LINE OF CREDIT AGREEMENT
THIS LINE OF CREDIT AGREEMENT (the "Agreement"), is entered into as of the 6th day of August, 2001,
by and between Hyseq, Inc., a Nevada corporation ("Borrower"), and Dr. George B. Rathmann ("Lender").
Borrower desires to obtain from Lender a line of credit (the "Line of Credit"), making available to Borrower a
principal amount of twenty million dollars ($20,000,000).
NOW, THEREFORE, Lender and Borrower hereby agree as follows:
LINE OF CREDIT
1.1 ADVANCES. SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, LENDER
HEREBY AGREES TO MAKE ADVANCES (EACH, AN "ADVANCE", AND COLLECTIVELY, THE
"ADVANCES"), TO BORROWER FROM TIME TO TIME UP TO AND INCLUDING AUGUST 5, 2003.
THE AGGREGATE AMOUNT OF ALL OUTSTANDING ADVANCES SHALL NOT EXCEED
TWENTY MILLION DOLLARS ($20,000,000) (THE "CREDIT LIMIT"). PROCEEDS OF ADVANCES
SHALL BE USED FOR WORKING CAPITAL AND GENERAL CORPORATE PURPOSES OF
1.2 Borrowing and Repayment. Borrower may from time to time during the term of this Agreement borrow,
partially or wholly repay its outstanding borrowings, and reborrow; provided however, that the total outstanding
Advances shall not at any time exceed the Credit Limit. Each time Borrower desires an Advance, Borrower shall
submit to Lender a drawing request in substantially the form of Exhibit B attached hereto ("Drawing Request"),
setting forth the amount requested to be borrowed. Borrower may submit Drawing Requests no more frequently
than once each week.
1.3 Promissory Note. Borrower's obligation to repay the Advances and accrued interest thereon shall be
evidenced by a convertible promissory notice substantially in the form attached hereto as Exhibit A (the "Note"),
which may be converted by mutual agreement of Lender and Borrower into shares of Borrower's common stock,
par value $0.001 per share (the "Common Stock"), at any time up to and including the Maturity Date (as defined
in Section 1.7 herein). The shares of Commo