<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 19, 1998
-----------------
Commission File Number 0-28392
-------
HARVARD SCIENTIFIC CORP
-----------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0226455
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation)
100 North Arlington Avenue, Suite 380, Reno, Nevada 89501
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (702) 786-9005
<PAGE>
Item No. 5. Other Events.
- ----------- -------------
On November 3, 1995, BioSphere Technology Inc. ("BTI"), a major
shareholder of the Company, entered into a Licensing Agreement ("Agreement")
with a European licensor, Pharma Maehle ("Pharma"), whereby Pharma was to
establish the European market for the Company's erectile dysfunction product to
develop, manufacture, sell, practice and exploit the use of the Company's
proprietary license technology. In February 1996, the parties executed an
agreement to reflect the transfer of said agreement from BTI to the Company. On
March 20, 1996, Section 19.0 (Entire Agreement) of the Agreement was amended,
evidently to better express the intent of the parties that the agreement was the
only agreement between the parties.
On December 30, 1996, the Company notified Pharma in writing that it was
terminating the Agreement for breach of contract and the implied covenant of
good faith and fair dealing inherent in all contracts by failing to exercise
reasonable diligence to exploit the licenses technology and patent rights.
Furthermore, Pharma has failed to submit to the Company an annual business plan
for each country in the licenses Territory as required by the Agreement, and has
failed within a reasonable time to seek and obtain Board of Health approval for
the marketing of the product in the countries within the Territory and to
initiate sales of the product in the Territory within 2 months thereafter, as
required the Agreement. In addition, it is believed that Pharma has breached the
confidentiality provisions of the Agreement. The Company has requested Pharma to
cease and desist from any further development, manufacture, sale, practice,
exploitation or other use of the Company's technology, process and/or product
patents, which were subjects of the Agreement.
On January 3, 1997, Pharma's council responded to the Company's
President, Ian Hicks, disputing the breach of contract items.
On January 13, 1997, the Company signed a Letter of Understanding with
Pharma, whereby the parties would consider working out a formal agreement
settling their disputes after seeking advice from legal counsel. The agreement
was to be accomplished within 10 working days from January 13, 1997. A formal
agreement was never concluded.
On January 29,1997, again, the Company notified Pharma of it's intent to
terminate any and all agreements with Pharma. On February 5, 1997, Pharma's
legal council responded in a letter disputing each item of breach of contract.
On February 10, 1997, the Company's President, Ian Hicks, submitted a letter to
Pharma's council again stating the specific facts as to why the Company is
dissatisfied with Pharma's performance and suggesting a resolution to the matter
or termination of the License Agreement and Letter of Understanding. Pharma
alleges the prior notices of termination were withdrawn by Mr. Hicks through
correspondence on March 5, 1997. The Company questions the circumstances
surrounding this correspondence and the relationship between Pharma and Mr.
Hicks at that point in time.
On October 17,1997, the Company's legal council again notified Pharma
that it terminated the relationship on February 10, 1997 requesting that all
documents and correspondences pertaining to the Company be returned to the
Company's legal council. On October 20, 1997, Pharma's legal council responded
claiming the termination is invalid due to the absence of a valid reason for
termination and the alleged rescission of the January 20, 1997 termination by
Ian Hicks.
<PAGE>
On February 19, 1998, the Company's legal council again notified Pharma
of its breach of contract and termination of the agreement referencing all prior
termination letters to be valid. Furthermore, on February 19, 1998, the Company
made a demand for arbitration of the disputes between the parties in the state
of Nevada, as provided for in the agreement. A demand for response is requested
no later than March 13, 1998. Should a response not be received by such date,
the Company intents to request the Second Judicial Court to compel such
arbitration pursuant to the Nevada Revised Statues.
Item No. 7. Exhibits
- ----------- --------
1. Licensing Agreement dated November 3, 1995, between BTI and Pharma Maehle.
2. Amendment to the Licensing Agreement, signed March 20,1996.
3. Modification to Licensing Agreement dated December 29, 1995.
4. Letter of Termination of License Agreement dated December 30,1996, from Ian
Hicks, the Company's President, addressed to Pharma.
5. Pharma's legal council response to Ian Hicks, dated January 3, 1997.
6. Letter of termination of License Agreement from Ian Hicks to Pharma, dated
January 29,1997.
7. Pharma legal council response to the above termination letter (dated January
29,1 997), to Ian Hicks, dated February 5, 1997.
8. Letter from Ian Hicks to Pharma's legal council dated February 10, 1997
responding to the above letter dated February 5, 1997.
9. Letter to Pharma from Ian Hicks dated March 5, 1997.
10. Letter of Notice of Termination from Alexander Walker Jr. to Pharma dated
October 17, 1997.
11. Letter from Pharma legal council to Alexander Walker,
Jr. dated October 20, 1997, responding to the letter dated October 17, 1997.
12. Letter of Notice of Termination of License Agreement from legal council,
Hardesty & Bader, Ltd., to Pharma dated February 19, 1998
13. Demand for Arbitration letter from legal council, Hardesty & Bader, Ltd., to
Pharma dated February 19, 1998
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
HARVARD SCIENTIFIC CORP.
/s/ Thomas E. Waite
------------------------------
Mr. Thomas E. Waite, President
<PAGE>
LICENSING AGREEMENT
This Agreement is entered into as of the 3rd November 1995, by and between
Pharma Maehle, Ernst Grote Street 23, 30196 Isernhagen, Germany, a privately
held company organized under the laws of Germany (hereafter "Licensee") and
Bio-sphere Technology, 4446 Los Reyes Court, Las Vegas, Nevada 89121, USA, a
U.S. corporation (hereafter "Licensor").
Licensor is a research and development company which has expended considerable
resources to develop certain manufacturing process, including Licensor
technology and Licensor process and product patents. This Agreement pertains
specifically to the technologies referred to within Licensor as the proprietary
technologies and proprietary process and product patents which are defined
below.
Licensee is a company which, among other things, manufactures through third
parties, products as well as markets and distributes products. Licensor and
Licensee mutually desire to enter into an Agreement whereby Licensor permits
Licensee to utilize Licensor technology and patents to manufacture, market and
sell products developed by Licenser under Licensee's label. Licensee compensates
Licensor therefore, all upon the terms and conditions of this Agreement.
Now therefore in consideration of the mutual covenants and undertakings set
forth herein the parties agree:
1.0 DEFINITION
- --------------
1.1 "Licensor technology" means and includes Licensor design technology and
Licensor process technology for the PGE1 male erectile dysfunction product,
which includes all technical information and know-how, including product
manufacture and clinical data which is available. This information is specific
to a particular technology, which in this Agreement includes proprietary process
and product technology.
1.2 "Licenser process and product patents" means any U.S., European or
International patent or patent applications now owned or controlled by Licensor.
1.3 "Execution date" is the date this Agreement is signed.
1.4 "Documentation date" is the date of the delivery of each category of
documents is completed.
1
<PAGE>
1.5 "Payment" shall mean receipt by Licensor of the agree-upon sum for the
delivery of the technology as per this Agreement.
1.6 "Territory" shall mean Western and Eastern Europe.
2.0 Grant of License.
- ---------------------
2.1 Licensor grants to Licensee for the life of this Agreement the
following rights.
2.1.1 An exclusive license to the Licensor's technology for use only
in Licensee designated facilities in the Territory according to the terms and
conditions of this Agreement, for the purpose of manufacturing the components of
and the completed product for distribution and sales in the Territory.
3.0 Transfer of Technology
- --------------------------
Licensor shall furnish to Licensee all the required Licenser technology in
its possession, including documentation, software, training and consultation
initiated upon signing this Agreement.
4.0 Options
- -----------
Licensor may develop a second generation product, or subsequent trade
secrets, additional internal technology, patents or trademarks, which are
proprietary to the Licensor. Licensee has the right to a non-exclusive option to
negotiate for such technology or subsequent trade secrets during the term of
this agreement with Licensor.
5.0 New Developments
- --------------------
5 1 Licenser and Licensee agree to keep each other regularly and fully
informed about new improvement modification, applications and other developments
relating to Licensor Technology, whether patentable or unpatentable. Any
developments that are jointly developed by Licensor and Licensee shall be owned
by both Parties, unless negotiated and agreed otherwise, to only include the
same license rights as this agreement in the Territory described in Section 1.6
above.
6.0 Representations, Warrants & Covenants
- -----------------------------------------
6.1 in order to induce Licensee to enter into the Agreement and to
consummate the transaction contemplated hereunder, Licensor makes the following
representations:
2
<PAGE>
6.1.1 Organization: Licensor is a corporation duly organized, validly
existing, and in good standing order under the laws of the state of Nevada, USA.
6.1.2 Authorization: The execution and delivery of the Agreement and
consummation of the transaction contemplated hereby have been duly authorized by
the Board of Directors of Licensor.
6.1.3 Licensor is owner of the deliverables listed. In the event
Licensor is not prepared to maintain patents and provide protection to Licensee.
The Licensee should be so informed immediately. The Licensee then has three (3)
months in which time can assume all such responsibilities for the patents
pertaining to the product, as well as assuming full legal and maintenance coats
of such patents.
6.2 Representations of Licensee: In order to induce the Licensor to enter
into this Agreement and to consummate the transactions contemplated hereunder
Licensee makes the following representations:
6.2.1 Licensee is a corporation duly organized, validly existing, and
in good standing order under the laws of Germany.
6.2.2 Authorization: The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of the Licensee, and this Agreement
constitutes Licensee's valid and binding obligation and is enforceable in
accordance with its terms.
6.3 Licensor and Licensee mutually covenant to comply with all the time
deadlines imposed by this Agreement.
7.0 Confidentiality and Non-Disclosure
- --------------------------------------
7.1 Licensee hereby agrees to keep confidential from any third party any
and all information relating to Licensors technology, other than those parties
who have a need to know to manufacture product for Licensee or those parties to
whom information must be disclosed according to local law.
7.2 Licensee agrees that information relating to Licensor's technology
provided by Licensor will be disclosed or made available only to those employees
or subcontractors who agree in writing to receive information and to retain
confidentiality thereof.
7.3 The term of confidentiality shall be three years from the date of
signing this Agreement, unless the information becomes public knowledge
3
<PAGE>
through no fault or action of either Licensee or Licensor. In the event of
breach of confidentiality, either party may seek compensatory damages through
the legal system as permitted by law. In the event information becomes available
to third parties each party to this Agreement shall make available to the other
its communications records in order to ensure that the breach of confidentiality
was not due to an action of either party to this Agreement.
8.0 Infringements
- -----------------
8.1 To the best of Licensor's knowledge, none of the Licensor patents
infringe the rights of any third party. In the event that such infringements are
alleged by third parties, Licensor agrees to use all best commercial efforts to
remedy the situation and to assume full liability for such infringements.
8.2 Licensee agree to exercise diligence in locating possible infringements
and shall immediately inform Licensor of any such situation which may come to
the attention of Licensee. In such event, Licensor shall initiate any and all
appropriate legal actions to stop such infringements. Licensee will share
Licensor's costs in dealing with such possible infringers in the Territory
described in Section 1.6. Any damages recovered from such action will be divided
between Licensor and Licensee/ shall be borne by Licensor.
9.0 Inspection to Verify Compliance
- -----------------------------------
Licensee shall permit duly authorized representatives of Licensor, upon
reasonable notice, to enter into and upon any premises of Licensee for the
purpose of inspecting the same to ascertain that all of the provisions of this
Agreement are being compiled with by Licensee.
10.0 Government Approvals
- -------------------------
As a condition to the process transfer in whole or in part, Licensee shall
obtain or cause to be obtained at its expense all permits including legal
registration of the product for marketing and sale within the Territory. Such
permits and approvals will also include any necessary for importing components
of the product to be manufactured with Licensor's technology.
11.0 Indemnities for Malfeasance, Liability for Personal Injury or
Indemnification
- --------------------------------------------------------------------------------
11.1 The license herein granted to Licensee is primarily in the nature of
sharing information. Process operation, plant and equipment safety shall be the
sole responsibility of Licensee. Accordingly, Licensor shall not be liable for
any personal injury, property damage resulting from the design or manufacture of
product or product components used in connection with this Agreement.
4
<PAGE>
11.2 When one party to this Agreement admits another party's representative
to his premises, the admitting party shall not be liable for any claims, losses,
damages, or expenses due to death or injury suffered in the said premises by the
said visiting personnel.
12.0 Term and Termination
- -------------------------
12.1 This Agreement shall remain in force for the life of the patent from
the execution date, but this Agreement may be renewed thereafter, from year to
year, until expiration of the last to expire of Licensor patents.
12.2 Should this Agreement be terminated for any reason, Licensee shall not
be able to claim from Licensor any damages or compensation for losses or
expenses incurred, or for lost profits.
12.3 Termination of this Agreement for any reason shall not affect (a)
obligations including the payment of any fees, which have accrued as of the date
of termination, and (b) those obligations which, from the context hereof, are
intended to survive termination of this Agreement
12.4 Termination or intent to terminate this agreement requires
notification from the terminating party to the other in writing, 6 months prior
to the termination date, which shall be the date of expiration of the last of
the patents held by the Licensor.
12.5 Should either party declare bankruptcy, the surviving party has the
right of first refusal to acquire the patents and proprietary information from
the bankrupt party. In the event Bio-sphere declares bankruptcy, Pharma Maehle
has the right to continue the marketing of the product, use of and access to the
patents, with continuing royalty payments to the original patent holder. In the
event Pharma Maehle declares bankruptcy, Bio-sphere has the right to assume
control of distributors and continue product marketing and distribution in the
Territory.
12.6 Licensor can terminate this Agreement with three (3) months written
notice if Licensee is unable to initiate sales of the product in the Territory
within 2 months of receipt of Board of Health approval for the marketing of the
product in the countries within the Territory.
12.7 Licensee will submit to Licensor an annual business plan for each
country in the Territory which includes projected product sales. Licensor and
Licensee shall mutually agree to these projected product sales as a monitoring
mechanism for Licensee performance, including annual growth of sales. Failure of
Licensee to perform according to agreed upon product sales levels could lead to
loss of exclusivity according to this agreement, however, Licensee and
5
<PAGE>
Licensor shall negotiate in good faith to reach agreement on remediation of any
such performance issue/s.
12.8 Licensee agrees to pay Licensor a royalty of 20% of the Licensee's
selling price to its distributors or subsidiaries. Once the amount of $250,000
has been paid to Licensor from the royalty on product sales, the royalty shall
be reduced to 13% of the Licensee's selling price to its distributors or
subsidiaries. Royalties will be paid quarterly in US dollars in a manner to be
determined and agreed upon by the parties to this Agreement.
13.0 Waivers
- ------------
If either party waives its right to sue or terminate this Agreement arising
from a breach of any provision thereof, that waiver will not be construed as a
continuing waiver of other breaches of the same or other provisions.
14.0 No Assignment
- ------------------
This Agreement and any of the rights and obligations hereunder cannot be
assigned or otherwise transferred by either party and will not inure to the
benefit of any successor of either party, whether by operation of law or
otherwise, without the written consent of the other party. The assignment or
transfer without such consent will be null and void, and will constitute breach
of this Agreement. Either party reserves the right to transfer information to a
wholly or majority owned subsidiary of the party, provided all other terms and
condition. of this Agreement are adhered to.
In the event of acquisition or merger of either party with another organization
this Agreement shall continue to remain in force.
15.0 Force Majeur
- -----------------
Neither party shall be in default hereunder by reason of its delay in the
performance of or its failure to perform any of its obligations hereunder if
such delay or failure is caused by strikes, acts of God or the public enemy,
riots, incendiaries, interference by civil or military authorities, compliance
with governmental laws, rules and regulations, delays in transit or delivery,
inability to secure necessary governmental priorities for materials, or any
fault beyond its control or without its fault of negligence.
16.0 Arbitration
- ----------------
16.1 This Agreement will be construed, in all respects, according to the
laws of the state of Nevada, USA, provided, however, that if any provisions of
this Agreement are in contravention of the laws of Germany, such provisions
6
<PAGE>
shall either be ineffective to the extent that they are in contravention of
such laws without invalidating the remaining provisions hereof.
16.2 Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, will be settled by binding arbitration to take place in
Nevada, USA.
17.0 Notices
- ------------
17.1 All notices required herein shall be transmitted by first class mail,
or overnight courier delivery, if necessary.
17.2 Written notices may be delivered personally or may be transmitted by
facsimile to the president of the subject party or to the officer specified in
Subparagraph 17.3.
17.3 Mailed notices shall be deemed to have been effective seven days
following the date of mailing by certified mail, postage prepaid, return receipt
requested addressed as follows:
Bio-sphere Technology, Inc. 4446 Los Reyes Court, Las Vegas. Nevada 89121, USA.
Pharma Maehle, Ernst Grote Street 23, 30196 Isernhagen, Germany.
18.0 English Language
- ---------------------
This Agreement is prepared in the English language only. Any other summary
or documentation prepared in the German language shall be translated into
English.
19.0 Entire Agreement
- ---------------------
This Agreement constitutes the entire and only Agreement between the
parties relating to the subject matter hereof and supersedes and cancels all
previous Agreements, negotiations, commitments, and representations in respect
thereto, and cannot be released, discharged, abandoned, changed or modified in
any manner except by an instrument in writing of concurrent or subsequent date
and signed by duly authorized officers or representatives or each of the parties
hereto.
7
<PAGE>
Agreed to on this third day of November 1995 by:-
Pharma Maehle: Bio-Sphere Technology
Name: H. Maehle Name: Jackie See
Signature: /s/ H. Maehle Signature: /s/ Jackie See
Title: President Title: President
Date: 11-3-95 Date: 11-3-95
8
<PAGE>
Amendment
Ref: Licensing Agreement dated 3 November 1995, Section 19.0. Entire
Agreement, page 7
18.0 Entire Agreement
- ---------------------
This agreement constitutes the entire and only Agreement between Bio-sphere
Technology Inc. and Pharma Maehle (or its predecessor company, Innotec Pharma
and Consulting), or any of its progeny, relating to the subject matter hereof
and supersedes and cancels all previous Agreements, negotiations, commitments,
and representations in respect thereto, and cannot be released, discharged,
abandoned, changed or modified in any manner except by an instrument in writing
of concurrent or subsequent date and signed by duly authorized officers or
representatives or each of the parties hereto.
Pharma Maehle: Bio-sphere Technology:
Name: Heike Maehle Name: Ian Hicks
Signature: /s/ H. Maehle Signature: /s/ Ian Hicks
Date: 20.3.96 Date: 20 Mar 96
<PAGE>
This Modification to Agreement dated December 29th, 1995 by and between:
Bio-sphere Technology, Inc. (A Nevada Corporation)
herein referred to as "Bio-sphere";
Harvard Scientific Corp. (A Nevada Corporation),
formerly named The Male Edge, Inc., a subsidiary company of Bio-sphere,
herein referred to as "HSC"; and
and Pharma Maehle, Ernst Grote St. 23, 30196 Isernhagen, Germany
herein referred to as "Licensee",
WHEREAS, Bio-sphere developed a Prostaglandin based treatment for male erectile
dysfunction, herein referred to as "product", and;
WHEREAS, Bio-sphere entered into Licensing Agreement ("Agreement") with Licensee
dated November 3, 1995 to register, manufacture, market and sell its product
within the Territory of Eastern and Western Europe;
AND WHEREAS, HSC held all rights to the product and Bio-sphere has assigned
Agreement to HSC;
IT IS THEREFORE AGREED on this date set forth below that:
1) HSC shall resume the responsibilities of Bio-sphere under the same terms
and conditions in the Agreement.
2) Licensee and Bio-sphere acknowledges this assignment is the only
modification to the original Agreement as of this date and that all other terms
and conditions remain in full force and effect as of the signing of this
Modification to Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth below.
Harvard Scientific Corp. Bio-sphere Technology, Inc. Pharma Maehle
/s/ Neal Armstrong /s/ Donald Steffens /s/ H. Maehle
- ----------------------- ------------------------- ---------------
By: Neal Armstrong By: Donald Steffens By: H. Maehle
Chief Financial Officer Vice President President
Date: 2/27/96 Date: 2-20-96 Date: 2-26-96
<PAGE>
BIO-SPHERE TECHNOLOGY, INC.
17991 Fitch Avenue
Irvine, California 92614
Telephone: (714) 252-1952
Facsimile: (714) 252.9379
December 30, 1996
VIA FEDERAL EXPRESS AND
CERTIFIED MAIL, RETURN RECEIPT REQUESTED
Ms. Heike Maehle
President
Pharma Maehle
Ernst Grote Street 23
30198 Isernhagen, Germany
Re: Termination of License Agreement
Dear Ms. Maehle:
On behalf of Harvard Scientific Corp. ("Licensor"), please consider
this official notice that the Licensing Agreement ("Agreement") entered into as
of the 3rd November 1995, by and between Licensor and Pharma Maehle
("Licensee"), with respect to the technology known as PGE1, is hereby terminated
effective immediately.
Licensor elects to terminate the Agreement because Licensee has
materially breached the Agreement, and the implied covenant of good faith and
fair dealing inherent in all contracts by failing to exercise reasonable
diligence to exploit the licensed technology and patent rights. Among other
things, notwithstanding the fact that the Agreement was entered into nearly 14
months ago, Licensee has failed to submit to Licensor an annual business plan
for each country in the licensed Territory as required by Agreement Section
12.7; and has failed within a reasonable time to seek and obtain Board of Health
approval for the marketing of the product in the countries within the Territory
and to initiate sales of the product in the Territory within 2 months
thereafter, as required by Agreement Section 12.6.
Further, Licensee has breached the confidentiality provisions of
Agreement Section 7.1, et seq. Licensor reserves all rights and remedies with
respect to any damages suffered by Licensor as a result of such breach.
<PAGE>
Ms. Heike Maehle
December 30, 1996
Page 2
Accordingly, please cease and desist from any further development,
manufacture, sale, practice, exploitation or other use of Licensor Technology,
Licensor Process and/or Product Patents, which were the subject of the
Agreement. Please return to Licensor all originals and copies of all
documentation, software, training, consultation and other materials relating to
the Licensor technology, Licenser Process and/or Product Patents. You may return
such materials and direct any further communications regarding this mater to the
undersigned at Licensor's Irvine, California offices.
Very truly yours,
/s/ Ian Hicks
Bio-Sphere Technology.
By: Ian Hicks, President
cc: Alex Walker, Esq.
J.T. Cardinelli, Esq.
<PAGE>
DETLEV OELFKE LLM.
RECHTBANWALT
RA Detlev Oelfke - Postfach/PO Box 1026 - D-30010 Hannover
Bahnhotstrasse 3
D-30159 Hannover
Telefon (02 11) 3 60 28-0
Telefax (05 11) 3 60 28-77
Bio-sphere Technology, Inc.
Attn. Mr. Ian Hicks, President
17991 Fitch
Irvine, California 92614 U.S.A.
January 3, 1997
License Agreement between Pharma Maehle and Harvard
Scientific Corporation
Dear Sirs
This is to advise you that I represent Pharma Maehle GmbH, the licensee of the
subject license agreement. My client has forwarded your letter of December 30,
1996 to my attention.
1. Reviewing the factual and legal sitation relating to the "termination" on
your part, it appears obvious that your letter of termination is of no legal
consequences.
First of all, from a supplementary agreement entitled Modification to Agreement
dated December 29th, 1995, concluded between my client as well as your company
and the company of Harvard Scientific Corp., it follows that Harvard Scientific
Corp. has assumed the responsibilities that were formerly those of your company
under the license agreement. Therefore, Harvard Scientific Corp. must now
effectively be regarded as the licensor. Consequently, if the licensor had a
right to terminate the license in accordance with the terms of the agreement
such right would lie with Harvard Scientific Corp., not with your company.
In any case, no such right to terminate exists under the present circumstances.
In particular, my client is not in breach of the agreement.
<PAGE>
My client has been diligently pursuing the exploitation of the licensed
technology, in particular, by negotiating with various companies suitable for
manufacturing and/or distributing the product. The licensor, Harvard Scientific
Corp., has been informed from time to time of the steps undertaken by my client
in pursuing this goal.
In fact, my client has been successful in establishing relations with companies
that are interested in becoming a partner for manufacturing and/or distributing
the product. A corresponding letter of intent exists in the hands of my client.
Two companies are presently running manufacturing tests for the product.
Moreover, my client has obtained consent of the Ethical Commission to proceed
with phase 3 clinical studies for the European approval of the drug.
Having obtained this essentially without any assistance from the licensor in
such a short period of time represents an outstanding achievement. This has been
acknowledged repeatedly by the licensor.
My client submitted five business plans including sales forecasts which have
been discussed in detail with Messrs. Hicks and Goldberg of the licensor,
Harvard Scientific Corp., who found them adequate in every respect. Of course,
sales will begin immediately upon receipt of permits in each territory, in
accordance with clause 12.6 of the license agreement.
Besides, even if my client would be in default of any express or implied
performance provision under the license agreement, licensor would need to resort
to good faith negotiation. in accordance with clause 12.7 of the agreement.
There would be no right or, indeed, need to terminate the agreement.
Finally, my client at no time breached any confidentiality in accordance with
clauses 7.1 et seq. of the agreement.
It follows that there is no basis for terminating the license and, therefore,
your written declaration to that effect is void. The license agreement is and
remains in force.
2. Of course, my client is aware of negotiations on your part or by the licensor
with at least one multinational corporation relating to licensing the rights in
the technology in the territory exclusively reserved to my client under the
agreement. My client is further aware of the fact that your letter of
"termination" is an attempt to overcome now undesired obligations in relation to
my client which are a bar to proposed activities in the territory of any third
<PAGE>
party without my client's consent. In order to make what you regard a better
deal you attempt to breach the agreement with my client, denying my client the
fruits of its efforts and rightful profits for the future.
In view of this, please be advised that in the event that you or the licensor
have taken or will take any action resulting in damages to my client, in
particular, refuse any required assistance under the agreement or permit
activities of any third party breaching the exclusivity of my client in the
territory, you will be held liable for any such damages.
Your sincerely
/s/ Detlev Oelfke
Detlev Oelfke
Attorney at law
<PAGE>
HARVARD
SCIENTIFIC
29 Jan. 1997
Via Facsimile and First Class Mail
- ----------------------------------
Ms. Heike Maehle
President
Pharma Maehle
Ernst Grote Street 23
30196 Isernhagen, Germany
Re: Termination of License Agreement
Dear Ms. Maehle:
As per notice of your lawyer in his letter of January 3, 1997, Harvard
Scientific Corp. has assumed the responsibilities pertaining to the male
erectile product. Inasmuch as Harvard Scientific Corp. met with you in good
faith on January 13, 1997 to resolve the issue arising, recent communications
from Pharma Maehle suggest otherwise. As per instructions from the Executive
Committee and the Board of Directors of Harvard Scientific Corp., the letter of
December 30, 1996 is resent under the auspices of Harvard Scientific Corp.
On behalf of Harvard Scientific Corp. ("Licensor") please consider this official
notice that the Licensing Agreement ("Agreement") entered into as of the 3rd
November 1995, by and between Licensor and Pharma Maehle ("Licensee"), with
respect to the technology known as PGE1, is hereby terminated effective
immediately.
Licensor elects to terminate the Agreement because Licensee has materially
breached the Agreement, and the implied covenant of good faith and fair dealing
inherent in all contracts by failing to exercise reasonable diligence to exploit
the licensed technology and patent rights. Among other things, notwithstanding
the fact that the Agreement was entered into nearly 14 months ago, Licensee has
failed to submit to Licensor an annual business plan for each country in the
licensed Territory as required by Agreement Section 12.7; and has failed within
a reasonable time to seek and obtain Board of Health approval for the marketing
of the product in the countries within the Territory and to initiate sales of
the product in the Territory within 2 months thereafter, as required by
Agreement Section 12.6.
Further, Licensee has breached the confidentiality provisions of Agreement
Section 7.1, et seq. Licensor reserves all rights and remedies with respect to
any damages suffered by Licensor as a result of such breach.
Research and Development Office: 17991 Fitch-Irvine-CA 92614
Tel:(714) 252 8191 Fax: (714) 252 9379
<PAGE>
Ms. Heike Maehle
January 29, 1997
Accordingly, please cease and desist from any further development, manufacture,
sale, practice, exploitation or other use of Licensor Technology, Licensor
Process and/or Product Patents, which were the subject of the Agreement. Please
return to Licensor all originals and copies of all documentation, software,
training, consultation and other materials relating to the Licensor technology,
Licensor Process and/or Product Patents. You may return such materials and
direct any further communications regarding this matter to the undersigned at
Licensor's Irvine, California offices.
Very truly yours,
/s/ Ian Hicks
Harvard Scientific Corp.
By: Ian Hicks, President
cc: Alex Walker, Esq
J.T. Cardinelli, Esq.
Research and Development Office: 17991 Fitch-Irvine-CA 92814
Tel:(714) 252 8191 Fax:(714) 252 9379
<PAGE>
Brummerstedt Oelfke Seewald
Anwalskanzie
Brummerstedt Oelfke Seewald PO Box 1026 D-30010 Hannover
Dipl-Ing H.D. Brummerstedt
Dipl-Ing Jugen Seewald
Patentanwaite - European Patent Attorneys
Detlev Oelfke, LLM.
Rechtechtwalt
Harvard Scientific Corp. Bahnhofstrasse 3
Attn. Mr. Ian Hicks, President D-30159 Hannover
17991 Fitch Telefon (05 11) 3 80 28-0
Irvine, California 92614 Telefax (05 11) 3 80 28-77
U.S.A.
February 5, 1997
Mein Zeichen/ My ref: 064-17
License Agreement between Pharma Maehle and Harvard
Scientific Corporation
Dear Sirs
You are aware of the fact that I represent Pharma Maehle GmbH, the licensee of
the subject license agreement. My client has forwarded your letter of January
29, 1997 to my attention -
1. On behalf of my client please be advised that your letter of termination is
of no legal consequence. The reasons herefor have been duly stated in my letter
of January 3, 1997 to Bio-Sphere, Inc., and are as follows:
My client is not in breach of the agreement.
My client has been diligently pursuing the exploitation of the licensed
technology, in particular, by negotiating with various companies suitable for
manufacturing and/or distributing the product. You have been informed from time
to time of the steps undertaken by my client in pursuing this goal.
In fact, my client has been successful in establishing relations with companies
that are interested in becoming a partner for manufacturing and/or distributing
the product. A corresponding letter of intent exists in the hands of my client.
Two companies are presently running manufacturing tests for the product.
<PAGE>
Moreover, my client has obtained consent of the Ethical Commission to proceed
with phase 3 clinical studies for the European approval of the drug.
Having obtained this essentially without any assistance from the licensor in
such a short period of time represents an outstanding achievement. This has been
acknowledged repeatedly by your company.
My client submitted five business plans (plus one amendment) including sales
forecasts which have been discussed in detail with Messrs. Hicks and Goldberg of
your company, who found them adequate in every respect. Of course, sales will
begin immediately upon receipt of permits in each territory, in accordance with
clause 12.6 of the license agreement.
Besides, even if my client would be in default of any express or implied
performance provision under the license agreement, licensor would need to resort
to good faith negotiations in accordance with clause 12.7 of the agreement.
There would be no right or, indeed, need to terminate the agreement.
Finally, my client at no time breached any confidentiality in accordance with
clauses 7.1 et seq. of the agreement.
It follows that there is no basis for terminating the license and, therefore,
your written declaration to that effect is void. The license agreement is and
remains in force.
2. From the contents of your letter it appears that you are no longer pursuing
an agreement in good faith between the parties as discussed in the recent
meeting on January 13, 1997. Rather, you have elected to pursue a policy of
violating the license agreement with my client.
3. My client is aware of the fact that you are continuing negotiations with the
aim of licensing the rights in the technology in the territory exclusively
reserved to my client under the existing license agreement. My client is further
aware of the fact that you are trying to actively prevent my client from
continuing and successfully concluding its negotiations in good faith towards a
proper execution of the European license.
This constitutes a flagrant violation of the license agreement which cannot be
tolerated by my client.
Therefore, on behalf of my client I must insist that you provide me with a
declaration
- - confirming that the termination is without effect and the license agreement
between Harvard Scientific Corp. and Pharma Maehle GmbH is still in force
<PAGE>
as well as an undertaking to refrain from
- - representing to third parties that Pharma Maehle GmbH is no longer a licensee
of Harvard with exclusive rights in Europe;
- - negotiating with third parties towards licensing the technology for the
territory of Europe; and
- - attempting to influence third parties to retrain from negotiating with Pharma
Maehle GmbH over the manufacture and distribution of the licensed product in
Europe.
In view of the urgency created by your conduct, we look forward to receiving the
above declarations at your earliest convenience, and no later than
Wednesday, February 12, 1997.
In the event that you should fail to provide the required declaration in time,
my client shall have the right to initiate legal proceedings in the proper venue
against your company as well as Bio-Sphere, Inc. and anyone involved in the
violation of contractual obligations, inter alia, in particular, Mr. Ian Hicks
in person. No further warning shall be required.
Your sincerely
/s/ Detlev Oelfke
Detlev Oelfke
Attorney at law
<PAGE>
HARVARD
SCIENTIFIC
February 10 1997
VIA FACSIMILE AND FIRST CLASS MAIL
- ----------------------------------
Detlev Oelfke
Bahnhofstrasse 3
D-30159
Hannover, Germany
Re: Harvard Scientific Corporation/ Pharma Maehle License Agreement
Dear Mr. Oelfke:
We are in receipt of your letter of February 5, 1997. With respect to your
client's insistence that it is not in breach of the Agreement, we acknowledge
your representations that Pharma Maehle has engaged in discussions with
potential manufacturers and/or distributors of the Product, has submitted
certain business plans and sales forecasts, and may have made certain efforts
towards clinical studies. Nevertheless, in November 1995, Pharma Maehle was
granted a license without any license fee or other concurrent consideration
based on the understanding that having been provided with all currently
available data regarding the Product, Pharma Maehle would raise substantial
capital and undertake product development in Europe without further assistance
or support from Licensor.
The reality of the situation is that Pharma Maehle has been unable to raise
significant capital and its product development efforts have been unduly slow
and now have virtually ceased altogether. The net effects is the European
development and marketing of the Product being held hostage by a License
Agreement that Pharma Maehle appears unable to perform. It is for this reason
that in December 1996, Licenser first invited Ms. Maehle to meet in the US, at
Licensor's expense to discuss a consensual resolution of the situation. Ms.
Maehle booked her trip and appeared prepared to engage in a good faith
discussions toward a mutually beneficial resolution. For reasons which are not
entirely clear, Ms. Maehle canceled her trip. Licensor was therefor left with no
alternative but to terminate the Agreement.
Shortly thereafter Ms. Maehle contacted executive committee member Thomas Waite
in order to reinitiate discussion toward an amicable resolution. Accordingly, a
meeting was convened in New York on January 13, 1997, with Licenser reimbursing
Ms. Maehle for her airfare. Ms. Maehle was accompanied by her marketing advisor,
Friedel Frauendorfer. The meeting was perceived to be successful, in that
<PAGE>
February 10, 1997
Page 2
it resulted in a Letter of Understanding, signed by all persons present.
Undoubtedly, you have a copy of the Letter of Understanding, under which Ms.
Maehle would receive generous present and future compensation for rescission of
the license.
Despite having reached the agreement reflected in the Letter of Understanding,
after returning to Germany, Ms. Maehle again reneged on her commitments. Rather
than proceeding to consummate the Letter of Understanding, Ms. Maehle presented
a demand for information and a series of questions of excessive depth and
detail. It appears that Ms. Maehle was no longer interested in restructuring the
relationship in a mutually and expedient manner. Thus, Licensor was compelled to
renew its termination notice.
If your client is intent on the current course of action, Licensor will have no
choice but to insist on termination of the License and arbitration in Nevada to
resolve any outstanding issues. If, however, Pharma Maehle is interested in
continuing in good faith to finalize the details and consummate the transaction
outline in the Letter of Understanding, Licensor will work diligently toward
that end. Please direct your client's response and any further communications
regarding this matter to our council J.T. Cardinelli at 96 Winter Street, Reno,
Nevada 89503 U.S.A., telephone number (702)322-7422, fax number (702) 322-2303.
Thank you for your prompt attention to this matter.
Very truly yours,
/s/ Ian Hicks
Harvard Scientific Corp.
By: Ian Hicks, President
cc: J.T. Cardinelli, Esq.
<PAGE>
HARVARD
SCIENTIFIC
FACSIMILE MESSAGE
TO: Heike Maehle DATE: 5 Mar. 97
Pharma Maehle
FAX: 011 49 511 6151396
FROM: Ian Hicks
Harvard Scientific
FAX: 714 252 9379
Dear Heike,
This is to advise you that Harvard Scientific recognizes the Pharma Maehle -
Harvard agreement in existence between the two companies. Accordingly, the
previous communication of January 29, 1997 to the contrary is voided.
Harvard Scientific expects to receive similar statement from Pharma Maehle
accepting the cancellation of the above communication and acceptance of the fact
that the agreement between the companies permits the parties to pursue sound
product and business development in order to bring the product to market as
rapidly as possible.
Sincerely,
/s/ Ian Hicks
Ian Hicks
President
Research Office: 17991 Fitch-Irvine-California
Tel: 714 252 8194; Fax 714 252 9379
<PAGE>
ALEXANDER H. WALKER, JR.
Attorney and Counselor
American Plaza II
57 West 700 South, Suite 400
Salt Lake City, Utah 84101
(801) 521-3292
FAX (801) 521-3301
October 17, 1997
Via Fax Transmission:
011-49-511-615-1396
Heike Maehle
Phaehle-Maehle
Ernst - Grote - Str 23A
D-30916
Isernhagen, Germany
RE: HARVARD SCIENTIFIC CORPORATION
Dear Mrs. Maehle:
This office serves as general counsel for Harvard Scientific Corporation a
Nevada corporation "Harvard'.
On February 10, 1997 Harvard served notice upon you that it terminated your
relationship with Harvard. This fact was confirmed by Harvard in its filings
with the United States Securities and Exchange Commission.
All documents and correspondence pertaining to Harvard must be delivered to
me. You are prohibited from holding yourself or your firm out to the business
community as having any relationship whatsoever with Harvard.
Very truly yours,
/s/ Alexander H. Walker Jr.
Alexander H. Walker, Jr.
AHW:mm
cc: Harvard Scientific Corp.
<PAGE>
Brummerstedt Oelfke Seewald
Anwalskanzie
Brummerstedt Oelfke Seewald PO Box 1026 D-30010 Hannover
Dipl-Ing H.D. Brummerstedt
Dipl-Ing Jugen Seewald
Patentanwaite - European Patent Attorneys
Alexander H. Walker Detlev Oelfke, LLM.
Attorney and Councelor Rechtechtwalt
American Plaza II
57 West 200 South, Suite 400 Bahnhofstrasse 3
Salt Lake City, Utah 84101 D-30159 Hannover
U.S.A. Telefon (05 11) 3 60 28-0
Telefax (05 11) 3 60 28-77
October 20, 1997
Our ref.: 064-17
Re. License Agreement between Pharma Maehle and Harvard
Scientific Corporation
Dear Mr. Walker:
We are acting on behalf of Pharma Maehle GmbH, the licensee of the subject
license agreement. Our client is in receipt of your telefax letter of October
17, 1997. Our client has requested that we respond to your communication on its
behalf.
We note that you act as general counsel for Harvard Scientific Corporation,
Reno, Nevada. Your client up to now was represented by the law offices of J.T.
Cardinelli Esq, 96 Winter Street, Reno, Nevada 89503, and our previous
correspondence relating to the issue of the existence of the license
relationship between the parties was conducted with that firm as well as with
Harvard and Bio-Sphere. Inc. Please let us know if you are unaware of any
previous communications of earlier this year.
Indeed, your client attempted to terminate the agreement with its licensee
Pharma Maehle. However, absence any valid reason for such termination, your
client's declarations were without effect. Moreover, upon our request, Ian Hicks
on behalf of your client confirmed by letter of March 5, 1997 that Harvard
Scientific Corporation recognizes the license agreement between the parties.
We took that as the end of the issue. Our client is surprised to find that you
are invoking an invalid termination made and revoked more than half a year
<PAGE>
-2-
ago, in particular, since the parties meantime had dealings and communications
with each other on a fairly regular basis, working towards a successful
development of the product and finding partners for marketing the drug.
Moreover, the parties have been negotiating towards an agreement pursuant to
which Harvard will re-purchase the license from Maehle.
It appears that you have been ill informed about past proceedings.
In any event, Harvard lacks the power to terminate the agreement. For further
reference, we refer to our letters of January 3, 1997 to Bio-Sphere, Inc., of
February 5, 1997 to Harvard and of February 18, 1997 to J.T. Cardinalli. Esp.
Yours sincerely
/s/ Detlev Oelfke
Detlev Oelfke
Attorney at law
<PAGE>
HARDESTY & BADER, LTD.
ATTORNEYS AT LAW
A Nevada Professional Corporation
245 East Liberty Street
Suite 300
Reno, Nevada 89501-2220
Telephone (702) 332-5000
Facsimile (702) 322-5484
February 19, 1998
Via Facsimile
and Federal Express
Ms. Heike Maehle
President
Pharma Maehle
Ernst Grote Street 23
30196 Isernhagen, Germany
Re: Termination of Licensing Agreement dated November 3, 1995 (including
all amendments thereto)
Dear Me. Maehle
This law office has been retained by Harvard Scientific Corporation
("Harvard") with regard to the above referenced matter. As you are aware, on
November 3. 1995, Pharma Maehle entered into a Licensing Agreement with
Bio-sphere technology with respect to technology known as PGE1. Said licensing
agreement was amended by the parties thereto on December 29, 1995 and again on
March 20, 1996 (hereinafter said licensing agreement and the amendments thereto
shall be referred to as "Licensing Agreement"). As you are further aware, the
December 29, 1995 amendment referred to above substituted Harvard for Bio-sphere
as "Licensor."
By letter to you dated December 30, 1996, Harvard terminated the Licensing
Agreement due to various breaches of said Licensing Agreement by Pharma Maehle.
Again on January 29, 1997, Harvard informed you by letter of the termination of
the Licensing Agreement.
Harvard acknowledges that subsequent to said termination letters, various
correspondence and communications occurred between Pharma Maehle and Harvard.
However, the result of such communication and correspondence does not resolve
the issues surrounding Pharma Maehle's breaches of the Licensing Agreement or
Harvard's intent to terminate said Licensing Agreement as a result of said
breaches.
<PAGE>
February 19, 1998
Page 2
Accordingly, notwithstanding the above referenced termination letters, and
without waiving its rights to assert that the effective termination of the
Licensing Agreement was December 30, 1996 or January 29, 1997, Harvard hereby
notifies you that the Licensing Agreement is terminated, effective immediately.
Harvard elects to terminate the Agreement because Licensee has materially
breached the Licensing Agreement, and the implied covenant of good faith and
fair dealing inherent in all contracts by failing to exercise reasonable
diligence to exploit the licensed technology and patent rights. Among other
things, notwithstanding the fact that the Licensing Agreement was entered into
over two (2) years ago, Pharma Maehle has failed to submit to Harvard an annual
business plan for each end every country in the licensed Territory as required
by the Licensing Agreement at paragraph 12.7; and has failed within a reasonable
time to seek and obtain Board of Health approval for the marketing of the
product in the countries within the Territory and to initiate sales of the
product in the Territory within two (2) months thereafter, as required by the
Licensing Agreement at paragraph 12.6.
As was explained in a February 10, 1997 letter from Ian Hick's to you,
Harvard acknowledges that Pharma Maehle has taken some steps with regard to
fulfilling its obligations under the Licensing Agreement, however, such actions
fall far short of the duties and obligations required of Pharma Maehle under the
Licensing Agreement. Moreover, any and all attempts at good faith negotiations
between Pharma Maehle and Harvard as provided in paragraph 12.7 of the Licensing
Agreement (including, but not limited to, meetings occurring on or about January
13, 1997 between Harvard and Heike Maehle), have not produced a settlement
acceptable to both Harvard and Pharma Maehle. Therefore, Harvard has a right to
terminate the Licensing Agreement pursuant to its express terms.
Furthermore, Pharma Maehle has breached the confidentiality provisions of
the Licensing Agreement contained in paragraphs 7.1, 7.2, and 7.3. Harvard
reserves all rights and remedies with respect to any damages suffered by
Licensor as a result of such breach.
Based on the above termination, and the express provisions of the Licensing
Agreement, please cease and desist from any further development, manufacture,
sale, practice, exploitation or other use of the Licensor Technology, Licensor
Process and/or Product Patents, which were the subject of the Licensing
Agreement. Please return to Harvard all originals and copies of all
documentation, software, training, consultation and other materials relating to
the Licensor technology, Licensor Process and/or Product Patents.
As is evident from your prior correspondence, Pharma Maehle has taken the
position that it is not in breach of the Licensing Agreement, and therefore,
Harvard has no basis for terminating the Licensing Agreement. Accordingly,
through a separate letter of even date herewith Harvard shall invoke the
<PAGE>
February 19, 1998
Page 3
arbitration provisions of paragraphs 16.1 and 16.2 of the Licensing Agreement
and demand arbitration.
In the event you acknowledge Harvard's rightful termination of the
Licensing Agreement pursuant to this letter and the aforementioned letters dated
December 30, 1996 and January 29, 1997, you may return all materials relating to
the Licensing Agreement and direct any further communications regarding this
matter to our offices at the address referenced in the letterhead. Otherwise
arbitration of the disputes between Pharma Maehle and Harvard will be commenced
in Reno, Nevada, pursuant to the Licensing Agreement. If you have any question,
please give me a call. Thank you for your immediate attention to this matter.
Sincerely,
HARDESTY, BADER & RYAN, LTD.
/s/ James W. Hardesty
James W Hardesty
cc: Thomas Waite
Dr. Jackie See
Barbara Krilich
Detlev Oelfke, LL.M.
<PAGE>
HARDESTY & BADER, LTD.
ATTORNEYS AT LAW
A Nevada Professional Corporation
245 East Liberty Street
Suite 300
Reno, Nevada 89501-2220
Telephone (702) 332-5000
Facsimile (702) 322-5484
February 19, 1998
Via Facsimile
and Federal Express
Ms. Heike Maehle
President
Pharma Maehle
Ernst Grote Street 23
30196 Isernhagen, Germany
Re: Demand for Arbitration under Paragraphs 16.1 and 16.2 of Licensing
Agreement dated November 3, 1995 (including all amendments thereto)
Dear Ms. Maehle:
Pursuant to Paragraph 16.1 and 16.2 of that certain Licensing Agreement
between Pharma Maehle and Bio-Sphere Technologies dated November 3. 1995.
(including all amendments thereto) (hereafter "Licensing Agreement"), Harvard
Scientific Corporation hereby demands arbitration of the existing dispute
between the parties relating to (i) Pharma Maehle's breach of the Licensing
Agreement, and (ii) the validity and finality of Harvard's termination of the
Licensing Agreement on December 30, 1996, January 29, 1997, and February 19,
1998.
Pursuant to the Licensing Agreement said binding arbitration shall take
place in Reno, Nevada. If Pharma Maehle and Harvard cannot mutually agree on an
arbitrator, Harvard will request the Second Judicial District Court appoint such
arbitrator pursuant to Nevada Revised Statutes Section 38.055.
Please respond to this demand no later than 4:30 p.m. Pacific Standard
Time, Friday, March 13, 1998. If we do not receive a response by such date and
time, Harvard shall request the Second Judicial District Court compel such
arbitration pursuant to Nevada Revised Statutes Sections 38.035 and 38.045.
<PAGE>
February 19, 1998
Page 2
If you have any questions, please give me a call. Thank you for your immediate
attention to this matter.
Sincerely,
HARDESTY, BADER & RYAN, LTD.
/s/ James W. Hardesty
James W. Hardesty
cc: Thomas Waite
Dr. Jackie See
Barbara Krilich
Detlev Oelfke, LL.M.
