SEPARATION AGREEMENT AND RELEASE

This  Separation  Agreement and Release of Claims  ("Agreement")  is made by and
between  Jay  Oyakawa  ("Employee")  and  Calypte  Biomedical  Corporation  (the
"Company" OR "Employer"), and all subsidiaries,  affiliates and/or joint venture
companies of Employer.

The ("Company") has elected to provide Employee with Severance Payments.

NOW THEEFORE,  in  consideration  of the mutual promises and releases  contained
herein and for other good and valuable  consideration,  the sufficiency of which
is hereby acknowledged, the parties agree as follows:

      1.    Upon the execution of this Agreement:

            a.    Employee  shall be  terminated  from  Employment  with Calypte
                  Biomedical Corporation effective January 19, 2004.

            b.    Employee  will  have the  right to elect to  continue,  at his
                  cost, coverage under the Calypte Biomedical Corporation Health
                  Plan, in accordance with the health care continuation coverage
                  provisions of the Consolidated  Omnibus Budget  Reconciliation
                  Act of 1985 ("COBRA").

            c.    Employee will  voluntarily  resign as President and a Director
                  of  Employer,  annexed  hereto  is a true  copy of  Employee's
                  resignation.  Additionally,  Employee consents to the issuance
                  of the attached copy of a press release announcing  Employee's
                  resignation  as an officer and director.

            d.    Employee  agrees that Employee will be bound by Sections 9 and
                  10 of his  Employment  agreement  dated  August 12,  2003 with
                  respect to confidentiality with Employer.

      2.    In consideration of the promises  contained  herein,  the Company is
            willing to provide  Employee with the Severance  Package outlined in
            this  Agreement  and  Release  ("Agreement"),  in  exchange  for and
            subject  to  Employee's   execution  and   non-revocation   of  this
            Agreement.  If the within agreement has not been revoked (as defined
            in paragraph "8" below).  Employee shall receive a Severance Package
            that will include a Severance Payment equal to (12) months of salary
            in monthly  installment  payments of ($ 29,166) per month ($350,000)
            The first  payment  will be paid on the Release  Effective  Date (As
            defined in Section 11)  Employer  will deduct the sum of  $16,766.39
            over three (3) consecutive monthly payments.  Said sum is an advance
            that was paid to  Employee  for travel  expenses.  In the event that
            Employer  obtains  equity  or  debt  financing,   including  without
            limitation,  any type of loan in, of the sum of at least  $5,000,000
            during the term  hereof,  Employer  agrees to pay the balance of any
            monthly installments due to Employee.  In addition,  Employer agrees
            to award Employee  effective January 15, 2004, 750,000 stock options
            to purchase  750,000 shares of common stock, at $.32 per share under
            Employer's  Employee  stock option plan,  which grant shall vest the
            earlier of the Release  Effective Date (as defined in section 11) or
            January 14, 2005, and to pay  reasonable  attorneys fees to Employee
            for his  appearance  if  required  at the  Securities  and  Exchange
            Commission,  as  well  as  indemnify  Employee  in  accordance  with
            Delaware  law. The  Severance is not subject to  applicable  payroll
            withholding deductions.  You will then be entitled to participate in
            the  Company's  group  Medical Plan pursuant to COBRA (as defined in
            paragraph "1").


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                        SEPARATION AGREEMENT AND RELEASE

3.

      a.    In  consideration  for the  Severance  Package  provided to Employee
            pursuant to this Agreement,  Employee for himself and for his heirs,
            executors, and assigns (hereinafter  collectively referred to as the
            "Releasors"),  forever  releases and  discharges the Company and any
            and  all  of  its  parent  corporations,   subsidiaries,  divisions,
            affiliated entities,  predecessors,  successors and assigns, and any
            and all of its or their  Employee  benefit and /or pension  plans or
            funds, and any of its or their past or present officers,  directors,
            stockholders, agents, trustees, administrators, Employees or assigns
            (whether  acting as agents for such entities or in their  individual
            capacities)  (hereinafter  collectively referred to as "Releasees"),
            from  any and all  claims,  demands,  causes  of  action,  fees  and
            liabilities  of  any  kind  whatsoever  (based  upon  any  legal  or
            equitable  theory,  whether  contractual,   common-law,   statutory,
            federal, state, local or otherwise), whether known or unknown, which
            Releasors ever had, now have or may have against Releasees by reason
            arising out of or in any way connected  with  Employee's  Employment
            with the Company,  the  termination of or decision to terminate such
            Employment, and/or any of the events relating directly or indirectly
            to or  surrounding  that  termination;  or any  other  transactions,
            occurrences,  acts or  omissions  or any  loss ,  damage  or  injury
            whatever, known or unknown, suspected or unsuspected, resulting from
            any of  them,  committed  or  omitted  prior  to the  date  of  this
            Agreement, and including,  without limitation,  claims for breach of
            contract, libel, slander, wrongful discharge, intentional infliction
            of emotional  harm, or other tort, or  discrimination  or harassment
            based  upon  any  federal,  state,  or  municipal  statute  or local
            ordinance  relating to discrimination  in Employment.  And any claim
            for attorneys' fees, costs,  disbursements and/or the like. Or other
            matter up to and including the Release Effective Date.

      b.    Without limiting the generality of the foregoing subparagraph "(a)",
            this  Agreement is intended to and shall release the Releasees  from
            any  and  all  claims  against  Employer,  whether,  arising  out of
            Employee's Employment, or including but not limited to (i) any claim
            under the Age  Discrimination in Employment Act, as amended,  or the
            Older Workers Benefit Protection Act; (ii) any claim under Title VII
            of the Civil Rights Act of 1964,  as amended;  (iii) any claim under
            the  Americans  with  Disabilities  Act, as amended;  (iv) any claim
            under  the  Employee  Retirement  Income  Security  Act of 1974,  as
            amended  ("ERISA")  (excluding  claims for accrued,  vested benefits
            under any Employee  benefit plan of the Company in  accordance  with
            the terms of such plan and applicable  law); (v) any claim under the
            Federal Family and Medical Leave Act ("FMLA");  (vi) any claim under
            the Equal Pay Act; (vii) any claim under the California  State Human
            Rights Law, or any other Human Rights Law.


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                        SEPARATION AGREEMENT AND RELEASE

      c.    This release shall not prevent  Releasors  from enforcing any rights
            under this Agreement.

4.    Employee agrees,  to the maximum extent permitted by law, that he will not
      commence,  maintain,  prosecute or participate as a party or a member of a
      class in any action or proceeding of any kind against any of the Releases,
      arising out of any act, omission,  transaction or occurrence  occurring up
      to and including the Release  Effective  Date and warrants that he has not
      done so as of the Release Effective Date.

5.    Employee  further agrees except as otherwise  provided in paragraph  "3c",
      that he will not seek or accept any award or settlement from any source or
      proceeding  with respect to any claim or right covered by  paragraphs  "3"
      and "4".

6.    The terms and  conditions of this  Agreement are and shall be deemed to be
      confidential,  and shall not be  disclosed  by  Employee  to any person or
      entity  without  the  prior  written  consent  of the  Company,  except if
      required  by  law   (Securities   and   Exchange   Commission   Disclosure
      Requirements) and to Employee's attorneys or family members, provided that
      they agree to maintain the  confidentiality  of this  Agreement.  Employee
      further  represents  that he has not disclosed the terms and conditions of
      this Agreement to anyone other than his attorneys and family members.

7.    Employee agrees that he has not and will not engage in any conduct that is
      injurious to releasee's reputation or interest,  including but not limited
      to  (i)  divulging,  communicating,  or in  any  way  making  use  of  any
      confidential  or proprietary  information  acquired in the  performance of
      duties for Releasees; and (ii) publicly disparaging (or inducing others to
      publicly  disparage)  Releasees,  including  making comments or statements
      which  would  adversely  affect the  Company to the press,  the  Company's
      Employees or  individuals or entities with whom the Company has a business
      relationship.  If The Company  receives  any  inquiries  from  prospective
      Employers concerning Employee,  the Company agrees that it will respond to
      such inquiries by stating his separation from the Company was amicable and
      on good terms and pursuant to Company policy,  it will provide  Employee's
      dates of Employment and Employee's last title with the Company.

8.    Consultation and Cooperation by Employee agrees to make himself reasonably
      available to the Company,  at mutually agreed times and places, to respond
      to  requests by the Company  for  information  concerning  facts or events
      relating to The Company that may be within his  knowledge.  Employee  will
      cooperate fully with the Company or any of its officers and directors,  in
      connection  with any or all future  litigation or  regulatory  proceedings
      brought by or against  the  Company to the extent The  Company  reasonably
      deems Employee  cooperation either necessary or helpful. In the event that
      the Company requires Employee  cooperation,  the Company agrees to pay any
      of Employee  reasonable  expenses in providing such  cooperation  (such as
      travel and accommodations).


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                        SEPARATION AGREEMENT AND RELEASE

9.    Confidentiality.  The  parties  further  agree  that  the  terms  of  this
      Agreement,  and the negotiations  leading up to it, shall not be disclosed
      by the parties to any person,  other than in a  proceeding  to enforce the
      terms of this Agreement or pursuant to valid subpoena or court order, with
      the exception of the parties'  lawyers,  accountants,  tax preparers  and,
      with  respect to Employee,  immediate  family,  provided  that the parties
      inform any such persons that they must not disclose the same to any person
      and they agree to that  condition.  In response to any inquiry  from third
      parties,  the parties and their  attorneys may state only that the parties
      have resolved the matter.

10.   Non-Disparagement.  Employee  and  the  Company  agree  that,  except  for
      truthful  statements  in any  proceeding  to  enforce  this  Agreement  or
      pursuant to a valid Subpoena or Court Order,  neither will make or publish
      any statement  (orally or in writing) that becomes or reasonably  could be
      expected to become publicly known, or instigate,  assist or participate in
      the  making or  publication  of any such  statement,  which  would  libel,
      slander  or  disparage   (whether  or  not  such   disparagement   legally
      constitutes  libel or slander)  the other or, with respect to the Company,
      any of its  affiliates or any other entity or person within the Company or
      its affiliates,  any of their affairs or operations, or the reputations of
      any of their past or present officers, directors, agents,  representatives
      and Employees.

11.   Employee  shall  have  twenty-one  (21) days from the date of  receipt  to
      consider the terms and conditions of this Agreement.  If the terms of this
      Agreement meet Employee's approval,  Employee may accept this Agreement by
      signing it and  returning it to Employer.  Further,  Employee may sign and
      return this  Agreement at any time within this period.  After signing this
      Agreement,  Employee  shall have seven (7) days to revoke  this  Agreement
      ("Revocation Period") by indicating he desire to do so in writing that is:
      (a) addressed to Employer at the address listed above, and (b) received by
      he no later than the seventh (7th) day  following the date Employee  signs
      this  Agreement.  The effective date of this Agreement shall be the eighth
      (8th) day following  Employee's  signing of this  Agreement  (the "Release
      Effective Date"),  provided Employee does not revoke this Agreement during
      the  revocation  Period.  In the  event  Employee  does  not  accept  this
      Agreement  as set forth  above,  or  revokes  this  Agreement  during  the
      Revocation  Period,  this  Agreement  including  but  not  limited  to the
      obligation of the Company and its  subsidiaries  and affiliates to provide
      the payment  referred to in paragraph "2" above,  shall  automatically  be
      deemed null and void, in addition to the stock  options being  immediately
      cancelled.

12.   Employee  acknowledges  that:  (a) he has carefully read this Agreement in
      its entirety; (b) he has been advised by the Company in writing to consult
      with an attorney of he choosing in connection with this Agreement;  (c) he
      fully  understands the  significance of all of the terms and conditions of
      this  Agreement;  (d) he has  discussed  it  with  his  independent  legal
      counsel,  or has had a  reasonable  opportunity  to do so;  (e) he has had
      answered to his satisfaction any questions he has asked with regard to the
      meaning and  significance of any of the provisions of this agreement;  and
      (f) he is signing this Agreement  voluntarily and of his own free will and
      assents to all the terms and conditions contained herein.


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                        SEPARATION AGREEMENT AND RELEASE

13.   The making of this Agreement is not intended,  and shall not be construed,
      as an admission  that  Releasees  have violated any federal state or local
      law  (statutory  or  decisional),  ordinance or  regulation,  breached any
      contract, or committed any wrong whatsoever against Employee.  The payment
      of Severance  Benefits to Employee  will not be considered an admission of
      any  liability  on the part of the Company  with  respect to any claims or
      potential claims made by Employee.

14.   This  Agreement  is binding  upon,  and shall inure to the benefit of, the
      parties and their respective heirs, executors, administrators,  successors
      and assigns.

15.   This  Agreement  shall be  interpreted,  construed,  governed and enforced
      according to the laws of the State of  California,  and the parties in any
      action arising out of this Agreement shall be subject to the  jurisdiction
      and venue of the federal and state  courts,  as applicable in the State of
      California.

      a.    If any provision of this Agreement shall be held by a court of court
            of competent  jurisdiction  to be illegal,  void, or  unenforceable,
            such provision shall be of no force and effect. However,  illegality
            or unenforceability of such provision shall have no effect upon, and
            shall not impair the  enforceability of, any other provision of this
            Agreement;  provided,  however, that, upon any finding by a court of
            competent  jurisdiction that the release and covenants  provided for
            by paragraphs "3" and "4" of this  Agreement are illegal,  void, and
            unenforceable   or  not  entered  into  knowingly  and  voluntarily,
            Employee agrees, at the Company's option,  either to return promptly
            to the Company the  Enhanced  Severance  paid to he pursuant to this
            Agreement or to execute a release,  waiver  and/or  covenant that is
            legal and enforceable.

      b.    If Employee seeks to challenge the validity of or otherwise  vitiate
            this  Agreement  or  any  provision  thereof   (including,   without
            limitation, paragraphs "3" and "4"), Employee, to the maximum extent
            permitted by law, shall, as a precondition,  be required to repay to
            the Company the  severance  paid to he pursuant to the terms of this
            Agreement.

      c.    Any breach of the terms of paragraphs "4", "6", "7", "8", "9" and/or
            "10" shall  constitute  a material  breach of this  Agreement  as to
            which the Company may seek appropriate  relief  (including,  but not
            limited to repayment of the  Severance  paid to Employee  under this
            Agreement) in a court of competent jurisdiction.

      d.    Employee  further agrees that any claim or counterclaim  made by the
            Company to enforce the terms of this  Agreement  shall not be deemed
            retaliatory.

16.   The parties  agree that this  Agreement  may only be used as evidence in a
      subsequent  proceeding in which any of the parties allege a breach of this
      Agreement.


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<PAGE>

17.   This Agreement  (together with the accompanying cover letter)  constitutes
      the complete  understanding between the parties and supersedes any and all
      agreements,  understandings,  and  discussions,  whether  written or oral,
      between the  parties.  No other  promises or  agreements  shall be binding
      unless in  writing  and signed  after the  Release  Effective  Date by the
      parties to be bound thereby.

ACCEPTED AND AGREED TO:
EMPLOYEE


By: /s/ Jay Oyakawa                     Date: 19 Jan 04
   --------------------------------          ----------
       Jay Oyakawa

State of California        )
                           ) ss:
County of                  )


On this _____ day of ____________,  2004,  before me personally came Jay Oyakawa
to me known and known to me to be the person described herein,  and who executed
the foregoing  Agreement and Release,  and he duly acknowledged that he executed
the same.



-----------------------------------
         Notary Public

ACCEPTED AND AGREED TO:

CALYPTE BIOMEDICAL CORPORATION


By: /s/ Anthony J. Cataldo                 Date: 19 Jan 04
   --------------------------------             -----------
   Chairman


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