<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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
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 14a-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:
-----------------------------------------------------------------------
(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>
[LOGO]
1440 FOURTH STREET
BERKELEY, CALIFORNIA 94710
October 26, 1999
Dear Stockholder:
You are cordially invited to attend Calypte Biomedical Corporation's Annual
Meeting of Stockholders on Thursday, November 18, 1999. 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 1998 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,
/s/ WILLIAM A. BOEGER
William A. Boeger
CHAIRMAN OF THE BOARD OF DIRECTORS
<PAGE>
[LOGO]
1440 FOURTH STREET
BERKELEY, CALIFORNIA 94710
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 18, 1999
------------------------
October 26, 1999
The 1999 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 Thursday, November 18, 1999,
at 9:00 a.m. local time, for the following purposes:
1. To elect nine directors of the Company to hold office until the next
Annual Meeting of Stockholders and until their successors are elected and
qualified;
2. To vote on a proposed amendment to the 1991 Incentive Stock Plan to
increase by 500,000 the number of shares of Common Stock reserved for
issuance thereunder;
3. To vote on a proposed amendment to the 1995 Director Option Plan to i)
increase by 150,000 the number of shares of Common Stock reserved for
issuance thereunder; ii) allow option grantees thereunder to transfer
some or all of their options so granted to immediate family members
during the lifetime of the grantee; iii) allow the Board of Directors of
Calypte to determine the number of options to be granted to directors,
provided that the number of options for each newly-elected director in
any given year will be the same for each such director and the number of
options for each re-elected director in any given year will be the same
for each such director; iv) provide for each grant under the plan to vest
monthly over the twelve month period commencing with the date of election
or re-election of the optionee as director, provided that such option
will become vested and fully exercisable on the date of the next annual
meeting of stockholders if such meeting occurs less that one year after
the date of grant; v) provide that each option granted will be
exercisable over a period of ten years commencing with the date of such
option grant to the extent the option has become vested, regardless of
whether the optionee has terminated service as a board member provided,
however, that if an optionee is removed from the board, the option will
terminate if it is not exercised within 90 days of the date of such
removal; and vi) allow non-employee directors who also serve as
consultants to the Company to participate in the Director Option Plan in
order to account for their separate service as directors.
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, 1999; and
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Stockholders of record on October 21, 1999 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,
/s/ WILLIAM A. BOEGER
William A. Boeger
CHAIRMAN OF THE BOARD AND 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>
[LOGO]
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 Thursday, November 18, 1999, 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 stockholder 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 October 21, 1999 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 20,415,650 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
1
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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 October 26, 1999.
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 1991 Incentive Stock Plan (the "Incentive Stock Plan"); (3) for
the proposed amendment to the 1995 Director Option Plan (the "Director 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, nine directors are to be elected to hold office until
the 2000 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.
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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............. 49 Chairman of the Board of Directors and Secretary, Calypte
Biomedical Corporation 3/91
David Collins................. 65 Chief Executive Officer, Calypte Biomedical Corporation 12/95
Nancy E. Katz................. 40 President, Chief Operating Officer and Chief Financial Officer,
Calypte Biomedical Corporation 10/99
Howard B. Urnovitz, Ph.D...... 45 Chief Science Officer, Calypte Biomedical Corporation 11/89
Paul Freiman.................. 65 President and Chief Executive Officer, Neurobiological
Technologies, Inc. 12/97
Julius R. Krevans, M.D........ 75 Chancellor Emeritus Director of International Medical Care
University of California, San Francisco 3/95
Mark Novitch, M.D............. 67 Adjunct Professor, George Washington University Medical Center 9/95
Zafar Randawa, Ph.D........... 51 Director of the New Technology Evaluation Division, Otsuka
America Pharmaceutical 12/96
John J. DiPietro.............. 41 Vice President of Finance & Administration, Tripath Technology
Inc. 10/99
</TABLE>
WILLIAM A. BOEGER has served as the Company's Chairman of the Board and
Secretary and as a consultant to the Company since October 1999. From December
1997 until October 1999 he served as the Company's President, Chief Executive
Officer and Chairman of the Board. From September 1995 until December 1997, he
served as the Company's Chairman of the Board. From May 1995 until September
1995, Mr. Boeger served as the Company's Chairman and Chief Executive Officer.
From January 1994 until May 1995, Mr. Boeger served as the Company's Chairman,
President and Chief Executive Officer. Mr. Boeger has been a director of the
Company since 1991. He is a founder and Managing General Partner of Quest
Ventures, a venture capital partnership founded in August 1985. Prior to that he
was a General Partner of Continental Capital Ventures, a venture capital
partnership. Before entering the venture capital field, he worked at Harvard
Medical School and Peter Bent Brigham Hospital and served on the faculty of the
Amos Tuck Business School at Dartmouth College. Mr. Boeger also serves as a
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 Cell Pathways, Inc. Mr. Boeger received his M.B.A. from Harvard
Business School and his B.S. from Williams College.
DAVID COLLINS has served as the Company's Chief Executive Officer and Vice
Chairman of the Board of Directors since October 1999. From July 1998 until
October 1999 he served as the Company's Vice Chairman of the Board of Directors.
From December 1997 until June 1998 he served as the Company's Vice Chairman of
the Board of Directors and as a consultant to the Company. 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. 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.
3
<PAGE>
NANCY E. KATZ has served as the Company's President, Chief Operating Officer
and Chief Financial Officer since October 1999. Prior to joining Calypte, Ms.
Katz served as President of Zila Pharm Inc., a prescription and non-prescription
oral health care products company. From 1995 until 1998, Ms. Katz was Vice
President of U.S. Sales & Marketing with LifeScan, Inc., a Johnson & Johnson
company that provides blood glucose diagnostic products. From 1987 to 1994, she
held several positions, including Senior Director and General Manager with
Schering-Plough Corporation, a medical products company. From 1981 to 1987, Ms.
Katz held several marketing positions with American Home Products, a
multinational health care corporation. Ms. Katz received her B.A. in Business
Administration from the University of South Florida.
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
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.
PAUL FREIMAN has served as a member of the Company's Board of Directors
since July 1998. From December 1997 until June 1998 he served as a member of the
Company's Board of Directors and as a consultant to the Company. 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, Otsuka America Pharmaceuticals, Inc., Penwest Corp., and several other
biotechnology companies. 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 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 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.
4
<PAGE>
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
that 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.
JOHN J. DIPIETRO has served on the Company's Board of Directors and as a
consultant to the Company since October 1999. From December 1997 until September
1999 he served as the Company's Chief Operating Officer, Vice President of
Finance, Chief Financial Officer and Secretary. From October 1995 until December
1997, he served as the Vice President of Finance, Chief Financial Officer and
Secretary. Mr. DiPietro is currently the Vice President of Finance &
Administration of Tripath Technology Inc., a digital technology company, and has
served in that capacity since September 1999. Mr. DiPietro was Vice President of
Finance, Chief Financial Officer and Secretary of Meris Laboratories, Inc., a
full service clinical laboratory, from 1991 until 1995. From 1980 until 1983 and
from 1986 until 1991, Mr. DiPietro was a Senior Manager at Price Waterhouse. Mr.
DiPietro served as Credit Manager for Motorola, Inc., an electronics company,
from 1983 until 1986. Mr. DiPietro also consults with various private companies.
He is a Certified Public Accountant and received his M.B.A. from the University
of Chicago, Graduate School of Business and a B.S. in Accounting from Lehigh
University.
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 1998. The Board has standing Audit,
Compensation and Nominating Committees. During 1998, 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.
AUDIT COMMITTEE
The Audit Committee consists of Messrs. Novitch, Randawa and Boeger (a
non-voting member). Mr. Randawa replaced Mr. Collins as a member of the Audit
Committee upon Mr. Collins' resignation from the committee in October 1999 in
connection with Mr. Collins' assumption of the duties of Chief Executive Officer
of the Company. 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 1998.
The audit committee meeting to discuss the results of the audit of the financial
statements of the Company for the year ended December 31, 1998 was held in 1999.
COMPENSATION COMMITTEE
The Compensation Committee consists of Messrs. Krevans and Freiman. Mr.
Freiman replaced Mr. Collins as a member of the Compensation Committee upon Mr.
Collins' resignation from the committee in October 1999 in connection with Mr.
Collins' assumption of the duties of Chief Executive Officer of the Company. The
Compensation Committee reviews and approves the compensation of the
5
<PAGE>
Company's executive officers and administers the Company's stock plans. The
Compensation Committee met three times in 1998.
NOMINATING COMMITTEE
The Nominating Committee consists of Messrs. Krevans (Chairman), Novitch and
Freiman. Mr. Freiman replaced Mr. Collins as a member of the Nominating
Committee upon Mr. Collins' resignation from the committee in October 1999 in
connection with Mr. Collins' assumption of the duties of Chief Executive Officer
of the Company. The Nominating Committee recommends future additions, deletions
and slates of board members to the full Board. The Nominating Committee held no
meetings in 1998.
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
Director Stock Plan, non-employee directors of the Company have in the past
received automatic grants of stock options to purchase shares of Common Stock.
Under the proposal to amend the Director Stock Plan which will be voted on by
the Company's stockholders at this year's annual meeting, the practice of
automatic grants will end and option grants will instead be determined by the
Board of Directors. In addition to the option grants, all outside directors
receive $5,000 per year in consideration of their membership on the Board.
DIRECTOR STOCK PLAN
The Director Stock 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 Stock Plan. Under the Director Stock 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 "Automatic 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 "Automatic 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 Stock 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 Automatic First Option vests on each of the
first four anniversaries of the date of grant of the Automatic First Option.
Twelve and one-half percent of the shares subject to the Automatic Subsequent
Option shall be exercisable on the first day of each month following the date of
grant. The term of the Director Stock Plan is ten years unless sooner
terminated.
There were 30,000 options granted in 1998 under the Director Stock Plan.
An amendment to the Director Stock Plan that would increase the number of
shares reserved under the plan and that would replace the Automatic First Option
and the Automatic Subsequent Option with discretionary options that would be
granted by the Board of Directors is being submitted to the stockholders in this
proxy for a vote at the annual meeting. Certain other changes to the Director
Stock Plan are also being submitted. See Proposal 3 on Page 20 of this proxy
statement.
6
<PAGE>
INFORMATION ON EXECUTIVE COMPENSATION
The following table sets forth certain compensation awarded or paid by the
Company during the years ended December 31, 1998, 1997 and 1996 to its Chief
Executive Officer and each of the other executive officers of the Company who
earned at least $100,000 in salary and bonus from their employment during fiscal
1998 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
SECURITIES
NAME AND PRINCIPAL UNDERLYING OPTIONS ALL OTHER
POSITION YEAR SALARY($) BONUS($) GRANTED(#)(1) COMPENSATION($)
- ------------------------- ---------- --------- ----------- -------------------- ---------------
<S> <C> <C> <C> <C> <C>
William A. Boeger(2) .... 1998 $ 210,000(3) $ 74,686(4) 600,000(5) $25,881(6)
President, Chief 1997 50,000(7) 5,385(8) 195,000(9) 15,470(10)
Executive Officer and 1996 83,334(11) 0 0 11,560(12)
Chairman of the Board
of Directors
Howard B. Urnovitz ...... 1998 157,846(13) 432 250,000(5) 4,200(14)
Chief Science Officer 1997 87,692 0 150,000(9) 4,200(14)
1996 132,231 61,552(15) 0 85,000(16)
John J. DiPietro(17) .... 1998 144,911 432 300,000(5)/50,000(9) 25,496(12)
Chief Operating 1997 131,250 0 80,000(9) 36,073(12)
Officer, Chief 1996 126,346 0 10,000(9) 32,201(12)
Financial Officer, Vice
President of Finance
and Secretary
</TABLE>
- ------------------------
(1) All figures in this column represent options to purchase the Company's
common stock.
(2) 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. From December 1997
to October 1999, Mr. Boeger served as Chairman of the Board of Directors,
Chief Executive Officer and President. David Collins succeeded Mr. Boeger
as Chief Executive Officer in October 1999. Nancy E. Katz succeeded Mr.
Boeger as President in October 1999. Mr. Boeger continues to serve Calypte
as Chairman of the Board of Directors, as Secretary and as a consultant.
(3) $15,000 was paid to Mr. Boeger in 1998 for services rendered by Mr. Boeger
in 1997.
(4) Represents $74,290 for non-cash bonus related to forgiveness of a portion
of a $70,000 notes receivable including interest from Mr. Boeger and a $396
cash bonus.
(5) Option grant was made upon cancellation of certain options previously
granted.
(6) Represents $20,406 in living expenses and $5,475 in car allowance, $75 of
which relates to a 1997 car allowance.
(7) Represents amounts paid to an affiliate of Quest Ventures, a venture
capital partnership of which Mr. Boeger is Managing General Partner.
(8) Represents non-cash bonus related to forgiveness of a portion of a $70,000
note receivable including interest from Mr. Boeger.
(9) These options were canceled in October 1998.
7
<PAGE>
(10) Represents $10,595 for living expenses and $4,875 for car allowance.
(11) $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.
(12) Represents living expenses.
(13) $5,846 was paid to Dr. Urnovitz in 1998 for services rendered in 1997.
(14) Represents car allowance.
(15) Represents a one-time bonus to defray the tax liability on the deemed
income from the forgiveness of the note receivable from Dr. Urnovitz.
(16) Represents forgiveness of an $85,000 note receivable from Dr. Urnovitz.
(17) Mr. DiPietro joined the Company in October 1995 as Vice President of
Finance, Chief Financial Officer, and Secretary. In December 1997, Mr.
DiPietro was named Chief Operating Officer, Vice President of Finance,
Chief Financial Officer and Secretary. Since September 1999 Mr. DiPietro
has served Calypte as a consultant and as a member of the Board of
Directors. In October 1999, Nancy E. Katz was named Chief Financial
Officer.
The following table sets forth information concerning stock options granted
to the Named Executive Officers during the fiscal year ended December 31, 1998:
STOCK OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL
PERCENT OF REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK
GRANTED TO PRICE APPRECIATION
EMPLOYEES IN FOR 10-YEAR OPTION
OPTIONS FISCAL YEAR EXERCISE PRICE EXPIRATION TERM (3)
NAME GRANTED (#) (1) ($/SH)(2) DATE 5%($) 10%($)
- --------------------- -------------- ------------ -------------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
William A. Boeger.... 600,000(4)(5) 31.49% $1.00 10/29/98 377,337 956,245
Howard B. Urnovitz... 250,000(4) 13.12% 1.00 10/29/98 157,224 398,436
John J. DiPietro..... 50,000(7) 2.62% 4.06 N/A N/A N/A
300,000(4)(6) 15.75% 1.00 10/29/08 188,668 478,123
</TABLE>
- ------------------------
(1) Based on aggregate of 1,905,108 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, 1998, 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 become exercisable at the rate of 4.17% of the shares
subject to the option at November 29, 1998 and at the rate of 4.16% each
month thereafter. The options expire ten years from
8
<PAGE>
the date of grant, or earlier upon termination of employment. The grant was
made upon the officer agreeing to the cancellation of certain stock options
previously granted.
(5) Pursuant to a consulting agreement between Mr. Boeger and the Company, the
rate of vesting in the option was reduced to 0.83% each month during the
twelve-month period of the agreement commencing in October 1999. The options
expire ten years from the date of grant, or earlier upon termination of
employment or of the consulting relationship with the Company.
(6) Pursuant to a consulting agreement between Mr. DiPietro and the Company, the
rate of vesting in the option was reduced to 1.33% each month during the
twelve-month period of the agreement commencing in September 1999. The
options expire ten years from the date of grant, or earlier upon termination
of employment or of the consulting relationship with the Company.
(7) These options granted to Mr. DiPietro in 1998 were canceled in October 1998.
The following table sets forth information concerning option exercises for
the year ended December 31, 1998, with respect to each of the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN 1998
AND DECEMBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISABLE VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE YEAR END(#) AT FISCAL YEAR END($)
NAME EXERCISE(#) REALIZED($) (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(1)
- ------------------------- ----------- --------------- --------------------------- ------------------------------
<S> <C> <C> <C> <C>
William A. Boeger........ -- -- 240,000/550,000 $545,000/$1,031,250
Howard B. Urnovitz....... 30,000 $116,250 136,833/229,167 314,562/429,688
John J. DiPietro......... -- -- 60,000/275,000 112,500/515,625
</TABLE>
- ------------------------
(1) Value realized and value of unexercised in-the-money options is based on a
value of $2.875 per share of the Common Stock, the closing price on December
31, 1998 as quoted on the NASDAQ Smallcap Market. Amounts reflect such fair
market value minus the exercise price multiplied by the number of shares to
be acquired on exercise and do not indicate that the optionee actually sold
such stock.
10-YEAR OPTION GRANTS RELATED TO CANCELLATION OF PRIOR GRANTS (1)
<TABLE>
<CAPTION>
NUMBER OF EXERCISE LENGTH OF
SECURITIES MARKET PRICE PRICE AT ORIGINAL OPTION
UNDERLYING OF STOCK AT TIME OF NEW TERM REMAINING AT
OPTIONS TIME OF EXCHANGE EXERCISE TIME EXCHANGED
NAME DATE EXCHANGED EXCHANGE ($) ($/SH) $ PRICE (2)
- ----------------------------------- -------- ---------- ------------ -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
William A. Boeger.................. 10/29/98 600,000(3) $1.00 $3.75 $1.00 9 Years and
President, Chief Executive 1 Month
Officer and Chairman of the
Board of Directors
Howard B. Urnovitz................. 10/29/98 250,000(4) 1.00 $4.50(4) 1.00 8 Years and
Chief Science Officer 8 Months
John J. DiPietro................... 10/29/98 300,000(5) 1.00 (6) 1.00 (7)
Chief Operating Officer, Chief
Financial Officer, Vice
President of Finance and
Secretary
</TABLE>
9
<PAGE>
(1) Each of the Named Executive Officers received the stock option grants listed
in connection with employment agreements between each officer and the
Company and the cancellation of certain stock options that had been
previously granted. Vesting in the newly issued stock options commenced in
October 1998 and no allowance was made for previous vesting in the cancelled
options.
(2) Length remaining of original option term rounded to nearest month.
(3) 195,000 options previously granted to Mr. Boeger were cancelled in
connection with the new option grant.
(4) 150,000 options previously granted to Mr. Urnovitz were cancelled in
connection with the new option grant.
(5) 140,000 options previously granted to Mr. DiPietro were cancelled in
connection with the new option grant.
(6) Of the options Mr. DiPietro agreed to cancel, 10,000 had an exercise price
of $5.95 per share, 80,000 had an exercise price of $3.625 per share and
50,000 had an exercise price of $4.0625 per share.
(7) Of the options Mr. DiPietro agreed to cancel, 10,000 had 8 years and 2
months remaining in the original option term, 80,000 had 9 years and 2
months remaining in the original option term and 50,000 had 9 years and 8
months remaining in the original option term.
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 Freiman. Mr. Freiman replaced Mr. Collins as a member of the
Compensation Committee upon Mr. Collins' resignation from the committee in
October 1999 in connection with Mr. Collins' assumption of the duties of Chief
Executive Officer of the Company.
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.
10
<PAGE>
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-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 1998, Mr. Boeger received cash payments for salary of $210,000 ($15,000
of which related to services rendered by Mr. Boeger in 1997). The Committee
continued to consider this level of payment appropriate in view of Mr. Boeger's
leadership and accomplishments. Mr. Boeger also received other compensation of
$20,406 for living expenses and $5,475 for car allowance. Mr. Boeger also
received a non-cash bonus of $74,290 related to forgiveness of a portion of a
$70,000 note receivable including interest and a $396 cash bonus.
COMPENSATION COMMITTEE
Julius Krevans, M.D.
Paul Freiman
October 18, 1999
11
<PAGE>
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. During Calypte's 1998 fiscal year, the Compensation Committee was
comprised of Dr. Krevans and Mr. Collins. Mr. Freiman replaced Mr. Collins as a
member of the Compensation Committee upon Mr. Collins' resignation from the
committee in October 1999 in connection with Mr. Collins' assumption of the
duties of Chief Executive Officer of the Company.
In December 1997, the Company entered into a consulting agreement with Mr.
Collins, effective from December 1997 to December 1998. The agreement was
terminated in June 1998. Under the agreement, Mr. Collins received compensation
of $6,000 per month and was granted 50,000 stock options which vested ratably
over the period of the agreement. In October 1999, in conjunction with Mr.
Collins' resignation from the Compensation Committee, the Company entered into a
consulting agreement with Mr. Collins, effective from October 1999 to October
2000. Under the agreement, Mr. Collins receives compensation of $1,000 per day
for service to the Company commensurate with the office of Chief Executive
Officer for at least five days each month and was granted 150,000 stock options
which vest ratably over the period of the agreement.
In December 1997, the Company entered into a consulting agreement with Paul
Freiman, a Board member, effective from January 1998 through December 1998,
which was terminated in June 1998. Under the agreement, Mr. Freiman received
compensation of $30,000 per year and was granted 50,000 stock options which
vested over a 36-month period with the possibility of immediate vesting under
certain conditions.
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 1999 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 October 1998, the Company entered into an employment agreement with
William A. Boeger as the Chairman of the Board, Chief Executive Officer and
President of the Company for a term effective through December 31, 1999, which
provided for an annual salary of $225,000. In addition, he was granted 600,000
stock options which were to vest over twenty-four months. Mr. Boeger was also
entitled to a monthly car allowance of $450, a twenty-five percent bonus upon
the achievement of milestones mutually agreed to by the officer and the Board of
Directors, temporary housing, and travel between his home and the Company. In
the event Mr. Boeger's employment were to be terminated by the Company other
than for cause, he would receive his base salary for twelve months and all stock
options that would have vested during the twelve month period following
termination. In the event Mr. Boeger voluntarily terminated his employment
anytime after July 1, 1999 he would be entitled to receive a one-time payment
equal to six months of his then current salary and vesting in his unvested stock
options would cease.
In October 1999, Mr. Boeger voluntarily terminated his employment with
Calypte. Also in October 1999, the Company entered into a consulting agreement
with Mr. Boeger, effective from October 1999 to October 2000. Under the
agreement, Mr. Boeger will receive $1,023 per day for full-time service to the
Company from October 18, 1999 through November 30, 1999 to assist in the
transition of his successors as Chief Executive Officer and President of the
Company. For the remaining term of the agreement Mr. Boeger will receive $1,000
per day for five days of consulting each month and such additional days as
Calypte will request his services. Throughout the term of the agreement, Mr.
Boeger will continue vesting in the stock options he was granted during his
prior service as an executive officer of Calypte, at the
12
<PAGE>
reduced rate of 5,000 shares per month. Mr. Boeger will also continue to serve
the Company as Chairman of the Board and Secretary.
In October 1998, the Company entered into an employment agreement with John
DiPietro for a term effective through December 31, 1999, which provided for an
annual salary of $170,000. In addition, Mr. DiPietro was granted 300,000 stock
options, which were to vest over twenty-four months. Mr. DiPietro was also
entitled to a monthly car allowance of $350, a twenty-five percent bonus under
the Company's bonus plan, reimbursement for the cost of a corporate apartment,
which expenses would be increased sufficiently to reimburse for taxes owed on
such expenses, and certain change in control provisions. In the event Mr.
DiPietro's employment were to be terminated by the Company other than for cause,
he would receive his base salary for twelve months and all stock options that
would have vested during the term of this agreement would become fully vested.
In September 1999, Mr. DiPietro voluntarily terminated his employment with
Calypte. Also, in September 1999, the Company entered into a consulting
agreement with Mr. DiPietro, who has since been elected as a member of the
Board. The agreement is effective from September 1999 to September 2000. Under
the agreement, Mr. DiPietro will not receive any cash compensation but he will
continue vesting in the stock options he was granted during his prior service as
an executive officer of Calypte, at the reduced rate of 4,000 shares per month.
In October 1999 the Company entered into an employment agreement with Nancy
E. Katz as the President and Chief Operating Officer of the Company. The
agreement provides for an annual salary of $220,000. In addition, Ms. Katz was
granted 450,000 stock options, 150,000 of which vested immediately and the
balance of which vest annually over two years. The Company also agreed to
reimburse Ms. Katz for legal expenses incurred in negotiation of the agreement
up to a maximum of $3,500. In the event that Ms. Katz' employment is terminated
by the Company, other than for cause, she will receive her base salary during
the twelve month period following termination.
In December 1997 and in October 1999, the Company entered into consulting
agreements with David Collins. Please see the discussion in "Compensation
Committee Interlocks and Insider Participation" on page 12 of this proxy
statement.
In 1997, in recognition of a Technology Rights Agreement entered into
between the Company and Dr. Urnovitz, the Company funded the expenses of the
Chronic Illness Research Foundation, a research foundation started by Dr.
Urnovitz with which Mr. Boeger is also affiliated. The Company has entered into
a loan agreement with Dr. Urnovitz to repay such funding to the Company and to
limit funding to a maximum of $165,000. 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. Also in
1998, the due date was extended to July 1, 1999. In the second quarter of 1999,
the due date was further extended to December 31, 1999. 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.
The note from Dr. Urnovitz is a full recourse obligation. It is secured by
Dr. Urnovitz's employee options in the Company, and requires maintenance of a
collateral value of 200% of the loan value. This maintenance covenant was not
met at all times during the third and fourth quarter of 1998. However, at all
times Calypte had the ability to reach Dr. Urnovitz's personal assets which
Calypte believed were adequate to provide for payment and the payment of
royalties.
13
<PAGE>
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 paid Quest Management $50,000 per year payable in monthly installments.
Mr. Boeger is a founder and Managing General Partner of Quest. The agreement is
automatically renewable each year subject to three months notice prior to the
end of the calendar year. The agreement was not renewed for 1999.
In 1997, the Company paid Pepgen, a minority-owned affiliate of the Company
$72,000 for an exclusive license to all technology that relates to urine-based
diagnostics developed by Pepgen.
During 1998, the Company loaned Pepgen $768,000 at an interest rate of 10%.
During the first quarter of 1999, the Company loaned Pepgen an additional
$64,000 at an interest rate of 10%. The Company's note receivable from Pepgen
totaling $832,000 as of March 31, 1999 was secured by all intellectual property
of Pepgen. The entire loan plus interest was due July 1, 1999.
In May 1999, Pepgen received a financing offer from a third party that was
contingent upon Calypte converting its note receivable due from Pepgen into an
additional equity interest in Pepgen. At a meeting of the Calypte Board of
Directors, the Board agreed for such a conversion to take place. Effective March
31, 1999, the Company has written off its total investment in the note
receivable from Pepgen including all accrued interest as research and
development costs. Additional amounts of $63,000 were spent on in-process
research and development related to Pepgen during the second quarter of 1999. In
October 1999, Calypte announced that Pepgen had secured the new round of
financing. Following the closing of the financing, Calypte owns forty-one
percent of Pepgen.
14
<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.
COMPARISON OF 29 MONTH CUMULATIVE TOTAL RETURN*
AMONG CALYPTE BIOMEDICAL CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE HAMBRECHT & QUIST BIOTECHNOLOGY INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RESEARCH DATA GROUP
<S> <C>
Calypte Biomedical Corp (CALY)
Date* Transaction Type
7/26/96 Begin
12/31/96 Year End
12/31/97 Year End
12/31/98 End
* Specified ending dates or ex-dividend dates.
** All Closing Prices and Dividends are adjusted for stock splits and stock
dividends.
*** 'Begin Shares' based on $100 investment.
CALYPTE BIOMEDICAL CORPORATION
7/26/96 100
12/31/96 138
12/31/96 65
12/31/96 48
<CAPTION>
RESEARCH DATA GROUP
<S> <C> <C>
Calypte Biomedical Corp (CALY)
Date* Closing Price**
7/26/96 $6.000
12/31/96 $8.250
12/31/97 $3.875
12/31/98 $2.875
* Specified ending dates or ex-dividend dates.
** All Closing Prices and Dividends are adjusted for stock splits and stock
dividends.
*** 'Begin Shares' based on $100 investment.
NASDAAQ STOCK MARKET (U.S.)
7/26/96 100
12/31/96 119
12/31/96 146
12/31/96 206
<CAPTION>
RESEARCH DATA GROUP TOTAL RETURN WORKSHEET
Begin: 7/26/96
FYE: 12/31/98
End: 12/31/98
Calypte Biomedical Corp (CALY)
Date* Beginning No. of Shares***
7/26/96 16.67
12/31/96 16.67
12/31/97 16.67
12/31/98 16.67
* Specified ending dates or ex-dividend dates.
** All Closing Prices and Dividends are adjusted for stock splits and stock
dividends.
*** 'Begin Shares' based on $100 investment.
HAMBRECHT & QUIST BIOTECHNOLOGY
7/26/96 100
12/31/96 109
12/31/96 111
12/31/96 168
<CAPTION>
RESEARCH DATA GROUP
Calypte Biomedical Corp (CALY)
Date* Ending Shares Cum. Tot. Return
7/26/96 16.667 100.00
12/31/96 16.667 137.50
12/31/97 16.667 64.58
12/31/98 16.667 47.92
* Specified ending dates or ex-dividend dates.
** All Closing Prices and Dividends are adjusted for stock splits and stock
dividends.
*** 'Begin Shares' based on $100 investment.
7/26/96
12/31/96
12/31/96
12/31/96
</TABLE>
* $100 INVESTED ON 7/26/96 IN STOCK OR INDEX--
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
15
<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 October 15, 1999 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 % OF
BENEFICIALLY TOTAL
5% STOCKHOLDERS, DIRECTORS AND OFFICERS(1) OWNED (2)
- ------------------------------------------------------------------------- ----------- ---------
<S> <C> <C>
H&Q Healthcare Investors ................................................ 1,433,993 7.02%
50 Rowes Wharf--4th Floor
Boston, MA 02110
Otsuka Pharmaceutical Co., Ltd.(3) ...................................... 1,302,147 6.38%
463-10 Kagsuno Kawauchi-cho
Tokoshima Japan
Zafar Randawa, Ph.D.(3)(4)............................................... 1,302,147 6.38%
William A. Boeger(5)..................................................... 1,008,684 4.79%
Howard B. Urnovitz, Ph.D.(6)............................................. 420,615 2.04%
John DiPietro(7)......................................................... 169,349 *
Nancy E. Katz(8)......................................................... 150,000 *
David Collins(9)......................................................... 132,000 *
Paul Freiman(10)......................................................... 42,000 *
Mark Novitch, M.D.(11)................................................... 36,000 *
Julius Krevans, M.D.(12)................................................. 18,500 *
All directors and executive officers as a group (9 persons).............. 3,279,295 15.04%
</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) Based on 20,415,650 shares outstanding as of October 15, 1999.
(3) Includes 9,000 shares subject to options exercisable within 60 days.
(4) Dr. Randawa is a director of the Company and an affiliate of Otsuka
Pharmaceutical Co., Ltd.
(5) 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 475,002 shares subject to options exercisable within
60 days owned by Mr. Boeger.
(6) Includes 251,417 shares subject to options exercisable within 60 days.
(7) Includes 172,001 shares subject to options exercisable within 60 days.
(8) Includes 150,000 shares subject to options exercisable within 60 days.
(9) Includes 92,000 shares subject to options exercisable within 60 days.
(10) Includes 42,000 shares subject to options exercisable within 60 days.
(11) Includes 32,000 shares subject to options exercisable within 60 days.
(12) Includes 9,500 shares subject to options exercisable within 60 days.
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.
16
<PAGE>
Based solely on its review of such reports received or written
representations from reporting persons, the Company believes that during fiscal
year 1998 all the Reporting Persons complied with applicable filing requirements
subject to the following exceptions: Dr. Krevans had one late filing of report
Form 4 with respect to a stock option exercise.
PROPOSED AMENDMENT OF THE 1991 INCENTIVE STOCK PLAN
(PROPOSAL 2)
Subject to the approval of the stockholders, the Board has amended the 1991
Incentive Stock Plan (the "Incentive Stock Plan"). The proposed amendment
increases by 500,000 the number of shares of Common Stock reserved for issuance
under the Incentive Stock Plan.
In 1991, the Board approved the adoption of the Incentive 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 Incentive Stock
Plan by the Board. In 1998, 1,000,000 additional shares of Common Stock were
reserved for issuance upon exercise of options granted under the Incentive Stock
Plan by the Board. Under the Incentive Stock Plan, employees or consultants may
be granted options that allow for the purchase of shares of Common Stock.
Under the terms of the Incentive 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 Incentive 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
Incentive 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
Incentive 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 Incentive Stock Plan
at any time, subject to certain limitations. The Incentive Stock Plan will
terminate in 2001, unless sooner terminated by the Board.
The Board is of the opinion that the Incentive 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 Incentive Stock
Plan as proposed. Consistent with the Company's compensation objectives, rewards
under the Incentive Stock Plan are dependent on those factors which directly
benefit the Company's stockholders and appreciation in the market value of the
Common Stock.
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 September 30, 1999, 727,031 options remained available for grant under
the Incentive Stock Plan. The number of newly authorized shares on which options
could be granted under the Incentive Stock Plan will represent approximately
2.45% of the currently outstanding shares of Common Stock.
17
<PAGE>
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 ("ISOS")
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, then any
appreciation in the 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.
18
<PAGE>
NONQUALIFIED STOCK OPTIONS (NSOS)
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-term 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 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.
19
<PAGE>
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 Incentive Stock Plan
during the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION OPTIONS(1)
- --------------------------------------------------------------------------------- ----------
<S> <C>
William A. Boeger, .............................................................. 600,000
President, Chief Executive Officer and Chairman
Howard B. Urnovitz, ............................................................. 250,000
Chief Science Officer
John J. DiPietro, ............................................................... 300,000
Chief Operating Officer, Chief Financial Officer,
Vice President of Finance and Secretary
Executive Group.................................................................. 1,150,000
Non-Executive Director Group..................................................... 0
Non-Executive Employee Group..................................................... 641,108
</TABLE>
- ------------------------
(1) All options granted at fair market value as of the date of grant.
APPROVAL REQUIRED
Approval of Proposal 2 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.
PROPOSED AMENDMENT TO THE 1995 DIRECTOR OPTION PLAN
(PROPOSAL 3)
Subject to the approval of the stockholders, the Board has amended the 1995
Director Option Plan (the "Director Stock Plan") as described below.
DESCRIPTION OF THE PROPOSAL
1. Currently, the total number of shares of Common Stock reserved and
available for issuance pursuant to options under the Director Stock Plan is
200,000 shares. The proposed amendment to the Director Stock Plan increases the
number of shares of Common Stock reserved for issuance thereunder by 150,000 to
350,000.
2. Currently, the options granted under the Director Stock Plan are
non-transferable during the lifetime of the person who is granted the option
(the "Optionee"). The proposed amendment to the Director Stock Plan allows the
transfer of all or any portion of any option to (i) the spouse, children or
grandchildren of the Optionee ("Immediate Family Members"), (ii) a partnership
in which such Immediate Family Members are the only partners, or (iii) a trust
or trusts for the exclusive benefit of such Immediate Family Members, provided
that (x) there may be no consideration for such transfer, (y) the agreement
pursuant to which such options are transferred must be in a form consistent with
the Director Stock Plan, and must expressly provide for transferability in a
manner consistent with this amendment, and (z) subsequent transfers of
transferred options shall be prohibited except those by will or the laws of
descent and distribution. Following transfer, any such options shall continue to
be subject to the same
20
<PAGE>
terms and conditions as were applicable immediately prior to transfer. The
effect of termination of the Optionee's service on the Board of Directors shall
continue to be applied with respect to the original Optionee, following which
the options shall be exercisable by the transferee only to the extent, and for
the periods specified in the Director Stock Plan on the occurrence of such
termination. Neither the Company nor the administrator of the Director Stock
Plan shall have any obligation to provide the transferee with notice of
termination of an Optionee.
3. Currently, Optionees under the Director Stock Plan automatically receive
an option to purchase 12,000 shares of Common Stock (the "Automatic First
Option") on the date on which each such person first becomes a director, whether
through election by the stockholders of the Company or the Board to fill a
vacancy. Thereafter, each such director receives an option to acquire 3,000
shares of Common Stock (the "Automatic Subsequent Option") on each date of the
Company's Annual Meeting of Stockholders at which such outside director is
elected.
The proposed amendment to the Director Stock Plan will discontinue both the
Automatic First Option and the Automatic Second Option and instead place
discretionary authority with Calypte's Board of Directors to determine the
number of shares of Common Stock to be granted to Optionees on the date on which
each person first becomes a director, provided that in any given year the number
of options granted to each newly-elected director shall be equal. The Board of
Directors will also determine the number of options to be granted to each
re-elected director, provided that the number of options granted in any given
year will be same for each such re-elected director.
4. Currently each Automatic First Option becomes exercisable in
installments cumulatively as to twenty-five percent of the shares granted on
each anniversary of its date of grant and each Automatic Subsequent Option
becomes exercisable in installments cumulatively as to twelve and one-half
percent of the shares granted on the first day of each month following the date
of grant.
The proposed amendment to the Director Stock Plan which discontinues the
Automatic First Option and Automatic Subsequent Option provides that each grant
under the plan will vest monthly over the twelve month period commencing with
the date of election or re-election of the Optionee as director, provided that
such option will become vested and fully exercisable on the date of the next
annual meeting of stockholders if such meeting occurs less than one year after
the date of grant.
5. Currently, options granted under the Director Stock Plan have a term of
ten years from the date of grant and require that when an Optionee's status as a
director terminates, the Optionee may exercise his or her option for those
shares which were exercisable as of the date of termination within three months
from the date of termination, unless such termination is due to death or
disability, in which case the Optionee or his or her legal representative have
twelve months from the date of such event to exercise the option, provided that
no option may be exercised if its ten year term has expired.
The proposed amendment to the Director Stock Plan provides that each option
granted will be exercisable over a period of ten years commencing with the date
of such option grant to the extent that the option has become vested, regardless
of whether the Optionee has terminated service as a board member provided,
however, that if an Optionee is removed from the Board, the option will
terminate if it is not exercised within 90 days of the date of such removal.
6. Currently options can be granted under the Director Stock Plan only to
directors who are not employees of the Company or consultants to the Company.
The proposed amendment to the Director Stock Plan would allow nonemployee
directors who also serve as consultants to the Company to participate in the
Director Stock Plan in order to account for their separate service as directors.
21
<PAGE>
DESCRIPTION OF THE DIRECTOR STOCK PLAN
Only nonemployee directors of the Company are eligible to participate in the
Director Stock Plan. The Director Stock Plan is currently designed to work
automatically. However, to the extent administration is necessary, it is
provided by the Board or the Board may delegate its authority to a committee of
the Board. Option grants to nonemployee directors under the current plan are
made on a formula basis and not on a discretionary basis. As currently in
effect, the Director Stock Plan provides that when a person who is not an
employee or a consultant of the Company and who has not previously been a member
of the Board is elected or appointed a member of the Board, the Company will
grant that person on the effective date of such election or appointment an NSO
to purchase 12,000 shares of Common Stock, the Automatic First Option. The
Director Stock Plan further provides that on the date of the annual meeting of
stockholders, each nonemployee director then in office is automatically granted
an option to purchase 3,000 shares, the Automatic Subsequent Option. Automatic
First Options vest over four years from the date of grant and are fully
exercisable on the fourth anniversary of the option grant. Automatic Subsequent
Options vest over the first eight months of the grant and are fully exercisable
on the first day of the eighth month following the grant. If the Director Stock
Plan is amended as proposed the Automatic First Option and the Automatic
Subsequent Option would discontinue and the Board of Directors of Calypte would
determine the number of shares that will be granted to newly-elected and to
re-elected directors, provided that the number of options for each newly-elected
director in any given year will be the same for each such director and the
number of options for each re-elected director in any given year will be same
for each such director. In addition, the proposed amendment to the Director
Stock Plan provides that each grant under the plan will vest monthly over the
twelve month period commencing with the date of election or re-election of the
Optionee as director, provided that such option will become vested and fully
exercisable on the date of the next annual meeting of stockholders if such
meeting occurs less than one year after the date of grant.
Under the current Director Stock Plan, only directors who are nonemployees
of the Company or consultants to the Company may be granted options. If the
Director Stock Plan is amended as proposed, nonemployee directors who are
consultants to the Company would be allowed to receive option grants under the
plan in order to account for their separate service to the Company as directors.
If the Director Stock Plan is amended as proposed the number of shares of
Common Stock reserved under the Director Stock Plan will increase by 150,000
shares. The consideration to be paid for the shares to be issued upon exercise
of an option, including the method of payment, shall consist of (i) cash, (ii)
check, (iii) delivery of a properly executed exercise notice together with such
other documentation as the Company and the broker, if applicable, shall require
to effect an exercise of the option and delivery to the Company of the sale or
loan proceeds required to pay the exercise price, or (iv) any combination of the
foregoing methods of payment. Funds received by the Company upon exercise of an
option are used for general corporate purposes.
Options granted under the Director Stock Plan have a term of ten years.
Under the current plan, if the Optionee's status as a nonemployee director of
the Company terminates for any reason (other than as a result of death or
disability), the Optionee may, but only within three months following the date
of such event, exercise any option granted under the Director Stock Plan but
only to the extent such option was exercisable on the date of such event. To the
extent that the option is not exercised within such three month period, the
option terminates. If the Optionee's status as a nonemployee director of the
Company terminates as a result of his or her death or disability, the Optionee
or his legal representative may, but only within twelve months following the
date of such event, exercise any option granted under the Director Stock Plan
but only to the extent such option was exercisable on the date of such event. To
the extent that the option is not exercised within such twelve month period, the
option terminates. If the Director Stock Plan is amended as proposed, each
option granted will be exercisable over a period of ten years commencing with
the date of such option grant to the extent the option has become vested,
regardless of whether the Optionee has terminated service as a board member
provided, however, that if an Optionee is
22
<PAGE>
removed from the Board, the option will terminate if it is not exercised within
90 days of the date of such removal.
As the Director Stock Plan is currently in effect, options are not
transferable, except by will or the laws of descent and distribution. If the
Director Stock Plan is amended as proposed, options would also be transferable
by gift to a family member or a partnership or trust for a family member during
the lifetime of the Optionee.
To the extent necessary and desirable to comply with Rule 16b-3 or Section
422 of the Code (or any other applicable law or regulation), the Company will
obtain stockholder approval of any amendment to the Director Stock Plan in such
a manner and to such a degree as required. Any such amendment or termination of
the Director Stock Plan shall not affect options already granted and such
options shall remain in full force and effect as if the Director Stock Plan had
not been amended or terminated. The Director Stock Plan will terminate in 2005
unless earlier terminated as described above.
Options granted under the Director Stock Plan are nonstatutory options. A
director Optionee will not recognize any taxable income at the time he or she is
granted a non-statutory option. However, upon exercise of an option, an Optionee
will generally recognize ordinary income measured for tax purposes by the excess
of the then fair market value of the shares over the exercise price. If a sale
of shares acquired upon exercise of an option could subject the director to suit
under Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the date of recognition of such ordinary income may be deferred
for up to six months unless the director timely files an election with the
Internal Revenue Service under Section 83(b) of the Code. The Optionee's holding
period for long-term capital gain purposes commences as of the date he or she
recognizes ordinary income with respect to an option exercise. Upon resale of
such shares by the Optionee, any difference between the sales price and the
exercise price, to the extent not recognized as ordinary income as provided
above, will be treated as capital gain or loss and will qualify for long-term
capital gain or loss treatment if the shares have been held for more than one
year. The Company will be entitled to a tax deduction in the amount and at the
time that the director recognizes ordinary income with respect to shares
acquired upon exercise of a nonstatutory option.
Subject to any required action by the stockholders of the Company, the
number of shares covered by each outstanding option, and the number of shares
which have been authorized for issuance under the Director Stock Plan but as to
which no options have yet been granted or which have been returned to the
Director Stock Plan upon cancellation or expiration of an option, as well as the
price per share covered by each such outstanding option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares 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 aggregate number of issued shares 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 of
Directors, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided in the Director Stock Plan, 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 subject to an
option. In the event of the proposed dissolution or liquidation of the Company,
all outstanding options will terminate immediately before the consummation of
such proposed action. In the event of a sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, each outstanding option shall be assumed or an equivalent option
substituted by the successor corporation. If the successor corporation does not
agree to assume the option or substitute an equivalent option, each outstanding
option shall become fully vested and exercisable. In the event of such
acceleration of the option, the Optionee shall have 30 days from the date of
notice of the option's acceleration to exercise all or a portion of the option,
and the option shall terminate upon the expiration of such 30 day period.
23
<PAGE>
PLAN BENEFITS
The following table shows the number of shares of Common Stock issuable upon
exercise of options granted to the named Optionees under the Director Stock Plan
during the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION OPTIONS(1)
- ---------------------------------------------------------------------------------- -----------
<S> <C>
David Collins, Director........................................................... 3,000
Paul E. Freiman, Director......................................................... 3,000
Julius Krevans M.D., Director..................................................... 3,000
Mark Novitch M.D., Director....................................................... 3,000
Otsuka Pharmaceutical Co., Ltd. (Zafar Randawa, Director)......................... 3,000
</TABLE>
- ------------------------
(1) All options granted at fair market value as of the date of grant.
The Company believes that in order to attract and retain highly qualified
candidates to serve as directors, it is important that directors have meaningful
equity ownership in the Company. Initially, the reason for creating a
nondiscretionary option plan for outside directors and for making such options
non-transferable was to comply with rules of the Securities and Exchange
Commission (the "Commission"), while still allowing equity participation by the
outside directors. Subsequent rule changes by the Commission have eliminated
such "disinterested" administration requirements and the Company believes that
the Board should have the discretion to make reasonable use of all available
means to attract and retain such highly qualified director candidates.
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 1995 DIRECTOR 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.
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, 1999. PROXIES SOLICITED BY THE
BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY A DIFFERENT CHOICE IN THEIR
PROXIES.
24
<PAGE>
OTHER MATTERS
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR INCLUSION IN THE COMPANY'S
PROXY STATEMENT FOR THE 2000 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 January 14, 2000, to be
considered. Proposals should be addressed to William A. Boeger, Secretary,
Calypte Biomedical Corporation, 1440 Fourth Street, Berkeley, California 94710.
Any stockholder who wishes to bring a proposal before the Calypte Biomedical
Corporation 2000 Annual Meeting of Stockholders, but does not wish to include it
in the Company's proxy materials, must provide written notice of the proposal to
Calypte's Secretary, at the above address, by February 14, 2000.
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,
/s/ WILLIAM A. BOEGER
William A. Boeger
CHAIRMAN OF THE BOARD AND SECRETARY
Berkeley, California
October 26, 1999
25
<PAGE>
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 NANCY E. KATZ,
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 November 18, 1999, 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>
--- Please mark your
X votes as indicated
--- in this example
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.
FOR all nominees WITHHOLD AUTHORITY
(except as marked to vote for all
to the contrary below) nominees listed below
___________________ _____________________
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.; Nancy E.
Katz; John J. DiPietro.
(The Board of Directors recommends a vote FOR.)
This proxy will be voted in the election of directors in the manner described
in the proxy statement for the 1999 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 1991 Incentive Stock Plan to increase by 500,000
the number of shares of Common Stock reserved for issuance thereunder.
(The Board of Directors recommends a vote FOR.)
FOR AGAINST ABSTAIN
----- ----- -----
3. Proposal to amend the 1995 Director Option Plan to i) increase by
150,000 the number of shares of Common Stock reserved for issuance
thereunder; ii) allow option grantees thereunder to transfer some or all
of their options so granted to immediate family members during the lifetime
of the optionee; iii) allow the Board of Directors of Calypte to determine
the number of options to be granted to directors, provided that the number
of options for each newly-elected director in any given year will be the
same for each such director and the number of options for each re-elected
director in any given year will be the same for each such director; iv)
provide for each grant under the plan to vest monthly over the twelve
month period commencing with the date of election or re-election of the
optionee as director, provided that such option will become vested and
fully exercisable on the date of the next annual meeting of stockholders
if such meeting occurs less that one year after the date of grant; v)
provide that each option granted will be exercisable over a period of
ten years commencing with the date of such option grant to the extent
the option has become vested, regardless of whether the optionee has
terminated service as a board member, provided, however, that if an
optionee is removed from the board, the option will terminate if it is not
exercised within 90 days of the date of such removal; and vi) allow
non-employee directors who also serve as consultants to the Company to
participate in the 1995 Director Option Plan in order to account for their
separate service as directors. (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, 1999.
(The Board of Directors recommends a vote FOR.)
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.
- ---------------------------------------------
Signature of Stockholder
- ---------------------------------------------
Signature if held jointly
Dated: , 1999
--------------------
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
