ALEXANDER H. WALKER, JR.
Attorney at Law
American Plaza 11
57 West 200 South, Suite 400
Salt Lake City, Utah 84101
Telephone (801) 521-3292
(801) 521-3301 Fax
December 23, 1997
SENT BY UNITED PARCEL SERVICE
-----------------------------
Dr. Jackie R. See, Director
Harvard Scientific Corp.
17992 Mitchell South, Suite 100
Irvine, CA 92614
SENT BY UNITED PARCEL SERVICE
-----------------------------
Thomas E. Waite, President and Director
Harvard Scientiflc Corp.
106 Ridge Road
Lake Mary, Florida 32746
Re: Harvard Scientific Corp.
("Harvard")
Gentlemen:
1. The events of the last two weeks have made it clear that current management
no longer desires my participation as a director. I have been removed as an
officer and effectively excluded from decisions the other directors make. This
likely is due to the fact that I do not agree with the decisions current
management has made regarding how the corporation is run and what information
is, and is not, being disclosed to the shareholders. I think it is appropriate
to outline some of the items with which I disagree.
2. Most, if not all, of the things with which I disagree have occurred since Tom
Waite was elected president and a director of Harvard last month. When Waite was
elected president, it was understood by both Waite and the Board of Directors
that Waite would report to the board in connection with his duties as president.
Most importantly, it was understood that Waite would not obligate Harvard to
issue shares in connection with any contract without first obtaining board
approval.
Dr. Jackie R. See
Thomas R. Waite
December 23, 1997
Page 2
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Within the first week after his election, Waite, without board approval, signed
an agreement with Kostech Data Corporation under the terms of which Waite
obligated Harvard to issue 100,000 shares of common stock as compensation to
Kostech. Waite did not run the agreement by the board before negotiating the
issuance of shares or signing the agreement, and I expressed my concern with
Waite's actions in this regard in no uncertain terms.
3. Waite also balked at signing the employment agreement drafted by the company
for his employment as president. Waite drafted his own version of the agreement
and submitted it to Harvard. I drafted the company's version per the board's
instructions. Waite's version contained significantly different terms than the
company's version. First, Waite's version was automatically renewable each year.
That is, Waite could remain president and draw his $240,000 per year salary as
long as he wanted. Second, Waite's version allowed Waite to move the
corporation's offices to where he lived in Florida, further strengthening
Waite's exclusive control over the corporations activities. Again, I did not
agree with the provisions in Waite's version of his employment agreement. To my
knowledge, Waite has yet to sign an employment agreement with Harvard. Past
corporate officers have signed agreements and if Waite has not, his situation
represents a marked difference in the company's adherence to corporate
formalities.
4. Shortly after taking office, Waite contacted me and asked me as Harvard's
corporate secretary to send him a check for $25,000, which Waite said he
intended to use as a slush fund for expenses. It was my understanding that
corporate expenses would be reimbursed after they were incurred and proper
documentation regarding those expenses was submitted. Without board
authorization, I refused to give Waite $25,000 of the corporation's money absent
verification of how the funds were to be spent.
5. Thereafter, Tom Waite called me at home on Monday, December 1, 1997, at 10:00
p.m. and stated that Barbara Krilich had been appointed as corporate treasurer
of Harvard and that she would take control of the corporate check book. He also
informed me that Krilich would be issued 500,000 shares of Harvard's stock and
that she would be paid $120,000 per year. I asked Waite if Krilich's appointment
had been approved by Jackie See, the corporation's other director. Waite
informed me that See had agreed to Krilich's appointment.
Dr. Jackie R. See
Thomas R. Waite
December 23, 1997
Page 3
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6. The next day, Tuesday, December 2, 1997, I contacted Jackie See and asked him
about Krilich's appointment. See told me that he had not heard about the matter
before my call and that he had not approved Krilich's appointment. The situation
regarding Krilich was worsened by the fact that the board had approved the
appointment of Curt Orgill as corporate treasurer in a board meeting held on
November 20, 1997. I informed See that Krilich's appointment in place of Orgill
could create liability for the corporation as Orgill had resigned from his
former job in order to accept the position with Harvard per the board's previous
commitment. It was my understanding that See agreed with me and that the
corporation would honor its commitment to Mr. Orgill.
7. I then confronted Waite when he called me at my home on Tuesday, December 2,
1997, with what in my opinion was his misrepresentation about See's approval of
Krilich's appointment. During this conversation, I expressed my opinion that
Waite had lied to me and that I could no longer trust him.
8. On Wednesday, December 3, 1997, See called me at home. See informed me that
Waite had an investor, or investors, who would put $12 million into Harvard, but
only it I resigned as an officer and director. In addition, the $12 million only
would be put into Harvard if Nevada Agency and Trust Company was replaced as
Harvard's transfer agent. Of course, as has been disclosed in past corporate
filings, I am a principal of Nevada Agency and Trust Company. In short, as long
as I severed all ties with Harvard, Waite would arrange for the $12 million to
be put into Harvard. See then asked me to step down so Waite would put the funds
into the corporation. Given the breakdown in my communications with Waite, I
agreed as long as the $12 million transaction was real and as long as a suitable
severance agreement could be put in place.
9. Thereafter, See and Waite held what they purported to be a telephonic meeting
of the board of directors on Thursday, December 4, 1997. At this meeting, See
wrongly represented that I had resigned as an officer and director. The board
then proceeded to wrongly fill my positions with Harvard and wrongly terminate
Nevada Agency and Trust Company as Harvard's transfer agent. This meeting was
held without notice and was invalid.
10. When I learned of the invalid meeting, I took steps to protect the
corporation's assets. I hired an attorney for this purpose. I was prepared to
seek court intervention if the corporation's officers and directors did not
follow proper corporate formalities. Thereafter, the directors properly noticed
a directors' meeting in order to take all actions they wished to legally take.
The fact that this
Dr. Jackie R. See
Thomas R. Waite
December 23, 1997
Page 4
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second directors' meeting was called confirmed at least two things: (1) the
previous telephonic meeting was invalid; and (2) I had not resigned as a
director as See had wrongly represented.
11. I have not been given any documentation which confirms the existence of the
$12 million infusion of funds which Waite claims will be made to Harvard. I
believe that such documentation should be made available to all board members.
Either such documentation does not exist or a decision has been made not to
provide me as a member of the board with such documentation. I do not agree with
any decision to take action upon the promise of $12 million without confirmation
of the obligation to put the $12 million into the corporation.
12. It is my opinion that under Waite's supervision, Harvard's assets are being
dissipated unnecessarily. Krilich's appointment and salary are unnecessary in
light of the previous employment of Mr. Orgill. Of course, both See and Waite
are aware of the fact that Mr. Orgill has been my accountant for. many years and
that I certainly favor and approve of his appointment, as did they at the board
meeting held on November 20, 1997.
13. It also is my opinion that the termination of Nevada Agency and Trust
Company as Harvard's transfer agent is a breach of the ninety (90) day notice
provision in the agreement between Nevada Agency and Trust Company and Harvard,
and also violates Rule 17Ad-16 of the Securities Exchange Act of 1934, as
amended, which requires a transition period of ten (10) days during a change of
transfer agents. Management has chosen to ignore these facts, a decision with
which I do not agree, and opened the corporation to further liability.
14. Also, in my opinion, Harvard is not disclosing material information to the
shareholders. For example, See has informed me, and I have relied on the
accuracy of his representations, that the Phase I testing of the corporation's
principle product will be audited by the Food and Drug Administration. For
months I have advocated the disclosure of this fact, if it is true, and a full
discussion of the impact such an audit could have on the approval process. I
believe such a disclosure should be made immediately and I do not agree with the
corporation's failure to make such a disclosure.
Dr. Jackie R. See
Thomas R. Waite
December 23, 1997
Page 5
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15. Also, in my opinion, the press release the corporation made on or about
December 11, 1997 denying the existence of any class action suits by
shareholders could be construed as misleading. A copy of the press release which
I downloaded from the Internet is attached hereto. While it may be true that the
officers and directors are unaware of any class action suits by shareholders,
they are aware of at least one suit brought by a shareholder against the
corporation. Of course, I refer to the Cogdill v. Harvard matter pending in the
Superior Court of the State of California, County of Los Angeles, Case No.
KC025611. In my opinion, the press release should have made mention of that fact
and I do not agree with the corporation's decision to omit that fact from the
press release.
16. Given these conflicts with management, I can no longer serve as a director.
Therefore, because of my disagreements with on the matters relating to the
corporation's operations, policies and practices, I resign as a director of
Harvard. This letter and its attachment is my written description of my
disagreements and pursuant to Item 6(a) of Form 8-K I hereby request that this
matter be disclosed on Form 8-K. Pursuant to Item 6(c), this letter and its
attachment must be filed as an exhibit to such a Form 8-K filing.
Very truly yours,
/s/ Alexander H. Walker, Jr.
A.H.WalkerJr.:cje
cc: David R. Baker
McDonald Carano Wilson McCune
Nevada Agency and Trust Company
Thursday December 11, 10:03 am Easter Time
Company Press Release
HARVARD SCIENTIFIC CORP. PRESIDENT DISMISSES ALL
RUMORS
RENO, Nov.-(BUSINESS WIRE)-Dec. 11, 1997-Management of Harvard Scientific Corp.
(OTC:BB HVSF) said today that it has come to the company's attention through
e-mail messages and telephone calls that certain unfounded rumors have been
circulating about the company. Management assets further that neither the
company, its registered agent nor its legal counsel is aware of any class action
lawsuits initiated by shareholders or any other party, as has been rumored.
Management also stated emphatically that the company has not been notified by
the Securities and Exchange Commission of any pending investigations against the
company. Rumors to that effect are completely unfounded. Thomas Waite, President
and Chief Executive Officer, said he knows of no reason for the recent drop in
the price of the company's stock. He added that management is focused on
enhancing the fundamentals of the company through strengthening the balance
sheet and by fully implementing its plan to bring the company's products to
market. Management, he said; has full faith and confidence in the operational
and scientific teams it has assembled to expedite this process. Harvard
Scientific Corp. is a biopharmaceutical company that develops products relating
to liposomal delivery of Prostaglandin E-1 for the treatment of male erectile
dysfunction, impotency and sexual enhancement. The company's patented process
allows the Prostaglandin E-1 to be administered as a liquid via a painless
delivery system. The company also has developed a topically applied skin
treatment for psoriasis and is working with the FDA to establish Phase I
clinical trials protocol for that product.
Contact:
I.W. Miller & Company
Ira Miller, 714/833-9001
or
Scopes, Garcia & Carlisle
Ellie Muth, 801/364-8720 |
