Document:

<PAGE>

                                                                   EXHIBIT 10.62

                         CALYPTE BIOMEDICAL CORPORATION
                             1265 Harbor Bay Parkway
                                Alameda, CA 94502

                        Effective as of October 18, 1999

VIA FEDEX
Nancy E. Katz
4307 Quail Run Place
Danville, CA 94506

         Re:      YOUR EMPLOYMENT WITH CALYPTE BIOMEDICAL CORPORATION

Dear Nancy,

         As we have discussed, upon your signature at the end of this letter,
this letter will set forth the binding agreement (the "AGREEMENT"), effective as
of October 18, 1999, (the "EFFECTIVE DATE"), between you and Calypte Biomedical
Corporation, a Delaware corporation ("CALYPTE"), with respect to your employment
by Calypte. Calypte hereby employs you, and you hereby accept employment with
Calypte, on the following terms:

         1.       POSITION, COMPENSATION, BENEFITS; EQUITY.

                  (a) COMMENCEMENT; POSITION. Your employment with Calypte under
this Agreement, and your salary and benefits, will commence as of October 18,
1999 (the "START DATE"), subject to the provisions of Paragraph 2(b)(ii) hereof.
During the term hereof, and subject to the next sentence hereof, commencing as
of October 18, 1999, you will serve as President and Chief Operating Officer of
Calypte, and will serve as Chief Financial Officer of Calypte until your
replacement for the position of Chief Financial Officer has been elected. You
will report to the Board of Directors (the "BOARD") of Calypte, and while so
serving will report directly to Calypte's Chairman and/or Chief Executive
Officer so long as either of such positions is filled, and will perform such
additional duties and will exercise such responsibilities on behalf of Calypte
as from time to time will be assigned to you by the Board and that are customary
for such respective positions. You will be eligible to be elected as Chief
Executive Officer of the Company at such time as, in the good faith judgment of
the Board, such election would be appropriate. The Board will elect you as a
Director at its next scheduled meeting, currently set for October 19, 1999.
During your service hereunder, you will at all times provide your full working
time and best efforts to the performance of your obligations and duties
hereunder.

                  (b) BASE COMPENSATION; BONUS. During the term of your
employment hereunder, you will be paid an annual salary at the rate of Two
Hundred Twenty Thousand Dollars ($220,000.00) per year, payable in monthly
amounts of Eighteen Thousand Three Hundred Thirty-Three Dollars ($18,333.33),
prorated for partial months, payable in accordance with Calypte's normal pay
periods and practices. During the term hereof, you will be eligible for such
salary increases, bonus and other incentive payments as the Board may from time
to time determine.

                  (c) OTHER BENEFITS; PAYMENT OF EXPENSES. In addition to the
compensation and other benefits referred to herein, you will participate in such
other benefits as are generally made available from time to time by Calypte to
its executive officers, provided that (i) Calypte

<PAGE>

Nancy E. Katz
September 21, 1999
Page 2

may increase, decrease or otherwise change its employee benefits at it
discretion, at any time, with or without notice or cause, and (ii) nothing
herein will obligate Calypte to continue any of such benefits for you if
discontinued for other executive officers. You will also be entitled to
reimbursement from Calypte for all commercially reasonable out-of-pocket
expenses incurred by you in connection with Calypte's business for which you
submit invoices and other documentation as reasonably requested by Calypte under
its policies for reimbursement as in effect from time to time. You will be
entitled to vacation in accordance with Calypte's policies therefor as in effect
from time to time, provided that you will use your best efforts to schedule your
vacation to avoid conflict with your duties hereunder. You will be included
under Calypte's directors' and officers' insurance coverage at a level
substantially similar to that provided to other directors and senior executives
of Calypte. Calypte will reimburse reasonable attorneys' fees up to a maximum of
Thirty-Five Hundred Dollars ($3,500.00) which are incurred by you in connection
with the negotiation and execution of this Agreement.

                  (d) STOCK OPTION. Within fifteen (15) days after the Start
Date, Calypte will, by action of its Board, grant to you an incentive stock
option (the "OPTION"), under Calypte's then current Equity Incentive Plan (the
"PLAN"), for a total of four hundred fifty thousand (450,000) shares of Common
Stock of Calypte, subject to the following:

                            (i)    EXERCISEABILITY; REPURCHASE RIGHT. The Option
will be immediately vested and exerciseable as to one hundred fifty thousand
(150,000) shares, and will become vested and exerciseable, at each of the first
and second anniversaries of the Start Date, for an additional one hundred fifty
thousand (150,000) shares, provided you are, at such anniversary, then still
employed by or serving as a consultant to Calypte. The Option otherwise will be
granted under such customary documentation as to form of grant and exercise as
is used for other incentive stock options granted under the Plan, provided that
such grant documentation will contain a provision that if a Sale of Assets or
Change of Control, as hereinafter defined, occurs prior to October 18, 2001
(which is the second anniversary of the Start Date), and provided your
employment with Calypte has not been terminated for cause within the ninety (90)
days preceding the date of the relevant event, then the Option will
automatically become vested and exerciseable as to all shares for which it is
not then otherwise vested and exerciseable, as of the date of the Sale of Assets
or Change of Control. For purposes of this Agreement, a "SALE OF ASSETS OR
CHANGE OF CONTROL" means (a) the closing of a sale by Calypte of all or
substantially all of its assets, in one or a series of related transactions (a
sale of assets), or (b) the date upon which those persons who, immediately prior
to such date, held fifty percent (50%) or more of the outstanding voting
securities of Calypte, immediately after such date hold less than fifty percent
(50%) of the outstanding voting securities of Calypte (a change of control),
provided that such event is the result of a sale or other transfer, including a
merger or other reorganization involving Calypte, of equity securities from one
or more parties to one or more other parties, and provided that this provision
will not apply in the event of the issuance by Calypte of its equity securities
in an equity financing, whether as a private placement or in any public offering
by Calypte of its securities.

                            (ii)   EXERCISE PRICE; PAYMENT. The Option will have
an exercise price equal to the fair market value per share of the Common Stock
as determined in good faith by the Board as of the date of grant. The grant will
provide that you may pay for such shares upon

<PAGE>

Nancy E. Katz
September 21, 1999
Page 3

exercise by cash, cancellation of indebtedness of Calypte to you, and/or a full
recourse promissory note to Calypte secured by adequate collateral, which may
consist of the shares so purchased.

         2.       TERM OF EMPLOYMENT; TERMINATION.

                  (a) TERM. Notwithstanding that your employment hereunder will
start October 18, 1999, this Agreement will be effective as of the date set
forth above (the "EFFECTIVE DATE") and will continue until terminated in the
manner provided in Paragraph 2(b) hereof.

                  (b) TERMINATION; POST-TERMINATION MATTERS.

                            (i)    CERTAIN DEFINITIONS.  As used in this
Agreement:

                                   (A) A "VOLUNTARY TERMINATION" means any
termination by you voluntarily of your employment hereunder.

                                   (B) "CAUSE" means your willful failure to
follow lawful and commercially reasonable directives of the Board after written
notice to you describing such failure in reasonable detail and providing you
with a reasonable opportunity to cure such failure, and/or intentional damage to
the tangible or intangible property of Calypte, and/or conviction of a crime
involving moral turpitude, and/or the performance of any dishonest or fraudulent
act which is or would be, in each case as determined in good faith by the Board,
materially detrimental to the interest of Calypte and its other stockholders.

                                   (C) "DISABILITY" means your inability, by
reason of physical or mental infirmity, or both, to perform the essential
functions of your position hereunder with or without accommodation, as
determined in each case in good faith by the Board after reasonable consultation
with your attending doctor(s) and, if possible, with you.

                                   (D) A termination "WITHOUT CAUSE" means a
termination at the will of Calypte other than for "cause" as defined in
Paragraph 2(b)(i)(B) hereof.

                            (ii)   TERMINATION IF YOU DO NOT TIMELY COMMENCE
EMPLOYMENT; The offer of employment by Calypte to you made by this Agreement,
and this Agreement, automatically will terminate as of 9:00 a.m. California time
on October 18, 1999, or such later date and/or time as you and Calypte may agree
in a mutually-signed writing, which will be an amendment hereto, if you have not
commenced full-time employment with Calypte hereunder by October 18, 1999 or
such later-agreed date.

                            (iii)  "AT WILL" EMPLOYMENT AND TERMINATION AFTER
YOU COMMENCE EMPLOYMENT. Once you commence your employment with Calypte on the
Start Date, your employment by Calypte hereunder will be "at will" and either
you or Calypte may terminate your employment at any time, for any reason, or no
reason, and with or without cause, as defined herein. This Agreement will
terminate and, except as expressly provided otherwise herein or as otherwise
required by law, Calypte will be relieved of its obligations hereunder, upon the
termination your employment under this Agreement by reason of (A) your death, or
(B) your

<PAGE>

Nancy E. Katz
September 21, 1999
Page 4

disability, or (C) your voluntary termination of employment, or (D) your
termination by Calypte with cause, as defined herein, or (5) your termination by
Calypte without cause, as defined herein.

                            (iv)   TERMINATION BY CALYPTE FOR YOUR DISABILITY.
Calypte may terminate your employment for disability by written notice to you,
specifying therein the date of such termination, if your disability continues
either continuously or periodically during a period of three (3) consecutive
months following the date of initial determination of your disability by the
Board acting in good faith.

                            (v)    VOLUNTARY TERMINATION BY YOU. You may
terminate your employment with Calypte upon at least thirty (30) days prior
written notice to Calypte, to the attention of the Chairman of the Board. Any
failure by you to provide such timely notice will result in an automatic
forfeiture, for the year in which the termination occurs, of any bonus which you
otherwise had accrued as at the date of your voluntary termination.

                            (vi)   TERMINATION BY CALYPTE FOR CAUSE. Calypte may
terminate your employment hereunder at any time for cause. Calypte will give you
written notice of any termination for cause, specifying therein in reasonable
detail the basis for such termination for cause and specifying the effective
date of such termination.

                            (vii)  TERMINATION BY CALYPTE WITHOUT CAUSE. Calypte
may terminate your employment at any time without cause, with written notice to
you specifying therein that such termination is without cause and specifying the
effective date of such termination. The effective date of termination will be no
less than thirty (30) days from the date of such notice. Any such termination
without cause will be within the sole discretion of Calypte, which if exercised
by Calypte will be unlimited and will not be subject to any test of
reasonableness by any court of law or by you.

                            (viii) "CONSTRUCTIVE TERMINATION EVENT" will be
deemed to have occurred at Calypte's close of business on the fourteenth (14th)
day after, and including, the first day, that any of the following actions is
taken by Calypte and such action is not reversed in full by Calypte within such
fourteen-day period unless prior to the expiration of such fourteen-day period
you have otherwise agreed to the specific relevant event in writing: (1) your
aggregate benefits (excluding your salary compensation and any already-set bonus
plan amounts, which may only be increased, decreased or otherwise changed by
mutual written agreement of Calypte and you as an amendment hereto or to the
relevant bonus plan, if applicable) are materially reduced below those in effect
immediately prior to the effective date of such Constructive Termination Event,
and such reduction is not applied as part of an overall reduction in benefits in
which you are treated proportionally to other executive officers of Calypte
given your position, length of service, income and other relevant factors
customary within the medical diagnostics industry at the date of such reduction,
and/or (2) your duties and/or authority are materially decreased from those
normal for the positions of President and Chief Operating Officer of a
publicly-held company in the medical diagnostics business (you acknowledge and
agree that Calypte is currently seeking a full-time Chief Financial Officer, and
that you are serving in that position until your successor has been appointed),
and/or (3) your title is changed to a title other than

<PAGE>

Nancy E. Katz
September 21, 1999
Page 5

President and Chief Operating Officer that, under normal practice within the
medical diagnostics industry at the date of such reduction, would be considered
to be a lower-level title than your prior title.

                  (c)       POST-TERMINATION MATTERS:

                            (i)    AUTOMATIC RESIGNATION FROM OFFICE. By your
signature on this Agreement, this Agreement will serve automatically, without
the need for any further signatures, as your resignation, effective as of the
date of your actual termination of employment hereunder, for whatever reason,
and whether by you or by Calypte, from any and all officer positions you may
hold with Calypte at the date of such termination, including without limitation
those of a member of the Board.

                            (ii)   RETURN OF MATERIALS. Upon any termination
hereof, you will promptly return to Calypte all copies and originals of
documents and other tangible impressions, in any medium, containing confidential
or proprietary information of Calypte, in your possession or under your control.

                            (iii)  ACCRUED SALARY AND BONUS. After such
termination other than without cause, Calypte will only be obliged to pay to
you, and will pay when due, such amounts of salary, and any bonus accrued
through, and payable at, the date of such termination or, as to bonus amounts,
at such other times as you and Calypte may have otherwise agreed in writing.

                            (iv)   EXPENSES. Calypte will pay all expenses
required to be reimbursed hereunder to you within thirty (30) days after its
receipt from you of all appropriate documentation therefor in accordance with
then-effective policies of Calypte.

                            (v)    POST-TERMINATION PAYMENTS IF YOU ARE
TERMINATED WITHOUT CAUSE OR IF A CONSTRUCTIVE TERMINATION EVENT IS DEEMED TO
HAVE OCCURRED. If your employment hereunder is terminated by Calypte without
cause at any time, or if a Constructive Termination Event is deemed to have
occurred pursuant to Section 2(b)(viii) herein, then, in addition to any other
accrued amounts you may be due hereunder at the time of such termination,
Calypte will pay you, over the twelve (12) month period commencing with the date
of such termination, as severance, and with the first such payment being paid on
the first monthly anniversary of such termination date, an amount equal, as to
each such twelve payments, to your monthly base salary with Calypte as in effect
immediately prior to the date of such termination.

                            (vi)   NONSOLICITATION. During the twelve (12) month
period following your termination other than for death, you will not directly or
indirectly, on behalf of yourself or on behalf of anyone else:

                                   (A) CUSTOMER AND COLLABORATORS. Call upon
any of the customers or collaborators of Calypte (or potential customers or
collaborators or clients of Calypte whose business you solicited on behalf of
Calypte or about whose needs you gained information during your employment
relationship hereunder with Calypte) who are such at the time of your
termination of employment hereunder, for the purpose of (1) soliciting or
providing any product or service within the field of business in which Calypte
is operating at the time of such termination (the

<PAGE>

Nancy E. Katz
September 21, 1999
Page 6

"BUSINESS FIELD"), which Business Field will be deemed to be the diagnosis of
HIV and other sexually transmitted diseases (STD's), unless the Board in good
faith communicates to you otherwise as to the Business Field in writing, signed
by its then-Chairman, or by any Board member if you are the Chairman at the date
of such termination, given to you at the time of such termination or within two
(2) days after such termination, or (2) providing customers to any person or
entity conducting a business in the Business Field (a "COMPETITIVE BUSINESS");
the determination of whether another-business is a Competitive Business will be
made in good faith by the Board, and communicated to you in writing, signed by
its then-Chairman, or by any two outside Board members if you are the Chairman
at the date of such termination, given to you at the time of such termination or
within two (2) days after such termination;

                                   (B) EMPLOYEES, CONSULTANTS, ETC. Call upon
any of the other employees, consultants or representatives of Calypte who are
such at the time of your termination of employment hereunder, for the purpose of
soliciting or inducing such employees, consultants or representatives to
discontinue their relationship with Calypte or to establish a relationship with
you or with any Competitive Business;

                                   (C) NO SOLICITATION. Solicit, divert or take
away or attempt to solicit, divert or take away any of the customers,
collaborators, clients, or other business connections of Calypte or other
employees or representatives maintaining a relationship with Calypte who are
such or who are in the process of potentially becoming such at the time of your
termination of employment hereunder.

         If you so request, Calypte will advise you upon your termination as to
the identity of any customers, collaborators, clients, or other business
connections of Calypte or other employees or representatives maintaining a
relationship with Calypte as existing at that time, which information will be
considered to be confidential and proprietary information of Calypte. You
covenant and agree with Calypte that, if you violate any of your covenants or
agreements under this Paragraph 2(c)(vi), Calypte will be entitled to an
accounting and repayment of all profits, compensation, commissions, remuneration
or benefits that you directly or indirectly has realized and/or may realize as a
result of, growing out of or in connection with any such violation; such remedy
will be in addition to and not in limitation of any injunctive relief or other
rights or remedies that Calypte is or may be entitled at law or in equity or
under this Agreement. You have carefully read and considered the provisions of
this Paragraph 2(c)(vi) and agree that the restrictions set forth in this
Paragraph 2(c)(vi) are fair and reasonable and are reasonably required for the
protection of the interests of Calypte, its officers, Directors and its other
employees. In the event that, notwithstanding the foregoing, any part of the
covenants set forth in this Paragraph 2(c)(vi) are held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining parts thereof will
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included therein. In the event that any
provision of this Paragraph 2(c)(vi) is held by a court of competent
jurisdiction to exceed the restrictions which such court deems reasonable and
enforceable, such restrictions will be deemed to become and thereafter be the
maximum restrictions that such court deems reasonable and enforceable.

         3.       CONFIDENTIALITY AND INVENTION ASSIGNMENT AGREEMENTS; NO USE OF
CERTAIN RIGHTS OR PROPERTY. You will execute and deliver such customary
confidentiality and invention

<PAGE>

Nancy E. Katz
September 21, 1999
Page 7

assignment agreements during the term hereof as Calypte requests of its
employees. You represent and warrant to Calypte that you are not bringing with
you, and covenant with Calypte that you will not use in the course of your
employment with Calypte, any proprietary rights or intellectual property rights
to which you do not lawfully possess.

         4.       BOARD OF DIRECTORS. For so long as you are serving as an
employee of Calypte hereunder in the role of President or Chief Executive
Officer, or both, Calypte will place your name in nomination for election as a
Director of Calypte if you so notify the Chairman of the Board in writing of
your desire to serve as such, reasonably prior to the date of any election of
Directors of Calypte, of which date Calypte will give you reasonable advance
notice.

         5.       DISPUTE RESOLUTION. Any controversy or claim arising out of or
relating to this Agreement will be settled by arbitration in San Francisco,
California, in accordance with the rules of the American Arbitration
Association.

         6.       MISCELLANEOUS.

                  (a) GOVERNING LAW. This Agreement will be subject to and
governed by the laws of the State of California, without regard to its conflict
of laws provisions.

                  (b) NO WAIVER; AMENDMENT. Failure to insist upon strict
compliance with any provision hereof will not be deemed a waiver of such
provision or any other provision hereof. This Agreement may not be modified
except by a written agreement executed by the parties hereto.

                  (c) SEVERABILITY; CONTEXT. The provision of this Agreement
will be deemed severable, and the invalidity or unenforceability of any one or
more of the provisions hereof will not affect the validity and enforceability of
the other provisions hereof. Whenever required by the context, the singular
number will include the plural and the masculine or neuter gender will include
all genders.

                  (d) SURVIVAL. Provisions herein which by their terms so
provide will survive any termination of this Agreement or termination of your
employment by Calypte.

                  (e) EQUITABLE RELIEF. In the event of a breach or threatened
breach by you or Calypte of the provisions of this Agreement, you and Calypte
will, in addition to any other rights and remedies available to you and Calypte,
at law or otherwise, be entitled to an injunction to be issued by any court of
competent jurisdiction enjoining and restraining the other party from committing
any present violation or future violation of this Agreement.

                  (f) NO ASSIGNMENT; BINDING NATURE. You may not assign your
rights or obligations hereunder and any attempted assignment will be null and
void. This Agreement will be binding upon and inure to the benefit of the
successors and assigns of Calypte and upon your heirs, administrators and
executors.

                  (g) NOTICES. Unless otherwise herein provided, notice required
or permitted to be given to a party pursuant to the provisions of this Agreement
will be in writing and will be

<PAGE>

Nancy E. Katz
September 21, 1999
Page 8

effective and deemed given under this Agreement on the earliest of: (i) the date
of personal delivery; (ii) the date of delivery with confirmed answerback by
facsimile; or (iii) the next business day after deposit with a
nationally-recognized courier or overnight service, including FedEx or Express
Mail, for United States deliveries or three (3) business days after such deposit
for deliveries outside of the United States. All notices not delivered
personally or by facsimile will be sent with postage and other charges prepaid
and properly addressed to the party to be notified at the address set forth at
the beginning of this Agreement, or at such other address as such party may
designate by ten (10) days' advance written notice to the other party hereto.
All notices for delivery outside the United States will be sent by facsimile, or
by nationally recognized courier or overnight service, including Express Mail.
Notices by you to Calypte will be marked to the attention of the Chairman of the
Board, if such position then is filled by someone other than you, and if you are
then the Chairman, then you will send such notices to all other Directors.

                  (h) COUNTERPARTS. This Agreement may be executed in
counterparts transmitted via electronic facsimile, each of which will be an
original and both of which together will constitute one instrument.

                  Nancy, we look forward with pleasure to working with you for
the success of Calypte.
                                   Sincerely,

                                   /s/ WILLIAM BOEGER
                                   --------------------------------------
                                   William Boeger, President and
                                   Chief Executive Officer

ACCEPTED AND AGREED:

/s/ NANCY E. KATZ
----------------------------------
     NANCY E. KATZ<PAGE>

                                                                  EXHIBIT 10.63

                        [CALYPTE BIOMEDICAL LETTERHEAD]

                                                 December 10, 1998

Hideji Nonomura
Director, Department of Diagnosis
Otsuka Pharmaceutical Co., Ltd.
463-10 Kagasuno Kawauchi-cho
Tokushima, Japan 771-0130

         Re:       LETTER OF INTENT RE MODIFICATION OF DISTRIBUTION AGREEMENT

Dear Mr. Nonomura:

         This Letter of Intent sets forth the understanding that Calypte and
Otsuka Pharmaceutical have reached with respect to modifying the Distribution
Agreement between our companies executed as of August 7, 1994. We at Calypte
value our long and friendly relationship with Otsuka, and we very much
respect and appreciate your response to our request that Otsuka agree to
relinquish (except in Japan) its role as distributor of Calypte's HIV test
kits in the Asian Territory. The following points, which have been approved
by Calypte's Board, describe the understanding we have reached regarding
modifications we will make to the Distribution Agreement:

         1.        Otsuka will retain the exclusive distribution rights in
Japan for Calypte's urine HIV-1 EIA Kit, the "Improved Kit" for which we are
now in the process of obtaining approval, and other improved or expanded HIV
test kits that Calypte may develop or to which it may obtain rights in the
future, including test kits for HIV-2 and HIV-1 Group O. Calypte will also
grant Otsuka the exclusive right to conduct and distribute Western blot tests
in Japan. Commencing upon Otsuka's receipt of approval from the Japanese
regulatory authority to begin commercial sales and marketing of Calypte's EIA
test kit (which we anticipate will be the Improved Kit, not the original
kit), the minimum annual tests of such approval kit to be purchased by Otsuka
from Calypte

<PAGE>

shall be fifty thousand (50,000); PROVIDED that, the first "year" to which
such purchase commitment shall apply shall be the balance of the calendar
year following the date on which Otsuka receives approval from the Japanese
regulatory authority PLUS the next calendar year (thereafter, such purchase
commitment shall apply in each subsequent calendar year). There shall be no
minimum purchase commitment for Western Blot tests.

         2.        Calypte will, in consideration of Otsuka relinquishing its
distribution rights outside of Japan, pay Otsuka one of the following amounts:

                   a)  if the successor distributor pays Calypte an upfront
fee and/or milestone payments in addition to royalties or minimum purchases,
Calypte will pay Otsuka the greater of $500,000 or 25% of such
upfront/milestone payments paid to Calypte by the successor distributor (the
25% payments, if applicable, will be paid to Otsuka at the time the successor
distributor makes such payments to Calypte); or

                   b)  if the successor distributor pays no such upfront
fees/milestone payments to Calypte, Calypte will pay Otsuka a total of
$350,000, payable in seven (7) monthly installments of $50,000 each, the
first such installment being due the first day of the calendar month
following execution of the agreement with the successor distributor.

The above payments contemplate that Calypte will select a successor
distributor for all substantial countries in the Asian Territory outside of
Japan. If the first successor distributor has a territory with fewer than all
of the substantial countries in the Asian Territory outside of Japan, Calypte
and Otsuka will discuss in good faith an adjustment to this fee arrangement.

         3.        Following Otsuka's relinquishment of its distribution
rights in the Asian Territory outside of Japan, Calypte will pay Otsuka five
percent (5%) of Calypte's revenues from the sale or use of Calypte HIV test
kits (urine and Western Blot) in or for the Asian Territory outside of Japan,
beginning on the date of the first commercial sale of such Calypte products
in the Asian Territory outside of Japan. Revenues that are the subject of the
percentage payments to be made under this paragraph will include Calypte's
gross revenues from the successor distributor(s) of Calypte's products in the
Asian Territory outside of Japan as well as gross revenues to Calypte from
its direct sales to such countries.

         4.        Otsuka is currently conducting or plans to conduct
clinical trials in Thailand and China and may continue such clinical trials
even through it will be relinquishing its distribution rights in the Asian
Territory outside of Japan. Otsuka agrees that it will work cooperatively
with Calypte on these clinical trials and, once this Letter of Intent has
been signed, Otsuka agrees to defer to Calypte on matters relating to any
clinical trials outside Japan. Otsuka will provide the results of such
clinical trials to Calypte and to the successor distributor designated by
Calypte. In addition, Otsuka will assign the regulatory approvals it has
obtained in Indonesia and Australia relating to Calypte products to the
successor distributor designated by Calypte. Otsuka will provide

                                       2

<PAGE>

the above at no charge. Otsuka has recently commenced clinical trials of
Calypte products in China. Otsuka will provide a copy of the protocol for
such trials to Calypte and will provide any results obtained from such trials
to Calypte and to the successor distributor designated by Calypte. The
successor distributor will reimburse Otsuka for actual amounts paid by Otsuka
for the conduct of such clinical trials in China, excluding Otsuka's own
out-of-pocket expenses, which Otsuka shall bear. Given the difficulties
encountered with the original Calypte EIA test kit, described below, Calypte
does not expect Otsuka to engage in further development efforts relating to
the original product.

         5.        Certain problems encountered in Asia with the use of the
original HIV-1 EIA test kit (the current "Product" within the meaning of the
Distribution Agreement) delayed Otsuka's ability to introduce and
commercialize the Product in the Asian Territory. We appreciate the efforts
of Otsuka and hereby confirm that Otsuka is in good standing under the
Distribution Agreement. Calypte and Otsuka have worked cooperatively to find a
solution to such problems and to develop the "Improved Kit." In part, the
percentage payments to be made by Calypte to Otsuka, described above in
Paragraph 3, reflect Calypte's gratitude for the cooperative efforts of
Otsuka in the development of the Improved Kit. The Specifications referenced
in the Distribution Agreement will be modified to relate to the Improved Kit,
and the diligence commitments and references to the "Date of First Sale" in
the Distribution Agreement will all be deemed to apply to the Improved Kit,
upon its availability for development and commercialization.

         We are pleased that we have reached an understanding on the basic
terms of modifications to be made to the Distribution Agreement. I believe
this Letter of Intent accurately reflects the understanding we have reached
in our meetings on this subject. If you agree, please sign below and return a
signed copy to me.

         Again, I want to thank you for your consideration in this regard.

                                            Very truly yours,

                                            /s/ William Boeger

                                            William Boeger, III President

                                       3

<PAGE>

AGREED AND ACCEPTED:

OTSUKA PHARMACEUTICAL CO., LTD.

/s/ Hideji Nonomura
---------------------------------------
Signature

Hideji Nonomura
---------------------------------------
Name

Director, Diagnostic Department
OTSUKA PHARMACEUTICAL CO. LTD.
---------------------------------------
Title

January 10, 1999
---------------------------------------
Date

                                       4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}]]