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EXHIBIT 10.5  

 
 

6% CONVERTIBLE DEBENTURE    
  

NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. 

	No. 1	 	US $550,000

  
 

    Calypte Biomedical Corporation
  
    6% CONVERTIBLE DEBENTURE DUE APRIL 26, 2001    
  

    THIS DEBENTURE is issued by Calypte Biomedical Corporation, a corporation organized and existing under the laws of the State of Delaware (the "Company") and is
designated as its 6% Convertible Debenture Due April 26, 2001. 

    FOR
VALUE RECEIVED, the Company promises to pay to AMRO International, S.A. or permitted assigns (the "Holder"), the principal sum five hundred fifty thousand and 00/100 (US $550,000)
Dollars
on April 26, 2001 (the "Maturity Date") and to pay interest quarterly in arrears on the principal sum outstanding at the rate of 6% per annum (based upon a 365 calendar day year) accruing from
the date of initial issuance. Accrual of interest shall commence on the first business day to occur after the date of initial issuance and continue until payment in full of the principal sum has been
made or duly provided for. The first interest payment shall be due and payable on the earlier of the (i) Maturity Date, and (ii) upon redemption or conversion and on June 1,
September 1, December 1 and April 1 thereafter. If the Maturity Date or any interest payment date is not a business day in the State of New York, then such payment shall be made
on the next succeeding business day. The Company will pay the principal of, and any accrued and unpaid interest due upon this Debenture on the Maturity Date by check or wire transfer to the person who
is the registered Holder. The forwarding of such check or money order shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and
interest on this Debenture to the extent of the sum represented by such check or wire transfer plus any amounts so deducted. 

    This
Debenture is subject to the following additional provisions: 

    1.  The
Company shall be entitled to withhold from all payments of interest on this Debenture any amounts required to be withheld under the applicable provisions of the
United States income tax laws or other applicable laws at the time of such payments, and Holder shall execute and deliver all required documentation in connection therewith. 

    2.  This
Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended (the "Act"), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this
Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer
documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Act or any applicable state or foreign securities laws. 

1

 

Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may treat the person in whose name this Debenture is duly registered on the Company's Debenture
Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary. This Debenture has been executed and delivered pursuant to the Convertible Debenture and Warrants Purchase Agreement dated as of January 19, 2001
between the Company and the original Holder (the "Purchase Agreement"), and is subject to the terms and conditions of the Purchase Agreement, which are, by this reference, incorporated herein and made
a part hereof, including but not limited to, the short sale prohibition in Section 5.2 therein. Capitalized
terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement. 

    3.  On
any Trading Day on or prior to the Maturity Date, the Holder of this Debenture may convert the Purchase Price or any portion thereof, into shares of Common Stock
("Conversion Shares"), at a conversion price for each Conversion Share ("Conversion Price") equal to $1.2232 (95% of the average closing bid price during the ten (10) consecutive Trading Days
immediately prior to the applicable Closing Date)(subject to adjustment for stock splits and the like)(the "Set Price"). At any time commencing after the Maturity Date, the Holder of this Debenture
may convert the Purchase Price or any portion thereof, into Conversion Shares at a Conversion Price equal to the lesser of (A) the Set Price, and (B) 85% of the average of the three
(3) lowest closing bid prices during the twenty-two (22) Trading Days immediately prior to the Conversion Date (as defined below). If, upon any conversion of this Debenture,
the Company's issuance of Conversion Shares would cause it to violate any listing requirement of the Principal Market, then in lieu of such stock issuance, the Company shall pay the Holder cash in an
amount equal to the closing price of the Common Stock on the Conversion Date multiplied by the number of shares which would otherwise have been issuable upon such conversion within five
(5) calendar days. The Company shall be liable for the liquidated damages set forth in Section 8 herein for any failure to make such payments to the Investor within the specified period
of time. Additionally, after the Maturity Date, except for sales of its securities (i) pursuant to the exercise of options granted or to be granted under an employee benefit plan which plan has
been approved by the Company's stockholders, (ii) pursuant to any compensatory plan for a full-time employee or key consultant, (iii) in connection with a strategic
partnership or other business transaction, the principal purpose of which is not simply to raise money, or (iv) pursuant to the Equity Line Agreement, if during the period beginning on the date
hereof and ending when the Holder no longer holds any of the principal amount of this Debenture or any accrued but unpaid interest of this Debenture (the "MFN Period"), the Company sells any shares of
its Common Stock at a fixed per share selling price ("Per Share Selling Price") lower than the Set Price per share, then the Set Price shall be adjusted downward to equal such lower Per Share Selling
Price. The Company shall give to each Investor written notice of any such sale within 24 hours of the closing of any such sale. 

    (a) For
the purpose of this Section 3, the term "Per Share Selling Price" shall mean the amount actually paid by third parties for each Conversion Share. A sale
of shares of Common Stock shall include the sale or issuance of rights, options, warrants or convertible securities ("derivative securities") under which the Company is or may become obligated to
issue shares of Common Stock, and in such circumstances the sale of Common Stock shall be deemed to have occurred at the time of the issuance of the derivative securities and the Per Share Selling
Price of the Common Stock covered thereby shall also include the exercise or conversion price thereof (in addition to the consideration per underlying Conversion Share received by the Company upon
such sale or issuance of the derivative security). In case of any such security issued within the MFN Period in a "Variable Rate Transaction" or an "MFN Transaction" (each as defined below), the Per
Share Selling Price shall be deemed to be the lowest fixed conversion or fixed exercise price at which such securities are converted or exercised in the 

2

 

case of a Variable Rate Transaction, or the lowest adjustment price in the case of an MFN Transaction. If shares are issued for a consideration other than cash, the per share selling price shall be
the fair value of such consideration as determined in good faith by the Board of Directors of the Company. 

    (b) For
the purpose of Section 3(a), the term "Variable Rate Transaction" shall mean a transaction in which the Company issues or sells (a) any debt or
equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (x) at a conversion, exercise or exchange
rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Stock at any time after the initial issuance of such debt or equity securities, or
(y) with a fixed conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of
specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock (but excluding standard stock split anti-dilution
provisions), or (b) any securities of the Company pursuant to an "equity line" structure which provides for the sale, from time to time, of securities of the Company which are registered for
resale pursuant to the Securities Act. 

    (c) For
the purposes of Section 4(a), the term "MFN Transaction" shall mean a transaction in which the Company issues or sells any securities in a capital
raising transaction or series of related transactions (the "New Offering") which grants to an investor (the "New Investor") the right to receive additional shares based upon future transactions of the
Company on terms more favorable than those granted to the New Investor in the New Offering. 

    (d) In
case of any stock split or reverse stock split, stock dividend, reclassification of the common stock, recapitalization, merger or consolidation, or like capital
adjustment affecting the Common Stock of the Company, the provisions of this Section 3 shall be applied in a fair, equitable and reasonable manner so as to give effect, as nearly as may be, to
the purposes hereof. 

    4.  The
rate of interest on this Debenture shall be six percent (6%), per annum (based on a 365 calendar day year), on the outstanding principal until paid or converted
and payable only in cash, pursuant to this Debenture, unless otherwise agreed to by the Investor. 

    5.  The
Company shall use at least 50% of the net proceeds from any other sale for cash of its securities (including the Equity Line Agreement) (each a "Subsequent
Sale"), to redeem this Debenture, plus all accrued but unpaid interest and the applicable Payment Premium. During the 90 calendar day period commencing on the Closing Date the Payment Premium shall be
0% of the outstanding principal balance. During the period commencing immediately thereafter the Payment Premium shall be 15% of the outstanding principal balance. The Company shall give the Holder at
least five (5) Trading Days' notice prior to the closing date of a Subsequent Sale (each a "Subsequent Sale Closing Date"). The
Company shall make redemption payments to the Holder on such Subsequent Sale Closing Date directly out of the proceeds of any such Subsequent Sale. The Holder shall have the right to convert this
Debenture as set forth in Section 3 until the Trading Day immediately prior to the Trading Day set for payment of the redemption price. 

    6.  The
Company shall have the right at any time to deliver to the Holder a written notice of the Company's intent to redeem part or all of the outstanding amount of
this Debenture, plus all accrued but unpaid interest, and the applicable Payment Premium, pursuant to the schedule of Payment Premiums set forth in Section 5 herein. The Company shall make the
redemption payment to the Holder on the date set forth in the Company's notice of redemption, or else the redemption notice shall be void, and the Company shall thereafter not have any further right
to 

3

 

redeem this Debenture. The notice of redemption shall be delivered at least five (5) Trading Days prior to the date of redemption. The Holder shall have the right to convert this Debenture as
set forth in Section 3 until the Trading Day prior to date of redemption, if this Debenture is otherwise convertible at that time. 

    7.  On
the Maturity Date, the Company shall pay the principal of and any accrued but unpaid interest due upon this Debenture, less any amounts required by law to be
deducted, to the registered Holder and addressed to such Holder at the last address appearing on the debenture register. 

    8.  

    (a) Conversion
shall be effectuated by surrendering this Debenture to the Company (if such Conversion will convert all outstanding principal) together with the form of
conversion notice attached hereto as Exhibit A (the "Notice of Conversion"), executed by the Holder evidencing such Holder's intention to convert
this Debenture or a specified portion (as above provided) hereof, and accompanied, if required by the Company, by proper assignment hereof in blank. Interest accrued or accruing from the date of
issuance to the Conversion Date shall be paid as set forth above. No fraction of a share or scrip representing a fraction of a share will be issued on conversion, but the number of shares issuable
shall be rounded to the nearest whole share. The "Conversion Date" shall be deemed to be the date on which the Holder faxes the Notice of Conversion duly executed to the Company. Facsimile delivery of
the Notice of Conversion shall be accepted by the Company at facsimile number (501) 814-8403 Attn.: Jerry Dotson and a copy of the Notice of Conversion shall
be faxed simultaneously to facsimile number 650) 324-0638, Attn.: Bruce Jenett, Esq. Certificates representing Common Stock upon conversion will be delivered
to the Holder within four (4) Trading Days from the Conversion Date. Delivery of Conversion Shares shall be made to the address specified by the Holder in the Notice of Conversion. 

    (b) The
Company understands that a delay in the issuance of Conversion Shares or, if applicable, cash, upon a conversion pursuant to Section 3 herein beyond four
(4) Trading Days could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay late payments to the Holder for late issuance of Conversion
Shares in accordance with the following schedule (where "No. Trading Days Late" is defined as the number of Trading Days beyond four (4) Trading Days from the Conversion Date). 

	No. Trading Days Late
 
	 	Late Payment for Each

$5,000 of Principal Amount

Being Converted

	1	 	$100
	2	 	$200
	3	 	$300
	4	 	$400
	5	 	$500
	6	 	$600
	7	 	$700
	8	 	$800
	9	 	$900
	10	 	$1,000
	More than 10	 	$1,000 +$200 for each Trading Day Late beyond 10 Trading Days

  The
Company shall pay any payments incurred under this Paragraph 8(b) in immediately available funds upon demand. Nothing herein shall limit Holder's right to pursue injunctive 

4

 

relief and/or actual damages for the Company's failure to issue and deliver Conversion Shares or, if applicable, cash, to the Holder, including, without limitation, the Holder's actual losses
occasioned by any "buy-in" of Common Stock necessitated by such late delivery. Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the
Company fails for any reason to effect delivery of such Conversion Shares or, if applicable, cash, within four (4) Trading Days from the Conversion Date, the Holder will be entitled to revoke
the relevant Notice of Conversion by delivering a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to
delivery of such Notice of Conversion, and in such event no late payments shall be due in connection with such withdrawn conversion. 

    (c) If
at any time (a) the Company challenges, disputes or denies the right of the Holder to effect the conversion of this Debenture into Conversion Shares or,
if applicable, cash, or otherwise dishonors or rejects any Notice of Conversion properly delivered in accordance with this Paragraph 8 or (b) any Company stockholder who is not and has
never been an Affiliate (as defined in Rule 405 under the Securities Act of 1933, as amended) of the Holder obtains a judgment or any injunctive relief from any court or public or governmental
authority which denies, enjoins, limits, modifies, delays or disputes the right of the Holder hereof to effect the conversion of this Debenture into Conversion Shares, then the Holder shall have the
right, by written notice, to require the Company to promptly redeem this Debenture for cash at a redemption price equal to one hundred fifty percent (150%) of the outstanding principal amount hereof
and all accrued and unpaid interest hereon. Under any of the circumstances set forth above, the Company shall indemnify and hold harmless the Holder and be responsible for the payment of all costs and
expenses of the Holder, including its reasonable legal fees and expenses, as and when incurred in disputing any such action or pursuing its rights hereunder (in addition to any other rights of the
Holder). In the event a Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder
or any one associated or affiliated with the Holder of has been engaged in any violation of law, agreement or for any other reason, unless, an injunction from a court, on notice, restraining and or
enjoining conversion of all or part of this Debenture shall have been sought and obtained and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the principal
amount of this Debenture outstanding, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which
shall be payable to such Holder to the extent it obtains judgment. In the absence of an injunction precluding the same, the Company shall issue Conversion Shares or, if applicable, cash, upon a
properly noticed conversion. 

    9.  No
provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on,
this Debenture at the time, place, and rate, and in the coin or currency or Conversion Shares herein prescribed. This Debenture is a direct obligation of the Company. 

    10. No
recourse shall be had for the payment of the principal of, or the interest on, this Debenture, or for any claim based hereon, or otherwise in respect hereof,
against any incorporator, shareholder, employee, officer or director, as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issue hereof, expressly waived and released. 

    11. In
case of any (1) merger or consolidation of the Company with or into another Person, or (2) sale by the Company of more than one-half of
the assets of the Company (on an as valued basis) in one or a series of related transactions, the Holder shall have the right to (A) deem such 

5

 

an occurrence an Event of Default and exercise its rights of prepayment pursuant to Paragraph 14 herein, (B) convert its aggregate principal amount of this Debenture then outstanding
into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and the Holder shall be
entitled upon such event or series of related events to receive such amount of securities, cash and property as the Conversion Shares into which such aggregate principal amount of this Debenture could
have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, (x) require the surviving entity
to issue convertible debentures with such aggregate stated value or in such face amount, as the case may be, equal to the aggregate principal amount of this Debenture then held by the Holder, plus all
accrued and unpaid interest and other amounts owing thereon, which newly issued debentures shall have terms identical (including with respect to conversion) to the terms of this Debenture and shall be
entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debenture was issued (including, without limitation, as such
rights relate to the acquisition, transferability, registration and listing of such shares of stock other securities issuable upon conversion thereof), and (y) simultaneously with the issuance
of such convertible debentures, shall have the right to convert such instrument only into shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of
Common Stock following such merger or consolidation. In the case of clause (C), the conversion price applicable for the newly convertible debentures shall be based upon the amount of
securities, cash and property that each Conversion Share would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such
transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this
Paragraph upon any conversion or redemption following such event. This Paragraph shall similarly apply to successive such events. 

    12. The
Holder, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this
Debenture or the Conversion Shares thereof except under circumstances which will not result in a violation of the Act or any applicable state Blue Sky or foreign laws or similar laws relating to the
sale of securities. 

    13. This
Debenture shall be governed by and construed in accordance with the laws of the State of New York. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this
Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions. 

    14. The
following shall constitute an "Event of Default": 

	a.
	The
Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of three (3) Trading Days; or

	b.
	Any
of the material representations or warranties made by the Company herein, in the Purchase Agreement, the Registration Rights Agreement, or in any agreement, certificate or
financial statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Purchase Agreement shall be false or misleading in any
material respect at the time made; or

	c.
	The
Company fails to issue Conversion Shares to the Holder or to cause its Transfer Agent to issue Conversion Shares, or, if applicable, cash, upon proper exercise by the Holder of
the conversion rights of the Holder in accordance with the terms of this 

6

 

Debenture,
fails to transfer or to cause its Transfer Agent to transfer any certificate for Conversion Shares issued to the as and when required by this Debenture or the Registration Rights Agreement,
and such transfer is otherwise lawful, or fails to remove any restrictive legend or to cause its Transfer Agent to transfer any certificate or any Conversion Shares issued to the Holder as and when
required by this Debenture, the Purchase Agreement or the Registration Rights Agreement and such legend removal is otherwise lawful, and any such failure shall continue uncured for five
(5) business days; or 

	d.
	The
Company shall fail to perform or observe, in any material respect, any other covenant, term, provision, condition, agreement or obligation of the Company under the Purchase
Agreement, the Registration Rights Agreement or this Debenture and such failure shall continue uncured for a period of thirty (30) days after written notice from the Holder of such failure; or

	e.
	The
Company shall (1) admit in writing its inability to pay its debts generally as they mature; (2) make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (3) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; or

	f.
	A
trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within
sixty (60) days after such appointment; or

	g.
	Any
governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of
the properties or assets of the Company and shall not be dismissed within sixty (60) days thereafter; or

	h.
	Any
money judgment, writ or warrant of attachment, or similar process in excess of One Hundred Thousand ($100,000) Dollars in the aggregate shall be entered or filed against the
Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of sixty (60) days or in any event later than five (5) days prior
to the date of any proposed sale thereunder; or

	i.
	Bankruptcy,
reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted
by or against the Company and, if instituted against the Company, shall not be dismissed within sixty (60) days after such institution or the Company shall by any action or answer approve of,
consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding;

	j.
	The
Registration Statement is not declared effective by the Commission within one hundred eighty (180) days from the Closing Date; and

	k.
	The
Company shall have its Common Stock suspended or delisted from trading on a Principal Market for in excess of five (5) Trading Days. 

Then,
or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any
subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything herein or in any note or other
instruments contained to the contrary notwithstanding, and the Holder may immediately enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded
by law. 

7

 

    15. Nothing contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a
shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms hereof. 

    16. In
no event shall the Holder be permitted to convert this Debenture for Conversion Shares to the extent that (x) the number of shares of Common Stock
beneficially owned by such Holder (other than Conversion Shares) plus (y) the number of Conversion Shares, would be equal to or exceed 9.9% of the number of shares of Common Stock then issued
and outstanding, including shares issuable upon conversion of this Debenture held by such Holder after application of this Paragraph 16. As used herein, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. To the extent that the limitation contained in this
Paragraph 16 applies, the determination of whether this Debenture is convertible (in relation to other securities owned by the Holder) and of which a portion of this Debenture is convertible
shall be in the sole discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder's determination of whether this Debenture is convertible (in relation to
other securities owned by such Holder) and of which portion of this Debenture is convertible, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to convert this Debenture at such time as such conversion will not
violate the provisions of this Paragraph 16. The provisions of this Paragraph 16 may be waived by the Holder of this Debenture upon, at the election of the Holder, not less than 75
calendar days' prior notice to the Company, and the provisions of this Paragraph 16 shall continue to apply until such 75th day (or such later date as may be specified in such
notice of waiver). No conversion of this Debenture in violation of this Paragraph 16 but otherwise in accordance with this Debenture shall affect the status of the Common Stock issued upon such
conversion as validly issued, fully-paid and nonassessable. If instead of receiving cash on the Maturity Date the Holder instead exercises its right to convert this Debenture into Common
Stock pursuant to Paragraph 3 by delivery of a Notice of Conversion prior to receipt of payment, and such conversion would cause the limit contained in the first sentence of this
Paragraph 16 to be exceeded, such conversion of this Debenture shall occur up to such limit and the remaining unconverted portion of this Debenture shall be converted into Common Stock in
accordance with one or more Notices of Conversion delivered by the Holder 65 days after the Maturity Date. 

8

 

    IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized. 

	Dated: January 26, 2001	 	 	 	 
	 	 	Calypte Biomedical Corporation
	

 	
 	

By:	
 	

/s/ Nancy Katz
	 	 	 	 	

	 	 	 	 	Nancy Katz, President & CEO
	

Attest:	
 	

 	
 	

 
	

/s/ Jerry Dotson

	
 	

 	
 	

 

9

 
 
 

EXHIBIT A
  
    NOTICE OF CONVERSION    
  

(To be Executed by the Registered Holder in order to Convert the Debenture) 

    The
undersigned hereby irrevocably elects to convert $________________________ of the principal amount of the above Debenture No. _______ into Shares of Common Stock of Calypte
Biomedical Corporation (the "Company") according to the conditions hereof, as of the date written below. 

Date
of Conversion* ___________________________________________________________________ 

Conversion
Price * ___________________________________________________________________ 

Accrued
Interest ______________________________________________________________________ 

Signature
__________________________________________________________________________

                                         
                                         
  [Name]
 

Address:
____________________________________________________________________________ 

               ____________________________________________________________________________

*If
such conversion represents the remaining principal balance of the Debenture, the original Debenture must accompany this notice within three (3) Trading Days. 

10

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6% CONVERTIBLE DEBENTURE

Calypte Biomedical Corporation 6% CONVERTIBLE DEBENTURE DUE APRIL 26, 2001

EXHIBIT A NOTICE OF CONVERSIONPrepared by MERRILL CORPORATION www.edgaradvantage.com

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Exhibit 10.6    
    

 
  6% CONVERTIBLE DEBENTURE    
  

NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. 

	No. 2	 	US $550,000

 
 

Calypte Biomedical Corporation    
  

6%
CONVERTIBLE DEBENTURE DUE JUNE 11, 2001 

    THIS
DEBENTURE is issued by Calypte Biomedical Corporation, a corporation organized and existing under the laws of the State of Delaware (the "Company") and is designated as its 6%
Convertible Debenture Due June 11, 2001. 

    FOR
VALUE RECEIVED, the Company promises to pay to AMRO International, S.A. or permitted assigns (the "Holder"), the principal sum five hundred fifty thousand and 00/100 (US $550,000)
Dollars on June 11, 2001 (the "Maturity Date") and to pay interest quarterly in arrears on the principal sum outstanding at the rate of 6% per annum (based upon a 365 calendar day year)
accruing from the date of initial issuance. Accrual of interest shall commence on the first business day to occur after the date of initial issuance and continue until payment in full of the principal
sum has been made or duly provided for. The first interest payment shall be due and payable on the earlier of the (i) Maturity Date, and (ii) upon redemption or conversion and on
June 1, September 1, December 1 and April 1 thereafter. If the Maturity Date or any interest payment date is not a business day in the State of New York, then such payment
shall be made on the next succeeding business day. The Company will pay the principal of, and any accrued and unpaid interest due upon this Debenture on the Maturity Date by check or wire transfer to
the person who is the registered Holder. The forwarding of such check or money order shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for
principal and interest on this Debenture to the extent of the sum represented by such check or wire transfer plus any amounts so deducted. 

    This
Debenture is subject to the following additional provisions: 

    1.  The
Company shall be entitled to withhold from all payments of interest on this Debenture any amounts required to be withheld under the applicable provisions of the
United States income tax laws or other applicable laws at the time of such payments, and Holder shall execute and deliver all required documentation in connection therewith. 

    2.  This
Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended (the "Act"), and other applicable state and foreign securities laws. The Holder shall deliver written notice to the Company of any proposed transfer of this
Debenture. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer
documentation including legal opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Act or any applicable state or foreign securities laws.
Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may treat the person in whose name this 

1

 

Debenture is duly registered on the Company's Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture
be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. This Debenture has been executed and delivered pursuant to the Convertible Debenture and Warrants
Purchase Agreement dated as of January 22, 2001 between the Company and the original
Holder (the "Purchase Agreement"), and is subject to the terms and conditions of the Purchase Agreement, which are, by this reference, incorporated herein and made a part hereof, including but not
limited to, the short sale prohibition in Section 5.2 therein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase
Agreement. 

    3.  On
any Trading Day on or prior to the Maturity Date, the Holder of this Debenture may convert the Purchase Price or any portion thereof, into shares of Common Stock
("Conversion Shares"), at a conversion price for each Conversion Share ("Conversion Price") equal to $0.9858 (95% of the average closing bid price during the ten (10) consecutive Trading Days
immediately prior to the applicable Closing Date)(subject to adjustment for stock splits and the like)(the "Set Price"). At any time commencing after the Maturity Date, the Holder of this Debenture
may convert the Purchase Price or any portion thereof, into Conversion Shares at a Conversion Price equal to the lesser of (A) the Set Price, and (B) 85% of the average of the three
(3) lowest closing bid prices during the twenty-two (22) Trading Days immediately prior to the Conversion Date (as defined below). If, upon any conversion of this Debenture,
the Company's issuance of Conversion Shares would cause it to violate any listing requirement of the Principal Market, then in lieu of such stock issuance, the Company shall pay the Holder cash in an
amount equal to the closing price of the Common Stock on the Conversion Date multiplied by the number of shares which would otherwise have been issuable upon such conversion within five
(5) calendar days. The Company shall be liable for the liquidated damages set forth in Section 8 herein for any failure to make such payments to the Investor within the specified period
of time. Additionally, after the Maturity Date, except for sales of its securities (i) pursuant to the exercise of options granted or to be granted under an employee benefit plan which plan has
been approved by the Company's stockholders, (ii) pursuant to any compensatory plan for a full-time employee or key consultant, (iii) in connection with a strategic
partnership or other business transaction, the principal purpose of which is not simply to raise money, or (iv) pursuant to the Equity Line Agreement, if during the period beginning on the date
hereof and ending when the Holder no longer holds any of the principal amount of this Debenture or any accrued but unpaid interest of this Debenture (the "MFN Period"), the Company sells any shares of
its Common Stock at a fixed per share selling price ("Per Share Selling Price") lower than the Set Price per share, then the Set Price shall be adjusted downward to equal such lower Per Share Selling
Price. The Company shall give to each Investor written notice of any such sale within 24 hours of the closing of any such sale. 

    (a) For
the purpose of this Section 3, the term "Per Share Selling Price" shall mean the amount actually paid by third parties for each Conversion Share. A sale
of shares of Common Stock shall include the sale or issuance of rights, options, warrants or convertible securities ("derivative securities") under which the Company is or may become obligated to
issue shares of Common Stock, and in such circumstances the sale of Common Stock shall be deemed to have occurred at the time of the issuance of the derivative securities and the Per Share Selling
Price of the Common Stock covered thereby shall also include the exercise or conversion price thereof (in addition to the consideration per underlying Conversion Share received by the Company upon
such sale or issuance of the derivative security). In case of any such security issued within the MFN Period in a "Variable Rate Transaction" or an "MFN Transaction" (each as defined below), the Per
Share Selling Price shall be deemed to be the lowest fixed conversion or fixed exercise price at which such securities are converted or exercised in the case of a Variable Rate Transaction, or the
lowest adjustment price in the case of an MFN Transaction. If
shares are issued for a consideration other than cash, the per share selling price shall be the fair value of such consideration as determined in good faith by the Board of Directors of the Company. 

2

 

    (b) For the purpose of Section 3(a), the term "Variable Rate Transaction" shall mean a transaction in which the Company issues or sells (a) any debt or
equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (x) at a conversion, exercise or exchange
rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Stock at any time after the initial issuance of such debt or equity securities, or
(y) with a fixed conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of
specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock (but excluding standard stock split anti-dilution
provisions), or (b) any securities of the Company pursuant to an "equity line" structure which provides for the sale, from time to time, of securities of the Company which are registered for
resale pursuant to the Securities Act. 

    (c) For
the purposes of Section 4(a), the term "MFN Transaction" shall mean a transaction in which the Company issues or sells any securities in a capital
raising transaction or series of related transactions (the "New Offering") which grants to an investor (the "New Investor") the right to receive additional shares based upon future transactions of the
Company on terms more favorable than those granted to the New Investor in the New Offering. 

    (d) In
case of any stock split or reverse stock split, stock dividend, reclassification of the common stock, recapitalization, merger or consolidation, or like capital
adjustment affecting the Common Stock of the Company, the provisions of this Section 3 shall be applied in a fair, equitable and reasonable manner so as to give effect, as nearly as may be, to
the purposes hereof. 

    4.  The
rate of interest on this Debenture shall be six percent (6%), per annum (based on a 365 calendar day year), on the outstanding principal until paid or converted
and payable only in cash, pursuant to this Debenture, unless otherwise agreed to by the Investor. 

    5.  The
Company shall use at least 50% of the net proceeds from any other sale for cash of its securities (including the Equity Line Agreement) (each a "Subsequent
Sale"), to redeem any outstanding debenture held by the Holder, plus all accrued but unpaid interest and the applicable Payment Premium. If there is more than one debenture outstanding, any net
proceeds from a Subsequent Sale used to redeem the outstanding debentures held by the Holder shall first be applied to redeem the
debenture with the earliest maturity date. During the 90 calendar day period commencing on the Closing Date the Payment Premium shall be 0% of the outstanding principal balance. During the period
commencing immediately thereafter the Payment Premium shall be 15% of the outstanding principal balance. The Company shall give the Holder at least five (5) Trading Days' notice prior to the
closing date of a Subsequent Sale (each a "Subsequent Sale Closing Date"). The Company shall make redemption payments to the Holder on such Subsequent Sale Closing Date directly out of the proceeds of
any such Subsequent Sale. The Holder shall have the right to convert this Debenture as set forth in Section 3 until the Trading Day immediately prior to the Trading Day set for payment of the
redemption price. 

    6.  The
Company shall have the right at any time to deliver to the Holder a written notice of the Company's intent to redeem part or all of the outstanding amount of
this Debenture, plus all accrued but unpaid interest, and the applicable Payment Premium, pursuant to the schedule of Payment Premiums set forth in Section 5 herein. The Company shall make the
redemption payment to the Holder on the date set forth in the Company's notice of redemption, or else the redemption notice shall be void, and the Company shall thereafter not have any further right
to redeem this Debenture. The notice of redemption shall be delivered at least five (5) Trading Days prior to the date of redemption. The Holder shall have the right to convert this Debenture
as set forth in Section 3 until the Trading Day prior to date of redemption, if this Debenture is otherwise convertible at that time. 

3

 

    7.  On the Maturity Date, the Company shall pay the principal of and any accrued but unpaid interest due upon this Debenture, less any amounts required by law to be
deducted, to the registered Holder and addressed to such Holder at the last address appearing on the debenture register. 

    8.  

    (a) Conversion
shall be effectuated by surrendering this Debenture to the Company (if such Conversion will convert all outstanding principal) together with the form of
conversion notice attached hereto as Exhibit A (the "Notice of Conversion"), executed by the Holder evidencing such Holder's intention to convert
this Debenture or a specified portion (as above provided) hereof, and accompanied, if required by the Company, by proper assignment hereof in blank. Interest accrued or accruing from the date of
issuance to the Conversion Date shall be paid as set forth above. No fraction of a share or scrip representing a fraction of a share will be issued on conversion, but the number of shares issuable
shall be rounded to the nearest whole share. The "Conversion Date" shall be deemed to be the date on which the Holder faxes the Notice of Conversion duly executed to the Company. Facsimile delivery of
the Notice of Conversion shall be accepted by the Company at facsimile number (501) 814-8403 Attn.: Jerry Dotson and a copy of the Notice of Conversion shall
be faxed simultaneously to facsimile number (650) 324-0638, Attn.: Bruce Jenett, Esq. Certificates representing Common Stock upon conversion will
be delivered to the Holder within four (4) Trading Days from the Conversion Date. Delivery of Conversion Shares shall be made to the address specified by the Holder in the Notice of Conversion. 

    (b) The
Company understands that a delay in the issuance of Conversion Shares or, if applicable, cash, upon a conversion pursuant to Section 3 herein beyond four
(4) Trading Days could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay late payments to the Holder for late issuance of Conversion
Shares in accordance with the following schedule (where "No. Trading Days Late" is defined as the number of Trading Days beyond four (4) Trading Days from the Conversion Date). 

	No. Trading Days Late
	 	Late Payment for Each

$5,000 of Principal Amount

Being Converted

	1	 	$100
	2	 	$200
	3	 	$300
	4	 	$400
	5	 	$500
	6	 	$600
	7	 	$700
	8	 	$800
	9	 	$900
	10	 	$1,000
	More than 10	 	$1,000 + $200 for each Trading Day Late beyond 10 Trading Days

    The
Company shall pay any payments incurred under this Paragraph 8(b) in immediately available funds upon demand. Nothing herein shall limit Holder's right to pursue injunctive
relief and/or actual damages for the Company's failure to issue and deliver Conversion Shares or, if applicable, cash, to the Holder, including, without limitation, the Holder's actual losses
occasioned by any "buy-in" of Common Stock necessitated by such late delivery. Furthermore, in addition to any other remedies which may be
available to the Holder, in the event that the Company fails for any reason to effect delivery of such Conversion Shares or, if applicable, cash, within four (4) Trading Days from the
Conversion Date, the Holder will be entitled to revoke the relevant Notice of Conversion by delivering a notice to such effect to the Company, whereupon the 

4

 

Company and the Holder shall each be restored to their respective positions immediately prior to delivery of such Notice of Conversion, and in such event no late payments shall be due in connection
with such withdrawn conversion. 

    (c) If
at any time (a) the Company challenges, disputes or denies the right of the Holder to effect the conversion of this Debenture into Conversion Shares or,
if applicable, cash, or otherwise dishonors or rejects any Notice of Conversion properly delivered in accordance with this Paragraph 8 or (b) any Company stockholder who is not and has
never been an Affiliate (as defined in Rule 405 under the Securities Act of 1933, as amended) of the Holder obtains a judgment or any injunctive relief from any court or public or governmental
authority which denies, enjoins, limits, modifies, delays or disputes the right of the Holder hereof to effect the conversion of this Debenture into Conversion Shares, then the Holder shall have the
right, by written notice, to require the Company to promptly redeem this Debenture for cash at a redemption price equal to one hundred fifty percent (150%) of the outstanding principal amount hereof
and all accrued and unpaid interest hereon. Under any of the circumstances set forth above, the Company shall indemnify and hold harmless the Holder and be responsible for the payment of all costs and
expenses of the Holder, including its reasonable legal fees and expenses, as and when incurred in disputing any such action or pursuing its rights hereunder (in addition to any other rights of the
Holder). In the event a Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder
or any one associated or affiliated with the Holder of has been engaged in any violation of law, agreement or for any other reason, unless, an injunction from a court, on notice, restraining and or
enjoining conversion of all or part of this Debenture shall have been sought and obtained and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the principal
amount of this Debenture outstanding, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which
shall be payable to such Holder to the extent it obtains judgment. In the absence of an injunction precluding the same, the Company shall issue Conversion Shares or, if applicable, cash, upon a
properly noticed conversion. 

    9.  No
provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on,
this Debenture at the time, place, and rate, and in the coin or currency or Conversion Shares herein prescribed. This Debenture is a direct obligation of the Company. 

    10. No
recourse shall be had for the payment of the principal of, or the interest on, this Debenture, or for any claim based hereon, or otherwise in respect hereof,
against any incorporator, shareholder, employee, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived
and released. 

    11. In
case of any (1) merger or consolidation of the Company with or into another Person, or (2) sale by the Company of more than one-half of
the assets of the Company (on an as valued basis) in one or a series of related transactions, the Holder shall have the right to (A) deem such an occurrence an Event of Default and exercise its
rights of prepayment pursuant to Paragraph 14 herein, (B) convert its aggregate principal amount of this Debenture then outstanding into the shares of stock and other securities, cash
and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and the Holder shall be entitled upon such event or series of related events
to receive such amount of securities, cash and property as the Conversion Shares into which such aggregate principal amount of this Debenture could have been converted immediately prior to such
merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, (x) require the surviving entity to issue convertible debentures with such
aggregate stated 

5

 

value or in such face amount, as the case may be, equal to the aggregate principal amount of this Debenture then held by the Holder, plus all accrued and unpaid interest and other amounts owing
thereon, which newly issued debentures shall have terms identical (including with respect to conversion) to the terms of this Debenture and shall be entitled to all of the rights and privileges of the
Holder of this Debenture set forth herein and the agreements pursuant to which this Debenture was issued (including, without limitation, as such rights relate to the acquisition, transferability,
registration and listing of such shares of stock other securities issuable upon conversion thereof), and (y) simultaneously with the issuance of such convertible debentures, shall have the
right to convert such instrument only into shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger or
consolidation. In the case of clause (C), the conversion price applicable for the newly convertible debentures shall be based upon the amount of securities, cash and property that each
Conversion Share would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or
consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Paragraph upon any conversion or redemption
following such event. This Paragraph shall similarly apply to successive such events. 

    12. The
Holder, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this
Debenture or the Conversion Shares thereof except under circumstances which will not result in a violation of the Act or any applicable state Blue Sky or foreign laws or similar laws relating to the
sale of securities. 

    13. This
Debenture shall be governed by and construed in accordance with the laws of the State of New York. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this
Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions. 

    14. The
following shall constitute an "Event of Default": 

	a.
	The
Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of three (3) Trading Days; or

	b.
	Any
of the material representations or warranties made by the Company herein, in the Purchase Agreement, the Registration Rights Agreement, or in any agreement, certificate or
financial statements heretofore or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Purchase Agreement shall be false or misleading in any
material respect at the time made; or

	c.
	The
Company fails to issue Conversion Shares to the Holder or to cause its Transfer Agent to issue Conversion Shares, or, if applicable, cash, upon proper exercise by the Holder of
the conversion rights of the Holder in accordance with the terms of this Debenture, fails to transfer or to cause its Transfer Agent to transfer any certificate for Conversion Shares issued to the as
and when required by this Debenture or the Registration Rights Agreement, and such transfer is otherwise lawful, or fails to remove any restrictive legend or to cause its Transfer Agent to transfer
any certificate or any Conversion Shares issued to the Holder as and when required by this Debenture, the Purchase Agreement or the Registration Rights Agreement and such legend removal is otherwise
lawful, and any such failure shall continue uncured for five (5) business days; or

	d.
	The
Company shall fail to perform or observe, in any material respect, any other covenant, term, provision, condition, agreement or obligation of the Company under the Purchase 

6

 

Agreement,
the Registration Rights Agreement or this Debenture and such failure shall continue uncured for a period of thirty (30) days after written notice from the Holder of such failure; or 

	e.
	The
Company shall (1) admit in writing its inability to pay its debts generally as they mature; (2) make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (3) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; or

	f.
	A
trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within
sixty (60) days after such appointment; or

	g.
	Any
governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of
the properties or assets of the Company and shall not be dismissed within sixty (60) days thereafter; or

	h.
	Any
money judgment, writ or warrant of attachment, or similar process in excess of One Hundred Thousand ($100,000) Dollars in the aggregate shall be entered or filed against the
Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of sixty (60) days or in any event later than five (5) days prior
to the date of any proposed sale thereunder; or

	i.
	Bankruptcy,
reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted
by or against the Company and, if instituted against the Company, shall not be dismissed within sixty (60) days after such institution or the Company shall by any action or answer approve of,
consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding;

	j.
	The
Registration Statement is not declared effective by the Commission within one hundred eighty (180) days from the Closing Date; and

	k.
	The
Company shall have its Common Stock suspended or delisted from trading on a Principal Market for in excess of five (5) Trading Days. 

Then,
or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any
subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Debenture immediately due and payable, without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately enforce any and all
of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. 

    15. Nothing
contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a
shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms hereof. 

    16. In
no event shall the Holder be permitted to convert this Debenture for Conversion Shares to the extent that (x) the number of shares of Common Stock
beneficially owned by such Holder (other than Conversion Shares) plus (y) the number of Conversion Shares, would be equal to or exceed 9.9% of the number of shares of Common Stock then issued
and outstanding, including shares issuable upon conversion of this Debenture held by such Holder after application of this Paragraph 16. As used 

7

 

herein, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. To the extent
that the limitation contained in this Paragraph 16 applies, the determination of whether this Debenture is convertible (in relation to other securities owned by the Holder) and of which a
portion of this Debenture is convertible shall be in the sole discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder's determination of whether this
Debenture is convertible (in relation to other securities owned by such Holder) and of which portion of this Debenture is convertible, in each case subject to such aggregate percentage limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such determination. Nothing contained herein shall be deemed to restrict the right of a Holder to convert this Debenture at
such time as such conversion will not violate the provisions of this Paragraph 16. The provisions of this Paragraph 16 may be waived by the Holder of this Debenture upon, at the election
of the Holder, not less than 75 calendar days' prior notice to the Company, and the provisions of this Paragraph 16 shall continue to apply until such 75th day (or such later date
as may be specified in such notice of waiver). No conversion of this Debenture in violation of this Paragraph 16 but otherwise in accordance with this Debenture shall affect the status of the
Common Stock issued upon such conversion as validly issued, fully-paid and nonassessable. If instead of receiving cash on the Maturity Date the Holder instead exercises its right to
convert this Debenture into Common Stock pursuant to Paragraph 3 by delivery of a Notice of Conversion prior to receipt of payment, and such conversion would cause the limit contained in the
first sentence of this Paragraph 16 to be exceeded, such conversion of this Debenture shall occur up to such limit and the remaining unconverted portion of this Debenture shall be
converted into Common Stock in accordance with one or more Notices of Conversion delivered by the Holder 65 days after the Maturity Date. 

    IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized. 

	Dated: March 13, 2001	 	 	 	 
	

 	
 	

Calypte Biomedical Corporation
	

 	
 	

By:	
 	

/s/ Nancy Katz
 Nancy Katz, President & CEO

Attest:

/s/
Jerry Dotson 

8

 
 
 

EXHIBIT A    
    
    NOTICE OF CONVERSION    
  

    (To be Executed by the Registered Holder in order to Convert the Debenture) 

The
undersigned hereby irrevocably elects to convert $                         of the principal amount of the above Debenture
No.    into Shares of Common Stock of Calypte Biomedical Corporation (the "Company") according to the conditions hereof, as of the date written
below. 

	Date of Conversion*	 	

	

Conversion Price *	
 	

	

Accrued Interest	
 	

	

Signature	
 	

 
	 	 	
 [Name]
	

Address:	
 	

	

    *If
such conversion represents the remaining principal balance of the Debenture, the original Debenture must accompany this notice within three (3) Trading Days. 

9

QuickLinks

Exhibit 10.6

6% CONVERTIBLE DEBENTURE

Calypte Biomedical Corporation

EXHIBIT A NOTICE OF CONVERSION

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