, each
Participant shall agree, by entering the Plan:
(i) promptly to give the Company notice of any shares of Common
Stock disposed of within two (2) years after the date of grant of the
applicable option, or within one (1) year of the Purchase Date, and
the number of such shares disposed of (a "disqualifying disposition");
(ii) that the Company may withhold, pursuant to Code Sections
3102, 3301, and 3402, from his wages and other cash compensation paid
to him in all payroll periods following in the same calendar year, any
additional taxes the Company may become liable for in respect of
amounts includable in his income as additional compensation as a
result of a disqualifying disposition of Common Stock acquired under
the Plan, or as a result of the acquisition of Common Stock under the
Plan; and
(iii) that he shall repay the Company any amount of additional
taxes the Company may become liable for in respect of amounts
includable in his income as additional compensation as a result of a
disqualifying disposition of Common Stock acquired under the Plan, or
as a result of the acquisition of Common Stock under the Plan, that
cannot be satisfied by withholding from the wages and other cash
compensation paid to him by the Company.
(i) This Plan is intended to comply in all respects with applicable law
and regulations, including with respect to Participants who are officers or
directors for purposes of Section 16 of the Securities Exchange Act of
1934, as amended from time to time, Rule 16b-3 of the Securities and
Exchange Commission. In case any one or more provisions of this Plan shall
be held invalid, illegal, or unenforceable in any respect under applicable
law and regulation (including Rule 16b-3), the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby and the invalid, illegal, or unnenforceable provision
shall be deemed null and void; however, to the extent permitted by law, any
provision that could be deemed null and void shall first be construed,
interpreted, or revised retroactively to permit this Plan to be
8
<PAGE> 9
construed in compliance with all applicable law (including Rule 16b-3), so
as to further the intent of this Plan. Notwithstanding anything herein to
the contrary, with respect to Participants who are officers and
directors for purposes of Section 16(b) of the Securities Exchange Act of
1934, as amended from time to time, and if required to comply with the
rules promulgated thereunder, such Participants shall not be permitted to
direct the sale of any Common Stock purchased hereunder until at least six
(6) months have elapsed from the date of a purchase, unless the Committee
determines that the sale of the Common Stock otherwise satisfies the then
current Rule 16b-3 requirements.
16. EFFECTIVE DATE AND APPROVALS
The Plan shall become effective at a time when:
(a) the Plan has been adopted by the Board; and
(b) a registration statement on Form S-8 under the Securities Act of 1933,
as amended, has become effective with respect to the Plan; and
(c) the Committee has notified the eligible Employees that they may
commence participation in the Plan; and
(d) the Plan is approved by the holders of a majority of the outstanding
shares of Common Stock of the Company, which approval must occur within the
period ending twelve (12) months after the date the Plan is adopted by the
Board. In the event such stockholder approval is not obtained, the Plan
shall terminate and have no further force or effect, and all amounts
collected from the Participants during any initial Offering Period(s)
hereunder shall be refunded.
Unless sooner terminated by the Board, or as set forth above, the Plan shall
terminate upon the earlier of (i) the tenth (10th) anniversary of the adoption
of the Plan by the Board, or (ii) the date on which all shares available for
issuance under the Plan shall have been sold under the Plan.
17. APPLICABLE LAW
All questions pertaining to the validity, construction, and administration of
the Plan shall be determined in conformity with the laws of Nevada, to the
extent not inconsistent with Section 423 of the Code and the regulations
thereunder.
Adopted the 16th day of March, 1998.
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EXHIBIT 5
[LETTERHEAD OF SACHNOFF & WEAVER, LTD.]
May 18, 1998
Hyseq, Inc.
670 Almanor Avenue
Sunnyvale, California 94086
Re: Registration Statement on Form S-8
Hyseq, Inc. Employee Stock Purchase Plan
Gentlemen:
We have acted as counsel for Hyseq, Inc. (the "Company") in connection
with the Registration Statement on Form S-8 filed by the Company with the
Securities and Exchange Commission to effect the registration, pursuant to the
Securities Act of 1933, of 50,000 shares of common stock, $0.001 par value (the
"Common Stock"), which may be offered by the Company under the above-referenced
Plan.
In connection with this opinion, we have relied as to matters of fact,
without investigation, upon certificates of public officials and others and upon
affidavits, certificates and statements of directors, officers and employees of,
and the accountants for, the Company. We also have examined originals or copies,
certified or otherwise identified to our satisfaction, of such corporate and
other instruments, documents and records as we have deemed relevant and
necessary to examine for the purpose of this opinion, including the Plan. In
addition, we have reviewed such questions of law as we have considered necessary
and appropriate for the purposes of this opinion.
We have assumed the accuracy and completeness of all documents and
records that we have reviewed, the genuineness of all signatures, the due
authority of the parties signing such
<PAGE> 2
Hyseq, Inc.
May 18, 1998
Page 2
documents, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all the documents submitted to us as
certified or photostatic copies and the authenticity of the originals of such
latter documents.
Based upon and subject to the foregoing, we advise you that, in our
opinion, the shares of Common Stock proposed to be offered by the Company as set
forth in the Registration Statement have been duly authorized and, when issued
and sold as set forth in the Registration Statement, and in accordance with the
Hyseq, Inc. Employee Stock Purchase Plan, referred to in the Registration
Statement, such shares will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement. In giving this consent, we do not
hereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933 or the rules and regulations of
the Securities and Exchange Commission.
We express no opinions as to matters under or involving any laws other
than the Federal laws of the United States of America and the General
Corporation Law of the State of Nevada.
Very truly yours,
/S/ SACHNOFF & WEAVER, LTD.
SACHNOFF & WEAVER, LTD.
<PAGE> 1
Exhibit 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Hyseq, Inc. Employee Stock Purchase Plan of our
report dated January 30, 1998, with respect to the consolidated financial
statements of Hyseq, Inc. for the year ended December 31, 1997 included in its
Annual Report on Form 10-K, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
May 18, 1998
