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