Item 1.01
Entry into a Material Definitive Agreement.
On June 23, 2017, Rockwell Medical, Inc. (the Company) and Baxter Healthcare Corporation (Baxter) settled the arbitration (the Settlement) related to claims made by each party alleging that the other party had materially breached the Exclusive Distribution Agreement dated October 2, 2014 between the Company and Baxter (the Distribution Agreement). The Settlement included a mutual release with respect to all known claims existing on the date of the Settlement and the arbitration was dismissed with prejudice. No payments were made by either party in connection with the Settlement.
In connection with the Settlement, on June 23, 2017, the Company and Baxter entered into a First Amendment to Exclusive Distribution Agreement (the Distribution Agreement Amendment) that revises the Distribution Agreement to, among other revisions:
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Clarify the method for allocating one significant customers business between the Company and Baxter until the Company is able to assign the related supply contract to Baxter with such customers consent or Baxter enters into a replacement contract for concentrate products with such customer;
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Divide the minimum order threshold into separate thresholds for a significant customer and all other customers, respectively, and establish new baseline and annual increase amounts relating to the two thresholds;
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Require both parties to consent to construction of a West Coast facility as a condition to Baxters obligation to pay the related fee;
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Modify the pricing schedule to provide more competitive pricing to Baxter with the intention of encouraging it to increase business; and
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Modify the dispute resolution procedures.
Also in connection with the Settlement, on June 23, 2017, the Company and Baxter entered into a First Amendment to Investment Agreement (the Investment Agreement Amendment) which amended the Companys Investment Agreement with Baxter dated October 2, 2014 (the Investment Agreement). Among other modifications, the Investment Agreement Amendment necessitates that, during the period in which the existing standstill provisions apply, Baxter vote its shares in the manner recommended by the Companys board of directors on all proposals and director nominees with respect to any shareholder meeting or consent solicitation with respect to which the Company solicits proxies or consents, and hold its shares until the date which is the earlier of one year after the effective date of the Amendment or the day after the Companys 2018 annual meeting of shareholders.
The foregoing summaries do not purport to be a complete description of the terms of the Distribution Agreement Amendment or the Investment Agreement Amendment and are qualified in their entirety by reference to the full text of the Distribution Agreement Amendment and the Investment Agreement Amendment, copies of which will be filed by the Company with its next Quarterly Report on Form 10-Q.