EXHIBIT 10.127

 

[LOGO OF CALYPTE BIOMEDICAL CORPORATION]

1265 Harbor Bay Parkway

Alameda, California 94502

 

February 28, 2003

 

VIA FACSIMILE

 

Paul Kessler

Bristol Investment Fund, Ltd.

6363 Sunset Boulevard

Fifth Floor

Hollywood, CA 90028

 

Re: Letter Agreement

 

Dear Mr. Kessler,

 

In the spirit of resolving the issue related to the interpretation of the
Securities Purchase Agreement dated February 11, 2002 (the “Agreement”), and
without prejudice to the Company’s interpretation of the Agreement, the within
is to memorialize the understanding and agreement between Bristol Investment
Fund, Ltd. (“Bristol”) and Calypte Biomedical Corporation (“Calypte” or the
“Company”) whereby Calypte will proceed immediately to process pursuant to the
effective S-2 Registration Statement (File No. 333-84660) (the “Registration
Statement”) the conversion request of Bristol of certain debentures purchased
under the Agreement as of February 18, 2003 without penalty to Calypte for any
claimed delays in processing the conversion.

 

Consistent with the tabular disclosure contained in the Registration Statement,
shares of common stock (“Original Shares”) issued upon conversion, subject to
the Registration Statement will be based upon a conversion rate of 70% of the
average of the lowest three (3) lowest-traded share prices of the common stock
during the 20 business days prior to the date that Bristol notifies the Company
of its election to convert (the “Conversion Price”). The Company agrees that it
will issue additional shares of its common stock upon receipt of a further
conversion notice (“Further Conversion Notice”) based upon the difference in the
number of shares issuable upon a conversion rate of 60% of the average of the
three (3) lowest closing bid prices of the common stock during the 22 business
days prior to the date Bristol notifies the Company of its election to convert
and the Conversion Price (the “Additional Shares”). The Further Conversion
Notice will be issued by Bristol simultaneously with the filing of a post
effective amendment to the Registration Statement by the Company with the
Securities and Exchange Commission.

 

The Company further agrees to ensure that Bristol will not sustain any loss with
respect to the Additional Shares. Specifically, in the event the closing price
of the Company’s common stock at the date of filing the post effective amendment
to the Registration Statement is less than the closing price of the Company’s
common stock at the date the Company is notified of the election of conversion
for the Original Shares, the Company will provide Bristol within three (3)
business days, cash consideration for the lesser market value of the shares (the
“Diminished Market Value”), or at the option of Bristol, the Company will
provide in lieu of the cash consideration additional shares of Calypte common
stock representing the Diminished Market Value of the

 

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Additional Shares based upon the closing price of Calypte’s common stock as of
the filing date of the post effective amendment to the Registration Statement.

 

It is understood that due to the age of the Company’s financial statements, the
post effective amendment to the Registration Statement can not be filed until
immediately following the filing of the Company’s 10-K for the fiscal year ended
December 31, 2002. The post effective amendment will include additional
disclosure that states that the conversion rate of the debentures are subject to
adjustment pursuant to certain price protections set forth in the Agreement.

 

Please arrange for the agreement to be acknowledged by Bristol and return an
executed copy to my attention for countersignature along with a duplicate copy
of the executed notice of conversion forwarded to the Company.

 

AGREED TO AND ACCEPTED BY:

 

BRISTOL INVESTMENT FUND, LTD.

     

CALYPTE BIOMEDICAL CORPORATION

By:

 

  /s/     Paul Kessler

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By:

 

/s/     Richard D Brounstein

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Title:

 

Director

     

Title

 

EVP & CFO

 

 

 

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