<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1996
REGISTRATION NO. 333-04105
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CALYPTE BIOMEDICAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 3826 06-1226727
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
1440 FOURTH STREET
BERKELEY, CALIFORNIA 94710
(510) 526-2541
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN P. DAVIS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CALYPTE BIOMEDICAL CORPORATION
1440 FOURTH STREET
BERKELEY, CALIFORNIA 94710
(510) 526-2541
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
JOHN B. GOODRICH, ESQ. ALAN C. MENDELSON, ESQ.
AARON J. ALTER, ESQ. ROBERT J. BRIGHAM, ESQ.
WILSON SONSINI GOODRICH & ROSATI COOLEY GODWARD CASTRO HUDDLESON & TATUM
PROFESSIONAL CORPORATION FIVE PALO ALTO SQUARE, 4TH FLOOR
650 PAGE MILL ROAD 300 EL CAMINO REAL
PALO ALTO, CALIFORNIA 94304-1050 PALO ALTO, CALIFORNIA 94306-2155
(415) 493-9300 (415) 843-5000
</TABLE>
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
------------------------
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. / /
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If the only securities being delivered pursuant to this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED(1) PRICE PER SHARE(2) PRICE(2) FEE(3)
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<S> <C> <C> <C> <C>
Common Stock, $.001 par
value....................... 2,875,000 $10.00 $28,750,000 $9,913.80
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</TABLE>
(1) Includes 375,000 shares that the Underwriters have the option to purchase to
cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(a).
(3) Previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
CALYPTE BIOMEDICAL CORPORATION
------------------------
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING LOCATION IN
PROSPECTUS OF PART I ITEMS OF FORM S-1
<TABLE>
<CAPTION>
ITEM NUMBER AND HEADING IN FORM S-1
REGISTRATION STATEMENT LOCATION OF CAPTION IN PROSPECTUS
---------------------------------------------------- -----------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus...................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front Cover Page; Outside
Back Cover Page
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................... Prospectus Summary; Risk Factors
4. Use of Proceeds..................................... Use of Proceeds
5. Determination of Offering Price..................... Outside Front Cover Page;
Underwriting
6. Dilution............................................ Dilution
7. Selling Security Holders............................ Not Applicable
8. Plan of Distribution................................ Outside and Inside Front Cover
Pages; Underwriting; Outside Back
Cover Page
9. Description of Securities to be Registered.......... Prospectus Summary; Capitalization;
Description of Capital Stock;
Shares Eligible for Future Sale
10. Interests of Named Experts and Counsel.............. Legal Matters; Experts
11. Information with Respect to the Registrant.......... Outside and Inside Front Cover
Pages; Prospectus Summary; Risk
Factors; Use of Proceeds; Dividend
Policy; Capitalization; Dilution;
Selected Consolidated Financial
Data; Management's Discussion and
Analysis of Financial Condition and
Results of Operations; Business;
Management; Certain Transactions;
Principal Stockholders; Description
of Capital Stock; Shares Eligible
for Future Sale; Consolidated
Financial Statements; Outside Back
Cover Page
12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... Not Applicable
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED JUNE 25, 1996
2,500,000 SHARES
LOGO
COMMON STOCK
------------------------------------------------
All of the shares of common stock ("Common Stock") offered hereby are being sold
by Calypte Biomedical Corporation ("Calypte" or the "Company"). Prior to this
Offering, there has been no public market for the Common Stock, and there can be
no assurance that such a market will develop or, if one does develop, that it
will be sustained. It is currently estimated that the initial public offering
price will be between $8.00 and $10.00 per share. For a discussion of the
factors to be considered in determining the initial public offering price, see
"Underwriting." Application has been made for inclusion of the Common Stock on
the Nasdaq National Market under the symbol "CALY."
------------------------------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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Per Share.................... $ $ $
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Total(3)..................... $ $ $
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</TABLE>
(1) See "Underwriting" for indemnification arrangements with the Underwriter.
(2) Before deducting expenses payable by the Company estimated at $1,020,000.
(3) The Company has granted to the Underwriters an option, exercisable within 30
days from the date of this Prospectus, to purchase up to 375,000 additional
shares solely to cover over-allotments, if any. If the Underwriters exercise
such option in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
------------------------------------------------
The shares of Common Stock are offered by the Underwriter, subject to prior
sale, withdrawal, cancellation or modification of the offer without notice,
delivery to and acceptance by the Underwriter, and certain other conditions. It
is expected that delivery of the shares of Common Stock, offered hereby will be
made in New York, New York, on or about , 1996.
------------------------------------------------
PACIFIC GROWTH EQUITIES, INC.
The date of this Prospectus is , 1996.
<PAGE> 4
THE CALYPTE HIV-1 URINE-BASED TEST HAS NOT BEEN APPROVED BY THE FDA FOR
MARKETING IN THE UNITED STATES. THE TEST CANNOT BE SOLD IN THE UNITED STATES
UNLESS AND UNTIL SUCH FDA APPROVAL IS OBTAINED, IF AT ALL.
[Pictures to Come]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
The Company intends to furnish its stockholders with annual reports containing
consolidated financial statements audited by its independent auditors and
quarterly reports containing unaudited consolidated financial data for the first
three quarters of each fiscal year.
CalypteTM and SentinelTM are trademarks of the Company. This Prospectus also
contains trademarks and tradenames of other companies.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including the Consolidated Financial Statements and Notes thereto,
appearing elsewhere in this Prospectus.
THE COMPANY
Calypte Biomedical Corporation ("Calypte" or the "Company") is a leader in the
development of a urine-based screening test for the detection of Human
Immunodeficiency Virus Type-1 ("HIV-1"), the putative cause of Acquired
Immunodeficiency Syndrome ("AIDS"). The Company has integrated several
proprietary technologies to develop a test which, in Company-funded clinical
trials conducted by or on behalf of the Company, detected the presence of HIV
antibodies in urine with 99.33% sensitivity (as compared to blood). Specificity
of the screening test with a companion western blot confirmatory test was 100%.
Calypte believes that its proprietary urine-based test offers significant
advantages compared to existing blood-based tests, including ease-of-use, lower
costs, and significantly reduced risk of infection from collecting and handling
specimens. Urine collection is non-invasive and painless, and urine is the most
commonly collected body fluid. The Company estimates that the cost of
collecting, handling, testing and disposing of urine specimens will be
significantly less than that of blood specimens. Independent studies report that
the likelihood of finding infectious HIV virus in urine is extremely low, which
greatly reduces the risk and cost of accidental exposure to health care workers,
laboratory personnel, and patients being tested.
On March 28, 1996, the Company received a letter from the U.S. Food and Drug
Administration ("FDA") stating that the Company's HIV-1 urine screening test was
approvable pending finalization of the package insert and other labeling. The
Company's screening test, when used with the western blot confirmatory test for
urine licensed from Cambridge Biotech Corporation ("Cambridge Biotech"), will
provide the only complete urine-based HIV testing system. This western blot test
is already licensed by the FDA for use with blood, and is currently pending FDA
clearance for use with urine. On June 21, 1996 the FDA Blood Products Advisory
Committee determined that the clinical data and test protocol of the Cambridge
Biotech urine confirmatory test supported its use in conjunction with the
Calypte urine based HIV-1 test. The Company believes that the benefits of its
testing system will enable it to penetrate existing markets and expand into new
markets that are currently not served by blood-based and oral fluid-based HIV
test systems.
The Company also intends to submit a pre-market application ("PMA") to the FDA
for approval to market the Company's over-the-counter ("OTC") home urine
collection kit. The Company's home collection kit would allow consumers, in the
privacy of their homes, to take a urine sample, mail it to Calypte Biomedical
Laboratories for analysis and then anonymously obtain results and professional
counseling by telephone. On May 14, 1996, Direct Access Diagnostics, a
subsidiary of Johnson & Johnson, received FDA clearance for the first OTC home
blood collection kit for HIV. The Company believes that the Direct Access
Diagnostics FDA approved OTC product will accelerate consumer acceptance and
awareness of home collection for HIV. The Company believes that an OTC urine
collection kit for HIV would have advantages compared to an OTC blood collection
kit for HIV.
HIV is the leading cause of death for persons age 25 to 44 in the United States.
Those infected with HIV are generally asymptomatic until several years after HIV
infection, and during this period most are unaware of their HIV status.
According to the World Health Organization, HIV currently infects approximately
10 million individuals and is forecasted to infect between 30 and 40 million
individuals by the year 2000.
It is estimated that 27 million blood bank screening tests and 26 million other
HIV screening tests were performed in 1994 in the United States. In addition to
blood banks, the largest domestic demand for HIV testing is generated by
physicians, the life insurance industry, the military, the criminal justice
system and the Immigration and Naturalization Service. The high cost of testing
blood for HIV has precluded large HIV public health screening programs. Even in
the United States, only four million of the 14 million life insurance policies
written each year currently utilize HIV screening.
The Company's objective is to be the leader in the development and
commercialization of urine-based diagnostic tests. The Company's primary
strategy is to exploit the advantages of using urine instead of blood for HIV
testing in order to establish its diagnostic screening test as the screening
method of choice for HIV. The Company plans to build upon its expertise in
urine-based diagnostics to develop additional urine-based tests for sexually
transmitted diseases and other human conditions. Initially, the Company intends
to focus on developing and commercializing urine-based screening tests for
HIV-2, Chlamydia and H. pylori. The key components of the Company's business
strategy are to: (i) target and expand the life insurance testing market, (ii)
penetrate the United States clinical laboratory market, (iii) pursue
international markets through distributor relationships, (iv) establish Calypte
Biomedical Laboratories, (v) enter the emerging OTC market, and (vi) develop
additional urine-based diagnostics.
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."
3
<PAGE> 6
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company.......... 2,500,000 shares
Common Stock to be outstanding after the
offering................................... 10,359,046 shares(1)
Use of proceeds.............................. Expand product development efforts and support
clinical trials; develop Calypte Biomedical
Laboratories; expand manufacturing capacity;
redeem mandatorily redeemable preferred stock;
repay certain indebtedness; and for working
capital and general corporate purposes.
Proposed Nasdaq National Market symbol....... CALY
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTH PERIOD
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Revenue................................... $ -- $ -- $ -- $ -- $ --
Loss from operations...................... (6,303) (5,462) (10,380) (1,462) (2,723)
Net loss attributable to common
stockholders............................ (6,301) (5,587) (10,411) (1,428) (2,846)
Net loss per share attributable to common
stockholders(2)......................... $ (1.22) $ (0.90) $ (1.40) $ (0.19) $ (0.38)
Weighted average shares used to compute
net loss per share attributable to
common stockholders(2).................. 5,182,594 6,187,396 7,450,692 7,450,212 7,450,241
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996(1)
----------------------------
ACTUAL AS ADJUSTED(3)
-------- ---------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.......................................... $ 1,842 $ 16,730
Working capital.................................................... (3,791) 14,348
Total assets....................................................... 4,826 19,714
Mandatorily Redeemable Series A Preferred Stock.................... 1,766 --
Deficit accumulated during development stage....................... (33,217) (33,217)
Total stockholders' equity (deficit)............................... (4,248) 15,657
</TABLE>
- ---------------
(1) The actual and as adjusted information excludes, as of June 21, 1996, (i)
1,311,420 shares of Common Stock issuable upon exercise of outstanding
options granted under the Company's stock option plans at a weighted average
exercise price of $0.54 per share, (ii) 1,303,007 shares of Common Stock
available for future grant under the Company's stock option plans, (iii)
warrants to purchase 1,066,355 shares of Common Stock at prices ranging from
$5.00 to $7.50 per share and (iv) options to purchase 475,000 shares of
Common Stock at $7.50 per share. See "Capitalization" and
"Management -- Stock Option Plans" and Notes 9, 10 and 12 of Notes to
Consolidated Financial Statements and Notes 5, 6 and 7 of Notes to
Consolidated Condensed Financial Statements.
(2) See Note 2 of Notes to Consolidated Financial Statements and Note 2 of Notes
to Consolidated Condensed Financial Statements.
(3) Adjusted to give effect to (i) the receipt of the net proceeds from the sale
of 2,500,000 shares of Common Stock offered by the Company hereby at an
assumed initial public offering price of $9.00 per share and after deducting
the estimated underwriting discounts and commissions and offering expenses
payable by the Company, (ii) the redemption by the Company of its
Mandatorily Redeemable Series A Preferred Stock including accumulated unpaid
dividends and (iii) the repayment of $2.7 million of current notes payable.
As adjusted information also reflects the repayment of $503,000 of current
notes payable which were repaid by the Company in April 1996. See "Use of
Proceeds" and "Capitalization."
---------------
Except as otherwise noted, all information in this Prospectus (i) assumes no
exercise of the Underwriter's over-allotment option, (ii) reflects the
reincorporation of the Company into Delaware to be effected in July 1996, and
(iii) except in the Consolidated Financial Statements reflects, (a) the
conversion of outstanding shares of Convertible Preferred Stock of the Company
(except for the Mandatorily Redeemable Series A Preferred Stock being redeemed
after the Offering) into Common Stock, which will occur automatically upon the
completion of this Offering. See "Capitalization," "Description of Capital
Stock" and "Underwriting."
RISK FACTORS
For a discussion of considerations relevant to an investment in the Common
Stock, see "Risk Factors" beginning on page 5.
4
<PAGE> 7
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in the following risk factors, which should be
carefully considered by potential investors, before purchasing the Common Stock
offered hereby:
UNCERTAINTY OF REGULATORY APPROVAL FOR HIV-1 SCREENING TEST. The Company has
filed a product license application ("PLA") and an establishment licensing
application ("ELA") with the FDA relating to its urine-based HIV-1 screening
test. On March 28, 1996, the Company received a letter from the FDA stating that
the Company's HIV-1 urine screening test was approvable, pending finalization of
the package insert and other labeling. The satisfaction of these conditions is
determined solely by the FDA, and the Company cannot predict when approval of
its test may be received, if at all. There can be no assurance that the Company
will ultimately receive approval for its urine-based HIV-1 test. Failure to
obtain approval for its test would have a material adverse effect on the
Company's business, financial condition and results of operations.
DEPENDENCE ON SOLE SOURCE OF SUPPLY AND REGULATORY APPROVAL OF CONFIRMATORY
TEST. In order to minimize the possibility of false positive reports, positive
HIV screening results must be confirmed with an additional test format before
being reported to the physician or patient in the United States and in most
developed countries. The Company has entered into an agreement with Cambridge
Biotech under which both Calypte and Cambridge Biotech will market and
distribute a urine-capable western blot confirmatory test which uses technology
licensed from the Company. The western blot kit manufactured by Cambridge
Biotech has already received FDA approval for blood testing, and is the only
confirmatory test for which application has been made for FDA approval for use
with urine. Failure of Cambridge Biotech to receive FDA approval of its
application could have a material adverse effect on the Company's business,
financial condition and results of operations.
LIMITED OPERATING HISTORY; HISTORY OF LOSSES. The Company has a limited history
of operations, and since its inception in February 1988, the Company has been
primarily engaged in research and development. As of March 31, 1996, the Company
has generated revenues of $2.4 million primarily from research and development
contracts. The Company has experienced significant operating losses since
inception and, as of March 31, 1996, had an accumulated deficit of $33.2
million. The Company expects operating losses to continue as it initiates
marketing and sales activities and expands research and development. The Company
does not have experience in manufacturing, marketing or selling its products in
commercial quantities. 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. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
RELIANCE ON PROPRIETARY TECHNOLOGY AND KNOW-HOW; LICENSE OBLIGATIONS. The
Company's ability to compete effectively will depend in large part on its
ability to develop and maintain proprietary aspects of its technology. The
Company has the right to utilize certain patents and proprietary rights under
licensing agreements with New York University ("NYU"), Cambridge Biotech,
Repligen Corporation ("Repligen"), Texas A&M University System and Stanford
University. These license arrangements secure intellectual property rights for
the manufacture and sale of the Company's products. Pursuant to these license
agreements, the Company must pay product royalties and under certain agreements
the Company must make minimum royalty payments. In the event that the Company
does not receive approval for its urine-based HIV-1 test or develop alternate
sources of revenues, the obligation to make minimum royalty payments could have
a material adverse impact on the Company's results of operations. Failure to
make required minimum royalty payments may result in the loss of exclusivity or
termination of the license. There can be no assurance that the Company will be
able to maintain exclusivity or maintain its current license agreements.
Termination of any of these licenses could have a material adverse effect on the
Company's business, financial condition and results of operations.
The HIV testing industry has been characterized by extensive litigation
regarding patents and other intellectual property rights. Litigation or
interference proceedings could result in significant diversion of efforts
5
<PAGE> 8
by the Company's management and technical personnel. There are a number of filed
and issued patents involved with the detection of HIV antibodies. One such
patent is currently owned by Chiron Corporation. There can be no assurances that
Chiron will not assert such claims against the Company. Patent litigation can be
costly and protracted. The expense of litigating a claim against the Company for
patent infringement could have a material adverse effect on the Company's
business, financial condition and results of operations. In the event that the
Company was found to be infringing a validly issued patent, and the Company
could not obtain a license to such patent on reasonable terms, the Company could
be forced to pay damages, obtain a license to such patent at a significantly
higher rate or, possibly, remove its urine-based HIV-1 test from the market.
Such an event would have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Reliance On
Proprietary Technology and Know-How."
In addition, there can be no assurance that competitors, many of which have
substantial resources and have made substantial investments in competing
technologies, do not have, or will not seek to apply for and obtain, patents
that will prevent, limit or interfere with the Company's ability to make, use or
sell its products either in the U.S. or in international markets. There can be
no assurance that the Company will not be required to obtain additional cross
licenses in the future or that the Company will not in the future become subject
to patent infringement claims and litigation or interference proceedings
declared by the U.S. Patent and Trademark Office ("USPTO") to determine the
priority of inventions. The defense and prosecution of intellectual property
suits, USPTO interference proceedings and related legal and administrative
proceedings are both costly and time consuming. Litigation may be necessary to
enforce patents issued to or licensed by the Company, to protect trade secrets
or know-how owned by the Company or to determine the enforceability, scope and
validity of the proprietary rights of others.
The Company relies on trade secrets and proprietary know-how, which it seeks to
protect, in part, through appropriate confidentiality and proprietary
information agreements. These agreements generally provide that all information
developed by or made known to the individual by the Company during the course of
the individual's relationship with the Company is to be kept confidential and
not disclosed to third parties, except in specific circumstances. The agreements
generally provide that all inventions conceived by the individual in the course
of rendering services to the Company shall be the exclusive property of the
Company; however, certain of the Company's agreements with consultants, who
typically are employed on a full-time basis by academic institutions or
hospitals, do not contain assignment of invention provisions. There can be no
assurance that proprietary information or confidentiality agreements with
employees, consultants and others will not be breached, that the Company would
have adequate remedies for any breach, or that the Company's trade secrets will
not otherwise become known to or independently developed by competitors. See
"Business -- Reliance on Proprietary Technology and Know-How."
UNCERTAINTY OF MARKET ACCEPTANCE; LACK OF SALES AND MARKETING EXPERIENCE. The
Company's first product represents a new method of determining the presence of
HIV antibodies in humans, and there can be no assurance that this product will
gain market acceptance even if necessary international and U.S. regulatory and
reimbursement approvals are obtained. The Company believes that recommendations
and endorsements by the medical diagnostic community will be essential for
market acceptance of this product, and there can be no assurance that any such
recommendations or endorsements will be obtained. Failure of the Company's
products to achieve market acceptance would have a material adverse effect on
the Company's business, financial condition and results of operations.
The Company has no experience marketing and selling its product either directly
or through distributors. The Company intends to establish a small direct sales
force for sales to certain U.S. laboratories. There can be no assurance that the
Company's marketing and direct sales efforts will be successful. The Company's
sales and marketing strategy relies significantly upon third party distributors
for the sale of its product. There can be no assurance that these distributors
will market the Company's product successfully or that, if such relationships
are terminated, the Company will be able to establish relationships with other
distributors on satisfactory terms, if at all. Any disruption in the Company's
distribution, sales or marketing network could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business -- Sales, Marketing and Distribution."
6
<PAGE> 9
DEPENDENCE ON A SINGLE PRODUCT. The Company's HIV-1 urine-based screening test,
if licensed for marketing by the FDA, will be the Company's only FDA-approved
product. Upon approval, there can be no assurance that the Company's marketing
efforts will be successful. Furthermore, because the screening test will
represent the Company's sole near-term product, the Company could be required to
cease operations if this product fails to achieve market acceptance or generate
significant revenue. See "Business -- Products."
DEPENDENCE UPON KEY SUPPLIERS. The Company purchases raw materials and
components used in its products from various suppliers and relies on single
sources for several of these components. Establishment of additional or
replacement suppliers for these components cannot be accomplished quickly. The
Company has a number of single-source components, and any delay or interruption
in supply of these components could significantly impair the Company's ability
to manufacture its products in commercial quantities, and therefore would have a
material adverse effect on the Company's business, financial condition and
results of operations, particularly if and when the Company scales up its
manufacturing activities in support of commercial sales. See
"Business -- Manufacturing."
LIMITED MANUFACTURING EXPERIENCE; SCALE-UP RISK. The Company has only limited
experience in manufacturing its product. The Company has primarily manufactured
its product in limited quantities for submission to the FDA for ongoing
compliance, international clinical trials and building its inventory in
anticipation of commercialization. The Company does not have experience in
manufacturing its products in commercial quantities. Manufacturers often
encounter difficulties in scaling-up production of new product, including
problems involving production yields, quality control and assurance, raw
material supply and shortages of qualified personnel. The Company's
manufacturing relies on certain rare reagents including its viral seed stock,
the loss of which would impair the Company's ability to manufacture its product.
The Company currently manufactures its product in, and is awaiting final FDA
license for, its Berkeley, California facility. The Company is completing
qualification of a larger manufacturing facility in Alameda, California, and is
preparing an amendment to its pending establishment license for this facility.
Difficulties encountered by the Company in manufacturing scale-up to meet
commercial demand, including delays in receiving FDA approval for the Alameda
facility, could have a material adverse effect on its business, financial
condition and results of operations. See "Business -- Manufacturing" and
" -- Government Regulation."
DEPENDENCE UPON INTERNATIONAL DISTRIBUTORS AND SALES. The Company intends to
market and sell its products internationally through a network of distributors,
and the Company's international sales are dependent upon the marketing efforts
of, and sales by, these distributors. The Company anticipates that a significant
portion of its revenues for the next several years will be derived from
international distributor sales. International sales and operations involve a
number of inherent risks and may be limited or disrupted by 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 exchange rates. The Company's
distribution agreement with Otsuka Pharmaceutical Co. Ltd. is terminable without
cause upon 120 days prior notice. Certain of the Company's distributors have
limited international marketing experience, and there can be no assurance that
the Company's distributors will be able to market successfully the Company's
products in any international market. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business -- Sales,
Marketing and Distribution."
INTENSE COMPETITION IN COMPANY'S MARKETS AND RAPID TECHNOLOGICAL ADVANCES BY
COMPETITORS. Competition in the emerging market for HIV testing is intense and
is expected to increase. The Company believes its principal competition will
come from existing HIV blood-based assays and from oral fluid testing assays.
Furthermore, new testing methodologies could be developed in the future that
render the Company's urine-based HIV test impractical, uneconomical, or
obsolete. Most of the Company's competitors have significantly greater
financial, manufacturing, technical, research, marketing, sales, distribution
and other resources than the Company. There can be no assurance that the
Company's competitors will not succeed in developing or marketing technologies
and products that are more effective than those developed by the Company or that
would render the Company's technologies or products obsolete or otherwise
commercially unattractive. In addition, there can be no assurance that
competitors will not succeed in obtaining regulatory approval for such products,
or introducing or commercializing them prior to the Company. Such developments
could have a
7
<PAGE> 10
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Competition."
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS. The Company expects that its
revenues and results of operations may fluctuate significantly from quarter to
quarter and will depend on a number of factors, many of which are outside the
Company's control. These factors include actions relating to regulatory matters,
the extent to which the Company's products gain market acceptance, the timing
and size of distributor purchases, introduction of alternative means for testing
for HIV, competition, the timing and cost of new product introductions, and
general economic conditions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
EXTENSIVE GOVERNMENT REGULATION. The Company's products are subject to extensive
regulation by the FDA and, to varying degrees, by state and foreign regulatory
agencies. The manufacture and sale of diagnostic products, including the
Company's products, are subject to extensive regulation by numerous governmental
authorities in the U.S. and other countries. In the U.S., the Company's products
are regulated either as biologics, such as in the case of the Company's HIV-1
urine-based screening test, or as medical devices, as in the case of the
Company's anticipated HIV-1 urine collection kit. The process of obtaining FDA
and other required regulatory approvals is lengthy, expensive and uncertain,
frequently requiring from one to several years from the date of FDA submissions
if approval is obtained at all. Sales of diagnostic tests and products outside
of the U.S. are subject to foreign regulatory requirements that vary widely from
country to country. The time required to obtain approval for sale in foreign
countries may be longer or shorter than that required for FDA approval and the
requirements may differ. The preparation of required applications and the
subsequent foreign regulatory approval process is expensive, lengthy and
uncertain. There can be no assurance that the Company will be able to obtain
necessary regulatory approvals or clearances in a timely manner or at all, and
delays in receipt of or failure to receive such approvals or clearances, the
loss of previously received approvals or clearances, or failure to comply with
existing or future regulatory requirements would have a material adverse effect
on the Company's business, financial condition and results of operations. If the
FDA believes that a company is not in compliance with the regulations, it can
institute proceedings to detain or seize a product or prohibit marketing and
sales of the Company's products, issue a recall, and assess civil and criminal
penalties against the Company, its officers or its employees, and take other
enforcement actions.
The Company intends to file a pre-market approval application ("PMA") with the
FDA for the HIV-1 urine collection kit which constitutes an application for
approval of over-the-counter sales of this urine collection device so that
consumers could purchase the device for the collection and mailing of specimens
directly to the Company for HIV testing. The Company believes that a submission
for this device must set forth Calypte's plans for reporting results to the
consumer and for providing counseling services as well as the collection kit
itself. There can be no assurance that the FDA will approve the Company's HIV-1
urine collection device for over-the-counter distribution and sale. Furthermore,
there can be no assurance that the FDA will not request additional data or
require that the Company conduct further clinical studies causing the Company to
incur further cost and delay. In addition, there can be no assurance that the
FDA will not limit the intended use of the Company's products as a condition of
PMA approval.
In addition, the manufacture, sale or use of the Company's products are subject
to regulation by other federal entities, such as the Occupational Safety and
Health Agency, the Environmental Protection Agency, and by various state
agencies, including the California Environmental Protection Agency. Federal and
state regulations regarding the manufacture, sale or use of the Company's
products are subject to future change and these changes could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Distribution of the Company's products outside the U.S. is also subject to
extensive government regulation. In a majority of foreign countries, FDA
approval is required first in order to receive approval in that country. The
export by the Company of certain of its products which have not yet been cleared
for domestic commercial distribution may be subject to FDA export restrictions.
Failure to obtain necessary regulatory approvals, or failure to comply with
regulatory requirements, would have a material adverse effect on the Company's
business, financial condition and results of operations.
8
<PAGE> 11
The Company will be required to adhere to applicable FDA regulations regarding
current Good Manufacturing Practices ("cGMP") in the U.S. and similar
regulations in other countries, which include testing, control and documentation
requirements. Ongoing compliance with GMP and other applicable regulatory
requirements, such as reporting requirements will be monitored through periodic
inspections by state and federal agencies, including the FDA, and by comparable
agencies in other countries. Failure to comply with applicable regulatory
requirements, including marketing products for unapproved uses, could result in,
among other things, fines, injunctions, civil penalties, recall or seizure of
products, total or partial suspension of production, refusal of the government
to grant premarket clearance or premarket approval for products, withdrawal of
approvals and criminal prosecution. In addition, changes in existing regulations
or adoption of new governmental regulations or policies could prevent or delay
regulatory approval of the Company's products or result in increased regulatory
costs. Furthermore, once approval is granted, subsequent modifications to the
approved product or manufacturing process may require a supplemental PLA and ELA
or PMA as the case may be or may require the submission of a new PMA
application, which could require substantial additional clinical data and FDA
review.
Due to the nature of its manufacturing processes, the Company is subject to
stringent federal, state and local laws, rules, regulations and policies
governing the use, generation, manufacture, storage, air emission, discharge,
handling and disposal of certain materials and wastes. There can be no assurance
that the Company will not be required to incur significant costs to comply with
land use and environmental regulations as manufacturing is scaled-up to
commercial levels, nor that the operations, business or financial condition of
the Company will not be materially and adversely affected by current or future
environmental laws, rules, regulations and policies. There can be no assurance
that the Company will be able to obtain and maintain all required permits in
connection with the operation of its manufacturing facilities. When and if the
Company begins to produce products on a commercial scale, it will be a
significant user and disposer of water. The disposal of water used in the
Company's manufacturing processes must comply with applicable federal, state and
local environmental protection laws, and compliance with these laws may be
costly and difficult. See "Business -- Manufacturing."
ESTABLISHMENT AND REGULATION OF REFERENCE LABORATORY. The Company intends to
establish a clinical reference laboratory in connection with seeking approval
for an OTC home urine collection kit for HIV-1. There are a number of risks in
establishing a reference laboratory especially for testing for HIV. The Company
must, among other actions, seek to hire and retain key laboratory personnel,
purchase necessary equipment, secure required permits, incur marketing expenses,
obtain customers, and comply with government regulations. The Company's planned
laboratory would test for HIV using the Company's urine-based HIV-1 test and, if
approvals are obtained, receive home collected urine for HIV testing. The
Company may be required to offer counseling in connection with the reporting of
results to laboratory customers. There can be no assurance that the Company can
establish or receive the necessary approval for the laboratory.
If the Company establishes a reference laboratory for the testing of urine
samples using the Company's urine-based HIV-1 screening test, the Company's
laboratory would be regulated under the Clinical Laboratory Improvement
Amendments of 1988 ("CLIA"). CLIA is intended to ensure the quality and
reliability of all medical testing in laboratories in the U.S. by requiring that
any health care facility in which testing is performed meet specified standards
in the areas of personnel qualification, administration, participation in
proficiency testing, patient test management, quality control, quality
assurance, and inspections. The regulations have established three levels of
regulatory control based on the test's complexity: "waived," "moderately
complex," and "highly complex." Calypte believes that its test will be
categorized as highly complex, which would require the Company and laboratories
using its test to meet certain quality control and personnel standards that are
more rigorous than those for moderately complex tests. Under the CLIA
regulations, all laboratories performing high or moderately complex tests are
required to obtain either a registration certificate or certifications of
accreditation from the Health Care Finance Administration ("HCFA"). There can be
no assurance that the CLIA regulations and future administrative interpretations
of CLIA will not have an adverse impact on the potential market for the
Company's products. The Company would also be subject to state laboratory
licensure standards and laws governing the disposal of infectious and/or
hazardous wastes.
9
<PAGE> 12
PRODUCT LIABILITY AND RECALL RISK; LIMITED INSURANCE COVERAGE. The manufacture
and sale of medical diagnostic products entail significant risk of product
liability claims or product recalls. While the Company maintains product
liability insurance, the Company faces the risk of litigation in the event of
false positive or false negative reports. There can be no assurance that the
Company's existing insurance coverage limits will be adequate to protect the
Company from any liabilities it might incur in connection with the clinical
trials or sales of its products. In addition, the Company may require increased
product liability coverage as its products are commercialized. Such insurance is
expensive and in the future may not be available on acceptable terms, if at all.
A successful product liability claim or series of claims brought against the
Company in excess of its insurance coverage, or a recall of the Company's
products, could have a material adverse effect on the Company's business,
financial condition and results of operations.
DEPENDENCE UPON KEY PERSONNEL. The Company is dependent upon a number of key
management and technical personnel. The Company has employment agreements with
the members of its core management team. The Company's ability to manage its
transition to commercial-scale operations, and hence its success, will depend on
the efforts of these individuals, among others. The loss of the services of one
or more key employees could have a material adverse effect on the Company. The
Company's success will also depend on its ability to attract and retain
additional highly qualified management and technical personnel. The Company
faces intense competition for qualified personnel, many of whom are often
subject to competing employment offers, and there can be no assurance that the
Company will be able to attract and retain such personnel.
William A. Boeger is the Chief Executive Officer and Chief Financial Officer of
Pepgen, a 49% owned therapeutic subsidiary of the Company, and Dr. Howard B.
Urnovitz is President and Chief Science Officer. In addition, Mr. Boeger and Dr.
Unrovitz are both officers of the Chronic Illness Research Foundation, a non-
profit organization. Accordingly, although these individuals will devote such
amount of their working hours as they reasonably deem necessary to the business
of the Company, these individuals do not devote all of their working hours to
the Company's affairs. See "Business -- Employees" and "Management."
CONTROL BY DIRECTORS, EXECUTIVE OFFICERS AND AFFILIATED ENTITIES. The Company's
directors, executive officers and entities affiliated with them will, in the
aggregate, beneficially own approximately 29.22% of the Company's outstanding
Common Stock following the completion of this Offering. Accordingly, these
stockholders, individually and as a group, would be able to effectively control
the Company on substantially all matters requiring approval by the stockholders
of the Company, including the election of directors and the approval of mergers
or other business combination transactions. See "Principal Stockholders."
NO PRIOR PUBLIC TRADING MARKET; POSSIBLE VOLATILITY OF STOCK PRICE;
DILUTION. Prior to this Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
or, if one does develop, that it will be maintained. The initial public offering
price, which is established by negotiations between the Company and the
Underwriters, may not be indicative of prices that will prevail in the trading
market. The stock market has from time to time experienced significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. These broad market fluctuations may adversely affect the
market price of the Company's Common Stock. In addition, the market price of the
shares of Common Stock is likely to be highly volatile. Factors such as
fluctuations in the Company's operating results, announcements of technological
innovations or new products by the Company or its competitors, FDA and
international regulatory actions, actions with respect to reimbursement matters,
developments with respect to patents or proprietary rights, public concern as to
the safety of products developed by the Company or others, changes in health
care policy in the U.S. and internationally, changes in stock market analysts'
recommendations regarding the Company, other medical products companies or the
medical product industry generally and general market conditions may have a
significant effect on the market price of the Common Stock. The initial public
offering price is substantially higher than the net tangible book value per
share of Common Stock. Investors purchasing shares of Common Stock in this
Offering will therefore incur immediate and substantial net tangible book value
dilution. See "Underwriting and Dilution."
RISK OF UNALLOCATED PROCEEDS. The Company expects that it will use a portion of
the net proceeds of this offering for general corporate purposes, including
working capital. The Company has no specific plans as to the use of the
unallocated proceeds from this offering. Pending use, the Company plans to
invest the net proceeds
10
<PAGE> 13
in investment-grade, interest-bearing securities. Accordingly, management will
have significant flexibility in applying a portion of the net proceeds of this
offering. See "Use of Proceeds."
POTENTIAL ADVERSE EFFECT ON MARKET PRICE OF SHARES ELIGIBLE FOR FUTURE
SALE. Sales of Common Stock (including shares issued upon the exercise of
outstanding options) in the public market after this Offering could materially
adversely affect the market price of the Common Stock. Such sales also might
make it more difficult for the Company to sell equity securities or
equity-related securities in the future at a time and price that the Company
deems appropriate. Upon the completion of this Offering, the Company will have
10,359,046 shares of Common Stock outstanding, of which the 2,500,000 shares
offered hereby will be freely tradable (unless held by affiliates of the
Company) and the remaining 7,859,046 shares will be restricted securities within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
Holders of an aggregate of 7,611,736 shares of Common Stock and options to
purchase 1,170,273 shares of Common Stock have entered into lock-up agreements
under which they have agreed not to sell, directly or indirectly, any shares
owned by them for a period of 180 days after the date of this Prospectus without
the prior written consent of the Representatives of the Underwriters. Upon
expiration of the 180-day lock-up agreements, approximately 5,805,713 shares of
Common Stock will become eligible for immediate public resale subject to the
volume limitations of Rule 144, under Rule 144(k) or by non-affiliates holding
stock issued to them under Rule 701. A total of 7,392,010 of the shares
outstanding immediately following the completion of this Offering will be
entitled to registration rights with respect to such shares upon termination of
lock-up agreements. See "Shares Eligible for Future Sale." In addition, 475,000
shares of Calypte Common Stock may be acquired by stockholders of Pepgen
Corporation upon exercise of options issued to them, 1,066,355 shares may be
acquired by warrantholders upon exercise of warrants issued to them, and an
additional 1,311,420 shares may be acquired by other optionholders (to the
extent vested), which shares will become eligible for public resale at various
times two years after the acquisition of such shares. See
"Business -- Investment in Pepgen Corporation" and "Certain Transactions."
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS. Certain provisions of
Calypte's Certificate of Incorporation and Bylaws could discourage potential
acquisition proposals and could delay or prevent a change in control of Calypte.
Such provisions could diminish the opportunities for a stockholder to
participate in tender offers, including tender offers at a price above the then
current market value of the Common Stock. Such provisions may also inhibit
increases in the market price of the Common Stock that could result from
takeover attempts. In addition, the Board of Directors of Calypte, without
further stockholder approval, may issue Preferred Stock with such terms as the
Board of Directors may determine, that could have the effect of delaying or
preventing a change in control of Calypte. The issuance of Preferred Stock could
also adversely affect the voting power of the holders of Common Stock, including
the loss of voting control to others. See "Description of Capital
Stock -- Change of Control Provisions."
DIVIDENDS. The Company has accumulated unpaid dividends on its Series A
Preferred Stock, which accumulated dividends will be paid upon redemption of the
Series A Preferred Stock upon the closing of this Offering. The Company
currently intends to retain any future earnings for future growth and,
therefore, does not anticipate either declaring or paying any cash dividends in
the foreseeable future.
11
<PAGE> 14
THE COMPANY
Urnotech Calypte Biomedical Corporation was incorporated in California in
November 1989, changed its name to Calypte Biomedical Corporation in November
1992 and will be reincorporated in Delaware in July 1996. The Company's
principal office is located at 1440 Fourth Street, Berkeley, California 94710,
and its telephone number is (510) 526-2541.
USE OF PROCEEDS
The net proceeds to the Company from the sale of 2,500,000 shares of Common
Stock offered by the Company hereby at an assumed initial public offering price
of $9.00 per share are estimated to be $20 million ($23 million if the
Underwriter's over-allotment option is exercised in full). Of the net proceeds
of this Offering, the Company expects to expend approximately $5 million to
expand product development efforts and to support clinical trials, approximately
$4 million to fund the development of Calypte Biomedical Laboratories,
approximately $2 million to expand manufacturing capacity, approximately $2
million to redeem the Company's Series A Preferred Stock, approximately $1.5
million to repay a loan bearing interest at the prime rate plus 3.5% (11.75% at
June 21, 1996) due on July 5, 1996 to Silicon Valley Bank, $1 million to repay
the Pepgen promissory note bearing interest at 4% per annum due on October 31,
1996, and approximately $250,000 to repay a note bearing interest at 10% per
annum due on August 1, 1996 to the Purdue Frederick Corporation. The balance of
the net proceeds amounting to approximately $4.2 million will be used for
working capital and general corporate purposes. A portion of the proceeds may
also be used for investments in or acquisitions of complementary businesses,
products or technologies. From time to time the Company considers and engages in
discussions with other parties regarding possible investments in or acquisitions
of complementary businesses, products or technologies, although there are
currently no agreements or understandings regarding any such investments or
acquisitions. Pending the use of the proceeds as described above, the Company
intends to invest such net proceeds in short-term, investment grade,
interest-bearing securities.
DIVIDEND POLICY
The Company has accumulated unpaid dividends on its Series A Preferred Stock,
which accumulated dividends will be paid upon redemption of the Series A
Preferred Stock upon the closing of this Offering. The Company currently intends
to retain any future earnings for future growth and, therefore, does not
anticipate either accumulating, declaring or paying any cash dividends in the
foreseeable future.
12
<PAGE> 15
CAPITALIZATION
The following table sets forth the capitalization of the Company as of March 31,
1996 (i) on an actual basis, (ii) on a pro forma basis to reflect (a) the
automatic conversion of all outstanding shares of Convertible Preferred Stock
into Common Stock upon the closing of this Offering and (b) the repayment of
approximately $503,000 of current notes payable which were repaid by the Company
in April 1996 and (iii) on an as adjusted basis to give effect to (a) the
receipt by the Company of the net proceeds from the sale of 2,500,000 shares of
Common Stock offered hereby at an assumed initial public offering price of $9.00
per share after deducting the estimated underwriting discounts and commissions
and offering expenses payable by the Company, (b) the redemption by the Company
of its mandatorily redeemable Series A Preferred Stock, including accumulated
unpaid dividends and (c) the repayment of approximately $2,748,000 of current
notes payable. This table should be read in conjunction with the Consolidated
Financial Statements of the Company and the Notes thereto and the Consolidated
Condensed Financial Statements of the Company and the Notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS, EXCEPT SHARE AND PER
SHARE DATA)
<S> <C> <C> <C>
Long-term portion of capital lease obligations.......... $ 683 $ 683 $ 683
Mandatorily Redeemable Series A Preferred Stock:
100,000 shares authorized at $0.001 par value; 100,000
shares issued and outstanding, actual; 100,000
shares issued and outstanding, pro forma; no shares
issued and outstanding, as adjusted................ 1,766 1,766 --
Stockholders' equity (deficit):
Convertible Preferred Stock, $0.001 par value,
8,637,638 shares authorized; 6,832,416 shares
issued and outstanding, actual; no shares issued or
outstanding, pro forma and as adjusted............. 7 -- --
Preferred Stock, no shares authorized, actual and pro
forma; 5,000,000 shares authorized, as adjusted; no
shares issued or outstanding, actual pro forma and
as adjusted........................................ -- -- --
Common Stock, $0.001 par value; 12,000,000 shares
authorized, actual; 20,000,000 shares authorized,
pro forma and as adjusted; 574,018 shares issued
and outstanding, actual; 7,406,434 shares issued
and outstanding, pro forma; 9,906,434 shares issued
and outstanding, as adjusted (1)................... -- 7 10
Additional paid-in capital............................ 29,329 29,329 49,231
Deferred compensation................................. (367) (367) (367)
Deficit accumulated during development stage.......... $(33,217) $ (33,217) $ (33,217)
======== ======== ========
Total stockholders' equity (deficit).......... $ (4,248) $ (4,248) $ 15,657
======== ======== ========
Total capitalization.......................... $ (1,799) $ (1,799) $ 16,340
======== ======== ========
</TABLE>
- ---------------
(1) The actual, pro forma, and as adjusted information excludes, as of March 31,
1996, (i) 1,292,561 shares of Common Stock issuable upon exercise of
outstanding options granted under the Company's stock option plans at a
weighted average exercise price of $0.54 per share, (ii) 1,321,907 shares of
Common Stock available for grant under the Company's stock option plans,
(iii) warrants to purchase 1,762,101 shares of Common Stock at prices
ranging from $5.00 to $7.50 per share and options to purchase 475,000 shares
of Common Stock at $7.50 per share. See "Capitalization" and
"Management -- Stock Option Plans" and Notes 9, 10 and 12 of Notes to
Consolidated Financial Statements and Notes 5, 6 and 7 of Notes to
Consolidated Condensed Financial Statements.
13
<PAGE> 16
DILUTION
As of March 31, 1996, the Company had negative pro forma net tangible book value
of $(4,247,684) or $(0.57) per share of Common Stock. "Pro forma net tangible
book value" per share represents the amount of total pro forma tangible assets
less total pro forma liabilities and less total pro forma mandatorily redeemable
Series A Preferred Stock divided by 7,406,434, the pro forma number of shares of
Common Stock issued and outstanding after giving effect to the automatic
conversion upon consummation of the offering of net outstanding shares of
Convertible Preferred Stock at March 31, 1996 into Common Stock. Without taking
into account any other changes in the pro forma net tangible book value after
March 31, 1996, other than to give effect to the receipt by the Company of the
net proceeds from the sale of the 2,500,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $9.00 per share, the pro
forma as adjusted net tangible book value of the Company as of March 31, 1996
would have been approximately $15,657,316 or $1.58 per share. This represents an
immediate increase in net tangible book value of $2.15 per share to existing
stockholders and an immediate dilution of net tangible book value of $7.42 per
share to new investors purchasing shares at an assumed initial public offering
price of $9.00 per share. The following table illustrates this per share
dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share..................... $ 9.00
Pro forma net tangible book value per share before the offering... (0.57)
Increase per share attributable to new investors.................. 2.15
------
Pro forma net tangible book value per share after the offering...... 1.58
-----
Dilution per share to new investors................................. $ 7.42
=====
</TABLE>
The following table summarizes, on a pro forma basis as of March 31, 1996, the
differences between existing stockholders and purchasers of shares in the
offering (at an assumed initial public offering price of $9.00 per share) with
respect to the number of shares of Common Stock purchased from the Company, the
total consideration paid and the average price per share paid:
<TABLE>
<CAPTION>
SHARES TOTAL
PURCHASED CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------- ------- ---------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders....... 7,406,434 74.8% $30,816,598 57.8% $4.16
New investors............... 2,500,000 25.2 22,500,000 42.2 9.00
--------- ----- ----------- -----
Total............. 9,906,434 100.0% $53,316,598 100.0%
========= ===== =========== =====
</TABLE>
The foregoing table assumes no exercise of stock options or warrants outstanding
after March 31, 1996. As of March 31, 1996, there were options outstanding to
purchase a total of 1,292,561 shares of Common Stock at a weighted average
exercise price of $0.54 per share: there were warrants outstanding to purchase
1,762,101 shares of Common Stock at prices ranging from $5.00 to $7.50 per
share; and there were options to purchase 475,000 shares of Common Stock at
$7.50 per share. To the extent that any shares of Common Stock are issued on
exercise of any of these options or warrants or additional options or warrants
granted after March 31, 1996, there will be further dilution to new investors.
See "Management -- Stock Plans" and Notes 9, 10 and 12 of Notes to Consolidated
Financial Statements and Notes 5, 6 and 7 of Notes to Consolidated Condensed
Financial Statements.
14
<PAGE> 17
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data as of and for the years ended December
31, 1991, 1992, 1993, 1994 and 1995 are derived from the audited consolidated
financial statements of the Company. The financial statements of the Company as
of December 31, 1994 and 1995 and for each of the years in three-year period
ended December 31, 1995, together with the notes thereto and the related report
of KPMG Peat Marwick LLP independent certified public accountants, are included
elsewhere in this Prospectus. The selected consolidated financial data set forth
below as of and for the three months ended March 31, 1995 and 1996, and for the
period from February 18, 1988 (inception) through March 31, 1996 were derived
from unaudited consolidated condensed financial statements, which are included
elsewhere in this Prospectus, and include, in the opinion of the Company, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the Company's financial position at that date and results
of operations for those periods. The results for the three months ended March
31, 1996 are not necessarily indicative of the results for any future period.
The selected consolidated financial data set forth below is qualified in its
entirety by, and should be read in conjunction with, the Consolidated Financial
Statements and Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in the
Prospectus.
<TABLE>
<CAPTION>
FEBRUARY 18,
1988
THREE MONTH PERIOD (INCEPTION)
YEAR ENDED DECEMBER 31, ENDED MARCH 31, THROUGH
--------------------------------------------------------- ---------------------- MARCH 31,
1991 1992 1993 1994 1995 1995 1996 1996
--------- --------- --------- --------- --------- --------- --------- ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Revenue earned under research
and development contracts,
substantially from related
parties..................... $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 2,390
Operating expenses:
Research and development.... 1,205 2,604 4,519 3,644 5,018 971 1,827 22,174
Purchased in-process
research and development
costs..................... -- -- -- -- 2,500 -- -- 2,500
Selling, general and
administrative............ 1,096 1,280 1,784 1,818 2,862 491 896 11,823
--------- --------- --------- --------- --------- -------- --------- ---------
Loss from operations.......... (2,301) (3,884) (6,303) (5,462) (10,380) (1,462) (2,723) (34,107)
Interest income (expense),
net......................... (58) 45 108 (35) 78 43 (98) (131)
Other income.................. 5 38 15 31 12 21 5 76
--------- --------- --------- --------- --------- -------- --------- ---------
Loss before income taxes and
extraordinary item.......... (2,354) (3,801) (6,180) (5,466) (10,290) (1,398) (2,816) (34,162)
Income taxes.................. (51) (1) (1) (1) (1) -- -- (61)
--------- --------- --------- --------- --------- -------- --------- ---------
Loss before extraordinary
item........................ (2,405) (3,802) (6,181) (5,467) (10,291) (1,398) (2,816) (34,223)
Extraordinary gain on debt
extinguishment.............. 485...... -- -- -- -- -- -- 485
--------- --------- --------- --------- --------- -------- --------- ---------
Net loss...................... (1,920) (3,802) (6,181) (5,467) (10,291) (1,398) (2,816) (33,738)
Less dividend on mandatorily
redeemable Series A
preferred stock............. (120) (120) (120) (120) (120) (30) (30) (766)
--------- --------- --------- --------- --------- -------- --------- ---------
Net loss attributable to
common stockholders......... $ (2,040) $ (3,922) $ (6,301) $ (5,587) $ (10,411) $ (1,428) $ (2,846) $(34,504)
========= ========= ========= ========= ========= ======== ========= =========
Net loss per share
attributable to common
stockholders before
extraordinary item.......... $ (1.14) $ (0.98) $ (1.22) $ (0.90) $ (1.40) $ (0.19) $ (0.38)
Extraordinary gain on debt
extinguishment, per share... 0.22 -- -- -- -- -- --
--------- --------- --------- --------- --------- -------- ---------
Net loss per share
attributable to common
stockholders(1)............. $ (0.92) $ (0.98) $ (1.22) $ (0.90) $ (1.40) $ (0.19) $ (0.38)
========= ========= ========= ========= ========= ======== =========
Weighted average shares used
to
compute net loss per share
attributable to common
stockholders(1)............. 2,210,447 3,985,278 5,182,594 6,187,396 7,450,692 7,450,212 7,450,241
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1996
-------------------------------------------------- ------------------------
1991 1992 1993 1994 1995 ACTUAL PRO FORMA(2)
------- ------- -------- -------- -------- -------- ------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents......................... $ 2,233 $ 7,254 $ 1,492 $ 4,478 $ 2,559 $ 1,842 $ 1,339
Working capital................................... 1,196 6,042 867 3,117 (2,402) (3,791) (3,791)
Total assets...................................... 2,561 7,770 2,887 5,965 5,337 4,826 4,323
Long-term portion of capital lease obligations and
notes payable................................... 471 310 462 196 543 683 683
Mandatorily redeemable Series A preferred stock... 1,256 1,376 1,496 1,616 1,736 1,766 1,766
Deficit accumulated during development stage...... (4,659) (8,461) (14,643) (20,110) (30,401) (33,217) (33,217)
Total stockholders' equity (deficit).............. (213) 4,812 (26) 2,659 (2,746) (4,248) (4,248)
</TABLE>
- ---------------
(1) See Note 2 of Notes to Consolidated Condensed Financial Statements and Note
2 of Notes to Consolidated Condensed Financial Statements.
(2) Reflects the conversion of 6,832,416 shares of Convertible Preferred Stock
into 6,832,416 shares of Common Stock as of March 31, 1996 and reflects the
repayment of $503,000 of current notes payable which were repaid by the
Company in April 1996.
15
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under "Risk Factors" and elsewhere in this Prospectus.
OVERVIEW
Since commencement of operations in 1988, the Company has reported its results
as a development stage company, engaged in research, development and
commercialization of its products. The Company's efforts have been primarily
focused on developing and obtaining approval for its urine-based diagnostic
tests for sexually transmitted diseases. In March, 1996, the Company received a
letter from the FDA stating that the Company's urine-based HIV-1 test was
approvable pending finalization of the package insert and other labeling.
The Company has a limited history of operations and has experienced significant
operating losses since inception. As of March 31, 1996, the Company had an
accumulated deficit of $33.2 million. The Company has not begun to market its
urine-based HIV-1 test. The Company expects operating losses to continue as it
initiates marketing and sales activities and additional research and
development. The Company's marketing strategy is to use distributors, focused
direct selling and marketing partners to penetrate certain targeted domestic
markets. The Company plans to maintain a small direct sales force to sell the
Company's urine-based HIV-1 test to 12 major laboratories serving the life
insurance, military, immigration and criminal justice markets. Other U.S. and
all international markets will be penetrated utilizing diagnostic product
distributors.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1996 and 1995
Research and development expense, consisting primarily of research,
manufacturing and quality assurance personnel and materials related to the
development of the urine-based HIV-1 test, increased 88% to $1.8 million for the
three months ended March 31, 1996 from $971,000 for the three months ended March
31, 1995. The increase was principally due to additional personnel, facility and
material costs required for increased manufacturing activity.
Selling, general and administrative expenses, consisting primarily of personnel,
outside consultants, facility operating leases and related expenses, increased
82% to $896,000 for the three months ended March 31, 1996 from $491,000 for the
three months ended March 31, 1995. The increase was primarily due to personnel
additions and related expenses.
Interest income (expense) and other income, consisting primarily of interest
earned on cash and cash equivalents, interest paid on equipment lease financing
and interest paid or accrued on outstanding notes payable, decreased $157,000 to
$(93,000) for the three months ended March 31, 1996 from $64,000 for the three
months ended March 31, 1995. The decrease was primarily due to interest payments
on the Company's bank line of credit and interest accrued on the note payable to
Pepgen, and also due to lower interest income as a result of lower cash
balances.
Years Ended December 31, 1995 and 1994
Research and development expenses increased 38% to $5.0 million in 1995 from
$3.6 million for 1994. This increase was principally due to additional personnel
and material costs required for increased manufacturing activities.
Purchased in-process research and development costs of $2.5 million were
incurred in 1995; no such costs were incurred in 1994. The 1995 costs were
attributable solely to the Company's investment in Pepgen Corporation and the
resulting write-off of research and development in process acquired. Pepgen is a
16
<PAGE> 19
therapeutic research and development company engaged primarily in the
development of therapeutic compounds.
Selling, general and administrative expenses, increased 57% to $2.9 million in
1995 from $1.8 million in 1994. This increase was primarily due to additional
legal and consulting fees relating to general corporate matters and an increase
in marketing personnel in anticipation of product launch.
Interest income (expense) and other income, increased $94,000 to $90,000 in 1995
from ($4,000) in 1994. This increase was primarily due to interest earned on
proceeds from preferred stock offerings.
Years Ended December 31, 1994 and 1993
Research and development expenses decreased 19%, to $3.6 million in 1994 from
$4.5 million in 1993. The decrease was due primarily to approximately $1.0
million of non-recurring payments made in 1993 for patent license fees and
technology licenses.
Interest income (expense) and other income decreased $127,000 to ($4,000) for
1994 from $123,000 for 1993. This decrease related primarily to a full year of
interest payments in 1994 on equipment lease lines.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed operations from inception primarily through the private
placement of preferred stock and, to a lesser extent, from payments related to
research and development agreements, bank lines of credit, equipment lease
financings and borrowings from notes payable. Since inception through March 31,
1996, the Company has received approximately $30.3 million in net proceeds from
private placements of the Company's equity securities. In addition,
approximately $1.3 million was borrowed by the Company through equipment lease
financings, of which approximately $1.1 million was outstanding as of March 31,
1996, and $2.4 million was received from research and development agreements. In
addition, in December 1995 the Company executed a $2.0 million line of credit
with a bank which was due on March 5, 1996. In March 1996 the Company signed an
amendment to the agreement, whereby the Company agreed to repay $500,000 on the
line of credit and the due date was extended to July 5, 1996. In April, the
Company repaid the $500,000 and the line of credit was reduced to $1.5 million.
In addition, the Company has a note payable to a former related party for
$248,000 due August 1, 1996.
During the three months ended March 31, 1996 and the years ended December 31,
1995, 1994 and 1993 the Company's cash used in operations was $2.1 million, $6.6
million, $4.6 million, and $6.6 million, respectively. The cash used in
operations was primarily to fund research and development expenses related to
the urine-based HIV-1 test along with general and administrative expenses of the
Company.
The Company has entered into employment agreements with officers and other
employees of the Company, with varying terms and lengths. Included in current
liabilities at March 31, 1996 is $260,000 payable to an officer for relocation
expense.
The Company acquired equipment and leasehold improvements during the three
months ended March 31, 1996 and the years ended December 31, 1995, 1994, and
1993 of $217,000, $1.1 million, $625,000, and $813,000, respectively. Costs
incurred included the purchase of equipment relating to build-out and scale-up
of manufacturing facilities in 1996 and 1995, the build-out of the Company's
Alameda facility in 1994 and the renovation of its manufacturing facility in
Berkeley in 1994 and 1993.
During 1995, the Company acquired a 49% interest in Pepgen for $2.5 million,
comprised of $1.0 million in cash paid at closing, a note payable of $1.0
million, and options to purchase 475,000 shares of Common Stock valued at
$500,000. The note payable is due upon the earlier of (i) October 1996 or (ii)
60 days following either FDA approval of the Company's urine-based HIV-1
screening test or the closing of this Offering. Other than the payment of the
$1.0 million promissory note, Calypte does not have any ongoing commitments to
fund Pepgen.
The Company has entered into an agreement that provides for royalty payments to
former related parties based on sales of certain products conceived by the
former related parties prior to March 30, 1989.
17
<PAGE> 20
The Company has entered into arrangements with various organizations to receive
the right to utilize certain patents and proprietary rights under licensing
agreements in exchange for the Company making certain royalty payments based on
sales of certain products and services. The royalty obligations are based on a
percentage of net sales of licensed products and include minimum annual royalty
payments under some agreements.
In August 1993 and as amended in 1994, the Company entered into a research
agreement that allowed for a university to perform certain research on behalf of
the Company for a seven-year period. Under the terms of the agreement, the
Company may negotiate certain license rights to the inventions made by the
university resulting from this research. The Company's annual payment under this
agreement is approximately $150,000 through 1999.
As of March 31, 1996, the Company had $1.8 million in cash and cash equivalents.
Subsequent to March 31, 1996 and as of June 21, 1996 the Company received $3.4
million in proceeds related to the exercise of warrants issued in conjunction
with the Series E Preferred Stock offering in May and June 1995. As of June 21,
1996, potential proceeds related to unexercised warrants expiring on June 23,
1996, totaled $1.1 million.
The Company expects to use a portion of the net proceeds of this Offering for
research and development and clinical studies, increase of manufacturing
capacity, repayment of a bank line of credit, redemption of the Series A
Preferred Stock, repayment of the note payable to a former related party,
repayment of the note issued to Pepgen, as well as for working capital and
general corporate purposes. A portion of the proceeds may also be used for
investments in or acquisitions of complementary businesses, products or
technologies. Although the Company believes net proceeds from this Offering,
together with current cash, will be sufficient to meet the Company's operating
expenses and capital requirements for the next eighteen months, the Company's
future liquidity and capital requirements will depend on numerous factors,
including regulatory actions by the FDA and other international regulatory
bodies, market acceptance of its products, and intellectual property protection.
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.
18
<PAGE> 21
BUSINESS
THE COMPANY
Calypte Biomedical Corporation ("Calypte" or the "Company") is a leader in the
development of a urine-based screening test for the detection of Human
Immunodeficiency Virus, Type-1 ("HIV-1"), the putative cause of Acquired
Immunodeficiency Syndrome ("AIDS"). The Company has integrated several
proprietary technologies to develop a test which, in Company-funded clinical
trials conducted by or on behalf of the Company, detected the presence of HIV
antibodies in urine with 99.3% sensitivity (as compared to blood). Specificity
of the screening test with a companion western blot confirmatory test was 100%.
Calypte believes that its proprietary urine-based test offers significant
advantages compared to existing blood-based tests, including ease-of-use, lower
costs, and significantly reduced risk of infection from collecting and handling
specimens. Urine collection is non-invasive and painless, and urine is the most
commonly collected body fluid. The Company estimates that the cost of
collecting, handling, testing and disposing of urine specimens will be
significantly less than that of blood specimens. Independent studies report that
the likelihood of finding infectious HIV virus in urine is extremely low, which
greatly reduces the risk and cost of accidental exposure to health care workers,
laboratory personnel, and patients being tested.
On March 28, 1996, the Company received a letter from the FDA stating that the
Company's HIV-1 urine screening test was approvable pending finalization of the
package insert and other labeling. The Company's screening test, when used with
the western blot confirmatory test for urine licensed exclusively from Cambridge
Biotech, will provide the only complete urine-based HIV testing system. This
western blot test is already licensed by the FDA for use with blood, and is
currently pending FDA clearance for use with urine. On June 21, 1996 the FDA
Blood Products Advisory Committee determined that the clinical data and test
protocol of the Cambridge Biotech urine confirmatory test supported its use in
conjunction with the Calypte urine-based HIV-1 test. The Company believes that
the benefits of its testing system will enable it to penetrate existing markets
and expand into new markets that are currently not served by blood-based and
oral fluid-based HIV test systems.
The Company also intends to submit a PMA to the FDA for approval of the
Company's OTC home urine collection kit. The Company's home collection kit would
allow consumers, in the privacy of their homes, to take a urine sample, mail it
to Calypte Biomedical Laboratories for analysis and then anonymously obtain
results and professional counseling by telephone. On May 14, 1996, Direct Access
Diagnostics, a subsidiary of Johnson & Johnson, received FDA clearance for the
first OTC home blood collection kit for HIV. The Company believes that the
Direct Access Diagnostics FDA approved OTC product will accelerate consumer
acceptance and awareness of home collection for HIV. The Company believes that
an OTC urine collection kit for HIV would have advantages compared to an OTC
blood collection kit for HIV.
The Company intends to develop and commercialize additional urine-based tests
for other sexually transmitted diseases and other human retroviruses and
diseases based on its enabling urine testing technologies. Initially, the
Company intends to focus on developing and commercializing urine-based screening
tests for HIV-2, Chlamydia and H. pylori.
Upon approval, the Company intends to market its urine-based HIV-1 screening
test through direct sales personnel and distributors depending upon the market
segment and the location of the market. Calypte believes that its urine-based
test will achieve market acceptance because of safety, cost, convenience, and
painless collection of the fluid to be tested. There can be no assurance that
the Company's products or the Company's planned products will receive FDA
clearance or approval and become commercially available.
BACKGROUND
HIV is the putative cause of AIDS, which is the leading cause of death for
persons ages 25 to 44 in the U.S. Those infected with HIV generally do not show
symptoms of AIDS until several years after HIV infection, if at all. Because
most persons infected with HIV are asymptomatic for AIDS and are unaware of
their HIV status, such persons do not avail themselves of medical treatment and
may unknowingly expose others to the risk of infection. Prior exposure to HIV
can be detected in laboratory tests even though the individual infected with HIV
is asymptomatic.
19
<PAGE> 22
According to the World Health Organization, Human Immunodeficiency Virus ("HIV")
currently infects approximately 10 million individuals worldwide and will infect
between 30 and 40 million individuals worldwide by the year 2000. HIV is spread
by a transfer of bodily fluids primarily through sexual contact, blood
transfusions, sharing intravenous needles, accidental needle sticks or
transmission from infected mothers to newborns. The Rockefeller Foundation
reports that heterosexual transmission accounts for 75% of HIV infection
worldwide. The incidence of HIV-2 is insignificant except in certain countries
in West Africa where its incidence is more frequently reported.
The discovery in 1984 of circulating HIV antibodies in the blood led to the
development and widespread use of HIV blood screening tests. Testing by blood
banks of blood used in transfusions soon followed in an effort to maintain and
protect the integrity of the blood supply. Most HIV antibody screening tests are
EIAs. These tests operate on the principle that antibodies will react with a
known antigen; this reaction is detected by using enzymes as indicators. It is
estimated that 27 million blood bank screening tests and 26 million other HIV
screening tests were performed in 1994 in the United States. Outside of blood
bank screening, the largest domestic demand for HIV testing is generated by
physicians, the life insurance industry, the military, the criminal justice
system and the Immigration and Naturalization Service.
To minimize the risk of incorrectly reporting that an individual is infected
with HIV (a false positive result), most countries require a strict testing
protocol. The protocol is to first test a sample for the presence of HIV. Any
sample found to be reactive in the initial screen is then retested in duplicate.
If either of the retests are reactive, the same sample is tested again using a
more precise and expensive confirmatory test. The presence of HIV antibodies,
based on the results of the confirmatory test, is considered diagnostic for HIV
infection.
HIV blood testing can be expensive and poses risk of infection to health care
personnel. The typical HIV screening test requires a trained health care worker
or phlebotomist to draw and centrifuge a blood sample, which is then tested for
the presence of HIV antibodies. Blood is typically drawn at physician offices,
hospitals, or blood draw stations, where trained personnel are available, and
then sent to a laboratory for HIV testing. Blood samples and related
blood-sampling equipment require careful handling to avoid accidental exposure
to blood-borne pathogens, including HIV. In addition, the use of blood-based
tests has become increasingly costly because of the costs of disposing of
potentially infected specimens, syringes, needles and transfer tubes. The
overall cost of blood-based testing has precluded large public health screening
programs, particularly in less developed countries, many of which have
significantly higher rates of HIV infection than that of the U.S. Even in the
United States, certain populations are not routinely screened due to the high
cost of blood-based testing. For example, currently only four million of the
approximately 14 million life insurance policies written each year utilize HIV
screening.
In December 1994, the FDA approved the first non-invasive method for HIV-1
testing, an oral fluid-based screening test and collection device. Collection of
oral fluid is technique dependent, and detailed instructions on the proper use
of the oral fluid collection device need to be carefully followed. In addition,
oral fluid is not commonly collected and is rarely tested for other diagnostic
purposes. In June 1996, one manufacturer received approval from the FDA for a
western blot oral-fluid confirmatory test.
HIV screening can also be performed by using a dried blood spot ("DBS")
specimen. DBS sampling, which was developed in the late 1980's, is a variant of
blood sampling for the testing of newborns. The DBS sampling method involves
sticking a baby's heel or an adult's finger with a sharp lancet and collecting
five or six drops of blood onto filter paper. The laboratory punches the dried
blood spots out of the filter paper, and the non-cellular components of the
blood spot are eluted back in liquid form by soaking the punches in diluent. The
resulting fluid is then assayed by one of several traditional serum/plasma EIAs.
The DBS method, which is comparable in cost to traditional serum tests, is
susceptible to problems in sample variability, the adequacy of volume for
testing, pain on sample withdrawal, and invasiveness.
The Company believes that a large market opportunity exists for home urine
collection and remote testing for HIV infection. On May 14, 1996, the FDA
approved the first DBS OTC home collection kit for HIV. This
20
<PAGE> 23
collection kit, to be marketed by Direct Access Diagnostics, a subsidiary of
Johnson & Johnson, is reported to retail for $40. Two other companies have
submitted applications to the FDA for DBS OTC home collection kits for HIV.
These companies are Home Access Health Corporation and ChemTrak Incorporated.
The Company believes that the Direct Access Diagnostics FDA approved OTC product
will accelerate consumer acceptance and awareness of home collection for HIV.
THE CALYPTE URINE-BASED HIV-1 SCREENING TEST
Calypte's proprietary urine-based HIV-1 screening test is non-invasive, easy to
use, reliable and avoids many of the costs and risks associated with blood-based
testing. The Company's screening test, when used with the western blot
confirmatory test for urine licensed exclusively from Cambridge Biotech, will
provide the only complete urine-based HIV testing system. Laboratories using the
Company's system can complete the entire testing profile for HIV-1 using a
single urine specimen. The Company believes that the benefits of its testing
system will enable it to penetrate existing markets and expand into new markets
that are not served currently by the more expensive blood and oral fluid-based
HIV test systems. Key benefits of the Company's test include:
- -- Ease of Use/Non-Invasive Collection. Urine is the most commonly collected
bodily fluid for laboratory testing. Because it requires no special
preservatives or containers, it is also easier to collect, handle, and
discard than blood. Furthermore, the Company's test is in standard EIA format
and is designed to be used with standard laboratory equipment. Blood sampling
is invasive and, for many patients, stressful and painful. The ability to
screen non-invasively for HIV in all types of patients, including intravenous
drug users and newborns, will enhance patient comfort and may significantly
increase the voluntary testing rates in patients who might otherwise decline
testing.
- -- Lower Overall Cost. The Company's urine-based screening test may lower
significantly the overall cost of testing for HIV because the cost of
collecting, transporting, testing and disposing of urine specimens can be
significantly less than that of blood specimens, and less than the cost of an
oral fluid screening test with a blood-based confirmatory test. Additional
cost savings may accrue as a function of reduced needlestick incidents and
associated counseling, testing and lost productivity.
- -- Safety. Independent studies have concluded that the likelihood of finding
infectious HIV virus in urine is extremely low. There have been no reported
cases of transmission of HIV virus through contact with urine of HIV-infected
patients. Accordingly, the risk of HIV infection to health care and
laboratory workers accidentally exposed to urine samples is negligible. Since
no needles are used in the Calypte urine sampling process, the test
eliminates this route of accidental infection. In developing countries, where
the supply of sterile needles and syringes cannot be guaranteed, the safety
benefits of using urine sampling extend to patients as well as to health care
workers.
- -- Reliability. The Company has performed clinical studies demonstrating the
effectiveness of using urine as a reliable and clinically valid sample for
HIV testing. In Company-funded clinical trials conducted by or on behalf of
the Company, for the HIV-1 urine EIA, a total of approximately 11,000 matched
blood and urine specimens were tested. In two different studies, assay
specificity was assessed by testing samples from a combined subset of low
risk individuals, and specificity of the screening test in conjunction with
the confirmatory tests was 100%. Sensitivity (correlation to blood tests) of
the urine screening test was estimated by testing samples from a subset of
individuals with a clinical diagnosis of AIDS at five sites, and sensitivity
was 99.33%.
In spite of the benefits of the Company's urine-based screening test, such test
represents a new method of determining the presence of HIV antibodies.
Blood-based and oral-fluid based tests which constitute competitive products,
have the advantage of already being commercially marketed and have gained
acceptance from the medical community. There can be no assurance that the
Company's urine-based screening test will gain any significant degree of market
acceptance among physicians, patients or health care payors, even if necessary
regulatory and reimbursement approvals are obtained.
21
<PAGE> 24
The Company's test uses an industry standard 96 well microtiter plate to detect
antibodies to HIV-1 in urine. The HIV-1 antibodies, when present in urine, bind
to Calypte's proprietary antigen coated on prepared microtiter plates. A
subsequent enzymatic reaction produces a color change revealing the presence of
HIV-1 antibodies.
The test requires only 200 microliters of urine (approximately four drops) and
can be performed using standard laboratory equipment. Collection of the urine
can take place any time of day, and the test does not require a 24-hour voided
specimen or a midstream, clean-catch sample. Samples can be shipped and stored
at two to 30 degrees centigrade for up to 55 days before testing. The laboratory
protocol for testing urine is nearly identical to that of blood, requiring few,
if any, modifications to existing laboratory protocols.
The Company has entered into an agreement with Cambridge Biotech under which
both Calypte and Cambridge Biotech will market and distribute a urine-capable
western blot confirmatory test which uses technology licensed from the Company.
The western blot kit manufactured by Cambridge Biotech has already received FDA
approval for blood testing, and is the only confirmatory test for which
application has been made for FDA approval for use with urine. Clinical data
related to the Cambridge Biotech License Amendment Application was reviewed by
the FDA Blood Products Advisory Committee on June 21, 1996. The Blood Products
Advisory Committee provides guidance to the FDA on issues related to product
licence applications currently under review by the FDA. At the June 21, 1996
meeting, the Blood Products Advisory Committee determined that the clinical data
and test protocol of the Cambridge Biotech urine confirmatory test supported its
use in conjunction with the Calypte urine-based HIV-1 test. There can be no
assurance that the FDA will grant approval of the Cambridge Biotech urine
confirmatory test.
STRATEGY
The Company's objective is to be the leader in the development and
commercialization of urine-based diagnostic tests. The Company's primary
strategy is to exploit the advantages of using urine instead of blood for HIV
testing to establish its diagnostic screening test as the screening method of
choice for HIV. In addition, building on its expertise in urine-based
diagnostics, the Company intends to develop additional urine-based tests for
sexually transmitted diseases and other human conditions. The key components of
the Company's business strategy are to:
- -- Target and Expand Life Insurance Testing Market. Upon FDA approval, the
Company intends to market its urine-based HIV screening test kit directly to
the five major laboratories that perform the substantial majority of HIV
tests for the domestic life insurance industry. These laboratories currently
collect and test urine from most life insurance applicants for other diseases
and risks. Because of the overall lower cost and because urine is already
routinely collected, the Company believes that its test will enable life
insurance companies to increase the number of applicants tested for HIV.
- -- Penetrate U.S. Clinical Laboratory Market. The Company, through its
distributors, intends to market its tests to laboratories currently serving
physicians. Because of restrictions on the collection of blood in the
physician's office imposed by CLIA, many physicians refer their HIV "at-risk"
patients to phlebotomists at outside laboratory service centers for blood
collection. The Company's urine-based HIV test will allow physicians' offices
to collect the specimen for use with the Company's HIV test.
- -- Pursue International Markets Through Distributor Relationships. Upon approval
from appropriate regulatory authorities, the Company intends to market its
HIV test in international markets pursuant to existing worldwide distribution
agreements. Because of its safety, ease of collection and lower costs, the
Company believes that its urine-based test may be widely employed in certain
international markets not presently served by HIV blood tests.
- -- Enter Emerging OTC Market. The Company intends to file a PMA for FDA approval
of its OTC urine collection kit for home collection. The Company believes
that its OTC urine collection kit would be used by consumers who desire home
urine collection and anonymous HIV testing through Calypte Biomedical
Laboratories. The Company intends to collaborate with a corporate partner to
market and distribute its collection kit to retail outlets in the United
States.
22
<PAGE> 25
- -- Establish Calypte Biomedical Laboratories. The Company intends to establish
Calypte Biomedical Laboratories -- a reference testing laboratory to perform
HIV testing of home-collected urine specimens.
- -- Develop Additional Urine-Based Diagnostics. The Company intends to develop
and commercialize additional urine-based tests for other sexually transmitted
diseases, other human retroviruses and non-sexually transmitted diseases
based on its enabling urine testing technologies. Initially, the Company
intends to focus on developing and commercializing a urine-based screening
test for HIV-2, Chlamydia and H. pylori.
PRODUCTS UNDER DEVELOPMENT
OTC. The Company believes a market opportunity exists for home urine collection
and remote testing for HIV infection. The Company intends to submit an
application for FDA approval for an OTC home urine collection device, which the
consumer would purchase at retail outlets instead of visiting a physician's
office or laboratory for HIV testing. The consumer would provide a specimen sent
in a prepaid mailer to the Company's testing laboratory, Calypte Biomedical
Laboratories. The Company would perform the test, and the consumer will obtain
the results by telephoning the Company and identifying himself or herself with a
unique code to preserve anonymity. The Company believes that the FDA will
require that the results of the tests be reported under strictly controlled
protocols, including counseling. In the event that the Company's OTC HIV home
urine collection kit is approved by the FDA, the Company intends to continue to
manufacture the urine-based HIV-1 test and operate the testing laboratory. The
Company plans to enter into an agreement with an OTC marketing partner to market
and distribute the collection kit.
Chlamydia. The Company received a notice of allowance for a U.S. patent for the
detection of Chlamydia antibodies in urine and is developing a urine-based
Chlamydia detection test. It has been estimated that there are 4.0 million new
cases of Chlamydia occurring annually in the United States and 15 to 20 million
tests for Chlamydia are conducted each year in the United States. Existing tests
for Chlamydia, because they require a urethral swab or a blood sample, are
uncomfortable for the patient. The majority of Chlamydia patients are
asymptomatic and therefore, seldom seek medical treatment. Chlamydia is
estimated to be responsible for between one quarter to one half of all pelvic
inflammatory diseases, about half of all cases of tubal infertility and about
half of all ectopic pregnancies.
HIV-2. The Company is also developing a test for HIV-2, the less common form of
HIV. The Company believes that such a test is important in certain export
markets where the incidence of HIV-2 is higher or where such testing is mandated
by government regulation. In addition, the Company believes that the ability to
detect HIV-2 antibodies will be of value in protecting the Company's competitive
position. The Company has the first right of negotiation with Cambridge Biotech
for certain rights for the detection of HIV-2 under the Cambridge Biotech patent
license from Sanofi Diagnostic Pasteur.
H. pylori. The Company is in discussions with Otsuka Pharmaceutical Co., Ltd.
("Otsuka") to obtain a license to distribute Otsuka's urine-based diagnostic
test for Helicobacter pylori (H. pylori), the putative cause of gastric ulcers
and other intestinal conditions. The H. pylori urine-based test is currently
under development at Otsuka.
Other Diagnostics. The Company is also planning to evaluate the development of
urine-based diagnostic tests for syphilis and herpes. Ultimately, the Company
intends to expand its diagnostic test line so that it will be possible to test
for a wide range of sexually transmitted and other diseases with a single,
non-invasively collected urine sample.
SALES, MARKETING AND DISTRIBUTION
The Company's marketing strategy is to use distributors, focused direct selling
and marketing partners to penetrate certain targeted domestic markets. The
Company plans to maintain a small direct sales force to sell the Company's HIV-1
screening test and potential future products to 12 major laboratories serving
the life insurance, military, immigration and criminal justice markets. Other
U.S. and all international markets will be
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penetrated utilizing diagnostic product distributors. The Company will work
collaboratively with its distributors to market and promote the products in
their local markets.
The following table summarizes the markets and geographic regions covered by the
Company and its distributors for its HIV-1 test:
<TABLE>
<CAPTION>
COMPANY GEOGRAPHIC REGION MARKETS
---------------- -------------------------------- --------------------------------
<S> <C> <C>
Calypte United States 12 laboratories serving the life
insurance, military, immigration
and criminal justice markets.
Calypte Canada All
Seradyn United States All but the above laboratories.
Seradyn Europe, Latin America, Africa, All
Middle East
Otsuka Asia, Australia, New Zealand All
Travenol Israel All
</TABLE>
Seradyn, Inc. Seradyn, Inc. ("Seradyn") a subsidiary of Mitsubishi Chemical
Corporation, is a manufacturer and distributor of clinical diagnostic and
industrial/analytical instrumentation products. In April 1995, the Company
entered into an agreement with Seradyn under which Seradyn was granted exclusive
distribution rights for the HIV-1 tests under the trade name "Seradyn Sentinel"
for all non-Calypte accounts in the United States, and all customers in Europe,
Latin America, Africa and the Middle East (excluding Israel). The agreement
provides for certain minimum purchases by Seradyn. If such minimum purchases are
not met, the Company has the right to terminate the agreement or render
Seradyn's rights non-exclusive for the region in which the minimum purchases
were not met, provided that Seradyn will be guaranteed the prices given to
Calypte's most favored customers in the territory. The initial term of the
agreement extends through December 1998. Seradyn has the right to extend the
agreement for successive two-year terms provided it has met minimum sales
requirements. Seradyn has agreed to assist the Company in obtaining regulatory
approvals in its distribution territory at the Company's expense. The agreement
also grants Seradyn a right of first refusal on distribution rights for certain
new products which may be developed during the term of the agreement.
Otsuka Pharmaceutical Co., Ltd. Otsuka Pharmaceutical Co., Ltd ("Otsuka") is a
Japanese integrated health care and consumer products conglomerate. In August
1994 the Company entered into a distribution agreement with Otsuka, which gives
Otsuka exclusive distribution rights for the urine-based HIV-1 test and to use
the trademark "Calypte" to market the test in 22 Asian countries, Australia and
New Zealand. To maintain exclusivity, the agreement requires that Otsuka
purchase certain annual minimums, which increase each year, and total 70 million
tests over ten years. Otsuka has agreed to use its best efforts to obtain
regulatory approvals for the product in its territory. The agreement is for a
term of ten years, and is terminable without cause by Otsuka upon 120-days
notice. The Company has committed up to one-half of its total manufacturing
capacity to Otsuka. If the Company is unable to meet Otsuka's manufacturing
requirements, Otsuka has a right to manufacture tests itself. The agreement also
grants Otsuka the right of first refusal to distribute certain new products
which may be developed during the term of the agreement.
Travenol Laboratories (Israel) Ltd. In December 1994 the Company entered into an
agreement with Travenol Laboratories (Israel) Ltd. ("Travenol"), a division of
Baxter-Travenol Laboratories. The agreement gives Travenol exclusive rights to
distribute the HIV-1 test and to use the trademark "Calypte" within Israel.
Under the agreement, Travenol will undertake registration of the product in
Israel with the Company paying regulatory fees. The term of the agreement is
perpetual unless terminated earlier for specified causes. No minimum purchase
levels are required.
The Company's products represent a new method of determining the presence of HIV
antibodies and there can be no assurance that these products will gain any
significant degree of market acceptance among physicians, patients or health
care payors, even if necessary international and U.S. regulatory and
reimbursement approvals are obtained. The Company believes that recommendations
and endorsements by the medical community will be essential for market
acceptance of the products, and there can be no assurance that any such
recommendations or endorsements will be obtained. The Company has no experience
marketing and
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<PAGE> 27
selling its products either directly or through its distributors. The Company's
marketing strategy relies upon its alliances with third-party distributors for
the success of its products. There can be no assurance that the Company's direct
sales force will be effective, that its distributors will market successfully
the Company's products or that, if such relationships are terminated, the
Company will be able to establish relationships with other distributors on
satisfactory terms, if at all. Any disruption in the Company's distribution,
sales or marketing network, or failure of the Company's products to achieve
market acceptance, could have a material adverse effect on the Company's
business, financial condition and results of operations.
MANUFACTURING
The manufacture of the Company's urine-based HIV test involves antigen
production, plate processing and preparation of certain washes and other
reagents. Under cGMP, all steps are recorded, those requiring measurement or
calculation are checked by a second technician and all components are inspected
and/or tested at four stages by quality control technicians. Antigen production
involves cell culture, antigen expression and purification. Following
purification, the antigen is tested extensively and optimized for plate coating.
The coating of standard 96 well microtiter plates with antigen is completed
using standard plate coating equipment. Following binding of the antigen to the
plates, the plates are blocked and stabilized to prevent nonspecific binding of
the antigen. The plates are then dried and packaged in foil pouches. The washes
and reagents are produced using standard solution preparation techniques.
Calypte's manufacturing operations are located in Berkeley, California with an
annual capacity of approximately 4.5 million tests. The Company has applied for
an establishment license from the FDA for the production of its HIV-1 screening
test at this facility. The Company has completed a larger manufacturing facility
in Alameda, California and is manufacturing pilot lots required for an amendment
to its pending FDA license for approval of this facility. The capacity of the
Alameda facility is approximately 20 million tests per year. Additionally, the
Company has entered into a manufacturing agreement with Biomira Diagnostics,
Inc., a Canadian corporation, for the production of the Company's tests for
export to certain international markets, in compliance with Company
specifications.
Calypte purchases raw materials and components used in the manufacture of its
product from various suppliers and relies on single sources for several of these
components. Establishment of additional or replacement suppliers for these
components cannot be accomplished quickly. The Company has a number of
single-source components, and any delay or interruption in supply of these
components could significantly impair the Company's ability to manufacture its
products in sufficient quantities, and therefore would have a material adverse
effect on the Company's business, financial condition and results of operations,
particularly as the Company scales up its manufacturing activities in support of
commercial sales.
The Company has limited experience in manufacturing its products. The Company
currently manufactures its products in limited quantities for submission to FDA
for ongoing compliance, international clinical trials and building its inventory
in anticipation of commercialization. The Company does not have experience in
manufacturing its products in commercial quantities. Manufacturers often
encounter difficulties in scaling-up production of new products, including
problems involving production yields, quality control and assurance, raw
material supply and shortages of qualified personnel. Such assumptions may be
incomplete or inaccurate and unanticipated events and circumstances are likely
to occur. The larger Alameda facility will be needed if initial demand exceeds
the more limited capacity of the Berkeley facility. Difficulties encountered by
the Company in manufacturing scale-up to meet demand, including delays in
receiving FDA approval for the Alameda facility, could have a material adverse
effect on its business, financial condition and results of operations.
Due to the nature of its manufacturing processes, the Company is subject to
stringent federal, state and local laws, rules, regulations and policies
governing the use, generation, manufacture, storage, air emission, discharge,
handling and disposal of certain materials and wastes. There can be no assurance
that the Company will not be required to incur significant costs to comply with
land use and environmental regulations as manufacturing is scaled-up to
commercial levels, nor that the operations, business or financial condition of
the Company will not be materially and adversely affected by current or future
environmental laws, rules, regulations and policies. There can be no assurance
that the Company will be able to obtain and maintain all
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<PAGE> 28
required permits in connection with the operation of its manufacturing
facilities. When and if the Company begins to produce products on a commercial
scale, it will be a significant user and disposer of water. The disposal of
water used in the Company's manufacturing processes must comply with applicable
federal, state and local environmental protection laws, and compliance with
these laws may be costly and difficult.
TECHNOLOGY
The Company's HIV-1 urine-based test is based on the finding of scientists at
the New York University Medical Center in 1988 that antibodies to HIV-1 could be
found in urine. Prior to this discovery, it was commonly held that antibodies to
systemic infections could not pass through the kidneys, and thus, could not be
found in the urine of infected individuals. The researchers showed that HIV-1
envelope antibodies were present in all urine samples from HIV-1 seropositive
subjects. Building on this discovery, the Company developed an HIV-1 urine
enzyme immunoassay ("EIA") to detect antibodies to HIV-1 in urine. There are two
proprietary features of the Company's HIV-1 urine-based EIA that result in a
format sensitive enough to detect the low levels of HIV antibodies in urine: the
antigen target and the sample buffer in the assay.
Recognizing the prominence of envelope antibodies in urine, the antigen target
in the assay is a full length, recombinant glycosylated HIV-1 envelope protein,
rgp160. Although this antigen is a recombinant glycoprotein, it is identical to
the viral envelope protein gp160 in amino acid sequence and in the presence of
carbohydrate at glycosylation sites. This kind of antigen target can efficiently
capture the full range of HIV-1 envelope specific antibodies produced in the
human polyclonal response to the virus. The microwell assay format permits the
high availability of epitopes of the recombinant envelope glycoprotein for
antibody binding. This availability of epitopes results in the sensitivity
verified in clinical trials.
The Company has non-exclusive rights to the proprietary process used to express
the recombinant HIV-1 envelope glycoprotein from Texas A&M University. This
proprietary process for manufacture of rgp160 begins with the baculovirus
expression vector system established in an insect cell culture. The consistent
and high levels of rgp160 expression in baculovirus infected insect cell culture
is a critical step in the overall manufacture of rgp160. The Company improved
and upgraded the Repligen process with a proprietary process which uses a system
in which the HIV-1 envelope protein is produced in the insect cell membrane
rather than typical tissue culture systems where the protein is secreted into
insect cell culture media. Rgp160 is an insoluble protein and requires detergent
based extraction and purification procedures which are proprietary.
The Company developed and has obtained a U.S. patent claiming a sample buffer
formulation, which is used in the HIV-1 urine test. This sample buffer acts as a
diluent for urine in the assay procedure and significantly increases test
specificity by reducing non-specific binding of immunoglobulins (non-specific
antibodies) and other substances in urine that would decrease specificity and
sensitivity of HIV-1 antibody binding. Sample buffer is manufactured in the
Company's facilities.
The Company's products incorporate classical immunoassay technology based on
antibody-antigen reactions. Antibodies are immune system proteins produced as a
result of an organism's immune response to substances (antigens) foreign to the
body and specifically bind to antigens and signal the immune system to assist in
eliminating them. Immunoassays are used for diagnostic applications where the
presence or absence of a specific analyte is being evaluated and allow the
detection of some analytes at levels as low as one part per billion. Antigens
include viruses, bacteria, parasites, chemical toxins and other foreign
substances and hormones.
The HIV-1 urine assay format includes a standard 96 well microtiter plate which
is compatible with standard laboratory instrumentation. The microwell plates are
coated with proprietary recombinant HIV-1 envelope protein antigen. Patient
urine and the unique specimen diluent are introduced to the microwell
simultaneously. If HIV-1 antibodies are present, they bind to the antigen coated
well and remain during the subsequent wash steps. An enzyme labeled conjugate is
added to the well. This conjugate binds specifically to human antibody which
remains from the previous step. Following another wash, substrate reagent is
added and color development occurs due to the presence of the enzyme conjugate
in the well. This color is measured spectrophotometrically on a standard
laboratory microwell plate reader. The presence of HIV antibody in the
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<PAGE> 29
specimen is indicated by the development of color in the microwell, and the
intensity of the color is proportional to the amount of antibody.
CLINICAL TRIALS
The Company has performed preclinical and clinical studies which support the use
of urine as a reliable and clinically valid sample. Four of the studies are
described below:
Metpath Laboratories, Inc. The feasibility of HIV-1 antibody detection in urine
was established in a large preclinical study at Metpath Laboratories, Inc. which
included 7,357 urine samples from a low risk population. A positive prevalence
rate for HIV-1 in urine of 0.80% agreed with the reported HIV-1 serum positive
rate. Of the 1,746 urine samples matched to serum, five urine positives agreed
with the five serum positives. For urine negatives, 1,736 out of 1,741 were
correctly identified resulting in a 99.71% correlation to serum. In addition, in
a study of 94 paired urine and serum samples from subjects previously determined
to be HIV-1 seropositive, antibodies to HIV-1 were detected in all urine by
Calypte's urine-based HIV-1 screening test.
Center for AIDS Prevention Studies and the University of California at San
Francisco. Researchers at the Center for AIDS Prevention Studies and the
University of California at San Francisco ("UCSF") carried out a large
validation study of the diagnostic accuracy of the urine-based HIV-1 screening
test for HIV envelope antibodies in urine. Matched blood and urine specimens
collected from 586 recovering alcoholics were tested by two independent
laboratories blinded to results at the other site. The matched urine samples
were tested by and confirmed by a urine-based western blot. The urine-based
HIV-1 screening test when confirmed by a urine western blot led to a correct
diagnosis in all samples. The authors reported that the urine EIA demonstrated a
specificity of 100% and a sensitivity also estimated to be 100%.
Multicenter Trial. In clinical trials for the urine-based HIV-1 screening test
conducted at five geographic locations, approximately 11,000 matched blood and
urine specimens were tested. Assay specificity was assessed by testing paired
urine and serum samples from a combined subset of 7,074 low risk individuals.
Specificity of the screening test (prior to confirmation with western blot) was
determined to be 99.18%. In diagnosis of AIDS, sensitivity was estimated to be
99.33%. Paired urine and serum specimens from asymptomatic and symptomatic HIV-1
infected subjects and subjects at high risk for HIV-1 infection were also
tested. Urine correlation with blood for these 614 samples was 98.20%.
Japanese Ministry of Health Study. An independent study of the performance of
the urine-based HIV-1 screening test was carried out by the Japanese Ministry of
Health and reported at the 1994 International AIDS Conference in Yokohama,
Japan. Paired urine and serum samples from 200 HIV-1 infected subjects and 700
healthy subjects in a low risk population were tested using the urine-based
HIV-1 screening test, confirmed by urine western blot and compared with serum
EIA and serum western blot results. There was agreement between all 200 urine
positives and serum positives and agreement between all 700 urine negative and
serum negative results. Urine correlation with serum was 100% for all urine
samples tested.
INVESTMENT IN PEPGEN
In October 1995 Calypte purchased a 49% equity interest in Pepgen, a therapeutic
research and drug development company with two lead compounds in preclinical
evaluation. The first compound is an interferon product, called interferon-tau,
which in early animal trials has shown to be effective both as an anti-viral and
anti-tumor agent with less toxicity than other interferons. Pepgen has planned
further preclinical studies and if the preclinical studies are successful,
Pepgen anticipates seeking approval from the FDA to commence human clinical
trials. Pepgen's second lead compound is a growth factor called uteroferrin.
This compound has stimulatory effects on the growth and differentiation of blood
cells. Uteroferrin is a glycoprotein that is secreted by the uterine
endometrioepithelium. Based on animal studies, the stimulation of hematopoietic
cells by uteroferrin appears to act at an earlier stage of stem cell development
than other known hematopoietic growth factors.
Pepgen holds an exclusive worldwide license to both of these compounds from the
University of Florida. The Company purchased its equity position in Pepgen for
$2.5 million, comprised of $1.0 million paid at closing,
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$1.0 million payable to Pepgen pursuant to a promissory note and options to
purchase the Company's Common Stock valued at $500,000. The $1.0 million
promissory note is due and payable upon the earlier of (i) October 1996 or (ii)
60 days following either FDA approval of the Company's urine-based HIV-1
screening test or the closing of this Offering. The options were granted to
Pepgen shareholders for the purchase of an aggregate of 475,000 shares of the
Company's Common Stock at a price of $7.50 per share, of which 100,000 are
immediately exercisable and the remaining 375,000 are exercisable upon
attainment of certain milestones. The options expire at the earlier of September
2005 or three years after becoming exercisable. In addition, Calypte has the
right of first negotiation to purchase the remaining 51% of Pepgen at fair
market value, and the Company is entitled to elect two of the seven Board
members of Pepgen. Other than the payment of the $1.0 million promissory note,
Calypte does not have any ongoing commitments to fund Pepgen. See "Certain
Transactions" and "Use of Proceeds."
PATENTS, PROPRIETARY RIGHTS AND LICENSES
The Company believes that its future success will depend in large part on its
ability to protect its patents and proprietary rights. Accordingly, the
Company's ability to compete effectively will depend in part on its ability to
develop and maintain proprietary aspects of its technology. The Company has one
U.S. patent, four pending U.S. patent applications, and thirteen foreign
patents, and sixteen pending foreign patent applications. In addition, the
Company has the right to utilize certain patents and proprietary rights under
licensing agreements with NYU, Cambridge Biotech, Repligen, Texas A&M University
System and Stanford University. These license arrangements secure intellectual
property rights for the manufacture and sale of the Company's products.
The Company has licensed from NYU, on an exclusive basis, a U.S. patent for the
detection of antibodies to HIV in urine. The rights under the license extend
until the expiration of the U.S. patent in 2009 provided the Company makes
certain payments. The Company has the right to make, use, sell and sublicense
products utilizing the technology described in the patent and is obligated to
make certain fixed and royalty payments to NYU to maintain exclusivity of the
license. In connection with the NYU license, the Company also funded research at
NYU, and expects to continue to do so through 1999. The Company has exclusive
worldwide license to NYU inventions that arise from the research funded by the
Company.
The Company has sublicensed from Cambridge Biotech proprietary technology
related to the HIV envelope glycoprotein. The Company has a non-exclusive
worldwide sublicense to make, have made, use and sell products that relate to
the licensed technology. The Company is required to pay Cambridge Biotech
royalties on products incorporating the licensed technology. The license extends
until the expiration of the licensed patents in 2005, although the Company can
terminate the agreement at any time upon 30-day's written notice.
The Company has been granted a non-exclusive license from Texas A&M University
to make, have made, use and sell products based on its proprietary recombinant
expression systems. The Company is required to pay certain fixed and royalty
payments to Texas A&M University on net sales varying with the content of Texas
A&M's technology in the Company's products.
The Company licensed from Repligen HIV-1 gp160 recombinant virus seed stock. The
Company has been granted (i) an exclusive license to make, have made, use and
sell products incorporating this material for diagnostic purposes, and (ii)
non-exclusive license to make, have made, use and sell the gp160 seed stock for
research purposes. For seven years beginning on the date the Company first
realizes net sales from products incorporating gp160, the Company must pay to
Repligen certain royalties on net sales derived such from products and certain
royalties on net sublicensing revenue derived from sales of products
incorporating. In addition, the Company is required to pay certain fixed and
royalty payments for a non-transferrable, non-exclusive license from Stanford
University to a patent relating to recombinant DNA processes.
The HIV testing industry has been characterized by extensive litigation
regarding patents and other intellectual property rights. Litigation or
interference proceedings could result in significant diversion of efforts by the
Company's management and technical personnel. There are a number of filed and
issued patents involved with the detection of HIV antibodies. One such patent is
currently owned by Chiron Corporation. While the Company, based on the opinion
of its patent counsel, believes that its urine-based HIV-1 screening
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test does not infringe the Chiron patent, there can be no assurances that Chiron
will not assert such claims against the Company. Patent litigation can be costly
and protracted. The expense of litigating a claim against the Company for patent
infringement could have a material adverse effect on the Company's business,
financial condition and results of operations. In the event that the Company was
found to be infringing a validly issued patent, and the Company could not obtain
a license to such patent on reasonable terms, the Company could be forced to pay
damages, obtain a license to such patent at a significantly higher rate or,
possibly, remove its urine-based HIV-1 screening test from the market. Such an
event would have a material adverse effect on the Company's business, financial
condition and results of operations.
There can be no assurance that the Company will not in the future become subject
to patent infringement claims and litigation or interference proceedings
declared by the USPTO to determine the priority of inventions.
Although patent and intellectual property disputes in the medical diagnostic
area have often been settled through licensing or similar arrangements, costs
associated with such arrangements may be substantial and could include ongoing
royalties. Furthermore, there can be no assurance that necessary licenses would
be available to the Company on satisfactory terms if at all. Adverse
determinations in a judicial or administrative proceeding or failure to obtain
necessary licenses could prevent the Company from manufacturing and selling its
products, which would have a material adverse effect on the Company's business,
financial condition and results of operations. There can be no assurance that
the Company will be able to maintain exclusivity under or maintain its current
license agreements.
The Company relies on trade secrets and proprietary know-how, which it seeks to
protect, in part, through appropriate confidentiality and proprietary
information agreements. These agreements generally provide that all confidential
information developed or made known to the individual by the Company during the
course of the individual's relationship with the Company is to be kept
confidential and not disclosed to third parties, except in specific
circumstances. The agreements generally provide that all inventions conceived by
the individual in the course of rendering services to the Company shall be the
exclusive property of the Company; however, certain of the Company's agreement
with consultants, who typically are employed on a full-time basis by academic
institutions or hospitals, do not contain assignment of invention provisions.
There can be no assurance that proprietary information or confidentiality
agreements with employees, consultants and others will not be breached, that the
Company would have adequate remedies for any breach, or that the Company's trade
secrets will not otherwise become known to or independently developed by
competitors.
GOVERNMENT REGULATION
Overview
The Company's products are subject to extensive regulation by the FDA and, to
varying degrees, by state and foreign regulatory agencies. The Company's
products are regulated by the FDA under the Federal Food, Drug, and Cosmetic Act
(the "Act"), as amended by the Medical Device Amendments of 1976 and the Safe
Medical Devices Act of 1990, among other laws. Under the Act, the FDA regulates
the preclinical and clinical testing, manufacturing, labeling, distribution,
sale and promotion of medical devices in the U.S. The FDA prohibits a device,
whether or not cleared under a 510(k) premarket notification or approved under a
PMA, from being marketed for unapproved clinical uses. If the FDA believes that
a company is not in compliance with the regulations, it can institute
proceedings to detain or seize a product, issue a recall, prohibit marketing and
sales of the Company's products and assess civil and criminal penalties against
the Company, its officers or its employees. Furthermore, the Company plans to
sell products in certain foreign countries of which impose local regulatory
requirements. The preparation of required applications and subsequent FDA and
foreign regulatory approval process is expensive, lengthy and uncertain. Failure
to comply with FDA and similar foreign requirements could result in civil
monetary penalties or criminal sanctions, restrictions on or injunctions against
marketing of the Company's products. Additional enforcement actions may
potentially include seizure or recall of the Company's products, and other
regulatory action. There can be no assurance that the Company will be able to
obtain necessary regulatory approvals or clearances in a timely manner or at
all, and delays in receipt of or failure to receive such approvals or
clearances, the loss of previously received
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approvals or clearances, or failure to comply with existing or future regulatory
requirements would have a material adverse effect on the Company's business,
financial condition and results of operations.
HIV-1 Screening and Diagnostic Tests
The Company's HIV-1 screening test is regulated by the FDA Center for Biologics
Evaluation and Research. When the test was submitted to the FDA in September
1992, the FDA required a PLA and an ELA for the Company's Berkeley, California
manufacturing facility.
OTC Home Urine Collection Kit
The Company intends to file a PMA with the FDA for the HIV-1 home urine
collection kit which would allow consumers, in the privacy of their homes to
take a urine sample, mail it to Calypte Biomedical Laboratories for analysis and
then anonymously obtain results and professional counseling by telephone. The
Company believes that a submission for FDA approval of this product must set
forth the Company's plans for the reporting of results to the consumer and
consumer counseling services. In addition, the PMA will need to include the
results of extensive clinical studies and manufacturing information and may be
reviewed by a panel of experts outside the FDA. Clinical studies need to be
conducted in accordance with FDA requirements, and the failure to strictly
comply with such requirements could result in the FDA's refusal to accept the
data or in other sanctions.
There can be no assurance that the FDA will approve the Company's HIV-1 home
urine collection kit for OTC distribution and sale. Furthermore, there can be no
assurance that the FDA will not request additional data or require that the
Company conduct further clinical studies causing the Company to incur additional
costs and delay. In addition, there can be no assurance that the FDA will not
limit the intended use of the Company's products as a condition of PMA approval.
Failure to receive or delays in receipt of FDA approvals, or any FDA limitations
on the intended use of the Company's products, would have a material adverse
effect on the Company's business, financial condition and results of operations.
Manufacturing Facilities
The FDA requires the Company's products to be manufactured in compliance with
cGMP regulations. In addition, the Company is subject to certain additional
manufacturing regulations imposed by the State of California. These regulations
require that the Company manufacture its products and maintain related
documentation for testing and control activities. The Company's facilities and
manufacturing processes have been periodically inspected by the State of
California and other agencies and remain subject to audit from time to time. The
Company believes that it is in substantial compliance with all applicable
federal and state regulations. Nevertheless, there can be no assurance its
manufacturing facility will satisfy cGMP or California manufacturing
requirements. Enforcement of the cGMP regulations has increased significantly in
the last several years, and the FDA has publicly stated that compliance will be
more strictly enforced. In the event that the FDA determines the Company to be
out of compliance with its regulations and to the extent that the Company is
unable to convince the FDA of the adequacy of its compliance, the FDA has the
power to assert penalties, including injunctions or temporary suspension of
shipment until compliance is achieved. In addition, FDA will not approve ELA or
PMA if the facility is found in noncompliance with cGMPs. Such penalties could
have a material adverse effect on the Company's business, financial condition
and results of operations.
In addition, the manufacture, sale or use of the Company's products are subject
to regulation by other federal entities, such as the Occupational Safety and
Health Agency, the Environmental Protection Agency, and by various state
agencies, including the California Environmental Protection Agency. Federal and
state regulations regarding the manufacture, sale or use of the Company's
products are subject to future change, and these changes could have a material
adverse effect on the Company's business, financial condition and results of
operations.
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International
Distribution of the Company's products outside the United States is also subject
to regulatory requirements that vary from country to country. In a number of
foreign countries, FDA approval is required prior to approval in that country.
The export by the Company of certain of its products which have not yet been
approved for domestic commercial distribution may be subject to FDA export
restrictions. To date, the Company has not received approval for the sale of its
product in any foreign country. Failure to obtain necessary regulatory approvals
or failure to comply with regulatory requirements would have a material adverse
effect on the Company's business, financial condition and results of operations.
Calypte Biomedical Laboratories
Any of Calypte's laboratory customers, using the Company's diagnostic devices
for clinical use in the United States, and the Company itself when it
establishes its own laboratory, will be regulated under CLIA. CLIA is intended
to ensure the quality and reliability of all medical testing in laboratories in
the United States by requiring that any health care facility in which testing is
performed meet specified standards in the areas of personnel qualification,
administration, participation in proficiency testing, patient test management,
quality control, quality assurance and inspections. The regulations have
established three levels of regulatory control based on complexity: "waived,"
"moderately complex," and "highly complex." Calypte believes that its test will
be categorized as highly complex tests for clinical use in the United States.
Laboratories that perform either moderately or highly complex tests must meet
quality control and personnel standards. Personnel requirements for highly
complex tests are more rigorous than those for moderately complex tests,
requiring that personnel have more education and experience than personnel
conducting moderately complex tests. Under the CLIA regulations, all
laboratories performing high or moderately complex tests are required to obtain
either a registration certificate or certifications of accreditation from the
Health Care Financial Administration. There can be no assurance that the CLIA
regulations and future administrative interpretations of CLIA will not have an
adverse impact on the potential market for the Company's products.
Therapeutic Products
If the Company exercises its rights to acquire a controlling interest in or
substantially all of Pepgen, Calypte will be required to obtain FDA approval for
Pepgen's therapeutic products, a process which has historically been
substantially more costly and time consuming than for diagnostic products. To
obtain such approval, the Company must conduct preclinical safety and toxicology
studies in the laboratory and Phase I, II, and III clinical studies under FDA
approved protocols. The results of the pre-clinical and clinical testing for a
new drug, together with detailed manufacturing and other information, would then
be submitted to the FDA in the form of a new drug application. In responding to
a new drug application, the FDA may refuse to accept the application for filing,
request additional information or deny the application if the FDA determines
that the application does not satisfy its regulatory approval criteria. The
process of completing clinical testing usually takes a number of years and
requires the expenditure of substantial resources. The length of the FDA review
period varies widely depending upon the amount and quality of the data in the
application and the nature and indications of the proposed product. In addition,
the FDA may require post-marketing reporting and may require surveillance
programs to monitor the usage and side effects of the drug product after product
approval. The Company has no current plans to acquire the remaining equity
ownership in Pepgen or to develop Pepgen therapeutic products.
COMPETITION
Competition in the in vitro diagnostic market is intense and expected to
increase. Within the United States, the Company will face competition from a
number of well-established manufacturers of blood-based EIAs, plus at least one
system for the detection of HIV antibodies using oral fluid samples. In
addition, the Company may face intense competition from competitors with
significantly greater financial, marketing and distribution resources than the
Company, several of whom have already submitted applications to FDA for approval
of their OTC products.
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<PAGE> 34
The suppliers of blood-based HIV tests in the United States include Abbott
Laboratories ("Abbott"), Organon-Teknika Corporation ("Organon-Teknika"), Sanofi
Diagnostic Pasteur ("Sanofi"), Ortho Diagnostics ("Ortho") and Cambridge
Biotech. All of these companies have many years of HIV market experience, and
they typically offer a number of different testing products. Abbott, Sanofi and
Ortho currently sell FDA-licensed blood-based HIV-1/HIV-2 combination tests on
the market in the United States, and other companies may be developing
HIV-1/HIV-2 products.
The Company believes that HIV screening tests which permit the use of oral fluid
may offer significant competition to the Company's urine-based HIV-1 screening
test. The OraSure(TM) collection device manufactured by Epitope, Inc.
("Epitope") used in conjunction with an HIV-1 EIA manufactured by Organon-
Teknika received FDA approval for marketing in the United States in December
1994. In June 1996, Epitope received approval from the FDA for a western blot
oral-fluid confirmatory test.
The Company is not aware of any competitors which have submitted urine-based HIV
screening tests to the FDA, but there can be no assurance that such tests will
not be submitted in the future for approval by the FDA. The Company is aware of
only one other manufacturer, Murex Corporation ("Murex"), which has publicly
announced urine capability for an HIV test. Murex manufactures a number of HIV
assays in microtiter format, none of which have been submitted to the FDA for
review. One such microtiter assay, "gacelisa," is intended for use on saliva and
urine samples but is marketed only outside of the U.S. primarily as a research
assay. Murex markets one HIV product in the U.S., the SUDS(TM) rapid test, which
is intended for use on serum and plasma only. Although urine capability for this
test has been reported in scientific literature, the Company is not aware of any
applications for expanded sampling claims for this assay. In addition, the
SUDS(TM) assay format is not conducive to high-volume testing.
Essentially all of the Company's competitors actively market their diagnostic
products outside of the U.S. In addition, outside of the U.S., where the
regulatory requirements for HIV screening tests are less onerous than those of
the FDA, a much wider range of competitors can be found. Manufacturers from
Japan, Canada, Europe, and Australia offer a number of HIV screening tests in
those markets including HIV-1/HIV-2 tests, rapid tests and other non-EIA format
tests, which are not approved for sale in the U.S. market. There can be no
assurances that the Company's products will compete effectively against these
products in foreign markets, or that these competing products will not achieve
FDA approval.
Three companies have submitted applications to the FDA for OTC HIV blood
testing: Direct Access Diagnostics, a subsidiary of Johnson & Johnson, Home
Access Health Corporation, and ChemTrak Incorporated. The FDA has approved the
home collection kit for HIV blood testing developed by Direct Access
Diagnostics. The Company believes that an OTC HIV testing system which does not
require consumers to collect their own blood may compete favorably against DBS
systems. However, there can be no assurances that the earlier market entry of
these competitors, their substantial promotional and distribution resources, and
future introduction of HIV-1/HIV-2 products will not prevent the Company from
competing favorably. The Company's inability to compete favorably with respect
to any of these factors could have a material adverse effect on its business,
financial condition, and results of operations.
If the Company is successful in developing and introducing urine-based Chlamydia
or other STD tests, it will face competition from established diagnostic testing
companies with greater financial, marketing and distribution resources than the
Company. Some of these companies are marketing established tests in widely-used
formats. In addition, Abbott Laboratories has applied for FDA approval for a
urine-based diagnostic test for chlamydia antigen.
EMPLOYEES
As of March 31, 1996, the Company had 59 full time employees, 13 of whom were
engaged in or directly supported the Company's research and development
activities, 29 of whom were in manufacturing, facilities and quality assurance,
three of whom were in marketing and sales and 14 of whom were in administration.
The Company's employees are not represented by a union or collective bargaining
entity. The Company believes its relations with its employees are good.
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<PAGE> 35
FACILITIES
The Company currently leases approximately 20,000 square feet of office,
research and manufacturing space in Berkeley, California. The existing lease
expires in June 1997, with an option to renew the lease for two one-year terms.
The Company also leases approximately 22,000 square feet of office and
manufacturing space in Alameda, California. The existing lease expires in
November, 1998, with an option to renew the lease for two successive five-year
periods. The Company believes that existing facilities are adequate to support
the Company's activities for the foreseeable future.
LEGAL PROCEEDINGS
An action was brought against the Company in California Superior Court by a
former employee, alleging, in connection with the Company's termination of the
employee, gender and age discrimination, wrongful termination, breach of
contract and breach of implied covenant of good faith and fair dealing. This
former employee has requested in her complaint compensatory and punitive damages
along with attorneys fees and costs. The Company believes that the claims are
without merit and plans to vigorously defend against them.
SCIENTIFIC ADVISORY BOARD
The Scientific Advisory Board is composed of certain of the Company's scientists
and other leading scientists who have been actively involved in pioneering HIV
research. Scientific Advisory Board members meet as a group and individually
with management and key scientific employees of the Company on a regular basis.
Scientific Advisory Board members have taken an active role in helping the
Company identify scientific and product development opportunities and recruiting
and evaluating the Company's scientific staff. The Company has granted options
to acquire its Common Stock to members of the Scientific Advisory Board.
The members of the Scientific Advisory Board and their experience are set forth
below:
ABUL K. ABBAS, M.D., Professor, Department of Pathology, Harvard Medical School.
Dr. Abul Abbas is an expert in the cellular interactions and cytokine regulation
of the immune response. Professor Abbas received his M.D. in India in 1968 and
interned at Harvard Medical School in 1970. He has held the position of
Professor of Pathology since 1991. Professor Abbas has also received the
Parke-Davis Award for Experimental Pathology (1987).
ALVIN FRIEDMAN-KIEN, M.D., Professor, New York University Medical Center, New
York. Since 1994, Dr. Friedman-Kien has been a Professor of Microbiology and
Dermatology at New York University Medical Center and Bellevue Hospital. Dr.
Friedman-Kien is a clinician and researcher with expertise in the field of AIDS
and AIDS related opportunistic infections. In particular, Professor
Friedman-Kien is an expert in the etiological relationship between HIV and other
human viruses. The detection of antibodies to HIV in urine was first reported by
Dr. Friedman-Kien. Dr. Friedman-Kien graduated in 1956 with a B.A. degree from
Brown University and received an M.D. degree from Yale University Medical School
in 1960.
TOBY D. GOTTFRIED, PH.D. is the Company's Director of Research and Development.
See "Management -- Directors and Executive Officers."
HOWARD JOHNSON, PH.D., Graduate Research Professor, Department of Microbiology
and Cell Science at the University of Florida in Gainesville. From 1985 to 1988
he was Professor in the Department of Comparative and Experimental Pathology at
the University of Florida. Prior to this, Dr. Johnson was also on the faculty of
the University of Texas. He was also Founder and President of PepTech, Inc., a
subsidiary of Pepgen, and holds the patent on arginine vasopressin-binding
antihypertensive peptide. He is currently a member of a National Advisory
Council for the National Institutes of Health. Dr. Johnson received his B.S. and
Ph.D. degrees from The Ohio State University.
NORMAN KLINMAN, M.D., PH.D., Member, Department of Immunology, The Scripps
Research Institute, La Jolla, California. Dr. Klinman received his M.D. in 1962
and Ph.D. in Microbiology in 1965 from the University of Pennsylvania. He served
on the faculty of the Department of Pathology and Microbiology at the University
of Pennsylvania for 10 years before accepting his current position in 1978 in
the Department of Immunology at Scripps.
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<PAGE> 36
DANIEL LANDERS, M.D., Director for the Division of Reproductive and Infectious
Diseases and Immunology, Department of Obstetrics, Gynecology & Reproductive
Sciences, Magee-Womens Hospital at the University of Pittsburgh. From 1992 to
1995, Dr. Landers was Associate Professor for the Department of Obstetrics,
Gynecology and Reproductive Sciences at UCSF. He is a well-known expert in
sexually transmitted diseases in women, and the recipient of numerous awards,
including the Susman Memorial Award for the Infectious Diseases Society of
America, Young Investigator Award for Infectious Disease Society for OB/GYN, an
NIH Physician-Scientist Award, and the Pediatric AIDS Foundation Scholar Award.
He received his M.D. in 1980 at UCSF.
LUC MONTAGNIER, M.D., Professor, Pasteur Institute, Paris, France. Professor
Montagnier began his career as a researcher at the Centre National de la
Recherche Scientifique. In 1972, he joined the Pasteur Institute and formed the
Division of Viral Oncology. In 1983, he discovered the HIV virus and showed its
etiologic role in AIDS. In 1985, his research team isolated the second human
AIDS virus (HIV-2) from West African patients. Among the numerous honors and
prizes received by Professor Montagnier are the Rosen Price (1971), the Gallien
Prize (1985), the Lasker Prize (1986), the Gairdner Price (1987), the Japan
Prize (1988), and the Amsterdam Prize (1994). He is also a Comandeur de l'Ordre
National merite and is a Director of the French National Center of Scientific
Research.
HOWARD B. URNOVITZ, PH.D. is the Company's Chief Science Officer and a Director.
See "Management -- Directors and Executive Officers."
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<PAGE> 37
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to the executive
officers and directors of the Company as of May 15, 1996:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------- --- ----------------------------------------------
<S> <C> <C>
William A. Boeger (1)(2)....... 46 Chairman of the Board of Directors
John P. Davis.................. 54 President, Chief Executive Officer and Member
of the Board of Directors
Howard B. Urnovitz, Ph.D....... 42 Chief Science Officer and Member of the Board
of Directors
John J. DiPietro............... 38 Vice President of Finance, Chief Financial
Officer and Secretary
Toby Gottfried, Ph.D........... 57 Director of Research and Development
Richard Van Maanen............. 36 Director of Marketing, Sales and Business
Development
Jeffrey Lang................... 45 Director of Operations
Cynthia Green.................. 49 Director of Regulatory Affairs and Quality
Assurance and Quality Control
Kuo-Yu (Frank) Chiang.......... 44 Member of the Board of Directors
David Collins (1).............. 62 Member of the Board of Directors
Julius R. Krevans, M.D. (2).... 71 Member of the Board of Directors
Mark Novitch, M.D. (1)......... 64 Member of the Board of Directors
Roger Quy, Ph.D. (2)........... 45 Member of the Board of Directors
Hideji Nonomura................ 49 Member of the Board of Directors
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
WILLIAM A. BOEGER has served as the Company's Chairman of the Board since
January 1994. From January 1994 until September 1995, Mr. Boeger served as the
Company's Chairman, President and Chief Executive Officer. Mr. Boeger has been a
Director of the Company since 1991. He is a founder and Managing General Partner
of Quest Ventures, a venture capital partnership founded in August 1985. Prior
to that he was a General Partner of Continental Capital Ventures, a venture
capital partnership. Before entering the venture capital field, he worked at
Harvard Medical School and Peter Bent Brigham Hospital and served on the faculty
of the Amos Tuck Business School at Dartmouth College. Mr. Boeger also serves as
Chief Executive Officer and Chief Financial Officer of Pepgen Corporation, the
49% owned therapeutic subsidiary of Calypte. He also serves on the Board of
Directors of IRIDEX Corporation and several private life sciences companies and
non-profit corporations. Mr. Boeger received his M.B.A. from the Harvard
Business School and his B.S. from Williams College.
JOHN P. DAVIS has served as the Company's President and Chief Executive Officer
since September 1995. He joined the Company in May 1995 as President and Chief
Operating Officer. Prior to joining the Company, from 1984 until 1995, Mr. Davis
was co-founder, President and, later, Chief Executive Officer of Dianon Systems,
Inc., a medical laboratory company specializing in oncology, urology, and
anatomic pathology testing services and information systems. From 1981 until
1984, Mr. Davis was Division President of API, a diagnostic products division of
American Home Products Corporation. Mr. Davis was employed from 1966 until 1981
by Abbott Laboratories, a multinational health care corporation company, where
he held senior management positions in both the Ross Laboratories and the
Diagnostics Products Divisions, most recently as Division Vice President and
General Manager of the Diagnostic Products Business Unit. Mr. Davis also serves
as a director of Pepgen and is a member of the board of directors of Athena
Neuroscience Inc. He is a board
35
<PAGE> 38
member and Vice Chairman of the Board of Directors of Dianon Systems Inc. Mr.
Davis received a B.S. from The Ohio State University.
HOWARD B. URNOVITZ, PH.D. is the founder of the Company and serves as Chief
Science Officer. Prior to founding the Company in 1988, Dr. Urnovitz was a
Senior Scientist at the Institute of Cancer Research in San Francisco from 1985
to 1987. He was Director of Molecular and Cellular Engineering at Xoma
Corporation, a biotechnology corporation, from 1983 to 1985. Prior to this, he
was Director of the Hybridoma Laboratory at the University of Iowa. Dr. Urnovitz
received a B.S. in Microbiology and a Ph.D. in Microbiology from the University
of Michigan, and completed a post-doctoral study at Washington University.
JOHN J. DIPIETRO has served as the Company's Vice President of Finance, Chief
Financial Officer and Secretary since October 1995. Prior to joining the
Company, he was Vice President of Finance, Chief Financial Officer and Secretary
of Meris Laboratories, a full service clinical laboratory, from 1991 until 1995.
While at Meris Laboratories, Mr. DiPietro, inter alia, was a respondent in an
SEC administrative proceeding (No. 3-8484), dated September 26, 1994 in which,
without admitting or denying the SEC's findings, Mr. DiPietro consented to the
entry of an order that Mr. DiPietro cease and desist from committing or causing
any violation, and any future violations of Sections 17(a)(2) and (3) of the
Securities Act, Section 13(a) of the Exchange Act and Rules 126-20, 13a-1, and
13a-13 thereunder. From 1980 until 1983 and from 1986 until 1991, Mr. DiPietro
was a Senior Manager at Price Waterhouse. Mr. DiPietro served as Credit Manager
for Motorola, Inc., an electronics company, from 1983 until 1986. He is a
Certified Public Accountant and received his M.B.A. from the University of
Chicago, Graduate School of Business and a B.S. in accounting from Lehigh
University.
TOBY GOTTFRIED, PH.D. has served as Director of Research and Development since
joining the Company in 1988. From 1983 until 1988 she was a founding Senior
Scientist of Carcinex Corporation, a cancer therapeutic company. From 1978 until
1980, Dr. Gottfried was a scientist at the Hepatitis Research Laboratory of the
University of California, San Francisco Medical Center. Dr. Gottfried received
her Ph.D. in Biochemistry from the University of Pennsylvania and her B.S. from
Cornell University.
RICHARD VAN MAANEN has served as Director of Marketing, Sales and Business
Development since March 1993. Prior to joining Calypte, Mr. Van Maanen held
several positions from 1987 until 1993 at ADI Diagnostics Inc., a medical
manufacturing company, including Director of Sales and Marketing, Marketing
Manager, and Canadian Business Manager. From 1983 until 1987 he held sales and
marketing positions with the Diagnostics Division of Abbott Laboratories and
from 1981 until 1983 he was with Millipore Corporation, a filtration products
company. Mr. Van Maanen received a B.S. in Biology from the University of
Guelph, Ontario.
JEFFREY LANG has served as Director of Operations since June 1993. From 1992
until 1993 he was Director of Operations at Varian Associates, a medical
products company, supporting medical device operations. Prior to that, from 1983
until 1991 Mr. Lang held several positions with Airco Coating Technology, an
engineering and glass coating company, including Vice President of Manufacturing
and Engineering, Director of Manufacturing and Engineering, and Operations
Manager. From 1973 until 1983, he held several positions with Miles
Laboratories, a pharmaceutical company, including Production Manager, Senior
Manufacturing Engineer, and Production Supervisor. Mr. Lang received his B.S. in
Physics from California State University, Hayward.
CYNTHIA GREEN has served as Director of Regulatory Affairs, Quality Assurance
and Quality Control since June 1992. From 1990 until 1992, she was Manager of
Regulatory and Quality Assurance at CellPro Inc., a biotechnology company. Prior
to that, from 1983 until 1990, Ms. Green worked at Genetic Systems, a
manufacturer of HIV and hepatitis diagnostic products, as the Quality Assurance
and Quality Control Manager. Ms. Green received a B.S. in Bacteriology and
Public Health from Washington State University.
FRANK CHIANG has served on the Company's Board of Directors since March 1992.
From 1972 to the present he has been employed by the Ta Chiang Corporation,
Ltd., a Taiwanese holding corporation, where he has served in a number of
executive capacities including his most recent position as President. Mr. Chiang
also serves on the Board of Directors of the G.C.H. Company, the Ta Security
Limited Company, and the Fidelity Venture Capital Corporation.
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<PAGE> 39
DAVID COLLINS has served on the Company's Board of Directors since December
1995. From 1989 until 1994 he served as Executive Vice President with
Schering-Plough Corporation, a medical products company, and President of the
HealthCare Products division, responsible for all OTC and consumer health care
products. From 1988 to 1989, he was a founding partner of Galen Partners, a
venture capital firm. From 1985 to 1988, he held several positions at Johnson &
Johnson, including Vice Chairman Board of Directors for Public Affairs &
Planning and Vice Chairman Executive Committee & Chairman Consumer Sector. He is
also a member of the Board of Directors of Penederm, Inc., Lander, Inc., and
Claneil Enterprises, Inc., a private company. Mr. Collins received his L.L.B. at
Harvard Law School and his B.A. at the University of Notre Dame.
JULIUS KREVANS, M.D. has served on the Company's Board of Directors since March
1995. Dr. Krevans has been Chancellor Emeritus and Director of International
Medical Care at University of California at San Francisco since 1993. From 1982
until 1993, Dr. Krevans served as Chancellor at UCSF, and was Dean of the School
of Medicine at UCSF from 1971 until 1982. Prior to this, Dr. Krevans served as
Dean for Academic Affairs at The Johns Hopkins University School of Medicine
where he also served on the faculty for 18 years and was Professor of Medicine
from 1968 until 1971. He is also a director of Neoprobe. Dr. Krevans served as a
director of Parnassus Pharmaceuticals Incorporated, which was liquidated under
Chapter 7 of the Federal Bankruptcy Code in 1995. Dr. Krevans received his M.D.
from New York University, College of Medicine and completed a residency in
Medicine at The Johns Hopkins University School of Medicine.
MARK NOVITCH, M.D. has served on the Company's Board of Directors since
September 1995. Dr. Novitch has been a Professor of Health Care Sciences at
George Washington University since the beginning of 1994. From 1985 until 1993,
Dr. Novitch served in senior executive positions with the Upjohn Company, a
medical products company, including Vice Chairman of the Board of Directors,
Corporate Executive Vice President, Corporate Senior Vice President for
Scientific Administration and Corporate Vice President. Prior to this, for 14
years, Dr. Novitch served with the FDA where from 1983 until 1984 he was Acting
Commissioner. For seven years, Dr. Novitch was on the faculty at Harvard Medical
School. He is also a member of the Board of Directors of Osiris Therapeutics,
Inc., Neurogen Corporation, Guidant Corporation and Alteon, Inc. Dr. Novitch
received his A.B. from Yale University, and his M.D. from the New York Medical
College.
ROGER QUY, PH.D. has served on the Company's Board of Directors since November
1991. Dr. Quy has been general partner of Technology Partners, a venture capital
firm focused on early stage companies since 1989. From 1982 to 1989, Dr. Quy
held several management positions with Hewlett-Packard Corporation including
member of Directors Staff for Hewlett-Packard Labs and Research and Development
for HP Labs Europe. He serves as a Chairman or a Director of several early stage
medical companies. Dr. Quy received an M.B.A. in finance from the Haas School of
Business, University of California at Berkeley, a Ph.D. in Neuroscience and a
B.A. from the University of Keele, England.
HIDEJI NONOMURA has served on the Company's Board of Directors since December
1995. Mr. Nonomura is currently the Director of the Diagnostic Reagents Division
of Otsuka Pharmaceutical Company and has served in this capacity since April
1996. From January 1991 until March 1996, Mr. Nonomura served as the Director of
Overseas Affairs of Otsuka Pharmaceutical Company. Mr. Nonomura holds a B.S. in
Chemistry from Tokyo University of Education.
DIRECTOR COMPENSATION
The Company's directors are reimbursed for their out-of-pocket travel expenses
associated with their attendance at Board meetings. Under the Company's 1995
Director Option Plan, non-employee directors of the Company receive automatic
grants of stock options to purchase shares of Common Stock. In addition, all
outside directors receive $5,000 per year in consideration of their attendance
on the Board of Directors.
1995 DIRECTOR OPTION PLAN
The Company's Director Option Plan was adopted by the Company's Board of
Directors in December 1995 and stockholders in 1996. Under the Director Option
Plan, the Company reserved 200,000 shares of Common
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<PAGE> 40
Stock for issuance to the directors of the Company pursuant to nonstatutory
stock options. Under the Director Option Plan directors who are also not
employees or consultants of the Company automatically receive an option to
purchase 12,000 shares of Common Stock (the "First Option") on the date on which
such person first becomes a director, whether through election by the
stockholders of the Company or appointment by the Board to fill a vacancy.
Thereafter, each such person shall receive an option to acquire 3,000 shares of
the Company's Common Stock (the "Subsequent Option") on each date of the
Company's Annual Meeting of Stockholders where such outside director is
reelected. Each option granted under the Director Option Plan shall be
exercisable at 100% of the fair market value of the Company's Common Stock on
the date such option was granted. Twenty-five percent of the First Option shall
vest one year after the date of grant, with 25% vesting each anniversary
thereafter. Twelve and one-half percent of the shares subject to the Subsequent
Option shall be exercisable on the first day of each month following the date of
grant. The Plan shall be in effect for a term of ten years unless sooner
terminated under the Director Option Plan.
EXECUTIVE COMPENSATION
The following table sets forth certain compensation awarded or paid by the
Company during the year ended December 31, 1995 to its Chief Executive Officer
and each of the other most highly compensated executive officers of the Company
whose salary and bonus for such fiscal year were in excess of $100,000
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
SECURITIES
UNDERLYING
ANNUAL COMPENSATION OPTIONS
------------------------------------- GRANTED
NAME AND PRINCIPAL POSITION SALARY BONUS OTHER (#)
- ------------------------------------------ -------- ------- ------- ------------
<S> <C> <C> <C> <C>
William A. Boeger, Chief Executive Officer
and Chairman of the Board of
Directors(1)............................ $272,500(2) $ -- $ 7,210(3) 220,000(4)
John P. Davis, President and Chief
Executive Officer(5).................... 126,602 -- 15,819(6) 320,000
Howard B. Urnovitz, Chief Science
Officer................................. 139,691 16,816 -- 180,000
Cynthia Green, Director of Regulatory
Affairs and QA/QC....................... 192,000(7) -- 9,961(3) --
</TABLE>
- ---------------
(1) Mr. Boeger served as the Company's Chairman of the Board of Directors, Chief
Executive Officer, and President until May 1995. From May 1995 to September
1995 he served as Chairman of the Board of Directors and Chief Executive
Officer. Since September 1995 he has served as Chairman of the Board of
Directors.
(2) $135,000 was paid to an affiliate of Quest Ventures, a venture capital
partnership of which Mr. Boeger is Managing General Partner, in 1995 for
services rendered by Mr. Boeger in 1994. $118,750 was paid to an affiliate
of Quest Ventures in 1995 for services rendered by Mr. Boeger in 1995.
$18,750 was paid to Pepgen Corporation, a subsidiary of the Company of which
Mr. Boeger is President and Chief Financial Officer, in 1995 for services
rendered by Mr. Boeger in 1995.
(3) Represents reimbursements for living expenses.
(4) Excludes options to purchase 67,303 shares issued to an affiliate of Quest
Ventures.
(5) Mr. Davis joined the Company in May 1995 as its President and Chief
Operating Officer. In September 1995 Mr. Davis was named President and Chief
Executive Officer.
(6) Represents reimbursements for living expenses. Excludes $75,000 which the
Company accrued for reimbursement of moving expenses. Such amount was not
paid in 1995.
(7) Ms. Green is retained by the Company as a consultant.
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<PAGE> 41
The following table sets forth information concerning stock options granted to
the Named Executive Officers during the fiscal year ended December 31, 1995.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED FISCAL YEAR(1) ($/SH)(2) DATE 5%($) 10%($)
- ---------------------------- ---------- -------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William A. Boeger........... 220,000(4) 22.2% $0.50 01/25/01 $2,543,389 $3,397,691
John P. Davis............... 320,000(5) 32.2% $0.50 05/31/05 $4,531,217 $7,309,978
Howard B. Urnovitz.......... 180,000(6) 18.1% $0.50 01/25/01 $2,080,955 $2,779,929
Cynthia Green............... -- -- -- -- -- --
</TABLE>
- ---------------
(1) Based on an aggregate of 992,371 options granted under the Company's
Incentive Stock Plan to employees and directors of, and consultants to, the
Company during the year ended December 31, 1995, including the Named
Executive Officers.
(2) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant as determined by the Board of
Directors.
(3) The potential realizable value is calculated based on the term of the option
at its time of grant. It is calculated assuming that the public offering
price of $9.00 per share appreciates from the date of grant at the indicated
annual rate compounded annually for the entire term of the option and the
option is exercised and sold on the last day of its term for the appreciated
stock price. With respect to options granted at fair market value, no gain
to the optionee is possible unless the stock price increases over the option
term.
(4) Options granted become exercisable at the rate of 110,000 of the shares
subject to the option at January 25, 1995 and 8.34% of the remaining 110,000
shares subject to the option each month thereafter for the next 12 months.
The options expire six years from the date of grant, or earlier upon
termination of employment.
(5) Options granted become exercisable at the rate of 20% of the shares subject
to the option at May 1, 1996 and at the rate of 1.67% per month thereafter
for the next four years. The options expire ten years from the date of
grant, or earlier upon termination of employment.
(6) Options granted become exercisable at the rate of 25% of the shares subject
to the option at January 25, 1996 and at the rate of 2.08% per month
thereafter for the next three years.
39
<PAGE> 42
The following table sets forth information concerning option exercises for the
year ended December 31, 1995, with respect to each of the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN 1995
AND DECEMBER 31, 1995 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISABLE IN-THE-MONEY
OPTIONS OPTIONS AT
SHARES AT DECEMBER 31, 1995 DECEMBER 31, 1995
ACQUIRED ON VALUE (EXERCISABLE/ (EXERCISED/
NAME EXERCISE($) REALIZED($) UNEXERCISABLE) UNEXERCISABLE)(1)
- ------------------------------ ----------- ----------- -------------------- -----------------------
<S> <C> <C> <C> <C>
William A. Boeger............. -- -- 210,831/ 9,169 $ 1,792,063/ $ 77,937
John P. Davis................. -- -- -- / 320,000 $-- / $2,720,000
Howard B. Urnovitz............ -- -- 105,000/ 180,000 $ 921,900/ $1,530,000
Cynthia Green................. -- -- 10,625/ 27,625 $ 90,462/ $ 234,913
</TABLE>
- ---------------
(1) Value realized and value of unexercised in-the-money options is based on a
value of $9.00 per share of the Company's Common Stock, the estimated public
offering price, even though at the December 31, 1995 the fair market value
of the Common Stock was determined by the Board of Directors to be $5.00 per
share. Amounts reflected are based on the assumed value minus the exercise
price multiplied by the number of shares acquired on exercise and do not
indicate that the optionee sold such stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The Compensation Committee is responsible for determining salaries, incentives
and other forms of compensation for directors, officers and other employees of
the Company and administers various incentive compensation and benefit plans.
The Compensation Committee consists of Dr. Krevans, Dr. Quy and Mr. Boeger, who
is a non-voting member.
INCENTIVE STOCK PLAN
A total of 2,740,992 shares of Common Stock have been reserved for issuance
under the Company's Incentive Stock Plan (the "Stock Plan"). As of March 31,
1996, 126,524 shares had been issued upon the exercise of stock options granted
under the Stock Plan, 1,292,561 shares were subject to outstanding options and
1,321,907 remained available for future grant. The Stock Plan is administered by
the compensation committee of the board of directors. Under the Stock Plan,
options may be granted to employees, including directors who are employees, and
consultants. Only employees may receive "incentive stock options," which are
intended to qualify for certain tax treatment; nonemployees receive
"nonstatutory stock options," which do not qualify for such treatment. In the
event of a change in control of the Company, including a merger or sale of
substantially all of the Company's assets, outstanding options may be assumed by
any successor corporation or may become exercisable. The exercise price of
incentive stock options under the Stock Plan must at least equal the fair market
value of the Common Stock on the date of grant, while the exercise price of
nonstatutory options must at least equal 85% of such market value. Options
granted under the Stock Plan generally vest on a cumulative monthly basis over
four or five years, and in the case of incentive stock options, must be
exercised within six or ten years. The Board may amend or modify the Stock Plan
at any time. The Stock Plan will terminate in 2001, unless sooner terminated by
the Board.
1995 EMPLOYEE STOCK PURCHASE PLAN
The Company's Employee Stock Purchase Plan (the "Purchase Plan") was adopted by
the Company's Board of Directors in December 1995 and stockholders in June 1996.
The Purchase Plan is intended to qualify under Section 423 of the Code. The
Company has reserved 300,000 shares of Common Stock for issuance under the
Purchase Plan. Under the Purchase Plan, an eligible employee may purchase shares
of Common Stock from the Company through payroll deductions of up to 10% of his
or her compensation, at a price per share equal to 85% of the lower of (i) the
fair market value of the Company's Common Stock on the first day of an offering
40
<PAGE> 43
period under the Purchase Plan or (ii) the fair market value of the Common Stock
on the last day of an offering period. Except for the first offering period,
each offering period will last for six months and will commence the first day on
which the national stock exchanges and The Nasdaq Stock Market are open for
trading, on or after May 1 and November 1 of each year. The first offering
period will begin upon the effective date of this Offering and will end on
October 31, 1996. Any employee who is customarily employed for at least 20 hours
per week and more than five months per calendar year, who has been so employed
for at least three consecutive months on or before the commencement date of an
offering period is eligible to participate in the Purchase Plan.
LIMITATIONS OF LIABILITY AND INDEMNIFICATION MATTERS
Prior to the closing of the Offering, the Company intends to reincorporate in
Delaware, in part to take advantage of certain provisions in Delaware's
corporate law relating to limitations on liability of corporate officers and
directors. The Company believes that the reincorporation into Delaware, the
provisions of its Certificate of Incorporation and Bylaws and the separate
indemnification agreements outlined below are necessary to attract and retain
qualified persons as directors and officers.
The Company's Certificate of Incorporation limits the liability of directors to
the maximum extent permitted by Delaware law. Delaware law provides that
directors of a company will not be personally liable for monetary damages for
breach of their fiduciary duties as directors, except for liability (i) for any
breach of their duty of loyalty to the company or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments or dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of Delaware General
Corporation Law or (iv) for transactions from which the director derived an
improper personal benefit.
The Company's Bylaws provide that the Company shall indemnify its officers and
directors and may indemnify its employees and other agents to the fullest extent
provided by Delaware law, including those circumstances where indemnification
would otherwise be discretionary under Delaware law. The Company believes that
indemnification under its Bylaws covers at least negligence on the part of
indemnified parties. The Bylaws authorize the use of indemnification agreements
and the Company has entered into such agreements with each of its directors and
executive officers.
The Company has obtained officer and director liability insurance with respect
to liabilities arising out of certain matters, including matters arising under
the Securities Act.
At present, there is no pending litigation or proceeding involving any director
or officer, employee or agent of the Company where indemnification will be
required or permitted. The Company is not aware of any threatened litigation or
proceeding which may result in a claim for such indemnification.
41
<PAGE> 44
CERTAIN TRANSACTIONS
FORMATION OF THE COMPANY AND RELATED TRANSACTIONS
From its inception to June 21, 1996, the Company has issued or sold shares of
Common Stock at prices ranging from $0.20 to $8.10, and Series B, Series C,
Series D and Series E Preferred Stock at prices of $1.86, $3.70, $5.00 and $5.00
to $7.50 per share, respectively, to the following directors, entities
affiliated with directors, and 5% stockholders.
<TABLE>
<CAPTION>
SERIES SERIES SERIES SERIES
NAME COMMON B C D E
- ------------------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Directors
William A. Boeger.............................. -- -- -- -- --
John P. Davis.................................. -- -- -- -- --
Howard B. Urnovitz............................. 139,000 -- -- -- --
David Collins.................................. -- -- -- -- --
Julius R. Krevans.............................. -- -- -- -- 4,000
Mark Novitch................................... -- -- -- -- --
Roger Quy...................................... -- -- -- -- --
Hideji Nonomura................................ -- -- -- -- --
Kuo-Yu (Frank) Chiang.......................... 5,662 -- 556,082 -- --
Entities Affiliated with Directors
Quest Ventures II (1).......................... 29,322 79,680 83,482 14,850 --
Quest Ventures International(1)................ 20,042 54,461 57,059 10,150 --
Otsuka Pharmaceutical Co., Ltd.(2)............. -- 268,282 164,685 260,000 600,000
Technology Partners West Fund IV(3)............ -- -- 270,270 150,000 200,000
Steven F. Urnovitz(4).......................... 1,569 -- -- -- --
Other 5% Stockholders
Suez Technology Fund........................... 30,853 134,141 209,459 50,000 66,500
H&Q HealthCare Investors....................... -- -- -- 200,000 50,400
H&Q Life Sciences Investors.................... -- -- -- 100,000 48,300
Entities Affiliated with MVP Investors,
L.P. ....................................... -- -- 216,217 242,000 --
</TABLE>
- ---------------
(1) William A. Boeger is a founder of the Company and Managing General Partner
of Quest Ventures, an affiliate of these entities.
(2) Hideji Nonomura is the Director of the Diagnostic Reagents Division of
Otsuka Pharmaceutical Co., Ltd.
(3) Roger Quy is a general partner of Technology Partners, an affiliate of
Technology Partners West Fund IV.
(4) Steven F. Urnovitz is the brother of Howard B. Urnovitz.
Upon the completion of this Offering, each outstanding share of Series B, C, D
and E Preferred Stock will be converted into one share of Common Stock.
PEPGEN CORPORATION
In October 1995, Calypte purchased a 49% equity interest in Pepgen Corporation.
Pepgen is a research and development stage company involved in the field of
human therapeutics. Calypte purchased the equity position for a total of
$2,500,000, with $1,000,000 paid in cash at closing, a promissory note in the
amount of $1,000,000 and options to purchase 475,000 shares of Common Stock
valued at $500,000. The note is due and payable the earlier of (i) October 1996
or (ii) 60 days following either the Company's approval by the FDA of its HIV-1
urine assay or the completion of a public offering of securities. In addition to
its 49% ownership, Calypte has the first right of negotiation to purchase the
remaining 51% of Pepgen at fair market value.
42
<PAGE> 45
Calypte is also entitled to elect two of seven members of the Pepgen board of
directors. Other than the second installment of the equity purchase described
above, Calypte does not anticipate that it will use any of the proceeds from
this Offering for Pepgen (see "Use of Proceeds"). Pepgen expects to fund its
product development through loans, grants, collaborations, or equity investment
from corporate partners and governmental agencies. Calypte has no ongoing
obligation to provide Pepgen with any additional funds beyond its original
equity investment. The option grants by the Company in connection with its
purchase of 49% of Pepgen, were granted to the current Pepgen shareholders and
consisted of options to purchase an aggregate of 475,000 shares of Calypte
Common Stock at an exercise price of $7.50 per share. 100,000 of such shares are
exercisable immediately, with the remaining shares subject to exercise upon the
attainment of the following milestones:
<TABLE>
<CAPTION>
MILESTONE CALYPTE SHARES SUBJECT TO ADDITIONAL OPTIONS
- -------------------------------------------------------- --------------------------------------------
<S> <C>
Upon signing of a Research and Development Contract with
proceeds of $1,000,000 or more to Pepgen 100,000 shares
Upon signing of a licensing agreement with proceeds of
$5,000,000 or more to Pepgen 100,000 shares
Upon the filing of an Investigation of New Drug ("IND")
application with the FDA or with similar agencies in
Europe or Japan 25,000 shares
Upon the filing of a New Drug Application ("NDA") with
the USFDA or with similar agencies in Europe or Japan 50,000 shares
Upon first commercial sales of a Pepgen product based on
an NDA 100,000 shares
</TABLE>
EMPLOYMENT ARRANGEMENTS
On April 10, 1995, and amended as of April 22, 1996, the Company entered into an
employment agreement with John P. Davis providing for employment of Mr. Davis as
the Company's President and Chief Executive Officer for a term from May 1, 1995
through December 31, 1996. The agreement is automatically renewable each year
subject to 90 days notice prior to the end of each calender year. Mr. Davis'
salary under this agreement initially $185,000 per year, increased to $195,000
per year upon his appointment as Chief Executive Officer of the Company, which
occurred in September 1995. Mr. Davis is also eligible for a maximum $35,000
bonus in 1996. This agreement also entitles Mr. Davis to moving expenses in
connection with relocating Mr. Davis and his family from Connecticut to
California, which expenses shall not exceed $150,000 and which expenses shall be
increased sufficiently to reimburse Mr. Davis for the taxes owed on such
expenses. In addition, Mr. Davis shall be entitled to receive $1,000 per month
as reimbursement for temporary living expenses for up to nine months. The
agreement also provides that Mr. Davis shall receive a $375 car allowance and
reimbursement for all operating expenses, maintenance, licence fees, and
insurance. Mr. Davis shall also be entitled to vacation and other benefits
provided to the Company's employees generally. Mr. Davis was granted an option
to purchase 320,000 shares of Common Stock at $0.50 per share, which option Mr.
Davis can exercise as to 64,000 of the shares on May 1, 1996, and 5,333 shares
per month thereafter, or in the event of an acquisition of the Company as to all
of the shares subject to the option. In the event Mr. Davis's employment with
the Company is terminated by the Company other than for cause (i) during the
first year of employment, Mr. Davis shall receive his base salary for 12 months;
(ii) during the second year or employment, Mr. Davis shall receive his base
salary for nine months; and (iii) thereafter, he shall receive his base salary
for six months.
On January 10, 1994, the Company entered into an employment agreement with
William Boeger, the Company's Chairman of the Board and a Director, and the
Company's former Chief Executive Officer. This agreement provided that Mr.
Boeger would devote not less than one-half time to the Company, and the Company
would issue to Mr. Boeger or Quest Ventures, an investment partnership with
which Mr. Boeger served as a principal prior to joining the Company, an option
to acquire 154,276 shares of the Company at an exercise price of $0.50 per
share.
On January 25, 1995, the Company entered into an employment agreement with
Howard Urnovitz, a Founder, Director, and Chief Science Officer of the Company.
This agreement provides for annual salary of $140,000
43
<PAGE> 46
plus an annual bonus not to exceed $35,000 per year. Dr. Urnovitz will also be
entitled to vacation and other benefits available to the Company's employees
generally. The agreement provides that on the date the Company's urine-based HIV
test is approved by the FDA, the Company will forgive $42,500 in principal owed
to the Company on the promissory note and reduce the collateral securing the
note by one-half, and, pay Dr. Urnovitz a one-time bonus to defray the federal
tax liability on the deemed income from the forgiveness of the note. When this
agreement was executed, all of Dr. Urnovitz's unvested stock options immediately
vested, and Dr. Urnovitz was granted an option to acquire 180,000 shares of the
Company's Common Stock at $0.50 per share, which option Dr. Urnovitz can
exercise as to 25% of the shares one year after grant and 2.08% of the shares
per month thereafter, subject to ratable 48-month vesting. If the Company
terminates Dr. Urnovitz's employment other than for cause, Dr. Urnovitz would be
entitled to six months of base salary.
In March 1992, the Company loaned Dr. Howard Urnovitz $85,000. The loan is
evidenced by the above-mentioned promissory note and secured by shares of Common
Stock of the Company owned by Dr. Urnovitz. The note, as amended, provides for
current interest payments at the rate of 7% per annum, and a lump-sum remaining
principal repayment in March 1997.
In May 1993, the Company entered into a Business Consultant Agreement with
Cynthia L. Green, the Company's Director of Regulatory Affairs and Quality
Assurance and Quality Control. The agreement is automatically renewable each
year unless cancelled by either party on 90 days notice. Ms. Green's fee for
acting as Director of Regulatory Affairs and Quality Assurance and Quality
Control for the Company was set at $16,000 per month. In addition, Ms. Green
received an option to acquire 2,500 shares of Common Stock at an exercise price
equal to the fair market value of the Common Stock on the date of grant. Such
option vests 20% one year after grant, plus 1.66667% per month thereafter. In
September 1992, Ms. Green was granted an option to purchase 2,500 shares of
Common Stock at an exercise price equal to the fair market value of the Common
Stock on the date of grant. Such option vests 20% one year after grant, plus
1.66667% per month thereafter. In January 1994, Ms. Green was issued 8,250
shares of Common Stock at a purchase price equal to the fair market value of the
Common Stock on the date of issuance. Such shares vested 11 months after
issuance. In March 1994, Ms. Green was issued an option for 25,000 shares at an
exercise price equal to the fair market value of the Common Stock on the date of
grant. Such option vests upon FDA approval of the Company's HIV-1 urine-based
test.
In October 1995, the Company entered into an employment agreement with John J.
DiPietro, providing for the employment of Mr. DiPietro as the Company's Vice
President, Finance and Chief Financial Officer, for a term from October 1995
through December 1996. The agreement is automatically renewable each year
subject to 90 days notice prior to the end of each calendar year. Mr. DiPietro's
salary under this agreement is initially $125,000 per year. This agreement also
provides Mr. DiPietro with reimbursement for the cost of a corporate apartment,
which expenses shall be increased sufficiently to reimburse Mr. DiPietro for the
taxes owed on such expenses. Mr. DiPietro is also eligible for a bonus under the
Company's bonus plan and shall be entitled to vacation and other benefits
provided to the Company's employees generally. Mr. DiPietro was granted an
option to purchase 35,000 shares of Common Stock at $1.00 per share, which
option Mr. DiPietro can exercise as to 20% of the shares one year after grant
and 583 shares per month thereafter, or in the event of certain defined events
or an acquisition of the Company, as to all of the shares subject to the option.
In the event Mr. DiPietro's employment with the Company is terminated by the
Company other than for cause, (i) during the first year of employment, Mr.
DiPietro shall receive his base salary for nine months; (ii) thereafter, Mr.
DiPietro shall receive his base salary for six months.
FUTURE TRANSACTIONS
All future transactions, including any loans from the Company to its officers,
directors, principal stockholders or affiliates, will be approved by a majority
of the board of directors, including a majority of the independent and
disinterested members of the board of directors or, if required by law, a
majority of disinterested stockholders, and will be on terms no less favorable
to the Company than could be obtained from unaffiliated third parties.
44
<PAGE> 47
PRINCIPAL STOCKHOLDERS
The following table sets forth information known to the Company with respect to
the beneficial ownership of its Common Stock as of May 10, 1996, and as adjusted
to reflect the sale of Common Stock offered by the Company hereby and conversion
of all outstanding shares of Preferred Stock into shares of Common Stock, for
(i) each who is known by the Company to own beneficially more than 5% of the
Common Stock, (ii) each of the Company's directors, (iii) each Named Executive
Officer and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
PERCENT OF TOTAL(2)
SHARES -----------------------
BENEFICIALLY BEFORE AFTER
5% STOCKHOLDERS, DIRECTORS AND OFFICERS OWNED(1) OFFERING OFFERING
- ------------------------------------------------------------------------------- ------------ -------- --------
<S> <C> <C> <C>
Otsuka Pharmaceutical Co., Ltd.(3)............................................. 1,493,147 18.99% 14.14%
463-10 Kagasuno
Kawauchi-cho
Tokoshima Japan
Hideji Nonomura(3)............................................................. 1,493,147 18.99 14.14
Entities Affiliated with Quest Ventures(4)..................................... 723,322 9.00 6.74
126 South Park
San Francisco, CA 94107
William A. Boeger(4)........................................................... 723,322 9.00 6.74
Technology Partners(5)......................................................... 620,270 8.09 5.65
1550 Tiburon Boulevard, Suite A
Belvedere, CA 94920
Roger Quy, Ph.D.(5)............................................................ 620,270 8.09 5.65
Kuo-Yu (Frank) Chiang.......................................................... 561,744 7.33 5.42
Suez Technology Fund(6)........................................................ 557,453 7.21 5.35
3000 Sand Hill Road
Bldg. 2, Suite 160
Menlo Park, CA 94028
Entities Affiliated with MVP Investors, L.P.................................... 458,217 5.98 4.42
45 Milk Street
Boston, MA 02109
Entities Affiliated with H&Q Capital Management(7)............................. 417,400 5.43 4.02
Howard B. Urnovitz, Ph.D.(8)................................................... 307,749 3.93 2.92
John P. Davis(9)............................................................... 69,333 * *
Richard Van Maanen(10)......................................................... 25,902 * *
Toby Gottfried, Ph.D.(11)...................................................... 15,462 * *
Cynthia Green(12).............................................................. 11,207 * *
Jeffrey Lang(13)............................................................... 5,083 * *
Julius R. Krevans, M.D.(14).................................................... 4,000 * *
John J. DiPietro............................................................... -- * *
David Collins.................................................................. -- * *
Mark Novitch, M.D.............................................................. -- * *
All directors and executive officers as a group
(14 persons)(3)(4)(5)(8)(9)(10)(11)(12)(13)(14).............................. 3,837,219 44.98% 33.93%
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1%
(1) Based on 7,664,651 shares outstanding prior to the Offering and 10,359,046
shares outstanding after the Offering. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission. In
computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of Common Stock subject to
options held by that person that are currently exercisable or exercisable
within 60 days of May 10, 1996 are deemed outstanding. To the Company's
knowledge, except as set forth in the footnotes to this table and subject
to applicable community property laws, each person named in this table has
sole voting and investment proves with respect to the shares set forth
opposite such person's name. Except as otherwise indicated, the address of
each of the persons in this table is as follows: c/o Calypte Biomedical
Corporation, 1440 Fourth Street, Berkeley, California 94710.
(2) Assumes no exercise of the Underwriters' over allotment option to purchase
up to 375,000 additional shares of Common Stock. See "Underwriting."
(3) Includes 200,000 shares subject to warrants exercisable within 60 days. Mr.
Nonomura is a director of the Company and an affiliate of Otsuka
Pharmaceutical Co., Ltd.
(4) Includes 154,276 shares subject to options exercisable within 60 days owned
by entities affiliated with Quest Ventures. Also includes 220,000 shares
subject to options exercisable within 60 days owned by Mr. Boeger. Mr.
Boeger is a partner of Quest Ventures.
(5) Includes 620,270 shares owned by Technology Partners. Mr. Quy is a director
of the Company and an affiliate of Technology Partners.
(6) Includes 66,500 shares subject to warrants exercisable within 60 days.
(7) Includes 18,700 shares subject to warrants exercisable within 60 days.
(8) Includes 168,749 shares subject to options exercisable within 60 days.
(9) Includes 69,333 subject to options exercisable within 60 days.
(10) Includes 25,902 shares subject to options exercisable within 60 days.
(11) Includes 10,062 shares subject to options exercisable within 60 days.
(12) Includes 11,207 shares subject to options exercisable within 60 days.
(13) Includes 5,083 shares subject to options exercisable within 60 days.
(14) Includes 2,000 shares subject to warrants exercisable within 60 days.
45
<PAGE> 48
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company will consist of 20,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock, after giving effect to the
restatement of the Company's Articles of Incorporation upon the closing of this
Offering. The following summaries of certain provisions of the Common Stock and
Preferred Stock do not purport to be complete and are subject to, and qualified
in their entirety by, the provisions of the Company's Articles of Incorporation,
which is included as an exhibit to the Registration Statement of which this
Prospectus forms a part, and by applicable law.
COMMON STOCK
As of June 21, 1996 there were 7,859,046 shares of Common Stock outstanding,
which were held of record by 227 stockholders. The holders of Common Stock are
entitled to one vote per share on all matters to be voted upon by the
stockholders. Subject to preferences that may be applicable to any outstanding
Preferred Stock, the holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by the board of
directors out of funds legally available for that purpose. See "Dividend
Policy." In the event of a liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of
Preferred Stock, if any, then outstanding. The Common Stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding shares
of Common Stock are fully paid and nonassessable, and the shares of Common Stock
to be issued upon the closing of this Offering will be fully paid and
nonassessable.
PREFERRED STOCK
The board of directors has the authority, without action by the stockholders, to
designate and issue Preferred Stock in one or more series and to designate the
rights, preferences and privileges of each series, any or all of which may be
greater than the rights of the Common Stock. It is not possible to state the
actual effect of the issuance of any shares of Preferred Stock upon the rights
of holders of the Common Stock until the board of directors determines the
specific rights of the holders of such Preferred Stock. However, the effects
might include, among other things, restricting dividends on the Common Stock,
diluting the voting power of the Common Stock, impairing the liquidation rights
of the Common Stock and delaying or preventing a change in control of the
Company without further action by the stockholders. The Company has no present
plans to issue any shares of Preferred Stock.
WARRANTS
As of June 21, 1996, the Company had outstanding warrants to purchase 1,066,355
shares of Common Stock, at a weighted average exercise price of $5.42 per share.
Such warrants expire on various dates, the latest of which is 7 years from the
effective date of the Offering. The holders of such warrants are entitled to
certain registration rights with respect to the Common Stock issued upon
exercise thereon. See "Description of Capital Stock -- Registration Rights."
CHANGE OF CONTROL PROVISIONS
Certain provisions of the Company's Certificate of Incorporation and Bylaws may
have the effect of preventing, discouraging or delaying any change in the
control of the Company and may maintain the incumbency of the Board of Directors
and management. The authorization of undesignated preferred stock makes it
possible for the Board of Directors to issue preferred stock with voting or
other rights or preferences that could impede the success of any attempt to
change control of the Company.
The Company is subject to the provisions of Section 203 of the Delaware General
Corporation Law (the "Antitakeover Law") regulating corporate takeovers. The
Antitakeover Law prevents certain Delaware corporations, including those whose
securities are listed on the Nasdaq National Market, from engaging, under
certain circumstances, in a "business combination" (which includes a merger or
sale of more than 10% of the corporation's assets) with any "interested
stockholder" (a stockholder who acquired 15% or more of the corporation's
outstanding voting stock without the prior approval of the corporation's Board
of Directors) for
46
<PAGE> 49
three years following the date that such stockholder became an "interested
stockholder." A Delaware corporation may "opt out" of the Antitakeover Law with
an express provision in its original certificate of incorporation or an express
provision in its certificate of incorporation or bylaws resulting from a
stockholders' amendment approved by at least a majority of the outstanding
voting shares. The Company has not "opted out" of the application of the
Antitakeover Law.
REGISTRATION RIGHTS OF CERTAIN HOLDERS
The holders of 7,392,010 shares of Common Stock (the "Registrable Securities")
or their transferees are entitled to certain rights with respect to the
registration of such shares under the Securities Act. These rights are provided
under the terms of an agreement between the Company and the holders of
Registrable Securities. Subject to certain limitations in the agreement, the
holders of at least 30% of the Registrable Securities may require, on two
occasions beginning after three months from the date of this Prospectus, that
the Company use its best efforts to register the Registrable Securities for
public resale. If the Company registers any of its Common Stock either for its
own account or for the account of other security holders, the holders of
Registrable Securities are entitled to include their shares of Common Stock in
the registration, subject to the ability of the underwriters to limit the number
of shares included in the offering. The holders of Registrable Securities may
also require the Company (not more than once during any 12-month period) to
register all or a portion of their Registrable Securities on Form S-3 when use
of such form becomes available to the Company, provided, among other
limitations, that the proposed aggregate selling price (net of any underwriters'
discounts or commissions) is at least $1.0 million. All registration expenses
must be borne by the Company and all selling expenses relating to Registrable
Securities must be borne by the holders of the securities being registered.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is First
Interstate Bank of California. Its telephone number is (415) 773-7801.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this Offering, there has been no market for the Common Stock of the
Company. Future sales of substantial amounts of Common Stock in the public
market could adversely affect market prices prevailing from time to time. As
described below, no shares currently outstanding will be available for sale
immediately after this Offering due to certain legal restrictions on resale.
Sales of substantial amounts of Common Stock of the Company in the public market
after the restrictions lapse could adversely affect the prevailing market price
and the ability of the Company to raise equity capital in the future.
Upon the completion of this Offering, the Company will have 10,359,046 shares of
Common Stock outstanding, assuming no exercise of options or warrants after June
21, 1996. Of these shares, the 2,500,000 shares sold in this Offering will be
freely tradable without restriction under the Securities Act, unless held by
"affiliates" of the Company, as that term is defined in Rule 144 under the
Securities Act. The remaining 7,859,046 shares of Common Stock held by existing
stockholders were issued and sold by the Company in reliance on exemptions from
the registration requirements of the Securities Act. These shares may be sold in
the public market only if registered, or pursuant to an exemption from
registration such as Rule 144, 144(k) or 701 under the Securities Act.
Stockholders who in the aggregate hold 97% of the shares of Common Stock of the
Company outstanding immediately prior to the completion of this Offering have
entered into lock-up agreements under which they have agreed not to offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of, or agree
to dispose of, directly or indirectly, any shares of Common Stock, options or
warrants to acquire shares of Common Stock or securities exchangeable for or
convertible into Common Stock owned by them for a period of 180 days after the
date of this Prospectus, without the prior written consent of the
Representatives of the Underwriters. The Company has entered into a similar
agreement, except that the Company may grant options and issue stock under its
current stock option and stock purchase plans and pursuant to other currently
outstanding options.
47
<PAGE> 50
As of June 21, 1996, 2,852,775 shares were subject to outstanding options and
warrants. Of these shares 75% are subject to the lock-up agreements described
above. Approximately 120 days after the date of this Prospectus, the Company
intends to file a Registration Statement on Form S-8 covering shares issuable
under the Company's 1991 Stock Plan (including shares subject to then
outstanding options), 1995 Director Option Plan and 1995 Employee Stock Purchase
Plan, thus permitting the resale of such shares in the public market without
restriction under the Securities Act after expiration of the applicable
agreements.
Upon expiration of the lock-up agreements, approximately 2,465,586 shares of
Common Stock will become eligible for immediate public resale, pursuant to Rule
144(k) or for non-affiliates in certain cases pursuant to Rule 701. An
additional 3,220,560 shares will be available for resale subject to the volume
limitations of Rule 144. 7,392,010 of the shares outstanding immediately
following the completion of this Offering will be entitled to registration
rights with respect to such shares upon the release of lock-up agreements. The
number of shares sold in the public market could increase if such rights are
exercised.
In general, under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated) who has beneficially owned shares for at least two years
(including the holding period of any prior owner, except an affiliate) is
entitled to sell in "broker's transactions" or to market makers, within any
three-month period commencing 90 days after the date of this Prospectus, a
number of shares that does not exceed the greater of (i) one percent of the
number of shares of Common Stock then outstanding (approximately 101,000 shares
immediately after this Offering) or (ii) the average weekly trading volume of
the Common Stock during the four calendar weeks preceding the required filing of
a Form 144 with respect to such sale. Sales under Rule 144 are generally subject
to certain manner of sale provisions and notice requirements and to the
availability of current public information about the Company. Under Rule 144(k),
a person who is not deemed to have been an affiliate of the Company at any time
during the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least three years, is entitled to sell such shares
without having to comply with the manner of sale, public information, volume
limitation or notice provisions of Rule 144. Under Rule 701 under the Securities
Act, persons who purchase shares upon exercise of options granted prior to the
effective date of this Offering are entitled to sell such shares 90 days after
the effective date of this Offering in reliance on Rule 144, without having to
comply with the holding period requirements of Rule 144 and, in the case of
non-affiliates, without having to comply with the public information, volume
limitation or notice provisions of Rule 144.
The Securities and Exchange Commission has recently proposed reducing the
initial Rule 144 holding period to one year and the Rule 144(k) holding period
to two years. There can be no assurance as to when or whether such rule changes
will be enacted. If enacted, such modification will have a material effect on
the time when shares of the Company's Common Stock become eligible for resale.
48
<PAGE> 51
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives Pacific Growth Equities,
Inc., have agreed to purchase from the Company the following respective number
of shares of Common Stock:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
---------------------------------------------------------- ------------------
<S> <C>
Pacific Growth Equities, Inc..............................
----------
Total.....................................................
==============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent, including the absence of any material
adverse change in the Company's business and the receipt of certain
certificates, opinions and letters from the Company, its counsel and independent
auditors. The nature of the Underwriters' obligation is such that they are
committed to purchase all shares of the Common Stock offered hereby if any of
such shares are purchased.
The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow and such dealers may reallow
a concession not in excess of $ per share to certain other dealers.
After the initial public offering of the shares, the offering price and other
selling terms may be changed by the Representatives of the Underwriters.
The Company has granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to 375,000
additional shares of Common Stock at the initial public offering price, less the
underwriting discount, set forth on the cover page of this Prospectus. To the
extent that the Underwriters exercise this option, each of the Underwriters will
have a firm commitment to purchase approximately the same percentage thereof
which the number of shares of Common Stock to be purchased by it shown in the
above table bears to the total number of shares of Common Stock offered hereby.
The Company will be obligated, pursuant to the option, to sell such shares to
the Underwriters to the extent the option is exercised. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of shares of Common Stock offered hereby.
The offering of the shares is made for delivery when, as and if accepted by the
Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments the Underwriters may be required to make in respect thereof.
Stockholders, including the executive officers and directors, who will own in
the aggregate 7,428,879 shares of Common Stock after the offering, have agreed
that they will not, without the prior written consent of Pacific Growth
Equities, Inc. offer, sell or otherwise dispose of any shares of Common Stock,
options or warrants to acquire shares of Common Stock or securities exchangeable
for or convertible into shares of Common Stock
49
<PAGE> 52
owned by them during the 180-day period following the date of this Prospectus.
The Company has agreed that it will not, without the prior written consent of
Pacific Growth Equities, Inc. offer, sell or otherwise dispose of any shares of
Common Stock, options or warrants to acquire shares of Common Stock or
securities exchangeable for or convertible into shares of Common Stock during
the 180-day period following the date of this Prospectus, except that the
Company may issue. Upon the exercise of options granted prior to the date
hereof, and may grant additional options under its stock and employee stock
purchase plans, provided that, without the prior written consent of Pacific
Growth Equities, Inc., such additional options shall not be exercisable during
such period. Sales of such shares in the future could adversely affect the
market price of the Common Stock.
The Representatives of the Underwriters have informed the Company that the
Underwriters do not intend to confirm sales to accounts over which they exercise
discretionary authority.
Prior to this Offering, there has been no public market for the Common Stock.
The initial public offering price for the Common Stock will be determined by
negotiation between the Company and the Representatives. Among the factors to be
considered in determining the initial public offering price are prevailing
market and economic conditions, revenues and earnings of the Company, market
valuations of other companies engaged in activities similar to the Company
estimates of the business potential and prospects of the Company, the present
state of the Company's business operations, the Company's management and other
factors deemed relevant. The estimated initial public offering price range set
forth on the cover of this preliminary prospectus is subject to change as a
result of market conditions and other factors.
At the request of the Company, the Underwriters have reserved up to 125,000
shares of Common Stock for sale at the initial public offering price to
officers, directors, employees and certain other persons associated with the
Company. The number of shares available for sale to the general public will be
reduced to the extent such persons purchase such reserved shares. Any reserved
shares not so purchased will be offered by the Underwriters to the general
public on the same basis as the other shares offered hereby. Reserved shares
purchased by individuals will, except as restricted by applicable securities
laws, be available for resale following the Offering.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Certain legal matters will be passed upon for the Underwriters
by Cooley Godward Castro Huddleson & Tatum, Palo Alto, California. As of the
date of this Prospectus, certain members of Wilson Sonsini Goodrich & Rosati,
Professional Corporation and investment partnerships of which such persons are
partners beneficially own 10,000 shares of the Company's Common Stock.
50
<PAGE> 53
EXPERTS
The consolidated financial statements of Calypte Biomedical Corporation and
subsidiary (a development stage company) as of December 31, 1994 and 1995 and
for each of the years in the three-year period ended December 31, 1995, and for
the period from February 18, 1988 (inception) through December 31, 1995, and the
financial statements of Pepgen Corporation and subsidiary (a development stage
enterprise) as of December 31, 1993 and 1994, and for the period from July 8,
1992 (inception) through December 31, 1992 and for each of the years in the
two-year period ended December 31, 1994 and for the period from July 8, 1992
(inception) through December 31, 1994, have been included herein and in the
Registration Statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
The statements in this Prospectus in paragraphs 2 and 3 under the caption "Risk
Factors -- Reliance on Proprietary Technology and Know-How" and in paragraphs 6
and 7 under the caption "Business -- Patents, Proprietary Rights and Licenses"
have been reviewed and approved by Arnold, White & Durkee, special patent
counsel for the Company, as experts in such matters, and included herein in
reliance upon such review and approval.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. a Registration Statement on Form S-1 under the
Securities Act with respect to the shares of Common Stock being offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and such Common Stock, reference is made
to the Registration Statement and to the exhibits and schedules filed as a part
thereof. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement. A copy of the Registration
Statement may be inspected without charge at the Commission's principal office
in Washington, D.C., and copies of all or any part of the Registration Statement
may be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of certain fees prescribed by
the Commission. In addition, the Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commisison through the Electronic Data Gathering, Analysis, and Retrieval
system.
51
<PAGE> 54
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS, CALYPTE BIOMEDICAL CORPORATION (A DEVELOPMENT STAGE
ENTERPRISE)
Independent Auditors' Report..................................................... F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995..................... F-3
Consolidated Statements of Operations for the years ended December 31, 1993, 1994
and 1995 and for the period from February 18, 1988 (inception) through December
31, 1995........................................................................ F-4
Consolidated Statements of Stockholders' Equity (Deficit) for the period from
February 18, 1988 (inception) through December 31, 1995......................... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994
and 1995 and for the period from February 18, 1988 (inception) through December
31, 1995........................................................................ F-7
Notes to Consolidated Financial Statements....................................... F-8
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CALYPTE BIOMEDICAL CORPORATION (A
DEVELOPMENT STAGE ENTERPRISE) (UNAUDITED)
Consolidated Condensed Balance Sheets as of December 31, 1995 and March 31,
1996............................................................................ F-23
Consolidated Condensed Statements of Operations for the three-months ended March
31, 1995 and 1996 and for the period from February 18, 1988 (inception) through
March 31, 1996.................................................................. F-24
Consolidated Condensed Statements of Cash Flows for the three-months ended March
31, 1995 and 1996 and for the period from February 18, 1988 (inception) through
March 31, 1996.................................................................. F-25
Notes to Consolidated Condensed Financial Statements............................. F-26
PRO FORMA FINANCIAL INFORMATION, CALYPTE BIOMEDICAL CORPORATION (A DEVELOPMENT STAGE
ENTERPRISE) (UNAUDITED)
Pro Forma Financial Information.................................................. F-30
Pro Forma Consolidated Condensed Statement of Operations for the year ended
December 31, 1995............................................................... F-31
CONSOLIDATED FINANCIAL STATEMENTS, PEPGEN CORPORATION (A DEVELOPMENT STAGE ENTERPRISE)
Independent Auditors' Report..................................................... F-32
Consolidated Balance Sheets as of December 31, 1993 and 1994..................... F-33
Consolidated Statements of Operations for the period from July 8, 1992
(inception) through December 31, 1992, for the years ended December 31, 1993 and
1994 and the period from July 8, 1992 (inception) through December 31, 1994..... F-34
Consolidated Statements of Shareholders' Equity (Deficiency) for the period from
July 8, 1992 (inception) through December 31, 1994.............................. F-35
Consolidated Statements of Cash Flows for the period from July 8, 1992
(inception) through December 31, 1992, for the years ended December 31, 1993 and
1994 and the period from July 8, 1992 (inception) through December 31 1994...... F-36
Notes to Consolidated Financial Statements....................................... F-37
CONSOLIDATED FINANCIAL STATEMENTS, PEPGEN CORPORATION (A DEVELOPMENT STAGE ENTERPRISE)
(UNAUDITED)
Consolidated Balance Sheet as of December 31, 1995............................... F-43
Consolidated Statements of Operations for the year ended December 31, 1995 and
for the period from July 8, 1992 (inception) through December 31, 1995.......... F-44
Consolidated Statements of Shareholders' Equity (Deficiency) for the period July
8, 1992 (inception) through December 31, 1995................................... F-45
Consolidated Statements of Cash Flows for the year ended December 31, 1995 and
for the period from July 8, 1992 (inception) through December 31, 1995.......... F-46
Notes to Consolidated Financial Statements....................................... F-47
</TABLE>
F-1
<PAGE> 55
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Calypte Biomedical Corporation:
We have audited the accompanying consolidated balance sheets of Calypte
Biomedical Corporation and subsidiary (a development stage enterprise) (the
Company) as of December 31, 1994 and 1995, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for
each of the years in the three-year period ended December 31, 1995, and for the
period from February 18, 1988 (inception) through December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Calypte Biomedical
Corporation and subsidiary (a development stage enterprise) as of December 31,
1994 and 1995, and the consolidated results of their operations and their cash
flows for each of the years in the three-year period ended December 31, 1995,
and for the period from February 18, 1988 (inception) through December 31, 1995,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
San Francisco, California
January 16, 1996
F-2
<PAGE> 56
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1994 1995
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................................. $ 4,477,924 $ 2,558,650
Other current assets................................................... 40,956 755,572
------------ ------------
Total current assets................................................ 4,518,880 3,314,222
Property and equipment, net.............................................. 1,255,521 1,854,010
Note receivable from officer............................................. 85,000 42,500
Other assets............................................................. 105,115 126,144
------------ ------------
$ 5,964,516 $ 5,336,876
=========== ===========
LIABILITIES, MANDITORILY REDEEMABLE
PREFERRED STOCK, AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable....................................................... $ 169,429 $ 1,053,536
Accrued expenses....................................................... 365,850 643,911
Notes payable -- current portion....................................... 277,255 3,258,456
Capital lease obligations -- current portion........................... 89,519 260,214
Deferred revenue....................................................... 500,000 500,000
------------ ------------
Total current liabilities........................................... 1,402,053 5,716,117
Deferred rent obligation................................................. 91,280 87,357
Notes payable -- long-term portion....................................... 10,613 --
Capital lease obligations -- long-term portion........................... 185,232 542,725
------------ ------------
Total liabilities................................................... 1,689,178 6,346,199
Mandatorily redeemable Series A preferred stock, $0.001 par value;
100,000 shares authorized, issued, and outstanding; aggregate
redemption and liquidation value of $1,000,000 plus cumulative
dividends.............................................................. 1,616,438 1,736,438
Commitments and contingencies
Stockholders' equity (deficit):
Series B convertible preferred stock, $0.001 par value; 804,860 shares
authorized; 804,846 shares issued and outstanding as of December 31,
1994 and 1995; aggregate liquidation value of $1,500,235 as of
December 31, 1994 and 1995.......................................... 805 805
Series C convertible preferred stock, $0.001 par value; 1,702,727
shares authorized; 1,702,705 shares issued and outstanding as of
December 31, 1994 and 1995; aggregate liquidation value of
$6,300,004 as of December 31, 1994 and 1995......................... 1,703 1,703
Series D convertible preferred stock, $0.001 par value; 2,130,051
shares authorized; 2,116,999 shares issued and outstanding as of
December 31, 1994 and 1995; aggregate liquidation value of
$10,584,995 as of December 31, 1994 and 1995........................ 2,117 2,117
Series E convertible preferred stock, $0.001 par value; 4,000,000
shares authorized; 1,077,500 and 1,967,866 shares issued and
outstanding as of December 31, 1994 and 1995, respectively;
aggregate liquidation value of $5,387,500 and $9,839,330 as of
December 31, 1994 and 1995, respectively............................ 1,077 1,967
Common stock, $0.001 par value; 12,000,000 shares authorized; 569,352
and 573,899 shares issued and outstanding as of December 31, 1994
and 1995, respectively.............................................. 569 574
Additional paid-in capital............................................. 22,762,330 28,014,030
Deferred compensation.................................................. -- (365,871)
Deficit accumulated during development stage........................... (20,109,701) (30,401,086)
------------ ------------
Total stockholders' equity (deficit)................................ 2,658,900 (2,745,761)
------------ ------------
$ 5,964,516 $ 5,336,876
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 57
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 18,
1988
(INCEPTION)
YEARS ENDED DECEMBER 31, THROUGH
----------------------------------------- DECEMBER 31,
1993 1994 1995 1995
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue earned under research and
development contracts, substantially from
related parties.......................... $ -- $ -- $ -- $ 2,390,187
Operating expenses:
Research and development................. 4,518,984 3,643,781 5,017,545 20,346,564
Purchased in-process research and
development costs..................... -- -- 2,500,000 2,500,000
Selling, general and administrative...... 1,784,318 1,818,560 2,862,049 10,926,405
----------- ----------- ------------ ------------
Loss from operations............. (6,303,302) (5,462,341) (10,379,594) (31,382,782)
Interest income............................ 163,509 47,714 194,944 569,828
Interest expense........................... (55,274) (81,782) (116,842) (603,019)
Other income............................... 15,395 31,027 11,707 70,443
----------- ----------- ------------ ------------
Loss before income taxes and
extraordinary item............. (6,179,672) (5,465,382) (10,289,785) (31,345,530)
Income taxes............................... (1,600) (1,600) (1,600) (60,750)
----------- ----------- ------------ ------------
Loss before extraordinary item... (6,181,272) (5,466,982) (10,291,385) (31,406,280)
Extraordinary gain on debt
extinguishment........................... -- -- -- 485,453
----------- ----------- ------------ ------------
Net loss......................... (6,181,272) (5,466,982) (10,291,385) (30,920,827)
Less dividend on mandatorily redeemable
Series A preferred stock................. (120,000) (120,000) (120,000) (736,438)
----------- ----------- ------------ ------------
Net loss attributable to common
stockholders............................. $(6,301,272) $(5,586,982) $(10,411,385) $(31,657,265)
=========== =========== ============ ============
Net loss per share attributable to common
stockholders............................. $ (1.22) $ (0.90) $ (1.40)
=========== =========== ============
Weighted average shares used to compute net
loss per share attributable to common
stockholders............................. 5,182,594 6,187,396 7,450,692
=========== =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 58
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
PERIOD FROM FEBRUARY 18, 1988 (INCEPTION) THROUGH DECEMBER 31, 1995
<TABLE>
<CAPTION>
JOINT CONVERTIBLE PREFERRED STOCK ADDITIONAL
VENTURERS' ----------------------------------------- COMMON PAID-IN DEFERRED
CAPITAL SERIES B SERIES C SERIES D SERIES E STOCK CAPITAL COMPENSATION
----------- -------- -------- -------- -------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock as of
February 18, 1988 (date of
inception).................... $ -- $ -- $ -- $ -- $ -- $75,500 $ -- $ --
Capital contributions.......... 1,610,779 -- -- -- -- -- -- --
Exchange of Calypte, Inc. stock
for 100,000 shares of common
stock and 100,000 shares of
mandatorily redeemable Series
A preferred stock of the
Company on November 11, 1989
at $0.001 per share.......... -- -- -- -- -- (75,400) -- --
Common stock of 60,035 shares
issued for cash.............. -- -- -- -- -- 60 99,837 --
Compensation paid by issuance
of 170,610 shares of common
stock........................ -- -- -- -- -- 171 33,951 --
Conversion of notes payable to
61,426 shares of common
stock........................ -- -- -- -- -- 60 12,225 --
Conversion of notes payable to
29,506 shares of Series B
convertible preferred
stock........................ -- 30 -- -- -- -- 54,970 --
Series B convertible preferred
stock of 775,340 shares
issued for cash.............. -- 775 -- -- -- -- 1,387,333 --
Series C convertible preferred
stock of 810,812 shares
issued for cash.............. -- -- 811 -- -- -- 2,946,008 --
Dividend requirements on
mandatorily redeemable Series
A preferred stock............ -- -- -- -- -- -- (90,000) --
Net loss....................... (1,610,779) -- -- -- -- -- -- --
----------- -------- -------- -------- -------- ------- ----------- ------------
Balances as of December 31,
1991......................... -- 805 811 -- -- 391 4,444,324 --
Exercise of stock options for
68,083 shares of common
stock........................ -- -- -- -- -- 68 13,128 --
Compensation paid by issuance
of 31,670 shares of common
stock........................ -- -- -- -- -- 32 5,267 --
Series C convertible preferred
stock of 891,893 shares
issued for cash.............. -- -- 892 -- -- -- 3,208,379 --
Series D convertible preferred
stock of 800,000 shares
issued for cash.............. -- -- -- 800 -- -- 5,718,631 --
Dividend requirements on
mandatorily redeemable Series
A preferred stock............ -- -- -- -- -- -- (120,000) --
Net loss....................... -- -- -- -- -- -- -- --
----------- -------- -------- -------- -------- ------- ----------- ------------
Balances as of December 31,
1992......................... $ -- $805 $1,703 $ 800 $ -- $ 491 $13,269,729 $ --
<CAPTION>
DEFICIT
ACCUMULATED TOTAL
DURING STOCKHOLDERS'
DEVELOPMENT EQUITY
STAGE (DEFICIT)
------------ -------------
<S> <C> <C>
Issuance of common stock as of
February 18, 1988 (date of
inception).................... $ -- $ 75,500
Capital contributions.......... -- 1,610,779
Exchange of Calypte, Inc. stock
for 100,000 shares of common
stock and 100,000 shares of
mandatorily redeemable Series
A preferred stock of the
Company on November 11, 1989
at $0.001 per share.......... (924,600) (1,000,000)
Common stock of 60,035 shares
issued for cash.............. -- 99,897
Compensation paid by issuance
of 170,610 shares of common
stock........................ -- 34,122
Conversion of notes payable to
61,426 shares of common
stock........................ -- 12,285
Conversion of notes payable to
29,506 shares of Series B
convertible preferred
stock........................ -- 55,000
Series B convertible preferred
stock of 775,340 shares
issued for cash.............. -- 1,388,108
Series C convertible preferred
stock of 810,812 shares
issued for cash.............. -- 2,946,819
Dividend requirements on
mandatorily redeemable Series
A preferred stock............ (166,438) (256,438)
Net loss....................... (3,567,913) (5,178,692)
------------ -------------
Balances as of December 31,
1991......................... (4,658,951) (212,620)
Exercise of stock options for
68,083 shares of common
stock........................ -- 13,196
Compensation paid by issuance
of 31,670 shares of common
stock........................ -- 5,299
Series C convertible preferred
stock of 891,893 shares
issued for cash.............. -- 3,209,271
Series D convertible preferred
stock of 800,000 shares
issued for cash.............. -- 5,719,431
Dividend requirements on
mandatorily redeemable Series
A preferred stock............ -- (120,000)
Net loss....................... (3,802,496) (3,802,496)
------------ -------------
Balances as of December 31,
1992......................... $ (8,461,447) $ 4,812,081
</TABLE>
F-5
<PAGE> 59
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
PERIOD FROM FEBRUARY 18, 1988 (INCEPTION) THROUGH DECEMBER 31, 1995
<TABLE>
<CAPTION>
JOINT CONVERTIBLE PREFERRED STOCK ADDITIONAL
VENTURERS' ----------------------------------------- COMMON PAID-IN DEFERRED
CAPITAL SERIES B SERIES C SERIES D SERIES E STOCK CAPITAL COMPENSATION
----------- -------- -------- -------- -------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances as of December 31,
1992......................... $ -- $805 $1,703 $ 800 $ -- $ 491 $13,269,729 $ --
Common stock of 2,500 shares
issued for cash.............. -- -- -- -- -- 3 1,997 --
Exercise of stock options for
22,444 shares of common
stock........................ -- -- -- -- -- 23 8,640 --
Compensation paid by issuance
of 10,000 shares of common
stock........................ -- -- -- -- -- 10 7,990 --
Series D convertible preferred
stock of 199,999 shares
issued for cash.............. -- -- -- 200 -- -- 1,444,729 --
Dividends requirements on
mandatorily redeemable Series
A preferred stock............ -- -- -- -- -- -- (120,000) --
Net loss....................... -- -- -- -- -- -- -- --
---- ---- ------ ------ ------ ---- ----------- --------
Balances as of December 31,
1993......................... -- 805 1,703 1,000 -- 527 14,613,085 --
Conversion of Series D
convertible preferred stock
into 1.5 shares for each
share outstanding as of March
3, 1994; 500,000 additional
shares issued................ -- -- -- 500 -- -- (500) --
Common stock of 11,250 shares
issued for cash.............. -- -- -- -- -- 11 8,839 --
Exercise of stock options for
31,334 shares of common
stock........................ -- -- -- -- -- 31 12,034 --
Series D convertible preferred
stock of 617,000 shares
issued for cash.............. -- -- -- 617 -- -- 2,885,466 --
Series E convertible preferred
stock of 1,077,500 shares
issued for cash.............. -- -- -- -- 1,077 -- 5,363,406 --
Dividend requirements on
mandatorily redeemable Series
A preferred stock............ -- -- -- -- -- -- (120,000) --
Net loss....................... -- -- -- -- -- -- -- --
---- ---- ------ ------ ------ ---- ----------- --------
Balance as of December 31,
1994......................... -- 805 1,703 2,117 1,077 569 22,762,330 --
Series E convertible preferred
stock of 888,446 shares
issued for cash, 1,920 issued
for other than cash.......... -- -- -- -- 890 -- 4,302,278 --
Exercise of stock options for
4,547 shares of common
stock........................ -- -- -- -- -- 5 2,431 --
Dividend requirements on
mandatorily redeemable Series
A preferred stock............ -- -- -- -- -- -- (120,000) --
Options issued upon the
investment in Pepgen
Corporation.................. -- -- -- -- -- -- 500,000 --
Compensation relating to
granting of stock options.... -- -- -- -- -- -- 566,991 (566,991)
Amortization of deferred
compensation................. -- -- -- -- -- -- -- 201,120
Net loss....................... -- -- -- -- -- -- -- --
---- ---- ------ ------ ------ ---- ----------- --------
Balances as of December 31,
1995......................... $ -- $805 $1,703 $2,117 $1,967 $ 574 $28,014,030 $ (365,871)
==== ==== ====== ====== ====== ==== =========== ========
<CAPTION>
DEFICIT
ACCUMULATED TOTAL
DURING STOCKHOLDERS'
DEVELOPMENT EQUITY
STAGE (DEFICIT)
------------ -------------
<S> <C> <C>
Balances as of December 31,
1992......................... $ (8,461,447) $ 4,812,081
Common stock of 2,500 shares
issued for cash.............. -- 2,000
Exercise of stock options for
22,444 shares of common
stock........................ -- 8,663
Compensation paid by issuance
of 10,000 shares of common
stock........................ -- 8,000
Series D convertible preferred
stock of 199,999 shares
issued for cash.............. -- 1,444,929
Dividends requirements on
mandatorily redeemable Series
A preferred stock............ -- (120,000)
Net loss....................... (6,181,272) (6,181,272)
------------- -----------
Balances as of December 31,
1993......................... (14,642,719) (25,599)
Conversion of Series D
convertible preferred stock
into 1.5 shares for each
share outstanding as of March
3, 1994; 500,000 additional
shares issued................ -- --
Common stock of 11,250 shares
issued for cash.............. -- 8,850
Exercise of stock options for
31,334 shares of common
stock........................ -- 12,065
Series D convertible preferred
stock of 617,000 shares
issued for cash.............. -- 2,886,083
Series E convertible preferred
stock of 1,077,500 shares
issued for cash.............. -- 5,364,483
Dividend requirements on
mandatorily redeemable Series
A preferred stock............ -- (120,000)
Net loss....................... (5,466,982) (5,466,982)
------------- -----------
Balance as of December 31,
1994......................... (20,109,701) 2,658,900
Series E convertible preferred
stock of 888,446 shares
issued for cash, 1,920 issued
for other than cash.......... -- 4,303,168
Exercise of stock options for
4,547 shares of common
stock........................ -- 2,436
Dividend requirements on
mandatorily redeemable Series
A preferred stock............ -- (120,000)
Options issued upon the
investment in Pepgen
Corporation.................. -- 500,000
Compensation relating to
granting of stock options.... -- --
Amortization of deferred
compensation................. -- 201,120
Net loss....................... (10,291,385) (10,291,385)
------------- -----------
Balances as of December 31,
1995......................... $(30,401,086) $ (2,745,761)
============= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 60
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 18, 1988
YEARS ENDED DECEMBER 31, (INCEPTION)
---------------------------------------- THROUGH DECEMBER 31,
1993 1994 1995 1995
----------- ----------- ------------ --------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................... $(6,181,272) $(5,466,982) $(10,291,385) $(30,920,827)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................... 198,445 331,760 465,585 1,817,247
Loss on sale or disposal of equipment................... 5,254 -- 73,581 115,192
Extraordinary gain on debt extinguishment............... -- -- -- (485,453)
Amortization of deferred compensation................... -- -- 201,120 201,120
Compensation paid by stock issuance..................... 8,000 -- -- 47,421
Purchased in-process research and development costs..... -- -- 2,500,000 2,500,000
Changes in operating assets and liabilities:
Other current assets................................. (235,269) 254,426 (714,616) (516,732)
Organizational costs................................. -- -- -- (123,074)
Other assets......................................... (33,537) (52,925) 21,471 (407,484)
Accounts payable and accrued expenses................ (395,206) 319,802 1,162,168 2,099,517
Deferred rent obligation............................. 33,422 57,858 (3,923) 87,350
Note payable in exchange for expenses paid on behalf
of the Company..................................... -- -- -- 191,964
----------- ----------- ------------ ------------
Net cash used in operating activities.............. (6,600,163) (4,556,061) (6,585,999) (25,393,759)
----------- ----------- ------------ ------------
Cash flows from investing activities:
Proceeds from disposition of equipment...................... -- -- -- 25,000
Purchase of equipment....................................... (504,343) (625,231) (476,299) (2,276,552)
Investment in Pepgen........................................ -- -- (1,000,000) (1,000,000)
----------- ----------- ------------ ------------
Net cash used in investing activities.............. (504,343) (625,231) (1,476,299) (3,251,552)
----------- ----------- ------------ ------------
Cash flows from financing activities:
Proceeds from the sale of stock............................. 1,510,664 8,493,415 4,444,516 28,279,403
Expenses paid related to sale of stock...................... (55,072) (221,934) (138,912) (870,006)
Prepaid license fee......................................... -- -- -- 500,000
Principal payments on notes payable......................... (188,890) (76,322) (29,412) (916,926)
Principal payments on capital lease obligations............. (5,520) (28,137) (133,168) (166,824)
Proceeds from notes payable................................. 81,860 -- 2,000,000 2,692,035
Capital contributions....................................... -- -- -- 75,500
Joint ventures' capital contributions....................... -- -- -- 1,610,779
----------- ----------- ------------ ------------
Net cash provided by financing activities.......... 1,343,042 8,167,022 6,143,024 31,203,961
----------- ----------- ------------ ------------
Net (decrease) increase in cash and cash equivalents.......... (5,761,464) 2,985,730 (1,919,274) 2,558,650
Cash and cash equivalents at beginning of period.............. 7,253,658 1,492,194 4,477,924 --
----------- ----------- ------------ ------------
Cash and cash equivalents at end of period.................... $ 1,492,194 $ 4,477,924 $ 2,558,650 $ 2,558,650
=========== =========== ============ ============
Supplemental disclosure of cash flow activities:
Cash paid for interest...................................... $ 52,975 $ 83,036 $ 104,509 $ 478,178
Cash paid for income taxes.................................. 1,600 1,600 1,600 60,100
Supplemental disclosure of noncash activities:
Acquisition of equipment through obligations under capital
leases.................................................... 308,408 -- 661,356 969,764
Accrued liabilities converted to notes payable.............. -- -- -- 363,091
Accrued liabilities converted to common stock............... -- -- -- 38,978
Notes payable converted to common stock..................... -- -- -- 458,760
Notes payable converted to Series B convertible preferred
stock..................................................... -- -- -- 50,000
Note payable issued upon investment in Pepgen Corporation... -- -- 1,000,000 1,000,000
Options issued upon investment in Pepgen Corporation........ -- -- 500,000 500,000
Dividend on mandatorily redeemable Series A preferred
stock..................................................... 120,000 120,000 120,000 736,438
Deferred compensation attributable to stock grants.......... -- -- 566,991 566,991
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 61
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1994, AND 1995
(1) THE COMPANY AND BASIS OF PRESENTATION
Calpyte Biomedical Corporation (the Company) was incorporated on November 11,
1989 and is a development stage enterprise. The Company's primary activities
have been to obtain funding and to perform research and development. The Company
is in the process of applying for approvals to market and sell its product in
both domestic and foreign markets.
The accompanying consolidated financial statements include the results of
operations of the Company and its wholly owned subsidiary, Calypte, Inc., and
Calypte Biomedical Company (the Joint Venture). All significant intercompany
accounts and transactions have been eliminated in consolidation.
The Company accounts for its 49% interest in Pepgen Corporation (Pepgen) under
the equity method (Note 12).
In December 1995, the Board of Directors authorized the incorporation of a
wholly owned subsidiary in the state of Delaware. After receipt of stockholder
approval and upon closing of the Company's initial public offering (IPO), the
Board of Directors intends to direct management to merge the Company into the
Delaware subsidiary, with the Delaware company becoming the surviving entity.
The Board of Directors has authorized 20 million shares of common stock in the
Delaware company.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
Cash equivalents consist primarily of fixed income securities. The Company
considers all highly liquid debt instruments with original maturities of three
months or less to be cash equivalents.
Property and Equipment
Property and equipment are stated at cost. Machinery and equipment, furniture
and fixtures, and computer equipment are depreciated using the straight-line
method over the estimated useful life of the assets, generally four to five
years. Leasehold improvements and equipment under capital leases are amortized
or depreciated over the shorter of the lease term or the useful life of the
improvement.
Fair Value of Financial Instruments
Financial assets and liabilities have carrying values which approximate their
fair values for all periods presented.
Revenue
Revenue from product sales is recognized upon product shipment.
Deferred Revenue
Deferred revenue is accrued on payments received from customers in advance of
product shipment and will be recognized as revenue upon shipment of the related
products.
Income Taxes
Prior to January 1, 1993, income taxes were provided for all items included in
the accompanying consolidated statements of operations regardless of when such
items were reported for income tax purposes in accordance with the requirements
of Accounting Principles Board Opinion No. 11, Accounting for Income Taxes.
F-8
<PAGE> 62
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
Effective January 1, 1993, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, Accounting for Income Taxes. SFAS No. 109 requires an
asset and liability approach for the financial reporting of income taxes. Under
SFAS No. 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
Reclassifications
Certain reclassifications in the accompanying consolidated financial statements
have been made in order to conform to the December 31, 1995 consolidated
financial statement presentation.
Net Loss Per Share Attributable to Common Stockholders
Except as noted below, net loss per share attributable to common stockholders is
computed using the weighted average number of shares of common stock
outstanding. Common equivalent shares from stock options and warrants are
excluded from the computation as their effect is antidilutive, except that,
pursuant to the Securities and Exchange Commission (SEC) Staff Accounting
Bulletin No. 83, common stock issued for consideration below the assumed initial
public offering (IPO) price and warrants exercised, warrants granted and stock
options granted with exercise prices below the IPO price during the 12-month
period preceding the date of the initial filing of the Registration Statement,
even when antidilutive, have been included in the calculation of common
equivalent shares, using the treasury stock method based on the assumed IPO
price, as if they were outstanding for all periods presented.
Furthermore, common equivalent shares from convertible preferred stock that will
be converted upon the completion of the Company's IPO are included using the "as
if converted" method.
In accordance with paragraph 23 of Accounting Principles Board Opinion No. 15,
pro forma net loss per share has been presented to reflect the use of proceeds
from the Company's IPO to repay the mandatorily redeemable Series A preferred
stock and to repay certain debt obligations as of the beginning of the period
presented. The pro forma weighted average shares for the year ended December 31,
1995 were 7,948,465 and pro forma net loss was $10,174,543 which resulted in pro
forma net loss per share of $1.28 for the year ended December 31, 1995.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-9
<PAGE> 63
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
(3) OTHER CURRENT ASSETS
Other current assets as of December 31, 1994 and 1995 consisted of the
following:
<TABLE>
<CAPTION>
1994 1995
------- --------
<S> <C> <C>
Receivable under equipment lease line of credit....... $ -- $315,846
Deferred public offering costs........................ -- 200,667
Other prepaid expenses................................ 13,732 205,977
Other................................................. 27,224 33,082
------- --------
$40,956 $755,572
======= ========
</TABLE>
(4) PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 1994 and 1995 consisted of the
following:
<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Computer equipment.............................. $ 133,993 $ 237,405
Machinery and equipment......................... 775,878 1,403,520
Furniture and fixtures.......................... 225,961 187,657
Leasehold improvements.......................... 1,257,605 1,415,402
----------- -----------
2,393,437 3,243,984
Accumulated depreciation and amortization....... (1,137,916) (1,389,974)
----------- -----------
Property and equipment, net..................... $ 1,255,521 $ 1,854,010
========== ==========
</TABLE>
During 1988, property was purchased from an unrelated party subject to a note
for $442,052. The note was subsequently assigned to Purdue Frederick
Diagnostics, Inc., a former related party of the Company. The Company's
remaining obligation is reflected in notes payable (Note 6). The Company
recognized depreciation expense of $178,000, $315,000 and $466,000 for the years
ended December 1993, 1994 and 1995, respectively.
(5) ACCRUED EXPENSES
Accrued expenses as of December 31, 1994 and 1995 consisted of the following:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Accrued minimum royalty payments..................... $120,000 $160,000
Accrued management fee to shareholder................ 135,000 --
Other................................................ 110,850 483,911
-------- --------
$365,850 $643,911
======== ========
</TABLE>
F-10
<PAGE> 64
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
(6) NOTES PAYABLE
Notes payable as of December 31, 1994 and 1995 consisted of the following:
<TABLE>
<CAPTION>
1994 1995
------- ----------
<S> <C> <C>
Prime plus 3.5%; 12% as of December 31, 1995; note
payable to a bank; secured by property and
equipment; due March 1996......................... $ -- $2,000,000
10% note payable to a former related party; secured
by property and equipment; due October 1995....... 247,843 247,843
12% note payable; secured by equipment; due April
1996.............................................. 40,025 10,613
4% note payable to Pepgen, due the earlier of: 60
days following either FDA approval of the
Company's urine-based HIV-1 test or completion of
an IPO; or April 23, 1996......................... -- 1,000,000
------- ----------
Notes payable.................................. 287,868 3,258,456
Less current portion................................ 277,255 3,258,456
------- ----------
Long-term portion................................... $10,613 $ --
======= =========
</TABLE>
In December 1995, the Company entered into a line of credit agreement with a
bank to borrow up to $2,000,000 at an interest rate of prime plus 3.5%. The
agreement requires the Company to maintain a balance of cash and cash
equivalents of not less than $700,000 as of the last day of each month during
the term of the agreement. In addition, borrowings under the line of credit
agreement are secured by the Company's assets. Borrowings under the line of
credit are due upon the earlier of the closing of the Company's sale of its
common stock in an IPO or March 5, 1996, at which time the line of credit
agreement will expire.
The note payable to Pepgen relates to the Company's September 1995 investment in
Pepgen (Note 12).
The Company intends to extend the note payable to a former related party.
In March 1991, the Company issued 61,426 shares of common stock in satisfaction
of notes payable of $458,760 and accrued interest of $38,978. The difference
between the fair market value of the common stock and the exchange value of
$8.103 per share resulted in an extraordinary gain on debt extinguishment of
$485,453.
(7) LEASES
Capital Leases
In 1993, and as amended in 1995, the Company obtained two equipment lease lines
of credit which aggregated $2,300,000 and were collateralized by the related
equipment acquired with the borrowings. The Company's ability to draw additional
funds on these lease lines of credit expired in December 1995. However,
drawdowns subsequent to the expiration have been allowed under one of the lease
lines. Lease payments under the lines of credit are based on the total delivered
equipment cost multiplied by a monthly rate factor of approximately 3.5%
(approximate effective interest rate of 18% per annum). In addition, as partial
consideration for obtaining the lease lines, the Company issued certain warrants
to purchase common stock of the Company (Note 9).
F-11
<PAGE> 65
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
Equipment acquired under the lease lines of credit as of December 31, 1994 and
1995 consisted of the following:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Machinery and equipment............................ $ 226,251 $ 887,607
Leasehold improvements............................. 82,157 82,157
--------- ---------
308,408 969,764
Accumulated depreciation and amortization.......... (129,959) (250,149)
--------- ---------
$ 178,449 $ 719,615
========= =========
</TABLE>
Future minimum lease payments under capital leases as of December 31, 1995 were:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------------------------------------
<S> <C>
1996............................................... $390,028
1997............................................... 349,063
1998............................................... 314,964
--------
1,054,055
Less amount representing interest....................... 251,116
--------
Present value of capital lease obligations.............. 802,939
Less current portion of capital lease obligations....... 260,214
--------
Capital lease obligations -- long-term portion.......... $542,725
========
</TABLE>
Operating Leases
The Company leases office and manufacturing space in Berkeley and Alameda,
California, under two noncancelable operating leases. Under the Alameda lease
agreement, the Company is required to provide a security deposit in the form of
a letter of credit in the amount of $50,000, secured by a $50,000 certificate of
deposit which is included in other assets in the accompanying consolidated
balance sheets. Total rent expense, net of income from a one-year sublease
agreement of $184,000 in 1995, under these leases was $209,627, $504,971, and
$327,056 for the years ended December 31, 1993, 1994, and 1995, respectively.
Future minimum rental payments under all noncancelable operating leases as of
December 31 were:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------------------------------------------
<S> <C>
1996.................................................. $ 559,560
1997.................................................. 472,560
1998.................................................. 314,405
1999.................................................. 11,004
2000.................................................. 7,866
----------
Total.......................................... $1,365,395
==========
</TABLE>
(8) MANDATORILY REDEEMABLE PREFERRED STOCK
In February 1988, a Joint Venture was formed between Calypte, Inc. and CBC
Diagnostics, Inc. (CBC), formerly known as Purdue Frederick Diagnostics, Inc.
When the Company was incorporated, the Company issued common stock and
mandatorily redeemable Series A preferred stock in exchange for all the common
F-12
<PAGE> 66
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
stock of Calypte, Inc. and all of the interests of the venturers in the Joint
Venture. The Joint Venture's losses up to total capital contributions were
allocated to CBC, who reported the losses on its income tax return.
Holders of mandatorily redeemable Series A preferred stock shares are entitled
to a preference over holders of common stock in involuntary or voluntary
liquidation, in the amount of $10.00 per share plus all accrued but unpaid
dividends (the redemption value) at the date of liquidation. The Company has the
option to voluntarily redeem all or a portion of the mandatorily redeemable
Series A preferred stock at any time that funds are legally available. The
Company is required to redeem all shares of mandatorily redeemable Series A
preferred stock within 60 days of any fiscal year-end in which the Company
attains $3,000,000 in retained earnings, and funds are legally available. The
mandatorily redeemable Series A preferred stock is nonvoting.
Holders of mandatorily redeemable Series A preferred stock shares are entitled
to receive cumulative dividends at the rate of $1.20 per share per annum.
Through December 31, 1995, cumulative preferred dividends totaling $736,438 have
been charged to stockholders' equity to accrete for the mandatorily redeemable
Series A preferred stock redemption value with a corresponding increase in the
recorded amount of the mandatorily redeemable Series A preferred stock.
(9) STOCKHOLDERS' EQUITY
Reverse Stock Split
On November 22, 1994, the stockholders and the Board of Directors approved a
1-for-10 reverse stock split of the Company's common and preferred stock. Par
value remained at $0.001. The stock accounts have been reduced and additional
paid-in capital has been increased to reflect the change in the cumulative par
value of the stock issued. All share and per share information in the
accompanying consolidated financial statements have been adjusted to reflect
this reverse stock split.
Series B Convertible Preferred Stock
Holders of Series B convertible preferred stock are entitled to a preference
over the holders of mandatorily redeemable Series A preferred stock in
involuntary or voluntary liquidation in the amount of $1.864 per share, subject
to certain limitations.
Series C Convertible Preferred Stock
Holders of Series C convertible preferred stock are entitled to a preference
over the holders of mandatorily redeemable Series A preferred stock and the
holders of Series B convertible preferred stock in involuntary or voluntary
liquidation in the amount of $3.70 per share, subject to certain limitations.
Series D Convertible Preferred Stock
In 1992, 800,000 shares of Series D convertible preferred stock were issued at a
price of $7.50 per share.
In 1993, an additional 199,999 shares of Series D convertible preferred stock
were issued at a price of $7.50 per share.
In March 1994, in accordance with certain antidilution rights, each outstanding
share of Series D convertible preferred stock was converted into 1.5 shares of
Series D convertible preferred stock. The liquidation preference and conversion
price of the Series D convertible preferred stock was reduced to $5.00 per
share. Also, the Company issued an additional 617,000 shares of Series D
convertible preferred stock during 1994 at a price of $5.00 per share.
F-13
<PAGE> 67
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
Holders of the Series D convertible preferred stock are entitled to a preference
over the holders of mandatorily redeemable Series A preferred stock and the
holders of Series B and C convertible preferred stock in involuntary or
voluntary liquidation in the amount of $5.00 per share, subject to certain
limitations.
Series E Convertible Preferred Stock
In November 1994, the Board of Directors authorized the issuance of up to
3,200,000 shares of Series E convertible preferred stock. In May 1995, the Board
of Directors increased the authorized shares of Series E convertible preferred
stock to 4,000,000. During 1994, 1,077,500 shares of Series E convertible
preferred stock along with warrants to purchase an additional 1,079,100 shares
of Series E convertible preferred stock were issued at $5.00 per share. Each
warrant gives the holder the right to purchase a share of Series E convertible
preferred stock for $5.00 per share.
During 1995, an additional 890,366 shares of Series E convertible preferred
stock were issued at a price of $5.00 per share. In connection with this
issuance, warrants to purchase an additional 885,046 shares of Series E
convertible preferred stock were issued. Each of the warrants gives its holder
the right to purchase a share of Series E convertible preferred stock for $7.50.
Holders of Series E convertible preferred stock are entitled to a preference
over the holders of mandatorily redeemable Series A preferred stock, and the
holders of Series B, C, and D convertible preferred stock in involuntary or
voluntary liquidation in the amount of $5.00 per share, subject to certain
limitations.
Rights of Convertible Preferred Stockholders
Holders of the Series B, C, D, and E convertible preferred stock are entitled to
(i) receive one vote for each share of common stock into which their shares are
convertible; (ii) elect members of the Company's Board of Directors; and (iii)
receive dividends prior and in preference to any payment of any dividend on
common stock.
Automatic Conversion of Convertible Preferred Stock
The Series B, C, D and E convertible preferred stock is convertible at any time
into common stock of the Company at the initial ratio of one share of common
stock for one share of Series B, C, D or E convertible preferred stock. The
conversion ratio is adjustable under certain circumstances. Dividends are not
cumulative and will not accrue unless declared.
Series B, C, D, and E convertible preferred stock are automatically convertible
into shares of common stock immediately upon the closing of the Company's IPO at
a per share price of not less than $7.50 and which results in aggregate cash
proceeds to the Company of at least $8,000,000.
Common Stock Warrants and Options
During 1993, the Company issued stock warrants for the purchase of 35,155 shares
of the Company's common stock at exercise prices ranging from $5.00 to $7.50 per
share as partial consideration for obtaining two lease lines of credit (Note 7).
These warrants expire upon the later of 2003 or five years after the closing of
the Company's sale of its common stock in a public offering.
During 1995, the Company made an investment in Pepgen, a development stage
enterprise. The Company's investment consisted in part, of options for the
purchase of up to 475,000 shares of the Company's common stock at an exercise
price of $7.50 per share (see Note 12).
F-14
<PAGE> 68
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
Convertible Preferred Stock Warrants
In conjunction with the Series D convertible preferred stock offerings during
1993 and 1994, the Company issued a stock warrant for the purchase of 18,000
shares of the Company's Series D convertible preferred stock at an exercise
price of $5.60 per share. This warrant expires on the earlier of the warrant's
expiration date of February 1996, the date of closing of the Company's sale of
common stock at a per share price of not less than $10.00 and which results in
aggregate cash proceeds to the Company of at least $10,000,000, or upon the
occurrence of certain other events as set forth in the warrant agreement. In
addition, the Company issued stock warrants for the purchase of 2,800 shares of
the Company's Series D convertible preferred stock at an exercise price of $6.00
per share. These warrants expire in 1997.
In conjunction with the Series E convertible preferred stock offerings in
November 1994 and May, June and September 1995, the Company issued stock
warrants for the purchase of 1,079,100, 414,000, 430,046 and 41,000 shares,
respectively, of the Company's Series E convertible preferred stock. The
warrants issued in November 1994 are exercisable at $5.00 per share and expire
in November 1997. The warrants issued in May, June and September 1995 are
exercisable at $7.50 per share and expire upon the earlier of one year after the
date of issue, 60 days following receipt by the Company of FDA approval on its
urine-based HIV-1 test, or 60 days following the closing date of the Company's
IPO. As of December 31, 1995, there were 1,079,100 of the $5.00 warrants
outstanding and 885,046 of the $7.50 warrants outstanding.
Change of Control Provisions
Certain provisions of the Company's Certificate of Incorporation and Bylaws may
have the effect of preventing, discouraging or delaying any change in the
control of the Company and may maintain the incumbency of the Board of Directors
and management. The authorization of undesignated preferred stock makes it
possible for the Board of Directors to issue preferred stock with voting or
other rights or preferences that could impede the success of any attempt to
change control of the Company.
(10) INCENTIVE STOCK AND STOCK OPTION PLANS
Incentive Stock Plan
In April 1991, the Company's Board of Directors approved the adoption of the
Company's Incentive Stock Plan (the Stock Plan) which authorized the issuance of
up to 290,992 shares of the Company's common stock. In January 1992 and November
1994, 200,000 and 1,000,000 additional shares, respectively, of common stock
were authorized by the Company's Board of Directors for issuance under the Stock
Plan. In December 1995, 1,250,000 additional shares of common stock were
authorized by the Company's Board of Directors. Under the Stock Plan, employees
or consultants may be granted options that allow for the purchase of shares of
the Company's common stock.
Under the terms of the Stock Plan, nonstatutory stock options may be granted
only to employees, including directors who are employees, and consultants.
Incentive stock options may be granted only to employees.
Nonstatutory stock options may be granted under the Stock Plan at a price not
less than 85% of the fair market value of the common stock on the date the
option is granted. Incentive stock options may be granted under the Stock Plan
at a price not less than 100% of the fair market value of the common stock on
the date the option is granted. The fair value of the common stock is determined
by the Board of Directors and includes consideration of a variety of factors
including other equity transactions of the Company. Options granted under the
Stock Plan generally vest monthly over four to five years. The term of the
nonstatutory and incentive stock options granted is 10 years or less from the
date of the grant, as provided in the option agreements.
F-15
<PAGE> 69
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
Incentive and nonstatutory stock options granted to employees and consultants
who, on the date of grant, own stock representing more than 10% of the voting
power of all classes of stock of the Company are granted at an exercise price
not less than 110% of the fair market value of the common stock. Any options
granted are exercisable at the time and under conditions as determined by the
Company's Board of Directors. The Board of Directors may amend or modify the
Stock Plan at any time. The Stock Plan will terminate in 2001, unless sooner
terminated by the Board of Directors.
The following table summarizes activity under the Stock Plan:
<TABLE>
<CAPTION>
OPTIONS EXERCISE PRICE
--------- --------------
<S> <C> <C>
Outstanding as of December 31, 1992................. 248,845 $ 0.20 - 0.40
Granted........................................... 62,300 0.40 - 0.50
Exercised......................................... (22,444) 0.20 - 0.40
Canceled.......................................... (6,808) 0.40 - 0.50
--------- ------------
Outstanding as of December 31, 1993................. 281,893 0.20 - 0.50
Granted........................................... 148,582 0.50 - 1.00
Exercised......................................... (31,334) 0.20 - 0.50
Canceled.......................................... (84,314) 0.20 - 1.00
--------- ------------
Outstanding as of December 31, 1994................. 314,827 0.20 - 1.00
Granted........................................... 992,371 0.50 - 5.00
Exercised......................................... (4,547) 0.50 - 1.00
Canceled.......................................... (17,237) 0.50 - 1.00
--------- ------------
Outstanding as of December 31, 1995................. 1,285,414 $ 0.20 - 5.00
========= ============
Exercisable as of December 31, 1995................. 543,799 $ 0.20 - 5.00
========= ============
</TABLE>
As of December 31, 1995, 1,329,173 shares of common stock were available for
grant under the Stock Plan.
In accordance with Staff Accounting Bulletin No. 83, the Company has recorded
deferred compensation of $567,000 for the difference between the grant price and
the deemed fair value of the stock for financial reporting purposes at the grant
date related to stock options granted within one year of a planned public
offering of the Company's common stock. This amount is being amortized over the
relevant period of benefit. For the year ended December 31, 1995, $201,000 was
amortized.
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
Accounting for Stock-Based Compensation. SFAS No. 123 applies to all
transactions in which an entity acquires goods or services by issuing equity
instruments such as common stock, except for employee stock ownership plans.
SFAS No. 123 establishes a new method of accounting for stock-based compensation
arrangements with employees which is fair value based. The statement encourages
(but does not require) employers to adopt the new method in place of the
provisions of Accounting Principles Board Opinion No. 25 (APB No. 25),
Accounting for Stock Issued to Employees. Companies may continue to apply the
accounting provisions of APB No. 25 in determining net income; however, they
must apply the disclosure requirements SFAS No. 123. If the Company were to
adopt the fair value based method of SFAS No. 123, a higher compensation cost
would result for fixed stock option plans and a different compensation cost
would result for the Company's contingent or variable stock option plans. The
recognition provisions and disclosure requirements of SFAS No. 123 are effective
for the year ending December 31, 1996. The Company has elected to continue to
use its current practice under APB No. 25.
Also see Notes 9 and 12 regarding outstanding warrants.
F-16
<PAGE> 70
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
1995 Employee Stock Purchase Plan
In December 1995, the Company's Board of Director's approved the Company's
Employee Stock Purchase Plan (the Purchase Plan) subject to the closing of the
Company's IPO of its common stock. The Purchase Plan is intended to qualify
under Section 423 of the Internal Revenue Code (the Code). The Company will
reserve 300,000 shares of common stock for issuance under the Purchase Plan.
Under the Purchase Plan, an eligible employee may purchase shares of common
stock from the Company through payroll deductions of up to 10% of his or her
compensation, at a price per share equal to 85% of the lower of (i) the fair
market value of the Company's common stock on the first day of an offering
period under the Purchase Plan or (ii) the fair market value of the common stock
on the last day of an offering period. Except for the first offering period,
each offering period will last for six months and will commence the first day on
which the national stock exchanges and the Nasdaq Stock Market are open for
trading, on or after May 1 and November 1 of each year. The first offering
period will begin upon the effective date of the Company's IPO and will end on
October 31, 1996. Any employee who is customarily employed for at least 20 hours
per week and more than five months per calendar year, who has been employed for
at least three consecutive months on or before the commencement date of an
offering period is eligible to participate in the Purchase Plan.
1995 Director Option Plan
In December 1995, the Company's Board of Director's approved the Company's
Director Option Plan (the Director Option Plan) subject to the closing of the
Company's IPO of its common stock. Under the Director Option Plan, the Company
will reserve 200,000 shares of common stock for issuance to the directors of the
Company pursuant to nonstatutory stock options. Under the Director Option Plan,
directors who are not employees or consultants of the Company automatically
receive an option to purchase 12,000 shares of common stock (the First Option)
on the date on which such person first becomes a director, whether through
election by the stockholders of the Company or appointment by the Board of
Directors to fill a vacancy. Thereafter, each person shall receive an option to
acquire 3,000 shares of the Company's common stock (the Subsequent Option) on
each date such outside director is reelected. Each option granted under the
Director Option Plan shall be exercisable at 100% of the fair market value of
the Company's common stock on the date such option was granted. Twenty-five
percent of the First Option shall vest one year after the date of grant, with
25% vesting each anniversary thereafter. Twelve and one-half percent of the
shares subject to the Subsequent Option shall be exercisable on the first day of
each month following the date of grant. The plan shall be in effect for a term
of ten years unless sooner terminated under the Director Option Plan.
(11) SECTION 401(K) PLAN
In October 1995 (effective January 1, 1995), the Company adopted a Retirement
Savings and Investment Plan (the 401(k) Plan) covering the Company's full-time
employees located in the United States. The 401(k) Plan is intended to qualify
under Section 401(k) of the Internal Revenue Code, so that contributions to the
401(k) Plan by employees or by the Company, and the investment earnings thereon,
are not taxable to employees until withdrawn from the 401(k) Plan, and so that
contributions by the Company, if any, will be deductible by the Company when
made. Pursuant to the 401(k) Plan, employees may elect to reduce their current
compensation by up to the statutorily prescribed annual limit and to have the
amount of such reduction contributed to the 401(k) Plan. The 401(k) Plan
permits, but does not require, additional matching contributions to the 401(k)
Plan by the Company on behalf of all participants in the 401(k) Plan. The
Company has not made any contributions to the 401(k) Plan.
F-17
<PAGE> 71
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
(12) INVESTMENT IN PEPGEN CORPORATION
During 1995, the Company purchased a 49% equity interest in Pepgen for $1.0
million paid at closing, $1.0 million payable to Pepgen pursuant to a promissory
note (Note 6) and options to purchase the Company's common stock valued at
$500,000. The options were granted to Pepgen stockholders' for the purchase of
an aggregate of 475,000 shares of the Company's common stock at a price of $7.50
per share, of which 100,000 of such shares were immediately exercisable upon
signing of the agreement and the remaining 375,000 shares become exercisable
upon attainment of certain milestones. The options expire in September 2005. In
addition, Calypte has the right of first negotiation to purchase the remaining
51% of Pepgen at fair market value, and the Company is entitled to elect two of
the seven Board members of Pepgen. Other than the payment of the $1.0 million
dollar promissory note, Calypte does not have any ongoing commitments to fund
Pepgen.
The Company uses the equity method to account for its investment in Pepgen. Upon
completion of this transaction, the Company wrote-off its entire investment in
Pepgen as purchased in-process research and development costs.
(13) INCOME TAXES
As discussed in Note 2, the Company adopted SFAS No. 109 effective January 1,
1993 on a prospective basis. The cumulative effect of this change in accounting
for income taxes did not have a significant effect on the consolidated financial
statements.
Income tax expense differed from the amounts computed by applying the U.S.
federal income tax rate of 34% to pretax losses as a result of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Computed "expected" tax expense..... $(2,101,600) $(1,829,600) $(3,418,300)
Meals and entertainment expenses,
and officers' life insurance not
deductible for income taxes....... 3,300 7,000 5,500
Research expenses................... 59,000 62,900 86,200
State tax expense................... 1,100 1,100 1,100
Losses and credits for which no
benefit has been recognized....... 2,089,200 1,790,100 3,334,500
Other............................... (49,400) (29,900) (7,400)
----------- ----------- -----------
$ 1,600 $ 1,600 $ 1,600
=========== =========== ===========
</TABLE>
F-18
<PAGE> 72
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
The tax effect of temporary differences that give rise to significant portions
of the deferred tax assets is presented below:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1994 1995
----------- ------------
<S> <C> <C>
Deferred tax assets:
Employee benefit reserves, including accrued
vacation.................................... $ 13,000 $ 25,500
Start-up and other capitalization.............. 9,100 7,300
Fixed assets, due to differences in
depreciation................................ 224,500 298,800
Deferred rent.................................. 36,600 35,100
Net operating loss carryover................... 6,290,100 8,941,100
Research and development credit................ 600,400 920,900
Loss contingency............................... 20,100 20,100
Purchased research and development............. -- 978,400
----------- ------------
Total gross deferred tax assets........ 7,193,800 11,227,200
Less valuation allowance......................... (7,193,800) (11,227,200)
----------- ------------
Net deferred tax asset................. $ -- $ --
=========== ============
</TABLE>
The net change in the valuation allowance for the years ended December 31, 1993,
1994, and 1995 was an increase of $2,444,000, $2,142,000, and $4,033,400,
respectively. Because there is uncertainty regarding the Company's ability to
realize its deferred tax assets, a 100% valuation allowance has been
established.
As of December 31, 1995, the Company had federal tax net operating loss
carryforwards of approximately $24,107,000, which will expire in the years 2004
through 2010. The Company also has federal research and development credit
carryforwards as of December 31, 1995 of approximately $750,000, which will
expire in the years 2005 through 2010.
State tax net operating loss carryforwards were approximately $12,133,000 and
state research and development credit carryforwards were $259,000 as of December
31, 1995. The state net operating loss carryforwards will expire in the years
1997 through 2000 and the state research and development credits will expire in
the years 2005 through 2010.
The Company's ability to utilize its net operating loss and research and
development tax credit carryforwards may be limited in the future if it is
determined that the Company experienced an ownership change, as defined in
Section 382 of the Internal Revenue Code, as a result of prior transactions or
upon the completion of the IPO.
(14) ROYALTY, LICENSE, AND RESEARCH AGREEMENTS
Royalty and License Agreements
The Company has entered into an agreement that provides for royalty payments to
former related parties based on sales of certain products conceived by the
former related parties prior to March 30, 1989.
The Company has entered into arrangements with various organizations to receive
the right to utilize certain patents and proprietary rights under licensing
agreements in exchange for the Company making certain royalty payments based on
sales of certain products and services. The royalty obligations are based on a
percentage of net sales of licensed products and include minimum annual royalty
payments under some agreements. During 1993, the Company paid $1,040,000 in
product license and related legal fees as consideration for these
F-19
<PAGE> 73
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
agreements, which has been recorded as research and development expense in the
accompanying consolidated statements of operations.
Research Agreement
In August 1993 and as amended in 1994, the Company entered into a research
agreement that allowed for a university to perform certain research on behalf of
the Company for a seven-year period. Under the terms of the agreement, the
Company may negotiate certain license rights to the inventions made by the
university resulting from this research. The Company's annual payment under this
agreement is approximately $150,000 through 1999.
(15) DISTRIBUTION AGREEMENTS
Seradyn, Inc.
In April 1995, the Company entered into an agreement with Seradyn, Inc.
(Seradyn), under which Seradyn was granted exclusive distribution rights for the
Company's urine-based HIV-1 test under the trade name "Seradyn Sentinel" for all
non-Calypte accounts in the United States and all customers in Europe, Latin
America, Africa, and the Middle East (excluding Israel). The agreement provides
for certain minimum purchases by Seradyn. If such minimum purchases are not met,
the Company has the right to terminate the agreement or render Seradyn's rights
non-exclusive for the region in which the minimum purchases were not met
provided that Seradyn will be guaranteed the prices given to Calypte's most
favored customers in the territory. The initial term of the agreement extends
through December 1998. Seradyn has the right to extend the agreement for
successive two-year terms provided it has met minimum sales requirements.
Seradyn has agreed to assist the Company in obtaining regulatory approvals in
its distribution territory at the Company's expense. The agreement also grants
Seradyn a right of first refusal on distribution rights for certain new products
which may be developed during the term of the agreement.
Otsuka Pharmaceutical Co., Ltd.
In August 1994, the Company entered into a distribution agreement with Otsuka
Pharmaceutical Co., Ltd. (Otsuka), a drug development and distribution company
incorporated in Japan. Otsuka is also a stockholder of the Company. The
agreement gives Otsuka exclusive distribution rights for the Company's
urine-based HIV-1 test and to use the name "Calypte" to market the test in 22
Asian countries, Australia and New Zealand. To maintain exclusivity, the
agreement requires that Otsuka purchase certain annual minimums, which increase
each year, and total 70 million tests over ten years. Otsuka has agreed to use
its best efforts to obtain regulatory approvals for the product in its
territory. In 1993, Otsuka paid $500,000 to the Company to be applied against
future commercial product purchases from the Company. The Company recorded this
$500,000 payment as deferred revenue as of December 31, 1994 and 1995.
The agreement between the Company and Otsuka is for a term of ten years, and is
terminable without cause by Otsuka upon 120-days notice. The Company has
committed up to one-half of its total manufacturing capacity to Otsuka. If the
Company is unable to meet Otsuka's manufacturing requirements, Otsuka has a
right to manufacture tests itself. The agreement also grants Otsuka the right of
first refusal to distribute certain new products which may be developed during
the term of the agreement.
F-20
<PAGE> 74
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
Travenol Laboratories (Israel) Ltd.
In December 1994, the Company entered into an agreement with Travenol
Laboratories (Israel) Ltd. (Travenol). The agreement gives Travenol exclusive
rights to distribute the Company's urine-based HIV-1 test under the trade name
"Calypte" within Israel. Under the agreement, Travenol will undertake
registration of the product in Israel with the Company paying regulatory fees.
The term of the agreement is perpetual unless terminated earlier for specified
causes. No minimum purchase levels are required under this agreement.
(16) CONSULTING AND EMPLOYEE AGREEMENTS
On April 10, 1995, the Company entered into an employment agreement with an
officer which is effective from May 1, 1995 through December 31, 1996. Under the
agreement the officer is receiving a salary of $195,000 per year and is eligible
for a maximum bonus in 1996 of $35,000. The agreement is automatically renewable
each year subject to three months notice prior to the end of each calendar year.
In the event the officer's employment with the Company is terminated by the
Company other than for cause, the officer may be entitled to receive his base
salary for up to 12 months. In addition, the Company agreed to pay the officer's
moving expenses in connection with his relocation to California.
On January 1, 1995, the Company entered into an employment agreement with an
officer for the year ended December 31, 1995, which provided for an annual
salary of $140,000 plus an annual bonus not to exceed $35,000 per year. The
agreement was automatically renewed for the year ending December 31, 1996 and is
automatically renewable each year subject to three months notice prior to the
end of each calendar year.
The Company has entered into other employee and consulting agreements with
varying terms, in the ordinary course of business.
(17) RELATED PARTY TRANSACTIONS
Included in revenue earned under research and development contracts is
$2,099,116 for the period from February 18, 1988 (inception) to December 31,
1995 earned from CBC or its affiliates. The founders of the Company included
entities affiliated with CBC.
In March 1992, the Company advanced $85,000 to a stockholder and officer of the
Company in exchange for a note receivable issued by the stockholder and officer.
In anticipation of the forgiveness of a portion of the note, the Company
wrote-off half of the note during 1995. The remaining $42,500 balance of the
note is due March 20, 1997 and is secured by shares in the Company's common
stock acquired by the borrower since 1989. Interest income recognized by the
Company and paid by the borrower was $6,132, $5,950, and $5,950 in 1993, 1994,
and 1995, respectively.
In January 1994, the Company entered into an agreement with a stockholder of the
Company for management services. Expense related to cash payments under this
agreement for such services was $135,000 and $137,500 for 1994 and 1995,
respectively. In addition, options to purchase 154,276 shares of the Company's
common stock at a per share price of $0.50 were granted to the stockholder.
(18) LEGAL MATTERS
The Company is subject to litigation from time to time in the ordinary course of
business. Although the amount of any liability with respect to such litigation
cannot be determined, in the opinion of management such liability, if any, will
not have a material adverse effect on the Company's financial condition or
results of operations.
F-21
<PAGE> 75
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, AND 1995
(19) ACCOUNTING CHANGES
In connection with the Company's filing of a registration statement with the SEC
for the planned sale of common stock in an IPO and pursuant to the provisions of
APB Opinion No. 20, Accounting Changes, the Company has retroactively restated
its consolidated financial statements for all periods presented to reclassify
its mandatorily redeemable Series A preferred stock out of permanent equity and
to accrue dividends on the manditorily redeemable Series A preferred stock
regardless of their declaration by the Company's Board of Directors. The impact
of this change was to recognize dividends of $120,000 in each of the years in
the three-year period ended December 31, 1995 and $736,438 for the period
February 18, 1988 (inception) through December 31, 1995. In addition, the
Company changed its policy with regards to the date it commences depreciating
and amortizing amounts capitalized for new facilities to the date such
facilities are available for their intended use. This change resulted in an
increase in the 1994 net loss of approximately $86,000.
F-22
<PAGE> 76
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, 1996
DECEMBER 31, --------------------------------
1995 ACTUAL PRO FORMA(NOTE 2)
------------ ------------ -----------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents........................................... $ 2,558,650 $ 1,841,696 $ 1,339,003
Other current assets................................................ 755,572 914,591 914,591
------------ ------------ ------------
Total current assets......................................... 3,314,222 2,756,287 2,253,594
Property and equipment, net........................................... 1,854,010 1,884,298 1,884,298
Note receivable from officer.......................................... 42,500 42,500 42,500
Other assets.......................................................... 126,144 143,485 143,485
------------ ------------ ------------
$ 5,336,876 $ 4,826,570 $ 4,323,877
============ ============ ============
LIABILITIES, MANDATORILY REDEEMABLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses............................... $ 1,697,447 $ 2,249,153 $ 2,249,153
Notes payable -- current portion.................................... 3,258,456 3,250,536 2,747,843
Capital lease obligations -- current portion........................ 260,214 423,384 423,384
Deferred revenue.................................................... 500,000 625,000 625,000
------------ ------------ ------------
Total current liabilities.................................... 5,716,117 6,548,073 6,045,380
Deferred rent obligation.............................................. 87,357 76,876 76,876
Capital lease obligations -- long-term portion........................ 542,725 682,867 682,867
------------ ------------ ------------
Total liabilities............................................ 6,346,199 7,307,816 6,805,123
Mandatorily redeemable Series A preferred stock, $0.001 par value;
100,000 shares authorized, issued, and outstanding; aggregate
redemption and liquidation value of $1,000,000 plus cumulative
dividends........................................................... 1,736,438 1,766,438 1,766,438
Commitments and contingencies
Stockholders' equity (deficit):
Series B convertible preferred stock, $0.001 par value; 804,860
shares authorized; 804,846 shares issued and outstanding as of
December 31, 1995 and March 31, 1996 (-0- shares pro forma);
aggregate liquidation value of $1,500,235 as of March 31, 1996
($-0- pro forma).................................................. 805 805 --
Series C convertible preferred stock, $0.001 par value; 1,702,727
shares authorized; 1,702,705 shares issued and outstanding as of
December 31, 1995 and March 31, 1996 (-0- shares pro forma);
aggregate liquidation value of $6,300,004 as of March 31, 1996
($-0- pro forma).................................................. 1,703 1,703 --
Series D convertible preferred stock, $0.001 par value; 2,130,051
shares authorized; 2,116,999 shares issued and outstanding as of
December 31, 1995 and March 31, 1996 (-0- shares pro forma);
aggregate liquidation value of $10,585,000 as of March 31, 1996
($-0- pro forma).................................................. 2,117 2,117 --
Series E convertible preferred stock, $0.001 par value; 4,000,000
shares authorized; 1,967,866 and 2,207,866 shares issued and
outstanding as of December 31, 1995 and March 31, 1996,
respectively (-0- shares pro forma); aggregate liquidation value
of $11,039,330 as of March 31, 1996 ($-0- pro forma).............. 1,967 2,207 --
Common stock, $0.001 par value; 12,000,000 shares authorized
(20,000,000 shares pro forma); 573,899 and 574,018 shares issued
and outstanding as of December 31, 1995 and March 31, 1996,
respectively (7,406,434 shares pro forma)......................... 574 574 7,406
Additional paid-in capital.......................................... 28,014,030 29,329,343 29,329,343
Deferred compensation............................................... (365,871) (366,914) (366,914)
Deficit accumulated during development stage........................ (30,401,086) (33,217,519) (33,217,519)
------------ ------------ ------------
Total stockholders' equity (deficit)......................... (2,745,761) (4,247,684) (4,247,684)
============ ============ ============
$ 5,336,876 $ 4,826,570 $ 4,323,877
============ ============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
F-23
<PAGE> 77
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
THREE MONTHS FEBRUARY 18, 1988
ENDED MARCH 31, (INCEPTION)
--------------------------- THROUGH MARCH 31,
1995 1996 1996
----------- ----------- -----------------
<S> <C> <C> <C>
Revenue earned under research and development
contracts, substantially from related
parties........................................ $ -- $ -- $ 2,390,187
Operating expenses:
Research and development....................... 970,811 1,827,559 22,174,123
Purchased in-process research and development
costs....................................... -- -- 2,500,000
Selling, general and administrative............ 491,527 896,185 11,822,590
----------- ----------- ------------
Loss from operations................... (1,462,338) (2,723,744) (34,106,526)
Interest income.................................. 60,761 36,939 606,767
Interest expense................................. (17,749) (134,845) (737,864)
Other income..................................... 21,066 5,217 75,660
----------- ----------- ------------
Loss before income taxes and
extraordinary item................... (1,398,260) (2,816,433) (34,161,963)
Income taxes..................................... -- -- (60,750)
----------- ----------- ------------
Loss before extraordinary item......... (1,398,260) (2,816,433) (34,222,713)
Extraordinary gain on debt extinguishment........ -- -- 485,453
----------- ----------- ------------
Net loss............................... (1,398,260) (2,816,433) (33,737,260)
Less dividend on mandatorily redeemable Series A
preferred stock................................ (30,000) (30,000) (766,438)
----------- ----------- ------------
Net loss attributable to common stockholders..... $(1,428,260) $(2,846,433) $ (34,503,698)
=========== =========== ============
Net loss per share attributable to common
stockholders................................... $ (0.19) $ (0.38)
=========== ===========
Weighted average shares used to compute net loss
per share attributable to common
stockholders................................... 7,450,212 7,450,241
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
F-24
<PAGE> 78
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
THREE MONTHS FEBRUARY 18, 1988
ENDED MARCH 31, (INCEPTION)
----------------------- THROUGH MARCH 31,
1995 1996 1996
---------- ---------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................... $(1,398,260) $(2,816,433) $(33,737,260)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization................... 104,354 187,070 2,004,317
Loss on sale or disposal of equipment........... 61,718 -- 115,192
Extraordinary gain on debt extinguishment....... -- -- (485,453)
Amortization of deferred compensation........... -- 44,391 245,505
Compensation paid by stock issuance............. 22,000 -- 47,421
Purchased in-process research and development
costs......................................... -- -- 2,500,000
Changes in operating assets and liabilities:
Other current assets.......................... (7,176) (159,019) (675,752)
Organizational costs.......................... -- -- (123,074)
Other assets.................................. (300) (17,341) (424,825)
Accounts payable, accrued expenses and
deferred revenue........................... (192,909) 676,706 2,776,222
Deferred rent obligation...................... (981) (10,481) 76,876
Note payable in exchange for expenses paid on
behalf of the Company...................... -- -- 191,964
----------- ----------- ------------
Net cash used in operating activities...... (1,411,554) (2,095,107) (27,488,867)
----------- ----------- ------------
Cash flows from investing activities:
Proceeds from disposition of equipment............. -- -- 25,000
Purchase of equipment.............................. (106,550) -- (2,276,552)
Investment in Pepgen Corporation................... -- -- (1,000,000)
----------- ----------- ------------
Net cash used in investing activities...... (106,550) -- (3,251,552)
----------- ----------- ------------
Cash flows from financing activities:
Proceeds from the sale of stock.................... 18,900 1,300,119 29,579,524
Expenses paid related to sale of stock............. (779) -- (870,006)
Prepaid license fee................................ -- -- 500,000
Principal payments on notes payable................ (7,026) (7,920) (924,846)
Principal payments on capital lease obligations.... (21,000) (66,688) (233,513)
Proceeds from notes payable........................ -- -- 2,692,035
Capital contributions.............................. -- -- 75,500
Joint ventures' capital contributions.............. -- -- 1,610,779
Proceeds from capital lease obligations............ -- 152,642 152,642
----------- ----------- ------------
Net cash (used in) provided by financing
activities............................... (9,905) 1,378,153 32,582,115
----------- ----------- ------------
Net (decrease) increase in cash and cash
equivalents........................................ (1,528,009) (716,954) 1,841,696
Cash and cash equivalents at beginning of period..... 4,477,924 2,558,650 --
----------- ----------- ------------
Cash and cash equivalents at end of period........... $2,949,915 $1,841,696 $ 1,841,696
=========== =========== ============
Supplemental disclosure of cash flow activities:
Cash paid for interest............................. $ 17,749 $ 95,822 $ 574,000
Cash paid for income taxes......................... -- -- 60,100
Supplemental disclosure of noncash activities:
Acquisition of equipment through obligations under
capital leases.................................. -- 217,358 1,187,122
Accrued liabilities converted to notes payable..... -- -- 363,091
Accrued liabilities converted to common stock...... -- -- 38,978
Notes payable converted to common stock............ -- -- 458,760
Notes payable converted to Series B convertible
preferred stock................................. -- -- 50,000
Note payable issued upon investment in Pepgen
Corporation..................................... -- -- 1,000,000
Options issued upon investment in Pepgen
Corporation..................................... -- -- 500,000
Dividend on mandatorily redeemable Series A
preferred stock................................. 30,000 30,000 766,438
Deferred compensation attributable to stock
grants.......................................... -- 45,425 612,416
</TABLE>
See accompanying notes to consolidated condensed financial statements.
F-25
<PAGE> 79
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1995 AND 1996
The accompanying unaudited consolidated condensed financial statements have been
prepared by the Company, pursuant to the rules and regulations of the Securities
and Exchange Commission, and reflect all adjustments which, in the opinion of
management, are necessary for a fair statement of the results for the interim
periods presented. Operating results for the three months ended March 31, 1996,
are not necessarily indicative of the results to be expected for the year.
Certain information in footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted pursuant to such rules and regulations. These
consolidated condensed financial statements should be read in conjunction with
the consolidated financial statements and the notes thereto for the year ended
December 31, 1995.
(1) THE COMPANY AND BASIS OF PRESENTATION
Calypte Biomedical Corporation (the Company) was incorporated on November 11,
1989 and is a development stage enterprise. The Company's primary activities
have been to obtain funding and to perform research and development. The Company
is in the process of applying for approvals to market and sell its product in
both domestic and foreign markets.
The accompanying consolidated condensed financial statements include the results
of operations of the Company and its wholly owned subsidiary, Calypte, Inc., and
Calypte Biomedical Company (the Joint Venture). All significant intercompany
accounts and transactions have been eliminated in consolidation.
The Company accounts for its 49% interest in Pepgen Corporation (Pepgen) under
the equity method (Note 7).
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Pro Forma Financial Information
Pro forma stockholders' equity (deficit) of the Company as of March 31, 1996
gives effect to the conversion of 6,832,416 shares of Series B, C, D, and E
convertible preferred stock into 6,832,416 shares of common stock and gives
effect to the reincorporation of the Company into a Delaware company and
authorization for the Company to issue up to 20 million shares of common stock.
Pro forma financial information also gives effect, as of March 31, 1996, to
repayment of $502,693 of current notes payable which were repaid in April 1996.
Net Loss Per Share Attributable to Common Stockholders
Except as noted below, net loss per share attributable to common stockholders is
computed using the weighted average number of shares of common stock
outstanding. Common equivalent shares from stock options and warrants are
excluded from the computation as their effect is antidilutive, except that,
pursuant to the Securities and Exchange Commission (SEC) Staff Accounting
Bulletin No. 83, common stock issued for consideration below the assumed IPO
price and warrants exercised, warrants granted and stock options granted with
exercise prices below the IPO price during the 12-month period preceding the
date of the initial
F-26
<PAGE> 80
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
MARCH 31, 1995 AND 1996
filing of the registration statement, even when antidilutive, have been included
in the calculation of common equivalent shares, using the treasury stock method
based on the assumed IPO price, as if they were outstanding for all periods
presented.
Furthermore, common equivalent shares from convertible preferred stock that will
be converted upon the completion of the Company's IPO are included using the "as
if converted" method.
In accordance with paragraph 23 of Accounting Principles Board Opinion No. 15,
pro forma net loss per share has been presented to reflect the use of proceeds
from the Company's IPO to repay the mandatorily redeemable Series A preferred
stock and to repay certain debt obligations as of the beginning of the period
presented. The pro forma weighted average shares for the three months ended
March 31, 1996 were 7,951,828 and pro forma net loss was $2,681,587 which
resulted in pro forma net loss per share of $0.34 for the three months ended
March 31, 1996.
(3) NOTES PAYABLE -- CURRENT PORTION
Notes payable consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ ----------
<S> <C> <C>
Prime plus 3.5%; 11.75% as of March 31, 1996; note
payable to a bank; secured by property and
equipment; due July 5, 1996...................... $2,000,000 $2,000,000
10% note payable to a former related party; secured
by property and equipment; due August 1, 1996.... 247,843 247,843
12% note payable; secured by equipment; due April
1996............................................. 10,613 2,693
4% note payable to Pepgen, due the earlier of: 60
days following either FDA approval of the
Company's urine-based HIV-1 test or completion of
an IPO; or April 23, 1996 (extended to October
31, 1996 in May 1996)............................ 1,000,000 1,000,000
---------- ----------
Notes payable -- current portion......... $3,258,456 $3,250,536
========== ==========
</TABLE>
In December 1995, the Company entered into a line of credit agreement with a
bank to borrow up to $2,000,000 at an interest rate of prime plus 3.5%. The
agreement requires the Company to maintain a balance of cash and cash
equivalents of not less than $700,000 as of the last day of each month during
the term of the agreement. In addition, borrowings under the line of credit
agreement are secured by the Company's assets. In March 1996, the Company
extended the due date of the line of credit such that the line of credit is due
July 5, 1996. In connection with the extension, the Company made a $500,000
principal payment in April 1996 and the available line of credit was reduced to
$1,500,000.
The note payable to Pepgen Corporation (Pepgen) relates to the Company's
September 1995 investment in Pepgen.
(4) LEASE COMMITMENTS
In 1993, and as amended in 1995, the Company obtained two equipment lease lines
of credit which aggregated $2,300,000 and were collateralized by the related
equipment acquired with the borrowings. The Company's ability to draw additional
funds on these lines of credit expired in December 1995. However, drawdowns
subsequent to the expiration have been allowed under one of these lease lines.
Lease payments under the lines of credit are based on the total delivered
equipment cost multiplied by a monthly rate factor of approximately
F-27
<PAGE> 81
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
MARCH 31, 1995 AND 1996
3.5% (approximate effective interest rate of 18% per annum). Through March 31,
1996, total borrowings under these equipment lease lines of credit were
approximately $1,340,000 to be repaid through 1998.
(5) STOCKHOLDERS' EQUITY
Automatic Conversion of Convertible Preferred Stock
Series B, C, D, and E convertible preferred stock are automatically convertible
into shares of common stock immediately upon the closing of the Company's IPO at
a per share price of not less than $7.50 and which results in aggregate cash
proceeds to the Company of at least $8,000,000.
Convertible Preferred Stock Warrants
On February 6, 1996, 18,000 warrants issued in conjunction with the Series D
convertible preferred stock offerings during 1993 and 1994 expired unexercised.
Warrants to purchase 2,800 shares of the Company's Series D convertible
preferred stock at an exercise price of $6.00 per share remain outstanding and
unexercised as of March 31, 1996. These warrants expire in 1997.
In conjunction with the Series E convertible preferred stock offerings in
November 1994 and in May, June and September 1995, the Company issued stock
warrants for the purchase of 1,079,100, 414,000, 430,046 and 41,000 shares,
respectively, of the Company's Series E convertible preferred stock. The
warrants issued in November 1994 are exercisable at $5.00 per share and expire
in November 1997. The warrants issued in May, June and September 1995 are
exercisable at $7.50 per share and expire upon the earlier of one year after the
date of issue, 60 days following receipt by the Company of FDA approval on its
urine-based HIV-1 test, or 60 days following the closing date of the Company's
IPO.
During the three months ended March 31, 1996, the Company received proceeds of
$1,000,000 and $300,000 from the exercise of 200,000 of the $5.00 warrants and
40,000 of the $7.50 warrants, respectively. As of March 31, 1996, there were
879,100 of the $5.00 warrants outstanding and 845,046 of the $7.50 warrants
outstanding.
(6) INCENTIVE STOCK PLAN
Under the Company's Incentive Stock Plan (the Stock Plan), 1,490,992 shares are
authorized for issuance and in December 1995, 1,250,000 additional shares of
common stock were authorized by the Company's Board of Directors for issuance
under the Stock Plan. Under the Stock Plan, employees or consultants may be
granted options that allow for the purchase of shares of the Company's common
stock.
The following table summarizes activity under the Stock Plan for the three
months ended March 31, 1996:
<TABLE>
<CAPTION>
OPTIONS EXERCISE PRICE
--------- --------------
<S> <C> <C>
Outstanding as of December 31, 1995................. 1,285,414 $ 0.20 - 5.00
Granted........................................... 7,400 1.00
Exercised......................................... (119) 1.00
Canceled.......................................... (134) 1.00
---------
Outstanding as of March 31, 1996.................... 1,292,561 0.20 - 5.00
========
Exercisable as of March 31, 1996.................... 630,780 0.20 - 5.00
========
</TABLE>
As of March 31, 1996, 1,321,907 shares of common stock were available for grant
under the Stock Plan.
F-28
<PAGE> 82
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
MARCH 31, 1995 AND 1996
(7) INVESTMENT IN PEPGEN CORPORATION
During 1995, the Company purchased a 49% equity interest in Pepgen for $1.0
million paid at closing, $1.0 million payable to Pepgen pursuant to a promissory
note (Note 3) and options to purchase the Company's common stock valued at
$500,000. The options were granted to Pepgen stockholders for the purchase of an
aggregate of 475,000 shares of the Company's common stock at a price of $7.50
per share, of which 100,000 of such shares were immediately exercisable upon
signing of the agreement and the remaining 375,000 shares become exercisable
upon attainment of certain milestones. The options expire in 2005. In addition,
Calypte has the right of first negotiation to purchase the remaining 51% of
Pepgen at fair market value, and the Company is entitled to elect two of the
seven Board members of Pepgen. Other than the payment of the $1.0 million dollar
promissory note, Calypte does not have any ongoing commitments to fund Pepgen.
The Company uses the equity method to account for its investment in Pepgen. Upon
completion of this transaction, the Company wrote-off its entire investment in
Pepgen as purchased in-process research and development costs.
(8) LEGAL MATTERS
The Company is subject to litigation from time to time in the ordinary course of
business. Although the amount of any liability with respect to such litigation
cannot be determined, in the opinion of management such liability, if any, will
not have a material adverse effect on the Company's financial condition or
results of operations.
(9) SUBSEQUENT EVENTS
Series E Stock Warrants
From March 31, 1996 to May 10, 1996, the Company received an additional $131,000
and $1,740,000 from the exercise of an additional 26,200 of the $5.00 warrants
and 231,976 of the $7.50 warrants, respectively. As of May 10, 1996, there were
852,900 of the $5.00 warrants and 613,070 of the $7.50 warrants outstanding.
Royalty and License Agreement
In April 1996, the Company signed an agreement with a corporation for the joint
development of a diagnostic product. As part of the agreement, the Company
granted a license to the corporation to make, use and sell the product. The
Company will receive royalty payments from the corporation based on a percentage
of net sales of the licensed product.
Authorization of Initial Public Offering
On May 16, 1996, the Board of Directors authorized the Company's management to
file a registration statement with the SEC permitting the Company to sell shares
of its common stock to the public.
F-29
<PAGE> 83
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
PRO FORMA FINANCIAL INFORMATION
During 1995, the Company acquired a 49% interest in Pepgen Corporation (Pepgen)
for $2.5 million. The $2.5 million was comprised of $1.0 million cash, a $1.0
million note payable and options granted to Pepgen shareholders to purchase
475,000 shares of the Company's common stock valued at $500,000. Other than the
payment of the $1.0 million note payable, Calypte does not have any ongoing
commitments to fund Pepgen. The Company uses the equity method to account for
its investment in Pepgen. Upon completion of the investment, the Company wrote
off its entire investment in Pepgen as purchased in-process research and
development costs.
The following Unaudited Pro Forma Consolidated Condensed Statement of Operations
gives the effect to the investment as if it had occurred on January 1, 1995. No
other unaudited pro forma consolidated condensed financial information is
presented since the transaction is already included in the audited Consolidated
Balance Sheet of the Company as of December 31, 1995 and in the unaudited
Consolidated Condensed Statement of Operations of the Company for the
three-month period ended March 31, 1996.
The Unaudited Pro Forma Consolidated Condensed Statement of Operations does not
purport to present the results of operations of Calypte Biomedical Corporation
had the transaction assumed therein occurred on the date specified, nor is it
indicative of the results of operations that may be achieved in the future.
The Unaudited Pro Forma Consolidated Condensed Statement of Operations is based
on certain assumptions and the adjustment described in Note(1) to the Unaudited
Pro Forma Consolidated Condensed Statement of Operations included herein and
should be read in conjunction with Management's Discussion and Analysis of
Financial Conditions and Results of Operations and the Consolidated Financial
Statements of the Company and the related Notes thereto and the Financial
Statements of Pepgen and the related Notes thereto included herein.
F-30
<PAGE> 84
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
CALYPTE PRO FORMA CALYPTE
HISTORICAL ADJUSTMENT PRO FORMA
----------- ---------- -----------
<S> <C> <C> <C>
Revenue earned under research and development
contracts, substantially from related parties..... $ -- $ -- $ --
Operating expenses:
Research and development.......................... 5,017,545 -- 5,017,545
Purchased in-process research and development
costs.......................................... 2,500,000 -- 2,500,000
Selling, general and administrative............... 2,862,049 -- 2,862,049
------------- -------- -------------
Loss from operations...................... (10,379,594) -- (10,379,594)
Interest income..................................... 194,944 -- 194,944
Interest expense.................................... (116,842) (30,000)(1) (146,842)
Other income........................................ 11,707 -- 11,707
------------- -------- -------------
Loss before income taxes.................. (10,289,785) (30,000) (10,319,785)
Income taxes........................................ (1,600) -- (1,600)
------------- -------- -------------
Net loss.................................. (10,291,385) (30,000) (10,321,385)
Less dividend on mandatorily redeemable Series A
preferred stock................................... (120,000) -- (120,000)
------------- -------- -------------
Net loss attributable to common stockholders........ $(10,411,385) $(30,000) $(10,441,385)
============= ======== =============
Net loss per share attributable to common
stockholders...................................... $ (1.40) $ (1.40)
============= =============
Weighted average shares used to compute net loss per
share attributable to common stockholders......... 7,450,692 7,450,692
============= =============
</TABLE>
- ---------------
(1) For purposes of the accompanying unaudited pro forma financial statement,
additional interest expense has been provided on the $1 million Pepgen note
payable at the rate of 4% for the period January 1 through September 30,
1995, the assumed transaction date for purposes of the pro forma financial
statement.
F-31
<PAGE> 85
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Pepgen Corporation:
We have audited the consolidated balance sheets of Pepgen Corporation and
subsidiary (a development stage enterprise) (the Company) as of December 31,
1993 and 1994, and the related consolidated statements of operations,
shareholders' equity (deficiency) and cash flows for the period from July 8,
1992 (inception) through December 31, 1992, for each of the years in the
two-year period ended December 31, 1994, and for the period from July 8, 1992
(inception) through December 31, 1994. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Pepgen Corporation
and subsidiary (a development stage enterprise) as of December 31, 1993 and
1994, and the results of their operations and their cash flows for the period
from July 8, 1992 (inception) through December 31, 1992, for each of the years
in the two-year period ended December 31, 1994, and for the period from July 8,
1992 (inception) through December 31, 1994, in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 1 to the
consolidated financial statements, the Company's losses from operations and
accumulated deficit during the development stage raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also described in note 1 to the consolidated
financial statements. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
KPMG Peat Marwick LLP
San Francisco, California
November 15, 1995
F-32
<PAGE> 86
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1994
--------- ---------
<S> <C> <C>
Current assets:
Cash............................................................... $ 11,691 $ 1,905
Other current assets............................................... 12,794 1,711
--------- ---------
Total current assets....................................... 24,485 3,616
Intangible assets, net of accumulated amortization of $1,573 in 1993
and $17,024 in 1994................................................ 105,716 113,758
Organization costs, net of accumulated amortization of $6,576 in 1993
and $12,822 in 1994................................................ 24,648 18,402
--------- ---------
$ 154,849 $ 135,776
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable................................................... $ 28,552 $ 24,816
Accrued salary..................................................... 8,030 105,000
Accrued consulting fees............................................ 3,000 24,700
Convertible notes payable to shareholder........................... -- 80,000
--------- ---------
Total current liabilities.................................. 39,582 234,516
Convertible notes payable to shareholder............................. 55,000 --
--------- ---------
Total liabilities.......................................... 94,582 234,516
--------- ---------
Commitments and subsequent events
Shareholders' equity (deficiency):
Convertible preferred stock, no par value, 20,000,000 shares
authorized, 763,300 shares issued and outstanding in 1993 and
1994, aggregate liquidation value of $381,650................... 381,650 381,650
Common stock, no par value, 40,000,000 shares authorized, 3,960,000
shares issued and outstanding in 1993 and 1994.................. 4,500 4,500
Deficit accumulated during the development stage................... (325,883) (484,890)
--------- ---------
Total shareholders' equity (deficiency).................... 60,267 (98,740)
--------- ---------
$ 154,849 $ 135,776
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-33
<PAGE> 87
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
JULY 8, 1992 JULY 8, 1992
(INCEPTION) YEARS ENDED DECEMBER (INCEPTION)
THROUGH 31, THROUGH
DECEMBER 31, ----------------------- DECEMBER 31,
1992 1993 1994 1994
------------ --------- --------- ------------
<S> <C> <C> <C> <C>
Revenue earned under research,
development and licensing agreements... $ -- $ -- $ 100,000 $ 100,000
Operating expenses:
Research and development............... 9,000 110,375 91,728 211,103
General and administrative............. 62,434 142,474 166,479 371,387
--------- --------- ---------
Total operating expenses....... 71,434 252,849 258,407 582,490
Loss before income taxes....... (71,434) (252,849) (158,207) (482,490)
Provision for income taxes............... 800 800 800 2,400
--------- --------- ---------
Net loss....................... $(72,234) $(253,649) $(159,007) $ (484,890)
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-34
<PAGE> 88
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)
PERIOD FROM JULY 8, 1992 (INCEPTION) THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
DEFICIT
CONVERTIBLE ACCUMULATED
PREFERRED STOCK COMMON STOCK DURING THE
------------------ ------------------ DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT STAGE TOTAL
------- -------- --------- ------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Net loss for the period from July 8,
1992 (inception) through December
31, 1992.......................... -- $ -- -- $ -- $ (72,234) $(72,234)
------- -------- --------- ------ -------- --------
Balances as of December 31, 1992.... -- -- -- -- (72,234) (72,234)
Issuance of common shares for
cash.............................. -- -- 3,900,000 3,900 -- 3,900
Issuance of convertible preferred
shares for cash................... 700,000 350,000 -- -- -- 350,000
Issuance of common shares on
conversion of note payable and
accrued interest.................. -- -- 60,000 600 -- 600
Issuance of convertible preferred
shares on conversion of note
payable and accrued interest...... 63,300 31,650 -- -- -- 31,650
Net loss............................ -- -- -- -- (253,649) (253,649)
------- -------- --------- ------ -------- --------
Balances as of December 31, 1993.... 763,300 381,650 3,960,000 4,500 (325,883) 60,267
Net loss............................ -- -- -- -- (159,007) (159,007)
------- -------- --------- ------ -------- --------
Balances as of December 31, 1994.... 763,300 $381,650 3,960,000 $4,500 $(484,890) $(98,740)
======= ======== ========= ====== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-35
<PAGE> 89
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
JULY 8, 1992 JULY 8, 1992
(INCEPTION) (INCEPTION)
THROUGH YEARS ENDED DECEMBER 31 THROUGH
DECEMBER 31, ----------------------- DECEMBER 31,
1992 1993 1994 1994
------------ --------- --------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................. $(72,234) $(253,649) $(159,007) $ (484,890)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization........................... 2,582 7,817 21,697 32,096
Purchased research and development
cost................................. -- 49,315 -- 49,315
(Increase) decrease in other current
assets............................... -- (12,794) 11,083 (1,711)
Increase in intangible assets.......... (50,453) (56,836) (23,493) (130,782)
Increase in organization costs......... (3,989) (27,235) -- (31,224)
Increase (decrease) in accounts payable
and accrued liabilities.............. 63,568 (23,986) 114,934 154,516
--------- ---------- ---------- ----------
Net cash used in operating
activities...................... (60,526) (317,368) (34,786) (412,680)
--------- ---------- ---------- ----------
Cash flows used in investing activities --
loans to and acquisition of PepTech....... -- (49,315) -- (49,315)
--------- ---------- ---------- ----------
Cash flows from financing activities:
Proceeds from issuance of notes payable to
shareholder............................ 55,000 55,000 80,000 190,000
Principal repayments on notes payable to
shareholder............................ -- (25,000) (55,000) (80,000)
Proceeds from issuance of common stock.... -- 3,900 -- 3,900
Proceeds from issuance of convertible
preferred stock........................ -- 350,000 -- 350,000
Change in bank overdraft.................. 5,526 (5,526) -- --
--------- ---------- ---------- ----------
Net cash provided by financing activities... 60,526 378,374 25,000 463,900
--------- ---------- ---------- ----------
Net (decrease) increase in cash............. -- 11,691 (9,768) 1,905
Cash at beginning of period................. -- -- 11,691 --
--------- ---------- ---------- ----------
Cash at end of period....................... $ -- $ 11,691 $ 1,905 $ 1,905
========= ========== ========== ==========
Supplemental disclosure of cash flow
information:
Cash paid during the year for income
taxes.................................. $ 800 $ 800 $ 800 $ 2,400
Supplemental disclosure of noncash financing
activities:
Conversion of note payable and accrued
interest to shareholder to common and
convertible preferred stock............ -- 32,250 -- 32,250
</TABLE>
See accompanying notes to consolidated financial statements.
F-36
<PAGE> 90
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993 AND 1994
(1) THE COMPANY
Pepgen Corporation (the Company) was incorporated in California on July 8, 1992
as a biopharmaceutical company and is currently conducting research.
The Company is in the development stage and has experienced losses since
inception; the Company's accumulated deficit during the development stage, (July
8, 1992 (inception) through December 31, 1994) was $484,890, including a loss of
$159,007 for the year ended December 31, 1994. Cash flows used in operations
were $34,786 in 1994. The Company's ability to continue as a going concern is
dependent upon management's ability to raise additional equity capital or obtain
debt financing to fund future operations. Management is actively seeking
additional financing and, during 1995, entered into an agreement with another
development stage enterprise to obtain such financing (Note 9).
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern and, accordingly, do not give
effect to adjustments that would be necessary should the Company be required to
realize its assets and satisfy its liabilities in other than the normal course
of business.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, PepTech, Inc. (PepTech). All intercompany
transactions and balances have been eliminated in consolidation.
Organization Costs
Organization costs are stated at cost and are being amortized over five years
using the straight-line method.
Research and Development
Research and development costs are expensed as incurred (Note 3).
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted rates expected to
apply to taxable income in years in which those temporary differences are
expected to be recovered or settled. Valuation allowances are established when
it is more likely than not that deferred tax assets will not be realized.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, at the date of financial statements, and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
F-37
<PAGE> 91
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993 AND 1994
Intangible Assets
Intangible assets consist of license fees and patent support costs. Such fees
and costs are capitalized and amortized over their estimated useful life of ten
years using the straight-line method. Amortization commences once final approval
of the related patent has been obtained. Such fees and costs are charged to
operations when it is determined that the patent will not be obtained or when
the Company determines that it will not pursue research or development of the
subject technology.
(3) ACQUISITION OF PEPTECH
On July 16, 1993, the Company acquired all of the outstanding capital stock of
PepTech for $25,000 cash, the cancellation of notes receivable from PepTech
totaling $20,000, and other expenses of $4,315. The acquisition was accounted
for as a purchase.
The sole shareholder and employee of PepTech is the principal researcher with
respect to certain technology and compounds pursuant to which the Company has
obtained license rights. PepTech has obtained a research grant, and has applied
for additional grants related to such technology and compounds. At the date of
acquisition, PepTech had no tangible assets or liabilities. Accordingly, the
entire purchase price was charged to operations at acquisition as purchased
research and development expense.
(4) NOTES PAYABLE TO SHAREHOLDER
Notes payable to shareholder (President) consist of the following at December
31:
<TABLE>
<CAPTION>
1993 1994
------- --------
<S> <C> <C>
Promissory notes to shareholder, uncollateralized, due
December 31, 1995..................................... $55,000 $ 80,000
Less current portion.................................... -- (80,000)
-------- -------
Long term portion....................................... $55,000 $ --
======== =======
</TABLE>
During 1994, the Company issued convertible promissory notes totaling $80,000 to
a shareholder and officer, payable on December 31, 1995. Of the total, $60,000
of these notes bear interest at 10% per annum while $20,000 are non-interest
bearing. These notes, including accrued interest, are convertible at the option
of the holder, in whole or in part, into shares of fully-paid and nonassessable
convertible preferred stock of the Company upon issuance of preferred stock by
the Company for proceeds of not less than $1,000,000 (the New Preferred Stock),
at a rate per share equal to the then fair market value. Shares issued upon
conversion would have the same rights, preferences and privileges, and be
subject to all of the same restrictions, as the New Preferred Stock. In
connection with the issuance of the convertible promissory notes, the noteholder
obtained an option to purchase up to 160,000 shares of common stock for the
price of $.01 per share at the time of issuance of the New Preferred Stock. The
Company must provide the holder notice of at least 20 days prior to the issuance
of the New Preferred Stock. Should the noteholder not give the Company notice of
his election to convert, the conversion feature and common stock option will
expire on the earlier of the issuance of New Preferred Stock or December 31,
1995.
Subsequent to December 31, 1994 the Company issued to the President and another
shareholder additional convertible promissory notes in the amount of $127,000.
These notes have the same terms as those issued in 1994, including the option to
purchase up to 254,000 shares of common stock at a price of $.01 per share.
Also, during 1995 the $20,000 non-interest bearing notes existing at December
31, 1994 and $100,000 of the notes issued in 1995 were repaid with all related
conversion and stock option features (for the purchase of 240,000
F-38
<PAGE> 92
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993 AND 1994
shares) expiring unexercised. The remaining balance of notes payable, including
accrued interest, all to the President, were converted into a new note payable
on November 15, 1995 which bears interest at 6.25% per annum. All conversion and
stock option features related to the notes expired unexercised.
During 1994, the Company issued convertible promissory notes totaling $55,000 to
a shareholder and officer with the same terms as the notes issued in 1993. The
1993 notes were prepaid in 1994 and the conversion feature and related option
expired.
(5) SHAREHOLDERS' EQUITY (DEFICIENCY)
The Company has two classes of stock: convertible preferred stock and common
stock. As of December 31, 1994, preferred stock consists of only Series A, for
which the Company has designated 8,000,000 of the 20,000,000 authorized shares.
The preferences, privileges, and restrictions granted or imposed on the
preferred stock are:
Dividend Rights
Holders of Series A preferred stock are entitled to dividends at an
annual rate of 8% per annum of the original $.50 per share price
(Original Purchase Price), if declared, prior to the payment of any
dividend on common stock. The right to such dividends is not
cumulative. No shares of common stock shall receive any dividend at a
rate which is greater than the rate at which the dividends are
simultaneously paid in respect of the preferred stock. No dividends
have been declared through December 31, 1994.
Conversion Rights
Each share of Series A preferred stock is, at any time, at the option
of the holder, convertible into shares of fully-paid and nonassessable
common stock. Each share of preferred stock is convertible into the
number of shares of common stock that results from dividing the
conversion price of preferred stock in effect at the time of
conversion into the Original Purchase Price for each share of
preferred stock being converted. The conversion price is subject to
adjustment from time to time.
Automatic Conversion
Upon either the voluntary conversion of at least 70% of the originally
issued shares of Series A preferred stock or the completion of a
qualified initial public offering in which the Company receives
proceeds of at least $5,000,000 at a price of at least $3.00 per
share, subject to adjustment, each share of preferred stock shall
automatically be converted into shares of common stock at the
conversion price for preferred stock then in effect.
Liquidation Rights
In the event of any liquidation, dissolution, or winding up of the
Company, the holders of Series A preferred stock shall be entitled to
an amount equal to the Original Purchase Price per share, plus all
declared but unpaid dividends, if any. If insufficient funds are
available to pay the full preference amount, then the amount available
shall be distributed ratably among the holders of the Series A
preferred stock. After payment of the liquidation preference to all
preferred shareholders, remaining assets of the Company shall be
distributed ratably to all common shareholders.
F-39
<PAGE> 93
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993 AND 1994
Voting Rights
Holders of Series A preferred stock are entitled to the number of
votes per share that would be equivalent to the number of shares of
common stock into which the shares of Series A preferred stock is
convertible.
Stock Options
During 1993, the Board of Directors of the Company approved the 1993 Flexible
Stock Incentive Plan (the Plan). Under the Plan, the Company may grant
nonqualified and incentive stock options to directors, officers, employees and
consultants of the Company to acquire up to 2,300,000 common shares of the
Company, which the Company has reserved. The exercise price of the options shall
equal the fair market value of the stock at the date of grant. The term of any
stock option may not exceed ten years from the date of grant. All options are
nonassignable.
In 1994, the Company granted to its President and founding shareholder options
to purchase of 100,000 shares of common stock at $.001 per share, the common
stock's then fair market value. Subsequent to December 31, 1994, the Company
granted additional options to its President and founding shareholder to purchase
another 100,000 common shares of stock at $.001 per share, the then fair market
value of the common stock. During 1995 all of these outstanding options were
exercised.
In 1995 the Board of Directors of the Company approved the 1995 Stock Option
Plan (the 1995 Plan). Under the 1995 Plan, the Company may grant nonqualified
and incentive stock options to directors, officers, employees and consultants of
the Company to acquire up to 30% of the fully diluted number of common shares of
the Company. The exercise price of the option shall equal the fair market value
of the stock at the date of grant. The term of any stock option may not exceed
ten years from the date of grant. All options are nonassignable.
(6) RESEARCH, DEVELOPMENT AND LICENSING AGREEMENTS
In 1992, the Company entered into a licensing agreement with a university to
obtain the right to utilize certain patents in exchange for a $57,000 cash
payment, future milestone payments of up to $250,000 and future royalty payments
or sales on products covered by the technology under license.
In 1992, the Company entered into an agreement with a university to perform
certain research and development work. Under this agreement, the Company paid
eight quarterly cash installments of $9,000 over the research period, which
expired in October 1994.
In 1993, the Company entered into an agreement with an independent research
group to perform certain research and development work. Under this agreement,
the Company paid quarterly cash installments of $8,000 over the research period,
which expired in May 1995. As of December 31, 1994, $13,300 was accrued under
this agreement.
During 1993, the Company entered into a licensing agreement with an independent
research group to obtain the right to utilize certain patents and proprietary
rights in exchange for a $15,000 cash payment, future milestone payments of up
to $125,000 and future royalty payments on sales of products covered by the
technology under license.
During 1994, the Company entered into an agreement with a pharmaceutical company
whereby consideration, totaling $100,000, was received by the Company in
exchange for the rights to evaluate the Company's material over a defined period
of time which is dependent on the achievement of certain technical milestones
and to enter into a worldwide, exclusive licensing agreement with the Company
for the acquisition of the related
F-40
<PAGE> 94
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993 AND 1994
patent, should it be obtained. The agreement was extended for an additional
month for an additional $25,000 in 1995.
In 1995, the Company entered into a research and development agreement with an
international company for the right to evaluate certain of the Company's
research, and an exclusive right to negotiate a license for patent rights in
certain countries. The Company received a $400,000 nonrefundable payment, and
will receive another $600,000 over the term of the agreement which expires in
1996. In connection with the agreement, the Company paid an $80,000 finders fee
to another party.
(7) COMMITMENTS
Consulting Agreement
In August 1993, the Company entered into a consulting agreement with one of its
founding shareholders. This agreement was terminated in August 1994. The total
amount earned and accrued as of December 31, 1994 was $24,700.
Employment Agreement
In July 1992, the Company entered into a five-year employment agreement with its
President, Chief Executive Officer and one of its founding shareholders. The
total amount earned in 1994 and 1993 was $108,000 and $95,000, respectively, of
which $116,000 was accrued at December 31, 1994.
(8) INCOME TAXES
The provision for income taxes for all periods presented in the accompanying
consolidated statements of operations represent minimum California franchise
taxes.
The significant tax effected components of temporary differences and
carryforwards of December 31, 1993 and 1994 are as follows:
<TABLE>
<CAPTION>
1993 1994
--------- ---------
<S> <C> <C>
Deferred tax assets:
Capitalized research and development............... $ 10,300 $ 17,000
Accrued expenses................................... 15,800 62,000
Net operating loss carryforwards................... 84,200 94,000
Depreciation and amortization...................... 38,000 40,800
Other.............................................. 2,800 8,000
--------- --------
Total deferred tax assets.................. 151,100 221,800
Valuation allowance................................ (151,100) (221,800)
--------- --------
Net deferred tax asset..................... $ -- $ --
========= ========
</TABLE>
The Company has established a valuation allowance to offset all deferred tax
assets at December 31, 1993 and 1994 as it is considered more likely than not
that the Company will not receive future benefit.
The Company had a net operating loss carryforward as of December 31, 1994
available to offset future taxable income for federal tax purposes of
approximately $268,200, which expires from 2002 to 2009. The Company's
utilization of its net operating loss and credit carryforwards to offset taxable
income will be subject to annual limitations pursuant to Section 382 of the
Internal Revenue Code due to cumulative changes in stock ownership.
F-41
<PAGE> 95
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993 AND 1994
(9) SUBSEQUENT EVENT
Subsequent to December 31, 1994, the Company and its shareholders entered into a
Master Stock Purchase Agreement (the Agreement) with Calypte Biomedical
Corporation, a development stage enterprise (Calypte), that provided for the
issuance of 3,041,406 of new shares of convertible preferred stock to Calypte in
exchange for cash of $45,875 and a note receivable in the amount of $1,000,000.
The Agreement also provided for the acquisition by Calypte of all 763,300
outstanding shares of the Company's convertible preferred stock from the
existing preferred shareholders for $954,125 in cash and for the issuance of
options for the purchase of Calypte common stock to the existing common
shareholders of the Company. After completion of the above transaction, Calypte
owned 49% of the Company's outstanding stock.
The convertible preferred stock acquired by Calypte is convertible into common
stock of the Company, at the option of the holder, at any time, at an initial
ratio of one share of common stock for one share of convertible preferred stock
and carries other conversion, voting, and dividend rights similar to those held
by the previous convertible preferred stock shareholders. The convertible
preferred stock has a liquidation preference aggregating $2,000,000 in the event
of an involuntary or voluntary liquidation.
Concurrent with the above transaction, the Company issued warrants to Calypte
that provide Calypte with the right to purchase up to 5,435,294 shares of the
Company's convertible preferred stock at a price of $0.01 per share. The
warrants may be exercised only to the extent that currently outstanding or new
options issued under the Company's 1995 Stock Option Plan are exercised for the
purchase of the Company's common stock or as a result of the Company granting
stock awards to any management employee of the Company for no consideration at a
ratio of 99.5% of the newly issued common shares.
The $1,000,000 note receivable from Calypte bears interest at 4% per annum and
is payable at the earlier of (a) six months from the date of issuance or (b) 60
days following either Calypte receiving FDA approval on its HIV-1 urine testing
product or the closing of the sale of Calypte's common stock in a public
offering.
Other terms of the Agreement provide Calypte with certain rights with regard to
the appointment of directors and the right of first negotiation to purchase the
remaining 51% of the Company at fair market value.
Also, concurrent with the Agreement, the Company entered into a separate
agreement that provides for payments to the former convertible preferred
shareholders and to the current common shareholders upon the receipt of
licensing fees from certain prospects identified as of the date of the
Agreement. The aggregate obligation to these current and former shareholders
consists of 20% of the net licensing fees, as defined, received prior to October
1996 from any of the prospects identified in the Agreement.
F-42
<PAGE> 96
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
DECEMBER
31, 1995
-----------
<S> <C>
Current assets -- Cash and cash equivalents................................... $ 193,320
Intangible assets, net of accumulated amortization of $20,808................. 209,778
Organization costs, net of accumulated amortization of $19,067................ 12,157
---------
$ 415,255
=========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued liabilities.................................... $ 210,565
Note payable to shareholder................................................. 98,523
---------
Total liabilities................................................... 309,088
---------
Shareholders' equity:
Convertible preferred stock, no par value, 20,000,000 shares authorized,
3,804,706 shares issued and outstanding.................................. 1,427,525
Common stock, no par value, 40,000,000 shares authorized, 4,160,000 shares
issued and outstanding................................................... 4,700
Amounts due from shareholder................................................ (1,011,667)
Deficit accumulated during the development stage............................ (314,391)
---------
Total shareholders' equity.......................................... 106,167
---------
$ 415,255
=========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-43
<PAGE> 97
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
JULY 8, 1992
(INCEPTION)
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1995 1995
------------ ------------
<S> <C> <C>
Revenue earned under research, development and licensing
agreements and grants....................................... $ 481,385 $ 581,385
Operating expenses:
Research and development.................................... 36,868 247,971
General and administrative.................................. 256,225 627,612
--------- ---------
Total operating expenses............................ 293,093 875,583
--------- ---------
Income (loss) from operations....................... 188,292 (294,198)
Other income (expense):
Interest income............................................. 12,598 12,598
Interest expense............................................ (17,351) (17,351)
--------- ---------
Income (loss) before income taxes................... 183,539 (298,951)
Provision for income taxes.................................... 13,040 15,440
--------- ---------
Net income (loss)................................... $ 170,499 $ (314,391)
========= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-44
<PAGE> 98
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)
(UNAUDITED)
PERIOD FROM JULY 8, 1992 (INCEPTION) THROUGH DECEMBER 31, 1995
<TABLE>
<CAPTION>
DEFICIT
CONVERTIBLE ACCUMULATED
PREFERRED STOCK COMMON STOCK AMOUNTS DUE DURING THE
---------------------- ------------------ FROM DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT SHAREHOLDER STAGE TOTAL
--------- ---------- --------- ------ ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net loss for the period from July 8,
1992 (inception) through December 31,
1992................................. -- $ -- -- $ -- $ -- $ (72,234) $ (72,234)
-------
-----
--------- ---------- ---------- ---------- -------- --------
Balances as of December 31, 1992....... -- -- -- -- -- (72,234) (72,234)
Issuance of common shares for cash..... -- -- 3,900,000 $3,900 -- -- 3,900
Issuance of convertible preferred
shares for cash...................... 700,000 350,000 -- -- -- -- 350,000
Issuance of common shares on conversion
of note payable and accrued
interest............................. -- -- 60,000 600 -- -- 600
Issuance of convertible preferred
shares on conversion of note payable
and accrued interest................. 63,300 31,650 -- -- -- -- 31,650
Net loss............................... -- -- -- -- -- (253,649) (253,649)
-------
-----
--------- ---------- ---------- ---------- -------- --------
Balances as of December 31, 1993....... 763,300 381,650 3,960,000 4,500 -- (325,883) 60,267
Net loss............................... -- -- -- -- -- (159,007) (159,007)
-------
-----
--------- ---------- ---------- ---------- -------- --------
Balances as of December 31, 1994....... 763,300 381,650 3,960,000 4,500 -- (484,890) (98,740)
Exercise of stock options.............. -- -- 200,000 200 -- -- 200
Issuance of convertible preferred
shares for cash and promissory
note................................. 3,041,406 1,045,875 -- -- (1,000,000 ) -- 45,875
Interest earned on promissory note..... -- -- -- -- (11,667 ) -- (11,667)
Net income............................. -- -- -- -- -- (170,499) (170,499)
-------
-----
--------- ---------- ---------- ---------- -------- --------
Balances as of December 31, 1995....... 3,804,706 $1,427,525 4,160,000 $4,700 $(1,011,667) $(314,391) $ 106,167
========= ========== ========== ============ ========== ======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-45
<PAGE> 99
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
JULY 8, 1992
(INCEPTION)
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1995 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................ $ 170,499 $ (314,391)
--------- ---------
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Noncash interest on shareholder note payable.................. 11,523 11,523
Amortization.................................................. 10,029 39,875
Purchased research and development cost....................... -- 49,315
(Increase) decrease in other current assets................... (9,956) (11,667)
Increase in intangible assets................................. (99,805) (230,587)
Increase in organization costs................................ -- (31,225)
Increase in accounts payable and accrued liabilities.......... 56,050 212,817
--------- ---------
Net cash provided by (used in) operating activities......... 138,340 (274,340)
--------- ---------
Cash used in investing activities -- acquisition of PepTech:....... -- (49,315)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of notes payable to shareholders.......... 127,000 317,000
Principal repayments of notes payable to shareholders............ (120,000) (200,000)
Proceeds from exercise of stock options.......................... 200 200
Proceeds from issuance of common stock........................... -- 3,900
Proceeds from issuance of convertible preferred stock............ 45,875 395,875
--------- ---------
Net cash provided by financing activities..................... 53,075 516,975
--------- ---------
Net increase in cash.......................................... 191,415 193,320
Cash and cash equivalents, beginning of period..................... 1,905 --
--------- ---------
Cash and cash equivalents, end of period........................... $ 193,320 $ 193,320
========= =========
Supplemental disclosure of noncash financing activities:
Promissory note due from shareholder received in exchange for
preferred stock............................................... $1,000,000 $1,000,000
Interest earned on promissory note due from shareholder.......... 11,667 11,667
Interest expense on shareholder note payable converted to new
shareholder note payable...................................... 11,523 11,523
Refinance of shareholder notes payable........................... 87,000 87,000
Conversion of note payable and accrued interest to common and
preferred stock............................................... -- 32,250
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes.................................................. 800 3,200
Interest...................................................... 5,828 5,828
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-46
<PAGE> 100
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1995
(1) THE COMPANY
Pepgen Corporation (the "Company") was incorporated in California on July 8,
1992 as a biopharmaceutical company.
The Company is in the development stage, has a working capital deficit and has
an accumulated deficit during the development stage of $314,391 at December 31,
1995. Moreover, the recoverability of the carrying value of the Company's assets
is entirely dependent upon the Company's ability to develop products related to
its patents, obtain regulatory approvals and successfully market its products.
Revenues to date have been primarily from research and development agreements in
an effort to develop the Company's products. The Company's planned principal
operations have not yet commenced. The Company is actively seeking additional
funding; however, the outcome of these activities is uncertain. These matters
raise a substantial doubt about the Company's ability to continue as a going
concern.
The accompanying consolidated financial statements have been prepared on a basis
of accounting principles applicable to a going concern and, accordingly, they do
not give effect to adjustments that would be necessary should the Company be
required to realize its assets and satisfy its liabilities in other than the
normal course of business.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, PepTech, Inc. (PepTech). All intercompany
transactions have been eliminated in consolidation.
Intangible Assets
Intangible assets consist of license fees and patent support costs. Such fees
and costs are capitalized and amortized over their estimated useful life of ten
years using the straight-line method. Amortization commences once final approval
of the related patent has been obtained. Such fees and costs are charged to
operations when it is determined that the patent will not be obtained or when
the Company determines that it will not pursue research or development of the
subject technology.
Organization Costs
Organization costs are stated at cost and are being amortized over their
estimated useful lives of five years using the straight-line method.
Research and Development
Research and development costs are expensed as incurred.
Income Taxes
Deferred income taxes are recognized for temporary differences between financial
statement and income tax bases of assets and liabilities using enacted rates in
effect for the years in which the differences are expected to reverse. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. The provision for income taxes represents the
tax payable for the period and the change during the period in deferred tax
assets and liabilities.
F-47
<PAGE> 101
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
DECEMBER 31, 1995
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, and amounts on deposit with
financial institutions that are readily convertible into cash with an acquired
maturity date of 90 days or less.
Fair Value of Financial Instruments
Financial assets and liabilities have carrying values which approximate their
fair values for all periods presented.
(3) ACQUISITION OF PEPTECH
On July 16, 1993, the Company acquired all of the outstanding capital stock of
PepTech for $25,000 cash, the cancellation of notes receivable from PepTech
totaling $20,000, and other expenses of $4,315.
The sole shareholder and employee of PepTech is the principal researcher with
respect to certain technology and compounds pursuant to which the Company has
obtained license rights. Moreover, PepTech has obtained a research grant, and
has applied for additional grants, related to such technology and compounds. At
the date of acquisition, PepTech had no tangible assets or liabilities.
Accordingly, the entire purchase price was charged to operations as purchased
research and development expenses.
(4) NOTE PAYABLE TO SHAREHOLDER
Note payable to shareholder consists of the following at December 31, 1995:
<TABLE>
<S> <C>
Promissory note to shareholder, uncollateralized, interest
payable at 6.25% per annum, no stated repayment date.......... $ 98,523
Less current portion............................................ (98,523)
--------
$ --
========
</TABLE>
(5) EQUITY
In 1995, the Company entered into a Master Stock Purchase Agreement (the
"Agreement") with a biomedical firm whereby, upon the completion of the events
contemplated by the Agreement, as described below, the biomedical firm would
acquire 49% of the fully-diluted common stock of the Company.
Under the terms of the Agreement, the biomedical firm purchased all of the
outstanding preferred shares from the existing shareholders for cash and certain
options to purchase common stock in the biomedical firm, and an additional
3,041,406 preferred shares from the Company for total consideration to the
Company of $1,045,875. Cash of $45,875 was paid at the closing and a promissory
note in the amount of $1,000,000 was issued. This promissory note bears interest
at 4% per annum and is payable at the earlier of: (a) October 1996 or (b) sixty
days following either FDA approval of the biomedical firm's major product or
completion of an initial public offering of the biomedical firm's common stock.
The Company also issued warrants to purchase an additional 5,435,294 shares of
the Company's preferred stock at $.001 per share. These warrants may be
exercised only to the extent that currently outstanding or new options issued
under the Company's 1995 Stock Option Plan are exercised for the purchase of the
Company's common stock or as a result of the Company granting stock awards to
any management employee of the Company for no consideration at a ratio of 99.5%
of the newly issued common shares.
F-48
<PAGE> 102
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
DECEMBER 31, 1995
If payment of the promissory note is not made in accordance with its terms, the
Company may repurchase or redeem the 3,041,406 shares of preferred stock for
$45,875, and the warrants to purchase the additional shares of preferred stock
shall expire.
Preferred Stock
The Company has authorized 20,000,000 shares of preferred stock of which
10,000,000 shares are designated as Series A Preferred Stock ("Series A
preferred"). The other 10,000,000 shares are currently undesignated.
Holders of Series A preferred stock are entitled to annual dividends at the rate
of 8%, payable quarterly. The dividends are not cumulative and are only payable
if declared by the Company's Board of Directors. Interest shall not be paid on
any undeclared or unpaid dividends. No dividends may be paid to common stock
shareholders until full annual dividends are declared and paid to the preferred
shareholders. No dividends have been declared as of December 31, 1995.
In the event of any liquidation, dissolution or wind up of the Company, either
voluntary or involuntary, the Series A preferred holders are entitled to an
aggregate liquidation value of $2,000,000.
The Series A preferred shares are convertible, at the holder's option, at any
time into an equal number of shares of the Company's common stock. The preferred
shares will automatically convert into common shares upon the earlier of: (a)
the closing of a firm commitment initial public offering with a price per common
share of no less than $3.00 and aggregate gross proceeds of no less than
$5,000,000, or (b) the voluntary conversion into common shares of at least 70%
of the issued and outstanding Series A preferred shares.
Series A preferred shareholders have voting rights in their equivalent number of
common shares, as if converted. Under the terms of the Agreement, the biomedical
firm is entitled to 49% of the voting interest in the Company at all times prior
to the conversion of Series A preferred shares to common shares.
(6) STOCK OPTIONS
During 1995, the Company approved the 1995 Incentive and Non-Statutory Stock
Option Plan (the Plan). This Plan replaced the 1993 Flexible Stock Incentive
Plan. Under the Plan, the Company may grant nonqualified and incentive stock
options to officers, employees and consultants of the Company to acquire up to
5,657,143 common shares of the Company. As of December 31, 1995, there were
1,885,695 options granted and outstanding under the Plan to the Company's Chief
Executive Officer, Chairman and founding shareholder as part of his employment
agreement (Note 7). These options are fully vested, are exercisable, and have an
exercise price of $.02 per share, the estimated fair market value of the
Company's common stock at the grant date.
During 1995, the Company approved a resolution with respect to compensation of
outside directors. Each outside director will be granted options to acquire
20,000 shares of common stock to be vested over four years, at the rate of 5,000
per year, at an exercise price of $.02 per share. As of December 31, 1995, no
options had been granted to outside directors.
In 1994, the Company granted options to acquire 100,000 shares of common stock
to its President and founding shareholder at $.001 per share, the estimated fair
market value of the Company's common stock at the grant date. In March 1995, the
Company granted an additional 100,000 common stock options to its President at
$.001 per share, the estimated fair market value of the Company's common stock
at the grant
F-49
<PAGE> 103
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
DECEMBER 31, 1995
date. The options to acquire 200,000 shares of common stock were exercised in
November 1995 for cash proceeds of $200.
(7) COMMITMENTS AND CONTINGENCIES
Research and Development Agreements
In 1993, the Company entered into an agreement with an independent research
group to perform certain research and development work. Under this agreement,
the Company paid quarterly cash installments over the research period, which
expired in May 1995. The amount paid under this agreement in 1995 was
approximately $11,000.
During 1994, the Company entered into an agreement with a major pharmaceutical
company whereby consideration, totaling $100,000, was received by the Company in
exchange for the rights to evaluate the Company's material over a defined period
of time and to enter into a worldwide, exclusive licensing agreement with the
Company for the acquisition of the related patent, should it be obtained. The
agreement was extended for one additional month during 1995 for an additional
$25,000. The agreement was mutually terminated subsequent to this one month
extension.
During 1995, the Company entered into an agreement with a major Japanese
research firm whereby a non-refundable cash payment of $400,000 was received by
the Company in 1995 for the right to use the Company's material in a research
and development program over a defined period of time. The agreement provides
for total consideration of $1,000,000 with the remainder to be paid upon the
attainment of certain milestones by the research program. Upon completion of the
research program, the Japanese firm has the option to pay the Company an
additional $3,000,000 for the right to negotiate an exclusive licensing
arrangement for the product in Japan and Korea. The negotiation period would be
over three months and the option payment would be non-refundable regardless of
the outcome of the negotiations.
Federal Research Grant
The Company is a recipient of a federal research grant amounting to $75,002. As
of December 31, 1995, the Company received $56,385 of this grant. The grant
expires on March 1, 1996.
Employment Agreement
In November 1995, the Company entered into an employment agreement with its
Chief Executive Officer, Chairman and one of its founding shareholders. The
agreement, which replaced a previous employment agreement, provides for minimum
annual salary and benefits. In the event of involuntary termination, as defined,
the Company is liable for twelve months of salary. The Company also granted the
executive fully vested options to acquire 1,885,695 shares of common stock (Note
6). The agreement expires on December 31, 1996, unless renewed. The total amount
earned by this executive in 1995 under employment agreements was $120,000.
Corporate Partnership Agreement
In March 1995, the Company entered into a twelve-month corporate partnership
agreement with an agent whereby the Company would pay the agent a defined
percentage of revenues or license fees received as a result of the agent
locating a corporate partner in Japan or Korea. During the year ended December
31, 1995, the Company paid the agent $80,000 for services performed.
F-50
<PAGE> 104
PEPGEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
DECEMBER 31, 1995
Net Licensing Fee Agreements
In September 1995, the Company entered into net licensing agreements, whereby
for a period of one year, the Company will pay ten percent of any net licensing
fee, as defined, received by the Company to the common shareholders and an
additional ten percent of any net licensing fee, as defined, to the previous
holders of preferred stock (prior to the investment by the biomedical firm --
see Note 5). No amounts were earned or paid under these net licensing fee
agreements for the year ended December 31, 1995.
(8) INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JULY 8, 1992
DECEMBER 31, (INCEPTION) THROUGH
1995 DECEMBER 31, 1995
------------ -------------------
<S> <C> <C>
Current:
Federal...................................... $ -- $ --
State........................................ 13,040 15,440
------- -------
$ 13,040 $15,440
======= =======
</TABLE>
The Company's effective tax rate differs from the U.S. federal statutory rate
due primarily to losses incurred for which benefits have not been realized, the
change in the valuation allowance and the effect of state income tax.
The tax effected amounts of temporary differences as of December 31, 1995 are as
follows:
<TABLE>
<S> <C>
Deferred tax assets:
Capitalized research and development...................... $ 20,647
State income taxes........................................ 4,434
Accrued expenses.......................................... 85,875
Net operating loss carryforwards.......................... 17,014
Other..................................................... 5,291
---------
Total deferred tax assets......................... 133,261
Valuation allowance....................................... (133,261)
---------
Net deferred tax asset............................ $ --
=========
</TABLE>
The Company has a net operating loss carryforward as of December 31, 1995
available to offset future taxable income for federal tax purposes of
approximately $50,000, which begins to expire in 2001.
In general, Section 382 of the Internal Revenue Code includes provisions which
limit the amount of net operating loss carryforwards and other tax attributes
that may be used annually in the event that a 50% ownership change (as defined)
takes place in any three-year period. The Company is currently evaluating
whether any adjustments are required as a result of Section 382.
(9) CONCENTRATION OF CREDIT RISK
The Company maintains its cash accounts in a commercial bank. At December 31,
1995, cash on deposit was in excess of the federally insured limit of $100,000
by approximately $84,000.
F-51
<PAGE> 105
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD
BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 5
The Company............................ 12
Use of Proceeds........................ 12
Dividend Policy........................ 12
Capitalization......................... 13
Dilution............................... 14
Selected Consolidated Financial Data... 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 16
Business............................... 19
Management............................. 35
Certain Transactions................... 42
Principal Stockholders................. 45
Description of Capital Stock........... 46
Shares Eligible for Future Sale........ 47
Underwriting........................... 49
Legal Matters.......................... 50
Experts................................ 51
Additional Information................. 51
Index to Consolidated Financial
Statements........................... F-1
</TABLE>
------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
2,500,000 SHARES
LOGO
COMMON STOCK
--------------------
PROSPECTUS
--------------------
PACIFIC GROWTH EQUITIES, INC.
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 106
APPENDIX--(DESCRIPTION OF GRAPHICS)
INSIDE FRONT COVER
[Graphic: The Manufacturing Process. This four panel graphic depicts the
Registrant's manufacturing process. The first panel depicts a laboratory staff
member holding a roller bottle containing a liquid. This person is standing in
front of an incubator containing roller bottles.]
Graphic Caption: Antigen production begins with the growth of proprietary cell
lines. Cells are grown in complex media, rotated in roller-bottles, and
incubated under controlled conditions.
[Graphic: Second panel. The second panel depicts a laboratory staff member
sitting in front of a laboratory hood under which are placed roller bottles.
The person is sitting in front of the hood dipping a pipette into one of the
roller bottles under the hood.]
Graphic Caption: Cells are infected with a vector carrying the genetic
information for the expression of HIV-1 envelope protein (rgp 160). Infected
cells containing rgp 160 are harvested, frozen and used for antigen puri-
fication.
[Graphic: Third panel. The third panel depicts certain laboratory equipment.]
Graphic Caption: Rgp 160 is purified in a sequential bioprocess incorporating
proprietary manufacturing techniques.
[Graphic: Fourth panel. This panel depicts the Company's test wells being
coated with antigen.]
Graphic Caption: Microwell plates are produced by automated filling of wells
with diluted rgp 160, incubation, blocking and packaging with dessicant.
GATEFOLD FOLLOWING INSIDE FRONT COVER
[Graphic: The HIV-1 Virus and Calypte urine test. This graphic depicts in one
panel the HIV-1 virus envelope structure and seven panels depicting the
operation of the Company's urine HIV-1 test for a positive and a negative test.]
Graphic Caption: Panel 1: The complex structure of HIV-1, the virus highly
associated with AIDS. Gp 160 is glyco-protein from the envelope region of the
HIV-1 virus. The same protein is manufactured in a recombinant form (rgp 160)
for use in the Calypte HIV-1 urine assay.
Graphic Caption: Panel 2: How the test works. Positive urine. Urine from HIV-1
positive subject which contains HIV-1 anti-bodies is added to a test well.
Graphic Caption: Panel 3: Human HIV-1 antibodies in urine bind to the rgp 160
in the well.
<PAGE> 107
Graphic Caption: Panel 4: Conjugate containing an enzyme is added to the well.
The conjugate will bind only to the human HIV-1 antibody. After the well is
washed, substrate reagent is added and color development occurs indicating the
presence of human HIV-1 antibody in the well.
Graphic Caption: Panel 5: The microwell plate coated with proprietary
recombinant HIV-1 rgp 160 antigen being filled with urine.
Graphic Caption: Panel 6: Negative Urine. Urine from HIV-1 negative subject
which contains no HIV-1 antibodies is added to a test well.
Graphic Caption: Panel 7: No antibodies are present in urine to bind to the rgp
160 in the well.
Graphic Caption: Panel 8: Conjugate containing an enzyme is added to the well.
The conjugate will not bind since the human HIV-1 antibody is not present.
After the well is washed, substrate reagent is added and color development will
not occur since no antibody and therefore no conjugate is present in the well.
Page Caption: The Calypte HIV-1 urine-based test has not been approved by the
FDA for marketing in the United States. The test cannot be sold in the United
States unless and until such FDA approval is obtained, if at all.
INSIDE BACK COVER
[Graphic: The HIV-1 Urine EIA Test Kit. This graphic depicts the Company's test
kit, including various bottles of reagents and packages of tests.]
Graphic Caption: The Calypte FDA HIV-1 Urine EIA Test Kit. When used with the
Western blot confirmatory test Calypte will provide the first and only complete
urine-based HIV testing system.
Page Caption: The Calypte HIV-1 urine-based test has not been approved by the
FDA for marketing in the United States. The test cannot be sold in the United
States unless and until such FDA approval is obtained, if at all.
<PAGE> 108
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the sale of
Common Stock being registered. All amounts are estimates except the SEC
registration fee NASD filing fee and Nasdaq National Market listing fee.
<TABLE>
<CAPTION>
AMOUNT TO BE
PAID BY THE
COMPANY
------------
<S> <C>
SEC registration fee............................................ $ 9,914
NASD filing fee................................................. 3,375
Nasdaq National Market listing fee.............................. 50,000
Printing and engraving costs.................................... 125,000
Legal fees and expenses......................................... 400,000
Accounting fees and expenses.................................... 230,000
Directors' and officers' prospectus liability insurance......... 120,000
Blue Sky fees and expenses...................................... 15,000
Transfer Agent and Registrar fees............................... 15,000
Miscellaneous expenses.......................................... 51,711
--------
Total................................................. $1,020,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation to
include in its charter documents, and in agreements between the corporation and
its directors and officers, provisions expanding the scope of indemnification
beyond that specifically provided by the current law.
Article VIII of the Registrant's Certificate of Incorporation provides for the
indemnification of directors to the fullest extent permissible under Delaware
law.
Article VI of the Registrant's Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of the corporation if
such person acted in good faith and in a manner reasonably believed to be in and
not opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his conduct was unlawful.
The Registrant has entered into indemnification agreements with its directors
and executive officers, in addition to indemnification provided for in the
Registrant's Bylaws, and intends to enter into indemnification agreements with
any new directors and executive officers in the future.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since May, 1993, the Registrant has issued and sold the following unregistered
securities.
1. In August 1993, the Company issued and sold 2,500 shares of Common Stock to
one consultant at a price of $0.80 per share.
2. In April 1994, the Company issued and sold 10,000 shares of Common Stock to
one accredited investor at a price of $0.80 per share.
3. In September 1994, the Company issued and sold 1,250 shares of Common Stock
to three employees at prices ranging from $0.50 to $1.00.
4. From December 28, 1992 to June 9, 1994, the Registrant issued and sold
2,116,999 shares of Series D Preferred Stock, convertible into 2,116,999 shares
of Common Stock, to a total of 44 accredited investors for an aggregate purchase
price of $10,584,996.
5. From November 10, 1994, to September 1, 1995, the Registrant issued to 72
accredited investors warrants to acquire 1,964,146 shares of Series E Preferred
Stock exercisable at prices per share ranging from $5.00 to $7.50.
II-1
<PAGE> 109
6. On June 26, 1995, the Registrant issued to 2 accredited investors warrants to
acquire 35,155 shares of Common Stock exercisable at prices per share ranging
from $5.00 to $7.50.
7. From February 2, 1993 to June 23, 1994, the Registrant issued warrants to 2
accredited investors to acquire 2,800 shares of Series D Preferred Stock
exercisable at prices per share ranging from $5.60 to $6.00.
8. On October 12, 1995, the Registrant issued to the 6 shareholders of Pepgen
options to acquire 475,000 shares of Common Stock at $7.50.
9. From May 1, 1993 to June 21, 1996, the Registrant issued employees, officers,
and consultants options to acquire 1,369,186 shares of Common Stock at exercise
prices per share ranging from $0.22 to $5.00.
10. From November 30, 1994 to June 21, 1996 the Registrant issued and sold a
total of 2,660,437 shares of Series E Preferred Stock, convertible into
2,660,437 shares of Common Stock, to a total of 72 accredited investors for an
aggregate purchase price of $15,420,080.
11. From May 1993 to May 1996, the Company has issued to those individuals
referred to in 9 above 39,527 shares of Common Stock upon exercise of options at
prices ranging from $0.20 to $1.00 per share.
The sales of the securities in paragraphs 2, 4, 5, 6, 7, 8 and 10 were deemed to
be exempt from registration under the Securities Act in reliance on Section 4(2)
of the Securities Act, or Regulation D or Regulation S promulgated thereunder.
The sales of securities in paragraphs 1, 3, 9, and 11 were deemed to be exempt
from registration under the Securities Act in reliance on Rule 701 promulgated
under Section 3(b) of the Securities Act as transactions by an issuer not
involving a public offering or transactions pursuant to compensatory benefit
plans and contracts relating to compensation as provided under such Rule 701.
With respect to the grants of stock options, an exemption from registration was
unnecessary in that none of the transactions involved a "sale" of securities as
such term is used in Section 2(3) of the Securities Act.
The recipients of the securities in each such transaction represented their
intention to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof, and appropriate legends
were affixed to the share certificates and instruments issued in such
transactions. All recipients received adequate information about the Registrant
or had access, through employment or other relationships to such information.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement among the Registrant and the Underwriters
therein represented by Pacific Growth Equities, Inc.
3.1* Restated Articles of Incorporation of Calypte Biomedical Corporation, a
California corporation, as currently in effect.
3.2 Form of Restated Certificate of Incorporation of the Company to be filed
after the closing of the offering made under this Registration Statement.
3.3* Bylaws of the Registrant, as currently in effect.
4.1* Registrant's specimen common stock certificate.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1* Form of Indemnification Agreement between the Company and each of its
directors and officers.
10.2* Incentive Stock Plan.
10.3* 1995 Director Option Plan.
10.4* 1995 Employee Stock Purchase Plan.
10.5* Lease Agreement between the Registrant and Charles A. Grant and Mark
Greenberg, dated as of November 30, 1990.
10.6* Second Lease Extension Agreement between Registrant and Charles A. Grant
and Mark Greenberg, dated as of May 14, 1991.
</TABLE>
II-2
<PAGE> 110
<TABLE>
<C> <S>
10.7* Lease Extension Agreement between Registrant and Charles A. Grant and Mark
Greenberg, dated as of February 5, 1992.
10.8* Lease Extension Agreement between Registrant Charles A. Grant and Mark
Greenberg, dated as of April 15, 1993.
10.9* Standard Form Lease 1255-1275 Harbor Bay Parkway Harbor Bay Business Park
between Commercial Center Bank and the Registrant, dated as of August 22,
1992.
10.10* Employment Agreement between the Registrant and John P. Davis, dated as of
April 10, 1995 as amended.
10.11 Amendment No. 1 to Employment Agreement between the Registrant and John P.
Davis, dated as of April 22, 1996.
10.12* Employment Agreement between the Registrant and Howard B. Urnovitz, dated
as of January 25, 1995.
10.13 Employment Agreement between the Registrant and John J. DiPietro, dated as
of September 26, 1995.
10.14* Business Consultant Agreement between the Registrant and Cynthia Green,
dated as of May 1, 1993.
10.15+* License Agreement between the Registrant and New York University, dated as
of August 13, 1993.
10.16* First Amendment to License Agreement between the Registrant and New York
University, dated as of January 11, 1995.
10.17* Second Amendment to License Agreement between the Registrant and New York
University, dated as of October 15, 1995.
10.18+* Third Amendment to License Agreement between the Registrant and New York
University, dated as of January 31, 1996.
10.19+* Research Agreement between the Registrant and New York University, dated
August 12, 1993.
10.20+* First Amendment to Research Agreement between the Registrant and New York
University, dated as of January 11, 1995.
10.21+* Sublicense Agreement between the Registrant and Cambridge Biotech
Corporation, dated as of March 31, 1992.
10.22+* Master Agreement between the Registrant and Cambridge Biotech Corporation,
dated as of April 12, 1996.
10.23+* Sub-License Agreement between the Registrant and Cambridge Biotech
Corporation, dated as of April 12, 1996.
10.24+* Agreement between the Registrant and Repligen Corporation, dated as of
March 8, 1993.
10.25+* Non-Exclusive License Agreement between the Registrant and The Texas A&M
University System, dated as of September 12, 1993.
10.26+* Non-Exclusive License Agreement between the Registrant and The Board of
Trustees of the Leland Stanford Junior University, dated as of March 1,
1993.
10.27+* Distribution Agreement between the Registrant and Otsuka Pharmaceutical
Co., Ltd., dated as of August 7, 1994.
10.28+* Distribution Agreement between the Registrant and Seradyn, Inc., dated as
of April 10, 1995.
10.29+* Distribution Agreement between the Registrant and Travenol Laboratories
(Israel), Ltd., dated as of December 31, 1994.
10.30+* Manufacturing/Packing Agreement between the Registrant and Biomira
(formerly ADI) Diagnostics Inc., dated as of September 27, 1994.
10.31 Loan and Bridge Security Agreement between the Registrant and Silicon
Valley Bank, dated as of December 8, 1995.
10.32* First Amendment to Loan and Security Agreement between the Registrant and
Silicon Valley Bank, dated as of March 5, 1996.
</TABLE>
II-3
<PAGE> 111
<TABLE>
<C> <S>
10.33 Form of Option Agreement for Stockholders of Pepgen Corporation dated as of
October 12, 1995.
10.34 $1.0 Million Promissory Note delivered to Pepgen Corporation, dated as of
October 12, 1995.
10.35 Equipment Lease Agreement between the Registrant and Phoenix Leasing, dated
as of August 20, 1993.
10.36 Equipment Lease Agreement between the Registrant and Meir Mitchell/GATX,
dated as of August 20, 1993.
11.1 Statement of Computation of Net Income Per Share.
21.1 Subsidiaries of the Registrant.
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
counsel to the Registrant (included in Exhibit 5.1).
23.3* Consent of Arnold White & Durkee.
24.1* Power of Attorney (see page II-5).
27.1* Financial Data Schedule.
</TABLE>
- ---------------
* Previously filed.
+ Confidential treatment requested as to certain portions of this exhibit.
(b) FINANCIAL STATEMENT SCHEDULES
Schedules not listed above have been omitted because the information required to
be set forth therein is not applicable or is shown in the financial statements
or notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters at
the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification by the Registrant for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions referenced in Item 14 of this
Registration Statement or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of Prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-4
<PAGE> 112
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant, Calypte
Biomedical Corporation, a corporation organized under the laws of the State of
California, has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Berkeley,
State of California, on the 25th day of June, 1996.
CALYPTE BIOMEDICAL CORPORATION
By: */s/ John P. Davis
------------------------------------
John P. Davis
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------- ----------------
<S> <C> <C>
*/s/ William A. Boeger, III Chairman of Board of June 25, 1996
- --------------------------------------------- Directors
William A. Boeger, III
*/s/ John P. Davis President, Chief Executive June 25, 1996
- --------------------------------------------- Officer and Director
John P. Davis (Principal Executive
Officer)
Chief Science Officer and
- --------------------------------------------- Director
Howard B. Urnovitz, Ph.D.
/s/ John J. DiPietro Vice President of Finance, June 25, 1996
- --------------------------------------------- Chief Financial Officer and
John J. DiPietro Secretary (Principal
Accounting Officer)
- --------------------------------------------- Director
Kuo-Yu (Frank) Chiang
*/s/ David Collins Director June 25, 1996
- ---------------------------------------------
David Collins
*/s/ Julius R. Krevans, M.D. Director June 25, 1996
- ---------------------------------------------
Julius R. Krevans, M.D.
*/s/ Mark Novitch, M.D. Director June 25, 1996
- ---------------------------------------------
Mark Novitch, M.D.
Director
- ---------------------------------------------
Roger Quy, Ph.D.
Director
- ---------------------------------------------
Hideji Nonomura
By: /s/ John J.
DiPietro
- ---------------------------------------------
John J. DiPietro
Attorney-in-fact
</TABLE>
II-5
<PAGE> 113
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
----- -------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement among the Registrant and the Underwriters
therein represented by Pacific Growth Equities, Inc.
3.1* Restated Articles of Incorporation of Calypte Biomedical Corporation, a
California corporation, as currently in effect.
3.2 Form of Restated Certificate of Incorporation of the Company to be filed after
the closing of the offering made under this Registration Statement.
3.3* Bylaws of the Registrant, as currently in effect.
4.1* Registrant's specimen common stock certificate.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1* Form of Indemnification Agreement between the Company and each of its directors
and officers.
10.2* Incentive Stock Plan.
10.3* 1995 Director Option Plan.
10.4* 1995 Employee Stock Purchase Plan.
10.5* Lease Agreement between the Registrant and Charles A. Grant and Mark Greenberg,
dated as of November 30, 1990.
10.6* Second Lease Extension Agreement between Registrant and Charles A. Grant and
Mark Greenberg, dated as of May 14, 1991.
10.7* Lease Extension Agreement between Registrant and Charles A. Grant and Mark
Greenberg, dated as of February 5, 1992.
10.8* Lease Extension Agreement between Registrant Charles A. Grant and Mark
Greenberg, dated as of April 15, 1993.
10.9* Standard Form Lease 1255-1275 Harbor Bay Parkway Harbor Bay Business Park
between Commercial Center Bank and the Registrant, dated as of August 22, 1992.
10.10* Employment Agreement between the Registrant and John P. Davis, dated as of
April 10, 1995 as amended.
10.11 Amendment No. 1 to Employment Agreement between the Registrant and John P.
Davis, dated as of April 22, 1996.
10.12* Employment Agreement between the Registrant and Howard B. Urnovitz, dated as of
January 25, 1995.
10.13 Employment Agreement between the Registrant and John J. DiPietro, dated as of
September 26, 1995.
10.14* Business Consultant Agreement between the Registrant and Cynthia Green, dated
as of May 1, 1993.
10.15+* License Agreement between the Registrant and New York University, dated as of
August 13, 1993.
10.16* First Amendment to License Agreement between the Registrant and New York
University, dated as of January 11, 1995.
10.17* Second Amendment to License Agreement between the Registrant and New York
University, dated as of October 15, 1995.
10.18+* Third Amendment to License Agreement between the Registrant and New York
University, dated as of January 31, 1996.
10.19+* Research Agreement between the Registrant and New York University, dated August
12, 1993.
10.20+* First Amendment to Research Agreement between the Registrant and New York
University, dated as of January 11, 1995.
</TABLE>
<PAGE> 114
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
----- -------------------------------------------------------------------------------
<C> <S>
10.21+* Sublicense Agreement between the Registrant and Cambridge Biotech Corporation,
dated as of March 31, 1992.
10.22+* Master Agreement between the Registrant and Cambridge Biotech Corporation,
dated as of April 12, 1996.
10.23+* Sub-License Agreement between the Registrant and Cambridge Biotech Corporation,
dated as of April 12, 1996.
10.24+* Agreement between the Registrant and Repligen Corporation, dated as of March 8,
1993.
10.25+* Non-Exclusive License Agreement between the Registrant and The Texas A&M
University System, dated as of September 12, 1993.
10.26+* Non-Exclusive License Agreement between the Registrant and The Board of
Trustees of the Leland Stanford Junior University, dated as of March 1, 1993.
10.27+* Distribution Agreement between the Registrant and Otsuka Pharmaceutical Co.,
Ltd., dated as of August 7, 1994.
10.28+* Distribution Agreement between the Registrant and Seradyn, Inc., dated as of
April 10, 1995.
10.29+* Distribution Agreement between the Registrant and Travenol Laboratories
(Israel), Ltd., dated as of December 31, 1994.
10.30+* Manufacturing/Packing Agreement between the Registrant and Biomira (formerly
ADI) Diagnostics Inc., dated as of September 27, 1994.
10.31 Loan and Bridge Security Agreement between the Registrant and Silicon Valley
Bank, dated as of December 8, 1995.
10.32* First Amendment to Loan and Security Agreement between the Registrant and
Silicon Valley Bank, dated as of March 5, 1996.
10.33 Form of Option Agreement for Stockholders of Pepgen Corporation dated as of
October 12, 1995.
10.34 $1.0 Million Promissory Note delivered to Pepgen Corporation, dated as of
October 12, 1995.
10.35 Equipment Lease Agreement between the Registrant and Phoenix Leasing, dated as
of August 20, 1993.
10.36 Equipment Lease Agreement between the Registrant and Meir Mitchell/GATX, dated
as of August 20, 1993.
11.1 Statement of Computation of Net Income Per Share.
21.1 Subsidiaries of the Registrant.
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel
to the Registrant (included in Exhibit 5.1).
23.3* Consent of Arnold White & Durkee.
24.1* Power of Attorney (see page II-5).
27.1* Financial Data Schedule.
</TABLE>
- ---------------
* Previously filed.
+ Confidential treatment requested as to certain portions of this exhibit.
<PAGE> 1
Exhibit 1.1
2,500,000 SHARES*
CALYPTE BIOMEDICAL CORPORATION
COMMON STOCK
FORM UNDERWRITING AGREEMENT
June ___, 1996
Pacific Growth Equities, Inc.
353 Sacramento Street, 16th Floor
San Francisco, California 94111
As Representative of the several Underwriters
Ladies and Gentlemen:
1. INTRODUCTORY. Calypte Biomedical Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters identified on
Exhibit A hereto (the "Underwriters") for whom you are acting as Representative
an aggregate of 2,500,000 shares (the "Firm Common Shares") of the Company's
authorized but unissued Common Stock ("Common Stock"). In addition, the Company
proposes to grant to the Underwriters an option to purchase up to 375,000
additional shares of Common Stock (the "Optional Common Shares"), as provided in
Section 4 hereof. The Firm Common Shares and, to the extent such option is
exercised, the Optional Common Shares are hereinafter collectively referred to
as the "Common Shares."
You have advised the Company that the Underwriters propose to make a public
offering of the Common Shares on the effective date of the registration
statement hereinafter referred to, or as soon thereafter as in your judgment is
advisable.
The Company hereby confirms its agreement with respect to the purchase of the
Common Shares by the Underwriters as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to you that:
(a) The Company has prepared a registration statement on Form S-1 (File
No. __________) with respect to the Common Shares in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules
- --------
*Plus an option to purchase up to 375,000 additional shares of Common Stock to
cover overallotments, if any.
1.
<PAGE> 2
and Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has filed such registration statement with the Commission. The
Company has prepared and has filed or proposes to file prior to the effective
date of such registration statement an amendment or amendments thereto, which
have been or will be similarly prepared. The Company has delivered to you two
signed copies of such registration statement and amendments, together with two
copies of each exhibit filed therewith. Conformed copies of such registration
statement and amendments (but without exhibits) and of the related preliminary
prospectus have been delivered to you in such reasonable quantities as you have
requested. The Company will next file with the Commission one of the following:
(i) prior to effectiveness of such registration statement, a further amendment
thereto, including the form of final prospectus, (ii) a final prospectus in
accordance with Rules 430A and 424(b) of the Rules and Regulations or (iii) a
term sheet (the "Term Sheet") as described in and in accordance with Rules 434
and 424(b) of the Rules and Regulations. As filed, such amendment and form of
final prospectus, such final prospectus or such Term Sheet shall include all
Rule 430A Information (as defined below) and, except to the extent you shall
agree in writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the date and time that this Agreement was
executed and delivered by the parties hereto, or, to the extent not completed at
such date and time, shall contain only such specific additional information and
other changes (beyond those contained in the latest Preliminary Prospectus) as
the Company shall have previously advised you in writing would be included or
made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended; provided, however, that such
term shall also include all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes effective
as provided by Rule 430A of the Rules and Regulations and any registration
statement filed pursuant to Rule 462(b) of the Rules and Regulations. The term
"Preliminary Prospectus" shall mean each preliminary prospectus referred to in
the preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule 430A
Information. The term "Prospectus" shall mean either (i) the prospectus relating
to the Common Shares in the form in which it is first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or, (ii) if a Term Sheet is
not used and no filing pursuant to Rule 424(b) of the Rules and Regulations is
required, the form of final prospectus included in the Registration Statement at
the time such registration statement becomes effective, or (iii) if a Term Sheet
is used, the Term Sheet in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, together with
the Preliminary Prospectus included in the Registration Statement at the time it
becomes effective. The term "Rule 430A Information" means information with
respect to the Common Shares and the offering thereof permitted to be omitted
from the Registration Statement when it becomes effective pursuant to Rule 430A
of the Rules and Regulations.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects
2.
<PAGE> 3
to the requirements of the Act and the Rules and Regulations and, as of its
date, has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and at the time
the Registration Statement becomes effective, and at all times subsequent
thereto up to and including each Closing Date hereinafter mentioned, the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, will contain all material statements and information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, no
representation or warranty contained in this subsection 2(b) shall be applicable
to information contained in or omitted from any Preliminary Prospectus, the
Registration Statement, the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter directly or through you, as
Representative, specifically for use in the preparation thereof.
(c) The Company does not own or control, directly or indirectly, any
corporation, association, partnership or entity other than Pepgen Corporation
(the "Subsidiary"). The Company and the Subsidiary have been duly incorporated
or otherwise formed and each is validly existing as a corporation in good
standing under the laws of the jurisdiction of its formation with full power and
authority (corporate and other) to own and lease its property and conduct its
business as described in the Prospectus. Each of the Company and the Subsidiary:
(i) is in possession of and operating in compliance with all authorizations,
licenses, permits, consents, certificates and orders material to the conduct of
its respective business, all of which are valid and in full force and effect;
and (ii) is duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction in which the ownership or leasing of properties
or the conduct of its business requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a material
adverse effect upon the Company. No proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, any such power and authority or qualification.
(d) The Company has an authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, were issued in compliance with all federal and
state securities laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities, and
conform to the description thereof contained in the Prospectus. Except as
disclosed in or contemplated by the Prospectus and the financial statements of
the Company, and the related notes thereto, included in the Prospectus, the
Company does not have outstanding any options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any such options, rights, convertible securities
or obligations. The description of the Company's stock option, stock bonus and
other stock plans or arrangements,
3.
<PAGE> 4
and the options or other rights granted and exercised thereunder, set forth in
the Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights. The
Prospectus accurately describes the Company's direct and indirect beneficial
ownership of the equity securities of the Subsidiary, and there are no
outstanding options to purchase or other rights to subscribe for or to purchase,
any securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of equity securities of the Subsidiary or any such
options, rights, convertible securities or obligations.
(e) The Common Shares have been duly authorized and, when issued,
delivered and paid for in the manner set forth in this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus. No preemptive rights or other
rights to subscribe for or purchase exist with respect to the issuance and sale
of the Common Shares by the Company pursuant to this Agreement. No person has
any right that has not lapsed or been waived to require the Company to register
the sale of any securities owned by such person under the Act in the public
offering contemplated by this Agreement. No further approval or authority of the
stockholders or the Board of Directors of the Company will be required for the
issuance and sale of the Common Shares as contemplated herein.
(f) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding obligation of the Company in accordance with its terms. The
making and performance of this Agreement by the Company and the consummation of
the transactions herein contemplated will not violate any provisions of the
certificate of incorporation or bylaws, or other organizational documents, of
the Company, and will not conflict with, result in the breach or violation of,
or constitute, either by itself or upon notice or the passage of time or both, a
default under any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company is a party or by
which the Company or any of its properties may be bound or affected, any statute
or any authorization, judgment, decree, order, rule or regulation of any court
or any regulatory body, administrative agency or other governmental body
applicable to the Company or any of its properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery of
this Agreement or the consummation of the transactions contemplated by this
Agreement, except for compliance with the Act, the Blue Sky laws applicable to
the public offering of the Common Shares by the Underwriters and the clearance
of such offering with the National Association of Securities Dealers, Inc. (the
"NASD").
(g) KPMG Peat Marwick LLP, who have expressed their opinion as to the
financial statements and schedules filed with the Commission as a part of the
Registration Statement and included in the Prospectus and in the Registration
Statement, are independent accountants for the Company as required by the Act
and the Rules and Regulations.
4.
<PAGE> 5
(h) The financial statements and schedules of the Company (together
with the related notes thereto) included in the Registration Statement and the
Prospectus present fairly the financial position of the Company as of the
respective dates of such financial statements and schedules, and the results of
operations and cash flows of the Company for the respective periods covered
thereby. Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis as certified, except as otherwise disclosed therein, by the independent
accountants named in subsection 2(g). No other financial statements, schedules
or information are required to be included in the Registration Statement. The
selected financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Consolidated Financial Data" fairly present the
information set forth therein on the basis stated in the Registration Statement.
(i) Except as disclosed in the Prospectus, and except as to defaults
that individually or in the aggregate would not be material to the Company,
neither the Company nor the Subsidiary is in violation or default of any
provision of its certificate of incorporation or bylaws, or other organizational
documents, nor is the Company or the Subsidiary in breach of or default as to
any provision of any agreement, judgment, decree, order, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to which
the Company or the Subsidiary is a party or by which the Company or the
Subsidiary or any of their respective properties are bound; and there does not
exist any state of facts that constitutes an event of default on the part of the
Company or the Subsidiary as defined in such documents or that, with notice or
lapse of time or both, would constitute such an event of default.
(j) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the Registration
Statement by the Act or by the Rules and Regulations that have not been
described or filed as required. The descriptions of all contracts referenced in
the Prospectus are accurate and complete; all such contracts are in full force
and effect on the date hereof; and neither the Company or, to the best of the
Company's knowledge, any other party, is in breach of or default under any of
such contracts.
(k) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or the Subsidiary is or may
be a party or of which property owned or leased by the Company or the Subsidiary
is or may be the subject, or related to environmental or discrimination matters,
which actions, suits or proceedings might, individually or in the aggregate,
prevent or adversely affect the transactions contemplated by this Agreement, or
result in a material adverse change in the condition (financial or otherwise),
properties, business, results of operations or prospects of the Company. No
labor disturbance by the employees of the Company or the Subsidiary exists or is
imminent that might be expected to affect adversely such condition, properties,
business, results of operations or prospects. Neither the Company nor the
Subsidiary is a party or subject to the provisions of any material injunction,
judgment, decree or order of any court, regulatory body, administrative agency
or other governmental body.
5.
<PAGE> 6
(l) The Company or the Subsidiary, as applicable, has good and
marketable title to all the properties and assets reflected as owned in the
Company's financial statements included in the Prospectus or the Registration
Statement and all properties and assets necessary for the conduct of its
business, in each case subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except (i) those, if any, reflected in such financial
statements (or elsewhere in the Prospectus), or (ii) those that are not material
in amount and do not adversely affect the use made and proposed to be made of
such property by the Company or the Subsidiary. Except as disclosed in the
Prospectus, the Company or the Subsidiary, as applicable, holds its leased
properties under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company. Except as
disclosed in the Prospectus, the Company or the Subsidiary, as applicable, owns
or leases all such properties as are necessary to its operations as now
conducted or as proposed to be conducted.
(m) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) neither the Company nor the
Subsidiary has incurred any material liabilities or obligations, indirect,
direct or contingent, or entered into any material verbal or written agreement
or other transaction that is not in the ordinary course of business or that
could result in a material reduction in the future earnings of the Company; (ii)
neither the Company nor the Subsidiary has sustained any material loss or
interference with its business or property from fire, flood, windstorm, accident
or other calamity, whether or not covered by insurance; (iii) the Company has
not paid or declared any dividends or other distributions with respect to its
capital stock and neither the Company nor the Subsidiary has defaulted on the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock (other than upon the sale of the
Common Shares hereunder and upon the exercise of options and warrants or
pursuant to employee benefit plans described in the Registration Statement) or
indebtedness material to the Company; and (v) there has not been any material
adverse change in the condition (financial or otherwise), business, properties,
results of operations or prospects of the Company or the Subsidiary.
(n) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and the Subsidiary each has sufficient trademarks, trade
names, patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct its respective business as described in
the Prospectus; the expiration of any trademarks, trade names, patent rights,
mask works, copyrights, licenses, approvals or governmental authorizations would
not have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company; and the Company has
no knowledge of any infringement by it or the Subsidiary of any trademark, trade
name rights, patent rights, mask works, copyrights, licenses, trade secret or
other similar rights of any others, and there is no claim being made against the
Company or the Subsidiary regarding trademark, trade name, patent, copyright,
license, trade secret or other infringement that could have a material adverse
effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company.
6.
<PAGE> 7
(o) Neither the Company nor the Subsidiary has been advised, and
neither has any reason to believe, that the Company or the Subsidiary is not
conducting its business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business and proposes
to conduct business, including, without limitation, all applicable statutes or
regulations relating to: the development, testing, manufacture, labelling,
advertising, sale or use of diagnostic medical products; the control of exports
from the United States; and local, state and federal environmental laws and
regulations, except as disclosed in the Prospectus and except where failure to
be so in compliance would not materially adversely affect the condition
(financial or otherwise), business, results of operations or prospects of the
Company.
(p) The Company and the Subsidiary have filed all necessary federal,
state and foreign income and franchise tax returns and has paid all taxes shown
as due thereon; and the Company has no knowledge of any tax deficiency that has
been or might be asserted or threatened against the Company or the Subsidiary
that could materially and adversely affect the business, operations or
properties of the Company.
(q) Neither the Company nor the Subsidiary is or will be after
completion of the offering described in the Prospectus, an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute prior to
the later to occur of (i) competition of the distribution of the Common Shares,
or (ii) the expiration of any time period within which a dealer is required
under the Securities Act to deliver a Prospectus relating to the Common Shares
any offering material in connection with the offering and sale of the Common
Shares other than the Prospectus, the Registration Statement and the other
materials permitted by the Act.
(s) The Company and the Subsidiary maintain insurance of the types and
in the amounts generally deemed adequate for their respective businesses,
including, but not limited to, product liability insurance, insurance covering
real and personal property owned or leased by the Company or the Subsidiary
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
(t) Neither the Company nor the Subsidiary has, at any time during the
last five years, directly or indirectly (i) made any unlawful contribution to
any candidate for foreign office, or failed to disclose fully any contribution
in violation of law, or (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of
the United States or any jurisdiction thereof.
7.
<PAGE> 8
(u) Neither the Company nor the Subsidiary has taken, nor will either
take, directly or indirectly, any action designed to or that might be reasonably
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Common Shares.
(v) The Common Stock has been duly authorized for quotation on the
Nasdaq National Market.
(w) The Company is not aware of any state of facts that might
reasonably be expected to result in any supplier to the Company or the
Subsidiary failing to deliver or delaying delivery of goods, services, or other
products to the Company or the Subsidiary, except for failures or delays that
would not materially adversely affect the financial condition or results of
operations of the Company.
(x) Neither the Company nor the Subsidiary has received any notice,
whether written or oral, from any distributor of the Company or the Subsidiary
of termination of a distribution agreement between the Company or the Subsidiary
and such distributor, and the Company is not aware of the revocation or
impending revocation of any governmental permit necessary for the sale of the
Company's or the Subsidiary's products in any state or country in which any such
distributor has authority to sell such products.
3. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. The Representative on
behalf of the several Underwriters represents and warrants to the Company that
the information set forth (i) on the cover page of the Prospectus with respect
to price, underwriting discounts and commissions and terms of offering and (ii)
under "Underwriting" in the Prospectus was furnished to the Company by and on
behalf of the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus and is correct in all material
respects. The Representative represents and warrants that it has been authorized
by each of the other Underwriters as the Representative to enter into this
Agreement on behalf of such other Underwriter and to act for such other
Underwriter in the manner herein provided.
4. PURCHASE, SALE AND DELIVERY OF COMMON SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to
the Underwriters the 2,500,000 Firm Common Shares. The Underwriters agree,
severally and not jointly, to purchase from the Company that number of Firm
Common Shares set forth opposite such Underwriter's name on Exhibit A. The
purchase price per share to be paid by the Underwriters shall be equal to the
initial price to the public per share less an amount per share equal to the per
share underwriting discount. The initial price to the public, which shall be a
fixed price, and the underwriting discount will be determined by separate
agreement among the Company and the Underwriters in substantially the form set
forth as Exhibit B hereto. It shall be a condition to this Agreement and the
obligation of the Company to sell and deliver the Firm Common Shares hereunder,
and of you to purchase the Firm Common Shares in the manner described herein,
that you shall purchase and pay for all the Firm Common Shares agreed to be
purchased hereunder upon tender to you of all such Firm Common Shares in
accordance with the terms hereof.
8.
<PAGE> 9
Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Pacific Growth
Equities, Inc., 353 Sacramento Street, 16th Floor, San Francisco, California (or
such other place as may be agreed upon by the Company and the Underwriters) at
such time and date, not later than the third full business day following the
first date that any of the Common Shares are released by you for sale to the
public, as you shall designate by at least 48 hours prior notice to the Company
(the "First Closing Date"); provided, however, that if the Prospectus is at any
time prior to the First Closing Date recirculated to the public, the First
Closing Date shall occur upon the later of the third full business day following
the first date that any of the Common Shares are released by you for sale to the
public or the date that is 48 hours after the date that the Prospectus has been
so recirculated.
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Company to you for the respective accounts of the several
Underwriters, against payment by the Underwriters of the purchase price therefor
by certified or official bank or investment bank checks payable in next day
funds to the order of the Company. The certificates for the Firm Common Shares
shall be registered in such names and denominations as you shall have requested
at least two full business days prior to the First Closing Date, and shall be
made available for checking and packaging on the business day preceding the
First Closing Date at a location in New York, New York, as may be designated by
you. Time shall be of the essence, and delivery at the time and place specified
in this Agreement is a further condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 375,000 Optional Common Shares
at the purchase price per share to be paid for the Firm Common Shares, for use
solely in covering any over-allotments made by you for the account of the
Underwriters in the sale and distribution of the Firm Common Shares. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the first date that any of the Common Shares are released by you
for sale to the public, upon notice by you to the Company setting forth the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, the names and denominations in which the certificates for
such shares are to be registered and the time and place at which such
certificates will be delivered. Such time of delivery (which may not be earlier
than the First Closing Date), being herein referred to as the "Second Closing
Date," shall be determined by you, but if at any time other than the First
Closing Date shall not be earlier than three nor later than five full business
days after delivery of such notice of exercise. The number of Optional Common
Shares to be purchased by each Underwriter shall be determined by multiplying
the number of Optional Common Shares to be sold by the Company pursuant to such
notice of exercise by a fraction, the numerator of which is the number of Firm
Common Shares to be purchased by such Underwriter as set forth opposite its name
in Exhibit A and the denominator of which is 375,000 (subject to such
adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares will be made
available for checking and packaging on the business day preceding the Second
Closing Date at a location in New
9.
<PAGE> 10
York, New York, as may be designated by you. The manner of payment for and
delivery of the Optional Common Shares shall be the same as for the Firm Common
Shares as specified in the two preceding paragraphs. At any time before lapse of
the option, you may cancel such option by giving written notice of such
cancellation to the Company. If the option is cancelled or expires unexercised
in whole or in part, the Company will deregister under the Act the number of
Optional Common Shares as to which the option has not been exercised.
You have advised the Company that each Underwriter has authorized you to accept
delivery of its Common Shares, to make payment and to take receipt therefor.
You, individually and not as the Representative of the Underwriters, may (but
shall not be obligated to) make payment for any Common Shares to be purchased by
any Underwriter whose funds shall not have been received by you by the First
Closing Date or the Second Closing Date, as the case may be, for the account of
such Underwriter, but any such payment shall not relieve such Underwriter from
any of its obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose to make a
public offering of the Common Shares as soon after the effective date of the
Registration Statement as in your judgment is advisable and at the public
offering price set forth on the cover page of and on the terms set forth in the
Prospectus.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date this
Agreement is executed and delivered by the parties hereto, to become effective.
If the Registration Statement has become or becomes effective pursuant to Rule
430A of the Rules and Regulations, or the filing of the Prospectus is otherwise
required under Rule 424(b) of the Rules and Regulations, the Company will file
the Prospectus, properly completed, pursuant to the applicable paragraph of Rule
424(b) of the Rules and Regulations within the time period prescribed and will
provide evidence satisfactory to you of such timely filing. The Company will
promptly advise you in writing (i) of the receipt of any comments of the
Commission, (ii) of any request of the Commission for amendment of or supplement
to the Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus or for additional information, (iii)
when the Registration Statement shall have become effective, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for that
purpose. If the Commission shall enter any such stop order at any time, the
Company shall use its best efforts to obtain the lifting of such order at the
earliest possible moment. The Company shall not file any amendment or supplement
to the Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus of which you have not been furnished
with a copy a reasonable time prior to such filing or to which you reasonably
object or which is not in compliance with the Act and the Rules and Regulations.
10.
<PAGE> 11
(b) The Company shall prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration Statement
or the Prospectus that in your judgment may be necessary or advisable to enable
the Underwriters to continue the distribution of the Common Shares and shall use
its best efforts to cause the same to become effective as promptly as possible.
The Company shall fully and completely comply with the provisions of Rule 430A
of the Rules and Regulations with respect to information omitted from the
Registration Statement in reliance upon such Rule.
(c) If at any time within the nine-month period referred to in Section
10(a)(3) of the Act during which a prospectus relating to the Common Shares is
required to be delivered under the Act any event occurs, as a result of which
the Prospectus, including any amendments or supplements, would include an untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or if
it is necessary at any time to amend the Prospectus, including any amendments or
supplements, to comply with the Act or the Rules and Regulations, the Company
shall promptly advise you thereof and shall promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will correct
such statement or omission or an amendment or supplement which will effect such
compliance and shall use its best efforts to cause the same to become effective
as soon as possible. In case any Underwriter is required to deliver a prospectus
after such nine-month period, the Company, upon request, but at the expense of
such Underwriter, shall promptly prepare such amendment or amendments to the
Registration Statement and such Prospectus or Prospectuses as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the Act.
(d) As soon as practicable, but not later than 45 days after the end of
the first quarter ending after one year following the "effective date of the
Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company shall make generally available to its security holders
an earnings statement (which need not be audited) covering a period of 12
consecutive months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph of Section
11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or a dealer, the Company,
at its expense, but only for the nine-month period referred to in Section
10(a)(3) of the Act, shall furnish to you copies of the Registration Statement,
the Prospectus, the Preliminary Prospectus and all amendments and supplements to
any such documents in each case as soon as available and in such quantities as
you may request, for the purposes contemplated by the Act.
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions from
the application of) the Blue Sky laws of such jurisdictions as you designate,
shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as reasonably required for the
distribution of the Common Shares. The Company shall not be required to qualify
as a foreign corporation or to file a general consent to service of process in
any such jurisdiction where it is not presently qualified or where it would be
subject to taxation as a
11.
<PAGE> 12
foreign corporation. The Company shall advise you promptly of the suspension of
the qualification or registration of (or any such exemption relating to) the
Common Shares for offering, sale or trading in any jurisdiction or any
initiation or threat of any proceeding for any such purpose, and in the event of
the issuance of any order suspending such qualification, registration or
exemption, the Company, with your cooperation, shall use its best efforts to
obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company shall
furnish to you and, upon your request, each of the other Underwriters: (i) as
soon as practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as of the
close of such fiscal year and statements of income, stockholders' equity and
cash flows for the year then ended and the opinion thereon of the Company's
independent public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Report on Form 8-K or other report filed by the Company
with the Commission, including the Report on Form SR required by Rule 463 of the
Securities Act, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed generally
to holders of its Common Stock.
(h) During the period of 180 days after the first date any of the
Common Shares are released by you for sale to the public, without your prior
written consent (which consent may be withheld in your sole discretion), the
Company shall not, other than upon the exercise of outstanding stock options and
warrants disclosed in the Prospectus and other than the grant of options to
employees under option plans described in the Prospectus and consistent with
past practice, issue, offer, sell, grant options to purchase or otherwise
dispose of any of the Company's equity securities or any other securities
convertible into or exchangeable with its Common Stock or other equity security.
(i) The Company shall apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company shall use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain exemptions
from the application of) the Blue Sky laws of the State of California (and
thereby permit market making transactions and secondary trading in the Company's
Common Stock in California), shall comply with such Blue Sky laws and shall
continue such qualifications, registrations and exemptions in effect for a
period of five years after the date hereof.
(k) Prior to the Second Closing Date, the Company shall not repurchase
or otherwise acquire any of the Company's Common Stock or declare or pay any
dividend or make any other distribution upon its Common Stock.
(l) For a period of five years after the date hereof, the Company shall
use its best efforts to maintain the listing of the Common Stock on the Nasdaq
National Market.
12.
<PAGE> 13
(m) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price for the shares has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
You may, in your sole discretion, waive in writing the performance by
the Company of any one or more of the foregoing covenants or extend the time for
their performance.
6. PAYMENT OF EXPENSES. Whether or not the transactions contemplated hereunder
are consummated or this Agreement becomes effective or is terminated, the
Company agrees to pay all costs, fees and expenses incurred by it in connection
with the performance of its obligations hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality of
the foregoing, (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel and the Company's independent accountants, (v) all costs
and expenses incurred in connection with the preparation, printing, filing,
shipping and distribution of the Registration Statement, each Preliminary
Prospectus and the Prospectus (including all exhibits and financial statements)
and all amendments and supplements provided for herein, this Agreement, the
Agreement among Underwriters, the Selected Dealers Agreement, the Underwriters'
Questionnaire, the Underwriters' Power of Attorney, and the Blue Sky Memorandum,
(vi) all filing fees, attorneys' fees and expenses incurred by the Company or
the Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under the Blue Sky laws, and (vii) the filing
fee of the NASD. Except as provided in this Section 6, Section 8 and Section 10
hereof, the Underwriters shall pay all of their expenses, including the fees and
disbursements of their counsel (excluding those relating to qualification,
registration or exemption under the Blue Sky laws and the Blue Sky Memorandum
referred to above).
7. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the
Underwriters to purchase and pay for the Firm Common Shares on the First Closing
Date and the Optional Common Shares on the Second Closing Date shall be subject
to the accuracy of the representations and warranties on the part of the Company
herein set forth as of the date hereof and as of the First Closing Date or the
Second Closing Date, as the case may be, to the accuracy of the statements of
Company officers made pursuant to the provisions hereof, to the performance by
the Company of its obligations hereunder, and to the following additional
conditions:
13.
<PAGE> 14
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., Washington, D.C. Time, on the date of this Agreement, or at such
later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and Regulations;
and prior to such Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Company or you, shall be contemplated by the Commission; and any request of
the Commission for inclusion of additional information in the Registration
Statement, or otherwise, shall have been complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and Prospectus, (i) there
shall not have been any change in the capital stock of the Company other than
pursuant to the exercise of outstanding options and warrants disclosed in the
Prospectus or any material change in the indebtedness of the Company or the
Subsidiary, (ii) except as set forth or contemplated by the Registration
Statement or the Prospectus, no material verbal or written agreement or other
transaction shall have been entered into by the Company or the Subsidiary, that
is not in the ordinary course of business or that could result in a material
reduction in the future earnings of the Company, (iii) no loss or damage
(whether or not insured) to the property of the Company or the Subsidiary shall
have been sustained that materially and adversely affects or may affect the
condition (financial or otherwise), business, results of operations or prospects
of the Company, (iv) no legal or governmental action, suit or proceeding
affecting the Company that is material to the Company or that affects or may
affect the transactions contemplated by this Agreement shall have been
instituted or threatened, and (v) there shall not have been any material change
in the condition (financial or otherwise), business, management, results of
operations or prospects of the Company that makes it impractical or inadvisable
in the judgment of the Representative to proceed with the public offering or
purchase of the Common Shares contemplated hereby.
(c) There shall have been furnished to you as representative of the
Underwriters on each Closing Date, in form and substance satisfactory to you:
(i) An opinion of Wilson, Sonsini, Goodrich & Rosati, counsel
for the Company, addressed to the Underwriters and dated the First Closing Date,
or the Second Closing Date, as the case may be, as set forth in Exhibit C-1
hereto.
In rendering such opinions, such counsel may rely (i) as to matters of local
law, on opinions of local counsel, (ii) as to matters of patent and other
intellectual property matters on the opinion of [ ], and (iii) as to
matters of fact, on certificates of officers of the Company or
governmental officials, provided that such counsel's opinion states
that such counsel is doing so and that the Underwriters are
justified in relying on such opinions or certificates and that copies
of such opinions of local counsel or certificates are attached to such
counsel's opinion.
14.
<PAGE> 15
(ii) An opinion of [ ], special patent counsel for the
Company, addressed to the Underwriters and dated the First Closing Date, or the
Second Closing Date, as the case may be, as set forth in Exhibit C-2 hereto.
(iii) An opinion of [ ], counsel for regulatory
matters for the Company, addressed to the Underwriters and dated the First
Closing Date, or the Second Closing Date, as the case may be, as set forth in
Exhibit C-3 hereto.
In rendering such opinions, such counsel may rely as to matters of local law on
opinions of local counsel, and as to matters of fact on certificates of officers
of the Company or governmental officials, provided that such counsel's opinion
states that such counsel is so doing and that the Underwriters are justified in
relying on such opinions of local counsel or certificates and that copies of
such opinions of local counsel or certificates are attached to such counsel's
opinion.
(iv) Such opinion or opinions of Cooley Godward Castro
Huddleson & Tatum, counsel for the Underwriters, dated the First Closing Date or
the Second Closing Date, as the case may be, with respect to the incorporation
of the Company, the sufficiency of all corporate proceedings and other legal
matters relating to this Agreement, the validity of the Common Shares, the
Registration Statement and the Prospectus and other related matters as you may
reasonably require, and the Company shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as they may
reasonably request for the purpose of enabling them to pass upon such matters.
In connection with such opinions, such counsel may rely on representations or
certificates of officers of the Company and governmental officials.
(v) A certificate of the Company executed by the Chief
Executive Officer or President and the chief financial or accounting officer of
the Company, dated the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) The representations and warranties of the Company
set forth in Section 2 of this Agreement are true and correct as of the date of
this Agreement and as of the First Closing Date or the Second Closing Date, as
the case may be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied on or
prior to such Closing Date;
(2) The Commission has not issued any order
preventing or suspending the use of the Prospectus or any Preliminary Prospectus
filed as a part of the Registration Statement or any amendment thereto; no stop
order suspending the effectiveness of the Registration Statement has been
issued; and to the best of the knowledge of the respective signers, no
proceedings for that purpose have been instituted or are pending or contemplated
under the Act;
(3) Each of the respective signers of the certificate
has carefully examined the Registration Statement and the Prospectus; in his
opinion and to the best of his knowledge, the Registration Statement and the
Prospectus and any amendments or supplements
15.
<PAGE> 16
thereto contain all statements required to be stated therein regarding the
Company or the Subsidiary; and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto includes any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction or event has
occurred that should have been set forth in an amendment to the Registration
Statement or in a supplement to or amendment of any prospectus which has not
been disclosed in such a supplement or amendment;
(5) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, and
except as disclosed in or contemplated by the Prospectus, there has not been any
material adverse change or a development involving a material adverse change in
the condition (financial or otherwise), business, properties, results of
operations, management or prospects of the Company or the Subsidiary; no legal
or governmental action, suit or proceeding is pending or threatened against the
Company or the Subsidiary that is material to the Company, whether or not
arising from transactions in the ordinary course of business, or that may
adversely affect the transactions contemplated by this Agreement; since such
dates and except as so disclosed, neither the Company nor the Subsidiary has
entered into any verbal or written agreement or other transaction that is not in
the ordinary course of business or that could result in a material reduction in
the future earnings of the Company; neither the Company nor the Subsidiary has
incurred any material liability or obligation, direct, contingent or indirect,
made any change in its capital stock, made any material change in its short-term
debt or funded debt or repurchased or otherwise acquired any of its capital
stock; and the Company has not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to stockholders of
record on a date prior to such Closing Date; and
(6) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus and except
as disclosed in or contemplated by the Prospectus, neither the Company nor the
Subsidiary has sustained any material loss or damage by strike, fire, flood,
windstorm, accident or other calamity (whether or not insured).
(vi) On the date Preliminary Prospectuses are first
circulated, the date immediately preceding the date this Agreement is executed,
the First Closing Date, and the Second Closing Date (if applicable), a letter
addressed to you as representative of the Underwriters from KPMG Peat Marwick
LLP, independent accountants, dated the date of its delivery as specified above,
in form and substance satisfactory to you.
(vii) On or before the First Closing Date, each director of
the Company, each officer of the Company, and each person who owns beneficially
1% or more of the outstanding shares of Common Stock (calculated without regard
to the offering contemplated hereby) or options to purchase 1% or more of the
outstanding shares of Common Stock (calculated without regard to the offering
contemplated hereby) as of the date hereof, in form and substance satisfactory
to you, confirming that for a period of 180 days after the first date any of the
16.
<PAGE> 17
Common Shares are released by you for sale to the public, such person will not
directly or indirectly sell or offer to sell or otherwise dispose of or transfer
any shares of Common Stock or any right to acquire such shares without your
prior written consent, which consent may be withheld in your sole discretion.
All such opinions, certificates, letters and documents shall be deemed in
compliance with the provisions hereof only if they are satisfactory to you and
to Cooley Godward Castro Huddleson & Tatum, counsel for the Underwriters. The
Company shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request. Any certificate
signed by any officer of the Company and delivered to you as representative of
the Underwriters or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the
statements made therein.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification by you to the Company without
liability on the part of the Underwriters or the Company except for the expenses
to be paid or reimbursed by the Company pursuant to Sections 6 and 8 hereof and
except to the extent provided in Section 10 hereof.
8. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. Notwithstanding any other provisions
hereof, if this Agreement shall be terminated by you pursuant to Section 7, or
if the sale to the Underwriters of the Common Shares at the First Closing is not
consummated because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or to comply with any provision hereof,
the Company agrees to reimburse you upon demand for all out-of-pocket expenses
that shall have been reasonably incurred by you in connection with the proposed
purchase and the sale of the Common Shares, including but not limited to fees
and disbursements of counsel, printing expenses, travel expenses, postage,
telegraph charges and telephone charges relating directly to the offering
contemplated hereby. Any such termination shall be without liability of any
party to any other party except that the provisions of this Section, Section 6
and Section 10 shall at all times be effective and shall apply.
9. EFFECTIVENESS OF REGISTRATION STATEMENT. You and the Company shall use your
and its best efforts to cause the Registration Statement to become effective, to
prevent the issuance of any stop order suspending the effectiveness of the
Registration Statement and, if such stop order be issued, to obtain as soon as
possible the lifting thereof.
10. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of the
Act against any losses, claims, damages, liabilities or expenses, joint or
several, to which any Underwriter or any such controlling person may become
subject, under the Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected
17.
<PAGE> 18
with the written consent of the Company), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state in
any of them a material fact required to be stated therein or necessary to make
the statements in any of them not misleading, or arise out of or are based in
whole or in part on any inaccuracy in the representations and warranties of the
Company contained herein or any failure of the Company to perform its
obligations hereunder or under law; and will reimburse each Underwriter and each
such controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 3 hereof. In addition
to its other obligations under this Section 10(a), the Company agrees that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, or any inaccuracy in the
representations and warranties of the Company herein or failure to perform its
obligations hereunder, all as described in this Section 10(a), it will reimburse
each Underwriter on a quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
obligation to reimburse each Underwriter for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, each Underwriter that received such
improper payment shall promptly return it to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing) announced from time
to time by Bank of America NT&SA, San Francisco, California (the "Prime Rate").
Any such interim reimbursement payments that are not made to an Underwriter
within 30 days of a request for reimbursement, shall bear interest at the Prime
Rate from the date of such request. This indemnity agreement will be in addition
to any liability that the Company may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Act, against any losses, claims, damages, liabilities or expenses to
which the Company, or any such director, officer or controlling person may
become subject, under the Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as
18.
<PAGE> 19
contemplated below) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, in reliance
upon and in conformity with the information furnished to the Company pursuant to
Section 3 hereof; and will reimburse the Company, or any such director, officer
or controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. In addition to its other obligations under
this Section 10(b), each Underwriter severally agrees that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 10(b) which relates to
information furnished to the Company pursuant to Section 3 hereof, it will
reimburse the Company on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company shall
promptly return it to the Underwriters together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such interim reimbursement
payments that are not made to the Company within 30 days of a request for
reimbursement, shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability that such
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability it may have to any indemnified party for contribution or otherwise
under the indemnity agreement contained in this Section to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties
19.
<PAGE> 20
which are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed counsel in connection with the assumption
of legal defenses in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel, approved by the
Representative in the case of paragraph (a), representing the indemnified
parties who are parties to such action) or (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) in respect of any losses, claims, damages, liabilities or expenses referred
to herein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Underwriters from the offering of the Common Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Underwriters in connection with the statements or omissions or inaccuracies
in the representations and warranties herein which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company and the Underwriters shall be deemed to be in the same proportion, in
the case of the Company as the total price paid to the Company for the Common
Shares sold by it to the Underwriters (net of underwriting commissions but
before deducting expenses) bears to the total price to the public set forth on
the cover of the Prospectus, and in the case of the Underwriters as the
underwriting discounts and commissions received by them bears to the total price
to the public set forth on the cover of the Prospectus. The relative fault of
the Company and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact or the inaccurate
or the alleged inaccurate representation and/or warranty relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in subparagraph (c) of
this Section, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
20.
<PAGE> 21
provisions set forth in subparagraph (c) of this Section with respect to notice
of commencement of any action shall apply if a claim for contribution is to be
made under this subparagraph (d); provided, however, that no additional notice
shall be required with respect to any action for which notice has been given
under subparagraph (c) for purposes of indemnification. The Company and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section were determined solely by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. Notwithstanding the
provisions of this Section, the Underwriters shall not be required to contribute
any amount in excess of the amount of the total underwriting commissions
received by the Underwriters in connection with the Common Shares underwritten
by them and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section are several in proportion to their respective underwriting commitments
and not joint.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 10(a) and 10(b)
hereof, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
under the provisions of the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration or
written notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Such an arbitration
would be limited to the operation of the interim reimbursement provisions
contained in Sections 10(a) and 10(b) hereof and would not resolve the ultimate
propriety or enforceability of the obligation to reimburse expenses which is
created by the provisions of such Sections 10(a) and 10(b) hereof.
11. DEFAULT OF UNDERWRITERS. It shall be a condition to this Agreement and the
obligation of the Company to sell and deliver the Common Shares hereunder, and
of the Underwriters to purchase the Common Shares in the manner as described
herein, that, except as hereinafter in this paragraph provided, the Underwriters
shall purchase and pay for all the Common Shares agreed to be purchased
hereunder upon tender to the Underwriters of all such shares in accordance with
the terms hereof. If any Underwriter defaults in its obligations to purchase
Common Shares hereunder on either the First or Second Closing Date and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase on such Closing Date does not exceed
10% of the total number of Common Shares which the Underwriters are obligated to
purchase on such Closing Date, the nondefaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Common Shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase on such Closing Date. If any Underwriter or Underwriters so
default and the aggregate number of Common Shares with respect to which such
default occurs is more than the above percentage and arrangements satisfactory
to you and the Company for the purchase of such Common Shares by other persons
are not made within 48 hours after such
21.
<PAGE> 22
default, this Agreement will terminate without liability on the part of the
Company except for the expenses to be paid by the Company pursuant to Sections 6
and 8 hereof and except to the extent provided in Section 10 hereof.
In the event Common Shares to which a default relates are to be purchased by
another party or parties, the Underwriters or the Company shall have the right
to postpone the First or Second Closing Date, as the case may be, for not more
than five business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, the term
"Underwriters" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
12. EFFECTIVE DATE. This Agreement shall become effective immediately as to
Sections 6, 8, 10, 13 and 14 and, as to all other provisions, (i) if at the time
of execution of this Agreement the Registration Statement has not become
effective, at 2:00 P.M., California time, on the first full business day
following the effectiveness of the Registration Statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 2:00 P.M., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Common Shares for sale to the public. For the
purposes of this Section, the Common Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams (i)
advising the Underwriters that the Common Shares are released for public
offering, or (ii) offering the Common Shares for sale to securities dealers,
whichever may occur first.
13. TERMINATION. Without limiting the right to terminate this Agreement pursuant
to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you or
by you by notice to the Company at any time prior to the time this Agreement
shall become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company to any Underwriter (except for
the expenses to be paid or reimbursed by the Company pursuant to Sections 6 and
8 hereof and except to the extent provided in Section 10 hereof) or of any
Underwriter to the Company (except to the extent provided in Section 10 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have been suspended on either such
Exchange or in the over the counter market by the NASD, or a general banking
moratorium shall have been established by federal, New York or California
authorities, (ii) if an outbreak of major hostilities
22.
<PAGE> 23
or other national or international calamity or any substantial change in
political, financial or economic conditions shall have occurred or shall have
accelerated or escalated to such an extent, as, in your judgment, to affect
adversely the marketability of the Common Shares or securities in general, (iii)
if any adverse event shall have occurred or shall exist which makes untrue or
incorrect in any material respect any statement or information contained in the
Registration Statement or Prospectus or which is not reflected in the
Registration Statement or Prospectus but should be reflected therein in order to
make the statements or information contained therein not misleading in any
material respect, or (iv) if there shall be any action, suit or proceeding
pending or threatened, or there shall have been any development or prospective
development involving particularly the business or properties or securities of
the Company or the transactions contemplated by this Agreement, which, in the
reasonable judgment of the Representative, may materially and adversely affect
the Company's business or earnings and makes it impracticable or inadvisable to
offer or sell the Common Shares. Any termination pursuant to this subsection (b)
shall without liability on the part of any Underwriter to the Company or on the
part of the Company to any Underwriter (except for expenses to be paid or
reimbursed by the Company pursuant to Sections 6 and 8 hereof and except to the
extent provided in Section 10 hereof).
(c) This Agreement shall also terminate at 5:00 P.M., California time,
on the tenth full business day after the Registration Statement shall have
become effective if the initial public offering price of the Common Shares shall
not then as yet have been determined as provided in Section 4 hereof. Any
termination pursuant to this subsection (c) shall be without liability on the
part of any Underwriter to the Company or on the part of the Company to any
Underwriter (except for expenses to be paid or reimbursed by the Company
pursuant to Sections 6 and 8 hereof and except to the extent provided in Section
10 hereof.)
14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective
indemnities, agreements, representations, warranties and other statements of the
Company, of its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or the Company or any
of its or their partners, officers or directors or any controlling person, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
15. NOTICES. All communications hereunder shall be in writing and, if sent to
the Underwriters shall be mailed, delivered or telegraphed and confirmed to you
at 353 Sacramento Street, 16th Floor, San Francisco, California 94111,
Attention: Mitchell Stevko, with a copy to Cooley Godward Castro Huddleson &
Tatum, Five Palo Alto Square, 3000 El Camino Real, Palo Alto, California
94306-2155, Attention: Alan C. Mendelson; and if sent to the Company shall be
mailed, delivered or telegraphed and confirmed to the Company at 1440 Fourth
Street,
23.
<PAGE> 24
Berkeley, California 94710, Attention: John P. Davis, with a copy to Wilson,
Sonsini, Goodrich & Rosati, PC, 650 Page Mill Road, Palo Alto, California
94304-1050, Attention: Aron J. Alter. The Company or you may change the address
for receipt of communications hereunder by giving notice to the others.
16. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon
the parties hereto, including any substitute Underwriters pursuant to Section 11
hereof, and to the benefit of the officers and directors and controlling persons
referred to in Section 10, and in each case their respective successors,
personal representatives and assigns, and no other person will have any right or
obligation hereunder. No such assignment shall relieve any party of its
obligations hereunder. The term "successors" shall not include any purchaser of
the Common Shares as such from any Underwriter merely by reason of such
purchase.
17. REPRESENTATION OF UNDERWRITERS. You will act as Representative for the
several Underwriters in connection with all dealings hereunder, and any action
under or in respect of this Agreement taken by you, as Representative, will be
binding upon all the Underwriters.
18. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or
enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
19. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the laws pertaining to conflicts of
laws) of the State of California.
20. GENERAL. This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. This Agreement may be executed in several counterparts, each one
of which shall be an original, and all of which shall constitute one and the
same document.
In this Agreement, the masculine, feminine and neuter genders and the singular
and the plural include one another. The section headings in this Agreement are
for the convenience of the parties only and will not affect the construction or
interpretation of this Agreement. This Agreement may be amended or modified, and
the observance of any term of this Agreement may be waived, only by a writing
signed by the Company and you.
24.
<PAGE> 25
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement among the Company and the Underwriters, all in
accordance with its terms.
Very truly yours,
CALYPTE BIOMEDICAL CORPORATION
By:
---------------------------
The foregoing Underwriting Agreement is
hereby confirmed and accepted by us in
San Francisco, California as of the date
first above written.
PACIFIC GROWTH EQUITIES, INC.
By:
-------------------------------------
Acting on Behalf of
the several Underwriters
25.
<PAGE> 26
EXHIBIT A
NUMBER OF FIRM COMMON
NAME OF UNDERWRITER SHARES TO BE PURCHASED
TOTAL: 2,500,000
<PAGE> 27
EXHIBIT B
PRICE DETERMINATION AGREEMENT
Referring to Section 4 of the Underwriting Agreement dated __________
___, 1996, among the Company and Pacific Growth Equities, Inc., acting as the
representative for the Underwriters as therein defined, with respect to the
purchase and sale of the Common Shares, we hereby confirm our agreement that the
initial public offering price of the Common Shares shall be $____ per share;
that the underwriting discount shall be $______ per share; and that the purchase
price to be paid by the Underwriters for the Common Shares to be purchased from
the Company shall be $______ per share.
This Agreement may be executed in various counterparts which together
shall constitute one and the same Agreement.
PACIFIC GROWTH EQUITIES, INC.
By
-------------------------------
Acting on Behalf of
the several Underwriters
CALYPTE BIOMEDICAL CORPORATION
By
-------------------------------
<PAGE> 28
EXHIBIT C-1
OPINION OF WILSON, SONSINI, GOODRICH& ROSATI, PC
(1) Each of the Company and the entities listed on Appendix A hereto
(each, a "Subsidiary") has been duly incorporated (or otherwise formed) and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, and the Company and each Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in all
other jurisdictions where the ownership or leasing of properties or the conduct
of its business requires such qualification, except for jurisdictions in which
the failure so to qualify would not have a material adverse effect on the
Company, and each has full corporate power and authority to own its properties
and conduct its business as described in the Registration Statement;
(2) All of the outstanding shares of common stock of each entity listed
on Appendix A hereto are owned by the Company or one or more other corporations
whose outstanding common stock is owned directly or indirectly by the Company.
(3) The authorized, issued and outstanding capital stock of the Company
is as set forth under the caption "Capitalization" in the Prospectus; all
necessary and proper corporate proceedings have been taken in order to authorize
validly such authorized Common Stock; all outstanding shares of Common Stock
(including the Firm Common Shares and any Optional Common Shares) have been duly
and validly issued, are fully paid and nonassessable, have been issued in
compliance with federal and state securities laws, were not issued in violation
of or subject to any preemptive rights or other rights to subscribe for or
purchase any securities and conform to the description thereof contained in the
Prospectus;
(4) The certificates evidencing the Common Shares to be delivered
hereunder are in due and proper form under Delaware law, and when duly
countersigned by the Company's transfer agent and registrar, and delivered to
you or upon your order against payment of the agreed consideration therefor in
accordance with the provisions of the Underwriting Agreement, the Common Shares
represented thereby will be duly authorized and validly issued, fully paid and
nonassessable, will not have been issued in violation of or subject to any
preemptive rights or, to such counsel's knowledge, other rights to subscribe for
or purchase securities and will conform in all respects to the description
thereof contained in the Prospectus;
(5) Except as disclosed in or specifically contemplated by the
Prospectus, to our knowledge, there are no outstanding options, warrants or
other rights calling for the issuance of, and no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable for capital stock of the Company;
1.
<PAGE> 29
(6) The Company has full right, power and authority to enter into the
Underwriting Agreement and to sell and deliver the Common Shares to the several
Underwriters; the Underwriting Agreement has been duly and validly authorized by
all necessary corporate action by the Company, has been duly and validly
executed and delivered by and on behalf of the Company, and is a valid and
binding agreement of the Company in accordance with its terms, except as
enforceability may be limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and except as to those provisions relating to indemnity or
contribution for liabilities arising under the Act as to which no opinion need
be expressed; and no approval, authorization, order, consent, registration,
filing, qualification, license or permit of or with any court, regulatory,
administrative or other governmental body is required for the execution and
delivery of the Underwriting Agreement by the Company or the consummation of the
transactions contemplated by the Underwriting Agreement, except such as have
been obtained and are in full force and effect under the Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and such as may be
required under applicable Blue Sky laws in connection with the purchase and
distribution of the Common Shares by the Underwriters and the clearance of such
offering with the NASD;
(7) The execution and performance of the Underwriting Agreement and the
consummation of the transactions herein contemplated will not conflict with,
result in the breach of, or constitute, either by itself or upon notice or the
passage of time or both, a default under, any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to which
to our knowledge the Company or any Subsidiary is a party or by which the
Company, any Subsidiary or any property of the Company or any Subsidiary may be
bound or affected that is material to the Company, or violate any of the
provisions of the certificate of incorporation or bylaws of the Company or any
Subsidiary or, so far as is known to us, violate any statute, judgment, decree,
order, rule or regulation of any court or governmental body having jurisdiction
over the Company, any Subsidiary or any property of the Company or any
Subsidiary;
(8) Neither the Company nor the Subsidiary is in violation of its
certificate of incorporation or bylaws, or to the best of our knowledge, in
breach of or default with respect to any provision of any agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
known to us to which the Company or any Subsidiary is a party or by which it or
any of its properties may be bound or affected, except where such default would
not materially adversely affect the Company; and, to our knowledge, the Company
and each Subsidiary are in compliance with all laws, rules, regulations,
judgments, decrees, orders and statutes of any court or jurisdiction to which it
is subject, except where noncompliance would not materially adversely affect the
Company;
(9) To the best of our knowledge, no holders of securities of the
Company have rights that have not lapsed or been waived to the registration of
shares of Common Stock or other securities, because of the filing of the
Registration Statement by the Company or the offering contemplated hereby;
2.
<PAGE> 30
(10) (a) The Registration Statement has become effective under the Act,
and, to the best of our knowledge, no stop order suspending the effectiveness of
the Registration Statement or preventing the use of the Prospectus has been
issued and no proceedings for that purpose have been instituted or are pending
or contemplated by the Commission; any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) of the Rules and Regulations has been
made in the manner and within the time period required by such Rule 424(b);
(b) The Registration Statement, the Prospectus and each amendment
or supplement thereto (except for the financial statements and schedules
included therein as to which we express no opinion) comply as to form in all
material respects with the requirements of the Act and the Rules and
Regulations;
(c) To the best of our knowledge, there are no franchises, leases,
contracts, agreements or documents of a character required to be disclosed in
the Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement that are not disclosed or filed, as required;
(d) To the best of our knowledge, there are no legal or
governmental actions, suits or proceedings pending or threatened against the
Company that are required to be described in the Prospectus that are not
described as required; and
(e) To the extent statements in the Prospectus or the Registration
Statement constitute summaries of statutes, governmental rules or regulations,
documents, legal matters, or proceedings, those statements are accurate in all
material respects and fairly present the information required to be shown in
Form S-1 with respect to such statutes, governmental rules or regulations,
documents, legal matters, or proceedings or conclusions of law and the
information purported to be included in such descriptions; provided, however,
that our opinion as to the foregoing matters in this subparagraph (e) are
limited to the Federal laws of the United States and the laws of the State of
Delaware;
(11) No transfer taxes are required to be paid in connection with the
sale and delivery of the Common Shares to the Underwriters hereunder;
(12) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended; and
(13) The Common Shares have been duly authorized for listing on the
Nasdaq National Market.
In addition to the matters set forth above, counsel rendering the
foregoing opinion shall also include a statement to the effect that nothing has
come to the attention of such counsel that leads them to believe that the
Registration Statement (except as to the financial statements and schedules and
other financial and statistical data contained therein, as to which such counsel
need
3.
<PAGE> 31
not express any opinion or belief) at the Effective Date contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, that
the Prospectus (except as to the financial statements and schedules and other
financial and statistical data contained therein, as to which such counsel need
not express any opinion or belief) as of its date or at the Closing Date (or any
later date on which Optional Common Shares are purchased), contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.
<PAGE> 32
EXHIBIT C-2
PATENT COUNSEL OPINION
Such counsel are familiar with the technology used by the Company in
its business and the manner of its use thereof and have read the Registration
Statement and the Prospectus, including particularly the portions of the
Registration Statement and the Prospectus referring to patents, trade secrets,
trademarks, service marks or other proprietary information or materials and:
(i) such counsel have no reason to believe that the Registration
Statement or the Prospectus (A) contains any untrue statement of a
material fact with respect to patents, trade secrets, trademarks,
service marks or other proprietary information or materials owned or
used by the Company, or the manner of its use thereof, or any
allegation on the part of any person that the Company is infringing any
patent rights, trade secrets, trademarks, service marks or other
proprietary information or materials of any such person or (B) omits to
state any material fact relating to patents, trade secrets, trademarks,
service marks or other proprietary information or materials owned or
used by the Company, or the manner of its use thereof, or any
allegation of which such counsel have knowledge, that is required to be
stated in the Registration Statement or the Prospectus or is necessary
to make the statements therein not misleading;
(ii) to the best of such counsel's knowledge and except as set forth in
the Prospectus there are no legal or governmental proceedings pending
relating to patent rights, trade secrets, trademarks, service marks or
other proprietary information or materials of the Company, and to the
best of such counsel's knowledge no such proceedings are threatened or
contemplated by governmental authorities or others;
(iii) such counsel do not know of any contracts or other documents,
relating to governmental regulation affecting the Company or the
Company's patents, trade secrets, trademarks, service marks or other
proprietary information or materials, of a character required to be
filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus that are not
filed or described as required;
(iv) to the best of such counsel's knowledge, the Company is not
infringing or otherwise violating any patents, trade secrets,
trademarks, service marks or other proprietary information or
materials, of others, and to the best of such counsel's knowledge there
are no infringements by others of any of the Company's patents, trade
secrets, trademarks, service marks or other proprietary information or
materials which in the judgment of such counsel could affect materially
the use thereof by the Company; and
(v) to the best of such counsel's knowledge, the Company owns or
possesses sufficient licenses or other rights to use all patents, trade
secrets, trademarks, service marks or other proprietary information or
materials necessary to conduct the business now being or proposed to be
conducted by the Company as described in the Prospectus.
<PAGE> 33
EXHIBIT C-3
REGULATORY COUNSEL OPINION
Such counsel is familiar with the business of the Company and has read
the Registration Statement and the Prospectus, including particularly the
portions of the Registration Statement and the Prospectus referring to the
Federal Drug Administration ("FDA") rules and regulations and the Company's
compliance therewith and;
(i) such counsel has no knowledge that the Registration Statement or
the Prospectus (A) contains any untrue statement of a material fact
with respect to FDA rules and regulations or the Company's compliance
therewith, or (B) omits to state any material fact relating to FDA
rules and regulations or the Company's compliance therewith that is
required to be stated in the Registration Statement or the Prospectus
or is necessary to make the statements therein not misleading;
(ii) to the best of such counsel's knowledge there are no legal or
governmental proceedings proceedings pending related to the Company and
its business, and to the best of such counsel's knowledge no such
proceedings are threatened or contemplated by governmental authorities
or others;
(iii) except as described in the Prospectus, the Company has received
all governmental permits, consents, certificates, approvals and
authorizations necessary in order to conduct its business as described
in the Registration Statement;
(iv) such counsel does not know of any contracts or other documents of
a character required to be described in the Registration Statement or
the Prospectus that are not so described.
<PAGE> 1
EXHIBIT 3.2
[This Restated Certificate of Incorporation will be filed at the
close of the IPO]
RESTATED CERTIFICATE OF INCORPORATION OF
CALYPTE BIOMEDICAL CORPORATION
The following Restated Certificate of Incorporation of Calypte
Biomedical Corporation (i)restates the provisions of the Certificate of
Incorporation of Calypte Biomedical Corporation filed with the Secretary of
State of the State of Delaware on January _, 1996, and (ii) supersedes the
original Certificate of Incorporation and all prior restatements thereof and
amendments thereto in their entirety.
ARTICLE I
The name of the corporation is Calypte Biomedical Corporation (the
"Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The Corporation is authorized to issue two classes of shares of stock
to be designated, respectively, Common Stock, $0.001 par value, and Preferred
Stock $0.001 par value. The total number of shares that the Corporation is
authorized to issue is 25,000,000 shares. The number of shares of Common Stock
authorized is 20,000,000. The number of shares of Preferred authorized is
5,000,000.
The Preferred Stock may be issued from time to time in one or more
series pursuant to a resolution or resolutions providing for such issue duly
adopted by the board of directors (authority to do so being hereby expressly
vested in the board). The board of directors is further authorized to
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued series of Preferred Stock and to fix the
number of shares of any series of Preferred Stock and the designation of any
such series of Preferred Stock. The board of directors, within the limits and
<PAGE> 2
restrictions stated in any resolution or resolutions of the board of directors
originally fixing the number of shares constituting any series, may increase or
decrease (but not below the number of shares in any such series then
outstanding) the number of shares of any series subsequent to the issue of
shares of that series.
The authority of the board of directors with respect to each such
class or series shall include, without limitation of the foregoing, the right
to determine and fix:
(a) the distinctive designation of such class or series
and the number of shares to constitute such class or series;
(b) the rate at which dividends on the shares of such
class or series shall be declared and paid, or set aside for payment, whether
dividends at the rate so determined shall be cumulative or accruing, and
whether the shares of such class or series shall be entitled to any
participating or other dividends in addition to dividends at the rate so
determined, and if so, on what terms;
(c) the right or obligation, if any, of the corporation
to redeem shares of the particular class or series of Preferred Stock and, if
redeemable, the price, terms and manner of such redemption;
(d) the special and relative rights and preferences, if
any, and the amount or amounts per share, which the shares of such class or
series of Preferred Stock shall be entitled to receive upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;
(e) the terms and conditions, if any, upon which shares
of such class or series shall be convertible into, or exchangeable for, shares
of capital stock of any other class or series, including the price or prices or
the rate or rates of conversion or exchange and the terms of adjustment, if
any;
(f) the obligation, if any, of the corporation to retire,
redeem or purchase shares of such class or series pursuant to a sinking fund or
fund of a similar nature or otherwise, and the terms and conditions of such
obligation;
(g) voting rights, if any, on the issuance of additional
shares of such class or series or any shares of any other class or series of
Preferred Stock;
(h) limitations, if any, on the issuance of additional
shares of such class or series or any shares of any other class or series of
Preferred Stock; and
(i) such other preferences, powers, qualifications,
special or relative rights and privileges thereof as the board of directors of
the corporation, acting in accordance with this Restated Certificate of
Incorporation, may deem advisable and are not inconsistent with law and the
provisions of this Restated Certificate of Incorporation.
-2-
<PAGE> 3
ARTICLE V
The Corporation reserves the right to amend, alter, change, or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this right.
ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
1. Limitation of Liability. To the fullest extent permitted by
the General Corporation Law of the State of Delaware as the same exists or as
may hereafter be amended, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.
2. Indemnification. The Corporation may indemnify to the fullest
extent permitted by law any person made or threatened to be made a party to an
action or proceeding, whether criminal, civil, administrative or investigative,
by reason of the fact that such person or his or her testator or intestate is
or was a director, officer or employee of the Corporation, or any predecessor
of the Corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the Corporation or any predecessor to the
Corporation.
3 . Amendments. Neither any amendment nor repeal of this Article VII,
nor the adoption of any provision of the Corporation's Certificate of
Incorporation inconsistent with this Article VII, shall eliminate or reduce the
effect of this Article VII, in respect of any matter occurring, or any action
or proceeding accruing or arising or that, but for this Article VII, would
accrue or arise, prior to such amendment, repeal, or adoption of an
inconsistent provision.
ARTICLE VIII
In the event any shares of Preferred Stock shall be redeemed or
converted pursuant to the terms hereof, the shares so converted or redeemed
shall not revert to the status of authorized but unissued shares, but instead
shall be canceled and shall not be re-issuable by the Corporation.
-3-
<PAGE> 4
ARTICLE IX
Holders of stock of any class or series of this corporation shall not
be entitled to cumulate their votes for the election of directors or any other
matter submitted to a vote of the stockholders, unless such cumulative voting
is required pursuant to Sections 2115 and/or 301.5 of the California
Corporations Code, in which event each such holder shall be entitled to as many
votes as shall equal the number of votes which (except for this provision as to
cumulative voting) such holder would be entitled to cast for the election of
directors with respect to his shares of stock multiplied by the number of
directors to be elected by him, and the holder may cast all of such votes for a
single director or may distribute them among the number of directors to be
voted for, or for any two or more of them as such holder may see fit, so long
as the name of the candidate for director shall have been placed in nomination
prior to the voting and the stockholder, or any other holder of the same class
or series of stock, has given notice at the meeting prior to the voting of the
intention to cumulate votes.
ARTICLE X
1. Number of Directors. The number of directors which
constitutes the whole Board of Directors of the corporation shall be designated
in the Bylaws of the corporation.
2. Election of Directors. Elections of directors need not be by
written ballot unless the Bylaws of the corporation shall so provide.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend
or repeal the Bylaws of the corporation.
ARTICLE XII
Immediately upon the closing of a public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering any of the corporation's securities (as that term is defined under the
Securities Act of 1933, as then in effect), no action shall be taken by the
stockholders of the corporation except at an annual or special meeting of the
stockholders called in accordance with the Bylaws of the corporation and no
action shall be taken by the stockholders by written consent.
ARTICLE XIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
-4-
<PAGE> 5
This Restated Certificate of Incorporation has been duly adopted by
the board of directors of the Corporation in accordance with the provisions of
Sections 242 and 245 of the General Corporation Law of the State of Delaware,
as amended.
The Restated Certificate of Incorporation only restates and integrates
and does not further amend the provisions of the Corporation's Certificate of
Incorporation and there is no discrepancy between those provisions and the
provisions of this Restated Certificate of Incorporation.
IN WITNESS WHEREOF, Calypte Biomedical Corporation has caused this
certificate to be signed by John P. Davis, its President and Chief Executive
Officer, this _____ day of _________________, 1996.
___________________________________________________
John P. Davis, President and Chief Executive Officer
-5-
<PAGE> 1
EXHIBIT 5.1
[WILSON SONSINI GOODRICH & ROSATI LETTERHEAD]
Calypte Biomedical Corporation
1440 Fourth Street
Berkeley, CA 94710
RE: REGISTRATION STATEMENT ON FORM S-1
(COMMISSION FILE NO. 333-4105)
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 to be filed with
the Securities and Exchange Commission (the "Registration Statement"), in
connection with the registration under the Securities Act of 1993, as amended,
of 2,875,000 shares (including an over-allotment option granted by the Company
to the underwriters to purchase 375,000 shares) of your Common Stock (the
"Shares"), all of which are authorized. The Shares are to be sold to the
underwriters for resale to the public as described in the Registration Statement
and pursuant to the Underwriting Agreement being filed as an exhibit thereto.
As your counsel, we have examined the proceedings proposed to be taken in
connection with the sale and issuance of the Shares.
It is our opinion that, upon completion of the proceedings being taken
or contemplated by us, as your counsel, to be taken prior to the issuance of
the Shares, and upon completion of the proceedings being taken in order to
permit such transactions to be carried out in accordance with the securities
laws of the various states, where required, the Shares, when issued and sold in
the manner referred to in the Registration Statement, will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendment thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati
<PAGE> 1
EXHIBIT 10.11
CALYPTE BIOMEDICAL
MEMORANDUM
Date: April 22, 1996
To: Jack Davis
From: Bill Boeger
Copy: John DiPietro
Subject: Relocation Assistance
- -------------------------------------------------------------------------------
I want to summarize the decision of the Calypte Board of Directors at its
February 13th meeting with regard to assistance in your relocation from
Connecticut to California. Based upon the decision of the Board, Section 5 of
your Employment Agreement dated April 10, 1995 would be eliminated in its
entirety and replaced with the following:
Section 5. Moving Expenses. Executive shall be reimbursed for actual
out-of-pocket moving expenses in connection with the relocation of the
Executive and his family. Such expenses shall include all costs associated
with the sale of the Executive's house in Connecticut, including real
estate commissions, closing costs and legal fees, as well as the costs
associated with the purchase of a new residence in California such as
mortgage points, loan fees, legal fees and inspection fees; provided,
however, that the total of such moving expenses paid by the Company shall
not exceed $150,000 prior to "grossing up" for taxes. In addition,
Executive shall be reimbursed for reasonable costs of moving personal
property from Connecticut to California.
Please give me a call if you have any questions.
<PAGE> 1
EXHIBIT 10.13
[CALYPTE BIOMEDICAL CORPORATION LETTERHEAD]
September 26, 1995
Mr. John J. DePietro
6458 Oberlin Way
San Jose, CA 95123
Dear John:
As I mentioned today, everyone here was very impressed with you, and we are
quite proud to offer you the position of Chief Financial Officer for Calypte
Biomedical Corporation. This letter will summarize the details of that offer.
Your position will be Chief Financial Officer and Vice President - Finances
reporting to me in my capacity as President and CEO. Your starting salary will
be $125,000 per year, and I intend to recommend to the Board a management
incentive plan for Calypte for 1996 which will provide (if approved) bonus and
cash compensation for all employees. The levels, and details, are yet to be
determined. I implemented a similar plan at my last company, and people at
your level could earn up to approximately 30% of their salary in bonus if they
met their individual and company goals.
Pending Board approval at our meeting tomorrow, you will be offered incentive
stock options on 35,000 shares of Calypte stock, and it is our intention to
make the option price of these shares $1.00 per share. This will be a 10-year
option with a 5-year vesting schedule. The terms of your option grant will
indicate that - in the event of a change in control of the company, the options
will vest immediately.
You will be extended an Employment Severance Agreement which will provide for
the payment of one year's salary in the event your employment is involuntarily
terminated for reasons other than cause at any time during the first 12 months
of your employment. Thereafter, your severance agreement will call for
severance payment of six months of salary in the event your employment is
terminated for reasons other than cause.
John, we are very excited about you joining our company, particularly, at this
pivotal stage of our growth and development as an organization. You can play a
crucial role in our IPO and we would expect to have you participate in our
roadshow.
In addition, you will have a corporate apartment (furnished) with all
utilities, etc., paid for by Calypte, the expenses for which shall be increased
sufficiently to reimburse you for the taxes owed on such expenses.
<PAGE> 2
Sincerely,
/s/ Jack Davis
Jack Davis
President
JD/dm
cc: Roxanne Barry
Bill Boeger
ACCEPTED AND AGREED TO this 6 th day of October, 1995.
--- -------
/s/ John J. DiPietro
- ---------------------------------
John J. DiPietro
<PAGE> 1
EXHIBIT 10.31
________________________________________________________________________________
CALYPTE BIOMEDICAL CORPORATION
LOAN AND BRIDGE SECURITY AGREEMENT
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. LOAN AND TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Bridge Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Interest Rates, Payments, and Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Crediting Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. CONDITIONS OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Conditions Precedent to Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4. CREATION OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Delivery of Additional Documentation Required . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Right to Inspect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Due Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Due Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.3 No Prior Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4 Bona Fide Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.5 Merchantable Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.6 Name; Location of Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.8 No Material Adverse Change in Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 10
5.9 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.10 Regulatory Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.11 Environmental Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.13 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.14 Government Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.16 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.2 Government Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 Financial Statements, Reports, Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Inventory; Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.7 Principal Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.8 Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1 Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.2 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.3 Mergers or Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.4 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.6 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.7 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.8 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.9 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.10 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.11 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.1 Payment Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.2 Covenant Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.3 Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.4 Attachment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.5 Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.6 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.7 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.8 Misrepresentations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9. BANK'S RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.1 Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.2 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.3 Accounts Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.4 Bank Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.5 Bank's Liability for Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.6 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.7 Demand; Protest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
12.3 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
12.4 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
12.5 Amendments in Writing, Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
12.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
12.7 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
12.8 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
ii
<PAGE> 4
This LOAN AND SECURITY AGREEMENT is entered into as of December
8,1995, by and between SILICON VALLEY BANK ("Bank") and CALYPTE BIOMEDICAL
CORPORATION ("Borrower").
RECITALS
Borrower wishes to obtain credit from Bank, and Bank desires to extend
credit to Borrower. This Agreement sets forth the terms on which Bank will
advance credit to Borrower, and Borrower will repay the amounts owing to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. As used in this Agreement, the
following terms shall have the following definitions:
"Accounts" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower and Borrower's Books relating to any of
the foregoing.
"Advance" means a cash advance under the Bridge Facility.
"Affiliate" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls
or is controlled by or is under common control with such Person, and each of
such Person's senior executive officers, directors, and partners.
"Bank Expenses" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, administration, and enforcement of the Loan
Documents; and Bank's reasonable attorneys' fees and expenses incurred in
amending, enforcing or defending the Loan Documents, whether or not suit is
brought.
"Borrower's Books" means all of Borrower's books and records
including: ledgers; records concerning Borrower's assets or liabilities, the
Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information.
"Bridge Facility" means the facility under which Borrower may
request Bank to issue a cash advance, as specified in Section 2.1 hereof.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which banks in the State of California are authorized or
required to close.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code.
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<PAGE> 5
"Collateral" means the property described on Exhibit A
attached hereto.
"Committed Line" means Two Million Dollars ($2,000,000).
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or
other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices;
provided, however, that the term "Contingent Obligation" shall not include
endorsements for collection or deposit in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determined amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by
such Person in good faith; provided, however, that such amount shall not in any
event exceed the maximum amount of the obligations under the guarantee or other
support arrangement.
"Daily Balance" means the amount of the Obligations owed at
the end of a given day.
"Equipment" means all present and future machinery, equipment,
tenant improvements, furniture, fixtures, vehicles, tools, parts and
attachments in which Borrower has any interest.
"Equity Event" means the sale of Borrower's equity securities
pursuant to a registration statement filed under the Securities Act of 1933, as
amended.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Indebtedness" means (a) all indebtedness for borrowed money
or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"Insolvency Proceeding" means any proceeding commenced by or
against any person or entity under any provision of the United States
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.
"Inventory" means all present and future inventory in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its
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<PAGE> 6
custody or possession or in transit and including any returns upon any accounts
or other proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the foregoing and any documents of title representing any
of the above, and Borrower's Books relating to any of the foregoing.
"Investment" means any beneficial ownership of (including
stock, partnership interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
" Lien" means any mortgage, lien, deed of trust, security
interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any note
or notes executed by Borrower, and any other agreement entered into between
Borrower and Bank in connection with this Agreement, all as amended or extended
from time to time.
"Material Adverse Effect" means a material adverse effect on
(i) the business operations or condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay
the Obligations, or (iii) the Collateral or the priority of Bank's lien on the
Collateral, taken as a whole.
"Maturity Date" means March 5, 1996.
"Negotiable Collateral" means all of Borrower's present and
future letters of credit of which it is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper, and Borrower's
Books relating to any of the foregoing.
"Obligations" means all debt, principal, interest, Bank
Expenses and other amounts owed to the Bank by Borrower pursuant to this
Agreement or any other agreement, whether absolute or contingent, due or to
become due, now existing or hereafter arising, including any interest that
accrues after the commencement of an Insolvency Proceeding and including any
debt, liability, or obligation owing from Borrower to others that Bank may have
obtained by assignment or otherwise.
"Periodic Payments" means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay
to Bank pursuant to the terms and provisions of any instrument, or agreement
now or hereafter in existence between Borrower and Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Bank arising
under this Agreement or any other Loan Document;
(b) Existing Indebtedness disclosed on the Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors and with respect to
surety bonds and similar obligations incurred in the ordinary course of
business;
(e) Indebtedness of any Subsidiary to Borrower and
Contingent Obligations of any Subsidiary with respect to obligations of
Borrower (provided that the primary obligations are not prohibited hereby);
provided that the incurrence of such Indebtedness or
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<PAGE> 7
Contingent Obligations, as the case may be, does not result in a violation of
Section 7.7 as a consequence of the provisos set forth in paragraph (d) of the
definition of "Permitted Investments";
(f) Indebtedness of Borrower to any Subsidiary and
Contingent Obligations of Borrower with respect to obligations of any
Subsidiary (provided that the primary obligations are not prohibited hereby),
and Indebtedness of any Subsidiary to any other Subsidiary and Contingent
Obligations of any Subsidiary with respect to obligations of any other
Subsidiary (provided that the primary obligations are not prohibited hereby);
(g) Indebtedness secured by Permitted Liens;
(h) Other Indebtedness not otherwise permitted by Section
7.4 not exceeding Fifty Thousand Dollars ($50,000) in the aggregate outstanding
at any time;
(i) Indebtedness by Borrower and its Subsidiaries
consisting of guarantees (and other credit support) of the obligations of
vendors and suppliers of Borrower or its Subsidiaries in respect of
transactions entered into in the ordinary course of business provided that such
guarantees (and other credit support) shall not at any time exceed Twenty-Five
Thousand Dollars ($25,000);
(j) Additional capital leases or indebtedness incurred
solely to purchase equipment which is secured in accordance with clause (c) of
"Permitted Liens" below and is not in excess of the lesser of the purchase
price of such equipment or the fair market value of such equipment on the date
of acquisition, provided that the outstanding principal amount of such
Indebtedness shall not exceed One Hundred Thousand Dollars ($100,000); and
(k) Extensions, refinancing, modifications, amendments
and restatements of any of items of Permitted Indebtedness (a) through (i)
above, provided that the principal amount thereof is not increased or the terms
thereof are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in
the Schedule;
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one (1) year from the date
of creation thereof and currently having the highest rating obtainable from
either Standard & Poor's Corporation or Moody's Investors Service, Inc., and
(iii) certificates of deposit maturing no more than one (1) year from the date
of investment therein issued by Bank;
(c) Investments consisting of the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business;
(d) Investments (whether consisting of the purchase of
securities, loans, capital contributions, or otherwise) of Subsidiaries in or
to other Subsidiaries or in Borrower;
(e) Investments consisting of receivables owing to
Borrower or its Subsidiaries by Persons and advances to customers or suppliers,
in each case, if created, acquired or made in the ordinary course of business;
provided that this paragraph (f) shall not apply to Investments owing by
Subsidiaries to Borrower;
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<PAGE> 8
(f) Investments consisting of (i) compensation of
employees, officers and directors of Borrower or its Subsidiaries so long as
the Board of Directors of Borrower determines that such compensation is in the
best interests of Borrower, (ii) travel advances, employee relocation loans and
other employee loans and advances in the ordinary course of business; (iii)
loans to employees, officers or directors relating to the purchase of equity
securities of Borrower or its Subsidiaries, (iv) other loans to officers and
employees approved by the Board of Directors in an aggregate amount not in
excess of Fifty Thousand Dollars ($50,000) outstanding at any time;
(g) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers, arising in the ordinary course of business;
(h) Investments pursuant to or arising under currency
agreements or interest rate agreements;
(i) Investments consisting of notes receivable of, or
prepaid royalties and other credit extensions to, customers and suppliers who
are not Affiliates in the ordinary course of business; provided that this
paragraph (i) shall not apply to Investments by Borrower in any Subsidiary;
(j) Investments constituting acquisitions permitted under
Section 7.3;
(k) Investments consisting of deposit accounts of
Borrower in which Bank has a Lien prior to any other Lien;
(l) Investments consisting of deposit accounts of any
Subsidiaries maintained in the ordinary course of business;
(m) Investments accepted in connection with Transfers
permitted by Section 7.1; and
(n) Other Investments aggregating not in excess of
Twenty-Five Thousand Dollars ($25,000) at any time.
"Permitted Liens" means the following:
(a) Any Liens existing as of the date hereof and
disclosed in the Schedule or arising under this Agreement or the other Loan
Documents;
(b) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in
good faith by appropriate proceedings, provided the same have no priority over
any of Bank's security interests;
(C) Liens (i) upon or in any equipment acquired or held
by Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time
of its acquisition, provided that the Lien is confined solely to the property
so acquired and improvements thereon, and the proceeds of such equipment;
(d) Leases or subleases and license and sublicenses
granted to others in the ordinary course of Borrower's or its Subsidiaries'
business not interfering in any material respect with the business of Borrower
and its Subsidiaries taken as a whole, and any interest or title of a lessor,
licensor or under any lease or license;
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<PAGE> 9
(e) Liens on assets (including the proceeds thereof and
accessions thereto) that existed at the time such assets were acquired by
Borrower or any Subsidiary (including Liens on assets of any corporation that
existed at the time it became or becomes a Subsidiary);
(f) Liens on Equipment leased by Borrower or any
Subsidiary pursuant to an operating lease in the ordinary course of business
(including proceeds thereof and accessions thereto) incurred solely for the
purpose of financing the lease of such Equipment;
(g) Liens arising from judgments, decrees or attachments
in circumstances not constituting an Event of Default under Section 8.7;
(h) Easements, reservations, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances affecting real property not interfering in any material respect
with the ordinary conduct of the business of Borrower and its Subsidiaries,
taken as a whole;
(i) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(j) Liens which constitute rights of set-off of a
customary nature or bankers' Liens with respect to amounts on deposit, whether
arising by operation of law or by contract, in connection with arrangements
entered into with banks in the ordinary course of business; provided that with
respect to Liens on amounts on deposit owned by Borrower, such Liens shall not
be prior to the Lien of Bank;
(k) Liens on insurance proceeds in favor of insurance
companies granted solely as security for financed premiums;
(l) Earn-out and royalty obligations existing on the date
hereof or entered into in connection with an acquisition permitted by Section
7.3; and
(m) Liens incurred in connection with the extension,
renewal or refinancing of the indebtedness secured by Liens of the type
described in clauses (a) through (c) above, provided that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit
corporation, firm, joint stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum,
most recently announced by Bank, as its "prime rate," whether or not such
announced rate is the lowest rate available from Bank.
" Responsible Officer" means each of the Chief Executive
Officer, the Chief Financial Officer and the Controller of Borrower.
"Schedule" means the schedule of exceptions attached hereto,
if any.
"Subordinated Debt" means any debt incurred by Borrower that
is subordinated to the debt owing by Borrower to Bank on terms acceptable to
Bank (and identified as being such by Borrower and Bank).
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<PAGE> 10
"Subsidiary" means any corporation or partnership in which (i)
any general partnership interest or (ii) more than 50% of the stock of which by
the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity shall, at the time as of which any
determination is being made, is owned by Borrower, either directly or through
an Affiliate.
1.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP and all
calculations made hereunder shall be made in accordance with GAAP. When used
herein, the terms "financial statements" shall include the notes and schedules
thereto.
2. LOAN AND TERMS OF PAYMENT
2.1 Bridge Facility. Subject to and upon the terms and
conditions of this Agreement, Bank agrees to make one (1) Advance to Borrower
in an aggregate amount not to exceed the Committed Line. Bank will credit the
amount of the Advance to Borrower's deposit account. The Bridge Facility shall
terminate on the Maturity Date, at which time the entire principal amount of
the Advance, all accrued interest, and other amounts due under this Agreement
shall be immediately due and payable.
2.2 Interest Rates, Payments, and Calculations.
(a) Interest Rate. Except as set forth in
Section 2.2(b), the Advance shall bear interest, on the average Daily Balance,
at a rate equal to three and one half (3.5) percentage points above the Prime
Rate.
(b) Default Rate. All Obligations shall bear
interest, from and after the occurrence of an Event of Default, at a rate equal
to five (5) percentage points above the interest rate applicable immediately
prior to the occurrence of the Event of Default.
(c) Payments. Interest hereunder shall be due
and payable on the fifth calendar day of each month during the term hereof.
Bank shall, at its option, charge such interest, all Bank Expenses, and all
Periodic Payments against any of Borrower's deposit accounts or against the
Committed Line, in which case those amounts shall thereafter accrue interest at
the rate then applicable hereunder. Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.
(d) Computation. In the event the Prime Rate is
changed from time to time hereafter, the applicable rate of interest hereunder
shall be increased or decreased effective as of 12:01 a.m. on the day the Prime
Rate is changed, by an amount equal to such change in the Prime Rate. All
interest chargeable under the Loan Documents shall be computed on the basis of
a three hundred sixty (360) day year for the actual number of days elapsed.
2.3 Crediting Payments. Prior to the occurrence of an
Event of Default, Bank shall credit a wire transfer of funds, check or other
item of payment to such deposit account or Obligation as Borrower specifies.
After the occurrence of an Event of Default, the receipt by Bank of any wire
transfer of funds, check, or other item of payment shall be immediately applied
to conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any
payment (other than a wire transfer of immediately available funds) received by
Bank after 12:00 noon California time shall be deemed to have been received by
Bank as of the opening of business on the immediately following Business Day.
Whenever any payment to Bank under the Loan Documents would otherwise be due
(except by reason of acceleration) on a date that is not a Business Day, such
7
<PAGE> 11
payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of
such extension.
2.4 Fees. Borrower shall pay to Bank the following:
(a) Facility Fee. A Facility Fee equal to Twenty
Thousand Dollars ($20,000), half of which has been paid and half of which shall
be paid on the date hereof. The entire Facility Fee shall be fully earned and
nonrefundable on the date hereof. An additional fee of Twenty Thousand Dollars
($20,000) shall be due on the Business Day following the Maturity Date, if all
Obligations have not been satisfied in full by the Maturity Date.
(b) Bank Expenses. Upon the date hereof, all
Bank Expenses incurred through the date hereof, including reasonable attorneys'
fees and expenses (not to exceed Four Thousand Dollars ($4,000)), and after the
date hereof, all Bank Expenses upon receipt of an invoice therefor;
2.5 Additional Costs. In case any law, regulation, treaty
or official directive or the interpretation or application thereof by any court
or any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
(a) subjects Bank to any tax with respect to
payments of principal or interest or any other amounts payable hereunder by
Borrower or otherwise with respect to the transactions contemplated hereby
(except for taxes on the overall net income of Bank imposed by the United States
of America or any political subdivision thereof);
(b) imposes, modifies or deems applicable any
deposit insurance, reserve, special deposit or similar requirement against
assets held by, or deposits in or for the account of, or loans by, Bank; or
(c) imposes upon Bank any other condition with
respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
any loans, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank
the amount of such increase in cost, reduction in income or additional expense
as and when such cost, reduction or expense is incurred or determined, upon
presentation by Bank of a statement of the amount and setting forth Bank's
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error; provided, however, that the Borrower
shall not be liable for any such amount attributable to any period prior to 180
day prior to the date of such certificate.
2.6 Term. Subject to Section 12.7, this Agreement shall
become effective upon the date hereof and shall continue in full force and
effect for a term ending on the Maturity Date. Notwithstanding termination,
Bank's Lien on the Collateral shall remain in effect for so long as any
Obligations (excluding Obligations under Sections 2.5 and 12.2 to the extent
they remain inchoate at the time outstanding payment Obligations are paid in
full) are outstanding.
3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Advance. The
obligation of Bank to make the Advance is subject to the condition precedent
that:
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(a) after due diligence inquiry conducted by Bank
at Borrower's expense, and upon completion of audits conducted by Bank at
Borrower's expense, there shall have been no discovery of any facts that in
Bank's sole discretion would have a Material Adverse Effect; and
(b) Bank shall have received, in form and
substance satisfactory to Bank, the following:
(i) this Agreement;
(ii) a certificate of the Secretary of
Borrower with respect to incumbency and resolutions authorizing the execution
and delivery of this Agreement;
(iii) insurance certificate;
(iv) financing statement (Form UCC-1);
(v) payment of the fees and Bank Expenses
then due specified in Section 2.5 hereof; and
(vi) such other documents, and completion
of such other matters, as Bank may reasonably deem necessary or appropriate.
4. CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Borrower grants to Bank
a continuing security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date hereof,
in each case, to the extent that a security interest in such Collateral can be
perfected by the filing of a financing statement, in the case of Collateral
consisting of instruments, documents, chattel paper or certificated securities,
to the extent that Bank takes possession of such Collateral.
4.2 Delivery of Additional Documentation Required.
Borrower shall from time to time execute and deliver to Bank, at the request of
Bank, all Negotiable Collateral, all financing statements and other documents
that Bank may reasonably request, in form satisfactory to Bank, to perfect and
continue perfected Bank's security interests in the Collateral and in order to
fully consummate all of the transactions contemplated under the Loan Documents.
4.3 Right to Inspect. Bank (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's usual business hours, to inspect Borrower's
Books and to make copies thereof and to check, test, and appraise the
Collateral in order to verify Borrower's financial condition or the amount,
condition of, or any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower and
each Subsidiary is a corporation duly existing and in good standing under the
laws of its state of incorporation and qualified and licensed to do business
in, and is in good standing in, any state in which the conduct of
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its business or its ownership of property requires that it be so qualified
except for states as to which any failure so to qualify would not have a
Material Adverse Effect.
5.2 Due Authorization; No Conflict. The execution,
delivery, and performance of the Loan Documents are within Borrower's powers,
have been duly authorized, and are not in conflict with nor constitute a breach
of any provision contained in Borrower's Certificate of Incorporation or
Bylaws, nor will they constitute an event of default under any material
agreement to which Borrower is a party or by which Borrower is bound. Borrower
is not in default under any agreement to which it is a party or by which it is
bound, which default would reasonably be expected to have a Material Adverse
Effect.
5.3 No Prior Encumbrances. Borrower has good and
indefeasible title to the Collateral, free and clear of Liens, except for
Permitted Liens.
5.4 Bona Fide Accounts. The Accounts are bona fide
existing obligations. The property giving rise to such Accounts has been
delivered to the account debtor or to the account debtor's agent for immediate
shipment to and unconditional acceptance by the account debtor.
5.5 Merchantable Inventory. All Inventory is in all
material respects of good and marketable quality, free from all material
defects.
5.6 Name; Location of Chief Executive Office. Except as
disclosed in the Schedule, Borrower has not done business under any name other
than that specified on the signature page hereof. The chief executive office
of Borrower is located at the address indicated in Section 10 hereof.
5.7 Litigation. Except as set forth in the Schedule,
there are no actions or proceedings pending (or, to Borrower's knowledge,
threatened) by or against Borrower or any Subsidiary before any court or
administrative agency in which a likely adverse decision would reasonably be
expected to have a Material Adverse Effect or a material adverse effect on
Borrower's interest or Bank's security interest in the Collateral.
5.8 No Material Adverse Change in Financial Statements.
All consolidated financial statements related to Borrower and any Subsidiary
that have been delivered by Borrower to Bank fairly present in all material
respects Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrower since the date of the most recent of such financial statements
submitted to Bank.
5.9 Solvency. Borrower is solvent and able to pay its
debts (including trade debts) as they mature.
5.10 Regulatory Compliance. Borrower and each Subsidiary
has met the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. No event has occurred resulting from
Borrower's failure to comply with ERISA that is reasonably likely to result in
Borrower's incurring any liability that would reasonably be expected to have a
Material Adverse Effect. Borrower is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940. Borrower is not engaged principally, or as one of the
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations G, T and
U of the Board of Governors of the Federal Reserve System). Borrower has
complied with all the provisions of the Federal Fair Labor Standards Act.
Borrower has not violated any statutes, laws, ordinances or rules applicable to
it, violation of which could have a Material Adverse Effect.
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5.11 Environmental Condition. None of Borrower's or any
Subsidiary's properties or assets has ever been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or hazardous substance other than in accordance
with applicable law; to the best of Borrower's knowledge, none of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous
waste or hazardous substances into the environment.
5.12 Taxes. Borrower and each Subsidiary has filed or
caused to be filed all material tax returns required to be filed, and has paid,
or has made adequate provision for the payment of, all taxes reflected therein.
5.13 Subsidiaries. Borrower does not own any stock,
partnership interest or other equity securities of any Person, except for
Permitted Investments.
5.14 Government Consents. Borrower and each Subsidiary
has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all governmental
authorities that are necessary for the continued operation of Borrower's
business as currently conducted except where the failure to obtain any such
consent, approval or authorization, to make any such declaration or filing or
to given any such notice would not reasonably be expected to have Material
Adverse Effect.
5.15 Intellectual Property. To Borrower's knowledge,
Borrower possesses and owns, free of any material infringement or other
material claims by third parties, all trademarks, trade names, copyrights,
patent rights, patents, licenses that are used in the conduct of its business
as now operated. To Borrower's knowledge, there is no material infringement by
others of any trademark, trade name, trade secret, service mark, patent,
copyright, license or other intellectual property right of Borrower.
5.16 Full Disclosure. No representation, warranty or
other statement made by Borrower in any certificate or written statement
furnished to Bank by Borrower in connection with the transactions contemplated
by this Agreement, taken as a whole, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements contained in such certificates or statements not misleading (it
being recognized by Bank that the projections and forecasts provided by
Borrower are not be viewed as facts and that actual results during the period
or periods covered by any such projections and forecasts may differ from the
projected or forecasted results).
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of
all outstanding Obligations, and for so long as Bank may have any commitment to
make an Advance hereunder, Borrower shall do all of the following:
6.1 Good Standing. Borrower shall maintain or cause to
be maintained its and each of its Subsidiaries' corporate existence and good
standing in its jurisdiction of incorporation and maintain qualification in
each jurisdiction in which the failure to so qualify would reasonably be
expected to have a Material Adverse Effect. Borrower shall maintain, and shall
cause each of its
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Subsidiaries to maintain, in force all licenses, approvals and agreements, the
loss of which would reasonably be expected to have a Material Adverse Effect.
6.2 Government Compliance. Borrower shall meet, and
shall cause each Subsidiary to meet, the minimum funding requirements of ERISA
with respect to any employee benefit plans subject to ERISA. Borrower shall
comply, and shall cause each Subsidiary to comply, with all statutes, laws,
ordinances and government rules and regulations to which it is subject,
noncompliance with which could have a Material Adverse Effect or a material
adverse effect on the Collateral or the priority of Bank's Lien on the
Collateral.
6.3 Financial Statements, Reports, Certificates.
Borrower shall deliver to Bank: (a) as soon as available, but in any event
within thirty (30) days after the end of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's
consolidated operations during such period, certified by a Responsible Officer;
(b) as soon as available, but in any event within ninety (90) days after the
end of Borrower's fiscal year, audited consolidated financial statements of
Borrower prepared in accordance with GAAP, consistently applied, together with
an unqualified opinion on such financial statements of an independent certified
public accounting firm reasonably acceptable to Bank; (c) within five (5) days
upon becoming available, copies of all statements, reports and notices sent or
made available generally by Borrower to its security holders or to any holders
of Subordinated Debt and, to the extent applicable, all reports on Form 8-K,
10-K and 10-Q (without exhibits) filed with the Securities and Exchange
Commission; (d) promptly upon receipt of notice thereof, a report of any legal
actions pending or threatened against Borrower or any Subsidiary that would
reasonably be expected to result in damages or costs to Borrower or any
Subsidiary of One Hundred Thousand Dollars ($100,000) or more; and (e) such
budgets, sales projections, operating plans or other financial information as
Bank may reasonably request from time to time.
Borrower shall deliver to Bank with the monthly financial statements a
Compliance Certificate signed by a Responsible Officer in substantially the
form of Exhibit B hereto.
6.4 Inventory; Returns. Borrower shall keep all
Inventory in good and marketable condition, free from all material defects.
Returns and allowances, if any, as between Borrower and its account debtors
shall be on the same basis and in accordance with the usual customary practices
of Borrower, as they exist at the time of the execution and delivery of this
Agreement. Borrower shall promptly notify Bank of all returns and recoveries
and of all disputes and claims, where the return, recovery, dispute or claim
involves more than Fifty Thousand Dollars ($50,000).
6.5 Taxes. Borrower shall make, and shall cause each
Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law,
and will execute and deliver to Bank, on demand, appropriate certificates
attesting to the payment or deposit thereof; and Borrower will make, and will
cause each Subsidiary to make, timely payment or deposit of all material tax
payments and withholding taxes required of it by applicable laws, including,
but not limited to, those laws concerning F.I.C.A., F.U.T.A., state disability,
and local, state, and federal income taxes, and will, upon request, furnish
Bank with proof satisfactory to Bank indicating that Borrower or a Subsidiary
has made such payments or deposits; provided that Borrower or a Subsidiary need
not make any payment if the amount or validity of such payment is contested in
good faith by appropriate proceedings and is reserved against (to the extent
required by GAAP) by Borrower.
6.6 Insurance.
(a) Borrower, at its expense, shall keep the
Collateral insured against loss or damage by fire, theft, explosion,
sprinklers, and all other hazards and risks, and in such amounts, as ordinarily
insured against by other owners in similar businesses conducted in the
locations where
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Borrower's business is conducted on the date hereof. Borrower shall also
maintain insurance relating to Borrower's ownership and use of the Collateral
in amounts and of a type that are customary to businesses similar to
Borrower's.
(b) All such policies of insurance shall be in
such form, with such companies, and in such amounts as reasonably satisfactory
to Bank. All such policies of property insurance shall contain a lender's loss
payable endorsement, in a form satisfactory to Bank, showing Bank as an
additional loss payee thereof and all liability insurance policies shall show
the Bank as an additional insured, and shall specify that the insurer must give
at least twenty (20) days notice to Bank before canceling its policy for any
reason. Upon Bank's request, Borrower shall deliver to Bank certified copies
of such policies of insurance and evidence of the payments of all premiums
therefor. So long as no Event of Default has occurred and is continuing,
Borrower shall have the option of applying the proceeds of any casualty policy
to the replacement or repair of destroyed or damaged property; provided, that
after the occurrence and during the continuance of an Event of Default, all
proceeds payable under any such casualty policy shall, at the option of Bank,
be payable to Bank for application to the Obligations.
6.7 Principal Depository. Borrower shall maintain its
principal depository and operating accounts with Bank.
6.8 Cash and Cash Equivalents. Beginning November 30,
1995, Borrower shall maintain as of the last day of each month during the term
of this Agreement a balance of cash and cash equivalents of not less than Seven
Hundred Thousand Dollars ($700,000).
6.9 Further Assurances. At any time and from time to
time Borrower shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Bank to effect the purposes of
this Agreement.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, without the prior written
consent of Bank, which Bank may grant or withhold in its sole discretion, so
long as any credit hereunder shall be available and until payment in full of
the outstanding Obligations or for so long as Bank may have any commitment to
make any Advances, Borrower will not do any of the following:
7.1 Dispositions. Convey, sell, lease, transfer or
otherwise dispose of (collectively, a "Transfer"), or permit any of its
Subsidiaries to Transfer, all or any part of its business or property, other
than: (i) Transfers of Inventory in the ordinary course of business; (ii)
Transfers of non-exclusive licenses and similar arrangements for the use of the
property of Borrower or its Subsidiaries; or (iii) Transfers of worn-out or
obsolete Equipment and (iv) Transfers which constitute liquidation of
Investments permitted under Section 7.7.
7.2 Change in Business. Engage in any business, or
permit any of its Subsidiaries to engage in any business, other than the
businesses currently engaged in by Borrower and any business substantially
similar or related thereto (or incidental thereto), or suffer a material change
in Borrower's ownership, other than the sale by Borrower of equity securities
of Borrower. Borrower will not, without thirty (30) days prior written
notification to Bank, relocate its chief executive office.
7.3 Mergers or Acquisitions. Merge or consolidate, or
permit any of its Subsidiaries to merge or consolidate, with or into any other
business organization, or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another
Person; provided, however, that this Section 7.3 shall not apply to
transactions among Borrower and its Subsidiaries in which Borrower is the
surviving entity or among its Subsidiaries, provided no Event of Default exists
before or immediately after giving effect to such transactions.
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7.4 Indebtedness. Create, incur, assume or be or remain
liable with respect to any Indebtedness, or permit any Subsidiary so to do,
other than Permitted Indebtedness.
7.5 Encumbrances. Create, incur, assume or suffer to
exist any Lien with respect to any of its property (including, without
limitation, intellectual property), or assign or otherwise convey any right to
receive income, including the sale of any Accounts, or permit any of its
Subsidiaries so to do, except for Permitted Liens.
7.6 Distributions. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock except for repurchases of stock from former employees of
Borrower in accordance with the terms of repurchase or similar agreements
between Borrower and such employees in an aggregate amount in any fiscal year
not to exceed Fifty Thousand Dollars ($50,000).
7.7 Investments. Directly or indirectly acquire or own,
or make any Investment in or to any Person, or permit any of its Subsidiaries
so to do, other than Permitted Investments.
7.8 Transactions with Affiliates. Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
Borrower except (i) for transactions that are in the ordinary course of
Borrower's business, upon fair and reasonable terms that are no less favorable
to Borrower than would be obtained in an arm's length transaction with a
nonaffiliated Person, (ii) transactions with a Subsidiary that are upon fair
and reasonable terms and transactions constituting Permitted Investments, and
(iii) transactions with Affiliates who in addition to being Affiliates are also
customers of the Borrower and who receive, as customers, terms more favorable
than the general public.
7.9 Subordinated Debt. Make any payment in respect of
any Subordinated Debt, or permit any of its Subsidiaries to make any such
payment, except in compliance with the terms of such Subordinated Debt, or
amend any provision contained in any documentation relating to the Subordinated
Debt without Bank's prior written consent.
7.10 Inventory. Store the Inventory with a bailee,
warehouseman, or similar party unless Bank has received a pledge of the
warehouse receipt covering such Inventory. Except for Inventory sold in the
ordinary course of business and except for such other locations as Bank may
approve in writing, Borrower shall keep the Inventory only at the location set
forth in Section 10 hereof or in the Schedule and such other locations of which
Borrower gives Bank prior written notice and as to which Borrower signs and
files a financing statement where needed to perfect Bank's security interest.
7.11 Compliance. Become an "investment company" or become
controlled by an "investment company," within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of
its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or use the proceeds of any Advance for
such purpose. Fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, fail
to comply with the Federal Fair Labor Standards Act or violate any law or
regulation, which violation could have a Material Adverse Effect or a material
adverse effect on the Collateral or the priority of Bank's Lien on the
Collateral, or permit any of its Subsidiaries to do any of the foregoing.
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8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an
Event of Default by Borrower under this Agreement:
8.1 Payment Default. If Borrower fails to pay the
principal of, or any interest on, any Advances when due and payable; or fails
to pay any portion of any other Obligations not constituting such principal or
interest, including without limitation Bank Expenses, within thirty (30) days
of receipt by Borrower of an invoice therefor;
8.2 Covenant Default. If Borrower fails to perform any
obligation under any of Sections 6.7 or 6.8 or violates any of the covenants
contained in Article 7 of this Agreement, or fails or neglects to perform,
keep, or observe any other material term, provision, condition, covenant, or
agreement contained in this Agreement, in any of the Loan Documents, or in any
other present or future agreement between Borrower and Bank and as to any
default under such other term, provision, condition, covenant or agreement that
can be cured, has failed to cure such default within thirty (30) days after
Borrower receives notice thereof or any Responsible Officer of Borrower becomes
aware thereof; provided, however, that if the default cannot by its nature be
cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely
to be cured within a reasonable time, then Borrower shall have an additional
reasonable period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, and within such reasonable time period the
failure to have cured such default shall not be deemed an Event of Default
(provided that no Advances will be required to be made during such cure
period);
8.3 Material Adverse Change. If there occurs a material
adverse change in Borrower's business or financial condition, or if there is a
material impairment of the prospect of repayment of any portion of the
Obligations or a material impairment of the value or priority of Bank's
security interests in the Collateral, and Borrower fails to cure such default
within ten (10) days after Borrower receives notice thereof.
8.4 Attachment. If any material portion of Borrower's
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any trustee, receiver or person
acting in a similar capacity and such attachment, seizure, writ or distress
warrant or levy has not been removed, discharged or rescinded within thirty
(30) days, or if Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs, or if a judgment or other claim becomes a lien or encumbrance upon any
material portion of Borrower's assets, or if a notice of lien, levy, or
assessment is filed of record with respect to any of Borrower's assets by the
United States Government, or any department, agency, or instrumentality
thereof, or by any state, county, municipal, or governmental agency, and the
same is not paid within thirty (30) days after Borrower receives notice
thereof, provided that none of the foregoing shall constitute an Event of
Default where such action or event is stayed or an adequate bond has been
posted pending a good faith contest by Borrower (provided that no Advances will
be required to be made during such cure period);
8.5 Insolvency. If Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within thirty (30)
days (provided that no Advances will be made prior to the dismissal of such
Insolvency Proceeding);
8.6 Other Agreements. If there is a default in any
agreement to which Borrower is a party with a third party or parties resulting
in a right by such third party or parties, whether or not exercised, to
accelerate the maturity of any Indebtedness in an amount in excess of Fifty
Thousand Dollars ($50,000) or that would reasonably be expected to have a
Material Adverse Effect;
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8.7 Judgments. If a judgment or judgments for the
payment of money in an amount, individually or in the aggregate, of at least
One Hundred Thousand Dollars ($100,000) shall be rendered against Borrower and
shall remain unsatisfied and unstayed for a period of forty-five (45) days
(provided that no Advances will be made prior to the satisfaction or stay of
such judgment); or
8.8 Misrepresentations. If any material
misrepresentation or material misstatement exists now or hereafter in any
warranty or representation set forth herein or in any certificate delivered to
Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to
enter into this Agreement or any other Loan Document and, as to any such
misrepresentation or misstatement that can be cured, Borrower fails to make
that cure within ten (10) days after Borrower receives notice thereof.
9. BANK'S RIGHTS AND REMEDIES
9.1 Rights and Remedies. Upon the occurrence and during
the continuance of an Event of Default, Bank may, at its election, without
notice of its election and without demand, do any one or more of the following,
all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable (provided that upon the occurrence of an Event of Default
described in Section 8.5 all Obligations shall become immediately due and
payable without any action by Bank);
(b) Cease advancing money or extending credit to
or for the benefit of Borrower under this Agreement or under any other
agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly
with account debtors for amounts, upon terms and in whatever order that Bank
reasonably considers advisable;
(d) Without notice to or demand upon Borrower,
make such payments and do such acts as Bank considers necessary or reasonable
to protect its security interest in the Collateral. Borrower agrees to
assemble the Collateral if Bank so requires, and to make the Collateral
available to Bank as Bank may designate. Borrower authorizes Bank to enter the
premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any encumbrance, charge, or lien which in Bank's determination appears to be
prior or superior to its security interest and to pay all expenses incurred in
connection therewith. With respect to any of Borrower's owned premises,
Borrower hereby grants Bank a license to enter into possession of such premises
and to occupy the same, without charge, in order to exercise any of Bank's
rights or remedies provided herein, at law, in equity, or otherwise;
(e) Without notice to Borrower set off and apply
to the Obligations any and all (i) balances and deposits of Borrower held by
Bank, or (ii) indebtedness at any time owing to or for the credit or the
account of Borrower held by Bank;
(f) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell (in the manner
provided for herein) the Collateral. Bank is hereby granted a license or other
right, solely pursuant to the provisions of this Section 9.1, to use, without
charge, Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral and,
in connection with Bank's exercise of its rights under this Section 9.1,
Borrower's rights under all licenses and all franchise agreements shall inure
to Bank's benefit;
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(g) Sell the Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including Borrower's
premises) as Bank determines is commercially reasonable;
(h) Bank may credit bid and purchase at any
public sale; and
(i) Any deficiency that exists after disposition
of the Collateral as provided above will be paid immediately by Borrower.
9.2 Power of Attorney. Effective only upon the
occurrence and during the continuance of an Event of Default, Borrower hereby
irrevocably appoints Bank (and any of Bank's designated officers, or employees)
as Borrower's true and lawful attorney to: (a) send requests for verification
of Accounts or notify account debtors of Bank's security interest in the
Accounts; (b) endorse Borrower's name on any checks or other forms of payment
or security that may come into Bank's possession; (c) sign Borrower's name on
any invoice or bill of lading relating to any Account, drafts against account
debtors, schedules and assignments of Accounts, verifications of Accounts, and
notices to account debtors; (d) make, settle, and adjust all claims under and
decisions with respect to Borrower's policies of insurance; and (e) settle and
adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Bank determines to be reasonable;
provided Bank may exercise such power of attorney to sign the name of Borrower
on any of the documents described in Section 4.2 regardless of whether an Event
of Default has occurred. The appointment of Bank as Borrower's attorney in
fact, and each and every one of Bank's rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully repaid
and Bank's obligation to provide Advances hereunder is terminated.
9.3 Accounts Collection. Upon the occurrence and during
the continuation of an Event of Default, Bank may notify any Person owing funds
to Borrower of Bank's security interest in such funds. Borrower shall collect
all amounts owing to Borrower for Bank, receive in trust all payments as Bank's
trustee, and immediately deliver such payments to Bank in their original form
as received from the account debtor, with proper endorsements for deposit.
9.4 Bank Expenses. If Borrower fails to pay any amounts
or furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Bank may do any or all of the
following: (a) make payment of the same or any part thereof; or (b) obtain and
maintain insurance policies of the type discussed in Section 6.6 of this
Agreement, and take any action with respect to such policies as Bank deems
prudent. Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by
Bank to make similar payments in the future or a waiver by Bank of any Event of
Default under this Agreement.
9.5 Bank's Liability for Collateral. So long as Bank
complies with its obligations under Section 9207 of the Code, Bank shall not in
any way or manner be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising in any manner
or fashion from any cause; (c) any diminution in the value thereof; or (d) any
act or default of any carrier, warehouseman, bailee, forwarding agency, or
other person whomsoever. Subject to the foregoing, all risk of loss, damage or
destruction of the Collateral shall be borne by Borrower.
9.6 Remedies Cumulative. Bank's rights and remedies
under this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Bank shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Bank
of one right or remedy shall be deemed an election, and no waiver by Bank of
any Event of Default on Borrower's part shall be deemed a continuing waiver.
No delay by Bank shall constitute a
17
<PAGE> 21
waiver, election, or acquiescence by it. No waiver by Bank shall be effective
unless made in a written document signed on behalf of Bank
9.7 Demand; Protest. Borrower waives demand, protest,
notice of protest, notice of dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.
10. NOTICES
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Borrower or to Bank, as the case may be, at
its addresses set forth below:
If to Borrower: Calypte Biomedical Corporation
1440 Fourth Street
Berkeley, CA 94710
Attn: Mr. Jack Davis
FAX: (510) 526-5381
If to Bank: Silicon Valley Bank
3003 Tasman Drive
Santa Clara, CA 95054
Attn: Ms. Mitzi Lazich
FAX: (408) 727-8728
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard
to principles of conflicts of law. Each of Borrower and Bank hereby submits
to the exclusive jurisdiction of the state and Federal courts located in the
County of Santa Clara, State of California. BORROWER AND BANK EACH HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH
PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS
12.1 Successors and Assigns.
(a) This Agreement shall bind and inure to the
benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this
18
<PAGE> 22
Agreement nor any rights hereunder may be assigned by Borrower without Bank's
prior written consent, which consent may be granted or withheld in Bank's sole
discretion. Bank shall have the right without the consent of or notice to
Borrower to sell, transfer, negotiate, or grant participations in all or any
part of, or any interest in Bank's obligations, rights and benefits hereunder.
(b) Bank may sell, negotiate or grant
participations to other financial institutions in all or part of the
obligations of the Borrower outstanding under the Loan Agreements, without
notice to or the approval of Borrower; provided that any such sale, negotiation
or participation shall be in compliance with the applicable federal and state
securities laws and the other requirements of this Section 12.1.
Notwithstanding the sale, negotiation or grant of participations, Bank shall
remain solely responsible for the performance of its obligations under this
Agreement, Bank shall remain the holder of the Note for all purposes under this
Agreement and Borrower shall continue to deal solely and directly with Bank in
connection with this Agreement and the other Loan Documents.
(c) The grant of a participation interest shall
be on such terms as the Bank determines are appropriate, provided only that (i)
the holder of such participation interest shall not have any of the rights of
Bank under this Agreement except, if the participation agreement so provides,
rights to demand the payment of costs of the type described in Section 2.7,
provided that the aggregate amount that the Borrower shall be required to pay
under Section 2.7 with respect to any ratable share of the Committed Line or
any Advance (including amounts paid to participants) shall not exceed the
amount that Borrower would have had to pay if no participation agreements had
been entered into, and (ii) the consent of the holder of such a participation
interest shall not be required for amendments or waivers of provisions of the
Loan Agreement other than those which (A) increase the amount of the Committed
Line, (B) extend the term of this Agreement, (C) decrease the rate of interest
or the amount of any fee or any other amount payable to Bank under this
Agreement, (D) reduce the principal amount payable under this Agreement, or (E)
extend the date fixed for the payment of principal or interest or any other
amount payable under this Agreement.
(d) The Bank may assign, from time to time, all
or any portion of its pro rata share of the Committed Line and the Note to an
Affiliate of the Bank or, subject to the prior written approval of Borrower
(which approval will not be unreasonably withheld), to any other financial
institution; provided, that (i) the amount the Committed Line being assigned
pursuant to each such assignment shall in no event be less than One Million
Dollars ($1,000,000) and shall be an integral multiple of Two Hundred Fifty
Thousand Dollars ($250,000) and (ii) the parties to each such assignment shall
execute and deliver to Borrower an assignment agreement in a form reasonably
acceptable to each. Upon such execution and delivery, from and after the
effective date specified in such assignment agreement (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment
agreement, have the rights and obligations of a Bank hereunder and (y) Bank
shall, to the extent that rights and obligations hereunder have been assigned
by it pursuant to such assignment agreement, relinquish its rights and be
released from its obligations under this Agreement (other than pursuant to this
Section 12.1(d), and, in the case of an assignment agreement covering all or
the remaining portion of Bank's rights and obligations under this Agreement,
Bank shall cease to be a party hereto. In the event of an assignment
hereunder, the parties agree to amend this Agreement to the extent necessary to
reflect the mechanical changes which are necessary to document such assignment
and which are standard for a multi-bank credit facility. Each party shall bear
its own expenses (including without limitation attorneys' fees and costs) with
respect to such an amendment.
12.2 Indemnification. Borrower shall defend, indemnify
and hold harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and
19
<PAGE> 23
Borrower whether under this Agreement, or otherwise (including without
limitation reasonable attorneys fees and expenses), except for losses caused by
Bank's gross negligence or willful misconduct.
12.3 Time of Essence. Time is of the essence for the
performance of all obligations set forth in this Agreement.
12.4 Severability of Provisions. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
12.5 Amendments in Writing, Integration. This Agreement
cannot be amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
12.6 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement.
12.7 Survival. All covenants, representations and
warranties made in this Agreement shall continue in full force and effect so
long as any Obligations (excluding Obligations under Sections 2.6 and 12.2 to
the extent they remain inchoate at the time that outstanding payment
Obligations are paid in full) remain outstanding. The obligations of Borrower
to indemnify Bank with respect to the expenses, damages, losses, costs and
liabilities described in Section 12.2 shall survive until all applicable
statute of limitations periods with respect to actions that may be brought
against Bank have run, provided that so long as the obligations set forth in
the first sentence of this Section 12.7 have been satisfied, and Bank has no
commitment to make any Advances or to make any other loans to Borrower, Bank
shall release all security interests granted hereunder and redeliver all
Collateral held by it in accordance with applicable law.
12.8 Confidentiality. In handling any confidential
information Bank shall exercise the same degree of care that it exercises with
respect to its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of Bank in connection with their
present or prospective business relations with Borrower, (ii) to prospective
transferees or purchasers of any interest in the Loans, provided that they have
entered into a comparable confidentiality agreement in favor of Borrower and
have delivered a copy to Borrower, (iii) as required by law, regulations, rule
or order, subpoena, judicial order or similar order, (iv) as may be required in
connection with the examination, audit or similar investigation of Bank, and
(v) as Bank may deem appropriate in connection with the exercise of any
remedies under this Agreement. Confidential information hereunder shall not
include information that either: (a) is in the public domain or in the
knowledge or possession of Bank when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank through no fault of Bank; or (b) is
disclosed to the Bank by a third party, provided the Bank does not have actual
knowledge that such third party is prohibited from disclosing such information.
Notwithstanding any provision of this Agreement to the contrary, neither
Borrower nor any of its Subsidiaries will be required to disclose, permit the
inspection, examination, copying or making extracts of, or discussions of; any
document, information or other matter that (i) prior to the occurrence of an
Event of Default constitutes nonfinancial trade secrets, or (ii) in respect to
which disclosure to the Banks (or designated representative) is then prohibited
by (a) law, or (b) an agreement binding upon Borrower or any Subsidiary that
was not entered into by Borrower or such Subsidiary for the primary purpose of
concealing information from Banks.
20
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
CALYPTE BIOMEDICAL CORPORATION
By:______________________________
Title:______________________________
SILICON VALLEY BANK
By:______________________________
Title:______________________________
21
<PAGE> 25
EXHIBIT A
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any of
the foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, trademarks,
service marks, trade styles, trade names, patents, patent applications, leases,
license agreements, franchise agreements, blueprints, drawings, purchase
orders, customer lists, route lists, infringements, claims, computer programs,
computer discs, computer tapes, literature, reports, catalogs, design rights,
income tax refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the licensing of technology
or the rendering of services by Borrower, whether or not earned by performance,
and any and all credit insurance, guaranties, and other security therefor, as
well as all merchandise returned to or reclaimed by Borrower and Borrower's
Books relating to any of the foregoing;
(e) All documents, cash, deposit accounts, securities (other than
securities of foreign Subsidiaries), letters of credit, certificates of
deposit, instruments and chattel paper now owned or hereafter acquired and
Borrower's Books relating to the foregoing;
(f) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter
acquired; all trade secret rights, including all rights to unpatented.
inventions, know-how, operating manuals, license rights and agreements and
confidential information, now owned or hereafter acquired; all claims for
damages by way of any past, present and future infringement of any of the
foregoing; and
(g) Any and all claims, rights and interests in any of the above
and all substitutions for, additions and accessions to and proceeds thereof.
22
<PAGE> 26
EXHIBIT B
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: CALYPTE BIOMEDICAL CORPORATION
The undersigned authorized officer of Calypte Biomedical Corporation
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (the "Agreement"), (i)
Borrower is in complete compliance for the period ending _____________ with
all required covenants except as noted below and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN
<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
<S> <C> <C> <C>
Monthly financial statements Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
<S> <C> <C> <C> <C>
Maintain on a Monthly Basis:
Minimum Cash and Cash Equivalents $700,000 $ Yes No
----------
</TABLE>
<TABLE>
<S> <C>
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY
Received by:_________________
Sincerely, AUTHORIZED SIGNER
______________________________ Date:________________________
SIGNATURE
Verified:____________________
AUTHORIZED SIGNER
______________________________ Date:________________________
TITLE
______________________________ Compliance Status: Yes No
DATE
</TABLE>
23
<PAGE> 27
SCHEDULE OF PERMITTED INDEBTEDNESS
24
<PAGE> 28
DISBURSEMENT REQUEST AND AUTHORIZATION
Borrower: Calypte Biomedical Corporation Bank: Silicon Valley Bank
===============================================================================
LOAN TYPE. This is a Variable Rate Bridge Loan of a principal amount up to
$2,000,000
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.
SPECIFIC PURPOSE. The specific purpose of this loan is: Short Term Working
Capital.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will
be disbursed until all of Bank's conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
<TABLE>
<CAPTION>
Bridge Loan
<S> <C>
Amount paid to Borrower directly: $2,000,000
Undisbursed Funds $0
Principal $2,000,000
</TABLE>
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
<TABLE>
<S> <C>
Prepaid Finance Charges Paid in Cash: $
----------
$10,000 Loan Fee
Other Charges Paid in Cash: $__________
$ Outside Counsel Fees and Expenses (Estimate)
----------
Total Charges Paid in Cash $__________
----------
</TABLE>
AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct
from Borrower's account numbered ______ the amount of any loan payment. If
the funds in the account are insufficient to cover any payment, Bank shall not
be obligated to advance funds to cover the payment.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO BANK. THIS
AUTHORIZATION IS DATED AS OF DECEMBER _______1995.
BORROWER:
CALYPTE BIOMEDICAL CORPORATION
______________________________
Authorized Officer
================================================================================
<PAGE> 29
AGREEMENT TO PROVIDE INSURANCE
GRANTOR: Calypte Biomedical Corporation BANK: Silicon Valley Bank
================================================================================
INSURANCE REQUIREMENTS. Calypte Biomedical Corporation ("Grantor")
understands that insurance coverage is required in connection with the
extending of a loan or the providing of other financial accommodations to
Grantor by Bank. These requirements are set forth in the Loan Documents. The
following minimum insurance coverages must be provided on the following
described collateral (the "Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type: All risks, including fire, theft and liability.
Amount: Full insurable value.
Basis: Replacement value.
Endorsements: Loss payable clause to Bank with stipulation that
coverage will not be cancelled or diminished without
a minimum of twenty (20) days' prior written notice
to Bank.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance
company Grantor may choose that is reasonably acceptable to Bank. Grantor
understands that credit may not be denied solely because insurance was not
purchased through Bank.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Bank, on
or before closing, evidence of the required insurance as provided above, with
an effective date of December 8, 1995, or earlier. Grantor acknowledges and
agrees that if Grantor fails to provide any required insurance or fails to
continue such insurance in force, Bank may do so at Grantor's expense as
provided in the Loan and Security Agreement. The cost of such insurance, at
the option of Bank, shall be payable on demand or shall be added to the
indebtedness as provided in the security document. GRANTOR ACKNOWLEDGES THAT
IF BANK SO PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL PROVIDE LIMITED
PROTECTION AGAINST PHYSICAL DAMAGE TO THE COLLATERAL, UP TO THE BALANCE OF THE
LOAN; HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN
ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL
RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
Grantor authorizes Bank to provide to any person (including any insurance agent
or company) all information Bank deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT
TO PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED DECEMBER
8,1995.
GRANTOR:
______________________________
X______________________________
Authorized Officer
FOR BANK USE ONLY
INSURANCE VERIFICATION
DATE:______________________________
PHONE:_____________________________
AGENT'S NAME:__________________________________________________________________
INSURANCE COMPANY:_____________________________________________________________
POLICY NUMBER:_________________________________________________________________
EFFECTIVE DATES:_______________________________________________________________
COMMENTS:______________________________________________________________________
<PAGE> 30
CORPORATE RESOLUTIONS TO BORROW
================================================================================
BORROWER: CALYPTE BIOMEDICAL CORPORATION
================================================================================
I, the undersigned Secretary or Assistant Secretary of Calypte
Biomedical Corporation (the "Corporation"), HEREBY CERTIFY that the Corporation
is organized and existing under and by virtue of the laws of the State of
California.
I FURTHER CERTIFY that at a meeting of the Directors of the
Corporation (or by other duly authorized corporate action in lieu of a
meeting), duly called and held, at which a quorum was present and voting, the
following resolutions were adopted.
BE IT RESOLVED, that ANY ONE (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
<TABLE>
<CAPTION>
NAMES POSITIONS ACTUAL SIGNATURES
--------- --------- -----------------
<S> <C> <C>
JACK DAVIS PRESIDENT & CEO
- -------------------- -------------------- --------------------
JOHN DI PIETRO CFO & VP FINANCE & SECRETARY
- -------------------- -------------------- --------------------
- -------------------- -------------------- --------------------
- -------------------- -------------------- --------------------
- -------------------- -------------------- --------------------
</TABLE>
acting for and on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Silicon Valley Bank
("Bank"), on such terms as may be agreed upon between the officers, employees,
or agents and Bank, such sum or sums of money as in their judgment should be
borrowed, without limitation, including such sums as are specified in that
certain Loan and Security Agreement dated as of December 8, 1995 (the "Loan
Agreement").
EXECUTE NOTES. To execute and deliver to Bank the Loan Agreement and
any promissory note or notes of the Corporation, on Lender's forms, at such
rates of interest and on such terms as may be agreed upon, evidencing the sums
of money so borrowed or any indebtedness of the Corporation to Bank, and also
to execute and deliver to Lender one or more renewals, extensions,
modifications, refinancings, consolidations, or substitutions for one or more
of the notes, or any portion of the notes.
GRANT SECURITY. To grant a security interest to Bank in the
Collateral described in the Loan Agreement, which security interest shall secure
all of the Corporation's Obligations, as described in the Loan Agreement.
NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.
1
<PAGE> 31
LETTERS OF CREDIT. To execute letters of credit applications and
other related documents pertaining to Bank's issuance of letters of credit.
FURTHER ACTS. In the case of lines of credit, to designate additional
or alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any and
all fees and costs, and to execute and deliver such other documents and
agreements as they may in their discretion deem reasonably necessary or proper
in order to carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect
at the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names;
that the foregoing Resolutions now stand of record on the books of the
Corporation; and that the Resolutions are in full force and effect and have not
been modified or revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on December __, 1995
and attest that the signatures set opposite the names listed above are their
genuine signatures.
CERTIFIED TO AND ATTESTED BY:
X______________________________
================================================================================
2
<PAGE> 32
INVOICE FOR FEES AND EXPENSES
BORROWER: CALYPTE BIOMEDICAL CORPORATION
LOAN OFFICER: Mitzi Lazich
DATE: December 7, 1995
<TABLE>
<S> <C>
Loan Fees: $20,000.00
Credit Reports: 35.00
UCC Search: 150.00
UCC Filing Fee: 20.00
----------
Total Fees: $20,205.00*
Less Payment
Received: 10,000.00
----------
TOTAL FEES DUE: $10,205.00
</TABLE>
*This is an estimate only, the actual expenses may vary.
PLEASE INDICATE THE METHOD OF PAYMENT:
( ) A check for the total amount is attached
( ) Debit DDA #____________ for the total amount
( ) Loan proceeds
CALYPTE BIOMEDICAL CORPORATION
______________________________ ____________________
Authorized Signer Date
SILICON VALLEY BANK
______________________________ ____________________
Julie Schneider Date
<PAGE> 33
STATE OF CALIFORNIA
UNIFORM COMMERCIAL CODE--FINANCING STATEMENT--FORM UCC-1
This financing Statement is presented for filing and will remain effective,
with certain exceptions, for five years from the date of filing,
pursuant to Section 9403 of the California Uniform Commercial Code.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR 1A. SOCIAL SECURITY OR FEDERAL TAX NO.
CALYPTE BIOMEDICAL CORPORATION
- ----------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
1440 FOURTH STREET BERKELEY, CA 94710
- ----------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR 2A. SOCIAL SECURITY OR FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
2b. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OR STYLES 3A. FEDERAL TAX NUMBER
- ----------------------------------------------------------------------------------------------------------------------------------
4. SECURED PARTY 4A. FEDERAL TAX NO.
SILICON VALLEY BANK
3003 TASMAN DRIVE 94-2875288
SANTA CLARA, CA 95054
- ----------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY 5A. FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following type of property:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF BY THIS REFERENCE.
- ----------------------------------------------------------------------------------------------------------------------------------
7A. [X] PRODUCTS OF COLLATERAL ARE ALSO COVERED 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH INSTRUCTION 5(a) ITEM:
[ ] (1) [ ] (2) [ ] (3) [ ] (4)
- ----------------------------------------------------------------------------------------------------------------------------------
8. [ ] DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SECTION 9105 (1) (o)
- ----------------------------------------------------------------------------------------------------------------------------------
9. DATE: 12-07-1995 C 10. THIS SPACE FOR USE OF FILING OFFICER
[SIG] O (DATE, TIME, FILE NUMBER AND FILING OFFICER)
D
SIGNATURE(S) OF DEBTOR(S) E
- ---------------------------------------------------------------------
CALYPTE BIOMEDICAL CORPORATION 1
- ------------------------------------------------------------- 2
3
SIGNATURE(S) OF SECURED PARTY(IES) 4
- -------------------------------------------------------------
SILICON VALLEY BANK 5
============================================================= 6
11. Return copy to:
7
/ /
SILICON VALLEY BANK 8
DOCUMENTATION/NC 661
3003 TASMAN DRIVE 9
SANTA CLARA, CA 95054
/ / 0
=============================================================
FORM UCC-1
==================================================================================================================================
</TABLE>
<PAGE> 34
STATE OF CALIFORNIA
UNIFORM COMMERCIAL CODE--FINANCING STATEMENT--FORM UCC-1
This financing Statement is presented for filing and will remain effective,
with certain exceptions, for five years from the date of filing,
pursuant to Section 9403 of the California Uniform Commercial Code.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR 1A. SOCIAL SECURITY OR FEDERAL TAX NO.
CALYPTE BIOMEDICAL CORPORATION
- ----------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
1440 FOURTH STREET BERKELEY, CA 94710
- ----------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR 2A. SOCIAL SECURITY OR FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
2b. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OR STYLES 3A. FEDERAL TAX NUMBER
- ----------------------------------------------------------------------------------------------------------------------------------
4. SECURED PARTY 4A. FEDERAL TAX NO.
SILICON VALLEY BANK
3003 TASMAN DRIVE 94-2875288
SANTA CLARA, CA 95054
- ----------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY 5A. FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following type of property:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF BY THIS REFERENCE.
- ----------------------------------------------------------------------------------------------------------------------------------
7A. [X] PRODUCTS OF COLLATERAL ARE ALSO COVERED 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH INSTRUCTION 5(a) ITEM:
[ ] (1) [ ] (2) [ ] (3) [ ] (4)
- ----------------------------------------------------------------------------------------------------------------------------------
8. [ ] DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SECTION 9105 (1) (o)
- ----------------------------------------------------------------------------------------------------------------------------------
9. DATE: 12-07-1995 C 10. THIS SPACE FOR USE OF FILING OFFICER
[SIG] O (DATE, TIME, FILE NUMBER AND FILING OFFICER)
D
SIGNATURE(S) OF DEBTOR(S) E
- ---------------------------------------------------------------------
CALYPTE BIOMEDICAL CORPORATION 1
- ------------------------------------------------------------- 2
3
SIGNATURE(S) OF SECURED PARTY(IES) 4
- -------------------------------------------------------------
SILICON VALLEY BANK 5
============================================================= 6
11. Return copy to:
7
/ /
SILICON VALLEY BANK 8
DOCUMENTATION/NC 661
3003 TASMAN DRIVE 9
SANTA CLARA, CA 95054
/ / 0
=============================================================
FORM UCC-1
==================================================================================================================================
</TABLE>
<PAGE> 35
STATE OF CALIFORNIA
UNIFORM COMMERCIAL CODE--FINANCING STATEMENT--FORM UCC-1
This financing Statement is presented for filing and will remain effective,
with certain exceptions, for five years from the date of filing,
pursuant to Section 9403 of the California Uniform Commercial Code.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR 1A. SOCIAL SECURITY OR FEDERAL TAX NO.
CALYPTE BIOMEDICAL CORPORATION
- ----------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
1440 FOURTH STREET BERKELEY, CA 94710
- ----------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR 2A. SOCIAL SECURITY OR FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
2b. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OR STYLES 3A. FEDERAL TAX NUMBER
- ----------------------------------------------------------------------------------------------------------------------------------
4. SECURED PARTY 4A. FEDERAL TAX NO.
SILICON VALLEY BANK
3003 TASMAN DRIVE 94-2875288
SANTA CLARA, CA 95054
- ----------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY 5A. FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following type of property:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF BY THIS REFERENCE.
- ----------------------------------------------------------------------------------------------------------------------------------
7A. [X] PRODUCTS OF COLLATERAL ARE ALSO COVERED 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH INSTRUCTION 5(a) ITEM:
[ ] (1) [ ] (2) [ ] (3) [ ] (4)
- ----------------------------------------------------------------------------------------------------------------------------------
8. [ ] DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SECTION 9105 (1) (o)
- ----------------------------------------------------------------------------------------------------------------------------------
9. DATE: 12-07-1995 C 10. THIS SPACE FOR USE OF FILING OFFICER
[SIG] O (DATE, TIME, FILE NUMBER AND FILING OFFICER)
D
SIGNATURE(S) OF DEBTOR(S) E
- ---------------------------------------------------------------------
CALYPTE BIOMEDICAL CORPORATION 1
- ------------------------------------------------------------- 2
3
SIGNATURE(S) OF SECURED PARTY(IES) 4
- -------------------------------------------------------------
SILICON VALLEY BANK 5
============================================================= 6
11. Return copy to:
7
/ /
SILICON VALLEY BANK 8
DOCUMENTATION/NC 661
3003 TASMAN DRIVE 9
SANTA CLARA, CA 95054
/ / 0
=============================================================
FORM UCC-1
==================================================================================================================================
</TABLE>
<PAGE> 36
STATE OF CALIFORNIA
UNIFORM COMMERCIAL CODE--FINANCING STATEMENT--FORM UCC-1
This financing Statement is presented for filing and will remain effective,
with certain exceptions, for five years from the date of filing,
pursuant to Section 9403 of the California Uniform Commercial Code.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR 1A. SOCIAL SECURITY OR FEDERAL TAX NO.
CALYPTE BIOMEDICAL CORPORATION
- ----------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
1440 FOURTH STREET BERKELEY, CA 94710
- ----------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR 2A. SOCIAL SECURITY OR FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
2b. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OR STYLES 3A. FEDERAL TAX NUMBER
- ----------------------------------------------------------------------------------------------------------------------------------
4. SECURED PARTY 4A. FEDERAL TAX NO.
SILICON VALLEY BANK
3003 TASMAN DRIVE 94-2875288
SANTA CLARA, CA 95054
- ----------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY 5A. FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following type of property:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF BY THIS REFERENCE.
- ----------------------------------------------------------------------------------------------------------------------------------
7A. [X] PRODUCTS OF COLLATERAL ARE ALSO COVERED 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH INSTRUCTION 5(a) ITEM:
[ ] (1) [ ] (2) [ ] (3) [ ] (4)
- ----------------------------------------------------------------------------------------------------------------------------------
8. [ ] DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SECTION 9105 (1) (o)
- ----------------------------------------------------------------------------------------------------------------------------------
9. DATE: 12-07-1995 C 10. THIS SPACE FOR USE OF FILING OFFICER
[SIG] O (DATE, TIME, FILE NUMBER AND FILING OFFICER)
D
SIGNATURE(S) OF DEBTOR(S) E
- ---------------------------------------------------------------------
CALYPTE BIOMEDICAL CORPORATION 1
- ------------------------------------------------------------- 2
3
SIGNATURE(S) OF SECURED PARTY(IES) 4
- -------------------------------------------------------------
SILICON VALLEY BANK 5
============================================================= 6
11. Return copy to:
7
/ /
SILICON VALLEY BANK 8
DOCUMENTATION/NC 661
3003 TASMAN DRIVE 9
SANTA CLARA, CA 95054
/ / 0
=============================================================
FORM UCC-1
==================================================================================================================================
</TABLE>
<PAGE> 37
SILICON VALLEY BANK
FUNDS TRANSFER AGREEMENT
SECURITY PROCEDURE SERVICE ADDENDUM
The following contains a description of the security procedures
offered by Silicon Valley Bank ("Bank") to authenticate a Client's Payment
Order instructions. Except as otherwise specified, these security procedures
are not designed to detect, and Bank has no obligation to detect, Client error
in the transmission or content of instructions for the Payment Order.
TELEPHONE-INITIATED PAYMENT ORDERS
DOMESTIC AND INTERNATIONAL
REPETITIVE PAYMENT ORDERS- PRIMARY SECURITY PROCEDURE
All repetitive Payment Orders, including repetitive Payment Orders to
beneficiaries located outside the United States, may be telephone-initiated.
Bank's Primary Security Procedure is to require Client to provide the signature
of an Authorized Representative (as listed in the Authorized Representative
Addendum) on Client's Repetitive Transfer Request form other standard form
used by Bank to document repetitive transfer services. Upon receiving the
signed Repetitive Transfer Request, Bank will verify the signature of the
Authorized Representative against the signature specimen on file with Bank and
perform a Call-Back to a different Authorized Representative to verify the
repetitive transfer information. In addition, Bank will provide Client with a
Repetitive Payment Identification Code to be used when Client's Authorized
Representative initiates a Payment Order instruction by telephone. Bank will
perform a Call-Back on every repetitive Payment Order to a different Authorized
Representative when a Repetitive Payment Order is initiated. Client shall
maintain the highest level of security of the code utilized in connection with
the Security Procedures. Client shall promptly notify Bank of any compromise
of security or unauthorized disclosure or use and shall promptly thereafter
confirm such information in writing to Bank. Client will be responsible for
any liability, loss, or damage resulting from such breach of security or
unauthorized disclosure or use.
REPETITIVE PAYMENT ORDERS- SECONDARY SECURITY PROCEDURE
The Secondary Procedure is identical to the Primary Procedure
described above except that the Client chooses not to use the added precaution
of a Call-Back. Client waives Call-Back verification for all Repetitive
Payment Orders.
By initialing above, Client acknowledges that payment orders will be verified
by a security procedure which is a higher-risk procedure and Client agrees to
assume all liability for unauthorized payment orders confirmed in accordance
with the higher-risk security procedure.
WRITTEN PAYMENT ORDERS
DOMESTIC AND INTERNATIONAL
NON-REPETITIVE PAYMENT ORDERS-PRIMARY SECURITY PROCEDURE
All non-repetitive Payment Orders, including non-repetitive Payment Orders to
beneficiaries located outside the United States, must be written. All
repetitive Payment Orders, at the election of Client, may be in writing.
Written transfers (signed by an Authorized Representative as listed in this
Authorized Representative Addendum) shall be in a form acceptable to Bank and
delivered in person or by fax. Bank will perform a signature comparison to
verify that the individual whose signature appears on the written transfer
request is an Authorized Representative. In addition, Bank will telephone a
second Authorized Representative to authenticate the transfer request.
1
<PAGE> 38
SILICON VALLEY BANK
FUNDS TRANSFER AGREEMENT
SECURITY PROCEDURE SERVICE ADDENDUM
This Addendum must be signed by an individual or individuals,
authorized by the corporate resolution or bylaws to sign Funds Transfer
Agreements.
Calypte Biomedical Corporation
______________________________________________
(Print Name of Client)
_________________________ _________________________
(BY) Jack Davis (BY) John DiPietro
President & CEO VP & CFO
_________________________ _________________________
(TITLE) (TITLE)
12/19/95 12/19/95
_________________________ _________________________
(Date) (Date)
2
<PAGE> 1
EXHIBIT 10.33
THIS OPTION AND THE SECURITIES SUBJECT TO THIS OPTION HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN
EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE.
OPTION TO PURCHASE COMMON STOCK OF
CALYPTE BIOMEDICAL CORPORATION
ISSUANCE DATE: OCTOBER 12,1995
EXPIRATION DATE: OCTOBER 12,2005 OR EARLIER
This certifies that Cal-Wood Investment Ltd. or permitted assigns, is
entitled, subject to the terms set forth below, to purchase from Calypte
Biomedical Corporation, a California corporation, (the "Company") up to 7,221
shares (which number is subject to adjustment as provided herein) of fully paid
and nonassessable Common Stock of the Company at the purchase price of $7.50
per share, subject to adjustment as provided herein, (the "Purchase Price") at
any time or from time to time through October 12, 2005 or earlier per terms set
forth below. Such price and number of shares are subject to adjustment as
provided in Section 2 of this Option.
1. Definitions
As used in this Option, the following terms, unless the context
otherwise requires, have the following meanings:
(a) "Company" includes any corporation which shall succeed to or
assume obligations of the Company under this Option.
(b) "Stock", when used with reference to shares of stock of the
Company, means shares of Common Stock of the Company, as presently defined in
the Company's Restated Articles of Incorporation, and stock of any other class
into which those shares many hereafter be changed.
(c) "Shares" shall mean the shares of Stock purchasable hereunder
and shall include all shares into which the Shares purchasable hereunder may be
converted or changed.
(d) "Optionholder", "holder of Option", "holder", or similar terms
when the context refers to a holder of the Option, mean any person who shall at
the time be the register holder of this Option.
2. Milestones
(a) The Optionholder may exercise the Option to purchase common
stock subject to the attainment of the Milestones set forth in the schedule
below. The
1
<PAGE> 2
achievement of a Milestone is a condition precedent to the availability of an
Option to purchase the respective number of common stock at the Exercise
Price.:
<TABLE>
<CAPTION>
MILESTONES NUMBER OF SHARES SUBJECT TO
OPTIONS
<S> <C> <C>
1. Upon the Effective Date of the Agreement 1,520
for the purchase of Pepgen Securities
2. Upon signing of a Research and 1,520
Development Contract with proceeds of
$1 million USD or greater
3. Upon signing of a licensing agreement 1,520
with proceeds of $5 million USD or
greater
4. Upon filing of an Investigation of New 381
Drug ("IND") application with the US
Food and Drug Administration
("USFDA"), or with similar agencies in
Europe or Japan
5. Upon filing of a New Drug Application 760
("NDA") with the USFDA or with similar
agencies in Europe or Japan
6. Upon first commercial sales of an 1,520
Company product based on an NDA
</TABLE>
(b) Upon the achievement of a Milestone set forth in
paragraph 2 above thereby giving rise to the Option to exercise the number of
shares indicated next to the Milestone as provided for herein, the Optionholder
shall have thereafter thirty-six (36) months in which to exercise said Options
("Option Period"). Failure to remit to the Company the Exercise Price within
said Option Period shall constitute an irrevocable waiver of the right to
exercise said Option granted hereunder. Payment of the Exercise Price for all
options exercised pursuant to this Agreement is due on transfer of the
Company's Common Stock. Optionholder shall not be eligible to own any
fractional shares of the Company's Common Stock and calculation of the option
eligibility of the Optionholder shall at all times be rounded down to the
nearest whole number of shares.
(c) Notwithstanding any provision to the contrary, this
Agreement and the Option granted hereunder shall automatically terminate and
expire ten (10) years after the Effective Date. At such point in time, any
Milestones not yet achieved which would have given rise to an Option as set
forth herein and any rights related thereto shall also terminate. In no event
shall any part of the option be exercisable after the expiration of the ten
(10) years (referenced above) from the Effective Date.
3. Adjustment of Purchase Price and Number of Shares
The number and kind of securities purchasable upon the exercise of
this Option and the Purchase Price shall be subject to adjustment from time to
time upon the occurrence of certain events, as follows:
2
<PAGE> 3
(a) Reclassification. In case of any reclassification or change
of outstanding securities of the class issuable upon exercise of this Option
(other than upon any consolidation or merger of the Company with or into
another corporation unless this corporation is the surviving corporation, or
upon the sale of all or substantially all of the assets of the Company) then,
and in any such case, the holder of this Option, upon the exercise hereof at
any time after the consummation of such reclassification or change shall be
entitled to receive in lieu of each share of Stock theretofore issuable upon
exercise of this Option, the kind and amount of shares of stock, other
securities, money and property received upon such reclassification or change by
a holder of one share of Stock. The provisions of this subsection (a) shall
similarly apply to successive reclassification or changes.
(b) Subdivision or Combination of Stock. If the Company at any
time while this Option remains outstanding and unexpired shall subdivide or
combine its Stock, the Purchase Price shall be proportionately decreased in the
case of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this Option
is outstanding shall pay a dividend with respect to Stock payable in Stock, or
make any other distribution of Stock with respect to Stock (except any
distribution specifically provided for in the foregoing subsections (a) or (b),
then the Purchase Price shall be adjusted, effective from and after the date of
determination of shareholders entitled to receive such dividend or
distribution, to that price determined by a fraction, (a) the numerator of
which shall be the total number of shares of Stock outstanding immediately
prior to such dividend or distribution, and (b) the denominator of which shall
be the total number of shares of Stock outstanding immediately after such
dividend or distribution.
(d) Non-Cash Dividends. If the Company at any time while this
Option is outstanding shall pay a dividend with respect to Stock payable in
securities other than Stock or other non-cash property, or make any other
distribution of such securities or property with respect to Stock (except any
distribution specifically provided for in the foregoing subsections (a) or
(b)), then this Option shall represent the right to acquire upon exercise of
this Option such securities or property which a holder of Stock would have been
entitled to receive upon such dividend or distribution, without the payment by
the holder of this Option of any additional consideration for such securities
or property.
(e) Adjustment of Number of Shares. Upon each adjustment in the
Purchase Price, the number of Shares shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Purchase Price by a fraction, the
numerator of which shall be the Purchase Price immediately prior to such
adjustment and the denominator of which shall be the Purchase Price immediately
thereafter.
(f) Notice of Adjustments. Whenever the Purchase Price shall be
adjusted pursuant to Section 2 hereof, the Company shall issue a certificate
signed by its chief financial officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated and the Purchase Price or Prices after
giving effect to such adjustment, and the securities or other property for
which this Option may then be exercised, and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to the holder
of this Option.
3
<PAGE> 4
4. Exercise Provisions
(a) Manner of Exercise. This Option may be exercised in part or
in whole only by the holder of this Option surrendering to the Company at its
principal office in California, this Option, together with the exercise form
attached to this Option duly executed by the holder together with payment to
the Company in the amount obtained by multiplying the Purchase Price by the
number of shares of Stock designated in the exercise form. Payment may be in
cash or by bank check payable to the order of the Company.
(b) Partial Exercise. On any partial exercise, the Company shall
promptly issue and deliver to the holder of this Option a new Option or Options
of like tenor in the name of that holder providing for the right to purchase
that number of shares of Stock as to which this Option has not been exercised.
(c) Net Exercise Rights. Notwithstanding the payment provisions
set forth in this Section 4, the holder may elect to receive shares of Option
Stock equal to the value (as determined below) of this Option by surrender of
this Option at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder the number
of shares of Common Stock determined by use of the following formula:
X = Y(A-B)
A
Where: X = the number of shares of Common Stock to be issued to the
holder.
Y = the number of shares of Common Stock subject to this
Option
A = the Fair Market Value (as defined below) of one (1) share
of Common Stock.
B = the per share Purchase Price pursuant to this Option.
For purpose of this Section 7, fair market value of a share as of a
particular date shall mean:
(i) If the Company's registration statement under the Act,
covering its initial underwritten public offering of stock, has been declared
effective by the Securities and Exchange Commission, then the fair market value
of a share shall be calculated on the basis of the closing market price (last
trade regular way if the Stock is traded on the New York or American Stock
Exchange, and if not so traded, the last sale price or mean of the bid and
asked prices as reported by NASDAQ) as of the date of exercise.
(ii) If such a registration statement has not been declared
effective, or if it has been declared effective but the offering is not
consummated in accordance with the terms of the underwriting agreement between
the Company and its underwriters relating to such registration statement, then
as determined in good faith by the Company's Board of Directors upon a review
of relevant factors.
5. Delivery of Stock Certificates
Within a reasonable time after full or partial exercise of this
Option, the Company at its expense will cause to be issued in the name of and
delivered to the holder of this Option, a certificate or certificates for the
number of fully paid and nonassessable shares of Stock to
4
<PAGE> 5
which that holder shall be entitled upon such exercise, together with any other
securities and property to which that holder is entitled upon such exercise
under the terms of this Option. No fractional shares will be issued upon
exercise of rights to purchase under this Option. If upon any exercise of this
Option a fraction of a share results, the Company will pay the cash value of
that fractional share, calculated on the basis of the closing market price
(last trade regular way if the Stock is traded on the New York or American
Stock Exchange, and if not so traded, the last sale price or mean of the bid
and asked prices as reported by NASDAQ) as of the date of exercise, or, if the
Stock is not publicly traded, then on the basis of the Company's good faith
determination of the fair market value of the Stock.
6. Compliance with Securities Act, Disposition of Shares of Common Stock,
Registration Rights
(a) Compliance with Securities Act. The holder of this Option, by
acceptance hereof, agrees that this Option and the Shares to be issued upon
exercise hereof are being acquired for investment and that he will not offer,
sell or otherwise dispose of this Option or any Shares to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). Upon exercise of this
Option, the holder hereof shall confirm in writing, in a form satisfactory to
the Company, that the Shares are being acquired for investment and not with a
view toward distribution or resale (unless sale of the Shares has been
registered under the Act). Any proposed transferee of this Option or the
Shares (except a transferee of the Shares in a registered public offering) will
be required to agree to the provisions of this Section 6. Certificates
representing all Shares (unless registered under the Act) shall be stamped or
imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES
MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A
REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO THESE
SECURITIES OR (II) THERE IS AN OPINION OF COUNSEL, SATISFACTORY TO THE
CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE.
(b) Notice of Proposed Transfers. Prior to any proposed transfer
of this Option or any of the Shares, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice (the "Notice") to the Company of such
holder's intention to make such transfer. The Notice shall describe the manner
and circumstances of the proposed transfer in sufficient detail. If requested
by the Company prior to the transfer being effected, the holder shall provide
to the Company a written opinion of legal counsel who shall be reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Option or the Shares may be effected without
registration under the Securities Act. The holder of such securities shall be
entitled to transfer such securities in accordance with the terms of the Notice
only after the Company has consented in writing to such transfer. Each option
or stock certificate evidencing the securities so transferred shall bear the
appropriate restrictive legend set forth above, except that such certificate
shall not bear such restrictive legend if in the opinion of counsel for the
Company such legend is not required in order to establish compliance with any
provisions of the securities laws. Transfer of the Option is further
restricted by Section 7(f) hereof.
5
<PAGE> 6
7. Miscellaneous Provisions
(a) Reservation of Stock. The Company convenants that it will at
all times reserve and keep available, solely for issuance upon exercise of this
Option, all shares of Stock or other securities from time to time issuable upon
exercise of this Option.
(b) Modification. This Option and any of its terms may be
changed, waived, or terminated by a written instrument signed by the Company
and the holders of the Options representing the right to acquire a majority of
the shares of Stock then subject to issuance upon the exercise of the Options.
(c) Replacement. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction, or mutilation of this Option
and, in the case of loss, theft, or destruction, on delivery of any indemnity
agreement or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Option, the
Company at its expense will execute and deliver, in lieu of this Option, a new
Option of like tenor.
(d) Option Agent. The Company may, on written notice to the
holder of this Option, appoint an agent having an office in California for the
purposes of issuing Stock or other securities upon the exercise of this Option
and of replacing or exchanging this Option, and after that appointment any such
issuance, replacement, or exchange shall be made at that office by that agent.
(e) No Rights as Shareholder. No holder of this Option, as such,
shall be entitled to vote or receive dividends or be considered a shareholder
of the Company for any purpose, nor shall anything in this Option be construed
to confer on any holder of this Option as such, any rights of a shareholder of
the Company or any right to vote, to give or withhold consent to any corporate
action, to receive notice of meeting of shareholders, to receive dividends or
subscription rights or otherwise.
(f) Nontransferability. This Option may not be transferred or
assigned without the prior written consent of the Company except, subject to
Section 6(a) and (b), in its entirety to single purchaser who agrees to be
bound by all the terms hereof including this paragraph.
(g) Notices. Notices hereunder to the holder of this Option shall
be sent by certified or registered mail to the address given to the Company by
such holder and shall be deemed given when so mailed.
(h) Governing Law. This Option shall be governed by the laws of
the State of California as applied to contracts entered into in California
between California residents.
CALYPTE BIOMEDICAL CORPORATION
By: [SIG]
----------------------------
Jack Davis
6
<PAGE> 7
FORM OF EXERCISE
(To be signed upon exercise of Option)
To: Calypte Biomedical Corporation
The undersigned holder of the attached Option hereby irrevocably
elects to exercise the right to purchase________________ shares of_____
_______________Stock of Calypte Biomedical Corporation and herewith makes
payment of $____________________ for those shares, and requests that the
certificate for those shares be issued in the name of the undersigned and
delivered to the address below the signature of the undersigned. The
undersigned hereby affirms the statements and convenants in Section 6 of the
Option.
Dated:____________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
attached Option).
______________________________
Signature
______________________________
Address
______________________________
7
<PAGE> 8
THIS OPTION AND THE SECURITIES SUBJECT TO THIS OPTION HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN
EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE.
OPTION TO PURCHASE COMMON STOCK OF
CALYPTE BIOMEDICAL CORPORATION
ISSUANCE DATE: OCTOBER 12,1995
EXPIRATION DATE: OCTOBER 12, 2005 OR EARLIER
This certifies that Frederick M. Haney or permitted assigns, is
entitled, subject to the terms set forth below, to purchase from Calypte
Biomedical Corporation, a California corporation, (the "Company") up to 29,972
shares (which number is subject to adjustment as provided herein) of fully paid
and nonassessable Common Stock of the Company at the purchase price of $7.50
per share, subject to adjustment as provided herein, (the "Purchase Price") at
any time or from time to time through October 12, 2005 or earlier per terms set
forth below. Such price and number of shares are subject to adjustment as
provided in Section 2 of this Option.
1. Definitions
As used in this Option, the following terms, unless the context
otherwise requires, have the following meanings:
(a) "Company" includes any corporation which shall succeed to or
assume obligations of the Company under this Option.
(b) "Stock", when used with reference to shares of stock of the
Company, means shares of Common Stock of the Company, as presently defined in
the Company's Restated Articles of Incorporation, and stock of any other class
into which those shares many hereafter be changed.
(c) "Shares" shall mean the shares of Stock purchasable hereunder
and shall include all shares into which the Shares purchasable hereunder may be
converted or changed.
(d) "Optionholder", "holder of Option", "holder", or similar terms
when the context refers to a holder of the Option, mean any person who shall at
the time be the register holder of this Option.
2 . Milestones
(a) The Optionholder may exercise the Option to purchase common
stock subject to the attainment of the Milestones set forth in the schedule
below. The
1
<PAGE> 9
achievement of a Milestone is a condition precedent to the availability of an
Option to purchase the respective number of common stock at the Exercise Price:
<TABLE>
<CAPTION>
MILESTONES NUMBER OF SHARES
SUBJECT TO
OPTIONS
<S> <C> <C>
1. Upon the Effective Date of the Agreement 6,310
for the purchase of Pepgen Securities
2. Upon signing of a Research and 6,310
Development Contract with proceeds of
$1 million USD or greater
3. Upon signing of a licensing agreement 6,310
with proceeds of $5 million USD or
greater
4. Upon filing of an Investigation of New 1,577
Drug ("IND") application with the US
Food and Drug Administration
("USFDA"), or with similar agencies in
Europe or Japan
5. Upon filing of a New Drug Application 3,155
("NDA") with the USFDA or with similar
agencies in Europe or Japan
6. Upon first commercial sales of an 6,310
Company product based on an NDA
</TABLE>
(b) Upon the achievement of a Milestone set forth in paragraph 2
above thereby giving rise to the Option to exercise the number of shares
indicated next to the Milestone as provided for herein, the Optionholder shall
have thereafter thirty-six (36) months in which to exercise said Options
("Option Period"). Failure to remit to the Company the Exercise Price within
said Option Period shall constitute an irrevocable waiver of the right to
exercise said Option granted hereunder. Payment of the Exercise Price for all
options exercised pursuant to this Agreement is due on transfer of the
Company's Common Stock. Optionholder shall not be eligible to own any
fractional shares of the Company's Common Stock and calculation of the option
eligibility of the Optionholder shall at all times be rounded down to the
nearest whole number of shares.
(c) Notwithstanding any provision to the contrary, this Agreement
and the Option granted hereunder shall automatically terminate and expire ten
(10) years after the Effective Date. At such point in time, any Milestones not
yet achieved which would have given rise to an Option as set forth herein and
any rights related thereto shall also terminate. In no event shall any part of
the option be exercisable after the expiration of the ten (10) years
(referenced above) from the Effective Date.
3. Adjustment of Purchase Price and Number of Shares
The number and kind of securities purchasable upon the exercise of
this Option and the Purchase Price shall be subject to adjustment from time to
time upon the occurrence of certain events, as follows:
2
<PAGE> 10
(a) Reclassification. In case of any reclassification or change
of outstanding securities of the class issuable upon exercise of this Option
(other than upon any consolidation or merger of the Company with or into
another corporation unless this corporation is the surviving corporation, or
upon the sale of all or substantially all of the assets of the Company) then,
and in any such case, the holder of this Option, upon the exercise hereof at
any time after the consummation of such reclassification or change shall be
entitled to receive in lieu of each share of Stock theretofore issuable upon
exercise of this Option, the kind and amount of shares of stock, other
securities, money and property received upon such reclassification or change by
a holder of one share of Stock. The provisions of this subsection (a) shall
similarly apply to successive reclassification or changes.
(b) Subdivision or Combination of Stock. If the Company at any
time while this Option remains outstanding and unexpired shall subdivide or
combine its Stock, the Purchase Price shall be proportionately decreased in the
case of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this Option
is outstanding shall pay a dividend with respect to Stock payable in Stock, or
make any other distribution of Stock with respect to Stock (except any
distribution specifically provided for in the foregoing subsections (a) or
(b)), then the Purchase Price shall be adjusted, effective from and after the
date of determination of shareholders entitled to receive such dividend or
distribution, to that price determined by a fraction, (a) the numerator of
which shall be the total number of shares of Stock outstanding immediately
prior to such dividend or distribution, and (b) the denominator of which shall
be the total number of shares of Stock outstanding immediately after such
dividend or distribution.
(d) Non-Cash Dividends. If the Company at any time while this
Option is outstanding shall pay a dividend with respect to Stock payable in
securities other than Stock or other non-cash property, or make any other
distribution of such securities or property with respect to Stock (except any
distribution specifically provided for in the foregoing subsections (a) or (b),
then this Option shall represent the right to acquire upon exercise of this
Option such securities or property which a holder of Stock would have been
entitled to receive upon such dividend or distribution, without the payment by
the holder of this Option of any additional consideration for such securities
or property.
(e) Adjustment of Number of Shares. Upon each adjustment in the
Purchase Price, the number of Shares shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Purchase Price by a fraction, the
numerator of which shall be the Purchase Price immediately prior to such
adjustment and the denominator of which shall be the Purchase Price immediately
thereafter.
(f) Notice of Adjustments. Whenever the Purchase Price shall be
adjusted pursuant to Section 2 hereof, the Company shall issue a certificate
signed by its chief financial officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated and the Purchase Price or Prices after
giving effect to such adjustment, and the securities or other property for
which this Option may then be exercised, and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to the holder
of this Option.
3
<PAGE> 11
4. Exercise Provisions
(a) Manner of Exercise. This Option may be exercised in part or
in whole only by the holder of this Option surrendering to the Company at its
principal office in California, this Option, together with the exercise form
attached to this Option duly executed by the holder together with payment to
the Company in the amount obtained by multiplying the Purchase Price by the
number of shares of Stock designated in the exercise form. Payment may be in
cash or by bank check payable to the order of the Company.
(b) Partial Exercise. On any partial exercise, the Company shall
promptly issue and deliver to the holder of this Option a new Option or Options
of like tenor in the name of that holder providing for the right to purchase
that number of shares of Stock as to which this Option has not been exercised.
(c) Net Exercise Rights. Notwithstanding the payment provisions
set forth in this Section 4, the holder may elect to receive shares of Option
Stock equal to the value (as determined below) of this Option by surrender of
this Option at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder the number of
shares of Common Stock determined by use of the following formula:
X = Y(A-B)
A
Where: X = the number of shares of Common Stock to be issued to the holder.
Y = the number of shares of Common Stock subject to this Option
A = the Fair Market Value (as defined below) of one (1) share of
Common Stock.
B = the per share Purchase Price pursuant to this Option.
For purpose of this Section 7, fair market value of a share as of a
particular date shall mean:
(i) If the Company's registration statement under the Act,
covering its initial underwritten public offering of stock, has been declared
effective by the Securities and Exchange Commission, then the fair market value
of a share shall be calculated on the basis of the closing market price (last
trade regular way if the Stock is traded on the New York or American Stock
Exchange, and if not so traded, the last sale price or mean of the bid and
asked prices as reported by NASDAQ) as of the date of exercise.
(ii) If such a registration statement has not been declared
effective, or if it has been declared effective but the offering is not
consummated in accordance with the terms of the underwriting agreement between
the Company and its underwriters relating to such registration statement, then
as determined in good faith by the Company's Board of Directors upon a review
of relevant factors.
5. Delivery of Stock Certificates
Within a reasonable time after full or partial exercise of this
Option, the Company at its expense will cause to be issued in the name of and
delivered to the holder of this Option, a certificate or certificates for the
number of fully paid and nonassessable shares of Stock to
4
<PAGE> 12
which that holder shall be entitled upon such exercise, together with any other
securities and property to which that holder is entitled upon such exercise
under the terms of this Option. No fractional shares will be issued upon
exercise of rights to purchase under this Option. If upon any exercise of this
Option a fraction of a share results, the Company will pay the cash value of
that fractional share, calculated on the basis of the closing market price
(last trade regular way if the Stock is traded on the New York or American
Stock Exchange, and if not so traded, the last sale price or mean of the bid
and asked prices as reported by NASDAQ) as of the date of exercise, or, if the
Stock is not publicly traded, then on the basis of the Company's good faith
determination of the fair market value of the Stock.
6. Compliance with Securities Act; Disposition of Shares of Common Stock,
Registration Rights
(a) Compliance with Securities Act. The holder of this Option, by
acceptance hereof, agrees that this Option and the Shares to be issued upon
exercise hereof are being acquired for investment and that he will not offer,
sell or otherwise dispose of this Option or any Shares to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). Upon exercise of this
Option, the holder hereof shall confirm in writing, in a form satisfactory to
the Company, that the Shares are being acquired for investment and not with a
view toward distribution or resale (unless sale of the Shares has been
registered under the Act). Any proposed transferee of this Option or the
Shares (except a transferee of the Shares in a registered public offering) will
be required to agree to the provisions of this Section 6. Certificates
representing all Shares (unless registered under the Act) shall be stamped or
imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT
BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION
STATEMENT UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES OR (II)
THERE IS AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION, THAT
AN EXEMPTION THEREFROM IS AVAILABLE.
(b) Notice of Proposed Transfers. Prior to any proposed transfer
of this Option or any of the Shares, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice (the "Notice") to the Company of such
holder's intention to make such transfer. The Notice shall describe the manner
and circumstances of the proposed transfer in sufficient detail. If requested
by the Company prior to the transfer being effected, the holder shall provide
to the Company a written opinion of legal counsel who shall be reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Option or the Shares may be effected without
registration under the Securities Act. The holder of such securities shall be
entitled to transfer such securities in accordance with the terms, of the
Notice only after the Company has consented in writing to such transfer. Each
option or stock certificate evidencing the securities so transferred shall bear
the appropriate restrictive legend set forth above, except that such
certificate shall not bear such restrictive legend if in the opinion of counsel
for the Company such legend is not required in order to establish compliance
with any provisions of the securities laws. Transfer of the Option is further
restricted by Section 7(f) hereof.
5
<PAGE> 13
7. Miscellaneous Provisions
(a) Reservation of Stock. The Company convenants that it will at
all times reserve and keep available, solely for issuance upon exercise of this
Option, all shares of Stock or other securities from time to time issuable upon
exercise of this Option.
(b) Modification. This Option and any of its terms may be
changed, waived, or terminated by a written instrument signed by the Company
and the holders of the Options representing the right to acquire a majority of
the shares of Stock then subject to issuance upon the exercise of the Options.
(c) Replacement. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction, or mutilation of this Option
and, in the case of loss, theft, or destruction, on delivery of any indemnity
agreement or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Option, the
Company at its expense will execute and deliver, in lieu of this Option, a new
Option of like tenor.
(d) Option Agent. The Company may, on written notice to the
holder of this Option, appoint an agent having an office in California for the
purposes of issuing Stock or other securities upon the exercise of this Option
and of replacing or exchanging this Option, and after that appointment any such
issuance, replacement, or exchange shall be made at that office by that agent.
(e) No Rights as Shareholder. No holder of this Option, as such,
shall be entitled to vote or receive dividends or be considered a shareholder
of the Company for any purpose, nor shall anything in this Option be construed
to confer on any holder of this Option as such, any rights of a shareholder of
the Company or any right to vote, to give or withhold consent to any corporate
action, to receive notice of meeting of shareholders, to receive dividends or
subscription rights or otherwise.
(f) Nontransferability. This Option may not be transferred or
assigned without the prior written consent of the Company except, subject to
Section 6(a) and (b), in its entirety to single purchaser who agrees to be
bound by all the terms hereof including this paragraph.
(g) Notices. Notices hereunder to the holder of this Option shall
be sent by certified or registered mail to the address given to the Company by
such holder and shall be deemed given when so mailed.
(h) Governing Law. This Option shall be governed by the laws of
the State of California as applied to contracts entered into in California
between California residents.
CALYPTE BIOMEDICAL CORPORATION
By: [SIG]
------------------------------
Jack Davis
6
<PAGE> 14
FORM OF EXERCISE
(To be signed upon exercise of Option)
To: Calypte Biomedical Corporation
The undersigned holder of the attached Option hereby irrevocably
elects to exercise the right to purchase_______________ shares
of____________________ Stock of Calypte Biomedical Corporation and herewith
makes payment of $______ ____________ for those shares, and requests that the
certificate for those shares be issued in the name of the undersigned and
delivered to the address below the signature of the undersigned. The
undersigned hereby affirms the statements and convenants, in Section 6 of the
Option.
Dated:______________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the attached Option).
______________________________
Signature
______________________________
Address
______________________________
7
<PAGE> 15
THIS OPTION AND THE SECURITIES SUBJECT TO THIS OPTION HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN
EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE
OPTION TO PURCHASE COMMON STOCK OF
CALYPTE BIOMEDICAL CORPORATION
ISSUANCE DATE: OCTOBER 12,1995
EXPIRATION DATE: OCTOBER 12, 2005 OR EARLIER
This certifies that Fuller W. Bazer or permitted assigns, is entitled,
subject to the terms set forth below, to purchase from Calypte Biomedical
Corporation, a California corporation, (the "Company") up to 95,950 shares
(which number is subject to adjustment as provided herein) of fully paid and
nonassessable Common Stock of the Company at the purchase price of $7.50 per
share, subject to adjustment as provided herein, (the "Purchase Price") at any
time or from time to time through October 12, 2005 or earlier per terms set
forth below. Such price and number of shares are subject to adjustment as
provided in Section 2 of this Option.
1. Definitions
As used in this Option, the following terms, unless the context
otherwise requires, have the following meanings:
(a) "Company" includes any corporation which shall succeed to or
assume obligations of the Company under this Option.
(b) "Stock", when used with reference to shares of stock of the
Company, means shares of Common Stock of the Company, as presently defined in
the Company's Restated Articles of Incorporation, and stock of any other class
into which those shares many hereafter be changed.
(c) "Shares" shall mean the shares of Stock purchasable hereunder
and shall include all shares into which the Shares purchasable hereunder may be
converted or changed.
(d) "Optionholder", "holder of Option", "holder", or similar terms
when the context refers to a holder of the Option, mean any person who shall at
the time be the register holder of this Option.
2 . Milestones
(a) The Optionholder may exercise the Option to purchase common
stock subject to the attainment of the Milestones set forth in the schedule
below. The
1
<PAGE> 16
achievement of a Milestone is a condition precedent to the availability of an
Option to purchase the respective number of common stock at the Exercise
Price.:
<TABLE>
<CAPTION>
MILESTONES NUMBER OF SHARES SUBJECT TO
OPTIONS
<S> <C> <C>
1. Upon the Effective Date of the Agreement 20,200
for the purchase of Pepgen Securities
2. Upon signing of a Research and 20,200
Development Contract with proceeds of
$1 million USD or greater
3. Upon signing of a licensing agreement 20,200
with proceeds of $5 million USD or
greater
4. Upon filing of an Investigation of New 5,050
Drug ("IND") application with the US
Food and Drug Administration
("USFDA"), or with similar agencies in
Europe or Japan
5. Upon filing of a New Drug Application 10,100
("NDA") with the USFDA or with similar
agencies in Europe or Japan
6. Upon first commercial sales of an 20,200
Company product based on an NDA
</TABLE>
(b) Upon the achievement of a Milestone set forth in paragraph 2
above thereby giving rise to the Option to exercise the number of shares
indicated next to the Milestone as provided for herein, the Optionholder shall
have thereafter thirty-six (36) months in which to exercise said Options
("Option Period"). Failure to remit to the Company the Exercise Price within
said Option Period shall constitute an irrevocable waiver of the right to
exercise said Option granted hereunder. Payment of the Exercise Price for all
options exercised pursuant to this Agreement is due on transfer of the
Company's Common Stock. Optionholder shall not be eligible to own any
fractional shares of the Company's Common Stock and calculation of the option
eligibility of the Optionholder shall at all times be rounded down to the
nearest whole number of shares.
(c) Notwithstanding any provision to the contrary, this Agreement
and the Option granted hereunder shall automatically terminate and expire ten
(10) years after the Effective Date. At such point in time, any Milestones not
yet achieved which would have given rise to an Option as set forth herein and
any rights related thereto shall also terminate. In no event shall any part of
the option be exercisable after the expiration of the ten (10) years
(referenced above) from the Effective Date.
3. Adjustment of Purchase Price and Number of Shares
The number and kind of securities purchasable upon the exercise of this Option
and the Purchase Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
2
<PAGE> 17
(a) Reclassification. In case of any reclassification or change
of outstanding securities of the class issuable upon exercise of this Option
(other than upon any consolidation or merger of the Company with or into
another corporation unless this corporation is the surviving corporation, or
upon the sale of all or substantially all of the assets of the Company) then,
and in any such case, the holder of this Option, upon the exercise hereof at
any time after the consummation of such reclassification or change shall be
entitled to receive in lieu of each share of Stock theretofore issuable upon
exercise of this Option, the kind and amount of shares of stock, other
securities, money and property received upon such reclassification or change by
a holder of one share of Stock. The provisions of this subsection (a) shall
similarly apply to successive reclassification or changes.
(b) Subdivision or Combination of Stock. If the Company at any
time while this Option remains outstanding and unexpired shall subdivide or
combine its Stock, the Purchase Price shall be proportionately decreased in the
case of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this Option
is outstanding shall pay a dividend with respect to Stock payable in Stock, or
make any other distribution of Stock with respect to Stock (except any
distribution specifically provided for in the foregoing subsections (a) or
(b)), then the Purchase Price shall be adjusted, effective from and after the
date of determination of shareholders entitled to receive such dividend or
distribution, to that price determined by a fraction, (a) the numerator of
which shall be the total number of shares of Stock outstanding immediately
prior to such dividend or distribution, and (b) the denominator of which shall
be the total number of shares of Stock outstanding immediately after such
dividend or distribution.
(d) Non-Cash Dividends. If the Company at any time while this
Option is outstanding shall pay a dividend with respect to Stock payable in
securities other than Stock or other non-cash property, or make any other
distribution of such securities or property with respect to Stock (except any
distribution specifically provided for in the foregoing subsections (a) or
(b)), then this Option shall represent the right to acquire upon exercise of
this Option such securities or property which a holder of Stock would have been
entitled to receive upon such dividend or distribution, without the payment by
the holder of this Option of any additional consideration for such securities
or property.
(e) Adjustment of Number of Shares. Upon each adjustment in the
Purchase Price, the number of Shares shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Purchase Price by a fraction, the
numerator of which shall be the Purchase Price immediately prior to such
adjustment and the denominator of which shall be the Purchase Price immediately
thereafter.
(f) Notice of Adjustments. Whenever the Purchase Price shall be
adjusted pursuant to Section 2 hereof, the Company shall issue a certificate
signed by its chief financial officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated and the Purchase Price or Prices after
giving effect to such adjustment, and the securities or other property for
which this Option may then be exercised, and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to the holder
of this Option.
3
<PAGE> 18
4. Exercise Provisions
(a) Manner of Exercise. This Option may be exercised in part or
in whole only by the holder of this Option surrendering to the Company at its
principal office in California, this Option, together with the exercise form
attached to this Option duly executed by the holder together with payment to
the Company in the amount obtained by multiplying the Purchase Price by the
number of shares of Stock designated in the exercise form. Payment may be in
cash or by bank check payable to the order of the Company.
(b) Partial Exercise. On any partial exercise, the Company shall
promptly issue and deliver to the holder of this Option a new Option or Options
of like tenor in the name of that holder providing for the right to purchase
that number of shares of Stock as to which this Option has not been exercised.
(c) Net Exercise Rights. Notwithstanding the payment provisions
set forth in this Section 4, the holder may elect to receive shares of Option
Stock equal to the value (as determined below) of this Option by surrender of
this Option at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder the number of
shares of Common Stock determined by use of the following formula:
X = Y(A-B)
A
Where: X = the number of shares of Common Stock to be issued to the holder.
Y = the number of shares of Common Stock subject to this Option
A = the Fair Market Value (as defined below) of one (1) share of Common
Stock.
B = the per share Purchase Price pursuant to this Option.
For purpose of this Section 7, fair market value of a share as of a
particular date shall mean:
(i) If the Company's registration statement under the Act,
covering its initial underwritten public offering of stock, has been declared
effective by the Securities and Exchange Commission, then the fair market value
of a share shall be calculated on the basis of the closing market price (last
trade regular way if the Stock is traded on the New York or American Stock
Exchange, and if not so traded, the last sale price or mean of the bid and
asked prices as reported by NASDAQ) as of the date of exercise.
(ii) If such a registration statement has not been declared
effective, or if it has been declared effective but the offering is not
consummated in accordance with the terms of the underwriting agreement between
the Company and its underwriters relating to such registration statement, then
as determined in good faith by the Company's Board of Directors upon a review
of relevant factors.
5. Delivery of Stock Certificates
Within a reasonable time after full or partial exercise of this Option, the
Company at its expense will cause to be issued in the name of and delivered to
the holder of this Option, a certificate or certificates for the number of
fully paid and nonassessable shares of Stock to
4
<PAGE> 19
which that holder shall be entitled upon such exercise, together with any other
securities and property to which that holder is entitled upon such exercise
under the terms of this Option. No fractional shares will be issued upon
exercise of rights to purchase under this Option. If upon any exercise of this
Option a fraction of a share results, the Company will pay the cash value of
that fractional share, calculated on the basis of the closing market price
(last trade regular way if the Stock is traded on the New York or American
Stock Exchange, and if not so traded, the last sale price or mean of the bid
and asked prices as reported by NASDAQ) as of the date of exercise, or, if the
Stock is not publicly traded, then on the basis of the Company's good faith
determination of the fair market value of the Stock.
6. Compliance with Securities Act; Disposition of Shares of Common
Stock, Registration Rights
(a) Compliance with Securities Act. The holder of this Option, by
acceptance hereof, agrees that this Option and the Shares to be issued upon
exercise hereof are being acquired for investment and that he will not offer,
sell or otherwise dispose of this Option or any Shares to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). Upon exercise of this
Option, the holder hereof shall confirm in writing, in a form satisfactory to
the Company, that the Shares are being acquired for investment and not with a
view toward distribution or resale (unless sale of the Shares has been
registered under the Act). Any proposed transferee of this Option or the
Shares (except a transferee of the Shares in a registered public offering) will
be required to agree to the provisions of this Section 6. Certificates
representing all Shares (unless registered under the Act) shall be stamped or
imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE
OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT
UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION
OF COUNSEL, SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS
AVAILABLE.
(b) Notice of Proposed Transfers. Prior to any proposed transfer
of this Option or any of the Shares, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice (the "Notice") to the Company of such
holder's intention to make such transfer. The Notice shall describe the manner
and circumstances of the proposed transfer in sufficient detail. If requested
by the Company prior to the transfer being effected, the holder shall provide
to the Company a written opinion of legal counsel who shall be reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Option or the Shares may be effected without
registration under the Securities Act. The holder of such securities shall be
entitled to transfer such securities in accordance with the terms of the Notice
only after the Company has consented in writing to such transfer. Each option
or stock certificate evidencing the securities so transferred shall bear the
appropriate restrictive legend set forth above, except that such certificate
shall not bear such restrictive legend if in the opinion of counsel for the
Company such legend is not required in order to establish compliance with any
provisions of the securities laws. Transfer of the Option is further
restricted by Section 7(f) hereof.
5
<PAGE> 20
7. Miscellaneous Provisions
(a) Reservation of Stock. The Company covenants that it will at
all times reserve and keep available, solely for issuance upon exercise of this
Option, all shares of Stock or other securities from time to time issuable upon
exercise of this Option.
(b) Modification. This Option and any of its terms may be
changed, waived, or terminated by a written instrument signed by the Company
and the holders of the Options representing the right to acquire a majority of
the shares of Stock then subject to issuance upon the exercise of the Options.
(c) Replacement. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction, or mutilation of this Option
and, in the case of loss, theft, or destruction, on delivery of any indemnity
agreement or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Option, the
Company at its expense will execute and deliver, in lieu of this Option, a new
Option of like tenor.
(d) Option Agent. The Company may, on written notice to the
holder of this Option, appoint an agent having an office in California for the
purposes of issuing Stock or other securities upon the exercise of this Option
and of replacing or exchanging this Option, and after that appointment any such
issuance, replacement, or exchange shall be made at that office by that agent.
(e) No Rights as Shareholder. No holder of this Option, as such,
shall be entitled to vote or receive dividends or be considered a shareholder
of the Company for any purpose, nor shall anything in this Option be construed
to confer on any holder of this Option as such, any rights of a shareholder of
the Company or any right to vote, to give or withhold consent to any corporate
action, to receive notice of meeting of shareholders, to receive dividends or
subscription rights or otherwise.
(f) Nontransferability. This Option may not be transferred or
assigned without the prior written consent of the Company except, subject to
Section 6(a) and (b), in its entirety to single purchaser who agrees to be
bound by all the terms hereof including this paragraph.
(g) Notices. Notices hereunder to the holder of this Option shall
be sent by certified or registered mail to the address given to the Company by
such holder and shall be deemed given when so mailed.
(h) Governing Law. This Option shall be governed by the laws of
the State of California as applied to contracts entered into in California
between California residents.
CALYPTE BIOMEDICAL CORPORATION
By: /s/ JACK DAVIS
-----------------------------
Jack Davis
6
<PAGE> 21
FORM OF EXERCISE
(To be signed upon exercise of Option)
To: Calypte Biomedical Corporation
The undersigned holder of the attached Option hereby irrevocably
elects to exercise the right to purchase ______________ shares of ____________
Stock of Calypte Biomedical Corporation and herewith makes payment of $ ________
for those shares, and requests that the certificate for those shares be issued
in the name of the undersigned and delivered to the address below the signature
of the undersigned. The undersigned hereby affirms the statements and
covenants in Section 6 of the Option.
Dated:
- ------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the attached Option).
Signature
---------------------------------
Address
---------------------------------
---------------------------------
7
<PAGE> 22
THIS OPTION AND THE SECURITIES SUBJECT TO THIS OPTION HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE
OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT
UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION
OF COUNSEL, SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS
AVAILABLE.
OPTION TO PURCHASE COMMON STOCK OF
CALYPTE BIOMEDICAL CORPORATION
ISSUANCE DATE: OCTOBER 12,1995
EXPIRATION DATE: OCTOBER 12,2005 OR EARLIER
This certifies that Howard M. Johnson or permitted assigns, is
entitled, subject to the terms set forth below, to purchase from Calypte
Biomedical Corporation, a California corporation, (the "Company") up to 119,937
shares (which number is subject to adjustment as provided herein) of fully paid
and nonassessable Common Stock of the Company at the purchase price of $7.50 per
share, subject to adjustment as provided herein, (the "Purchase Price") at any
time or from time to time through October 12, 2005 or earlier per terms set
forth below. Such price and number of shares are subject to adjustment as
provided in Section 2 of this Option.
1. Definitions
As used in this Option, the following terms, unless the context
otherwise requires, have the following meanings:
(a) "Company" includes any corporation which shall succeed to or
assume obligations of the Company under this Option.
(b) "Stock", when used with reference to shares of stock of the
Company, means shares of Common Stock of the Company, as presently defined in
the Company's Restated Articles of Incorporation, and stock of any other class
into which those shares many hereafter be changed.
(c) "Shares" shall mean the shares of Stock purchasable hereunder
and shall include all shares into which the Shares purchasable hereunder may be
converted or changed.
(d) "Optionholder", "holder of Option", "holder", or similar terms
when the context refers to a holder of the Option, mean any person who shall at
the time be the register holder of this Option.
2. Milestones
(a) The Optionholder may exercise the Option to purchase common stock
subject to the attainment of the Milestones set forth in the schedule below.
The
1
<PAGE> 23
achievement of a Milestone is a condition precedent to the availability of an
Option to purchase the respective number of common stock at the Exercise
Price.:
<TABLE>
<CAPTION>
MILESTONES NUMBER OF SHARES SUBJECT TO
OPTIONS
<S> <C> <C>
1. Upon the Effective Date of the Agreement 25,250
for the purchase of Pepgen Securities
2. Upon signing of a Research and 25,250
Development Contract with proceeds of
$1 million USD or greater
3. Upon signing of a licensing agreement 25,250
with proceeds of $5 million USD or
greater
4. Upon filing of an Investigation of New 6,312
Drug ("IND") application with the US
Food and Drug Administration
("USFDA"), or with similar agencies in
Europe or Japan
5. Upon filing of a New Drug Application 12,625
("NDA") with the USFDA or with similar
agencies in Europe or Japan
6. Upon first commercial sales of an 25,250
Company product based on an NDA
</TABLE>
(b) Upon the achievement of a Milestone set forth in paragraph 2
above thereby giving rise to the Option to exercise the number of shares
indicated next to the Milestone as provided for herein, the Optionholder shall
have thereafter thirty-six (36) months in which to exercise said Options
("Option Period"). Failure to remit to the Company the Exercise Price within
said Option Period shall constitute an irrevocable waiver of the right to
exercise said Option granted hereunder. Payment of the Exercise Price for all
options exercised pursuant to this Agreement is due on transfer of the
Company's Common Stock. Optionholder shall not be eligible to own any
fractional shares of the Company's Common Stock and calculation of the option
eligibility of the Optionholder shall at all times be rounded down to the
nearest whole number of shares.
(c) Notwithstanding any provision to the contrary, this Agreement
and the Option granted hereunder shall automatically terminate and expire ten
(10) years after the Effective Date. At such point in time, any Milestones not
yet achieved which would have given rise to an Option as set forth herein and
any rights related thereto shall also terminate. In no event shall any part of
the option be exercisable after the expiration of the ten (10) years
(referenced above) from the Effective Date.
3. Adjustment of Purchase Price and Number of Shares
The number and kind of securities purchasable upon the exercise of this Option
and the Purchase Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
2
<PAGE> 24
(a) Reclassification. In case of any reclassification or change
of outstanding securities of the class issuable upon exercise of this Option
(other than upon any consolidation or merger of the Company with or into
another corporation unless this corporation is the surviving corporation, or
upon the sale of all or substantially all of the assets of the Company) then,
and in any such case, the holder of this Option, upon the exercise hereof at
any time after the consummation of such reclassification or change shall be
entitled to receive in lieu of each share of Stock theretofore issuable upon
exercise of this Option, the kind and amount of shares of stock, other
securities, money and property received upon such reclassification or change by
a holder of one share of Stock. The provisions of this subsection (a) shall
similarly apply to successive reclassification or changes.
(b) Subdivision or Combination of Stock. If the Company at any
time while this Option remains outstanding and unexpired shall subdivide or
combine its Stock, the Purchase Price shall be proportionately decreased in the
case of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this Option
is outstanding shall pay a dividend with respect to Stock payable in Stock, or
make any other distribution of Stock with respect to Stock (except any
distribution specifically provided for in the foregoing subsections (a) or
(b)), then the Purchase Price shall be adjusted, effective from and after the
date of determination of shareholders entitled to receive such dividend or
distribution, to that price determined by a fraction, (a) the numerator of
which shall be the total number of shares of Stock outstanding immediately
prior to such dividend or distribution, and (b) the denominator of which shall
be the total number of shares of Stock outstanding immediately after such
dividend or distribution.
(d) Non-Cash Dividends. If the Company at any time while this
Option is outstanding shall pay a dividend with respect to Stock payable in
securities other than Stock or other non-cash property, or make any other
distribution of such securities or property with respect to Stock (except any
distribution specifically provided for in the foregoing subsections (a) or
(b)), then this Option shall represent the right to acquire upon exercise of
this Option such securities or property which a holder of Stock would have been
entitled to receive upon such dividend or distribution, without the payment by
the holder of this Option of any additional consideration for such securities
or property.
(e) Adjustment of Number of Shares. Upon each adjustment in the
Purchase Price, the number of Shares shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Purchase Price by a fraction, the
numerator of which shall be the Purchase Price immediately prior to such
adjustment and the denominator of which shall be the Purchase Price immediately
thereafter.
(f) Notice of Adjustments. Whenever the Purchase Price shall be
adjusted pursuant to Section 2 hereof, the Company shall issue a certificate
signed by its chief financial officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated and the Purchase Price or Prices after
giving effect to such adjustment, and the securities or other property for
which this Option may then be exercised, and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to the holder
of this Option.
3
<PAGE> 25
4. Exercise Provisions
(a) Manner of Exercise. This Option may be exercised in part or
in whole only by the holder of this Option surrendering to the Company at its
principal office in California, this Option, together with the exercise form
attached to this Option duly executed by the holder together with payment to
the Company in the amount obtained by multiplying the Purchase Price by the
number of shares of Stock designated in the exercise form. Payment may be in
cash or by bank check payable to the order of the Company.
(b) Partial Exercise. On any partial exercise, the Company shall
promptly issue and deliver to the holder of this Option a new Option or Options
of like tenor in the name of that holder providing for the right to purchase
that number of shares of Stock as to which this Option has not been exercised.
(c) Net Exercise Rights. Notwithstanding the payment provisions
set forth in this Section 4, the holder may elect to receive shares of Option
Stock equal to the value (as determined below) of this Option by surrender of
this Option at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder the number of
shares of Common Stock determined by use of the following formula:
X = Y(A-B)
A
Where: X the number of shares of Common Stock to be issued to the holder.
Y = the number of shares of Common Stock subject to this Option
A = the Fair Market Value (as defined below) of one (1) share of Common
Stock.
B = the per share Purchase Price pursuant to this Option.
For purpose of this Section 7, fair market value of a share as of a
particular date shall mean:
(i) If the Company's registration statement under the Act,
covering its initial underwritten public offering of stock, has been declared
effective by the Securities and Exchange Commission, then the fair market value
of a share shall be calculated on the basis of the closing market price (last
trade regular way if the Stock is traded on the New York or American Stock
Exchange, and if not so traded, the last sale price or mean of the bid and
asked prices as reported by NASDAQ) as of the date of exercise.
(ii) If such a registration statement has not been declared
effective, or if it has been declared effective but the offering is not
consummated in accordance with the terms of the underwriting agreement between
the Company and its underwriters relating to such registration statement, then
as determined in good faith by the Company's Board of Directors upon a review
of relevant factors.
5. Delivery of Stock Certificates
Within a reasonable time after full or partial exercise of this Option, the
Company at its expense will cause to be issued in the name of and delivered to
the holder of this Option, a certificate or certificates for the number of
fully paid and nonassessable shares of Stock to
4
<PAGE> 26
which that holder shall be entitled upon such exercise, together with any other
securities and property to which that holder is entitled upon such exercise
under the terms, of this Option. No fractional shares will be issued upon
exercise of rights to purchase under this Option. If upon any exercise of this
Option a fraction of a share results, the Company will pay the cash value of
that fractional share, calculated on the basis of the closing market price
(last trade regular way if the Stock is traded on the New York or American
Stock Exchange, and if not so traded, the last sale price or mean of the bid
and asked prices as reported by NASDAQ) as of the date of exercise, or, if the
Stock is not publicly traded, then on the basis of the Company's good faith
determination of the fair market value of the Stock.
6. Compliance with Securities Act; Disposition of Shares of Common
Stock; Registration Rights
(a) Compliance with Securities Act. The holder of this Option, by
acceptance hereof, agrees that this Option and the Shares to be issued upon
exercise hereof are being acquired for investment and that he will not offer,
sell or otherwise dispose of this Option or any Shares to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). Upon exercise of this
Option, the holder hereof shall confirm in writing, in a form satisfactory to
the Company, that the Shares are being acquired for investment and not with a
view toward distribution or resale (unless sale of the Shares has been
registered under the Act). Any proposed transferee of this Option or the
Shares (except a transferee of the Shares in a registered public offering) will
be required to agree to the provisions of this Section 6. Certificates
representing all Shares (unless registered under the Act) shall be stamped or
imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE
OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT
UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION
OF COUNSEL, SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS
AVAILABLE.
(b) Notice of Proposed Transfers. Prior to any proposed transfer
of this Option or any of the Shares, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice (the "Notice") to the Company of such
holder's intention to make such transfer. The Notice shall describe the manner
and circumstances of the proposed transfer in sufficient detail. If requested
by the Company prior to the transfer being effected, the holder shall provide
to the Company a written opinion of legal counsel who shall be reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Option or the Shares may be effected without
registration under the Securities Act. The holder of such securities shall be
entitled to transfer such securities in accordance with the terms of the Notice
only after the Company has consented in writing to such transfer. Each option
or stock certificate evidencing the securities so transferred shall bear the
appropriate restrictive legend set forth above, except that such certificate
shall not bear such restrictive legend if in the opinion of counsel for the
Company such legend is not required in order to establish compliance with any
provisions of the securities laws. Transfer of the Option is further
restricted by Section 7(f) hereof.
5
<PAGE> 27
7. Miscellaneous Provisions
(a) Reservation of Stock. The Company covenants that it will at
all times reserve and keep available, solely for issuance upon exercise of this
Option, all shares of Stock or other securities from time to time issuable upon
exercise of this Option.
(b) Modification. This Option and any of its terms may be
changed, waived, or terminated by a written instrument signed by the Company
and the holders of the Options representing the right to acquire a majority of
the shares of Stock then subject to issuance upon the exercise of the Options.
(c) Replacement. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction, or mutilation of this Option
and, in the case of loss, theft, or destruction, on delivery of any indemnity
agreement or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Option, the
Company at its expense will execute and deliver, in lieu of this Option, a new
Option of like tenor.
(d) Option Agent. The Company may, on written notice to the
holder of this Option, appoint an agent having an office in California for the
purposes of issuing Stock or other securities upon the exercise of this Option
and of replacing or exchanging this Option, and after that appointment any such
issuance, replacement, or exchange shall be made at that office by that agent.
(e) No Rights as Shareholder. No holder of this Option, as such,
shall be entitled to vote or receive dividends or be considered a shareholder
of the Company for any purpose, nor shall anything in this Option be construed
to confer on any holder of this Option as such, any rights of a shareholder of
the Company or any right to vote, to give or withhold consent to any corporate
action, to receive notice of meeting of shareholders, to receive dividends or
subscription rights or otherwise.
(f) Nontransferability. This Option may not be transferred or
assigned without the prior written consent of the Company except, subject to
Section 6(a) and (b), in its entirety to single purchaser who agrees to be
bound by all the terms hereof including this paragraph.
(g) Notices. Notices hereunder to the holder of this Option shall
be sent by certified or registered mail to the address given to the Company by
such holder and shall be deemed given when so mailed.
(h) Governing Law. This Option shall be governed by the laws of
the State of California as applied to contracts entered into in California
between California residents.
CALYPTE BIOMEDICAL CORPORATION
By: /s/ JACK DAVIS
-----------------------------------
Jack Davis
6
<PAGE> 28
FORM OF EXERCISE
(To be signed upon exercise of Option)
To: Calypte Biomedical Corporation
The undersigned holder of the attached Option hereby irrevocably
elects to exercise the right to purchase _______________ shares of _____________
Stock of Calypte Biomedical Corporation and herewith makes payment of $ ________
for those shares, and requests that the certificate for those shares be issued
in the name of the undersigned and delivered to the address below the signature
of the undersigned. The undersigned hereby affirms the statements and
covenants in Section 6 of the Option.
Dated:
- ---------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the attached Option).
------------------------------------------
Signature
------------------------------------------
Address
------------------------------------------
7
<PAGE> 29
THIS OPTION AND THE SECURITIES SUBJECT TO THIS OPTION HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE
OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT
UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION
OF COUNSEL, SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS
AVAILABLE.
OPTION TO PURCHASE COMMON STOCK OF
CALYPTE BIOMEDICAL CORPORATION
ISSUANCE DATE: OCTOBER 12,1995
EXPIRATION DATE: OCTOBER 12, 2005 OR EARLIER
This certifies that C. P. Liu or permitted assigns, is entitled,
subject to the terms set forth below, to purchase from Calypte Biomedical
Corporation, a California corporation, (the "Company") up to 221,920 shares
(which number is subject to adjustment as provided herein) of fully paid and
nonassessable Common Stock of the Company at the purchase price of $7.50 per
share, subject to adjustment as provided herein, (the "Purchase Price") at any
time or from time to time through October 12, 2005 or earlier per terms set
forth below. Such price and number of shares are subject to adjustment as
provided in Section 2 of this Option.
1. Definitions
As used in this Option, the following terms, unless the context
otherwise requires, have the following meanings:
(a) "Company" includes any corporation which shall succeed to or
assume obligations of the Company under this Option.
(b) "Stock", when used with reference to shares of stock of the
Company, means shares of Common Stock of the Company, as presently defined in
the Company's Restated Articles of Incorporation, and stock of any other class
into which those shares many hereafter be changed.
(c) "Shares" shall mean the shares of Stock purchasable hereunder
and shall include all shares into which the Shares purchasable hereunder may be
converted or changed.
(d) "Optionholder", "holder of Option", "holder", or similar terms
when the context refers to a holder of the Option, mean any person who shall at
the time be the register holder of this Option.
2. Milestones
(a) The Optionholder may exercise the Option to purchase common
stock subject to the attainment of the Milestones set forth in the schedule
below. The
1.
<PAGE> 30
achievement of a Milestone is a condition precedent to the availability of an
Option to purchase the respective number of common stock at the Exercise
Price.:
<TABLE>
<CAPTION>
MILESTONES NUMBER OF SHARES SUBJECT TO
OPTIONS
<S> <C> <C>
1. Upon the Effective Date of the Agreement 46,720
for the purchase of Pepgen Securities
2. Upon signing of a Research and 46,720
Development Contract with proceeds of
$1 million USD or greater
3. Upon signing of a licensing agreement 46,720
with proceeds of $5 million USD or
greater
4. Upon filing of an Investigation of New 11,680
Drug ("IND") application with the US
Food and Drug Administration
("USFDA"), or with similar agencies in
Europe or Japan
5. Upon filing of a New Drug Application 23,360
("NDA") with the USFDA or with similar
agencies in Europe or Japan
6. Upon first commercial sales of an 46,720
Company product based on an NDA
</TABLE>
(b) Upon the achievement of a Milestone set forth in paragraph 2
above thereby giving rise to the Option to exercise the number of shares
indicated next to the Milestone as provided for herein, the Optionholder shall
have thereafter thirty-six (36) months in which to exercise said Options
("Option Period"). Failure to remit to the Company the Exercise Price within
said Option Period shall constitute an irrevocable waiver of the right to
exercise said Option granted hereunder. Payment of the Exercise Price for all
options exercised pursuant to this Agreement is due on transfer of the
Company's Common Stock. Optionholder shall not be eligible to own any
fractional shares of the Company's Common Stock and calculation of the option
eligibility of the Optionholder shall at all times be rounded down to the
nearest whole number of shares.
(c) Notwithstanding any provision to the contrary, this Agreement
and the Option granted hereunder shall automatically terminate and expire ten
(10) years after the Effective Date. At such point in time, any Milestones not
yet achieved which would have given rise to an Option as set forth herein and
any rights related thereto shall also terminate. In no event shall any part of
the option be exercisable after the expiration of the ten (10) years
(referenced above) from the Effective Date.
3. Adjustment of Purchase Price and Number of Shares
The number and kind of securities purchasable upon the exercise of this Option
and the Purchase Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
2
<PAGE> 31
(a) Reclassification. In case of any reclassification or change
of outstanding securities of the class issuable upon exercise of this Option
(other than upon any consolidation or merger of the Company with or into
another corporation unless this corporation is the surviving corporation, or
upon the sale of all or substantially all of the assets of the Company) then,
and in any such case, the holder of this Option, upon the exercise hereof at
any time after the consummation of such reclassification or change shall be
entitled to receive in lieu of each share of Stock theretofore issuable upon
exercise of this Option, the kind and amount of shares of stock, other
securities, money and property received upon such reclassification or change by
a holder of one share of Stock. The provisions of this subsection (a) shall
similarly apply to successive reclassification or changes.
(b) Subdivision or Combination of Stock. If the Company at any
time while this Option remains outstanding and unexpired shall subdivide or
combine its Stock, the Purchase Price shall be proportionately decreased in the
case of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this Option
is outstanding shall pay a dividend with respect to Stock payable in Stock, or
make any other distribution of Stock with respect to Stock (except any
distribution specifically provided for in the foregoing subsections (a) or
(b)), then the Purchase Price shall be adjusted, effective from and after the
date of determination of shareholders entitled to receive such dividend or
distribution, to that price determined by a fraction, (a) the numerator of
which shall be the total number of shares of Stock outstanding immediately
prior to such dividend or distribution, and (b) the denominator of which shall
be the total number of shares of Stock outstanding immediately after such
dividend or distribution.
(d) Non-Cash Dividends. If the Company at any time while this
Option is outstanding shall pay a dividend with respect to Stock payable in
securities other than Stock or other non-cash property, or make any other
distribution of such securities or property with respect to Stock (except any
distribution specifically provided for in the foregoing subsections (a) or
(b)), then this Option shall represent the right to acquire upon exercise of
this Option such securities or property which a holder of Stock would have been
entitled to receive upon such dividend or distribution, without the payment by
the holder of this Option of any additional consideration for such securities
or property.
(e) Adjustment of Number of Shares. Upon each adjustment in the
Purchase Price, the number of Shares shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Purchase Price by a fraction, the
numerator of which shall be the Purchase Price immediately prior to such
adjustment and the denominator of which shall be the Purchase Price immediately
thereafter.
(f) Notice of Adjustments. Whenever the Purchase Price shall be
adjusted pursuant to Section 2 hereof, the Company shall issue a certificate
signed by its chief financial officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated and the Purchase Price or Prices after
giving effect to such adjustment, and the securities or other property for
which this Option may then be exercised, and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to the holder
of this Option.
3
<PAGE> 32
4. Exercise Provisions
(a) Manner of Exercise. This Option may be exercised in part or
in whole only by the holder of this Option surrendering to the Company at its
principal office in California, this Option, together with the exercise form
attached to this Option duly executed by the holder together with payment to
the Company in the amount obtained by multiplying the Purchase Price by the
number of shares of Stock designated in the exercise form. Payment may be in
cash or by bank check payable to the order of the Company.
(b) Partial Exercise. On any partial exercise, the Company shall
promptly issue and deliver to the holder of this Option a new Option or Options
of like tenor in the name of that holder providing for the right to purchase
that number of shares of Stock as to which this Option has not been exercised.
(c) Net Exercise Rights. Notwithstanding the payment provisions
set forth in this Section 4, the holder may elect to receive shares of Option
Stock equal to the value (as determined below) of this Option by surrender of
this Option at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder the number
of shares of Common Stock determined by use of the following formula:
X = Y(A-B)
A
Where: X = the number of shares of Common Stock to be issued to the holder.
Y = the number of shares of Common Stock subject to this Option
A = the Fair Market Value (as defined below) of one (1) share of Common
Stock.
B = the per share Purchase Price pursuant to this Option.
For purpose of this Section 7, fair market value of a share as of a
particular date shall mean:
(i) If the Company's registration statement under the Act,
covering its initial underwritten public offering of stock, has been declared
effective by the Securities and Exchange Commission, then the fair market value
of a share shall be calculated on the basis of the closing market price (last
trade regular way if the Stock is traded on the New York or American Stock
Exchange, and if not so traded, the last sale price or mean of the bid and
asked prices as reported by NASDAQ) as of the date of exercise.
(ii) If such a registration statement has not been declared
effective, or if it has been declared effective but the offering is not
consummated in accordance with the terms of the underwriting agreement between
the Company and its underwriters relating to such registration statement, then
as determined in good faith by the Company's Board of Directors upon a review
of relevant factors.
5. Delivery of Stock Certificates
Within a reasonable time after full or partial exercise of this Option, the
Company at its expense will cause to be issued in the name of and delivered to
the holder of this Option, a certificate or certificates for the number of
fully paid and nonassessable shares of Stock to
4
<PAGE> 33
which that holder shall be entitled upon such exercise, together with any other
securities and property to which that holder is entitled upon such exercise
under the terms of this Option. No fractional shares will be issued upon
exercise of rights to purchase under this Option. If upon any exercise of this
Option a fraction of a share results, the Company will pay the cash value of
that fractional share, calculated on the basis of the closing market price
(last trade regular way if the Stock is traded on the New York or American
Stock Exchange, and if not so traded, the last sale price or mean of the bid
and asked prices as reported by NASDAQ) as of the date of exercise, or, if the
Stock is not publicly traded, then on the basis of the Company's good faith
determination of the fair market value of the Stock.
6. Compliance with Securities Act; Disposition of Shares of Common
Stock; Registration Rights
(a) Compliance with Securities Act. The holder of this Option, by
acceptance hereof, agrees that this Option and the Shares to be issued upon
exercise hereof are being acquired for investment and that he will not offer,
sell or otherwise dispose of this Option or any Shares to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). Upon exercise of this
Option, the holder hereof shall confirm in writing, in a form satisfactory to
the Company, that the Shares are being acquired for investment and not with a
view toward distribution or resale (unless sale of the Shares has been
registered under the Act). Any proposed transferee of this Option or the
Shares (except a transferee of the Shares in a registered public offering) will
be required to agree to the provisions of this Section 6. Certificates
representing all Shares (unless registered under the Act) shall be stamped or
imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE
OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT
UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION
OF COUNSEL, SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS
AVAILABLE.
(b) Notice of Proposed Transfers. Prior to any proposed transfer
of this Option or any of the Shares, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice (the "Notice") to the Company of such
holder's intention to make such transfer. The Notice shall describe the manner
and circumstances of the proposed transfer in sufficient detail. If requested
by the Company prior to the transfer being effected, the holder shall provide
to the Company a written opinion of legal counsel who shall be reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Option or the Shares may be effected without
registration under the Securities Act. The holder of such securities shall be
entitled to transfer such securities in accordance with the terms of the Notice
only after the Company has consented in writing to such transfer. Each option
or stock certificate evidencing the securities so transferred shall bear the
appropriate restrictive legend set forth above, except that such certificate
shall not bear such restrictive legend if in the opinion of counsel for the
Company such legend is not required in order to establish compliance with any
provisions of the securities laws. Transfer of the Option is further
restricted by Section 7(f) hereof.
5
<PAGE> 34
7. Miscellaneous Provisions
(a) Reservation of Stock. The Company covenants, that it will at
all times reserve and keep available, solely for issuance upon exercise of this
Option, all shares of Stock or other securities from time to time issuable upon
exercise of this Option.
(b) Modification. This Option and any of its terms may be
changed, waived, or terminated by a written instrument signed by the Company
and the holders of the Options representing the right to acquire a majority of
the shares of Stock then subject to issuance upon the exercise of the Options.
(c) Replacement. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction, or mutilation of this Option
and, in the case of loss, theft, or destruction, on delivery of any indemnity
agreement or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Option, the
Company at its expense will execute and deliver, in lieu of this Option, a new
Option of like tenor.
(d) Option Agent. The Company may, on written notice to the
holder of this Option, appoint an agent having an office in California for
the purposes of issuing Stock or other securities upon the exercise of this
Option and of replacing or exchanging this Option, and after that appointment
any such issuance, replacement, or exchange shall be made at that office by
that agent.
(e) No Rights as Shareholder. No holder of this Option, as such,
shall be entitled to vote or receive dividends or be considered a shareholder
of the Company for any purpose, nor shall anything in this Option be construed
to confer on any holder of this Option as such, any rights of a shareholder of
the Company or any right to vote, to give or withhold consent to any corporate
action, to receive notice of meeting of shareholders, to receive dividends or
subscription rights or otherwise.
(f) Nontransferability. This Option may not be transferred or
assigned without the prior written consent of the Company except, subject to
Section 6(a) and (b), in its entirety to single purchaser who agrees to be
bound by all the terms hereof including this paragraph.
(g) Notices. Notices hereunder to the holder of this Option shall
be sent by certified or registered mail to the address given to the Company by
such holder and shall be deemed given when so mailed.
(h) Governing Law. This Option shall be governed by the laws of
the State of California as applied to contracts entered into in California
between California residents.
CALYPTE BIOMEDICAL CORPORATION
By: /s/ JACK DAVIS
-------------------------------------
Jack Davis
6
<PAGE> 35
FORM OF EXERCISE
(To be signed upon exercise of Option)
To: Calypte Biomedical Corporation
The undersigned holder of the attached Option hereby irrevocably
elects to exercise the right to purchase _______________ shares of _____________
Stock of Calypte Biomedical Corporation and herewith makes payment of $_________
for those shares, and requests that the certificate for those shares be issued
in the name of the undersigned and delivered to the address below the signature
of the undersigned. The undersigned hereby affirms the statements and
covenants in Section 6 of the Option.
Dated:
- ---------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the attached Option).
-------------------------------------------
Signature
-------------------------------------------
Address
-------------------------------------------
7
<PAGE> 36
Milestones
<TABLE>
<CAPTION>
Pepgen
Shares Held % Held 1 2 3 4 5 6 Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Chih-Ping Liu 1,850,000 46.72% 46,720 46,720 46,720 11,680 23,360 46,720 221,920
- ------------------------------------------------------------------------------------------------------------------------
Howard M. Johnson 1,000,000 25.25% 25,250 25,250 25,250 6,312 12,625 25,250 119,937
- ------------------------------------------------------------------------------------------------------------------------
Fuller W. Bazer 800,000 20.20% 20,200 20,200 20,200 5,050 10,100 20,200 95,950
- ------------------------------------------------------------------------------------------------------------------------
Cal-Wood Investments Ltd 60,000 1.52% 1,520 1,520 1,520 381 760 1,520 7,221
- ------------------------------------------------------------------------------------------------------------------------
Frederick M. Haney 250,000 6.31% 6,310 6,310 6,310 1,577 3,155 6,310 29,972
- ------------------------------------------------------------------------------------------------------------------------
Total 3,960,000 100.00% 100,000 100,000 100,000 25,000 50,000 100,000 475,000
========================================================================================================================
</TABLE>
<PAGE> 1
EXHIBIT 10.34
SECURED NONRECOURSE PROMISSORY NOTE
S1,000,000 Oakland, California October 12, 1995
FOR VALUE RECEIVED, the undersigned, CALYPTE BIOMEDICAL CORPORATION,
a California corporation ("Maker"), promises to pay to the order of PEPGEN
CORPORATION, a California corporation (together with any successors or
assigns, "Payee"), having its address at 1440 Fourth Street, Berkeley,
California 94710, the principal sum of One Million Dollars (S1,000,000) plus
interest on the unpaid principal calculated at the rate of four percent (4%)
per annum.
This Note is made pursuant and subject to the provisions of that
certain Master Stock Purchase Agreement between Maker, Payee and former
preferred shareholders of Payee, dated September 19, 1995 (the "Purchase
Agreement"), including but not limited to the provisions of Section 1.2(b)
thereof pertaining to the redemption of the preferred stock in Payee purchased
by Maker with the proceeds under this Note.
All principal and accrued interest under this Note shall be due and
payable in full not later than sixty (60) days following the earlier to occur
of: (i) approval by the United States Food and Drug Administration of Payee's
HIV screening assay, or (ii) completion of an initial Public Offering of
Payee's stock, as that term is defined in Section 1.2(b) of the Purchase
Agreement.
All payments shall be payable to Payee at its address set forth above,
or at such other place as Payee may designate from time to time in writing to
Maker. All payments shall be applied first to the payment of interest due, then
to the payment of other sums payable hereunder, and finally to the principal
amount then remaining unpaid. This Note may be prepaid in whole or in part at
any time without penalty or premium.
Maker shall be deemed in default hereunder in the event (i) Maker
shall fail to make payment of principal and accrued interest as and when due
hereunder, or (ii) Maker shall fail to perform any other term, covenant or
agreement Maker is obligated to perform or observe contained in this Note or
the Pledge Agreement (as defined below). If an event of default is not cured
within ten (10) days following written notice from Payee, then all sums owed
hereunder shall, at the option of Payee, become immediately due and payable.
Maker hereby waives diligence, presentment, demand, protest and notice
of any kind whatsoever hereunder.
Maker agrees to pay all costs incurred by Payee in the collection or
enforcement of this Note, including reasonable attorneys' fees.
<PAGE> 2
This Note shall be secured by Maker's pledge of shares of stock in
Payee pursuant to the terms and conditions of that certain Security and Pledge
Agreement of even date herewith between Maker and Payee (the "Pledge
Agreement").
Notwithstanding any provision to the contrary in this Note or the
Pledge Agreement, this Note is nonrecourse. The holder hereof shall have no
recourse to any assets or properties of Maker other than the collateral that is
pledged by Maker pursuant to the Pledge Agreement.
All references herein to Maker shall be deemed to include its
successors and assigns and all obligations hereunder shall be binding upon its
successors and assigns. This Note shall not be assigned by the holder thereof
without the written consent of Maker.
This Note shall be interpreted and enforced in accordance with the
laws of the State of California, and shall be deemed to have been executed and
delivered in the State of California.
"Maker"
CALYPTE BIOMEDICAL CORPORATION,
a California Corporation
By: /s/ JACK DAVIS
------------------------------
Name: Jack Davis
------------------------------
Its: President
------------------------------
2
<PAGE> 3
SECURITY AND PLEDGE AGREEMENT
THIS SECURITY AND PLEDGE AGREEMENT ("Agreement") is made and entered
into as of September 19, 1995, by and among PEPGEN CORPORATION, a California
corporation ("Pledgee"), CALYPTE BIOMEDICAL CORPORATION, a California
corporation ("Pledgor") and WENDEL, ROSEN, BLACK & DEAN ("Pledge Holder").
RECITALS
A. Pledgor and Pledgee entered into that certain Master Stock
Purchase Agreement, dated September 19, 1995, whereby Pledgor purchased from
Pledgee 3,041,406 shares of Series A Preferred Stock of Pledgee (the "Shares").
B. The purchase price for the Shares was paid in part by delivery
of Pledgor's Secured Nonrecourse Promissory Note, dated of or about even date
herewith, in the principal sum of One Million Dollars ($1,000,000), a copy of
which is attached hereto as Exhibit A (the "Note").
C. Pledgor has agreed to secure its obligations under the Note
with a pledge of the Shares, subject to the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the above recitals of fact and the
mutual covenants and obligations set forth herein, the parties hereby agree as
follows:
AGREEMENT
1. Appointment and Powers of Pledge Holder. Pledgor and Pledgee
appoint Pledge Holder for the purposes set forth in this Agreement. Each of
Pledgor and Pledgee hereby constitutes and appoints Pledge Holder as its
attorney-in-fact for the purpose of carrying out the provisions of this
Agreement and taking any action and executing any instrument which Pledge Holder
may reasonably deem necessary or appropriate to accomplish the purposes hereof,
which appointment is irrevocable and coupled with an interest, that being Pledge
Holder's rights and duties under this Agreement.
2. Pledge. As security for payment and performance of the Note,
Pledgor hereby pledges and grants to Pledgee a security interest in (i) the
Shares, and (ii) any warrants, options, or additional shares of Pledgee at any
time and from time to time receivable or otherwise distributable in respect of,
in exchange for or in substitution for any of the Shares, together with any
proceeds thereof (collectively, the "Collateral"). Pledgor herewith deposits
with Pledge Holder the Shares as represented by certificate no. PA-15,
accompanied by stock powers executed in blank with respect thereto, which Shares
and stock powers are to be held by Pledge Holder for use in accordance with the
terms and provisions of this Agreement. Pledge
1
<PAGE> 4
Holder may, but need not, have the Shares registered in its name as Pledge
Holder pursuant to this Agreement.
3. Remedy Upon Default. In the event of default by Pledgor under
the Note and its failure to be cured in accordance with the terms thereof,
Pledgee's sole and exclusive remedy shall be to retain the Collateral in
satisfaction of Pledgor's obligations to Pledgee hereby secured. Pledgee shall
exercise this remedy by providing written notice thereof to Pledge Holder.
Upon receipt of such notice from Pledgee, Pledge Holder shall deliver to
Pledgee the Shares, any accompanying stock powers, and any other Collateral
held by Pledge Holder. Pledgee acknowledges that: (i) Pledgor's obligations
under the Note are non-recourse; and (ii) the foregoing remedy constitutes
Pledgee's only remedy in the event of default by Pledgor under the Note.
4. Waiver of Law. Except as otherwise expressly specified in this
Agreement, ail of the provisions of law governing the retention of pledged
property and prescribing the conditions, demands, and notice of mailing with
respect thereto are hereby expressly waived by Pledgor.
5. Nonwaiver. Should Pledge Holder postpone any action to be
taken hereunder, or accept a payment on a date beyond the due date of the Note,
such action shall not constitute a waiver of any of the rights of Pledgee
hereunder or under the Note.
6. Assignment. This Agreement may be assigned by Pledgee only in
connection with an assignment of the Note as may be permitted thereunder.
7. Enforcement. Should Pledgee be required to bring an action in
law or in equity against Pledgor for the enforcement of any of the provisions of
this Agreement, for the recovery of damages for breach of this Agreement or to
resolve a controversy arising hereunder, then the losing party shall pay the
costs of the prevailing party arising out of such action, including reasonable
attorneys' fees.
8. Voting; Dividends. Voting rights to the Collateral are to be
retained by Pledgor during the existence of this Agreement and so long as no
default occurs under the Note. Upon any default under the Note, Pledgee shall,
in addition to any other remedies permitted hereunder, be entitled to vote all
shares held by Pledge Holder until such time as the default is cured by payment
of the amount in default. Pledgor grants Pledgee an irrevocable proxy right to
vote the Collateral in such case, which proxy is coupled with an interest, that
being Pledgee's rights hereunder. Any and all cash dividends declared and paid
on the Collateral during the term of this Agreement shall be paid to Pledgor, so
long as Pledgor is not in default under the Note.
9. Release of Collateral. Upon payment of any portion of the
principal sum under the Note, Pledge Holder shall deliver to Pledgor that
percentage of the Collateral equal to the percentage of the principal of the
Note represented by that particular payment. When all sums of principal and
interest under the Note have been paid full, all Collateral held by Pledge
Holder
2
<PAGE> 5
shall be delivered to Pledgor, and this Agreement shall be terminated. The
Collateral shall be released by Pledge Holder only after written notice from
Pledgee or such other holder of the Note (or upon adequate proof submitted by
Pledgor) that payment of principal and/or interest, as applicable, has been
made as required hereunder.
10. Release of Pledge Holder. Pledgor and Pledgee hereby release
Pledge Holder from any liability arising from Pledge Holder's performance
hereunder, except liability for acts of gross negligence or willful misconduct.
Without limiting the preceding sentence, Pledge Holder shall not be liable for
failure of any of the conditions of the pledge or for failure to ascertain the
terms or conditions, or comply with, any of the provisions of any agreement or
other document referred to in this Agreement nor shall Pledge Holder be liable
for the wrongful assertion by either Pledgor or Pledgee of its or their rights
and/or remedies hereunder. Pledge Holder shall not be liable for forgeries or
impersonations. Should any controversy arise between the parties hereto, or
with any third person, Pledge Holder shall not be required to determine the same
or take any action, but may await the settlement of such controversy by
appropriate legal proceedings. Pledgor and Pledgee hereby agree to and shall
indemnify, protect, defend and hold harmless Pledge Holder and its partners,
agents, employees, directors, officers, and principals from all liabilities,
obligations, losses, damages, actions, suits, costs and expenses (including,
without limitation, attorneys' fees) of whatever kind or nature imposed on,
incurred by, or asserted against Pledge Holder which are in any way related to
or arise out of the execution and delivery of this Agreement or any action taken
hereunder by Pledge Holder.
11. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given to any
party if delivered by hand, telexed, telecopied or mailed (certified or
registered mail), with postage prepaid, to the parties at the addresses set
forth on the signature pages hereof, or such other address as a party shall
furnish to the others in writing.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original against any party
whose signature appears thereon, and all of which shall together constitute one
and the same instrument. This Agreement shall become binding when one or more
counterparts thereof, individually or taken together, shall bear the signatures
of all the parties reflected hereon as signatories.
13. Binding Effect. All powers, rights and privileges hereinabove
given are to apply to and bind the heirs, executors and administrators of the
parties hereto.
14. Further Cooperation. Each party to this Agreement agrees to
execute and deliver such further documents and do such further acts and things
as may be reasonably necessary to effectuate the purposes of this Agreement.
15. Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws of the State of California.
3
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PLEDGOR: PLEDGEE:
CALYPTE BIOMEDICAL CORPORATION, PEPGEN CORPORATION,
a California corporation a California corporation
By: /s/ JACK DAVIS By: /s/ C.P. LIN
--------------------------- ---------------------------
Name: Jack Davis Name: C. P. Lin
------------------------- -------------------------
Title: President Title: President
------------------------ ------------------------
Address: 1440 Fourth Street Address: 19481 Pompano Lane, #104
Berkeley, CA 94710 Huntington Beach, CA 92648
PLEDGE HOLDER:
WENDEL, ROSEN, BLACK & DEAN
By: /s/ PETER PANG
---------------------------
Name: Peter Pang
---------------------------
Address: 1111 Broadway, 24th Floor
Oakland, CA 94607
4
<PAGE> 7
EXHIBIT A
TO
SECURITY AND PLEDGE AGREEMENT
(to follow]
5
<PAGE> 1
EXHIBIT 10.35
MASTER EQUIPMENT LEASE AGREEMENT
Agreement No.____________________ Dated as of August 20, 1993
between
PHOENIX LEASING INCORPORATED
2401 Kerner Boulevard
San Rafael, California 94901
as Lessor
and
CALYPTE BIOMEDICAL CORPORATION,
a California corporation
1440 Fourth Street
Berkeley, CA 94710
as Lessee
LESSOR'S COMMITMENT: $1,150,000
Rent Factor: 12 months at 1.5% Initial Lease Term: 42 months
followed by 30
months at 3.5%
Minimum Funding Amount: $75,000 Maximum No. of Fundings: One
per month
Minimum Renewal Percentage: 1.3% Minimum Purchase Option
Percentage: 10% (Does not
apply to Tenant Improvements)
Commitment Termination Date: June 30, 1994
Eligible Equipment: Scientific laboratory and test equipment; manufacturing
equipment; and up to $200,000 of tenant improvements.
The terms and information set forth on this cover page are a part of
the MASTER EQUIPMENT LEASE AGREEMENT, dated as of the date first written above
(this "Lease"), entered into by and between PHOENIX LEASING INCORPORATED
("Lessor") and the Lessee set forth above, the terms and conditions of which
are as follows:
<PAGE> 2
LESSOR'S OBLIGATIONS UNDER THIS LEASE AND EACH SCHEDULE ARE SUBJECT TO
THE PRIOR SATISFACTION OF THE CONDITIONS SET FORTH ON RIDER I HERETO.
1. DEFINITIONS: Unless otherwise defined in this Lease (which
term shall include the cover page, any Rider, any Exhibit or any Schedule
hereto), capitalized terms shall have the following meanings:
"Commitment Termination Date" means the date set forth opposite such
term on the cover page of this Lease, or such earlier date on which Lessor
terminates its commitment to fund pursuant to the terms of this Lease.
"Delivery Date" means, with respect to any Schedule, the date first
set forth on such Schedule.
"Eligible Equipment" means Equipment of the types listed following
such term on the cover page of this Lease to the extent acceptable to Lessor.
"Environmental Law" means the Resource Conservation and Recovery Act
of 1987, the Comprehensive Environmental Response, Compensation and Liability
Act, and any other Federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree (in each case having the force of law) regulating
or imposing liability or standards of conduct concerning, any Hazardous
Materials or other hazardous, toxic or dangerous waste, constituent, or other
substance, whether solid, liquid or gas, as now or at any time hereafter in
effect.
"Equipment" means all equipment, fixtures and personal property listed
in any Schedule together with all replacement parts, additions, accessions and
accessories to such equipment, fixtures and personal property.
"Event of Default" shall have the meaning set forth in Section 12
hereof
"Hazardous Materials" means any hazardous substance, pollutant or
contaminant defined as such in any Environmental Law.
"Initial Lease Term" means the period of months set forth opposite
such term on the cover page of this Lease.
"Initial Rent Factor" means the Rent Factor set forth on the cover
page of this Lease calculated using the Initial Implicit Rate.
"Interim Rental Payment" shall have the meaning set forth Section 3(a)
of this Lease.
"Lessor's Commitment" means the maximum amount that Lessor may be
obligated to fund under the Lease, which amount is set forth opposite such term
on the cover page of this Lease.
"Lessor's Cost" with respect to a Unit of Equipment means the total
cost to Lessor of purchasing such Unit of Equipment, as indicated on the
applicable Schedule.
"Maximum Number of Fundings" means the number of fundings under this
Lease specified opposite such term on the cover page hereof.
"Minimum Funding Amount" means the amount set forth opposite such term
on the cover page of this Lease.
"Minimum Purchase Option Percentage" means the percentage of Lessor's
Cost set forth opposite such term on the cover page of this Lease.
"Minimum Renewal Percentage" means the percentage set forth opposite
such term on the cover page of this Lease.
1
<PAGE> 3
"Rent Commencement Date" means the date, with respect to any Schedule,
set forth in Section 3(a) of such Schedule, which shall be the first day of the
calendar quarter immediately following the Delivery Date for such Schedule.
"Rent Factor" means the percentages set forth opposite such term on
the cover page of this Lease.
"Rental Payment" means, for any Schedule, the monthly rent payment for
the Units identified in such Schedule.
"Schedule" or "Schedule No." means a schedule in the form of Exhibit E
to this Lease identifying this Lease and incorporating this Lease by reference,
which is executed by both parties hereto.
"Stipulated Loss Value" shall have the meaning set forth in Section
11(e).
"Term" means the Initial Lease Term, together with any renewal or
extension thereof.
"Treasury Base Rate" means the interest rate set forth opposite such
term on the cover page of this Lease.
"Treasury Constant Maturity" means the period of months set forth
opposite such term on the cover page of this Lease.
"Unit" means an item of Equipment.
2. LEASE: Lessor agrees to lease to Lessee and Lessee agrees to
lease from Lessor the Equipment described in each Schedule on the terms and
subject to the conditions specified herein and therein. Lessor's obligation to
fund Schedules under this Lease shall terminate on the Commitment Termination
Date. Lessor may, in its sole discretion, terminate its commitment herein to
fund the Lessor's Commitment or any unfunded portion thereof at any time if:
(a) there is any material adverse change to the general affairs, management,
results of operations, condition (financial or otherwise) or prospects of
Lessee, whether or not arising from transactions in the ordinary course of
business, (b) there is any material adverse deviation by Lessee from the
business plan of Lessee presented to and not disapproved in writing by Lessor,
since the date first written on the cover page of this Lease, (c) any Event of
Default exists, or (d) if any term or condition in any Schedule is not
satisfied by the Delivery Date of such Schedule. This Lease shall constitute a
"Finance Lease" under Division 10 of the California Uniform Commercial Code
("UCC"); provided, however, that the characterization of this Lease as a
"Finance Lease' is for purposes of Division 10 of the UCC only, and shall not
affect the accounting treatment of this Lease. This Lease, and Lessee's
obligation to pay all rent and other sums hereunder, shall be absolute and
unconditional, and shall not be subject to, and Lessee hereby waives any right
of or to, abatement, reduction, set-off, defense or counterclaim. Lessee
waives any and all rights and remedies conferred upon Lessee by UCC Sections
10508 through 10522, including (without limitation) Lessee's rights to (i)
cancel or repudiate this Lease, (ii) reject or revoke acceptance of the leased
property, (iii) recover damages from Lessor for breach of warranty or for any
other reason, (iv) claim a security interest in any rejected property in
Lessee's possession or control, (v) deduct from Rental Payments all or any part
of any claimed damages resulting from Lessor's default under this Lease, (vi)
accept partial delivery of the Equipment, (vii) "cover" by making any purchase
or lease of other property in substitution for property due from Lessor, (viii)
recover from the Lessor any general, special, incidental or consequential
damages, for any reason whatsoever, and (ix) seek specific performance,
replevin or the like for any of the Equipment. Lessee acknowledges that, at
the time of each Schedule, it will have received and approved the terms of the
agreements with the vendors under which Lessor will, subject to the terms and
2
<PAGE> 4
conditions of this Lease, purchase the Units covered by such Schedule. The
Units shall be leased for commercial purposes only, and not for consumer,
personal, home or family purposes. This Lease describes the terms of, and is
intended by the parties hereto to be, a true lease; provided, however, that the
parties acknowledge that the terms and conditions of the Lease may,
alternatively, create a secured financing or lease for security. If this Lease
as supplemented by any Schedule constitutes a security agreement or lease for
security, the Lessee hereby grants a security interest to Lessor in all of
Lessee's right, title and interest in the Units described in Annex A to such
Schedule and the proceeds thereof, to secure all of Lessee's obligations under
this Lease and such Schedule.
3. TERM AND RENTALS: THIS LEASE SHALL BE EFFECTIVE UPON EXECUTION
AND DELIVERY HEREOF by Lessee and Lessor. (a) The Initial Lease Term for each
Schedule shall commence upon the Rent Commencement Date set forth in such
Schedule. For the Initial Lease Term of such Schedule, Lessee agrees to pay
Lessor aggregate rentals equal to the number of months in the Initial Lease
Term of such Schedule multiplied by the amount of the Rental Payment specified
in such Schedule. In addition, for the period from the Delivery Date of each
Schedule until such Schedule's Rent Commencement Date, Lessee shall pay an
interim rental ("Interim Rental Payment") equal to the product of (i) the total
rental for the Initial Lease Term of such Schedule divided by 1,260 [42 x 30]
and (ii) the actual number of days between the Delivery Date and the Rent
Commencement Date, including the Delivery Date but excluding the Rent
Commencement Date. Lessor will make reasonable efforts to send Lessee invoices
for Rental Payments, but the failure to do so or the incorrectness of any
invoice will not relieve Lessee of its obligation to pay all amounts, including
Rental Payments, due under this Lease. The Interim Rental. Payment for each
Schedule is due on the Delivery Date for such Schedule and the remaining Rental
Payments are due commencing on the Rent Commencement Date and thereafter on the
same date of each succeeding month of the Term, or as specified in the
applicable Schedule. A late charge on any overdue payments shall accrue at the
rate of 1.5% per month on the overdue amount, or the highest lawful rate,
whichever is less. (b) It is not the intent of the parties to create rent or
other payment obligations of Lessee which will be considered usurious under
applicable law. However, if any such payment shall be found to be usurious by
a court of competent jurisdiction, then Rental Payments or such other amounts
shall automatically be reduced to the highest rate or amounts permitted by
applicable law and the usurious portion of the Rental Payments or such other
amounts shall be applied to the Lessee's remaining obligations under the Lease
in a manner reasonably determined by Lessor. If Lessee retains possession of
any Unit after the expiration or termination of this Lease, Rental Payments
shall continue to be paid with respect to such Unit at the rate set forth in
Section 3(a) of the Schedule relating to such Unit until all obligations of
Lessee under this Lease relating to such Unit, including, without limitation,
Rental Payments and payments due under Section 4 of this Lease, have been
satisfied. This Lease may be terminated only as expressly provided herein.
4. LESSEE'S PURCHASE OF TENANT IMPROVEMENTS; OPTIONS AT END OF
INITIAL LEASE TERM FOR NON-TENANT IMPROVEMENTS:
4A. Tenant Improvements. At the expiration of the Initial Lease
Term of each Schedule covering tenant improvements, Lessee shall purchase all
of the Units that are tenant
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improvements under such Schedule for a purchase price equal to fifteen percent
(15%) of Lessor's Cost of all such Units, plus any applicable sales or other
transfer tax.
4B. Non-Tenant Improvements.
(a) Provided that the Lease has not been terminated and that no
Event of Default or event which, with notice or lapse of time or both, would
become an Event of Default shall have occurred and be continuing, Lessee shall
elect one of the following options in clauses (i) or (ii) below:
(i) Lessee's Option to Renew: At the expiration of the Initial
Lease Term of the first Schedule covering Units other than tenant improvements,
Lessee may elect to renew the Lease with respect to all, but not less than all,
of such Units under all Schedules to the Lease at their respective expiration
dates for not less than twelve (12) months nor more than thirty-six (36) months
for a rent equal to the "Fair Rental Value" (as defined in Section 4B(b) below)
of such Units for such additional period, but in no event less than the Minimum
Renewal Percentage of Lessor's Cost of such Units per month, which rent shall
be paid monthly in advance. At the end of the renewal term, Lessee must
purchase all of such Units for a purchase price equal to the Fair Market Value
(as defined in Section 4B(b) below) plus any applicable sales or other transfer
tax.
(ii) Lessee's Option to Purchase: At the expiration of the Initial
Lease Term of the first Schedule covering Units other than tenant improvements,
Lessee may elect to purchase all, but not less than all, of such Units under
all Schedules to the Lease at their respective expiration dates for a purchase
price equal to the "Fair Market Value" (as defined in Section 4(b) below)
thereof as of the end of the Initial Lease Term of the first Schedule covering
Units other than tenant improvements, but in no event less than the Minimum
Purchase Option Percentage of Lessor's Cost of all such Units nor greater than
twenty-five percent (25%) of Lessor's Cost of all such Units, plus any
applicable sales or other transfer tax.
(iii) If neither of the foregoing options in clauses (i) or (ii) of
this Section 4B(a) is duly exercised by Lessee, this Lease shall be renewed at
the rental in effect immediately prior to the renewal with respect to all Units
other than tenant improvements covered by the applicable Schedule from the
expiration date of the Initial Lease Term of such Schedule on a month-to-month
basis. Lessee may terminate any such extended term on 90 days' notice to
Lessor and shall along with such notice elect one of the options in clauses (i)
or (d) above.
Either of the foregoing options in clauses (i) or (ii) shall be
exercised by written notice delivered to Lessor not more than 180 days and not
less than 120 days prior to the expiration of the Initial Lease Term of the
Units which are subject to the first Schedule covering Units other than tenant
improvements..
(b) Fair Market Value or Fair Rental Value, as the case may be,
shall be determined on the basis of and shall be equal in amount to the value
which would obtain in an arm's-length transaction between an informed and
willing buyer-user or lessee-user (other than
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<PAGE> 6
a used equipment dealer) and an informed and willing seller or lessor under no
compulsion to sell or lease, on the assumptions that: such Units (i) are being
sold "in place and in use"; (ii) are free and clear of all liens and
encumbrances; and (iii) are in the condition required upon the return of the
Units under Section 9 of this Lease. In such determination, costs of removal
from the location of current use shall not be a deduction from such value(s).
(c) If the Lessor and Lessee have not agreed upon a determination
of the Fair Market Value or Fair Rental Value of any Unit within 30 days after
one of the parties has requested such determination, that determination shall
be made by a certified independent appraiser approved by both Lessor and
Lessee, such approvals not to be unreasonably withheld. The appraiser shall be
furnished with a letter of instruction concerning the preparation of the
appraisal, together with a copy of the Lease and Schedule and, to the extent
available, related purchase orders and/or invoices. The appraiser shall be
instructed to make such determination within 30 days following appointment.
The determination made by the appraiser shall be final and binding on both
Lessor and Lessee. The fees and expenses of any appraisal shall be paid by the
Lessee, if such appraisal is needed for the Lessor's exercise of its remedies
under Sections 12 and 13 hereof, and equally by the Lessor and Lessee
otherwise.
4C. General. The purchase of the Units by Lessee pursuant to this
Section 4 shall be "AS IS, WHERE IS", without recourse to or any warranty by
Lessor, other than a warranty that the Units are free and clear of liens and
encumbrances resulting from acts of Lessor.
5. WARRANTIES; INDEMNITY:
(a) Lessee acknowledges that it has made the selection of each
Unit based upon its own judgment. LESSOR MAKES NO EXPRESS OR IMPLIED
WARRANTIES INCLUDING, WITHOUT LIMITATION, THOSE OF DESCRIPTION, INFRINGEMENT,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE WITH RESPECT TO THE
EQUIPMENT AND HEREBY DISCLAIMS THE SAME. Lessor shall have no liability for
any damages, whether direct or consequential, incurred by Lessee as a result
of any defect or malfunction of a Unit. Lessee agrees to look solely to the
manufacturer or vendor of any defective or malfunctioning Unit for the repair
or replacement of such Unit and to continue to make all Rental Payments with
respect to such Unit in spite of such defect or malfunction. Lessor hereby
assigns to Lessee, for and during the Term, any warranty, guaranty or indemnity
of the manufacturer or vendor issued to Lessor with respect to any Unit.
(b) Lessee shall indemnify, reimburse and hold Lessor (including,
without limitation, each of its partners) and each of their respective
successors, assigns, officers, directors, shareholders, servants, agents and
employees harmless from and against all liabilities, losses, damages, actions,
suits, demands, claims of any kind and nature (including, without limitation,
claims relating to environmental discharge, cleanup or compliance), and all
costs and expenses whatsoever to the extent they may be incurred or suffered by
such indemnified party in connection therewith (including, without limitation,
reasonable attorneys' fees and expenses), fines, penalties (and other charges
of applicable governmental authorities), licensing fees relating to any Unit,
damage to or loss of use of property (including, without limitation,
consequential or special damages to third parties or damages to Lessee's
property), or bodily
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<PAGE> 7
injury to or death of any person (including, without limitation, any agent or
employee of Lessee) (each a "Claim"), directly or indirectly relating to or
arising out of the acquisition, use, lease or sublease, ownership, operation,
possession, control, storage or condition of any Unit (regardless of whether
such Unit is at the time in the possession of Lessee), the falsity of any
non-tax representation or warranty of Lessee or Lessee's failure to comply
with the terms of the Lease during the Term. The foregoing indemnity shall
cover, without limitation, (i) any Claim in connection with a design or other
defect (latent or patent) in any Unit, (ii) any Claim for infringement of any
patent, copyright, trademark or other intellectual property right, (iii) any
Claim resulting from the presence on or under or the escape, seepage, leakage,
spillage, discharge, emission or release from any Unit of any Hazardous
Materials, including, without limitation, any Claims asserted or arising under
any Environmental Law, or (iv) any Claim for negligence or strict or absolute
liability in tort; provided, however, that Lessee shall not indemnify Lessor
for any liability incurred by Lessor as a direct and sole result of Lessor's
gross negligence or willful misconduct. Such indemnities shall continue in
full force and effect, notwithstanding the expiration or termination of this
Lease. Upon Lessor's written demand, Lessee shall assume and diligently
conduct, at its sole cost and expense, the entire defense of Lessor and its
agents, employees, successors and assigns against any indemnified Claim
described in this Section 5. Lessee shall not settle or compromise any Claim
against or involving Lessor without first obtaining Lessor's written consent
thereto, which consent shall not be unreasonably withheld.
6. TITLE, LOCATION AND RETURN: Lessor and Lessee hereby confirm
their intent that the Equipment remain and be deemed personal property and that
title thereto shall remain in Lessor. If requested by Lessor, Lessee will
affix plates or markings on the Equipment indicating the interests of Lessor.
Lessee may not remove the Equipment from its place of installation without
Lessor's prior written consent, which consent shall not be unreasonably
withheld. Lessor shall have the right to inspect the Equipment during regular
business hours, with reasonable notice, and in compliance with Lessee's
reasonable security procedures. If for any reason the Equipment is to be
returned to Lessor on Lessor's demand hereunder, Lessee at its own risk and
expense, will cause the Equipment to be delivered promptly to Lessor free of
all Hazardous Materials and in the same condition as when delivered hereunder,
ordinary wear and tear excepted, to such point in the United States as Lessor
may designate and in such a manner as is consistent with the manufacturer's
recommendations, if any, for transportation and packaging of such Equipment.
All charges to cover Equipment transportation, deinstallation, storage until
returned, packing, and handling and all other costs associated with a return of
the Equipment to the location designated by Lessor shall be paid by Lessee.
7. SUBLEASE, ASSIGNMENT: Lessee acknowledges and agrees that
Lessor may, subject to the terms of this Lease, sell, assign, grant a security
interest in, or otherwise transfer all or any part of its rights, title and
interest in this Lease and the Equipment. Upon Lessor's written notice, Lessee
shall, if requested, pay directly to such assignee without abatement, deduction
or set-off all amounts which become due hereunder. Lessee waives and agrees it
will not assert against such assignee any counterclaim or set-off in any action
for rent under the Lease. Such assignee shall have and be entitled to exercise
any and all rights and remedies of Lessor hereunder, and all references herein
to Lessor shall include Lessor's assignee. Lessee acknowledges that such a
sale, assignment, grant or transfer would neither
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materially change Lessee's duties nor materially increase the burdens or risks
imposed on the Lessee under this Lease. LESSEE MAY NOT, WITHOUT LESSOR'S PRIOR
WRITTEN CONSENT, (i) SUBLEASE, TRANSFER, DISPOSE OF OR ASSIGN ITS RIGHTS IN
RESPECT OF ANY UNIT OR ITS OBLIGATIONS UNDER THIS LEASE OR (ii) ASSIGN, GRANT
A SECURITY INTEREST IN, OR OTHERWISE TRANSFER ALL OR ANY PART OF ITS RIGHTS,
TITLE AND INTEREST IN AND TO THIS LEASE OR THE EQUIPMENT.
8. TAXES: Lessee agrees to pay if and when due, in addition to
other amounts due hereunder and under each Schedule, all fees and assessments,
and all sales, use, property, excise and other taxes and charges (including all
interest and penalties) (collectively "Taxes"), now or hereafter imposed by any
governmental body or agency upon any of the Equipment or upon the purchase,
ownership, possession, leasing, operation, use, rentals or other payments, or
disposition hereunder whether payable by Lessor or Lessee (exclusive of taxes
on or measured by Lessor's net income). Lessee agrees to prepare and file
promptly with the appropriate offices any and all tax and similar returns
required to be filed with respect thereto, or, if requested by Lessor, to
notify Lessor of such requirements and furnish Lessor with all information
required by Lessor so that it may effect such filing, at Lessee's expense. Any
Taxes paid by or imposed on, Lessor on behalf of Lessee shall become
immediately due and payable on Lessor's demand. Lessor, as owner, shall be
entitled to any and all depreciation and modified cost recovery deductions
provided under the Internal Revenue Code of 1986, as amended from time to time
and any other such tax benefits which may now or hereafter be available to an
owner of such Equipment (collectively, "Tax Benefits"). If as a result of (i)
the inaccuracy or breach of any of Lessee's representations, warranties and
covenants herein or in any Schedule, or (ii) the acts or failure to act of
Lessee or any person claiming an interest in the Equipment through the Lessee
(other than a casualty or other event described in Section 11 with respect to
which Stipulated Loss Value shall have been paid by Lessee), Lessor or any of
its assigns shall lose, or shall not, in its reasonable opinion, have the right
to claim, or there shall be disallowed, deferred or recaptured, any portion of
the Tax Benefits with respect to a Unit (a "Loss of Tax Benefits") or there
shall be included in Lessor's gross income any amounts other than Rental
Payments in respect of the purchase price of any Unit (an "Inclusion"), then,
on and after the next succeeding Rent Payment date after written notice to
Lessee by Lessor, Lessee agrees as follows: The rent for the Equipment shall,
on the Rent Payment date next succeeding Lessor's written notice to Lessee of
Lessor's payment of any tax payment attributable to such Inclusion or of a Loss
of Tax Benefits, be increased to such amount or amounts as shall, by the end of
the original term of the last Schedule to this Lease, in the reasonable opinion
of Lessor, after deduction of all fees, taxes, or other charges required to be
paid by Lessor in respect of the receipt of all amounts payable by Lessee to
Lessor under this Section 8 under the laws of any federal, state, or local
government or taxing authority in the United States, cause Lessor's after-tax
yield and cash flow in respect of the Equipment to equal those which would have
been realized by Lessor if Lessor had not incurred such a Loss of Tax Benefits
or had such an Inclusion. If any claim or contest regarding any tax indemnity
covered by this Section 8 shall arise, such claim or contest shall be addressed
or conducted, at Lessee's expense, in the manner reasonably specified by
Lessor.
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9. USE; MAINTENANCE: (a) Lessee, at its expense, shall make all
necessary site preparations and cause the Equipment to be operated in
accordance with any applicable manufacturer's manuals or instructions. So long
as no Event of Default has occurred and is continuing, Lessee shall have the
right to quietly possess and use the Equipment as provided herein without
interference by Lessor. (b) Lessee, at its expense, shall maintain the
Equipment in good condition, reasonable wear and tear excepted, and will comply
with all laws, ordinances and regulations to which the use and operation of the
Equipment may be or become subject. Such obligation shall extend to repair
and replacement of any partial loss or damage to the Equipment, regardless of
the cause. If maintenance is mandated by the manufacturer, Lessee shall obtain
and keep in effect at all times during the Term maintenance service contracts
with suppliers approved by Lessor, such approval not to be unreasonably
withheld. All parts furnished in connection with such maintenance or repair
shall immediately become part of the Equipment. All such maintenance, repair
and replacement services shall be paid for and discharged by Lessee when due
with the result that no lien will attach to the Equipment. Only qualified
personnel of Lessee shall operate the Equipment. The Equipment shall be used
only for the purposes for which it was designed.
10. INSURANCE: (a) Lessee shall obtain and maintain for the Term,
at its own expense, (i) "all risk" insurance against loss or damage to the
Equipment, (ii) commercial general liability insurance (including contractual
liability, products liability and completed operations coverages) reasonably
satisfactory to Lessor, and (iii) such other insurance against such other risks
of loss and with such terms, as shall in each case be reasonably satisfactory
to or reasonably required by Lessor (as to carriers, amounts and otherwise).
(b) The amount of the "all risk" insurance shall be the greater of the
replacement value of the Equipment (as new) or the "Stipulated Loss Value"
specified in the applicable Schedules, which amount shall be determined to
Lessor's reasonable satisfaction as of each anniversary date of this Lease with
the amount so determined being put into effect on the next succeeding renewal
or inception date of such insurance. (c) The deductible with respect to
"all-risk" insurance required by clause (b) above and product liability
insurance required by clause (a) above shall not exceed $25,000; otherwise
there shall be no deductible with respect to any insurance required to be
maintained hereunder. (d) The amount of commercial general liability insurance
(other than products liability coverage and completed operations insurance)
required by clause (a) above shall be at least $2,000,000 per occurrence.
The amount of the products liability and completed operations insurance
required by clause (a) above shall be at least (i) $1,000,000 per occurrence
until the earlier of (A) the date Lessee commences commercial sales of its
products, or (B) January 1, 1994, and (ii) thereafter, $5,000,000 per
occurrence. (e) Each "all risk" policy shall: (i) name Lessor as sole loss
payee with respect to the Equipment, (ii) provide for each insurer's waiver of
its right of subrogation against Lessor and Lessee, and (iii) provide that such
insurance (A) shall not be invalidated by any action of Lessee, or any breach
by Lessee of any provision of any of its insurance policies, and (B) shall
waive set-off, counterclaim or offset against Lessor. Each liability policy
shall (w) name Lessor as an additional insured and (x) provide that such
insurance shall have cross-liability and severability of interest endorsements
(which shall not increase the aggregate policy limits of Lessee's insurance).
All insurance policies (y) shall provide that Lessee's insurance shall be
primary without a right of contribution of Lessor's insurance, if any, or any
obligation on the part of Lessor to pay premiums of Lessee, and (z) shall
contain a clause requiring the insurer to give
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Lessor at least 30 days' prior written notice of its cancellation (other than
cancellation for non-payment for which 10 days' notice shall be sufficient).
Lessee shall on or prior to the Delivery Date of Schedule No. 1 and prior to
each policy renewal, furnish to Lessor certificates of insurance or other
evidence satisfactory to Lessor that such insurance coverage is in effect.
Lessee further agrees to give Lessor prompt notice of any damage to, or loss
of, the Equipment, or any part thereof.
11. LOSS; DAMAGE; DESTRUCTION AND SEIZURE: (a) Lessee shall bear
the risk of the Units being lost, stolen, destroyed, damaged or seized by
governmental authority for any reason whatsoever at any time until the latest
to occur of (i) the expiration or termination of the Term or (ii) any storage
period thereafter or (iii) the return of the subject Unit to Lessor (if
authorized hereunder), and shall proceed diligently and cooperate fully to
recover any and all damages, insurance proceeds or condemnation awards. (b)
Except as described in Section 11(c) hereof, if during the Term or the
storage period thereafter, any Unit shall be lost, stolen, destroyed,
irreparably damaged. or seized by governmental authority for a period equal to
at least the remainder of the Term, Lessor shall receive from the proceeds of
insurance obtained pursuant to Section 10 hereof, from any award paid by the
seizing governmental authority and, to the extent not received from the
proceeds of such insurance or award or both, from Lessee, on or before the
Rental Payment date next succeeding such loss, theft, destruction, damage or
governmental seizure: (i) all accrued and unpaid rent in respect of such Unit
including rent due on the rental payment date next succeeding the date of such
loss or seizure if the rent is in arrears; (ii) the Stipulated Loss Value of
such Unit, determined as of such Rental Payment date; (iii) all other sums, if
any, that shall have become due and payable hereunder; and (iv) interest on the
foregoing at the lower of the rate equal to 1.5% per month or the highest rate
then permitted by applicable law from the due date(s) of such payment(s) to
the date of payment. On receipt by Lessor of the amount specified hereinabove
with respect to each such Unit so lost, stolen, destroyed, damaged or seized,
(i) this Lease shall be deemed terminated as to such Unit and rent in respect
of such Unit shall be deemed abated, as of the Rental Payment date next
succeeding such loss, theft, damage, destruction or seizure; and (ii) so long
as no default or Event of Default has occurred and is continuing hereunder,
Lessor shall on demand, transfer title to such Unit, "AS IS, WHERE IS, WITHOUT
RECOURSE, REPRESENTATION OR WARRANTY," to Lessee, or, if appropriate in
Lessor's sole judgment, which judgment shall be exercised in a reasonable
manner, and on prior notice to Lessee, to Lessee's insurance carrier. Any
proceeds of insurance payable to Lessor pursuant to this Section 11 and Section
10 hereof received by Lessee shall be paid to Lessor promptly upon their
receipt by Lessee. If any proceeds of insurance or awards received from
governmental authorities are in excess of the amount owed under this Section
11(b), Lessor shall promptly remit to Lessee the amount in excess of the amount
owed to Lessor. (c) So long as no Event of Default shall have occurred and be
continuing, any proceeds of insurance obtained pursuant to Section 10 hereof
received with respect to any Unit the repair of which is practical shall, at
the election of Lessee, be applied either to the repair of such Unit or, upon
Lessor's receipt of evidence of the repair of the Unit reasonably satisfactory
to Lessor, to the reimbursement of Lessee for the cost of such repair. (d)
Lessee shall promptly, but in any event within 30 days thereafter, notify
Lessor in writing in reasonable detail of any loss, theft, destruction or
seizure described in this Section 11. (e) The Stipulated Loss Value payable by
Lessee under this Lease shall be that percentage of Lessor's Cost of the
affected Unit(s) set forth in the table attached to the applicable Schedule as
Annex B opposite the
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Rental Payment date next following the event giving rise to Lessee's obligation
to pay Stipulated Loss Value. Stipulated Loss Values and Rental Payments shall
not be prorated.
12. EVENTS OF DEFAULT: An "Event of Default" shall occur if
Lessee: (a) fails to pay/make any Rental Payment or other payment required
hereunder when due and such failure continues for a period of 10 days; or (b)
fails to perform or observe any other material covenant, condition or agreement
hereunder or breaches any provision contained herein or in any other document
furnished Lessor in connection herewith, and such failure or breach continues
for a period of 30 days after written notice by Lessor; or (c) makes any
representation or warranty herein or in any document furnished in connection
herewith, which shall have been materially false or inaccurate when made; or
(d) fails to maintain insurance under this Lease or otherwise required by the
Lessor hereunder; or (e) shall admit in writing that it is unable to pay its
debts as they become due, become insolvent or bankrupt or make an assignment
for the benefit of its creditors or consents to the appointment of a trustee or
receiver or insolvency proceedings shall be instituted by or against Lessee.
13. REMEDIES: Upon the occurrence of any Event of Default and at
any time thereafter, provided such Event of Default is then continuing (which
occurrence, for purposes of clause (a)(ii)(B) below is the day Lessee shall be
deemed to tender possession of the Equipment to Lessor), (a) Lessor may, in its
discretion, do any one or more of the following, all of which Lessor and Lessee
expressly agree are commercially reasonable under the UCC and any other
applicable law: (i) terminate this Lease; (ii) declare to be immediately due
and payable: (A) all unpaid rent and sums then due and payable under this Lease
(other than amounts payable under clause (B) hereof, if any,) plus (B) an
amount equal to the greater of the then applicable Stipulated Loss Value (which
value Lessee acknowledges has a reasonable discount rate implicit therein) or
the then applicable fair market value of the Equipment as determined by Lessor
(but in no event less than an amount equal to the Minimum Purchase Option
Percentage of Lessor's Cost); (iii) require that Lessee return all Equipment to
Lessor in accordance with Section 6 hereof; (iv) enter upon the premises where
such Equipment is located and take immediate possession of and remove the same,
all without liability to Lessor or its agents for such entry; (v) sell any or
all of the Equipment at public or private sale, with or without notice to
Lessee or advertisement, or otherwise dispose of, hold, use, operate, lease to
others or keep idle such Equipment, all free and clear of any rights of Lessee
and without any duty to account to Lessee for such action or inaction or for
any proceeds with respect thereto subject to applicable law; (vi) exercise any
other right or remedy which may be available under the UCC or other applicable
law including the right to recover damages for the breach hereof. (b) In
addition, Lessee shall be liable for, and reimburse Lessor for, all reasonable
and necessary attorneys' fees and other expenses incurred by Lessor as a result
of the foregoing defaults, or the exercise of Lessor's remedies, including
without limitation placing any Equipment in the condition required by Section 9
hereof. No remedy referred to in this Section 13 is intended to be exclusive,
but each shall be cumulative and in addition to any other remedy referred to
above or otherwise available to Lessor at law or in equity. (c) There shall be
no waiver by Lessor of any default unless in writing and such waiver shall not
constitute a waiver of any other default by Lessee, or a waiver of any of
Lessor's other rights. Lessee waives any rights now or hereafter conferred by
statute or otherwise that may require Lessor to sell, re-lease or otherwise use
or dispose any Unit in mitigation of the
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Lessor's damages or that might otherwise limit or modify any of Lessor's rights
or remedies under this Lease.
14. LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS:
(a) Lessee warrants and represents the following as of the date hereof:
(i) Lessee is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and is duly qualified
and authorized to do business in the state where the Equipment will be
located; (ii) Lessee has the full corporate power, authority and legal right
and has obtained all necessary approvals, consents and given all notices to
execute and deliver this Lease and perform the terms hereof and of each
Schedule; (iii) there is no action, proceeding or patent claim pending or,
insofar as Lessee knows, threatened against Lessee or any of its subsidiaries
before any court or administrative agency which might have a materially adverse
effect on the business, condition or operations of Lessee or such subsidiary;
and (iv) this Lease has been and each Schedule will be duly executed and
delivered by Lessee and constitute or will constitute the valid, binding and
enforceable obligations of Lessee. (b) Lessee agrees that by its signature on
each Schedule it shall be deemed to have warranted and represented the
following as of the Delivery Date of such Schedule: (i) all of the Units being
delivered on the Delivery Date of such Schedule are accurately described in
Annex A attached to such Schedule, have been fully assembled and conform to all
applicable performance criteria; (ii) the requirements of this Lease and of
Lessor with respect to the identification of the Units have been met; and (iii)
except as set forth in Annex C to the applicable Schedule, each of the
representations and warranties set forth in clause (a) of this Section 14
remains true and correct. (c) Lessee covenants and agrees that it shall not,
without Lessor's prior written consent, attempt, cause or permit another to
sell, transfer, encumber, part with possession, or sublet, voluntarily or
involuntarily, any Unit.
15. NOTICES. All notices (and financial information required to
be delivered to Lessor under Section 16(c) of this Lease) shall be addressed as
follows:
If to Lessor:
PHOENIX LEASING INCORPORATED
2401 Kerner Boulevard
San Rafael, California 94901
Attn: Lease Administration
If to Lessee, at the address set forth on the cover page of this
Lease.
16. MISCELLANEOUS: (a) Any notices hereunder shall be in writing
and shall be deemed given when delivered personally, by private courier, by
facsimile transmission or sent by certified mail, postage prepaid, addressed to
the other party at its address set forth herein or to such other address as
either party may designate in writing. Such notices or demands shall be deemed
given upon receipt in the case of personal delivery, mailing or facsimile
transmission. (b) Lessee will promptly execute and deliver to Lessor such
further reasonable documents (including, but not limited to, financing
statements) and take such further reasonable action (such as obtaining landlord
or mortgagee's waivers), as Lessor may request
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in order to more effectively carry out the intent and purpose of this Lease or
an assignment of Lessor's interest herein. (c) Lessee shall furnish to Lessor
monthly and audited annual financial statements and such other financial
information as Lessor may reasonably request from time to time. (d) This Lease
constitutes the entire agreement on the subject matter hereof between the
parties hereto (other than any document executed in connection herewith) and
shall be binding upon and inure to the benefit of the parties hereto, their
permitted successors and assigns. (e) Any provision of the Lease which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof; and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. (f) Time is of the
essence with respect to the Lease. (g) The captions set forth herein are for
convenience only and shall not define or limit any of the terms hereof. (h) The
language in this Lease and the related documents is to be construed as to its
fair meaning and not strictly for or against any party. (i) All payments shall
be paid to the address designated by Lessor in the applicable Schedule or
otherwise in a writing signed by Lessor. (j) Lessee's and Lessor's obligations
hereunder shall survive the expiration and termination of the Term to the
extent required for full performance and satisfaction thereof. (k) ALL MATTERS
INVOLVING THE CONSTRUCTION, VALIDITY, PERFORMANCE AND ENFORCEMENT OF THIS LEASE
WILL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT
TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF LAW. This Lease is being
executed in the State of California and is to be performed in such State.
Lessee agrees and consents that the Superior Court of the State of California
for the County of Marin or the Federal District Court for the jurisdiction in
that County shall have jurisdiction and shall be the venue for determination of
all controversies, disputes and actions arising under this Lease. Nothing
contained herein is intended to preclude Lessor from commencing any action
under this Lease in any court having jurisdiction thereof. (1) This Lease may
be executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts shall
together constitute one and same instrument; provided, however, that to the
extent, if any, that this Lease constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction), no security interest in this Lease may be created through the
transfer or possession of any counterpart of this Lease other than the original
executed counterpart of this Lease, which shall be identified as such
counterpart.
17. AMENDMENTS, MODIFICATIONS, WAIVERS: NONE OF THE PROVISIONS OF
THIS LEASE MAY BE AMENDED, MODIFIED OR WAIVED EXCEPT IN A WRITING SIGNED BY
LESSOR AND LESSEE.
INITIALS___________(LESSOR) INITIALS___________ (LESSEE)
12
<PAGE> 14
This Lease is hereby duly executed by the parties hereto as set forth
below.
LESSEE: LESSOR:
CALYPTE BIOMEDICAL CORPORATION PHOENIX LEASING INCORPORATED
BY: PAUL SIEGEL BY: N.H. NELSON
-------------------------------
NAME (PRINT):PAUL SIEGEL NAME (PRINT): N. H. NELSON
TITLE: CHIEF FINANCIAL OFFICER TITLE: VP
DATE:05/19/93 DATE: 05/27/93
This Lease incorporates the following Riders as if set forth
herein:
Rider I;______________; ______________; ______________
INITIALS N.H.N. (LESSOR) INITIALS P.S. (LESSEE)
Exhibit A - Warrant
Exhibit B - Landlord Waiver
Exhibit C - Purchase Order and Invoice Assignment
Exhibit D - Bill of Sale
Exhibit E - Form of Schedule
Exhibit F - Security Deposit Pledge Agreement
13
<PAGE> 15
RIDER I
TO MASTER EQUIPMENT
LEASE AGREEMENT NO.-
DATED AUGUST 20, 1993
Conditions to Lessor's Obligations
By their initials below and on the signature page of the Master
Equipment Lease Agreement referenced in the upper right corner of this page,
Lessor and Lessee agree that the Lease incorporates the following terms:
1. On or prior to the date of execution of the Lease by Lessor,
Lessor shall have received in form and substance satisfactory to Lessor:
(a) A Warrant substantially in the form of Exhibit A hereto.
(b) A Security Deposit Pledge Agreement in the form of Exhibit
F hereto.
(c) A legal opinion of Lessee's legal counsel in form and
substance reasonably satisfactory to Lessor.
(d) Copies, certified by the Secretary or Assistant Secretary
or Chief Financial Officer of Lessee, of: (A) the Articles of
Incorporation and By-Laws of Lessee (as amended to the date of
the Lease) and (B) the resolutions adopted by Lessee's board
of directors authorizing the execution and delivery of this
Lease, the Schedules, the Warrant and the other documents
referred to herein and the performance by Lessee of its
obligations hereunder and thereunder;
(e) Unless the opinion of Lessor's legal counsel contains
language to the same effect, a Good Standing Certificate
(including franchise tax status) with respect to Lessee from
Lessee's state of incorporation, dated a date reasonably close
to the date of acceptance of the Lease by Lessor.
(f) Evidence of the insurance coverage required by Section 10
of the Lease.
(g) All necessary consents of shareholders and other third
parties with respect to the subject matter of the Lease, the
Schedules and the Warrant.
(h) All other documents as Lessor shall have reasonably
requested.
2. Prior to any funding on a Delivery Date, Lessee shall Have
satisfied all of the conditions set forth in the applicable Schedule.
Initials______________(Lessor)
Initials______________(Lessee)
RIDER I
<PAGE> 16
EXHIBIT A
WARRANT
<PAGE> 17
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION
OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THIS WARRANT.
CALYPTE BIOMEDICAL CORPORATION
WARRANT TO PURCHASE 122,667 SHARES
OF COMMON STOCK
THIS CERTIFIES THAT, for value received, Phoenix Leasing Incorporated
is entitled to subscribe for and purchase 122,667 shares of the fully paid and
nonassessable Common Stock, $.001 par value (as adjusted pursuant to Section 4
hereof, the "Shares") of Calypte Biomedical Corporation, a California
corporation (the "Company"), at the price of $.75 per share (such price and
such other price as shall result, from time to time, from the adjustments
specified in Section 4 hereof is herein referred to as the "Warrant Price"),
subject to the provisions and upon the terms and conditions hereinafter set
forth. As used herein, (a) the term "Common Stock" shall mean the Company's
presently authorized Common Stock, and any stock into or for which such Common
Stock may hereafter be converted or exchanged, (b) the term "Date of Grant"
shall mean August 20, 1993, and (c) the term "Other Warrants" shall mean any
other warrants issued by the Company in connection with the transaction with
respect to which this Warrant was issued, and any warrant issued upon transfer
or partial exercise of this Warrant. The term "Warrant" as used herein shall
be deemed to include Other Warrants unless the context clearly requires
otherwise.
1. Term. The purchase right represented by this Warrant is
exercisable, in whole or in part, at any time and from time to time from the
Date of Grant through the later of (i) ten (10) years after the Date of Grant
or (ii) five (5) years after the closing of the Company's initial public
offering of its Common Stock effected pursuant to a Registration Statement on
Form S-1 (or its successor) filed under the Securities Act of 1933, as amended
(the "Act").
2. Method of Exercise; Payment; Issuance of New Warrant.
Subject to Section I hereof, the purchase right represented by this Warrant may
be exercised by the holder hereof, in whole or in part and from time to time,
by either, at the election of the holder hereof, (a) the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit A duly
executed) at the principal office of the Company and by the payment to the
Company, by
<PAGE> 18
check, of an amount equal to the then applicable Warrant Price multiplied by
the number of Shares then being purchased, or (b) if in connection with a
registered public offering of the Company's securities, the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit A-1 duly
executed) at the principal office of the Company together with notice of
arrangements reasonably satisfactory to the Company for payment to the Company
either by check or from the proceeds of the sale of shares to be sold by the
holder in such public offering of an amount equal to the then applicable
Warrant Price per share multiplied by the number of Shares then being
purchased. The person or persons in whose name(s) any certificate(s)
representing shares of Common Stock shall be issuable upon exercise of this
Warrant shall be deemed to have become the holder(s) of record of, and shall be
treated for all purposes as the record holder(s) of, the shares represented
thereby (and such shares shall be deemed to have been issued) immediately prior
to the close of business on the date or dates upon which this Warrant is
exercised. In the event of any exercise of the rights represented by this
Warrant, certificates for the shares of stock so purchased shall be delivered
to the holder hereof as soon as possible and in any event within thirty days
after such exercise and, unless this Warrant has been fully exercised or
expired, a new Warrant representing the portion of the Shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the holder hereof as soon as possible and in any event within such
thirty-day period.
3. Stock Fully Paid; Reservation of Shares. All Shares that may
be issued upon the exercise of the rights represented by this Warrant will,
upon issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number
and kind of securities purchasable upon the exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) Reclassification or Merger. In case of any reclassification,
change or conversion of securities of the class issuable upon exercise of this
Warrant (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), or in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is the acquiring and the surviving corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), or in case of any sale of all or substantially all of the assets
of the Company, the Company, or such successor or purchasing corporation, as
the case may be, shall duly execute and deliver to the holder of this Warrant a
new Warrant (in form and substance satisfactory to the holder of this Warrant),
so that the holder of this Warrant shall have the right to receive, at a total
purchase price not
2
<PAGE> 19
to exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the shares of Common Stock theretofore issuable
upon exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change or
merger by a holder of the number of shares of Common Stock then purchasable
under this Warrant. Such new Warrant shall provide for adjustments that shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Section 4. The provisions of this subparagraph (a) shall similarly
apply to successive reclassifications, changes, mergers and transfers.
(b) Subdivision or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its outstanding shares of Common Stock, the Warrant Price shall be
proportionately decreased in the case of a subdivision or increased in the case
of a combination, effective at the close of business on the date the
subdivision or combination becomes effective.
(c) Stock Dividends and Other Distributions. If the Company at
any time while this Warrant is outstanding and unexpired shall (i) pay a
dividend with respect to Common Stock payable in Common Stock, or (ii) make any
other distribution with respect to Common Stock (except any distribution
specifically provided for in the foregoing subparagraphs (a) and (b)) of Common
Stock, then the Warrant Price shall be adjusted, from and after the date of
determination of shareholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Warrant Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.
(d) Adjustment of Number of Shares. Upon each adjustment in the
Warrant Price, the number of Shares of Common Stock purchasable hereunder shall
be adjusted, to the nearest whole share, to the product obtained by multiplying
the number of Shares purchasable immediately prior to such adjustment in the
Warrant Price by a fraction, the numerator of which shall be the Warrant Price
immediately prior to such adjustment and the denominator of which shall be the
Warrant Price immediately thereafter.
(e) Antidilution Rights. In the event that the "Conversion Price"
(as defined in the Company's Restated Articles of Incorporation, as amended
through the Date of Grant, a true and complete copy of which is attached hereto
as Exhibit B (the "Charter")), for the Company's Series D Preferred Stock is
reduced from time to time prior to December 16, 1993 pursuant to the
antidilution rights applicable to the Series D Preferred Stock set forth in
Section 6.C.(a)(i)(I) of Article III of the Charter (other than reductions
covered by Sections 4(b) or (c) of this Warrant), then the same reduction
shall forthwith be made to the Warrant Price, subject to proportionate
adjustment to reflect any stock split or combination, stock dividend or similar
event occurring after the Date of Grant. The intent of this Section 4(e) is to
provide the holder of this Warrant with the same antidilution protection as
would have
3
<PAGE> 20
prevailed prior to December 16, 1993 if this Warrant had entitled the holder
hereof to purchase shares of the Company's Series D Preferred Stock (rather
than Common Stock), as such antidilution protection is set forth in the
Charter. Such antidilution rights shall not be amended, modified or waived in
any manner that is materially adverse to the holder hereof without such
holder's prior written consent. The Company shall promptly provide the holder
hereof with any restatement, amendment, modification or waiver of the Charter
promptly after the same has been made.
5. Notice of Adjustments. Whenever the Warrant Price or the
number of Shares purchasable hereunder shall be adjusted pursuant to Section 4
hereof, the Company shall make a certificate signed by its chief financial
officer setting forth, in reasonable detail, the event requiring the adjustment
the amount of the adjustment, the method by which such adjustment was
calculated, and the Warrant Price and the number of Shares purchasable
hereunder after giving effect to such adjustment, which shall be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to
the holder of this Warrant.
6. Fractional Shares. No fractional shares of Common Stock will
be issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor based on the
fair market value of the Common Stock on the date of exercise as reasonably
determined in good faith by the Company's Board of Directors.
7. Compliance with Securities Act: Disposition of Warrant or
Shares of Common Stock.
(a) Compliance with Securities Act. The holder of this
Warrant, by acceptance hereof, agrees that this Warrant, and the shares of
Common Stock to be issued upon exercise hereof are being acquired for investment
and that such holder will not offer, sell or otherwise dispose of this Warrant,
or any shares of Common Stock to be issued upon exercise hereof except under
circumstances which will not result in a violation of the Act. Upon exercise of
this Warrant, unless the Shares being acquired are registered under the Act or
an exemption from such registration is available, the holder hereof shall
confirm in writing, by executing the form attached as Schedule 1 to Exhibit A
hereto, that the shares of Common Stock so purchased are being acquired for
investment and not with a view toward distribution or resale. This Warrant and
all shares of Common Stock issued upon exercise of this Warrant (unless
registered under the Act) shall be stamped or imprinted with a legend in
substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO
SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION
STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH RE-
4
<PAGE> 21
GISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM
THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING
WITH THE PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THESE
SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY."
In addition, in connection with the issuance of this Warrant, the
holder specifically represents to the Company by acceptance of this Warrant as
follows:
(1) The holder is aware of the Company's business affairs and
financial condition, and has acquired information about the Company sufficient
to reach an informed and knowledgeable decision to acquire this Warrant. The
holder is acquiring this Warrant for its own account for investment purposes
only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Act.
(2) The holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
holder's investment intent as expressed herein. In this connection, the holder
understands that, in the view of the SEC, the statutory basis for such
exemption may be unavailable if the holder's representation was predicated
solely upon a present intention to hold the Warrant for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Warrant, or for a period of one
year or any other fixed period in the future.
(3) The holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and any applicable
state securities laws, or unless exemptions from registration are otherwise
available. Moreover, the holder understands that, except as provided in
Section 9 hereof, the Company is under no obligation to register this Warrant.
(4) The holder is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering
subject to the satisfaction of certain conditions, if applicable, including,
among other things: The availability of certain public information about the
Company, the resale occurring not less than two years after the party has
purchased and paid for the securities to be sold; the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly
with a market maker (as said term is defined under the Securities Exchange Act
of 1934, as amended) and the amount of securities being sold during any three-
month period not exceeding the specified limitations stated therein.
(5) The holder further understands that at the time it wishes to
sell this Warrant there may be no public market upon which to make such a sale,
and that, even if such a public market then exists, the Company may not be
satisfying the current public information re-
5
<PAGE> 22
quirements of Rule 144 and 144A, and that, in such event, the holder may be
precluded from selling this Warrant under Rule 144 and 144A even if the
two-year minimum holding period had been satisfied.
(6) The holder further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 and 144A are not
exclusive, the Staff of the SEC has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rule 144 and 144A will have a
substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their
own risk.
(b) Disposition of Warrant or Shares. With respect to any
offer, sale or other disposition of this Warrant or any shares of Common Stock
acquired pursuant to the exercise of this Warrant prior to registration of such
Warrant or shares, the holder hereof and each subsequent holder of this Warrant
agrees to give written notice to the Company prior thereto, describing briefly
the manner thereof, together with a written opinion of such holder's counsel,
if reasonably requested by the Company, to the effect that such offer, sale or
other disposition may be effected without registration or qualification (under
the Act as then in effect or any federal or state law then in effect) of this
Warrant or such shares of Common Stock and indicating whether or not under the
Act certificates for this Warrant or such shares of Common Stock to be sold or
otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with such law.
Promptly upon receiving such written notice and reasonably satisfactory
opinion, if so requested, the Company, as promptly as practicable, shall notify
such holder that such holder may sell or otherwise dispose of this Warrant or
such shares of Common Stock, all in accordance with the terms of the notice
delivered to the Company. If a determination has been made pursuant to this
subsection (b) that the opinion of counsel for the holder is not reasonably
satisfactory to the Company, the Company shall so notify the holder promptly
after such determination has been made and shall specify in detail the legal
analysis supporting any such conclusion. Notwithstanding the foregoing, this
Warrant or such shares of Common Stock may, as to such federal laws, be
offered, sold or otherwise disposed of in accordance with Rule 144 or 144A
under the Act, provided that the Company shall have been furnished with such
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 or 144A have been satisfied. Each
certificate representing this Warrant or the shares of Common Stock thus
transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a
legend as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the
holder, such legend is not required in order to ensure compliance with such
laws. The Company may issue stop transfer instructions to its transfer agent
in connection with such restrictions.
6
<PAGE> 23
(c) Excepted Transfers. Neither any restrictions of any legend
described in this Warrant nor the requirements of Section 7(b) above shall
apply to any transfer without any additional consideration of, or grant of a
security interest in, this Warrant or any part hereof (i) to a partner of the
holder if the holder is a partnership, (ii) by the holder to a partnership of
which the holder is a general partner, or (iii) to any affiliate of the holder
if the holder is a corporation; provided, however, in any such transfer, the
transferee shall on the Company's request agree in writing to be bound by the
terms of this Warrant as if an original signatory hereto.
8. Rights as Shareholders; Information. No holder of this
Warrant, as such, shall be entitled to vote or receive dividends or be deemed
the holder of Common Stock or any other securities of the Company which may at
any time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the holder of this Warrant, as
such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to receive notice of meetings, or to receive dividends
or subscription rights or otherwise until this Warrant shall have been
exercised and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. Notwithstanding the foregoing, the Company
will transmit to the holder of this Warrant such information, documents and
reports as are generally distributed to the holders of any class or series of
the securities of the Company concurrently with the distribution thereof to the
shareholders.
9. Registration Rights. The Company covenants and agrees as
follows:
9.1 Definitions. For purposes of this Section 9:
(a) The term "Registrable Shares" means (i) the Common
Stock issuable or issued upon exercise or conversion of this Warrant or upon
exercise or conversion of the Other Warrants, and (ii) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, such Common Stock;
(b) The term "Shareholder" means any person owning or
having the right to acquire Registrable Shares or any assignee thereof in
accordance with Paragraph 9.3 hereof; and
(c) The term "Registration Rights" means Section 9
(other than Sections 9.1, 9.3 and 9.4) of the Agreement for the Purchase and
Sale of Series D Preferred Stock dated as of December 16, 1992 by and among
the Company and the investors who are signatories thereto (the "Purchase
Agreement").
9.2 Grant of Rights. The Company hereby grants to the
Shareholders the rights set forth in the Registration Rights. A true and
complete copy of the Registration
7
<PAGE> 24
Rights is attached hereto as Exhibit C. The Company represents and warrants to
the Shareholders that the Company has obtained all consents of parties to the
Purchase Agreement and of any other persons that are required in order for the
Registrable Shares to be included in the definition of "Registrable Securities"
and for the Shareholders to be included in the definition of "Holders," as such
terms are used in the Registration Rights.
9.3 Assignment of Registration Rights. Notwithstanding any
provision of the Registration Rights, the rights to cause the Company to
register Registrable Shares pursuant to the Registration Rights and this
Section 9 may be assigned by a Shareholder to a transferee or assignee of such
securities provided the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act.
9.4 No Conflicting Agreements. The Company represents and
warrants to the Shareholders that the Company is not a party to any agreement
that conflicts in any manner with the Shareholders' rights to cause the Company
to register Registrable Shares pursuant to the Registration Rights and this
Section 9. The Company covenants and agrees that it shall not, without the
prior written consent of the Shareholders holding a majority of the outstanding
Registrable Shares, amend, modify or restate the Registration Rights if the
rights of the Shareholders would be subordinated, diminished or otherwise
adversely affected in a different manner than other "Holders" of "Registrable
Securities" (as defined in the Registration Rights).
9.5 Rights and Obligations Survive Exercise and Expiration
of Warrant. The rights and obligations of the Company, of the holder of this
Warrant and of the Registrable Shares contained in the Registration Rights and
this Section 9 shall survive exercise, conversion and expiration of this
Warrant.
10. Additional Rights.
10.1 Secondary Sales. The Company agrees that it will not
interfere with the holder of this Warrant in obtaining liquidity if
opportunities to make secondary sales of the Company's securities become
available. To this end, the Company will promptly provide the holder of this
Warrant with the same notice (if any) as it provides to other holders of the
Company's securities of any offer to acquire from the Company's security
holders more than five percent (5%) of the total voting power of the Company
and will not interfere with the holder in arranging the sale of this Warrant to
the person or persons making such offer.
10.2 Mergers. The Company will provide the holder of this
Warrant with at least 30 days' notice of the terms and conditions of any
proposed (i) sale, lease exchange, conveyance or other disposition of all or
substantially all of its property or business, or (ii)
8
<PAGE> 25
merger into or consolidation with any other corporation (other than a
wholly-owned subsidiary of the Company), or any other transaction (including a
merger or other reorganization) or series of related transactions, in which
more than 50% of the voting power of the Company is disposed of.
10.3 Right to Convert Warrant into Common Stock: Net
Issuance.
(a) Right to Convert. In addition to and without
limiting the rights of the holder under the terms of this Warrant, the holder
shall have the right to convert this Warrant or any portion thereof (the
"Conversion Right") into shares of Common Stock as provided in this Section 10.3
at any time or from time to time during the term of this Warrant. Upon
exercise of the Conversion Right with respect to a particular number of shares
subject to this Warrant (the "Converted Warrant Shares"), the Company shall
deliver to the holder (without payment by the holder of any exercise price or
any cash or other consideration) (X) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing the value
of this Warrant (or the specified portion hereof) on the Conversion Date (as
defined in subsection (b) hereof), which value shall be determined by
subtracting (A) the aggregate Warrant Price of the Converted Warrant Shares
immediately prior to the exercise of the Conversion Right from (B) the aggregate
fair market value of the Converted Warrant Shares issuable upon exercise of this
Warrant (or the specified portion hereof) on the Conversion Date (as herein
defined) by (Y) the fair market value of one share of Common Stock on the
Conversion Date (as herein defined).
Expressed as a formula, such conversion shall be computed as follows:
X = B - A
Y
Where: X = the number of shares Common Stock that may be issued to
holder
Y = the fair market value (FMV) of one share of Common Stock
A = the aggregate Warrant Price (i.e., Converted Warrant Shares
x Warrant Price)
B = the aggregate FMV (i.e., FMV x Converted Warrant Shares)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to
the holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined).
9
<PAGE> 26
(b) Method of Exercise. The Conversion Right may be
exercised by the holder by the surrender of this Warrant at the principal
office of the Company together with a written statement specifying that the
holder thereby intends to exercise the Conversion Right and indicating the
number of shares subject to this Warrant which are being surrendered (referred
to in subsection (a) hereof as the Converted Warrant Shares) in exercise of the
Conversion Right. Such conversion shall be effective upon receipt by the
Company of this Warrant together with the aforesaid written statement, or on
such later date as is specified therein (the "Conversion Date"), and, at the
election of the holder hereof, may be made contingent upon the closing of the
sale of the Company's Common Stock to the public in a public offering pursuant
to a Registration Statement under the Act (a "Public Offering"). Certificates
for the shares issuable upon exercise of the Conversion Right and, if
applicable, a new warrant evidencing the balance of the shares remaining
subject to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the holder within thirty (30) days following the Conversion Date.
(c) Determination of Fair Market Value. For purposes of
this Section 10.3, "fair market value" of a share of Common Stock as of a
particular date (the "Determination Date") shall mean:
(i) If the Conversion Right is exercised in connection with and
contingent upon a Public Offering, and if the Company's Registration Statement
relating to such Public Offering ("Registration Statement") has been declared
effective by the SEC, then the initial "Price to Public" specified in the final
prospectus with respect to such offering.
(ii) If the Conversion Right is not exercised in connection with
and contingent upon a Public Offering, then as follows:
(A) If traded on a securities exchange, the fair market
value of the Common Stock shall be deemed to be the average of the
closing prices of the Common Stock on such exchange over the 30-day
period ending five business days prior to the Determination Date;
(B) If traded over-the-counter, the fair market value of
the Common Stock shall be deemed to be the average of the closing bid
prices of the Common Stock over the 30-day period ending five business
days prior to the Determination Date; and
(C) If there is no public market for the Common Stock,
then fair market value shall be determined by mutual agreement of the
holder of this Warrant and the Company, and if the holder and the
Company are unable to so agree, by an investment banker of national
reputation selected by the Company and reasonably acceptable to the
holder of this Warrant. The fees and expenses of any such investment
banker shall be borne equally by the Company and the holder of this
Warrant.
10
<PAGE> 27
11. Representations and Warranties. The Company represents and
warrants to the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by
the Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and
other equitable remedies;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions
granted to or imposed upon the Common Stock and the holders thereof are as set
forth in the Charter, as amended to the Date of the Grant, a true and complete
copy of which has been delivered to the original holder of this Warrant and is
attached hereto as Exhibit B;
(d) The execution and delivery of this Warrant are not,
and the issuance of the Shares upon exercise of this Warrant in accordance
with the terms hereof will not be, inconsistent with the Company's Charter or
by-laws, do not and will not contravene any law, governmental rule or
regulation, judgment or order applicable to the Company, and do not and will
not conflict with or contravene any provision of, or constitute a default
under, any indenture, mortgage, contract or other instrument of which the
Company is a party or by which it is bound or require the consent or approval
of, the giving of notice to, the registration or filing with or the taking of
any action in respect of or by, any Federal, state or local government
authority or agency or other person, except for the filing of notices pursuant
to federal and state securities laws, which filings will be effected by the
time required thereby; and
(e) There are no actions, suits, audits, investigations
or proceedings pending or, to the knowledge of the Company, threatened against
the Company in any court or before any governmental commission, board or
authority which, if adversely determined, will have a material adverse effect
on the ability of the Company to perform its obligations under this Warrant.
12. Modification and Waiver. This Warrant and any provision
hereof may be changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of the same is sought
13. Notices. Any notice, request, communication or other document
required or permitted to be given or delivered to the holder hereof or the
Company shall be delivered, or shall be sent by certified or registered mail,
postage prepaid, to each such holder at its address
11
<PAGE> 28
as shown on the books of the Company or to the Company at the address indicated
therefor on the signature page of this Warrant.
14. Binding Effect on Successors. This Warrant shall be binding
upon any corporation succeeding the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets, and all of the
obligations of the Company relating to the Common Stock issuable upon the
exercise or conversion of this Warrant shall survive the exercise, conversion
and termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the holder
hereof. The Company will, at the time of the exercise or conversion of this
Warrant, in whole or in part, upon request of the holder hereof but at the
Company's expense, acknowledge in writing its continuing obligation to the
holder hereof in respect of any rights (including, without limitation, any
right to registration of the shares of Registrable Securities) to which the
holder hereof shall continue to be entitled after such exercise or conversion
in accordance with this Warrant; provided, that the failure of the holder
hereof to make any such request shall not affect the continuing obligation of
the Company to the holder hereof in respect of such rights.
15. Lost Warrants or Stock Certificates. The Company covenants to
the holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
16. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
17. Governing Law. This Warrant shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the
laws of the State of California.,
18. Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the holder hereof contained
herein shall survive the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained
herein shall survive indefinitely until, by their respective terms, they are no
longer operative.
19. Remedies. In case any one or more of the covenants and
agreements contained in this Warrant shall have been breached, the holders
hereof (in the case of a breach by the Company), or the Company (in the case of
a breach by a holder), may proceed to protect and enforce their or its rights
either by suit in equity and/or by action at law, including, but not limited
to, an action for damages as a result of any such breach and/or an action for
specific performance of any such covenant or agreement contained in this
Warrant.
12
<PAGE> 29
20. Value. The Company and the holder of this Warrant agree that
the value of this Warrant and the Other Warrants on the Date of Grant is
$100.00.
21. Acceptance. Receipt of this Warrant by the holder hereof
shall constitute acceptance of and agreement to the foregoing terms and
conditions.
22. No Impairment of Rights. The Company will not, by amendment
of its Charter or through any other means, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against impairment.
CALYPTE BIOMEDICAL CORPORATION
By___________________________
Title_________________________
Address: 1440 Fourth Street
Berkeley, CA 94701
Date:____________________________, 199_
13
<PAGE> 30
EXHIBIT A
NOTICE OF EXERCISE
To: Calypte Biomedical Corporation
1. The undersigned hereby elects to purchase______________________
shares of Common Stock of Calypte Biomedical Corporation pursuant to the terms
of the attached Warrant, and tenders herewith payment of the purchase price of
such shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below:
______________________________
(Name)
______________________________
______________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Schedule 1.
______________________________
(Signature)
(Date)______________________________
14
<PAGE> 31
EXHIBIT A-1
NOTICE OF EXERCISE
To: Calypte Biomedical Corporation (the "Company")
1. Contingent upon and effective immediately prior to the
closing (the "Closing") of the Company's public offering contemplated by the
Registration Statement on Form S-______, filed ____________, 199__, the
undersigned hereby elects to purchase ________ shares of Common Stock of the
Company (or such lesser number of shares as may be sold on behalf of the
undersigned at the Closing) pursuant to the terms of the attached Warrant.
2. Please deliver to the custodian for the selling shareholders a
stock certificate representing such ________ shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering.
If such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
---------------------------------------
(Signature)
- --------------------
(Date)
15
<PAGE> 32
Schedule 1
INVESTMENT REPRESENTATION STATEMENT
Purchaser:
Company: Calypte Biomedical Corporation
Security: Common Stock
Amount:
Date:
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:
(a) The Purchaser is aware of the Company's business affairs and
financial condition, and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities. The
Purchaser is purchasing the Securities for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Act").
(b) The Purchaser understand that the Securities have not
been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the
bona fide nature of the Purchaser's investment intent as expressed herein.
In this connection, the Purchaser understands that, in the view of the
Securities and Exchange Commission ("SEC"), the statutory basis for such
exemption may be unavailable if the Purchaser's representation was predicated
solely upon a present intention to hold these Securities for the minimum
capital gains period specified under tax statutes, for a deferred sale, for or
until an increase or decrease in the market price of the Securities, or for a
period of one year or any other fixed period in the future.
(c) The Purchaser further understands that the Securities must be
held indefinitely unless subsequently registered under the Act or unless an
exemption from registration is otherwise available. Moreover, the Purchaser
understands that the Company is under no obligation to register the Securities
except as set forth in the Warrant under which the Securities are being
acquired. In addition, the Purchaser understands that the certificate
evidencing the Securities will be imprinted with the legend referred to in the
Warrant under which the Securities are being purchased.
(d) The Purchaser is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities"
16
<PAGE> 33
acquired, directly Or indirectly, from the issuer thereof (or from an affiliate
of such issuer), in a non-public offering subject to the satisfaction of certain
conditions, if applicable, including, among other things: The availability of
certain public information about the Company, the resale occurring not less than
two years after the party has purchased and paid for the securities to be sold;
the sale being made through a broker in an unsolicited "broker's transaction" or
in transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934, as amended) and the amount of securities being
sold during any three-month period not exceeding the specified limitations
stated therein.
(e) The Purchaser further understands that at the time it wishes
to sell the Securities there may be no public market upon which to make such a
sale, and that, even if such a public market then exists, the Company may not
be satisfying the current public information requirements of Rule 144 and 144A,
and that, in such event, the Purchaser may be precluded from selling the
Securities under Rule 144 and 144A even if the two-year minimum holding period
had been satisfied.
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive,
the Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers
or sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
Purchaser:
----------------------------------
Date: ____________, 199__
17
<PAGE> 34
Exhibit B
Restated Articles of Incorporation, as Amended
18
<PAGE> 35
Exhibit C
Section 9 of Series D Preferred Stock Agreement
19
<PAGE> 36
Exhibit B
LANDLORD WAIVER
<PAGE> 37
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
PHOENIX LEASING INCORPORATED
2401 Kerner Boulevard
San Rafael, California 94901
Attn: Lease Administration
CONSENT TO REMOVAL OF PERSONAL PROPERTY
KNOW ALL PERSONS BY THESE PRESENTS:
(i) The undersigned has an interest as owner and landlord in the
following described real property (the "Real Property"):
That certain real property in the County of Alameda, State of California, with
the street address of ___________ and more fully described as:
SEE ATTACHMENT 1 ATTACHED HERETO FOR FULL LEGAL DESCRIPTION
(ii) Calypte Biomedical Corporation, a California corporation
("Lessee"), has entered into or will enter into a Master Equipment Lease
Agreement with Phoenix Leasing Incorporated ("Lessor") dated as of August 20,
1993 (the "Lease Agreement") and certain Schedules related thereto
(collectively the "Lease").
(iii) Lessor, as a condition to entering into the Lease Agreement,
requires that the undersigned consent to the removal by Lessor of the equipment
and other assets covered by the Lease (hereinafter called "Equipment") from the
Real Property, no matter how it is affixed thereto, and to the other matters
set forth below.
NOW, THEREFORE, for good and sufficient consideration, receipt of which is
hereby acknowledged, the undersigned consents to the placing of the Equipment on
the Real Property, and agrees with Lessor as follows:
1. Undersigned waives and releases each and every right which
undersigned now has, under laws of California or by virtue of the lease for
the Real Property now in effect, to levy
<PAGE> 38
or distrain upon for rent, in arrears, in advance or both, or to claim or assert
title to the Equipment that is already on said Real Property, or may hereafter
be delivered or installed thereon.
2. The Equipment shall be considered to be personal property and
shall not be considered part of the Real Property regardless of whether or by
what means it is or may become attached or affixed to the Real Property.
3. The undersigned will permit Lessor to enter upon the Real
Property for the purpose of exercising any right it may have under the terms of
the Lease or otherwise, including, without limitation, the right to remove the
Equipment; provided, however, that if Lessor, in removing the Equipment damages
any improvements of the undersigned on the Real Property, Lessor will, at its
expense, cause same to be repaired.
4. This agreement shall be binding upon the heirs, successors and
assigns of the undersigned and shall inure to the benefit of Lessor and its
successors and assigns. Upon any sale, transfer or other assignment of the
Real Property, the undersigned shall notify the transferee of the existence of
this agreement and that it is binding on the transferee.
IN WITNESS WHEREOF, the undersigned has executed this instrument at
______________, this _____ day of ________, 19__.
By:
----------------------------------
Title:
-------------------------------
Date:
--------------------------------
The foregoing Consent must be acknowledged before a Notary Public.
[ATTACH NOTARY JURAT]
2
<PAGE> 39
ATTACHMENT 1
LEGAL DESCRIPTION OF PREMISES
[To Be Provided By Tenant]
<PAGE> 40
State of ____________________)
)
County of ___________________)
On ________________________________________________, 19___ before
me, the undersigned, personally appeared _________________, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature _____________________________ (Seal)
State of ___________________)
)
County of __________________)
On ___________________________________________, 19__ before me, the
undersigned, personally appeared ____________________________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature _____________________________ (Seal)
<PAGE> 41
EXHIBIT C
PURCHASE ORDER AND INVOICE ASSIGNMENT
<PAGE> 42
PURCHASE ORDER AND INVOICE ASSIGNMENT
THIS PURCHASE ORDER ASSIGNMENT, dated as of ____________, 199_ (this
"Assignment"), between Calypte Biomedical Corporation ("Assignor") and
Phoenix Leasing Incorporated ("Assignee");
WITNESSETH:
WHEREAS, Assignor has submitted its Purchase Orders and Invoices
listed in Schedule 1 hereto (collectively, the "Purchase Orders"), to
____________ (the "Vendor") concerning certain Units of equipment (the "Units")
listed in Schedule 1 hereto to be subject to a Master Equipment Lease
Agreement, dated as of August 20, 1993 (the "Lease"), between Assignor and
Assignee (all terms used but not otherwise defined herein shall have the
meaning given to them in the Lease):
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. Assignor does hereby sell, assign, transfer and set
over unto Assignee, all of the Assignor's rights to and interests in the
Purchase Orders as and to the extent that the same relates to the Units.
The assignment herein shall include, without limitation, the right of Assignee
to purchase the Units pursuant to the Purchase Orders and to take title to the
Units, all claims for damages in respect of the Units arising as a result of
any default by Vendor under the Purchase Orders, together with any and all
rights of Assignor to compel performance of the terms of the Purchase Orders in
respect of the Units.
2. The exercise by Assignee of any of the rights assigned
hereunder shall not release Assignor from any of its duties or obligations to
Vendor under the Purchase Orders except to the extent that such exercise by
Assignee shall constitute performance of such duties and obligations.
3. Upon satisfaction of the conditions set forth in the
applicable Schedule to the Lease with respect to the Units, Assignee shall
purchase such Unit by paying or causing to be paid, by check mailed or
delivered to Vendor, on such date or thereafter as permitted by Vendor, an
amount equal to the purchase price of the Unit, as such amount may be adjusted
in accordance with the terms of the Purchase Orders and reflected on invoices
prepared by Vendor to Assignee on or before the date of delivery and acceptance
of the Unit.
4. Assignor agrees that it will, at any time and from time to
time, upon the written consent of Assignee, promptly and duly exercise
and deliver any and all such further instruments and documents and take
such further action as Assignee may reasonably request
<PAGE> 43
in order that Assignee may obtain the full benefits of this Agreement and of
the rights and powers herein granted.
5. Assignor does hereby represent and warrant that the Purchase
Orders are in full force and effect and that Assignor is not in default under
any of them. Assignor does hereby further represent and warrant that Assignor
has not assigned or pledged, and so long as this Assignment shall remain in
effect, will not assign or pledge, the whole or any part of the rights hereby
assigned or any of its rights with respect to the Units under the Purchase
Orders to anyone other than Assignee.
IN WITNESS WHEREOF, the parties hereto have caused this Purchase Order
Assignment to be duly executed as of the day and year first above written.
CALYPTE BIOMEDICAL CORPORATION PHOENIX LEASING INCORPORATED
(Lessee) (Lessor)
By By
-------------------------------- ----------------------------------
Title Title
----------------------------- -------------------------------
Acknowledged and Consented to this
________ day of ___________________________, 199___.
___________________________________________ (Vendor)
By:
------------------------------------
Title:
---------------------------------
<PAGE> 44
SCHEDULE I
TO
PURCHASE ORDER AND INVOICE ASSIGNMENT
<PAGE> 45
EXHIBIT D
BILL OF SALE
<PAGE> 46
BILL OF SALE
For valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, CALYPTE BIOMEDICAL CORPORATION ("Seller") does hereby
sell, grant, transfer and deliver to Phoenix Leasing Incorporated ("Buyer"),
all of Seller's right, title and interest in and to the property listed on
Schedule I attached hereto (the "Equipment"), together with all warranties,
guarantees and indemnities owned by Seller with respect to the Equipment (the
"Equipment Warranties"), to have and to hold the Equipment and the Equipment
Warranties forever.
Seller covenants and warrants that:
(1) it is the owner of, and has absolute title to, the Equipment and the
Equipment Warranties, which, as of the date hereof, are free and clear of all
claims, liens and encumbrances;
(2) it has not made any prior sale, assignment, or transfer of the Equipment
or the Equipment Warranties;
(3) it has the present right, power and authority to sell the Equipment and
the Equipment Warranties to Buyer; and
(4) all action has been taken which is required to make this Bill of Sale a
legal, valid and binding obligation of Seller.
Seller shall forever warrant and defend the sale of the Equipment and the
Equipment Warranties to Buyer, its successors and assigns, against all claims,
liens and encumbrances and against any and every person or persons claiming any
interest in the Equipment or the Equipment Warranties, except with respect to
any claims, liens or encumbrances caused by any action of Buyer not contemplated
under that certain Master Equipment Lease Agreement dated as of August 20, 1993
by and between Buyer and Seller (together with all Schedules thereto, the
"Lease") or under any agreement, instrument or other document delivered in
connection with the Lease.
This Bill of Sale shall be binding on the successors and assigns of the Seller
and shall inure to the benefit of the successors and assigns of Buyer.
Executed as of ____________, 199__, at _____________________________________.
CALYPTE BIOMEDICAL CORPORATION
By:
--------------------------------
Title:
-----------------------------
<PAGE> 47
ANNEX A
TO
BILL OF SALE
<PAGE> 48
EXHIBIT E
SCHEDULE NO. ______
TRUE LEASE
This Schedule No. ______ (this "Schedule"), dated ____________, 199 __
(such date being the "Delivery Date" for this Schedule), is a part of the Master
Equipment Lease Agreement, dated as of August 20, 1993 (the "Lease"), between
PHOENIX LEASING INCORPORATED ("Lessor") and CALYPTE BIOMEDICAL CORPORATION
("Lessee") and is incorporated therein by this reference. The terms used in
this Schedule shall have the meanings given to them in the Lease unless
otherwise defined herein.
1. Description and Cost of Units
The Units subject to this Schedule are described in Annex A hereto.
The Lessor's Cost for this Schedule is:
$____________
2. Acceptance; Obligations
Lessee confirms that on the Delivery Date hereof (i) all of the Units
described in Annex A attached hereto were duly accepted by Lessee and became
subject to the Lease; and (ii) Lessee became obligated to make Rental Payments
to Lessor and perform certain other obligations with respect to such Units as
provided in the Lease and this Schedule.
3. Rent
(a) Commencing on ____________, 19___ (the "Rent
Commencement Date") and on the first day of each month thereafter, the rent for
each Unit shall be paid by Lessee in advance by check (or if requested by
Lessor, by wire transfer), to the location prescribed by Lessor in writing, in
forty-two (42) consecutive installments, each of the first twelve (12) of which
shall be calculated based upon a Rent Factor of 1.5% of the Lessor's Cost for
this Schedule and each of the following thirty (30) of which shall be
calculated based upon a Rent Factor of 3.5% of the Lessor's Cost for this
Schedule, which rentals are:
$__________ for each of the first 12 such installments, and
$__________ for each of the following 30 such installments.
(b) The Lease Term for the Units subject to this Schedule is 42
months and commences on the Rent Commencement Date. The Lease Term for the
Units subject to this Schedule shall expire on:
____________, 199___
<PAGE> 49
(c) The Interim Rental Payment for the period from the Delivery
Date of this Schedule through the Rent Commencement Date, which is due on the
Delivery date, is:
$__________.
4. Conditions. Lessor's obligations under the Lease and this
Schedule are subject to the prior satisfaction of the following conditions on
or before the Delivery Date of this Schedule:
(a) Lessor shall have received, in form and substance satisfactory
to Lessor:
(i) All applicable waivers of landlords and/or mortgagees,
substantially in the form of Exhibit B to the Lease.
(ii) To the extent Lessor deems it necessary, a release or other
arrangement with any other lessor or lender to the Company to insure that there
will be no impairment of Lessor's interest in the Units subject to this or
other Schedules.
(iii) A sales tax exemption or other similar certificate from Lessee
with respect to any Units included in this Schedule, but not placed in service
by Lessee before the Delivery Date of this Schedule.
(iv) Copies of invoices, purchase orders and cancelled checks
relating to all Units being placed under the Lease pursuant to a sale/leaseback
on the Delivery Date of this Schedule and/or a Purchase Order and Invoice
Assignment from Lessee to Lessor substantially in the form of Exhibit C to the
Lease, instead of copies of cancelled checks, for all Units to be purchased by
Lessor directly from the vendor.
(v) For all sales of Units by Lessee to Lessor, a Bill of Sale,
substantially in the form of Exhibit D to the Lease.
(vi) An executed copy of each manufacturer's service contract
entered into by Lessee pursuant to Section 9 of the Lease.
(vii) A Certificate of Acceptance covering the Units subject to this
Schedule.
(b) Lessee shall have filed or recorded, to the satisfaction of
Lessor, all instruments and documents, including, but not limited to, Financing
Statements on Form UCC-1 and Releases and Termination Statements on Form UCC-2,
then deemed necessary by Lessor to preserve and protect its rights hereunder,
under the Uniform Commercial Code (including the termination of any
after-acquired property clause of third parties with respect to any Unit) and,
if applicable, not less than ten days before the Delivery Date, a notice of the
proposed transfer to Lessor by Lessee of title to the Units to be placed under
the Lease on such Delivery Date shall have been published as and to the extent
required by Section 3440 of the Civil Code of the State of California.
2
<PAGE> 50
(c) Lessor shall have received all other documents and Lessee
shall have performed all other acts as Lessor shall have reasonably requested
to consummate the transaction contemplated by this Schedule.
(d) Except with the prior consent of Lessor which shall not be
unreasonably withheld, (i) Lessor's Cost for the Units subject to this Schedule
shall be equal to or exceed the Minimum Funding Amount, (ii) Lessor's Cost for
the Units subject to this Schedule when aggregated with Lessor's Cost for all
Units under all previously funded Schedules shall not exceed the Lessor's
Commitment set forth on the cover page of the Lease, and (iii) the funding
contemplated by this Schedule when aggregated with all previous fundings under
the Lease shall not exceed the Maximum Number of Fundings.
(e) Except with the prior written consent of Lessor, the aggregate
of Lessor's Cost of all Units subject to this Schedule and all Schedules
previously made subject to the Lease which consist of tenant improvements,
computer software, equipment manufactured specially for Lessee and/or delivery
and installation costs shall not exceed 17.39% ($200,000 of Lessor's Cost if
the entire Lessor's Commitment is funded) of the total Lessor's Cost of
Equipment funded.
(f) The Delivery Date of this Schedule shall not be later than the
Commitment Termination Date.
(g) On the Delivery Date of this Schedule no Event of Default or
event, which with the passage of time or the giving of notice or both would
constitute an Event of Default, shall exist.
(h) Except with the prior written consent of Lessor which shall
not be unreasonable withheld, all of the Units listed on Annex A shall consist
of Eligible Equipment.
5. Representations and Warranties. Lessee hereby makes the
representations and warranties set forth in Section 14 of the Lease.
6. Payments. Pursuant to Section 16(h) of the Lease, all
payments shall be made to Lessor at 2401 Kerner Boulevard, San Rafael,
California 94901 unless otherwise indicated in a writing signed by Lessor.
3
<PAGE> 51
This Schedule is hereby duly executed by the parties hereto as of the
date first written above.
PHOENIX LEASING INCORPORATED
By
-----------------------------------
Title
--------------------------------
LESSEE'S ADDRESS CALYPTE BIOMEDICAL CORPORATION
FOR NOTICES:
1440 Fourth Street
Berkeley, CA 94710 By:
ATTN: Paul Siegel ----------------------------------
Chief Financial officer Title:
-------------------------------
Annex A - Description of Units
Annex B - Stipulated Loss Values
Annex C - Exceptions to Representations and Warranties
4
<PAGE> 52
ANNEX A
DESCRIPTION OF UNITS
Units are Located at Lessee's Offices at
____________________________, CA ________.
<TABLE>
<CAPTION>
Major
Equipment Description Manufacturer Identification Lessor's
Category of Unit or Vendor or Serial No. Cost
-------- ----------- ------------ ------------- --------
<S> <C> <C> <C> <C>
Subtotal By
Equipment Category $_________
</TABLE>
5
<PAGE> 53
ANNEX B
STIPULATED LOSS VALUES
<TABLE>
<CAPTION>
Rental Stipulated Loss Value
Payment Date Percentage of Lessor's Cost
- ------------ ---------------------------
<S> <C>
Thereafter ________________ *
</TABLE>
* If Lessee renews the Lease, the Stipulated Loss Value during any
extended Term shall be an amount equal to the fair market value of the Units as
at the end of the applicable initial lease term, as reasonably determined by
Lessor, or in the event of disagreement between Lessor and Lessee, as
determined by the independent appraiser selected under the provisions of
Section 4(b) of the Lease; provided, however, that such Stipulated Loss Value
shall not be less than 25% of Lessor's Cost of the Units.
6
<PAGE> 54
ANNEX C
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
7
<PAGE> 55
EXHIBIT F
SECURITY DEPOSIT PLEDGE AGREEMENT
<PAGE> 56
SECURITY DEPOSIT PLEDGE AGREEMENT
AGREEMENT made and entered into as of August 20, 1993, by and between
Calypte Biomedical Corporation, a California corporation, with a principal
place of business at 1440 Fourth Street, Berkeley, CA 94710 ("Pledgor") and
Phoenix Leasing Incorporated, a California corporation, with its place of
business at 2401 Kerner Boulevard, San Rafael, California 94901 ("Pledgee").
WITNESSETH
In consideration of, and as an inducement for Pledgee (i) to enter
into and advance funds under the Equipment Lease Agreement, dated as of August
20, 1993 (as amended from time to time, the "Lease"), with Pledgor and one or
more Schedules in connection with the Lease (the "Schedules"), and (ii) to
secure the payment of rentals and performance of all Pledgor's other
obligations under this Agreement, the Lease and all exhibits and Schedules
thereto (collectively, the "Obligations"), Pledgor shall deposit and pledge
with Pledgee, on the Delivery Date of each Schedule, a cash collateral security
deposit (the "Security Deposit") in the amount of six percent (6%) of Lessor's
Cost under such Schedule (such terms and other terms not otherwise defined
herein having the meaning therefor as set forth in the Lease or the Schedules).
NOW THEREFORE, it is agreed:
1. Delivery of Deposit; Earnings. Pledgor shall, on or before
the Delivery Date of each Schedule, deliver the Security Deposit for such
Schedule to Pledgee to secure the due and punctual payment and performance of
the Obligations. Pledgor will receive simple interest on the Security Deposit
at a rate equal to four and one-half percent (4.5%) per annum (the
"Earnings"), such Earnings to be paid to Pledgor when and if the Security
Deposit is returned to Pledgor in accordance with the terms hereof. Pledgee
may commingle the Security Deposit and Earnings with its own funds or otherwise
deposit such Security Deposit in any bank selected by Pledgee.
2. Grant of Security. All funds held by the Pledgee,
representing the Security Deposit and any Earnings, shall constitute collateral
security for the performance by Pledgor of all its Obligations. Accordingly,
Pledgor assigns, delivers, pledges and conveys to Pledgee, and grants to
Pledgee a first priority, perfected security interest in and to the Security
Deposit and all Earnings for the prompt and unconditional fulfillment of the
Obligations.
1
<PAGE> 57
3. Deposit Defaults. If any default or Event of Default under
the Lease (each being a "Deposit Default") by Pledgor shall occur and be
continuing, earnings accrued on the Security Deposit for Pledgor's benefit
shall cease on notice of such Deposit Default to Pledgor. Pledgee may
thereupon apply the Security Deposit and any Earnings (accrued to the date of
such default notice), in such manner as Pledgee reasonably determines, towards
the satisfaction of the Obligations, including the payment of all costs and
expenses incurred by Pledgee as a result of any Deposit Default.
4. Enforcement. Pledgee shall have no duty to commence an action
against or seek recourse from Pledgor in the event of a Deposit Default first
before enforcing the provisions of this Agreement. The Obligations of Pledgor
shall be absolute and unconditional, and shall remain in force and effect
without regard to, and shall not be released or discharged or in any way
affected by:
(a) any amendment or modification of or supplement to the Lease or
any exhibit or Schedule thereto, or to this Agreement;
(b) any exercise or non-exercise of any right, remedy or privilege
under or in respect to this Agreement, the Lease or any exhibit or Schedule
thereto, or any other instrument provided for in any thereof, or any waiver,
consent, indulgence or actions or inaction with respect to any such instrument;
(c) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding of or against
Pledgor; or
(d) any payment received by Pledgee and subsequently refunded or
returned to Pledgor or anyone on behalf of Pledgor.
5. Return of Security Deposit. So long as no Event of Default
shall have occurred and be continuing under the Lease, at the end of the Term
of each Schedule, the Security Deposit with respect to such Schedule shall be
applied first to Pledgor's end-of-Term obligations to Pledgee with respect to
such Schedule, and the balance (if any) of such Security Deposit with respect
to such Schedule and Earnings attributable thereto (less any portion thereof
applied or otherwise utilized pursuant to this Agreement) shall be delivered to
Pledgor.
6. Further Assurances. Pledgor will promptly execute and deliver
to Pledgee such further reasonable documents and take such further reasonable
action as Pledgee may request in order to more effectively carry out the intent
and purpose of this Agreement or an assignment of Pledgee's interest herein.
7. Notices. Notices required or permitted hereunder shall be
given in accordance with the Lease.
2
<PAGE> 58
8. Amendments and Supplements. No agreement shall be effective
to amend, supplement or discharge this Agreement in whole or in part unless
such agreement is in writing, signed by the parties hereto.
9. Assignability. This Agreement shall be binding upon and shall
inure to the benefit of the successors and assigns of the parties hereto.
Pledgor hereby acknowledges that Lessor's rights under this Agreement may be
assigned at any time to any person having an interest in the Lease.
10. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California.
11. Assignment. Pledgor shall not transfer or assign, in whole or
in part, any of its rights under this Agreement. Pledgee shall have the
absolute right to transfer or assign to any person, firm, partnership,
corporation or other entity, for security or otherwise, any or all of Pledgee's
obligations, benefits and interests under this Agreement without the consent of
or notice to Pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
PHOENIX LEASING INCORPORATED,
Pledgee
By:
----------------------------------
Its:
---------------------------------
CALYPTE BIOMEDICAL CORPORATION,
Pledgor
By:
----------------------------------
Its:
---------------------------------
3
<PAGE> 59
referred to in clause (i), (ii) or (iii) of paragraph 5 immediately above.
7. Nothing herein shall affect your liability on the Note or the
security given in respect thereof. Regardless of any deferral by Purdue
Frederick made on the date hereof or hereafter agreed to by Purdue Frederick,
if by November 30, 1994, you are not current in respect of principal and
interest (including any adjustment with respect thereto provided for herein) on
the Note, Purdue Frederick may exercise any or all rights it possesses as the
holder of the Note.
Please signify your acceptance of the terms hereof by signing the
duplicate copy enclosed.
Very truly yours,
THE PURDUE FREDERICK COMPANY
By HOWARD R. UDELL
-----------------------------------
Title: Group V.P., General Counsel
Accepted and Agreed to:
CALYPTE BIOMEDICAL CORPORATION
By
-------------------------------
Title:
3
<PAGE> 60
AMENDMENT TO MASTER EQUIPMENT LEASE AGREEMENT NO. 9893
THIS AMENDMENT TO MASTER EQUIPMENT LEASE ("Amendment") is entered into
effective June 30, 1995 by and between Phoenix Leasing Incorporated as lessor
("Lessor") and Calypte Biomedical corporation as lessee ("Lessee").
WHEREAS, Lessor and Lessee entered into a Master Equipment Lease dated as of
August 20, 1993 ("Lease").
WHEREAS, Lessor and Lessee now wish to amend the Lease.
NOW, THEREFORE, for valuable consideration, the receipt of which is hereby
acknowledged, the Lease is hereby amended as follows:
1. Initial Lease Term: Change from "42 months" to "36 months."
2. Rent Factor: Change to read "36 months at 3.2402%."
3. Commitment Termination Date: Change from "June 30, 1994" to "September
30, 1995."
4. Eligible Equipment: After the word "improvements" add the following:
"only after Lessee receives FDA approval."
Except as herein amended, the Lease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
above written.
PHOENIX LEASING INCORPORATED CALYPTE BIOMEDICAL CORPORATION
BY: BY:
----------------------------- ----------------------------------
TITLE: Contract Administrator TITLE: President
-------------------------- -------------------------------
<PAGE> 61
SCHEDULE NO. 1
TRUE LEASE
This Schedule No. 1 (this "Schedule"), dated November 1, 1993 (such
date being the "Delivery Date" for this Schedule), is a part of the Master
Equipment Lease Agreement, dated as of August 20, 1993 (the "Lease"), between
PHOENIX LEASING INCORPORATED ("Lessor") and CALYPTE BIOMEDICAL CORPORATION
("Lessee") and is incorporated therein by this reference. The terms used in
this Schedule shall have the meanings given to them in the Lease unless
otherwise defined herein.
1. Description and Cost of Units
The Units subject to this Schedule are described in Annex A hereto.
The Lessor's Cost for this Schedule is:
$83,228.91
2. Acceptance: Obligations
Lessee confirms that on the Delivery Date hereof (i) all of the Units
described in Annex A attached hereto were duly accepted by, Lessee and became
subject to the Lease; and (ii) Lessee became obligated to make Rental Payments
to Lessor and perform certain other obligations with respect to such Units as
provided in the Lease and this Schedule.
3. Rent
(a) Commencing on November 1, 1993 (the "Rent Commencement Date")
and on the first day of each month thereafter, the rent for each Unit shall be
paid by Lessee in advance by check (or if requested by Lessor, by wire
transfer), to the location prescribed by Lessor in writing, in forty-two (42)
consecutive installments, each of the first twelve (12) of which shall be
calculated based upon a Rent Factor of 1.5% of the Lessor's Cost for this
Schedule and each of the following thirty (30) of which shall be calculated
based upon a Rent Factor of 3.5% of the Lessor's Cost for this Schedule, which
rentals are:
$1,248.43 for each of the first 12 such installments, and
$2,913.01 for each of the following 30 such installments.
(b) The Lease Term for the Units subject to this Schedule is 42
months and commences on the Rent Commencement Date. The Lease Term for the
Units subject to this Schedule shall expire on:
April 31, 1997
(c) The Interim Rental Payment for the period from the Delivery
Date of this Schedule through the Rent Commencement Date, which is due on the
Delivery Date, is:
$0.00.
1
<PAGE> 62
4. Conditions. Lessor's obligations under the Lease and this
Schedule are subject to the prior satisfaction of the following conditions on
or before the Delivery Date of this Schedule:
(a) Lessor shall have received, in form and substance
satisfactory, to Lessor:
(i) All applicable waivers of landlords and/or mortgagees,
substantially in the form of Exhibit B to the Lease.
(ii) To the extent Lessor deems it necessary, a release or other
arrangement with any other lessor or lender to the Company to insure that there
will be no impairment of Lessor's interest in the Units subject to this or
other Schedules.
(iii) A sales tax exemption or other similar certificate from Lessee
with respect to any Units included in this Schedule, but not placed in service
by Lessee before the Delivery Date of this Schedule.
(iv) Copies of invoices, purchase orders and cancelled checks
relating to all Units being placed under the Lease pursuant to a sale/leaseback
on the Delivery Date of this Schedule and/or a Purchase Order and invoice
Assignment from Lessee to Lessor substantially in the form of Exhibit C to the
Lease, instead of copies of cancelled checks, for all Units to be purchased by
Lessor directly from the vendor.
(v) For all sales of Units by Lessee to Lessor, a Bill of Sale,
substantially in the form of Exhibit D to the Lease.
(vi) An executed copy of each manufacturer's service contract
entered into by Lessee pursuant to Section 9 of the Lease.
(vii) A Certificate of Acceptance covering the Units subject to this
Schedule.
(b) Lessee shall have filed or recorded, to the satisfaction of
Lessor, all instruments and documents, including, but not limited to, Financing
Statements on Form UCC-1 and Releases and Termination Statements on Form UCC-2,
then deemed necessary by Lessor to preserve and protect its rights hereunder,
under the Uniform Commercial Code (including the termination of any
after-acquired property clause of third parties with respect to any Unit) and,
if applicable, not less than ten days before the Delivery Date, a notice of the
proposed transfer to Lessor by Lessee of title to the Units to be placed under
the Lease on such Delivery Date shall have been published as and to the extent
required by Section 3440 of the Civil Code of the State of California.
(c) Lessor shall have received all other documents and Lessee
shall have performed all other acts as Lessor shall have reasonably requested
to consummate the transaction contemplated by this Schedule.
(d) Except with the prior consent of Lessor which shall not be
unreasonably withheld, (i) Lessor's Cost for the Units subject to this
Schedule shall be equal to or exceed the Minimum Funding Amount, (ii) Lessor's
Cost for the Units subject to this Schedule when aggregated with Lessor's Cost
for all
2
<PAGE> 63
Units under all previously funded Schedules shall not exceed the Lessor's
Commitment set forth on the cover page of the Lease, and (iii) the funding
contemplated by this Schedule when aggregated with all previous fundings under
the Lease shall not exceed the Maximum Number of Fundings.
(e) Except with the prior written consent of Lessor, the aggregate
of Lessor's Cost of all Units subject to this Schedule and all Schedules
previously made subject to the Lease which consist of tenant improvements,
computer software, equipment manufactured specially for Lessee and/or delivery
and installation costs shall not exceed 17.39% ($200,000 of Lessor's Cost if
the entire Lessor's Commitment is funded) of the total Lessor's Cost of
Equipment funded.
(f) The Delivery Date of this Schedule shall not be later than the
Commitment Termination Date.
(g) On the Delivery Date of this Schedule no Event of Default or
event, which with the passage of time or the giving of notice or both would
constitute an Event of Default, shall exist.
(h) Except with the prior written consent of Lessor which shall
not be unreasonably withheld, all of the Units listed on Annex A shall consist
of Eligible Equipment.
5. Representations and Warranties. Lessee hereby makes the
representations and warranties set forth in Section 14 of the Lease.
6. Payments. Pursuant to Section 16(h) of the Lease, all
payments shall be made to Lessor at 2401 Kerner Boulevard, San Rafael,
California 94901 unless otherwise indicated in a writing signed by Lessor.
This Schedule is hereby duly executed by the parties hereto as of the
date first written above.
PHOENIX LEASING INCORPORATED
By:
----------------------------------
Title: Contract Administrator
-------------------------------
LESSEE'S ADDRESS
FOR NOTICES: CALYPTE BIOMEDICAL CORPORATION
1440 Fourth Street By: PAUL SIEGEL
Berkeley, CA 94710 ----------------------------------
Attn: Paul Siegel Title: Chief Financial Officer
Chief Financial Officer -------------------------------
Annex A - Description of Units
Annex B - Stipulated Loss Values
Annex C - Exceptions to Representations and Warranties
3
<PAGE> 64
PHOENIX-SCHED 1
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
CHECK
- ---------------------------------------------------------------------------------------------------------------------------------
DATE CHECK # INVOICE # PO # DEPT. CAR # ACQ DATE ASSET # ITEM COST
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8/27/93 2569 1698 10537 300-610 R-027 8/11/93 1166 TABLE - LAB UTILITY 377.50
- ---------------------------------------------------------------------------------------------------------------------------------
8/27/93 2569 1698 10537 300-610 R-027 8/11/93 1169 TABLE - LAB UTILITY 377.50
- ---------------------------------------------------------------------------------------------------------------------------------
8/27/93 2569 1698 10537 300-610 R-027 8/11/93 1167 TABLE - LAB UTILITY 377.50
- ---------------------------------------------------------------------------------------------------------------------------------
8/27/93 2569 1698 10537 300-610 R-027 8/11/93 1168 TABLE - LAB UTILITY 377.50
- ---------------------------------------------------------------------------------------------------------------------------------
8/27/95 2543 1065 300-610 R-027 7/23/93 R-027 SOFTWALL CLEANROOMS 491.25
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2629 73222 10638 300 R-001a 8/18/93 1147 ELECTROPHORESIS 1,095.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2651 190666-01 10430 300 R-003 7/7/93 1131 FRACTION COLLECTOR 1,450.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2672 593376 10650 300 R-006b 8/23/93 1130 CONDUCTIVITY METER 2,093.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1137 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1138 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1139 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1140 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1141 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1142 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1143 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1144 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1145 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1146 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1136 CAGE 1,056.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2816 351223 10734 300 R-042 9/21/93 1133 COLUMN 2,250.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/29/93 2742 2614402 10691 300 R-018 9/3/93 1132 SONIC DISMEMBRATOR 2,516.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/29/93 2742 2683631 10711 300-610 R-001B 9/14/93 1148 TRANSMISSION DENSITOMETER 1,825.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2900 54367570 10770 400 M-001 9/29/93 1162 BALANCE - TOP LOADING 1,652.40
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2900 54367570 10770 400 M-001 9/29/93 1163 BALANCE - ANALYTICAL 1,940.40
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2900 54367570 10770 400 M-001 9/29/93 1164 PRINTER 636.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2900 54367570 10770 400 M-001 9/29/93 1165 PRINTER 636.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2855 66136 10667 400 M-034 9/13/93 1135 FEEZER - CHEST -50C 3,082.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2855 66012 10667 400 M-034 9/10/93 1134 FEEZER - CHEST -90C 5,000.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2829 97186 10722 300 R-041 9/27/93 1151 POWER SUPPLY 715.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2811 118385 10747 320 AS-024 9/22/93 1129 FILE - 4 DR LATERAL 564.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/24/93 2705 MACIIVX,SEIKO 10829 210 AS-002c 9/24/93 1127 MAC II VX 999.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/24/93 2705 MACIIVX,SEIKO 10829 210 AS-002c 9/24/93 1126 MONITOR - 14" COLOR 529.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2866 0-8762 10761 210 AS-001 9/28/93 1128 PRINTER - LASER 4,299.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2900 54367560 10770 400 M-001 9/30/93 1161 BALANCE 2,876.40
- ---------------------------------------------------------------------------------------------------------------------------------
79296 10792 400 M-044 10/7/93 SCULLERY SINK 2,856.72
- ---------------------------------------------------------------------------------------------------------------------------------
8WF1801 10812 300 R-002 10/9/93 1149 INTEGRATOR 1,595.00
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DESCRIPTION VENDOR
- ---------------------------------------------------------------
<C> <C>
BEIGE W/DRAWERS 48X30X31" NORLAB HANSON
- ---------------------------------------------------------------
BEIGE W/DRAWERS 48X30X31" NORLAB HANSON
- ---------------------------------------------------------------
BEIGE W/DRAWERS 60X30X37" NORLAB HANSON
- ---------------------------------------------------------------
BEIGE W/DRAWERS 72X30X37" NORLAB HANSON
- ---------------------------------------------------------------
SUPPORT BARS ENVIROFLEX
- ---------------------------------------------------------------
LARGE FORMAT GEL BIO-RAD
- ---------------------------------------------------------------
RETRIEVER II, 117 VOLTS, 60HZ ISCO
- ---------------------------------------------------------------
W/CDC 104 CELL RADIOMETER
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 22.5'X10' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
P90X500 AMICON
- ---------------------------------------------------------------
W/EXTENDER & COOLING CELL FISHER
- ---------------------------------------------------------------
FISHER
- ---------------------------------------------------------------
DELTA RANGE VWR
- ---------------------------------------------------------------
VWR
- ---------------------------------------------------------------
METTLER TOLEDO VWR
- ---------------------------------------------------------------
METTLER TOLEDO VWR
- ---------------------------------------------------------------
HARRIS
- ---------------------------------------------------------------
HARRIS
- ---------------------------------------------------------------
100/120V BIORAD
- ---------------------------------------------------------------
PUTTY, LEGAL AC PAPER
- ---------------------------------------------------------------
4/80 COMPUTERWARE
- ---------------------------------------------------------------
TRINITRON COMPUTERWARE
- ---------------------------------------------------------------
POSTSCRIPT LEVEL II LASER-LIFE
- ---------------------------------------------------------------
HIGH CAPACITY VWR
- ---------------------------------------------------------------
STAINLESS STEEL FOOD SERVICE EQUIPMENT
- ---------------------------------------------------------------
HEWLETT PACKARD
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
</TABLE>
LE: PHOENIX - SCHED 1 DATE: 10/28/93
Page 1
<PAGE> 65
PHOENIX-SCHED 1
<TABLE>
<CAPTION>
CHECK
DATE CHECK # INVOICE # PO # DEPT. CAR # ACQ DATE ASSET # ITEM COST
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 117.29
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 117.29
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 117.29
- ---------------------------------------------------------------------------------------------------------------------------------
10/15/93 2913 MONITOR 210 AS-027 10/15/93 1174 MONITOR 948.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2658 844435 10648 300-610 8/31/93 1170 PELLICON HOLDER 4,979.00
- ---------------------------------------------------------------------------------------------------------------------------------
2406860 10730 300-610 R-040 9/30/93 1171 INCUBATOR 5,894.00
- ---------------------------------------------------------------------------------------------------------------------------------
2406860 10730 300-610 R-040 9/30/93 1173 INCUBATOR 5,894.00
- ---------------------------------------------------------------------------------------------------------------------------------
2406860 10730 300-610 R-040 9/30/93 1171 CHART RECORDER 695.00
- ---------------------------------------------------------------------------------------------------------------------------------
2406860 10730 300-610 R-040 9/30/93 1171 CHART RECORDER 695.00
- ---------------------------------------------------------------------------------------------------------------------------------
8/27/93 2604 33448750 10556 400 M-033a 8/19/93 CORROSIVE CABINET 395.70
- ---------------------------------------------------------------------------------------------------------------------------------
8/27/93 2604 33448750 10556 400 M-033a 8/19/93 CORROSIVE CABINET 395.70
- ---------------------------------------------------------------------------------------------------------------------------------
8/27/93 2604 33448750 10556 400 M-033a 8/19/93 FLAMMABLE CABINET 408.45
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2882 29408 10732 120 AS-026 9/21/93 1159 CONFERENCE TABLE 229.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2862 29408 10732 120 AS-026 9/21/93 1151 CHAIR - OAK BLUE 80.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2862 29408 10732 120 AS-026 9/21/93 1153 CHAIR - OAK BLUE 80.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2862 29408 10732 120 AS-026 9/21/93 1155 CHAIR - OAK BLUE 80.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2862 29408 10732 120 AS-026 9/21/93 1157 CHAIR - OAK BLUE 80.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2862 29408 10732 120 AS-026 9/21/93 1152 CHAIR - OAK STEEL GRAY 80.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2862 29408 10732 120 AS-026 9/21/93 1154 CHAIR - OAK STEEL GRAY 80.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2862 29408 10732 120 AS-026 9/21/93 1156 CHAIR - OAK STEEL GRAY 80.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2862 29408 10732 120 AS-026 9/21/93 1158 CHAIR - OAK STEEL GRAY 80.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2623 3051853 10611 400 8/20/93 1160 COAT RACK 295.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2623 3051853 10611 400 8/20/93 1172 COAT RACK 295.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2623 3051853 10611 400 8/20/93 1177 COAT RACK 295.00
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL FURNITURE & EQUIPMENT 65,816.26
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 CLEANROOM 300 R-027 8/19/93 R-027 AIR DUCTS FOR CLEANROOM 2,544.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 TWO LABS 400 M-025 8/19/93 M-025 AIR DUCTS FOR LABS 11,400.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/29/93 2770 1089 400 M-025 9/16/93 M-025 ELECTRICAL IMPROVEMENTS 867.50
- ---------------------------------------------------------------------------------------------------------------------------------
9/29/93 2770 1087 400 M-025 9/1/93 M-025 ELECTRICAL IMPROVEMENTS 2,601.15
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL TENANT IMPROVEMENTS 17,412.65
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL 83,228.91
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DESCRIPTION VENDOR
- ---------------------------------------------------------------
<C> <C>
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" CLOSED ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" CLOSED ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" CLOSED ADVANCED WAREHOUSE
- ---------------------------------------------------------------
19" B&W COMPUTERWARE
- ---------------------------------------------------------------
SANITARY SS MILLIPORE
- ---------------------------------------------------------------
REFRIGERATOR FORMA
- ---------------------------------------------------------------
REFRIGERATOR FORMA
- ---------------------------------------------------------------
FACILITY INSTALLED FORMA
- ---------------------------------------------------------------
FACILITY INSTALLED FORMA
- ---------------------------------------------------------------
30 GALLON 44X43X18" LAB SAFETY SUPPLY
- ---------------------------------------------------------------
30 GALLON 44X43X18" LAB SAFETY SUPPLY
- ---------------------------------------------------------------
30 GALLON 44X43X18" LAB SAFETY SUPPLY
- ---------------------------------------------------------------
MED OAK 36X42X96 KANTOR'S
- ---------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ---------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ---------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ---------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ---------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ---------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ---------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ---------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ---------------------------------------------------------------
STAINLESS STEEL W/ SHELVES BAXTER
- ---------------------------------------------------------------
STAINLESS STEEL W/ SHELVES BAXTER
- ---------------------------------------------------------------
STAINLESS STEEL W/ SHELVES BAXTER
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
SAN BRUNO SHEET METAL
- ---------------------------------------------------------------
SAN BRUNO SHEET METAL
- ---------------------------------------------------------------
POWER CONSTRUCTION
- ---------------------------------------------------------------
POWER CONSTRUCTION
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
- ---------------------------------------------------------------
</TABLE>
Page 2
<PAGE> 66
Attachment to Equipment Schedule No. 1
CASUALTY VALUES
<TABLE>
<CAPTION>
Month of % of Original Equipment Month of % of Original Equipment
Lease Term Purchase Price Lease Term Purchase Price
- ---------- ----------------------- ---------- -----------------------
<S> <C> <C> <C>
0 125.0 36 71.0
1 123.5 37 69.5
2 122.0 38 68.0
3 120.5 39 66.5
4 119.0 40 65.0
5 117.5 41 63.5
6 116.0 42 62.0
7 114.5 43 60.5
8 113.0 44 59.0
9 111.5 45 57.5
10 110.0 46 56.0
11 108.5 47 54.5
12 107.0 48 53.0
13 105.5 49 51.5
14 104.0 50 50.0
15 102.5 51 48.5
16 101.0 52 47.0
17 99.5 53 45.5
18 98.0 54 44.0
19 96.5 55 42.5
20 95.0 56 41.0
21 93.5 57 39.5
22 92.0 58 38.0
23 90.5 59 36.5
24 89.0 60 35.0
25 87.5 61 33.5
26 86.0 62 32.0
27 84.5 63 30.5
28 83.0 64 29.0
29 81.5 65 27.5
30 80.0 66 26.0
31 78.5 67 24.5
32 77.0 68 23.0
33 75.5 69 21.5
34 74.0 70 20.0
35 72.5 Thereafter 20.0
</TABLE>
Lessor's Lessee's
Initials ______ Initials ______
<PAGE> 67
BILL OF SALE
For valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, CALYPTE BIOMEDICAL CORPORATION ("Seller") does hereby sell,
grant, transfer and deliver to Phoenix Leasing Incorporated ("Buyer"), all of
Seller's right, title and interest in and to the property listed on Schedule 1
attached hereto (the "Equipment"), together with all warranties, guarantees and
indemnities owned by Seller with respect to the Equipment (the "Equipment
Warranties"), to have and to hold the Equipment and the Equipment Warranties
forever.
Seller covenants and warrants that:
(1) it is the owner of, and has absolute title to, the Equipment and the
Equipment Warranties, which, as of the date hereof, are free and clear of all
claims, liens and encumbrances;
(2) it has not made any prior sale, assignment, or transfer of the
Equipment or the Equipment Warranties;
(3) it has the present right, power and authority to sell the Equipment and
the Equipment Warranties to Buyer; and
(4) all action has been taken which is required to make this Bill of Sale a
legal, valid and binding obligation of Seller.
Seller shall forever warrant and defend the sale of the Equipment and the
Equipment Warranties to Buyer, its successors and assigns, against all claims,
liens and encumbrances and against any and every person or persons claiming any
interest in the Equipment or the Equipment Warranties, except with respect to
any claims, liens or encumbrances caused by any action of Buyer not
contemplated under that certain Master Equipment Lease Agreement dated as of
August 20, 1993 by and between Buyer and Seller (together with all Schedules
thereto, the "Lease") or under any agreement, instrument or other document
delivered in connection with the Lease.
This Bill of Sale shall be binding on the successors and assigns of the Seller
and shall inure to the benefit of the successors and assigns of Buyer.
Executed as of November 15, 1993, at Berkeley, CA.
CALYPTE BIOMEDICAL CORPORATION
By: PAUL SIEGEL
----------------------------------
Title: Chief Financial Officer
-------------------------------
4
<PAGE> 68
PHOENIX-SCHED 1
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
CHECK
- ---------------------------------------------------------------------------------------------------------------------------------
DATE CHECK # INVOICE # PO # DEPT. CAR # ACQ DATE ASSET # ITEM COST
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8/27/93 2569 1698 10537 300-610 R-027 8/11/93 1166 TABLE - LAB UTILITY 377.50
- ---------------------------------------------------------------------------------------------------------------------------------
8/27/93 2569 1698 10537 300-610 R-027 8/11/93 1169 TABLE - LAB UTILITY 377.50
- ---------------------------------------------------------------------------------------------------------------------------------
8/27/93 2569 1698 10537 300-610 R-027 8/11/93 1167 TABLE - LAB UTILITY 377.50
- ---------------------------------------------------------------------------------------------------------------------------------
8/27/93 2569 1698 10537 300-610 R-027 8/11/93 1168 TABLE - LAB UTILITY 377.50
- ---------------------------------------------------------------------------------------------------------------------------------
8/27/95 2543 1065 300-610 R-027 7/23/93 R-027 SOFTWALL CLEANROOMS 491.25
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2629 73222 10638 300 R-001a 8/18/93 1147 ELECTROPHORESIS 1,095.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2651 190666-01 10430 300 R-003 7/7/93 1131 FRACTION COLLECTOR 1,450.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2672 593376 10650 300 R-006b 8/23/93 1130 CONDUCTIVITY METER 2,093.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1137 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1138 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1139 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1140 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1141 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1142 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1143 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1144 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1145 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1146 SHELVING 120.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 15271 10552 400 M-028 8/24/93 1136 CAGE 1,056.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2816 351223 10734 300 R-042 9/21/93 1133 COLUMN 2,250.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/29/93 2742 2614402 10691 300 R-018 9/3/93 1132 SONIC DISMEMBRATOR 2,516.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/29/93 2742 2683631 10711 300-610 R-001B 9/14/93 1148 TRANSMISSION DENSITOMETER 1,825.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2900 54367570 10770 400 M-001 9/29/93 1162 BALANCE - TOP LOADING 1,652.40
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2900 54367570 10770 400 M-001 9/29/93 1163 BALANCE - ANALYTICAL 1,940.40
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2900 54367570 10770 400 M-001 9/29/93 1164 PRINTER 636.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2900 54367570 10770 400 M-001 9/29/93 1165 PRINTER 636.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2855 66136 10667 400 M-034 9/13/93 1135 FEEZER - CHEST -50C 3,082.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2855 66012 10667 400 M-034 9/10/93 1134 FEEZER - CHEST -90C 5,000.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2829 97186 10722 300 R-041 9/27/93 1151 POWER SUPPLY 715.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2811 118385 10747 320 AS-024 9/22/93 1129 FILE - 4 DR LATERAL 564.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/24/93 2705 MACIIVX,SEIKO 10829 210 AS-002c 9/24/93 1127 MAC II VX 999.00
- ---------------------------------------------------------------------------------------------------------------------------------
9/24/93 2705 MACIIVX,SEIKO 10829 210 AS-002c 9/24/93 1126 MONITOR - 14" COLOR 529.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2866 0-8762 10761 210 AS-001 9/28/93 1128 PRINTER - LASER 4,299.00
- ---------------------------------------------------------------------------------------------------------------------------------
10/13/93 2900 54367560 10770 400 M-001 9/30/93 1161 BALANCE 2,876.40
- ---------------------------------------------------------------------------------------------------------------------------------
79296 10792 400 M-044 10/7/93 SCULLERY SINK 2,856.72
- ---------------------------------------------------------------------------------------------------------------------------------
8WF1801 10812 300 R-002 10/9/93 1149 INTEGRATOR 1,595.00
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DESCRIPTION VENDOR
- ---------------------------------------------------------------
<C> <C>
BEIGE W/DRAWERS 48X30X31" NORLAB HANSON
- ---------------------------------------------------------------
BEIGE W/DRAWERS 48X30X31" NORLAB HANSON
- ---------------------------------------------------------------
BEIGE W/DRAWERS 60X30X37" NORLAB HANSON
- ---------------------------------------------------------------
BEIGE W/DRAWERS 72X30X37" NORLAB HANSON
- ---------------------------------------------------------------
SUPPORT BARS ENVIROFLEX
- ---------------------------------------------------------------
LARGE FORMAT GEL BIO-RAD
- ---------------------------------------------------------------
RETRIEVER II, 117 VOLTS, 60HZ ISCO
- ---------------------------------------------------------------
W/CDC 104 CELL RADIOMETER
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 72X36X8' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
WAREHOUSE 22.5'X10' SILICON VALLEY SHELVING
- ---------------------------------------------------------------
P90X500 AMICON
- ---------------------------------------------------------------
W/EXTENDER & COOLING CELL FISHER
- ---------------------------------------------------------------
FISHER
- ---------------------------------------------------------------
DELTA RANGE VWR
- ---------------------------------------------------------------
VWR
- ---------------------------------------------------------------
METTLER TOLEDO VWR
- ---------------------------------------------------------------
METTLER TOLEDO VWR
- ---------------------------------------------------------------
HARRIS
- ---------------------------------------------------------------
HARRIS
- ---------------------------------------------------------------
100/120V BIORAD
- ---------------------------------------------------------------
PUTTY, LEGAL AC PAPER
- ---------------------------------------------------------------
4/80 COMPUTERWARE
- ---------------------------------------------------------------
TRINITRON COMPUTERWARE
- ---------------------------------------------------------------
POSTSCRIPT LEVEL II LASER-LIFE
- ---------------------------------------------------------------
HIGH CAPACITY VWR
- ---------------------------------------------------------------
STAINLESS STEEL FOOD SERVICE EQUIPMENT
- ---------------------------------------------------------------
HEWLETT PACKARD
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
WAREHOUSE 36X18X85" OPEN ADVANCED WAREHOUSE
- ---------------------------------------------------------------
</TABLE>
LE: PHOENIX - SCHED 1 DATE: 10/28/93
Page 1
<PAGE> 69
<TABLE>
<CAPTION>
PHOENIX-SCHED 1
- -----------------------------------------------------------------------------------------------------------------------------------
CHECK
- ----------------------------------------------------------------------------------------------------------------------------------
DATE CHECK # INVOICE # PO # DEPT CAR # ACQ DATE ASSET # ITEM COST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ----------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 76.91
- ----------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 117.29
- ----------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 117.29
- ----------------------------------------------------------------------------------------------------------------------------------
SHELVING 10874 400 M-047 10/22/93 SHELVING 117.29
- ----------------------------------------------------------------------------------------------------------------------------------
10/15/93 2913 MONITOR 210 AS-027 10/15/93 1174 MONITOR 948.00
- ----------------------------------------------------------------------------------------------------------------------------------
9/10/93 2658 844435 10648 300-610 8/31/93 1170 PELLICON HOLDER 4,979.00
- ----------------------------------------------------------------------------------------------------------------------------------
2406860 10730 399-610 R-040 9/30/93 1171 INCUBATOR 5,894.00
- ----------------------------------------------------------------------------------------------------------------------------------
2406860 10730 399-610 R-040 9/30/93 1173 INCUBATOR 5,894.00
- ----------------------------------------------------------------------------------------------------------------------------------
2406860 10730 399-610 R-040 9/30/93 1171 CHART RECORDER 695.00
- ----------------------------------------------------------------------------------------------------------------------------------
2406860 10730 399-610 R-040 9/30/93 1173 CHART RECORDER 695.00
- ----------------------------------------------------------------------------------------------------------------------------------
8/27/93 2604 33448750 10556 400 M-033A 8/19/93 CORROSIVE CABINET 395.70
- ----------------------------------------------------------------------------------------------------------------------------------
8/27/93 2604 33448750 10556 400 M-033A 8/19/93 CORROSIVE CABINET 395.70
- ----------------------------------------------------------------------------------------------------------------------------------
8/27/93 2604 33448750 10556 400 M-033A 8/19/93 FLAMMABLE CABINET 408.45
- ----------------------------------------------------------------------------------------------------------------------------------
10/13/93 2882 29408 10732 120 AS-028 9/21/93 1159 CONFERENCE TABLE 229.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/13/93 2882 29408 10732 120 AS-028 9/21/93 1151 CHAIR - OAK BLUE 80.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/13/93 2882 29408 10732 120 AS-028 9/21/93 1153 CHAIR - OAK BLUE 80.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/13/93 2882 29408 10732 120 AS-028 9/21/93 1155 CHAIR - OAK BLUE 80.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/13/93 2882 29408 10732 120 AS-028 9/21/93 1157 CHAIR - OAK BLUE 80.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/13/93 2882 29408 10732 120 AS-028 9/21/93 1152 CHAIR - OAK STEEL GRAY 80.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/13/93 2882 29408 10732 120 AS-028 9/21/93 1154 CHAIR - OAK STEEL GRAY 80.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/13/93 2882 29408 10732 120 AS-028 9/21/93 1156 CHAIR - OAK STEEL GRAY 80.00
- ----------------------------------------------------------------------------------------------------------------------------------
10/13/93 2882 29408 10732 120 AS-028 9/21/93 1158 CHAIR - OAK STEEL GRAY 80.00
- ----------------------------------------------------------------------------------------------------------------------------------
9/10/93 2623 3051853 10611 400 8/20/93 1160 COAT RACK 295.00
- ----------------------------------------------------------------------------------------------------------------------------------
9/10/93 2623 3051853 10611 400 8/20/93 1172 COAT RACK 295.00
- ----------------------------------------------------------------------------------------------------------------------------------
9/10/93 2623 3051853 10611 400 8/20/93 1177 COAT RACK 295.00
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL FURNITURE & EQUIPMENT 85,816.26
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 CLEANROOM 300 R-027 8/19/93 R-027 AIR DUCTS FOR CLEANROOM 2,544.00
- ----------------------------------------------------------------------------------------------------------------------------------
9/10/93 2698 TWO LABS 400 M-025 8/19/93 M-025 AIR DUCTS FOR LABS 11,400.00
- ----------------------------------------------------------------------------------------------------------------------------------
9/29/93 2770 1089 400 M-025 9/16/93 M-025 ELECTRICAL IMPROVEMENTS 867.50
- ----------------------------------------------------------------------------------------------------------------------------------
9/29/93 2770 1087 400 M-025 9/1/93 M-025 ELECTRICAL IMPROVEMENTS 2,601.15
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL TENANT IMPROVEMENTS 17,512.65
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL 83,228.91
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
- ------------------------------------------------------------------
DESCRIPTION VENDOR
- ------------------------------------------------------------------
<S> <C>
- ------------------------------------------------------------------
WAREHOUSE 36x18x85" OPEN ADVANCED WAREHOUSE
- ------------------------------------------------------------------
WAREHOUSE 36x18x85" OPEN ADVANCED WAREHOUSE
- ------------------------------------------------------------------
WAREHOUSE 36x18x85" CLOSED ADVANCED WAREHOUSE
- ------------------------------------------------------------------
WAREHOUSE 36x18x85" CLOSED ADVANCED WAREHOUSE
- ------------------------------------------------------------------
WAREHOUSE 36x18x85" CLOSED ADVANCED WAREHOUSE
- ------------------------------------------------------------------
19" B&W COMPUTER WARE
- ------------------------------------------------------------------
SANITARY SS MILLIPORE
- ------------------------------------------------------------------
REFIGERATOR FORMA
- ------------------------------------------------------------------
REFRIGERATOR FORMA
- ------------------------------------------------------------------
FACILITY INSTALLED FORMA
- ------------------------------------------------------------------
FACILITY INSTALLED FORMA
- ------------------------------------------------------------------
30 GALLON 44X43X18" LAB SAFETY SUPPLY
- ------------------------------------------------------------------
30 GALLON 44X43X18" LAB SAFETY SUPPLY
- ------------------------------------------------------------------
30 GALLON 44X43X18" LAB SAFETY SUPPLY
- ------------------------------------------------------------------
MED OAK 36X42X96 KANTOR'S
- ------------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ------------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ------------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ------------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ------------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ------------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ------------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ------------------------------------------------------------------
SIDE CHAIR KANTOR'S
- ------------------------------------------------------------------
STAINLESS STEEL W/SHELVES BAXTER
- ------------------------------------------------------------------
STAINLESS STEEL W/SHELVES BAXTER
- ------------------------------------------------------------------
STAINLESS STEEL W/SHELVES BAXTER
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
SAN BRUNO SHEET METAL
- ------------------------------------------------------------------
SAN BRUNO SHEET METAL
- ------------------------------------------------------------------
POWER CONSTRUCTION
- ------------------------------------------------------------------
POWER CONSTRUCTION
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
</TABLE>
Page 2
<PAGE> 70
Wire Activity Date: NOVEMBER 19, 1993 Page No.: 1
WIRE SERVICES DEPARTMENT
POST OFFICE BOX 60691
LOS ANGELES, CA 90060
Account Number 1480001571 For Inquiries Call: (415) 843-6353
148
CALYPTE BIOMEDICAL CORP
1440 FOURTH ST
BERKELEY CA 94710
Wire Transfer Activity
IF YOU HAVE A CHECKING OR SAVINGS ACCOUNT WITH UNION BANK,
THE WIRE TRANSFER FEE(S) WILL BE CHARGED AGAINST YOUR ACCOUNT OR APPEAR ON YOUR
ACCOUNT ANALYSIS STATEMENT.
<TABLE>
<CAPTION>
INCOMING WIRE TRANSFER CREDITS
TYPE AMOUNT OUR TRN RECEIVED FROM REFERENCE
<S> <C> <C> <C> <C>
00 $500,000.00 931119-006021 NORTHERN TRUST COMPANY, THE 9311190048362394
ORIGINATOR KIDDER PEABODY & COMPANY INCORPORAT
INFORMATION
ORIGINATOR TO BENEF: BNF-CALYPTE BIOMEDICAL CORP MONEY MARKET
BANK TO BANK: SEQ-931119004836
ORIGINATOR: KIDDER PEABODY & COMPANY INCORPORATED
00 $78,235.18 931119-005617 FIRST INTERSTATE BANK 3648
ORIGINATOR BENHAM GOVERNMENT AGY FUND
INFORMATION
ORIGINATOR TO BENEF: 7158912 BY ORDER OF PHOENIX LEASING INC CONTACT SCHUYLER BAILEY
ORIGINATOR: BENHAM GOVERNMENT AGY FUND
- -----------------------------------------------------------------------------------------------------------------------
Upon receipt, please examine the confirmation and statement, and report Total Debits: $.00
any error irregularity in any transfer immediately. If you have any
questions, please call your office of account. Total Credits: $578,235.18
Total Transactions: 2
</TABLE>
<PAGE> 71
SCHEDULE NO. 2
TRUE LEASE
This Schedule No. 2 (this "Schedule"), dated as of June 30, 1995,
(such date being the "Delivery Date" for this Schedule), is a part of the
Master Equipment Lease Agreement, dated as of August 20, 1993 (the "Lease"),
between PHOENIX LEASING INCORPORATED ("Lessor") and CALYPTE BIOMEDICAL
CORPORATION ("Lessee") and is incorporated therein by this reference. The
terms used in this Schedule shall have the meanings given to them in the Lease
unless otherwise defined herein.
1. Description and Cost of Units
The Units subject to this Schedule are described in Annex A hereto.
The Lessor's Cost for this Schedule is:
$177,217.40
2. Acceptance: Obligations
Lessee confirms that on the Delivery Date hereof (i) all of the Units
described in Annex A attached hereto were duly accepted by Lessee and became
subject to the Lease; and (ii) Lessee became obligated to make Rental Payments
to Lessor and perform certain other obligations with respect to such Units as
provided in the Lease and this Schedule.
3. Rent
(a) Commencing on July 14, 1995 (the "Rent Commencement Date") and
on the first day of each month thereafter, the rent for each Unit shall be paid
by Lessee in advance by check (or if requested by Lessor, by wire transfer), to
the location prescribed by Lessor in writing, in thirty-six (36) consecutive
installments, each of which shall be calculated based upon a Rent Factor of
3.2402% of the Lessor's Cost for this Schedule, which rentals are:
$5,742.20 for each of the 36 installments.
(b) The Lease Term for the Units subject to this Schedule
is 36 months and commences on the Rent Commencement Date. The Lease Term for
the Units subject to this Schedule shall expire on:
July 31, 1995
(c) The Interim Rental Payment for the period from the Delivery
Date of this Schedule through the Rent Commencement Date, which is due on the
Delivery Date, is:
$3,253.91
-1-
<PAGE> 72
4. Conditions. Lessor's obligations under the Lease and this
Schedule are subject to the prior satisfaction of the following conditions on
or before the Delivery Date of this Schedule:
(a) Lessor shall have received, in form and substance satisfactory
to Lessor:
(i) All applicable waivers of landlords and/or mortgagees,
substantially in the form of Exhibit B to the Lease.
(ii) To the extent Lessor deems it necessary, a release or other
arrangement with any other lessor or lender to the Company to insure that there
will be no impairment of Lessor's interest in the Units subject to this or
other Schedules.
(iii) A sales tax exemption or other similar certificate from Lessee
with respect to any Units included in this Schedule, but not placed in service
by Lessee before the Delivery Date of this Schedule.
(iv) Copies of invoices, purchase orders and cancelled checks
relating to all Units being placed under the Lease pursuant to a sale/leaseback
on the Delivery Date of this Schedule and/or a Purchase Order and Invoice
Assignment from Lessee to Lessor substantially in the form of Exhibit C to the
Lease, instead of copies of cancelled checks, for all Units to be purchased by
Lessor directly from the vendor.
(v) For all sales of Units by Lessee to Lessor, a Bill of Sale,
substantially in the form of Exhibit D to the Lease.
(vi) An executed copy of each manufacturer's service contract
entered into by Lessee pursuant to Section 9 of the Lease.
(vii) A Certificate of Acceptance covering the Units subject to this
Schedule.
(b) Lessee shall have filed or recorded, to the satisfaction of
Lessor, all instruments and documents, including, but not limited to, Financing
Statements on Form UCC-1 and Releases and Termination Statements on Form UCC-2,
then deemed necessary by Lessor to preserve and protect its rights hereunder,
under the Uniform Commercial Code (including the termination of any
after-acquired property clause of third parties with respect to any Unit) and,
if applicable, not less than ten days before the Delivery Date, a notice of the
proposed transfer to Lessor by Lessee of title to the Units to be placed under
the Lease on such Delivery Date shall have been published as and to the extent
required by Section 3440 of the Civil Code of the State of California.
(c) Lessor shall have received all other documents and Lessee
shall have performed all other acts as Lessor shall have reasonably requested
to consummate the transaction contemplated by this Schedule.
(d) Except with the prior consent of Lessor which shall not be
unreasonably withheld, (i) Lessor's Cost for the Units subject to this Schedule
shall be equal to or exceed the Minimum Funding Amount, (ii) Lessor's Cost for
the Units subject to this Schedule when aggregated with Lessor's Cost for all
-2-
<PAGE> 73
Units under all previously funded Schedules shall not exceed the Lessor's
Commitment set forth on the cover page of the Lease, and (iii) the funding
contemplated by this Schedule when aggregated with all previous fundings under
the Lease shall not exceed the Maximum Number of Fundings.
(e) Except with the prior written consent of Lessor, the aggregate
of Lessor's Cost of all Units subject to this Schedule and all Schedules
previously made subject to the Lease which consist of tenant improvements,
computer software, equipment manufactured specially for Lessee and/or delivery
and installation costs shall not exceed 17.39% ($200,000 of Lessor's Cost if
the entire Lessor's Commitment is funded) of the total Lessor's Cost of
Equipment funded.
(f) The Delivery Date of this Schedule shall not be later than the
Commitment Termination Date.
(g) On the Delivery Date of this Schedule no Event of Default or
event, which with the passage of time or the giving of notice or both would
constitute an Event of Default, shall exist.
(h) Except with the prior written consent of Lessor which shall
not be unreasonably withheld, all of the Units listed on Annex A shall consist
of Eligible Equipment.
5. Representations and Warranties. Lessee hereby makes the
representations and warranties set forth in Section 14 of the Lease.
6. Payments. Pursuant to Section 16(h) of the Lease, all
payments shall be made to Lessor at 2401 Kerner Boulevard, San Rafael,
California 94901 unless otherwise indicated in a writing signed by Lessor.
This Schedule is hereby duly executed by the parties hereto as of the
date first written above.
PHOENIX LEASING INCORPORATED
By:
----------------------------------
Title: Contract Administrator
-------------------------------
LESSEE'S ADDRESS
FOR NOTICES: CALYPTE BIOMEDICAL CORPORATION
1440 Fourth Street By:
Berkeley, CA 94710 ----------------------------------
Attn: Paul Siegel Title: President
Chief Financial Officer -------------------------------
Annex A - Description of Units
Annex B - Stipulated Loss Values
Annex C - Exceptions to Representations and Warranties
-3-
<PAGE> 74
ANNEX A
Description of Units
<TABLE>
<CAPTION>
Description Serial Number Invoice Number
----------- ------------- --------------
<S> <C> <C>
Ionics Ultrapure Water System 7102A, 7102B, 7102C
w/valves
Total: $177,217.40
</TABLE>
<PAGE> 75
ANNEX B
STIPULATED LOSS VALUES
<TABLE>
<CAPTION>
Month of % of original Equipment Month of % of Original Equipment
Lease Term Purchase Price Lease Term Purchase Price
- ---------- ----------------------- ---------- -----------------------
<S> <C> <C> <C>
0 125.0 36 71.0
1 123.5 37 69.5
2 122.0 38 68.0
3 120.5 39 66.5
4 119.0 40 65.0
5 117.5 41 63.5
6 116.0 42 62.0
7 114.5 43 60.5
8 113.0 44 59.0
9 111.5 45 57.5
10 110.0 46 56.0
11 108.5 47 54.5
12 107.0 48 53.0
13 105.5 49 51.5
14 104.0 50 50.0
15 102.5 51 48.5
16 101.0 52 47.0
17 99.5 53 45.5
18 98.0 54 44.0
19 96.5 55 42.5
20 95.0 56 41.0
21 93.5 57 39.5
22 92.0 58 38.0
23 90.5 59 36.5
24 89.0 60 35.0
25 87.5 61 33.5
26 86.0 62 32.0
27 84.5 63 30.5
28 83.0 64 29.0
29 81.5 65 27.5
30 80.0 66 26.0
31 78.5 67 24.5
32 77.0 68 23.0
33 75.5 69 21.5
34 74.0 70 20.0
35 72.5 Thereafter 20.0
</TABLE>
Lessor's Lessee's
Initials ______ Initials ______
<PAGE> 76
ANNEX C
Exceptions to Representations and Warranties
Lessor's Lessee's
Initials ______ Initials ______
<PAGE> 1
EXHIBIT 10.36
HOSIE, WES, McLAUGHLIN & SACKS
ATTORNEYS AT LAW
FACSIMILE ONE SANSOME STREET ALASKA OFFICE
5) 781-2525 FOURTEENTH FLOOR 510 L STREET. SUITE 500
SAN FRANCISCO, CALIFORNIA 94104 ANCHORAGE, ALASKA 99501
(415) 781-3200 (907) 279-2114
September 24, 1993
VIA CALIFORNIA OVERNIGHT
Mr. Paul Siegel
Chief Financial Officer
Calypte Biomedical Corporation
1440 Fourth Street
Berkeley, California 94710
Re: MMC/GATX PARTNERSHIP NO. I - CALYPTE BIOMEDICAL CORPORATION
Dear Paul:
Enclosed for your review, signature and return to me are the following
closing documents in connection with the upcoming Schedules Nos. 1, 2 and 3
under the Equipment Lease:
1. UCC-1 Sale-Leaseback Notice.
2. UCC-1 Precautionary Financing Statement.
3. UCC-1 Precautionary Fixture Filing.
Please return the signed UCCs to me as soon as possible.
Also enclosed for your records are fully-executed copies of the Master
Equipment Lease Agreement and the Security Deposit Pledge Agreement. I will
send you execution copies of Schedules Nos. 1, 2 and 3 and the related Bill of
Sale in the next few days.
Please call me if you have any questions or comments.
Sincerely,
/s/ ROBERT F. MCLAUGHLIN
Robert F. McLaughlin
RFM:ogw
Enclosures.
cc: Thomas Klein, Esq. - w/enc. -- UCCs only (via California Overnight)
Annette Bishop - w/o enc.
David G. Mayer, Esq. - w/o enc.
<PAGE> 2
MASTER EQUIPMENT LEASE AGREEMENT
Agreement No. ___________ Dated as of August 20, 1993
between
MMC/GATX PARTNERSHIP NO. 1,
Four Embarcadero Center,
San Francisco, CA 94111
as Lessor
and
CALYPTE BIOMEDICAL CORPORATION,
a California corporation
1440 Fourth Street
Berkeley, CA. 94710
as Lessee
LESSOR'S COMMITMENT: $1,150,000
<TABLE>
<S> <C>
Initial Rent Factor: 12 months at 1.5% Initial Lease Term: 42 months
followed by 30
months at 3.5%
Treasury Base Rate: 4.68% Treasury Constant, Maturity: 42 months
Initial Implicit Rate: 10.91% Minimum Implicit Rate: 10.00%
Minimum Funding Amount: $75,000 Maximum No. of Fundings: One per month
Minimum Renewal Percentage: 1.3% Minimum Purchase Option Percentage: 10%
</TABLE>
Commitment Termination Date: June 30, 1994
Eligible Equipment: Scientific laboratory and test equipment;
manufacturing equipment; and up to $200,000
of tenant improvements.
The terms and information set forth on this cover page are a part of
the MASTER EQUIPMENT LEASE AGREEMENT, dated as of the date first written above
(this "Lease"), entered into by and between MMC/GATX PARTNERSHIP NO. I
("Lessor") and the Lessee set forth above, the terms and conditions of which
are as follows:
<PAGE> 3
LESSOR'S OBLIGATIONS UNDER THIS LEASE AND EACH SCHEDULE ARE SUBJECT TO
THE PRIOR SATISFACTION OF THE CONDITIONS SET FORTH ON RIDER I HERETO.
1. DEFINITIONS: Unless otherwise defined in this Lease (which
term shall include the cover page, any Rider, any Exhibit or any Schedule
hereto), capitalized terms shall have the following meanings:
"Commitment Termination Date" means the date set forth opposite such
term on the cover page of this Lease, or such earlier date on which Lessor
terminates its commitment to fund pursuant to the terms of this Lease.
"Delivery Date" means, with respect to any Schedule, the date first set
forth on such Schedule.
"Eligible Equipment" means Equipment of the types listed following
such term on the cover page of this Lease to the extent acceptable to Lessor.
"Environmental Law" means the Resource Conservation and Recovery Act
of 1987, the Comprehensive Environmental Response, Compensation and Liability
Act, and any other Federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree (in each case having the force of law) regulating
or imposing liability or standards of conduct concerning, any Hazardous
Materials or other hazardous, toxic or dangerous waste, constituent, or other
substance, whether solid, liquid or gas, as now or at any time hereafter in
effect.
"Equipment" means all equipment, fixtures and personal property listed
in any Schedule together with all replacement parts, additions, accessions and
accessories to such equipment, fixtures and personal property.
"Event of Default" shall have the meaning set forth in Section 12
hereof.
"Hazardous Materials" means any hazardous substance, pollutant or
contaminant defined as such in any Environmental Law.
"Implicit Rate" means, with respect to a Schedule, an implicit
interest rate used in calculating the Rent Factor applicable to such Schedule,
calculated as set forth in Section 3(b) of this Lease.
"Initial Implicit Rate" means the implicit interest rate specified on
the cover page of this Lease.
"Initial Lease Term" means the period of months set forth opposite
such term on the cover page of this Lease.
"Initial Rent Factor" means the Rent Factor set forth on the cover
page of this Lease calculated using the Initial Implicit Rate.
"Interim Rental Payment" shall have the meaning set forth Section 3(a)
of this Lease.
"Lessor's Commitment" means the maximum amount that Lessor may be
obligated to fund under the Lease, which amount is set forth opposite such term
on the cover page of this Lease.
"Lessor's Cost" with respect to a Unit of Equipment means the total
cost to Lessor of purchasing such Unit of Equipment, as indicated on the
applicable Schedule.
"Maximum Number of Fundings" means the number of fundings under this
Lease specified opposite such term on the cover page hereof.
"Minimum Funding Amount" means the amount set forth opposite such term
on the cover page of this Lease.
1
<PAGE> 4
"Minimum Implicit Rate" means the interest rate set forth opposite
such term on the cover page to this Lease.
"Minimum Purchase Option Percentage" means the percentage of Lessor's
Cost set forth opposite such term on the cover page of this Lease.
"Minimum Renewal Percentage" means the percentage set forth opposite
such term on the cover page of this Lease.
"Rent Commencement Date" means the date, with respect to any Schedule,
set forth in Section 3(a) of such Schedule, which shall be the first day of
the calendar quarter immediately following the Delivery Date for such Schedule.
"Rent Factor" means, with respect to a Schedule, the rent factor
calculated using the Implicit Rate applicable on the Delivery Date of such
Schedule.
"Rental Payment" means, for any Schedule, the monthly rent payment for
the Units identified in such Schedule.
"Schedule" or "Schedule No. " means a schedule in the form of Exhibit
E to this Lease identifying this Lease and incorporating this Lease by
reference, which is executed by both parties hereto.
"Stipulated Loss Value" shall have the meaning set forth in Section
11(e).
"Term" means the Initial Lease Term, together with any renewal or
extension thereof.
"Treasury Base Rate" means the interest rate set forth opposite such
term on the cover page of this Lease.
"Treasury Constant Maturity" means the period of months set forth
opposite such term on the cover page of this Lease.
"Unit" means an item of Equipment.
2. LEASE: Lessor agrees to lease to Lessee and Lessee agrees to
lease from Lessor the Equipment described in each Schedule on the terms and
subject to the conditions specified herein and therein. Lessor's obligation to
fund Schedules under this Lease shall terminate on the Commitment Termination
Date. Lessor may, in its sole discretion, terminate its commitment herein to
fund the Lessor's Commitment or any unfunded portion thereof at any time if:
(a) there is any material adverse change to the general affairs, management,
results of operations, condition (financial or otherwise) or prospects of
Lessee, whether or not arising from transactions in the ordinary course of
business, (b) there is any material adverse deviation by Lessee from the
business plan of Lessee presented to and not disapproved in writing by Lessor,
since the date first written on the cover page of this Lease, (c) any Event of
Default exists, or (d) if any term or condition in any Schedule is not
satisfied by the Delivery Date of such Schedule. This Lease shall constitute a
"Finance Lease" under Division 10 of the California Uniform Commercial Code
("UCC"); provided, however, that the characterization of this Lease as a
"Finance Lease" is for purposes of Division 10 of the UCC only, and shall not
affect the accounting treatment of this Lease. This Lease, and Lessee's
obligation to pay all rent and other sums hereunder, shall be absolute and
unconditional, and shall not be subject to, and Lessee hereby waives any right
of or to, abatement, reduction, set-off, defense or counterclaim. Lessee
waives any and all rights and remedies conferred upon Lessee by UCC Sections
10508 through 10522, including (without limitation) Lessee's rights to (i)
cancel or repudiate this Lease, (ii) reject or revoke acceptance of the leased
property, (iii) recover damages from Lessor for breach of warranty or for any
other reason, (iv) claim a security interest in any rejected property in
Lessee's possession or control, (v) deduct from Rental Payments all or any part
of any claimed damages resulting from Lessor's default under this
2
<PAGE> 5
Lease, (vi) accept partial delivery of the Equipment, (vii) "cover" by making
any purchase or lease of other property in substitution for property due from
Lessor, (viii) recover from the Lessor any general, special, incidental or
consequential damages, for any reason whatsoever, and (ix) seek specific
performance, replevin or the like for any of the Equipment. Lessee
acknowledges that, at the time of each Schedule, it will have received and
approved the terms of the agreements with the vendors under which Lessor will,
subject to the terms and conditions of this Lease, purchase the Units covered
by such Schedule. The Units shall be leased for commercial purposes only, and
not for consumer, personal, home or family purposes. This Lease describes the
terms of, and is intended by the parties hereto to be, a true lease; provided,
however, that the parties acknowledge that the terms and conditions of the
Lease may, alternatively, create a secured financing or lease for security. If
this Lease as supplemented by any Schedule constitutes a security agreement or
lease for security, the Lessee hereby grants a security interest to Lessor in
all of Lessee's right, title and interest in the Units described in Annex A to
such Schedule and the proceeds thereof, to secure all of Lessee's obligations
under this Lease and such Schedule.
3. TERM AND RENTALS: THIS LEASE SHALL BE EFFECTIVE UPON EXECUTION
AND DELIVERY HEREOF by Lessee and Lessor. (a) The Initial Lease Term for each
Schedule shall commence upon the Rent Commencement Date set forth in such
Schedule. For the Initial Lease Term of such Schedule, Lessee agrees to pay
Lessor aggregate rentals equal to the number of months in the Initial Lease
Term of such Schedule multiplied by the amount of the Rental Payment specified
in such Schedule. In addition, for the period from the Delivery Date of each
Schedule until such Schedule's Rent Commencement Date, Lessee shall pay an
interim rental ("Interim Rental Payment") equal to the product of (i) the total
rental for the Initial Lease Term of such Schedule divided by 1,260 [42 x 30]
and (ii) the actual number of days between the Delivery Date and the Rent
Commencement Date, including the Delivery Date but excluding the Rent
Commencement Date. Lessor will make reasonable efforts to se nd Lessee
invoices for Rental Payments, but the failure to do so or the incorrectness of
any invoice will not relieve Lessee of its obligation to pay all amounts,
including Rental Payments, due under this Lease. The Interim Rental Payment
for each Schedule is due on the Delivery Date for such Schedule and the
remaining Rental Payments are due commencing on the Rent Commencement Date and
thereafter on the same date of each succeeding month of the Term, or as
specified in the applicable Schedule. A late charge on any overdue payments
shall accrue at the rate of 1.5% per month on the overdue amount, or the
highest lawful rate, whichever is less. (b) The Rent Factor will be calculated
for each Schedule based on a basis point for basis point adjustment (if any) to
the Initial Implicit Rate equal to the change from the Treasury Base Rate in
the U.S. Treasury note rate for notes of a term equal to the Treasury Constant
Maturity as quoted three business days prior to the Delivery Date for such
Schedule in The Wall Street Journal. The Implicit Rate used for calculating
the Rent Factor for any Schedule shall not be less than the Minimum Implicit
Rate. (c) It is not the intent of the parties to create rent or other payment
obligations of Lessee which will be considered usurious under applicable law.
However, if any such payment shall be found to be usurious by a court of
competent jurisdiction, then Rental Payments or such other amounts shall
automatically be reduced to the highest rate or amounts permitted by applicable
law and the usurious portion of the Rental Payments or such other amounts shall
be applied to the Lessee's remaining obligations under the Lease in a manner
reasonably determined by Lessor. If Lessee retains possession of any Unit
after the expiration or termination of this
3
<PAGE> 6
Lease, Rental Payments shall continue to be paid with respect to such Unit at
the rate set forth in Section 3(a) of the Schedule relating to such Unit until
all obligations of Lessee under this Lease relating to such Unit, including,
without limitation, Rental Payments and payments due under Section 4 of this
Lease, have been satisfied. This Lease may be terminated only as expressly
provided herein.
4. LESSEE'S PURCHASE OF TENANT IMPROVEMENTS; OPTIONS AT END OF
INITIAL LEASE TERM FOR NON-TENANT IMPROVEMENTS:
4A. Tenant Improvements. At the expiration of the Initial Lease
Term of each Schedule covering tenant improvements, Lessee shall purchase all
of the Units that are tenant improvements under such Schedule for a purchase
price equal to fifteen percent (15%) of Lessor's Cost of all such Units, plus
any applicable sales or other transfer tax.
4B. Non-Tenant Improvements.
(a) Provided that the Lease has not been terminated and that no
Event of Default or event which, with notice or lapse of time or both, would
become an Event of Default shall have occurred and be continuing, Lessee shall
elect one of the following options in clauses (i) or (ii) below:
(i) Lessee's Option to Renew: At the expiration of the
Initial Lease Term of the first Schedule covering Units other than
tenant improvements, Lessee may elect to renew the Lease with respect
to all, but not less than all, of such Units under all Schedules to
the Lease at their respective expiration dates for not less than
twelve (12) months nor more than thirty-six (36) months for a rent
equal to the "Fair Rental Value" (as defined in Section 4B(b) below)
of such Units for such additional period, but in no event less than
the Minimum Renewal Percentage of Lessor's Cost of such Units per
month, which rent shall be paid monthly in advance. At the end of the
renewal term, Lessee must purchase all of such Units for a purchase
price equal to the Fair Market Value (as defined in Section 4B(b)
below) plus any applicable sales or other transfer tax.
(ii) Lessee's Option to Purchase: At the expiration of the
Initial Lease Term of the first Schedule covering Units other than
tenant improvements, Lessee may elect to purchase all, but not less
than all, of such Units under all Schedules to the Lease at their
respective expiration dates for a purchase price equal to the "Fair
Market Value" (as defined in Section 4(b) below) thereof as of the end
of the Initial Lease Term of the first Schedule covering Units other
than tenant improvements, but in no event less than the Minimum
Purchase Option Percentage of Lessor's Cost of all such Units nor
greater than twenty-five percent (25%) of Lessor's Cost of all such
Units, plus any applicable sales or other transfer tax.
(iii) If neither of the foregoing options in clauses (i) or
(ii) of this Section 4B(a) is duly exercised by Lessee, this Lease
shall be renewed at the rental in effect immediately prior to the
renewal with respect to all Units other than tenant improvements
covered by the applicable Schedule from the expiration date of the
Initial Lease Term of such Schedule on a month-to-month basis. Lessee
may terminate any such extended term on 90 days'
4
<PAGE> 7
notice to Lessor and shall along with such notice elect one of the
options in clauses (i) or (ii) above.
Either of the foregoing options in clauses (i) or (ii) shall be
exercised by written notice delivered to Lessor not more than 180 days and not
less than 120 days prior to the expiration of the Initial Lease Tenn of the
Units which are subject to the first Schedule covering Units other than tenant
improvements.
(b) Fair Market Value or Fair Rental Value, as the case may be,
shall be determined on the basis of and shall be equal in amount to the value
which would obtain in an arm's-length transaction between an informed and
willing buyer-user or lessee-user (other than a used equipment dealer) and an
informed and willing seller or lessor under no compulsion to sell or lease, on
the assumptions that: such Units (i) are being sold "in place and in use"; (ii)
are free and clear of all liens and encumbrances; and (iii) are in the
condition required upon the return of the Units under Section 9 of this Lease.
In such determination, costs of removal from the location of current use shall
not be a deduction from such value(s).
(c) If the Lessor and Lessee have not agreed upon a determination
of the Fair Market Value or Fair Rental Value of any Unit within 30 days after
one of the parties has requested such determination, that determination shall
be made by a certified independent appraiser approved by both Lessor and
Lessee, such approvals not to be unreasonably withheld. The appraiser shall be
furnished with a letter of instruction concerning the preparation of the
appraisal, together with a copy of the Lease and Schedule and, to the extent
available, related purchase orders and/or invoices. The appraiser shall be
instructed to make such determination within 30 days following appointment.
The determination made by the appraiser shall be final and binding on both
Lessor and Lessee. The fees and expenses of any appraisal shall be paid by the
Lessee, if such appraisal is needed for the Lessor's exercise of its remedies
under Sections 12 and 13 hereof, and equally by the Lessor and Lessee
otherwise.
4C. General. The purchase of the Units by Lessee pursuant to this
Section 4 shall be "AS IS, WHERE IS", without recourse to or any warranty by
Lessor, other than a warranty that the Units are free and clear of liens and
encumbrances resulting from acts of Lessor.
5. WARRANTIES; INDEMNITY:
(a) Lessee acknowledges that it has made the selection of each
Unit based upon its own judgment. LESSOR MAKES NO EXPRESS OR IMPLIED WARRANTIES
INCLUDING, WITHOUT LIMITATION, THOSE OF DESCRIPTION, INFRINGEMENT,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE WITH RESPECT TO THE
EQUIPMENT AND HEREBY DISCLAIMS THE SAME. Lessor shall have no liability for
any damages, whether direct or consequential, incurred by Lessee as a result of
any defect or malfunction of a Unit. Lessee agrees to look solely to the
manufacturer or vendor of any defective or malfunctioning Unit for the repair
or replacement of such Unit and to continue to make all Rental Payments with
respect to such Unit in spite of such defect or malfunction. Lessor hereby
assigns to Lessee, for and during the Term, any warranty, guaranty or indemnity
of the manufacturer or vendor issued to Lessor with respect to any Unit.
5
<PAGE> 8
(b) Lessee shall indemnify, reimburse and hold Lessor (including,
without limitation, each of its partners) and each of their respective
successors, assigns, officers, directors, shareholders, servants, agents and
employees harmless from and against all liabilities, losses, damages, actions,
suits, demands, claims of any kind and nature (including, without limitation,
claims relating to environmental discharge, cleanup or compliance), and all
costs and expenses whatsoever to the extent they may be incurred or suffered by
such indemnified party in connection therewith (including, without limitation
reasonable attorneys' fees and expenses), fines, penalties (and other charges
of applicable governmental authorities), licensing fees relating to any Unit,
damage to or loss of use of property (including, without limitation,
consequential or special damages to third parties or damages to Lessee's
property), or bodily injury to or death of any person (including, without
limitation, any agent or employee of Lessee) (each a "Claim"), directly or
indirectly relating to or arising out of the acquisition, use, lease or
sublease, ownership, operation, possession, control, storage or condition of
any Unit (regardless of whether such Unit is at the time in the possession of
Lessee), the falsity of any non-tax representation or warranty of Lessee or
Lessee's failure to comply with the terms of the Lease during the Term. The
foregoing indemnity shall cover, without limitation, (i) any Claim in
connection with a design or other defect (latent or patent) in any Unit, (ii)
any Claim for infringement of any patent, copyright, trademark or other
intellectual property right, (iii) any Claim resulting from the presence on or
under or the escape, seepage, leakage, spillage, discharge, emission or release
from any Unit of any Hazardous Materials, including, without limitation, any
Claims asserted or arising under any Environmental Law, or (iv) any Claim for
negligence or strict or absolute liability in tort; provided, however, that
Lessee shall not indemnify Lessor for any liability incurred by Lessor as a
direct and sole result of Lessor's gross negligence or willful misconduct.
Such indemnities shall continue in full force and effect, notwithstanding the
expiration or termination of this Lease. Upon Lessor's written demand, Lessee
shall assume and diligently conduct, at its sole cost and expense, the entire
defense of Lessor and its agents, employees, successors and assigns against any
indemnified Claim described in this Section 5. Lessee shall not settle or
compromise any Claim against or involving Lessor without first obtaining
Lessor's written consent thereto, which consent shall not be unreasonably
withheld.
6. TITLE, LOCATION AND RETURN: Lessor and Lessee hereby confirm
their intent that the Equipment remain and be deemed personal property and that
title thereto shall remain in Lessor. If requested by Lessor, Lessee will
affix plates or markings on the Equipment indicating the interests of Lessor.
Lessee may not remove the Equipment from its place of installation without
Lessor's prior written consent, which consent shall not be unreasonably
withheld. Lessor shall have the right to inspect the Equipment during regular
business hours, with reasonable notice, and in compliance with Lessee's
reasonable security procedures. If for any reason the Equipment is to be
returned to Lessor on Lessor's demand hereunder, Lessee at its own risk and
expense, will cause the Equipment to be delivered promptly to Lessor free of
all Hazardous Materials and in the same condition as when delivered hereunder,
ordinary wear and tear excepted, to such point in the United States as Lessor
may designate and in such a manner as is consistent with the manufacturer's
recommendations, if any, for transportation and packaging of such Equipment.
All charges to cover Equipment transportation, deinstallation, storage until
returned, packing, and handling and all other costs associated with a return of
the Equipment to the location designated by Lessor shall be paid by Lessee.
6
<PAGE> 9
7. SUBLEASE, ASSIGNMENT: Lessee acknowledges and agrees that
Lessor may, subject to the terms of this Lease, sell, assign, grant a security
interest in, or otherwise transfer all or any part of its rights, title and
interest in this Lease and the Equipment. Upon Lessor's written notice, Lessee
shall, if requested, pay directly to such assignee without abatement, deduction
or set-off all amounts which become due hereunder. Lessee waives and agrees it
will not assert against such assignee any counterclaim or set-off in any action
for rent under the Lease. Such assignee shall have and be entitled to exercise
any and all rights and remedies of Lessor hereunder, and all references herein
to Lessor shall include Lessor's assignee. Lessee acknowledges that such a
sale, assignment, grant or transfer would neither materially change Lessee's
duties nor materially increase the burdens or risks imposed on the Lessee under
this Lease. LESSEE MAY NOT, WITHOUT LESSOR'S PRIOR WRITTEN CONSENT, (i)
SUBLEASE, TRANSFER, DISPOSE OF OR ASSIGN ITS RIGHTS IN RESPECT OF ANY UNIT OR
ITS OBLIGATIONS UNDER THIS LEASE OR (ii) ASSIGN, GRANT A SECURITY INTEREST IN,
OR OTHERWISE TRANSFER ALL OR ANY PART OF ITS RIGHTS, TITLE AND INTEREST IN AND
TO THIS LEASE OR THE EQUIPMENT.
8. TAXES: Lessee agrees to pay if and when due, in addition to
other amounts due hereunder and under each Schedule, all fees and assessments,
and all sales, use, property, excise and other taxes and charges (including all
interest and penalties) (collectively "Taxes"), now or hereafter imposed by any
governmental body or agency upon any of the Equipment or upon the purchase,
ownership, possession, leasing, operation, use, rentals or other payments, or
disposition hereunder whether payable by Lessor or Lessee (exclusive of taxes
on or measured by Lessor's net income). Lessee agrees to prepare and file
promptly with the appropriate offices any and all tax and similar returns
required to be filed with respect thereto, or, if requested by Lessor, to
notify Lessor of such requirements and furnish Lessor with all information
required by Lessor so that it may effect such filing, at Lessee's expense. Any
Taxes paid by or imposed on, Lessor on behalf of Lessee shall become
immediately due and payable on Lessor's demand. Lessor, as owner, shall be
entitled to any and all depreciation and modified cost recovery deductions
provided under the Internal Revenue Code of 1986, as amended from time to time
and any other such tax benefits which may now or hereafter be available to an
owner of such Equipment (collectively, "Tax Benefits"). If as a result of (i)
the inaccuracy or breach of any of Lessee's representations,, warranties and
covenants herein or in any Schedule, or (ii) the acts or failure to act of
Lessee or any person claiming an interest in the Equipment through the Lessee
(other than a casualty or other event described in Section 11 with respect to
which Stipulated Loss Value shall have been paid by Lessee), Lessor or any of
its assigns shall lose, or shall not, in its reasonable opinion, have the right
to claim, or there shall be disallowed, deferred or recaptured, any portion of
the Tax Benefits with respect to a Unit (a "Loss of Tax Benefits") or there
shall be included in Lessor's gross income any amounts other than Rental
Payments in respect of the purchase price of any Unit (an "Inclusion"), then,
on and after the next succeeding Rent Payment date after written notice to
Lessee by Lessor, Lessee agrees as follows: The rent for the Equipment shall,
on the Rent Payment date next succeeding Lessor's written notice to Lessee of
Lessor's payment of any tax payment attributable to such Inclusion or of a Loss
of Tax Benefits, be increased to such amount or amounts as shall, by the end of
the original term of the last Schedule to this Lease, in the reasonable opinion
of Lessor, after deduction of all fees, taxes, or other charges required to be
paid by Lessor in respect of the receipt of all amounts payable by Lessee to
Lessor under
7
<PAGE> 10
this Section 8 under the laws of any federal, state, or local government or
taxing authority in the United States, cause Lessor's after-tax yield and cash
flow in respect of the Equipment to equal those which would have been realized
by Lessor if Lessor had not incurred such a Loss of Tax Benefits or had such an
Inclusion. If any claim or contest regarding any tax indemnity covered by this
Section 8 shall arise, such claim or contest shall be addressed or conducted,
at Lessee's expense, in the manner reasonably specified by Lessor.
9. USE; MAINTENANCE: (a) Lessee, at its expense, shall make all
necessary site preparations and cause the Equipment to be operated in
accordance with any applicable manufacturer's manuals or instructions. So long
as no Event of Default has occurred and is continuing, Lessee shall have the
right to quietly possess and use the Equipment as provided herein without
interference by Lessor. (b) Lessee, at its expense, shall maintain the
Equipment in good condition, reasonable wear and tear excepted, and will comply
with all laws, ordinances and regulations to which the use and operation of the
Equipment may be or become subject. Such obligation shall extend to repair and
replacement of any partial loss or damage to the Equipment, regardless of the
cause. If maintenance is mandated by the manufacturer, Lessee shall obtain and
keep in effect at all times during the Term maintenance service contracts with
suppliers approved by Lessor, such approval not to be unreasonably withheld.
All parts furnished in connection with such maintenance or repair shall
immediately become part of the Equipment. All such maintenance, repair and
replacement services shall be paid for and discharged by Lessee when due with
the result that no lien will attach to the Equipment. Only qualified personnel
of Lessee shall operate the Equipment. The Equipment shall be used only for
the purposes for which it was designed.
10. INSURANCE: (a) Lessee shall obtain and maintain for the Term,
at its own expense, (i) "all risk" insurance against loss or damage to the
Equipment, (ii) commercial general liability insurance (including contractual
liability, products liability and completed operations coverages) reasonably
satisfactory to Lessor, and (iii) such other insurance against such other risks
of loss and with such terms, as shall in each case be reasonably satisfactory
to or reasonably required by Lessor (as to carriers, amounts and otherwise).
(b) The amount of the "all risk" insurance shall be the greater of the
replacement value of the Equipment (as new) or the "Stipulated Loss Value"
specified in the applicable Schedules, which amount shall be determined to
Lessor's reasonable satisfaction as of each anniversary date of this Lease with
the amount so determined being put into effect on the next succeeding renewal
or inception date of such insurance. (c) The deductible with respect to
"all-risk" insurance required by clause (b) above and product liability
insurance required by clause (a) above shall not exceed $25,000; otherwise
there shall be no deductible with respect to any insurance required to be
maintained hereunder. (d) The amount of commercial general liability insurance
(other than products liability coverage and completed operations insurance)
required by clause (a) above shall be at least $2,000,000 per occurrence. The
amount of the products liability and completed operations insurance required by
clause (a) above shall be at least $2,000,000 per occurrence. (e) Each "all
risk" policy shall: (i) name Lessor as sole loss payee with respect to the
Equipment, (ii) provide for each insurer's waiver of its right of subrogation
against Lessor and Lessee, and (iii) provide that such insurance (A) shall not
be invalidated by any action of Lessee, or any breach by Lessee of any
provision of any of its insurance policies, and (B) shall waive set-off,
counterclaim or offset against Lessor. Each liability policy shall
8
<PAGE> 11
(w) name Lessor as an additional insured and (x) provide that such insurance
shall have cross-liability and severability of interest endorsements (which
shall not increase the aggregate' policy limits of Lessee's insurance). All
insurance policies (y) shall provide that Lessee's insurance shall be primary
without a right of contribution of Lessor's insurance, if any, or any
obligation on the part of Lessor to pay premiums of Lessee, and (z) shall
contain a clause requiring the insurer to give Lessor at least 30 days' prior
written notice of its cancellation (other than cancellation for non-payment for
which 10 days' notice shall be sufficient). Lessee shall on or prior to the
Delivery Date of Schedule No. 1 and prior to each policy renewal, furnish to
Lessor certificates of insurance or other evidence satisfactory to Lessor that
such insurance coverage is in effect. Lessee further agrees to give Lessor
prompt notice of any damage to, or loss of, the Equipment, or any part thereof.
11. LOSS; DAMAGE; DESTRUCTION AND SEIZURE: (a) Lessee shall bear
the risk of the Units being lost, stolen, destroyed, damaged or seized by
governmental authority for any reason whatsoever at any time until the latest
to occur' of (i) the expiration or termination of the Term or (ii) any storage
period thereafter or (iii) the return of the subject Unit to Lessor (if
authorized hereunder), and shall proceed diligently and cooperate fully to
recover any and all damages, insurance proceeds or condemnation awards. (b)
Except as described in Section 11(c) hereof, if during the Term or the storage
period thereafter, any Unit shall be lost, stolen, destroyed, irreparably
damaged or seized by governmental authority for a period equal to at least the
remainder of the Term, Lessor shall receive from the proceeds of insurance
obtained pursuant to Section 10 hereof, from any award paid by the seizing
governmental authority and, to the extent not received from the proceeds of
such insurance or award or both, from Lessee, on or before the Rental Payment
date next succeeding such loss, theft, destruction, damage or governmental
seizure: (i) all accrued and unpaid rent in respect of such Unit including rent
due on the rental payment date next succeeding the date of such loss or seizure
if the rent is in arrears; (ii) the Stipulated Loss Value of such Unit,
determined as of such Rental Payment date; (iii) all other sums, if any, that
shall have become due and payable hereunder; and (iv) interest on the foregoing
at the lower of the rate equal to 1.5% per month or the highest rate then
permitted by applicable law from the due dates(s) of such payment(s) to the
date of payment. On receipt by Lessor of the amount specified hereinabove with
respect to each such Unit so lost, stolen, destroyed, damaged or seized, (i)
this Lease shall be deemed terminated as to such Unit and rent in respect of
such Unit shall be deemed abated, as of the Rental Payment date next succeeding
such loss, theft, damage, destruction or seizure; and (ii) so long as no
default or Event of Default has occurred and is continuing hereunder, Lessor
shall on demand, transfer title to such Unit, "AS IS, WHERE IS, WITHOUT
RECOURSE, REPRESENTATION OR WARRANTY," to Lessee, or, if appropriate in
Lessor's sole judgment, which judgment shall be exercised in a reasonable
manner, and on prior notice to Lessee, to Lessee's insurance carrier. Any
proceeds of insurance payable to Lessor pursuant to this Section 11 and Section
10 hereof received by Lessee shall be paid to Lessor promptly upon their
receipt by Lessee. If any proceeds of insurance or awards received from
governmental authorities are in excess of the amount owed under this Section
11(b), Lessor shall promptly remit to Lessee the amount in excess of the amount
owed to Lessor. (c) So long as no Event of Default shall have occurred and be
continuing, any proceeds of insurance obtained pursuant to Section 10 hereof
received with respect to any Unit the repair of which is practical shall, at
the election of Lessee, be applied either to the repair of such Unit
9
<PAGE> 12
or, upon Lessor's receipt of evidence of the repair of the Unit reasonably
satisfactory to Lessor, to the reimbursement of Lessee for the cost of such
repair. (d) Lessee shall promptly, but in any event within 30 days thereafter,
notify Lessor in writing in reasonable detail of any loss, theft, destruction
or seizure described in this Section 11. (e) The Stipulated Loss Value payable
by Lessee under this Lease shall be that percentage of Lessor's Cost of the
affected Unit(s) set forth in the table attached to the applicable Schedule as
Annex B opposite the Rental Payment date next following the event giving rise
to Lessee's obligation to pay Stipulated Loss Value. Stipulated Loss Values
and Rental Payments shall not be prorated.
12. EVENTS OF DEFAULT: An "Event of Default" shall occur if
Lessee: (a) fails to pay/make any Rental Payment or other payment required
hereunder when due and such failure continues for a period of 10 days; or (b)
fails to perform or observe any other material covenant, condition or agreement
hereunder or breaches any provision contained herein or in any other document
furnished Lessor in connection herewith, and such failure or breach continues
for a period of 30 days after written notice by Lessor; or (c) makes any
representation or warranty herein or in any document furnished in connection
herewith, which shall have been materially false or inaccurate when made; or
(d) fails to maintain insurance under this Lease or otherwise required by the
Lessor hereunder; or (e) shall admit in writing that it is unable to pay its
debts as they become due, become insolvent or bankrupt or make an assignment
for the benefit of its creditors or consents to the appointment of a trustee or
receiver or insolvency proceedings shall be instituted by or against Lessee.
13. REMEDIES: Upon the occurrence of any Event of Default and at
any time thereafter, provided such Event of Default is then continuing (which
occurrence, for purposes of clause (a)(ii)(B) below is the day Lessee shall be
deemed to tender possession of the Equipment to Lessor), (a) Lessor may, in its
discretion, do any one or more of the following, all of which Lessor and Lessee
expressly agree are commercially reasonable under the UCC and any other
applicable law: (i) terminate this Lease; (ii) declare to be immediately due
and payable: (A) all unpaid rent and sums then due and payable under this Lease
(other than amounts payable under clause (B) hereof, if any,) plus (B) an
amount equal to the greater of the then applicable Stipulated Loss Value (which
value Lessee acknowledges has a reasonable discount rate implicit therein) or
the then applicable fair market value of the Equipment as determined by Lessor
(but in no event less than an amount, equal to the Minimum Purchase Option
Percentage of Lessor's Cost); (iii) require that Lessee return all Equipment to
Lessor in accordance with Section 6 hereof, (iv) enter upon the premises where
such Equipment is located and take immediate possession of and remove the same,
all without liability to Lessor or its agents for such entry; (v) sell any or
all of the Equipment at public or private sale, with or without notice to
Lessee or advertisement, or otherwise dispose of, hold, use, operate, lease to
others or keep idle such Equipment, all free and clear of any rights of Lessee
and without any duty to account to Lessee for such action or inaction or for
any proceeds with respect thereto subject to applicable law; (vi) exercise any
other right or remedy which may be available under the UCC or other applicable
law including the right to recover damages for the breach hereof. (b) In
addition, Lessee shall be liable for, and reimburse Lessor for, all reasonable
and necessary attorneys' fees and other expenses incurred by Lessor as a result
of the foregoing defaults, or the exercise of Lessor's remedies, including
without limitation placing any Equipment in the condition required by Section 9
hereof. No remedy referred to
10
<PAGE> 13
in this Section 13 is intended to be exclusive, but each shall be cumulative
and in addition to any other remedy referred to above or otherwise available to
Lessor at law or in equity (c) There shall be no waiver by Lessor of any
default unless in writing and such waiver shall not constitute a waiver of any
other default by Lessee, or a waiver of any of Lessor's other rights. Lessee
waives any rights now or hereafter conferred by statute or otherwise that may
require Lessor to sell, re-lease or otherwise use or dispose any Unit in
mitigation of the Lessor's damages or that might otherwise limit or modify any
of Lessor's rights or remedies under this Lease.
14. LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS: (a) Lessee
warrants and represents the following as of the date hereof. (i) Lessee is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and is duly qualified and authorized to do
business in the state where the Equipment will be located; (ii) Lessee has the
full corporate power, authority and legal right and has obtained all necessary
approvals, consents and given all notices to execute and deliver this Lease and
perform the terms hereof and of each Schedule; (iii) there is no action,
proceeding or patent claim pending or, insofar as Lessee knows, threatened
against Lessee or any of its subsidiaries before any court or administrative
agency which might have a materially adverse effect on the business, condition
or operations of Lessee or such subsidiary; and (iv) this Lease has been and
each Schedule will be duly executed and delivered by Lessee and constitute or
will constitute the valid, binding and enforceable obligations of Lessee. (b)
Lessee agrees that by its signature on each Schedule it shall be deemed to have
warranted and represented the following as of the Delivery Date of such
Schedule: (i) all of the Units being delivered on the Delivery Date of such
Schedule are accurately described in Annex A attached to such Schedule, have
been fully assembled and conform to all applicable performance criteria; (ii)
the requirements of this Lease and of Lessor with respect to the identification
of the Units have been met; and (iii) except as set forth in Annex C to the
applicable Schedule, each of the representations and warranties set forth in
clause (a) of this Section 14 remains true and correct. (c) Lessee covenants and
agrees that it shall not, without Lessor's prior written consent, attempt, cause
or permit another to sell, transfer, encumber, part with possession, or sublet,
voluntarily or involuntarily, any Unit.
11
<PAGE> 14
15. NOTICES. All notices (and financial information required to be
delivered to Lessor under Section 16(c) of this Lease) shall be addressed as
follows:
If to Lessor:
MMC/GATX PARTNERSHIP NO. I
c/o GATX CAPITAL CORPORATION, Agent
Four Embarcadero Center, Suite 2200
San Francisco, CA 94111
Attn: Contract Administration
With a copy of required financial information to:
MEIER MITCHELL & COMPANY
4 Orinda Way, Suite 200-B
Orinda, California 94563
Attn: Contract Administration
If to Lessee, at the address set forth on the cover page of this
Lease.
16. MISCELLANEOUS: (a) Any notices hereunder shall be in writing
and shall be deemed given when delivered personally, by private courier, by
facsimile transmission or sent by certified mail, postage prepaid, addressed to
the other party at its address set forth herein or to such other address as
either party may designate in writing. Such notices or demands shall be deemed
given upon receipt in the case of personal delivery, mailing or facsimile
transmission. (b) Lessee will promptly execute and deliver to Lessor such
further reasonable documents (including, but not limited to, financing
statements) and take such further reasonable action (such as obtaining landlord
or mortgagee's waivers), as Lessor may request in order to more effectively
carry out the intent and purpose of this Lease or an assignment of Lessor's
interest herein. (c) Lessee shall furnish to Lessor monthly and audited annual
financial statements and such other financial information as Lessor may
reasonably request from time to time. (d) This Lease constitutes the entire
agreement on the subject matter hereof between the parties hereto (other than
any document executed in connection herewith) and shall be binding upon and
inure to the benefit of the parties hereto, their permitted successors and
assigns. (e) Any provision of the Lease which is unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof; and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. (f) Time is of the essence with respect to the Lease. (g)
The captions set forth herein are for convenience only and shall not define or
limit any of the terms hereof (h) The language in this Lease and the related
documents is to be construed as to its fair meaning and not strictly for or
against any party. (i) All payments shall be paid to the address designated by
Lessor in the applicable Schedule or otherwise in a writing signed by Lessor.
(j) Lessee's and Lessor's obligations hereunder shall survive the expiration
and termination of the Term to the extent required for full performance and
satisfaction thereof. (k) ALL MATTERS INVOLVING THE CONSTRUCTION, VALIDITY,
PERFORMANCE AND ENFORCEMENT OF THIS LEASE WILL BE GOVERNED BY THE LAWS OF THE
12
<PAGE> 15
STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW OR
CHOICE OF LAW. This Lease is being executed in the State of California and is
to be performed in such State. Lessee agrees and consents that the Superior
Court of the State of California for the County of San Francisco or the Federal
District Court for the jurisdiction in that County shall have jurisdiction and
shall be the venue for determination of all controversies, disputes and actions
arising under this Lease. Nothing contained herein is intended to preclude
Lessor from commencing any action under this Lease in any court having
jurisdiction thereof. (1) This Lease may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and same
instrument; provided, however, that to the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease may be created through the transfer or possession of any counterpart of
this Lease other than the original executed counterpart of this Lease, which
shall be identified as such counterpart.
17. AMENDMENTS, MODIFICATIONS, WAIVERS: NONE OF THE PROVISIONS OF
TIES LEASE MAY BE AMENDED, MODIFIED OR WAIVED EXCEPT IN A WRITING SIGNED BY
LESSOR AND LESSEE.
INITIALS /s/ KG (LESSOR) /s/ PS INITIALS (LESSEE)
This Lease is hereby duly executed by the parties hereto as set forth
below.
LESSEE: LESSOR:
CALYPTE BIOMEDICAL CORPORATION MMC/GATX PARTNERSHIP NO. I
By GATX CAPITAL CORPORATION, as
Agent
BY: /s/ PAUL SIGEL BY: /s/ KEITH E. GUINN
NAME (PRINT): Paul Sigel NAME (PRINT): Keith E. Guinn
TITLE: CFO TITLE: VP
DATE: [ILLEGIBLE] DATE: 9/24/93
This Lease incorporates the following Riders as if set forth herein:
Rider I; ___________ ; ___________ ; ___________
INITIALS /s/ KG (LESSOR) INITIALS /s/ PS (LESSEE)
13
<PAGE> 16
Exhibit A - Warrant
Exhibit B - Landlord Waiver
Exhibit C - Purchase Order and Invoice Assignment
Exhibit D - Bill of Sale
Exhibit E - Form of Schedule
Exhibit F - Security Deposit Pledge Agreement
14
<PAGE> 17
RIDER I
TO MASTER EQUIPMENT
LEASE AGREEMENT NO._____
DATED AUGUST 20, 1993
Conditions to Lessor's Obligations
By their initials below and on the signature page of the Master
Equipment Lease Agreement referenced in the upper right corner of this page,
Lessor and Lessee agree that the Lease incorporates the following terms:
1. On or prior to the date of execution of the Lease by Lessor,
Lessor shall have received in form and substance satisfactory to Lessor:
(a) A Warrant substantially in the form of Exhibit A hereto.
(b) A Security Deposit Pledge Agreement in the form of Exhibit F
hereto.
(c) A legal opinion of Lessee's legal counsel in form and
substance reasonably satisfactory to Lessor.
(d) Copies, certified by the Secretary or Assistant Secretary or
Chief Financial Officer of Lessee, of: (A) the Articles of
Incorporation and By-Laws of Lessee (as amended to the date of
the Lease) and (B) the resolutions adopted by Lessee's board
of directors authorizing the execution and delivery of this
Lease, the Schedules, the Warrant and the other documents
referred to herein and the performance by Lessee of its
obligations hereunder and thereunder;
(e) Unless the opinion of Lessor's legal counsel contains language
to the same effect, a Good Standing Certificate (including
franchise tax status) with respect to Lessee from Lessee's
state of incorporation, dated a date reasonably close to the
date of acceptance of the Lease by Lessor.
(f) Evidence of the insurance coverage required by Section 10 of
the Lease.
(g) All necessary consents of shareholders and other third parties
with respect to the subject matter of the Lease, the Schedules
and the Warrant.
(h) All other documents as Lessor shall have reasonably requested.
2. Prior to any funding on a Delivery Date, Lessee shall have
satisfied all of the conditions set forth in the applicable Schedule.
Initials /s/ KG (Lessor)
Initials /s/ PS (Lessee)
RIDER I
<PAGE> 18
RIDER II
TO MASTER EQUIPMENT
LEASE AGREEMENT NO._____
DATED AUGUST 20,1993
LESSOR:MMC/GATX PARTNERSHIP NO. I
LESSEE: CALYPTE BIOMEDICAL CORPORATION
Lessor and Lessee hereby agree that the Master Equipment Lease
Agreement referenced in the upper right corner of this page (the "Lease")
incorporates the following amended terms:
Notwithstanding the provisions of Section 10 of the Lease, the amount
of products liability and completed operations insurance required by
clause (a) of Section 10 of the Lease shall be at least (i) $1,000,000
per occurrence until the earlier of (A) the date Lessee commences
commercial sales of its products, or (B) January 1, 1994, and (ii)
thereafter, $5,000,000 per occurrence.
This Rider II is hereby duly executed by the parties hereto as set
forth below.
LESSEE: LESSOR:
CALYPTE BIOMEDICAL CORPORATION MMC/GATX PARTNERSHIP NO. I
By GATX Capital Corporation, as Agent
By /s/ PAUL SIEGEL By: /s/ KEITH E. GUINN
Name: Paul Siegel Name: KEITH E. GUINN
Title: CFO Title: VP
Date: 8/20/93 Date: 9/24/93
<PAGE> 19
EXHIBIT A
WARRANT
<PAGE> 20
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY
BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED
THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT
REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE
GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THIS WARRANT.
CALYPTE BIOMEDICAL CORPORATION
WARRANT TO PURCHASE 122,667 SHARES
OF COMMON STOCK
THIS CERTIFIES THAT, for value received, MMC/GATX Partnership No. I
(the "Partnership") is entitled to subscribe for and purchase 122,667 shares of
the fully paid and nonassessable Common Stock, $.001 par value (as adjusted
pursuant to Section 4 hereof, the "Shares") of Calypte Biomedical Corporation,
a California corporation (the "Company"), at the price of $.75 per share (such
price and such other price as shall result, from time to time, from the
adjustments specified in Section 4 hereof is herein referred to as the "Warrant
Price"), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, (a) the term "Common Stock" shall mean
the Company's presently authorized Common Stock, and any stock into or for
which such Common Stock may hereafter be converted or exchanged, (b) the term
"Date of Grant" shall mean August 20, 1993, and (c) the term "Other Warrants"
shall mean any other warrants issued by the Company in connection with the
transaction with respect to which this Warrant was issued, and any warrant
issued upon transfer or partial exercise of this Warrant. The term "Warrant"
as used herein shall be deemed to include Other Warrants unless the context
clearly requires otherwise.
1. Term. The purchase right represented by this Warrant is
exercisable, in whole or in part, at any time and from time to time from the
Date of Grant through the later of (i) ten (10) years after the Date of Grant
or (ii) five (5) years after the closing of the Company's initial public
offering of its Common Stock effected pursuant to a Registration Statement on
Form S-1 (or its successor) filed under the Securities Act of 1933, as amended
(the "Act").
2. Method of Exercise, Payment, Issuance of New Warrant. Subject
to Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, by
either, at the election of the holder hereof, (a) the surrender of this Warrant
(with the notice of exercise form attached hereto as Exhibit A duly executed)
at the principal office of the Company and by the payment to the Company, by
<PAGE> 21
check, of an amount equal to the then applicable Warrant Price multiplied by the
number of Shares then being purchased, or (b) if in connection with a registered
public offering of the Company's securities, the surrender of this Warrant (with
the notice of exercise form attached hereto as Exhibit A-1 duly executed) at the
principal office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either by check or from
the proceeds of the sale of shares to be sold by the holder in such public
offering of an amount equal to the then applicable Warrant Price per share
multiplied by the number of Shares then being purchased. The person or persons
in whose name(s) any certificate(s) representing shares of Common Stock shall be
issuable upon exercise of this Warrant shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the shares represented thereby (and such shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be delivered to the holder hereof as soon as possible and in any
event within thirty days after such exercise and, unless this Warrant has been
fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof as soon as possible and in
any event within such thirty-day period.
3. Stock Fully Paid; Reservation of Shares. All Shares that may
be issued upon the exercise of the rights represented by this Warrant will,
upon issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number
and kind of securities purchasable upon the exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) Reclassification or Merger. In case of any reclassification,
change or conversion of securities of the class issuable upon exercise of this
Warrant (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination),
or in case of any merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, shall
duly execute and deliver to the holder of this Warrant a new Warrant (in form
and substance satisfactory to the holder of this Warrant), so that the holder of
this Warrant shall have the right to receive, at a total purchase price not
2
<PAGE> 22
to exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the shares of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change or
merger by a holder of the number of shares of Common Stock then purchasable
under this Warrant. Such new Warrant shall provide for adjustments that shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Section 4. The provisions of this subparagraph (a) shall similarly
apply to successive reclassifications, changes, mergers and transfers.
(b) Subdivision or Combination of Shares. If the Company
at any time while this Warrant remains outstanding and unexpired shall
subdivide or combine its outstanding shares of Common Stock, the Warrant Price
shall be proportionately decreased in the case of a subdivision or increased in
the case of a combination, effective at the close of business on the date the
subdivision or combination becomes effective.
(c) Stock Dividends and Other Distributions. If the
Company at any time while this Warrant is outstanding and unexpired shall (i)
pay a dividend with respect to Common Stock payable in Common Stock, or (ii)
make any other distribution with respect to Common Stock (except any
distribution specifically provided for in the foregoing subparagraphs (a) and
(b)) of Common Stock, then the Warrant Price shall be adjusted, from and after
the date of determination of shareholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Warrant Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.
(d) Adjustment of Number of Shares. Upon each
adjustment in the Warrant Price, the number of Shares of Common Stock
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of Shares purchasable immediately
prior to such adjustment in the Warrant Price by a fraction, the numerator of
which shall be the Warrant Price immediately prior to such adjustment and the
denominator of which shall be the Warrant Price immediately thereafter.
(e) Antidilution Rights. In the event that the
"Conversion Price" (as defined in the Company's Restated Articles of
Incorporation, as amended through the Date of Grant, a true and complete copy
of which is attached hereto as Exhibit B (the "Charter")), for the Company's
Series D Preferred Stock is reduced from time to time prior to December 16,
1993 pursuant to the antidilution rights applicable to the Series D Preferred
Stock set forth in Section 6.C.(a)(i)(I) of Article III of the Charter (other
than reductions covered by Sections 4(b) or (c) of this Warrant), then the same
reduction shall forthwith be made to the Warrant Price, subject to
proportionate adjustment to reflect any stock split or combination, stock
dividend or similar event occurring after the Date of Grant. The intent of
this Section 4(e) is to provide the holder of this Warrant with the same
antidilution protection as would have
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<PAGE> 23
prevailed prior to December 16, 1993 if this Warrant had entitled the holder
hereof to purchase shares of the Company's Series D Preferred Stock (rather
than Common Stock), as such antidilution protection is set forth in the
Charter. Such antidilution rights shall not be amended, modified or waived in
any manner that is materially adverse to the holder hereof without such
holder's prior written consent. The Company shall promptly provide the holder
hereof with any restatement, amendment, modification or waiver of the Charter
promptly after the same has been made.
5. Notice of Adjustments. Whenever the Warrant Price or the
number of Shares purchasable hereunder shall be adjusted pursuant to Section 4
hereof, the Company shall make a certificate signed by its chief financial
officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the Warrant Price and the number of Shares purchasable
hereunder after giving effect to such adjustment, which shall be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to
the holder of this Warrant.
6. Fractional Shares. No fractional shares of Common Stock will
be issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor based on the
fair market value of the Common Stock on the date of exercise as reasonably
determined in good faith by the Company's Board of Directors.
7. Compliance with Securities Act, Disposition of Warrant or
Shares of Common Stock.
(a) Compliance with Securities Act. The holder of this
Warrant, by accept agrees that this Warrant, and the shares of Common Stock to
be issued upon exercise hereof are being acquired for investment and that such
holder will not offer, sell or otherwise dispose of this Warrant, or any shares
of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Act. Upon exercise of this
Warrant, unless the Shares being acquired are registered under the Act or an
exemption from such registration is available, the holder hereof shall confirm
in writing, by executing the form attached as Schedule 1 to Exhibit A hereto,
that the shares of Common Stock so purchased are being acquired for investment
and not with a view toward distribution or resale. This Warrant and all shares
of Common Stock issued upon exercise of this Warrant (unless registered under
the Act) shall be stamped or imprinted with a legend in substantially the
following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO
SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION
STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH RE-
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<PAGE> 24
GISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM
THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING
WITH THE PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THESE
SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY."
In addition, in connection with the issuance of this Warrant, the
holder specifically represents to the Company by acceptance of this Warrant as
follows:
(1) The holder is aware of the Company's business affairs and
financial condition, and has acquired information about the Company sufficient
to reach an informed and knowledgeable decision to acquire this Warrant. The
holder is acquiring this Warrant for its own account for investment purposes
only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Act.
(2) The holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
holder's investment intent as, expressed herein. In this connection, the
holder understands that, in the view of the SEC, the statutory basis for such
exemption may be unavailable if the holder's representation was predicated
solely upon a present intention to hold the Warrant for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Warrant, or for a period of one
year or any other fixed period in the future.
(3) The holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and any applicable
state securities laws, or unless exemptions from registration are otherwise
available. Moreover, the holder understands that, except as provided in
Section 9 hereof, the Company is under no obligation to register this Warrant.
(4) The holder is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among
other things: The availability of certain public information about the Company,
the resale occurring not less than two years after the party has purchased and
paid for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three-month period
not exceeding the specified limitations stated therein.
(5) The holder further understands that at the time it wishes to
sell this Warrant there may be no public market upon which to make such a sale,
and that, even if such a public market then exists, the Company may not be
satisfying the current public information re-
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<PAGE> 25
quirements of Rule 144 and 144A, and that, in such event, the holder may be
precluded from selling this Warrant under Rule 144 and 144A even if the
two-year minimum holding period had been satisfied.
(6) The holder further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 and 144A are not
exclusive, the Staff of the SEC has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rule 144 and 144A will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own
risk.
(b) Disposition of Warrant or Shares. With respect to
any offer, sale or other disposition of this Warrant or any shares of Common
Stock acquired pursuant to the exercise of this Warrant prior to registration
of such Warrant or shares, the holder hereof and each subsequent holder of this
Warrant agrees to give written notice to the Company prior thereto, describing
briefly the manner thereof, together with a written opinion of such holder's
counsel, if reasonably requested by the Company, to the effect that such offer,
sale or other disposition may be effected without registration or qualification
(under the Act as then in effect or any federal or state law then in effect) of
this Warrant or such shares of Common Stock and indicating whether or not under
the Act certificates for this Warrant or such shares of Common Stock to be sold
or otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with such law.
Promptly upon receiving such written notice and reasonably satisfactory
opinion, if so requested, the Company, as promptly as practicable, shall notify
such holder that such holder may sell or otherwise dispose of this Warrant or
such shares of Common Stock, all in accordance with the terms of the notice
delivered to the Company. If a determination has been made pursuant to this
subsection (b) that the opinion of counsel for the holder is not reasonably
satisfactory to the Company, the Company shall so notify the holder promptly
after such determination has been made and shall specify in detail the legal
analysis supporting any such conclusion. Notwithstanding the foregoing, this
Warrant or such shares of Common Stock may, as to such federal laws, be
offered, sold or otherwise disposed of in accordance with Rule 144 or 144A
under the Act, provided that the Company shall have been furnished with such.
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 or 144A have been satisfied. Each
certificate representing this Warrant or the shares of Common Stock thus
transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a
legend as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the
holder, such legend is not required in order to ensure compliance with such
laws. The Company may issue stop transfer instructions to its transfer agent
in connection with such restrictions.
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<PAGE> 26
(c) Excepted Transfers. Neither any restrictions of any legend
described in this Warrant nor the requirements of Section 7(b) above shall
apply to any transfer without any additional consideration of, or grant of a
security interest in, this Warrant or any part hereof (i) to a partner of the
holder if the holder is a partnership, (ii) by the holder to a partnership of
which the holder is a general partner, or (iii) to any affiliate of the holder
if the holder is a corporation; provided, however, in any such transfer, the
transferee shall on the Company's request agree in writing to be bound by the
terms of this Warrant as if an original signatory hereto.
8. Rights as Shareholders, Information. No holder of this
Warrant, as such, shall be entitled to vote or receive dividends or be deemed
the holder of Common Stock or any other securities of the Company which may at
any time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the holder of this Warrant, as
such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to receive notice of meetings, or to receive dividends
or subscription rights or otherwise until this Warrant shall have been
exercised and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. Notwithstanding the foregoing, the Company
will transmit to the holder of this Warrant such information, documents and
reports as are generally distributed to the holders of any class or series of
the securities of the Company concurrently with the distribution thereof to the
shareholders.
9. Registration Rights. The Company covenants and agrees as
follows:
9.1 Definitions. For purposes of this Section 9:
(a) The term "Registrable Shares" means (i) the Common
Stock issuable or issued upon exercise or conversion of this Warrant or upon
exercise or conversion of the Other Warrants, and (ii) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, such Series Common
Stock;
(b) The term "Shareholder" means any person owning or
having the right to acquire Registrable Shares or any assignee thereof in
accordance with Paragraph 9.3 hereof; and
(c) The term "Registration Rights" means Section 9 (other
than Sections 9.1, 9.3 and 9.4) of the Agreement for the Purchase and Sale of
Series D Preferred Stock dated as of December 16, 1992 by and among the Company
and the investors who are signatories thereto (the "Purchase Agreement").
9.2 Grant of Rights. The Company hereby grants to the
Shareholders the rights set forth in the Registration Rights. A true and
complete copy of the Registration
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<PAGE> 27
Rights is attached hereto as Exhibit C. The Company represents and warrants to
the Shareholders that the Company has obtained all consents of parties to the
Purchase Agreement and of any other persons that are required in order for the
Registrable Shares to be included in the definition of "Registrable Securities"
and for the Shareholders to be included in the definition of "Holders," as such
terms are used in the Registration Rights.
9.3 Assignment of Registration Rights. Notwithstanding
any provision of the Registration Rights, the rights to cause the Company to
register Registrable Shares pursuant to the Registration Rights and this
Section 9 may be assigned by a Shareholder to a transferee or assignee of such
securities provided the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act.
9.4 No Conflicting Agreements. The Company represents
and warrants to the Shareholders that the Company is not a party to any
agreement that conflicts in any manner with the Shareholders' rights to cause
the Company to register Registrable Shares pursuant to the Registration Rights
and this Section 9. The Company covenants and agrees that it shall not, without
the prior written consent of the Shareholders holding a majority of the
outstanding Registrable Shares, amend, modify or restate the Registration
Rights if the rights of the Shareholders would be subordinated, diminished or
otherwise adversely affected in a different manner than other "Holders" of
"Registrable Securities" (as defined in the Registration Rights).
9.5 Rights and Obligations Survive Exercise and
Expiration of Warrant. The rights and obligations of the Company, of the
holder of this Warrant and of the Registrable Shares contained in the
Registration Rights and this Section 9 shall survive exercise, conversion and
expiration of this Warrant.
10. Additional Rights.
10.1 Secondary Sales. The Company agrees that it will not
interfere with the holder of this Warrant in obtaining liquidity if
opportunities to make secondary sales of the Company's securities become
available. To this end, the Company will promptly provide the holder of this
Warrant with the same notice (if any) as it provides to other holders of the
Company's securities of any offer to acquire from the Company's security
holders more than five percent (5%) of the total voting power of the Company
and will not interfere with the holder in arranging the sale of this Warrant to
the person or persons making such offer.
10.2 Mergers. The Company will provide the holder of this
Warrant with at least 30 days' notice of the terms and conditions of any
proposed (i) sale, lease, exchange, conveyance or other disposition of all or
substantially all of its property or business, or (ii)
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<PAGE> 28
merger into or consolidation with any other corporation (other than a
wholly-owned subsidiary of the Company), or any other transaction (including a
merger or other reorganization) or series of related transactions, in which
more than 50% of the voting power of the Company is disposed of.
10.3 Right to Convert Warrant into Common Stock: Net
Issuance.
(a) Right to Convert. In addition to and without
limiting the rights of the holder under the terms of this Warrant, the holder
shall have the right to convert this Warrant or any portion thereof (the
"Conversion Right") into shares of Common Stock as provided in this Section
10.3 at any time or from time to time during the term of this Warrant. Upon
exercise of the Conversion Right with respect to a particular number of shares
subject to this Warrant (the "Converted Warrant Shares"), the Company shall
deliver to the holder (without payment by the holder of any exercise price or
any cash or other consideration) (X) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing the value
of this Warrant (or the specified portion hereof) on the Conversion Date (as
defined in subsection (b) hereof), which value shall be determined by
subtracting (A) the aggregate Warrant Price of the Converted Warrant Shares
immediately prior to the exercise of the Conversion Right from (B) the
aggregate fair market value of the Converted Warrant Shares issuable upon
exercise of this Warrant (or the specified portion hereof) on the Conversion
Date (as herein defined) by (Y) the fair market value of one share of Common
Stock on the Conversion Date (as herein defined).
Expressed as a formula, such conversion shall be computed as follows:
X = B - A
-----
Y
Where: X = the number of shares Common Stock that may be issued
to holder
Y = the fair market value (FMV) of one share of Common Stock
A = the aggregate Warrant Price (i.e., Converted Warrant
Shares x Warrant Price)
B = the aggregate FMV (i.e., FMV x Converted Warrant Shares)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to
the holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined).
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<PAGE> 29
(b) Method of Exercise. The Conversion Right may
be exercised by the holder by the surrender of this Warrant at the principal
office of the Company together with a written statement specifying that the
holder thereby intends to exercise the Conversion Right and indicating the
number of shares subject to this Warrant which are being surrendered (referred
to in subsection (a) hereof as the Converted Warrant Shares) in exercise of the
Conversion Right. Such conversion shall be effective upon receipt by the
Company of this Warrant together with the aforesaid written statement, or on
such later date as is specified therein (the "Conversion Date"), and, at the
election of the holder hereof, may be made contingent upon the closing of the
sale of the Company's Common Stock to the public in a public offering pursuant
to a Registration Statement under the Act (a "Public Offering"). Certificates
for the shares issuable upon exercise of the Conversion Right and, if
applicable, a new warrant evidencing the balance of the shares remaining
subject to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the holder within thirty (30) days following the Conversion Date.
(c) Determination of Fair Market Value. For
purposes of this Section 10.3, "fair market value" of a share of Common Stock
as of a particular date (the "Determination Date") shall mean:
(i) If the Conversion Right is exercised in connection
with and contingent upon a Public Offering, and if the Company's Registration
Statement relating to such Public Offering ("Registration Statement") has been
declared effective by the SEC, then the initial "Price to Public" specified in
the final prospectus with respect to such offering.
(ii) If the Conversion Right is not exercised in
connection with and contingent upon a Public Offering, then as follows:
(A) If traded on a securities exchange, the fair market
value of the Common Stock shall be deemed to be the average of the
closing prices of the Common Stock on such exchange over the 30-day
period ending five business days prior to the Determination Date;
(B) If traded over-the-counter, the fair market value of
the Common Stock shall be deemed to be the average of the closing bid
prices of the Common Stock over the 30-day period ending five business
days prior to the Determination Date; and
(C) If there is no public market for the Common Stock,
then fair market value shall be determined by mutual agreement of the
holder of this Warrant and the Company, and if the holder and the
Company are unable to so agree, by an investment banker of national
reputation selected by the Company and reasonably acceptable to the
holder of this Warrant. The fees and expenses of any such investment
banker shall be borne equally by the Company and the holder of this
Warrant.
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<PAGE> 30
11. Representations and Warranties. The Company represents and
warrants to the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by
the Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and
other equitable remedies;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions
granted to or imposed upon the Common Stock and the holders thereof are as set
forth in the Charter, as amended to the Date of the Grant, a true and complete
copy of which has been delivered to the original holder of this Warrant and is
attached hereto as Exhibit B;
(d) The execution and delivery of this Warrant are not,
and the issuance of the Shares upon exercise of this Warrant in accordance with
the terms hereof will not be, inconsistent with the Company's Charter or
by-laws, do not and will not contravene any law, governmental rule or
regulation, judgment or order applicable to the Company, and do not and will not
conflict with or contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration or filing with or the taking of any action in
respect of or by, any Federal, state or local government authority or agency or
other person, except for the filing of notices pursuant to federal and state
securities laws, which filings will be effected by the time required thereby;
and
(e) There are no actions, suits, audits, investigations
or proceedings pending or, to the knowledge of the Company, threatened against
the Company in any court or before any governmental commission, board or
authority which, if adversely determined, will have a material adverse effect
on the ability of the Company to perform its obligations under this Warrant.
12. Modification and Waiver. This Warrant and any provision
hereof may be changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of the same is sought.
13. Notices. Any notice, request, communication or other document
required or permitted to be given or delivered to the holder hereof or the
Company shall be delivered, or shall be sent by certified or registered mail,
postage prepaid, to each such holder at its address
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<PAGE> 31
as shown on the books of the Company or to the Company at the address indicated
therefor on the signature page of this Warrant.
14. Binding Effect on Successors. This Warrant shall be binding
upon any corporation succeeding the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets, and all of the
obligations of the Company relating to the Common Stock issuable upon the
exercise or conversion of this Warrant shall survive the exercise, conversion
and termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the holder
hereof. The Company will, at the time of the exercise or conversion of this
Warrant, in whole or in part, upon request of the holder hereof but at the
Company's expense, acknowledge in writing its continuing obligation to the
holder hereof in respect of any rights (including, without limitation, any
right to registration of the shares of Registrable Securities) to which the
holder hereof shall continue to be entitled after such exercise or conversion
in accordance with this Warrant; provided, that the failure of the holder
hereof to make any such request shall not affect the continuing obligation of
the Company to the holder hereof in respect of such rights.
15. Lost Warrants or Stock Certificates. The Company covenants to
the holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
16. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
17. Governing Law. This Warrant shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the
laws of the State of California.
18. Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the holder hereof contained
herein shall survive the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained
herein shall survive indefinitely until, by their respective terms, they are no
longer operative.
19. Remedies. In case any one or more of the covenants and
agreements contained in this Warrant shall have been breached, the holders
hereof (in the case of a breach by the Company), or the Company (in the case of
a breach by a holder), may proceed to protect and enforce their or its rights
either by suit in equity and/or by action at law, including, but not limited
to, an action for damages as a result of any such breach and/or an action for
specific performance of any such covenant or agreement contained in this
Warrant.
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<PAGE> 32
20. Value. The Company and the holder of this Warrant agree that
the value of this Warrant and the Other Warrants on the Date of Grant is
$100.00.
21. Acceptance. Receipt of this Warrant by the holder hereof
shall constitute acceptance of and agreement to the foregoing terms and
conditions.
22. No Impairment of Rights. The Company will not, by amendment
of its Charter or through any other means, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against impairment.
CALYPTE BIOMEDICAL CORPORATION
By ___________________________________
Title
Address: 1440 Fourth Street
Berkeley, CA 94701
Date: ________________________ 199_
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<PAGE> 33
EXHIBIT A
NOTICE OF EXERCISE
To: Calypte Biomedical Corporation
1. The undersigned hereby elects to purchase _________________
shares of Common Stock of Calypte Biomedical Corporation pursuant to the terms
of the attached Warrant, and tenders herewith payment of the purchase price of
such shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below:
(Name)
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Schedule 1.
---------------------------------
(Signature)
----------------------------
(Date)
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<PAGE> 34
EXHIBIT A-1
NOTICE OF EXERCISE
To: Calypte Biomedical Corporation (the "Company")
1. Contingent upon and effective immediately prior to the closing
(the "Closing") of the Company's public offering contemplated by the
Registration Statement on Form S-____________, filed __________ 199__, the
undersigned hereby elects to purchase _____ shares of Common Stock of the
Company (or such lesser number of shares as may be sold on behalf of the
undersigned at the Closing) pursuant to the terms of the attached Warrant.
2. Please deliver to the custodian for the selling shareholders a
stock certificate representing such ________ shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $______________ or, if less, the net
proceeds due the undersigned from the sale of shares in the aforesaid public
offering. If such net proceeds are less than the purchase price for such
shares, the undersigned agrees to deliver the difference to the Company prior
to the Closing.
-------------------------------------
(Signature)
--------------------
(Date)
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<PAGE> 35
Schedule I
INVESTMENT REPRESENTATION STATEMENT
Purchaser:
Company: Calypte Biomedical Corporation
Security: Common Stock
Amount:
Date:
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:
(a) The Purchaser is aware of the Company's business affairs and
financial condition, and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities. The
Purchaser is purchasing the Securities for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Act").
(b) The Purchaser understands that the Securities have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the Purchaser's investment intent as expressed herein. In this
connection, the Purchaser understands that, in the view of the Securities and
Exchange Commission ("SEC"), the statutory basis for such exemption may be
unavailable if the Purchaser's representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.
(c) The Purchaser further understands that the Securities must be
held indefinitely unless subsequently registered under the Act or unless an
exemption from registration is otherwise available. Moreover, the Purchaser
understands that the Company is under no obligation to register the Securities
except as set forth in the Warrant under which the Securities are being
acquired. In addition, the Purchaser understands that the certificate
evidencing the Securities will be imprinted with the legend referred to in the
Warrant under which the Securities are being purchased.
(d) The Purchaser is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities"
16
<PAGE> 36
acquired, directly or indirectly, from the issuer thereof (or from an affiliate
of such issuer), in a non-public offering subject to the satisfaction of
certain conditions, if applicable, including, among other things: The
availability of certain public information about the Company, the resale
occurring not less than two years after the party has purchased and paid for
the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three-month period
not exceeding the specified limitations stated therein.
(e) The Purchaser further understands that at the time it wishes
to sell the Securities there may be no public market upon which to make such a
sale, and that, even if such a public market then exists, the Company may not
be satisfying the current public information requirements of Rule 144 and 144A,
and that, in such event, the Purchaser may be precluded from selling the
Securities under Rule 144 and 144A even if the two-year minimum holding period
had been satisfied.
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive,
the Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers
or sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
Purchaser:
------------------------------------
Date: 199
---------------------- ----
17
<PAGE> 37
Exhibit B
Restated Articles of Incorporation, as Amended
18
<PAGE> 38
Exhibit C
Section 9 of Series D Preferred Stock Agreement
19
<PAGE> 39
EXHIBIT B
LANDLORD WAIVER
<PAGE> 40
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
MMC/GATX PARTNERSHIP NO. I
c/o GATX CAPITAL CORPORATION, Agent
Four Embarcadero Center, Suite 2200
San Francisco, CA 94111
Attn: Contract Administration
CONSENT TO REMOVAL OF PERSONAL PROPERTY
KNOW ALL PERSONS BY THESE PRESENTS:
(i) The undersigned has an interest as owner and landlord in the
following described real property (the "Real Property"):
That certain real property in the County of Alameda, State of
California, with the street address of _________________ and more fully
described as:
SEE ATTACHMENT 1 ATTACHED HERETO FOR FULL LEGAL DESCRIPTION
(ii) Calypte Biomedical Corporation, a California corporation
("Lessee"), has entered into or will enter into a Master Equipment Lease
Agreement with MMC/GATX Partnership No. I ("Lessor") dated as of August 20,
1993 (the "Lease Agreement") and certain Schedules related thereto
(collectively the "Lease").
(iii) Lessor, as a condition to entering into the Lease Agreement,
requires that the undersigned consent to the removal by Lessor of the equipment
and other assets covered by the Lease (hereinafter called "Equipment") from the
Real Property, no matter how it is affixed thereto, and to the other matters
set forth below.
NOW, THEREFORE, for good and sufficient consideration, receipt of
which is hereby acknowledged, the undersigned consents to the placing of the
Equipment on the Real Property, and agrees with Lessor as follows:
<PAGE> 41
1. Undersigned waives and releases each and every right which
undersigned now has, under laws of California or by virtue of the lease for the
Real Property now in effect, to levy or distrain upon for rent, in arrears, in
advance or both, or to claim or assert title to the Equipment that is already
on said Real Property, or may hereafter be delivered or installed thereon.
2. The Equipment shall be considered to be personal property and
shall not be considered part of the Real Property regardless of whether or by
what means it is or may become attached or affixed to the Real Property.
3. The undersigned will permit Lessor to enter upon the Real
Property for the purpose of exercising any right it may have under the terms of
the Lease or otherwise, including, without limitation, the right to remove the
Equipment; provided, however, that if Lessor, in removing the Equipment damages
any improvements of the undersigned on the Real Property, Lessor will, at its
expense, cause same to be repaired.
4. This agreement shall be binding upon the heirs, successors and
assigns of the undersigned and shall inure to the benefit of Lessor and its
successors and assigns. Upon any sale, transfer or other assignment of the
Real Property, the undersigned shall notify the transferee of the existence of
this agreement and that it is binding on the transferee.
IN WITNESS WHEREOF, the undersigned has executed this instrument at _________,
this ___ day of _____, 19__.
By: _______________________________
Title: _______________________________
Date: _______________________________
The foregoing Consent must be acknowledged before a Notary Public.
[ATTACH NOTARY JURAT]
2
<PAGE> 42
ATTACHMENT 1
LEGAL DESCRIPTION OF PREMISES
[To Be Provided By Tenant]
<PAGE> 43
State of_____________________)
)
County of____________________)
On ________________________, 19_____ before me, the undersigned,
personally appeared _______________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature ____________________________________ (Seal)
State of_____________________)
)
County of____________________)
On ________________________, 19_____ before me, the undersigned,
personally appeared ______________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature ____________________________________ (Seal)
<PAGE> 44
EXHIBIT C
PURCHASE ORDER AND INVOICE ASSIGNMENT
<PAGE> 45
PURCHASE ORDER AND INVOICE ASSIGNMENT
THIS PURCHASE ORDER ASSIGNMENT, dated as of _____________, 199_ (this
"Assignment"), between Calypte Biomedical Corporation ("Assignor") and MMC/GATX
Partnership No. I ("Assignee");
WITNESSETH:
WHEREAS, Assignor has submitted its Purchase Orders and Invoices listed
in Schedule 1 hereto (collectively, the "Purchase Orders"), to ____________ (the
"Vendor") concerning certain Units of equipment (the "Units") listed in Schedule
1 hereto to be subject to a Master Equipment Lease Agreement, dated as of August
20, 1993 (the "Lease"), between Assignor and Assignee (all terms used but not
otherwise defined herein shall have the meaning given to them in the Lease):
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. Assignor does hereby sell, assign, transfer and set over unto
Assignee, all of the Assignor's rights to and interests in the Purchase Orders
as and to the extent that the same relates to the Units. The assignment herein
shall include, without limitation, the right of Assignee to purchase the Units
pursuant to the Purchase Orders and to take title to the Units, all claims for
damages in respect of the Units arising as a result of any default by Vendor
under the Purchase Orders, together with any and all rights of Assignor to
compel performance of the terms of the Purchase Orders in respect of the Units.
2. The exercise by Assignee of any of the rights assigned
hereunder shall not release Assignor from any of its duties or obligations to
Vendor under the Purchase Orders except to the extent that such exercise by
Assignee shall constitute performance of such duties and obligations.
3. Upon satisfaction of the conditions set forth in the
applicable Schedule to the Lease with respect to the Units, Assignee shall
purchase such Unit by paying or causing to be paid, by check mailed or
delivered to Vendor, on such date or thereafter as permitted by Vendor, an
amount equal to the purchase price of the Unit, as such amount may be adjusted
in accordance with the terms of the Purchase Orders and reflected on invoices
prepared by Vendor to Assignee on or before the date of delivery and acceptance
of the Unit.
4. Assignor agrees that it will, at any time and from time to
time, upon the written consent of Assignee, promptly and duly exercise and
deliver any and all such further instruments and documents and take such
further action as Assignee may reasonably request
<PAGE> 46
in order that Assignee may obtain the full benefits of this Agreement and of
the rights and powers herein granted.
5. Assignor does hereby represent and warrant that the Purchase
Orders are in full force and effect and that Assignor is not in default under
any of them. Assignor does hereby further represent and warrant that Assignor
has not assigned or pledged, and so long as this Assignment shall remain in
effect, will not assign or pledge, the whole or any part of the rights hereby
assigned or any of its rights with respect to the Units under the Purchase
Orders to anyone other than Assignee.
IN WITNESS WHEREOF, the parties hereto have caused this Purchase Order
Assignment to be duly executed as of the day and year first above written.
CALYPTE BIOMEDICAL CORPORATION MMC/GATX PARTNERSHIP NO. I
(Lessee) (Lessor)
By GATX Capital Corporation, Agent
By By
__________________________ _________________________________
Title Title
______________________ ______________________________
Acknowledged and Consented to this
____________________ day of ____________________, 199______
__________________________________________________(Vendor)
By: ___________________________________________________
Title: ___________________________________________________
<PAGE> 47
SCHEDULE I
TO
PURCHASE ORDER AND INVOICE ASSIGNMENT
<PAGE> 48
EXHIBIT D
BILL OF SALE
<PAGE> 49
BILL OF SALE
For valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, CALYPTE BIOMEDICAL CORPORATION ("Seller") does hereby
sell, grant, transfer and deliver to MMC/GATX Partnership No. I ("Buyer"), all
of Seller's right, title and interest in and to the property listed on Schedule
1 attached hereto (the "Equipment"), together with all warranties, guarantees
and indemnities owned by Seller with respect to the Equipment (the "Equipment
Warranties"), to have and to hold the Equipment and the Equipment Warranties
forever.
Seller covenants and warrants that:
(1) it is the owner of, and has absolute title to, the Equipment and the
Equipment Warranties, which, as of the date hereof, are free and clear of all
claims, liens and encumbrances;
(2) it has not made any prior sale, assignment, or transfer of the
Equipment or the Equipment Warranties;
(3) it has the present right, power and authority to sell the Equipment
and the Equipment Warranties to Buyer; and
(4) all action has been taken which is required to make this Bill of Sale
a legal, valid and binding obligation of Seller.
Seller shall forever warrant and defend the sale of the Equipment and the
Equipment Warranties to Buyer, its successors and assigns, against all claims,
liens and encumbrances and against any and every person or persons claiming any
interest in the Equipment or the Equipment Warranties, except with respect to
any claims, liens or encumbrances caused by any action of Buyer not
contemplated under that certain Master Equipment Lease Agreement dated as of
August 20, 1993 by and between Buyer and Seller (together with all Schedules
thereto, the "Lease") or under any agreement, instrument or other document
delivered in connection with the Lease.
This Bill of Sale shall be binding on the successors and assigns of the Seller
and shall inure to the benefit of the successors and assigns of Buyer.
Executed as of ______________________, 199__, at ___________________________.
CALYPTE BIOMEDICAL CORPORATION
By:_________________________________
Title:______________________________
<PAGE> 50
ANNEX A
TO
BILL OF SALE
<PAGE> 51
EXHIBIT E
SCHEDULE NO._______
TRUE LEASE
This Schedule No.______________ (this "Schedule"), dated
_____________, 199_ (such date being the "Delivery Date" for this Schedule), is
a part of the Master Equipment Lease Agreement, dated as of August 20, 1993
(the "Lease"), between MMC/GATX PARTNERSHIP NO. I ("Lessor") and CALYPTE
BIOMEDICAL CORPORATION ("Lessee") and is incorporated therein by this
reference. The terms used in this Schedule shall have the meanings given to
them in the Lease unless otherwise defined herein.
1. Description and Cost of Units
The Units subject to this Schedule are described in Annex A
hereto. The Lessor's Cost for this Schedule is:
$________________________.
2. Acceptance; Obligations
Lessee confirms that on the Delivery Date hereof (i)
all of the Units described in Annex A attached hereto were duly accepted by
Lessee and became subject to the Lease; and (ii) Lessee became obligated to
make Rental Payments to Lessor and perform certain other obligations with
respect to such Units as provided in the Lease and this Schedule.
3. Rent
(a) Commencing on ________________________, 19___ (the
"Rent Commencement Date") and on the first day of each month thereafter, the
rent for each Unit shall be paid by Lessee in advance by check (or if requested
by Lessor, by wire transfer), to the location prescribed by Lessor in writing,
in forty-two (42) consecutive installments, each of the first twelve (12) of
which shall be calculated based upon a Rent Factor of _____________________ %
of the Lessor's Cost for this Schedule and each of the following thirty (30) of
which shall be calculated based upon a Rent Factor of _______________ % of the
Lessor's Cost for this Schedule, which rentals are:
$ ___________________ for each of the first 12 such installments, and
$ ___________________ for each of the following 30 such installments.
(b) The Lease Term for the Units subject to this Schedule
is 42 months and commences on the Rent Commencement Date. The Lease Term for
the Units subject to this Schedule shall expire on:
_____________________, 199___
<PAGE> 52
(c) The Interim Rental Payment for the period from the
Delivery Date of this Schedule through the Rent Commencement Date, which is due
on the Delivery date, is:
$ ____________________________.
4. Conditions. Lessor's obligations under the Lease and
this Schedule are subject to the prior satisfaction of the following conditions
on or before the Delivery Date of this Schedule:
(a) Lessor shall have received, in form and substance
satisfactory to Lessor:
(i) All acceptable waivers of landlords and/or
mortgagees, substantially in the form of Exhibit B to the Lease.
(ii) To the extent Lessor deems it necessary, a release or
other arrangement with any other lessor or lender to the Company to
insure that there will be no impairment of Lessor's interest in the
Units subject to this or other Schedules.
(iii) A sales tax exemption or other similar certificate
from Lessee with respect to any Units included in this Schedule, but
not placed in service by Lessee before the Delivery Date of this
Schedule.
(iv) Copies of invoices, purchase orders and cancelled
checks relating to all Units being placed under the Lease pursuant to
a sale/leaseback on the Delivery Date of this Schedule and/or a
Purchase Order and Invoice Assignment from Lessee to Lessor
substantially in the form of Exhibit C to the Lease, instead of copies
of cancelled checks, for all Units to be purchased by Lessor directly
from the vendor.
(v) For all sales of Units by Lessee to Lessor, a Bill of
Sale, substantially in the form of Exhibit D to the Lease.
(vi) An executed copy of each manufacturer's service
contract entered into by Lessee pursuant to Section 9 of the Lease.
(b) Lessee shall have filed or recorded, to the
satisfaction of Lessor, all instruments and documents, including, but not
limited to, Financing Statements on Form UCC-1 and Releases and Termination
Statements on Form UCC-2, then deemed necessary by Lessor to preserve and
protect its rights hereunder, under the Uniform Commercial Code (including the
termination of any after-acquired property clause of third parties with respect
to any Unit) and, if applicable, not less than ten days before the Delivery
Date, a notice of the proposed transfer to Lessor by Lessee of title to the
Units to be placed under the Lease on such Delivery Date shall have been
published as and to the extent required by Section 3440 of the Civil Code of
the State of California.
2
<PAGE> 53
(c) Lessor shall have received all other documents and
Lessee shall have performed all other acts as Lessor shall have reasonably
requested to consummate the transaction contemplated by this Schedule.
(d) Except with the prior consent of Lessor which shall
not be unreasonably withheld, (i) Lessor's Cost for the Units subject to this
Schedule shall be equal to or exceed the Minimum Funding Amount, (ii) Lessor's
Cost for the Units subject to this Schedule when aggregated with Lessor's Cost
for all Units under all previously funded Schedules shall not exceed the
Lessor's Commitment set forth on the cover page of the Lease, and (iii) the
funding contemplated by this Schedule when aggregated with all previous
fundings under the Lease shall not exceed the Maximum Number of Fundings.
(e) Except with the prior written consent of Lessor which
shall not be unreasonably withheld, the aggregate of Lessor's Cost of all Units
subject to this Schedule and all Schedules previously made subject to the Lease
which consist of tenant improvements, computer software, equipment manufactured
specially for Lessee and/or delivery and installation costs shall not exceed
17.39% ($200,000 of Lessor's Cost if the entire Lessor's Commitment is funded)
of the total Lessor's Cost of Equipment funded.
(f) The Delivery Date of this Schedule shall not be later
than the Commitment Termination Date.
(g) On the Delivery Date of this Schedule no Event of
Default or event, which with the passage of time or the giving of notice or
both would constitute an Event of Default, shall exist.
(h) Except with the prior written consent of Lessor which
shall not be unreasonable withheld, all of the Units listed on Annex A shall
consist of Eligible Equipment.
5. Representations and Warranties. Lessee hereby makes
the representations and warranties set forth in Section 14 of the Lease.
6. Payments. Pursuant to Section 16(h) of the Lease,
all payments shall be made to Lessor c/o GATX Capital Corporation, as Agent,
Box 71316, Chicago, Illinois 60694 unless otherwise indicated in a writing
signed by Lessor.
3
<PAGE> 54
This Schedule is hereby duly executed by the parties hereto as of the
date first written above.
MMC/GATX PARTNERSHIP NO. I
By GATX Capital Corporation, as Agent
By _____________________________________
Title ___________________________________
CALYPTE BIOMEDICAL CORPORATION
By _____________________________________
Title ___________________________________
LESSEE'S ADDRESS
FOR NOTICES:
1440 Fourth Street
Berkeley, CA 94710
ATTN: Paul Siegel
Chief Financial Officer
Annex A - Description of Units
Annex B - Stipulated Loss Values
Annex C - Exceptions to Representations and Warranties
4
<PAGE> 55
ANNEX A
DESCRIPTION OF UNITS
Units are Located at Lessee's Offices at
______________________________________, CA ________________.
<TABLE>
<CAPTION>
Major
Equipment Description Manufacturer Identification Lessor's
Category of Unit or Vendor or Serial No. Cost
-------- ------- --------- ------------ ----
<S> <C> <C> <C> <C>
</TABLE>
Subtotal By
Equipment Category $_______________
5
<PAGE> 56
ANNEX B
STIPULATED LOSS VALUES
<TABLE>
<CAPTION>
Rental Stipulated Loss Value
Payment Date Percentage of Lessor's Cost
- ------------ ---------------------------
<S> <C>
</TABLE>
Thereafter _________________________________ *
* If Lessee renews the Lease, the Stipulated Loss Value during any
extended Term shall be an amount equal to the fair market value of the Units as
at the end of the applicable initial lease term, as reasonably determined by
Lessor, or in the event of disagreement between Lessor and Lessee, as
determined by the independent appraiser selected under the provisions of
Section 4(b) of the Lease; provided, however, that such Stipulated Loss Value
shall not be less than 25% of Lessor's Cost of the Units.
6
<PAGE> 57
ANNEX C
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
7
<PAGE> 58
EXHIBIT F
SECURITY DEPOSIT PLEDGE AGREEMENT
<PAGE> 59
SECURITY DEPOSIT PLEDGE AGREEMENT
AGREEMENT made and entered into as of August 20, 1993, by and between
Calypte Biomedical Corporation, a California corporation, with a principal
place of business at 1440 Fourth Street, Berkeley, CA 94710 ("Pledgor") and
MMC/GATX Partnership No. I, a California general partnership, with its place of
business at c/o GATX Capital Corporation, Four Embarcadero Center, San
Francisco, CA 94111, as Agent (the "Agent" or "Pledgee").
WITNESSETH
In consideration of, and as an inducement for Pledgee (i) to enter
into and advance funds under the Equipment Lease Agreement, dated as of August.
20, 1993 (as amended from time to time, the "Lease"), with Pledgor and one or
more Schedules in connection with the Lease (the "Schedules"), and (ii) to
secure the payment of rentals and performance of all Pledgor's other
obligations under this Agreement, the Lease and all exhibits and Schedules
thereto (collectively, the "Obligations"), Pledgor shall deposit and pledge
with Pledgee, on the Delivery Date of each Schedule, a cash collateral security
deposit (the "Security Deposit") in the amount of six percent (6%) of Lessor's
Cost under such Schedule (such terms and other terms not otherwise defined
herein having the meaning therefor as set forth in the Lease or the Schedules).
NOW THEREFORE, it is agreed:
1. Delivery of Deposit; Earnings. Pledgor shall, on or before
the Delivery Date of each Schedule, deliver the Security Deposit for such
Schedule to Pledgee to secure the due and punctual payment and performance of
the Obligations. Pledgor will receive simple interest on the Security Deposit
at a rate equal to four and one-half percent (4.5%) per annum (the
"Earnings"), such Earnings to be paid to Pledgor when and if the Security
Deposit is returned to Pledgor in accordance with the terms hereof. The Agent
may commingle the Security Deposit and Earnings with its own funds or funds of
the Pledgee or otherwise deposit such Security Deposit in any bank selected by
Pledgee.
2. Grant of Security. All funds held by the Pledgee,
representing the Security Deposit and any Earnings, shall constitute collateral
security for the performance by Pledgor of all its Obligations. Accordingly,
Pledgor assigns, delivers, pledges and conveys to Pledgee, and grants to
Pledgee a first priority, perfected security interest in and to the Security
Deposit and all Earnings for the prompt and unconditional fulfillment of the
Obligations.
1
<PAGE> 60
3. Deposit Defaults. If any default or Event of Default under
the Lease (each being a "Deposit Default") by Pledgor shall occur and be
continuing, earnings accrued on the Security Deposit for Pledgor's benefit
shall cease on notice of such Deposit Default to Pledgor. Pledgee may
thereupon apply the Security Deposit and any Earnings (accrued to the date of
such default notice), in such manner as Pledgee reasonably determines, towards
the satisfaction of the Obligations, including the payment of all costs and
expenses incurred by Pledgee as a result of any Deposit Default.
4. Enforcement. Pledgee shall have no duty to commence an action against
or seek recourse from Pledgor in the event of a Deposit Default first before
enforcing the provisions of this Agreement. The Obligations of Pledgor
shall be absolute and unconditional, and shall remain in force and effect
without regard to, and shall not be released or discharged or in any way
affected by:
(a) any amendment or modification of or supplement to
the Lease or any exhibit or Schedule thereto, or to this Agreement;
(b) any exercise or non-exercise of any right, remedy or
privilege under or in respect to this Agreement, the Lease or any exhibit or
Schedule thereto, or any other instrument provided for in any thereof, or any
waiver, consent, indulgence or actions or inaction with respect to any such
instrument;
(c) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar proceeding of or
against Pledgor; or
(d) any payment received by Pledgee and subsequently
refunded or returned to Pledgor or anyone on behalf of Pledgor.
5. Return of Security Deposit. So long as no Event of Default
shall have occurred and be continuing under the Lease, at the end of the Term
of each Schedule, the Security Deposit with respect to such Schedule shall be
applied first to Pledgor's end-of-Term obligations to Pledgee with respect to
such Schedule, and the balance (if any) of such Security Deposit with respect
to such Schedule and Earnings attributable thereto (less any portion thereof
applied or otherwise utilized pursuant to this Agreement) shall be delivered to
Pledgor.
6. Further Assurances. Pledgor will promptly execute and deliver
to Pledgee such further reasonable documents and take such further reasonable
action as Pledgee may request in order to more effectively carry out the intent
and purpose of this Agreement or an assignment of Pledgee's interest herein.
7. Notices. Notices required or permitted hereunder shall be
given in accordance with the Lease.
2
<PAGE> 61
8. Amendments and Supplements. No agreement shall be effective
to amend, supplement or discharge this Agreement in whole or in part unless
such agreement is in writing, signed by the parties hereto.
9. Assignability. This Agreement shall be binding upon and shall
inure to the benefit of the successors and assigns of the parties hereto.
Pledgor hereby acknowledges that Lessor's rights under this Agreement may be
assigned at any time to any person having an interest in the Lease.
10. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California.
11. Assignment. Pledgor shall not transfer or assign, in whole or
in part, any of its rights under this Agreement. Pledgee shall have the
absolute right to transfer or assign to any person, firm, partnership,
corporation or other entity, for security or otherwise, any or all of Pledgee's
obligations, benefits and interests under this Agreement without the consent of
or notice to Pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
MMC/GATX PARTNERSHIP NO. I
By GATX CAPITAL CORPORATION
as Agent for Pledgee
By:
-----------------------------
Its:
----------------------------
CALYPTE BIOMEDICAL CORPORATION,
Pledgor
By:
-----------------------------
Its:
----------------------------
3
<PAGE> 62
SECURITY DEPOSIT PLEDGE AGREEMENT
AGREEMENT made and entered into as of August 20, 1993, by and between
Calypte Biomedical Corporation, a California corporation, with a principal
place of business at 1440 Fourth Street, Berkeley, CA 94710 ("Pledgor") and
MMC/GATX Partnership No. I, a California general partnership, with its place of
business at c/o GATX Capital Corporation, Four Embarcadero Center, San
Francisco, CA 94111, as Agent (the "Agent" or "Pledgee").
WITNESSETH
In consideration of, and as an inducement for Pledgee (i) to enter into
and advance funds under the Equipment Lease Agreement, dated as of August 20,
1993 (as amended from time to time, the "Lease"), with Pledgor and one or more
Schedules in connection with the Lease (the "Schedules"), and (ii) to secure
the payment of rentals and performance of all Pledgor's other obligations under
this Agreement, the Lease and all exhibits and Schedules thereto
(collectively, the "Obligations"), Pledgor shall deposit and pledge with
Pledgee, on the Delivery Date of each Schedule, a cash collateral security
deposit (the "Security Deposit") in the amount of six percent (6%) of Lessor's
Cost under such Schedule (such terms and other terms not otherwise defined
herein having the meaning therefor as set forth in the Lease or the Schedules).
NOW THEREFORE, it is agreed:
1. Delivery of Deposit; Earnings. Pledgor shall, on or before
the Delivery Date of each Schedule, deliver the Security Deposit for such
Schedule to Pledgee to secure the due and punctual payment and performance of
the Obligations. Pledgor will receive simple interest on the Security Deposit
at a rate equal to four and one-half percent (4.5%) per annum (the "Earnings"),
such Earnings to be paid to Pledgor when and if the Security Deposit is
returned to Pledgor in accordance with the terms hereof. The Agent may
commingle the Security Deposit and Earnings with its own funds or funds of the
Pledgee or otherwise deposit such Security Deposit in any bank selected by
Pledgee.
2. Grant of Security. All funds held by the Pledgee,
representing the Security Deposit and any Earnings, shall constitute collateral
security for the performance by Pledgor of all its Obligations. Accordingly,
Pledgor assigns, delivers, pledges and conveys to Pledgee, and grants to
Pledgee a first priority, perfected security interest in and to the Security
Deposit and all Earnings for the prompt and unconditional fulfillment of the
Obligations.
1
<PAGE> 63
3. Deposit Defaults. If any default or Event of Default under
the Lease (each being a "Deposit Default") by Pledgor shall occur and be
continuing, earnings accrued on the Security Deposit for Pledgor's benefit
shall cease on notice of such Deposit Default to Pledgor. Pledgee may
thereupon apply the Security Deposit and any Earnings (accrued to the date of
such default notice), in such manner as Pledgee reasonably determines, towards
the satisfaction of the Obligations, including the payment of all costs and
expenses incurred by Pledgee as a result of any Deposit Default.
4. Enforcement. Pledgee shall have no duty to commence an action
against or seek recourse from Pledgor in the event of a Deposit Default first
before enforcing the provisions of this Agreement. The Obligations of Pledgor
shall be absolute and unconditional, and shall remain in force and effect
without regard to, and shall not be released or discharged or in any way
affected by:
(a) any amendment or modification of or supplement to
the Lease or any exhibit or Schedule thereto, or to this Agreement;
(b) any exercise or non-exercise of any right, remedy or
privilege under or in respect to this Agreement, the Lease or any exhibit or
Schedule thereto, or any other instrument provided for in any thereof, or any
waiver, consent, indulgence or actions or inaction with respect to any such
instrument;
(c) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar proceeding of or
against Pledgor; or
(d) any payment received by Pledgee and subsequently
refunded or returned to Pledgor or anyone on behalf of Pledgor.
5. Return of Security Deposit. So long as no Event of Default
shall have occurred and be continuing under the Lease, at the end of the Term
of each Schedule, the Security Deposit with respect to such Schedule shall be
applied first to Pledgor's end-of-Term obligations to Pledgee with respect to
such Schedule, and the balance (if any) of such Security Deposit with respect
to such Schedule and Earnings attributable thereto (less any portion thereof
applied or otherwise utilized pursuant to this Agreement) shall be delivered to
Pledgor.
6. Further Assurances. Pledgor will promptly execute and deliver
to Pledgee such further reasonable documents and take such further reasonable
action as Pledgee may request in order to more effectively carry out the intent
and purpose of this Agreement or an assignment of Pledgee's interest herein.
7. Notices. Notices required or permitted hereunder shall be
given in accordance with the Lease.
2
<PAGE> 64
8. Amendments and Supplements. No agreement shall be effective
to amend, supplement or discharge this Agreement in whole or in part unless
such agreement is in writing, signed by the parties hereto.
9. Assignability. This Agreement shall be binding upon and shall
inure to the benefit of the successors and assigns of the parties hereto.
Pledgor hereby acknowledges that Lessor's rights under this Agreement may be
assigned at any time to any person having an interest in the Lease.
10. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California.
11. Assignment. Pledgor shall not transfer or assign, in whole or
in part, any of its rights under this Agreement. Pledgee shall have the
absolute right to transfer or assign to any person, firm, partnership,
corporation or other entity, for security or otherwise, any or all of Pledgee's
obligations, benefits and interests under this Agreement without the consent of
or notice to Pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
MMC/GATX PARTNERSHIP NO. I
By GATX CAPITAL CORPORATION
as Agent for Pledgee
By: [SIG]
-----------------------------
Its: VP
----------------------------
CALYPTE BIOMEDICAL CORPORATION,
Pledgor
By: [SIG]
-----------------------------
ITS: CFO
----------------------------
3
<PAGE> 65
[LETTERHEAD]
VIA CALIFORNIA OVERNIGHT
Mr. Paul Siegel
Chief Financial Officer
Calypte Biomedical Corporation
1440 Fourth Street
Berkeley, California 94710
RE: MMC/GATX PARTNERSHIP NO. I - CALYPTE BIOMEDICAL CORPORATION
Dear Paul:
Enclosed are the following documents:
1. Original lessee's copy of Schedule No. 1 dated October 4, 1993.
2. Original lessee's copy of Schedule No. 2 dated October 4, 1993.
3. Original lessee's copy of Schedule No. 3 dated October 4, 1993.
4. Copy of Proof of Publication of the sale-leaseback notice.
5. Copy of the three financing statements filed in connection with the
above transaction.
Please call me or Tom Klein if you have questions.
Very truly yours,
[SIG]
William S. Veatch
WSV:ogw
Enclosures.
cc: Thomas Klein, Esq. - w/enc.
James V. Mitchell - w/o enc.
<PAGE> 66
SCHEDULE NO. 1
TRUE LEASE
This Schedule No. 1 (this "Schedule"), dated October 4, 1993
(such date being the "Delivery Date" for this Schedule), is a part of the
Master Equipment Lease Agreement, dated as of August 20, 1993 (the "Lease"),
between MMC/GATX PARTNERSHIP NO. I ("Lessor") and CALYPTE BIOMEDICAL
CORPORATION ("Lessee") and is incorporated therein by this reference. The
terms used in this Schedule shall have the meanings given to them in the Lease
unless otherwise defined herein.
1. Description and Cost of Units
The Units subject to this Schedule are described in Annex A
hereto. The Lessor's Cost for this Schedule is:
$ 38,012.90
2. Acceptance; Obligations
Lessee confirms that on the Delivery Date hereof (i) all of
the Units described in Annex A attached hereto were duly accepted by Lessee and
became subject to the Lease; and (ii) Lessee became obligated to make Rental
Payments to Lessor and perform certain other obligations with respect to such
Units as provided in the Lease and this Schedule.
3. Rent
(a) Commencing on October 4, 1993 (the "Rent Commencement
Date") and on the fourth day of each month thereafter, the rent for each Unit
shall be paid by Lessee in advance by check (or if requested by Lessor, by
wire transfer), to the location prescribed by Lessor in writing, in forty-two
(42) consecutive installments, each of the first twelve (12) of which shall be
calculated based upon a Rent Factor of 1.4946% of the Lessor's Cost for this
Schedule and each of the following thirty (30) of which shall be calculated
based upon a Rent Factor of 3.4825% of the Lessor's Cost for this Schedule,
which rentals are:
$ 568.14 for each of the first 12 such installments, and
$1,323.80 for each of the following 30 such installments.
(b) The Lease Term for the Units subject to this Schedule
is 42 months and commences on the Rent Commencement Date. The Lease Term for
the Units subject to this Schedule shall expire on:
April 3, 1997
<PAGE> 67
(c) The Interim Rental Payment for the period from the
Delivery Date of this Schedule through the Rent Commencement Date, which is due
on the Delivery date, is:
$0.
4. Conditions. Lessor's obligations under the Lease and
this Schedule are subject to the prior satisfaction of the following conditions
on or before the Delivery Date of this Schedule:
(a) Lessor shall have received, in form and substance
satisfactory to Lessor:
(i) All acceptable waivers of landlords and/or mortgagees,
substantially in the form of Exhibit B to the Lease.
(ii) To the extent Lessor deems it necessary, a release or
other arrangement with any other lessor or lender to the Company to
insure that there will be no impairment of Lessor's interest in the
Units subject to this or other Schedules.
(iii) A sales tax exemption or other similar certificate
from Lessee with respect to any Units included in this Schedule, but
not placed in service by Lessee before the Delivery Date of this
Schedule.
(iv) Copies of invoices, purchase orders and cancelled
checks relating to all Units being placed under the Lease pursuant to a
sale/leaseback on the Delivery Date of this Schedule and/or a Purchase
Order and Invoice Assignment from Lessee to Lessor substantially in the
form of Exhibit C to the Lease, instead of copies of cancelled checks,
for all Units to be purchased by Lessor directly from the vendor.
(v) For all sales of Units by Lessee to Lessor, a Bill of
Sale, substantially in the form of Exhibit D to the Lease.
(vi) An executed copy of each manufacturer's service
contract entered into by Lessee pursuant to Section 9 of the Lease.
(b) Lessee shall have filed or recorded, to the
satisfaction of Lessor, all instruments and documents, including, but not
limited to, Financing Statements on Form UCC-1 and Releases and Termination
Statements on Form UCC-2, then deemed necessary by Lessor to preserve and
protect its rights hereunder, under the Uniform Commercial Code (including the
termination of any after-acquired property clause of third parties with respect
to any Unit) and, if applicable, not less than ten days before the Delivery
Date, a notice of the proposed transfer to Lessor by Lessee of title to the
Units to be placed under the Lease on such Delivery Date shall have been
published as and to the extent required by Section 3440 of the Civil Code of
the State of California.
2
<PAGE> 68
(c) Lessor shall have received all other documents and
Lessee shall have performed all other acts as Lessor shall have reasonably
requested to consummate the transaction contemplated by this Schedule.
(d) Except with the prior consent of Lessor which shall
not be unreasonably withheld, (i) Lessor's Cost for the Units subject to this
Schedule shall be equal to or exceed the Minimum Funding Amount, (ii) Lessor's
Cost for the Units subject to this Schedule when aggregated with Lessor's Cost
for all Units under all previously funded Schedules shall not exceed the
Lessor's Commitment set forth on the cover page of the Lease, and (iii) the
funding contemplated by this Schedule when aggregated with all previous
fundings under the Lease shall not exceed the Maximum Number of Fundings.
(e) Except with the prior written consent of Lessor which
shall not be unreasonably withheld, the aggregate of Lessor's Cost of all Units
subject to this Schedule and all Schedules previously made subject to the Lease
which consist of tenant improvements, computer software, equipment manufactured
specially for Lessee and/or delivery and installation costs shall not exceed
17.39% ($200,000 of Lessor's Cost if the entire Lessor's Commitment is funded)
of the total Lessor's Cost of Equipment funded.
(f) The Delivery Date of this Schedule shall not be later
than the Commitment Termination Date.
(g) On the Delivery Date of this Schedule no Event of
Default or event, which with the passage of time or the giving of notice or
both would constitute an Event of Default, shall exist.
(h) Except with the prior written consent of Lessor which
shall not be unreasonable withheld, all of the Units listed on Annex A shall
consist of Eligible Equipment.
5. Representations and Warranties. Lessee hereby makes
the representations and warranties set forth in Section 14 of the Lease.
6. Payments. Pursuant to Section 16(h) of the Lease,
all payments shall be made to Lessor c/o GATX Capital Corporation, as Agent,
Box 71316, Chicago, Illinois 60694 unless otherwise indicated in a writing
signed by Lessor.
3
<PAGE> 69
This Schedule is hereby duly executed by the parties hereto as
of the date first written above.
MMC/GATX PARTNERSHIP NO. I
By GATX Capital Corporation, as Agent
By [SIG]
---------------------------------------
Title Vice President
------------------------------------
LESSEE'S ADDRESS
FOR NOTICES: CALYPTE BIOMEDICAL CORPORATION
1440 Fourth Street
Berkeley, CA 94710 By: [SIG]
ATTN: Paul Siegel --------------------------------------
Chief Financial Officer Title: Chief Financial Officer
-----------------------------------
Annex A - Description of Units
Annex B - Stipulated Loss Values
Annex C - Exceptions to Representations and Warranties
4
<PAGE> 70
ANNEX A
DESCRIPTION OF UNITS
Units are Located at Lessee's Offices at
, CA .
------------------------------------------------------ -----
<TABLE>
<CAPTION>
Major
Equipment Description Manufacturer Identification Lessor's
Category of Unit or Vendor or Serial No. Cost
<S> <C> <C> <C> <C>
</TABLE>
Subtotal By
Equipment Category $
--------------------
5
<PAGE> 71
22-Sep-93 CALYPTE BIOMEDICAL/SCHEDULE NO. 1 PAGE 1
ANNEX A
ALL UNITS LOCATED AT:
1440 FOURTH STREET
BERKELEY, CA 94710
<TABLE>
<CAPTION>
ASSET COST OF
# VENDOR QTY ITEM DESCRIPTION INVOICE # UNIT
- ----- ----------------------- ----- ------------------------ --------- ---------
TENANT IMPROVEMENTS
-------------------
<S> <C> <C> <C> <C> <C>
R-027 4 PHASE ELECTRIC GENERATOR HOOKUP & 1963 3,515.90
CLEANROOM POWER & LIGHTING
- --------------------------------------------------------------------------------------------------------------
R-027 DELUCCHI SHEET METAL STAINLESS STEEL FABRICATION 42937 162.00
FOR CLEANROOMS
- --------------------------------------------------------------------------------------------------------------
R-027 DELUCCHI SHEET METAL STAINLESS STEEL FABRICATION 42936 147.50
FOR CLEANROOMS
- --------------------------------------------------------------------------------------------------------------
R-027 DELUCCHI SHEET METAL STAINLESS STEEL FABRICATION 42950 92.00
FOR CLEANROOMS
- --------------------------------------------------------------------------------------------------------------
R-027 LO HEATH LABOR AND MATERIALS FOR 1445 281.00
PLUMBING SERVICES AS FOLLOWS:
RELOCATE 2 FIRE SPRINKLER HEADS
CAP 2 PVC PIPES
- --------------------------------------------------------------------------------------------------------------
R-027 LO HEATH LABOR AND MATERIALS FOR 1446 118.50
PLUMBING SERVICES AS FOLLOWS:
REBUILD 1 CHICAGO LAB FAUCET
REPAIR LEAK UNDER LAB SINK
- --------------------------------------------------------------------------------------------------------------
R-027 MICROCANTAMINATION INSTALLATION OF 1 TRAX IND. 549 100.00
CONTROL SERVICES PRODUCTS VINYL CURTAIN WALL
PANEL; MOVE 1 FRAME SUPPORT 6"
- --------------------------------------------------------------------------------------------------------------
R-027 PETER S. BERRY MATERIALS AND LABOR TO 15064 180.00
RELOCATE CENTRIFUGE OUTLET
TO CLEANROOM
- --------------------------------------------------------------------------------------------------------------
R-027 SAN BRUNO SHEET METAL INSTALLATION OF: 4/21/93 12,870.00
1 7 1/2 TON HEAT PUMP
1 5 TON HEAT PUMP ON ROOF AREA
W/SPRING ICELATORS
ALL DUCT WORK W/RETURN &
SUPPLY DAMPERS
FARR GLIDE FILTER BOXES
SUPPLY OUTSIDE AIR W/SEPARATE FILTERS
REMOVE OLD SKYLIGHT & INSTALL
2 X 4 & PLYWOOD W/METAL COVER
- --------------------------------------------------------------------------------------------------------------
R-027 SAN BRUNO SHEET METAL INSTALLED ALL DUCT WORK IN 4/30/93 8,865.00
CEILING AREA
- --------------------------------------------------------------------------------------------------------------
R-027 TRAX INDUSTRIAL 1 CUSTOM ANTI-STATIC SOFTWALL 4536 1,046.00
PRODUCTS PANEL FOR CLEANROOM
- --------------------------------------------------------------------------------------------------------------
M-027 4 PHASE ELECTRIC EMERGENCY POWER SET-UP 4/21/93 5,250.00
- --------------------------------------------------------------------------------------------------------------
M-026 J & M ENTERPRISES PHASE III - WAREHOUSE 1440.1 5,385.00
- --------------------------------------------------------------------------------------------------------------
GRAND TOTAL $38,012.90
==========
</TABLE>
<PAGE> 72
ANNEX B
STIPULATED LOSS VALUES
<TABLE>
<CAPTION>
Rental Stipulated Loss Value
Payment Date Percentage of Lessor's Cost
- ------------ ---------------------------
<S> <C>
</TABLE>
Thereafter___________________ *
* If Lessee renews the Lease, the Stipulated Loss Value during any
extended Term shall be an amount equal to the fair market value of the Units as
at the end of the applicable initial lease term, as reasonably determined by
Lessor, or in the event of disagreement between Lessor and Lessee, as
determined by the independent appraiser selected under the provisions of
Section 4(b) of the Lease; provided, however, that such Stipulated Loss Value
shall not be less than 25% of Lessor's Cost of the Units.
6
<PAGE> 73
ANNEX B
CALYPTE BIOMEDICAL
Stipulated Loss Values
<TABLE>
<CAPTION>
Stipulated Loss Value
Rental as a Percentage of
Payment Date Lessor's Cost
----------------- --------------------
<S> <C> <C> <C> <C>
(on or before) 1 Oct-93 100.00
2 Nov-93 99.89
3 Dec-93 99.77
4 Jan-94 99.66
5 Feb-94 99.54
6 Mar-94 99.43
7 Apr-94 99.31
8 May-94 99.20
9 Jun-94 99.08
10 Jul-94 98.97
11 Aug-94 98.85
12 Sep-94 98.74
13 Oct-94 98.62
14 Nov-94 98.51
15 Dec-94 98.39
16 Jan-95 98.28
17 Feb-95 98.16
18 Mar-95 98.05
19 Apr-95 95.45
20 May-95 92.84
21 Jun-95 90.19
22 Jul-95 87.53
23 Aug-95 84.84
24 Sep-95 82.11
25 Oct-95 79.37
26 Nov-95 76.59
27 Dec-95 73.78
28 Jan-96 70.95
29 Feb-96 68.08
30 Mar-96 65.18
31 Apr-96 62.24
32 May-96 59.30
33 Jun-96 56.31
34 Jul-96 53.32
35 Aug-96 50.29
36 Sep-96 47.23
37 Oct-96 44.15
38 Nov-96 41.04
39 Dec-96 37.88
40 Jan-97 34.72
41 Feb-97 31.52
42 Mar-97 28.28
43 Apr-97 and Thereafter 25.00
</TABLE>
* If Lessee renews the Lease, the Stipulated Loss Value during any extended
Term shall be an amount equal to the fair market value of the Units as at the
end of the applicable initial lease term, as reasonably determined by Lessor,
or in the event of disagreement between Lessor and Lessee, as determined by the
independent appraiser selected under the provisions of Section 4(b) of the
Lease; provided, however, that such Stipulated Loss Value shall not be less
than 25% of Lessor's Cost of the Units.
<PAGE> 74
ANNEX C
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
NONE
7
<PAGE> 75
SCHEDULE NO. 2
TRUE LEASE
This Schedule No. 2 (this "Schedule"), dated October 4, 1993
(such date being the "Delivery Date" for this Schedule), is a part of the
Master Equipment Lease Agreement, dated as of August 20, 1993 (the "Lease"),
between MMC/GATX PARTNERSHIP NO. I ("Lessor") and CALYPTE BIOMEDICAL
CORPORATION ("Lessee") and is incorporated therein by this reference. The terms
used in this Schedule shall have the meanings given to them in the Lease unless
otherwise defined herein.
1. Description and Cost of Units
The Units subject to this Schedule are described in
Annex A hereto. The Lessor's Cost for this Schedule is:
$148,871.25
2. Acceptance; Obligations
Lessee confirms that on the Delivery Date hereof (i)
all of the Units described in Annex A attached hereto were duly accepted by
Lessee and became subject to the Lease; and (ii) Lessee became obligated to
make Rental Payments to Lessor and perform certain other obligations with
respect to such Units as provided in the Lease and this Schedule.
3. Rent
(a) Commencing on October 4, 1993 (the "Rent Commencement
Date") and on the fourth day of each month thereafter, the rent for each Unit
shall be paid by Lessee in advance by check (or if requested by Lessor, by wire
transfer), to the location prescribed by Lessor in writing, in forty-two (42)
consecutive installments, each of the first twelve (12) of which shall be
calculated based upon a Rent Factor of 1.4946% of the Lessor's Cost for this
Schedule and each of the following thirty (30) of which shall be calculated
based upon a Rent Factor of 3.4825% of the Lessor's Cost for this Schedule,
which rentals are:
$2,225.03 for each of the first 12 such installments, and
$5,184.44 for each of the following 30 such installments.
(b) The Lease Term for the Units subject to this Schedule
is 42 months and commences on the Rent Commencement Date. The Lease Term for
the Units subject to this Schedule shall expire on:
April 3, 1997
<PAGE> 76
(c) The Interim Rental Payment for the period from the
Delivery Date of this Schedule through the Rent Commencement Date, which is due
on the Delivery date, is:
$0.
4. Conditions. Lessor's obligations under the Lease and
this Schedule are subject to the prior satisfaction of the following conditions
on or before the Delivery Date of this Schedule:
(a) Lessor shall have received, in form and substance
satisfactory to Lessor:
(i) All acceptable waivers of landlords and/or
mortgagees, substantially in the form of Exhibit B to the Lease.
(ii) To the extent Lessor deems it necessary, a release or
other arrangement with any other lessor or lender to the Company to insure that
there will be no impairment of Lessor's interest in the Units subject to this
or other Schedules.
(iii) A sales tax exemption or other similar certificate
from Lessee with respect to any Units included in this Schedule, but not placed
in service by Lessee before the Delivery Date of this Schedule.
(iv) Copies of invoices, purchase orders and cancelled
checks relating to all Units being placed under the Lease pursuant to a
sale/leaseback on the Delivery Date of this Schedule and/or a Purchase Order
and Invoice Assignment from Lessee to Lessor substantially in the form of
Exhibit C to the Lease, instead of copies of cancelled checks, for all Units to
be purchased by Lessor directly from the vendor.
(v) For all sales of Units by Lessee to Lessor, a Bill of
Sale, substantially in the form of Exhibit D to the Lease.
(vi) An executed copy of each manufacturer's service
contract entered into by Lessee pursuant to Section 9 of the Lease.
(b) Lessee shall have filed or recorded, to the
satisfaction of Lessor, all instruments and documents, including, but not
limited to, Financing Statements on Form UCC-1 and Releases and Termination
Statements on Form UCC-2, then deemed necessary by Lessor to preserve and
protect its rights hereunder, under the Uniform Commercial Code (including the
termination of any after-acquired property clause of third parties with respect
to any Unit) and, if applicable, not less than ten days before the Delivery
Date, a notice of the proposed transfer to Lessor by Lessee of title to the
Units to be placed under the Lease on such Delivery Date shall have been
published as and to the extent required by Section 3440 of the Civil Code of
the State of California.
2
<PAGE> 77
(c) Lessor shall have received all other documents and
Lessee shall have performed all other acts as Lessor shall have reasonably
requested to consummate the transaction contemplated by this Schedule.
(d) Except with the prior consent of Lessor which shall
not be unreasonably withheld, (i) Lessor's Cost for the Units subject to this
Schedule shall be equal to or exceed the Minimum Funding Amount, (ii) Lessor's
Cost for the Units subject to this Schedule when aggregated with Lessor's Cost
for all Units under all previously funded Schedules shall not exceed the
Lessor's Commitment set forth on the cover page of the Lease, and (iii) the
funding contemplated by this Schedule when aggregated with all previous
fundings under the Lease shall not exceed the Maximum Number of Fundings.
(e) Except with the prior written consent of Lessor which
shall not be unreasonably withheld, the aggregate of Lessor's Cost of all Units
subject to this Schedule and all Schedules previously made subject to the Lease
which consist of tenant improvements, computer software, equipment manufactured
specially for Lessee and/or delivery and installation costs shall not exceed
17.39% ($200,000 of Lessor's Cost if the entire Lessor's Commitment is funded)
of the total Lessor's Cost of Equipment funded.
(f) The Delivery Date of this Schedule shall not be later
than the Commitment Termination Date.
(g) On the Delivery Date of this Schedule no Event of
Default or event, which with the passage of time or the giving of notice or
both would constitute an Event of Default, shall exist.
(h) Except with the prior written consent of Lessor
which shall not be unreasonably withheld, all of the Units listed on Annex A
shall consist of Eligible Equipment.
5. Representations and Warranties. Lessee hereby makes
the representations and warranties set forth in Section 14 of the Lease.
6. Payments. Pursuant to Section 16(h) of the Lease,
all payments shall be made to Lessor c/o GATX Capital Corporation, as Agent,
Box 71316, Chicago, Illinois 60694 unless otherwise indicated in a writing
signed by Lessor.
3
<PAGE> 78
This Schedule is hereby duly executed by the parties hereto as
of the date first written above.
MMC/GATX PARTNERSHIP NO. I
By GATX Capital Corporation, as Agent
By /SIG/
----------------------------------
Title Vice President
----------------------------------
LESSEE'S ADDRESS
FOR NOTICES: CALYPTE BIOMEDICAL CORPORATION
1440 Fourth Street
Berkeley, CA 94710 By: /SIG/
ATTN: Paul Siegel --------------------------------
Chief Financial Officer
Title: Chief Financial Officer
--------------------------------
Annex A - Description of Units
Annex B - Stipulated Loss Values
Annex C - Exceptions to Representations and Warranties
4
<PAGE> 79
ANNEX A
DESCRIPTION OF UNITS
Units are Located at Lessee's Offices at ___________________________,
CA ______________.
<TABLE>
<CAPTION>
Major
Equipment Description Manufacturer Identification Lessor's
Category of Unit or Vendor or Serial No. Cost
- -------- ------- --------- -------------- ----
<S> <C> <C> <C> <C>
</TABLE>
Subtotal By
Equipment Category $_________________
5
<PAGE> 80
22-Sep-93 CALYPTE BIOMEDICAL/SCHEDULE NO. 2 PAGE 1
ANNEX A
ALL UNITS LOCATED AT:
1440 FOURTH STREET
BERKELEY, CA 94710
<TABLE>
<CAPTION>
ASSET COST OF
# VENDOR QTY ITEM DESCRIPTION MODEL # PO # INVOICE # SERIAL # UNIT
- ----- ------ --- ---------------- ------- ---- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LAB EQUIPMENT
- -------------
1065 AIR TECHNIQUES 1 PARTICULATE DET. UNIT - TDA-2E 10181 5276 10065 5,690.00
PORTABLE AEROSOL PHOTOMETER
WITH PARTS
1 PORTABLE AEROSOL GENERATO FTDA-4A 9912 1,250.00
- -------------------------------------------------------------------------------------------------------------------------------
1112 BAXTER 1 BIOFUGE 15 MICROCENTRIFUGE 10288 9014760 1,552.50
1 ANGLE ROTOR 240.00
- -------------------------------------------------------------------------------------------------------------------------------
1051 BIO-TEK 1 MICROPLATE READER EL312 10189 118914 85259 5,800.00
- -------------------------------------------------------------------------------------------------------------------------------
R-027 ENVIROFLEX 1 PORTABLE SOFTWALL CLEAN 10024 DEPOSIT 7,430.00
ROOM 16' X 10'; 4 HEPA; 3 LIGHTS 1025
1 PORTABLE SOFTWALL CLEAN 1031 7,019.00
ROOM 14' X 12'; 3 HEPA; 3 LIGHTS
1 PORTABLE SOFTWALL CLEAN 6,732.00
ROOM 12' X 11'; 3 HEPA; 3 LIGHTS
- -------------------------------------------------------------------------------------------------------------------------------
1123 ISCO 1 UA-6 DETECTOR WITH TYPE 11 10430 190666-00 3,500.00
OPTICAL UNIT
1 DIVERTER VALVE 275.00
- -------------------------------------------------------------------------------------------------------------------------------
KAYE INSTRUMENTS 1 PORTABLE VALIDATOR ASSY. 10294 53652 8,000.00
1 D4 PLUS ANALOG PANEL ASSY 820.00
1 PROBE ASSY 1,950.00
- -------------------------------------------------------------------------------------------------------------------------------
KAYE INSTRUMENTS 1 CALIBRATOR - 115V LTR-50 10294 53829 5,500.00
- -------------------------------------------------------------------------------------------------------------------------------
MED-EQUIP 1 STEAM GENERATOR 9291 5648 N3-13378 13,000.00
STAINLESS STEEL
- -------------------------------------------------------------------------------------------------------------------------------
1054 MILLIPORE 1 HPLC INERT PROTEIN 625 LC 10115 719923 24,109.00
PURIFICATION SYSTEM
1 WATERS FRACTION COLLECTOR 486 3,314.60
1 DUAL PEN RECORDER SE-120 2,009.70
- -------------------------------------------------------------------------------------------------------------------------------
1054 MILLIPORE 1 AP MINICOLUM 5MM X 100MM 10115 719237 215.30
1 DIVERTER VALVE 301.40
- -------------------------------------------------------------------------------------------------------------------------------
1114 PETERSON POWER SYSTEM 1 OLYMPIAN GENERATOR-DIESEL CD076 10087 E099301 2007042 15,276.18
ENGINE LIQUID COOLED
1115 1 OLYMPIAN DOUBLE WALL TANK CTS020Y 93A01704W 2,486.82
- -------------------------------------------------------------------------------------------------------------------------------
1052 SHANDON UPSHAW 1 CYTOSPIN 3 (SLIDE MAKING 10196 3575830 4,995.00
APPARATUS)
- -------------------------------------------------------------------------------------------------------------------------------
1113 SIERRA INSTRUMENTS 1 HOT WIRE ANEMOMETER 634 10519 41849 18593 1,675.00
- -------------------------------------------------------------------------------------------------------------------------------
1088 TERRA UNIVERSAL 1 DESICCATOR CHAMBER 10247 19065 2,088.00
PLEXIGLASS 45" X 24" X 60", 10
DOORS - HERMETICALLY SEALED
56 PLEXIGLASS SHELF W/ BOW GUARD 840.00
1 STAND: 3" H, STEEL 198.00
4 CASTER WITH BRAKE 128.00
- -------------------------------------------------------------------------------------------------------------------------------
1039 VWR 2 ROTARY CULTURE APPARATUS DECK 10117 5E-07 910.80
- -------------------------------------------------------------------------------------------------------------------------------
1111 VWR 1 WHEATON ROTARY CULTURE BASE 10249 5E-07 1,311.00
4 ROTARY CULTURE DECK 1,548.00
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 81
22-Sep-93 CALYPTE BIOMEDICAL/SCHEDULE NO. 2 PAGE 2
ANNEX A
ALL UNITS LOCATED AT:
1440 FOURTH STREET
BERKELEY, CA 94710
<TABLE>
<CAPTION>
ASSET COST OF
# VENDOR QTY ITEM DESCRIPTION MODEL # PO # INVOICE # SERIAL # UNIT
- ----- ------ --- ---------------- ------- ---- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1109 VWR 1 AQUASTAR TITRATOR C2000 10363 SE-07 5,328.00
1 AQUASTAR SOLID EVAPORATOR EV-6T 4,496.00
- -------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL LAB EQUIPMENT $139,989.30
-----------
- -------------------------------------------------------------------------------------------------------------------------------
FURNTURE
- --------
1074 AC PAPER 1 FILE-4 OR LATERAL; HON; LEGAL; 10238 110120 629.00
PUTTY
- -------------------------------------------------------------------------------------------------------------------------------
1086 NORLAB HANSON 2 LAB BENCHES; PROTABLE; TABLES 10411 1621 2,979.00
1087 AND SHELVES; BEIGE
- -------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL FURNITURE $3,608.00
---------
- -------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT
- ------------------
1120 COMPUTERWARE 1 CENTRIS 610 CPU W/80 MB 10542 500492 F2319LHBCN2 1,597.00
HARDDRIVE WITH 4MB MEMORY &
APPLE KEYBOARD II
- -------------------------------------------------------------------------------------------------------------------------------
1117 COMPUTERWARE 1 CENTRIS 610 CPU W/80 MB 10549 500589 F2314LAXCN2 1,398.00
HARDDRIVE AND APPLE KEYBOARD
- -------------------------------------------------------------------------------------------------------------------------------
1081 FUTURE NOW 1 SEIKO MONITOR-14" COLOR CM1445 10381 368215 27MS273B 480.00
- -------------------------------------------------------------------------------------------------------------------------------
1121 FUTURE NOW 1 SEIKO MONITOR-14" COLOR CM1445 10548 S0400477 26M5093B 480.00
1118 1 SEIKO MONITOR-14" COLOR CM1445 27M5693B 480.00
- -------------------------------------------------------------------------------------------------------------------------------
1082 MAC PRO SYSTEMS 1 MAC IISI 40/3 10380 JW0279 FC2252XTC56 838.95
- -------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL COMPUTERS $5,273.95
---------
GRAND TOTAL $148,871.25
===========
</TABLE>
<PAGE> 82
ANNEX B
STIPULATED LOSS VALUES
Rental Stipulated Loss Value
Payment Date Percentage of Lessor's Cost
- ------------ ---------------------------
Thereafter ________________________________ *
* If Lessee renews the Lease, the Stipulated Loss Value during any
extended Term shall be an amount equal to the fair market value of the Units as
at the end of the applicable initial lease term, as reasonably determined by
Lessor, or in the event of disagreement between Lessor and Lessee, as
determined by the independent appraiser selected under the provisions of
Section 4(b) of the Lease; provided, however, that such Stipulated Loss Value
shall not be less than 25% of Lessor's Cost of the Units.
6
<PAGE> 83
ANNEX B
CALYPTE BIOMEDICAL
Stipulated Loss Values
<TABLE>
<CAPTION>
Stipulated Loss Value
Rental as a Percentage of
Payment Date Lessor's Cost
----------------- ------------------
<S> <C> <C> <C> <C>
(on or before) 1 Oct-93 100.00
2 Nov-93 99.89
3 Dec-93 99.77
4 Jan-94 99.66
5 Feb-94 99.54
6 Mar-94 99.43
7 Apr-94 99.31
8 May-94 99.20
9 Jun-94 99.08
10 Jul-94 98.97
11 Aug-94 98.85
12 Sep-94 98.74
13 Oct-94 98.62
14 Nov-94 98.51
15 Dec-94 98.39
16 Jan-95 98.28
17 Feb-95 98.16
18 Mar-95 98.05
19 Apr-95 95.45
20 May-95 92.84
21 Jun-95 90.19
22 Jul-95 87.53
23 Aug-95 84.84
24 Sep-95 82.11
25 Oct-95 79.37
26 Nov-95 76.59
27 Oct-95 73.78
28 Jan-96 70.95
29 Feb-96 68.08
30 Mar-96 65.18
31 Apr-96 62.24
32 May-96 59.30
33 Jun-96 56.31
34 Jul-96 53.32
35 Aug-96 50.29
36 Sep-96 47.23
37 Oct-96 44.15
38 Nov-96 41.04
39 Dec-96 37.88
40 Jan-97 34.72
41 Feb-97 31.52
42 Mar-97 28.28
43 Apr-97 and Thereafter 25.00
</TABLE>
* If Lessee renews the Lease, the Stipulated Loss Value during any extended
Term shall be an amount equal to the fair market value of the Units as at the
end of the applicable initial lease term, as reasonably determined by Lessor,
or in the event of disagreement between Lessor and Lessee, as determined by the
independent appraiser selected under the provisions of Section 4(b) of the
Lease; provided, however, that such Stipulated Loss Value shall not be less
than 25% of Lessor's Cost of the Units.
<PAGE> 84
ANNEX C
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
NONE
7
<PAGE> 85
SCHEDULE NO. 3
TRUE LEASE
This Schedule No. 3 (this "Schedule"), dated October 4, 1993 (such
date being the "Delivery Date" for this Schedule), is a part of the Master
Equipment Lease Agreement, dated as of August 20, 1993 (the "Lease"), between
MMC/GATX PARTNERSHIP NO. I ("Lessor") and CALYPTE BIOMEDICAL CORPORATION
("Lessee") and is incorporated therein by this reference. The terms used in
this Schedule shall have the meanings given to them in the Lease unless
otherwise defined herein.
1. Description and Cost of Units
The Units subject to this Schedule are described in Annex A
hereto. The Lessor's Cost for this Schedule is:
$38,297.00
2. Acceptance; Obligations
Lessee confirms that on the Delivery Date hereof (i) all of the Units
described in Annex A attached hereto were duly accepted by Lessee and became
subject to the Lease; and (ii) Lessee became obligated to make Rental Payments
to Lessor and perform certain other obligations with respect to such Units as
provided in the Lease and this Schedule.
3. Rent
(a) Commencing on October 4, 1993 (the "Rent Commencement
Date") and on the fourth day of each month thereafter, the rent for each Unit
shall be paid by Lessee in advance by check (or if requested by Lessor, by wire
transfer), to the location prescribed by Lessor in writing, in forty-two (42)
consecutive installments, each of the first twelve (12) of which shall be
calculated based upon a Rent Factor of 1.4946% of the Lessor's Cost for this
Schedule and each of the following thirty (30) of which shall be calculated
based upon a Rent Factor of 3.4825% of the Lessor's Cost for this Schedule,
which rentals are:
$ 572.39 for each of the first 12 such installments, and
$1,333.69 for each of the following 30 such installments.
(b) The Lease Term for the Units subject to this Schedule
is 42 months and commences on the Rent Commencement Date. The Lease Term for
the Units subject to this Schedule shall expire on:
April 3, 1997
<PAGE> 86
(c) The Interim Rental Payment for the period from the
Delivery Date of this Schedule through the Rent Commencement Date, which is due
on the Delivery date, is:
$0.
4. Conditions. Lessor's obligations under the Lease and
this Schedule are subject to the prior satisfaction of the following conditions
on or before the Delivery Date of this Schedule:
(a) Lessor shall have received, in form and substance
satisfactory to Lessor:
(i) All acceptable waivers of landlords and/or
mortgagees, substantially in the form of Exhibit B to the Lease.
(ii) To the extent Lessor deems it necessary, a
release or other arrangement with any other lessor or lender to the Company to
insure that there will be no impairment of Lessor's interest in the Units
subject to this or other Schedules.
(iii) A sales tax exemption or other similar
certificate from Lessee with respect to any Units included in this Schedule,
but not placed in service by Lessee before the Delivery Date of this Schedule.
(iv) Copies of invoices, purchase orders and
cancelled checks relating to all Units being placed under the Lease pursuant to
a sale/leaseback on the Delivery Date of this Schedule and/or a Purchase Order
and Invoice Assignment from Lessee to Lessor substantially in the form of
Exhibit C to the Lease, instead of copies of cancelled checks, for all Units
to be purchased by Lessor directly from the vendor.
(v) For all sales of Units by Lessee to Lessor, a
Bill of Sale, substantially in the form of Exhibit D to the Lease.
(vi) An executed copy of each manufacturer's
service contract entered into by Lessee pursuant to Section 9 of the Lease.
(b) Lessee shall have filed or recorded, to the
satisfaction of Lessor, all instruments and documents, including, but not
limited to, Financing Statements on Form UCC-1 and Releases and Termination
Statements on Form UCC-2, then deemed necessary by Lessor to preserve and
protect its rights hereunder, under the Uniform Commercial Code (including the
termination of any after-acquired property clause of third parties with respect
to any Unit) and, if applicable, not less than ten days before the Delivery
Date, a notice of the proposed transfer to Lessor by Lessee of title to the
Units to be placed under the Lease on such Delivery Date shall have been
published as and to the extent required by Section 3440 of the Civil Code of
the State of California.
2
<PAGE> 87
(c) Lessor shall have received all other documents and
Lessee shall have performed all other acts as Lessor shall have reasonably
requested to consummate the transaction contemplated by this Schedule.
(d) Except with the prior consent of Lessor which shall
not be unreasonably withheld, (i) Lessor's Cost for the Units subject to this
Schedule shall be equal to or exceed the Minimum Funding Amount, (ii) Lessor's
Cost for the Units subject to this Schedule when aggregated with Lessor's Cost
for all Units under all previously funded Schedules shall not exceed the
Lessor's Commitment set forth on the cover page of the Lease, and (iii) the
funding contemplated by this Schedule when aggregated with all previous
fundings under the Lease shall not exceed the Maximum Number of Fundings.
(e) Except with the prior written consent of Lessor which
shall not be unreasonably withheld, the aggregate of Lessor's Cost of all Units
subject to this Schedule and all Schedules previously made subject to the Lease
which consist of tenant improvements, computer software, equipment manufactured
specially for Lessee and/or delivery and installation costs shall not exceed
17.39% ($200,000 of Lessor's Cost if the entire Lessor's Commitment is funded)
of the total Lessor's Cost of Equipment funded.
(f) The Delivery Date of this Schedule shall not be later
than the Commitment Termination Date.
(g) On the Delivery Date of this Schedule no Event of
Default or event, which with the passage of time or the giving of notice or
both would constitute an Event of Default, shall exist.
(h) Except with the prior written consent of Lessor which
shall not be unreasonably withheld, all of the Units listed on Annex A shall
consist of Eligible Equipment.
5. Representations and Warranties. Lessee hereby makes the
representations and warranties set forth in Section 14 of the Lease.
6. Payments. Pursuant to Section 16(h) of the Lease, all payments
shall be made to Lessor c/o GATX Capital Corporation, as Agent, Box 71316,
Chicago, Illinois 60694 unless otherwise indicated in a writing signed by
Lessor.
3
<PAGE> 88
This Schedule is hereby duly executed by the parties hereto as of the
date first written above.
MMC/GATX PARTNERSHIP NO. I
By GATX Capital Corporation, as Agent
By [SIG]
---------------------------------------
Title VP
------------------------------------
CALYPTE BIOMEDICAL CORPORATION
By: [SIG]
---------------------------------------
Title: Chief Financial Officer
------------------------------------
LESSEE'S ADDRESS
FOR NOTICES:
1440 Fourth Street
Berkeley, CA 94710
ATTN: Paul Siegel
Chief Financial Officer
Annex A - Description of Units
Annex B - Stipulated Loss Values
Annex C - Exceptions to Representations and Warranties
4
<PAGE> 89
ANNEX A
DESCRIPTION OF UNITS
Units are Located at Lessee's Offices at ____________________,
CA _______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Major
Equipment Description Manufacturer Identification Lessor's
Category of Unit or Vendor or Serial No. Cost
- -------- ------- --------- ------------- ----
</TABLE>
Subtotal By
Equipment Category $ ______________________
5
<PAGE> 90
22-Sep-93 CALYPTE BIOMEDICAL/SCHEDULE NO. 3 PAGE 1
ANNEX A
ALL UNITS LOCATED AT:
1440 FOURTH STREET
BERKELEY, CA 94710
<TABLE>
<CAPTION>
ASSET
# VENDOR QTY ITEM DESCRIPTION MODEL # PO # INVOICE # SERIAL #
- ----- ------ --- ---------------- ------- ---- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
LAB EQUIPMENT
- -------------
1034 COLE-PARMER 1 SCALE MIXER, STIR PAK 115 W/ 10012 1500795 M92002749
CONTROLLER, MOTOR, SUPPORT
PLATFORM, PIVOT MOUNT & CLAMP
- ----------------------------------------------------------------------------------------------------------------------------------
1067 FISHER 1 CORROSIVE SAFETY CABINET 9768 982505
- ----------------------------------------------------------------------------------------------------------------------------------
1016 FISHER 1 PH METER 340 10001 1426579
- ----------------------------------------------------------------------------------------------------------------------------------
1038 FORMA 1 INCUBATOR--REACH IN LARGE 9906 2375900 36069
CAPACITY 32 C.F.
1 RECORDER
- ----------------------------------------------------------------------------------------------------------------------------------
1036 HARRIS MANUFACTURING 1 FREEZER CHEST--50C 9978 49995 P23C-138269-Pt
- ----------------------------------------------------------------------------------------------------------------------------------
1040 SCIENTIFIC INSTRUMENTS 1 OLYMPUS MICROSCOPE-- 10025 78497
FLUORESCENT WITH ACCESSORIES
- ----------------------------------------------------------------------------------------------------------------------------------
1039 VWR 1 WHEATON ROTARY CULTURE BASE 9996 45976860
1 ROTARY CULTURE DECK
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
FURNITURE
- ---------
1024 AC PAPER & SUPPLY 1 SCHWAB INSULATE LEGAL FILE 4CFC-5000 9940 106317
CABINET 4 DRAWER PUTTY
- ----------------------------------------------------------------------------------------------------------------------------------
1022 AC PAPER 1 FILE CABINET--INSULATED 4DR. 9940 107401
LATERAL; PUTTY LEGAL
- ----------------------------------------------------------------------------------------------------------------------------------
AS-008 CV INSTALLATIONS 2 HERMAN MILLER WORKSTATIONS 10133 4/6/93
8' x 10' FOR FAX & PRINTER; GRAY
- ----------------------------------------------------------------------------------------------------------------------------------
1013 SAM CLAR OFFICE FURNITURE 1 DESK--WOOD 36X72 USED 9926 41118
1014 1 CREDENZA--WOOD USED
1042 1 FILE--2 DR LATERAL WOOD
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT
- ----------------
1041 TAYLOR MADE 1 CANNON PLAIN PAPER FAX L775 10010 PUR. SPEC.
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT
- ------------------
1044 COMPUTERWARE 1 TRINITRON MONITOR--14" COLOR 9931 679050 S1237RK04
1008 1 APPLE MONITOR--12" MONOCHROME SG2341VVC97
- ----------------------------------------------------------------------------------------------------------------------------------
1010 COMPUTERWARE (UNION BANK) 1 MAC IIsi CPU W/40MB HARD DRIVE II SI 9859 678183 FC2234C1C56
1084 1 MAC IIsi CPU W/40MB HARD DRIVE II SI FC22347FC56
1011 1 MAC IIsi CPU W/40MB HARD DRIVE II SI FC22335YC56
1007 1 MAC IIsi CPU W/40MB HARD DRIVE II SI FC22347BC56
- ----------------------------------------------------------------------------------------------------------------------------------
1009 PERIPHERAL LAND INCORPORATED 1 INFINITY EXTERNAL DRIVE 88-R/44 9896 94549 16055
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ASSET COST OF NBV
# VENDOR QTY ITEM DESCRIPTION UNIT COST
- ----- ------ --- ---------------- ------- ----
<S> <C> <C> <C> <C> <C>
LAB EQUIPMENT
- -------------
1034 COLE-PARMER 1 SCALE MIXER, STIR PAK 115 W/ $ 721.00 $ 692.00
CONTROLLER, MOTOR, SUPPORT
PLATFORM, PIVOT MOUNT & CLAMP
- ------------------------------------------------------------------------------------------------------------
1067 FISHER 1 CORROSIVE SAFETY CABINET 405.00 384.00
- ------------------------------------------------------------------------------------------------------------
1016 FISHER 1 PH METER 495.30 454.00
- ------------------------------------------------------------------------------------------------------------
1038 FORMA 1 INCUBATOR--REACH IN LARGE 6,028.00 5,777.00
CAPACITY 32 C.F.
1 RECORDER 719.00 659.00
- ------------------------------------------------------------------------------------------------------------
1036 HARRIS MANUFACTURING 1 FREEZER CHEST--50C 3,194.00 3,088.00
- ------------------------------------------------------------------------------------------------------------
1040 SCIENTIFIC INSTRUMENTS 1 OLYMPUS MICROSCOPE-- 13,829.00 13,253.00
FLUORESCENT WITH ACCESSORIES
- ------------------------------------------------------------------------------------------------------------
1039 VWR 1 WHEATON ROTARY CULTURE BASE 1,249.00 1,186.00
1 ROTARY CULTURE DECK 379.00 354.00
- ------------------------------------------------------------------------------------------------------------
SUBTOTAL LAB EQUIPMENT $27,019.30 $25,827.00
---------- ----------
- ------------------------------------------------------------------------------------------------------------
FURNITURE
- ---------
1024 AC PAPER & SUPPLY 1 SCHWAB INSULATE LEGAL FILE 929.25 852.00
CABINET 4 DRAWER PUTTY
- ------------------------------------------------------------------------------------------------------------
1022 AC PAPER 1 FILE CABINET--INSULATED 4DR. 445.00 408.00
LATERAL; PUTTY LEGAL
- ------------------------------------------------------------------------------------------------------------
AS-008 CV INSTALLATIONS 2 HERMAN MILLER WORKSTATIONS 2,500.00 2,292.00
8' x 10' FOR FAX & PRINTER; GRAY
- ------------------------------------------------------------------------------------------------------------
1013 SAM CLAR OFFICE FURNITURE 1 DESK--WOOD 36X72 USED 299.95 270.00
1014 1 CREDENZA--WOOD USED 299.95 270.00
1042 1 FILE--2 DR LATERAL WOOD 174.95 157.00
- ------------------------------------------------------------------------------------------------------------
SUBTOTAL FURNITURE $4,649.10 $4,249.00
--------- ---------
- ------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT
- ----------------
1041 TAYLOR MADE 1 CANNON PLAIN PAPER FAX 4,068.00 3,729.00
- ------------------------------------------------------------------------------------------------------------
SUBTOTAL OFFICE EQUIPMENT $4,068.00 $3,729.00
--------- ---------
- ------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT
- ------------------
1044 COMPUTERWARE 1 TRINITRON MONITOR--14" COLOR 529.00 476.00
1008 1 APPLE MONITOR--12" MONOCHROME 199.00 179.00
- ------------------------------------------------------------------------------------------------------------
1010 COMPUTERWARE (UNION BANK) 1 MAC IIsi CPU W/40MB HARD DRIVE II SI 899.00 824.00
1084 1 MAC IIsi CPU W/40MB HARD DRIVE II SI 899.00 824.00
1011 1 MAC IIsi CPU W/40MB HARD DRIVE II SI 899.00 824.00
1007 1 MAC IIsi CPU W/40MB HARD DRIVE II SI 899.00 824.00
- ------------------------------------------------------------------------------------------------------------
1009 PERIPHERAL LAND INCORPORATED 1 INFINITY EXTERNAL DRIVE 590.00 541.00
- ------------------------------------------------------------------------------------------------------------
SUBTOTAL COMPUTER EQUIPMENT $4,914.00 $4,492.00
--------- ---------
GRAND TOTAL $40,650.40 $38,297.00
---------- ----------
</TABLE>
<PAGE> 91
ANNEX B
STIPULATED LOSS VALUES
Rental Stipulated Loss Value
Payment Date Percentage of Lessor's Cost
- ------------ ---------------------------
Thereafter ___________________________ *
*If Lessee renews the Lease, the Stipulated Loss Value during any
extended Term shall be an amount equal to the fair market value of the Units as
at the end of the applicable initial lease term, as reasonably determined by
Lessor, or in the event of disagreement between Lessor and Lessee, as
determined by the independent appraiser selected under the provisions of
Section 4(b) of the Lease; provided, however, that such Stipulated Loss Value
shall not be less than 25% of Lessor's Cost of the Units.
6
<PAGE> 92
ANNEX B
CALYPTE BIOMEDICAL
Stipulated Loss Values
<TABLE>
<CAPTION>
Stipulated Loss Value
Rental as a Percentage of
Payment Date Lessor's Cost
----------------- ------------------
<S> <C> <C> <C> <C>
(on or before) 1 Oct-93 100.00
2 Nov-93 99.89
3 Dec-93 99.77
4 Jan-94 99.66
5 Feb-94 99.54
6 Mar-94 99.43
7 Apr-94 99.31
8 May-94 99.20
9 Jun-94 99.08
10 Jul-94 98.97
11 Aug-94 98.85
12 Sep-94 98.74
13 Oct-94 98.62
14 Nov-94 98.51
15 Dec-94 98.39
16 Jan-95 98.28
17 Feb-95 98.16
18 Mar-95 98.05
19 Apr-95 95.45
20 May-95 92.84
21 Jun-95 90.19
22 Jul-95 87.53
23 Aug-95 84.84
24 Sep-95 82.11
25 Oct-95 79.37
26 Nov-95 76.59
27 Oct-95 73.78
28 Jan-96 70.95
29 Feb-96 68.08
30 Mar-96 65.18
31 Apr-96 62.24
32 May-96 59.30
33 Jun-96 56.31
34 Jul-96 53.32
35 Aug-96 50.29
36 Sep-96 47.23
37 Oct-96 44.15
38 Nov-96 41.04
39 Dec-96 37.88
40 Jan-97 34.72
41 Feb-97 31.52
42 Mar-97 28.28
43 Apr-97 and Thereafter 25.00
</TABLE>
* If Lessee renews the Lease, the Stipulated Loss Value during any extended
Term shall be an amount equal to the fair market value of the Units as at the
end of the applicable initial lease term, as reasonably determined by Lessor,
or in the event of disagreement between Lessor and Lessee, as determined by the
independent appraiser selected under the provisions of Section 4(b) of the
Lease; provided, however, that such Stipulated Loss Value shall not be less
than 25% of Lessor's Cost of the Units.
<PAGE> 93
ANNEX C
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
NONE
7
<PAGE> 94
NOTICE OF INTENDED TRANSFER AND LEASE BACK
RE: 1440 4TH ST. BERKELEY, CA 94710
SALE DATE: OCTOBER 2, 1993
CNS118716
PROOF OF PUBLICATION
STATE OF CALIFORNIA
Alameda County, ss
RONALD J. LEWIS of said County,
does hereby certify
That he is and was during all times herein mentioned a citizen of the United
States over the age of 21 years and neither a party to nor in anyway interested
in the matter or action herein set forth and is and was competent to be a
witness in said matter or action.
That he is now and at all times herein mentioned was the principal clerk of The
Independent Berkeley Student Publishing Co., Inc., publishers of The Daily
Californian which is and was at all times herein mentioned a newspaper of
general circulation printed and published daily in the City of Berkeley, County
of Alameda, State of California, and as such principal clerk, has now and at all
times had charge of all legal notices and advertisements in said newspaper, that
said The Daily Californian is now and was at all times herein mentioned a
newspaper of general circulation as that term is defined by Section 6000 of the
Government Code and as provided by said Section, is and at all of said times was
published for the dissemination of local and telegraphic news and intelligence
of a general character, having a bona fide subscription list of paying
subscribers, and is not and at none of said times was devoted to the interests
or published for the entertainment or instruction of a particular class,
profession, trade, calling, race, or denomination, or for any number of such
classes, professions, trades, callings, race, or denominations, that at all
times said newspaper has been established, printed and published at regular
intervals in said County and State, for more than one year preceding the date of
the first publication of the notice herein mentioned, that said notice was set
in type no smaller than nonpareil, and was preceded with words printed in black
face type no smaller than nonpareil describing and expressing in general terms
and purpose and character of the notice intended to be given.
THAT THE
NOTICE OF INTENDED TRANSFER AND LEASEBACK
RE; 1440 4TH ST. BERKELEY, CA 94710
SALE DATE: OCTOBER 2, 1993
of which the annexed is a printed copy, was published in said newspaper and not
in any supplement thereof on the following dates to wit:
9/22/93
I certify (or declare) under penalty of perjury that the foregoing is true and
correct.
Dated at Berkeley, California this 22ND day of SEPTEMBER 1993.
Signed [SIG]
------------------------------------------------------------
NOTICE OF INTENDED
TRANSFER AND LEASEBACK
Notice is hereby given that Calypte Biomedical Corporation, a
California corporation, (the "Transferer"), whose address is 1440 Fourth Street,
Berkeley, CA 94710, intends to transfer certain personal property to MMC/GATX
Partnership No. 1, a California partnership (the "Intended Transferee") whose
address is c/o GATX Capital Corporation, Four Embarcadero Center, Suite 2200,
San Francisco, California 94111; and that said intended Transferee (Leasor)
intends to leaseback to said Transferor (Leasee), the said personal property, a
general description of which is as follows, to wit: certain scientific
laboratory and test equipment, manufacturing equipment, tenant improvements,
fixtures, furniture and personal property, including, without limitation, a
portable aerosol photometer and generator, a biofuge 15 microcentrifuge, angle
rotor, a microplate reader, portable softwall clean rooms, UA-6 detector,
portable validator assy., probe assy., a calibrator, a steam generator, an HPLC
inert protein purification system, Olympian generator-diesel engine liquid
cooled, Aquastar titrator, Aquastar solid evaporator, stainless steel
fabrication for cleanrooms, rubber base to cleanroom, pipes and sprinkler heads,
faucet, and vinyl curtain wall panel.
The personal property to be transferred shall be located at the
premises of the Transferor at the following two locations: 1625 Harbor Bay
Parkway, Technology Center at Harbor Bay, Alameda, CA 94501; and 1440 4th
Street, Berkeley, CA 94710.
Such sale and leaseback transaction is to be consummated on or after
October 2, 1993. Dated: September 16, 1993.
MMC/GATX PARTNERSHIP NO. 1,
By GATX Capital Corporation,
as Agent
By: David G. Mayer
Name: David G. Mayer
Title: Assistant Secretary
CNS 1118716
<PAGE> 95
This FINANCING STATEMENT is presented for filing and will remain effective
with certain exceptions for a period of five years from the date of filing
pursuant to Section 9403 of the California Uniform Commercial Code.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR (LAST NAME FIRST--IF AN INDIVIDUAL) (LESSEE) 1A. SOCIAL SECURITY OR FEDERAL TAX NO.
CALYPTE BIOMEDICAL CORPORATION
- ----------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
1440 FOURTH STREET BERKELEY, CALIFORNIA 94710
- ----------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST--IF AN INDIVIDUAL) 2A. SOCIAL SECURITY OR FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
2B. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OR STYLES (IF ANY) 3A. FEDERAL TAX NUMBER
- ----------------------------------------------------------------------------------------------------------------------------------
4. (LESSOR) MMC/GATX PARTNERSHIP NO. I 4A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME c/o GATX CAPITAL CORPORATION, AS AGENT OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS FOUR EMBARCADERO CENTER, SUITE 2200
CITY SAN FRANCISCO STATE CALIFORNIA ZIP CODE 94111
- ----------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS
CITY STATE ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following types or items of property (include description of real property on which
located and owner of record when required by Instruction 4).
This filing is made for notice purposes only. The parties acknowledge and agree that the Master Equipment Lease Agreement is a
true lease and that, in accordance with Section 9-408 of the Uniform Commercial Code, the execution and filing of this Financing
Statement shall not of itself be a factor or evidence to the contrary. The parties acknowledge that the equipment and other
property covered by this Financing Statement shall be personal property and shall not constitute fixtures for any purposes and
that the execution of this Financing Statement shall not be used as evidence to the contrary.
See also "Schedule 1 to the Financing Statement" attached hereto and incorporated herein by this reference.
- ----------------------------------------------------------------------------------------------------------------------------------
7. CHECK [X] 7A. [X] PRODUCTS OF COLLATERAL 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH
IF APPLICABLE ARE ALSO COVERED INSTRUCTION 5(a) ITEM:
[ ] (1) [ ] (2) [ ] (3) [ ] (4)
- ----------------------------------------------------------------------------------------------------------------------------------
8. CHECK [X]
IF APPLICABLE [ ] DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SECTION 9105 (1) (n)
- ----------------------------------------------------------------------------------------------------------------------------------
9. CALYPTE BIOMEDICAL CORPORATION DATE: 9/27/93 C 10. THIS SPACE FOR USE OF FILING OFFICER
O (DATE, TIME, FILE NUMBER
By: [SIG] D AND FILING OFFICER)
SIGNATURE(S) OF DEBTOR(S) Title: CFO E
- ---------------------------------------------------------------------
CALYPTE BIOMEDICAL CORPORATION 1
TYPE OR PRINT NAME(S) OF DEBTOR(S)
- ------------------------------------------------------------- 2
3
SIGNATURE(S) OF SECURED PARTY(IES) 4
- -------------------------------------------------------------
MMC/GATX PARTNERSHIP NO. I 5
By: GATX Capital Corporation, as Agent
TYPE OR PRINT NAME(S) OF SECURED PARTY(IES) 6
=============================================================
11. Return copy to: 7
NAME / /
ADDRESS Robert F. McLaughlin 8
CITY Hosie, Wes, McLaughlin & Sacks
STATE One Sansome Street, 14th Floor 9
ZIP CODE San Francisco, CA 94104
/ / 0
=============================================================
FORM UCC-1--
Approved by the Secretary of State
==================================================================================================================================
(1) FILING OFFICER COPY
</TABLE>
[RECEIVED STAMP]
<PAGE> 96
This FINANCING STATEMENT is presented for filing and will remain effective
with certain exceptions for a period of five years from the date of filing
pursuant to Section 9403 of the California Uniform Commercial Code.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR (LAST NAME FIRST--IF AN INDIVIDUAL) (LESSEE) 1A. SOCIAL SECURITY OR FEDERAL TAX NO.
CALYPTE BIOMEDICAL CORPORATION
- ----------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
1440 FOURTH STREET BERKELEY, CALIFORNIA 94710
- ----------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST--IF AN INDIVIDUAL) 2A. SOCIAL SECURITY OR FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
2B. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OR STYLES (IF ANY) 3A. FEDERAL TAX NUMBER
- ----------------------------------------------------------------------------------------------------------------------------------
4. (LESSOR) MMC/GATX PARTNERSHIP NO. I 4A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME c/o GATX CAPITAL CORPORATION, AS AGENT OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS FOUR EMBARCADERO CENTER, SUITE 2200
CITY SAN FRANCISCO STATE CALIFORNIA ZIP CODE 94111
- ----------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS
CITY STATE ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following types or items of property (include description of real property on which
located and owner of record when required by Instruction 4).
This filing is made for notice purposes only. The parties acknowledge and agree that the Master Equipment Lease Agreement is a
true lease and that, in accordance with Section 9-408 of the Uniform Commercial Code, the execution and filing of this Financing
Statement shall not of itself be a factor or evidence to the contrary. The parties acknowledge that the equipment and other
property covered by this Financing Statement shall be personal property and shall not constitute fixtures for any purposes and
that the execution of this Financing Statement shall not be used as evidence to the contrary.
See also "Schedule 1 to the Financing Statement" attached hereto and incorporated herein by this reference.
- ----------------------------------------------------------------------------------------------------------------------------------
7. CHECK [X] 7A. [X] PRODUCTS OF COLLATERAL 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH
IF APPLICABLE ARE ALSO COVERED INSTRUCTION 5(a) ITEM:
[ ] (1) [ ] (2) [ ] (3) [ ] (4)
- ----------------------------------------------------------------------------------------------------------------------------------
8. CHECK [X]
IF APPLICABLE [ ] DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SECTION 9105 (1) (n)
- ----------------------------------------------------------------------------------------------------------------------------------
9. CALYPTE BIOMEDICAL CORPORATION DATE: 9/27/93 C 10. THIS SPACE FOR USE OF FILING OFFICER
O (DATE, TIME, FILE NUMBER
By: [SIG] D AND FILING OFFICER)
SIGNATURE(S) OF DEBTOR(S) Title: CFO E
- ---------------------------------------------------------------------
CALYPTE BIOMEDICAL CORPORATION 1
TYPE OR PRINT NAME(S) OF DEBTOR(S)
- ------------------------------------------------------------- 2
3
SIGNATURE(S) OF SECURED PARTY(IES) 4
- -------------------------------------------------------------
MMC/GATX PARTNERSHIP NO. I 5 [STAMP]
By: GATX Capital Corporation, as Agent
TYPE OR PRINT NAME(S) OF SECURED PARTY(IES) 6
=============================================================
11. Return copy to: 7
NAME / /
ADDRESS Robert F. McLaughlin 8
CITY Hosie, Wes, McLaughlin & Sacks
STATE One Sansome Street, 14th Floor 9
ZIP CODE San Francisco, CA 94104
/ / 0
=============================================================
FORM UCC-1--
Approved by the Secretary of State
==================================================================================================================================
(4) FILE COPY--DEBTOR
</TABLE>
<PAGE> 97
SCHEDULE 1 TO
FINANCING STATEMENT
DEBTOR (Lessee): CALYPTE BIOMEDICAL CORPORATION
SECURED PARTY (Lessor): MMC/GATX Partnership No. I
ITEM 6: The items which shall constitute Lessor's equipment and other
personal property under the Master Equipment Lease Agreement, dated as of
August 20, 1993, as amended or supplemented from time to time (the "Lease"),
between MMC/GATX Partnership No. I ("MMC/GATX"), and Calypte Biomedical
Corporation ("Lessee," such term and other terms not defined herein having the
meaning referred to in the Lease) and the Schedules to the Lease, are as
follows:
All right, title and interest of the Lessee in and to each and every
Unit of equipment, tenant improvements, fixtures, software, parts, components
or personal property covered by the Lease (including all Schedules executed in
connection therewith) and as further described below (which such equipment,
tenant improvements, fixtures, software, parts, components and personal
property shall remain subject to the lien of the Lease until specifically
released in writing) whether or not any such equipment, tenant improvements,
fixtures, software, parts, components and personal property is thereafter
purported to be sold, destroyed, released, subleased, assigned, conveyed,
transferred or otherwise disposed of; together with all accessories, equipment,
parts and appurtenances appertaining or attached to any of such equipment,
tenant improvements, fixtures, software, parts, components or personal
property, whether now owned or hereafter acquired, and all substitutions,
renewals or replacements of and additions, improvements, accessions and
accumulations to any and all of such equipment, tenant improvements, fixtures,
software, parts, components or personal property, together with all the income,
profits and avails therefrom and the proceeds thereof, including, without
limitation, insurance payments and all proceeds from sales or other
dispositions thereof.
The Lease (including all schedules executed in connection therewith)
is intended by the parties thereto to be a true lease. However, if
notwithstanding the intent of the parties, the Lease is held to create a
secured financing or lease for security, the Lessee shall be deemed to have
granted to MMC/GATX a security interest in the above-described equipment and
other property.
The specific Units constituting equipment and personal property under
Schedules 1, 2 and 3 to the Lease include, without limitation, the equipment
and property set forth on the attached Annex A which is made a part hereof.
The equipment and personal property set forth on the attached Annex A
was sold by Lessee to Lessor prior to being leased by Lessor to Lessee.
Other Security:
That certain Security Deposit and proceeds thereof under the Security
Deposit Pledge Agreement, dated as of August 20, 1993, between MMC/GATX and
Lessee.
1
<PAGE> 98
22-Sep-93 CALYPTE BIOMEDICAL/SCHEDULE NO. 1 PAGE 1
ANNEX A
ALL UNITS LOCATED AT:
1440 FOURTH STREET
BERKELEY, CA 94710
<TABLE>
<CAPTION>
ASSET COST OF
# VENDOR QTY ITEM DESCRIPTION INVOICE # UNIT
- ----- ------ --- ---------------- --------- ---------
<S> <C> <C> <C> <C> <C>
TENANT IMPROVEMENTS
- -------------------
R-027 4 PHASE ELECTRIC GENERATOR HOOKUP & 1963 3,515.90
CLEANROOM POWER & LIGHTING
- --------------------------------------------------------------------------------------------------------------------------------
R-027 DELUCCHI SHEET METAL STAINLESS STEEL FABRICATION 42937 162.00
FOR CLEANROOMS
- --------------------------------------------------------------------------------------------------------------------------------
R-027 DELUCCHI SHEET METAL STAINLESS STEEL FABRICATION 42936 147.50
FOR CLEANRROMS
- --------------------------------------------------------------------------------------------------------------------------------
R-027 DELUCCHI SHEET METAL STAINLESS STEEL FABRICATION 42950 92.00
FOR CLEANROOMS
- --------------------------------------------------------------------------------------------------------------------------------
R-027 LO HEATH LABOR AND MATERIALS FOR 1445 281.00
PLUMBING SERVICES AS FOLLOWS:
RELOCATE 2 FIRE SPRINKLER HEADS
CAP 2 PVC PIPES
- --------------------------------------------------------------------------------------------------------------------------------
R-027 LO HEALTH LABOR AND MATERIALS FOR 1446 118.50
PLUMBING SERVICES AS FOLLOWS:
REBUILD 1 CHICAGO LAB FAUCET
REPAIR LEAK UNDER LAB SINK
- --------------------------------------------------------------------------------------------------------------------------------
R-027 MICROCANTAMINATION INSTALLATION OF 1 TRAX IND. 549 100.00
CONTROL SERVICES PRODUCTS VINYL CURTAIN WALL
PANEL; MOVE 1 FRAME SUPPORT 6"
- --------------------------------------------------------------------------------------------------------------------------------
R-027 PETER S. BERRY MATERIALS AND LABOR TO 15064 180.00
RELOCATE CENTRIFUGE OUTLET
TO CLEANROOM
- --------------------------------------------------------------------------------------------------------------------------------
R-027 SAN BRUNO SHEET METAL INSTALLATION OF: 4/21/93 12,870.00
1 7 1/2 TON HEAT PUMP
1 5 TON HEAT PUMP ON ROOF AREA
W/SPRING ICELATORS
ALL DUCT WORK W/RETURN &
SUPPLY DAMPERS
FARR GLIDE FILTER BOXES
SUPPLY OUTSIDE AIR W/SEPARATE FILTERS
REMOVE OLD SKYLIGHT & INSTALL
2 X 4 & PLYWOOD W/METAL COVER
- --------------------------------------------------------------------------------------------------------------------------------
R-027 SAN BRUNO SHEET METAL INSTALLED ALL DUCT WORK IN 4/30/93 8,865.00
CEILING AREA
- --------------------------------------------------------------------------------------------------------------------------------
R-027 TRAX INDUSTRIAL 1 CUSTOM ANTI-STATIC SOFTWALL 4536 1,046.00
PRODUCTS PANEL FOR CLEANROOM
- --------------------------------------------------------------------------------------------------------------------------------
M-027 4 PHASE ELECTRIC EMERGENCY POWER SET-UP 4/21/93 5,250.00
- --------------------------------------------------------------------------------------------------------------------------------
M-026 J&M ENTERPRISES PHASE III-WAREHOUSE 1440.1 5,385.00
- --------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL $38,012.90
==========
</TABLE>
<PAGE> 99
22-Sep-93 CALYPTE BIOMEDICAL/SCHEDULE NO. 2 PAGE 1
ANNEX A
ALL UNITS LOCATED AT:
1440 FOURTH STREET
BERKELEY, CA 94710
<TABLE>
<CAPTION>
ASSET COST OF
# VENDOR QTY ITEM DESCRIPTION MODEL # PO # INVOICE # SERIAL # UNIT
- ----- --------------------- ----- ------------------------ --------- ------ --------- -------- ---------
LAB EQUIPMENT
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1065 AIR TECHNIQUES 1 PARTICULATE DET. UNIT - TDA-2E 10181 6276 10065 5,690.00
PORTABLE AEROSOL PHOTOMETER
WITH PARTS
1 PORTABLE AEROSOL GENERATOR TDA-4A 9912 1,250.00
- ---------------------------------------------------------------------------------------------------------------------------------
1112 BAXTER 1 BIOFUGE 15 MICROCENTRIFUGE 10288 9014760 1,552.50
1 ANGLE ROTOR 240.00
- ---------------------------------------------------------------------------------------------------------------------------------
1051 BIO-TEK 1 MICROPLATE READER EL312 10189 118914 85259 5,800.00
- ---------------------------------------------------------------------------------------------------------------------------------
R-027 ENVIROFLEX 1 PORTABLE SOFTWALL CLEAN 10024 DEPOSIT 7,430.00
ROOM 16' X 10'; 4 HEPA; 3 LIGHTS 1025
1 PORTABLE SOFTWALL CLEAN 1031 7,019.00
ROOM 14' X 12'; 3 HEPA; 3 LIGHTS
1 PORTABLE SOFTWALL CLEAN 6,732.00
ROOM 12' X 11'; 3 HEPA; 3 LIGHTS
- ---------------------------------------------------------------------------------------------------------------------------------
1123 ISCO 1 UA-6 DETECTOR WITH TYPE 11 10430 190666-00 3,500.00
OPTICAL UNIT
1 DIVERTER VALVE 275.00
- ---------------------------------------------------------------------------------------------------------------------------------
KAYE INSTRUMENTS 1 PORTABLE VALIDATOR ASSY. 10294 53652 8,000.00
1 D4 PLUS ANALOG PANEL ASSY. 820.00
1 PROBE ASSY. 1,950.00
- ---------------------------------------------------------------------------------------------------------------------------------
KAYE INSTRUMENTS 1 CALIBRATOR - 115V LTR-50 10294 53829 5,500.00
- ---------------------------------------------------------------------------------------------------------------------------------
MED-EQUIP 1 STEAM GENERATOR 9291 5648 N3-13378 13,000.00
STAINLESS STEEL
- ---------------------------------------------------------------------------------------------------------------------------------
1054 MILLIPORE 1 HPLC INERT PROTEIN 625 LC 10115 719923 24,109.00
PURIFICATION SYSTEM
1 WATERS FRACTION COLLECTOR 486 3,314.60
1 DUAL PEN RECORDER SE-120 2,009.70
- ---------------------------------------------------------------------------------------------------------------------------------
1054 MILLIPORE 1 AP MINICOLUM 5MM X 100MM 10115 719237 215.30
1 DIVERTER VALVE 301.40
- ---------------------------------------------------------------------------------------------------------------------------------
1114 PETERSON POWER SYSTEM 1 OLYMPIAN GENERATOR - DIESEL CD075 10087 E099301 2007042 15,276.18
ENGINE LIQUID COOLED
1115 1 OLYMPIAN DOUBLE WALL TANK CTS020Y 93A01704W 2,486.82
- ---------------------------------------------------------------------------------------------------------------------------------
1052 SHANDON UPSHAW 1 CYTOSPIN 3 (SLIDE MAKING 10196 3575830 4,995.00
APPARATUS)
- ---------------------------------------------------------------------------------------------------------------------------------
1113 SIERRA INSTRUMENTS 1 HOT WIRE ANEMOMETER 634 10519 41849 18593 1,675.00
- ---------------------------------------------------------------------------------------------------------------------------------
1088 TERRA UNIVERSAL 1 DESICCATOR CHAMBER 10247 19065 2,088.00
PLEXIGLASS 45" X 24" X 60", 10
DOORS - HERMETICALLY SEALED
56 PLEXIGLASS SHELF W/80W GUARD 840.00
1 STAND; 3" H, STEEL 198.00
4 CASTER WITH BRAKE 128.00
- ---------------------------------------------------------------------------------------------------------------------------------
1039 VWR 2 ROTARY CULTURE APPARATUS DECK 10117 5E-07 910.80
- ---------------------------------------------------------------------------------------------------------------------------------
1111 VWR 1 WHEATON ROTARY CULTURE BASE 10249 5E-07 1,311.00
4 ROTARY CULTURE DECK 1,548.00
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 100
22-Sep-93 CALYPTE BIOMEDICAL/SCHEDULE NO. 2 PAGE 2
ANNEX A
ALL UNITS LOCATED AT:
1440 FOURTH STREET
BERKELEY, CA 94710
<TABLE>
<CAPTION>
ASSET COST OF
# VENDOR QTY ITEM DESCRIPTION MODEL # PO # INVOICE # SERIAL # UNIT
- ----- --------------------- ----- ------------------------ --------- ------ --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1109 VWR 1 AQUASTAR TITRATOR C2000 10363 5E-07 5,328.00
1 AQUASTAR SOLID EVAPORATOR EV-ST 4,496.00
- ---------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL LAB EQUIPMENT $139,989.30
-----------
- ---------------------------------------------------------------------------------------------------------------------------------
FURNITURE
- ---------
1074 AC PAPER 1 FILE - 4 DR LATERAL; HON; LEGAL; 10238 110120 629.00
PUTTY
- ---------------------------------------------------------------------------------------------------------------------------------
1086 NORLAB HANSON 2 LAB BENCHES; PROTABLE; TABLES 10411 1621 2,979.00
1087 AND SHELVES, BEIGE
- ---------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL FURNITURE $3,608.00
---------
- ---------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT
- ------------------
1120 COMPUTERWARE 1 CENTRIS 610 CPU W/80 MB 10542 500492 F2319LHBCN2 1,597.00
HARDDRIVE WITH 4MB MEMORY &
APPLE KEYBOARD II
- ---------------------------------------------------------------------------------------------------------------------------------
1117 COMPUTERWARE 1 CENTRIS 610 CPU W/80 MB 10549 500589 F2314LAXCN2 1,398.00
HARDDRIVE AND APPLE KEYBOARD
- ---------------------------------------------------------------------------------------------------------------------------------
1081 FUTURE NOW 1 SEIKO MONITOR - 14" COLOR CM1445 10381 368215 27M52738 480.00
- ---------------------------------------------------------------------------------------------------------------------------------
1121 FUTURE NOW 1 SEIKO MONITOR - 14" COLOR CM1445 10548 S0400477 26M50938 480.00
1118 1 SEIKO MONITOR - 14" COLOR CM1445 27M56938 480.00
- ---------------------------------------------------------------------------------------------------------------------------------
1082 MAC PRO SYSTEMS 1 MAC IISI 40/3 10380 JW0279 FC2252XTC56 838.95
- ---------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL COMPUTERS $5,273.95
---------
GRAND TOTAL $148,871.25
===========
</TABLE>
<PAGE> 101
22-Sep-93 CALYPTE BIOMEDICAL/SCHEDULE NO. 3 PAGE 1
ANNEX A
ALL UNITS LOCATED AT:
1440 FOURTH STREET
BERKELEY, CA 94710
<TABLE>
<CAPTION>
ASSET COST OF NBV
# VENDOR QTY ITEM DESCRIPTION MODEL # PO # INVOICE # SERIAL # UNIT COST
- ----- ------ --- ---------------- ------- ---- --------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LAB EQUIPMENT
- -------------
1034 COLE-PARMER 1 SCALE MIXER, STIR PAK 115 W/ 10012 1500795 M92002749 721.00 692.00
CONTROLLER, MOTOR, SUPPORT
PLATFORM, PIVOT MOUNT & CLAMP
- ------------------------------------------------------------------------------------------------------------------------------------
1067 FISHER 1 CORROSIVE SAFETY CABINET 9768 982505 405.00 384.00
- ------------------------------------------------------------------------------------------------------------------------------------
1016 FISHER 1 PH METER 340 10001 1428579 495.30 464.00
- ------------------------------------------------------------------------------------------------------------------------------------
1038 FORMA 1 INCUBATOR-REACH IN LARGE 9906 2375900 36069 6,028.00 5,777.00
CAPACITY 32 C.F.
1 RECORDER 719.00 659.00
- ------------------------------------------------------------------------------------------------------------------------------------
1036 HARRIS MANUFACTURING 1 FREEZER CHEST -50C 9976 49995 P23C-136269-P1 3,194.00 3,088.00
- ------------------------------------------------------------------------------------------------------------------------------------
1040 SCIENTIFIC INSTRUMENTS 1 OLYMPUS MICROSCOPE- 10025 78497 13,829.00 13,253.00
FLUORESCENT WITH ACCESSORIES
- ------------------------------------------------------------------------------------------------------------------------------------
1039 VWR 1 WHEATON ROTARY CULTURE BASE 9996 45976860 1,249.00 1,186.00
1 ROTARY CULTURE DECK 379.00 354.00
- ------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL LAB EQUIPMENT $27,019.30 $25,827.00
---------------------
- ------------------------------------------------------------------------------------------------------------------------------------
FURNITURE
- ---------
1024 AC PAPER & SUPPLY 1 SCHWAB INSULATE LEGAL FILE 4CFC-5000 9940 106317 929.25 852.00
CABINET 4 DRAWER PUTTY
- ------------------------------------------------------------------------------------------------------------------------------------
1022 AC PAPER 1 FILE CABINET-INSULATED 4DR 9940 107401 445.00 408.00
LATERAL; PUTTY LEGAL
- ------------------------------------------------------------------------------------------------------------------------------------
AS-008 CVL INSTALLATIONS 2 HERMAN MILLER WORKSTATIONS 10133 4/6/93 2,500.00 2,292.00
8' X 10' FOR FAX & PRINTER; GRAY
- ------------------------------------------------------------------------------------------------------------------------------------
1013 SAM CLAR OFFICE FURNITURE 1 DESK-WOOD 38X72 USED 9926 41118 299.95 270.00
1014 1 CREDENZA-WOOD USED 299.95 270.00
1042 1 FILE-2 DR LATERAL WOOD 174.95 157.00
- ------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL FURNITURE $4,649.10 $4,249.00
--------------------
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT
- ----------------
1041 TAYLOR MADE 1 CANNON PLAIN PAPER FAX L775 10010 PUR. SPEC. 4,068.00 3,729.00
- ------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL OFFICE EQUIPMENT $4,068.00 $3,729.00
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT
- ------------------
1044 COMPUTERWARE 1 TRINITRON MONITOR-14" COLOR 9931 679050 S1237RK04 529.00 476.00
1008 1 APPLE MONITOR-12" MONOCHROME SG2341VVC97 199.00 179.00
- ------------------------------------------------------------------------------------------------------------------------------------
1010 COMPUTERWARE (UNION BANK) 1 MAC IIsi CPU W/40MB HARD DRIVE II SI 9859 878183 FC2234C1C56 899.00 824.00
1084 1 MAC IIsi CPU W/40MB HARD DRIVE II SI FC22347FC56 899.00 824.00
1011 1 MAC IIsi CPU W/40MB HARD DRIVE II SI FC22335YC56 899.00 824.00
1007 1 MAC IIsi CPU W/40MB HARD DRIVE II SI FC22347BC56 899.00 824.00
- ------------------------------------------------------------------------------------------------------------------------------------
1009 PERIPHERAL LAND INCORPORATED 1 INFINITY EXTERNAL DRIVE 88-R/W44 9898 94549 16055 590.00 541.00
- ------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL COMPUTER EQUIPMENT $4,914.00 $4,492.00
--------------------
GRAND TOTAL $40,650.40 $38.297.00
=====================
</TABLE>
<PAGE> 102
This FINANCING STATEMENT is presented for filing and will remain effective
with certain exceptions for a period of five years from the date of filing
pursuant to Section 9403 of the California Uniform Commercial Code.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR (LAST NAME FIRST--IF AN INDIVIDUAL) (TRANSFEROR) 1A. SOCIAL SECURITY OR FEDERAL TAX NO.
CALYPTE BIOMEDICAL CORPORATION
- ----------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
1440 FOURTH STREET BERKELEY, CALIFORNIA 94710
- ----------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST--IF AN INDIVIDUAL) 2A. SOCIAL SECURITY OR FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
2B. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OR STYLES (IF ANY) 3A. FEDERAL TAX NUMBER
- ----------------------------------------------------------------------------------------------------------------------------------
4. (TRANSFEREE) MMC/GATX PARTNERSHIP NO. I 4A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME c/o GATX CAPITAL CORPORATION, AS AGENT OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS FOUR EMBARCADERO CENTER, SUITE 2200
CITY SAN FRANCISCO STATE CALIFORNIA ZIP CODE 94111
- ----------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS
CITY STATE ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following types or items of property (include description of real property on which
located and owner of record when required by Instruction 4).
See Exhibit A attached hereto and incorporated herein by this reference.
- ----------------------------------------------------------------------------------------------------------------------------------
7. CHECK [X] 7A. [X] PRODUCTS OF COLLATERAL 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH
IF APPLICABLE ARE ALSO COVERED INSTRUCTION 5(a) ITEM:
[ ] (1) [ ] (2) [ ] (3) [ ] (4)
- ----------------------------------------------------------------------------------------------------------------------------------
8. CHECK [X]
IF APPLICABLE [ ] DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SECTION 9105 (1) (n)
- ----------------------------------------------------------------------------------------------------------------------------------
9. CALYPTE BIOMEDICAL CORPORATION DATE: 9/27/93 C 10. THIS SPACE FOR USE OF FILING OFFICER
O (DATE, TIME, FILE NUMBER
By: [SIG] D AND FILING OFFICER)
SIGNATURE(S) OF DEBTOR(S) Title: CFO E
- ---------------------------------------------------------------------
CALYPTE BIOMEDICAL CORPORATION 1
TYPE OR PRINT NAME(S) OF DEBTOR(S)
- ------------------------------------------------------------- 2
3
SIGNATURE(S) OF SECURED PARTY(IES) 4
- -------------------------------------------------------------
MMC/GATX PARTNERSHIP NO. I 5
By: GATX Capital Corporation, as Agent
TYPE OR PRINT NAME(S) OF SECURED PARTY(IES) 6
=============================================================
11. Return copy to: 7
NAME / /
ADDRESS Robert F. McLaughlin 8
CITY Hosie, Wes, McLaughlin & Sacks
STATE One Sansome Street, 14th Floor 9
ZIP CODE San Francisco, CA 94104
/ / 0
=============================================================
FORM UCC-1--
Approved by the Secretary of State
==================================================================================================================================
(1) FILING OFFICER COPY
</TABLE>
[RECEIVED STAMP]
<PAGE> 103
This FINANCING STATEMENT is presented for filing and will remain effective
with certain exceptions for a period of five years from the date of filing
pursuant to Section 9403 of the California Uniform Commercial Code.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR (LAST NAME FIRST--IF AN INDIVIDUAL) (TRANSFEROR) 1A. SOCIAL SECURITY OR FEDERAL TAX NO.
CALYPTE BIOMEDICAL CORPORATION
- ----------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
1440 FOURTH STREET BERKELEY, CALIFORNIA 94710
- ----------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST--IF AN INDIVIDUAL) 2A. SOCIAL SECURITY OR FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
2B. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OR STYLES (IF ANY) 3A. FEDERAL TAX NUMBER
- ----------------------------------------------------------------------------------------------------------------------------------
4. (TRANSFEREE) MMC/GATX PARTNERSHIP NO. I 4A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME c/o GATX CAPITAL CORPORATION, AS AGENT OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS FOUR EMBARCADERO CENTER, SUITE 2200
CITY SAN FRANCISCO STATE CALIFORNIA ZIP CODE 94111
- ----------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS
CITY STATE ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following types or items of property (include description of real property on which
located and owner of record when required by Instruction 4).
See Exhibit A attached hereto and incorporated herein by this reference.
- ----------------------------------------------------------------------------------------------------------------------------------
7. CHECK [X] 7A. [X] PRODUCTS OF COLLATERAL 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH
IF APPLICABLE ARE ALSO COVERED INSTRUCTION 5(a) ITEM:
[ ] (1) [ ] (2) [ ] (3) [ ] (4)
- ----------------------------------------------------------------------------------------------------------------------------------
8. CHECK [X]
IF APPLICABLE [ ] DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SECTION 9105 (1) (n)
- ----------------------------------------------------------------------------------------------------------------------------------
9. CALYPTE BIOMEDICAL CORPORATION DATE: 9/27/93 C 10. THIS SPACE FOR USE OF FILING OFFICER
O (DATE, TIME, FILE NUMBER
By: [SIG] D AND FILING OFFICER)
SIGNATURE(S) OF DEBTOR(S) Title: CFO E
- ---------------------------------------------------------------------
CALYPTE BIOMEDICAL CORPORATION 1
TYPE OR PRINT NAME(S) OF DEBTOR(S)
- ------------------------------------------------------------- 2
3
SIGNATURE(S) OF SECURED PARTY(IES) 4
- -------------------------------------------------------------
MMC/GATX PARTNERSHIP NO. I 5 [STAMP]
By: GATX Capital Corporation, as Agent
TYPE OR PRINT NAME(S) OF SECURED PARTY(IES) 6
=============================================================
11. Return copy to: 7
NAME / /
ADDRESS Robert F. McLaughlin 8
CITY Hosie, Wes, McLaughlin & Sacks
STATE One Sansome Street, 14th Floor 9
ZIP CODE San Francisco, CA 94104
/ / 0
=============================================================
FORM UCC-1--
Approved by the Secretary of State
==================================================================================================================================
(4 FILE COPY--DEBTOR
</TABLE>
<PAGE> 104
EXHIBIT A TO
FINANCING STATEMENT
DEBTOR (Transferor): Calypte Biomedical Corporation
SECURED PARTY (Transferee): MMC/GATX Partnership No. I
ITEM 6
NOTICE OF INTENDED
TRANSFER AND
LEASEBACK
Notice is hereby given that Calypte Biomedical Corporation, a
California corporation, (the "Transferor"), whose address is 1440 Fourth
Street, Berkeley, CA 94710, intends to transfer certain personal property to
MMC/GATX Partnership No. I, a California partnership (the "Intended
Transferee") whose address is c/o GATX Capital Corporation, Four Embarcadero
Center, Suite 2200, San Francisco, California 94111; and that said intended
Transferee (Lessor) intends to leaseback to said Transferor (Lessee), the said
personal property, a general description of which is as follows, to wit:
certain scientific laboratory and test equipment, manufacturing equipment,
tenant improvements, fixtures, furniture and personal property, including,
without limitation, a portable aerosol photometer and generator, a biofuge 15
microcentrifuge, angle rotor, a microplate reader, portable softwall clean
rooms, UA-6 detector, portable validator assy., probe assy., a calibrator, a
steam generator, an HPLC inert protein purification system, Olympian
generator-diesel engine liquid cooled, Aquastar titrator, Aquastar solid
evaporator, stainless steel fabrication for cleanrooms, rubber base to
cleanroom, pipes and sprinkler heads, faucet, and vinyl curtain wall panel.
The personal property to be transferred shall be located at the
premises of the Transferor at the following two locations:
1625 Harbor Bay Parkway, Technology Center at Harbor Bay, Alameda, CA
94501; and
1440 4th Street, Berkeley, CA 94710.
Such sale and leaseback transaction is to be consummated on or after
October 2, 1993.
<PAGE> 105
FIXTURE FILING
This FINANCING STATEMENT is presented for filing and will remain effective
with certain exceptions for a period of five years from the date of filing
pursuant to Section 9403 of the California Uniform Commercial Code.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR (LAST NAME FIRST--IF AN INDIVIDUAL) (LESSEE) 1A. SOCIAL SECURITY OR FEDERAL TAX NO.
CALYPTE BIOMEDICAL CORPORATION
- ----------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
1440 FOURTH STREET BERKELEY, CALIFORNIA 94710
- ----------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST--IF AN INDIVIDUAL) 2A. SOCIAL SECURITY OR FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
2B. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OR STYLES (IF ANY) 3A. FEDERAL TAX NUMBER
- ----------------------------------------------------------------------------------------------------------------------------------
4. (LESSOR) MMC/GATX PARTNERSHIP NO. I 4A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME c/o GATX CAPITAL CORPORATION, AS AGENT OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS FOUR EMBARCADERO CENTER, SUITE 2200
CITY SAN FRANCISCO STATE CALIFORNIA ZIP CODE 94111
- ----------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS
CITY STATE ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following types or items of property (include description of real property on which
located and owner of record when required by Instruction 4).
This filing is made for notice purposes only. The parties acknowledge and agree that the Master Equipment Lease Agreement is a
true lease and that, in accordance with Section 9-408 of the Uniform Commercial Code, the execution and filing of this Financing
Statement shall not of itself be a factor or evidence to the contrary.
See also "Schedule 1 to the Financing Statement" attached hereto and incorporated herein by this reference.
This is a fixture filing.
- ----------------------------------------------------------------------------------------------------------------------------------
7. CHECK [X] 7A. [X] PRODUCTS OF COLLATERAL 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH
IF APPLICABLE ARE ALSO COVERED INSTRUCTION 5(a) ITEM:
[ ] (1) [ ] (2) [ ] (3) [ ] (4)
- ----------------------------------------------------------------------------------------------------------------------------------
8. CHECK [X]
IF APPLICABLE [ ] DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SECTION 9105 (1) (n)
- ----------------------------------------------------------------------------------------------------------------------------------
9. CALYPTE BIOMEDICAL CORPORATION DATE: 9/27/93 C 10. THIS SPACE FOR USE OF FILING OFFICER
O (DATE, TIME, FILE NUMBER
By: [SIG] D AND FILING OFFICER)
SIGNATURE(S) OF DEBTOR(S) Title: CFO E
- ---------------------------------------------------------------------
CALYPTE BIOMEDICAL CORPORATION 1
TYPE OR PRINT NAME(S) OF DEBTOR(S)
- ------------------------------------------------------------- 2
3
SIGNATURE(S) OF SECURED PARTY(IES) 4
- -------------------------------------------------------------
MMC/GATX PARTNERSHIP NO. I 5 [STAMP]
By: GATX Capital Corporation, as Agent
TYPE OR PRINT NAME(S) OF SECURED PARTY(IES) 6
=============================================================
11. Return copy to: 7
NAME / RETURN TO: /
ADDRESS CALIFORNIA LENDERS' & ATTORNEYS' SERVICES 8
CITY 1000 G Street, Suite 225
STATE Sacramento, CA 95814 (916) 447-6237 9
ZIP CODE Toll Free in California Only: (800) 952-5696
/ Account Number 2860 06W / 0
=============================================================
Filing Officer is requested to note file number, date and
hour of filing on this copy and return to the above party.
FORM UCC-1--
Approved by the Secretary of State
==================================================================================================================================
(1) FILING OFFICER COPY--ACKNOWLEDGEMENT
</TABLE>
<PAGE> 106
FIXTURE FILING
This FINANCING STATEMENT is presented for filing and will remain effective
with certain exceptions for a period of five years from the date of filing
pursuant to Section 9403 of the California Uniform Commercial Code.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR (LAST NAME FIRST--IF AN INDIVIDUAL) (LESSEE) 1A. SOCIAL SECURITY OR FEDERAL TAX NO.
CALYPTE BIOMEDICAL CORPORATION
- ----------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
1440 FOURTH STREET BERKELEY, CALIFORNIA 94710
- ----------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST--IF AN INDIVIDUAL) 2A. SOCIAL SECURITY OR FEDERAL TAX NO.
- ----------------------------------------------------------------------------------------------------------------------------------
2B. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OR STYLES (IF ANY) 3A. FEDERAL TAX NUMBER
- ----------------------------------------------------------------------------------------------------------------------------------
4. (LESSOR) MMC/GATX PARTNERSHIP NO. I 4A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME c/o GATX CAPITAL CORPORATION, AS AGENT OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS FOUR EMBARCADERO CENTER, SUITE 2200
CITY SAN FRANCISCO STATE CALIFORNIA ZIP CODE 94111
- ----------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIAL SECURITY NO., FEDERAL TAX NO.
NAME OR BANK TRANSIT AND A.B.A. NO.
MAILING ADDRESS
CITY STATE ZIP CODE
- ----------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following types or items of property (include description of real property on which
located and owner of record when required by Instruction 4).
This filing is made for notice purposes only. The parties acknowledge and agree that the Master Equipment Lease Agreement is a
true lease and that, in accordance with Section 9-408 of the Uniform Commercial Code, the execution and filing of this Financing
Statement shall not of itself be a factor or evidence to the contrary.
See also "Schedule 1 to the Financing Statement" attached hereto and incorporated herein by this reference.
This is a fixture filing.
- ----------------------------------------------------------------------------------------------------------------------------------
7. CHECK [X] 7A. [X] PRODUCTS OF COLLATERAL 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH
IF APPLICABLE ARE ALSO COVERED INSTRUCTION 5(a) ITEM:
[ ] (1) [ ] (2) [ ] (3) [ ] (4)
- ----------------------------------------------------------------------------------------------------------------------------------
8. CHECK [X]
IF APPLICABLE [ ] DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SECTION 9105 (1) (n)
- ----------------------------------------------------------------------------------------------------------------------------------
9. CALYPTE BIOMEDICAL CORPORATION DATE: 9/27/93 C 10. THIS SPACE FOR USE OF FILING OFFICER
O (DATE, TIME, FILE NUMBER
By: [SIG] D AND FILING OFFICER)
SIGNATURE(S) OF DEBTOR(S) Title: CFO E
- ---------------------------------------------------------------------
CALYPTE BIOMEDICAL CORPORATION 1
TYPE OR PRINT NAME(S) OF DEBTOR(S)
- ------------------------------------------------------------- 2
3
SIGNATURE(S) OF SECURED PARTY(IES) 4
- -------------------------------------------------------------
MMC/GATX PARTNERSHIP NO. I 5 [STAMP]
By: GATX Capital Corporation, as Agent
TYPE OR PRINT NAME(S) OF SECURED PARTY(IES) 6
=============================================================
11. Return copy to: 7
NAME / RETURN TO: /
ADDRESS CALIFORNIA LENDERS' & ATTORNEYS' SERVICES 8
CITY 1000 G Street, Suite 225
STATE Sacramento, CA 95814 (916) 447-6237 9
ZIP CODE Toll Free in California Only: (800) 952-5696
/ Account Number 2860 06W / 0
=============================================================
FORM UCC-1--
Approved by the Secretary of State
==================================================================================================================================
(4) FILE COPY--DEBTOR
</TABLE>
<PAGE> 107
SCHEDULE 1 TO
FINANCING STATEMENT
(FIXTURE FILING)
DEBTOR (Lessee): CALYPTE BIOMEDICAL CORPORATION
SECURED PARTY (Lessor): MMC/GATX Partnership No. I
Item 6: The items which shall constitute Lessor's equipment and other personal
property under the Master Equipment Lease Agreement, dated as of August 20,
1993, as amended or supplemented from time to time (the "Lease"), between
MMC/GATX Partnership No. I ("MMC/GATX"), and Calypte Biomedical Corporation
("Lessee," such term and other terms not defined herein having the meaning
referred to in the Lease) and the Schedules to the Lease, are as follows:
All right, title and interest of the Lessee in and to each and every
Unit of equipment, tenant improvements, fixtures, software, parts, components
or personal property covered by the Lease (including all Schedules executed in
connection therewith) and as further described below (which such equipment,
tenant improvements, fixtures, software, parts, components and personal
property shall remain subject to the lien of the Lease until specifically
released in writing) whether or not any such equipment, tenant improvements,
fixtures, software, parts, components and personal property is thereafter
purported to be sold, destroyed, released, subleased, assigned, conveyed,
transferred or otherwise disposed of; together with all accessories,
equipment, parts and appurtenances appertaining or attached to any of such
equipment, tenant improvements, fixtures, software, parts, components or
personal property, whether now owned or hereafter acquired, and all
substitutions, renewals or replacements of and additions, improvements,
accessions and accumulations to any and all of such equipment, tenant
improvements, fixtures, software, parts, components or personal property;
together with all the income, profits and avails therefrom and the proceeds
thereof, including, without limitation, insurance payments and all proceeds
from sales or other dispositions thereof.
The Lease (including all schedules executed in connection therewith)
is intended by the parties thereto to be a true lease. However, if
notwithstanding the intent of the parties, the Lease is held to create a
secured financing or lease for security, the Lessee shall be deemed to have
granted to MMC/GATX a security interest in the above-described equipment and
other property.
The specific Units constituting equipment and personal property under
Schedule 1 include, without limitation, the equipment and property set forth on
the attached Annex A which is made a part hereof.
The above goods are, or may become, fixtures on the real property
described in Schedule 2 to this financing statement, commonly known as 1440
Fourth Street, Berkeley, California 94710.
1
<PAGE> 108
This financing statement is to be recorded in the real estate records
of the County of Alameda.
The name of the record owner of the real property is G&G Properties.
The equipment and personal property set forth on the attached Annex A
was sold by Lessee to Lessor prior to being leased by Lessor to Lessee.
Other Security:
That certain Security Deposit and proceeds thereof under the Security
Deposit Pledge Agreement, dated as of August 20, 1993, between MMC/GATX and
Lessee.
2
<PAGE> 109
22-Sep-93 CALYPTE BIOMEDICAL/SCHEDULE NO. 1 PAGE 1
ANNEX A
ALL UNITS LOCATED AT:
1440 FOURTH STREET
BERKELEY, CA 94710
<TABLE>
<CAPTION>
ASSET COST OF
# VENDOR QTY ITEM DESCRIPTION INVOICE # UNIT
- ----- ------ --- ---------------- --------- -------
<S> <C> <C> <C> <C> <C>
TENANT IMPROVEMENTS
- -------------------
R-027 4 PHASE ELECTRIC GENERATOR HOOKUP & 1963 3,515.90
CLEANROOM POWER & LIGHTING
- ----------------------------------------------------------------------------------------------------------------
R-027 DELUCCHI SHEET METAL STAINLESS STEEL FABRICATION 42937 162.00
FOR CLEANROOMS
- ----------------------------------------------------------------------------------------------------------------
R-027 DELUCCHI SHEET METAL STAINLESS STEEL FABRICATION 42936 147.50
FOR CLEANROOMS
- ----------------------------------------------------------------------------------------------------------------
R-027 DELUCCHI SHEET METAL STAINLESS STEEL FABRICATION 42950 92.00
FOR CLEANROOMS
- ----------------------------------------------------------------------------------------------------------------
R-027 LO HEATH LABOR AND MATERIALS FOR 1445 281.00
PLUMBING SERVICES AS FOLLOWS:
RELOCATE 2 FIRE SPRINKLER HEADS
CAP 2 PVC PIPES
- ----------------------------------------------------------------------------------------------------------------
R-027 LO HEATH LABOR AND MATERIALS FOR 1446 118.50
PLUMBING SERVICES AS FOLLOWS:
REBUILD 1 CHICAGO LAB FAUCET
REPAIR LEAK UNDER LAB SINK
- ----------------------------------------------------------------------------------------------------------------
R-027 MICROCANTAMINATION INSTALLATION OF 1 TRAX IND. 549 100.00
CONTROL SERVICES PRODUCTS VINYL CURTAIN WALL
PANEL; MOVE 1 FRAME SUPPORT 6"
- ----------------------------------------------------------------------------------------------------------------
R-027 PETER S. BERRY MATERIALS AND LABOR TO 15064 180.00
RELOCATE CENTRIFUGE OUTLET
TO CLEANROOM
- ----------------------------------------------------------------------------------------------------------------
R-027 SAN BRUNO SHEET METAL INSTALLATION OF: 4/21/93 12,870.00
1 7-1/2 TON HEAT PUMP
1 5 TON HEAT PUMP ON ROOF AREA
W/SPRING ICELATORS
ALL DUCT WORK W/RETURN &
SUPPLY DAMPERS
FARR GLIDE FILTER BOXES
SUPPLY OUTSIDE AIR W/SEPARATE FILTERS
REMOVE OLD SKYLIGHT & INSTALL
2 X 4 & PLYWOOD W/METAL COVER
- ----------------------------------------------------------------------------------------------------------------
R-027 SAN BRUNO SHEET METAL INSTALLED ALL DUCT WORK IN 4/30/93 8,865.00
CEILING AREA
- ----------------------------------------------------------------------------------------------------------------
R-027 TRAX INDUSTIAL 1 CUSTOM ANTI-STATIC SOFTWALL 4536 1,046.00
PRODUCTS PANEL FOR CLEANROOM
- ----------------------------------------------------------------------------------------------------------------
M-027 4 PHASE ELECTRIC EMERGENCY POWER SET-UP 4/21/93 5,250.00
- ----------------------------------------------------------------------------------------------------------------
M-026 J&M ENTERPRISES PHASE III--WAREHOUSE 1440.1 5,385.00
- ----------------------------------------------------------------------------------------------------------------
GRAND TOTAL $38,012.90
==========
</TABLE>
CALIFORNIA LENDERS'
AND ATTORNEYS' SERVICES
1000 G STREET, SUITE 225
SACRAMENTO, CA 95814
<PAGE> 110
AMENDMENT NO. 1 TO LEASE & SCHEDULE
SCHEDULE NO. 4
This Schedule No. 4 (this Schedule), dated June 30, 1995 (such date
being the "Delivery Date") for this Schedule), is a part of the Master
Equipment Lease Agreement, dated as of August 20, 1993 (the "Lease"), between
MMC/GATX PARTNERSHIP NO. I ("Lessor") and CALYPTE BIOMEDICAL CORPORATION
("Lessee") and is incorporated therein by this reference. The terms used in
this Schedule shall have the meanings given to them in the Lease unless
otherwise defined herein. The Commitment Termination Date is hereby amended to
December 31, 1995. The Initial Lease Term applicable to this Schedule and all
subsequent schedules is hereby amended to 36 months. The Initial Rent Factor
applicable to this Schedule and all subsequent schedules is hereby amended to
3.2402%.
1. Description and Cost of Units
The units subject to this Schedule are described in Annex A hereto.
The Lessor's Cost for this Schedule is:
$168,923.19
2. Acceptance; Obligations
Lessee confirms that on the Delivery Date hereof (i) all of the Units
described in Annex A attached hereto were duly accepted by Lessee and became
subject to the Lease; and (ii) Lessee became obligated to make Rental Payments
to Lessor and perform certain other obligations with respect to such Units as
provided in the Lease and Schedule.
3. Rent
(a) Commencing on July 1, 1995 (the "Rent Commencement Date") and
on the first day of each month thereafter, the rent for each Unit shall be paid
by Lessee in advance by check (or if requested by Lessor, by wire transfer), to
the location prescribed by Lessor in writing, in thirty-six (36) consecutive
installments, each of which shall be calculated based upon a Rent Factor of
3.2935% of the Lessor's cost for this Schedule which rental is:
$5,563.49 for each such installment.
(b) The Lease Term for the Units subject to this Schedule is 36
months and commences on the Rent Commencement Date. The Lease Term for the
Units subject to this Schedule shall expire on:
July 1, 1998
<PAGE> 111
(c) The Interim Rental Payment for the period from the Delivery
Date of this Schedule through the Rent Commencement Date, which is due on the
Delivery Date is:
$185.45
4. Conditions. Lessor's obligations under the Lease and this
Schedule are subject to the prior satisfaction of the following conditions on
or before the Delivery Date of this Schedule:
(a) Lessor shall have received, in form and substance
satisfactory to Lessor:
(i) All acceptable waivers of landlords and/or
mortgagees, substantially in the form of Exhibit B to the Lease.
(ii) To the extent Lessor deems it necessary, a release or
other arrangement with any other lessor or lender to the Company to insure that
there will be no impairment of Lessor's interest in the Units subject to this
or other Schedules.
(iii) A sales tax exemption or other similar certificate
from Lessee with respect to any Units included in this Schedule, but not placed
in service by Lessee before the Delivery Date of this Schedule.
(iv) Copies of invoices, purchase orders and cancelled
checks relating to all Units being placed under the Lease pursuant to a
sale/leaseback on the Delivery Date of this Schedule and/or a Purchase Order
and Invoice Assignment form Lessee to Lessor substantially in the form of
Exhibit C to the Lease, instead of copies of cancelled checks, for all Units
purchased by Lessor directly from the vendor.
(v) For all sales of Units by Lessee to Lessor, a Bill of
Sale substantially in the form of Exhibit D to the Lease.
(vi) An executed copy of each manufacturer's service
contract entered into by Lessee pursuant to Section 9 of the Lease.
(vi) Two new Warrants acceptable to Lessor replacing the
Warrant granted August 20, 1993.
(b) Lessee shall have filed or recorded, to the
satisfaction of Lessor, all instruments and documents, including, but not
limited to, Financing Statements on Form UCC-1 and Releases and Termination
Statements on Form UCC-2, then deemed necessary by Lessor to preserve and
protect its rights hereunder, under the Uniform Commercial Code (including the
termination of any after-acquired property clause of third parties with respect
to any Unit) and,
<PAGE> 112
if applicable, not less than ten days before the Delivery Date, a notice of the
proposed transfer to Lessor by Lessee of title to the Units to be placed under
the Lease on such Delivery Date shall have been published as and to the extent
required by Section 3440 of the Civil Code of the State of California.
(c) Lessor shall have received all other documents and
Lessee shall have performed all other acts as Lessor shall have reasonably
requested to consummate the transaction contemplated by this Schedule.
(d) Except with the prior consent of Lessor which shall
not be unreasonably withheld, (i) Lessor's Cost for the Units subject to this
Schedule shall be equal to or exceed the Minimum Funding Amount, (ii) Lessor's
cost for the Units subject to this Schedule when aggregated with Lessor Cost
for all Units under all previously funded Schedules shall not exceed the
Lessor's Commitment set forth on the cover page of the Lease, and (iii) the
funding contemplated by this Schedule when aggregated with all previous
fundings under the Lease shall not exceed the Maximum Number of Fundings.
(e) Except with the prior written consent of Lessor which
shall not be unreasonably withheld, the aggregate of Lessor's Cost for all
Units subject to this Schedule and all Schedules previously made subject to the
Lease which consist of tenant improvements, computer software, equipment
manufactured specially for Lessee and/or delivery and installation costs shall
not exceed 17.39% ($200,000 of Lessor's Costs if the entire Lessor's Commitment
is funded) of the total Lessor's Cost of Equipment funded, provided however,
that tenant improvements will not be eligible Equipment until Lessee receives
FDA approval of its lead product.
(f) The Delivery Date of this Schedule shall not be later
than the Commitment Termination Date.
(g) On the Delivery Date of this Schedule no Event of
Default or event, which with the passage of time or the giving of notice or
both would constitute an Event of Default, shall exist.
(h) Except with the prior written consent of Lessor which
shall not be unreasonably withheld, all of the Units listed on Annex A shall
consist of Eligible Equipment.
5. Representation and Warranties. Lessee hereby makes
the representations and warranties set forth in Section 14 of the Lease.
6. Payments. Pursuant to Section 16(h) of the Lease all
payments shall be made to Lessor c/o GATX Capital Corporation, as Agent, Box
71316, Chicago, Illinois 60694 unless otherwise indicated in a writing signed
by Lessor.
<PAGE> 113
This Schedule is hereby duly executed by the parties hereto as of the
date first written above.
MMC/GATX PARTNERSHIP NO. I
By: GATX Capital Corporation, as Agent
By: [SIG]
-----------------------------------
Title: VP
--------------------------------
CALYPTE BIOMEDICAL CORPORATION
By: [SIG]
-----------------------------------
Title: President
--------------------------------
LESSEE'S ADDRESS
FOR NOTICES:
1440 Fourth Street
Berkeley, CA 94710
ATTN: Bill Boeger
Chairman & C.E.O.
Annex A - Description of Units
Annex B - Stipulated Loss Values
Annex C - Exceptions to Representations and Warranties
<PAGE> 114
06/30/95 CALYPTE BIOMEDICAL SCHEDULE NO. 4 - ANNEX A PAGE 1
<TABLE>
<CAPTION>
REF.# VENDOR QTY. DESCRIPTION P.O. # INVOICE # SERIAL # UNIT COST NBV TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMPUTER EQUIPMENT
==================
1 Miracle Computers, Inc. 1 Everex Stepnote 4DX4/100 4M/524 12741 122445 4031917A 3,481.00
w/ethernet and memory upgrade $3,481.00
- ------------------------------------------------------------------------------------------------------------------------------------
2 Miracle Computers, Inc. 1 PowerMac 6100/66 w/ add'l memory 12764 122508 XB5150P4TE 2,908.00
$2,908.00
- ------------------------------------------------------------------------------------------------------------------------------------
3 Miracle Computers, Inc. 1 PowerMac 6100/66 w/ add'l memory 121964 XB5124FE47Z 2,877.00
1 Sony CPD-15SF1 15" Monitor S01-7124395-H 449.00
$3,326.00
- ------------------------------------------------------------------------------------------------------------------------------------
4 Gateway 2000 1 Gateway 2000 PC 486x66 12460 509154 3208724 1,459.00
1 Sony 15" Vivitron Monitor 5209235 340.00
$1,799.00
- ------------------------------------------------------------------------------------------------------------------------------------
5 Hard Drive Super Source 1 DAT External Backup Unit 12440 TM10726 50125549/ 929.00
(Located in Ref. #10, line #1) TEC5B7 $929.00
- ------------------------------------------------------------------------------------------------------------------------------------
6 Computerware 1 Duo Dock for Mac Powerbook 12208 1079365 TF3391SJIAI 495.00
(Located in Ref. #11) $495.00
- ------------------------------------------------------------------------------------------------------------------------------------
7 The Mac Zone 2 Sony Multiscan 15" Monitors 547307500017 20005858 905.96
@ $452.98/ea 20005860
2 Sony Universal Mac to VGA Cable 30.00
@ $15./ea $935.96
- ------------------------------------------------------------------------------------------------------------------------------------
8 HIQ Computer Systems 1 HIQMARS 486DX66 mhz w/monitor 12258 27147 BVL449B0063035 1,254.00
(Manufacturer is HIQ) $1,254.00
- ------------------------------------------------------------------------------------------------------------------------------------
9 HIQ Computer Systems 1 8mb of ram 70 ns for 486PCI 27099 310.00
1 PCI SVGA Card 1mb 27101 100.00
1 VLB SVGA Card 1mb (returned) (68.00)
1 VLB SCSI Card 106.00
(Located in Ref. #10--Item #1) $448.00
- ------------------------------------------------------------------------------------------------------------------------------------
10 HIQ Computer Systems 1 Green PC-486DX66 mhz w/256k PCI 12155 26722 BRL424B0011266 1,728.00
& Monitor
1 Green PC-486DX66 mhz w/256k PCI BRL424B0023134 1,728.00
& Monitor
1 Green PC-486DX66 mhz w/256k PCI BRL424B0023148 1,728.00
& Monitor
1 Green PC-486DX66 mhz w/256k PCI BRL424B0023738 1,728.00
& Monitor
(Manufacturer is HIQ) $6,912.00
- ------------------------------------------------------------------------------------------------------------------------------------
11 Macattack Computers 1 Powerbook Duo 280c 12/320 w/modem 12083 44073 FC445HCN230 3,708.00
3,411.36 $3,411.36
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 115
06/30/95 CALYPTE BIOMEDICAL SCHEDULE NO. 4 - ANNEX A PAGE 2
<TABLE>
<CAPTION>
REF.# VENDOR QTY. DESCRIPTION P.O. # INVOICE # SERIAL # UNIT COST NBV TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12 Proctor-Willenbacher 1 Micropolic 4110 int. Hard Disk 11829 PW-10018-84 A237227 803.85
(Located in system funded by
MMC/GATX on 10/4/93-s/n#F2314LAXCN2) 667.20 $667.20
- ------------------------------------------------------------------------------------------------------------------------------------
13 Compaq Computer Corp. 1 Compaq Prolinea & Densitometer PC 11426 53905 A416HHC70850 3,139.00
4/66 with monitor & add'l memory 141685-001 2,354.25 $2,354.25
- ------------------------------------------------------------------------------------------------------------------------------------
14 Compaq Computer Corp. 1 Compaq Contura Laptop model 120 11229 49101 7410HDJ33500 2,135.00
1,601.25 $1,601.25
- ------------------------------------------------------------------------------------------------------------------------------------
15 Gateway 2000 1 Gateway 2000 PC 486x66 w/monitor 11090 3481382 1827692 2,065.00
1,383.55 $1,383.55
====================================================================================================================================
SUBTOTAL COMPUTER EQUPMENT $31,905.57
====================================================================================================================================
OFFICE FURNITURE & EQUIPMENT
----------------------------
16 Kantors 1 Adjustable leg Table 12506 6430 164.83
1 Computer Stand 169.84
$334.67
- ------------------------------------------------------------------------------------------------------------------------------------
17 Kantors 5 Oak 84" Bookshelves @ $269.99/ea 12327A 83033 1,349.95
$1,349.95
- ------------------------------------------------------------------------------------------------------------------------------------
18 Kantors 2 Oak Bookcases @ $154.99/ea 12276 82725 309.98
$309.98
- ------------------------------------------------------------------------------------------------------------------------------------
19 Kantors 5 Admiral Steno Chairs @ $238./ea 11537 36296 1,190.00
5 Admiral Task Chairs @ $338./ea 1,690.00
2,160.00 $2,160.00
- ------------------------------------------------------------------------------------------------------------------------------------
20 Corporate Raider 1 Okidata Printer 12106 8533 312A0020796 820.00
754.40 $754.40
- ------------------------------------------------------------------------------------------------------------------------------------
21 Kantors 1 5 Drawer Lateral File 12288 6126 678.65
$678.65
- ------------------------------------------------------------------------------------------------------------------------------------
22 MAC 1 Deskwriter 560C Printer 301997 SG4C817142 529.00
$529.00
====================================================================================================================================
SUBTOTAL OFFICE FURNITURE & EQUIPMENT $6,116.65
====================================================================================================================================
</TABLE>
<PAGE> 116
06/30/95 CALYPTE BIOMEDICAL SCHEDULE NO. 4 - ANNEX A PAGE 3
<TABLE>
<CAPTION>
REF.# VENDOR QTY. DESCRIPTION P.O. # INVOICE # SERIAL # UNIT COST NBV TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LAB EQUIPMENT
-------------
23 Circuit City 1 Refrigerator 24001435599 940905682 459.97
$459.97
- ------------------------------------------------------------------------------------------------------------------------------------
24 Acme Scale 1 Floor Scale 12426 953829 1048460.1RW 8,008.32
$8,008.32
- ------------------------------------------------------------------------------------------------------------------------------------
25 American Vacuum Tedhnology 2 Stands for Portable Mixers 12522 10602 950.00
@ $475./ea $950.00
- ------------------------------------------------------------------------------------------------------------------------------------
26 Millipore 1 Milliflex Single Pump 12525 1260087 F4MM98269 1,301.00
$1,301.00
- ------------------------------------------------------------------------------------------------------------------------------------
27 Sartorius Corporation 1 Sartocheck III Filter Integrity 12486 111319-01 4502019 14,025.00
Tester $14,025.00
- ------------------------------------------------------------------------------------------------------------------------------------
29 Advanced Handling Systems 1 Cage for -80c Freezer 12269 3836 964.00
$964.00
- ------------------------------------------------------------------------------------------------------------------------------------
30 Sullair Pacific 1 Air Compressor 12304 908736 E03-C00595 10,751.00
$10,751.00
- ------------------------------------------------------------------------------------------------------------------------------------
31 VWR Scientific 2 PH meters w/electrodes 12469 27158330 123124 3,389.64
@ $1694.82/ea 167879 $3,389.64
- ------------------------------------------------------------------------------------------------------------------------------------
32 Pelco Sales 1 Double Refrigerator 12495 3-021 1323231 1,970.00
$1,970.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 117
06/30/95 CALYPTE BIOMEDICAL SCHEDULE NO. 4 - ANNEX A PAGE 4
<TABLE>
<CAPTION>
REF.# VENDOR QTY. DESCRIPTION P.O. # INVOICE # SERIAL # UNIT COST NBV TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
33 Scientific Equipment Exchange 1 Beckman Centrifuge 12485 2619 3657 9,995.00
$9,995.00
- ------------------------------------------------------------------------------------------------------------------------------------
34 Baxter Scientific 3 Free Standing Gowning Benches 11965 4627443 1,335.00
@ $445./ea $1,335.00
- ------------------------------------------------------------------------------------------------------------------------------------
35 Advanced Handling Systems 6 Transport Cars w/ casters 12104 3576 4,490.00
@ $748.33/ea $4,490.00
- ------------------------------------------------------------------------------------------------------------------------------------
36 Baxter Scientific 1 Urine Chem-Analyzer 12138 3582283 2,115.00
$2,115.00
- ------------------------------------------------------------------------------------------------------------------------------------
37 Biotest Diagnostics 1 Centrifugal Air Sampler 12069 106168 11648 1,775.00
1,663.00 $1,663.00
- ------------------------------------------------------------------------------------------------------------------------------------
38 Harris Manufacturing 1 Chart Recorder for -20C Freezer 12073 118232 659.00
606.28 $606.28
- ------------------------------------------------------------------------------------------------------------------------------------
39 Silicon Valley Shelving 1 Locker for Change Room 11980 50598 1,397.00
1,285.24 $1,285.24
- ------------------------------------------------------------------------------------------------------------------------------------
40 VWR Scientific 1 Small Incubator 12113 22881680 35823-204 1,360.00
1,251.20 $1,251.20
- ------------------------------------------------------------------------------------------------------------------------------------
41 VWR Scientific 4 Temp/Humidity Chart Recorder 12035 21870800 4322445-449 1,962.00
@ $490.50/ea 1,805.04 $1,805.04
- ------------------------------------------------------------------------------------------------------------------------------------
42 VWR Scientific 1 Bioprocess Kettles 12053 22634040 2674 5,882.00
0150 5,426.59 $5,426.59
- ------------------------------------------------------------------------------------------------------------------------------------
43 Altair/Linde Gases 2 Nitrogen Regulators @ $473.25/ea 11982 768356 946.50
870.78 $870.78
- ------------------------------------------------------------------------------------------------------------------------------------
44 Baxter Scientific 5 Two Shelf Plastic Carts 11965 1393722 700.00
@ $140./ea
1 Stem Caster Cart 249.75
873.77 $873.77
- ------------------------------------------------------------------------------------------------------------------------------------
45 Baxter Scientific 1 Biocentrifuge Rotor 12030 1439695 243.75
224.25 $224.25
- ------------------------------------------------------------------------------------------------------------------------------------
46 Baxter Scientific 1 Biocentrifuge 12030 1524548 75003637 1,175.00
1,081.00 $1,081.00
- ------------------------------------------------------------------------------------------------------------------------------------
47 Baxter Scientific 5 Two Shelf Plastic Carts 11965 2288046 700.00
@ $140./ea
2 Stem Caster Cart @ $330./ea 660.00
1,251.20 $1,251.20
- ------------------------------------------------------------------------------------------------------------------------------------
48 Baxter Scientific 10 Cleanroom Chairs @ $310./ea 11993 2288045 3,100.00
2,852.00 $2,852.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 118
06/30/95 CALYPTE BIOMEDICAL - SCHEDULE NO. 4 - ANNEX A PAGE 5
<TABLE>
<CAPTION>
REF.# VENDOR QTY. DESCRIPTION P.O.# INVOICE# SERIAL # UNIT COST NBV TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
49 Harris Manufacturing 1 -20C Freezer 11959 113556 Y03D-188874-YD 3,365.40
3,096.17 $3,096.17
- -----------------------------------------------------------------------------------------------------------------------------------
51 The Baker Company 1 Baker 4' Chemgard Fume Hood 11958 72871 57075 5,618.00
1 4' Base Cabinet 51928 1,130.00
6,208.16 $6,208.16
- -----------------------------------------------------------------------------------------------------------------------------------
52 Amicon, Inc. 1 Stirred Cell 11574 386703 785.00
772.20 $772.20
- -----------------------------------------------------------------------------------------------------------------------------------
53 Bio-Tek Instruments 1 Combo Pressure/Vacuum 11613 135103 97846 1,445.00
System
1,329.40 $1,329.40
- -----------------------------------------------------------------------------------------------------------------------------------
54 Nuaire, Inc. 1 Horizontal Flow Clean Cabinet 11820 52407 60215ABV 3,512.83
3,231.80 $3,231.80
- -----------------------------------------------------------------------------------------------------------------------------------
55 Bio-Rad Laboratories 1 Econo System Chromatography 11612 272714 Mon=700BR05945 7,240.00
**SEE COPY OF QUOTE #94-1990 701BR04787 6,009.20 $6,009.20
- -----------------------------------------------------------------------------------------------------------------------------------
56 Bio-Rad Laboratories 1 Demsitometer 11580 572510 T41405H 12,500.00
**SEE COPY OF QUOTE #94-0964 10,375.00 $10,375.00
- -----------------------------------------------------------------------------------------------------------------------------------
57 Met One, Inc. 1 Particle Counter 11647 27965 95188012 4,600.00
95188012A 3,818.00 $3,818.00
- -----------------------------------------------------------------------------------------------------------------------------------
58 Norlab Manufacturing 1 Controlair 4' Fume Hood & 11592 2127 3S147A 2,562.00
Accessories 2,126.46 $2,126.46
- -----------------------------------------------------------------------------------------------------------------------------------
59 Dynatech Laboratories 1 Pump 11161 47877 2,400.00
1,608.00 $1,608.00
- -----------------------------------------------------------------------------------------------------------------------------------
61 National Instrument 1 Fil-A-Matic Filling Machine 10717 153510 19854 14,579.00
Co. 59523-2 9,767.93 $9,767.93
- -----------------------------------------------------------------------------------------------------------------------------------
62 Advanced Handling 1 Black Plastic Pallet 12220 3644 175.00
Systems 1 3 Shelf Metro Cart 275.00
1 2 Shelf Metro Cart 145.00
$595.00
- -----------------------------------------------------------------------------------------------------------------------------------
63 Advanced Handling 1 18x36x69"h Metro Max Cart 12341 3831 250.00
Systems 3 18x36x69" Metro Max Carts
@$325./ea. 975.00 $1,225.00
- -----------------------------------------------------------------------------------------------------------------------------------
64 Advanced Handling 1 Lot Price for 25 Metro
Systems Shelves & 20 Posts 12104 3592 2,004.75
1,844.37 $1,844.37
===================================================================================================================================
SUB TOTAL LAB EQUIPMENT $130,900.97
===================================================================================================================================
</TABLE>
<PAGE> 119
06/30/95 CALYPTE BIOMEDICAL - SCHEDULE NO. 4 - ANNEX A PAGE 6
<TABLE>
<CAPTION>
REF.# VENDOR QTY. DESCRIPTION P.O.# INVOICE# SERIAL # UNIT COST NBV TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TOTAL - SCHEDULE NO. 4 $168,923.19
====================== ===========
</TABLE>
<PAGE> 120
ANNEX B
CALYPTE BIOMEDICAL
Schedule No. 4
Stipulated Loss Values (SLV) as
a Percentage of Lessor's Cost
<TABLE>
<CAPTION>
Rental Rental
Payment Date *SLV Payment Date *SLV
-------------------- --------------------
<S> <C> <C> <C> <C><C> <C>
on or 1 01-Jul-95 100.00% 23 01-May-97 61.59%
before 2 01-Aug-95 99.59% 24 01-Jun-97 59.24%
3 01-Sep-95 98.37% 25 01-Jul-97 56.86%
4 01-Oct-95 97.00% 26 01-Aug-97 54.44%
5 01-Nov-95 96.57% 27 01-Sep-97 51.97%
6 01-Dec-95 95.28% 28 01-Oct-97 49.47%
7 01-Jan-96 93.63% 29 01-Nov-97 46.94%
8 01-Feb-96 91.93% 30 01-Dec-97 44.34%
9 01-Mar-96 90.19% 31 01-Jan-98 41.72%
10 01-Apr-90 88.41% 32 01-Feb-98 39.06%
11 01-May-96 86.59% 33 01-Mar-98 36.34%
12 01-Jun-96 84.74% 34 01-Apr-98 33.57%
13 01-Jul-96 82.84% 35 01-May-98 30.75%
14 01-Aug-96 80.91% 36 01-Jun-98 27.90%
15 01-Sep-96 78.93% 37 01-Jul-98 25.00%
16 01-Oct-96 76.92% Thereafter 25.00%
17 01-Nov-96 74.86%
18 01-Dec-96 72.75%
19 01-Jan-97 70.61%
20 01-Feb-97 68.42%
21 01-Mar-97 66.19%
22 01-Apr-97 63.90%
</TABLE>
* Each Stipulated Loan Value percentage assumes payment of all Scheduled
Payments due on or before the indicated Payment Date.
<PAGE> 121
Calypte Biomedical, Inc. Commitment Deposit/Expenses
- ------------------------ ---------------------------
Instructions: This is a sample taken from the Neocrin transaction. Just fill in
the blanks as you see fit. This is also a good worksheet to send to the
customer when they ask how their Deposit was used.
CALYPTE BIOMEDICAL INC.
-----------------------
Section E of the Proposal Letter: "A Commitment Fee of $15,000 is required by
- -------------------------------------------------------------------------------
the Lessor to initiate its due diligence review process. This deposit is
- -------------------------------------------------------------------------------
refundable if the transaction is not approved by the Lessor, which approval is
- -------------------------------------------------------------------------------
in the sole discretion of the Lessor. Should the transaction be approved, any
- -------------------------------------------------------------------------------
portion of the fee not utilized to pay expenses, will be applied on a pro rata
- -------------------------------------------------------------------------------
basis to the first rental payable on each Schedule. If, subsequent to the
- -------------------------------------------------------------------------------
Lessor's approval and mutually acceptable lease documents, the Lessee does not
- -------------------------------------------------------------------------------
proceed with this transaction, fails to execute final documents with Lessor or
- -------------------------------------------------------------------------------
does not utilize the lease line, the fee shall be retained by the Lessor."
- -------------------------------------------------------------------------------
COMMITMENT DEPOSIT 25,000.00
Phoenix Leasing Commitment Deposit Portion: (7,500.00)
MMC/GATX Partnership No. 1 Commitment Deposit Retained: 17,500.00
<TABLE>
<CAPTION>
<S> <C> <C> <C>
EXPENSES Legal Attorney Fees 9,467.50
-----
Clerical overtime 0.00
Telephone 4.05
UCC Work 213.00
Copying Expense 380.70
Postage 0.00
Express Delivery 418.11
Outside Services 91.15
Facsimile 144.00
---------
10,718.51
Travel 0.00
------ ----
Total Expenses 10,718.51 (10,718.51)
-------------- ----------
Legal Expense Cap: (10,000.00)
REMAINING DEPOSIT $7,500.00
---------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
As a % of $7,500.00
Lessor's Apply Against
1,150,000.00 Commitment Commitment Remtal
------------------------------- ---------- -------------
<S> <C> <C> <C>
First Draw $38,012.90 3.31% (248.25)
Second Draw $148,871.25 12.95% (971.25)
Third Draw $38,297.00 3.33% (249.75)
Fourth Draw $168,923.19 14.69% (1,101.75)
Fifth Draw $0.00 0.00% 0.00
----- ----- ----
$394,104.34 34.28% (2,571.00)
Remaining Deposit 4,929.00
========
---------------------------------------------------------------
<S> <C> <C>
CREDITS TAKEN 1 258.18 All 3 credits were credited
Please Note: When the credits shown here were taken 2 1,010.10 to Invoice #17961.
all legal expenses were not allocated. Therefore the 3 259.74
overpaid amounts totalling $58.77 will be subtracted 4 1,042.98 Invoice #1168M
from the pro-rata credit from the commitment deposit --------
on Schedule 4. (i.e. $1,101.75 - $58.77 = $1,042.98) 2,571.00
The box above reflects the revised allocation of the
commitment deposit.
</TABLE>
<PAGE> 1
EXHIBIT 11.1
CALYPTE BIOMEDICAL CORPORATION
COMPUTATION OF LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Net loss attributable to common
stockholders................. $(6,301,272) $(5,586,982) $(10,411,385) $(1,428,260) $(2,846,433)
=========== =========== ============ =========== ===========
Weighted average shares used to
compute net loss per share
attributable to common
stockholders:................
Convertible preferred
stock................... 3,492,026 4,460,402 5,705,714 5,705,234 5,705,234
Common stock.............. 514,939 551,365 569,349 569,349 569,378
Number of common shares issued,
warrants granted, warrants
exercised and stock options
granted in accordance with
Staff Accounting Bulletin No.
83........................... 1,175,629 1,175,629 1,175,629 1,175,629 1,175,629
----------- ----------- ------------ ----------- -----------
Total................ 5,182,594 6,187,396 7,450,692 7,450,212 7,450,241
=========== =========== ============ =========== ===========
Net loss per share
attributable to
common
stockholders....... $ (1.22) $ (0.90) $ (1.40) $ (0.19) $ (0.38)
=========== =========== ============ =========== ===========
</TABLE>
The calculation includes the shares of convertible preferred stock (Series B,
Series C, Series D and Series E) as if they had converted to common stock on
their respective original dates of issuance, because such shares automatically
convert to common stock upon the closing of the public offering of the Company's
common stock.
<PAGE> 1
EXHIBIT 21.1
LIST OF SUBSIDIARIES
Calypte, Inc., a Delaware corporation
Calypte Biomedical Corporation, a Delaware corporation
Pepgen Corporation, a California corporation (49% owned)
<PAGE> 1
EXHIBIT 23.1
We consent to the use of our reports included herein and to the reference to our
firm under the headings "Selected Consolidated Financial Data" and "Experts" in
the Prospectus.
San Francisco, California /s/ KPMG Peat Marwick LLP
June 24, 1996
