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Registration No. 333-_____
As filed with the Securities and Exchange Commission on May 19, 1998
- --------------------------------------------------------------------------------
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)
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)
HYSEQ, INC. NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
AND
HYSEQ, INC. STOCK OPTION AGREEMENTS
(Full title of the plans)
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 Amount to be Proposed maximum Proposed maximum Amount of
class of securities registered(1) offering price per aggregate offering registration fee(2)
to be registered(1) share(2) price(2)
<S> <C> <C> <C> <C>
- ------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Common Stock, par value
$.001 per share 734,392 $13.125 $9,638,895 $2,843
- ------------------------- ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>
(1) This Registration Statement includes any additional shares of the
registrant's Common Stock that may be issued pursuant to antidilution provisions
contained in the plans.
(2) 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.
<PAGE> 2
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 period 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.
<TABLE>
<CAPTION>
<S> <C>
/s/ Robert D. Weist /s/ Lewis S. Gruber
- ------------------- -------------------
Robert D. Weist Lewis S. Gruber
/s/ Christopher R. Wolf /s/ Radomir B. Crkvenjakov, Ph.D.
- ----------------------- ---------------------------------
Christopher R. Wolf Radomir B. Crkvenjakov, Ph.D.
/s/ Radoje T. Drmanac, Ph.D. /s/ Greta E. Marshall
- ---------------------------- ---------------------
Radoje T. Drmanac, Ph.D. Greta E. Marshall
/s/ Raymond F. Baddour, Ph.D. /s/ Kenneth D. Noonan, Ph.D.
- ----------------------------- ----------------------------
Raymond F. Baddour, Ph.D. Kenneth D. Noonan, Ph.D.
/s/ Thomas N. McCarter III
- --------------------------
Thomas N. McCarter III
</TABLE>
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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, Ph.D.
- ----------------------------
Radoje T. Drmanac, Ph.D. Co-Senior Vice President for Research and Director
/s/ Radomir B. Crkvenjakov, Ph.D.
- ---------------------------------
Radomir B. Crkvenjakov, Ph.D. Co-Senior Vice President for Research and Director
/s/ Raymond F. Baddour, Ph.D.
- -----------------------------
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, Ph.D.
- ----------------------------
Kenneth D. Noonan, Ph.D. Director
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
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<S> <C>
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. Non-Employee Director Stock Option Plan
4.4 Hyseq, Inc. Stock Option Agreement
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)
</TABLE>
- ------------------------------
* 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.
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<PAGE> 1
EXHIBIT 4.3
HYSEQ, INC.
NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
I. GENERAL
A. PURPOSE:
Hyseq Inc., a Nevada corporation (the "COMPANY"), hereby adopts this
Non-Employee Director Stock Option Plan, subject to stockholder approval. This
plan shall be known as the HYSEQ, INC. NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(the "PLAN"). The purpose of the Plan is to foster and promote the long-term
financial success of the Company and materially increase stockholder value by:
(a) motivating superior performance by means of long-term performance related
incentives, (b) encouraging, and providing a means to obtain, an ownership
interest in the Company, (c) attracting and retaining outstanding talent by
providing incentive compensation opportunities competitive with other companies
and (d) enabling non-employee directors to participate in the long-term growth
and financial success of the Company.
B. ADMINISTRATION:
1. The Plan shall be administered by the Compensation Committee of
the Board of Directors of the Company (the "BOARD") or such other committee of
directors as is designated by the Board (the "COMMITTEE"), which shall consist
of two or more members. The members shall be appointed by the Board, and any
vacancy on the Committee shall be filled by the Board.
2. Subject to the limitations of the Plan, the Committee shall
have the sole and complete authority: (i) to interpret the Plan and to adopt,
amend and rescind administrative guidelines and other rules and regulations
relating to the Plan, (ii) to correct any defect or omission or to reconcile any
inconsistency in the Plan or in any award granted hereunder and (iii) to make
all other determinations and to take all other actions necessary or advisable
for the implementation and administration of the Plan. The Committee's
determinations on matters within its authority shall be conclusive and binding
upon the Company and all other persons.
3. All expenses associated with the Plan shall be borne by the
Company.
4. The Committee may, to the extent that any such action will not
prevent the Plan from complying with Rule 16b-3, delegate any of its authority
hereunder to such persons as it deems appropriate.
<PAGE> 2
C. PARTICIPATION:
Only directors of the Corporation who, at the time an Option is
granted, meet the following criteria (a "PARTICIPANT") shall be entitled to
participate in the Plan: (a) the director is not and has not been for at least
two years, an employee or officer of the Corporation or any subsidiary of the
Corporation; and (b) the director does not receive compensation directly or
indirectly as a consultant, or in any capacity other than as a director, in
excess of $60,000 in any year.
D. TYPES OF AWARDS UNDER PLAN:
Awards under the Plan will be in the form of non-statutory Stock
Options ("OPTIONS"), as described in Article II.
E. SHARES SUBJECT TO THE PLAN:
Shares of stock covered by Options granted under the Plan may be, in
whole or in part, authorized and unissued or treasury shares of the Company's
common stock, $.001 par value per share, or such other shares as may be
substituted pursuant to Section 3.2 ("COMMON STOCK"). The maximum number of
shares of Common Stock which may be issued for all purposes under the Plan shall
be 72,000 (subject to adjustment pursuant to Section 3.2). Any shares of Common
Stock subject to an Option which, for any reason, is canceled or terminated
without been exercised, shall again be available for Options under the Plan. No
fractional shares shall be issued, and the Committee shall determine the manner
in which fractional share value shall be treated.
F. GENDER AND NUMBER:
Except when otherwise indicated by the contest, words in the masculine
gender used in the Plan shall include the feminine gender, the singular shall
include the plural, and the plural shall include the singular.
II. STOCK OPTIONS
A. AWARD OF STOCK OPTIONS:
Effective on the date on which a Director first becomes a member of the
Board of Directors of the Company, commencing with Directors who first become
members on or after September 5, 1996 ("NEW DIRECTORS"), each New Director who
satisfies the conditions set forth in Section 1.3 will automatically be awarded
a stock option (an "INITIAL OPTION" or the "INITIAL OPTIONS") under the Plan to
purchase 12,000 shares of Common Stock (subject to adjustment pursuant to .
Effective on the date of each Annual Meeting of the Stockholders, commencing
with the Annual Meeting of the Stockholders held in 1997. each Director then in
office who satisfies the conditions set forth in Section 1.3, will automatically
be awarded a stock option (a "SUBSEQUENT OPTION" or the "SUBSEQUENT OPTIONS,"
collectively with the "INITIAL OPTIONS"
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referred to herein as an "OPTION" or "OPTIONS") to purchase that number of
shares which, when added to shares underlying other options held by the Director
which vest in that following the year in which the Participant receives the
Initial Option. The Initial Option shall continue to be exercisable until the
first to occur of the tenth anniversary of the date of grant or one month
following the date the Director ceases to be a Participant. Each of a Director's
Subsequent Options shall become exercisable on the date of grant (the date of
each Annual Meeting) and shall continue to be exercisable until the first to
occur of the tenth anniversary of the date on which the Subsequent option(s) was
granted or one month following the date the Director ceases to be a Participant.
Notwithstanding the foregoing, in the event that the death or disability of the
Director occurs, all outstanding Options will be exercisable by the Director (or
his legal representative or designated beneficiary) for one year following the
Director's death or disability, provided, however, if the Option is exercised
within the first six months after it becomes exercisable, any shares of Co on
Stock issued on such exercise may not be sold until the six month anniversary of
the date of the grant of the Option.
III. MISCELLANEOUS PROVISIONS
A. NON-TRANSFERABILITY:
No Option under the Plan, and no interest therein, shall be
transferable by the Participant otherwise than by will or, if the Participant
dies intestate, by the laws of descent and distribution. All Options shall be
exercisable or received during the Participant's lifetime only by the
Participant or his legal representative. Any transfer contrary to this Section
3.1 will nullify the Option.
B. ADJUSTMENTS UPON CERTAIN CHANGES:
1. If the outstanding shares of Common Stock are increased,
decreased or changed into, or exchanged for, a different number or kind of
shares or securities of the Company through a reorganization or merger in which
the Company is the surviving entity, or through a combination, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or otherwise,
an appropriate adjustment shall be made in the number and kind of shares that
may be issued pursuant to Options. A corresponding adjustment to the
consideration payable with respect to Options granted prior to any such change
shall also be made. Any such adjustment, however, shall be made without change
in the total payment, 1f any, applicable to the portion of the Option not
exercised but with a corresponding adjustment in the price for each share.
2. Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation
or upon sale of all or substantially all of the Company's property, the Plan
shall terminate, and any outstanding Options shall terminate and be forfeited.
Notwithstanding the foregoing, the Committee may provide in writing in
connection with, or in contemplation of, any such transaction for any or all of
the following alternatives (separately or in combinations): (i) for the
assumption by the successor corporation
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of the Options theretofore granted or the substitution by such corporation for
such Options of options covering the stock of the Successor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the number and
kind of shares and prices; (ii) for the continuance of the Plan by such
successor corporation in which event the Plan and the Options shall continue in
the manner and under the terms as provided; or (iii) for the payment in cash or
shares of Common Stock in lieu of and in complete satisfaction of such Options.
C. TAX WITHHOLDING:
1. The Company shall have the power to withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy any
withholding or other tax due from the Company with respect to any amount payable
and/or shares issuable under the Plan, and the Company may defer such payment or
issuance unless indemnified to its satisfaction.
2. Subject to the consent of the Committee, due to the exercise of
an option, a Director may make an irrevocable election (an "ELECTION") to (A)
have shares of Common Stock otherwise issuable upon such exercise withheld, or
(B) tender back to the Company shares of Common Stock received pursuant to such
exercise or (C) deliver back to the Company pursuant to such exercise previously
acquired shares of Common Stock of the Company having a Fair Market Value
sufficient to satisfy all or part of the Director's estimated tax obligations
associated with the transaction. Such Election must be made by a Director prior
to the date on which the relevant tax obligation arises (the "TAX DATE"). The
Committee may disapprove of any Election, may suspend or terminate the right to
make Elections, or may provide with respect to any Option under this Plan that
the right to make Elections shall not apply to such Options.
D. CONDITIONS ON OPTIONS:
In addition to the other terms hereof, in the event a Participant's
status as a non-employee director ceases by reason of disability while holding
any Option, the rights of such Participant to any such Option shall be subject
to the conditions that until any such Option is exercised, he shall (a) not
engage, either directly or indirectly, in any manner or capacity as advisor,
principal, agent, partner, officer, director, employee, member of any
association or otherwise, in any business or activity which is at the time
competitive with any business or activity conducted by the Company and (b) be
available at reasonable times for consultations (which shall not require
substantial time or effort) at the request of the Company's management with
respect to phases of the business with which he was actively connected, but such
consultations shall not be required to be performed at any place or places
outside of the United States of America or during usual vacation periods or
periods of illness or other incapacity. In the event that either of the above
conditions is not fulfilled, the Participant shall forfeit all rights to any
unexercised Option held on the date of the breach of condition. Any
determination by the Board of the Company, which shall act upon the
recommendation of the Chairman, that the Participant is, or has, engaged in a
competitive business or activity as aforesaid or has not been available for
consultations an aforesaid shall be conclusive.
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E. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN:
1. The Board may suspend or terminate the Plan or any portion
thereof at any time and may amend it from time to time in such respects as the
Board may deem advisable in order that any Options thereunder shall conform to
or otherwise reflect any change in applicable laws or regulations, or to permit
the Company or the Participants to enjoy the benefits of any change in
applicable law or regulations, or in any other respect the Board may deem to be
in the best interests of the Company; provided, however, that no such amendment
shall, without stockholder approval to the extent required by law, agreement or
the rules of any exchange upon which the Common Stock is listed, (i) except as
provided in Section 3.2, materially increase the number of shares of Common
Stock which may be issued under the Plan, (ii) materially modify the
requirements as to eligibility for participation in the Plan, (iii) materially
increase the benefits accruing to Participants under the Plan, or (iv) extend
the termination date of the Plan. No such amendment, suspension or termination
shall (A) impair the rights of Participants under outstanding Options without
the consent of the Participants affected thereby or (B) make any change that
would disqualify the Plan, or any other plan of the Company intended to be so
qualified, from the exemption period provided by Rule 16b-3 promulgated under
the Securities Exchange Act of 1934 (the "EXCHANGE ACT").
2. The Committee may amend or modify any outstanding Options, in
any manner to the extent that the Committee would have had the authority under
the Plan to initially award such Options, as so modified or amended, including,
without limitation, to change the date or dates as of which such Options may be
exercised. No such amendment or modification shall impair the rights of any
Participant under any such Option without the consent of such Participant.
F. DEFINITIONS AND OTHER GENERAL PROVISIONS:
1. The term "disability" as used under the Plan shall mean a
finding by the Committee that a Participant is fully and permanently unable to
serve as a director of the Company because of a physical or mental disability.
2. The term "Fair Market Value" as it relates to Common Stock on
any given date means (i) the mean of the high and low sales prices of the
Company's Common Stock as reported by the Composite Tape of the New York Stock
Exchange (or, if not so reported, on any domestic stock exchanges on which the
Common Stock is then listed); or (ii) if the Common Stock is not listed on any
domestic stock exchange, the mean of the high and low sales prices of the
Company's Common Stock as reported by the National Association of Securities
Dealers Automated Quotation System (or, if not so reported, by the system then
regarded as the most reliable source of such quotations) or, if there are no
reported sales on such date, the mean of the closing bid and asked prices as so
reported; or, (iii) if the Common Stock is listed on a domestic exchange or
quoted in the domestic over-the-counter market, but there are not reported sales
or quotations, as the case may be, on the given date, the value determined
pursuant to (i) or (ii) above using the reported sale prices or quotations on
the last previous date on which so report; or
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<PAGE> 6
(iv) if none of the foregoing clauses apply, the fair value as determined in
good faith by the Board or the Committee.
G. LISTING, REGISTRATION AND LEGAL COMPLIANCE:
Each Option shall be subject to the requirement that if at any time the
Committee shall determine, in its discretion, that the listing, registration or
qualification of such Option, or any shares of Common Stock or other property
subject thereto, upon any securities exchange or under any foreign, federal or
state securities or other law or regulation, or the consent or approval of any
governmental body or the taking of any other action to comply with or otherwise
with respect to any such law or regulation, is necessary or desirable as a
condition to or in connection with the granting of such Option or the issue,
delivery or purchase of shares of Common Stock or other property thereunder, no
such Option may be exercised or paid in Common Stock or other property unless
such listing, registration, qualification, consent, approval or other action
shall have been effected or obtained free of any conditions not acceptable to
the Committee and the holder of the Option will supply the Company with such
certificates, representation and information as the Company shall request and
shall otherwise cooperate with the Company in effecting or obtaining such
listing, registration, qualification, consent, approval or other action. In the
case of persons subject to Section 16(b) of the Exchange Act, the Committee may
at any time impose any limitations upon the exercise, delivery or payment of any
Option which, in the discretion of the Committee, are necessary or desirable in
order to comply with said Section 16(b) and the rules and regulations
thereunder. If the Company, as part of an offering of securities or otherwise,
finds it desirable because of foreign, federal or state legal or regulatory
requirements to reduce the period during which Options may be exercised, the
Committee may, in its discretion and without the holders' consent, so reduce
such period on not less than 15 days written notice to the holders thereof.
H. LOANS:
The Committee may provide for the Company to make loans to finance the
exercise of any Option as well as the estimated or actual amount of any taxes
payable by the holder as a result of-the exercise or payment of any Option and
may prescribe, or may empower the Company to prescribe, the other terms and
conditions (including but not limited to the interest rate, maturity date and
whether the loan will be secured or unsecured) of any such loan.
I. INDEMNIFICATION:
Each person who is or shall have been a member of the Committee shall
be indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by him in
connection with or resulting from any claim, action, suit, or proceeding to
which he may be a party or in which he may be involved by reason of any action
taken or failure to act under the Plan and against and from any and all amounts
paid by him in settlement thereof, with the Company's approval, or paid by him
in satisfaction of any judgment in any such action, suit, or proceeding against
him, provided he shall give the Company an opportunity, at its own expense, to
handle and defend the came before he
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undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persona may be entitled under the Company's Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.
J. BENEFICIARY DESIGNATION:
Each Participant under the Plan may name, from time to time, any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his death before he
receives any or all of such benefit. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during his lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to his
estate.
K. RIGHTS OF PARTICIPANTS:
Nothing in the Plan shall interfere with or limit in any way the right
of the Stockholders to terminate any Participant as a director, nor confer upon
any Participant any right to continue as a Director of the Company for any
period of time.
L. REQUIREMENTS OF LAW, GOVERNING LAW:
The granting of Options and the issuance of shares of Common Stock
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required. The Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of California. The
provisions of the Plan shall be interpreted as to comply with the conditions or
requirements of Rule 16b-3 under the Exchange Act, unless a contrary
interpretation of any such provisions is otherwise required by applicable law.
M. EFFECTIVE DATE:
This Stock Option Plan, having been approved by the holders of a
majority of the shares of Common Stock and Series A Preferred Stock at the
Annual Meeting of the Stockholders held on October 24, 1996, shall be deemed
effective as of October 24, 1996. No awards of Options shall be made hereunder
after October 23, 2005.
7
<PAGE> 8
AMENDMENT NO. 1 TO
HYSEQ, INC. NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
WHEREAS, the Board of Directors of Hyseq, Inc. has approved that
certain Amendment No. 1 to the Hyseq, Inc. Non-Employee Director Stock Option
Plan (the "Plan"), effective March 16, 1998.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Article II.D.1 shall be amended to read as follows:
1. Options may be exercised by the delivery of written
notice of exercise and payment of the aggregate Option Price
for the shares to be purchased to the Corporate Secretary of
the Corporation. On the date specified in such written
notice, the Company shall accept payment for the Option
shares in cash, by bank or certified check, by wire transfer,
or by such other means as may be approved by the Committee.
If approved in advance by the Committee, payment may also be
made (i) by delivering shares of Common Stock already owned
for at least six (6) months by the Participant and which have
a total Fair Market Value on the date of such delivery equal
to the Option Price; (ii) by authorizing the Company to
retain Option shares that otherwise would be issuable upon
exercise of the Option having a total Fair Market Value on
the date of delivery equal to the Option Price; (iii) by the
delivery of cash or the extension of credit by a
broker-dealer to whom the Participant has submitted a notice
of exercise or otherwise indicated an intent to exercise an
Option (in accordance with part 220, Chapter II, Title 12 of
the Code of Federal Regulations, a so-called "cashless"
exercise); or (iv) by any combination of the foregoing. As
soon as practicable after receipt of each notice and full
payment, the Company shall deliver to the Participant a
certificate or certificates representing the acquired shares
of Common Stock.
2. Article II.D.3 shall be amended to read as follows:
3. One half of the Participant's Initial Option shall be
exercisable on the date of grant and one fourth of the
Initial Option shall become exercisable on the date of the
Annual Meeting of the Stockholders held in each of the two
years following the year in which the Participant receives
the Initial Option. The Initial Option shall continue to be
exercisable until the tenth anniversary of the date of grant.
Each of a Director's Subsequent Options shall
<PAGE> 9
become exercisable on the date of grant (the date of each
Annual Meeting) and shall continue to be exercisable until
the tenth anniversary of the date on which the Subsequent
Option(s) was granted. Notwithstanding the foregoing, in the
event a Participant's status as a non-employee director
ceases as the result of his termination for cause, all of the
Participant's outstanding options shall immediately
terminate.
3. Article III.F shall be amended by adding the following Paragraph
3:
3. The term "cause" as used under the Plan shall be deemed
to include (but shall not be limited to) wrongful
appropriation of funds of the Company, divulging confidential
information about the Company to the public, the commission
of a gross misdemeanor or felony, or the performance of any
similar action that the Board or the Committee, in their sole
discretion, may deem to be sufficiently injurious to the
interests of the Company to constitute substantial cause for
termination. The determination of the Board or the Committee
as to the existence of cause shall be conclusive and binding
upon the Participant and the Company.
2
<PAGE> 10
AMENDMENT NO. 2 TO
HYSEQ, INC. NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
WHEREAS, the Board of Directors of Hyseq, Inc. has approved that
certain Amendment No. 2 to the Hyseq, Inc. Non-Employee Director Stock Option
Plan (the "Plan"), effective March 16, 1998.
NOW, THEREFORE, Article II.D.3 of the Plan is hereby amended by adding
the following paragraph at the end of that section:
The foregoing notwithstanding, in the event of a "change
of control," all Options granted under the Plan, whether or
not exercisable at the time of the change of control, shall
become immediately exercisable. A change of control shall be
deemed to occur on the earliest of (a) the acquisition by any
entity, person, or group of beneficial ownership, as that
term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934, of more than 50% of the outstanding capital
stock of the Company entitled to vote for the election of
directors ("Voting Stock"); (b) the commencement by any
entity, person, or group (other than the Company or a
subsidiary of the Company) of a tender offer or an exchange
offer for more than 50% of the outstanding Voting Stock of
the Company; (c) the effective time of (1) a merger or
consolidation of the Company with one or more corporations as
a result of which the holders of the outstanding Voting Stock
of the Company immediately prior to such merger hold less
than 50% of the Voting Stock of the surviving or resulting
corporation, or (2) a transfer of substantially all of the
property or assets of the Company other than to an entity of
which the Company owns at least 80% of the Voting Stock; and
(d) the election to the Board, without the recommendation or
approval of the incumbent Board, of the lesser of (1) three
directors, or (2) directors constituting a majority of the
number of directors of the Company then in office.
<PAGE> 1
EXHIBIT 4.4
HYSEQ INC.
HYSEQ, INC.
STOCK OPTION AGREEMENT
----------------------
<TABLE>
<S><C>
|================|=====================|==================|=================|=================|
| | |Number of |Price Per |Social Security |
|Granted To |Grant Date |Shares |Share |Number |
|----------------|---------------------|------------------|-------- --------|-----------------|
| | | | | |
| | | | | |
|================|=====================|==================|=================|=================|
</TABLE>
1. You are hereby granted the option to purchase, at the above stated
price, upon and subject to the provisions and conditions hereinafter set forth,
the total number of shares of common stock, $.01 par value per share ("Common
Stock"), of Hyseq, Inc. (the "Company") as stated below, in the installments for
the number of shares which shall accrue in the percentages and on the dates as
shown below. This option is a non-statutory stock option and is neither
designated as, nor intended to be, an incentive stock option.
No. of Shares Accrual Date
------------- ------------
25% of the shares granted On the date of grant
25% of the shares granted 1 year from date of grant
25% of the shares granted 2 years from date of grant
25% of the shares granted 3 years from date of grant
================================================================================
I hereby acknowledge receipt of this option and understand that it is governed
by the terms of this contract. I acknowledge that I am aware of the provisions
contained in this contract whereby the Board of Directors may terminate or amend
this contract. I further acknowledge that the grant hereby made to me does not,
under any circumstances, create any right for me to receive any grant in the
future. I represent that I am an "accredited investor" as such term is defined
in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as
amended.
- ---------------------------------- ----------------------------------
Signature Date
<PAGE> 2
2. To exercise your option to purchase any shares hereunder, it shall be
necessary for you, on or after the date on which such purchase privilege accrues
and prior to the above-stated expiration date, to make payment in full to Hyseq,
Inc., in cash or in Common Stock of the Company or in a combination thereof, for
the shares which you so elect to purchase, at the price per share herein
described, whereupon you will receive the shares for which you thus make
payment. If all or part of the payment is in shares of Common Stock of the
Company, such shares shall be valued at their fair market value on the date of
exercise.
3. The Board of Directors reserves and shall have the right, by written
notice to you, to amend or terminate the provisions of this contract in any
manner that it may deem necessary or advisable to carry out the purpose of this
grant as the result of, or to comply with, any change in applicable regulations,
interpretation or statutory enactment, provided that any such change shall be
applicable only to the shares for which payment shall not then have been made as
herein provided.
4. If you cease to be an employee, all of your then outstanding options
which have not accrued shall terminate immediately.
5. In the event of your death or disability while an employee, all
outstanding options will be exercisable by you (or your legal representative or
designated beneficiary) for one year following your death of disability.
6. (a) If the outstanding shares of Common Stock are increased,
decreased or changed into, or exchanged for, a different number or kind of
shares or securities of the Company through a reorganization or merger in which
the Company is the surviving entity, or through a combination, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or otherwise,
an appropriate adjustment shall be made in the number and kind of shares that
may be issued pursuant to options. The corresponding adjustment to the
consideration payable with respect to options granted prior to any such change
shall also be made. Any such adjustment, however, shall be made without change
and the total payment, if any, applicable to the portion of the option not
exercised with a corresponding adjustment in the price for each share.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon sale of all or substantially all of the Company's property, this
contract shall terminate, and any outstanding options shall terminate and be
forfeited. Notwithstanding the foregoing, the Board of Directors may provide in
writing in connection with, or in contemplation of, any such transaction for any
or all of the following alternatives (separately or in combination):
(i) for the assumption by the successor corporation of the
options theretofore granted or the substitution by such
corporation for such options of awards covering the stock
of the successor corporation,
2
<PAGE> 3
or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and
prices;
(ii) for the continuance of the contract by such successor
corporation in which event the options shall continue
in the manner and under the terms so provided; or
(iii) for the payment in cash or shares of common stock in lieu
of and in complete satisfaction of such options.
7. The purchase option herein granted shall be exercisable during your
lifetime only by you or your legal representative, and in the event of your
death then thereafter only by your beneficiary, and in any event only in
accordance with and subject to the provisions and conditions herein set forth.
You may name, from time to time, any beneficiary or beneficiaries (who may be
named contingently or successively). Each designation will revoke all prior
designations and will be effective only when filed in writing with the Company
during your lifetime. In the absence of any such designation, your estate shall
be deemed to be your beneficiary.
8. This contract and the purchase privilege or option herein granted
shall not otherwise by transferable by you, expressly or by operation of law,
and any attempted transfer or other disposition thereof by you shall be void and
shall nullify this option and result in the cancellation of this contract by the
Company.
9. If the exercise of this option requires withholding of tax under any
law, including, without limitation, under any federal, state or local law, the
Company may require you to pay to it or may withhold from your compensation, at
its option, the amount of such withholding prior to issuing any Common Stock or
retain such amount from any payment otherwise due to you.
10. Neither this option nor any shares to be acquired pursuant to the
exercise of any rights relating to this option have been or will be registered
under any securities laws other than the federal securities laws of the United
States and the Company has no obligation to register this option or any such
shares. Any shares acquired pursuant to rights relating to this option may not
be sold, transferred or otherwise traded in the absence of registration under or
an exemption from any applicable requirements of any securities laws applicable
to you, and each certificate representing such shares shall bear an appropriate
legend to such effect, if applicable.
11. Nothing in this contract shall interfere with or limit in any way
the right of the Company to terminate employment at any time, nor confer upon
you any right to continue in the employ of the Company for any period of time or
to continue your present or any other rate of compensation.
12. The issuance of shares of Common Stock shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. It is
the intent of the parties that: (i) the terms of this contract shall be governed
by, and construed in accordance with, the laws of the State of California, and
3
<PAGE> 4
(ii) the terms of the contract shall be subject to the jurisdiction of the
courts of the State of California.
13. Please acknowledge receipt of this option at the bottom of the
duplicate copy of the first page herewith enclosed and return the same within
thirty (30) days from the date you receive this option agreement to the office
of Hyseq, Inc., Attn: Robert D. Weist, 670 Alamanor Avenue, Sunnyvale, CA,
94086.
HYSEQ, INC.
By:
-------------------------------------
-------------------------------------
4
<PAGE> 1
EXHIBIT 5
[LETTERHEAD OF SACHNOFF & WEAVER]
May 18, 1998
Hyseq, Inc.
670 Almanor Avenue
Sunnyvale, California 94086
Re: Registration Statement on Form S-8
Hyseq, Inc. Non-Employee Director Stock Option Plan
and Hyseq, Inc. Stock Option Agreements
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 734,392 shares of common stock, $0.001 par value (the
"Common Stock"), which may be offered by the Company under the above-referenced
Plan and Agreements.
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 and
Agreements. 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. Non-Employee Director Stock Option Plan and Hyseq, Inc. Stock Option
Agreements 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. Non-Employee Director Stock Option
Plan and Stock Option Agreements 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
