EX-10.31






Exhibit 10.31




[* *] Portions of the this exhibit have been omitted pursuant to a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.



SECOND AMENDMENT TO SUPPLY AGREEMENT




     This Second Amendment (this “Second Amendment”) to the Supply Agreement, effective as
of May 5, 2004 (the “Original Agreement”), is made and entered into as of November 18,
2008, and effective as of May 5, 2008 (the “Second Amendment Effective Date”), by and
between DaVita Inc., a Delaware corporation (“DaVita”), and Rockwell Medical Technologies,
Inc., a Michigan corporation (“Rockwell”). The term “Agreement” as used herein
shall mean the Original Agreement as amended, modified and supplemented by the First Amendment (as
defined in Recital A) and this Second Amendment, and all other capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in the Original Agreement.



RECITALS




     A. DaVita and Rockwell entered into that certain First Amendment to Supply Agreement, dated as
of May 29, 2007 (the “First Amendment”), whereby DaVita and Rockwell among other things:
(i) extended the term of the Agreement from May 5, 2007 to May 4, 2008 and (ii) amended the pricing
and delivery terms for the Products.



     B. DaVita and Rockwell desire to enter into this Second Amendment to, among other things: (i)
extend the term of the Agreement from May 5, 2008 to December 31, 2010, (ii) amend the pricing and
delivery terms of the Products effective as of August 1, 2008, and (iii) include a mechanism for
handling any recalls of the Products.



     NOW, THEREFORE, in consideration of the foregoing and mutual covenants and agreements
contained in this Second Amendment, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:



     1. Term. Section 2 of the Agreement is hereby amended and replaced in its entirety
with the following:




“2. Term. The term of this Agreement shall commence on May 5, 2004 and
continue until December 31, 2010 (the “Initial Term”), unless sooner terminated in
accordance with Section 9 below. If upon expiration of the Initial Term,
(a) the parties have not negotiated, executed and delivered (i) a new agreement
relating to the subject matter hereof or (ii) an extension of this Agreement, and
(b) any of the Products continue to be ordered and delivered between the parties,
this Agreement shall continue on a month-to-month basis with respect to the Products
that continue to be ordered and delivered, upon the same terms and conditions that
were in effect prior to such expiration, until either party provides [*          
*] prior written notice of termination (the Initial Term, together with any such
extension, shall hereinafter be collectively referred to as the “Term”).”



 









 








     2. Purchase Price. Section 3(a) of the Agreement is hereby amended and replaced in
its entirety with the following:




“The purchase price for each of the Products for the period of May 5, 2008 through
December 31, 2009 shall be as set forth in Exhibit A. On or before
September 30, 2009, ROCKWELL may submit a written notice to DAVITA requesting an
increase to the purchase price of each of the Products for calendar year 2010 (a
“Purchase Price Increase Notice Request”). [*          




*] DAVITA acknowledges and agrees that ROCKWELL shall have sixty (60) days to cure
any breach of this Section 3(a).”



     3. Product Commitment. Section 3(b) of the Agreement is hereby amended by inserting
the following at the end of such section:




“ROCKWELL’s only remedy for a breach of the provisions of this Section 3(b)
by DAVITA shall be to terminate this Agreement in accordance with the terms and
conditions of Section 9(a) of this Agreement, and in such event ROCKWELL
shall not be entitled to any other relief or remedy whatsoever, including without
limitation monetary damages.”



     4. Discontinuation Event. The Agreement is hereby amended by inserting a new Section
3(c) into the Agreement as follows:



2









 






“c. DAVITA agrees that (i) in the event one or more of its clinics intends on
discontinuing the purchase of its Products requirements from ROCKWELL (a
“Discontinuation Event”), it shall provide ROCKWELL with at least ninety (90) days’
prior written notice of such Discontinuation Event [*




*] In the event of a breach by DAVITA of the provisions of this Section
3(c), ROCKWELL’s sole and exclusive remedy shall be to terminate this Agreement
upon sixty (60) days advance written notice; provided that DAVITA
has not cured, corrected or otherwise resolved such breach in such sixty (60) day
period.”



     5. Mixers. Section 4 of the Agreement is hereby amended and replaced in its entirety
with the following:




“4. Mixers.




(a) For the period of May 5, 2004 through November 17, 2008, ROCKWELL will provide
to each clinic purchasing Dri-Sate® Dry Acid, one Dri-Sate Dry Acid Mixer (each, a
“Mixer”) as set forth in Exhibit A, and ROCKWELL shall maintain and service each
Mixer in accordance with the highest reasonable industry performance standards, at
no additional charge to DAVITA. Each clinic which has received a Mixer pursuant to
this Section 4(a) [*




*]




(b)      [*



3









 






*]




6. Payment Terms. Section 7 of the Agreement is hereby amended and replaced
in its entirety with the following:




“7. Payment Terms. All purchases by DAVITA of Products pursuant to this
Agreement shall be paid on terms net 30 days. DAVITA may withhold payment on the
portion of any invoice for which DAVITA has a bona fide dispute if it (a) pays all
undisputed amounts; (b) notifies ROCKWELL that it is disputing charges; and (c)
provides a reconciliation of charges and documentation necessary to support its
claimed adjustment. All other purchase terms and conditions shall be as set forth
on Exhibit C.”



     7. Failure to Perform Supply Obligations. Section 8(a) of the Agreement is hereby
amended and replaced in its entirety with the following:




“8. Failure to Perform Supply Obligation.




a. In the event ROCKWELL cannot supply or does not deliver any of the Products
within and for the time period required by this Agreement (and not caused by the
negligence of the non-performing party) (a “Failure to Supply Event”), ROCKWELL
covenants and agrees that it shall (i) give notice as promptly as is practicable
under the circumstances to DAVITA of such Failure to Supply Event, unless an order
of a regulatory agency or other action arising out of patient safety concerns
requires the giving of shorter notice; [*



4









 






*] ROCKWELL further agrees and covenants that during a Failure to Supply Event,
DAVITA shall not be subject to the commitment requirements set forth in Section 3(b)
of this Agreement.




b. ROCKWELL acknowledges and agrees that a breach by ROCKWELL of any of the
provisions of this Section 8 shall constitute a substantial breach for
purposes of Section 9(a) of this Agreement which entitles DAVITA at its sole
and absolute discretion to terminate this Agreement pursuant to the provisions of
Section 10 hereof.”



     8. Potential Rockwell Clinics. Section 8(b) of the Agreement is hereby deleted in its
entirety.



     9. Termination Default. Section 9(a) of the Agreement is hereby amended and replaced
in its entirety with the following:




“a. substantial breach of the terms of this Agreement, which breach is not cured,
corrected or otherwise resolved within thirty (30) days after written notice by the
non-breaching party (setting forth the particulars of the alleged breach) to the
breaching party. A “substantial breach” shall include a failure to perform any
material obligation hereunder, including without limitation a failure to pay any
amount due hereunder or under any purchase order issued hereunder when due, other
than amounts which DAVITA or ROCKWELL disputes in good faith; or.”



     10. Termination. Section 10 of this Agreement is hereby amended and replaced in its
entirety with the following:




“10. Termination. Upon the occurrence of a Termination Default hereunder,
the non-defaulting party may terminate this Agreement immediately upon written
notice to the defaulting party. [*



5









 






*] Termination of this Agreement shall not relieve either party of obligations
incurred prior to the effective date of termination, including without limitation
obligations of payment of monies or credits owed at the time of such termination.
The provisions of this Section 10 and of Sections 13 (Confidentiality), 14
(Warranties), 15 (Indemnification and Insurance), 20 (Choice of law), 21 (Attorney
fees), 25 (Open Records), 26 (Discounts), and any other provision the context of
which shows the parties intended it to survive, shall survive any expiration or
termination of this Agreement.”



     11. Product Addition. Section 11 of the Agreement is hereby amended and replaced in
its entirety with the following:




“11. Product Addition and Product Replacement.




a. Throughout the Term, ROCKWELL shall provide to DAVITA the right to purchase
and/or lease all new products manufactured, utilized, licensed, sold or distributed
by ROCKWELL or any of its affiliates (including products and product lines acquired
by ROCKWELL or any of its affiliates as a result of an acquisition, merger or other
transaction involving ROCKWELL or any of its affiliates), that are or that become
Commercially Available and which are not already covered by this Agreement or by any
other agreement, whether written or oral, between the parties (such products are
collectively referred to as “Additional Products” and individually as an “Additional
Product”). ROCKWELL agrees to include DAVITA in all of its distributions of
customer announcements regarding ROCKWELL’s Additional Products. The purchase price
for such Additional Products shall be negotiated by the parties in good faith and
the agreed upon purchase price shall be memorialized in writing as a supplement or
amendment to this Agreement. For purposes of this Section 11, “Commercially
Available” means any product that is approved by the Food and Drug Administration
and manufactured, utilized, sold or distributed anywhere in the United States by
ROCKWELL and/or any of its affiliates. If ROCKWELL acquires any Additional Product
as a result of an acquisition, merger or other transaction involving ROCKWELL or any
of its affiliates with a person or entity with which DAVITA already has a purchase
or rebate arrangement (a “Prior Agreement”), ROCKWELL covenants and agrees that it
shall continue to abide by all of the terms and conditions of such Prior Agreement
or if DAVITA requests, such Additional Products shall be included in this Agreement
on terms to be negotiated and determined as provided in this Section 11(a).



6









 






b. If at anytime during the Term, ROCKWELL introduces a product or offering that is
a replacement for an existing Product covered by this Agreement, whether developed
by ROCKWELL or acquired by ROCKWELL in connection with any transaction (a
“Replacement Product”), ROCKWELL will allow DAVITA or any of its clinics, as
applicable, to purchase such Replacement Product at the same price as the Product it
is replacing or is ultimately intended to replace.”



     12. Recall. The Agreement is hereby amended by inserting a new Section 35 titled
“Recall” into the Agreement as follows:




“35. Recall. In the event ROCKWELL believes in its sole discretion that it
may be necessary to conduct a recall, field correction, market withdrawal, stock
recovery, or other similar action with respect to any of the Products (a “Recall”),
ROCKWELL shall immediately notify DAVITA. The parties agree that the final decision
as to and control of the handling of any Recall shall be in ROCKWELL’s sole
discretion; provided that ROCKWELL conducts the Recall in accordance
with any and all applicable legal requirements. In the event that ROCKWELL does not
conduct the Recall in accordance with all applicable legal requirements, DAVITA
shall have the right to take any and all actions it determines necessary to comply
with such requirements, in its sole and absolute discretion. DAVITA shall provide
all reasonable assistance requested by ROCKWELL in connection with a Recall. If a
Recall arises as a result of the manufacture of any of the Products, ROCKWELL shall
reimburse DAVITA for (a) one hundred percent (100%) of the costs incurred by DAVITA
to acquire a replacement product for the recalled Product or if a replacement
product is not available for the recalled Product one hundred percent (100%) of the
costs paid by DAVITA for such recalled Product and (b) all out-of-pocket expenses
incurred by DAVITA in connection with such Recall. DAVITA and ROCKWELL shall
maintain records of all sales of the Products and customers sufficient to adequately
administer a Recall for the period required by applicable legal requirements.
ROCKWELL shall also indemnify and hold the DAVITA Indemnitees harmless from any
claims, damages, losses, costs or expenses (including reasonable attorneys’ fees)
incurred by the DAVITA Indemnitees in connection with such Recall. In the event of
a Recall, neither party shall make any statement to the press or public concerning
the Recall without first notifying the other party and obtaining the other party’s
prior written approval of any such statement, which approval shall not be
unreasonably, withheld, conditioned or delayed.”



     13. Audit Rights. The Agreement is hereby amended by inserting a new Section 36 titled
“Audit Rights” into the Agreement as follows:




“36. Audit Rights. If DAVITA disagrees with any computation or statement
delivered by ROCKWELL to DAVITA under this Agreement, DAVITA may, within thirty (30)
days after the receipt of such computation or statement, audit



7









 







any such computation or statement. DAVITA shall conduct any such audit during such
times as may be mutually agreed to by the parties. In the event DAVITA’s audit
results in a number different from that set forth in the computation or statement
delivered by ROCKWELL to DAVITA, DAVITA shall deliver a written notice (an
“Objection Notice”) to ROCKWELL setting forth in reasonable detail any and all items
of disagreement related to such computation or statement. If DAVITA does not
deliver an Objection Notice within the requisite time period, the calculations set
forth in any such computation or statement delivered by ROCKWELL to DAVITA shall be
deemed final, conclusive and binding on the parties. ROCKWELL and DAVITA will use
their commercially reasonable efforts to resolve any disagreements relating to any
computation or statement, but if they do not obtain a final resolution within twenty
(20) days after ROCKWELL has received the Objection Notice, then either ROCKWELL or
DAVITA may refer the items in dispute to a nationally recognized firm of independent
public accountants as to which ROCKWELL and DAVITA mutually agree (the
“Firm”), to resolve any remaining disagreements. ROCKWELL and DAVITA will
direct the Firm to render a determination within twenty (20) days of its retention,
and ROCKWELL and DAVITA and their respective agents will cooperate with the Firm
during its engagement. The determination of the Firm will be conclusive and binding
upon ROCKWELL and DAVITA. ROCKWELL and DAVITA shall bear that percentage of the
fees and expenses of the Firm equal to the proportion of the dollar value of the
unresolved disputed issues determined in favor of the other party.”



     14. Corporate Integrity Agreement. The Agreement is hereby amended by inserting a new
Section 37 titled “Corporate Integrity Agreement” into the Agreement as follows:




“37. Corporate Integrity Agreement. The parties, as applicable, hereby
acknowledge and agree as follows:




     (a) ROCKWELL acknowledges that DVA Renal Healthcare, Inc. (“DVA Healthcare”), a
subsidiary of DAVITA, is under a Corporate Integrity Agreement (the “CIA”) with the
Office of the Inspector General of the Federal Department of Health and Human
Services, and that such CIA imposes various reporting and operational compliance
related obligations on DVA Healthcare. To the extent not otherwise set forth
herein, ROCKWELL agrees to cooperate with DVA Healthcare in compliance with the
requirements of such CIA, as such requirements may apply to the performance of
ROCKWELL’s obligations under this Agreement.




     (b) ROCKWELL hereby certifies that it will comply with the terms of DVA
Healthcare’s Corporate Compliance Program, including any training required to be
provided thereunder by DVA Healthcare to employees and certain contractors, and DVA
Healthcare’s Compliance Critical Concepts and policies and procedures related to
compliance with 42 U.S.C. § 1320a-7b(b) (the “Anti-Kickback Statute”), a copy of
each of which will be provided to ROCKWELL, in



8









 







each case as applicable to the performance of ROCKWELL’s obligations under this
Agreement.




     (c) ROCKWELL and DAVITA (on behalf of DVA Healthcare) agree and certify that
this Agreement is not intended to generate referrals for services or supplies for
which payment may be made in whole or in part under any federal healthcare program.




     (d) ROCKWELL certifies that it will abide by the terms of the Anti-Kickback
Statute in connection with the performance of any of its obligations under this
Agreement.”



     15. Availability of Products. The Agreement is hereby amended by inserting a new
Section 38 titled “Availability of Products” into the Agreement as follows:




“38. Availability of Products. ROCKWELL agrees and covenants to DAVITA that
it shall, at all times during the Term, to allow for the continuous and
uninterrupted supply of each of the Products to DAVITA to enable the physicians at
the dialysis clinics owned and managed by DAVITA to treat their patients [*




*] During the Term, ROCKWELL and DAVITA agree to continuously work together and use
their best efforts to increase and improve the inventory reserve of each of the
Products maintained by ROCKWELL for use exclusively by DAVITA.”



     16. Payment Terms. The following language included in Section 7 of the First
Amendment is hereby deleted in its entirety: “terms are net 30 days, there is no discount.”



     17. Exhibit A. “Exhibit A-2” of the Agreement is hereby deleted in its entirety and
replaced with a new “Exhibit A” attached hereto as Exhibit A.



     18. Exhibit B. “Exhibit B-2” of the Agreement is hereby deleted in its entirety and
replaced with a new “Exhibit B” attached hereto as Exhibit B.



     19. Exhibit C. “Exhibit C-2” of the Agreement is hereby deleted in its entirety and
replaced with a new “Exhibit C” attached hereto as Exhibit C.



     20. No Other Changes. Except as specifically amended in this Second Amendment, all
other terms and conditions of the Agreement shall remain unchanged and in full force and effect and
shall govern and apply to all matters contemplated by this Second Amendment.



     21. Governing Law. All issues and questions concerning the construction, validity,
enforcement and interpretation of this Second Amendment shall be governed by and construed in



9









 







accordance with the laws of the State of Delaware, without giving effect to any choice of law
or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the laws of the State
of Delaware.



     22. Severability. Whenever possible, each provision of this Second Amendment shall be
interpreted in such manner to be effective and valid under applicable law, but if any provision of
this Second Amendment is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Second Amendment will be
reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.



     23. Counterparts; Facsimile/PDF Signatures. This Second Amendment may be executed in
any number of counterparts and any party to this Second Amendment may execute any such counterpart,
each of which when executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument. This Second
Amendment shall become binding when one or more counterparts taken together shall have been
executed and delivered by the parties. The parties hereto agree that facsimile or PDF transmission
of original signatures shall constitute and be accepted as original signatures.



[Signature Page Follows]




10









 








     IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to the Supply
Agreement to be executed by their respective duly authorized representatives and effective as of
the Second Amendment Effective Date.



DAVITA:




 





DAVITA INC.




 





By: /s/ LeAnne Zumwalt

Name: LeAnne Zumwalt

Title: Vice President




 




 





ROCKWELL:



 





ROCKWELL MEDICAL TECHNOLOGIES, INC.




 




By: /s/ Robert L. Chioini

Name: Robert L. Chioini

Title: Chief Executive Officer




11









 










EXHIBIT A



ACCOUNT:       DaVita, Inc. – Supply Agreement

LOCATION:     See Exhibit B –
Service Territory




A.      Prices effective May 5, 2008 through July 31, 2008




	 	 	 	 	 	 	 	 	 
	 
	CATALOG #

	 	DESCRIPTION
	 	PACKAGING
	 	UNIT
	 	PRICE
	 
	 
	 	 	 	 	 	 	 	 
	[*
	 	 	 	 	 	 	 	 






	 	 	 
	*]
	 	 
	 
	NOTE:
	 	 
	•

	 	[*     *]
	•

	 	[*
	 

	 	*]






 









 






B.      Prices effective August 1, 2008 through December 31, 2009




[*     




	 	 	 
	*]
	 	 
	 
	 	 
	 
	NOTE:
	 	 
	•

	 	[*     *]
	•

	 	[*
	 

	 	*]






13









 






[*




	 	 	 
	*]
	 	 
	 
	 	 
	 
	NOTE:
	 	 
	•

	 	     [*     *]
	•

	 	[*
	 

	 	*]
	 
	 	 
	30142 Wixom Road    o    Wixom, MI 48393    o    (248) 960-9009    o    Fax (248) 960-9119    o     (800) 449-3353






14









 












EXHIBIT B



The purchase price for the Products as set forth on Exhibit A is applicable in the
following states:



[*     *]



[*     *]



States not listed above are not subject to the purchase price for the Products set forth on
Exhibit A and the purchase price for the Products going to states not listed above shall be
quoted by ROCKWELL to DAVITA on an individual basis:




30142 Wixom Road    o    Wixom, MI 48393    o    (248) 960-9009    o    Fax (248) 960-9119     o     (800) 449-3353




15









 













EXHIBIT C

“DAVITA SHIPPING & ORDERING GUIDELINES



GENERAL GUIDELINES APPLICABLE TO ALL PRODUCTS (DRI-SATE® DRY ACID CONCENTRATE, LIQUID
ACID CONCENTRATE, BICARBONATE POWDER, STERILYTE® LIQUID BICARBONATE, and CLEANING
AGENTS)




	 	 	 
	1.

	 	[* *]
	2.

	 	[* *]
	3.

	 	[* *]
	4.

	 	[* *]
	5.

	 	[* *]
	6.

	 	[* *]
	 
	 	 
	7.

	 	NOTE: [* *]






SPECIFIC ADDITIONAL GUIDELINES FOR CERTAIN PRODUCTS



[*      *]




30142 Wixom Road    o     Wixom, MI 48393     o    (248) 960-9009     o    Fax (248) 960-9119    o    (800) 449-3353





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