DISTRIBUTOR SETTLEMENT AGREEMENT

DISTRIBUTOR SETTLEMENT

AGREEMENT

Table of Contents

Page

I. Definitions............................................................................................................................1

II. Participation by States and Condition to Preliminary Agreement .....................................13

III. Injunctive Relief .................................................................................................................13

IV. Settlement Payments ..........................................................................................................13

V. Allocation and Use of Settlement Payments ......................................................................28

VI. Enforcement .......................................................................................................................34

VII. Participation by Subdivisions ............................................................................................40

VIII. Condition to Effectiveness of Agreement and Filing of Consent Judgment .....................42

IX. Additional Restitution ........................................................................................................44

X. Plaintiffs’ Attorneys’ Fees and Costs ................................................................................44

XI. Release ...............................................................................................................................44

XII. Later Litigating Subdivisions .............................................................................................49

XIII. Reductions/Offsets .............................................................................................................53

XIV. Miscellaneous ....................................................................................................................54

EXHIBIT A Alleged Harms ....................................................................................................... A-1

EXHIBIT B Enforcement Committee Organizational Bylaws ................................................... B-1

EXHIBIT C Litigating Subdivisions List ................................................................................... C-1

EXHIBIT D Later Litigating Subdivision Suspension and Offset Determinations .................... D-1

EXHIBIT E List of Opioid Remediation Uses ........................................................................... E-1

EXHIBIT F List of States and Overall Allocation Percentages .................................................. F-1

EXHIBIT G Subdivisions Eligible to Receive Direct Allocations from the Subdivision

Fund and Default Subdivision Fund Allocation Percentages ................................ G-1

EXHIBIT H Participation Tier Determination

.......................................................................... H-1

EXHIBIT I Primary Subdivisions ................................................................................................. I-1

EXHIBIT J Settling Distributors’ Subsidiaries, Joint Ventures, and Predecessor Entities ......... J-1

EXHIBIT K Subdivision Settlement Participation Form ........................................................... K-1

EXHIBIT L Settlement Fund Administrator .............................................................................. L-1

EXHIBIT M Settlement Payment Schedule .............................................................................. M-1

EXHIBIT N Additional Restitution Amount Allocation ............................................................ N-1

EXHIBIT O Adoption of a State-Subdivision Agreement ......................................................... O-1

EXHIBIT P Injunctive Relief ...................................................................................................... P-1

EXHIBIT Q Illustrative Examples of Prepayments .................................................................... Q-1

EXHIBIT R Agreement on Attorneys’ Fees, Expenses and Costs ............................................. R-1

EXHIBIT S Agreement on the State Outside Counsel Fee Fund ................................................ S-1

EXHIBIT T Agreement on the State Cost Fund Administration ................................................ T-1

EXHIBIT U ABC IRS Form 1098-F .......................................................................................... U-1

EXHIBIT V Cardinal IRS Form 1098-F .................................................................................... V-1

EXHIBIT W McKesson IRS Form 1098-F ............................................................................... W-1

EXHIBIT X Severity Factors ...................................................................................................... X-1

DISTRIBUTOR SETTLEMENT AGREEMENT

This Settlement Agreement, dated as of July 21, 2021 (the “Agreement”), sets forth the terms of

settlement between and among the Settling States, the Settling Distributors, and the Participating

Subdivisions (as those terms are defined below). Upon satisfaction of the conditions set forth in

Section II and Section VIII, this Agreement will be binding on all Settling States, Settling

Distributors, and Participating Subdivisions. This Agreement will then be filed as part of

Consent Judgments in the respective courts of each of the Settling States, pursuant to the terms

set forth in Section VIII.

I. Definitions

For all sections of this Agreement except Exhibit E and Exhibit P, the following

definitions apply:

A. “Abatement Accounts Fund.” The component of the Settlement Fund

described in Section V.E.

B. “Additional Restitution Amount.” The amount available to Settling States

listed on XIV.X.1.b.Exhibit N totaling $282,692,307.70.

C. “Agreement.” This agreement, as set forth above. For the avoidance of doubt,

this Agreement is inclusive of all exhibits.

D. “Alleged Harms.” The alleged past, present, and future financial, societal, and

public nuisance harms and related expenditures arising out of the alleged misuse and abuse of

Products, non-exclusive examples of which are described in the documents listed on Exhibit A,

that have allegedly arisen as a result of the physical and bodily injuries sustained by individuals

suffering from opioid-related addiction, abuse, death, and other related diseases and disorders,

and that have allegedly been caused by the Settling Distributors.

E. “Allocation Statute.” A state law that governs allocation, distribution, and/or

use of some or all of the Settlement Fund amounts allocated to that State and/or its Subdivisions.

In addition to modifying the allocation set forth in Section V.D.2, an Allocation Statute may,

without limitation, contain a Statutory Trust, further restrict expenditures of funds, form an

advisory committee, establish oversight and reporting requirements, or address other default

provisions and other matters related to the funds. An Allocation Statute is not required to

address all three (3) types of funds comprising the Settlement Fund or all default provisions.

F. “Annual Payment.” The total amount payable to the Settlement Fund

Administrator by the Settling Distributors on the Payment Date each year, as calculated by the

Settlement Fund Administrator pursuant to Section IV.B.1.e. For the avoidance of doubt, this

term does not include the Additional Restitution Amount or amounts paid pursuant to Section X.

G. “Appropriate Official.” As defined in Section XIV.F.3.

H. “Bankruptcy Code.” Title 11 of the United States Code, 11 U.S.C. § 101, et

seq.

I. “Bar.” Either: (1) a law barring Subdivisions in a State from maintaining

Released Claims against Released Entities (either through a direct bar or through a grant of

authority to release claims and the exercise of such authority in full) or (2) a ruling by the highest

court of the State (or, in a State with a single intermediate court of appeals, the intermediate

court of appeals when not subject to further review by the highest court of the State) setting forth

the general principle that Subdivisions in the State may not maintain any Released Claims

against Released Entities, whether on the ground of this Agreement (or the release in it) or

otherwise. For the avoidance of doubt, a law or ruling that is conditioned or predicated upon

payment by a Released Entity (apart from the Annual Payments by Settling Distributors under

this Agreement) shall not constitute a Bar.

J. “Case-Specific Resolution.” Either: (1) a law barring the Subdivision at issue

from maintaining any Released Claims against any Released Entities (either through a direct bar

or through a grant of authority to release claims and the exercise of such authority in full); or (2)

a ruling by a court of competent jurisdiction over the Subdivision at issue that the Subdivision

may not maintain any Released Claims at issue against any Released Entities, whether on the

ground of this Agreement (or the release in it) or otherwise. For the avoidance of doubt, a law or

ruling that is conditioned or predicated upon payment by a Released Entity (apart from the

Annual Payments by Settling Distributors under this Agreement) shall not constitute a Case-

Specific Resolution.

K. “Claim.” Any past, present or future cause of action, claim for relief, cross-

claim or counterclaim, theory of liability, demand, derivative claim, request, assessment, charge,

covenant, damage, debt, lien, loss, penalty, judgment, right, obligation, dispute, suit, contract,

controversy, agreement, parens patriae claim, promise, performance, warranty, omission, or

grievance of any nature whatsoever, whether legal, equitable, statutory, regulatory or

administrative, whether arising under federal, state or local common law, statute, regulation,

guidance, ordinance or principles of equity, whether filed or unfiled, whether asserted or

unasserted, whether known or unknown, whether accrued or unaccrued, whether foreseen,

unforeseen or unforeseeable, whether discovered or undiscovered, whether suspected or

unsuspected, whether fixed or contingent, and whether existing or hereafter arising, in all such

cases, including, but not limited to, any request for declaratory, injunctive, or equitable relief,

compensatory, punitive, or statutory damages, absolute liability, strict liability, restitution,

abatement, subrogation, contribution, indemnity, apportionment, disgorgement, reimbursement,

attorney fees, expert fees, consultant fees, fines, penalties, expenses, costs or any other legal,

equitable, civil, administrative, or regulatory remedy whatsoever.

L. “Claim-Over.” A Claim asserted by a Non-Released Entity against a Released

Entity on the basis of contribution, indemnity, or other claim-over on any theory relating to a

Non-Party Covered Conduct Claim asserted by a Releasor.

M. “Compensatory Restitution Amount.” The aggregate amount paid or incurred

by the Settling Distributors hereunder other than amounts paid as attorneys’ fees and costs or

identified pursuant to Section V.B.2 as being used to pay attorneys’ fees, investigation costs or

litigation costs.

N. “Consent Judgment.” A state-specific consent judgment in a form to be

agreed by the Settling States and the Settling Distributors prior to the Initial Participation Date

that, among other things, (1) approves this Agreement and (2) provides for the release set forth in

Section XI.A, including the dismissal with prejudice of any Released Claims that the Settling

State has brought against Released Entities.

O. “Covered Conduct.” Any actual or alleged act, failure to act, negligence,

statement, error, omission, breach of any duty, conduct, event, transaction, agreement,

misstatement, misleading statement or other activity of any kind whatsoever from the beginning

of time through the Reference Date (and any past, present, or future consequence of any such act,

failure to act, negligence, statement, error, omission, breach of duty, conduct, event, transaction,

agreement, misstatement, misleading statement or other activity) relating in any way to (1) the

discovery, development, manufacture, packaging, repackaging, marketing, promotion,

advertising, labeling, recall, withdrawal, distribution, delivery, monitoring, reporting, supply,

sale, prescribing, dispensing, physical security, warehousing, use or abuse of, or operating

procedures relating to, any Product, or any system, plan, policy or advocacy relating to any

Product or class of Products, including, but not limited to, any unbranded promotion, marketing,

programs, or campaigns relating to any Product or class of Products; (2) the characteristics,

properties, risks, or benefits of any Product; (3) the reporting, disclosure, non-reporting or non-

disclosure to federal, state or other regulators of orders placed with any Released Entity; or (4)

diversion control programs or suspicious order monitoring; provided, however, that as to any

Claim that a Releasor has brought or could bring, Covered Conduct does not include non-

compliance with statutory or administrative supply security standards concerning cleanliness of

facilities or stopping counterfeit products, so long as such standards apply to the storage and

distribution of both controlled and non-controlled pharmaceuticals.

P. “Designated State.” New York.

Q. “Effective Date.” The date sixty (60) calendar days after the Reference Date.

R. “Enforcement Committee.” A committee consisting of representatives of the

Settling States and of the Participating Subdivisions. Exhibit B contains the organizational

bylaws of the Enforcement Committee. Notice pursuant to Section XIV.Q shall be provided

when there are changes in membership or contact information.

S. “Final Order.” An order or judgment of a court of competent jurisdiction

with respect to the applicable subject matter (1) which has not been reversed or superseded by a

modified or amended order, is not currently stayed, and as to which any right to appeal or seek

certiorari, review, reargument, stay, or rehearing has expired, and as to which no appeal or

petition for certiorari, review, reargument, stay, or rehearing is pending, or (2) as to which an

appeal has been taken or petition for certiorari, review, reargument, stay, or rehearing has been

filed and (a) such appeal or petition for certiorari, review, reargument, stay, or rehearing has

been resolved by the highest court to which the order or judgment was appealed or from which

certiorari, review, reargument, stay, or rehearing was sought, or (b) the time to appeal further or

seek certiorari, review, reargument, stay, or rehearing has expired and no such further appeal or

petition for certiorari, review, reargument, stay, or rehearing is pending.

T. “Global Settlement Abatement Amount.” The abatement amount of

$19,045,384,616.

U. “Global Settlement Amount.” The Global Settlement Amount is $21 billion,

which shall be divided into the Global Settlement Abatement Amount, the Additional Restitution

Amount, and the Global Settlement Attorney Fee Amount.

V. “Global Settlement Attorney Fee Amount.” The attorney fee amount of

$1,671,923,077.

W. “Incentive Payment A.” The incentive payment described in Section IV.F.1.

X. “Incentive Payment B.” The incentive payment described in Section IV.F.2.

Y. “Incentive Payment C.” The incentive payment described in Section IV.F.3.

Z. “Incentive Payment D.” The incentive payment described in Section IV.F.4.

AA. “Incentive Payment Final Eligibility Date.” With respect to a Settling State,

the date that is the earlier of (1) the fifth Payment Date, (2) the date of completion of opening

statements in a trial of any action brought by a Subdivision in that State that includes a Released

Claim against a Released Entity when such date is more than two (2) years after the Effective

Date, or (3) two (2) years after the Effective Date in the event a trial of an action brought by a

Subdivision in that State that includes a Released Claim against a Released Entity began after the

Initial Participation Date but before two (2) years after the Effective Date.

BB. “Initial Participating Subdivision.” A Subdivision that meets the

requirements set forth in Section VII.D.

CC. “Initial Participation Date.” The date one hundred twenty (120) calendar

days after the Preliminary Agreement Date, unless it is extended by written agreement of the

Settling Distributors and the Enforcement Committee.

DD. “Injunctive Relief Terms.” The terms described in Section III and set forth in

Exhibit P.

EE. “Later Litigating Subdivision.” A Subdivision (or Subdivision official

asserting the right of or for the Subdivision to recover for alleged harms to the Subdivision

and/or the people thereof) that: (1) first files a lawsuit bringing a Released Claim against a

Released Entity after the Trigger Date; or (2) adds a Released Claim against a Released Entity

after the Trigger Date to a lawsuit brought before the Trigger Date that, prior to the Trigger Date,

did not include any Released Claims against a Released Entity; or (3) (a) was a Litigating

Subdivision whose Released Claims against Released Entities were resolved by a legislative Bar

or legislative Case-Specific Resolution as of the Trigger Date, (b) such legislative Bar or

legislative Case-Specific Resolution is subject to a Revocation Event after the Trigger Date, and

Subdivision in that State that includes a Released Claim against a Released Entity or one

hundred eighty (180) days from the Revocation Event passes without a Bar or Case-Specific

Resolution being implemented as to that Litigating Subdivision or the Litigating Subdivision’s

Released Claims being dismissed; or (4) (a) was a Litigating Subdivision whose Released Claims

against Released Entities were resolved by a judicial Bar or judicial Case-Specific Resolution as

of the Trigger Date, (b) such judicial Bar or judicial Case-Specific Resolution is subject to a

Revocation Event after the Trigger Date, and (c) such Litigating Subdivision takes any action in

its lawsuit asserting a Released Claim against a Released Entity other than seeking a stay or

dismissal.

FF. “Later Participating Subdivision.” A Participating Subdivision that is not an

Initial Participating Subdivision, but meets the requirements set forth in Section VII.E.

GG. “Litigating Subdivision.” A Subdivision (or Subdivision official) that brought

any Released Claim against any Released Entity prior to the Trigger Date; provided, however,

that a Subdivision (or Subdivision official) that is a Prior Litigating Subdivision shall not be

considered a Litigating Subdivision. Exhibit C is an agreed list of all Litigating Subdivisions.

Exhibit C will be updated (including with any corrections) periodically, and a final version of

Exhibit C will be attached hereto as of the Reference Date.

HH. “National Arbitration Panel.” The panel comprised as described in Section

VI.F.2.b.

II. “National Disputes.” As defined in Section VI.F.2.a.

JJ. “Net Abatement Amount.” The Global Settlement Abatement Amount as

reduced by the Tribal/W. Va. Subdivision Credit.

KK. “Net Settlement Prepayment Amount.” As defined in Section IV.J.1.

LL. “Non-Litigating Subdivision.” Any Subdivision that is neither a Litigating

Subdivision nor a Later Litigating Subdivision.

MM. “Non-Participating Subdivision.” Any Subdivision that is not a Participating

Subdivision.

NN. “Non-Party Covered Conduct Claim.” A Claim against any Non-Released

Entity involving, arising out of, or related to Covered Conduct (or conduct that would be

Covered Conduct if engaged in by a Released Entity).

OO. “Non-Party Settlement.” A settlement by any Releasor that settles any Non-

Party Covered Conduct Claim and includes a release of any Non-Released Entity.

PP. “Non-Released Entity.” An entity that is not a Released Entity.

QQ. “Non-Settling State.” Any State that is not a Settling State.

RR. “Offset Cap.” The per-State dollar amount which the dollar-for-dollar offset

described in Section XII.A cannot exceed in a Payment Year, to be calculated by multiplying the

amount of the relevant Annual Payment apportioned to the State and to its Subdivisions for that

Payment Year by the percentage for the applicable Participation Tier as set forth in Exhibit D.

SS. “Opioid Remediation.” Care, treatment, and other programs and expenditures

(including reimbursement for past such programs or expenditures

except where this Agreement

restricts the use of funds solely to future Opioid Remediation) designed to (1) address the misuse

and abuse of opioid products, (2) treat or mitigate opioid use or related disorders, or (3) mitigate

other alleged effects of, including on those injured as a result of, the opioid epidemic. Exhibit E

provides a non-exhaustive list of expenditures that qualify as being paid for Opioid Remediation.

Qualifying expenditures may include reasonable related administrative expenses.

TT. “Opioid Tax.” Any tax, assessment, license fee, surcharge or any other fee (other

than a fixed prospective excise tax or similar tax or fee that has no restriction on pass-through)

imposed by a State on a Settling Distributor on the sale, transfer or distribution of opioid

products; provided, however, that neither the Excise Tax on sale of Opioids, Article 20-D of New

York’s Tax Law nor the Opioid Stewardship Act, Article 33, Title 2-A of New York’s Public

Health Law shall be considered an Opioid Tax for purposes of this Agreement.

UU. “Overall Allocation Percentage.” A Settling State’s percentage as set forth in

Exhibit F. The aggregate Overall Allocation Percentages of all States (including Settling States

and Non-Settling States) shall equal one hundred percent (100%).

VV. “Participating Subdivision.” Any Subdivision that meets the requirements for

becoming a Participating Subdivision under Section VII.B and Section VII.C. Participating

Subdivisions include both Initial Participating Subdivisions and Later Participating Subdivisions.

WW. “Participation Tier.” The level of participation in this Agreement as

determined pursuant to Section VIII.C using the criteria set forth in Exhibit H.

XX. “Parties.” The Settling Distributors and the Settling States (each, a “Party”).

YY. “Payment Date.” The date on which the Settling Distributors make the

Annual Payment pursuant to Section IV.B.

ZZ. “Payment Year.” The calendar year during which the applicable Annual

Payment is due pursuant to Section IV.B. Payment Year 1 is 2021, Payment Year 2 is 2022 and

so forth. References to payment “for a Payment Year” mean the Annual Payment due during

that year. References to eligibility “for a Payment Year” mean eligibility in connection with the

Annual Payment due during that year.

AAA. “Preliminary Agreement Date.” The date on which the Settling Distributors

are to inform the Settling States of their determination whether the condition in Section II.B has

been satisfied. The Preliminary Agreement Date shall be no more than fourteen (14) calendar

days after the end of the notice period to States, unless it is extended by written agreement of the

Settling Distributors and the Enforcement Committee.

Reimbursement includes amounts paid to any governmental entities for past expenditures or programs.

BBB. “Prepayment Notice.” As defined in Section IV.J.1.

CCC. “Primary Subdivision.” A Subdivision that is a General Purpose Government

(including, but not limited to, a municipality, county, county subdivision, city, town, township,

parish, village, borough, gore, or any other entities that provide municipal-type government) with

population over 10,000; provided, however, that as used in connection with Incentive Payment

C, the population threshold is 30,000. Attached as Exhibit I is an agreed list of the Primary

Subdivisions in each State.

DDD. “Prior Litigating Subdivision” A Subdivision (or Subdivision official) that

brought any Released Claim against any Released Entity prior to the Trigger Date and all such

Released Claims were separately settled or finally adjudicated prior to the Trigger Date;

provided, however, that if the final adjudication was pursuant to a Bar, such Subdivision shall not

be considered a Prior Litigating Subdivision. Notwithstanding the prior sentence, the Settling

Distributors and the Settling State of the relevant Subdivision may agree in writing that the

Subdivision shall not be considered a Prior Litigating Subdivision.

EEE. “Product.” Any chemical substance, whether used for medicinal or non-

medicinal purposes, and whether natural, synthetic, or semi-synthetic, or any finished

pharmaceutical product made from or with such substance, that is: (1) an opioid or opiate, as

well as any product containing any such substance; or (2) benzodiazepine, carisoprodol, or

gabapentin; or (3) a combination or “cocktail” of chemical substances prescribed, sold, bought,

or dispensed to be used together that includes opioids or opiates. “Product” shall include, but is

not limited to, any substance consisting of or containing buprenorphine, codeine, fentanyl,

hydrocodone, hydromorphone, meperidine, methadone, morphine, oxycodone, oxymorphone,

tapentadol, tramadol, opium, heroin, carfentanil, diazepam, estazolam, quazepam, alprazolam,

clonazepam, oxazepam, flurazepam, triozolam, temazepam, midazolam, carisoprodol,

gabapentin, or any variant of these substances or any similar substance. Notwithstanding the

foregoing, nothing in this section prohibits a Settling State from taking administrative or

regulatory action related to benzodiazepine (including, but not limited to, diazepam, estazolam,

quazepam, alprazolam, clonazepam, oxazepam, flurazepam, triozolam, temazepam, and

midazolam), carisoprodol, or gabapentin that is wholly independent from the use of such drugs in

combination with opioids, provided such action does not seek money (including abatement

and/or remediation) for conduct prior to the Effective Date.

FFF. “Reference Date.” The date on which the Settling Distributors are to inform

the Settling States of their determination whether the condition in Section VIII has been satisfied.

The Reference Date shall be no later than thirty (30) calendar days after the Initial Participation

Date, unless it is extended by written agreement of the Settling Distributors and the Enforcement

Committee.

GGG. “Released Claims.” Any and all Claims that directly or indirectly are based

on, arise out of, or in any way relate to or concern the Covered Conduct occurring prior to the

Reference Date. Without limiting the foregoing, Released Claims include any Claims that have

been asserted against a Settling Distributor by any Settling State or Litigating Subdivision in any

federal, state, or local action or proceeding (whether judicial, arbitral, or administrative) based

on, arising out of, or relating to, in whole or in part, the Covered Conduct, or any such Claims

that could be or could have been asserted now or in the future in those actions or in any

comparable action or proceeding brought by a State, Subdivision, or Releasor (whether or not

such State, Subdivision, or Releasor has brought such action or proceeding). Released Claims

also include all Claims asserted in any proceeding to be dismissed pursuant to this Agreement,

whether or not such claims relate to Covered Conduct. The Parties intend that this term,

“Released Claims,” be interpreted broadly. This Agreement does not release Claims by private

individuals. It is the intent of the Parties that Claims by private individuals be treated in

accordance with applicable law. Released Claims is also used herein to describe claims brought

by a Later Litigating Subdivision or other non-party Subdivision that would have been Released

Claims if they had been brought by a Releasor against a Released Entity.

HHH. “Released Entities.” With respect to Released Claims, the Settling

Distributors and (1) all past and present subsidiaries, divisions, predecessors, successors, and

assigns (in each case, whether direct or indirect) of each Settling Distributor; (2) all past and

present subsidiaries and divisions (in each case, whether direct or indirect) of any entity

described in subsection (1); (3) the respective past and present officers, directors, members,

trustees, and employees of any of the foregoing (each for actions that occurred during and related

to their work for, or employment with, any of the Settling Distributors or the foregoing entities);

(4) all past and present joint ventures (whether direct or indirect) of each Settling Distributor or

its subsidiaries, including in any Settling Distributor or subsidiary’s capacity as a participating

member in such joint venture; (5) all direct or indirect parents and shareholders of the Settling

Distributors (solely in their capacity as parents or shareholders of the applicable Settling

Distributor with respect to Covered Conduct); and (6) any insurer of any Settling Distributor or

any person or entity otherwise described in subsections (1)-(5) (solely in its role as insurer of

such person or entity and subject to the last sentence of Section XI.B). Any person or entity

described in subsections (3)-(6) shall be a Released Entity solely in the capacity described in

such clause and shall not be a Released Entity with respect to its conduct in any other capacity.

For the avoidance of doubt, CVS Health Corp., Walgreens Boots Alliance, Inc., and Walmart

Inc. (collectively, the “Pharmacies”) are not Released Entities, nor are their direct or indirect

past or present subsidiaries, divisions, predecessors, successors, assigns, joint ventures,

shareholders, officers, directors, members, trustees, or employees (shareholders, officers,

directors, members, trustees, and employees for actions related to their work for, employment

with, or involvement with the Pharmacies) Released Entities. Notwithstanding the prior

sentence, any joint venture or past or present subsidiary of a Settling Distributor is a Released

Entity, including any joint venture between a Settling Distributor or any Settling Distributor’s

subsidiary and a Pharmacy (or any subsidiary of a Pharmacy); provided, however, that any joint

venture partner of a Settling Distributor or a Settling Distributor’s subsidiary is not a Released

Entity unless it falls within subsections (1)-(6) above. Lists of Settling Distributors’ subsidiaries,

joint ventures, and predecessor entities are appended to this Agreement as XIV.X.1.b.Exhibit J.

With respect to joint ventures (including predecessor entities), only entities listed on

XIV.X.1.b.Exhibit J are Released Entities. With respect to wholly-owned subsidiaries (including

predecessor entities), XIV.X.1.b.Exhibit J represents a good faith effort by the Settling

Distributors to list all such entities, but any and all wholly-owned subsidiaries (including

predecessor entities) of any Settling Distributor are Released Entities, whether or not they are

listed on XIV.X.1.b.Exhibit J. For the avoidance of doubt, any entity acquired, or joint venture

entered into, by a Settling Distributor after the Reference Date is not a Released Entity.

III. “Releasors.” With respect to Released Claims, (1) each Settling State;

(2) each Participating Subdivision; and (3) without limitation and to the maximum extent of the

power of each Settling State’s Attorney General and/or Participating Subdivision to release

Claims, (a) the Settling State’s and Participating Subdivision’s departments, agencies, divisions,

boards, commissions, Subdivisions, districts, instrumentalities of any kind and attorneys,

including its Attorney General, and any person in his or her official capacity whether elected or

appointed to serve any of the foregoing and any agency, person, or other entity claiming by or

through any of the foregoing, (b) any public entities, public instrumentalities, public educational

institutions, unincorporated districts, fire districts, irrigation districts, and other Special Districts

in a Settling State, and (c) any person or entity acting in a parens patriae, sovereign, quasi-

sovereign, private attorney general, qui tam, taxpayer, or other capacity seeking relief on behalf

of or generally applicable to the general public with respect to a Settling State or Subdivision in a

Settling State, whether or not any of them participate in this Agreement. The inclusion of a

specific reference to a type of entity in this definition shall not be construed as meaning that the

entity is not a Subdivision. Each Settling State’s Attorney General represents that he or she has

or has obtained (or will obtain no later than the Initial Participation Date) the authority set forth

in Section XI.F. In addition to being a Releasor as provided herein, a Participating Subdivision

shall also provide the Subdivision Settlement Participation Form referenced in Section VII

providing for a release to the fullest extent of the Participating Subdivision’s authority.

JJJ. “Revocation Event.” With respect to a Bar, Settlement Class Resolution, or

Case-Specific Resolution, a revocation, rescission, reversal, overruling, or interpretation that in

any way limits the effect of such Bar, Settlement Class Resolution, or Case-Specific Resolution

on Released Claims, or any other action or event that otherwise deprives the Bar, Settlement

Class Resolution, or Case-Specific Resolution of force or effect in any material respect.

KKK. “Settlement Class Resolution.” A class action resolution in a court of

competent jurisdiction in a Settling State (that is not successfully removed to federal court) with

respect to a class of Subdivisions in that State that (1) conforms with that Settling State’s

statutes, case law, and rules of procedure regarding class actions; (2) is approved and entered as

an order of a court of competent jurisdiction in that State and such order has become a Final

Order; (3) is binding on all Non-Participating Subdivisions in that State (other than opt outs as

permitted under the next sentence); (4) provides that all such Non-Participating Subdivisions

may not bring any Released Claims against any Released Entities, whether on the ground of this

Agreement (or the releases herein) or otherwise; and (5) does not impose any costs or obligations

on Settling Distributors other than those provided for in this Agreement, or contain any provision

inconsistent with any provision of this Agreement. If applicable state law requires that opt-out

rights be afforded to members of the class, a class action resolution otherwise meeting the

foregoing requirements shall qualify as a Settlement Class Resolution unless Subdivisions

collectively representing more than one percent (1%) of the total population of that State opt out.

In seeking certification of any Settlement Class, the applicable State and Participating

Subdivisions shall make clear that certification is sought solely for settlement purposes and shall

have no applicability beyond approval of the settlement for which certification is sought.

Nothing in this Agreement constitutes an admission by any Party that class certification would be

appropriate for litigation purposes in any case or for purposes unrelated to this Agreement.

LLL. “Settlement Fund.” The interest-bearing fund established pursuant to this

Agreement into which the Annual Payments are made under Section IV.

MMM. “Settlement Fund Administrator.” The entity that annually determines the

Annual Payment (including calculating Incentive Payments pursuant to Section IV and any

amounts subject to suspension, offset, or reduction pursuant to Section XII and Section XIII),

annually determines the Participation Tier pursuant to Section VIII.C, administers the Settlement

Fund, and distributes amounts into the Abatement Accounts Fund, State Fund, and Subdivision

Fund pursuant to this Agreement. The duties of the Settlement Fund Administrator shall be

governed by this Agreement. Prior to the Initial Participation Date, the Settling Distributors and

the Enforcement Committee shall agree to selection and removal processes for and the identity of

the Settlement Fund Administrator, and a detailed description of the Settlement Fund

Administrator’s duties and responsibilities, including a detailed mechanism for paying the

Settlement Fund Administrator’s fees and costs, all of which shall be appended to the Agreement

as Exhibit L.

NNN. “Settlement Fund Escrow.” The interest-bearing escrow fund established

pursuant to this Agreement to hold disputed or suspended payments made under this Agreement,

and to hold the first Annual Payment until the Effective Date.

OOO. “Settlement Payment Schedule.” The schedule attached to this Agreement as

Exhibit M.

PPP. “Settlement Prepayment.” As defined in Section IV.J.1.

QQQ. “Settlement Prepayment Reduction Schedule.” As defined in Section IV.J.1.

RRR. “Settling Distributors.” McKesson Corporation, Cardinal Health, Inc., and

AmerisourceBergen Corporation (each, a “Settling Distributor”).

SSS. “Settling State.” A State that has entered into this Agreement with all Settling

Distributors and delivers executed releases in accordance with Section VIII.A.

TTT. “State.” With the exception of West Virginia, which has addressed its claims

separately and is excluded from participation in this Agreement, the states, commonwealths, and

territories of the United States of America, as well as the District of Columbia. The 55 States are

listed in Exhibit F. Additionally, the use of non-capitalized “state” to describe something (e.g.,

“state court”) shall also be read to include parallel entities in commonwealths, territories, and the

District of Columbia (e.g., “territorial court”).

UUU. “State Fund.” The component of the Settlement Fund described in

Section V.C.

VVV. “State-Subdivision Agreement.” An agreement that a Settling State reaches

with the Subdivisions in that State regarding the allocation, distribution, and/or use of funds

allocated to that State and to its Subdivisions. A State-Subdivision Agreement shall be effective

if approved pursuant to the provisions of Exhibit O or if adopted by statute. Preexisting

agreements addressing funds other than those allocated pursuant to this Agreement shall qualify

if the approval requirements of Exhibit O are met. A State and its Subdivisions may revise a

State-Subdivision Agreement if approved pursuant to the provisions of Exhibit O, or if such

revision is adopted by statute.

WWW. “Statutory Trust.” A trust fund established by state law to receive funds

allocated to a Settling State’s Abatement Accounts Fund and restrict any expenditures made

using funds from such Settling State’s Abatement Accounts Fund to Opioid Remediation, subject

to reasonable administrative expenses. A State may give a Statutory Trust authority to allocate

one (1) or more of the three (3) types of funds comprising such State’s Settlement Fund, but this

is not required.

XXX. “Subdivision.” Any (1) General Purpose Government (including, but not

limited to, a municipality, county, county subdivision, city, town, township, parish, village,

borough, gore, or any other entities that provide municipal-type government), School District, or

Special District within a State, and (2) any other subdivision or subdivision official or sub-entity

of or located within a State (whether political, geographical or otherwise, whether functioning or

non-functioning, regardless of population overlap, and including, but not limited to,

Nonfunctioning Governmental Units and public institutions) that has filed a lawsuit that includes

a Released Claim against a Released Entity in a direct, parens patriae, or any other capacity.

“General Purpose Government,” “School District,” and “Special District” shall correspond to the

“five basic types of local governments” recognized by the U.S. Census Bureau and match the

2017 list of Governmental Units.

The three (3) General Purpose Governments are county,

municipal, and township governments; the two (2) special purpose governments are School

Districts and Special Districts.

“Fire District,” “Health District,” “Hospital District,” and

“Library District” shall correspond to categories of Special Districts recognized by the U.S.

Census Bureau.

References to a State’s Subdivisions or to a Subdivision “in,” “of,” or “within”

a State include Subdivisions located within the State even if they are not formally or legally a

sub-entity of the State; provided, however, that a “Health District” that includes any of the

following words or phrases in its name shall not be considered a Subdivision: mosquito, pest,

insect, spray, vector, animal, air quality, air pollution, clean air, coastal water, tuberculosis, and

sanitary.

YYY. “Subdivision Allocation Percentage.” The portion of a Settling State’s

Subdivision Fund set forth in Exhibit G that a Subdivision will receive pursuant to Section V.C

or Section V.D if it becomes a Participating Subdivision. The aggregate Subdivision Allocation

https://www.census.gov/data/datasets/2017/econ/gus/public-use-files.html

E.g., U.S. Census Bureau, “Technical Documentation: 2017 Public Use Files for State and Local Government

Organization” at 7 (noting that “the Census Bureau recognizes five basic types of local governments,” that three of

those are “general purpose governments” (county governments, municipal governments, and township

governments), and that the other two are “school district and special district governments”),

https://www2.census.gov/programs-surveys/gus/datasets/2017/2017_gov_org_meth_tech_doc.pdf.

A list of 2017 Government Units provided by the Census Bureau identifies 38,542 Special Districts and

categorizes them by “FUNCTION_NAME.” “Govt_Units_2017_Final” spreadsheet, “Special District” sheet,

included in “Independent Governments - list of governments with reference information,”

https://www.census.gov/data/datasets/2017/econ/gus/public-use-files.html. As used herein, “Fire District”

corresponds to Special District function name “24 – Local Fire Protection,” “Health District” corresponds to Special

District function name “32 – Health,” “Hospital District” corresponds to Special District function name “40 –

Hospitals,” and “Library District” corresponds to Special District function name “52 – Libraries.” See id.

Percentage of all Subdivisions receiving a Subdivision Allocation Percentage in each State shall

equal one hundred percent (100%). Immediately upon the effectiveness of any State-Subdivision

Agreement, Allocation Statute, Statutory Trust, or voluntary redistribution allowed by Section

V.D.3 (or upon the effectiveness of an amendment to any State-Subdivision Agreement,

Allocation Statute, Statutory Trust, or voluntary redistribution allowed by Section V.D.3) that

addresses allocation from the Subdivision Fund, or upon any, whether before or after the Initial

Participation Date, Exhibit G will automatically be amended to reflect the allocation from the

Subdivision Fund pursuant to the State-Subdivision Agreement, Allocation Statute, Statutory

Trust, or voluntary redistribution allowed by Section V.D.3. The Subdivision Allocation

Percentages contained in Exhibit G may not change once notice is distributed pursuant to Section

VII.A, except upon the effectiveness of any State-Subdivision Agreement, Allocation Statute,

Statutory Trust, or voluntary redistribution allowed by Section V.D.3 (or upon the effectiveness

of an amendment to any State-Subdivision Agreement, Allocation Statute, Statutory Trust, or

voluntary redistribution allowed by Section V.D.3) that addresses allocation from the

Subdivision Fund. For the avoidance of doubt, no Subdivision not listed on Exhibit G shall

receive an allocation from the Subdivision Fund and no provision of this Agreement shall be

interpreted to create such an entitlement.

ZZZ. “Subdivision Fund.” The component of the Settlement Fund described in

Section V.C.

AAAA. “Subdivision Settlement Participation Form.” The form attached as Exhibit K

that Participating Subdivisions must execute and return to the Settlement Fund Administrator.

BBBB. “Suspension Amount.” The amount calculated as follows: the per capita

amount corresponding to the applicable Participation Tier as set forth in Exhibit D multiplied by

the population of the Later Litigating Subdivision.

CCCC. “Suspension Cap.” The amount calculated as follows: the suspension

percentage corresponding to the applicable Participation Tier as set forth in Exhibit D multiplied

by the amount of the relevant Annual Payment apportioned to the State of the Later Litigating

Subdivision and to Subdivisions in that State in each year of the suspension.

DDDD. “Suspension Deadline.” With respect to a lawsuit filed by a Later Litigating

Subdivision asserting a Released Claim, the deadline set forth in Exhibit D corresponding to the

applicable Participation Tier.

EEEE. “Threshold Motion.” A motion to dismiss or equivalent dispositive motion

made at the outset of litigation under applicable procedure. A Threshold Motion must include as

potential grounds for dismissal any applicable Bar or the relevant release by a Settling State or

Participating Subdivision provided under this Agreement and, where appropriate under

applicable law, any applicable limitations defense.

FFFF. “Tribal/W. Va. Subdivision Credit.” The Tribal/W. Va. Subdivision Credit

shall equal 2.58% of the Global Settlement Abatement Amount.

GGGG. “Trigger Date.” In the case of a Primary Subdivision, the Reference Date. In

the case of all other Subdivisions, the Preliminary Agreement Date.

II. Participation by States and Condition to Preliminary Agreement

A. Notice to States. On July 22, 2021 this Agreement shall be distributed to all

States. The States’ Attorneys General shall then have a period of thirty (30) calendar days to

decide whether to become Settling States. States that determine to become Settling States shall

so notify the National Association of Attorneys General and Settling Distributors and shall

further commit to obtaining any necessary additional State releases prior to the Reference Date.

This notice period may be extended by written agreement of the Settling Distributors and the

Enforcement Committee.

B. Condition to Preliminary Agreement. Following the notice period set forth in

Section II.A above, the Settling Distributors shall determine on or before the Preliminary

Agreement Date whether, in their sole discretion, enough States have agreed to become Settling

States to proceed with notice to Subdivisions as set forth in Section VII below. If the Settling

Distributors determine that this condition has been satisfied, and that notice to the Litigating

Subdivisions should proceed, they will so notify the Settling States by providing notice to the

Enforcement Committee and Settlement Fund Administrator on the Preliminary Agreement

Date. If the Settling Distributors determine that this condition has not been satisfied, they will so

notify the Settling States by providing notice to the Enforcement Committee and Settlement

Fund Administrator, and this Agreement will have no further effect and all releases and other

commitments or obligations contained herein will be void.

C. Later Joinder by States. After the Preliminary Agreement Date, a State may only

become a Settling State with the consent of the Settling Distributors, in their sole discretion. If a

State becomes a Settling State more than sixty (60) calendar days after the Preliminary

Agreement Date, but on or before January 1, 2022, the Subdivisions in that State that become

Participating Subdivisions within ninety (90) calendar days of the State becoming a Settling

State shall be considered Initial Participating Subdvisions. A State may not become a Settling

State after January 1, 2022.

D. Litigation Activity. Following the Preliminary Agreement Date, States that

determine to become Settling States shall make best efforts to cease litigation activity against

Settling Distributors, including by jointly seeking stays or severance of claim against the Settling

Distributors, where feasible, and otherwise to minimize such activity by means of agreed

deadline extensions and agreed postponement of depositions, document productions, and motion

practice if a motion to stay or sever is not feasible or is denied.

III. Injunctive Relief

A. Injunctive Relief. As part of the Consent Judgment, the Parties agree to the entry

of the injunctive relief terms attached in Exhibit P.

IV. Settlement Payments

A. Settlement Fund. All payments under this Section IV shall be made into the

Settlement Fund, except that, where specified, they shall be made into the Settlement Fund

Escrow. The Settlement Fund shall be allocated and used only as specified in Section V.

B. Annual Payments. The Settling Distributors shall make eighteen (18) Annual

Payments, each comprised of base and incentive payments as provided in this Section IV, as well

as fifty percent (50%) of the amount of any Settlement Fund Administrator costs and fees that

exceed the available interest accrued in the Settlement Fund as provided in Section V.C.5, and as

determined by the Settlement Fund Administrator as set forth in this Agreement.

1. All data relevant to the determination of the Annual Payment and

allocations to Settling States and their Participating Subdivisions listed on Exhibit G shall

be submitted to the Settlement Fund Administrator no later than sixty (60) calendar days

prior to the Payment Date for each Annual Payment. The Settlement Fund Administrator

shall then determine the Annual Payment, the amount to be paid to each Settling State

and its Participating Subdivisions included on Exhibit G, and the amount of any

Settlement Fund Administrator costs and fees, all consistent with the provisions in

Exhibit L, by:

a. determining, for each Settling State, the amount of base and

incentive payments to which the State is entitled by applying the criteria under

Section IV.D, Section IV.E, and Section IV.F;

b. applying any suspensions, offsets, or reductions as specified under

Section IV, Section XII, and Section XIII;

c. applying any adjustment required as a result of prepayment or

significant financial constraint, as specified under Section IV.J and Section IV.K;

d. determining the amount of any Settlement Fund Administrator

costs and fees that exceed the available interest accrued in the Settlement Fund, as

well as the amounts, if any, of such costs and fees owed by Settling Distributors

and out of the Settlement Fund pursuant to Section V.C.5;

e. determining the total amount owed by Settling Distributors

(including any amounts to be held in the Settlement Fund Escrow pending

resolution of a case by a Later Litigating Subdivision as described in Section XII)

to all Settling States and the Participating Subdivisions listed on Exhibit G; and

f. the Settlement Fund Administrator shall then allocate, after

subtracting the portion of any Settlement Fund Administrator costs and fees owed

out of funds from the Settlement Fund pursuant to Section V.C.5, the Annual

Payment pursuant to Section V.C and Section V.D among the Settling States,

among the separate types of funds for each Settling State (if applicable), and

among the Participating Subdivisions listed on Exhibit G.

2. The Settlement Fund Administrator shall also apply the allocation

percentages set forth in Section IV.I and determine for each Settling Distributor the

amount of its allocable share of the Annual Payment. For the avoidance of doubt, each

Settling Distributor’s liability for its share of the Annual Payment is several, and not

joint.

3. As soon as possible, but no later than fifty (50) calendar days prior to the

Payment Date for each Annual Payment and following the determination described in

Section IV.B.1 and Section IV.B.2, the Settlement Fund Administrator shall give notice

to the Settling Distributors, the Settling States, and the Enforcement Committee of the

amount of the Annual Payment (including the amount of the Settlement Fund to be

allocated to the Settlement Fund Administrator in costs and fees pursuant to Section

V.C.5), the amount to be received by each Settling State, the amount to be received by

the separate types of funds for each Settling State (if applicable), and the amount to be

received by each Settling State’s Participating Subdivisions listed on Exhibit G. The

Settlement Fund Administrator shall also give notice to each Settling Distributor of the

amount of its allocable share of the Annual Payment, including its allocable share of the

amount of any Settlement Fund Administrator costs and fees that exceed the available

interest accrued in the Settlement Fund pursuant to Section V.C.5.

4. Within twenty-one (21) calendar days of the notice provided by the

Settlement Fund Administrator, any party may dispute, in writing, the calculation of the

Annual Payment (including the amount allocated for Settlement Fund Administrator costs

and fees), or the amount to be received by a Settling State and/or its Participating

Subdivisions listed on Exhibit G. Such disputing party must provide a written notice of

dispute to the Settlement Fund Administrator, the Enforcement Committee, any affected

Settling State, and the Settling Distributors identifying the nature of the dispute, the

amount of money that is disputed, and the Settling State(s) affected.

5. Within twenty-one (21) calendar days of the sending of a written notice of

dispute, any affected party may submit a response, in writing, to the Settlement Fund

Administrator, the Enforcement Committee, any affected Settling State, and the Settling

Distributors identifying the basis for disagreement with the notice of dispute.

6. If no response is filed, the Settlement Fund Administrator shall adjust the

amount calculated consistent with the written notice of dispute, and each Settling

Distributor shall pay its allocable share of the adjusted amount, collectively totaling that

year’s Annual Payment, on the Payment Date. If a written response to the written notice

of dispute is timely sent to the Settlement Fund Administrator, the Settlement Fund

Administrator shall notify the Settling Distributors of the preliminary amount to be paid,

which shall be the greater of the amount originally calculated by the Settling

Administrator or the amount that would be consistent with the notice of dispute,

provided, however, that in no circumstances shall the preliminary amount to be paid be

higher than the maximum amount of Base and Incentive Payments A and D for that

Payment Year as set forth on Exhibit M. For the avoidance of doubt, a transfer of

suspended payments from the Settlement Fund Escrow pursuant to Section XII.A.2 does

not count toward determining whether the amount to be paid is higher than the maximum

amount of Base and Incentive Payments A and D for that Payment Year as set forth on

Exhibit M.

7. The Settlement Fund Administrator shall place any disputed amount of the

preliminary amount paid by the Settling Distributors into the Settlement Fund Escrow

and shall disburse any undisputed amount to each Settling State and its Participating

Subdivisions listed on Exhibit G within fifteen (15) calendar days of the Payment Date or

at such later time as directed by each Settling State.

8. Disputes described in this subsection shall be resolved in accordance with

the terms of Section VI.F.

9. For the avoidance of doubt, no Subdivision not listed on Exhibit G shall

receive an allocation from the Subdivision Fund and no provision of this Agreement shall

be interpreted to create such an entitlement.

C. Procedure for Annual Payment in Payment Years 1 and 2. The process described

in Section IV.B shall not apply to Payment Years 1 and 2. The procedure in lieu of Section

IV.B.1 for Payment Years 1 and 2 is as set forth below:

1. The Payment Date for Payment Year 1 is September 30, 2021. Provided

that the condition set forth in Section II.B has been satisfied, on or before such date, the

Settling Distributors shall pay into the Settlement Fund Escrow the total amount of the

base payment, Incentive Payment A for the Settling States (the amount specified in

Exhibit M for Payment Year 1 reduced by the allocable share of any Non-Settling States),

and the Settling Distributors’ allocable share of the amount of any Settlement Fund

Administrator costs and fees that exceed the available interest accrued in the Settlement

Fund pursuant to Section V.C.5. In the event that, in accordance with the terms of

Section VIII.A, the Settling Distributors determine not to proceed with the Settlement, or

the Settlement does not become effective for any other reason, the funds held in the

Settlement Fund Escrow shall immediately revert to the Settling Distributors. If the

condition set forth in Section VIII.A is met, the Settlement Fund Administrator shall

allocate the Annual Payment, after subtracting the portion of Settlement Fund

Administrator costs and fees owed out of funds from the Settlement Fund pursuant to

Section V.C.5, pursuant to Section V.C and Section V.D among the Settling States and

their Participating Subdivisions listed on Exhibit G. The portion of any Settlement Fund

Administrator costs and fees owed out of funds from the Settlement Fund pursuant to

Section V.C.5 shall be available to the Settlement Fund Administrator for the payment of

such costs and fees immediately. The remainder of the Annual Payment for Payment

Year 1 shall be transferred by the Settlement Fund Administrator on the Effective Date

from the Settlement Fund Escrow to the Settlement Fund and then to each Settling State

and to its Initial Participating Subdivisions included on Exhibit G; provided, however,

that for any Settling State where the Consent Judgment has not been entered as of the

Effective Date, the funds allocable to that Settling State and its Participating Subdivisions

included on Exhibit G shall not be transferred from the Settlement Fund Escrow or

disbursed until ten (10) calendar days after the entry of the Consent Judgment in that

State; and, provided, further, the Settlement Fund Administrator shall leave in the

Settlement Fund Escrow funds allocated to Subdivisions included on Exhibit G that are

not Initial Participating Subdivisions. Should such a Subdivision become a Participating

Subdivision between the Initial Participation Date and the Effective Date, the allocation

for such Participating Subdivision shall be transferred to the Settlement Fund and paid to

the Participating Subdivision at the same time as Initial Participating Subdivisions in that

State are paid.

2. The Payment Date for Payment Year 2 is July 15, 2022. On or before

such date, the Settling Distributors shall pay into the Settlement Fund the total amount of

the base payment, Incentive Payment A for the Settling States (the amount specified in

Exhibit M for Payment Year 2 reduced by the allocable share of any Non-Settling States),

and the Settling Distributors’ allocable share of the amount of any Settlement Fund

Administrator costs and fees that exceed the available interest accrued in the Settlement

Fund pursuant to Section V.C.5. The portion of any Settlement Fund Administrator costs

and fees owed out of funds from the Settlement Fund pursuant to Section V.C.5 shall be

available to the Settlement Fund Administrator for the payment of such costs and fees

immediately. The Settlement Fund Administrator shall disburse the remaining amounts

to each Settling State and to its Participating Subdivisions included on Exhibit G within

fifteen (15) calendar days of the Payment Date or at such later time as directed by each

Settling State. If a Settling State enacts a legislative Bar after the Initial Participation

Date, but before July 15, 2022, a Subdivision that meets the requirements for becoming a

Participating Subdivision under Section VII prior to July 15, 2022 (but was not an Initial

Participating Subdivision) shall be eligible to receive its allocated share (if any) for

Payment Year 2, and it shall also receive any amounts allocated to it for Payment Year 1

from the Settlement Fund Escrow.

3. Any amounts remaining in the Settlement Fund Escrow for allocations to

Subdivisions listed on Exhibit G that have not become Participating Subdivisions after all

payments for Payment Year 2 are disbursed shall be transferred to the Settlement Fund

and disbursed to the appropriate sub-funds in each Settling State pursuant to Section

V.D.5.

4. Any disputes as to the allocation of the Annual Payments in Payment

Years 1 and 2 shall be resolved pursuant to the process set forth in Section IV.B.3

through Section IV.B.8, except that in Payment Year 1, the Settlement Fund

Administrator shall have until ten (10) calendar days after the Initial Participation Date to

give notice of the amount to be received by each Settling State, the amount to be received

by the separate types of funds for each Settling State (if applicable), and the amount to be

received by each Initial Participating Subdivision in the Settling States that is listed on

Exhibit G.

D. Payment Date for Subsequent Payment Years. The Payment Date for Payment

Year 3 and successive Payment Years is July 15 of the third and successive years and the Annual

Payment shall be made pursuant to the process set forth in Section IV.B, except that, with respect

to Payment Year 3, Settling States shall have up to the Payment Date to become eligible for

Incentive Payment A and thus avoid the reductions set forth in Section XIII. If a Settling State

enacts a Bar less than sixty (60) calendar days before the Payment Date for Payment Year 3,

each Settling Distributor shall pay, within thirty (30) calendar days of the Payment Year 3

Payment Date, its allocable share, pursuant to Section IV.I, of the difference between the Annual

Payment as calculated by the Settlement Fund Administrator and the amount that would have

been owed had the Settlement Fund Administrator taken the Bar into account.

E. Base Payments. Subject to the suspension, reduction, and offset provisions set

forth in Section XII and Section XIII, the Settling Distributors shall collectively make base

payments equal to fifty-five percent (55%) of the Net Abatement Amount multiplied by the

aggregate Overall Allocation Percentage of the Settling States. These payments will be due in

installments consistent with Exhibit M over the eighteen (18) Payment Years and as adjusted by

the Settlement Fund Administrator pursuant to the provisions in Section IV, Section XII, and

Section XIII.

F. Incentive Payments. Subject to the suspension, offset, and reduction provisions

set forth in Section XII and Section XIII, the Settling Distributors shall collectively make

potential additional incentive payments totaling up to a maximum of forty-five percent (45%) of

the Net Abatement Amount multiplied by the aggregate Overall Allocation Percentage of the

Settling States, with the actual amount depending on whether and the extent to which the criteria

set forth below are met in each Settling State. The incentive payments shall be divided among

four (4) categories, referred to as Incentive Payments A-D. Incentive Payments A-C will be due

in installments over the eighteen (18) Payment Years, and Incentive Payment D will be due in

installments over thirteen (13) years beginning with Payment Year 6. The total amount of

incentive payments in an Annual Payment shall be the sum of the incentive payments for which

individual Settling States are eligible for that Payment Year under the criteria set forth below.

The incentive payments shall be made with respect to a specific Settling State based on its

eligibility for that year under the criteria set forth below.

1. Incentive Payment A. Incentive Payment A shall be equal to forty percent

(40%) of the Net Abatement Amount multiplied by the aggregate Overall Allocation

Percentage of the Settling States, provided all Settling States satisfy the requirements of

Incentive Payment A. Incentive Payment A will be due to a Settling State as part of the

Annual Payment in each of the eighteen (18) Payment Years that a Settling State is

eligible for Incentive Payment A and shall equal a total potential maximum of

$7,421,605,477 if all States are eligible for all eighteen (18) Payment Years. Each

Settling State’s share of Incentive Payment A in a given year, provided that Settling State

is eligible, shall equal the total maximum amount available for Incentive Payment A for

that year as reflected in Exhibit M times the Settling State’s Overall Allocation

Percentage. Eligibility for Incentive Payment A is as follows:

a. For the Payment Years 1 and 2, all Settling States are deemed

eligible for Incentive Payment A.

b. For each Payment Year other than Payment Years 1 and 2, a

Settling State is eligible for Incentive Payment A if, as of sixty (60) calendar days

prior to the Payment Date (except that in Payment Year 3, this date is as of the

Payment Date), (i) there is a Bar in that State in full force and effect, (ii) there is a

Settlement Class Resolution in that State in full force and effect, (iii) the Released

Claims of all of the following entities are released through the execution of

Subdivision Settlement Participation Forms, or there is a Case-Specific

Resolution against such entities: all Primary Subdivisions, Litigating

Subdivisions, School Districts with a K-12 student enrollment of at least 25,000

or .10% of a State’s population, whichever is greater, and Health Districts and

Hospital Districts that have at least one hundred twenty-five (125) hospital beds in

one or more hospitals rendering services in that district; or (iv) a combination of

the actions in clauses (i)-(iii) has achieved the same level of resolution of Claims

by Subdivisions (e.g., a Bar against future litigation combined with full joinder by

Litigating Subdivisions). For the avoidance of doubt, subsection (iv) cannot be

satisfied unless all Litigating Subdivisions are Participating Subdivisions or there

is a Case-Specific Resolution against any such Subdivisions that are not

Participating Subdivisions. The Settling Distributors and the Enforcement

Committee shall meet and confer in order to agree on data sources for purposes of

this Section prior to the Preliminary Agreement Date.

c. Notwithstanding Section IV.F.1.b, for each Payment Year other

than Payment Years 1 and 2, a Settling State that is not eligible for Incentive

Payment A as of the Incentive Payment Final Eligibility Date shall not be eligible

for Incentive Payment A for that Payment Year or any subsequent Payment

Years.

d. If the Settling Distributors made a payment under Incentive

Payment A solely on the basis of a Bar or Settlement Class Resolution in a

Settling State and that Bar or Settlement Class Resolution is subsequently

removed, revoked, rescinded, reversed, overruled, interpreted in a manner to limit

the scope of the release, or otherwise deprived of force or effect in any material

respect, that Settling State shall not be eligible for Incentive Payment A thereafter,

unless the State requalifies for Incentive Payment A through any method pursuant

to Section IV.F.1.b, in which case the Settling State shall be eligible for Incentive

Payment A less any litigation fees and costs incurred by Settling Distributor in the

interim, except that, if the re-imposition occurs after the completion of opening

statements in a trial involving a Released Claim, the Settling State shall not be

eligible for Incentive Payment A (unless this exception is waived by the Settling

Distributors).

e. In determining the amount of Incentive Payment A that Settling

Distributors will pay in a Payment Year and each Settling State’s share, if any, of

Incentive Payment A for that Payment Year, the Settlement Fund Administrator

shall: (i) identify all Settling States that are eligible for Incentive Payment A; (ii)

multiply the Overall Allocation Percentage for each such eligible Settling State by

the maximum amount that Settling Distributors could owe with respect to

Incentive Payment A for that Payment Year as listed on Exhibit M. The amount

calculated in (ii) shall be the amount allocated to a Settling State eligible for

Incentive Payment A for that Payment Year and the aggregate of each such

amount for Settling States eligible for Incentive Payment A shall be the amount of

Incentive Payment A Settling Distributors are obligated to pay in that Payment

Year, all such amounts subject to the suspension, offset, and reduction provisions

in Section XII and Section XIII.

2. Incentive Payment B. Incentive Payment B shall be available to Settling

States that are not eligible for Incentive Payment A for the applicable Payment Year.

Incentive Payment B shall be equal to up to twenty-five percent (25%) of the Net

Abatement Amount multiplied by the aggregate Overall Allocation Percentage of the

Settling States. Incentive Payment B will be due to a Settling State as part of the Annual

Payment in each of the eighteen (18) Payment Years that a Settling State is eligible for

Incentive Payment B and equal a total potential maximum of $4,638,503,423 if all States

are eligible for all eighteen (18) Payment Years. Each Settling State’s maximum share of

Incentive Payment B in a given year shall equal the total maximum amount available for

Incentive Payment B for that year as reflected in Exhibit M times the Settling State’s

Overall Allocation Percentage. Eligibility for Incentive Payment B is as follows:

a. A Settling State is not eligible for Incentive Payment B for a

Payment Year for which it is eligible for Incentive Payment A.

b. Subject to Section IV.F.2.a, the amount of Incentive Payment B for

which a Settling State is eligible in a Payment Year shall be a percentage of that

State’s maximum share of Incentive Payment B based on the extent to which

(A) Litigating Subdivisions in the State are Participating Subdivisions or (B) there

is a Case-Specific Resolution against Litigating Subdivisions in the State,

collectively, “Incentive B Eligible Subdivisions.” The percentage of the State’s

maximum share of Incentive Payment B that the State is eligible for in a Payment

Year shall be determined according to the table below:

Percentage of Litigating

Subdivision Population

that is Incentive B

Eligible Subdivision

Population

Incentive Payment B

Eligibility Percentage

Up to 85% 0%

85%+ 30%

86+ 40%

91+ 50%

95+ 60%

99%+ 95%

100% 100%

The “Percentage of Litigating Subdivision Population that is Incentive B Eligible Subdivision Population” shall be

determined by the aggregate population of the Settling State’s Litigating Subdivisions that are Incentive B Eligible

Subdivisions divided by the aggregate population of the Settling State’s Litigating Subdivisions. In calculating the

Settling State’s population that resides in Litigating Subdivisions, (a) the population of the Settling State’s Litigating

Subdivisions shall be the sum of the population of all Litigating Subdivisions in the Settling State, notwithstanding

that persons may be included within the population of more than one Litigating Subdivision, and (b) the population

that resides in Incentive B Eligible Subdivisions shall be the sum of the population of the Incentive B Eligible

Subdivisions, notwithstanding that persons may be included within the population of more than one Incentive B

Eligible Subdivision. An individual Litigating Subdivision shall not be included more than once in the numerator,

and shall not be included more than once in the denominator, of the calculation regardless if it (or any of its

officials) is named as multiple plaintiffs in the same lawsuit; provided, however, that for the avoidance of doubt, no

Litigating Subdivision will be excluded from the numerator or denominator under this sentence unless a Litigating

Subdivision otherwise counted in the denominator has the authority to release the Claims (consistent with Section

XI) of the Litigating Subdivision to be excluded. For the avoidance of doubt, a Settling State in which the

population that resides in Incentive B Eligible Subdivisions is less than eighty-five percent (85%) of the population

of Litigating Subdivisions shall not be eligible for any portion of Incentive Payment B.

c. In determining the amount that Settling Distributors will pay in a

Payment Year under Incentive Payment B and each Settling State’s share of

Incentive Payment B for that Payment Year, the Settlement Fund Administrator

shall: (i) identify all States that are eligible for Incentive Payment B because they

are ineligible for Incentive Payment A; (ii) determine the Incentive Payment B

eligibility percentage for each such Settling State; (iii) multiply the Incentive

Payment B eligibility percentage for each such State by the Overall Allocation

Percentage of that State; (iv) multiply the product from (iii) by the maximum

amount that Settling Distributors could owe under Incentive Payment B for that

Payment Year from Exhibit M. The amount calculated in (iv) shall be the amount

allocated to a Settling State eligible for Incentive Payment B for that Payment

Year, and the aggregate of such amounts for Settling States eligible for Incentive

Payment B shall be the amount paid for that Payment Year by Settling

Distributors with respect to Incentive Payment B, all such amounts subject to the

suspension, offset, and reduction provisions in Section XII and Section XIII. If

there are no Litigating Subdivisions in a Settling State, and that Settling State is

otherwise eligible for Incentive Payment B, that Settling State will receive its full

allocable share of Incentive Payment B.

d. A Settling State’s eligibility for Incentive Payment B for a

Payment Year shall be determined as of sixty (60) calendar days prior to the

Payment Date for that Payment Year; provided that the percentage of Incentive

Payment B for which a Settling State is eligible as of the Incentive Payment Final

Eligibility Date shall cap its eligibility for that Payment Year and all subsequent

Payment Years.

3. Incentive Payment C. Incentive Payment C shall be available to Settling

States that are not eligible for Incentive Payment A for a Payment Year, including to

Settling States that are also eligible for Incentive Payment B. Incentive Payment C shall

be equal to up to fifteen percent (15%) of the Net Abatement Amount multiplied by the

aggregate Overall Allocation Percentage of the Settling States. Incentive Payment C will

be due to a Settling State as part of the Annual Payment in each of the eighteen (18)

Payment Years that a Settling State is eligible for Incentive Payment C and equal a total

potential maximum of $2,783,102,054 if all States are eligible for all eighteen (18)

Payment Years. Each Settling State’s maximum share of Incentive Payment C in a given

year shall equal the total maximum amount available for Incentive Payment C for that

year as reflected in Exhibit M multiplied by the Settling State’s Overall Allocation

Percentage. Eligibility for Incentive Payment C is as follows:

a. A Settling State is not eligible for Incentive Payment C for a

Payment Year in which it is eligible for Incentive Payment A.

b. Subject to Section IV.F.3.a, the amount of Incentive Payment C for

which a Settling State is eligible in a Payment Year shall be a percentage of the

State’s maximum share of Incentive Payment C based on the extent to which

(A) Non-Litigating Subdivisions that are Primary Subdivisions with a population

over 30,000 and Litigating Subdivisions in the State are Participating

Subdivisions or (B) there is a Case-Specific Resolution against Non-Litigating

Subdivisions that are Primary Subdivisions with a population over 30,000 and

Litigating Subdivisions in the State, collectively, “Incentive C Eligible

Subdivisions.” The percentage of the State’s maximum share of Incentive

Payment C that the State is eligible for in a Payment Year shall be determined

according to the table below:

Percentage of Relevant

Subdivision Population

that is Incentive C

Eligible Population

Incentive Payment C

Eligibility Percentage

Up to 60% 0%

60%+ 25%

70%+ 35%

75%+ 40%

80%+ 45%

85%+ 55%

90%+ 60%

93%+ 65%

94%+ 75%

95+ 90%

98+ 95%

100% 100%

c. In determining the amount that Settling Distributors will pay in a

Payment Year under Incentive Payment C and each Settling State’s share of

Incentive Payment C for that Payment Year, the Settlement Fund Administrator

shall: (i) identify all States that are eligible for Incentive Payment C because they

are ineligible for Incentive Payment A; (ii) determine the Incentive Payment C

eligibility percentage for each such Settling State; (iii) multiply the Incentive

Payment C eligibility percentage for each such State by the Overall Allocation

Percentage of that State; (iv) multiply the product from (iii) by the maximum

The “Percentage of Relevant Subdivision Population that is Incentive C Eligible Population” shall be determined

by the aggregate population of the Settling State’s Incentive C Eligible Subdivisions divided by the aggregate

population of the Settling State’s Non-Litigating Primary Subdivisions with a population over 30,000 and Litigating

Subdivisions (“Incentive Payment C Subdivisions”). None of the population figures shall include Prior Litigating

Subdivisions. In calculating the Settling State’s population that resides in Incentive Payment C Subdivisions, (a) the

population shall be the sum of the population of all Incentive Payment C Subdivisions in the Settling State,

notwithstanding that persons may be included within the population of more than one Incentive Payment C

Subdivision, and (b) the population that resides in Incentive C Eligible Subdivisions shall be the sum of the

population of the Incentive C Eligible Subdivisions, notwithstanding that persons may be included within the

population of more than one Incentive C Eligible Subdivision. An individual Incentive Payment C Subdivision shall

not be included more than once in the numerator, and shall not be included more than once in the denominator, of

the calculation regardless if it (or any of its officials) is named as multiple plaintiffs in the same lawsuit. For the

avoidance of doubt, a Settling State in which the population that resides in Incentive C Eligible Subdivisions is less

than sixty percent (60%) of the population of Incentive Payment C Subdivisions shall not be eligible for any portion

of Incentive Payment C.

amount that Settling Distributors could owe under Incentive Payment C for that

Payment Year from Exhibit M. The amount calculated in (iv) shall be the amount

allocated to a Settling State eligible for Incentive Payment C for that Payment

Year and the aggregate of such amounts for Settling States eligible for Incentive

Payment C shall be the amount paid for that Payment Year by Settling

Distributors with respect to Incentive Payment C, all such amounts subject to the

suspension, offset, and reduction provisions in Section XII and Section XIII. If

there are no Litigating Subdivisions or Non-Litigating Subdivisions that are

Primary Subdivisions with a population of more than 30,000 in a Settling State,

and that Settling State is otherwise eligible for Incentive Payment C, that Settling

State will receive its full allocable share of Incentive Payment C.

d. A Settling State’s eligibility for Incentive Payment C for a

Payment Year shall be determined as of sixty (60) calendar days prior to the

Payment Date for that Payment Year; provided that the percentage of Incentive

Payment C for which a Settling State is eligible as of the Incentive Payment Final

Eligibility Date shall cap its eligibility for that Payment Year and all subsequent

Payment Years.

4. Incentive Payment D. Incentive Payment D shall be applied at Payment

Year 6. Incentive Payment D shall be equal to five percent (5%) of the Net Abatement

Amount multiplied by the aggregate Overall Allocation Percentage of the Settling States.

Incentive Payment D will be due to a Settling State as part of the Annual Payment for

each of thirteen (13) Payment Years (from Payment Year 6 to Payment Year 18) that any

Settling State is eligible for Incentive Payment D and equal a total potential maximum of

$927,700,685 if all States are eligible for all thirteen (13) Payment Years. Each Settling

State’s share of Incentive Payment D in a given year shall equal the total maximum

amount available for Incentive Payment D for that year as reflected in Exhibit M times

the Settling State’s Overall Allocation Percentage. Eligibility for Incentive Payment D is

as follows:

a. A Settling State is eligible for Incentive Payment D if there has

been no Later Litigating Subdivision in that State that has had a Claim against a

Released Entity survive more than six (6) months after denial in whole or in part

of a Threshold Motion.

b. A Settling State’s eligibility for Incentive Payment D shall be

determined as of sixty (60) calendar days prior to the Payment Date. If a Later

Litigating Subdivision’s lawsuit in that State survives more than six (6) months

after denial in whole or in part of a Threshold Motion after that date, that State

shall not be eligible for Incentive Payment D for the Payment Year in which that

occurs and any subsequent Payment Year.

c. Notwithstanding Section IV.F.4, a Settling State can become re-

eligible for Incentive Payment D if the lawsuit that survived a Threshold Motion

is dismissed pursuant to a later motion on grounds included in the Threshold

Motion, in which case the Settling State shall be eligible for Incentive Payment D

less any litigation fees and costs incurred by Settling Distributor in the interim,

except that if the dismissal motion occurs after the completion of opening

statements in such action, the Settling State shall not be eligible for Incentive

Payment D.

d. For the avoidance of doubt, a Settling State may be eligible for

Incentive Payment D whether or not it is eligible for Incentive Payments A-C.

e. In determining the amount of Incentive Payment D that Settling

Distributors will pay in a Payment Year and each Settling State’s share, if any, of

Incentive Payment D for that Payment Year, the Settlement Fund Administrator

shall: (i) identify all Settling States that are eligible for Incentive Payment D; (ii)

multiply the Overall Allocation Percentage for each such eligible Settling State by

the maximum amount that Settling Distributors could owe with respect to

Incentive Payment D for that Payment Year listed on Exhibit M; and (iii) subtract

any litigation fees and costs allowed to be deducted pursuant to Section IV.F.4.c.

The amount calculated in (iii) shall be the amount allocated to a Settling State

eligible for Incentive Payment D for that Payment Year and the aggregate of each

such amount for Settling States eligible for Incentive Payment D shall be the

amount of Incentive Payment D Settling Distributors are obligated to pay in that

Payment Year, all such amounts subject to the suspension, reduction, and offset

provisions in Section XII and Section XIII.

G. Reductions/Offsets. The base and incentive payments are subject to suspension,

offset, and reduction as provided in Section XII and Section XIII.

H. State-Specific Agreements. Notwithstanding any other provision of this

Agreement or any other agreement, in the event that: (1) the Settling Distributors enter into an

agreement with any Settling State that resolves with finality such Settling State’s Claims

consistent with Section XI of this Agreement and such agreement has an effective date prior to

the Effective Date of this Agreement (such agreement, a “State-Specific Agreement”) and (2)

pursuant to the terms of the State-Specific Agreement, any payments, or any portion thereof,

made by the Settling Distributors thereunder are made in lieu of any payments (for the avoidance

of doubt, including the Additional Restitution Amount), or any portion thereof, to be made under

this Agreement and the Settling Distributors make such a payment pursuant to the State-Specific

Agreement, then the Settling Distributors will reduce any payments allocable to such Settling

State (whether made to the Settlement Fund Escrow or the Settlement Fund) made pursuant to

this Agreement to the extent such amount was already paid pursuant to the terms of the State-

Specific Agreement.

I. Allocation of Payments among Settling Distributors. Payments due from the

Settling Distributors under this Section IV, Section IX, and Section X will be allocated among

the Settling Distributors as follows: McKesson – 38.1%; Amerisource – 31.0%; Cardinal –

30.9%. A Settling Distributor’s sole responsibility for payments under this Agreement shall be

to make its share of each payment. The obligations of the Settling Distributors in this Agreement

are several and not joint. No Settling Distributor shall be responsible for any portion of another

Settling Distributor’s share.

J. Pre-payment Option.

1. Any Settling Distributor shall have the right, subject to the limitations set

forth in Section IV.J.3, to prepay any base payment or incentive payment in whole or in

part, without premium or penalty (a “Settlement Prepayment”) by providing at least

fourteen (14) calendar days prior written notice to the Settlement Fund Administrator and

Enforcement Committee (a “Prepayment Notice”). Any Prepayment Notice shall

specify: (a) the gross amount of the Settlement Prepayment (the “Gross Settlement

Amount”), (b) the manner in which such Settlement Prepayment shall be applied to

reduce such Settling Distributor’s future share of Annual Payments (i.e., to which future

year(s) the allocable portion of an Annual Payment owed by such Settling Distributor the

Settlement Prepayment should be applied) (such manner of application, a “Settlement

Prepayment Reduction Schedule”), (c) the net present value of the Settlement Prepayment

as of the Prepayment Date based on the Settlement Prepayment Reduction Schedule

using a discount rate equal to the prime rate as published by the Wall Street Journal on

the date of the Prepayment Notice plus 1.75% (such net present value amount, the “Net

Settlement Prepayment Amount”), and (d) the date on which the prepayment will be

made, which shall be no more than fifteen (15) calendar days after the date of the

Prepayment Notice (the “Prepayment Date”).

2. On the Prepayment Date the Settling Distributor shall pay the Net

Settlement Prepayment Amount to the Settlement Fund and such amount shall be used

only as specified in Section V. Following such payment, all future portions of the

Annual Payments allocated to the applicable Settling Distributor under Section IV.E and

Section IV.F shall be reduced pursuant to the Settlement Prepayment Reduction

Schedule, and the Exhibit M will be updated to give effect to such reduction, and going

forward such updated schedule will be Exhibit M.

3. A Settling Distributor’s right to make prepayments shall be subject to the

following limitations:

a. Prepayments may apply to base payments or to both base and

incentive payments. If the prepayment applies to both base and incentive

payments, the prepayments will apply proportionately across base and incentive

payments.

b. A Settling Distributor shall make no more than three (3)

prepayments over the eighteen (18) year payment term. A Settling Distributor

shall not make more than one (1) prepayment in a five (5) year period and there

shall not be prepayments made in the first two (2) Payment Years.

c. Prepayments shall only be applied to one (1) or more of the three

(3) Payment Years following the prepayment.

d. The total amount of a prepayment of base payments after

discounting calculations shall not be larger than the base payment for the Payment

Year with the lowest Annual Payment amount affected by the prepayment. The

total amount of a prepayment for both base payments and incentive payments

shall not be larger than the base payment and anticipated incentive payment for

the lowest Payment Year affected by the prepayment. The “anticipated incentive

payment” for a future Payment Year shall reflect the incentives earned by each

Settling State as of the time of the prepayment and any offsets or adjustments

known at that time.

e. In a Payment Year against which there has been a prepayment, if

the amount a Settling State is calculated to receive is greater than the amount

prepaid prior to discounting calculations, the Settling Distributor shall pay the

difference. If, in a Payment Year for which there has been a prepayment, the

amount that a Settling State is calculated to receive is less than the amount

calculated at the time of the prepayment, there shall be a credit for the difference

to the Settling Distributor to be applied in the subsequent Payment Year(s), if any.

f. Prepayments shall be applied proportionately to all Settling States.

4. The Settling States may agree to a prepayment that does not apply these

restrictions. Such a prepayment would need approval of Settling States representing at

least ninety-five percent (95%) allocable share as measured by the allocations in Exhibit

F; provided, however, that this provision does not limit or restrict any Settling State from

negotiating its own prepayment with a Settling Distributor.

5. For illustrative purposes only, attached as Exhibit Q are examples showing

a Settlement Prepayment, the related calculation of the Net Settlement Prepayment

Amount, and the related adjustment to the Settlement Payment Schedule.

K. Significant Financial Constraint.

1. A Settling Distributor’s allocable share of the Annual Payment for a

Payment Year may, at the election of such Settling Distributor, be deferred either (a) up

to the amount by which that share plus such Settling Distributor’s share of amounts

payable under Section IX and Section X would exceed twenty percent (20%) of such

Settling Distributor’s total operating cash flow (as determined pursuant to United States

generally accepted accounting principles) for its fiscal year that concluded most recently

prior to the due date for that payment or (b) (i) up to twenty-five percent (25%) if, as of

thirty (30) calendar days preceding that payment date, the company’s credit rating from

one or more of the three nationally recognized rating agencies is below BBB or Baa2 or

(ii) up to one hundred percent (100%) if, as of thirty (30) calendar days preceding that

payment date, the company’s credit rating from one or more of the three nationally

recognized rating agencies is below BBB- or Baa3. If the reason for exceeding twenty

percent (20%) of a Settling Distributor’s total operating cash flow or the decrease in

credit rating is substantially attributable to the incurrence of debt to fund post-settlement

acquisitions or to the payment of dividends and/or share repurchases that together are of

an amount that exceeds the total amount of those two items for the prior fiscal year, no

deferral is available. A Settling Distributor shall not be allowed to defer payment for a

Payment Year if that Settling Distributor engaged in any share repurchases in the three

fiscal quarters prior to the Payment Date for that Payment Year.

2. If a Settling Distributor has reason to believe that it will not be able to pay

some or all of its allocable share of the Annual Payment for a Payment Year, it shall

provide at least ninety (90) calendar days’ prior written notice to the Settlement Fund

Administrator and Enforcement Committee (a “Deferred Payment Notice”). Any

Deferred Payment Notice shall specify and include: (a) the gross amount of the payments

owed (including the estimated allocable portion of the Annual Payment, and amounts

owed under Section IX and Section X, by the relevant Settling Distributor), (b) the

amount that the Settling Distributor believes it will be unable to pay, (c) the accounting

and audited financial documents upon which the Settling Distributor relied for making

this determination, and (d) any other relevant information for the Enforcement

Committee to consider.

3. A Settling Distributor shall not utilize this provision during the first three

(3) Payment Years. If a Settling Distributor defers some or all of the payments due in a

Payment Year pursuant to this Section IV.K, it shall not repurchase any shares, or fund

new acquisitions with an acquisition price greater than $250 million, during the deferral

period until the deferred amount is fully repaid with interest. Any amounts deferred shall

bear interest at an interest rate equal to the prime rate as published by the Wall Street

Journal on the date of the Deferral Payment Notice plus 0.5%.

4. The Settling Distributor shall pay all deferred amounts, including

applicable interest on the next Payment Date. If the amounts previously deferred

(including interest) together with the Settling Distributor’s share of all payments due for a

Payment Year would allow for a deferral under Section IV.K.1, the Settling Distributor

shall pay as much of the previously deferred amounts (including interest) as it can pay

without triggering the ability to defer payment and may defer the remainder as permitted

under (and subject to the restrictions of) this Section IV.K.

5. Deferrals will apply proportionally across base payments and incentive

payments. For the avoidance of doubt, this Section IV.K applies fully to Payment Years

after the first three (3) Payment Years, including the base payments and all incentive

payments due pursuant to this Agreement during the Payment Year at issue.

6. If a Settling Distributor could pay a portion of its allocable share of the

Annual Payments due pursuant to this Agreement during a Payment Year without

triggering this Section IV.K, the Settling Distributor shall be required to pay that portion

as scheduled and only the excess would be subject to deferral at the election of the

Settling Distributor (in whole or in part) as provided herein.

7. The Settling Distributor shall pay any deferred amounts, including

applicable interest on or before the date on which the payment is due for Payment Year

18.

V. Allocation and Use of Settlement Payments

A. Components of Settlement Fund. The Settlement Fund shall be comprised of an

Abatement Accounts Fund, a State Fund, and a Subdivision Fund for each Settling State. The

payments made under Section IV into the Settlement Fund shall be initially allocated among

those three (3) sub-funds and distributed and used as provided below. Payments placed into the

Settlement Fund do not revert back to the Settling Distributors.

B. Use of Settlement Payments.

1. It is the intent of the Parties that the payments disbursed from the

Settlement Fund to Settling States and Participating Subdivisions be for Opioid

Remediation, subject to exceptions that must be documented in accordance with Section

V.B.2. In no event may less than eighty-five percent (85%) of the Settling Distributors’

maximum amount of payments pursuant to Section IV, Section IX, and Section X as set

forth on Exhibit M over the entirety of all Payments Years (but not any single Payment

Year) be spent on Opioid Remediation.

2. While disfavored by the Parties, a Settling State or a Participating

Subdivision set forth on Exhibit G may use monies from the Settlement Fund (that have

not been restricted by this Agreement solely to future Opioid Remediation) for purposes

that do not qualify as Opioid Remediation. If, at any time, a Settling State or a

Participating Subdivision set forth on Exhibit G uses any monies from the Settlement

Fund for a purpose that does not qualify as Opioid Remediation, such Settling State or

Participating Subdivision set forth on Exhibit G shall identify such amounts and report to

the Settlement Fund Administrator and the Settling Distributors how such funds were

used, including if used to pay attorneys’ fees, investigation costs, litigation costs, or costs

related to the operation and enforcement of this Agreement, respectively. It is the intent

of the Parties that the reporting under this Section V.B.2 shall be available to the public.

For the avoidance of doubt, (a) any amounts not identified under this Section V.B.2 as

used to pay attorneys’ fees, investigation costs, or litigation costs shall be included in the

“Compensatory Restitution Amount” for purposes of Section VI.F and (b) Participating

Subdivisions not listed on Exhibit G may only use monies from the Settlement Fund for

purposes that qualify as Opioid Remediation.

C. Allocation of Settlement Fund.

The allocation of the Settlement Fund allows for different approaches to be taken in

different states, such as through a State-Subdivision Agreement. Given the uniqueness of States

and their Subdivisions, Settling States and their Subdivisions are encouraged to enter into State-

Subdivision Agreements in order to direct the allocation of their portion of the Settlement Fund.

As set out below, the Settlement Fund Administrator will make an initial allocation to three (3)

state-level sub-funds. The Settlement Fund Administrator will then, for each Settling State and

its Participating Subdivisions, apply the terms of this Agreement and any relevant State-

Subdivision Agreement, Statutory Trust, Allocation Statute, or voluntary redistribution of funds

as set out below before disbursing the funds.

1. Base Payments. The Settlement Fund Administrator will allocate base

payments under Section IV.D among the Settling States in proportion to their respective

Overall Allocation Percentages. Base payments for each Settling State will then be

allocated fifteen percent (15%) to its State Fund, seventy percent (70%) to its Abatement

Accounts Fund, and fifteen percent (15%) to its Subdivision Fund. Amounts may be

reallocated and will be distributed as provided in Section V.D.

2. Incentive Payments. The Settlement Fund Administrator will treat

incentive payments under Section IV.F on a State-specific basis. Incentive payments for

which a Settling State is eligible under Section IV.F will be allocated fifteen percent

(15%) to its State Fund, seventy percent (70%) to its Abatement Accounts Fund, and

fifteen percent (15%) to its Subdivision Fund. Amounts may be reallocated and will be

distributed as provided in Section V.D.

3. Application of Adjustments. If a suspension, offset, or reduction under

Section XII or Section XIII applies with respect to a Settling State, the suspension, offset,

or reduction shall be applied proportionally to all amounts that would otherwise be

apportioned and distributed to the State Fund, the Abatement Accounts Fund, and the

Subdivision Fund for that State.

4. Settlement Fund Administrator. Prior to the Initial Participation Date, the

Settling Distributors and the Enforcement Committee will agree to a detailed mechanism

consistent with the foregoing for the Settlement Fund Administrator to follow in

allocating, apportioning, and distributing payments, which shall then be appended hereto

as Exhibit L.

5. Settlement Fund Administrator Costs. Any costs and fees associated with

or arising out of the duties of the Settlement Fund Administrator as described in Exhibit

L shall be paid from the interest accrued in the Settlement Fund Escrow and the

Settlement Fund; provided, however, that if such accrued interest is insufficient to pay the

entirety of any such costs and fees, Settling Distributors shall pay fifty percent (50%) of

the additional amount and fifty percent (50%) shall be paid out of the Settlement Fund.

D. Settlement Fund Reallocation and Distribution.

As set forth below, within a particular Settling State’s account, amounts contained in the

Settlement Fund sub-funds may be reallocated and distributed per a State-Subdivision

Agreement or other means. If the apportionment of amounts is not addressed and controlled

under Section V.D.1 and Section V.D.2, then the default provisions of Section V.D.4 apply. It is

not necessary that a State-Subdivision Agreement or other means of allocating funds pursuant to

Section V.D.1 and Section V.D.2 address all of the Settlement Fund sub-funds. For example, a

Statutory Trust might only address disbursements from a Settling State’s Abatement Accounts

Fund.

1. Distribution by State-Subdivision Agreement. If a Settling State has a

State-Subdivision Agreement, amounts apportioned to that State’s State Fund, Abatement

Accounts Fund, and Subdivision Fund under Section V.C shall be reallocated and

distributed as provided by that agreement. Any State-Subdivision Agreement entered

into after the Preliminary Agreement Date shall be applied only if it requires: (a) that all

amounts be used for Opioid Remediation, except as allowed by Section V.B.2, and (b)

that at least seventy percent (70%) of amounts be used solely for future Opioid

Remediation.

For a State-Subdivision Agreement to be applied to the relevant portion of

an Annual Payment, notice must be provided to the Settling Distributors and the

Settlement Fund Administrator at least sixty (60) calendar days prior to the Payment

Date.

2. Distribution by Allocation Statute. If a Settling State has an Allocation

Statute and/or a Statutory Trust that addresses allocation or distribution of amounts

apportioned to such State’s State Fund, Abatement Accounts Fund, and/or Subdivision

Fund and that, to the extent any or all such sub-funds are addressed, requires (1) all

amounts to be used for Opioid Remediation, except as allowed by Section V.B.2, and (2)

at least seventy percent (70%) of all amounts to be used solely for future Opioid

Remediation,

then, to the extent allocation or distribution is addressed, the amounts

apportioned to that State’s State Fund, Abatement Accounts Fund, and Subdivision Fund

under Section V.C shall be allocated and distributed as addressed and provided by the

applicable Allocation Statute or Statutory Trust. For the avoidance of doubt, an

Allocation Statute or Statutory Trust need not address all three (3) sub-funds that

comprise the Settlement Fund, and if the applicable Allocation Statute or Statutory Trust

does not address distribution of all or some of these three (3) sub-funds, the applicable

Allocation Statute or Statutory Trust does not replace the default provisions described in

Section V.D.4 of any such unaddressed fund. For example, if an Allocation Statute or

Statutory Trust that meets the requirements of this Section V.D.2 only addresses funds

restricted to abatement, then the default provisions in this Agreement concerning

allocation among the three (3) sub-funds comprising the Settlement Fund and the

distribution of the State Fund and Subdivision Fund for that State would still apply, while

the distribution of the applicable State’s Abatement Accounts Fund would be governed

by the qualifying Allocation Statute or Statutory Trust.

3. Voluntary Redistribution. A Settling State may choose to reallocate all or

a portion of its State Fund to its Abatement Accounts Fund. A Participating Subdivision

included on Exhibit G may choose to reallocate all or a portion of its allocation from the

Subdivision Fund to the State’s Abatement Accounts Fund or to another Participating

Subdivision. For a voluntary redistribution to be applied to the relevant portion of an

Annual Payment, notice must be provided to the Settling Distributors and the Settlement

Fund Administrator at least sixty (60) calendar days prior to the Payment Date.

4. Distribution in the Absence of a State-Subdivision Agreement, Allocation

Statute, or Statutory Trust. If Section V.D.1 and Section V.D.2 do not apply, amounts

Future Opioid Remediation includes amounts paid to satisfy any future demand by another governmental entity to

make a required reimbursement in connection with the past care and treatment of a person related to the Alleged

Harms.

Future Opioid Remediation includes amounts paid to satisfy any future demand by another governmental entity to

make a required reimbursement in connection with the past care and treatment of a person related to the Alleged

Harms.

apportioned to that State’s State Fund, Abatement Accounts Fund, and Subdivision Fund

under Section V.C shall be distributed as follows:

a. Amounts apportioned to that State’s State Fund shall be distributed

to that State.

b. Amounts apportioned to that State’s Abatement Accounts Fund

shall be distributed consistent with Section V.E. Each Settling State shall submit

to the Settlement Fund Administrator a designation of a lead state agency or other

entity to serve as the single point of contact for that Settling State’s funding

requests from the Abatement Accounts Fund and other communications with the

Settlement Fund Administrator. The designation of an individual entity is for

administrative purposes only and such designation shall not limit funding to such

entity or even require that such entity receive funds from this Agreement. The

designated entity shall be the only entity authorized to request funds from the

Settlement Fund Administrator to be disbursed from that Settling State’s

Abatement Accounts Fund. If a Settling State has established a Statutory Trust

then that Settling State’s single point of contact may direct the Settlement Fund

Administrator to release the State’s Abatement Accounts Fund to the Statutory

Trust.

c. Amounts apportioned to that State’s Subdivision Fund shall be

distributed to Participating Subdivisions in that State included on Exhibit G per

the Subdivision Allocation Percentage listed in Exhibit G. Section VII.I shall

govern amounts that would otherwise be distributed to Non-Participating

Subdivisions listed in Exhibit G. For the avoidance of doubt and notwithstanding

any other provision in this Agreement, no Non-Participating Subdivision will

receive any amount from the Settlement Fund, regardless of whether such

Subdivision is included on Exhibit G.

d. Special Districts shall not be allocated funds from the Subdivision

Fund, except through a voluntary redistribution allowed by Section V.D.3. A

Settling State may allocate funds from its State Fund or Abatement Accounts

Fund for Special Districts.

5. Restrictions on Distribution. No amounts may be distributed from the

Subdivision Fund contrary to Section VII, i.e., no amounts may be distributed directly to

Non-Participating Subdivisions or to Later Participating Subdivisions to the extent such a

distribution would violate Section VII.E through Section VII.H. Amounts allocated to

the Subdivision Fund that cannot be distributed by virtue of the preceding sentence shall

be distributed into the sub-account in the Abatement Accounts Fund for the Settling State

in which the Subdivision is located, unless those payments are redirected elsewhere by a

State-Subdivision Agreement described in Section V.D.1 or by an Allocation Statute or a

Statutory Trust described in Section V.D.2.

E. Provisions Regarding the Abatement Accounts Fund.

1. State-Subdivision Agreement, Allocation Statute, and Statutory Trust

Fund Provisions. A State-Subdivision Agreement, Allocation Statute, or Statutory Trust

may govern the operation and use of amounts in that State’s Abatement Accounts Fund

so long as it complies with the requirements of Section V.D.1 or Section V.D.2, as

applicable, and all direct payments to Subdivisions comply with Section VII.E through

Section VII.H.

2. Absence of a State-Subdivision Agreement, Allocation Statute, or

Statutory Trust. In the absence of a State-Subdivision Agreement, Allocation Statute, or

Statutory Trust that addresses distribution, the Abatement Accounts Fund will be used

solely for future Opioid Remediation

and the following shall apply with respect to a

Settling State:

a. Regional Remediation.

(i) At least fifty percent (50%) of distributions for remediation

from a State’s Abatement Accounts Fund shall be annually allocated and

tracked to the regional level. A Settling State may allow the Advisory

Committee established pursuant to Section V.E.2.d to define its regions

and assign regional allocations percentages. Otherwise, a Settling State

shall (A) define its initial regions, which shall consist of one (1) or more

General Purpose Subdivisions and which shall be designated by the state

agency with primary responsibility for substance abuse disorder services

employing, to the maximum extent practical, existing regions established

in that State for opioid abuse treatment or other public health purposes;

(B) assign initial regional allocation percentages to the regions based on

the Subdivision Allocation Percentages in Exhibit G and an assumption

that all Subdivisions included on Exhibit G will become Participating

Subdivisions.

(ii) This minimum regional expenditure percentage is

calculated on the Settling State’s initial Abatement Accounts Fund

allocation and does not include any additional amounts a Settling State has

directed to its Abatement Accounts Fund from its State Fund, or any other

amounts directed to the fund. A Settling State may dedicate more than

fifty percent (50%) of its Abatement Accounts Fund to the regional

expenditure and may annually adjust the percentage of its Abatement

Accounts Fund dedicated to regional expenditures as long as the

percentage remains above the minimum amount.

(iii) The Settling State (A) has the authority to adjust the

definition of the regions, and (B) may annually revise the percentages

Future Opioid Remediation includes amounts paid to satisfy any future demand by another governmental entity to

make a required reimbursement in connection with the past care and treatment of a person related to the Alleged

Harms.

allocated to each region to reflect the number of General Purpose

Subdivisions in each region that are Non-Participating Subdivisions.

b. Subdivision Block Grants. Certain Subdivisions shall be eligible to

receive regional allocation funds in the form of a block grant for future Opioid

Remediation. A Participating Subdivision eligible for block grants is a county or

parish (or in the case of States that do not have counties or parishes that function

as political subdivisions, a city) that (1) does not contain a Litigating Subdivision

or a Later Litigating Subdivision for which it has the authority to end the litigation

through a release, bar or other action, (2) either (i) has a population of 400,000 or

more or (ii) in the case of California has a population of 750,000 or more, and

(3) has funded or otherwise managed an established health care or treatment

infrastructure (e.g., health department or similar agency). Each Subdivision

eligible to receive block grants shall be assigned its own region.

c. Small States. Notwithstanding the provisions of Section V.E.2.a,

Settling States with populations under four (4) million that do not have existing

regions described in Section V.E.2.a shall not be required to establish regions.

However, such a Settling State that contains one (1) or more Subdivisions eligible

for block grants under Section V.E.2.c shall be divided regionally so that each

block-grant eligible Subdivision is a region and the remainder of the state is a

region.

d. Advisory Committee. The Settling State shall designate an Opioid

Settlement Remediation Advisory Committee (the “Advisory Committee”) to

provide input and recommendations regarding remediation spending from that

Settling State’s Abatement Accounts Fund. A Settling State may elect to use an

existing advisory committee or similar entity (created outside of a State-

Subdivision Agreement or Allocation Statute); provided, however, the Advisory

Committee or similar entity shall meet the following requirements:

(i) Written guidelines that establish the formation and

composition of the Advisory Committee, terms of service for members,

contingency for removal or resignation of members, a schedule of

meetings, and any other administrative details;

(ii) Composition that includes at least an equal number of local

representatives as state representatives;

(iii) A process for receiving input from Subdivisions and other

communities regarding how the opioid crisis is affecting their

communities, their abatement needs, and proposals for abatement

strategies and responses; and

(iv) A process by which Advisory Committee recommendations

for expenditures for Opioid Remediation will be made to and considered

by the appropriate state agencies.

3. Abatement Accounts Fund Reporting. The Settlement Fund Administrator

shall track and assist in the report of remediation disbursements as agreed to among the

Settling Distributors and the Enforcement Committee.

F. Nature of Payment. Each of the Settling Distributors, the Settling States, and the

Participating Subdivisions acknowledges and agrees that notwithstanding anything to the

contrary in this Agreement, including, but not limited to, the scope of the Released Claims:

1. It has entered into this Agreement to avoid the delay, expense,

inconvenience, and uncertainty of further litigation;

2. (a) The Settling States and Participating Subdivisions sought

compensatory restitution (within the meaning of 26 U.S.C. § 162(f)(2)(A)) as damages

for the Alleged Harms allegedly suffered by the Settling States and Participating

Subdivisions; (b) the Compensatory Restitution Amount is no greater than the amount, in

the aggregate, of the Alleged Harms allegedly suffered by the Settling States and

Participating Subdivisions; and (c) the portion of the Compensatory Restitution Amount

received by each Settling State or Participating Subdivision is no greater than the amount

of the Alleged Harms allegedly suffered by such Settling State or Participating

Subdivision;

3. The payment of the Compensatory Restitution Amount by the Settling

Distributors constitutes, and is paid for, compensatory restitution (within the meaning of

26 U.S.C. § 162(f)(2)(A)) for alleged damage or harm (as compensation for alleged

damage or harm arising out of alleged bodily injury) allegedly caused by the Settling

Distributors;

4. The Compensatory Restitution Amount is being paid as compensatory

restitution (within the meaning of 26 U.S.C. § 162(f)(2)(A)) in order to restore, in whole

or in part, the Settling States and Participating Subdivisions to the same position or

condition that they would be in had the Settling States and Participating Subdivisions not

suffered the Alleged Harms; and

5. For the avoidance of doubt: (a) no portion of the Compensatory

Restitution Amount represents reimbursement to any Settling State or Participating

Subdivision or other person or entity for the costs of any investigation or litigation,

(b) the entire Compensatory Restitution Amount is properly characterized as described in

Section V.F, and (c) no portion of the Compensatory Restitution Amount constitutes

disgorgement or is properly characterized as the payment of statutory or other fines,

penalties, punitive damages, or other punitive assessments.

VI. Enforcement

A. Enforceability. This Agreement is enforceable only by the Settling States and the

Settling Distributors; provided, however, that Released Entities may enforce Section XI and

Participating Subdivisions listed on Exhibit G have the enforcement rights described in Section

VI.D. Except to the extent allowed by the Injunctive Relief Terms, Settling States and

Participating Subdivisions shall not have enforcement rights with respect to either the terms of

this Agreement that apply only to or in other States or any Consent Judgment entered into by

another Settling State. Participating Subdivisions shall not have enforcement rights against the

Settling Distributors with respect to this Agreement or any Consent Judgment except that

Participating Subdivisions listed on Exhibit G shall have enforcement rights as set forth herein as

to payments that would be allocated to the Subdivision Fund or Abatement Accounts Fund

pursuant to Section V; provided, however, that each Settling State shall allow Participating

Subdivisions in such Settling State to notify it of any perceived violations of this Agreement or

the applicable Consent Judgment.

B. Jurisdiction. The Settling Distributors consent to the jurisdiction of the court in

which each Settling State files its Consent Judgment, limited to resolution of disputes identified

in Section VI.F.1 for resolution in that court.

C. Specific Terms Dispute Resolution.

1. Any dispute that is addressed by the provisions set forth in the Injunctive

Relief Terms shall be resolved as provided therein.

2. In the event that Settling Distributors believe that the eight-five percent

(85%) threshold established in Section V.B.1 is not being satisfied, any Party may request

that the Settling Distributors and Enforcement Committee meet and confer regarding the

use of funds to implement Section V.B.1. The completion of such meet-and-confer

process is a precondition to further action regarding any such dispute. Further action

concerning Section V.B.1 shall: (i) be limited to the Settling Distributors seeking to

reduce their Annual Payments by no more than five percent (5%) of the difference

between the actual amount of Opioid Remediation and the eighty-five percent (85%)

threshold established in Section V.B.1; (ii) only reduce Annual Payments to those

Settling States and their Participating Subdivisions that are below the eighty-five percent

(85%) threshold established in Section V.B.1; and (iii) not reduce Annual Payments

restricted to future Opioid Remediation.

D. State-Subdivision Enforcement.

1. A Subdivision shall not have enforcement rights against a Settling State in

which it is located with respect to this Agreement or any Consent Judgment except that a

Participating Subdivision listed on Exhibit G shall have enforcement rights (a) as

provided for in a State-Subdivision Agreement, Allocation Statute, or Statutory Trust

with respect to intrastate allocation or (b) in the absence of a State-Subdivision

Agreement, Allocation Statute, or Statutory Trust, to allegations that (i) the Settling

State’s use of Abatement Accounts Fund monies were not used for uses similar to or in

the nature of those uses contained in Exhibit E; or (ii) a Settling State failed to pay funds

directly from the Abatement Accounts Fund to a Participating Subdivision eligible to

receive a block grant pursuant to Section V.E.2.b.

2. A Settling State shall have enforcement rights against a Participating

Subdivision located in its territory (a) as provided for in a State-Subdivision Agreement,

Allocation Statute, or Statutory Trust; or (b) in the absence of a State-Subdivision

Agreement, Allocation Statute, or Statutory Trust, to allegations that the Participating

Subdivisions’ uses of Abatement Accounts Fund monies were not used for purposes

similar to or in the nature of those uses contained in Exhibit E.

3. As between Settling States and Participating Subdivisions, the above

rights are contractual in nature and nothing herein is intended to limit, restrict, change or

alter any other existing rights under law.

E. Subdivision Distributor Payment Enforcement. A Participating Subdivision listed

on Exhibit G shall have the same right as a Settling State pursuant to Section VI.F.2.a(v) to seek

resolution regarding the failure by a Settling Distributor to make its allocable share of an Annual

Payment in a Payment Year.

F. Other Terms Regarding Dispute Resolution.

1. Except to the extent provided by Section VI.C or Section VI.F.2, all

disputes shall be resolved in either the court that entered the relevant Consent Judgment

or, if no such Consent Judgment was entered, a state or territorial court with jurisdiction

located wherever the seat of the relevant state government is located.

a. State court proceedings shall be governed by the rules and

procedures of the relevant forum.

b. For the avoidance of doubt, disputes to be resolved in state court

include, but are not limited to, the following:

(i) disputes concerning whether expenditures qualify as Opioid

Remediation;

(ii) disputes between a Settling State and its Participating

Subdivisions as provided by Section VI.D, except to the extent the State-

Subdivision Agreement provides for other dispute resolution mechanisms.

For the avoidance of doubt, disputes between a Settling State and any

Participating Subdivision shall not be considered National Disputes;

(iii) whether this Agreement and relevant Consent Judgment are

binding under state law;

(iv) the extent of the Attorney General’s or other participating

entity’s authority under state law, including the extent of the authority to

release claims;

(v) whether the definition of a Bar, a Case-Specific Resolution,

Final Order, lead state agency as described in Section V.D.4.b, Later

Litigating Subdivision, Litigating Subdivision, or Threshold Motion have

been met; and

(vi) all other disputes not specifically identified in Section VI.C

or Section VI.F.2.

c. Any Party may request that the National Arbitration Panel provide

an interpretation of any provision of the settlement that is relevant to the state

court determination, and the National Arbitration Panel shall make reasonable

best efforts to supply such interpretation within the earlier of thirty (30) calendar

days or the time period required by the state court proceedings. Any Party may

submit that interpretation to the state court to the extent permitted by, and for such

weight provided by, the state court’s rules and procedures. If requested by a

Party, the National Arbitration Panel shall request that its interpretation be

accepted in the form of an amicus curiae brief, and any attorneys’ fees and costs

for preparing any such filing shall be paid for by the requesting Party.

2. National Disputes involving a Settling State, a Participating Subdivision

that has enforcement rights pursuant to Section VI.A, and/or a Settling Distributor shall

be resolved by the National Arbitration Panel.

a. National Disputes are disputes that are not addressed by

Section VI.C, and which are exceptions to Section VI.F.1’s presumption of

resolution in state courts because they involve issues of interpretation of terms

contained in this Agreement applicable to all Settling States without reference to a

particular State’s law. Disputes between a Settling State and any Participating

Subdivision shall not be considered National Disputes. National Disputes are

limited to the following:

(i) the amount of offset and/or credit attributable to Non-

Settling States or the Tribal/W. Va. Subdivision Credit;

(ii) issues involving the scope and definition of Product;

(iii) interpretation and application of the terms “Covered

Conduct,” “Released Entities,” and “Released Claims”;

(iv) the allocation of payments among Settling Distributors as

described in Section IV.I;

(v) the failure by a Settling Distributor to pay its allocable

share of the Annual Payment or of the Additional Restitution Amount in a

Payment Year, but for the avoidance of doubt, disputes between a Settling

Distributor and a Settling State over the amounts owed only to that state

that do not affect any other Settling State shall not be considered National

Disputes;

(vi) the interpretation and application of the significant

financial constraint provision in Section IV.K, including, without

limitation, eligibility for and amount of deferrals for any given year, time

for repayment, and compliance with restrictions during deferral term;

(vii) the interpretation and application of the prepayment

provisions as described in Section IV.J;

(viii) the interpretation and application of any most-favored-

nation provision in Section XIV.E;

(ix) questions regarding the performance and/or removal of the

Settlement Fund Administrator;

(x) replacement of the Monitor, as provided in the Injunctive

Relief Terms;

(xi) disputes involving liability of successor entities;

(xii) disputes that require a determination of the sufficiency of

participation in order to qualify for Incentive Payments A, B, or C, as well

as disputes over qualification for Participation Tiers;

(xiii) disputes involving a Releasor’s compliance with, and the

appropriate remedy under, Section XI.B.I.A.3;

(xiv) disputes requiring the interpretation of Agreement terms

that are national in scope or impact, which shall mean disputes requiring

the interpretation of Agreement terms that (i) concretely affect four (4) or

more Settling States; and (ii) do not turn on unique definitions and

interpretations under state law; and

(xv) any dispute subject to resolution under Section VI.F.1 but

for which all parties to the dispute agree to arbitration before the National

Arbitration Panel under the provisions of this Section VI.F.2.

b. The National Arbitration Panel shall be comprised of three (3)

arbitrators. One (1) arbitrator shall be chosen by the Settling Distributors, one (1)

arbitrator shall be chosen by the Enforcement Committee with due input from

Participating Subdivisions listed on Exhibit G, and the third arbitrator shall be

agreed upon by the first two (2) arbitrators. The membership of the National

Arbitration Panel is intended to remain constant throughout the term of this

Agreement, but in the event that replacements are required, the retiring arbitrator

shall be replaced by the party that selected him/her.

c. The National Arbitration Panel shall make reasonable best efforts

to decide all matters within one hundred eighty (180) calendar days of filing, and

in no event shall it take longer than one (1) year.

d. The National Arbitration Panel shall conduct all proceedings in a

reasonably streamlined process consistent with an opportunity for the parties to be

heard. Issues shall be resolved without the need for live witnesses where feasible,

and with a presumption in favor of remote participation to minimize the burdens

on the parties.

e. To the extent allowed under state law, a Settling State, a

Participating Subdivision that has enforcement rights pursuant to Section VI.A,

and (at any party’s request) the National Arbitration Panel may certify to an

appropriate state court any question of state law. The National Arbitration Panel

shall be bound by a final state court determination of such a certified question.

The time period for the arbitration shall be tolled during the course of the

certification process.

f. The arbitrators will give due deference to any authoritative

interpretation of state law, including any declaratory judgment or similar relief

obtained by a Settling State, a Participating Subdivision that has enforcement

rights pursuant to Section VI.A, or Settling Distributor on a state law issue.

g. The decisions of the National Arbitration Panel shall be binding on

Settling States, Participating Subdivisions, Settling Distributors, and the

Settlement Fund Administrator. In any proceeding before the National

Arbitration Panel involving a dispute between a Settling State and one or more

Settling Distributors whose resolution could prejudice the rights of a Participating

Subdivision(s) in that Settling State, such Participating Subdivision(s) shall be

allowed to file a statement of view in the proceeding.

h. Nothing herein shall be construed so as to limit or otherwise

restrict a State from seeking injunctive or other equitable relief in state court to

protect the health, safety, or welfare of its citizens.

i. Each party shall bear its own costs in any arbitration or court

proceeding arising under this Section VI. The costs for the arbitrators on the

National Arbitration Panel shall be divided and paid equally by the disputing sides

for each individual dispute, e.g., a dispute between a Settling Distributor and

Settling States/Participating Subdivisions shall be split fifty percent (50%) by the

Settling Distributor and fifty percent (50%) by the Settling States/Participating

Subdivisions that are parties to the dispute; a dispute between a Settling State and

a Participating Subdivision shall be split fifty percent (50%) by the Settling State

that is party to the dispute and fifty percent (50%) by any Participating

Subdivisions that are parties to the dispute.

3. Prior to initiating an action to enforce pursuant to this Section VI.F, the

complaining party must:

a. Provide written notice to the Enforcement Committee of its

complaint, including the provision of the Consent Judgment and/or Agreement

that the practice appears to violate, as well as the basis for its interpretation of the

disputed provision. The Enforcement Committee shall establish a reasonable

process and timeline for obtaining additional information from the involved

parties; provided, however, that the date the Enforcement Committee establishes

for obtaining additional information from the parties shall not be more than forty-

five (45) calendar days following the notice. The Enforcement Committee may

advise the involved parties of its views on the complaint and/or seek to resolve the

complaint informally.

b. Wait to commence any enforcement action until thirty (30)

calendar days after the date that the Enforcement Committee establishes for

obtaining additional information from the involved parties.

4. If the parties to a dispute cannot agree on the proper forum for resolution

of the dispute under the provisions of Section VI.F.1 or Section VI.F.2, a committee

comprising the Enforcement Committee and sufficient representatives of the Settling

Distributors such that the members of the Enforcement Committee have a majority of one

(1) member will determine the forum where the dispute will be initiated within twenty-

eight (28) calendar days of receiving notification of the dispute relating to the proper

forum. The forum identified by such committee shall be the sole forum for litigating the

issue of which forum will hear the substantive dispute, and the committee’s identification

of such forum in the first instance shall not be entitled to deference by the forum selected.

G. No Effect. Nothing in this Agreement shall be interpreted to limit the Settling

State’s Civil Investigative Demand (“CID”) or investigative subpoena authority, to the extent

such authority exists under applicable state law and the CID or investigative subpoena is issued

pursuant to such authority, and Settling Distributors reserve all of their rights in connection with

a CID or investigative subpoena issued pursuant to such authority.

VII. Participation by Subdivisions

A. Notice. No later than fifteen (15) calendar days after the Preliminary Agreement

Date, the Settling States, with the cooperation of the Settling Distributors, shall send individual

written notice of the opportunity to participate in this Agreement and the requirements of

participation to all Subdivisions in the Settling States that are (1) Litigating Subdivisions or (2)

Non-Litigating Subdivisions listed on Exhibit G. The costs of the written notice to such

Subdivisions shall be paid for by the Settling Distributors. The Settling States, with the

cooperation of the Settling Distributors, may also provide general notice reasonably calculated to

alert Non-Litigating Subdivisions in the Settling States to this Agreement, the opportunity to

participate in it, and the requirements for participation. Such notice may include publication and

other standard forms of notification, as well as notice to national state and county organizations

such as the National Association of Counties and the National League of Cities. The notice will

include that the deadline for becoming an Initial Participating Subdivision is the Initial

Participation Date. Nothing contained herein shall preclude a Settling State from providing

further notice to or otherwise contacting any of its Subdivisions about becoming a Participating

Subdivision, including beginning any of the activities described in this paragraph prior to the

Preliminary Agreement Date.

B. Requirements for Becoming a Participating Subdivision⸺Non-Litigating

Subdivisions. A Non-Litigating Subdivision in a Settling State may become a Participating

Subdivision by returning an executed Subdivision Settlement Participation Form to the

Settlement Fund Administrator specifying (1) that the Subdivision agrees to the terms of this

Agreement pertaining to Subdivisions, (2) that the Subdivision releases all Released Claims

against all Released Entities, (3) that the Subdivision agrees to use monies it receives, if any,

from the Settlement Fund pursuant to the applicable requirements of Section V; provided,

however, that Non-Litigating Subdivisions may only use monies originating from the Settlement

Fund for purposes that qualify as Opioid Remediation, and (4) that the Subdivision submits to

the jurisdiction of the court where the applicable Consent Judgment is filed for purposes limited

to that court’s role under this Agreement. The required Subdivision Settlement Participation

Form is attached as Exhibit K.

C. Requirements for Becoming a Participating Subdivision⸺Litigating

Subdivisions/Later Litigating Subdivisions. A Litigating Subdivision or Later Litigating

Subdivision in a Settling State may become a Participating Subdivision by returning an executed

Subdivision Settlement Participation Form to the Settlement Fund Administrator and upon

prompt dismissal with prejudice of its lawsuit. A Settling State may require each Litigating

Subdivision in that State to specify on the Subdivision Settlement Participation Form whether its

counsel has waived any contingency fee contract with that Participating Subdivision and

whether, if eligible, it intends to seek fees pursuant to Exhibit R. The Settlement Fund

Administrator shall provide quarterly reports of this information to the parties organized by

Settling State. A Litigating Subdivision or Later Litigating Subdivision may not become a

Participating Subdivision after the completion of opening statements in a trial of the lawsuit it

brought that includes a Released Claim against a Released Entity.

D. Initial Participating Subdivisions. A Subdivision qualifies as an Initial

Participating Subdivision if it meets the applicable requirements for becoming a Participating

Subdivision set forth in Section VII.B or Section VII.C by the Initial Participation Date. All

Subdivision Settlement Participation Forms shall be held in escrow by the Settlement Fund

Administrator until the Reference Date.

E. Later Participating Subdivisions. A Subdivision that is not an Initial Participating

Subdivision may become a Later Participating Subdivision by meeting the applicable

requirements for becoming a Participating Subdivision set forth in Section VII.B or Section

VII.C after the Initial Participation Date and by agreeing to be subject to the terms of a State-

Subdivision Agreement (if any) or any other structure adopted or applicable pursuant to

Section V.D or Section V.E. The following provisions govern what a Later Participating

Subdivision can receive (but do not apply to Initial Participating Subdivisions):

1. Except as provided in Section IV.C, a Later Participating Subdivision shall

not receive any share of any Annual Payment due before it became a Participating

Subdivision.

2. A Later Participating Subdivision that becomes a Participating

Subdivision after July 15, 2022 shall receive seventy-five percent (75%) of the share of

future base or incentive payments that it would have received had it become a Later

Participating Subdivision prior to that date (unless the Later Participating Subdivision is

subject to Section VII.E.3 or Section VII.E.4).

3. A Later Participating Subdivision that, after the Initial Participation Date,

maintains a lawsuit for a Released Claim(s) against a Released Entity and has judgment

entered against it on every such Claim before it became a Participating Subdivision (other

than a consensual dismissal with prejudice) shall receive fifty percent (50%) of the share

of future base or incentive payments that it would have received had it become a Later

Participating Subdivision prior to such judgment; provided, however, that if the

Subdivision appeals the judgment and the judgment is affirmed with finality before the

Subdivision becomes a Participating Subdivision, the Subdivision shall not receive any

share of any base payment or incentive payments.

4. A Later Participating Subdivision that becomes a Participating

Subdivision while a Bar or Case-Specific Resolution involving a different Subdivision

exists in its State shall receive twenty-five percent (25%) of the share of future base or

incentive payments that it would have received had it become a Later Participating

Subdivision without such Bar or Case-Specific Resolution.

F. No Increase in Payments. Amounts to be received by Later Participating

Subdivisions shall not increase the payments due from the Settling Distributors.

G. Ineligible Subdivisions. Subdivisions in Non-Settling States and Prior Litigating

Subdivisions are not eligible to be Participating Subdivisions.

H. Non-Participating Subdivisions. Non-Participating Subdivisions shall not

directly receive any portion of any Annual Payment, including from the State Fund and direct

distributions from the Abatement Accounts Fund; however, a Settling State may choose to fund

future Opioid Remediation that indirectly benefits Non-Participating Subdivisions.

I. Unpaid Allocations to Later Participating Subdivisions and Non-Participating

Subdivisions. Any base payment and incentive payments allocated pursuant to Section V.D to a

Later Participating Subdivision or Non-Participating Subdivision that cannot be paid pursuant to

this Section VII, including the amounts that remain unpaid after the reductions required by

Section VII.E.2 through Section VII.E.4, will be allocated to the Abatement Accounts Fund for

the Settling State in which the Subdivision is located, unless those payments are redirected

elsewhere by a State-Subdivision Agreement or by a Statutory Trust.

VIII. Condition to Effectiveness of Agreement and Filing of Consent Judgment

A. Determination to Proceed With Settlement.

1. The Settling States shall confer with legal representatives of the

Participating Subdivisions listed on Exhibit G and inform the Settling Distributors no

later than fifteen (15) calendar days prior to the Reference Date whether there is

sufficient participation to proceed with this Agreement. Within seven (7) calendar days

of informing the Settling Distributors that there is sufficient participation to proceed, the

Settling States will deliver all signatures and releases required by the Agreement to be

provided by the Settling States to the Settling Distributors.

2. If the Settling States inform Settling Distributors that there is sufficient

participation, the Settling Distributors will then determine on or before the Reference

Date whether there is sufficient State participation and sufficient resolution of the Claims

of the Litigating Subdivisions in the Settling States (through participation under

Section VII, Case-Specific Resolution(s) and Bar(s)) to proceed with this Agreement.

The determination shall be in the sole discretion of the Settling Distributors and may be

based on any criteria or factors deemed relevant by the Settling Distributors.

B. Notice by Settling Distributors. On or before the Reference Date, the Settling

Distributors shall inform the Settling States of their determination pursuant to Section VIII.A. If

the Settling Distributors determine to proceed, the Parties will proceed to file the Consent

Judgments and the obligations in the Subdivision Settlement Participation Forms will be

effective and binding as of the Reference Date. If the Settling Distributors determine not to

proceed, this Agreement will have no further effect, any amounts placed in escrow for Payment

Year 1, including funds referenced in Section IV.C.1, Section IX, Section X, and

XIV.X.1.b.Exhibit M, shall be returned to the Settling Distributors, and all releases (including

those contained in Subdivision Settlement Participation Forms) and other commitments or

obligations contained herein or in Subdivision Settlement Participation Forms will be void.

C. Determination of the Participation Tier.

1. On the Reference Date, provided that Settling Distributors determine to

proceed with this Agreement, the Settlement Fund Administrator shall determine the

Participation Tier. The criteria used to determine the Participation Tier are set forth in

Exhibit H. Any disputes as to the determination of the Participation Tier shall be decided

by the National Arbitration Panel.

2. The Participation Tier shall be redetermined by the Settlement Fund

Administrator annually as of the Payment Date, beginning with Payment Year 3, pursuant

to the criteria set forth in Exhibit H.

3. After Payment Year 6, the Participation Tier cannot move higher, unless

this restriction is waived by the Settling Distributors.

4. In the event that a Participation Tier redetermination moves the

Participation Tier higher, and that change is in whole or in part as a result of the post-

Reference Date enactment of a Bar and there is later a Revocation Event with respect to

such Bar, then on the next Payment Date that is at least one hundred eighty (180)

calendar days after the Revocation Event, the Participation Tier shall move down to the

Participation Tier that would have applied had the Bar never been enacted, unless the Bar

is reinstated or all Subdivisions affected by the Revocation Event become Participating

Subdivisions within one hundred eighty (180) calendar days of the Revocation Event.

This is the sole circumstance in which, on a nationwide basis, the Participation Tier can

move down.

5. In the event that there is a post-Reference Date Revocation Event with

respect to a Bar that was enacted in a Settling State prior to the Reference Date, then, on

the next Payment Date that is at least one hundred eighty (180) calendar days after the

Revocation Event, unless the Bar is reinstated or all Subdivisions affected by the

Revocation Event become Participating Subdivisions within one hundred eighty (180)

calendar days of the Revocation Event, the Participation Tier shall decrease – solely for

the State in which the Revocation Event occurred – to the Participation Tier

commensurate with the percentage of Litigating Subdivisions in that State that are

Participating Subdivisions and the percentage of Non-Litigating Subdivisions that are

both Primary Subdivisions and Participating Subdivisions, according to the criteria set

forth in Exhibit G, except that the calculations shall be performed as to that State alone.

For the avoidance of doubt and solely for the calculation in this subparagraph, the

Settling States Column of Exhibit H shall play no role. This is the sole circumstance in

which one Settling State will have a different Participation Tier than other Settling States.

6. The redetermination of the Participation Tier under Section VIII.C.2 shall

not affect payments already made or suspensions, offsets, or reductions already applied.

IX. Additional Restitution

A. Additional Restitution Amount. Pursuant to the schedule set forth in Exhibit M

and subject to the reduction specified in Section IX.B, the Settling Distributors shall pay an

Additional Restitution Amount to the Settling States listed in Exhibit N. Such funds shall be

paid, on the schedule set forth on Exhibit M, on the Payment Date for each relevant Payment

Year to such Settling States as allocated by the Settlement Fund Administrator pursuant to

Exhibit N.

B. Reduction of Additional Restitution Amount. In the event that any Non-Settling

States appear on Exhibit N, the amounts owed by Settling Distributors pursuant to this

Section IX shall be reduced by the allocations set forth on Exhibit N for any such Non-Settling

States.

C. Use of Funds. All funds paid as an Additional Restitution Amount shall be part of

the Compensatory Restitution Amount, shall be used for Opioid Remediation, except as allowed

by Section V.B.2, and shall be governed by the same requirements as specified in Section V.F.

X. Plaintiffs’ Attorneys’ Fees and Costs

The Agreement on Attorneys’ Fees, Expenses and Costs is set forth in Exhibit R and

incorporated herein by reference. The Agreement on the State Outside Counsel Fee Fund and

Agreement on the State Cost Fund Administration are set forth in Exhibit S and Exhibit T,

respectively, and are incorporated herein by reference.

XI. Release

A. Scope. As of the Effective Date, the Released Entities are hereby released and

forever discharged from all of the Releasors’ Released Claims. Each Settling State (for itself and

its Releasors) and Participating Subdivision hereby absolutely, unconditionally, and irrevocably

covenants not to bring, file, or claim, or to cause, assist or permit to be brought, filed, or claimed,

or to otherwise seek to establish liability for any Released Claims against any Released Entity in

any forum whatsoever. The releases provided for in this Agreement are intended by the Parties

to be broad and shall be interpreted so as to give the Released Entities the broadest possible bar

against any liability relating in any way to Released Claims and extend to the full extent of the

power of each Settling State and its Attorney General to release claims. This Agreement shall be

a complete bar to any Released Claim.

B. Claim-Over and Non-Party Settlement.

1. It is the intent of the Parties that:

a. Released Entities should not seek contribution or indemnification

(other than pursuant to an insurance contract), from other parties for their

payment obligations under this Agreement;

b. the payments made under this Agreement shall be the sole

payments made by the Released Entities to the Releasors involving, arising out

of, or related to Covered Conduct (or conduct that would be Covered Conduct if

engaged in by a Released Entity);

c. Claims by Releasors against non-Parties should not result in

additional payments by Released Entities, whether through contribution,

indemnification or any other means; and

d. the Agreement meets the requirements of the Uniform

Contribution Among Joint Tortfeasors Act and any similar state law or doctrine

that reduces or discharges a released party’s liability to any other parties.

The provisions of this Section XI.B are intended to be implemented consistent with these

principles. This Agreement and the releases and dismissals provided for herein are made in good

faith.

2. No Released Entity shall seek to recover for amounts paid under this

Agreement based on indemnification, contribution, or any other theory from a

manufacturer, pharmacy, hospital, pharmacy benefit manager, health insurer, third-party

vendor, trade association, distributor, or health care practitioner; provided that a Released

Entity shall be relieved of this prohibition with respect to any entity that asserts a Claim-

Over against it. For the avoidance of doubt, nothing herein shall prohibit a Released

Entity from recovering amounts owed pursuant to insurance contracts.

3. To the extent that, on or after the Reference Date, any Releasor enters

into a Non-Party Settlement, including in any bankruptcy case or through any plan of

reorganization (whether individually or as a class of creditors), the Releasor will include

(or in the case of a Non-Party Settlement made in connection with a bankruptcy case, will

cause the debtor to include), unless prohibited from doing so under applicable law, in the

Non-Party Settlement a prohibition on contribution or indemnity of any kind substantially

equivalent to that required from the Settling Distributors in Section XI.B.2, or a release

from such Non-Released Entity in favor of the Released Entities (in a form equivalent to

the releases contained in this Agreement) of any Claim-Over. The obligation to obtain

the prohibition and/or release required by this subsection is a material term of this

Agreement.

4. In the event that any Releasor obtains a judgment with respect to Non-

Party Covered Conduct against a Non-Released Entity that does not contain a prohibition

like that described in Section XI.B.3, or any Releasor files a Non-Party Covered Conduct

Claim against a Non-Released Entity in bankruptcy or a Releasor is prevented for any

reason from obtaining a prohibition/release in a Non-Party Settlement as provided in

Section XI.B.3, and such Non-Released Entity asserts a Claim-Over against a Released

Entity, the Released Entity shall be relieved of the prohibition in Section XI.B.2 with

respect to that Non-Released Entity and that Releasor and the Settling Distributors shall

take the following actions to ensure that the Released Entities do not pay more with

respect to Covered Conduct to Releasors or to Non-Released Entities than the amounts

owed under this Settlement Agreement by the Settling Distributors:

a. Settling Distributors shall notify that Releasor of the Claim-Over

within sixty (60) calendar days of the assertion of the Claim-Over or sixty (60)

calendar days of the Effective Date of this Settlement Agreement, whichever is

later;

b. Settling Distributors and that Releasor shall meet and confer

concerning the means to hold Released Entities harmless and ensure that they

are not required to pay more with respect to Covered Conduct than the amounts

owed by Settling Distributors under this Agreement;

c. That Releasor and Settling Distributors shall take steps sufficient

and permissible under the law of the State of the Releasor to hold Released

Entities harmless from the Claim-Over and ensure Released Entities are not

required to pay more with respect to Covered Conduct than the amounts owed

by Settling Distributors under this Agreement. Such steps may include, where

permissible:

(i) Filing of motions to dismiss or such other appropriate

motion by Settling Distributors or Released Entities, and supported by

Releasors, in response to any claim filed in litigation or arbitration;

(ii) Reduction of that Releasors’ Claim and any judgment it

has obtained or may obtain against such Non-Released Entity by

whatever amount or percentage is necessary to extinguish such Claim-

Over under applicable law, up to the amount that Releasor has obtained,

may obtain, or has authority to control from such Non-Released Entity;

(iii) Placement into escrow of funds paid by the Non-Released

Entities such that those funds are available to satisfy the Claim-Over;

(iv) Return of monies paid by Settling Distributors to that

Releasor under this Settlement Agreement to permit satisfaction of a

judgment against or settlement with the Non-Released Entity to satisfy

the Claim-Over;

(v) Payment of monies to Settling Distributors by that

Releasor to ensure they are held harmless from such Claim-Over, up to

the amount that Releasor has obtained, may obtain, or has authority to

control from such Non-Released Entity;

(vi) Credit to the Settling Distributors under this Agreement to

reduce the overall amounts to be paid under the Agreement such that

they are held harmless from the Claim-Over; and

(vii) Such other actions as that Releasor and Settling

Distributors may devise to hold Settling Distributors harmless from the

Claim-Over.

d. The actions of that Releasor and Settling Distributors taken

pursuant to paragraph (c) must, in combination, ensure Settling Distributors are

not required to pay more with respect to Covered Conduct than the amounts

owed by Settling Distributors under this Agreement.

e. In the event of any dispute over the sufficiency of the actions

taken pursuant to paragraph (c), that Releasor and the Settling Distributors may

seek review by the National Arbitration Panel, provided that, if the parties agree,

such dispute may be heard by the state court where the relevant Consent

Judgment was filed. The National Arbitration Panel shall have authority to

require Releasors to implement a remedy that includes one or more of the

actions specified in paragraph (c) sufficient to hold Released Entities fully

harmless. In the event that the Panel’s actions do not result in Released Entities

being held fully harmless, Settling Distributors shall have a claim for breach of

this Agreement by Releasors, with the remedy being payment of sufficient funds

to hold Settling Distributors harmless from the Claim-Over. For the avoidance

of doubt, the prior sentence does not limit or eliminate any other remedy that

Settling Distributors may have.

5. To the extent that the Claim-Over is based on a contractual indemnity,

the obligations under Section XI.B.4 shall extend solely to a Non-Party Covered Conduct

Claim against a pharmacy, clinic, hospital or other purchaser or dispenser of Products, a

manufacturer that sold Products, a consultant, and/or a pharmacy benefit manager or

other third-party payor. Each Settling Distributor shall notify the Settling States, to the

extent permitted by applicable law, in the event that any of these types of Non-Released

Entity asserts a Claim-Over arising out of contractual indemnity against it.

B. Indemnification and Contribution Prohibited. No Released Entity shall seek to

recover for amounts paid under this Agreement based on indemnification, contribution, or any

other theory, from a manufacturer, pharmacy, hospital, pharmacy benefit manager, health

insurer, third-party vendor, trade association, distributor, or health care practitioner. For the

avoidance of doubt, nothing herein shall prohibit a Released Entity from recovering amounts

owed pursuant to insurance contracts.

C. General Release. In connection with the releases provided for in this Agreement,

each Settling State (for itself and its Releasors) and Participating Subdivision expressly waives,

releases, and forever discharges any and all provisions, rights, and benefits conferred by any law

of any State or territory of the United States or other jurisdiction, or principle of common law,

which is similar, comparable, or equivalent to § 1542 of the California Civil Code, which reads:

General Release; extent. A general release does not extend to

claims that the creditor or releasing party does not know or suspect

to exist in his or her favor at the time of executing the release and

that if known by him or her, would have materially affected his or

her settlement with the debtor or released party.

A Releasor may hereafter discover facts other than or different from those which it knows,

believes, or assumes to be true with respect to the Released Claims, but each Settling State (for

itself and its Releasors) and Participating Subdivision hereby expressly waives and fully, finally,

and forever settles, releases and discharges, upon the Effective Date, any and all Released

Claims that may exist as of such date but which Releasors do not know or suspect to exist,

whether through ignorance, oversight, error, negligence or through no fault whatsoever, and

which, if known, would materially affect the Settling States’ decision to enter into this

Agreement or the Participating Subdivisions’ decision to participate in this Agreement.

D. Assigned Interest Waiver. To the extent that any Settling State has any direct or

indirect interest in any rights of a third-party that is a debtor under the Bankruptcy Code as a

result of a claim arising out of Covered Conduct by way of assignment or otherwise, including as

a result of being the beneficiary of a trust or other distribution entity, to assert claims against a

Settling Distributor (whether derivatively or otherwise), under any legal or equitable theory,

including for indemnification, contribution, or subrogation, such Settling State waives the right

to assert any such claim, or to receive a distribution or any benefit on account of such claim and

such claim, distribution, or benefit shall be deemed assigned to such Settling Distributor.

E. Res Judicata. Nothing in this Agreement shall be deemed to reduce the scope of

the res judicata or claim preclusive effect that the settlement memorialized in this Agreement,

and/or any Consent Judgment or other judgment entered on this Agreement, gives rise to under

applicable law.

F. Representation and Warranty. The signatories hereto on behalf of their respective

Settling States expressly represent and warrant that they have (or have obtained, or will obtain no

later than the Initial Participation Date) the authority to settle and release, to the maximum extent

of the State’s power, all Released Claims of (1) their respective Settling States, (2) all past and

present executive departments, state agencies, divisions, boards, commissions and

instrumentalities with the regulatory authority to enforce state and federal controlled substances

acts, and (3) any of their respective Settling State’s past and present executive departments,

agencies, divisions, boards, commissions and instrumentalities that have the authority to bring

Claims related to Covered Conduct seeking money (including abatement and/or remediation) or

revocation of a pharmaceutical distribution license. For the purposes of clause (3) above,

executive departments, agencies, divisions, boards, commissions, and instrumentalities are those

that are under the executive authority or direct control of the State’s Governor. Also for the

purposes of clause (3), a release from a State’s Governor is sufficient to demonstrate that the

appropriate releases have been obtained.

G. Effectiveness. The releases set forth in this Agreement shall not be impacted in

any way by any dispute that exists, has existed, or may later exist between or among the

Releasors. Nor shall such releases be impacted in any way by any current or future law,

regulation, ordinance, or court or agency order limiting, seizing, or controlling the distribution or

use of the Settlement Fund or any portion thereof, or by the enactment of future laws, or by any

seizure of the Settlement Fund or any portion thereof.

H. Cooperation. Releasors (1) will not encourage any person or entity to bring or

maintain any Released Claim against any Released Entity and (2) will reasonably cooperate with

and not oppose any effort by Settling Distributors to secure the prompt dismissal of any and all

Released Claims.

I. Non-Released Claims. Notwithstanding the foregoing or anything in the

definition of Released Claims, this Agreement does not waive, release or limit any criminal

liability, Claims for liability under tax law, Claims under securities law by a State Releasor as

investor, Claims against parties who are not Released Entities, Claims by private individuals, and

any claims arising under this Agreement for enforcement of this Agreement.

XII. Later Litigating Subdivisions

A. Released Claims against Released Entities. Subject to Section XII.B, the

following shall apply in the event a Later Litigating Subdivision in a Settling State maintains a

lawsuit for a Released Claim against a Released Entity after the Reference Date:

1. The Released Entity shall take ordinary and reasonable measures to defend

the action, including filing a Threshold Motion with respect to the Released Claim. The

Released Entity shall further notify the Settling State and Settlement Fund Administrator

immediately upon notice of a Later Litigating Subdivision bringing a lawsuit for a

Released Claim, and shall not oppose a Settling State’s submission in support of the

Threshold Motion.

2. The provisions of this Section XII.A.2 apply if the Later Litigating

Subdivision is a Primary Subdivision (except as provided in Section XII.A.2.f):

a. If a lawsuit including a Released Claim survives until the

Suspension Deadline for that lawsuit, the Settlement Fund Administrator shall

calculate the Suspension Amount applicable to the next Payment due from the

Settling Distributor(s) at issue and apportioned to the State of the Later Litigating

Subdivision and to Subdivisions in that State; provided, however, that the

Suspension Amount for a Payment Year cannot exceed the Suspension Cap. The

Suspension Amount shall be paid into the Settlement Fund Escrow account. If the

Suspension Amount exceeds the Suspension Cap for that Payment Year, then the

remaining amount will be paid into the Settlement Fund Escrow in the following

Payment Year, subject to the Suspension Cap for that Payment Year, and so forth

in each succeeding Payment Year until the entire Suspension Amount has been

paid into the Settlement Fund Escrow or the Released Claim is resolved, as

provided below, whichever comes first. A suspension does not apply during the

pendency of any appeal dismissing the lawsuit for a Released Claim in whole.

b. If the Released Claim is resolved with finality without requirement

of payment by the Released Entity, the placement of any remaining balance of the

Suspension Amount into the Settlement Fund Escrow shall cease and the

Settlement Fund Administrator shall immediately transfer amounts in the

Settlement Fund Escrow on account of the suspension to the Settling State at issue

and its Participating Subdivisions. The lawsuit will not cause further suspensions

unless the Released Claim is reinstated upon further review, legislative action, or

otherwise.

c. If the Released Claim is resolved with finality on terms requiring

payment by the Released Entity, the Settlement Fund Administrator will transfer

the amounts in the Settlement Fund Escrow on account of the suspension to the

Settling Distributor(s) at issue necessary to satisfy the payment obligation of the

Released Entity to the relevant Later Litigating Subdivision. If any balance

remains in the Settlement Fund Escrow on account of the suspension after transfer

of the amount necessary to satisfy the payment obligation, the Settlement Fund

Administrator will immediately transfer the balance to the Settling State at issue

and its Participating Subdivisions. If the payment obligation of the Released

Entity to the relevant Later Litigating Subdivision exceeds the amounts in the

Settlement Fund Escrow on account of the suspension, the Settling Distributor at

issue shall receive a dollar-for-dollar offset, subject to the yearly Offset Cap, for

the excess amount against its obligation to pay its allocable share of Annual

Payments that would be apportioned to the Settling State at issue and to its

Subdivisions. The offset shall be applied as follows: first against the Settling

Distributor’s allocable share of the Annual Payment due in Payment Year 18, up

to the Offset Cap for that Payment Year, with any remaining amounts above the

Offset Cap applied against the Settling Distributor’s allocable share of the Annual

Payment due in Payment Year 17, up to the Offset Cap for that Payment Year,

and so forth for each preceding Payment Year until the entire amount to be offset

has been applied or no future Payment Years remain.

d. If the lawsuit asserting a Released Claim is resolved with finality

on terms requiring payment by the Released Entity, and the Released Claim did

not give rise to a suspension of any Settling Distributor’s portion of any Annual

Payments (e.g., because it was resolved during Payment Years 1 or 2, during

which all Settling States are deemed eligible for Incentive Payment A and thus no

suspension of payments took place, as provided by Section XII.B), the Settling

Distributor at issue shall receive a dollar-for-dollar offset, subject to the yearly

Offset Cap, for the amount paid. The offset shall be applied against the relevant

Settling Distributor’s allocable portion of the Annual Payments starting in

Payment Year 18 and working backwards as set forth in Section XII.A.2.c. If the

lawsuit for a Released Claim is otherwise resolved by the Released Entity,

without the Settling Distributor filing a Threshold Motion despite an opportunity

to do so, and the Released Claim did not give rise to a suspension of any Settling

Distributor’s portion of any Annual Payments, the Settling Distributor at issue

shall not receive any offset for the amount paid.

e. If more than one Primary Subdivision in a Settling State becomes a

Later Litigating Subdivision, a single Suspension Cap applies and the total

amounts deducted from the share of the Annual Payment allocated to the Settling

State and its Participating Subdivisions in a given Payment Year cannot exceed

the Suspension Cap. For the avoidance of doubt, an individual Primary

Subdivision shall not trigger more than one suspension regardless if it (or any of

its officials) is named as multiple plaintiffs in the same lawsuit.

f. This Section XII.A.2 shall not apply with respect to a Primary

Subdivision that is either (i) a Later Litigating Subdivision under clause (3) of the

definition of that term solely because a legislative Bar or legislative Case-Specific

Resolution applicable as of the Reference Date is invalidated by judicial decision

after the Reference Date or (ii) a Later Litigating Subdivision under clause (4) of

the definition of that term. Such a Primary Subdivision shall be treated as a

General Purpose Government under Section XII.A.3.

3. The terms of this Section XII.A.3 apply if a the Later Litigating

Subdivision is not a Primary Subdivision (except for Primary Subdivisions referenced in

Section XII.A.2.f) but is a General Purpose Government, School District, Health District

or Hospital District: if the Released Claim is resolved with finality on terms requiring

payment by the Released Entity, the Settling Distributor at issue shall receive a dollar-

for-dollar offset, subject to the yearly Offset Cap, for the amount paid against its portion

of the obligation to make Annual Payments that would be apportioned to the Settling

State at issue and to its Subdivisions. The offset shall be applied as follows: first against

the relevant Settling Distributor’s allocable share of the Annual Payment due in Payment

Year 18, up to the Offset Cap for that Payment Year, with any remaining amounts above

the Offset Cap applied against the Payment due in Payment Year 17, up to the Offset Cap

for that Payment Year, and so forth for each preceding Payment Year until the entire

amount to be offset has been applied or no future Payment Year remains. If the Released

Claim is resolved on terms requiring payment during the first two (2) Payment Years, in

no case will any amounts be offset against the amounts due in Payment Years 1 and 2.

4. In no event shall the total of Suspension Amounts and offsets pursuant to

this Section applicable to a Settling State in a Payment Year for that Payment Year

exceed the Offset Cap for that State. If, in a Payment Year, the total of Suspension

Amounts and offsets applicable to a Settling State exceeds the Offset Cap, the Suspension

Amounts shall be reduced so that the total of Suspension Amounts and offsets equals the

Offset Cap.

5. For the avoidance of doubt, any offset pursuant to this Section XII in a

Settling State that is not eligible for Incentive Payment A shall continue to apply even if

the Settling State at issue subsequently becomes eligible for Incentive Payment A.

6. “Terms requiring payment” shall mean (i) a final monetary judgment or

(ii) a settlement; provided that the Released Entity sought the applicable State Attorney

General’s consent to the settlement and such consent was either obtained or unreasonably

withheld. Should the judgment or settlement resolve claims that are not Released Claims,

the offset shall be for the Released Claims portion only, which shall be distinguishable in

the judgment or settlement.

B. Exceptions.

1. Section XII.A shall not apply where the Settling State at issue meets the

eligibility criteria for and is entitled to Incentive Payment A for the Payment Year at

issue, except as expressly provided therein. For the avoidance of doubt, because all

Settling States are deemed eligible for Incentive Payment A for Payment Years 1 and 2

under Section IV.F.1.c, a suspension of Payments under Section XII.A.2 shall not apply

to any Settling States for those Payment Years.

2. An offset under Section XII.A.2 and Section XII.A.3 shall not apply

where the Later Litigating Subdivision opted out of a Settlement Class Resolution in the

Settling State at issue that was in full force and effect in that Settling State as of the due

date of the payment for Payment Year 2 and remains in full force and effect; provided

that an offset relating to that Subdivision may apply under Section XIII.

3. Section XII.A shall not apply where the Later Litigating Subdivision seeks

less than $10 million, or so long as its total claim is reduced to less than $10 million, in

the lawsuit for a Released Claim at issue.

4. An offset under Section XII.A.3 shall not apply where the applicable

Participation Tier is Participation Tier 1 and the population of the Later Litigating

Subdivision is under 10,000.

5. If the applicable Participation Tier is Participation Tier 2 or higher, and

the Later Litigating Subdivision has a population less than 10,000, the offset under

Section XII.A.3 shall only apply to amounts paid pursuant to a settlement or judgment

that are over $10 million per case or resolution. Any type of consolidated or aggregated

or joined or class actions, however styled, shall be considered a single case, and any

resolutions that occur within a sixty (60) calendar day period of each other and involve

Later Litigating Subdivisions that share common counsel and/or are created by the same

or related judgments, settlement agreements, or other instruments or are conditioned upon

one another, shall be considered a single resolution. For the avoidance of doubt, any such

case or resolution shall have only a single $10,000,000 exemption from the offset under

Section XII.A.3.

C. No Effect on Other Provisions. A suspension or offset under Section XII.A shall

not affect the Injunctive Relief Terms or the Consent Judgment.

D. No Effect on Other States. A suspension or offset under Section XII.A applicable

to one State shall not affect the allocation or payment of the Annual Payment to other Settling

States.

XIII. Reductions/Offsets

A. Non-Settling States. Non-Settling States shall not be eligible for any payments or

have any rights in connection with this Agreement. Accordingly, the stated maximum dollar

amounts of the payments specified in Exhibit M are reduced by the aggregate Overall Allocation

Percentage of Non-Settling States as set forth in Exhibit F.

B. Offset Relating to Incentive Payment A. If a Settling State is not eligible for

Incentive Payment A at the third Payment Date, the Settling Distributors shall receive an offset

with respect to that State.

The offset shall be the dollar amount difference between (1) the total

amount of the Incentive Payment A due from the Settling Distributors on the Effective Date and

on the Payment Date for Payment Year 2 allocated to that State and its Participating

Subdivisions, and (2) the total amount of Incentive Payments B and C that would have been due

from the Settling Distributors on the Effective Date and on the Payment Date for Payment Year 2

so allocated but for the State’s deemed eligibility for Incentive Payment A. The offset shall be

applied in equal installments to reduce the Annual Payments for Payment Years 3 through 7 that

would be apportioned to that State and to its Subdivisions, and shall remain applicable even if

that State subsequently becomes eligible for Incentive Payment A.

C. Settlement Class Resolution Opt Outs. If a Settling State is eligible for Incentive

Payment A on the basis of a Settlement Class Resolution, and a Primary Subdivision that opted

out of the Settlement Class Resolution maintains a lawsuit asserting a Released Claim against a

Released Entity, the following shall apply. If the lawsuit asserting a Released Claim either

survives a Threshold Motion or has an unresolved Threshold Motion fewer than sixty (60)

calendar days prior to the scheduled start of a trial involving a Released Claim, and is resolved

with finality on terms requiring payment by the Released Entity, the Settling Distributor at issue

shall receive a dollar-for-dollar offset for the amount paid against its obligation to make

remaining Incentive Payment A payments that would be apportioned to that State and to its

Subdivisions. For the avoidance of doubt, an offset shall not be applicable under this subsection

if it is applicable under Section XII.A with respect to the Subdivision at issue.

D. Revoked Bar, Settlement Class Resolution, or Case-Specific Resolution. If the

Settling Distributors made any Annual Payments that included any incentive payments earned as

a result of the existence of a Bar, Settlement Class Resolution, or Case-Specific Resolution in a

Settling State, and there is subsequently a Revocation Event with respect to that Bar, Settlement

Class Resolution, or Case-Specific Resolution after the determination of the amount of such

Annual Payment, the Settling Distributors shall receive a dollar-for-dollar offset against the

portion of remaining Annual Payments that would be allocated to that State and its Participating

Subdivisions. This offset will be calculated as the dollar amount difference between (1) the total

amount of incentive payments paid by the Settling Distributors by virtue of the Bar, Settlement

For purposes of this provision, in determining whether a Settling State would not be eligible for Incentive

Payment A for Payment Year 3, the criteria set forth in Section IV.F.1.b shall apply to that Payment Year.

Class Resolution, or Case-Specific Resolution subject to the Revocation Event and (2) the total

amount of incentive payments that would have been due from the Settling Distributors during

that time had the Bar, Settlement Class Resolution, or Case-Specific Resolution subject to the

Revocation Event not been in effect. The amount of incentive payments that would have been

due, referenced in clause (2) above, will be calculated one hundred eighty (180) calendar days

after the Revocation Event; for purposes of calculating the amount of incentive payments that

would have been due, any relevant Subdivision shall be included as a Participating Subdivision

if: (1) its Released Claims are extinguished by any subsequent Bar, Settlement Class Resolution,

or Case-Specific Resolution in effect as of the date of such calculation, or (2) it becomes a

Participating Subdivision (in addition to all other Participating Subdivisions) prior to the date of

such calculation.

E. Certain Taxes. Amounts paid by a Settling Distributor under an Opioid Tax in a

Settling State in a Payment Year shall give rise to a dollar-for-dollar offset against that Settling

Distributor’s obligation to pay its share of the Annual Payment in that Payment Year that would

be allocated to the taxing State or its Participating Subdivisions. If such amounts paid exceed

that Settling Distributor’s allocable share of the Annual Payment allocable to the taxing State or

its Participating Subdivisions in that Payment Year, the excess shall carry forward as an offset

against its allocable share of remaining Annual Payments that would be allocated to the taxing

State or its Participating Subdivisions

F. Not Subject to Suspension Cap or Offset Cap. For the avoidance of doubt, neither

the Suspension Cap nor the Offset Cap apply to the offsets and reductions set forth in this

Section XIII.

XIV. Miscellaneous

A. Population of General Purpose Governments. The population figures for General

Purpose Governments shall be the published U.S. Census Bureau’s population estimates for

July 1, 2019, released May 2020. These population figures shall remain unchanged during the

term of this Agreement.

B. Population of Special Districts. For any purpose in this Agreement in which the

population of a Special District is used other than Section IV.F.1.b: (a) School Districts’

population will be measured by the number of students enrolled who are eligible under the

Individuals with Disabilities Education Act (“IDEA”) or Section 504 of the Rehabilitation Act of

1973; (b) Health Districts’ and Hospital Districts’ population will be measured at twenty-five

percent (25%) of discharges; and (c) all other Special Districts’ (including Fire Districts’ and

Library Districts’) population will be measured at ten percent (10%) of the population served.

The Settling Distributors and the Enforcement Committee shall meet and confer in order to agree

on data sources for purposes of this Section prior to the Preliminary Agreement Date.

The estimates for counties and parishes were accessed at https://www.census.gov/data/datasets/time-

series/demo/popest/2010s-countiestotal.html. The estimates for cities and towns can currently be found at

https://www.census.gov/data/datasets/time-series/demo/popest/2010s-total-cities-and-towns.html.

C. Population Associated with Sheriffs. For any purpose in this Agreement in which

the population associated with a lawsuit by a sheriff is used, the population will be measured at

twenty percent (20%) of the capacity of the jail(s) operated by the sheriff.

D. No Admission. The Settling Distributors do not admit liability or wrongdoing.

Neither this Agreement nor the Consent Judgments shall be considered, construed or represented

to be (1) an admission, concession or evidence of liability or wrongdoing or (2) a waiver or any

limitation of any defense otherwise available to the Settling Distributors.

E. Most-Favored-Nation Provision.—Settling States.

1. If, after the Reference Date, any Settling Distributor enters into any

settlement agreement with any Non-Settling State that resolves Claims similar in scope to

the Claims released by a Settling State under this Agreement on overall payment terms

that are more favorable to such Non-Settling State than the overall payment terms of the

Agreement (after due consideration of relevant differences in population or other

appropriate factors), then the Settling States, individually or collectively, may elect to

seek review, pursuant to Section XIV.E.3, of the overall payment terms of this

Agreement and the Non-Settling State agreement so that such Settling State(s) may

obtain, with respect to that Settling Distributor, overall payment terms at least as

favorable as those obtained by such Non-Settling State. “Overall payment terms” refers

to consideration of all payment terms of the two agreements, taken together, including,

but not limited to the amount of payments, the timing of payments, and conditions or

contingencies on payments.

2. For any settlement with a Non-Settling State involving Released Claims

that is entered into after the Reference Date, Settling Distributors shall provide the

Enforcement Committee with a copy of the settlement agreement or relevant consent

judgment within thirty (30) calendar days of the consummation of such settlement. The

Enforcement Committee will promptly distribute such copy to all Settling States.

3. In the event that one or more Settling State(s) believes that the overall

payment terms of an agreement by a Settling Distributor with a Non-Settling State are

more favorable to the Non-Settling State, when compared based on the totality of the

considerations set forth in Section XIV.E.1, the Settling State(s) and the Settling

Distributor shall engage in the following process:

a. The Settling State(s) shall provide notice, within sixty (60)

calendar days of the date on which a settlement agreement or consent judgment is

provided to the Enforcement Committee, to the Settling Distributor of its (their)

intent to seek revision of this Agreement to provide payment terms that are, on an

overall basis, as favorable as those obtained by the Non-Settling State. Such

notice shall be confidential and not disclosed publicly to the extent allowed by

law and shall state, in detail, the basis for the State’s (States’) belief that it (they)

is entitled to a revision of the Agreement.

b. The Settling Distributor shall, within thirty (30) calendar days,

provide a response to the Settling State(s), explaining its position, in detail, as to

whether the Settling State(s) is entitled to more favorable overall payment terms

than those provided for in this Agreement.

c. In the event the Settling State(s) and Settling Distributor do not

reach agreement as to the application of Section XIV.E.1, the Settling State(s)

may petition the National Arbitration Panel to seek a ruling from the Panel as to

the applicability of Section XIV.E.1, provided that the Settling State(s) may seek

such review only if at least five (5) Settling States co-sign the petition. The Panel

shall consider submissions and argument by the parties pursuant to the procedures

set forth in Section VI.F.2.

d. The Settling State(s) and the Settling Distributor shall be bound by

the determination of the National Arbitration Panel.

4. This Section XIV.E does not apply to, and there is no ability of any

Settling State to seek or obtain revision of this Agreement based on, any Non-Settling

State agreement with any Settling Distributor that is entered into with: (a) a Non-Settling

State after a date sixty (60) calendar days prior to the scheduled start date of a trial

between any Settling Distributor and the Non-Settling State or any severed or bifurcated

portion thereof, provided that, where, in order to complete a settlement, a Non-Settling

State and a Settling Distributor jointly request an adjournment of the scheduled start date

of a trial within sixty (60) days of that date, this exception will apply as if the trial date

had not been adjourned; (b) a Non-Settling State that previously litigated to judgment a

case related to opioids against any manufacturer, distributor, or pharmacy; or (c) a Non-

Settling State that has obtained any court order or judicial determination that grants

judgment (in whole or in part) against any Settling Distributor. For avoidance of doubt,

the National Arbitration Panel shall have no power to review agreements described in this

paragraph.

5. This Section XIV.E does not apply to, and there is no ability of any

Settling State to seek or obtain revision of this Agreement based on, any agreement

between a Settling Distributor and (a) federally-recognized tribe(s) or (b) West Virginia

subdivisions or (c) Non-Participating Subdivisions. This Section XIV.E will not apply to

any agreement entered into more than eighteen (18) months after the Reference Date.

F. Tax Cooperation and Reporting.

1. Upon request by any Settling Distributor, the Settling States and

Participating Subdivisions agree to perform such further acts and to execute and deliver

such further documents as may be reasonably necessary for the Settling Distributors to

establish the statements set forth in Section V.E.3 to the satisfaction of their tax advisors,

their independent financial auditors, the Internal Revenue Service, or any other

governmental authority, including as contemplated by Treasury Regulations

Section 1.162-21(b)(3)(ii) and any subsequently proposed or finalized relevant

regulations or administrative guidance.

2. Without limiting the generality of Section XIV.F.1, each Settling State and

Participating Subdivision shall cooperate in good faith with any Settling Distributor with

respect to any tax claim, dispute, investigation, audit, examination, contest, litigation, or

other proceeding relating to this Agreement.

3. The Designated State, as defined in Section I.P as New York, on behalf of

all Settling States and Participating Subdivisions, shall designate one of its officers or

employees to act as the “appropriate official” within the meaning of Treasury Regulations

Section 1.6050X-1(f)(1)(ii)(B) (the “Appropriate Official”). The Designated State shall

direct and ensure that the Appropriate Official timely (a) files (i) at the time this

Agreement becomes binding on the Parties, an IRS Form 1098-F in the form attached as

Exhibit U, Exhibit V, and Exhibit W with respect to each of the Settling Distributors and

(ii) any legally required returns or amended returns with any applicable governmental

authority, or any returns requested by the respective Settling Distributors, and (b)

provides to each of the Settling Distributors a copy of (i) the IRS Form 1098-F filed with

respect to such Settling Distributor and (ii) any legally required written statement

pursuant to any applicable law and any other document referred to in clause (a)(ii) above.

Any such form, return, or statement shall be prepared and filed in a manner fully

consistent with Section V.E.3.

4. The Settling States and Participating Subdivisions agree that any return,

amended return, or written statement filed or provided pursuant to paragraph 3, and any

similar document, shall be prepared and filed in a manner consistent with reporting each

Settling Distributor’s portion of the Global Settlement Amount as the “Total amount to

be paid” pursuant to this Agreement in Box 1 of IRS Form 1098-F and each Settling

Distributor’s portion of the Compensatory Restitution Amount as

“Restitution/remediation amount” in Box 2 of IRS Form 1098-F, as reflected in the

attached Exhibit U, Exhibit V, and Exhibit W. If the Designated State or Appropriate

Official shall be required to file any return, amended return, or written statement

contemplated by this Section XIV.F other than an IRS Form 1098-F in the form attached

as Exhibit U, Exhibit V, and Exhibit W, the Designated State shall direct and ensure that

the Appropriate Official provides to each Settling Distributor a draft of such return,

amended return, or written statement in respect of such Settling Distributor no later than

sixty (60) calendar days prior to the due date thereof and shall accept and reflect any

reasonable comments of such Settling Distributor on the return, amended return, or

written statement in respect of such Settling Distributor.

5. For the avoidance of doubt, neither the Settling Distributors nor the

Settling States and Participating Subdivisions make any warranty or representation to any

Settling State, Participating Subdivision, or Releasor as to the tax consequences of the

payment of the Compensatory Restitution Amount (or any portion thereof).

G. No Third-Party Beneficiaries. Except as expressly provided in this Agreement,

no portion of this Agreement shall provide any rights to, or be enforceable by, any person or

entity that is not a Settling State or Released Entity. No Settling State may assign or otherwise

convey any right to enforce any provision of this Agreement.

H. Calculation. Any figure or percentage referred to in this Agreement shall be

carried to seven decimal places.

I. Construction. None of the Parties and no Participating Subdivision shall be

considered to be the drafter of this Agreement or of any of its provisions for the purpose of any

statute, case law, or rule of interpretation or construction that would or might cause any

provision to be construed against the drafter of this Agreement. The headings of the provisions

of this Agreement are not binding and are for reference only and do not limit, expand, or

otherwise affect the contents or meaning of this Agreement.

J. Cooperation. Each Party and each Participating Subdivision agrees to use its best

efforts and to cooperate with the other Parties and Participating Subdivisions to cause this

Agreement and the Consent Judgments to become effective, to obtain all necessary approvals,

consents and authorizations, if any, and to execute all documents and to take such other action as

may be appropriate in connection herewith. Consistent with the foregoing, each Party and each

Participating Subdivision agrees that it will not directly or indirectly assist or encourage any

challenge to this Agreement or any Consent Judgment by any other person, and will support the

integrity and enforcement of the terms of this Agreement and the Consent Judgments.

K. Entire Agreement. This Agreement, including its exhibits and any other

attachments, embodies the entire agreement and understanding between and among the Parties

and Participating Subdivisions relating to the subject matter hereof and supersedes (1) all prior

agreements and understandings relating to such subject matter, whether written or oral and (2) all

purportedly contemporaneous oral agreements and understandings relating to such subject

matter.

L. Execution. This Agreement may be executed in counterparts and by different

signatories on separate counterparts, each of which shall be deemed an original, but all of which

shall together be one and the same Agreement. One or more counterparts of this Agreement may

be delivered by facsimile or electronic transmission with the intent that it or they shall constitute

an original counterpart hereof. One or more counterparts of this Agreement may be signed by

electronic signature.

M. Good Faith and Voluntary Entry. Each Party warrants and represents that it

negotiated the terms of this Agreement in good faith. Each of the Parties and Participating

Subdivisions warrants and represents that it freely and voluntarily entered into this Agreement

without any degree of duress or compulsion. The Parties and Participating Subdivisions state

that no promise of any kind or nature whatsoever (other than the written terms of this

Agreement) was made to them to induce them to enter into this Agreement.

N. Legal Obligations. Nothing in this Agreement shall be construed as relieving any

Settling Distributor of the obligation to comply with all state and federal laws, regulations or

rules, nor shall any of the provisions herein be deemed to be permission to engage in any acts or

practices prohibited by such laws, regulations, or rules. Except with respect to the Injunctive

Relief Terms, in the event of a conflict between this Agreement and any requirement or

requirements of federal, state, or local laws, such that a Settling Distributor cannot comply with

this Agreement without violating such a requirement or requirements, the Settling Distributor

shall document such conflicts and notify the Attorney(s) General of the relevant Settling State(s)

that it intends to comply with the requirement or requirements to the extent necessary to

eliminate the conflict. With respect to the Injunctive Relief Terms, in the event of such a

conflict, the procedures set forth in Section III.X of the Injunctive Relief Terms will be followed.

O. No Prevailing Party. The Parties and Participating Subdivisions each agree that

they are not the prevailing party in this action, for purposes of any claim for fees, costs, or

expenses as prevailing parties arising under common law or under the terms of any statute,

because the Parties and Participating Subdivisions have reached a good faith settlement. The

Parties and Participating Subdivisions each further waive any right to challenge or contest the

validity of this Agreement on any ground, including, without limitation, that any term is

unconstitutional or is preempted by, or in conflict with, any current or future law. Nothing in the

previous sentence shall modify, or be construed to conflict with, Section XIV.M.

P. Non-Admissibility. The settlement negotiations resulting in this Agreement have

been undertaken by the Parties and by certain representatives of the Participating Subdivisions in

good faith and for settlement purposes only, and no evidence of negotiations or discussions

underlying this Agreement shall be offered or received in evidence in any action or proceeding

for any purpose. This Agreement shall not be offered or received in evidence in any action or

proceeding for any purpose other than in an action or proceeding arising under or relating to this

Agreement.

Q. Notices. All notices or other communications under this Agreement shall be in

writing (including, but not limited to, electronic communications) and shall be given to the

recipients indicated below:

For the Attorney(s) General:

Ashley Moody,

Attorney General

State of Florida

The Capitol,

PL-01

Tallahassee, FL 32399

Josh Stein, Attorney General

North Carolina Department of Justice

Attn: Daniel Mosteller

PO Box 629

Raleigh, NC 27602

[email protected]

For the Plaintiffs’ Executive Committee:

Paul F. Farrell

Farrell Law

P.O. Box 1180

Huntington, WV 25714-1180

Jayne Conroy

Simmons Hanly Conroy LLC

112 Madison Avenue, 7

Floor

New York, NY 10016-7416

[email protected]

Joseph F. Rice

Motley Rice LLC

28 Bridgeside Blvd.

Mount Pleasant, SC 29464

[email protected]

Peter Mougey

Levin Papantonio Rafferty

316 South Baylen St.

Pensacola, FL 32502

[email protected]

Paul J. Geller

Robbins Feller Rudman & Dowd LLP

120 East Palmetto Park Road

Boca Raton, FL 33432

[email protected]

For Settling Distributors:

Copy to AmerisourceBergen Corporation’s attorneys at:

Attn: Michael T. Reynolds

Cravath, Swaine & Moore

825 Eighth Avenue

New York, NY 10019

[email protected]

Copy to Cardinal Health, Inc.’s attorneys at:

Attn: Jeffrey M. Wintner, Esq.

Attn: Elaine P. Golin, Esq.

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

[email protected]

Attn: JB Kelly, Esq.

Cozen O’Connor

1200 19th ST NW

Washington DC 20036

[email protected]

Copy to McKesson Corporation’s attorneys at:

Attn: Thomas J. Perrelli

Jenner & Block LLP

1099 New York Ave., NW, Suite 900

Washington, D.C. 20001

[email protected]

Any Party or the Plaintiffs’ Executive Committee may change or add the contact information of

the persons designated to receive notice on its behalf by notice given (effective upon the giving

of such notice) as provided in this Section XIV.P.

R. No Waiver. The waiver of any rights conferred hereunder shall be effective only

if made by written instrument executed by the waiving Party or Parties. The waiver by any Party

of any breach of this Agreement shall not be deemed to be or construed as a waiver of any other

breach, whether prior, subsequent, or contemporaneous, nor shall such waiver be deemed to be

or construed as a waiver by any other Party.

S. Preservation of Privilege. Nothing contained in this Agreement or any Consent

Judgment, and no act required to be performed pursuant to this Agreement or any Consent

Judgment, is intended to constitute, cause, or effect any waiver (in whole or in part) of any

attorney-client privilege, work product protection, or common interest/joint defense privilege,

and each Party and Participating Subdivision agrees that it shall not make or cause to be made in

any forum any assertion to the contrary.

T. Successors.

1. This Agreement shall be binding upon, and inure to the benefit of, the

Settling Distributors and their respective successors and assigns.

2. A Settling Distributor shall not, in one (1) transaction or a series of related

transactions, sell or transfer U.S. assets having a fair market value equal to twenty-five

percent (25%) or more of the consolidated assets of such Settling Distributor (other than

sales or transfers of inventories, or sales or transfers to an entity owned directly or

indirectly by such Settling Distributor) where the sale or transfer is announced after the

Reference Date, is not for fair consideration, and would foreseeably and unreasonably

jeopardize such Settling Distributor’s ability to make the payments under this Agreement

that are due on or before the third Payment Date following the close of a sale or transfer

transaction, unless the Settling Distributor obtains the acquiror’s agreement that it will be

either a guarantor of or successor to the percentage of that Settling Distributor’s

remaining Payment Obligations under this Agreement equal to the percentage of the

Settling Distributor’s consolidated assets being sold or transferred in such

transaction. Percentages under this section shall be determined in accordance with

United States generally accepted accounting principles and as of the date of the Settling

Distributor’s most recent publicly filed consolidated balance sheet prior to the date of

entry into the sale or transfer agreement at issue. This Section XIV.T shall be

enforceable solely by the Enforcement Committee, and any objection under this Section

XIV.T not raised within twenty (20) calendar days of the announcement of the relevant

transaction is waived. Any dispute under this Section XIV.T shall be a National Dispute

as described in Section VI.F.2 and must be raised exclusively with the National

Arbitration Panel as described therein within twenty (20) calendar days of the

announcement, and the sole remedy shall be an order enjoining the transaction.

3. A Settling Distributor shall not, in one (1) transaction or a series of related

transactions, sell or transfer (other than sales or transfers to an entity owned directly or

indirectly by such Settling Distributor) more than twenty-five percent (25%) of the

distribution centers within its Full-Line Wholesale Pharmaceutical Distribution Business

(as that term is defined in the Injunctive Relief Terms) where the sale or transfer is

announced after the Reference Date, unless the Settling Distributor obtains the acquiror’s

agreement that it will be bound by the Injunctive Relief Terms.

U. Modification, Amendment, Alteration. After the Reference Date, any

modification, amendment, or alteration of this Agreement by the Parties shall be binding only if

evidenced in writing signed by the Settling Distributor to which the modification, amendment, or

alteration applies, if the change applies to less than all Settling Distributors, along with the

signatures of at least thirty-seven of those then serving Attorneys General of the Settling States

along with a representation from each Attorney General that either: (1) the advisory committee

or similar entity established or recognized by that Settling State (either pursuant to Section

V.E.2.d, by a State-Subdivision Agreement, or by statute) voted in favor of the modification,

amendment or alteration of this Agreement including at least one member appointed by the

Participating Subdivisions listed on Exhibit G; or (2) in States without any advisory committee,

that 50.1% (by population) of the Participating Subdivisions listed on Exhibit G expressed

approval of the modification, amendment, or alteration of this Agreement in a writing.

V. Termination.

1. Unless otherwise agreed to by each of the Settling Distributors and the

Settling State in question, this Agreement and all of its terms (except Section XIV.P and

any other non-admissibility provisions, which shall continue in full force and effect) shall

be canceled and terminated with respect to the Settling State, and the Agreement and all

orders issued by the courts in the Settling State pursuant to the Agreement shall become

null and void and of no effect if one or more of the following conditions applies:

a. a Consent Judgment approving this Agreement without

modification of any of the Agreement’s terms has not been entered as to the

Settling State by a court of competent jurisdiction on or before one hundred

eighty (180) calendar days after the Effective Date;

b. this Agreement or the Consent Judgment as to that Settling State

has been disapproved by a court of competent jurisdiction to which it was

presented for approval and/or entry (or, in the event of an appeal from or review

of a decision of such a court to approve this Agreement and the Consent

Judgment, by the court hearing such appeal or conducting such review), and the

time to appeal from such disapproval has expired, or, in the event of an appeal

from such disapproval, the appeal has been dismissed or the disapproval has been

affirmed by the court of last resort to which such appeal has been taken and such

dismissal or disapproval has become no longer subject to further appeal

(including, without limitation, review by the United States Supreme Court); or

2. If this Agreement is terminated with respect to a Settling State for

whatever reason pursuant to Section XIV.V.1, then:

a. an applicable statute of limitation or any similar time requirement

(excluding any statute of repose) shall be tolled from the date the Settling State

signed this Agreement until the later of the time permitted by applicable law or

for one year from the date of such termination, with the effect that the Settling

Distributors and the Settling State in question shall be in the same position with

respect to the statute of limitation as they were at the time the Settling State filed

its action; and

b. the Settling Distributors and the Settling State in question shall

jointly move the relevant court of competent jurisdiction for an order reinstating

the actions and claims dismissed pursuant to the terms of this Agreement

governing dismissal, with the effect that the Settling Distributors and the Settling

State in question shall be in the same position with respect to those actions and

claims as they were at the time the action or claim was stayed or dismissed.

3. Unless each of the Settling Distributors and the Enforcement Committee

agrees otherwise, this Agreement, with the exception of the Injunctive Relief Terms that

have their own provisions on duration, shall terminate as to all Parties as of the Payment

Date for Payment Year 18, provided that all Settling Distributors that as of that date are

not Bankrupt Settling Distributors have performed their Payment obligations under the

Agreement as of that date. If fewer than all Settling Distributors that as of that date are

not Bankrupt Settling Distributors have performed their Payment obligations under the

Agreement as of that date, then the Agreement shall terminate as of that date as to any

Settling Distributor that has performed its Payment obligations under the Agreement and

the Agreement (a) shall terminate as to each of the remaining Settling Distributors that as

of that date is not a Bankrupt Settling Distributor at such time as each performs its

Payment obligations under the Agreement and (b) shall terminate as to all Parties at such

time as all Settling Distributors that are not Bankrupt Settling Distributors have

performed their Payment obligations under the Agreement. Notwithstanding any other

provision in this Section XIV.V.3 or in this Agreement, all releases under this Agreement

will remain effective despite any termination under this Section XIV.V.3.

W. Governing Law. Except (1) as otherwise provided in this Agreement or (2) as

necessary, in the sole judgment of the National Arbitration Panel, to promote uniformity of

interpretation for matters within the scope of the National Arbitration Panel’s authority, this

Agreement shall be governed by and interpreted in accordance with the respective laws of the

Settling State, without regard to the conflict of law rules of such Settling State, that is seeking to

enforce the Agreement against Settling Distributor(s) or against which Settling Distributor(s) are

seeking enforcement. Notwithstanding any other provision in this subsection on governing law,

any disputes relating to the Settlement Fund Escrow shall be governed by and interpreted in

accordance with the law of the state where the escrow agent has its primary place of business.

X. Bankruptcy. The following provisions shall apply if a Settling Distributor enters

Bankruptcy (a Settling Distributor which does so and takes the actions, or is otherwise subjected

to the actions, referred to in (i) and/or (ii) herein being referred to as a “Bankrupt Settling

Distributor”) and (i) the Bankrupt Settling Distributor’s bankruptcy estate recovers, pursuant to

11 U.S.C. § 550, any payments made under this Agreement, or (ii) this Agreement is deemed

executory and is rejected by such Settling Distributor pursuant to 11 U.S.C. § 365:

1. In the event that both a number of Settling States equal to at least seventy-

five percent (75%) of the total number of Settling States and Settling States having

aggregate Overall Allocation Percentages as set forth on Exhibit F equal to at least

seventy-five percent (75%) of the total aggregate Overall Allocation Percentages

assigned to all Settling States deem (by written notice to the Settling Distributors other

than the Bankrupt Settling Distributor) that the financial obligations of this Agreement

have been terminated and rendered null and void as to such Bankrupt Settling Distributor

(except as provided in Section XIV.X.1.a) due to a material breach by such Bankrupt

Settling Distributor, whereupon, with respect to all Settling States:

a. all agreements, all concessions, all reductions of Releasing Parties'

Claims, and all releases and covenants not to sue, contained in this Agreement

shall immediately and automatically be deemed null and void as to such

Bankrupt Settling Distributor; the Settling States shall be deemed immediately

and automatically restored to the same position they were in immediately prior to

their entry into this Settlement Agreement in respect to such Bankrupt Settling

Distributor and the Settling States shall have the right to assert any and all claims

against such Bankrupt Settling Distributor in the Bankruptcy or otherwise, subject

to any automatic stay, without regard to any limits or agreements as to the amount

of the settlement otherwise provided in this Agreement; provided, however, that

notwithstanding the foregoing sentence, (i) all reductions of Releasing Parties'

Claims, and all releases and covenants not to sue, contained in this Agreement

shall remain in full force and effect as to all persons or entities other than the

Bankrupt Settling Distributor itself; and (ii) in the event a Settling State asserts

any Released Claim against a Bankrupt Settling Distributor after the rejection

and/or termination of this Agreement with respect to such Settling Distributor as

described in this Section XIV.X.1.a and receives a judgment, settlement or

distribution arising from such Released Claim, then the amount of any payments

such Settling State has previously received from such Bankrupt Settling

Distributor under this Agreement shall be applied to reduce the amount of any

such judgment, settlement or distribution (provided that no credit shall be given

against any such judgment, settlement or distribution for any payment that such

Settling State is required to disgorge or repay to the Bankrupt Settling

Distributor’s bankruptcy estate); and

b. the Settling States may exercise all rights provided under the

federal Bankruptcy Code (or other applicable bankruptcy or non-bankruptcy law)

with respect to their Claims against such Bankrupt Settling Distributor subject to

all defenses and rights of the Bankrupt Settling Distributor.

A-1

EXHIBIT A

Alleged Harms

The following export reports that were filed in connection with the case captioned In re National

Prescription Opiate Litigation, No. 1-17-md-02804 (S.D. Ohio):

1. Expert report of Professor David Cutler, dated March 25, 2019.

2. Expert report of Dr. Jeffrey B. Liebman, dated March 25, 2019.

3. Expert report of Professor Thomas McGuire regarding damages to Bellwethers, dated

March 25, 2019.

4. Report of Professor Thomas McGuire regarding public nuisance, dated March 25, 2019.

B-1

EXHIBIT B

Enforcement Committee Organizational Bylaws

ARTICLE I

These bylaws constitute the code of rules adopted by the Settling States and Participating

Subdivisions for the creation of an Enforcement Committee (the “Committee”) to exist and operate

during the term of the Agreement with the Settling Distributors and shall control the regulation

and management of the Committee’s affairs.

ARTICLE II

Purpose

The Committee is organized for the sole purpose of evaluating and taking such action as deemed

reasonable, necessary, and appropriate by the members of the Committee on the matters

delegated to the Committee under that certain Settlement Agreement between the Settling States

and the Settling Distributors dated July 21, 2021.

ARTICLE III

Members of the Committee

(1) Number of Members

The Committee will consist of seventeen (17) members (the “Members”). Upon majority

resolution of the Committee, the number of Members may be increased or decreased from

time to time, but in no event shall a decrease have the effect of decreasing the total number

of Members to less than seven Members.

(2) Initial Members

The Committee initially will consist of eleven Settling State Members and six Participating

Subdivision Members, three of the Participating Subdivisions shall be counties and three

shall be municipalities. The initial Settling State Members are representatives from:

Connecticut, Delaware, Florida, Georgia, Massachusetts, New York, North Carolina, Ohio,

Pennsylvania, Tennessee, and Texas. The initial Participating Subdivision Members are:

(a) Bexar County, Texas; (b) Broward County, Florida; (c) Chicago, Illinois; (d)

Cincinnati, Ohio; (e) Nashville, Tennessee; and (f) Nassau County, New York. Until the

Reference Date contained in the Settlement Agreement, the Participating Subdivisions may

designate their outside counsel to serve as their representative. After the Reference Date,

an employee or official of the Participating Subdivision must be the designated as the

representative of the Participating Subdivision.

(3) Term of Members

The term of office for Members of the Committee will be until the end of the term of the

Settlement Agreement, eighteen (18) years, unless and until a Member withdraws or

resigns from the Committee.

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(4) Resignation

Any Member may resign at any time by delivering written notice to the Chairperson of the

Committee. Such resignation shall take effect upon receipt or, if later, at the time specified

in the notice.

(5) Removal

(a) Any Member may be removed without cause, at any time, by a majority of the entire

Committee, at a Regular or Special Meeting called for that purpose. Any Member under

consideration of removal must first be notified about the consideration by written notice at

least five days prior to the meeting at which the vote takes place.

(b) In the event that any Member is not a Settling State or a Participating Subdivision or

the Member subsequently becomes a Later Litigating Subdivision or otherwise does not

support the Agreement, the Member shall be removed immediately without notice or vote

of the Committee.

(6) Vacancies

In the event of a vacancy, the Members of the same type (Settling State or Participating

Subdivision) shall select another Settling State or Participating Subdivision to fill that

Member’s position.

(7) Compensation

Members shall not receive any salaries or other compensation for their services, but, by

resolution of the Committee, may be reimbursed for any actual expenses incurred in the

performance of their duties for the Committee, as long as a majority of disinterested

Members approve the reimbursement. Any reimbursement shall be sought from the

Settlement Fund Administrator.

ARTICLE IV

Conflicts of Interest and Code of Ethics

If a Member, agent, or employee of the Committee has a conflict of interest, he or she may not

participate in a vote, discussion, or decision about the matter. Each Member shall follow any

applicable state or local law with respect to conflicts, gifts, and ethics.

ARTICLE V

Committee Meetings

(1) Place of Meetings

Meetings of the Committee will be held at any place that the Chairperson may designate,

including by telephonic or electronic means.

(2) Regul