AFFYMETRIX INC
S-8, 1996-09-03
COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH
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<PAGE>







      As filed with the Securities and Exchange Commission on September 3, 1996
                                      Registration No.  333-
                                                       -------------------------

                          SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549

                         ------------------------------------
                                       FORM S-8
                             REGISTRATION STATEMENT UNDER
                              THE SECURITIES ACT OF 1933

                                   AFFYMETRIX, INC.
                           ------------------------------
                (Exact Name of Registrant as Specified in Its Charter)

                 CALIFORNIA                                      77-0319159
            -------------------                            ---------------------
        (State or Other Jurisdiction of                      (I.R.S.Employer
       Incorporation or Organization)                       Identification No.)

               3380 CENTRAL EXPRESSWAY, SANTA CLARA, CALIFORNIA 95051
            --------------------------------------------------------
                       (Address of Principal Executive Offices)

                                  1993 Stock Plan
                     1996 Nonemployee Directors Stock Option Plan
                               (Full Title of the Plan)

                                Kenneth J. Nussbacher
                 Executive Vice President and Chief Financial Officer
                                   Affymetrix, Inc.
                3380 CENTRAL EXPRESSWAY, SANTA CLARA, CALIFORNIA 95051
               ------------------------------------------------------
                       (Name and Address of Agent For Service)

                                   (408) 522-6000
         --------------------------------------------------------------
            (Telephone Number, Including Area Code, of Agent For Service)

                         Copy to:  Stephen C. Ferruolo, Esq.
                           Heller Ehrman White & McAuliffe
                                525 University Avenue
                          Palo Alto, California  94301-1908
                                    (415) 324-7000

<TABLE>
<CAPTION>

                                  CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
                                                 Proposed Maximum     Proposed Maximum         Amount of
Title of Securities            Amount to be       Offering Price     Aggregate Offering       Registration
to be Registered                Registered         per Share (1)            Price                 Fee
- -----------------------------------------------------------------------------------------------------------
<S>                             <C>               <C>                 <C>                      <C>
Common Stock, no par value      3,394,521            $13.875              $47,098,978            $16,242
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of computing the amount of registration
    fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended,
    based on the average of the high and low prices of the Registrant's Common
    Stock reported on the Nasdaq National Market on August 30, 1996.

<PAGE>


                                       PART II

                  INFORMATION REQUIRED IN THE REGISTRATION STATEMENT


ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE

         The following documents filed or to be filed with the Securities and
Exchange Commission (the "Commission") by the registrant are incorporated by
reference in this registration statement:

         (a)  The registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1996;

         (b)  The registrant's Registration Statement on Form S-1 (No. 333
- -3648) filed with the Commission on April 15, 1996, as amended;

         (c)  The description of the Common Stock of the registrant contained
in the registrant's Registration Statement on Form 8-A (No. 0-28218) filed with
the Commission on April 16, 1996 pursuant to Section 12 of the Exchange Act of
1934, as amended (the "Exchange Act"); and

         (d)  All documents subsequently filed by the registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold.

ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL.

    The validity of the Common Stock offered hereby will be passed upon for the
registrant by Heller Ehrman White & McAuliffe, Palo Alto, California.  As of the
date of this Registration Statement, members of Heller Ehrman White & McAuliffe
beneficially own 27,080 shares of the Registrant's Common Stock.

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

    Pursuant to Section 204(a) and 317 of the California Corporations Code, as
amended, the registrant has included in its articles of incorporation and
by-laws provisions regarding the indemnification of officers and directors of
the registrant.  Article Four of registrant's Amended and Restated Articles of
Incorporation provides as follows:

    "The liability of the directors of this corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
This corporation is also authorized, to the fullest extent permissible under
California law, to indemnify its agents (as defined in Section 317 of the
California Corporations Code), whether by by-law, agreement or


                                         II-2

<PAGE>

otherwise, in excess of the indemnification expressly permitted by Section 317
and to advance defense expenses to its agents in connection with such matters as
they are incurred, subject to the limits on such excess indemnification set
forth in Section 204 of the California Corporations Code.  If, after the
effective date of this Article, California law is amended in a manner which
permits a corporation to limit the monetary or other liability of its directors
or to authorize indemnification of, or advancement of such defense expense to,
its directors or other persons, in any such case to a greater extent than is
permitted on such effective date, the references in this Article to "California
law" shall to that extent be deemed to refer to California law as so amended."

    Section 29 of the registrant's By-Laws, as amended, provides as follows:

    "29.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

    (A)  INDEMNIFICATION.  To the fullest extent permissible under California
law, the corporation shall indemnify its directors and officers against all
expenses, judgment, fines settlement and other amounts actually and reasonably
incurred by them in connection with any proceeding, including an action by or in
the right of the corporation, by reason of the fact that such person is or was a
director or officer of the corporation, or is or was serving at the request of
the corporation as a director, officer, trustee, employee or agent of another
corporation, or of a partnership, joint venture, trust or other enterprise
(including service with respect to employee benefit plans).  To the fullest
extent permissible under California law, expenses incurred by a director or
officer seeking indemnification under this By-law in defending any proceeding
shall be advanced by the corporation as they are incurred upon receipt by the
corporation of an undertaking by or on behalf of the director or officer to
repay such amount if it shall ultimately be determined that the director or
officer is not entitled to be indemnified by the corporation for those expenses.
If, after the effective date of this By-law, California law is amended in a
manner which permits the corporation to authorize indemnification of or
advancement of expenses to its directors or officers, in any such case to a
greater extent than is permitted on such effective date, the references in this
By-law to "California law" shall to that extent be deemed to refer to California
law as so amended.  The rights granted by this By-law are contractual in nature
and, as such, may not be altered with respect to any present or former director
or officer without the written consent of that person.

    (B)  PROCEDURE.  Upon written request to the Board of Directors by a person
seeking indemnification under this By-law, the Board shall promptly determine in
accordance with Section 317(e) of the California Corporations Code whether the
applicable standard of conduct has been met and, if so, the Board shall
authorize indemnification.  If the Board cannot authorize indemnification
because the number of directors who are parties to the proceeding with respect
to which indemnification is sought


                                         II-3

<PAGE>

prevents the formation of a quorum of directors who are not parties to the
proceeding, then, upon written request by the person seeking indemnification,
independent legal counsel (by means of a written opinion obtained at the
corporation's expense) or the corporation's shareholders shall determine whether
the applicable standard of conduct has been met and, if so, shall authorize
indemnification.

    (C)  DEFINITIONS.  The term "proceeding" means any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative.  The term "expenses" includes, without limitation, attorney's
fees and any expenses of establishing a right to indemnification."

    The registrant has entered into indemnification agreements with each of its
current directors and officers or persons controlling the Registrant pursuant to
the foregoing provisions.

ITEM 8.  EXHIBITS

 5       Opinion of Heller Ehrman White & McAuliffe

 23.1    Consent of Ernst & Young LLP, Independent Auditors

 23.3    Consent of Heller Ehrman White & McAuliffe
         (filed as part of Exhibit 5)

 24      Power of Attorney (See page II-6)

 99.1    1993 Stock Plan, as amended

 99.2    1996 Nonemployee Directors Stock Option Plan


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, as amended (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;

              (iii)     To include any material information with respect to the
    plan of distribution not previously disclosed


                                         II-4

<PAGE>

    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
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 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 liability under the Securities Act, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed 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 directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
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.


                                         II-5
<PAGE>



                                      SIGNATURES

         Pursuant to the requirements of the Securities Act, 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 Santa Clara, State of California, on this 30th day of
August, 1996.

                                                AFFYMETRIX, INC.



                                                By: /s/ John D. Diekman
                                                   --------------------------
                                                   John D. Diekman, Ph.D.
                                                   Chief Executive Officer and
                                                   Chairman
                                                  (Principal Executive Officer)



                         POWER OF ATTORNEY TO SIGN AMENDMENTS

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint John D. Diekman, Ph.D. and
Kenneth J. Nussbacher, or either or them, each with full power of substitution,
such person's true and lawful attorneys-in-fact and agents for such person in
such person's name, place and stead, in any and all capacities, to sign any or
all amendments (including post-effective amendments) to this Registration
Statement on Form S-8 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 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 in order to effectuate the same as fully, to all intents
and purposes, as he or such person might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents may lawfully do or
cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-8 has been signed by the following persons in the capacities
and on the dates indicated.


                                         II-6

<PAGE>
     SIGNATURE                          CAPACITY                      DATE
     ---------                          --------                      ----

    /s/ John D. Diekman
    ---------------------------
    John D. Diekman Ph.D.              Director, Chief          August 30, 1996
                                       Executive Officer and
                                       Chairman
                                       (Principal Executive
                                       Officer)
    /s/ Stephen P.A. Fodor
    ---------------------------
    Stephen P.A. Fodor, Ph.D.          Director and President   August 30, 1996
                               
    /s/ Paul Berg
    ---------------------------
    Paul Berg, Ph.D.                   Director                 August 30, 1996
                                                       
    /s/ Douglas M. Hurt
    ---------------------------
    Douglas M. Hurt                    Director                 August 30, 1996
                                                                      
    /s/ Vernon R. Loucks, Jr.
    ---------------------------
    Vernon R. Loucks, Jr.              Director                 August 30, 1996
                                                                    
    /s/ Barry C. Ross
    ---------------------------
    Barry C. Ross, Ph.D.               Director                 August 30, 1996
                                                                     
    /s/ David B. Singer
    ---------------------------
    David B. Singer                    Director                 August 30, 1996
                                                                   
    /s/ John A. Young
    ---------------------------
    John A. Young                      Director                 August 30, 1996
                                                                    

    ----------------------------
    Alejandro C. Zaffaroni, Ph.D.      Director
                                                                   
    /s/ Kenneth J. Nussbacher
    ----------------------------
    Kenneth J. Nussbacher              Chief Financial          August 30, 1996
                                       Officer (Principal            
                                       Financial and
                                       Accounting Officer)


                                         II-7

<PAGE>

                                  INDEX TO EXHIBITS
                                 ------------------



                                                                   SEQUENTIALLY
  ITEM                                                               NUMBERED
   NO.            DESCRIPTION OF ITEM                                  PAGE
  ----  -------------------------------------------------------    ------------
   5         Opinion of Heller Ehrman White & McAuliffe. . . . . .

  23.1       Consent of Ernst & Young LLP, Independent Auditors. .

  23.3       Consent of Heller Ehrman White & McAuliffe
             (filed as part of Exhibit 5). . . . . . . . . . . . .

  24         Power of Attorney (see page II-6) . . . . . . . . . .

  99.1       1993 Stock Plan, as amended . . . . . . . . . . . . .

  99.2       1996 Nonemployee Directors Stock Option Plan. . . . .



<PAGE>


                                   August 30, 1996


                                                                      18908-0001


Affymetrix, Inc.
3380 Central Expressway
Santa Clara, California
95051


                          REGISTRATION STATEMENT ON FORM S-8

Ladies and Gentlemen:

         We have acted as counsel to Affymetrix, Inc., a California corporation
(the "Company"), in connection with the Registration Statement on Form S-8 (the
"Registration Statement") which the Company proposes to file with the Securities
Exchange Commission on September 3, 1996 for the purposes of registering under
the Securities Exchange Act of 1933, as amended, an additional 3,394,521 shares
of its Common Stock, no par value (the "Shares").  The Shares are issuable under
the Company's 1993 Stock Plan, as amended, and 1996 Nonemployee Directors Stock
Option Plan (collectively the "Plans").

         We have assumed the authenticity of all records, documents and
instruments submitted to us as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
records, documents and instruments submitted to us as copies.

         In rendering our opinion, we have examined the following records,
documents and instruments:

         (a)  The Amended and Restated Articles of Incorporation of the
              Company, certified by the California Secretary of State as of
              August 29, 1996, and certified to us by an officer of the Company
              as being complete and in full force as of the date of this
              opinion;

         (b)  The Bylaws of the Company certified to us by an officer of the
              Company as being complete and in full force and effect as of the
              date of this opinion;

         (c)  A Certificate of an officer of the Company (i) attaching records
              certified to us as constituting all records of proceedings and
              actions of the Board of


<PAGE>


Affymetrix, Inc.
August 30, 1996                                                           Page 2


              Directors, including any committee thereof, and stockholders of
              the Company relating to the Shares, and the Registration
              Statement, and (ii) certifying as to certain factual matters;

         (d)  The Registration Statement;

         (e)  The Plans; and

         (f)  A letter from the American Stock Transfer & Trust Company, the
              Company's transfer agent, dated August 29, 1996, as to the number
              of shares of the Company's common stock that were outstanding on
              August 28, 1996.

         This opinion is limited to the federal law of the United States of
America and the law of the State of California, and we disclaim any opinion as
to the laws of any other jurisdiction.  We further disclaim any opinion as to
any other statute, rule, regulation, ordinance, order or other promulgation of
any other jurisdiction or any regional or local governmental body or as to any
related judicial or administrative opinion.

         Based on the foregoing and our examination of such questions of law as
we have deemed necessary or appropriate for the purpose of this opinion, and
assuming that (i) the Registration Statement becomes and remains effective
during the period when the Shares are offered and issued, (ii) the full
consideration stated in the Plans is paid for each Share and that such
consideration in respect of each Share includes payment of cash or other lawful
consideration, (iii) appropriate certificates evidencing the Shares are executed
and delivered by the Company, and (iv) all applicable securities laws are
complied with, it is our opinion that when issued and sold by the Company, after
payment therefore in the manner provided in the Plans and Registration
Statement, the Shares will be legally issued, fully paid and nonassessable.


<PAGE>


Affymetrix, Inc.
August 30, 1996                                                           Page 3


         This opinion is rendered to you in connection with the Registration
Statement and is solely for your benefit.  This opinion may not be relied upon
by you for any other purpose, or relied upon by any other person, firm,
corporation or other entity for any purpose, without our prior written consent.
We disclaim any obligation to advise you of any change of law that occurs, or
any facts of which we may become aware, after the date of this opinion.

         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.


                                       Very truly yours,


                                       /s/ Heller Ehrman White & McAuliffe



<PAGE>

                                                               EXHIBIT 23.1

             CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement 
(Form S-8) pertaining to the Affymetrix, Inc. 1993 Stock Plan and the 
Affymetrix, Inc. 1996 Nonemployee Directors Stock Option Plan, of our report 
dated February 9, 1996 (except for the first paragraph of Note 9 as to which 
the date is May 20, 1996) with respect to the financial statements of 
Affymetrix, Inc. included in Registration Statement (Form S-1 No. 333-3648) 
filed with the Securities and Exchange Commission on April 15, 1996, as 
amended.


                                                 ERNST & YOUNG LLP

Palo Alto, California
August 27, 1996


<PAGE>


                                   AFFYMETRIX, INC.

                                   1993 STOCK PLAN



         1.   PURPOSE; DEFINITIONS.
              (a)  PURPOSE. The purpose of the Plan is to attract, retain and
motivate officers, key employees, consultants and directors of Affymetrix, Inc.
(the "Company"), or a Parent or a Subsidiary, by giving them the opportunity to
acquire Stock ownership in the Company.  Options granted under this Plan will be
either Incentive Stock Options or Nonstatutory Stock Options.  This Plan also
provides for the grant of Purchase Rights providing for the direct sale of Stock
to eligible participants.
              (b)  DEFINITIONS.  For purposes of the Plan, the following terms
have the following meanings:
                   (i)  "Administrator" means the committee referred to in
Section 4 or the Board in its capacity as administrator of the Plan in
accordance with Section 4.
                   (ii) "Board" means the Board of Directors of the Company.
                   (iii) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute.
                   (iv) "Commission" means the Securities and Exchange
Commission, and any successor agency.
                   (v)  "Company" means Affymetrix, Inc.


<PAGE>


                   (vi) "Disinterested Person" has the meaning set forth in
Rule 16b-3 under the Exchange Act, and any successor definition adopted by the
Commission.
                   (vii) "Effective Date" has the meaning set forth in Section
2.
                   (viii) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
                   (ix) "Grant Date" means the date of grant of any Option or
Purchase Right.
                   (x) "Incentive Stock Option" means any Option intended to be
and designated as an "incentive stock option" within the meaning of Section 422
of the Code.
                   (xi) "Option" means an Option granted under Section 6.
                   (xii) "Option Agreement" means the written option agreement
covering an Option.
                   (xiii) "Optionee" means the holder of an Option.
                   (xiv) "Parent" has the meaning set forth in Section 425 of
the Code.
                   (xv) "Plan" means this Affymetrix, Inc. 1993 Stock Plan, as
amended from time to time.
                   (xvi) "Purchase Right" means a Purchase Right granted
pursuant to Section 7.
                   (xvii) "Qualified Domestic Relations Order" has the meaning
set forth in Section 414 of the Code or Title I


                                         -2-

<PAGE>




of the Employee Retirement Income Security Act, or the rules thereunder, and any
successor statute or rule.
                   (xviii) "Repurchase Agreement" means the written repurchase
agreement covering shares of Stock purchased pursuant to a Purchase Right.
                   (xix) "Rule 16b-3" means Rule 16b-3 under Section 16(b) of
the Exchange Act, as amended from time to time, and any successor rule.
                   (xx) "Stock" means the Common Stock of the Company, and any
successor entity.
                   (xxi) "Subsidiary" has the meaning set forth in Section 425
of the Code.
                   (xxii) "Tax Date" means the date defined in Section 8.
                   (xxiii) "Vesting Date" means the date on which an Option
becomes wholly or partially exercisable.
         2.   EFFECTIVE DATE; TERM OF PLAN.  The Effective Date of this Plan
shall be July 1, 1993.  This Plan, but not Options already granted, shall
terminate automatically ten years after its adoption by the Board, unless
terminated earlier by the Board under Section 15.  No Options or Purchase Rights
shall be granted after termination of this Plan but all Options and Purchase
Rights granted prior to termination shall remain in effect in accordance with
their terms.
         3.   NUMBER AND SOURCE OF SHARES OF STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 9, the total number of shares of Stock with
respect to which Options and Purchase Rights may be granted under this Plan is
3,700,000


                                         -3-

<PAGE>


shares of Stock.  If (i) any Option terminates or expires without being
exercised in full, (ii) any shares of stock subject to an Option or Purchase
Right are forfeited prior to conferring on their holder benefits of ownership
other than voting rights or accumulated dividends that are not realized, or
(iii) any Option or Purchase Right otherwise terminates without a payment being
made to the participant in the form of stock, the shares issuable under such
Option or Purchase Right, or forfeited without conferring benefits as described
above, shall again be available for issuance under this Plan.  If any shares of
Stock are repurchased by the Company, or are forfeited after conferring benefits
as described above, the shares so repurchased shall not again be available for
grant under this Plan.  The shares of Stock to be issued hereunder upon exercise
of an Option or Purchase Right may consist of authorized and unissued shares or
treasury shares.
         4.   ADMINISTRATION OF THE PLAN.  This Plan shall be administered by
the Board or upon delegation by the Board, either in its entirety or only as it
relates to persons subject to Section 16 of the Exchange Act, by a committee of
at least two members of the Board to which administration of this Plan is
delegated by the Board, all of whom shall be Disinterested Persons.  The
Administrator may delegate nondiscretionary administrative duties to such
employees of the Company, or a Parent or a Subsidiary, as it deems proper.
         The Administrator may also make rules and regulations which it deems
useful to administer this Plan.  Any decision or action of the Administrator in
connection with this Plan or any


                                         -4-

<PAGE>


Options or Purchase Rights granted or shares of Stock purchased under this Plan
shall be final and binding.  The Administrator shall not be liable for any
decision, action or omission respecting this Plan, or any Options or Purchase
Rights granted or shares of Stock sold under this Plan.  The Board at any time
may abolish the committee and revest in the Board the administration of the
Plan.
         5.   PERSONS ELIGIBLE TO PARTICIPATE IN THIS PLAN. Options and
Purchase Rights may be granted under this Plan to officers, key employees,
consultants and directors of the Company, or a Parent or a Subsidiary.
         6.   GRANT OF OPTIONS; TERMS AND CONDITIONS OF GRANT.
             (a)  GRANT OF OPTIONS.  The Administrator may, in its absolute 
discretion, grant Options under this Plan at any time and from time to time 
before the expiration of ten years from the Effective Date.  The Administrator
shall specify the type of Option, the Grant Date, the number of shares of Stock
covered by the Option, the exercise price and the terms and conditions for
exercise of the Option.  If the Administrator fails to specify the Grant Date,
the Grant Date shall be the date of the action taken by the Administrator to
grant the Option.  Notwithstanding the foregoing, if an Incentive Stock Option
is approved in anticipation of employment of any employee, the Grant Date shall
be the date the intended Optionee is first treated as an employee of the
Company, or a Parent or a Subsidiary, for payroll purposes.  As soon as
practicable after the Grant Date, the Company will provide the Optionee with a
written Option Agreement in the form approved by the Administrator, which sets


                                         -5-

<PAGE>


forth the type of Option, the Grant Date, the number of shares of Stock covered
by the Option, the exercise price and the terms and conditions for exercise of
the Option.
              (b)  TERMS AND CONDITIONS OF GRANT.  Options granted under this
Plan shall be subject to the following terms and conditions and such other terms
and conditions not inconsistent with this Plan as the Administrator may impose:
                   (i) TYPE OF OPTION.  Any Option granted under the Plan shall
be in such form as the Administrator may from time to time approve.  Incentive
Stock Options may be granted only to employees of the Company, or a Parent or a
Subsidiary.  Subject to the foregoing, the Administrator shall have the
authority to grant to any participant Incentive Stock Options, Nonqualified
Stock Options or both types of Options.  Any portion of an Option that is not
designated as, or does not qualify as, an Incentive Stock Option, shall
constitute a Nonqualified Stock Option.
                   (ii) EXERCISE OF OPTION.  In order to exercise all or any
portion of any Option granted under this Plan, an Optionee must remain as an
officer, employee, consultant or director of the Company, or a Parent or a
Subsidiary, until the Vesting Date.  The Option shall be exercisable on or after
each Vesting Date in accordance with the terms set forth in the Option
Agreement; provided, however, that the right to exercise an Option must vest  at
the rate of at least 20% per year over five years from the Grant Date.
              Notwithstanding any designation of an Option as an Incentive
Stock Option, to the extent that exercisability of any Incentive Stock Option
granted under this Plan or otherwise to


                                         -6-

<PAGE>


the Optionee by the Company, or a Parent or a Subsidiary, would result in an
Optionee being able to exercise for the first time in any calendar year
Incentive Stock Options to purchase shares of Stock having a fair market value
(determined as of the Grant Date) in excess of $100,000, the excess above
$100,000 determined in reverse order of the Grant Date shall be automatically
converted to a Nonstatutory Stock Option.  Notwithstanding the foregoing, the
Administrator in its absolute discretion may elect a different order for
determining which Incentive Stock Option shall automatically be converted to a
Nonstatutory Stock Option or may determine to defer the exercisability of an
Incentive Stock Option or portion of an Incentive Stock Option so that in no
event will Incentive Stock Options for Stock having a fair market value in
excess of $100,000 (determined as of the Grant Date) become exercisable for the
first time in any calendar year.
                   (iii) OPTION TERM.  The term of any Option shall be fixed by
the Administrator, but no Incentive Stock Option granted under this Plan may be
exercised more than ten years from the Grant Date.  If, at the time the Company
grants an Option, the Optionee directly or by attribution owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company, or a Parent or a Subsidiary, the Option shall not be exercisable more
than five years after the Grant Date.
                   (iv) EXERCISE PRICE.  The exercise price shall be at least
100% of the fair market value of the shares of Stock covered by the Option on
the Grant Date, as determined in good faith by the Administrator.  If, at the
time the Company


                                         -7-

<PAGE>


grants an Option, the Optionee directly or by attribution owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company, or a Parent or a Subsidiary, the exercise price shall be at least 110%
of the fair market value of the shares of Stock covered by the Option on the
Grant Date determined in the same manner.
                   (v)  METHOD OF EXERCISE.  To the extent the right to
purchase shares of Stock has accrued, Options may be exercised, in whole or in
part, from time to time in accordance with their terms by written notice from
the Optionee to the Company stating the number of shares of Stock with respect
to which the Option is being exercised and accompanied by payment in full of the
exercise price.  Payment may be made in cash, by check or by delivery, at the
absolute discretion of the Administrator, of shares of Stock held by the
Optionee.  If authorized by the Administrator, exercise of an Option may be made
pursuant to a "cashless exercise sale" procedure, pursuant to which funds to pay
for exercise of the Option are delivered to the issuer by a broker upon receipt
of stock certificates from the issuer, or pursuant to which participants obtain
margin loans from brokers to fund the exercise of the Option.  In the absolute
discretion of the Administrator, payment may be made by delivery of an
interest-bearing, full recourse promissory note.  In the discretion of the
Administrator, the exercise price may be paid by a combination of the above.
                   (vi) RESTRICTIONS ON STOCK; OPTION AGREEMENT.  At the time
it grants Options under this Plan, the Company may retain, for itself or others,
rights to repurchase the shares of


                                         -8-

<PAGE>


Stock acquired under the Option or impose other restrictions on such shares.
The terms and conditions of any such rights or other restrictions shall be set
forth in the Option Agreement evidencing the Option.  No Option shall be
exercisable until after execution of the Option Agreement by the Company and the
Optionee.
                   (vii) NONASSIGNABILITY OF OPTION RIGHTS.  No Option shall be
transferable other than by will or by the laws of descent and distribution or
pursuant to a Qualified Domestic Relations Order.  During the lifetime of an
Optionee, only the Optionee may exercise an Option.
                   (viii)    EXERCISE AFTER TERMINATION OF EMPLOYMENT OR DEATH.
If for any reason other than permanent and total disability or death an Optionee
ceases to be employed by the Company, or a Parent or a Subsidiary, in the case
of an Incentive Stock Option or to be employed by or to be a consultant or
director of the Company, or a Parent or a Subsidiary, in the case of a
Nonstatutory Stock Option, Options held at the date of such termination (to the
extent then exercisable) may be exercised, in whole or in part, at any time
within 3 months after the date of such termination or such lesser period of not
less than 30 days specified in the Option Agreement, but in no event after the
earlier of (i) the expiration date of the Option as set forth in the Option
Agreement, and (ii) ten years from the Grant Date.  If an Optionee becomes
permanently and totally disabled (within the meaning of Section 22(e)(3) of the
Code) or dies while employed by the Company, or a Parent or a Subsidiary, (or,
if the Optionee dies within the period that the Option remains


                                         -9-

<PAGE>


exercisable after termination of employment), Options then held (to the extent
then exercisable) may be exercised by the Optionee, the Optionee's personal
representative, or by the person to whom the Option is transferred by will or
the laws of descent and distribution or pursuant to a Qualified Domestic
Relations Order, in whole or in part, at any time within one year after the
disability or death or any lesser period of not less than 6 months specified in
the Option Agreement, but in no event after the earlier of (i) the expiration
date of the Option as set forth in the Option Agreement, and (ii) ten years from
the Grant Date.
                   (ix) COMPLIANCE WITH SECURITIES LAWS.  The Company shall not
be obligated to issue any shares of Stock upon exercise of an Option unless such
shares are at that time effectively registered or exempt from registration under
the federal securities laws and the offer and sale of the shares of Stock are
otherwise in compliance with all applicable securities laws.  The Company shall
have no obligation to register the shares of Stock under the federal securities
laws or to take whatever other steps may be necessary to enable the shares of
Stock to be offered and sold under federal or other securities laws.  Upon
exercising all or any portion of an Option, an Optionee may be required to
furnish representations or undertakings deemed appropriate by the Company to
enable the offer and sale of the shares of Stock or subsequent transfers of any
interest in such shares to comply with applicable securities laws.  Evidences of
ownership of shares of Stock acquired upon exercise of Options shall bear any
legend required by, or useful


                                         -10-

<PAGE>


for purposes of compliance with, applicable securities laws, this Plan or the
Option Agreement evidencing the Option.
         7.   PURCHASE RIGHTS.
              (a)  GRANT.  As soon as practicable after the Grant Date of a
Purchase Right, the Administrator shall advise the holder of such right in
writing of the terms, conditions and restrictions relating to the grant,
including the number of shares of Stock covered by the Purchase Right, the
purchase price, and the time within which the Purchase Right must be exercised.
              (b)  PURCHASE PRICE.  The purchase price of a Purchase Right
shall be at least 85% of the fair market value of the shares of Stock on the
Grant Date or on the date the Stock is purchased, as determined in good faith by
the Administrator.  If, at the time the Company grants a Purchase Right, the
purchaser directly or by attribution owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company, or a Parent
or a Subsidiary, the purchase price shall be at least 100% of the fair market
value of the shares of Stock on the Grant Date or on the date the Stock is
purchased, determined in the same manner.
              (c)  REPURCHASE AGREEMENT.  In connection with each purchase of
shares of Stock pursuant to a Purchase Right, purchaser shall be required to
enter into a Repurchase Agreement with the Company stating the terms, conditions
and restrictions relating to the shares being purchased.
         8.   PAYMENT OF TAXES.  Unless the Administrator permits otherwise,
the participant shall pay the Company in cash,


                                         -11-

<PAGE>


promptly when the amount of such obligations becomes determinable (the "Tax
Date"), all applicable local, state and federal withholding taxes applicable, in
the Administrator's absolute discretion, to (i) the exercise of any Option or
Purchase Right, or (ii) the transfer or other disposition of shares acquired
upon exercise of any Option or Purchase Right.
         If and to the extent authorized by the Administrator in its absolute
discretion, a participant may make an election to (x) deliver to the Company a
promissory note of the participant on the terms set forth in Section 6(b)(v),
(y) tender shares of Stock to the Company or (z) have shares of Stock or other
securities of the Company withheld by the Company, to pay the amount of tax that
the Administrator in its absolute discretion determines to be required to be
withheld by the Company.  Any election pursuant to clause (z) above by a
participant subject to Section 16 of the Exchange Act shall be subject to the
following limitations:
         (i)  such election shall be made at least six months before the Tax
Date and shall be irrevocable; or
         (ii) such election (x) shall be made in (or made earlier to take
effect in) any 10-day period beginning on the third business day following the
date of release for publication of the Company's quarterly or annual summary
statements of earnings and shall be subject to approval by the Administrator at
any time after such election has been made, and (y) the Option or Purchase Right
must be held at least six months prior to the Tax Date.


                                         -12-

<PAGE>

         Any shares of Stock so withheld or tendered shall be valued by the
Company at their fair market value on the Tax Date.  The right to so withhold or
tender shares of Stock shall relate separately to each Option or Purchase Right
or any increment thereof covering not less than 100 shares of Stock.
         9.   ADJUSTMENT FOR CHANGES IN CAPITALIZATION.  The existence of
outstanding Options shall not affect the Company's right to effect adjustments,
recapitalizations, reorganizations or other changes in its or any other
corporation's capital structure or business, any merger or consolidation, any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock, the dissolution or liquidation of the Company's or any
other corporation's assets or business or any other corporate act whether
similar to the events described above or otherwise.  Subject to Section 10, if
the outstanding shares of the Stock are increased or decreased in number or
changed into or exchanged for a different number or kind of securities of the
Company or any other corporation by reason of a recapitalization,
reclassification, stock split, combination of shares, stock dividend or other
event, the number and kind of securities with respect to which Options may be
granted under this Plan, the number and kind of securities as to which
outstanding Options may be exercised, and the exercise price at which
outstanding Options may be exercised, shall be adjusted, to the extent possible,
so as to prevent dilution and without regard to any resulting tax consequences
to the Optionee.


                                         -13-

<PAGE>


         10.  DISSOLUTION, LIQUIDATION, MERGER.  In the event of a dissolution
or liquidation of the Company, a merger in which the Company is not the
surviving corporation, or a sale of over 80% of the assets of the Company, the
Administrator, in its absolute discretion, may cancel each outstanding Option
upon payment in cash to the Optionee of the amount by which any cash and the
fair market value of any other property which the Optionee would have received
as consideration for the shares of Stock covered by the fully-vested portion of
the Option if the Option had been exercised before such liquidation,
dissolution, merger, or sale exceeds the exercise price of the Option.
         11.  SUCCESSOR CORPORATIONS.  In the event of a merger in which the
Company is not the surviving corporation, the successor entity may assume the
obligations under all outstanding Options.
         12.  NO RIGHTS AS SHAREHOLDER OR TO CONTINUED EMPLOYMENT.  An Optionee
shall have no rights as a shareholder with respect to any shares of Stock
covered by an Option until such Optionee has acquired title to such shares.
Subject to Sections 9 and 10, no adjustment shall be made for dividends or other
rights for which the record date is prior to the date title to the shares of
Stock has been acquired by the Optionee.  The grant of an Option shall in no way
be construed so as to confer on any Optionee the right to continued employment
by the Company, or a Parent or a Subsidiary.
         13.  FINANCIAL INFORMATION.  The Company shall provide to each
Optionee during the period such Optionee holds an outstanding Option, and to
each holder of Common Stock acquired


                                         -14-

<PAGE>


upon exercise of Options or Purchase Rights granted under the Plan for so long
as such person is a holder of such Common Stock, annual financial statements of
the Company as prepared either by the Company or independent certified public
accountants of the Company.  Such financial statements shall include, at a
minimum, a balance sheet and an income statement, and shall be delivered as soon
as practicable following the end of the Company's fiscal year.
         14.  DISQUALIFYING DISPOSITIONS.  If Stock acquired upon exercise of
an Option is disposed of in a disqualifying disposition within the meaning of
Section 422 of the Code, the holder of the shares of Stock immediately prior to
the disposition shall notify the Company in writing of the date and the terms of
such disposition and comply with any other requirements imposed by the Company
in order to enable the Company to secure the related income tax deduction to
which it is entitled.
         15.  TERMINATION; AMENDMENT.  The Board may amend, suspend or
terminate this Plan at any time and for any reason, but no amendment, suspension
or termination shall be made which would impair the right of any person under
any outstanding Options or Purchase Rights without such person's consent;
PROVIDED, HOWEVER, that any amendment which (i) increases the number of shares
of Stock available for issuance under this Plan (except as provided in Section
9), (ii) materially changes the class of persons who are eligible for the grant
of Options or Purchase Rights, or (iii) materially increases the benefits
accruing to participants under this Plan, shall be subject to the



                                         -15-

<PAGE>


approval of the Company's shareholders.  Shareholder approval shall not be
required for any other amendment of this Plan.
         16.  GOVERNING LAW.  This Plan and the rights of all persons under
this Plan shall be construed in accordance with and under applicable provisions
of the Code and the laws of the State of California.




<PAGE>


                     1996 NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
                                          OF
                                   AFFYMETRIX, INC.



     1.  PURPOSES OF THE PLAN

    The purposes of the 1996 Nonemployee Directors Stock Option Plan of
Affymetrix, Inc. a California corporation, are to:

         (a)  Encourage Nonemployee Directors to improve operations and
    increase profits of the Company;

         (b)  Encourage Nonemployee Directors to accept or continue their
    association with the Company; and

         (c)  Increase the interest of Nonemployee Directors in the Company's
    welfare through participation in the growth in value of the Common Stock of
    the Company.

    Options granted hereunder shall be "Nonstatutory Options", and shall not
include "incentive stock options" intended to satisfy the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended.

     2.  DEFINITIONS

    As used herein, the following definitions shall apply:

         (a)  "ADMINISTRATOR" shall mean the entity, either the Board or the
    Committee, responsible for administering this Plan, as provided in
    Section 3.

         (b)  "BOARD" shall mean the Board of Directors of the Company, as
    constituted from time to time.

         (c)  "CODE" shall mean the Internal Revenue Code of 1986, as amended.

         (d)  "COMMITTEE" shall mean the committee, if any, appointed by the
    Board in accordance with Section 5(a) to administer this Plan.

         (e)  "COMMON STOCK" shall mean the Common Stock of the Company.

         (f)  "COMPANY" shall mean Affymetrix, Inc., a California corporation.

         (g)  "DIRECTOR FEE" shall mean the cash amount, if any, a Nonemployee
    Director shall be entitled to receive for serving as a director of the
    Company in any fiscal year.

<PAGE>

         (h)  "FAIR MARKET VALUE" shall mean, as of the date in question, the
    last transaction price quoted by the NASDAQ National Market System on the
    date of grant; PROVIDED, HOWEVER, that if the Common Stock is not traded on
    such market system or the foregoing shall otherwise be inappropriate, then
    the Fair Market Value shall be determined by the Administrator in good
    faith at its sole discretion and on such basis as it shall deem
    appropriate.  Such determination shall be conclusive and binding on all
    persons.

         (i)  "NONEMPLOYEE DIRECTOR" shall mean any person who is a member of
    the Board but is not an employee of the Company and has not been an
    employee of the Company or any Subsidiary of the Company at any time during
    the preceding 12 months.  Service as a director does not in itself
    constitute employment for purposes of this definition.

         (j)  "OPTION" shall mean a stock option granted pursuant to this Plan.
    Each Option shall be a nonstatutory option not intended to qualify as an
    incentive stock option within the meaning of Section 422 of the Code.

         (k)  "OPTION AGREEMENT" shall mean the written agreement described in
    Section 6 evidencing the grant of an Option to a Nonemployee Director and
    containing the terms, conditions and restrictions pertaining to such
    Option.

         (l)  "OPTION SHARES" shall mean the Shares subject to an Option
    granted under this Plan.

         (m)  "OPTIONEE" shall mean a Nonemployee Director who holds an Option.

         (n)  "PLAN" shall mean this 1996 Nonemployee Directors Stock Option
    Plan of Affymetrix, Inc., as it may be amended from time to time.

         (o)  "RELATED OPTION" shall have the meaning set forth in Section 7.7.

         (p)  "RULE 16B-3" shall have the meaning set forth in Section 5(a).

         (q)  "SECTION" unless the context clearly indicates otherwise, shall
    refer to a Section of this Plan.

         (r)  "SHARE" shall mean a share of Common Stock, as adjusted in
    accordance with Section 7.1.

         (s)  "SUBSIDIARY" shall mean a "subsidiary corporation" of the
    Company, whether now or hereafter existing, within the meaning of
    Section 425(f) of the Code, but only for so long as it is a "subsidiary
    corporation".


                                         -2-

<PAGE>

     3.  ELIGIBLE PERSONS

    Every person who at the date of grant of an Option is a Nonemployee
Director is eligible to receive Options under this Plan.

     4.  STOCK SUBJECT TO THIS PLAN

    Subject to Section 7.1 of this Plan, the maximum aggregate number of Shares
which may be issued on exercise of Options granted pursuant to this Plan is
300,000 Shares.  The Shares covered by the portion of any grant under the Plan
which expires unexercised shall become available again for grants under the
Plan.

     5.  ADMINISTRATION

         5.1  ADMINISTRATOR.  This Plan shall be administered by the Board, or
    by a committee (the "Committee") of at least two Board members to which
    administration of the Plan is delegated (in either case, the
    "Administrator"), in accordance with the "disinterested administration"
    requirements of Rule 16b-3 promulgated by the Securities and Exchange
    Commission ("Rule 16b-3"), or any successor rule thereto.

         5.2  AUTHORITY.  Subject to the other provisions of this Plan, the
    Administrator shall have the authority, in its sole discretion:  (i) to
    determine the Fair Market Value of the Shares subject to Option; (ii) to
    interpret this Plan; (iii) to prescribe, amend and rescind rules and
    regulations relating to this Plan; (iv) to defer (with the consent of the
    Optionee) or accelerate the exercise date of any Option; (v) to authorize
    any person to execute on behalf of the Company any instrument evidencing
    the grant of an Option; and (vi) to make all other determinations deemed
    necessary or advisable for the administration of this Plan.  The
    Administrator may delegate nondiscretionary administrative duties to such
    employees of the Company as it deems proper.

         5.3  FINAL AND BINDING.  All questions of interpretation,
    implementation and application of this Plan shall be determined by the
    Administrator.  Such determination shall be final and binding on all
    persons.

     6.  GRANT OF OPTIONS

         6.1  DIRECTORS NOW IN OFFICE.  Those Nonemployee Directors in office
    on the date this Plan was approved by the Board received a grant of options
    in December 1995.  Subject to the terms and conditions of this Plan, on the
    date of the first meeting of the Board immediately after each annual
    meeting of shareholders of the Company that occurs on or after January 1,
    2001 (even if held on the same


                                         -3-

<PAGE>

    day as the meeting of shareholders), the Company shall grant to each such
    Nonemployee Director then in office an Option to purchase 6,667 Shares at
    an exercise price equal to the Fair Market Value of such Shares on the date
    of such option grant.

         6.2  INITIAL GRANTS TO FUTURE DIRECTORS.  Subject to the terms and
    conditions of this Plan, if any person who is not an officer or employee of
    the Company is first elected or appointed as a member of the Board on or
    after the date of adoption of this Plan by the Board, then on the effective
    date of such appointment or election of such person, the Company shall
    grant to such Nonemployee Director an Option to purchase 33,333 Shares at
    an exercise price equal to the Fair Market Value of such Shares on the date
    of such option grant.

         6.3  ANNUAL GRANTS TO FUTURE DIRECTORS.  Subject to the terms and
    conditions of this Plan, on the date of the first meeting of the Board
    immediately following each annual meeting of shareholders of the Company
    (even if held on the same day as the meeting of shareholders) which is held
    at least 54 months after the date of the initial option grant to a
    Nonemployee Director identified in Section 6.2 above, and thereafter, the
    Company shall grant to each such Nonemployee Director then in office an
    Option to purchase 6,667 Shares at an exercise price equal to the Fair
    Market Value of such Shares on the date of such option grant.

         6.4  OPTION AGREEMENTS.  No Options shall be granted under this Plan
    after 10 years after the date of adoption of this Plan by the Board.  Each
    Option shall be evidenced by a written Option Agreement, in form
    satisfactory to the Company, executed by the Company and the Nonemployee
    Director to whom such Option is granted; PROVIDED, HOWEVER, that the
    failure by the Company, the Nonemployee Director or both to execute such an
    agreement shall not invalidate the granting of an Option.

     7.  TERMS AND CONDITIONS OF OPTIONS

    Each Option granted under this Plan shall be subject to the terms and
conditions set forth in this Section 7.

         7.1  CHANGES IN CAPITAL STRUCTURE.  Subject to Section 7.2, if the
    Common Stock is changed by reason of a stock split, reverse stock split,
    stock dividend or re-capitalization, or converted into or exchanged for
    other securities as a result of a merger, consolidation or reorganization,
    appropriate adjustments shall be made in:  (a) the number and class of
    shares of Common Stock subject to this Plan and each Option outstanding
    under this Plan; and (b) the exercise price of each outstanding Option;
    PROVIDED, HOWEVER, that the Company shall not be required to issue
    fractional shares as a result of any such adjustments.


                                         -4-

<PAGE>

    Each such adjustment shall be subject to approval by the Administrator in
    its sole discretion.

         7.2  CORPORATE TRANSACTIONS.  In connection with an acquisition of the
    Company affected by a merger, consolidation, sale of all or substantially
    all of the Company's assets, acquisition of shares, or any like occurrence
    in which the Company is involved, the Company's right of repurchase set
    forth in Section 7.3 shall expire with respect to twice the number of
    Options otherwise determined pursuant to Section 7.3.  The Administrator
    shall have the authority, in its sole discretion to determine the time
    prior to consummation of such acquisition when such increased expiration of
    the right to repurchase shall become effective.

         7.3  TIME OF OPTION EXERCISE; REPURCHASE RIGHT.  Subject to the other
    provisions of this Plan, each Option granted pursuant to this Plan shall be
    for a term of 10 years and two days.  Each Option granted pursuant to this
    Plan shall be exercisable in full six months after the date of grant.  The
    Company shall have a right of repurchase at the Option exercise price (i)
    with respect to Shares purchased upon exercise of Options granted pursuant
    to Section 6.2 which shall expire with respect to 20% of the number of
    Shares covered by the Option grant on each of the first five anniversaries
    of the date of grant and (ii) with respect to Shares purchased upon
    exercise of Options granted pursuant to Sections 6.1 and 6.3 which shall
    expire with respect to 100% of the number of Shares covered by the Option
    grant on the first anniversary of the date of grant.  The Company may
    exercise its repurchase right by written notice to the Director within 120
    days after the date such Director ceases to act as a Director of the
    Company.

         7.4  LIMITATION ON OTHER GRANTS.  The Administrator shall have no
    discretion to grant Options under this Plan other than as set forth in
    Sections 6.1, 6.2 and 6.3.

         7.5  NONASSIGNABILITY OF OPTION RIGHTS.  No Option granted under this
    Plan shall be assignable or otherwise transferable by the Optionee, except
    by will or the laws of descent and distribution, or pursuant to a qualified
    domestic relations order as defined by the Code.  During the life of an
    Optionee, an Option shall be exercisable only by the Optionee.

         7.6  PAYMENT.  Except as provided below, payment in full, in cash,
    shall be made for all Option Shares purchased at the time written notice of
    exercise of an Option is given to the Company, and proceeds of any payment
    shall constitute general funds of the Company.  At the time an Option is
    granted or exercised, the Administrator, in the exercise of its absolute
    discretion, may authorize any one or more of the following additional
    methods of payment:  (a) acceptance


                                         -5-

<PAGE>

    of the Optionee's full recourse promissory note for all or part of the
    Option price, less any par value per share, which must be paid in cash,
    payable on such terms and bearing such interest rate as determined by the
    Administrator (but in no event less than the minimum interest rate
    specified under the Code at which no additional interest on debt
    instruments of such type would be imputed), which promissory note may be
    either secured or unsecured in such manner as the Administrator shall
    approve (including, without limitation, by a security interest in the
    Shares); (b) delivery by the Optionee of Common Stock already owned by the
    Optionee for all or part of the Option price, provided the Fair Market
    Value of such Common Stock is equal on the date of exercise to the Option
    price; PROVIDED, HOWEVER, that if an Optionee has exercised any portion of
    any Option granted by the Company by delivery of Common Stock, the Optionee
    may not, within six months following such exercise, exercise any Option
    granted under this Plan by delivery of Common Stock; and (c) any other
    consideration and method of payment to the extent permitted under the
    California Corporations Code.

         7.7  TERMINATION AS DIRECTOR.  Unless determined otherwise by the
    Administrator in its absolute discretion, to the extent not already expired
    or exercised, an Option shall terminate at the earlier of: (a) the
    expiration of the term of the Option; or (b) three months after the last
    day served by the Optionee as a director of the Company; PROVIDED, that an
    Option shall be exercisable after the date of termination of service as a
    director only to the extent exercisable on the date of termination; and
    PROVIDED FURTHER, that if termination of service as a director is due to
    the Optionee's death or "disability" (as determined in accordance with
    Section 22(e)(3) of the Code), the Optionee, or the Optionee's personal
    representative (or any other person who acquires the Option from the
    Optionee by will or the applicable laws of descent and distribution), may
    at any time within 18 months after the termination of service as a director
    (or such lesser period as is specified in the Option Agreement but in no
    event after the expiration of the term of the Option), exercise the rights
    to the extent they were exercisable on the date of the termination.

         7.8  WITHHOLDING AND EMPLOYMENT TAXES.  At the time of exercise of an
    Option (or at such later time(s) as the Company may prescribe), the
    Optionee shall remit to the Company in cash all applicable federal and
    state withholding and employment taxes.  If authorized by the Administrator
    in its sole discretion, an Optionee shall be permitted to elect, by means
    of a form of election to be prescribed by the Administrator, to have shares
    of Common Stock which are acquired upon exercise of the Option withheld by
    the Company or to tender to the Company other shares of Common Stock or
    other securities of the Company owned by the Optionee on the date of
    determination of the amount of tax to be withheld as


                                         -6-

<PAGE>

    a result of the exercise of such Option (the "Tax Date") to pay the amount
    of tax that is required by law to be withheld by the Company as a result of
    the exercise of such Option; PROVIDED, that such election satisfies the
    following requirements:  (a) such election shall be irrevocable; (b) such
    election shall be subject to the disapproval of the Administrator at any
    time; (c) such election may not be made within six months of the grant date
    of the Option the exercise of which resulted in the tax withholding
    obligation (the "Related Option"), except that this limitation shall not
    apply in the event of death or disability of the Optionee occurring prior
    to the expiration of the six month period; and (d) such election must be
    made either:  (x) at least six months prior to the Tax Date; or (y) prior
    to or coincident with the date of exercise of the Related Option and within
    any 10 business day period beginning on the third business day following
    the date of release by the Company for publication of quarterly or annual
    summary statements of sales or earnings of the Company.  Any securities so
    withheld or tendered shall be valued by the Company as of the Tax Date.

         7.9  OPTION TERM.  Each Option granted hereunder shall expire 10 years
    and two days after the date of grant.

     8.  MANNER OF EXERCISE

         8.1  NOTICE.  An Optionee wishing to exercise an Option shall give
    written notice to the Company at its principal executive office, to the
    attention of the officer of the Company designated by the Administrator,
    accompanied by payment of the exercise price as provided in Section 7.6
    and, if required, by payment of any federal or state withholding or
    employment taxes required to be withheld by virtue of exercise of the
    Option.  The date the Company receives written notice of an exercise
    hereunder accompanied by payment of the exercise price and any required
    federal or state withholding or employment taxes will be considered as the
    date such Option was exercised.  Unless otherwise provided by the
    Administrator, options may be exercised only twice in any calendar year.

         8.2  STOCK ISSUANCE.  Promptly after the date an Option is exercised,
    the Company shall, without stock issue or transfer taxes to the optionee or
    other person entitled to exercise the Option, deliver to the Optionee or
    such other person a certificate or certificates for the requisite number of
    shares of Common Stock.  An Optionee or transferee of an Optionee shall not
    have any privileges as a stockholder with respect to any Common Stock
    covered by the Option until the date of issuance of a stock certificate.


                                         -7-

<PAGE>

    9.   NO RIGHT TO DIRECTORSHIP

    Neither this Plan nor any Option granted hereunder shall confer upon any
Optionee any right with respect to continuation of the Optionee's membership on
the Board or shall interfere in any way with provisions in the Company's
Articles of Incorporation and By-Laws relating to the election, appointment,
terms of office, and removal of members of the Board.

    10.  FINANCIAL INFORMATION

    The Company shall provide to each Optionee during the period such optionee
holds an outstanding Option a copy of the financial statements of the Company as
prepared either by the Company or independent certified public accountants of
the Company.  Such financial statements shall be delivered as soon as
practicable following the end of the Company's fiscal year during the period
Options are outstanding.

    11.  LEGAL REQUIREMENTS

    The Company shall not be obligated to offer or sell any Shares upon
exercise of any Option unless the Shares are at that time effectively registered
or exempt from registration under the federal securities laws and the offer and
sale of the Shares are otherwise in compliance with all applicable securities
laws and the regulations of any stock exchange on which the Company's securities
may then be listed.  The Company shall have no obligation to register the Shares
covered by this Plan under the federal securities laws or take any other steps
as may be necessary to enable the Shares covered by this Plan to be offered and
sold under federal or other securities laws.  Upon exercising all or any portion
of an Option, an Optionee may be required to furnish representations or
undertakings deemed appropriate by the Company to enable the offer and sale of
the Shares or subsequent transfers of any interest in the Shares to comply with
applicable securities laws.  Certificates evidencing Shares acquired upon
exercise of Options shall bear any legend required by, or useful for purposes of
compliance with, applicable securities laws, this Plan or the Option Agreements.

    12.  AMENDMENTS TO PLAN

    The Board may amend this Plan at any time.  Without the consent of an
optionee, no amendment may adversely affect outstanding Options.  No amendment
shall require shareholder approval unless:

         (a)  shareholder approval is required to meet the exemptions provided
    by Rule 16b-3, or any successor rule thereto; or

         (b)  the Board otherwise concludes that shareholder approval is
    advisable.


                                         -8-

<PAGE>

    13.  SHAREHOLDER APPROVAL; TERM

    This Plan shall become effective upon adoption by the Board of Directors;
PROVIDED, HOWEVER, that no Option shall be exercisable unless and until written
consent of holders of a majority of the outstanding shares of capital stock of
the Company, or approval by holders of a majority of shares of capital stock of
the Company present, or represented, and entitled to vote at a validly called
shareholders' meeting (or such greater number as may be required by law or
applicable governmental regulations or orders) is obtained within 12 months
after adoption by the Board.  This Plan shall terminate 10 years after adoption
by the Board unless terminated earlier by the Board.  The Board may terminate
this Plan at any time without shareholder approval.  No Options shall be granted
after termination of this Plan, but termination shall not affect rights and
obligations under then outstanding Options.




Adopted by the Board of Directors:  March 27, 1996

Approved by the Shareholders:  April 15, 1996

Total number of shares covered by the Plan:  300,000


                                         -9-


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