<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
CALYPTE BIOMEDICAL CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14-a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
CALYPTE
BIOMEDICAL CORPORATION
1440 FOURTH STREET
BERKELEY, CALIFORNIA 94710
September 28, 1998
Dear Stockholder:
You are cordially invited to attend Calypte Biomedical Corporation's Annual
Meeting of Stockholders on Monday, October 26, 1998. The meeting will begin
promptly at 9:00 a.m. local time, at the administrative offices of Calypte,
located at 1265 Harbor Bay Parkway, Alameda, California.
The official Notice of Annual Meeting of Stockholders, Proxy Statement, form
of proxy and 1997 Annual Report to Stockholders are included with this letter.
The matters listed in the Notice of Annual Meeting of Stockholders are described
in detail in the Proxy Statement.
Your vote is important. Whether or not you plan to attend the annual
meeting, I urge you to complete, sign and date the enclosed proxy card and
return it in the accompanying envelope as soon as possible so that your stock
may be represented at the meeting.
Sincerely,
William A. Boeger
PRESIDENT & CHIEF EXECUTIVE OFFICER
<PAGE>
CALYPTE
BIOMEDICAL CORPORATION
1440 FOURTH STREET
BERKELEY, CALIFORNIA 94710
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 26, 1998
------------------------
September 28, 1998
The 1998 Annual Meeting of Stockholders of Calypte Biomedical Corporation
(the "Company") will be held at the administrative offices of the Company, 1265
Harbor Bay Parkway, Alameda, California 94502, on Monday, October 26, 1998, at
9:00 a.m. local time, for the following purposes:
1. To elect seven directors of the Company to hold office until the next
Annual Meeting of Stockholders and until their successors are elected and
qualified;
2. To approve an amendment to the Company's Restated Certificate of
Incorporation increasing the number of shares of the Company's Common
Stock authorized for issuance from 20,000,000 to 30,000,000 shares;
3. To vote on a proposed amendment to the 1991 Incentive Stock Plan to
increase by 1,000,000 the number of shares of Common Stock reserved for
issuance thereunder;
4. To ratify the appointment by the Board of Directors of KPMG Peat Marwick
LLP as independent auditors to audit the financial statements of the
Company and its consolidated subsidiaries for the fiscal year ending
December 31, 1998; and
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Stockholders of record on August 31, 1998 will be eligible to vote at this
meeting. Only stockholders of record at the close of business on such date will
be entitled to notice of and to vote at the meeting. To ensure your
representation at the meeting, you are urged to mark, sign, date and return the
enclosed proxy as promptly as possible in the envelope enclosed for that
purpose. If you attend the meeting, you may vote in person even if you return a
proxy.
By order of the Board of Directors,
John J. DiPietro
SECRETARY
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
PROXY CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
<PAGE>
CALYPTE
BIOMEDICAL CORPORATION
1440 FOURTH STREET
BERKELEY, CALIFORNIA 94710
------------------------
PROXY STATEMENT
---------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors (the "Board") of Calypte Biomedical
Corporation ("Calypte" or the "Company") for the Annual Meeting of Stockholders
(the "Annual Meeting"), and any postponements or adjournments thereof, to be
held at the administrative offices of Calypte, 1265 Harbor Bay Parkway, Alameda,
California 94502, on Monday, October 26, 1998, at 9:00 a.m. local time. The
Company's principal executive offices are located at 1440 Fourth Street,
Berkeley, California 94710. The telephone number at that address is (510)
749-5100. Every stockholder shall have the right to vote whether in person or by
one or more agents authorized by a written proxy signed by the person and filed
with the secretary of the Company. The shares represented by the proxies
received, properly dated and executed, and not revoked will be voted at the
Annual Meeting. A proxy may be revoked at any time before it is exercised by
delivering to the Company a written notice of revocation or a duly executed
proxy bearing a later date or by attending the Annual Meeting and voting in
person.
INFORMATION CONCERNING SOLICITATION AND VOTING
The close of business on August 31, 1998 has been fixed as the record date
(the "Record Date") for determining the holders of shares of Common Stock of the
Company, par value $.001 per share ("Common Stock") entitled to notice of and to
vote at the Annual Meeting. As of the close of business on the Record Date, the
Company had 13,424,073 shares of Common Stock outstanding and entitled to vote
at the Annual Meeting. The holders of a majority of voting power of the Common
Stock issued and outstanding and entitled to vote, present in person or
represented by proxy, shall constitute a quorum at the Annual Meeting except as
otherwise provided by statute. Each holder of Common Stock on the Record Date is
entitled to one vote for each share of Common Stock held by such stockholder,
and stockholders shall not be entitled to cumulate their votes in the election
of directors or with respect to any matter submitted to a vote of the
stockholders.
Shares represented by proxies that reflect abstentions or broker non-votes
will be counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Directors will be elected by a favorable
vote of a plurality of the shares of voting stock present and entitled to vote,
in person or by proxy, at the Annual Meeting. Accordingly, abstentions or broker
non-votes as to the election of directors will not affect the election of the
candidates receiving the plurality of votes. All other proposals to come before
the Annual Meeting require the approval of a majority of the shares of stock
having voting power present. Abstentions as to a particular proposal will have
the same effect as votes against such proposal. Broker non-votes, however, will
be treated as unvoted for purposes of determining approval of such proposal and
will not be counted as votes for or against such proposal.
This Proxy Statement and the accompanying form of proxy, which is being
solicited by the Company, will be first sent or given to stockholders on or
about September 28, 1998.
The shares represented by all valid proxies received will be voted in the
manner specified on the proxies. Where specific choices are not indicated, the
shares represented by all valid proxies received will be voted: (1) for the
nominees for director named in the Proxy Statement (2) for the proposed
amendment to the Company's Restated Certificate of Incorporation to increase the
number of shares of Common Stock authorized for issuance, (3) for the proposed
amendment to the 1991 Incentive Stock Plan (the
<PAGE>
"Stock Plan") and (4) for ratification of the appointment of KPMG Peat Marwick
LLP, as independent auditors.
Should any matter not described above be acted upon at the meeting, the
persons named in the proxy form will vote in accordance with their judgment.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitations may
be made by certain directors, officers and other employees of the Company by
personal interview, telephone or facsimile. No additional compensation will be
paid for such solicitation. The Company will request brokers and nominees who
hold stock in their names to furnish proxy material to beneficial owners of the
shares and will reimburse such brokers and nominees for their reasonable
expenses incurred in forwarding solicitation material to such beneficial owners.
ELECTION OF DIRECTORS
(PROPOSAL 1)
At the Annual Meeting, seven directors are to be elected to hold office
until the 1999 Annual Meeting. Each director, including a director elected or
appointed to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified. There
are no family relationships among any of the directors or executive officers of
the Company. The nominees listed below are all now Calypte directors. The Board
knows of no reason why any nominee may be unable or unwilling to serve as a
director. If any nominee is unable or unwilling to serve, the shares represented
by all valid proxies will be voted for the election of such other person as the
Board may recommend. The nominees receiving the highest number of affirmative
votes will be elected to the Board.
Certain information relating to each director nominee is set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- - ------------------------------------------ --- ----------------------------------------------------- -----------
<S> <C> <C> <C>
William A. Boeger......................... 48 President, Chief Executive Officer and Chairman 3/91
Calypte Biomedical Corporation
Howard B. Urnovitz, Ph.D.................. 44 Chief Science Officer 11/89
Calypte Biomedical Corporation
David Collins............................. 64 Consultant 12/95
Health Care Industry
Paul Freiman.............................. 64 President and Chief Executive Officer 12/97
Neurobiological Technologies, Inc.
Julius R. Krevans, M.D.................... 74 Chancellor Emeritus 3/95
Director of International Medical Care
University of California, San Francisco
Mark Novitch, M.D......................... 66 Adjunct Professor 9/95
George Washington University Medical Center
Zafar Randawa Ph.D........................ 50 Director of the New Technology Evaluation Division 12/96
Otsuka America Pharmaceutical
</TABLE>
WILLIAM A. BOEGER has served as the Company's President, Chief Executive
Officer and Chairman of the Board since December 1997. From September 1995 until
December 1997, he served as the Company's Chairman of the Board. 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
2
<PAGE>
Peter Bent Brigham Hospital and served on the faculty of the Amos Tuck Business
School at Dartmouth College. Mr. Boeger also serves as President and board
member of Pepgen Corporation ("Pepgen"), a company in which Calypte has a
minority interest. 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 Harvard Business School and
his B.S. from Williams College.
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 that, he
was Director of the Hybridoma Laboratory at the University of Iowa. Dr. Urnovitz
also serves as President and Chief Science Officer of Pepgen Corporation, a
company in which Calypte has a minority interest. 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.
DAVID COLLINS has served as the Company's Vice Chairman of the Board of
Directors and consultant since December 1997. He has been a member of the Board
of Directors since December 1995. From October 1994 to the present, Mr. Collins
has served as a consultant in the health care industry. From September 1989
until September 1994 he served as Executive Vice President with Schering-Plough
Corporation, a medical products company, and President of the Health Care
Products division, responsible for all OTC and consumer health care products.
From February 1988 to August 1989, he was a founding partner of Galen Partners,
a venture capital firm. From July 1962 to February 1988, he held several
positions at Johnson & Johnson, including Vice Chairman of the Board of
Directors for Public Affairs & Planning and Vice Chairman for the Executive
Committee & Chairman of the Consumer Sector. He is Chairman of the Board of
Directors of Penederm Incorporated. Mr. Collins is also a member of the Board of
Directors of Lander, Inc., Advanced Corneal Systems, Inc. and Claneil
Enterprises, Inc., all private companies. Mr. Collins received his L.L.B. at
Harvard Law School and his B.A. at the University of Notre Dame.
PAUL FREIMAN has served as a member of the Company's Board of Directors and
consultant since December 1997. He has served as the President and Chief
Executive Officer of Neurobiological Technologies, Inc since May 1997. In 1994,
Mr. Freiman retired from his position as Chairman and Chief Executive Officer of
Syntex Corporation, a pharmaceutical company. From 1962 until 1994, he held
several other positions at Syntex Corporation, including President and Chief
Operating Officer. Mr. Freiman is currently serving on the board of Digital Gene
Technologies, Inc., a private genomics company, and serves on the boards of
Penford Inc., Otsuka America Pharmaceuticals, Inc., Penwest Corp., and
LifeScience Economics, Inc. He has been chairman of the Pharmaceutical
Manufacturers Association of America (PhARMA) and has also chaired a number of
key PhARMA committees. Mr. Freiman is also an advisor to Burrill & Co., a San
Francisco merchant bank.
JULIUS R. 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 that, Dr.
Krevans served as Dean for Academic Affairs at John 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 John Hopkins University School of Medicine.
MARK NOVITCH, M.D. has served on the Company's Board of Directors since
September 1995. Dr. Novitch was a Professor of Health Care Sciences at George
Washington University from October 1994
3
<PAGE>
to June 1997. He is presently an Adjunct Professor at George Washington
University Medical Center. Since 1993, Dr. Novitch has also been a private
consultant in the pharmaceutical industry. From 1985 until 1993, he 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, Kos Pharmaceutical, and Alteon, Inc. Dr. Novitch received
his A.B. from Yale University, and his M.D. from the New York Medical College.
ZAFAR RANDAWA, PH.D. has served on the Company's Board of Directors since
December 1996. Dr. Randawa is currently the Director of the New Technology
Evaluation Division of Otsuka America Pharmaceutical, Inc. and has served in
this capacity since September 1995. From 1989 until September 1995, Dr. Randawa
served as a Chief Scientist at Otsuka America Pharmaceutical, Inc. Dr. Randawa
received his Ph.D. in Biochemistry at Oregon Health Sciences University, his
Master of Science degree in Biochemistry at Karachi University in Karachi,
Pakistan, his B.S. in Biochemistry from Karachi University and his B.S. in
Chemistry from Panjab University in Lahore, Pakistan.
APPROVAL REQUIRED
Approval of Proposal 1 requires the affirmative vote of a majority of the
outstanding shares of Common Stock of the Company represented and voting at the
Annual Meeting.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL NAMED NOMINEES. PROXIES
SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY A DIFFERENT
CHOICE IN THEIR PROXIES.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board met seven times during 1997. The Board has standing Audit,
Compensation and Nominating Committees. During 1997, all directors attended at
least 75% of the aggregate number of meetings of the Board and the standing
committees on which they served during the period in which they served as
directors, except for Dr. Krevans, who attended five Board meetings.
AUDIT COMMITTEE
The Audit Committee consists of Messrs. Novitch, Collins and Boeger (a
non-voting member). The Audit Committee recommends the engagement of the
Company's independent auditors, approves the services performed by such
auditors, reviews and evaluates the Company's accounting principles and its
system of accounting controls, and reviews with the auditors the Company's
annual audited financial statements and the audit thereof. There was one audit
committee meeting in 1997. The audit committee meeting to discuss the results of
the audit of the financial statements of the Company for the year ended December
31, 1997 was held in 1998.
COMPENSATION COMMITTEE
The Compensation Committee consists of Messrs. Krevans and Collins. The
Compensation Committee reviews and approves the compensation of the Company's
executive officers and administers the Company's stock plans. The Compensation
Committee met one time in 1997.
4
<PAGE>
NOMINATING COMMITTEE
The Nominating Committee consists of Messrs. Krevans (Chairman), Collins and
Novitch. The Nominating Committee recommends future additions, deletions and
slates of board members to the full Board. The Nominating Committee held no
meetings in 1997.
The Nominating Committee will consider stockholder suggestions for nominees
for director other than self-nominating suggestions. Suggestions may be
submitted to the Secretary of the Company at the Company's administrative
offices. Suggestions received by the Secretary's office prior to December 31
will be considered by the Committee at a meeting the following year, preceding
the mailing of proxy material to stockholders.
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 (the "Director 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 membership on the Board.
In December 1997, the Company entered into a consulting agreement with David
Collins, a Board member, effective from December 1997 to December 1998. Under
the agreement, Mr. Collins receives compensation of $6,000 per month and was
granted 50,000 stock options which vest ratably over the period of the
agreement. In addition, he will be granted an additional 50,000 stock options if
certain milestones are successfully achieved.
In December 1997, the Company entered into a consulting agreement with Paul
Freiman, a Board member, effective from January 1998 through December 1998.
Under the agreement, Mr. Freiman receives compensation of $30,000 per year and
was granted 50,000 stock options which vest over a 36-month period with the
possibility of immediate vesting under certain conditions. The agreement is
automatically renewable each year subject to three months' notice prior to the
end of each calendar year.
DIRECTOR OPTION PLAN
The Director Plan was adopted by the Board in December 1995 and stockholders
in 1996. 200,000 shares of Common Stock are reserved for issuance under the
Director Plan. Under the Director Plan, directors who are not also 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 each 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
director receives an option to acquire 3,000 shares of Common Stock (the
"Subsequent Option") on each date of the Company's Annual Meeting of
Stockholders at which such outside director is elected. Each option granted
under the Director Plan is exercisable at 100% of the fair market value of the
Common Stock on the date such option is granted. Twenty-five percent of the
First Option vests on each of the first four anniversaries of the date of grant
of the First Option. 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 term of the Director Plan is ten years unless sooner
terminated.
There were 21,000 options granted in 1997 under the Director Plan.
5
<PAGE>
INFORMATION ON EXECUTIVE COMPENSATION
The following table sets forth certain compensation awarded or paid by the
Company during the years ended December 31, 1997, 1996 and 1995 to its Chief
Executive Officer and each of the other executive officers of the Company who
earned at least $100,000 in salary and bonus from their employment with the
Company during fiscal 1997 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
SECURITIES
UNDERLYING
OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) GRANTED(#) COMPENSATION($)
- - ------------------------------------------------------- ---- ---------- --------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
John P. Davis(1) ...................................... 1997 195,000 0 0 5,600(2)
President and Chief Executive Officer 1996 195,000 0 0 322,810(3)
1995 126,602 0 320,000 15,819(4)
William A. Boeger(5) .................................. 1997 50,000(6) 5,385(7) 195,000 15,470(8)
President, Chief Executive Officer and Chairman of 1996 83,334(9) 0 0 11,560(4)
the Board of Directors 1995 272,500(10) 0 220,000 7,210(4)
Howard B. Urnovitz .................................... 1997 87,692 0 150,000 4,200(2)
Chief Science Officer 1996 132,231 61,552(11) 0 85,000(12)
1995 139,961 16,816 180,000 0
John J. DiPietro(13) .................................. 1997 131,250 0 80,000 36,073(4)
Chief Operating Officer, Chief Financial Officer, 1996 126,346 0 10,000 32,201(4)
Vice President of Finance and Secretary 1995 27,885 0 35,000 5,541(4)
</TABLE>
- - ------------------------
(1) 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. In December 1997, Mr. Davis resigned from his
position as President and Chief Executive Officer.
(2) Represents car allowance.
(3) Represents $5,469 for living expenses and $317,341 for reimbursement of
relocation expenses (which includes the reimbursement for taxes owed on such
expenses).
(4) Represents living expenses.
(5) Mr. Boeger served as the Company's Chairman of the Board of Directors,
Chief Executive Officer, and President from January 1994 until May 1995.
From May 1995 to September 1995, he served as Chairman of the Board of
Directors and Chief Executive Officer. From September 1995 to December 1997,
he served as Chairman of the Board of Directors. Since December 1997, Mr
Boeger has served as Chairman of the Board of Directors, Chief Executive
Officer and President.
(6) Represents amounts paid to an affiliate of Quest Ventures, a venture
capital partnership of which Mr. Boeger is Managing General Partner.
(7) Represents non-cash bonus related to forgiveness of a portion of a $70,000
note receivable including interest from Mr. Boeger.
(8) Represents $10,595 for living expenses and $4,875 for car allowance.
6
<PAGE>
(9) $12,500 was paid in 1996 to an affiliate of Quest Ventures, a venture
capital partnership of which Mr. Boeger is Managing General Partner, for
services rendered by Mr. Boeger in 1995. $70,834 was paid to an affiliate of
Quest Ventures in 1996 for services rendered by Mr. Boeger in 1996.
(10) $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.
(11) Represents a one-time bonus to defray the tax liability on the deemed
income from the forgiveness of the note receivable from Dr. Urnovitz.
(12) Represents forgiveness of an $85,000 note receivable from Dr. Urnovitz.
(13) Mr. DiPietro joined the Company in October 1995 as Chief Financial Officer
and Vice President of Finance. In December 1997, Mr. DiPietro was named
Chief Operating Officer, Chief Financial Officer and Vice President of
Finance.
The following table sets forth information concerning stock options granted
to the Named Executive Officers during the fiscal year ended December 31, 1997:
STOCK OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PERCENT OF PRICE APPRECIATION
TOTAL OPTIONS FOR 10-YEAR OPTION
GRANTED TO EXERCISE TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED(#) FISCAL YEAR(1) ($/SH)(2) DATE 5%($) 10%($)
- - --------------------------------------- ----------- --------------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
John P. Davis.......................... -- -- -- -- -- --
William A. Boeger...................... 195,000(4) 27.87% 3.75 12/18/07 420,175 1,102,202
Howard B. Urnovitz..................... 150,000(5) 21.44% 4.50 6/30/07 424,504 1,075,776
John J. DiPietro....................... 80,000(6) 11.44% 3.63 12/18/07 182,379 462,185
</TABLE>
- - ------------------------
(1) Based on aggregate of 699,599 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, 1997, including the Named Executive
Officers.
(2) The exercise price was based on the closing price of the stock on the date
of grant on the NASDAQ Smallcap Market.
(3) The assumed 5% and 10% compound rates of annual stock appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of future common stock
prices. Assuming a ten-year option term, annual compounding results in total
appreciation of 62.9% (at 5% per year) and 159.4% (at 10% per year).
(4) Options granted to Mr. Boeger become exercisable at the rate of 7.69% of the
shares subject to the option at January 18, 1998 and at the rate of 7.69%
per month thereafter. The options expire ten years from the date of grant,
or earlier upon termination of employment.
(5) Options granted to Dr. Urnovitz were fully exercisable on the date of grant.
The options expire ten years from the date of grant or earlier upon
termination of employment.
(6) Options granted to Mr. DiPietro become exercisable at the rate of 2.08% of
the shares subject to the option at January 18, 1998 and at the rate of
2.08% each month thereafter. The options expire ten years from the date of
grant or earlier upon termination of employment.
7
<PAGE>
The following table sets forth information concerning option exercises for
the year ended December 31, 1997, with respect to each of the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN 1997
AND DECEMBER 31, 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISABLE VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE END(#) AT FISCAL YEAR END($)
NAME EXERCISE(#) REALIZED($) (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(1)
- - ------------------------------- ----------- ----------- ------------------------- ---------------------------
<S> <C> <C> <C> <C>
John P. Davis.................. -- -- 165,329/154,671 712,981/667,019
William A. Boeger.............. 30,000 121,875 190,000/195,000 819,375/207,188
Howard B. Urnovitz............. 34,000 195,500 296,000/-- 676,500/--
John J. DiPietro............... -- -- 45,000/ 80,000 133,438/ 95,000
</TABLE>
- - ------------------------
(1) Value realized and value of unexercised in-the-money options is based on a
value of $4.8125 per share of the Common Stock, the closing price on
December 31, 1997 as quoted on the NASDAQ Smallcap Market. Amounts reflect
such fair market value minus the exercise price multiplied by the number of
shares to be acquired on exercise and do not indicate that the optionee
actually sold such stock.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pursuant to rules adopted by the Securities and Exchange Commission, the
Compensation Committee of the Board has furnished the following report on
executive compensation.
ROLE OF COMPENSATION COMMITTEE
The Compensation Committee is responsible for determining the most effective
total executive compensation strategy, based upon the business needs of the
Company and consistent with stockholders' interest. The Committee's role is to
review and approve the compensation of the Company's executive officers and to
administer the Company's stock plans. The Compensation Committee consists of
Messrs. Krevans and Collins.
COMPENSATION PHILOSOPHY
The major goals of the compensation program are to align compensation with
the attainment of key business objectives and to enable the Company to attract,
retain and reward capable executives and senior management who can contribute to
the continued success of the Company.
BASE SALARY
Base salary represents the fixed component of the executive compensation
program. Base salaries of the chief executive officer and senior management are
determined by reviewing comparable market base salary compensation, individual
performance, relevant experience and demonstrated capabilities in meeting the
requirements of the position. The Chief Executive Officer's base salary is
determined by the Committee's evaluation of his attainment of stated overall
goals and targets for the Company and his individual contribution and
performance.
LONG-TERM INCENTIVE AWARDS
Stock options serve to align the Company's stockholders' and employees'
goals. The objectives of the stock option and purchase plans of the Company are
to: (1) provide a long-term incentive to help reduce employee turnover, (2)
provide a competitive package for recruiting new employees, (3) provide a long-
8
<PAGE>
term reward for loyalty, dedication and service, and (4) allow all employees to
share in the rewards of "building stockholder value."
BONUS
Employees are eligible to earn annual cash bonuses for achievement of both
Company-wide and individual or departmental goals which are established at the
beginning of each year. This program is designed to: (1) enhance the ability of
the Company to attract and retain outstanding employees at all levels of the
Company, (2) create a link between compensation and performance, (3) strengthen
team building in order to foster a culture of fairness and equity, (4) motivate
employees, and (5) create commonality by aligning the interests of the
stockholders with those of the employees.
CHIEF EXECUTIVE OFFICER COMPENSATION
In 1997, Mr. Davis received cash payments for salary of $195,000. The
Committee continued to consider this level of payment appropriate in view of Mr.
Davis' leadership and accomplishments. Mr. Davis also received other
compensation of $5,600 representing a car allowance. Mr. Davis was eligible to
receive a maximum bonus of $35,000 in 1997, but none was awarded. Mr. Boeger did
not receive any compensation in 1997 for his role as President and Chief
Executive Officer. Mr. Boeger's employment arrangement is described under
"Certain Relationships and Related Transactions".
COMPENSATION COMMITTEE
JULIUS KREVANS, M.D.
DAVID COLLINS
July 31, 1998
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
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 and Mr.
Collins.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1995, the Company entered into an employment agreement with Dr.
Howard B. Urnovitz, as the Founder, Director and Chief Science Officer of the
Company 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 is automatically renewable each year subject to three months' notice
prior to the end of the calendar year and has been renewed for the 1998 calendar
year. In the event Dr. Urnovitz's employment is terminated by the Company other
than for cause, he is entitled to receive his base salary for six months.
In December 1997, the Company entered into an employment agreement with
William A. Boeger as President and Chief Executive Officer of the Company
effective from December 1997 through December 1998. Under the terms of the
agreement, Mr. Boeger receives a salary of $195,000 per year. In addition, he
was granted 195,000 stock options which vest over the period of the agreement.
Mr. Boeger is not entitled to a cash bonus during the initial term of the
agreement; in lieu of a cash bonus, the Company will forgive his indebtedness to
the Company in the amount of $70,000 plus accrued interest ratably over the term
of the agreement. The loan was originally made to Mr. Boeger in May 1997. The
agreement is automatically renewable each year subject to three months' notice
prior to the end of each calendar year. Mr. Boeger is also entitled to
reimbursement for temporary housing and travel between his home and the Company.
9
<PAGE>
In December 1997, the Company entered into an employment agreement with John
DiPietro as Chief Operating Officer, Chief Financial Officer and Vice President
of Finance of the Company for a term of three years, which provided for an
annual salary of $150,000. In addition, he was granted 80,000 stock options
which vest over 48 months. Mr. DiPietro is also entitled to a bonus under the
Company's bonus plan, reimbursement for the cost of a corporate apartment, which
expenses shall be increased sufficiently to reimburse for taxes owed on such
expenses, and certain change-in-control provisions. In the event his employment
is terminated by the Company other than for cause, Mr. DiPietro will receive his
base salary for six months and all stock options that would have vested during
the term of his employment agreement will become fully vested.
In 1997, in recognition of a Technology Rights Agreement entered into
between the Company and Dr. Urnovitz, the Company funded the expenses of a
research foundation started by Dr. Urnovitz. The Company has entered into a loan
agreement with Dr. Urnovitz to repay such funding to the Company. The loan is
evidenced by a promissory note and is secured by Dr. Urnovitz's stock options to
purchase Common Stock and stock owned with a market value of 200% of the
outstanding loan balance. The interest on the outstanding principal balance of
the loan is a variable rate of the prime rate plus 1%. The principal amount and
all accrued interest was originally due on December 1, 1997. On October 13,
1997, the due date was extended to March 1, 1998 and on December 18, 1997, the
due date was further extended to December 1, 1998. During 1998, the loan was
increased from $90,000 to $440,000 subject to the same terms of the initial loan
agreement. The Technology Rights Agreement gives the Company a first right of
refusal of an exclusive, worldwide license to practice, make or have made, use,
sell, distribute and license to other any invention or discovery made by Dr.
Urnovitz in exchange for a one-time cash payment and the payment of royalties.
In January 1998, the Company entered into an agreement with Quest Management
Company ("Quest Management") for the management services of William Boeger as
the Company's Chairman of the Board. Under the terms of the agreement, the
Company will pay Quest Management $50,000 per year payable in monthly
installments. The agreement is automatically renewable each year subject to
three months' notice prior to the end of the calendar year. Quest Management is
an affiliate of Quest Ventures, a venture capital partnership of which Mr.
Boeger is Managing General Partner.
In 1997, the Company paid Pepgen $72,000 for an exclusive license to all
technology that relates to urine-based diagnostics developed by Pepgen.
In January 1998, the Company loaned Pepgen $250,000 at an interest rate of
10%. The loan is secured by all intellectual property of Pepgen and was due on
March 31, 1998. The due date was extended to May 15, 1998.
During June 1998, the loan was increased to $300,000 under the same terms of
the initial loan agreement and subsequent to June 1998, the due date was
extended to December 31, 1998.
10
<PAGE>
STOCK PERFORMANCE CHART
The graph below compares the cumulative total stockholder return on the
Common Stock since the Company's initial public offering in 1996. The
Corporation's return is shown with the cumulative total return of the NASDAQ
Stock Market--U.S. Index and the Hambrecht & Quist Biotechnology Index. The
graph assumes a $100 investment made at the beginning of the respective period
and reinvestment of all dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CALYPTE NASDAQ STOCK HAMBRECHT & QUIST
<S> <C> <C> <C>
BIOMEDICAL CORPORATION MARKET-US BIOTECHNOLOGY
7/26/96 $100 $100 $100
12/31/96 $138 $119 $109
12/31/97 $65 $146 $111
</TABLE>
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to the Company with respect
to the beneficial ownership of its Common Stock as of July 31, 1998 for (i) all
persons known by the Company to own beneficially more than 5% of its outstanding
Common Stock, (ii) each of the Company's directors, (iii) each Named Executive
Officer and (iv) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY % OF
5% STOCKHOLDERS, DIRECTORS AND OFFICERS(1) OWNED TOTAL
- - -------------------------------------------------------------------------------- ------------ -----
<S> <C> <C>
Otsuka Pharmaceutical Co., Ltd.(2)
463-10 Kagsuno
Kawauchi-cho
Tokoshima Japan............................................................... 1,293,147 9.63%
Zafar Randawa, Ph.D.(2)......................................................... 1,293,147 9.63
H&Q Healthcare Investors
50 Rowes Wharf--4th Floor
Boston, MA 02110.............................................................. 833,993 6.21
William A. Boeger(3)............................................................ 858,682 6.18
Howard B. Urnovitz, Ph.D.(4).................................................... 436,200 3.19
John DiPietro(5)................................................................ 67,347 *
David Collins(6)................................................................ 62,249 *
Mark Novitch, M.D.(7)........................................................... 30,000 *
Julius Krevans, M.D.(8)......................................................... 15,000 *
Paul Freiman(9)................................................................. 12,500 *
John P. Davis................................................................... -- *
All directors and executive officers as a group (9 persons)..................... 2,775,125 19.38%
</TABLE>
- - ------------------------
* Represents beneficial ownership of less than 1%.
(1) 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 power 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) Dr. Randawa is a director of the Company and an affiliate of Otsuka
Pharmaceutical Co., Ltd.
(3) Includes 154,276 shares subject to options exercisable within 60 days owned
by entities affiliated with Quest Ventures of which Mr. Boeger is a partner.
Also includes 325,000 shares subject to options exercisable within 60 days
owned by Mr. Boeger.
(4) Includes 266,000 shares subject to options exercisable within 60 days.
(5) Includes 59,999 shares subject to options exercisable within 60 days.
(6) Includes 47,249 shares subject to options exercisable within 60 days.
(7) Includes 26,000 shares subject to options exercisable within 60 days.
(8) Includes 6,000 shares subject to options exercisable within 60 days.
(9) Includes 12,500 shares subject to options exercisable within 60 days.
12
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Section
16(a)"), requires the Company's executive officers, directors, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5
with the Securities and Exchange Commission and the National Association of
Securities Dealers. Such officers, directors and ten percent stockholders are
also required by the Securities and Exchange Commission rules to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely on its review of such reports received or written
representations from reporting persons, the Company believes that during fiscal
year 1997 there was no failure by any of its officers, directors or ten percent
stockholders to file on a timely basis any reports required by Section 16(a).
PROPOSED AMENDMENT TO THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION
(PROPOSAL 2)
The Board unanimously adopted, subject to stockholder approval, an amendment
to the Company's Restated Certificate of Incorporation (the "Amendment")
increasing the number of authorized shares of Common Stock from 20,000,000 to
30,000,000. The Board is requesting stockholder approval of the Amendment.
DESCRIPTION OF THE PROPOSAL
The Company's Restated Certificate of Incorporation currently authorizes the
issuance of 25,000,000 shares, of which 20,000,000 are authorized for issuance
as Common Stock and 5,000,000 are authorized for issuance as Preferred Stock. As
of the Record Date, the Company had 13,424,073 shares of Common Stock
outstanding and no shares of Preferred Stock outstanding. In addition, as of
that date, the Company had approximately (i) 2,746,550 shares of Common Stock
reserved for issuance under the its stock option and purchase plans and (ii)
510,155 shares of Common Stock issuable upon exercise of outstanding warrants.
If this Amendment is approved, the Board intends to cause a certificate of
amendment to the Restated Certificate of Incorporation to be filed as soon as
practicable after the date of the Annual Meeting. Upon effectiveness of this
Amendment and the amendment to the 1991 Incentive Stock Plan (see Proposal 3),
the Company will have approximately 12,319,222 shares of Common Stock authorized
but unreserved.
The Company anticipates that it may seek to acquire assets or businesses
which the Company believes will complement its existing business. The Company
also expects to sell additional shares, as necessary, to finance operations and
growth of the Company. The Board considers it advisable to have additional
authorized but unissued shares of Common Stock available to allow the Company to
act promptly with respect to possible future acquisitions or financings,
issuances under the Company's employee benefit plans and for other corporate
purposes approved by the Board. Having additional authorized shares of Common
Stock available for issuance would give the Company greater flexibility and
allow shares of Common Stock to be issued without the expense or delay of a
stockholders' meeting, except as may be required by applicable laws or
regulations. The Company has no specific plans for issuance of additional shares
of Common Stock, other than shares currently reserved under option and purchase
plans and for exercise of outstanding warrants.
The increase in authorized Common Stock will not have any immediate effect
on the rights of existing stockholders. The Board will have the authority to
issue authorized Common Stock without requiring future stockholder approval of
such issuances, except as may be required by applicable law or exchange
regulations. The increase in the authorized number of shares is not proposed for
the purpose of any anti-takeover effect and the Company has no present intention
of issuing additional shares of Common Stock for that purpose, the issuance of
such shares may have an anti-takeover effect, depending upon the identity of the
purchasers, the number of shares issued and the then current ownership of
outstanding shares of the
13
<PAGE>
Company. To the extent that the additional authorized shares are issued in the
future, they will decrease the existing stockholders' percentage equity
ownership and, depending upon the price at which they are issued as compared to
the price paid by existing stockholders for their shares, could be dilutive to
the existing stockholders. No stockholders of the Company have rights to
participate in offerings of additional shares by the Company.
APPROVAL REQUIRED
Approval of Proposal 2 requires the affirmative vote of a majority of the
outstanding shares of Common Stock of the Company.
THE BOARD RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF
COMMON STOCK. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE IN THEIR PROXIES.
PROPOSED AMENDMENT OF THE 1991 INCENTIVE STOCK PLAN
(PROPOSAL 3)
Subject to the approval of the stockholders, the Board, on the
recommendation of its Compensation Committee, has amended the 1991 Incentive
Stock Plan (the "Stock Plan"). The proposed amendment increases by 1,000,000 the
number of shares of Common Stock reserved for issuance under the Stock Plan.
In 1991, the Board approved the adoption of the Stock Plan which reserved
for issuance 290,992 shares of the Common Stock. In 1992 and 1994, 200,000 and
1,000,000 additional shares, respectively, of Common Stock were further reserved
by the Board for issuance upon exercise of options granted under the Stock Plan.
In 1995, 1,250,000 additional shares of Common Stock were reserved for issuance
upon exercise of options granted under the Stock Plan by the Board. Under the
Stock Plan, employees or consultants may be granted options that allow for the
purchase of shares of Common Stock.
Under the terms of the Stock Plan, nonqualified stock options may be granted
to employees and consultants. Incentive stock options may be granted only to
employees, including directors who are employees.
Nonqualified 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. Options granted under the Stock Plan generally
vest monthly over four to five years. The term of the nonqualified and incentive
stock options granted is 10 years or less from the date of grant, as provided in
the option agreements.
Incentive and nonqualified 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 Board. The Board may amend or modify the Stock Plan at any
time, subject to certain limitations. The Stock Plan will terminate in 2001,
unless sooner terminated by the Board.
The Board is of the opinion that the Stock Plan has helped the Company
compete for, motivate and retain high quality executives and other key
employees, and to align their interests with the interests of stockholders, and
that it is in the best interests of the Company to amend the Stock Plan as
proposed. Consistent with the Company's compensation objectives, rewards under
the Stock Plan are dependent on those factors which directly benefit the
Company's stockholders and appreciation in the market value of the Common Stock.
14
<PAGE>
The amendment will permit the continuation of option grants, thereby
providing long-term incentives to the executive officers and other key salaried
employees of the Company who have the potential to direct and manage the
business of the Company successfully in the future.
As of July 31, 1998, 741,053 options remained available for grant under the
Stock Plan. The number of newly authorized shares on which options could be
granted under the Stock Plan will represent approximately 7.4% of the currently
outstanding shares of Common Stock.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES IS BASED UPON
EXISTING STATUTES, REGULATIONS AND INTERPRETATIONS THEREOF. THE APPLICABLE RULES
ARE COMPLEX, AND INCOME TAX CONSEQUENCES MAY VARY DEPENDING UPON THE PARTICULAR
CIRCUMSTANCES OF EACH PLAN PARTICIPANT. THIS PROXY STATEMENT DESCRIBES FEDERAL
INCOME TAX CONSEQUENCES OF GENERAL APPLICABILITY, BUT DOES NOT PURPORT TO
DESCRIBE EITHER PARTICULAR CONSEQUENCES TO EACH INDIVIDUAL PLAN PARTICIPANT OR
FOREIGN, STATE OR LOCAL INCOME TAX CONSEQUENCES, WHICH MAY DIFFER FROM THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
INCENTIVE STOCK OPTIONS
AWARD; EXERCISE. ISOs are intended to constitute "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986 (the
"Code"). ISOs may be granted only to employees of the Company (including
directors who are also employees). An optionee does not recognize taxable income
upon either the grant or exercise of an ISO. However, the excess of the fair
market value of the shares purchased upon exercise over the option exercise
price (the "option spread") is includible in the optionee's "alternative minimum
taxable income" ("AMTI") for purposes of the alternative minimum tax ("AMT").
The option spread is generally measured on the date of exercise and is
includible in AMTI in the year of exercise. Special rules regarding the time of
AMTI inclusion may apply for shares subject to a repurchase right or other
"substantial risk of forfeiture" (including, in the case of each person subject
to the reporting requirements of Section 16 of the Exchange Act, any limitations
on resale of shares imposed under Section 16(b) of the Exchange Act).
SALE OF OPTION SHARES. If an optionee holds the shares purchased under an
ISO for at least two years from the date the ISO was granted and for at least
one year from the date the ISO was exercised, any gain from a sale of the shares
other than to the Company is taxable as long term capital gain. Under these
circumstances, the Company would not be entitled to a tax deduction at the time
the ISO was exercised or at the time the stock was sold. If an optionee were to
dispose of stock acquired pursuant to an ISO before the end of the required
holding periods (a "Disqualifying Disposition"), the amount by which the market
value of the stock at the time the ISO was exercised exceeded the exercise price
(or, if less, the amount of gain realized on the sale) would be taxable as
ordinary income, and the Company would be entitled to a corresponding tax
deduction. Such income is subject to information reporting requirements. Gain
from a Disqualifying Disposition in excess of the amount required to be
recognized as ordinary income is capital gain, and is "long term" gain if the
shares have been held more than one year as of the date of sale. Optionees are
required to notify the Company immediately prior to making a Disqualifying
Disposition. If stock is sold to the Company rather than to a third party, the
sale may not produce capital gain or loss. A sale of shares to the Company will
constitute a redemption of such shares, which could be taxable as a dividend
unless the redemption is "not necessarily equivalent to a dividend" within the
meaning of the Code.
EXERCISE WITH STOCK. If an optionee pays for ISO shares with shares of the
Company acquired under an ISO or a qualified employee stock purchase plan
("statutory option stock"), the tender of shares is a Disqualifying Disposition
of the statutory option stock if the above described (or other applicable)
holding periods respecting those shares have not been satisfied. If the holding
periods with respect to the statutory option stock are satisfied, or the shares
were not acquired under a statutory stock option of the Company,
15
<PAGE>
then any appreciation in value of the surrendered shares is not taxable upon
surrender. Special basis and holding period rules apply where previously-owned
stock is used to exercise an ISO.
The present position of the Internal Revenue Service ("IRS") appears to be
that income and employment withholding taxes are not imposed upon the exercise
of an ISO or the sale of ISO shares. The IRS is studying this position and may
change it at any time, possibly with retroactive effect.
NONQUALIFIED STOCK OPTIONS
AWARD; EXERCISE. An optionee is not taxable upon the award of an NSO.
Federal income tax consequences upon exercise of an NSO will depend upon whether
the shares thereby acquired are subject to a "substantial risk of forfeiture."
If the shares are not subject to a substantial risk of forfeiture, or if they
are so restricted and the optionee files an election under Section 83(b) of the
Code (a "Section 83(b) Election") with respect to the shares, the optionee will
have ordinary income at the time of exercise measured by the option spread on
the exercise date. The optionee's tax basis in the shares will be their fair
market value on the date of exercise, and the holding period for purposes of
determining whether capital gain or loss upon sale is long- or short-term also
will begin on that date. If the shares are subject to a substantial risk of
forfeiture and no Section 83(b) Election is filed, the optionee will not be
taxable upon exercise, but instead will have ordinary income, on the date the
restrictions lapse, in an amount equal to the difference between the amount paid
for the shares under the option and their fair market value as of the date of
lapse; in addition, the optionee's holding period will begin on the date of
lapse.
Whether or not the shares are subject to a substantial risk of forfeiture,
the amount of ordinary income taxable to an optionee who was an employee at the
time of grant constitutes "supplemental wages" subject to withholding of income
and employment taxes by the Company, and the Company receives a corresponding
income tax deduction.
SALE OF OPTION SHARES. Upon sale, other than to the Company, of shares
acquired under an NSO, an optionee generally will recognize capital gain or loss
to the extent of the difference between the sale price and the optionee's tax
basis in the shares, which will be long-term gain or loss if the employee's
holding period in the shares is more than one year. Certain lower rates apply if
the shares have been held for longer periods. If stock is sold to the Company
rather than to a third party, the sale may not produce capital gain or loss. A
sale of shares to the Company will constitute a redemption of such shares, which
could be taxable as a dividend unless the redemption is "not necessarily
equivalent to a dividend" within the meaning of the Code.
EXERCISE WITH STOCK. If an optionee tenders Common Stock (other than
statutory option stock--see above) to pay all or part of the exercise price of
an NSO, the optionee will not have a taxable gain or deductible loss on the
surrendered shares. Instead, shares acquired upon exercise that are equal in
value to the fair market value of the shares surrendered in payment are treated
as if they had been substituted for the surrendered shares, taking as their
basis and holding period the basis and holding period that the optionee had in
the surrendered shares. The additional shares are treated as newly acquired, are
taxable to the optionee, and have a basis equal to their fair market value on
the exercise date.
If the surrendered shares are statutory option stock as described above
under "Incentive Stock Options", with respect to which the applicable holding
period requirements for favorable income tax treatment have not expired, then
the newly acquired shares substituted for the statutory option shares should
remain subject to the federal income tax rules governing the surrendered shares,
but the surrender should not constitute a Disqualifying Disposition of the
surrendered stock.
SPECIAL FEDERAL INCOME TAX CONSIDERATION DUE TO SHORT SWING PROFIT RULE
The potential liability of a person subject to Section 16 of the Exchange
Act of 1934 to repay short-swing profits from the resale of shares acquired
under a Company plan constitutes a "substantial risk of
16
<PAGE>
forfeiture" within the meaning of the above-described rules, which is generally
treated as lapsing at such time as the potential liability under Section 16
lapses. Persons subject to Section 16 who would be required by Section 16 to
repay profits from the immediate resale of stock acquired under a Company plan
should consider whether to file a Section 83(b) Election at the time they
acquire stock under a Company plan in order to avoid deferral of the date they
are deemed to acquire shares for federal income tax purposes.
PLAN BENEFITS
The following table shows the number of shares of Common Stock issuable upon
exercise of options granted to the named groups under the Stock Plan during the
fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF OPTIONS(1)
- - ------------------------------------------------------------------------ --------------------
<S> <C>
John P. Davis,
President and Chief Executive Officer................................. --
William A. Boeger,
President, Chief Executive Officer and Chairman....................... 195,000
Howard B. Urnovitz,
Chief Science Officer................................................. 150,000
John J. DiPietro,
Chief Operating Officer, Chief Financial Officer, Vice President of
Finance and Secretary................................................. 80,000
Executive Group......................................................... 425,000
Non-Executive Director Group............................................ 100,000
Non-Executive Officer Employee Group.................................... --
</TABLE>
- - ------------------------
(1) All options granted at fair market value as of the date of grant.
APPROVAL REQUIRED
Approval of Proposal 3 requires the affirmative vote of a majority of the
outstanding shares of Common Stock of the Company represented and voting at the
Annual Meeting.
THE BOARD RECOMMENDS A VOTE FOR THE AMENDMENT OF THE 1991 INCENTIVE STOCK
PLAN. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS
SPECIFY A DIFFERENT CHOICE IN THEIR PROXIES.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 4)
The Board recommends that the stockholders ratify the Board's appointment of
the accounting firm of KPMG Peat Marwick LLP as independent auditors to audit
the financial statements of the Company. The firm has conducted the audits for
the Company for many years and is considered by management of the Corporation to
be well qualified.
Representatives from KPMG Peat Marwick LLP are expected to be at the Annual
Meeting and to be available to respond to appropriate questions. Such
representatives will have the opportunity to make a statement if they desire to
do so and to respond to appropriate questions raised during the meeting.
APPROVAL REQUIRED
Approval of Proposal 4 requires the affirmative vote of a majority of the
outstanding shares of Common Stock of the Company represented and voting at the
Annual Meeting.
17
<PAGE>
THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE APPOINTMENT OF KPMG PEAT
MARWICK LLP AS INDEPENDENT AUDITORS TO AUDIT THE FINANCIAL STATEMENTS OF THE
COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998. PROXIES SOLICITED BY THE
BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY A DIFFERENT CHOICE IN THEIR
PROXIES.
OTHER MATTERS
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR INCLUSION IN THE COMPANY'S
PROXY STATEMENT FOR THE 1999 ANNUAL MEETING
Under the rules of the Securities and Exchange Commission, stockholder
proposals submitted for next year's Proxy Statement must be received by the
Company no later than the close of business on May 17, 1999, to be considered.
Proposals should be addressed to John J. DiPietro, Secretary, Calypte Biomedical
Corporation, 1440 Fourth Street, Berkeley, California 94710.
OTHER INFORMATION
The Company does not know of any matters other than those referred to in the
accompanying Notice of Annual Meeting of Stockholders which may properly come
before the meeting or other matters incident to the conduct of the meeting. As
to any other matter or proposal that may properly come before the meeting,
including voting for the election of any person as a director in place of a
nominee named herein who becomes unable to serve or for good cause will not
serve and voting on a proposal omitted from this Proxy Statement pursuant to the
rules of the Securities and Exchange Commission, it is intended that proxies
received will be voted in accordance with the discretion of the proxy holders.
By order of the Board of Directors,
John J. DiPietro
SECRETARY
Berkeley, California
September 28, 1998
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APPENDIX A
CALYPTE BIOMEDICAL CORPORATION
1991 STOCK OPTION PLAN
(AS AMENDED)
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Committee, if one has been appointed, or the
Board of Directors of the Company, if no Committee is appointed.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one
is appointed.
(d) "Common Stock" shall mean the Common Stock of the Company.
(e) "Company" shall mean Calypte Biomedical Corporation, a Delaware
corporation.
(f) "Consultant" shall mean any person who is engaged by the Company or
any Parent or Subsidiary to render consulting services and is compensated
for such consulting services, and any director of the Company who is not an
Employee whether compensated for such services or not; provided that if and
in the event the Company registers any class of any equity security pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the term Consultant shall thereafter not include directors
who are not compensated for their services or are paid only a director's fee
by the Company.
(g) "Continuous Status as an Employee or Consultant" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any
other leave of absence approved by the Board; provided that such leave is
for a period of not more than 90 days or reemployment upon the expiration of
such leave is guaranteed by contract or statute.
(h) "Employee" shall mean any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The
payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the company.
(i) "Incentive Stock option" shall mean an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
(j) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(k) "Option" shall mean a stock option granted pursuant to the Plan.
(l) "Optioned Stock" shall mean the Common Stock subject to an Option.
(m) "Optionee" shall mean an Employee or Consultant who receives an
Option.
(n) "Parent" shall mean a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(o) "Plan" shall mean this 1991 Stock Option Plan.
<PAGE>
(p) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(q) "Subsidiary" shall mean a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 3,740,992 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock. If an Option should expire
or become unexercisable for any reason without having been exercised in full,
the unpurchased Shares which were subject thereto shall, unless the Plan shall
have been terminated, become available for future grant under the Plan. Shares
issued under the Plan and later repurchased by the Company shall also become
available for future grant or sale under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) Procedure. The Plan shall be administered by the Board of Directors
of the Company.
(i) Subject to subparagraph (ii), the Board of Directors may appoint
a committee consisting of not less than two members of the Board of
Directors to administer the Plan on behalf of the Board of Directors,
subject to such terms and conditions as the Board of Directors may
prescribe. Once appointed, the Committee shall continue to serve until
otherwise directed by the Board of Directors. Members of the Board who
are either eligible for Options or have bean granted Options may vote on
any matters affecting the administration of the Plan or the grant of any
Options pursuant to the Plan, except that no such member shall act upon
the granting of an option to himself, but any such member may be counted
in determining the existence of a quorum at any meeting of the Board
during which action is taken with respect to the granting of Options to
him.
(ii) Notwithstanding the foregoing subparagraph (i), if the Company
registers any class of any equity security pursuant to Section 12 of the
Exchange Act, from the effective date of such registration until six
months after the termination of such registration, any grants of Options
to officers or directors shall only be made by the Board of Directors;
provided, however, that if a majority of the Board of Directors is
eligible to participate in this Plan or any other stock option or other
stock plan of the Company or any of its affiliates, or has been eligible
at any time during the prior one-year period (or, if shorter, the period
following the initial registration of the Company's equity securities
under Section 12 of the Exchange Act), any grants of Options to directors
must be made by, or only in accordance with the recommendation of, a
Committee consisting of three or more persons, who may but need not be
directors or employees of the Company, appointed by the Board of
Directors and having full authority to act in the matter, none of whom is
eligible to participate in this Plan or any other stock option or other
stock plan of the Company or any of its affiliates, or has been eligible
at any time during the prior one-year period (or, if shorter, the period
following the initial registration of the Company's equity securities
under Section 12 of the Exchange Act). Any Committee administering the
Plan with respect to grants to officers who are not also directors shall
conform to the requirements of the preceding sentence. Once appointed,
the Committee shall continue to serve until otherwise directed by the
Board of Directors. (iii) Subject to the foregoing subparagraphs (i) and
(ii), from time to time the Board of Directors may increase the size of
the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor,
fill vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
(b) Powers of the Board. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive
Stock Options or Nonstatutory Stock Options; (ii) to
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determine, upon review of relevant information and in accordance with
Section 8(b) of the Plan, the fair market value of the Common Stock; (iii)
to determine the exercise price per share of Options to be granted, which
exercise price shall be determined in accordance with Section 8(a) of the
Plan; (iv) to determine the Employees or Consultants to whom, and the time
or times at which, Options shall be granted and the number of shares to be
represented by each Option; (v) to interpret the Plan; (vi) to prescribe,
amend and rescind rules and regulations relating to the Plan; (vii) to
determine the terms and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Option; (viii) to defer (with the consent of the Optionee) the exercise date
of any Option, consistent with the provisions of Section 5 of the Plan; (ix)
to authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option previously granted by the
Board; and (x) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(c) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding and all Optionees
and any other holders of any Options granted under the Plan.
5. ELIGIBILITY.
(a) Nonstatutory Stock Options may be granted only to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he is
otherwise eligible, be granted an additional Option or Options.
(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate fair
market value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company, its Parent or
Subsidiaries) exceeds $100,000, such Options shall be treated as
Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Options shall be taken into account in
the order in which they were granted, and the fair market value of the
Shares shall be determined as of the time the Option with respect to such
Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company,
nor shall it interfere in any way with his right or the Company's right to
terminate his employment or consulting relationship at any time, with or
without cause.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the shareholders of
the Company as described in Section 17 of the Plan. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 13 of the
Plan.
7. TERM OF OPTION. The term of each option shall be ten (10) years from
the date of grant thereof or such shorter term as may be provided in the Option
Agreement. However, in the case of an Option granted to an optionee who, at the
time the Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, if the Option is an Incentive Stock Option, the term of the Option
shall be five (5) years from the date of grant thereof or such shorter term as
may be provided in the Incentive Stock Option Agreement.
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8. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of such
Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the fair market value per Share on the date of
grant;
(B) granted to any other Employee, the per Share exercise price
shall be no less than 100% of the fair market value per Share on the
date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant of such
Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110%
of the fair market value per Share on the date of the grant;
(B) granted to any other person, the per Share exercise price
shall be no less than 85% of the fair market value per Share on the
date of grant. For purposes of this Section 8(a), in the event that
an Option is amended to reduce the exercise price, the date of grant
of such Option shall thereafter be considered to be the date of such
amendment.
(b) The fair market value shall be determined by the Board in its
discretion; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the mean of the bid
and asked prices (or the closing price per share if the Common Stock is
listed on the National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System) of the Common Stock for the date of
grant, as reported in the Wall Street Journal (or, if not so reported, as
otherwise reported by the NASDAQ System) or, in the event the Common Stock
is listed on a stock exchange, the fair market value per Share shall be the
closing price on such exchange on the date of grant of the Option, as
reported in the Wall Street Journal.
(c) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined
by the Board and may consist entirely of cash, check, promissory note, other
Shares of Common Stock which (i) either have been owned by the Optionee for
more than six (6) months on the date of surrender or were not acquired,
directly or indirectly, from the Company, and (ii) have a fair market value
on the date of surrender equal to the aggregate exercise price of the Shares
as to which said Option shall be exercised, or any combination of such
methods of payment, or such other consideration and method of payment for
the issuance of Shares to the extent permitted under Sections 408 and 409 of
the California General Corporation Law. In making its determination as to
the type of consideration to accept, the Board shall consider if acceptance
of such consideration may be reasonably expected to benefit the Company
(Section 315(b) of the California General Corporation Law).
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible
under the terms of the Plan. An Option may not be exercised for a fraction
of a Share. An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full
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<PAGE>
payment for the Shares with respect to which the Option is exercised has
been received by the Company. Full payment may, as authorized by the Board,
consist of any consideration and method of payment allowable under Section
8(c) of the Plan. Until the issuance (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such stock certificate
promptly upon exercise of the Option. In the event that the exercise of an
Option is treated in part as the exercise of an Incentive Stock Option and
in part as the exercise of a Nonstatutory Stock Option pursuant to Section
5(b), the Company shall issue a separate stock certificate evidencing the
Shares treated as acquired upon exercise of an Incentive Stock Option and a
separate stock certificate evidencing the Shares treated as acquired upon
exercise of a Nonstatutory Stock Option, and shall identify each such
certificate accordingly in its stock transfer records. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 11 of
the Plan. Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.
(b) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the event
of termination of an Optionee's Continuous Status as an Employee or
Consultant (as the case may be), such Optionee may, but only within three
(3) months (or such shorter period of time as is determined by the Board and
specified in the Option Agreement) after the date of such termination (but
in no event later than the date of expiration of the term of such Option as
set forth in the Option Agreement), exercise his Option to the extent that
he was entitled to exercise it at the date of such termination. To the
extent that he was not entitled to exercise the Option at the date of such
termination, or if he does not exercise such Option (which he was entitled
to exercise) within the time specified herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section
9 (b) above, in the event of termination of an Optionee's Continuous Status
as an Employee or Consultant as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), he may, but only
within six (6) months from the date of such termination (but in no event
later than the date of expiration of the term of such Option as set forth in
the Option Agreement), exercise his Option to the extent he was entitled to
exercise it at the date of such termination. To the extent that he was not
entitled to exercise the Option at the date of termination, or if he does
not exercise such Option (which he was entitled to exercise) within the time
specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. Notwithstanding the provisions of Section 9(b)
above, in the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his death an
Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of
the Option, the Option may be exercised, at any time within six (6)
months following the date of termination (but in no event later than the
date of expiration of the term of such Option as set forth in the Option
Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the
extent that the right to exercise had accrued as of the date of death of
the Optionee; or
(ii) within thirty (30) days after the termination of Continuous
Status as an Employee or Consultant, the Option may be exercised, at any
time within six (6) months following the date of death (but in no event
later than the date of expiration of the term of such Option as set forth
in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but
only to the extent of the right to exercise that had accrued at the date
of termination.
5
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10. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option. In the event
of the proposed dissolution or liquidation of the Company, the Board shall
notify the Optionee at least fifteen (15) days prior to such proposed action. To
the extent it has not been previously exercised, the Option will terminate
immediately prior to the consummation of such proposed action.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall unless
otherwise fixed by the Board, be the date on which the Board makes the
determination granting such Option. Notice of the determination shall be given
to each Employee or Consultant to whom an Option is so granted within a
reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval
of the shareholders of the Company in the manner described in Section 17 of
the Plan:
(i) any increase in the number of Shares subject to the Plan, other
than in connection with an adjustment under Section 11 of the Plan;
(ii) any change in the designation of the class of persons eligible
to be granted Options; or
(iii) if the Company has a class of equity securities registered
under Section 12 of the Exchange Act at the time of such revision or
amendment, any material increase in the benefits accruing to participants
under the Plan.
(b) SHAREHOLDER APPROVAL. If any amendment requiring shareholder
approval under Section 13(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section
12 of the Exchange Act, such shareholder approval shall be solicited as
described in Section 17 of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee
and the Board, which agreement must be in writing and signed by the Optionee
and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto
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<PAGE>
shall comply with all relevant provisions of law, including, without limitation,
the Securities Act of 1933, as amended, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
15. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
17. SHAREHOLDER APPROVAL.
(a) continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the
date the Plan is adopted.
(b) If and in the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval
of the shareholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act
and the rules and regulations promulgated thereunder.
(c) if any required approval by the shareholders of the Plan itself or
of any amendment thereto is solicited at any time otherwise than in the
manner described in Section 17(b) hereof, then the Company shall, at or
prior to the first annual meeting of shareholders held subsequent to the
later of (1) the first registration of any class of equity securities of the
Company under Section 12 of the Exchange Act or (2) the granting of an
option hereunder to an officer or director after such registration, do the
following:
(i) furnish in writing to the holders entitled to vote for the Plan
substantially the same information which would be required (if proxies to
be voted with respect to approval or disapproval of the Plan or amendment
were then being solicited) by the rules and regulations in effect under
Section 14(a) of the Exchange Act at the time such information is
furnished; and
(ii) file with, or mail for filing to, the Securities and Exchange
Commission four copies of the written information referred to in
subsection (i) hereof not later than the date on which such information
is first sent or given to shareholders.
18. INFORMATION TO OPTIONEES. The Company shall provide to its security
holders financial statements at least annually. The Company shall not be
required to provide such information to key employees whose duties in connection
with the Company assure their access to equivalent information.
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CALYPTE BIOMEDICAL CORPORATION
1440 FOURTH STREET
BERKELEY, CALIFORNIA 94710
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints WILLIAM A. BOEGER and JOHN J. DIPIETRO,
and each of them, with full power of substitution, as the proxy or proxies of
the undersigned to vote all shares of Common Stock of Calypte Biomedical
Corporation which the undersigned is entitled to vote at the annual meeting
of stockholders of Calypte Biomedical Corporation to be held at 1265 Harbor
Bay Parkway, Alameda, California 94502 on October 26, 1998, at 9:00 a.m.
local time, and at any adjournments or postponements thereof, with all powers
that the undersigned would have if personally present thereat:
(CONTINUED ON OTHER SIDE)
FOLD AND DETACH HERE
<PAGE>
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR Proposals 1, 2, 3 and 4.
--- Please mark your
X votes as indicated
--- in this example
1. Election of Directors
William A. Boeger; Howard B. Urnovitz, Ph.D.; David Collins; Paul Freiman;
Julius R. Krevans, M.D.; Mark Novitch, M.D.; Zafar Randawa, Ph.D.
(The Board of Directors recommends a vote FOR.)
FOR all nominees (except as marked to the contrary below)__
WITHHOLD AUTHORITY to vote for all nominees listed below __
This proxy will be voted in the election of directors in the manner described
in the proxy statement for the 1998 annual meeting of stockholders.
(INSTRUCTION: To withhold authority to vote for one or more individual
nominees, write such name or names in the space provided to the
right.)__________________
2. Proposal to amend the Company's Restated Certificate of Incorporation
increasing the number of shares of the Company's Common Stock authorized for
issuance from 20,000,000 to 30,000,000 shares. (The Board of Directors
recommends a vote FOR.)
FOR AGAINST ABSTAIN
---- ----- -----
3. Proposal to amend the 1991 Incentive Stock Plan to increase by 1,000,000
the number of shares of Common Stock reserved for issuance thereunder. (The
Board of Directors recommends a vote FOR.)
FOR AGAINST ABSTAIN
---- ----- -----
4. Proposal to ratify the appointment by the Board of Directors of KPMG Peat
Marwick LLP as independent auditors to audit the financial statements of the
Company and its consolidated subsidiaries for the fiscal year ending December
31, 1998. (The Board of Directors recommends a vote FOR.)
<PAGE>
FOR AGAINST ABSTAIN
---- ----- -----
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and at any adjournments or
postponements thereof.
Dated: , 1998
--------------------
- - ---------------------------------------------
Signature of Stockholder
- - ---------------------------------------------
Signature if held jointly
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
FOLD AND DETACH HERE
