-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WAdqikca6236ZE9xq63TJRt6AR9zOSMAod6wHMSuWe1W4g11+7mkx5thsS+WZwud SpXQT7e0xFyxxXFGvK5WCA== <SEC-DOCUMENT>0000912057-00-023835.txt : 20000515 <SEC-HEADER>0000912057-00-023835.hdr.sgml : 20000515 ACCESSION NUMBER: 0000912057-00-023835 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALYPTE BIOMEDICAL CORP CENTRAL INDEX KEY: 0000899426 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 061226727 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20985 FILM NUMBER: 628617 BUSINESS ADDRESS: STREET 1: 1265 HARBOR BAY PARKWAY CITY: ALAMEDA STATE: CA ZIP: 94502- BUSINESS PHONE: 5107495100 MAIL ADDRESS: STREET 1: 1265 HARBOR BAY PKWY CITY: ALAMEDA STATE: CA ZIP: 94502 </SEC-HEADER> <DOCUMENT> <TYPE>10-Q <SEQUENCE>1 <DESCRIPTION>10-Q <TEXT> <PAGE> ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ FORM 10-Q ------------------------ (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to ________________ Commission file number: 000-20985 CALYPTE BIOMEDICAL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 06-1226727 (State or other jurisdiction of incorporat (I.R.S. Employer or organization) Identification Number) 1265 HARBOR BAY PARKWAY, ALAMEDA, CALIFORNIA 94502 (Address of principal executive offices) (Zip Code) (510) 749-5100 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- The registrant had 24,766,712 shares of common stock outstanding as of April 30, 2000. ================================================================================ <PAGE> CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY FORM 10-Q INDEX <TABLE> <CAPTION> PAGE NO. -------- <S> <C> PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Balance Sheets (unaudited) at March 31, 2000 and December 31, 1999........... 3 Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2000 and 1999 (unaudited).................................. 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 (unaudited).............................. 5 Notes to Condensed Consolidated Financial Statements (unaudited)............................ 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 8 PART II. OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds......... 19 Item 6. Exhibits and Reports on Form 8-K.................. 19 </TABLE> - 2 - <PAGE> PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED) ASSETS <TABLE> <CAPTION> 3/31/00 12/31/99 ---------------- --------------- <S> <C> <C> Current assets: Cash and cash equivalents...................................................... $ 525 $ 2,652 Restricted cash................................................................ 743 - Securities available for sale.................................................. 509 503 Accounts receivable, net of allowance of $35 at March 31, 2000 and December 31, 1999..................................................... 721 583 Inventory...................................................................... 1,419 1,460 Notes receivable - officers and employees...................................... 598 551 Prepaid expenses............................................................... 204 201 Other current assets........................................................... 122 110 ---------------- --------------- Total current assets.................................................. 4,841 6,060 Property and equipment, net of accumulated depreciation of $4,039 at March 31, 2000 and $3,967 at December 31, 1999.............................. 1,568 1,543 Intangibles, net of accumulated amortization of $17 at March 31, 2000 and $14 at December 31, 1999.......................................... 39 42 Other assets ...................................................................... 174 176 ---------------- --------------- $ 6,622 $ 7,821 ================ =============== LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable............................................................... $ 1,527 $ 1,290 Accrued expenses............................................................... 1,561 1,476 Note payable - current portion................................................. 1,007 844 Capital lease obligations - current portion.................................... 73 90 Deferred revenue............................................................... 500 500 ---------------- --------------- Total current liabilities............................................. 4,668 4,200 Deferred rent obligation............................................................ 27 25 Note payable - long-term portion.................................................... 211 - Capital lease obligations - long-term portion....................................... 142 50 ---------------- --------------- Total liabilities..................................................... 5,048 4,275 Mandatorily redeemable Series A preferred stock, $0.001 par value; no shares authorized, 100,000 shares issued and outstanding; aggregate redemption and liquidation value of $1,000 plus cumulative dividends............................................ 2,246 2,216 Commitments and contingencies Stockholders' equity(deficit): Preferred Stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding............................... - - Common Stock, $0.001 par value; 30,000,000 shares authorized; 20,670,712 and 20,425,403 shares issued and outstanding as of March 31, 2000 and December 31, 1999, respectively............................................ 21 20 Additional paid-in capital..................................................... 68,372 68,226 Deferred compensation.......................................................... (107) (135) Accumulated deficit............................................................ (68,958) (66,781) ---------------- --------------- Total stockholders' equity (deficit).................................. (672) 1,330 ================= =============== $ 6,622 $ 7,821 ================= =============== </TABLE> - 3 - <PAGE> CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) <TABLE> <CAPTION> Three Months Ended March 31, --------------------------------------- 2000 1999 ------------- ------------- <S> <C> <C> Revenues: Product sales....................................................... $ 1,098 $ 834 ------------- ------------- Total revenue..................................................... 1,098 834 ------------- ------------- Operating expenses: Product costs....................................................... 1,417 997 Research and development costs...................................... 544 1,660 Selling, general and administrative costs........................... 1,309 1,130 ------------- ------------- Total expenses.................................................... 3,270 3,787 ------------- ------------- Loss from operations............................................ (2,172) (2,953) Interest income (expense), (net)....................................... (3) 29 -------------- ------------- Loss before income taxes........................................ (2,175) (2,924) Income taxes........................................................... (2) (2) -------------- -------------- Net loss........................................................ (2,177) (2,926) Less dividends on mandatorily redeemable Series A preferred stock............................................. (30) (30) ------------- ------------- Net loss attributable to common stockholders........................... $ (2,207) $ (2,956) ============= ============= Net loss per share attributable to common stockholders (basic and diluted)..................................... $ (0.11) $ (0.18) ============= ============= Weighted average shares used to compute net loss per share attributable to common stockholders (basic and diluted)..................................... 20,580 16,336 ============= ============= </TABLE> - 4 - <PAGE> CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) <TABLE> <CAPTION> Three Months Ended March 31, --------------------------------- 2000 1999 ------------ ------------- <S> <C> <C> Cash flows from operating activities: Net loss........................................................................... $ (2,177) $ (2,926) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization.................................................. 104 193 Amortization of deferred compensation.......................................... 28 19 Write-off of note and interest receivable to research and development costs.... - 890 Loss on sale of equipment...................................................... 19 - Changes in operating assets and liabilities: Accounts receivable........................................................ (138) (275) Inventory.................................................................. 41 115 Prepaid expenses and other current assets.................................. (15) (90) Other assets............................................................... 2 - Accounts payable, accrued expenses and deferred revenue............................................................... 322 653 Deferred rent obligation................................................... 2 (2) ------------ ------------- Net cash used in operating activities............................... (1,812) (1,423) ------------ ------------ Cash flows from investing activities: Purchases of equipment............................................................. (64) (23) Proceeds from sales of equipment................................................... 15 - Notes receivable from officers and employees....................................... (47) 16 Loans to related parties........................................................... - (64) Purchase of securities available for sale.......................................... (6) (200) Sale of securities available for sale.............................................. - 225 ------------ ------------ Net cash used in investing activities .............................. (102) (46) ------------ ------------- Cash flows from financing activities: Proceeds from sale of stock........................................................ 177 461 Expenses related to sale of stock.................................................. - (263) Expenses related to purchase of certain assets of Cambridge Biotech................ - (68) Principal payments on notes payable ............................................... (126) - Principal payments on capital lease obligations.................................... (21) (64) Cash pledged to bank pursuant to loan agreement.................................... (743) - Proceeds from notes payable........................................................ 500 2,000 ------------ ------------ Net cash (used in) provided by financing activities................. (213) 2,066 ------------- ------------ Net (decrease) increase in cash and cash equivalents.................................. (2,127) 597 Cash and cash equivalents at beginning of period...................................... 2,652 3,121 ------------ ------------ Cash and cash equivalents at end of period............................................ $ 525 $ 3,718 ============ ============ Supplemental disclosure of cash flow activities: Cash paid for interest........................................................... $ 34 $ 54 Cash paid for income taxes....................................................... - 2 Supplemental disclosure of noncash activities: Refinance of capital lease obligation............................................ 96 82 Dividends on mandatorily redeemable Series A preferred stock..................... 30 30 Valuation of acquisition of certain assets of Cambridge Biotech.................. - 293 Conversion of common stock subscribed to common stock............................ - 3 </TABLE> - 5 - <PAGE> CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 (UNAUDITED) (1) THE COMPANY AND BASIS OF PRESENTATION The Company's primary activities are marketing its FDA-approved urine Human Immunodeficiency Virus Type I (HIV-1) enzyme immunoassay (EIA) screening test, its FDA-approved urine and serum HIV-1 Western Blot supplemental tests and performing research and development on new products. The Company's HIV-1 screening and supplemental tests provide the only complete FDA-approved urine-based HIV-1 testing method. The Company believes that its urine-based tests offer significant advantages compared to existing blood-based or other bodily-fluid-based tests, including ease-of-use, lower costs, and significantly reduced risk of infection from collecting and handling specimens. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), and reflect all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of the Company's financial position as of March 31, 2000 and the results of its operations for the three months ended March 31, 2000 and 1999 and its cash flows for the three months ended March 31, 2000 and 1999. The Condensed Consolidated Balance Sheet as at December 31, 1999 is derived from the Company's audited financial statements. Interim results are not necessarily indicative of the results to be expected for the full year. This information should be read in conjunction with the Company's audited consolidated financial statements for each of the years in the three year period ended December 31, 1999 included in Form 10-K filed with the SEC on March 30, 2000. Certain information in footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to the rules and regulations of the SEC. The data disclosed in these notes to condensed consolidated financial statements for these periods is unaudited. (2) SIGNIFICANT ACCOUNTING POLICIES NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period presented. The computation of diluted earnings per common share is similar to the computation of basic net loss per share attributable to common stockholders, except that the denominator is increased for the assumed conversion of convertible securities and the exercise of dilutive options using the treasury stock method. The weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders were the same for the periods presented. Options and warrants for 4,507,947 shares and 3,548,795 shares in 2000 and 1999, respectively, were excluded from the computation of loss per share as their effect is antidilutive. (3) RESTRICTED CASH Pursuant to a loan agreement with a commercial bank, the Company has pledged $743,000 to the bank to secure the repayment of the related loan. Such funds are restricted as to the Company's use. The loan agreement requires the Company to maintain certain financial covenants and comply with certain reporting and other requirements. As a result of the Company's non-compliance with certain of the financial covenants and in accordance with the terms of the Agreement, during the first quarter of 2000, the Company pledged cash to the bank in amounts equivalent to 105% of the outstanding loan balance. As a result of such pledge, the Company is considered to have cured any default arising from any non- - 6 - <PAGE> CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 (UNAUDITED) compliance with the financial covenants. Subsequent to the pledge of cash, in January 2000, the bank and the Company modified the agreement to extend the repayment term through August 2001. (4) INVENTORY Inventory is stated at the lower of cost or market and the cost is determined using the first-in, first-out method. Inventory as of March 31, 2000 and December 31, 1999 consisted of the following: <TABLE> <CAPTION> 3/31/00 12/31/99 (in thousands) (in thousands) -------------- -------------- <S> <C> <C> Raw Materials $ 252 $ 233 Work-in-Process 793 862 Finished Goods 374 365 ---------- --------- Total Inventory $ 1,419 $ 1,460 ========== ========= </TABLE> (5) STOCK OPTION PLANS In February 2000, the Company's Board of Directors authorized the modification of stock options granted to employees from October 1998 through December 1999 under the Company's 1991 Incentive Stock Plan to decrease the vesting period from five years to three years. Neither the exercise price nor the life of the option was modified. (6) FINANCING On April 7, 2000, the Company completed the sale of 4,096,000 shares of common stock in a private placement that raised approximately $8.3 million after deducting the expenses of the transaction. Approximately one-half of the financing came from a private holding company that was not a prior investor in the Company and with which one of the Company's Directors is affiliated. A representative of the holding company was elected as a member of the Company's Board of Directors in April 2000. The balance of the private placement financing came primarily from the Company's existing investors. In March 2000, in conjunction with the private placement, one of the investors advanced the Company $500,000 with the intent that the loan would be converted to equity upon the closing of the private placement. The private placement closed following the effectiveness of a registration statement filed with the SEC, and the Company received the expected proceeds. The bridge loan and related accrued interest were converted to equity upon the closing of the private placement. In conjunction with the private placement the Company issued 100,000 warrants exercisable at $3.62 per share and 50,000 options exercisable at $2.05 per share. The warrants and options were valued on the date of grant at $3.03 per share and $2.86 per share, respectively, using the Black-Scholes option-pricing model with the following assumptions: expected dividend yield of 0.0%; risk free interest rate of 6.5%, the contractual life of 5 years for the warrants and 10 years for the options, and volatility of 80%. The expense associated with the warrants and options was accounted for as a transaction cost of the private placement. - 7 - <PAGE> ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE STATEMENTS IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" THAT RELATE TO FUTURE PLANS, EVENTS OR PERFORMANCE ARE FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS, EVENTS OR PERFORMANCE MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A VARIETY OF FACTORS, INCLUDING THOSE SET FORTH UNDER "FACTORS THAT MAY AFFECT FUTURE RESULTS, EVENTS OR PERFORMANCE" BELOW. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. OVERVIEW Calypte's efforts are currently focused on expanding the sales and marketing of its HIV-1 urine-based and serum-based diagnostic tests and on improving its products and processes. In the summer of 1998, upon receipt of a license for both its screening and supplemental tests, the Company began the marketing and sale in the U.S. of the only available FDA-approved urine-based HIV test method. There can be no assurance the Company will have significant revenues from sales of the HIV-1 urine screening assay or the supplemental test. The Company expects operating losses to continue in the near future as it continues to expand its sales and marketing activities for its current FDA-approved products and conducts additional research and development for process improvements and new products. The Company's marketing strategy is to use distributors, focused direct selling and marketing partners to penetrate certain targeted domestic markets. The Company maintains a small direct sales force to sell the Company's urine-based HIV-1 test to laboratories serving the life insurance market. International and other U.S. markets are addressed utilizing diagnostic product distributors. There can be no assurance that the Company's products will be successfully commercialized or that the Company will achieve significant product revenues. In addition, there can be no assurance that the Company will achieve or sustain profitability in the future. - 8 - <PAGE> RESULTS OF OPERATIONS The following represents selected financial data: <TABLE> <CAPTION> (in thousands) -------------------------- Three Months Ended March 31, -------------------------- 2000 1999 --------- --------- <S> <C> <C> Total revenue $ 1,098 $ 834 --------- --------- Operating expenses: Product costs 1,417 997 Research and development 544 1,660 Selling, general and administrative 1,309 1,130 --------- --------- Total expenses 3,270 3,787 --------- --------- Loss from operations (2,172) (2,953) Interest and other income (net) (3) 29 ---------- --------- Loss before income taxes $ (2,175) $ (2,924) ========= ========= </TABLE> THREE MONTHS ENDED MARCH 31, 2000 AND 1999 Revenues from product sales for the first quarter of 2000 totaled $1.1 million, an increase of $264,000 or 32% compared to the $834,000 reported in the first quarter of 1999. The increase in revenues is a result of increased sales across the Company's product line, including its HIV-1 urine screening test and both its urine-based and serum-based HIV supplemental tests. Product costs for the first quarter of 2000 totaled $1.4 million, an increase of $420,000 or 42% versus the $1.0 million for the first quarter of 1999. In addition to higher costs attributable to the increase in product sales compared to the first quarter of 1999, the Company continues to incur duplicative costs to operate and validate processes in its Alameda, California facility that has not yet been approved by the FDA to manufacture product for sale. Simultaneously, it is incurring costs to operate its two licensed facilities in Berkeley, California and Rockville, Maryland. Redundant manufacturing costs cannot cease until the Alameda facility receives FDA approval and the Company closes its Berkeley facility. Additionally, the Company incurred greater costs in the first quarter of 2000 to validate processes and ensure compliance with good manufacturing practices at its Rockville plant than in the first quarter of 1999. Research and development expense decreased by $1,116,000 or 67%, to $544,000 for the first quarter of 2000, compared to $1.7 million for the first quarter of 1999. In the first quarter of 1999, the Company wrote off a note receivable and accrued interest from a related party in the amount of $890,000 as a research and development expense. Pure research expenses have been curtailed in the first quarter of 2000 as the Company dedicates its resources to expanded marketing efforts for its existing products. Selling, general and administrative expenses increased by $179,000 or 16%, to $1.3 million in the first quarter of 2000, compared to $1.1 million in the first quarter of 1999. The change reflects a combination of increases in salary and benefits expenses attributable to additional sales and marketing personnel; increases in the usage of outside consultants, and the costs of underutilization of the Company's Alameda, California - 9 - <PAGE> manufacturing facility primarily for administrative purposes. Interest income, interest expense and other expense combined to result in a net expense of $3,000 for the first quarter of 2000, versus income of $29,000 for the first quarter of 1999. The change was primarily attributable to a decrease in interest income as a result of lower invested cash balances in 2000 compared to the first quarter of 1999. LIQUIDITY AND CAPITAL RESOURCES FINANCING ACTIVITIES The Company has financed its operations from its inception primarily through the private placement of preferred stock and common stock, its Initial Public Offering (IPO) of common stock and, to a lesser extent, from payments related to research and development agreements, a bank line of credit, equipment lease financings and borrowings from notes payable. During 1996, the Company completed its IPO of 2,536,259 shares of its Common Stock at $6.00 per share. After deducting underwriters' discounts and commissions and additional expenses associated with the IPO, the Company received net proceeds of $13.2 million. In October 1997, the Company completed a private placement of 2,600,999 shares of its Common Stock at $4.25 per share. The Company received net proceeds of approximately $10.2 million after deducting placement agent commissions and additional expenses associated with the private placement. In January 1999, the Company completed a private placement of 3,102,500 shares of its Common Stock at $1.00 per share. The Company received net proceeds of approximately $2.8 million after deducting placement agent commissions and additional expenses associated with the private placement. In April 1999, the Company completed a private placement of 3,398,000 shares of its Common Stock at $2.25 per share. The Company received net proceeds of approximately $7.0 million after deducting placement agent commissions and additional expenses associated with the private placement. In April 2000, the Company closed a private placement of 4,096,000 shares of its Common Stock at $2.05 per share following the effectiveness of a registration statement that the Company filed covering the resale of the shares by the investors. The Company received proceeds of approximately $8.3 million after deducting expenses of the transaction. In conjunction with the equity financing, the Company also issued warrants for 100,000 shares of Common Stock with an exercise price of $3.62 per share to one of the investors in return for a short-term bridge loan commitment. The Company drew $500,000 on the bridge loan during March 2000. The bridge loan and accrued interest were converted to equity upon the closing of the private placement transaction. In January 2000, the company renegotiated its bank loan agreement to extend the repayment term from August 2000 to August 2001. Restrictions on $743,000 cash pledged to the bank at March 31, 2000 will be released upon the Company's demonstration of compliance with the financial convenants in its loan agreement. The Company expects this to occur in May 2000 when it files its compliance documents for the month of April 2000 with the bank. Although the Company believes current cash, including the proceeds from the April 2000 private placement, will be sufficient to meet its operating expenses and capital requirements for the next twelve months, the Company's future liquidity and capital requirements will depend on numerous factors, including market acceptance of its products, improvements in the costs and efficiency of its manufacturing processes, regulatory actions by the FDA and other international regulatory bodies, intellectual property protection and the ability, if necessary, to raise additional capital in a timely manner. - 10 - <PAGE> There can be no assurance that the Company will be able to achieve improvements in its manufacturing processes or that the Company will achieve significant product revenues. In addition, there can be no assurance that the Company will achieve or sustain profitability in the future. There can be no assurance that the Company will not be required to raise additional capital or that such capital will be available on acceptable terms, if at all. Any failure to raise additional financing, if needed, will likely place us in significant financial jeopardy. Therefore, the Company cannot predict the adequacy of its capital resources on a long-term basis. OPERATING ACTIVITIES For the three months ended March 31, 2000 and 1999, the Company used cash of $1.8 million and $1.4 million, respectively, in its operations. The cash used in operations was primarily for inventory, marketing the Company's urine-based HIV-1 screening test and its urine-based and serum-based supplemental tests, and funding manufacturing, research and development, selling, and general and administrative expenses of the Company. NEW ACCOUNTING PRONOUNCEMENTS In March 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44 ("FIN No. 44"), ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION. This Interpretation clarifies the application of APB Opinion No. 25, "Accounting for Stock Issued to Employees" and is generally effective July 1, 2000, with certain conclusions in the Interpretation covering specific events that occur after either December 15, 1998 or January 12, 2000. To the extent that this Interpretation covers events occurring during the period after December 15, 1998, or January 12, 2000, but before the effective date of July 1, 2000, the effects of applying this Interpretation are to be recognized on a prospective basis from July 1, 2000. Management believes the adoption of FIN No. 44 will not have a material impact on our financial position, results of operations or cash flows. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"), summarizing the staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. In March 2000, the SEC issued Staff Accounting Bulletin No. 101A ("SAB 101A"), delaying the implementation date of SAB101. As amended, registrants with fiscal years that begin between December 16, 1999 and March 15, 2000 must adopt SAB 101 during the second fiscal quarter of their fiscal year. Management is reviewing SAB 101 and SAB 101A and at the current time does not believe that those interpretations will have a significant impact on our financial position, results of operations, or cash flows. In June 1998 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, or SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133, as recently amended by SFAS No. 137, is effective for fiscal years beginning after June 15, 2000. Management believes the adoption of SFAS No. 133 will not have a material effect on our financial position, results of operations, or cash flows. FACTORS THAT MAY AFFECT FUTURE RESULTS, EVENTS OR PERFORMANCE - 11 - <PAGE> Calypte has identified a number of risk factors and uncertainties that it faces. These factors, among others, may cause actual results, events or performance to differ materially from those expressed in any forward-looking statements we make in this Form 10-Q or in press releases or other public disclosures. Investors should be aware of the existence of these factors. UNCERTAIN MARKET ACCEPTANCE OF OUR NEW METHOD OF DETERMINING THE PRESENCE OF HIV ANTIBODIES. Our products incorporate a new method of determining the presence of HIV antibodies. There can be no assurance that we will obtain: - any significant degree of market acceptance among physicians, patients or health care payors; or - recommendations and endorsements by the medical community which are essential for market acceptance of the products. We have FDA approval to market our urine HIV-1 screening and supplemental tests in the United States and have been marketing these products since July 1998. To date, however, this testing method has only generated limited revenues and not achieved significant market penetration. The failure of our products to obtain market acceptance would have a material adverse effect on us. WE HAVE LIMITED EXPERIENCE SELLING AND MARKETING OUR HIV-1 URINE-BASED SCREENING TEST. We have little experience marketing and selling our products either directly or through our distributors. The success of our products depends upon alliances with third-party distributors including the distribution agreement announced in September 1999 with Carter-Wallace Inc. There can no assurance that: - our direct selling efforts will be effective; - our distributors will market successfully our products; or - if our relationships with distributors terminate, we will be able to establish relationships with other distributors on satisfactory terms, if at all. Any disruption in our distribution, sales or marketing network could have a material adverse effect on us. WE HAVE SUSTAINED LOSSES IN THE PAST AND WE EXPECT TO SUSTAIN LOSSES IN THE FUTURE. We have incurred losses in each year since our inception. Our net loss for the quarter ended March 31, 2000 was $2.2 million and our accumulated deficit as of March 31, 2000 was $69.0 million. We expect operating losses to continue as we continue our marketing and sales activities for our FDA-approved products and conduct additional research and development for product and process improvements and new products. - 12 - <PAGE> OUR QUARTERLY RESULTS MAY FLUCTUATE DUE TO CERTAIN REGULATORY, MARKETING AND COMPETITIVE FACTORS OVER WHICH WE HAVE LITTLE OR NO CONTROL. The factors listed below, some of which we cannot control, may cause our revenues and results of operations to fluctuate significantly: - actions taken by the FDA or foreign regulatory bodies relating to our products; - the extent to which our products and our Sentinel HIV and STD testing service gain market acceptance; - the timing and size of distributor purchases; and - introductions of alternative means for testing for HIV by competitors. WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING THAT WE MAY NEED IN THE FUTURE. The report of KPMG LLP covering the December 31, 1999 consolidated financial statements contains an explanatory paragraph that states that our recurring losses from operations and accumulated deficit raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty. We may need to raise more money to continue to finance our operations. We may not be able to obtain additional financing on acceptable terms, or at all. Any failure to raise additional financing, if needed, will likely place us in significant financial jeopardy. WE DEPEND UPON THE VIABILITY OF THREE PRODUCTS--OUR HIV-1 URINE-BASED SCREENING TEST AND OUR URINE AND BLOOD BASED SUPPLEMENTAL TESTS. Our HIV-1 urine-base screening test and urine and blood-based supplemental tests are our only products. Accordingly, we may have to cease operations if our tests fail to achieve market acceptance or generate significant revenues. OUR PRODUCTS DEPEND UPON RIGHTS TO TECHNOLOGY THAT WE HAVE LICENSED FROM THIRD PARTY PATENT HOLDERS AND THERE CAN BE NO ASSURANCE THAT THE RIGHTS WE HAVE UNDER THESE LICENSING AGREEMENTS ARE SUFFICIENT OR THAT WE CAN ADEQUATELY PROTECT THOSE RIGHTS. We currently have the right to use patent and proprietary rights which are material to the manufacture and sale of our HIV-1 urine-based screening test under licensing agreements with New York University, Cambridge Biotech Corporation, Repligen, and the Texas A&M University System. WE RELY ON SOLE SOURCE SUPPLIERS THAT WE CANNOT QUICKLY REPLACE FOR CERTAIN COMPONENTS CRITICAL TO THE MANUFACTURE OF OUR PRODUCTS. Any delay or interruption in the supply of these components could have a material adverse effect on us by significantly impairing our ability to manufacture products in sufficient quantities, particularly as we increase our manufacturing activities in support of commercial sales. WE HAVE LIMITED EXPERIENCE IN MANUFACTURING OUR PRODUCTS AND LITTLE EXPERIENCE IN MANUFACTURING OUR PRODUCTS IN COMMERCIAL QUANTITIES. We may encounter difficulties in scaling-up production of new products, including problems involving: - production yields; - 13 - <PAGE> - quality control and assurance; - raw material supply; and - shortages of qualified personnel. THE SUCCESS OF OUR PLANS TO ENTER INTERNATIONAL MARKETS MAY BE LIMITED OR DISRUPTED DUE TO RISKS RELATED TO INTERNATIONAL TRADE AND MARKETING AND THE CAPABILITIES OF OUR DISTRIBUTORS. We anticipate that international distributor sales will generate a significant portion of our revenues for the next several years. We believe that our urine-based test can provide significant benefits in countries that do not have the facilities or personnel to safely and effectively collect and test blood samples. The following risks may limit or disrupt our international sales: - the imposition of government controls; - export license requirements - political instability; - trade restrictions; - changes in tariffs; - difficulties in managing international operations; and - fluctuations in foreign currency exchanges rates. Some of our distributors have limited international marketing experience. There can be no assurance that these distributors will be able to successfully market our products in foreign markets. WE FACE INTENSE COMPETITION IN THE MEDICAL DIAGNOSTIC PRODUCTS MARKET AND RAPID TECHNOLOGICAL ADVANCES BY COMPETITORS. Competition in our diagnostic market is intense and we expect it to increase. Within the United States, our competitors include a number of well-established manufacturers of HIV tests using blood samples, plus at least one system for the detection of HIV antibodies using oral fluid samples. Many of our competitors have significantly greater financial, marketing and distribution resources than we do. Our competitors may succeed in developing or marketing technologies and products that are more effective than ours. These developments could render our technologies or products obsolete or noncompetitive or otherwise have a material adverse effect on us. OUR ABILITY TO MARKET OUR PRODUCTS DEPENDS UPON OBTAINING AND MAINTAINING FDA AND FOREIGN REGULATORY APPROVALS. Numerous governmental authorities in the United States and other countries regulate our products. The FDA regulates our products under federal statutes and - 14 - <PAGE> regulations related to pre-clinical and clinical testing, manufacturing, labeling, distribution, sale and promotion of medical devices in the United States. If we fail to comply with FDA regulations, or the FDA believes that we are not in compliance with such regulations, the FDA can: - detain or seize our products; - issue a recall of our products; - prohibit marketing and sales of our products; and - assess civil and criminal penalties against us, our officers or our employees. We also plan to sell our products in certain foreign countries where they may be subject to similar local regulatory requirements. The imposition of any of the sanctions described above could have a material adverse effect on us. The regulatory approval process in the United States and other countries is expensive, lengthy and uncertain. We may not obtain necessary regulatory approvals or clearances in a timely manner, if at all. We may lose previously obtained approvals or clearances or fail to comply with regulatory requirements. The occurrence of any of these events would have a material adverse effect on Calypte. Before we begin to manufacture our product at the Alameda facility, we must obtain FDA approval for that facility. Delays in receiving the FDA's approval or other difficulties which we encounter in scaling-up our manufacturing capacity to meet demand could have a material adverse effect on us. WE HAVE RECEIVED WARNING LETTERS FROM THE FDA REGARDING THE SUFFICIENCY OF OUR MANUFACTURING RECORDS AND PRODUCTION PROCEDURES AND WE MUST SATISFY THE FDA'S CONCERNS IN ORDER TO AVOID REGULATORY ACTION AGAINST US. In November 1998, the Company received a Warning Letter from the FDA following an inspection by the FDA of the Company's manufacturing facilities in Berkeley and Alameda, California. On December 11, 1998, the Company responded in writing to each of the deficiencies cited in the Warning Letter. The Company subsequently received another letter from the FDA requesting further responses regarding certain of the deficiencies. The Company responded to the subsequent letter on June 1, 1999. The FDA conducted a follow-up inspection of the Berkeley and Alameda facilities from September 28 through October 7, 1999, which resulted in observations requiring corrective action or response from the Company. The Company submitted its written responses to the FDA's inspection observations on November 4, 1999. On March 21, 2000, the Company received a response from the FDA requesting additional information. Company representatives met with and provided information to FDA officials on April 27, 2000 and on May 5, 2000 responded in writing to requests for additional information. Additionally, the FDA has granted a meeting with Company representatives on May 16, 2000 to review and provide comments on the Company's application for its Alameda facility. - 15 - <PAGE> In May 1999, the Company received a Warning Letter from the FDA that cited a number of significant observations related to its November 20 through December 11, 1998 inspection of the Company's manufacturing plant in Rockville, Maryland. On May 24, 1999, the Company responded in writing to each of the deficiencies cited in the Warning Letter. On November 19, 1999, the Company received a letter from the FDA stating that the Company's responses were considered adequate, and the Warning Letter was formally closed. Between November 30, and December 9, 1999, the FDA conducted a follow-up inspection of the Rockville facility that resulted in observations requiring corrective actions or response from the Company. On January 7, 2000, the Company responded in writing to each of the FDA observations and is awaiting the FDA's reply. On March 21, 2000, the Company received a response from the FDA requesting additional information. Company representatives met with and provided information to FDA officials on April 27, 2000 and on May 5, 2000 responded in writing to requests for additional information. If the FDA is not satisfied with the Company's responses and corrective actions regarding these matters at either its Alameda or Rockville facilities, the FDA could take regulatory actions against the Company, including license suspension, revocation, and/or denial, seizure of products and/or injunction, and/or civil penalties or criminal sanctions. Any such FDA action is likely to have a material adverse effect upon the Company's ability to conduct operations. In addition, failure of the Company to satisfy the FDA on these matters may adversely affect receiving approval for manufacturing at the Alameda facility and/or the Company's ability to export its products to certain international markets. AS A SMALL MANUFACTURER OF MEDICAL DIAGNOSTIC PRODUCTS, WE ARE EXPOSED TO PRODUCT LIABILITY AND RECALL RISKS FOR WHICH INSURANCE COVERAGE IS EXPENSIVE, LIMITED AND POTENTIALLY INADEQUATE. We manufacture medical diagnostic products, which subjects us to risks of product liability claims or product recalls, particularly in the event of false positive or false negative reports. A product recall or a successful product liability claim or claims that exceed our insurance coverage could have a material adverse effect on us. We maintain a $10,000,000 claims made policy of product liability insurance. However, product liability insurance is expensive. In the future we may not be able to obtain coverage on acceptable terms, if at all. Moreover, our insurance coverage may not adequately protect us from liability that we incur in connection with clinical trials or sales of our products. OUR CHARTER DOCUMENTS MAY INHIBIT A TAKEOVER. Certain provisions of our Certificate of Incorporation and Bylaws could: - discourage potential acquisition proposals; - delay or prevent a change in control of Calypte; - diminish stockholders' opportunities to participate in tender offers for our common stock, including tender offers at prices above the then current market price; or - 16 - <PAGE> - inhibit increases in the market price of our common stock that could results from takeover attempts. WE HAVE ADOPTED A SHAREHOLDER RIGHTS PLAN THAT HAS CERTAIN ANTI-TAKEOVER EFFECTS. On December 15, 1998, the Board of Directors of Calypte declared a dividend distribution of one preferred share purchase right ("Right") for each outstanding share of Common Stock of the Company. The dividend was payable to the stockholders of record on January 5, 1999 with respect to each share of Common Stock issued thereafter until a subsequent "distribution date" defined in a Rights Agreement and, in certain circumstances, with respect to shares of Common Stock issued after the Distribution Date. The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group that attempts to acquire the Company without conditioning the offer on the Rights being redeemed or a substantial number of Rights being acquired. However, the Rights should not interfere with any tender offer, or merger, which is approved by the Company because the Rights do not become exercisable in the event of an offer or other acquisition exempted by Calypte's Board of Directors. AN INVESTOR'S ABILITY TO TRADE OUR COMMON STOCK MAY BE LIMITED BY TRADING VOLUME. The trading volume in our common shares has been relatively limited. A consistently active trading market for our common stock may not develop. WE MAY BE REMOVED FROM THE NASDAQ SMALLCAP MARKET IF WE FAIL TO MEET CERTAIN MAINTENANCE CRITERIA. The Nasdaq Stock Market inquired on two occasions whether we continue to meet the net capital surplus maintenance criterion for trading on the Nasdaq SmallCap Market. We currently meet the maintenance criterion but our ability to continue to do so will depend on whether we are able to maintain net tangible assets of $2,000,000 and whether the minimum bid price for our common stock exceeds $1.00 per share for at least ten consecutive business days during any period of 120 consecutive business days. The public trading of our common stock and the ability of our stockholders to sell their shares could be significantly impaired if we fail to meet the maintenance criteria and are removed from the Nasdaq SmallCap Market. In that case, our common stock would trade on either the OTC bulletin board, a regional exchange or in the pink sheets, which would likely result in an even more limited trading volume. THE PRICE OF CALYPTE'S COMMON STOCK HAS BEEN HIGHLY VOLATILE DUE TO SEVERAL FACTORS WHICH WILL CONTINUE TO EFFECT THE PRICE OF OUR STOCK. Our common stock has traded as low as $1.28 per share and as high as $7.25 per share during the first quarter of 2000. Some of the factors leading to the volatility include: - price and volume fluctuations in the stock market at large which do not relate to our operating performance; - fluctuations in our operating results; - 17 - <PAGE> - announcements of technological innovations or new products which we or our competitors make; - FDA and international regulatory actions; - availability of reimbursement for use of our products from private health insurers, governmental health administration authorities and other third- party payors; - developments with respect to patents or proprietary rights; - public concern as to the safety of products that we or others develop; - changes in health care policy in the United States or abroad; and - changes in stock market analysts' recommendations regarding Calypte, other medical products companies or the medical product industry generally. CALYPTE AND THE PRICE OF CALYPTE SHARES MAY BE ADVERSELY EFFECTED BY THE PUBLIC SALE OF A SIGNIFICANT NUMBER OF THE SHARES ELIGIBLE FOR FUTURE SALE. All outstanding shares of our common stock are freely tradable. Sales of common stock in the public market could materially adversely affect the market price of our common stock. Such sales also may inhibit our ability to obtain future equity or equity-related financing on acceptable terms. OUR RESEARCH AND DEVELOPMENT OF HIV URINE TEST INVOLVES THE CONTROLLED USE OF HAZARDOUS MATERIALS. There can be no assurance that our safety procedures for handling and disposing of hazardous materials such as azide will comply with applicable regulations. In addition, we cannot eliminate the risk of accidental contamination or injury from these materials. We may be held liable for damages from such an accident and that liability could have a material adverse effect on us. WE MAY NOT BE ABLE TO RETAIN OUR KEY EXECUTIVES AND RESEARCH AND DEVELOPMENT PERSONNEL. As a small company with only 62 employees, our success depends on the services of key employees in executive and research and development positions. The loss of the services of one or more of such employees could have a material adverse effect on us. - 18 - <PAGE> PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS During the three years ended March 31, 2000, the Company completed three private placements of shares of its Common Stock. See "Financing Activities" in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section. In each instance, the proceeds were used to fund the Company's continuing operations. The shares sold in each of the private placements were exempt from registration with the Securities and Exchange Commission pursuant to Rule 506 of Regulation D of the Securities Act of 1933 as amended ("Securities Act"). Shares were sold only to accredited investors as defined in Rule 501 of the Securities Act and were registered for resale by such investors on Forms S-3 filed on October 21, 1997, November 14, 1998, and March 30, 1999. The proceeds from each private placement have been used to finance operations. SUBSEQUENT EVENT. On April 7, 2000, the Company completed the sale of 4,096,000 shares of its Common Stock to institutional investors in a private placement at $2.05 per share with an aggregate offering price of $8,396,000. The Company received net proceeds of approximately $8.3 million after deducting expenses associated with the private placement. The Company also issued warrants for 100,000 shares of its Common Stock to one of the investors in return for a bridge loan issued prior to the closing of the private placement. The warrants are exercisable at $3.62 per share. The shares sold in the private placement were exempt from registration with the Securities and Exchange Commission pursuant to Rule 506 of the Securities Act. Shares were sold only to accredited investors as defined in Rule 501 of the Securities Act and were registered for resale by such investors on a Form S-3 Registration Statement filed on March 13, 2000. The private placement closed following the effectiveness of the Registration Statement on April 5, 2000. The Company will use the proceeds from the private placement to finance its continuing operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits <TABLE> <S> <C> Exhibit 10.64 Loan Modification Agreement between Registrant and Silicon Valley Bank dated as of November 15, 1999 Exhibit 10.65 Loan Modification Agreement between Registrant and Silicon Valley Bank dated as of January 30, 2000 Exhibit 10.66 Restated Technology Rights Agreement between Registrant and Howard B. Urnovitz, Ph.D. dated as of March 1, 2000 Exhibit 10.67 Technology Rights Agreement between Registrant and Chronix Biomedical dated as of March 1, 2000 </TABLE> <PAGE> <TABLE> <S> <C> Exhibit 10.68* Exclusive Independent Contractor Agreement for Project Sentinel between Clinical Reference Laboratory, Inc. and Registrant dated as of January 21, 2000 Exhibit 27 Financial Data Schedule </TABLE> *Confidential treatment has been granted as to certain portions of this exhibit. b. Reports on Form 8-K None - -------------------------------------------------------------------------------- SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CALYPTE BIOMEDICAL CORPORATION ------------------------------ (Registrant) Date: May 12, 2000 By: /s/ Nancy E. Katz -------------------------- Nancy E. Katz PRESIDENT, CHIEF OPERATING OFFICER, AND CHIEF FINANCIAL OFFICER (Principal Accounting Officer) </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-10.64 <SEQUENCE>2 <DESCRIPTION>EXHIBIT 10.64 <TEXT> <PAGE> Exhibit 10.64 LOAN MODIFICATION AGREEMENT This Loan Modification Agreement is entered into as of November 15, 1999, by and between Calypte Biomedical Corporation (the "Borrower") and Silicon Valley Bank ("Bank"). 1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other documents, a Loan and Security Agreement, dated December 21, 1998, as may be amended from time to time, (the "Loan Agreement"). The Loan Agreement provided for, among other things, a Committed Line in the original principal amount of Two Million Dollars ($2,000,000). Defined terms used but not otherwise defined herein shall have the same meanings as in the Loan Agreement. Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as the "Indebtedness." 2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is secured by the Collateral as described in the Loan Agreement. Hereinafter, the above-described security documents and guaranties, together with all other documents securing repayment of the Indebtedness shall be referred to as the "Security Documents". Hereinafter, the Security Documents, together with all other documents evidencing or securing the Indebtedness shall be referred to as the "Existing Loan Documents". 3. DESCRIPTION OF CHANGE IN TERMS. A. MODIFICATION(S) TO LOAN AGREEMENT. 1. The term "Term Maturity Date" as defined in Section 1.1 entitled "Definitions" is hereby amended to mean August 20, 2000. 2. Notwithstanding the terms and conditions contained in Section 2.1 entitled "Term Loan", Bank will make one additional Term Advance prior to December 15, 1999 in an amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000) (the "Additional Term Advance"). The sum of (a) the Additional Term Advance and (b) the remaining aggregate Term Advances (after Borrower pays its Term Advance installment due November 20, 1999) shall be repaid in nine (9) equal monthly installments of principal, plus accrued interest, beginning December 20, 1999 and continuing on the twentieth (20th) day of each month thereafter through the Term Maturity Date, as amended herein. 3. Section 4.4 entitled "Triparty Agreement" is hereby deleted. 4. The following Section is hereby incorporated into the Loan Agreement: 6.12 Borrower shall maintain an amount equal to or greater than the current outstanding Term Advances in a Silicon Valley Bank money market account or other Silicon Valley Bank account approved by Bank. Borrower's failure to comply with this Section 6.12 shall be deemed an Event of Default. <PAGE> 4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above. 5. PAYMENT OF LOAN FEE. Borrower shall pay to Bank a fee in the amount of Two Thousand Five Hundred Dollars ($2,500) (the "Loan Fee") plus all out-of-pocket expenses. 6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing below) agrees that, as of the date hereof, it has no defenses against the obligations to pay any amounts under the Indebtedness. 7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing below) understands and agrees that in modifying the existing Indebtedness, Bank is relying upon Borrower's representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect. Bank's agreement to modifications to the existing Indebtedness pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Indebtedness. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Indebtedness. It is the intention of Bank and Borrower to retain as liable parties all makers and endorsers of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker, endorser, or guarantor will be released by virtue of this Loan Modification Agreement. The terms of this paragraph apply not only to this Loan Modification Agreement, but also to all subsequent loan modification agreements. 8. CONDITIONS. The effectiveness of this Loan Modification Agreement is conditioned upon Borrower's payment of the Loan Fee. This Loan Modification Agreement is executed as of the date first written above. BORROWER: BANK: CALYPTE BIOMEDICAL CORPORATION SILICON VALLEY BANK By: /s/ Nancy E. Katz By: /s/ Raed Y. AlFayoumi ------------------------------- ----------------------------- Name: Nancy E. Katz Name: Raed Y. AlFayouomi ----------------------------- --------------------------- Title: President Title: Vice President ----------------------------- --------------------------- </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-10.65 <SEQUENCE>3 <DESCRIPTION>EXHIBIT 10.65 <TEXT> <PAGE> Exhibit 10.65 LOAN MODIFICATION AGREEMENT This Loan Modification Agreement is entered into as of January 30, 2000, by and between Calypte Biomedical Corporation (the "Borrower") and Silicon Valley Bank ("Bank"). 1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other documents, a Loan and Security Agreement, dated December 21, 1998, as may be amended from time to time, (the "Loan Agreement"). The Loan Agreement provided for, among other things, a Committed Line in the original principal amount of Two Million Dollars ($2,000,000). Defined terms used but not otherwise defined herein shall have the same meanings as in the Loan Agreement. Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as the "Indebtedness." 2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is secured by the Collateral as described in the Loan Agreement. Hereinafter, the above-described security documents and guaranties, together with all other documents securing repayment of the Indebtedness shall be referred to as the "Security Documents". Hereinafter, the Security Documents, together with all other documents evidencing or securing the Indebtedness shall be referred to as the "Existing Loan Documents". 3. DESCRIPTION OF CHANGE IN TERMS. A. MODIFICATION(S) TO LOAN AGREEMENT. 1. The term "Term Maturity Date" as defined in Section 1.1 entitled "Definitions" is hereby amended to mean August 20, 2001. 2. Term Loan Advances shall be repaid in twenty (20) equal monthly installments of principal, plus accrued interest, beginning January 30, 2000 and continuing on the twentieth (20th) day of each month thereafter through the Term Maturity Date, as amended herein. 3. Section 6.12 is hereby deleted in its entirety. 4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above. 5. PAYMENT OF LOAN FEE. Borrower shall pay to Bank a fee in the amount of Two Hundred Fifty Dollars ($250) (the "Loan Fee") plus all out-of-pocket expenses. 6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing below) agrees that, as of the date hereof, it has no defenses against the obligations to pay any amounts under the Indebtedness. 7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing below) understands and agrees that in modifying the existing Indebtedness, Bank is relying upon Borrower's representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged <PAGE> and in full force and effect. Bank's agreement to modifications to the existing Indebtedness pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Indebtedness. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Indebtedness. It is the intention of Bank and Borrower to retain as liable parties all makers and endorsers of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker, endorser, or guarantor will be released by virtue of this Loan Modification Agreement. The terms of this paragraph apply not only to this Loan Modification Agreement, but also to all subsequent loan modification agreements. 8. CONDITIONS. The effectiveness of this Loan Modification Agreement is conditioned upon Borrower's payment of the Loan Fee. This Loan Modification Agreement is executed as of the date first written above. BORROWER: BANK: CALYPTE BIOMEDICAL CORPORATION SILICON VALLEY BANK By: /s/ Nancy E. Katz By: /s/ Raed AlFayoumi ------------------------------------- ----------------------------- Name: Nancy E. Katz Name: Raed AlFayoumi ----------------------------------- --------------------------- Title: President/Chief Operating Officer Title: Vice President ---------------------------------- -------------------------- </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-10.66 <SEQUENCE>4 <DESCRIPTION>EXHIBIT 10.66 <TEXT> <PAGE> Exhibit 10.66 RESTATED TECHNOLOGY RIGHTS AGREEMENT This Restated Technology Rights Agreement (the "AGREEMENT") is made effective as of March 1, 2000 (the "EFFECTIVE DATE"), by and between Calypte Biomedical Corporation (the "COMPANY"), a California corporation whose address is 1265 Harbor Bay Parkway, Alameda, California 94502, and Howard B. Urnovitz, Ph.D. (the "SCIENTIST") whose office is at 1440 Fourth Street, Berkeley, California 94710. This Agreement amends and restates in its entirety, as of March 1, 1997, that certain Technology Rights Agreement dated as of March 1, 1997 by and between the Company and the Scientist (the "ORIGINAL AGREEMENT"). RECITALS WHEREAS, at the Effective Date the Scientist serves, and has served since March 1, 1997, in the capacity of Chief Scientific Officer of the Company; and WHEREAS, the Scientist may develop certain technology during the time he is in the employment of the Company and which technology may not already have been assigned to the Company, without royalty and under a separate employee invention assignment agreement pursuant to the Scientist's relationship with the Company as an employee, or otherwise already assigned pursuant to Section 2.1 hereof, which the Company may desire to commercialize under a written agreement to be negotiated between the Company and the Scientist as set forth herein; WHEREAS, the parties desire to hereby amend and restate the Original Agreement in its entirety to clarify certain rights and obligations of the parties from and after March 1, 1997 as provided herein; NOW, THEREFORE, in consideration of the premises and the mutual agreements and undertakings herein set forth, the Company and the Scientist hereby agree as follows: 1. DEFINITIONS. Whenever used in this Agreement, the following terms will have the following meanings: 1.1 "CONFIDENTIAL INFORMATION" means all confidential or propriety information of the Scientist or the Company disclosed by one of them to the other in writing and reasonably identified in writing as confidential or proprietary, or reduced to writing, and so identified, within thirty (30) days after an oral disclosure, by either party to the other in connection with this Agreement. Confidential Information will not include: (a) information which is or which becomes publicly known through lawful means; or (b) information which is lawfully disclosed by the disclosing party, or by a third party who rightfully possesses the information, to others or the other party without confidential or proprietary restriction. <PAGE> 1.2 "SCIENTIST" means Howard B. Urnovitz, Ph.D. and any students or employees operating under his direct supervision rights to whose work belong, by written agreement or otherwise, to him. 1.3 "FIELD" means any urine-based medical diagnostic test. 1.4 "DIAGNOSTIC TECHNOLOGY" means any information, inventions, and discoveries made, conceived, derived, or otherwise reduced to practice by the Scientist related to the Field. 1.5 "NET SALES" means total revenues received from sales of products or services to customers less any quantity discounts, rebates, sales taxes, and allowance for bad debts and returns. 2. ASSIGNMENT OF CERTAIN PATENT RIGHTS; RIGHTS OF THE SCIENTIST TO EXECUTE AND DELIVER THIS AGREEMENT; EFFECT OF OTHER ASSIGNMENT AGREEMENTS. 2.1 ASSIGNMENT OF CERTAIN PATENT RIGHTS. The Scientist hereby acknowledges that the patents or patent applications listed on APPENDIX A attached hereto and incorporated herein by reference have been assigned by the Scientist to the Company effective as of March 1, 1997 under the Original Agreement, and that such assignment is irrevocable and unaffected by the amendment and restatement of the Original Agreement as effected hereby, and agrees and confirms that any products or services that have been or may be developed by the Company based upon such patents or patent applications are the property of the Company and are not subject to the provisions of Sections 2 and 3 hereof. 2.2 RIGHTS OF THE SCIENTIST TO EXECUTE AND DELIVER THIS AGREEMENT. The Scientist hereby represents and warrants to the Company that, from and after March 1, 1997, and as of the Effective Date, he (a) has full right and power to execute and deliver this Agreement, and has not assigned or otherwise transferred to any third party any rights that have been, or may be, assigned to the Company pursuant to this Agreement, and (b) is not subject to nor a party to any agreement or legal order or constraint that would be violated by his execution and delivery and performance of this Agreement. 2.3 EFFECT OF OTHER ASSIGNMENT AGREEMENTS. This Agreement will not govern the assignment by the Scientist to the Company of any intellectual property rights during his employment by the Company which assignment is otherwise the subject of a written employee invention assignment agreement between the Company and the Scientist in his capacity as an employee of the Company, and which assignment will be governed by the terms of such other agreement(s), if any. 3. TERM. The term of this Agreement will be from and including March 1, 1997 through and including the earliest of (a) the date agreed in writing by the Company and the Scientist, or (b) the date of the Scientist's death, or (c) 5:00 p.m. California time on March 1, 2007; provided that upon any termination hereof, except as may be otherwise specifically agreed in writing by the Company and the Scientist or their permitted successors, assigns or legal representatives, the rights of the parties accrued prior to the date of such termination, and the provisions of Sections 4 through 9 hereof will survive any such termination. -2- <PAGE> 4. FIRST RIGHT OF REFUSAL. During the term of this Agreement, the Scientist will promptly disclose in writing to the Company, in commercially reasonable detail, any Diagnostic Technology. Such disclosure will be considered to be Confidential Information of the Scientist. The Company will have sixty (60) days from and including the date of the Company's receipt of such disclosure to express in writing to the Scientist the Company's interest in obtaining from the Scientist an exclusive, worldwide license to practice, make or have made, use, sell, distribute, and license to others, any invention or discovery made by the Scientist within the Field covered by such disclosure. Any such written expression of interest by the Company to the Scientist will be considered to be Confidential Information of the Company. If by the end of such 60-day period the Company has not delivered to the Scientist the Company's written expression of such interest, the Company will have no further rights to the Diagnostic Technology covered by such particular disclosure, and the Scientist may thereafter enter into such agreement or agreements with such third party or parties as he desires, on such terms as he desires, with respect to such relevant Diagnostic Technology. If the Company does, within such 60-day period, deliver to the Scientist such written expression of the Company's interest in the Diagnostic Technology so disclosed, the Scientist and the Company will enter into a binding license agreement (each a "DIAGNOSTIC TECHNOLOGY LICENSE AGREEMENT"), having the terms set forth in Section 5 hereof, within ninety (90) days after the date such written expression of interest is delivered by the Company to the Scientist. 5. TERMS OF DIAGNOSTIC TECHNOLOGY LICENSE AGREEMENT(S). Each Diagnostic Technology License Agreement will contain customary and commercially reasonable provisions customary for the license of medical diagnostic technology in the United States, and will provide that, as consideration for the grant of an exclusive, worldwide license in perpetuity to the relevant Diagnostic Technology by the Scientist to the Company thereunder, the Company will pay to the Scientist or his assignee as will be specified in such Diagnostic Technology License Agreement, (a), as a license fee, a one-time cash payment equal to the total documented direct costs incurred by the Scientist or on his behalf related to the development of the licensed Diagnostic Technology, and (b) a running royalty, paid quarterly within forty-five (45) days after the end of the relevant quarter, equal to five percent (5%) of Net Sales of the Company from any products or services incorporating such Diagnostic Technology. 6. TITLE TO CERTAIN INVENTIONS, DISCOVERIES AND PATENTS. Unless otherwise agreed to by both parties, any invention, discoveries or patent rights made, conceived, derived, or otherwise reduced to practice by the Scientist, will be the property of the Scientist or his assignees subject to the rights of the Company under Sections 4 and 5 hereof with respect thereto. 7. PATENT COOPERATION. If the Company exercises its first right of refusal under Section 4 hereof as to the relevant Diagnostic Technology, the parties will consult with and cooperate with each other regarding the filing of all patent applications with respect to such relevant Diagnostic Technology. -3- <PAGE> 8. EFFECT OF AGREEMENT BY THE COMPANY WITH CHRONIX BIOMEDICAL. The Company and Chronix Biomedical, a company of which the Scientist is a principal ("CHRONIX"), are parties to a Technology Rights Agreement (the "CHRONIX AGREEMENT") of even date herewith by which the Company has a right of first refusal to license from Chronix, under terms identical to those described in Section 5 hereof, certain Diagnostic Technology that may be developed by Chronix during the term of the Chronix Agreement. In the event that any Diagnostic Technology is developed by the Scientist in the course of his employment by or consultancy for Chronix that becomes, by operation of law, including under any employee or consultancy invention assignment between the Scientist and Chronix, the property of Chronix, then such Diagnostic Technology, if licensed by the Company pursuant to its right of first refusal under the Chronix Agreement, will be licensed under the Chronix Agreement and not pursuant to this Agreement, and thus the Company will pay only one license fee and royalty therefor, to Chronix and not to the Scientist. 9. CONFIDENTIAL INFORMATION. The parties will maintain as confidential and will not use, except as permitted hereby, nor disclose to any third party except as may be required by law (and then with reasonable advance notice to the other party of such legally-required disclosure), all Confidential Information of the other party so long as it remains Confidential Information. 10. MISCELLANEOUS. 10.1 NOTICES. All notices required or permitted to be given under this Agreement will be given in writing and will be effective when either personally delivered (including delivery by FedEx or other courier), or when sent by facsimile, or deposited, postage prepaid, in the United States registered or certified mail, addressed as follows: To the Scientist: Howard B. Urnovitz, Ph.D. 1440 Fourth Street Berkeley, California 94710 Facsimile: ___-___-____ To the Company: Calypte Biomedical Corporation 1265 Harbor Bay Parkway Alameda, California 94502 Attn: Chief Executive Officer Facsimile: 510-814-8505 or such other address as either party may hereinafter specify by written notice to the other under this Section 10.1. Such notices and communications will be deemed effective on the date of delivery by hand or upon confirmed answerback by facsimile, or fourteen (14) days after having been sent by registered or certified mail. 10.2 ENTIRE AGREEMENT; AMENDMENT AND WAIVERS. This Agreement is the entire agreement between the Company and the Scientist with respect to the specific subject -4- <PAGE> matter hereof, superseding in their entirety all other or prior agreements or understandings between them with respect to the specific subject matter hereof, including without limitation the Original Agreement. This Agreement may not be modified, amended, or terminated, nor may any term hereof be waived, except by an instrument in writing, signed by the Company and the Scientist. No such waiver will operate as a waiver of, or estoppel with respect to, any other or subsequent matter. No failure to exercise and no delay in exercising any right, remedy, or power hereunder will operate as a waiver thereof, nor will any single or partial exercise of any right, remedy, or power hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, or power provided herein or by law or in equity. 10.3 SEVERABILITY; ENFORCEMENT. If any provision of this Agreement, or the application thereof to any person, place, or circumstance, is held by a court of competent jurisdiction to be invalid, unenforceable, or void, as written, in whole or in part, such provision will be deemed to be amended to the extent necessary to be enforceable and applied by such court in the broadest possible manner consistent with enforceability, and the remainder of this Agreement and such provisions as applied to other persons, places, and circumstances will remain in full force and effect. 10.4 ASSIGNMENT; BINDING EFFECT. This Agreement may not be assigned, nor may any of the Scientist's rights or obligations be delegated, by the Scientist. This Agreement may be assigned by the Company to any successor in business to the Company which purchases all or substantially all of the assets of the Company and which assumes in writing this Agreement and all obligations of the Company hereunder. This Agreement will be binding upon and will inure to the benefit of the parties and their respective successors, permitted assigns, and legal representatives, and upon the Scientist's heirs, executors and administrators, and will not benefit any person or entity other than the parties hereto and such specific persons so described. 10.5. REMEDIES. The parties agree that in the event of any breach or threatened breach of any of the covenants of the Scientist herein, the damage or imminent damage to the value and the goodwill of the Company's business will be irreparable and extremely difficult to estimate, making any remedy at law or in damages inadequate. Accordingly, the parties agree that the Company will be entitled to injunctive relief (including, without limitation, relief in the nature of a temporary restraining order) against the Scientist in the event of any breach or threatened breach of any such covenants by the Scientist, in addition to any other relief (including damages) available to the Company under this Agreement or under law. 10.6. GOVERNING LAW. The validity, interpretation, enforceability, and performance of this Agreement will be governed by and construed in accordance with the law of the State of California without regard to its principles of conflict of laws. THE SCIENTIST: CALYPTE BIOMEDICAL CORPORATION: /s/ Howard B. Urnovitz By: /s/ Nancy E. Katz - ------------------------------- ------------------------------- HOWARD B. URNOVITZ Name: Nancy E. Katz ----------------------------- Title: President/COO/CFO ---------------------------- -5- <PAGE> APPENDIX A PATENTS OWNED BY, OR ASSIGNED TO, CALYPTE BIOMEDICAL AS OF MARCH 1, 1997 BY HOWARD B. URNOVITZ, Ph.D. U.S. Patent No.: 5,516,638 Immunoassays for the Detection of Antibodies to Chlamydia Trachomatis in the Urine Issue Date: May 14, 1996 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-10.67 <SEQUENCE>5 <DESCRIPTION>EXHIBIT 10.67 <TEXT> <PAGE> Exhibit 10.67 TECHNOLOGY RIGHTS AGREEMENT This Technology Rights Agreement (the "AGREEMENT") is made effective as of March 1, 2000 (the "EFFECTIVE DATE"), by and between Calypte Biomedical Corporation ("CALYPTE"), a California corporation, and Chronix Biomedical, a California corporation ("CHRONIX"). 1. DEFINITIONS. Whenever used in this Agreement, the following terms will have the following meanings: 1.1 "CONFIDENTIAL INFORMATION" means all confidential or propriety information of Chronix or Calypte disclosed by one of them to the other in writing and reasonably identified in writing as confidential or proprietary, or reduced to writing, and so identified, within thirty (30) days after an oral disclosure, by either party to the other in connection with this Agreement. Confidential Information will not include: (a) information which is or which becomes publicly known through lawful means; or (ii) information which is lawfully disclosed by the disclosing party, or by a third party who rightfully possesses the information, to others or the other party without confidential or proprietary restriction. 1.2 "FIELD" means any urine-based medical diagnostic test. 1.3 "DIAGNOSTIC TECHNOLOGY" means any information, inventions, and discoveries made, conceived, derived, or otherwise reduced to practice by Chronix related to the Field. 1.4 "NET SALES" means total revenues received from sales of products or services to customers less any quantity discounts, rebates, sales taxes, and allowance for bad debts and returns. 2. RIGHTS OF THE PARTIES TO EXECUTE AND DELIVER THIS AGREEMENT. The parties hereby represent and warrant to each other that the representing party (a) has full right and power to execute and deliver this Agreement, and (b) is not subject to nor a party to any agreement or legal order or constraint that would be violated by the representing party's execution and delivery and performance of this Agreement. Chronix represents that it has not assigned or otherwise transferred to any third party any rights that may be assigned to Calypte pursuant to this Agreement. 3. TERM. <PAGE> The term of this Agreement will be from and including March 1, 2000 through and including the earliest of (a) the date agreed in writing by Calypte and Chronix, or (b) 5:00 p.m. California time on March 1, 2007; provided that upon any termination hereof, except as may be otherwise specifically agreed in writing by Calypte and Chronix or their permitted successors, assigns or legal representatives, the rights of the parties accrued prior to the date of such termination, and the provisions of Sections 4 through 9 hereof, will survive any such termination. 4. FIRST RIGHT OF REFUSAL. During the term of this Agreement, Chronix will promptly disclose in writing to Calypte, in commercially reasonable detail, any Diagnostic Technology. Such disclosure will be considered to be Confidential Information of Chronix. Calypte will have sixty (60) days from and including the date of Calypte's receipt of such disclosure to express in writing to Chronix Calypte's interest in obtaining from Chronix an exclusive, worldwide license to practice, make or have made, use, sell, distribute, and license to others, any invention or discovery made by Chronix within the Field covered by such disclosure. Any such written expression of interest by Calypte to Chronix will be considered to be Confidential Information of Calypte. If by the end of such 60-day period Calypte has not delivered to Chronix Calypte's written expression of such interest, Calypte will have no further rights to the Diagnostic Technology covered by such particular disclosure, and Chronix may thereafter enter into such agreement or agreements with such third party or parties as he desires, on such terms as he desires, with respect to such relevant Diagnostic Technology. If Calypte does, within such 60-day period, deliver to Chronix such written expression of Calypte's interest in the Diagnostic Technology so disclosed, Chronix and Calypte will enter into a binding license agreement (each a "DIAGNOSTIC TECHNOLOGY LICENSE AGREEMENT"), having the terms set forth in Section 5 hereof, within ninety (90) days after the date such written expression of interest is delivered by Calypte to Chronix. 5. TERMS OF DIAGNOSTIC TECHNOLOGY LICENSE AGREEMENT(S). Each Diagnostic Technology License Agreement will contain customary and commercially reasonable provisions customary for the license of medical diagnostic technology in the United States, and will provide that, as consideration for the grant of an exclusive, worldwide license in perpetuity to the relevant Diagnostic Technology by Chronix to Calypte thereunder, Calypte will pay to Chronix, as will be specified in such Diagnostic Technology License Agreement, (a), as a license fee, a one-time cash payment equal to the total documented direct costs incurred by Chronix or on Chronix's behalf related to the development of the licensed Diagnostic Technology, and (b) a running royalty, paid quarterly within forty-five (45) days after the end of the relevant quarter, equal to five percent (5%) of Net Sales of Calypte from any products or services incorporating such Diagnostic Technology. 6. TITLE TO CERTAIN INVENTIONS, DISCOVERIES AND PATENTS. Unless otherwise agreed to by both parties, any invention, discoveries or patent rights made, conceived, derived, or otherwise reduced to practice by Chronix, will be the property of Chronix subject to the rights of Calypte under Sections 4 and 5 hereof with respect thereto. -2- <PAGE> 7. PATENT COOPERATION. If Calypte exercises its first right of refusal under Section 4 hereof as to the relevant Diagnostic Technology, the parties will consult with and cooperate with each other regarding the filing of all patent applications with respect to such relevant Diagnostic Technology. 8. EFFECT OF AGREEMENT BY THE COMPANY WITH HOWARD B. URNOVITZ. Calypte and Howard B. Urnovitz, Ph.D., who is at the date hereof both a principal of Chronix and Chief Scientific Officer of Calypte, are parties to a Restated Technology Rights Agreement (the "CALYPTE AGREEMENT") of even date herewith by which Calypte has a right of first refusal to license from Dr. Urnovitz, under terms identical to those described in Section 5 hereof, certain Diagnostic Technology that may be developed by Dr. Urnovitz during the term of the Calypte Agreement and that does not otherwise belong to Calypte under any employee invention assignment agreements between Calypte and Dr. Urnovitz. In the event that any Diagnostic Technology is developed by Dr. Urnovitz in the course of his employment by or consultancy for Chronix that becomes, by operation of law, including under any employee or consultancy invention assignment between Dr. Urnovitz and Chronix, the property of Chronix, then such Diagnostic Technology, if licensed by Calypte pursuant to its right of first refusal under this Agreement, will be licensed under this Agreement and not pursuant to the Calypte Agreement, and thus Calypte will pay only one license fee and royalty therefor, to Chronix and not to Dr. Urnovitz; Chronix is aware that the Calypte Agreement contains provisions identical in substantive respect to this Section 8. 9. CONFIDENTIAL INFORMATION. The parties will maintain as confidential and will not use, except as permitted hereby, nor disclose to any third party except as may be required by law (and then with reasonable advance notice to the other party of such legally-required disclosure), all Confidential Information of the other party so long as it remains Confidential Information. 10. MISCELLANEOUS. 10.1 NOTICES. All notices required or permitted to be given under this Agreement will be given in writing and will be effective when either personally delivered (including delivery by FedEx or other courier), or when sent by facsimile, or deposited, postage prepaid, in the United States registered or certified mail, addressed as follows: To Chronix: Chronix Biomedical 1440 Fourth Street Berkeley, California 94710 Attn: Chief Executive Officer Facsimile: ___-___-____ To Calypte: Calypte Biomedical Corporation 1265 Harbor Bay Parkway -3- <PAGE> Alameda, California 94502 Attn: Chief Executive Officer Facsimile: 510-814-8505 or such other address as either party may hereinafter specify by written notice to the other under this Section 10.1. Such notices and communications will be deemed effective on the date of delivery by hand or upon confirmed answerback by facsimile, or fourteen (14) days after having been sent by registered or certified mail. 10.2 ENTIRE AGREEMENT; AMENDMENT AND WAIVERS. This Agreement is the entire agreement between Calypte and Chronix with respect to the specific subject matter hereof, superseding in their entirety all other or prior agreements or understandings between them with respect to the specific subject matter hereof. Chronix acknowledges that Calypte and Howard B. Urnovitz, Ph.D., a principal of Chronix, are parties to a Restated Technology Rights Agreement relating to Diagnostic Technology, a copy of which Restated Technology Rights Agreement has been furnished by Calypte to Chronix; the terms and conditions of this Agreement will control the relationship of Chronix and Calypte with respect to the matters described herein. This Agreement may not be modified, amended, or terminated, nor may any term hereof be waived, except by an instrument in writing, signed by Calypte and Chronix. No such waiver will operate as a waiver of, or estoppel with respect to, any other or subsequent matter. No failure to exercise and no delay in exercising any right, remedy, or power hereunder will operate as a waiver thereof, nor will any single or partial exercise of any right, remedy, or power hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, or power provided herein or by law or in equity. 10.3 SEVERABILITY; ENFORCEMENT. If any provision of this Agreement, or the application thereof to any person, place, or circumstance, is held by a court of competent jurisdiction to be invalid, unenforceable, or void, as written, in whole or in part, such provision will be deemed to be amended to the extent necessary to be enforceable and applied by such court in the broadest possible manner consistent with enforceability, and the remainder of this Agreement and such provisions as applied to other persons, places, and circumstances will remain in full force and effect. 10.4 ASSIGNMENT; BINDING EFFECT. This Agreement may be assigned by Calypte or Chronix to any successor in business to Calypte or Chronix, as the case may be, which purchases all or substantially all of the assets of Calypte or Chronix, as the case may be, and which assumes in writing this Agreement and all obligations of Calypte or Chronix, as the case may be, hereunder. This Agreement will be binding upon and will inure to the benefit of the parties and their respective successors, permitted assigns, and legal representatives, and will not benefit any person or entity other than the parties hereto and such specific persons so described. 910.5. [SIC] REMEDIES. The parties agree that in the event of any breach or threatened breach of any of the covenants of Chronix herein, the damage or imminent damage to the value and the goodwill of Calypte's business will be irreparable and extremely difficult to estimate, making any remedy at law or in damages inadequate. Accordingly, the parties agree that Calypte will be entitled to injunctive relief (including, without limitation, relief in the nature of a temporary restraining order) against Chronix in the event of any breach or threatened breach of -4- <PAGE> any such covenants by Chronix, in addition to any other relief (including damages) available to Calypte under this Agreement or under law. -5- <PAGE> 10.6. GOVERNING LAW. The validity, interpretation, enforceability, and performance of this Agreement will be governed by and construed in accordance with the law of the State of California without regard to its principles of conflict of laws. CHRONIX BIOMEDICAL: CALYPTE BIOMEDICAL CORPORATION: By: /s/ William A. Boeger By: /s/ Nancy E. Katz -------------------------- -------------------------- Name: William A. Boeger Name: Nancy E. Katz ----------------------- ----------------------- Title: President Title: President / COO/CFO ----------------------- ----------------------- -6- </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-10.68 <SEQUENCE>6 <DESCRIPTION>EXHIBIT 10.68 <TEXT> <PAGE> Exhibit 10.68 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT FOR PROJECT SENTINEL BETWEEN CLINICAL REFERENCE LABORATORY, INC. AND CALYPTE BIOMEDICAL CORPORATION - -------------------------------------------------------------------------------- = CONFIDENTIAL = - -------------------------------------------------------------------------------- The symbol '[**]' is used to indicate that a portion of the exhibit has been omitted and filed separately with the Committee. <PAGE> TABLE OF CONTENTS ----------------- <TABLE> <CAPTION> SECTION PAGE - ------- ---- <S> <C> 1 Structure of Relationship................................................................................1 1.1 General.........................................................................................1 1.2 Duties of CRL...................................................................................2 1.3 Duties of Calypte...............................................................................4 1.4 Supply of the Reagents..........................................................................4 1.5 Pricing and Allocation of Revenue...............................................................4 1.6 Independent Management..........................................................................4 1.7 Marketing and Promotion.........................................................................4 2 Duration of Agreement....................................................................................4 2.1 Term............................................................................................4 2.2 Termination by Mutual Consent...................................................................4 2.3 Termination for Cause...........................................................................5 2.4 Completion of Testing...........................................................................5 2.5 Survival of Rights and Obligations..............................................................5 3 Non-Competition and Exclusivity..........................................................................5 3.1 Limitation on Competing Activities..............................................................5 3.2 Use of Trademarks...............................................................................6 3.3 License of Technology...........................................................................6 4 Confidentiality of Information...........................................................................6 4.1 Non-Disclosure of Confidential Information......................................................6 4.2 Exceptions......................................................................................6 4.3 Return or Destruction of Confidential Information...............................................7 4.4 External Communications.........................................................................7 5 Insurance and Indemnification............................................................................7 5.1 Insurance.......................................................................................7 5.2 Indemnification.................................................................................7 6 Representations and Warranties...........................................................................8 6.1 Corporate Status................................................................................8 6.2 Binding Effect..................................................................................8 6.3 No Default......................................................................................8 6.4 Effect of Agreement.............................................................................8 7 Miscellaneous............................................................................................9 7.1 Governing Law...................................................................................9 </TABLE> - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE i THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- <TABLE> <S> <C> 7.2 Entire Agreement................................................................................9 7.3 Severability....................................................................................9 7.4 Force Majeure...................................................................................9 7.5 Non-Assignment..................................................................................9 7.6 Amendments.....................................................................................10 7.7 Notices........................................................................................10 7.8 Waivers........................................................................................10 7.9 Captions.......................................................................................10 7.10 Proper Business Practices......................................................................10 7.11 Counterparts...................................................................................10 SCHEDULE 1.4 INITIAL PRICES FOR REAGENTS....................................................................11 SCHEDULE 1.5 PRICING AND ALLOCATION OF REVENUE..............................................................12 EXHIBIT A PROJECT SENTINEL DESCRIPTION...................................................................13 EXHIBIT B FORM OF TESTING AGREEMENT......................................................................15 </TABLE> - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE ii THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT ------------------------------------------ THIS EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT (the "AGREEMENT") is made as of January 21, 2000 (the "EFFECTIVE DATE") between CLINICAL REFERENCE LABORATORY, INC., a Kansas corporation ("CRL"), and CALYPTE BIOMEDICAL CORPORATION, a Delaware corporation ("CALYPTE") (collectively, the "PARTIES"). R E C I T A L S --------------- A. Calypte is a manufacturer of in vitro diagnostic tests, in particular urine tests for the detection of HIV-1 antibodies, and is the owner of certain proprietary technology related to such tests (the "TECHNOLOGY"). B. CRL is a provider of in vitro diagnostic testing services, licensed throughout the United States to perform HIV-1 and other tests. C. The Parties have identified a commercial opportunity to provide to clinics, physicians and other healthcare providers (collectively, "PROVIDERS") a national urine testing service for the diagnosis of HIV-1 and other STD infections ("PROJECT SENTINEL"), more fully explained in Exhibit A hereto. The Parties acknowledge that Project Sentinel shall only include offering such tests to Providers and not the general public, as neither Party is in the business of providing, or has the capability to provide, pre- and post-testing counseling to the general public nor proper reporting of test results to governmental authorities as required by applicable law. D. The Parties desire to set forth the terms and conditions upon which they shall act as independent contractors on an exclusive basis to pursue Project Sentinel. A G R E E M E N T S ------------------- NOW, THEREFORE, the Parties agree as follows: 1 STRUCTURE OF RELATIONSHIP 1.1 GENERAL. Subject to the terms and conditions hereof, (i) Calypte hereby engages the services of CRL as specified herein and CRL undertakes to provide such services as an independent contractor, (ii) Calypte undertakes to perform the services specified herein, and (iii) Calypte shall promote urine STD clinical testing services such as those embodied in Project Sentinel exclusively with CRL, as provided herein to permit CRL to provide such services. This Agreement creates contractual rights between the Parties only, and shall not be deemed to create or give rise to a partnership, trust, joint venture, or other legal entity. For all purposes, the Parties shall be considered as independent contractors and shall not be deemed to be - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 1 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- partners, joint venturers, agents or affiliates of each other. This Agreement does not grant, and no Party shall have, any authority, express or implied, to create or assume any obligation, enter into any agreement, make any representation or warranty, file any document with any governmental body or serve or accept legal process on behalf of the other, to settle any claim by or against the other, or to bind or otherwise render the other liable in any way. 1.2 DUTIES OF CRL. CRL shall use commercially reasonable efforts to provide the following services to Calypte for Project Sentinel: 1.2.1 Assemble Collection Kits (as defined in Exhibit A hereto) and distribute Collection Kits to Providers. 1.2.2 Obtain a properly and fully completed, executed Testing Agreement (in substantially the form as set forth in Exhibit B hereto) from Calypte, Wampole Laboratories ("WAMPOLE") or Providers prior to receiving, administratively processing, testing or reporting the results of Specimens (as defined in Exhibit A hereto). 1.2.3 Receive and administratively process all Specimens in accordance with CRL's then-current standard procedures, PROVIDED that each Specimen shall only be identified by bar code number as further provided in Exhibit A hereto. 1.2.4 Perform requested diagnostic tests on Specimens in accordance with Calypte's written directions (which must be commercially reasonable and satisfactory to CRL), applicable law and regulations, and standard clinical laboratory practices. 1.2.5 Report Specimen test results to the relevant Provider via fax, e-mail or as directed by the Provider. 1.2.6 Assess and implement sampling and testing logistics for chlamydia and gonorrhea. 1.2.7 Bill customers pursuant to Section 1.5 hereto, PROVIDED that Calypte acknowledges that CRL shall not be responsible for risk of non-payment or collection efforts, and that CRL accordingly does not guarantee payment by Providers or any other party. CRL shall, however, use commercially reasonable efforts to obtain payment. If CRL does not pursue payment, then Calypte reserves the right to pursue payment at its sole expense and for its sole benefit. 1.2.8 Provide sales reports to Calypte within thirty (30) working days of the end of each month and apportion revenues for a given month within forty five (45) working days of the end of that month between the Parties in accordance with Section 1.5 hereof. 1.2.9 Such other duties as the Parties may mutually agree in writing to be performed by CRL. - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 2 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- 1.3 DUTIES OF CALYPTE. Calypte shall use commercially reasonable efforts to perform the following services for Project Sentinel: 1.3.1 Manufacture and provide HIV-1 Urine EIA and Urine Western Blot (the "REAGENTS") for supply to CRL pursuant to Section 1.4 hereof. Calypte warrants that the Reagents, when used according to the directions printed in the then-current package insert, shall meet the performance claims listed therein and shall be fit for the purposes intended for Project Sentinel. 1.3.2 Create, ensure compliance with applicable law and arrange for printing of all collateral materials including, but not limited to, brochures and advertising materials. 1.3.3 Use commercially reasonable efforts to develop additional urine-based testing methods and supplemental applications for urine STD testing. Upon the availability of such new tests, the parties shall negotiate in good faith the terms by which these new tests would be incorporated into Project Sentinel. 1.3.4 Conduct, oversee and bear all costs associated with telemarketing for Project Sentinel. 1.3.5 Ensure that CRL is the exclusive provider of the services specified in Section 1.2 for Project Sentinel. 1.3.6 Such other duties as the Parties may mutually agree in writing to be performed by Calypte. 1.4 SUPPLY OF THE REAGENTS [**] 1.5 PRICING AND ALLOCATION OF REVENUE. The initial pricing for the Collection Kits and testing services to be provided under Project Sentinel is set forth in Schedule 1.5 hereto. Given that Project Sentinel would not be possible without the contributions of each of the Parties, the Parties shall jointly make all pricing determinations for the products and services provided to Providers under this Agreement, including without limitation any amendment to Schedule 1.5 during the term hereof, subject to Section 1.4 hereof. CRL shall, on a monthly basis, allocate the revenues received under Project Sentinel in the manner set forth in Schedule 1.5 hereto and Section 1.2.8 hereof. Any adjustments to such allocations shall require the mutual written agreement of both Parties, PROVIDED that any increase in customer pricing, without a corresponding written agreement to the contrary, shall result in a proportional increase for all areas of allocation, subject to Section 1.4 hereof. CRL may offset against amounts due to Calypte pursuant to this Section 1.5 for amounts payable by Calypte to CRL hereunder. 1.6 INDEPENDENT MANAGEMENT. Except as expressly provided in this Agreement, CRL shall have exclusive decision-making authority relating to all services provided by CRL hereunder and Calypte shall have exclusive decision-making authority relating to all services performed by Calypte hereunder. 1.7 MARKETING AND PROMOTION. [**] 2 DURATION OF AGREEMENT 2.1 TERM. This Agreement shall be effective as of the Effective Date and shall be valid and continue in full force and effect for a period of five (5) years or until terminated in accordance with Sections 2.2 or 2.3 hereof. After the expiration of the initial five (5) year - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 3 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- period, this Agreement shall automatically renew for additional terms of one (1) year each, unless either party provides written notice of its intent not to renew this Agreement at least ninety (90) days prior to the expiration of the then current term. 2.2 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated at any time by the mutual written agreement of the Parties. 2.3 TERMINATION FOR CAUSE. Either Party may terminate this Agreement in the event that the other Party is in material breach of a material obligation under this Agreement and such breach is not remedied within sixty (60) calendar days after written notice of such breach is provided by the non-breaching Party to the Party in breach. 2.4 COMPLETION OF TESTING. Upon the expiration or termination of this Agreement for any reason, (i) Calypte acknowledges and agrees that CRL shall have the right and option to continue testing of Specimens, including without limitation use of the Technology, for a reasonable period of time (which at CRL's election may be at least until the expiration date of Collection Kits distributed prior to the effective date of the expiration or termination of this Agreement) to permit CRL to complete testing of Specimens received in Collection Kits remaining with Providers, (ii) CRL shall not be obligated to, but in its sole discretion may, recall Collection Kits from Providers at any time after sixty (60) calendar days from the expiration or termination date of this Agreement, Calypte shall within thirty (30) working days of CRL's invoice refund the portion of allocated revenues received by Calypte related to such Collection Kits, (iii) CRL shall, as commercially reasonable, immediately discontinue the assembly and distribution of Collection Kits (as described in Exhibit A) which are specifically designed for use solely with Project Sentinel, and (iv) Calypte shall at CRL's request repurchase Reagents not used by CRL at the price paid by CRL (PROVIDED that CRL shall use commercially reasonable efforts to (A) utilize all Reagents prior to requesting any such repurchase, and (B) notify Calypte as soon as is reasonably possible of any such repurchase, with an estimate of the amount of such repurchase). 2.5 SURVIVAL OF RIGHTS AND OBLIGATIONS. The rights and obligations of the Parties pursuant to Sections 2.4, 3.3, 4 and 5.2 hereof shall survive and continue after the termination of this Agreement. Termination of this Agreement shall not relieve the Parties of any liability which arose hereunder prior to the date of such termination nor preclude any Party from pursuing all rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement, nor prejudice a Party's right to obtain performance of any obligation provided for in this Agreement, which right expressly survives termination. 3 NON-COMPETITION AND EXCLUSIVITY 3.1 LIMITATION ON COMPETING ACTIVITIES. [**] - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 4 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- 3.2 USE OF TRADEMARKS. Calypte at its cost shall obtain and maintain U.S. Federal trademark or service mark registrations for "SENTINEL" and/or any other trademarks, service marks or trade names which the parties shall mutually determine to use for the promotion and operation of Project Sentinel (collectively, the "MARKS"). During the term of this Agreement and the completion period specified in Section 2.4 hereof, Calypte grants to CRL an exclusive (except as to Calypte and Wampole), royalty-free license to use the Marks for Project Sentinel. Calypte warrants to CRL that (subject to obtaining such registrations) it owns or will own the Marks and has or will have the right to license their use to CRL, and that CRL's use of the Marks shall not infringe the proprietary rights of any third party. Each of the parties undertakes and agrees that, except as otherwise may be agreed by them in writing, neither party shall use the Marks (i) for any purpose during the term hereof other than Project Sentinel, and (ii) for any purpose whatsoever after the expiration or termination of this Agreement. For the avoidance of doubt, Calypte agrees to not use the Marks after the expiration or termination of this Agreement except with the written consent of CRL. 3.3 LICENSE OF TECHNOLOGY. During the term of this Agreement and the completion period specified in Section 2.4 hereof, Calypte grants to CRL a non-exclusive, royalty-free license to use the Technology for Project Sentinel. Calypte warrants to CRL that to the best of its knowledge it owns the Technology and has the right to license its use to CRL, and that CRL's use of the Technology shall not infringe the proprietary rights of any third party. - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 5 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- 4 CONFIDENTIALITY OF INFORMATION 4.1 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Each Party shall maintain in confidence, and shall not use, disseminate or disclose for any purpose whatsoever other than for the purposes of this Agreement, any and all information (herein "CONFIDENTIAL INFORMATION"), whether oral or written (including, without limitation, in electronic form), furnished to it pursuant to this Agreement, or in connection with the transactions contemplated by this Agreement including, but not limited to, technical information, know-how, customer lists, trade secrets, business strategy, financial data, development and manufacturing processes and techniques, and all other confidential and proprietary information of whatever description, and shall cause, instruct and oblige its directors, officers, employees and agents and any other person acting in concert with it or on its behalf and having access to such Confidential Information to keep the same in confidence. 4.2 EXCEPTIONS. Notwithstanding the foregoing, no Party shall be obliged to keep in confidence or incur any liability for disclosure of Confidential Information received which (i) was already known to the recipient at the time of its receipt, (ii) was permitted in writing to be disclosed by the party from which it was obtained, (iii) was within the public domain at the time of its disclosure to the recipient, (iv) comes into the public domain without any breach of this Agreement, (v) becomes known or available to the recipient other than as a result of any breach of this Agreement by the recipient, or (vi) is validly required to be disclosed by any applicable law, court or regulatory or examining authority. Furthermore, in the event that a Party or anyone to whom a party transmits the Confidential Information becomes legally compelled to disclose any of the Confidential Information, such Party shall provide the other Party with prompt notice of such so that the other Party may seek an appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such a remedy is not obtained, each Party shall furnish only that portion of the Confidential Information that it is advised by written opinion of its legal counsel to be legally required and shall exercise commercially reasonable efforts to obtain such reliable assurance that confidential treatment shall be accorded to the Confidential Information. 4.3 RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION. Upon the expiration or termination of this Agreement, each Party agrees to return any Confidential Information and all copies thereof at the written request of the Party which furnished such Confidential Information, or shall procure that all tangible forms of such Confidential Information are destroyed. 4.4 EXTERNAL COMMUNICATIONS. Except as reasonably necessary to effect a Party's rights and obligations hereunder, without the prior written consent of the other Party, each Party, its agents, representatives and employees shall not disclose to any person or entity the terms, conditions or other facts with respect to this Agreement, the collaboration which is the subject hereof, or any transactions contemplated hereby. However, either party is free to issue and may disclose marketing or public relations information in an effort to further or enhance the marketing/public relations aspect of Project Sentinel. Such disclosing party shall - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 6 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- provide a copy of any such information to the other party before any information is disclosed to a non-party. 5 INSURANCE AND INDEMNIFICATION 5.1 INSURANCE. Each Party shall maintain policies of insurance (including without limitation liability, auto, workers compensation and professional negligence coverages) reasonably and prudently required for the conduct of their respective business, as determined by the individual Parties. 5.2 INDEMNIFICATION. Each Party (for purposes of this Section 5.2, an "INDEMNIFYING PARTY") shall, to the extent permitted by applicable law, defend, indemnify, and hold harmless the other Party and its respective officers, directors, shareholders, employees, agents, independent contractors, representatives and affiliates (for purposes of this Section 5.2, collectively the "INDEMNIFIED PERSONS") from and against any loss, damage, liability, cost or expense, including without limitation reasonable attorneys' fees and disbursements incurred or suffered by the Indemnified Persons, arising in connection with: 5.2.1 Any breach of a representation or warranty of the Indemnifying Party as set forth herein; 5.2.2 Any breach by the Indemnifying Party of any of its covenants, or failure by the Indemnifying Party to perform any of its agreements or obligations, as set forth in this Agreement; and 5.2.3 Claims or demands arising out of or related to any fraud, bad faith, willful misconduct or negligence of the Indemnifying Party or any of its affiliates, respectively, or their respective employees, agents or representatives, in connection with this Agreement. 6 REPRESENTATIONS AND WARRANTIES Each Party represents and warrants to the other Party, as of the Effective Date, that: 6.1 CORPORATE STATUS. Such Party is a corporation duly incorporated and organized and validly existing in all respects under the laws of the jurisdiction of its incorporation, with full power and authority to enter into, execute, deliver and perform its obligations under this Agreement and to own its assets and to carry on its business as it is now being conducted, and as currently planned to be conducted, and no action has been taken or threatened (whether by such party or any third party) for its liquidation, bankruptcy, receivership or analogous process. - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 7 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- 6.2 BINDING EFFECT. Such Party's execution and delivery of, and the performance of its obligations under, this Agreement has been duly and validly authorized, and each of its obligations hereunder constitutes its valid, legal and binding obligation enforceable against such Party in accordance with such obligation's terms. 6.3 NO DEFAULT. Such Party is not in violation of or default under any term of its articles of incorporation or analogous charter documents (as applicable) or any provision of any agreement to which it is a party or by which any of its assets or properties is bound, or to its knowledge any provision of any judgment, decree, order, writ, statute, rule or regulation applicable to it, which violation or default would materially and adversely affect its performance hereunder. 6.4 EFFECT OF AGREEMENT. The execution and delivery by such Party of this Agreement, and the performance or observance of any of its obligations hereunder, does not and will not conflict with, nor does it and nor will it result in any violation of or default under, any agreement to which it is a party or by which any of its assets or properties is bound, nor to its knowledge any provision of any judgment, order, decree, writ, statute, rule or regulation applicable to it, which violation or default would materially and adversely affect its business, assets liabilities, financial condition or prospects. 7 MISCELLANEOUS 7.1 GOVERNING LAW. This Agreement and the documents to be entered into pursuant to it shall be deemed to have been made in the State of Kansas and shall be governed by and construed and enforced in accordance with, the internal laws of the State of Kansas. 7.2 ENTIRE AGREEMENT. This Agreement, including the Schedules and Exhibits attached hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes and replaces any and all previous negotiations, understandings, correspondence, commitments and agreements, oral or written, with respect to such subject matter. 7.3 SEVERABILITY. Any provision of this Agreement which shall be held to be invalid, illegal, or unenforceable in any respect shall be ineffective to the extent of such invalidity, illegality or unenforceability only, without affecting or impairing in any way the remaining provisions hereof. If at any time any provision of this Agreement is held to be invalid, illegal, or unenforceable, then the Parties shall negotiate in good faith to modify such provision so that it is valid, legal and enforceable, and has the same intended economic effect as the original provision. 7.4 FORCE MAJEURE. A Party shall not be liable to the other Party for failure to perform any part of this Agreement, with the exception of payment obligations, if such failure results from an act of God, war conditions, revolt, revolution, sabotage, government, state or municipal - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 8 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- regulations or actions, embargo, fire, strike, or other labor trouble, or any cause beyond such Party's reasonable control. Upon the occurrence of any such event which results in, or will result in, delay or failure to perform according to the terms of this Agreement, the Party whose performance is delayed or prevented shall immediately give notice to the other Party of such occurrence and the effect and/or anticipated effect of such occurrence on the performance of such Party. The Party whose performance is so affected shall use commercially reasonable efforts to minimize disruptions in its performance and to resume full performance of its obligations under this Agreement as soon as possible. 7.5 NON-ASSIGNMENT. No Party may assign this Agreement or rights or obligations hereunder, in whole or in part, without the written consent of the other Party, which consent shall not be unreasonably withheld, PROVIDED that either Party may transfer, assign and/or delegate its rights and obligations hereunder to the purchaser of substantially all of its assets (which for the avoidance of doubt shall permit the acquisition of a controlling interest in the equity securities of either Party by any person or entity and/or the merger of either Party with any person or entity without the consent of the other Party) if such purchaser undertakes in writing to the other Party hereto to assume, observe and perform the obligations of such assigning Party, and such assigning Party remains liable to the other Party hereto for the full performance of such obligations. This Agreement shall be binding on and shall inure to the benefit of any and all successors and permitted assigns of either Party. 7.6 AMENDMENTS. No amendment, modification, revision or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by both Parties hereto. 7.7 NOTICES. All notices under this Agreement shall be in writing and given in person, first class registered mail or by Federal Express, Airborne or other reputable delivery service, delivery costs prepaid, addressed to the Parties at the addresses specified on the last page hereof, or to such other address of which either Party may notify the other pursuant to this provision. Any such notice or communication may also be given by facsimile or other electronic communication to the appropriate designation with confirmation of receipt. Notices sent by mail shall be effective upon receipt; notices given by hand, delivery service, fax, or other electronic communication shall be effective when delivered and with confirmation of receipt. 7.8 WAIVERS. A Party shall not be deemed to have waived any right, power or privilege under this Agreement unless such waiver is in writing and signed by such Party. No waiver shall be deemed to be a continuing waiver unless so stated in writing. 7.9 CAPTIONS. The captions appearing in this Agreement are inserted only as a matter of convenience and as a reference and in no way define, limit or describe the scope or intent of this Agreement. - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 9 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- 7.10 PROPER BUSINESS PRACTICES. No Party shall pay, promise, offer or authorize payment of anything of value in any form to any person or organization, either directly or indirectly, through an agent, representative, subcontractor or other third party, to obtain or retain business, where such payment, promise, offer or authorization is contrary to applicable law. Each Party shall comply with all applicable laws and regulations in the performances of its duties under this Agreement. 7.11 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, CRL and Calypte have executed this Agreement as of the date first written above. CLINICAL REFERENCE LABORATORY, INC. CALYPTE BIOMEDICAL CORPORATION BY: /s/ Timothy S. Sotos BY: /s/ Nancy E. Katz ------------------------- ------------------------------- Timothy Sotos Nancy Katz Chairman & CEO President ADDRESS: 8433 Quivera Road ADDRESS: 1265 Harbor Bay Parkway Lenexa, Kansas 66215 Alameda, CA 94502 FAX: (913) 492-2057 FAX: (510) 814-8408 - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 10 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- SCHEDULE 1.4 ------------ INITIAL PRICES FOR REAGENTS [**] SCHEDULE 1.5 ------------ PRICING AND ALLOCATION OF REVENUE [**] EXHIBIT A --------- PROJECT SENTINEL DESCRIPTION [**] EXHIBIT B --------- TESTING AGREEMENT REGARDING SENTINEL STD-TM- TESTING SERVICES The undersigned agrees as follows: - - The obligation of the Sentinel-TM- STD Testing Service is limited to the reporting of test results. Pre- and post-test counseling of patients is the sole responsibility of the party identified below. - - It is the sole responsibility of the party identified below to comply with local laws and regulations regarding the reporting of transmissible diseases to health authorities. - - The party identified below hereby certifies that it is authorized by competent authorities to order HIV antibody and STD testing. - - The party identified below hereby certifies that it is solely responsible for compliance with applicable laws and regulations regarding informed consent and confidentiality. - - The party identified below acknowledges that it will receive results that are identified only by bar-code number, and agrees not to submit samples identified in any manner by patient name. - - The party identified below accepts sole responsibility for compliance with sample collection and transport instructions, and agrees to collect and transport samples only with the materials provided. - - The party identified below agrees to purchase the urine testing services according to the pricing and delivery schedule indicated below. Services will be invoiced monthly based for kits shipped in that month, and payment will be made within 30 days of invoicing. Applicable sales taxes will be charged on the invoice. - - Kits which are unused or expired are not eligible for reimbursement or replacement. - - The party identified below understands that the Sentinel-TM- STD Testing Service is intended for, and priced for, a typical mix of positive and negative HIV antibody samples. The use of the Service purely as a means of confirming positive samples is contrary to the spirit of the Service, and CRL reserves the right to decline future orders from institutions that, in CRL's sole opinion, misuse the Service in this manner. <TABLE> <CAPTION> NUMBER OF SAMPLE FREQUENCY OF TEST SERVICE COLLECTION KITS PRICE SHIPMENT - ------------ --------------- ----- -------- <S> <C> <C> <C> HIV-1 Antibody Only 25 550.00 __ this order only ________/month HIV-1 Antibody Only 100 2,100.00 __ this order only ________/month HIV-1 Antibody, Chlamydia and Gonorrhea 25 2,250.00 __ this order only ________/month HIV-1 Antibody, Chlamydia and Gonorrhea 100 7,500.00 __ this order only ________/month Chlamydia and Gonorrhea 25 1,750.00 __ this order only ________/month Chlamydia and Gonorrhea 100 6,000.00 __ this order only ________/month </TABLE> Purchase Order No._______________________ - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 11 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- Clinical Reference Laboratories (CRL) agrees as follows: 1) CRL will process properly collected samples on a timely basis, and make every effort to report results (including HIV-1 Antibody Western Blot results if appropriate) within three working days of receipt of samples, subject to delays beyond its control. 2) CRL will report results electronically according to the mechanism identified below. 3) CRL will report results only by sample bar-code number. 4) CRL reserves the right to decline future orders from any Institution. 5) CRL shall ship collection kits with no less than 9 month remaining shelf life. - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 12 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. <PAGE> - -------------------------------------------------------------------------------- EXHIBIT B TESTING AGREEMENT REGARDING SENTINEL-TM- STD TESTING SERVICES SHIP TO: Company _____________________________________________________ Contact Name _____________________________________________________ Address _____________________________________________________ _____________________________________________________ City ______________________ State_________ Zip____________ ( ) ( ) - ------------------- --------------------- ------------------------ Telephone Facsimile E-mail - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - BILL TO: Company _____________________________________________________ Contact Name _____________________________________________________ Address _____________________________________________________ _____________________________________________________ City ______________________ State_________ Zip____________ ( ) ( ) - ------------------- --------------------- ------------------------ Telephone Facsimile E-mail - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - BUSINESS INFOR: Please check one: ____INDIVIDUAL ____PARTNERSHIP ____CORPORATION FEDERAL TAX ID #/SOCIAL SECURITY # __________________ STATE INCORP.__________ TYPE OF BUSINESS ____________________________ DATE STARTED _______________ MAJOR VENDOR REFERENCE: NAME______________________________________CONTACT_______________________ ADDRESS___________________________________PHONE_________________________ CITY________________________________STATE______________ZIP______________ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - TEST RESULTS ARE TO BE COMMUNICATED EXCLUSIVELY TO THE ATTENTION OF: Name__________________________________ Title________________________ Address______________________________________ _____________________________________________ City________________ State_________ Zip______ Telephone (_____)_______________ RESULTS ARE TO BE TRANSMITTED VIA Facsimile No. ( ) --- -------------------- (CHOOSE ONE) E-mail address --- -------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The undersigned is authorized on behalf of the Institution named above to agree, and hereby does agree, to the terms and conditions of this Sentinel-TM- STD Testing Agreement ____________________ ________________________________________________________ Name State Medical License No., if Institution is a physician Title_________________________________________ ______________________________________________ ___________________________ Signature Date - -------------------------------------------------------------------------------- EXCLUSIVE INDEPENDENT CONTRACTOR AGREEMENT PAGE 13 THE SYMBOL '[**]' IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-27.1 <SEQUENCE>7 <DESCRIPTION>EXHIBIT 27.1 <TEXT> <TABLE> <S> <C> <PAGE> <ARTICLE> 5 <MULTIPLIER> 1,000 <S> <C> <PERIOD-TYPE> 3-MOS <FISCAL-YEAR-END> DEC-31-2000 <PERIOD-END> MAR-31-2000 <CASH> 525 <SECURITIES> 509 <RECEIVABLES> 756 <ALLOWANCES> (35) <INVENTORY> 1,419 <CURRENT-ASSETS> 4,841 <PP&E> 5,607 <DEPRECIATION> (4,039) <TOTAL-ASSETS> 6,622 <CURRENT-LIABILITIES> 4,668 <BONDS> 353 <PREFERRED-MANDATORY> 2,246 <PREFERRED> 0 <COMMON> 21 <OTHER-SE> (693) <TOTAL-LIABILITY-AND-EQUITY> 6,622 <SALES> 1,098 <TOTAL-REVENUES> 1,098 <CGS> 1,417 <TOTAL-COSTS> 1,417 <OTHER-EXPENSES> 1,853 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> (36) <INCOME-PRETAX> (2,175) <INCOME-TAX> (2) <INCOME-CONTINUING> (2,177) <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> (2,207) <EPS-BASIC> (0.11) <EPS-DILUTED> (0.11) </TABLE> </TEXT> </DOCUMENT> </SEC-DOCUMENT> -----END PRIVACY-ENHANCED MESSAGE-----