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                                                                   EXHIBIT 10.12


                                   HYSEQ, INC.
                   NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN


1.       PURPOSE

The purpose of the Hyseq, Inc. Non-Qualified Employee Stock Purchase Plan is to
provide eligible Employees of Hyseq, Inc. and its Affiliates with an opportunity
to acquire a proprietary interest in the Company through the purchase of Common
Stock of the Company on a payroll deduction basis. It is believed that
participation in the ownership of the Company will be to the mutual benefit of
the eligible Employees and the Company. This Plan is not intended to constitute
an "employee stock purchase plan" within the meaning of Section 423 of the
Internal Revenue Code of 1986, as amended.

2.    DEFINITIONS

Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Plan, have the following meanings. Wherever
appropriate, words used in the singular shall be deemed to include the plural
and vice versa, and the masculine gender shall be deemed to include the feminine
gender.

      (a)  ACCOUNT means the funds accumulated with respect to an Employee as a
      result of deductions from his paycheck for the purpose of purchasing
      Common Stock under the Plan. The funds allocated to an Employee's Account
      shall remain the property of the Employee at all times prior to the
      purchase of the Common Stock, but may be commingled with the assets of the
      Company and used for general corporate purposes. No interest shall be paid
      or accrued on any funds accumulated in the Accounts of Employees.

      (b)  AFFILIATE means a corporation, as defined in Section 424(f) of the
      Code, that is a parent or subsidiary of the Company, direct or indirect.

      (c)  BOARD means the Board of Directors of the Company.

      (d)  CODE means the Internal Revenue Code of 1986, as amended.

      (e)  COMMITTEE means the committee to which the Board delegates the power
      to act under or pursuant to the provisions of the Plan, or the Board if no
      committee is selected.

      (f)  COMMON STOCK means the shares of common stock of the Company, $.001
      par value.

      (g)  COMPANY means Hyseq, Inc., a Nevada corporation, and any corporate
      successor to all or substantially all of the assets or voting stock of the
      Company.
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      (h) COMPENSATION means the compensation paid to an Employee by the
      Company during a payroll period for federal income tax purposes, as
      reported on an Employee's Form W-2 (or comparable reporting form) for
      income tax withholding purposes.

      (i) EFFECTIVE DATE means the date the Plan is adopted by, and made
      effective by, the Board, subject to the limitations of Section 16.

      (j) EMPLOYEE means any person who is employed by the Company or an
      Affiliate on a regular full-time basis. A person shall be considered
      employed on a regular full-time basis if he is customarily employed for
      more than twenty (20) hours per week.

      (k) OFFERING DATE means the date on which the Committee grants Employees
      the option to purchase shares of Common Stock.

      (l) OFFERING PERIOD means the period between the Offering Date and the
      Purchase Date.

      (m) PURCHASE DATE means the date on which the Committee purchases the
      shares of Common Stock, which date shall be the last day of an Offering
      Period.

      (n) PARTICIPANT means an Employee who elects to participate in the Plan.

      (o) PLAN means the Hyseq, Inc. Non-Qualified Employee Stock Purchase Plan.

3.    ELIGIBILITY

All Employees of the Company (excluding, however, any Employee who on the date
the Plan is adopted by the Board is an "executive officer," as defined under the
Securities Exchange Act of 1934, as amended, or any regulations promulgated
thereunder) and, if designated by the Board, any Affiliate, who are employed by
the Company and/or such designated Affiliate shall be eligible to participate in
the Plan on the first Offering Date coincident with or next following the
Employee's completion of ninety (90) continuous days of employment.

4.    ADMINISTRATION

The Plan shall be administered by the Committee, which shall consist of not less
than two (2) members of the Board. Subject to the provisions of the Plan, the
Committee shall be vested with full authority to make, administer, and interpret
such rules and regulations as it deems necessary to administer the Plan, and any
determination, decision, or action of the Committee in connection with the
construction, interpretation, administration, and application of the Plan shall
be final, conclusive, and binding upon all Participants and any and all persons
claiming under or through any Participant. Notwithstanding anything to the
contrary in the Plan, the Committee shall have the discretion to modify the
terms of the Plan with respect to Participants who reside outside of the United
States or who are employed by a subsidiary of the Company that has been formed
under the laws of any foreign country, if such modification is necessary in
order to conform such terms to the requirements of local laws.




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5.    STOCK

      (a)   The Common Stock to be sold to Participants under the Plan may, at
      the election of the Company, be either treasury shares, shares acquired on
      the open market, and/or shares originally issued for such purpose. The
      aggregate number of shares of Common Stock that shall be made available
      for purchase under the Plan shall not exceed fifty thousand (50,000)
      shares, subject to adjustment upon changes in capitalization of the
      Company as provided in subparagraph (b) below. In the event any purchase
      right granted under the Plan expires or terminates for any reason without
      having been exercised in full or ceases for any reason to be exercisable
      in whole or in part, the unpurchased shares subject thereto will again be
      available for purchase by Employees upon the exercise of purchase rights.
      If the total number of shares that otherwise would have been acquired
      under the Plan on any Purchase Date exceeds the number of shares of Common
      Stock then available under the Plan, the Company shall make a pro rata
      allocation of the shares remaining available in as nearly a uniform manner
      as shall be practicable and as it shall determine to be equitable. In such
      event, the payroll deductions to be made pursuant to the Participants'
      authorizations shall be reduced accordingly, or refunded to the
      Participants, as the case may be, and the Company shall give written
      notice of such reduction or refund to each affected Participant.

      (b)   Appropriate adjustments in the aggregate number of shares of Common
      Stock that shall be made available for purchase under the Plan shall be
      made to give effect to any mergers, consolidations, acquisitions,
      reorganizations, stock splits, stock dividends, or other relevant changes
      in the capitalization of the Company occurring after the Effective Date.
      The establishment of the Plan shall not affect in any way the right or
      power of the Company to make adjustments, reclassifications,
      reorganizations, or changes in its capital or business structure or to
      merge, consolidate, dissolve, liquidate, sell, or otherwise transfer all
      or any part of its business or assets. Adjustments under this Section 5
      shall be made in the sole discretion of the Committee, and its decision
      shall be binding and conclusive.

      (c)   A Participant shall not have any interest in shares covered by his
      authorized payroll deduction until shares of Common Stock are acquired for
      his Account.

6.    PARTICIPATION

      (a)   Each Employee may become a Participant in the Plan by authorizing a
      payroll deduction on a form provided by the Committee. Such authorization
      shall become effective on the next Offering Date following the delivery of
      the authorization form to the Committee; provided, (i) that the Employee
      is eligible under Section 3 to participate in the Plan on such Offering
      Date and (ii) that if the authorization form is delivered to the Committee
      less than fifteen (15) days prior to an Offering Date, it shall become
      effective on the first Offering Date that is fifteen (15) or more days
      following delivery of the authorization form to the Committee.

      (b)   At the time an Employee files his authorization for a payroll
      deduction, he shall elect to have deductions made from each paycheck that
      he receives, such deductions to




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      continue until the Participant withdraws from the Plan or otherwise
      becomes ineligible to participate in the Plan. Authorized payroll
      deductions shall be for a minimum of one percent (1%) and a maximum of ten
      percent (10%) of the Participant's Compensation. The deduction rate so
      authorized shall continue in effect through the Offering Period and each
      succeeding Offering Period. A Participant may increase the rate of his
      payroll deduction effective as of any subsequent Offering Date by filing a
      new authorization form with the Company fifteen (15) or more days prior to
      the next Offering Date. A Participant may, at any time during any Offering
      Period, reduce his rate of payroll deduction by filing a new authorization
      form with the Company, which shall become effective as soon as practicable
      after it is filed.

      (c)   All Compensation deductions made for a Participant shall be credited
      to his Account. Except as may otherwise be provided by the Committee under
      Section 4, a Participant may not make any separate cash payment into his
      Account.

7.    PURCHASE OF SHARES

      (a)   On the Offering Date when a Participant's authorization form for a
      deduction becomes effective, and on each succeeding Offering Date
      thereafter, he shall be deemed to have been granted an option to purchase
      as many full shares of Common Stock as he will be able to purchase with
      the Compensation deductions credited to his Account during the payroll
      periods within the applicable Offering Period for which the Compensation
      deductions are made. In addition to the foregoing, any cash dividends paid
      on shares of Common Stock held in his Account shall be added to the
      Account, and used to purchase Common Stock as otherwise provided herein.

      (b)   The purchase price for the shares of Common Stock to be purchased
      with payroll deductions from the Participant shall be equal to the "fair
      market value" of a share of Common Stock on the Purchase Date. Fair market
      value shall be defined as the closing bid price of the Common Stock on the
      largest national securities exchange on which such Common Stock is listed
      at the time the Common Stock is to be valued. If the Common Stock is not
      then listed on any such exchange, the fair market value shall be the
      closing sales price if such is reported or otherwise the mean between the
      closing "Bid" and the closing "Ask" prices, if any, as reported in the
      National Association of Securities Dealers Automated Quotation System
      ("NASDAQ") for the date of valuation, or if none, on the most recent trade
      date thirty (30) days or less prior to the date of valuation for which
      such quotations are reported. If the Common Stock is not then listed on
      any such exchange or quoted in NASDAQ, the fair market value shall be the
      mean between the average of the "Bid" and the average of the "Ask" prices,
      if any, as reported in the National Daily Quotation Service for the date
      of valuation, or, if none, for the most recent trade date thirty (30) days
      or less prior to the date of valuation for which such quotations are
      reported. If the fair market value cannot be determined under the
      preceding three sentences, it shall be determined in good faith by the
      Committee.




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8.    TIME OF PURCHASE

From time to time, the Committee shall grant to each Participant an option to
purchase shares of Common Stock in an amount equal to the number of shares of
Common Stock that the accumulated payroll deductions to be credited to his
Account during the Offering Period may purchase at the applicable purchase
price. Each Offering Period shall be for a specified period of time to be fixed
by the Committee. Each Participant who elects to purchase shares of Common Stock
hereunder shall be deemed to have exercised his option automatically on such
date of purchase. Administrative and commission costs on purchases shall be paid
by the Company. The Committee shall cause to be delivered periodically to each
Participant a statement showing the aggregate number of shares of Common Stock
in his Account, the number of shares of Common Stock purchased for him in the
preceding Offering Period, his aggregate Compensation deductions for the
preceding Offering Period, the price per share paid for the shares of Common
Stock purchased for him during the preceding Offering Period, and the amount of
cash, if any, remaining in his Account at the end of the preceding Offering
Period.

A Participant may request delivery to him of the cash in his Account or of the
shares of Common Stock held in his Account at any time (subject to any
limitations imposed by Section 16(b) of the Securities Exchange Act of 1934),
and the delivery thereof shall be made at such regular time as the Company or
its transfer agent shall determine. If such delivery is required at a time other
than the normal transfer date set by the Company or its transfer agent, the
Participant requesting such transfer shall pay the costs thereof. All of the
cash deposits in his Account shall be paid to him promptly after receipt of
notice of withdrawal, without interest. Shares of Common Stock to be delivered
to a Participant under the Plan shall be registered in the name of the
Participant or, if the Participant so directs in writing to the Committee, in
the name of the Participant and such person(s) as may be designated by the
Participant, to the extent permitted by applicable law, and delivered to the
Participant as soon as practicable after the request for a withdrawal. If a
Participant wishes to sell the shares of Common Stock in his Account, he may
notify the Committee to sell the same, in lieu of a distribution of such shares,
in which event all commission costs incurred in connection with the sale of the
shares of Common Stock shall be borne by the Participant. The Company shall pay
administrative costs associated therewith other than costs arising from a sale
occurring at a time different from the prearranged dates set by the Company or
its transfer agent for making such sales.

9.    CESSATION OF PARTICIPATION

A Participant may cease participation in the Plan at any time by notifying the
Committee in writing of his intent to cease his participation. If such notice is
received by the Committee the Company shall distribute to the Participant all of
his accumulated payroll deductions, without interest. If any Participant ceases
participation in the Plan, no further Compensation deductions shall be made on
his behalf after the effective date of his cessation, except in accordance with
a new authorization form filed with the Committee as provided in Section 6. Upon
ceasing participation in the Plan, a Participant shall not be permitted to
reenter the Plan until six (6) months have elapsed from the date his cessation
becomes effective.




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10.   INELIGIBILITY

An Employee must be employed by the Company or an Affiliate on the Purchase Date
in order to participate in the purchase for that Offering Period. If an option
expires without first having been exercised, all funds credited to the
Participant's Account shall be refunded without interest. If a Participant
becomes ineligible to participate in the Plan at any time, all Compensation
deductions made on behalf of the Participant that have not been used to purchase
shares of Common Stock shall be paid to the Participant within sixty (60) days
after the Committee determines that the Participant is not eligible to
participate in the Plan.

11.   DESIGNATION OF BENEFICIARY

A Participant may file a written designation of a beneficiary who shall receive
any shares of Common Stock (or remaining Compensation deductions) credited to
the Participant's Account under the Plan in the event of such Participant's
death prior to delivery to him of the certificates for such shares (or remaining
Compensation deductions). The designation of a beneficiary may be changed by the
Participant at any time by written notice given in accordance with rules and
procedures established by the Committee. Upon the death of a Participant, and
upon receipt by the Company of proof of the identity and existence, at the
Participant's death, of a beneficiary validly designated by him under the Plan,
the Company shall deliver such shares of Common Stock (or remaining Compensation
deductions) to such beneficiary. In the event of the death of the Participant,
and in the absence of a beneficiary validly designated under the Plan who is
living at the time of such Participant's death, the Company shall deliver such
shares (or remaining Compensation deductions) to the executor or administrator
of the estate of the Participant, or if no such executor or administrator has
been appointed, the Company, in its sole discretion, may deliver such shares (or
remaining Compensation deductions) to the Participant's spouse or to any one or
more dependents or relatives of the Participant, or to such other person or
persons as the Company may designate on behalf of the estate of such deceased
Participant.

12.   TRANSFERABILITY

Neither Compensation deductions nor Plan contributions credited to a
Participant's Account nor any rights with regard to Plan participation or the
right to purchase shares of Common Stock under the Plan may be assigned,
transferred, pledged, or otherwise disposed of in any way by a Participant other
than by will or the laws of descent and distribution; provided, however, that
shares of Common Stock purchased on behalf of a Participant and left in his
Account shall be subject to his absolute control. Any attempted assignment,
transfer, pledge, or other disposition shall be void and without effect.

13.   AMENDMENT OR TERMINATION

The Board may at any time amend the Plan in any respect, or terminate the Plan,
provided that no amendment or termination may decrease the rights of a
Participant during an Offering Period without his consent.





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14.   NOTICES

All notices or other communications by a Participant under or in connection with
the Plan shall be deemed to have been duly given when received in writing by the
Chief Financial Officer of the Company or when received in the form specified by
the Committee at the location and by the person designated by the Committee for
the receipt thereof.

15.   LIMITATIONS

Notwithstanding any other provisions of the Plan:

      (a)  All Employees shall have the same rights and privileges under the
      Plan, except that the amount of Common Stock that may be purchased
      pursuant to the Plan shall bear a uniform relationship to an Employee's
      Compensation. All rules and determinations of the Committee shall be
      uniformly and consistently applied to all persons in similar
      circumstances.

      (b)  Nothing in the Plan shall confer upon any Employee the right to
      continue in the employment of the Company or any Affiliate or affect the
      right that the Company or any Affiliate may have to terminate the
      employment of such Employee.

      (c)  No Participant shall have any right as a stockholder unless and
      until certificates for shares of Common Stock are issued to him or
      allocated to his Account.

      (d)  If under any provision of the Plan that requires a computation of the
      number of shares of Common Stock to be purchased, the number so computed
      is not a whole number of shares of Common Stock, such number of shares of
      Common Stock shall be rounded down to the next whole number.

      (e)  The Plan is intended to provide shares of Common Stock for investment
      and not for resale. The Company does not, however, intend to restrict or
      influence any Participant in the conduct of his own affairs. A
      Participant, therefore, may sell shares of Common Stock purchased under
      the Plan at any time he chooses, subject to compliance with any applicable
      federal or state securities laws or any applicable Company restriction or
      blackout periods; provided, however, that because of certain federal tax
      requirements, each Participant shall agree, by entering the Plan:

           (i)   that the Company may withhold, pursuant to Code ss.ss. 3102,
           3301, and 3402, from his wages and other cash compensation paid to
           him in all payroll periods following in the same calendar year, any
           taxes the Company may become liable for in respect of amounts
           includable in his income as compensation as a result of the
           acquisition of Common Stock under the Plan; and

           (ii)  that he shall repay the Company any amount of taxes the Company
           may become liable for in respect of amounts includable in his income
           as compensation as a result of a purchase of Common Stock under the
           Plan that cannot be satisfied




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           by withholding from the wages and other cash compensation paid to him
           by the Company.


      (f)  This Plan is intended to comply in all respects with applicable law
      and regulations, including with respect to Participants who are officers
      or directors for purposes of Section 16 of the Securities Exchange Act of
      1934, as amended from time to time, Rule 16b-3 of the Securities and
      Exchange Commission. In case any one or more provisions of this Plan shall
      be held invalid, illegal, or unenforceable in any respect under applicable
      law and regulation (including Rule 16b-3), the validity, legality, and
      enforceability of the remaining provisions shall not in any way be
      affected or impaired thereby and the invalid, illegal, or unenforceable
      provision shall be deemed null and void; however, to the extent permitted
      by law, any provision that could be deemed null and void shall first be
      construed, interpreted, or revised retroactively to permit this Plan to be
      construed in compliance with all applicable law (including Rule 16b-3), so
      as to further the intent of this Plan. Notwithstanding anything herein to
      the contrary, with respect to Participants who are officers and directors
      for purposes of Section 16(b) of the Securities Exchange Act of 1934, as
      amended from time to time, and if required to comply with the rules
      promulgated thereunder, such Participants shall not be permitted to direct
      the sale of any Common Stock purchased hereunder until at least six (6)
      months have elapsed from the date of a purchase, unless the Committee
      determines that the sale of the Common Stock otherwise satisfies the then
      current Rule 16b-3 requirements.

16.   EFFECTIVE DATE AND APPROVALS

The Plan shall become effective at a time when:

      (a)   the Plan has been adopted by the Board; and

      (b)   a registration statement on Form S-8 under the Securities Act of
      1933, as amended, has become effective with respect to the Plan; and

      (c)   the Committee has notified the eligible Employees that they may
      commence participation in the Plan.

Unless sooner terminated by the Board, or as set forth above, the Plan shall
terminate upon the earlier of (i) the tenth (10th) anniversary of the adoption
of the Plan by the Board, or (ii) the date on which all shares available for
issuance under the Plan shall have been sold under the Plan.

17.   APPLICABLE LAW

All questions pertaining to the validity, construction, and administration of
the Plan shall be determined in conformity with the laws of Nevada.

Adopted the 8th day of November, 1999.





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