EXHIBIT 10.32
HEADS OF AGREEMENT
These Heads of Agreement are intended to reflect the understanding of
the parties concerning (a) U. S. domestic cooperation between Miles Inc.
("Miles") and Schein Pharmaceutical, Inc. ("Schein") on developing synergies
in their respective U.S. Pharmaceutical businesses, (b) international
cooperation between Xxxxx X.X. ("Xxxxx")/Miles and Schein to build together an
international multisource pharmaceutical business, and (c) supply of chemical
drug ingredients by Bayer/Miles to Schein, in each case following the Closing
(as defined in the Stock Purchase Agreement dated February 15, 1994, as
amended).
The parties presently intend together to explore opportunities in the
following areas, recognizing that these areas, as well as the specific projects
within an area or market and the manner in which areas, markets and projects may
be explored, are subject to change from time to time as the parties' discussions
continue and as the working relationship among the parties develops over time.
DOMESTIC U.S. BUSINESS
----------------------
In order to maximize the benefits of the proposed cooperation for both
Miles and Schein in the U.S. domestic market, Miles and Schein will form joint
strategy teams (with
confidentiality agreements as appropriate). The teams will be formed promptly
following the Closing, and will be composed of operational, technical and
marketing representatives from each company, and involving such other
disciplines as the companies may from time to time decide. The teams will
explore potential areas of mutual interest and cooperation between Miles and
Schein in the U. S. domestic market, and will report to a Domestic Strategy
Committee comprised of representatives of both Miles and Schein.
INTERNATIONAL BUSINESS
----------------------
The objective of the Bayer/Xxxxx - Xxxxxx international cooperation is
to identify multisource pharmaceutical business opportunities which the parties
can jointly develop. To accomplish this, the companies may share their
expertise, employing Schein and Bayer products as appropriate, Bayer's
knowledge of international markets, production, marketing and distribution, and
each company's production facilities where appropriate. It will be important to
respect the key factors for success within the multisource market, such as early
market share, range of products and branding.
In order to maximize the benefits of the proposed cooperation for both
Bayer/Miles and Schein in the international market, Bayer and Schein will form
an International Management Committee comprised of representatives of both
Bayer/Miles and Schein. Each of Bayer/Miles and Schein will assign staff (with
2
confidentiality agreements as appropriate), charged with the development of the
international multisource business; or the Committee may decide to hire persons
from outside the organizations if this is considered appropriate. The staff
will prepare market entry proposals for the International Management Committee,
including recommendations as to
(a) Priority markets
(b) Entry strategies
(c) Resource allocations.
Due to the diverse nature of the international markets, various types
of entry strategy are conceivable, potentially including involvement of other
local companies.
The decision to jointly pursue a project in any of these areas in U.S.
domestic or international markets, and the organizational and economic structure
of a project, will require the unanimous approval of the Domestic Strategy
Committee or the International Management Committee, as the case may be. The
allocation of benefits derived from any jointly-pursued project will require the
approval of both Bayer/Miles and Schein, and will be based on separately
negotiated contractual agreements for each such project, which will take into
account the structure and the relative contributions of each party to those
proposed projects. In the event that an agreement as to a particular project
has not been or cannot be reached in an expeditious fashion, each of the parties
shall be allowed to pursue independent strategies.
3
CHEMICAL SYNTHESIS
------------------
A joint Bayer/Xxxxx - Xxxxxx team will investigate the possibility of
using Bayer's expertise in the chemical synthesis area to provide Schein with
chemical drug ingredients. This could include, at Schein's request, future
drugs to be launched by Schein, as well as supplying substances for Schein's
current portfolio, all upon terms and conditions as may from time to time be
mutually agreed to by Bayer/Miles and Schein.
While it is the desire and expectation that cooperation as
contemplated by these Heads of Agreements take place, all of this is subject to
the independent decision making, operation, growth and functioning of each of
the companies involved. These Heads of Agreement contemplate a dynamic and
fluid relationship, and to avoid any misunderstanding, it is important that
these and related points will become binding on the parties in respect of a
4
particular project only upon execution of definitive, mutually satisfactory
documentation.
These Heads of Agreement have been executed as of this 30th day of
September, 1994.
XXXXX XX
By: /s/
-----------------------
MILES INC.
By: /s/
-----------------------
SCHEIN PHARMACEUTICAL, INC.
By: /s/
-----------------------
5
