Hikma Opioid Settlement Agreement

Town of Wickenburg — Regular Meeting (2025-09-02)

Extracted text (via pymupdf) 173306 characters

HIKMA SETTLEMENT
AGREEMENT

HIKMA SETTLEMENT AGREEMENT
This Settlement Agreement, dated as of April 4, 2025 (the “Agreement”), sets forth the terms of
settlement between and among the Settling States, the Participating Subdivisions, and Hikma (as
those terms are defined below). Upon satisfaction of the conditions set forth in Sections II and
VIII, this Agreement will be binding on the Settling States, Hikma, and the Participating
Subdivisions. This Agreement will then be filed as part of a Consent Judgment in the respective
courts of each of the Settling States, pursuant to the terms set forth in Section IX.
I.
Definitions
Unless otherwise specified, the following definitions apply:
A.
“Additional Remediation Amount.” The amount available to the Settling
States listed in Exhibit M totaling up to $2,055,248.
B.
“Adjusted Maximum Remediation Payment.” The Maximum Remediation
Payment reduced by the State Allocation Percentage specified in Exhibit F for each Non-
Settling State.
C.
“Agreement.” The Hikma Settlement 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 damages, harms,
losses, and related expenditures allegedly incurred by the Settling States and Participating
Subdivisions arising out of the use 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, death, and other related diseases and disorders, and that have allegedly been
caused by Released Entities.
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 Settling State
and/or its Subdivisions. 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.
“Appropriate Official.” As defined in Section XIV.E.3.
G.
“Bankruptcy Code.” Title 11 of the United States Code, 11 U.S.C. § 101,
et seq.
H.
“Bar.” Either: (1) a law barring Subdivisions in a Settling State from
maintaining or asserting 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 Settling State (or, in a Settling State with a
single intermediate court of appeals, the intermediate court of appeals) when setting forth
the general principle that Subdivisions in the Settling State may not maintain or assert 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 Remediation Payment by
Hikma under this Agreement) shall not constitute a Bar.
I.
“Base Payment.” As defined in Section V.D.
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 payments by Hikma 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, fine, penalty, restitution, reimbursement,
disgorgement, expenses, 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,
remediation, 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 Hikma hereunder for Opioid Remediation, which includes the aggregate Base
and Incentive Payments earned by Settling Sates and does not include amounts paid as
attorneys’ fees and costs or identified pursuant to Section VI.B.2 as being used to pay

attorneys’ fees, investigation costs or litigation costs, which shall be up to the amount of
the Adjusted Maximum Remediation Payment.
N.
“Consent Judgment.” A consent judgment in a form to be agreed by the
Settling States and Hikma prior to the Effective 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” means any actual or alleged act, failure to act,
negligence, statement, error, omission, breach of any duty, conduct, event, transaction,
agreement, service, work, sale, 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, service, work, sale,
misstatement, misleading statement, or other activity) arising from or relating in any way to
(a) compounding, counseling, and documentation related to any Product or class of
Products; (b) the availability, discovery, research, development, manufacture, packaging,
repackaging, marketing, promotion, advertising, labeling, relabeling, recall, withdrawal,
distribution, delivery, monitoring, reporting, regulatory compliance supply, sale,
prescribing, dispensing, physical security, warehousing, use or abuse of, or operating
procedures relating to any Product, or any system, plan, policy, procedure, or advocacy
relating to any Product or class of Products, including but not limited to any unbranded or
branded promotion, marketing, or advertising, information, patient support or assistance,
educational programs, consultancy, research, other programs or campaigns, lobbying,
grants, sponsorships, charitable donations, or other funding relating to any Product or class
of Products; (c) the characteristics, properties, risks, or benefits of any Product or class of
Products; (d) the monitoring or non-monitoring of orders placed of any Product; (e),
reporting, disclosure, non-monitoring, non-reporting or non-disclosure to federal, state or
other regulators of orders for any Product placed with any Released Entity; (f) the selective
breeding, harvesting, extracting, purifying, exporting, importing, applying for quota for,
procuring quota for, handling, promoting, manufacturing, processing, packaging, supplying,
distributing, converting, or selling of, or otherwise engaging in any activity relating to,
precursor or component Products, including but not limited to natural, synthetic, semi-
synthetic or chemical raw materials, starting materials, finished active pharmaceutical
ingredients, drug substances, or any related intermediate Products; or (g) diversion control
programs, suspicious order monitoring, or regulatory compliance related to any Product.
P.
“Deposit Date.” July 25, 2025. This Date is the date by which Hikma shall
deposit the Adjusted Maximum Remediation Payment, Private Attorney Fees, the
Additional Remediation Amount, pursuant to Section V.D. This date is after the
Preliminary Agreement Date, on which Hikma agrees to proceed with the agreement; this
date may be changed by written agreement of Hikma and the Enforcement Committee.
Q.
“Designated State.” The state of New York.

R.
“Effective Date.” The date sixty (60) calendar days after the Reference
Date.
S.
“Eligible States.” The states, commonwealths, and territories of the United
States of America, excluding New Mexico. The 55 Eligible States are listed in Exhibit F.
T.
“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.
U.
“Fees Payment.” The amount payable by Hikma on the Payment Date
comprised of the Additional Remediation Amount payment, and the Private Attorney Fees
payment. The Fees Payment does not include the Remediation Payment.
V.
“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.
W.
“Force Majeure Event.” Any event reasonably beyond the control of
Hikma that prevents Hikma from manufacturing or distributing Settlement Product,
including wars, hostilities, revolution, riots, civil commotion, national emergency,
unavailability of supplies, epidemics, pandemics, health crisis, fire, flood, earthquake,
force of nature, explosion, terrorist act, embargo, or any act of God, or any law, regulation,
ordinance, or other act or order of any court or governmental authority.
X.
“Global Settlement Amount.” The Global Settlement Amount is
$110,616,074, which is comprised of the Maximum Remediation Payment, Private
Attorney Fees, Additional Remediation Amount, and the Settlement Product Cash
Conversion Amount. The Global Settlement Amount reflects a dollar figure that has been
reduced by a credit for New Mexico, which has previously settled with Hikma.
Notwithstanding any other language or provisions in this or any other agreement, the
Global Settlement Amount is the maximum dollar amount Hikma can pay in connection
with the Agreement.
Y.
“Hikma.” Hikma Pharmaceuticals USA Inc. f/k/a West-Ward
Pharmaceuticals Corp.

Z.
“Implementation Administrator.” Rubris, Inc., which is the vendor that will
be retained by Hikma to provide notice pursuant to Section VIII.A and to manage the initial
joinder period for Subdivisions, including the issuance and receipt of Subdivision
Settlement Participation Forms.
AA.
“Incentive Payment A.” The incentive payment described in Section V.E.4.
BB.
“Incentive Payment A Catch-Up Date.” August 1, 2026.
CC.
“Incentive Payment BC.” The incentive payment described in Section
V.E.5.
DD.
“Incentive Payment D.” The incentive payment described in Section V.E.6.
EE.
“Incentive Payment D Look-Back Dates.” Sixty days before each Incentive
Payment D Release Date.
FF.
“Incentive Payment D Release Dates.” August 1, 2027, and August 1, 2029.
These dates are when the Settlement Fund Administrator is to release Incentive Payment
D from the Settlement Fund to Settling States in accordance with Section V.E.6.
GG.
“Initial Participating Subdivision.” A Subdivision that meets the
requirements set forth in Section VIII.D.
HH.
“Initial Participation Date.” The date ninety (90) calendar days after the
Preliminary Agreement Date, unless it is extended by written agreement of Hikma and the
Enforcement Committee.
II.
“Injunctive Relief Terms.” The terms described in Section III and set forth
in Exhibit P.
JJ.
“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 Reference Date; or (2) adds a Released Claim against a Released
Entity after the Reference Date to a lawsuit brought before the Reference Date that, prior
to the Reference 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 Reference
Date, (b) such legislative Bar or legislative Case-Specific Resolution is subject to a
Revocation Event after the Reference Date, and (c) the earlier of the date of completion of
opening statements in a trial in an action brought by a Subdivision in that Settling 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 Reference Date, (b) such judicial Bar or judicial Case-Specific
Resolution is subject to a Revocation Event after the Reference 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.
KK.
“Later Participating Subdivision.” A Participating Subdivision that is not
an Initial Participating Subdivision, but meets the requirements set forth in Section VIII.E.
LL.
“Litigating Subdivision.” A Subdivision (or Subdivision official) that
brought any Released Claim against any Released Entity prior to the Reference Date.
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.
MM. “Maximum Incentive Payment D Amount.” The maximum amount that may
be owed by Hikma to Settling States and Subdivisions under Incentive Payment D, section
V.E.6, adjusted for Non-Settling States, States that qualify for Incentive Payment A, and
the Participation Percentage of Incentive BC Eligible Subdivision Population achieved by
the Payment Calculation Date.
NN.
“Maximum Remediation Payment.” The maximum amount owed by Hikma
to the Settling States and Subdivisions, exclusive of the Private Attorney Fees, and the
Additional Remediation Amount. The amount of the Maximum Remediation Payment is
$95,818,293.
OO.
“National Arbitration Panel.” The panel comprised as described in Section
VII.F.3.b.
PP.
“National Disputes.” As defined in Section VII.F.3.a.
QQ.
“Non-Litigating Subdivision.” Any Subdivision that is not a Litigating
Subdivision.
RR.
“Non-Participating Subdivision.” Any Subdivision that is not a
Participating Subdivision.
SS.
“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).
TT.
“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.
UU.
“Non-Released Entity.” An entity that is not a Released Entity.
VV.
“Non-Settling State.” Any Eligible State that is not a Settling State.

WW. “Opioid Remediation.” Care, treatment, and other programs and
expenditures (including reimbursement for past such programs or expenditures1 except
where this Agreement restricts the use of funds solely to future Opioid Remediation)
designed to (1) address the use of opioid products in the Settling States, (2) treat or mitigate
opioid use or related disorders in the Settling States, or (3) mitigate other alleged effects
of, including on those injured as a result of, the opioid epidemic in the Settling States.
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 in connection with the above.
XX.
“Participating Subdivision.” Any Subdivision that meets the requirements
for becoming a Participating Subdivision under Section VIII.B and Section VIII.C.
Participating Subdivisions include both Initial Participating Subdivisions and Later
Participating Subdivisions.
YY.
“Participation Percentage of Incentive BC Eligible Subdivision
Population.” As defined in Section V.E.5.e.
ZZ.
“Parties.” Hikma and the Settling States (each, a “Party”).
AAA. “Payment Calculation Date.” October 20, 2025, which is sixty (60) days
before the Payment Date. This date may be changed by written agreement of Hikma and
the Enforcement Committee.
BBB. “Payment Date.” December 19, 2025, which is the date by which Hikma
makes the Remediation Payment and the Fees Payment. This date may be changed by
written agreement of Hikma and the Enforcement Committee.
CCC. “Preliminary Agreement Date.” The date Hikma informs the Settling States
of its determination that 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 Eligible States, unless it is extended by written agreement of Hikma and
the Enforcement Committee.
DDD. “Primary Fire District.” A fire district that covers a population of 25,000,
or 0.20% of an Eligible State’s population if an Eligible State’s population is greater than
18 million. If not easily calculable from state data sources and agreed to between the
Eligible State and Hikma, a fire district’s population is calculated by dividing the
population of the county or counties a fire district serves by the number of fire districts in
the county or counties. “Primary Fire Districts” shall mean fire districts as identified in
connection with the implementation of the July 21, 2021, Janssen Settlement Agreement.
EEE. “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-

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

type government) with population over 10,000; provided, however, that as used in
connection with Incentive Payment BC, the population threshold is 30,000. Attached as
Exhibit I is an agreed list of the Primary Subdivisions in each Eligible State.
FFF.
“Private Attorney Fees” are the amount to be paid by Hikma for private
attorneys’ litigation fees and costs on behalf of Participating Subdivisions. The maximum
amount of Private Attorney Fees is $12,742,534. For avoidance of doubt, Private Attorney
Fees do not include the Additional Remediation Amount.
GGG. “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; (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,
naloxone, naltrexone, oxycodone, oxymorphone, pentazocine, propoxyphene, tapentadol,
tramadol, opium, heroin, carfentanil, diazepam, estazolam, quazepam, alprazolam,
clonazepam, oxazepam, flurazepam, triazolam, 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, triazolam,
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 Initial Participation Date.
“Product” also includes any natural, synthetic, semi-synthetic or chemical raw materials,
starting materials, finished active pharmaceutical ingredients, drug substances, and any
intermediate products used or created in the manufacturing process for any of the
substances described above.
HHH. “Reference Date.” The date on which Hikma is to inform the Settling States
of its determination whether the condition in Section IX 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 Hikma and the Enforcement Committee.
III.
“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 and/or Alleged
Harms occurring prior to the Initial Participation Date. Without limiting the foregoing,
Released Claims include any Claims that have been asserted against Released Entities by
a Settling State or any of its Litigating Subdivisions 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 and/or Alleged Harms, 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 Settling State, Subdivision, or Releasor
(whether or not such Settling State, Subdivision, or Releasor has brought such action or

proceeding). Released Claims also include all Claims against Released Entities asserted in
any proceeding to be dismissed pursuant to the Agreement, whether or not such claims
related to Covered Conduct and/or Alleged Harms. 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 non-party Subdivision that would have been Released Claims if they
had been brought by a Releasor against a Released Entity.
JJJ.
“Released Entities.” With respect to Released Claims, Hikma and (1) all
past and present subsidiaries, divisions, affiliates, predecessors, successors, and assigns (in
each case, whether direct or indirect) of Hikma; (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 Hikma or the foregoing entities); (4) all past and present joint
ventures (whether direct or indirect) of Hikma or its subsidiaries, including in any
subsidiary’s capacity as a participating member in such joint venture; (5) all direct or
indirect parents and shareholders of Hikma (solely in their capacity as parents or
shareholders of Hikma with respect to Covered Conduct); and (6) any insurer of Hikma 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.C). A list of Hikma’s
joint ventures, subsidiaries and affiliates and predecessor entities is set forth in Exhibit J.
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. Any entity acquired, or joint venture entered into, by Hikma
after the Initial Participation Date is not a Released Entity. Further and notwithstanding
anything else in this paragraph, no entity sued in In re: National Prescription Opiate
Litigation, No. 1:17-md-2804 (N.D. Ohio) is included as a Released Entity other than the
entities listed on Exhibit J.
KKK. “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, water districts, emergency services districts, school districts, healthcare
districts, hospital districts, Sheriffs and law enforcement districts, library districts,
coroner’s offices, and public transportation authorities, and other Special Districts in a
Settling State, including those with the regulatory authority to enforce state and federal
controlled substances acts or the authority to bring Claims related to Covered Conduct
seeking money (including abatement (or remediation and/or restitution)) or revoke a

pharmaceutical distribution license, 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, including but not limited to fines, penalties, or punitive damages, 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.G. In addition to being a Releasor
as provided herein, a Participating Subdivision shall also provide the Subdivision
Settlement Participation Form referenced in Section VIII providing for a release to the
fullest extent of the Participating Subdivision’s authority.
LLL. “Remediation Accounts Fund.” The component of the Settlement Fund
described in Section VI.C.
MMM. “Remediation Payment.” The amount payable to the Settlement Fund by
Hikma for Settling States’ Base Payments and Incentive Payments on the Payment Date,
as calculated by the Settlement Fund Administrator.
NNN. “Revocation Event.” With respect to a Bar or Case-Specific Resolution, a
legislative amendment, revocation, rescission, reversal, overruling, or interpretation that in
any way limits the effect of such Bar or Case-Specific Resolution on Released Claims, or
any other action or event that otherwise deprives the Bar, or Case-Specific Resolution of
force or effect in any material respect.
OOO. “Settlement Fund.” The interest-bearing fund established at [Bank TBD]
pursuant to this Agreement into which the Remediation Payment is made under Section V,
which is intended to be classified as a “qualified settlement fund” within the meaning of
26 C.F.R. §§ 1.468B-1 et seq. and which shall be approved by any Settling State in
accordance with the requirements of 26 C.F.R. § 1.468B-1.
PPP.
“Settlement Fund Administrator.” BrownGreer PLC, which is the entity
that determines the Remediation Payment (including calculating offset or reduction and
Incentive Payments pursuant to Section V and any amounts subject to offset pursuant to
Section XIII) and Additional Remediation Amount, administers the Settlement Fund, and
distributes amounts into the Remediation 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 Effective Date, Hikma and the Enforcement
Committee shall agree to 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.
QQQ. “Settlement Fund Escrow.” The interest-bearing escrow fund established
pursuant to this Agreement to hold disputed payments made under this Agreement.

RRR. “Settlement Product” naloxone hydrochloride 8mg nasal spray approved
pursuant to FDA New Drug Application No. 212045, currently listed in Hikma’s generics
catalog, which can be viewed at https://www.hikma.com/en-us/products , and is provided
to the Settling State as part of the settlement, at no cost as set forth in Section XV and
Exhibit D.
SSS.
“Settlement Product Cash Conversion Amount” means the resulting dollar
amount from when a Settling State has elected to convert all or a portion of its Settlement
Product Allocation into a cash payment pursuant to Section XV and Exhibit D. The
aggregate, maximum amount that could be paid from the conversion of Settlement Product
into cash is $6,944,074.
TTT. “Settlement Product Cash Conversion Amount Payment Date” is May 15,
2027. This date may be changed by written agreement of Hikma and the Enforcement
Committee.
UUU. “Settlement Product Election Date” is the date thirty (30) days after the
Effective Date by which a Settling State must submit its election of the Settling State’s
allocation of Settlement Product or cash conversion of Settlement Product pursuant to
Section XIV and Exhibit D.
VVV. “Settlement Product Election Form” means the form a Settling State uses
to submit its election of the Settling State’s allocation of Settlement Product or cash
conversion of Settlement Product pursuant to Section XV and Exhibit D.
WWW.
“Settling State.” An Eligible State that has entered into this
Agreement and delivers executed releases in accordance with Section IX.A.
XXX. “State Allocation Percentage.” A Settling State’s percentage as set forth in
Exhibit F.
YYY. “State Fund.” The component of the Settlement Fund described in Section
VI.C.
ZZZ. “State-Subdivision Agreement.” An agreement that a Settling State reaches
with the Subdivisions in that Settling State regarding the allocation, distribution, and/or use
of funds allocated to that Settling 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 Settling 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.
AAAA.
“Statutory Trust.” A trust fund established by state law to receive
funds allocated to a Settling State's Remediation Accounts Fund and restrict any
expenditures made using funds from the Settling State's Remediation Accounts Fund to
Opioid Remediation, subject to reasonable administrative expenses. A Settling State may

give a Statutory Trust authority to allocate one (1) or more of the three (3) types of funds
comprising such Settling State’s Settlement Fund, but this is not required.
BBBB. Statewide Payment Amount.” The amount the Settlement Fund
Administrator is to pay from the Remediation Payment to a Settling State, including its
separate types of funds (if applicable) and its Participating Subdivisions listed in Exhibit
G, on or as soon as practical after the Payment Date and Incentive Payment D Release
Dates.
CCCC. “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 Settling State, and (2) any other subdivision,
subdivision official acting in an official capacity on behalf of the subdivision (including,
without limitation, district attorneys, county attorneys, city attorneys, sheriffs, and any
other official, employee, or representative), or sub-entity of or located within a Settling
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.2 The three (3) General
Purpose Governments are county, municipal, and township governments; the two (2)
special purpose governments are School Districts and Special Districts.3 “Fire District,”
“Health District,” “Hospital District,” and “Library District” shall correspond to
categories of Special Districts recognized by the U.S. Census Bureau.4 References to a
Settling State’s Subdivisions or to a Subdivision “in,” “of,” or “within” a Settling State
include Subdivisions located within the Settling State even if they are not formally or
legally a sub-entity of the Settling State; provided, however, that a “Health District” that
includes any of the following words or phrases in its name shall not be considered a

2 https://www2.census.gov/programs-surveys/gus/datasets/2017/govt_units_2017.ZIP
3 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.
4 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://www2.census.gov/programs-surveys/gus/datasets/2017/govt_units_2017.ZIP. 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.

Subdivision: mosquito, pest, insect, spray, vector, animal, air quality, air pollution, clean
air, coastal water, tuberculosis, and sanitary.
DDDD. “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
VI if it becomes a Participating Subdivision. The aggregate Subdivision Allocation
Percentage of all Subdivisions receiving a Subdivision Allocation Percentage in each
Settling 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 VI.D.3 (or upon the effectiveness of an amendment to
any State-Subdivision Agreement, Allocation Statute, Statutory Trust, or voluntary
redistribution allowed by Section VI.D.3) that addresses allocation from the Subdivision
Fund, 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 VI.D.3. The Subdivision Allocation Percentages contained in Exhibit
G may not change once notice is distributed pursuant to Section VIII.A, except upon the
effectiveness of any State-Subdivision Agreement, Allocation Statute, Statutory Trust, or
voluntary redistribution allowed by Section VI.D.3 (or upon the effectiveness of an
amendment to any State-Subdivision Agreement, Allocation Statute, Statutory Trust, or
voluntary redistribution allowed by Section VI.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.
EEEE. “Subdivision Fund.” The component of the Settlement Fund described in
Section VI.A.
FFFF. “Subdivision Settlement Participation Form.” The form attached as Exhibit
K that Participating Subdivisions must execute and return to the Implementation
Administrator or Settlement Fund Administrator, and which shall (1) make such
Participating Subdivisions signatories to this Agreement, (2) include a full and complete
release of any and all of such Participating Subdivisions’ claims, and (3) require the prompt
dismissal with prejudice of any Released Claims that have been filed by any such
Participating Subdivision.
GGGG. “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.
II.
Participation by Eligible States and Condition to Preliminary
Agreement
A.
Notice to Eligible States. On May 26, 2025, this Agreement shall be
distributed to all Eligible States. The Attorneys General of the Eligible States shall then

have until June 25, 2025, to decide whether to become Settling States and notify the
Enforcement Committee and Hikma of that decision. Eligible States that determine to
become Settling States shall so notify Hikma 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 Hikma and the Enforcement Committee.
B.
Condition to Preliminary Agreement. Following the notice period set forth
in Section II.A, Hikma shall have fourteen (14) calendar days to determine whether, in its
sole discretion (based on any criteria or factors deemed relevant to Hikma), enough Eligible
States have agreed to become Settling States to proceed with notice to Subdivisions as set
forth in Section VIII. This period may be extended by written agreement of Hikma and the
Enforcement Committee. If Hikma determines that this condition has been satisfied, and
that notice to the Subdivisions should proceed, it will so notify the Settling States by
providing notice to the Enforcement Committee. The date of such notice shall be the
Preliminary Agreement Date. If Hikma determines that this condition has not been
satisfied, this Agreement will have no further effect and all releases and other commitments
or obligations contained herein will be void.
C.
Later Joinder by Eligible States. After the Preliminary Agreement Date, an
Eligible State may only become a Settling State with the consent of Hikma and the
Enforcement Committee, provided that the Enforcement Committee may not withhold
consent to an Eligible State’s later joinder if the Eligible State agrees to join pursuant to
the terms of this Agreement and the allocation set forth in Exhibit F. If an Eligible State
becomes a Settling State more than thirty (30) calendar days after the Preliminary
Agreement Date, but on or before the Reference Date, the Subdivisions in that Eligible
State that become Participating Subdivisions within ninety (90) calendar days of the
Eligible State becoming a Settling State shall be considered Initial Participating
Subdivisions. An Eligible State may not become a Settling State after the Reference Date.
D.
Litigation Activity. Following the Preliminary Agreement Date, Eligible
States that determine to become Settling States shall make reasonable efforts to cease
litigation activity against Hikma, including by jointly seeking stays or, where appropriate,
severance of claim against Hikma, 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
injunctive relief terms attached in Exhibit P.

IV.
Procedure for Segregated Account Deposits and Payments
A.
By the Deposit Date, Hikma shall deposit into a segregated interest-bearing
bank account it establishes the Adjusted Maximum Remediation Payment amount. Hikma
shall also deposit into two (2) separate segregated interest-bearing bank accounts it
establishes: (a) the Private Attorney Fees amount; and (b) the Additional Remediation
Amount. Hikma shall separately account for the interest earned on each of the three (3)
accounts.
B.
Hikma shall provide proof to the Enforcement Committee of the deposits
required by Section IV.D.1 by the Deposit Date. Hikma shall not remove any money from
the segregated bank accounts, except as provided by Section IV.F and Section IV.H.
C.
If an Eligible State joins the agreement pursuant to Section II.C and that
joinder is after the Deposit Date, Hikma shall deposit that Settling State’s maximum
Statewide Payment Amount, which is the Maximum Remediation Payment multiplied by
the Settling State’s State Allocation Percentage. Such deposit shall be within fifteen (15)
days of the Settling State’s joinder.
D.
If the condition set forth in Section IX.B is met, Hikma shall:
1. Transfer into the Settlement Fund on the Payment Date (unless the
Enforcement Committee specifies a later date) the Remediation Payment amount
calculated by the Settlement Fund Administrator pursuant to Section V.C.2 from the
segregated account. For the avoidance of doubt, this transfer includes the Maximum
Incentive Payment D Amount and includes any amounts that the Settlement Fund
Administrator will place into the Settlement Fund Escrow pursuant to Section
V.C.4.e.
a.
The interest earned from the deposit account holding the
Remediation Amount shall be used, first, to pay for the Implementation
Administrator, then to pay for the Implementation Administrator in the
Alvogen, Amneal, Apotex, Indivior, Mylan, Sun, and Zydus Settlement
Agreements, and finally to be transferred to the Settlement Fund to be used
to pay for the Settlement Fund Administrator pursuant to Section VI.C.4.
2. Transfer into the relevant funds as directed by the Enforcement Committee,
no later than the Payment Date (unless the Enforcement Committee specifies a later
date) the amount in the segregated account holding the Private Attorney Fees
(including all interest accrued on that account), minus any amounts not payable
pursuant to the terms of Exhibit R, and the amount in the segregated account holding
the Additional Remediation Amount (including all interest accrued on that account),
minus the Additional Remediation Amount that would have been owed to Non-
Settling States as calculated by multiplying the Additional Remediation Amount by
the sum of allocations on Exhibit N for Non-Settling States.

E.
The Remediation Payment transferred by Hikma into the Settlement Fund
pursuant to Section IV.D.1 shall be disbursed by the Settlement Fund Administrator to each
Settling State and to its Participating Subdivisions listed on Exhibit G pursuant to Section
V.C.5 through Section V.C.8; 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 listed on Exhibit G shall not be disbursed
until ten (10) calendar days after the entry of the Consent Judgment in that Settling State.
F.
Any amounts in the segregated accounts not subject to transfer pursuant to
Section IV.D shall immediately revert to Hikma after Hikma makes the transfers required
by Section IV.D.
G.
Except for the interest earned on the payment amounts, any unearned
Incentive Payment A amount in the Settlement Fund shall immediately revert to Hikma
after the Incentive Payment A Catch-Up Date. This excess reflects Settling States who
sought, but did not achieve, a Bar by the Incentive Payment A Catch-Up Date. Any
additional amount in the Settlement Fund exceeding the payments described in Section
V.C.3 shall immediately revert to Hikma after the last Incentive Payment D Release Date.
This excess is Settling States’ unearned Maximum Incentive Payment D amounts.
H.
In the event that, in accordance with the terms of Section X.B, Hikma
determines not to proceed with the Settlement, or the Settlement does not become effective
for any other reason, the funds held in the segregated bank accounts shall immediately
revert to Hikma.
V.
Settlement Payment Calculation Process
A.
Settlement Fund. All payments under this Section V 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 VI.
B.
Remediation Payment
1. Hikma shall make one Remediation Payment comprised of both Base
Payments and Incentive Payments as provided in Section IV.D.1.
2. In no instance shall Hikma’s Remediation Payment obligations exceed the
Adjusted Maximum Remediation Amount.
C.
Settlement Fund Payment Process
1. To determine the Remediation Payment, the Settlement Fund Administrator
shall use the data as of the Payment Calculation Date. Prior to the Effective Date,
the Parties will include Exhibit L, which sets forth in detail the process for the
Settlement Fund Administrator to obtain relevant data and for distributing funds to
the Settling States and their Participating Subdivisions listed on Exhibit G consistent
with the terms of this Agreement as quickly as practical.

2. On the Payment Calculation Date, the Settlement Fund Administrator shall
determine the Remediation Payment, consistent with the provisions in Exhibit L, by
determining the sum, for all Settling States, of the Base Payment amount, Incentive
Payments A or BC amount to which each Settling State is entitled (or could in the
future be entitled for states who notify Defendants of an intent to obtain a Bar by the
Incentive Payment A Catch-Up Date), and Incentive Payment D each Settling State
could in the future be entitled (e.g. the Maximum Incentive Payment D Amount) by
applying the criteria under Section V.D and Section V.E;
3. On the Payment Calculation Date, Incentive Payment A Catch-Up Date,
and each subsequent Incentive D Look-Back Date, the Settlement Fund
Administrator shall determine the Statewide Payment Amount for each Settling
State, consistent with the provisions in Exhibit L, by determining, for each Settling
State, the Base Payment amount (only on the Payment Calculation Date) and
Incentive Payment amount to which the Settling State is entitled on that date by
applying the criteria under Section V.D and Section V.E, after subtracting the
portion of any Settlement Fund Administrator costs and fees owed out of funds from
the Settlement Fund pursuant to Section VI.C.4.
4. No later than fifty (50) days prior to the Payment Date and Incentive
Payment D Release Dates, the Settlement Fund Administrator shall give notice to
Hikma, the Settling States, and the Enforcement Committee of the amount of the
Remediation Payment, and/or the Statewide Payment Amount for each Settling
State, following the determination described in Section V.C.2 and V.C.3, and the
following timeline shall apply:
a.
Within twenty-one (21) calendar days of the notice provided
by the Settlement Fund Administrator, Hikma, any Settling State or the
Enforcement Committee may dispute, in writing, the calculation of the
Remediation Payment and/or the Statewide Payment Amount for a Settling
State. Such disputing party must provide a written notice of dispute to the
Settlement Fund Administrator, the Enforcement Committee, any affected
Settling State, and Hikma identifying the nature of the dispute, the amount
of money that is disputed, and the Settling State(s) affected.
b.
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 Hikma identifying the basis for
disagreement with the notice of dispute.
c.
If no response is filed, the Settlement Fund Administrator
shall adjust the amount calculated consistent with the written notice of
dispute. In the case of the Remediation Payment, Hikma shall pay the
adjusted amount, collectively totaling the Remediation Payment, on the
Payment Date.

d.
If a written response to the written notice of dispute is timely
sent to the Settlement Fund Administrator, the Settlement Fund
Administrator shall notify Hikma, the Enforcement Committee, and any
affected Settling State of the preliminary amount, which shall be the greater
of the amount originally calculated by the Settlement Fund Administrator
or the amount that would be consistent with the notice of dispute. In the case
of the Remediation Payment, Hikma shall pay this preliminary amount,
provided, however, that in no circumstances shall the preliminary amount
to be paid be higher than the Maximum Remediation Payment.
e.
The Settlement Fund Administrator shall place any disputed
amount of the preliminary amount paid by Hikma into the Settlement Fund
Escrow and shall disburse any undisputed amount to each Settling State and
its Participating Subdivisions listed on Exhibit G pursuant to Section V.C.5.
5. If a Settling State informs the Settlement Fund Administrator that it and its
Participating Subdivisions listed on Exhibit G have agreed on the amount of its
Statewide Payment Amount, determined pursuant to Section V.C.3, to be distributed
to the Settling State, among its separate types of funds (if applicable), and among its
Participating Subdivisions listed on Exhibit G, the Settlement Fund Administrator
shall disburse the Statewide Payment Amount pursuant to the consensus distribution
amounts provided by the Settling State as quickly as practical. For a Settling State
that does not so notify the Settlement Fund Administrator, the Settlement Fund
Administrator shall allocate the Settling State’s Statewide Payment Amount,
pursuant to Section VI, among the separate types of funds for the Settling State (if
applicable), and among its Participating Subdivisions listed on Exhibit G using the
following procedures:
a.
As soon as possible for each payment and following the
determination described in Section V.C.3, the Settlement Fund
Administrator shall give notice to the relevant Settling States and their
Participating Subdivisions listed on Exhibit G 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 Participating Subdivision listed on Exhibit G for each Settling State.
b.
Within twenty-one (21) days of the notice provided by the
Settlement Fund Administrator, any Settling State or Participating
Subdivision listed on Exhibit G may dispute, in writing, the calculation of
the amount to be received by the relevant Settling State and/or its
Participating Subdivision listed on Exhibit G. A dispute will be deemed
invalid and disregarded if it challenges the allocations adopted by a State-
Subdivision Agreement approved pursuant to the provisions of Exhibit O or
by statute. Such disputing party must provide a written notice of dispute to
the Settlement Fund Administrator, any affected Settling State, and any
affected Participating Subdivision identifying the nature of the dispute, the
amount of money that is disputed, and the Settling State(s) affected.

c.
Within twenty-one (21) days of the sending of a written
notice of dispute, any affected Settling State or any affected Participating
Subdivision may submit a response, in writing, to the Settlement Fund
Administrator, any affected Settling State, and any affected Participating
Subdivision identifying the basis for disagreement with the notice of
dispute.
d.
If no response is filed, the Settlement Fund Administrator
shall adjust the amount calculated consistent with the written notice of
dispute.
e.
The Settlement Fund Administrator shall place any disputed
amount into the Settlement Fund Escrow and shall disburse any undisputed
amount to the Settling State and its Participating Subdivisions eligible for
payment.
6. Disputes described in this subsection (other than those for which no
response is filed under Sections V.C.4.c or V.C.5.d) shall be resolved in accordance
with the terms of Section VII.F.
7. The Settlement Fund Administrator may combine the disbursements of the
Remediation Payment with the disbursement of funds under other comparable
opioid settlements. In determining when disbursements of the Remediation Payment
will be made, the Settlement Fund Administrator may take into account the timeline
for the availability of disbursements under other comparable opioid settlements.
8. For the avoidance of doubt, Subdivisions not listed on Exhibit G shall not
receive an allocation from the Subdivision Fund and no provision of this Agreement
shall be interpreted to create such an entitlement.
D.
Base Payments.
1. Hikma shall make Base Payments into the Settlement Fund in an amount
equal to forty percent (40%) of the Adjusted Maximum Remediation Payment. The
maximum total for Base Payments is $38,327,317.
2. The Base Payment for any Settling State shall be the maximum total for
Base Payments, $38,327,317, times the Settling State’s State Allocation Percentage
specified in Exhibit F.
E.
Incentive Payments.
1. Hikma shall make potential additional Incentive Payments totaling up to a
maximum of sixty percent (60%) of the Adjusted Maximum Remediation Payment,
with the Incentive Payment amount depending on whether and the extent to which
the criteria set forth below are met in each Settling State. The maximum total for
Incentive Payments is $57,490,976.

2. A Settling State qualifies to receive an Incentive Payment in addition to its
Base Payment if it meets the incentive eligibility requirements specified below. The
maximum total Incentive Payment for any Settling State shall be no more than the
maximum total for Incentive Payments, $57,490,976, times the Settling State’s State
Allocation Percentage specified in Exhibit F. Incentive Payments are state-specific,
with the actual amount depending on whether and the extent to which the criteria set
forth below are met in such Settling State.
3. The Incentive Payments shall be divided among three (3) categories,
referred to as Incentive Payments A, BC, and D. Incentive Payments A and BC will
be due to Settling States on the Payment Date. Incentive Payment D will be paid to
Settling States in two equal installments on the Incentive Payment Release Dates.
The total amount of Incentive Payments due to Settling States shall be the sum of
the Incentive Payments for which the individual Settling States are eligible under
the criteria set forth below. The Incentive Payments shall be made with respect to a
specific Settling State based on its eligibility under the criteria set forth below. For
the avoidance of doubt, eligibility for Incentive Payments A, BC, and D shall be
determined on a Settling State-by-Settling State basis.
4. Incentive Payment A.
a.
Incentive Payment A is mutually exclusive with Incentive
Payment BC and D; if a Settling State receives Incentive Payment A in the
Remediation Payment, such Settling State is not eligible for Incentive
Payment BC or D.
b.
Incentive Payment A shall be equal to sixty percent (60%)
of the Adjusted Maximum Remediation Payment, 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 Remediation Payment, and
shall equal a total potential maximum of $57,490,976 if all Eligible States
qualify for Incentive Payment A. Each Settling State’s share of Incentive
Payment A, provided that Settling State qualifies, shall equal the total
maximum amount available for Incentive Payment A, $57,490,976, times
the Settling State’s State Allocation Percentage.
c.
Qualification for Incentive Payment A is as follows: A
Settling State qualifies for Incentive Payment A if, as of the Payment
Calculation Date: (i) there is a Bar in that Settling State in full force and
effect, (ii) 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 Settling State’s population,
whichever is greater, Hospital Districts that have at least one hundred
twenty-five (125) hospital beds in one or more hospitals rendering services
in that district, and Primary Fire Districts; or (iii) a combination of the

actions in clauses (i) and (ii) has achieved the same level of resolution of
Subdivision Claims (e.g., a Bar against future litigation combined with full
joinder by Litigating Subdivisions). For the avoidance of doubt, subsection
(iii) 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. Hikma and the
Enforcement Committee shall meet and confer in order to agree on data
sources for purposes of this Section prior to the Initial Participation Date.
d.
If a Settling State intends to achieve Incentive A by a Bar in
effect after the Payment Calculation date but before the Incentive A Catch-
Up Date, the Settling State shall notify Hikma no later than 30 days before
the Initial Participation Date. A Settling State who so notifies Hikma and
does not qualify for Incentive Payment A as of the Payment Date but
becomes eligible for Incentive Payment A as of the Incentive Payment A
Catch-Up Date shall receive the payment that it would have received for
Incentive Payment A (the “Incentive Payment A Catch-up Payment”) on
the Incentive Payment A Catch-Up Date. The Incentive Payment A Catch-
up Payment shall be reduced by any amounts paid to the Settling State under
Incentive Payment BC prior to the Settling State’s eligibility for Incentive
Payment A. A Settling State that does not qualify for Incentive Payment A
as of the Incentive Payment A Catch-Up Date shall not be eligible for
Incentive Payment A.
e.
To the extent a Settling State asserts that existing legislation
qualifies as a Bar, the Settling State shall provide notice to Hikma no later
than 30 days before the Initial Participation Date. Hikma shall indicate
before the Initial Participation Date whether existing legislation in a Settling
State is sufficient to qualify as a Bar.
5. Incentive Payment BC.
a.
Incentive Payment BC shall be available to Settling States
that do not qualify for Incentive Payment A.
b.
Incentive Payment BC shall be up to a maximum of fifty-
seven percent (57%) of the Settling State’s share of the Remediation
Payment. Incentive Payment BC will be due to a Settling State as part of
the Remediation Payment. Incentive Payment BC shall equal a total
potential maximum of $54,616,427 if all Eligible States qualify for
Incentive Payment BC (and do not qualify for Incentive Payment A).
c.
The maximum Incentive Payment BC for any Settling State
shall be the maximum potential Incentive Payment BC, $ 54,616,427, times
the Settling State’s State Allocation Percentage specified in Exhibit F,
provided such Settling State becomes eligible for Incentive Payment BC by
the Payment Calculation Date.

d.
The amount of Incentive Payment BC for which a Settling
State is eligible shall be determined based on the aggregate population of
the Settling State’s Incentive BC Subdivisions that are Participating
Subdivisions or have had their claims resolved through a Case-Specific
Resolution, divided by the aggregate population of all the Settling State’s
Incentive BC Subdivisions. The Settling State’s Incentive BC Subdivisions
are (i) all Litigating Subdivisions (including School Districts and Special
Districts) and (ii) all Primary Subdivisions that have not sued Hikma as of
the Initial Participation Date (collectively “Incentive BC Subdivisions”).
e.
The percentage of the Settling State’s maximum Incentive
Payment BC provided by Section V.E.5.c to which the Settling State is
entitled shall be determined according to the table of Incentive BC payment
levels below:
Participation Percentage of Incentive BC
Eligible Subdivision Population5
Incentive Payment BC Percentage
Less than 85%
0%
85% or more but less than 86%
3.57%
86% or more but less than 87%
8.93%
87% or more but less than 88%
14.29%
88% or more but less than 89%
19.64%
89% or more but less than 90%
25%
90% or more but less than 91%
30.36%
91% or more but less than 92%
35.71%
92% or more but less than 93%
41.07%
93% or more but less than 94%
46.43%

5 The “Participation Percentage of Incentive BC Eligible Subdivision Population” shall be determined by the aggregate
population of the Settling State’s Incentive BC Subdivisions that are Participating Subdivisions or have had their
claims resolved through a Case-Specific Resolution, divided by the aggregate population of the Settling State’s
Incentive BC Subdivisions. In calculating the Settling State’s population that resides in Incentive BC Subdivisions,
the population of the Settling State’s Incentive BC Subdivisions shall be the sum of the population of all Incentive BC
Subdivisions in the Settling State, notwithstanding that persons may be included within the population of more than
one Incentive BC Subdivision. An individual 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 Subdivision
will be excluded from the numerator or denominator under this sentence unless a Subdivision otherwise counted in
the denominator has the authority to release the Claims (consistent with Section X) of the Subdivision to be excluded.

94% or more but less than 95%
51.79%
95% or more but less than 96%
60.71%
96% or more but less than 97%
68.75%
97% or more but less than 98%
76.79%
98% or more but less than 99%
84.82%
99% or more but less than 100%
92.86%
100%
100%

f.
The percentage of the available Incentive Payment BC
amount for which a Settling State is eligible will be based on the
Participation Percentage of Incentive BC Eligible Subdivision Population
as of the Payment Calculation Date. If Incentive BC Eligible Subdivisions
that have become Participating Subdivisions, or achieved Case-Specific
Resolution status, collectively represent less than eighty-five percent (85%)
of a Settling State’s Incentive BC Eligible Subdivision population by the
Payment Calculation Date, the Settling State shall not receive any Incentive
Payment BC.
g.
If there are no Incentive BC Eligible Subdivisions in a
Settling State, and that Settling State is otherwise eligible for Incentive
Payment BC, that Settling State will receive its maximum Incentive
Payment BC provided by Section V.E.5.c.
6. Incentive Payment D.
a.
Incentive Payment D shall be available to Settling States that
do not qualify for Incentive Payment A.
b.
Incentive Payment D shall be equal to up to a maximum of
ten percent (10%) of the Adjusted Maximum Remediation Payment, with
the actual amount depending whether and the extent to which the criteria
set forth below are met in each Settling State. The maximum total for
Incentive Payment D is $9,581,829.6

6 The Incentive Payment BC table specified in Section V.E.5.e and Incentive Payment D table specified in Section
V.E.6.f operate so that the combined amount of Incentive Payment BC and Incentive Payment D cannot exceed sixty
percent (60%) of the Adjusted Maximum Remediation Payment over the term of the Agreement. Hikma will have no
obligation to pay more than $57,490,976 for the combined amounts of Incentive Payment BC and Incentive Payment
D minus any offsets for Non-Settling States.

c.
Incentive Payment D shall be released in two equal
installments—one installment on each Incentive Payment Release Date—
and the amount of Incentive Payment D released will depend on (i) the
Settling State meeting the qualifications set out in Section V.E.6.d and (ii)
the Participation Percentage of Incentive BC Eligible Subdivision
Population achieved by the Settling State as of the Payment Calculation
Date.
d.
A Settling State qualifies for Incentive Payment D if no Later
Litigating Subdivision (for purposes of Incentive Payment D, Later
Litigating Subdivisions are limited to (i) a Primary Subdivision; (ii) a school
district with a K-12 student enrollment of at least 25,000 or 0.10% of the
Settling State’s population, whichever is greater; (iii) a health district or
hospital district that has at least one hundred twenty-five (125) hospital beds
in one or more hospitals rendering services in that district; and (iv) Primary
Fire Districts) in that Settling State has a lawsuit against a Released Entity
survive more than six (6) months after denial in whole or in part of a
Threshold Motion.
e.
A Settling State’s qualification for Incentive Payment D
shall be determined on each Incentive Payment D Look-Back Date. If a
Later Litigating Subdivision’s lawsuit in that Settling State survives more
than six (6) months after denial in whole or in part a Threshold Motion after
that date, that Settling State shall not be eligible for Incentive Payment D
on that or any subsequent Incentive Payment D Release Date.
f.
The Incentive Payment D for any Settling State qualifying
for Incentive Payment D shall be equal to between three percent (3%) and
ten percent (10%) of the of the Maximum Remediation Payment times the
Settling State’s Allocation Percentage specified in Exhibit F. The
applicable percentage shall be determined based on the Participation
Percentage of Incentive BC Eligible Subdivision Population achieved by
the Payment Calculation Date as shown in the table below:

Participation Percentage of Incentive
BC Eligible Subdivision Population as
of the Payment Calculation Date
Each Eligible Settling State’s
Applicable Incentive Payment
D Percentage
Participation of less than 95%
10% of State Allocation
Participation of 95% but less than 96%
9% of State Allocation
Participation of 96% but less than 97%
8% of State Allocation
Participation of 97% but less than 98%
7% of State Allocation
Participation of 98% but less than 99%
6% of State Allocation
Participation of 99% but less than 100%
5% of State Allocation
Participation of 100%
3% of State Allocation

g.
Incentive Payment D shall be paid in two equal installments
on the Incentive Payment D Release Dates. On each Incentive Payment D
Look-Back Date, the Settlement Fund Administrator shall determine a
Settling State’s qualification for Incentive Payment D. Prior to each
Incentive Payment D Look-Back Date, Hikma may provide the Settlement
Fund Administrator and the Enforcement Committee with notice
identifying any Settling State(s) it believes do not qualify for Incentive
Payment D and information supporting its belief.
h.
Notwithstanding Section V.E.6.d and Section V.E.6.e, 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 Hikma 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.
F.
In no event shall any Settling State receive a Base Payment and Incentive
Payment totaling more than one hundred percent (100%) of its respective State Allocation
Percentage specified in Exhibit F times the Maximum Remediation Payment.
VI.
Allocation and Use of Settlement Payments
A.
Components of Settlement Fund. The Settlement Fund shall be funded by
the Remediation Payment and comprised of a Remediation 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. Unless otherwise specified herein, payments
placed into the Settlement Fund do not revert back to Hikma.
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 VI.B.2.
In no event may less than ninety-five percent (95%) of Hikma’s maximum amount
of payments pursuant to Section V 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 Hikma 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 VI.B.2
shall be available to the public. For the avoidance of doubt, (a) any amounts not
identified under this Section VI.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 Settling 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 V.D among the Settling States pursuant to Section V.D.2.
Base payments for each Settling State will then be allocated fifteen percent (15%)
to its State Fund, seventy percent (70%) to its Remediation Accounts Fund, and
fifteen percent (15%) to its Subdivision Fund. Amounts may be reallocated and will
be distributed as provided in Section VI.D.
2. Incentive Payments. The Settlement Fund Administrator will treat Incentive
Payments under Section V.E on a state-specific basis. Incentive Payments for which
a Settling State is eligible will be allocated fifteen percent (15%) to its State Fund,
seventy percent (70%) to its Remediation Accounts Fund, and fifteen percent (15%)
to its Subdivision Fund. Amounts may be reallocated and will be distributed as
provided in Section VI.D.
3. Settlement Fund Administrator. Prior to the Effective Date, Hikma 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.
4. 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, the additional amount shall be paid
out of the Settlement Fund. For the avoidance of doubt, nothing in this provision

shall require Hikma to pay any costs, fees or other amounts in excess of the Global
Settlement Amount.
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 VI.D.1 and
Section VI.D.2, then the default provisions of Section VI.D.4 apply. It is not necessary that
a State-Subdivision Agreement or other means of allocating funds pursuant to Section
VI.D.1 and Section VI.D.2 address all of the Settlement Fund sub-funds. For example, a
Statutory Trust might only address disbursements from a Settling State’s Remediation
Accounts Fund.
1. Distribution by State-Subdivision Agreement. If a Settling State has a State-
Subdivision Agreement, amounts apportioned to that Settling State’s State Fund,
Remediation Accounts Fund, and Subdivision Fund under Section VI.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 VI.B.2, and (b) that at least seventy percent (70%) of amounts be used
solely for future Opioid Remediation.7 For a State-Subdivision Agreement to be
applied to the relevant portion of the Remediation Payment, notice must be provided
to Hikma and the Settlement Fund Administrator by the Payment Calculation 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 Settling State’s State Fund, Remediation 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 VI.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 Settling State’s State Fund, Remediation
Accounts Fund, and Subdivision Fund under Section VI.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 VI of
any such unaddressed fund. For example, if an Allocation Statute or Statutory Trust
that meets the requirements of this Section VI.D.2 only addresses funds restricted to
remediation, then the default provisions of this Agreement concerning allocation
among the three (3) sub-funds comprising the Settlement Fund and the distribution

7 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

of the State Fund and Subdivision Fund for that Settling State would still apply,
while the distribution of the applicable State’s Remediation 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 Remediation 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 Settling State’s Remediation Accounts
Fund or to another Participating Subdivision. The Settlement Fund Administrator is
not required to honor a voluntary redistribution for which notice is provided to it
after the Payment Calculation Date.
4. Distribution in the Absence of a State-Subdivision Agreement, Allocation
Statute, or Statutory Trust. If Section VI.D.1, Section VI.D.2, and Section VI.D.3
do not apply, amounts apportioned to that Settling State’s State Fund, Remediation
Accounts Fund, and Subdivision Fund under Section VI.C shall be distributed as
follows:
a.
Amounts apportioned to that Settling State’s State Fund shall
be distributed to that Settling State.
b.
Amounts apportioned to that Settling State’s Remediation
Accounts Fund shall be distributed consistent with Section VI.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 Remediation
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
Remediation 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 Settling State’s Remediation
Accounts Fund to the Statutory Trust.
c.
Amounts apportioned to that Settling State’s Subdivision
Fund shall be distributed to Participating Subdivisions in that Settling State
included on Exhibit G per the Subdivision Allocation Percentage listed in
Exhibit G. Section VIII.H 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 directly 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 VI.D.3 to Special Districts that are Participating Subdivisions. A
Settling State may allocate funds from its State Fund or Remediation
Accounts Fund for Special Districts that are Participating Subdivisions.
5. Restrictions on Distribution. No amounts may be distributed from the
Subdivision Fund contrary to Section VIII, 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 VIII.E through Section VIII.G.
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 Remediation
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 VI.D.1 or by an Allocation Statute or a Statutory Trust
described in Section VI.D.2.
E.
Provisions Regarding the Remediation 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 Settling State’s Remediation
Accounts Fund so long as it complies with the requirements of Section VI.D.1 or
Section VI.D.2, as applicable, and all direct payments to Subdivisions comply with
Section VIII.E through Section VIII.G.
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 Remediation 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 Settling State’s Remediation Accounts Fund
shall be annually allocated and tracked to the regional level. A
Settling State may allow the Advisory Committee established
pursuant to Section VI.E.2.d to define its regions and assign regional
allocations percentages. Otherwise, the 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 Settling 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 Remediation Accounts Fund
allocation and does not include any additional amounts a Settling
State has directed to its Remediation 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 Remediation
Accounts Fund to the regional expenditure and may annually adjust
the percentage of its Remediation 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 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 Settling 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 Settling States. Notwithstanding the provisions of
Section VI.E.2.a, Settling States with populations under four (4) million that
do not have existing regions described in Section VI.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
VI.E.2.b 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 Remediation 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 remediation needs, and proposals for
remediation 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. Remediation
Accounts
Fund
Reporting.
The
Settlement
Fund
Administrator shall track and assist in the report of remediation disbursements as
agreed to between Hikma and the Enforcement Committee
F.
Nature of Payment. Hikma, the Settling States, and the Participating
Subdivisions each acknowledge and agree that notwithstanding anything to the contrary in
this Agreement, including, but not limited to, the scope of the Released Claims:
1. They have 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
payments (within the meaning of 26 U.S.C. § 162(f)(2)(A) and 26 C.F.R. § 1.162-
21(e)(4)(i)) as damages for the Alleged Harms allegedly suffered by the Settling
States and Participating Subdivisions; (b) the Compensatory Restitution Amount is
less than or equal to 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 less than or equal to the amount of the Alleged Harms
allegedly suffered by such Settling State or Participating Subdivision;
3. The payment of the Compensatory Restitution Amount by Hikma
constitutes payment(within the meaning of 26 U.S.C. § 162(f)(2)(A) and 26 C.F.R.
§ 1.162-21(e)(4)(i), (ii)) for alleged damage or harm allegedly caused by Hikma in
order to restore, in whole or in part, the Settling States, Participating Subdivisions,
and persons to the same position or condition that they would be in had the Settling

States, Participating Subdivisions, and persons not suffered the Alleged Harms, and
constitutes compensatory restitution and remediation for alleged damage or harm
allegedly caused by the potential violation of a law; and
4. For the avoidance of doubt: (a) the entire Compensatory Restitution
Amount is properly characterized as described in Section VI.F, (b) no portion of the
Compensatory Restitution Amount represents reimbursement to any Settling State
or Participating Subdivision or other person or entity for the fees or costs of any
investigation or litigation, including without limitation attorneys’ fees, (c) no portion
of the Global Settlement Amount constitutes the disgorgement of any allegedly ill-
gotten gains, and (d) no portion of the Global Settlement Amount is paid for, is in
place of, or is properly characterized as the payment of any fine, penalty, punitive
damages, or other punitive assessments.
VII.
Enforcement
A.
Enforceability. This Agreement is enforceable only by the Settling States
and Hikma; provided, however, that Released Entities may enforce Section XI and
Participating Subdivisions listed on Exhibit G have the enforcement rights described later
in this paragraph and in Section VII.D. Except to the extent allowed by the Injunctive Relief
Terms, Settling States and Participating Subdivisions shall not have enforcement rights
against Hikma with respect to either the terms of this Agreement that apply only to or in
other Settling States or any Consent Judgment entered into by another Settling State.
Participating Subdivisions shall not have enforcement rights against Hikma 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 Participating Subdivisions or the Remediation Accounts Fund in such
Settling State 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. Hikma consents to the jurisdiction of the court in which each
Settling State files its Consent Judgment, limited to resolution of disputes identified in
Section VII.F.2 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 Hikma believes that the ninety-five percent (95%)
threshold established in Section VI.B.1 is not being satisfied, any Party may request
that Hikma and the Enforcement Committee meet and confer regarding the use of
funds to implement Section VI.B.1. The completion of such meet-and-confer
process is a precondition to further action regarding any such dispute. Further action
concerning Section VI.B.1 shall: (i) be limited to Hikma seeking to reduce its
Settlement Product or Settlement Product Cash Conversion Amount by no more than

five percent (5%) of the difference between the actual amount of Opioid
Remediation and the ninety-five percent (95%) threshold established in Section
VI.B.1; (ii) only reduce to those Settling States and their Participating Subdivision(s)
that are below the ninety-five percent (95%) threshold established in Section VI.B.1;
and (iii) not reduce Remediation 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 Remediation 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 Remediation Accounts Fund to a Participating
Subdivision eligible to receive a block grant pursuant to Section VI.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 Remediation Accounts Fund monies were
not used for purposes similar to or in the nature of those uses contained in Exhibit
E.
3. As between the 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 Hikma Payment Enforcement. A Participating Subdivision
listed on Exhibit G shall have the same right as a Settling State to seek resolution regarding
the failure by Hikma to make its Remediation Payment.
F.
Other Terms Regarding Dispute Resolution.
1. The parties to a dispute shall promptly meet and confer in good faith to
resolve any dispute. If the parties cannot resolve the dispute informally, and unless
otherwise agreed in writing, they shall follow the remaining provisions of this
subsection to resolve the dispute.
2. Except to the extent provided by Section VII.C or Section VII.F.3, disputes
not resolved informally 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 VII.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
VI.D.4.b, Later Litigating Subdivision, Litigating Subdivision, or
Threshold Motion have been met; and
(vi)
all other disputes not specifically identified in
Section VII.C or Section VII.F.3.
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.

3. National Disputes involving a Settling State, a Participating Subdivision
that has enforcement rights pursuant to Section VII.A, and/or Hikma shall be
resolved by the National Arbitration Panel.
a.
National Disputes are disputes that are not addressed by
Section VII.C, and which are exceptions to Section VII.F.2’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;
(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 failure by Hikma to pay the Remediation
Payment or the Additional Remediation Amount, but for the
avoidance of doubt, disputes between Hikma 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;
(v)
questions regarding the performance and/or removal
of the Settlement Fund Administrator;
(vi)
disputes involving liability of successor entities;
(vii)
disputes that require a determination of the
sufficiency of participation in order to qualify for Incentive
Payments A, BC, or D;
(viii) disputes involving a Releasor’s compliance with, and
the appropriate remedy under, Section XI.B.5.c;
(ix)
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
(x)
any dispute subject to resolution under Section
VII.F.2 but for which all parties to the dispute agree to arbitration
before the National Arbitration Panel under the provisions of this
Section VII.F.3.

b.
The National Arbitration Panel shall be comprised of three
(3) neutral arbitrators. One (1) arbitrator shall be chosen by Hikma, 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
VII.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 VII.A, or Hikma on a state law issue.
g.
The decisions of the National Arbitration Panel shall be
binding on Settling States, Participating Subdivisions, Hikma, and the
Settlement Fund Administrator. In any proceeding before the National
Arbitration Panel involving a dispute between a Settling State and Hikma
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 Settling 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 VII. 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 Hikma
and Settling States/Participating Subdivisions shall be split fifty percent
(50%) by Hikma 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. For the avoidance
of doubt, Hikma shall not be responsible for the National Arbitration Panel
costs in disputes that do not concern Hikma.
4. Prior to initiating an action to enforce pursuant to this Section VII.F, the
complaining party must:
a.
Provide written notice to the Enforcement Committee and
Hikma 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.
5. If the parties to a dispute cannot agree on the proper forum for resolution of
the dispute under the provisions of Section VII.F.2 or Section VII.F.3, a committee
comprising the Enforcement Committee and sufficient representatives of Hikma
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.
Lien or Encumbrance. To the extent allowed by applicable law, this
Settlement Agreement shall not be deemed to create a lien or encumbrance against any real
property owned by Hikma or its affiliates, unless in the event of a default or breach of the
payment provisions by Hikma. Nothing in this Section shall be construed to limit any
remedy of any Settling State or Participating Subdivision in the event of a default or breach
of this Agreement by Hikma.

H.
No Effect. Nothing in this Agreement shall be interpreted to limit the
Settling States’ 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 Hikma reserves all of its rights in
connection with a CID or investigative subpoena issued pursuant to such authority.
VIII.
Participation by Subdivisions
A.
Notice. No later than fifteen (15) calendar days after the Preliminary
Agreement Date, the Implementation Administrator shall send individual written notice
(which may be delivered via e-mail or other electronic means and may be combined with
distribution of the Subdivision Settlement Participation Form) 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. To the extent a Special District is entitled to an allocation for a direct
payment through its inclusion in Exhibit G pursuant to a State-Subdivision Agreement,
Allocation Statute, Statutory Trust, or voluntary redistribution, the Implementation
Administrator, with the cooperation of the Settling States shall also send individual written
notice (which may be delivered via e-mail or other electronic means) of the opportunity to
participate in this Agreement and the requirements of participation to such Special
Districts. Unless otherwise agreed by the Parties, the version of Exhibit G used for notice
shall be the one in place as of the Preliminary Agreement Date. Notice (which may be
delivered via e-mail or other electronic means) shall also be provided simultaneously to
counsel of record for Litigating Subdivisions and known counsel for Non-Litigating
Subdivisions and Special Districts listed on Exhibit G. The costs of the Implementation
Administrator shall be paid for by the interest earned from the deposit accounts holding the
Adjusted Maximum Remediation Payment for Hikma, and nothing in this provision shall
require Hikma to pay any costs, fees or other amounts in excess of the Global Settlement
Amount. The Settling States, with the cooperation of Hikma, 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 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
Implementation Administrator or Settlement Fund Administrator (which may be executed
and returned by electronic means established by the Implementation Administrator or
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 VI; 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 Later Litigating Subdivision and Litigating
Subdivision in a Settling State may become a Participating Subdivision by returning an
executed Subdivision Settlement Participation Form to the Implementation Administrator
or Settlement Fund Administrator (which may be executed and returned by electronic
means established by the Implementation Administrator or Settlement Fund Administrator)
and upon prompt dismissal with prejudice of its lawsuit following the Reference Date or
the date on which the conditions for effectiveness in Section IX.B have been met,
whichever is later. A Settling State may require each Litigating Subdivision in that Settling
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 reports of this information to the parties upon request. A Litigating
Subdivision or Later Litigating Subdivision may not become a Participating Subdivision
after the completion of opening statements in a trial of a 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 VIII.B or Section VIII.C by the Initial
Participation Date. All Subdivision Settlement Participation Forms shall be held in escrow
by the Implementation Administrator until the Reference Date. If, for any reason, the
Agreement does not become effective, all obligations created by such forms and releases
in them shall be void ab initio and all Subdivision Settlement Participation Forms shall be
returned to Counsel for Litigating Subdivisions or to the Subdivisions not represented by
counsel or destroyed to the extent that such destruction is not prohibited by then existing
document preservation obligations.
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
VIII.B or Section VIII.C after the Initial Participation Date but before the Payment
Calculation 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 VI.D
or Section VI.E. Unless waived by Hikma, the following provisions govern what a Later
Participating Subdivision can receive (but do not apply to Initial Participating
Subdivisions):

1. A Later Participating Subdivision shall receive seventy-five percent (75%)
of the share of the Base Payment or Incentive Payment that it would have received
had it become an Initial Participating Subdivision.
2. A Later Participating Subdivision that had maintained a lawsuit for a
Released Claim against a Released Entity and had judgment entered against it on
any such Claim before it became a Participating Subdivision (other than consensual
dismissal with prejudice) shall receive 50% of the share of future Base Payments
and Incentive Payments that it would have received had it become a Participating
Subdivision prior to such judgment; provided, however that if the Subdivision
appeals the judgment and the judgment is affirmed with finality, the Subdivision
shall not receive any share of any Base Payments or Incentive Payments, and shall
return to Hikma any share of any Base Payments or Incentive Payments such
Subdivision had already received.
3. 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 the Base Payment
and Incentive Payment that it would have received if it had become an Initial
Participating Subdivision.
F.
No Increase in Payments. Amounts to be received by Later Participating
Subdivisions shall not increase the payments due from Hikma.
G.
Non-Participating Subdivisions. Non-Participating Subdivisions shall not
directly receive any portion of the Remediation Payment, including from the State Fund
and direct distributions from the Remediation Accounts Fund; however, a Settling State
may choose to fund future Opioid Remediation that indirectly benefits Non-Participating
Subdivisions.
H.
Unpaid Allocations to Later Participating Subdivisions and Non-
Participating Subdivisions. Any Base Payment and Incentive Payment allocated pursuant
to Section VI.D to a Later Participating Subdivision or Non-Participating Subdivision that
cannot be paid pursuant to this Section VIII, including the amounts that remain unpaid after
the reductions required by Section VIII.E., will be allocated to the Remediation 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.
IX.
Condition to Effectiveness of Agreement and Filing of Consent
Judgment
A.
Determination to Proceed with Settlement. —Settling States. Following the
Initial Subdivision Participation Date, the Enforcement Committee shall determine
whether to proceed with the Agreement on behalf of the Settling States, and the Settling
States shall be bound by the determination of the Enforcement Committee. No later than
fifteen (15) calendar days prior to the Reference Date, the Enforcement Committee shall
provide notice to Hikma of its decision. If the Enforcement Committee elects not to

proceed, this Agreement will have no further effect, 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. Within seven (7) calendar days of informing Hikma that there is sufficient
participation to proceed, the Enforcement Committee will deliver all signatures and
releases required by the Agreement to be provided by the Settling States to Hikma.
B.
Determination to Proceed with Settlement—Hikma. If the Settling States
elect to proceed, Hikma will then determine on or before the Reference Date whether there
is sufficient Eligible State participation, sufficient Subdivision participation, and sufficient
resolution of the Claims of the Litigating Subdivisions in the Settling States (through
participation under Section VIII, Case-Specific Resolution(s) and Bar(s)) to proceed with
this Agreement. The determination shall be in the sole discretion of Hikma and may be
based on any criteria or factors deemed relevant by Hikma.
C.
Notice by Hikma. On or before the Reference Date, Hikma shall inform the
Settling States of its determination pursuant to Section IX.B. If Hikma determines 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 Hikma determines not to proceed, this Agreement will have no further
effect, any amounts deposited, including funds referenced in Section IV.D. and Exhibit M,
shall revert to Hikma, 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.
X.
Settling State and Participating Subdivision Attorneys’ Fees and
Costs and Additional Remediation Amount
A.
The Agreement on Subdivision Attorneys’ Fees, Expenses and Costs is set
forth in Exhibit R and incorporated herein by reference.
B.
Additional Remediation Amount.
1. Subject to the reduction specified in Section X.B.2, Hikma shall pay an
Additional Remediation Amount to the Settling States listed in Exhibit N. Such
funds shall be paid as allocated by the Settlement Fund Administrator pursuant to
Exhibit N.
2. Reduction of Additional Remediation Amount. The amounts owed by Hikma
pursuant to this Section X.B shall be reduced by the allocations set forth on Exhibit
N for Non-Settling States.
3. For the avoidance of doubt, (1) a Settling State that retained outside counsel
in connection with the investigation of Hikma that receives an Additional
Remediation Amount may choose to have the Additional Remediation Amount
designated to pay the Settling State’s outside counsel, and may instruct the
Settlement Fund Administrator to pay those funds directly to the Settling State’s

outside counsel, and (2) Additional Remediation Amount funds, including funds
designated by a Settling State to pay its outside counsel under this paragraph, shall
not be subject to allocation as provided in Section VI.C through Section VI.E.
C.
All payments addressed by this Section X will be made no later than the
Payment Date pursuant to Section V.
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 (for itself and its Releasors) hereby
absolutely, unconditionally, and irrevocably covenants not to bring, file, or claim, or to
cause, assist in bringing, 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.
2. The provisions of 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.

3. 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.
4. 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, 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 Hikma in Section XI.B.3, 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.
5. 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.3 with respect to that Non-Released Entity and that
Releasor and Hikma shall take the following actions to ensure that the Released
Entities do not pay more with respect to Covered Conduct to the Releasor or to Non-
Released Entities than the amount owed under this Settlement Agreement by Hikma:
a.
Hikma 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.
Hikma and that Releasor shall meet and confer concerning
the means to hold Released Entities harmless and ensure that Hikma is not
required to pay more with respect to Covered Conduct than the amounts
owed by Hikma to the Releasor under this Agreement;
c.
The Releasor and Hikma 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 Hikma under this Agreement. Such steps may include, where
permissible:
(i)
Filing of motions to dismiss or such other appropriate
motion by Hikma or Released Entities, and supported by Releasor,
in response to any claim filed in litigation or arbitration;
(ii)
Reduction of the Releasor’s 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 the 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 Hikma to the 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 Hikma by the Releasor to
ensure it is 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 Hikma under this Agreement to reduce the
overall amounts to be paid under the Agreement such that it is held
harmless from the Claim-Over; and
(vii)
Such other actions as the Releasor and Hikma may
devise to hold Hikma harmless from the Claim-Over.
d.
The actions of the Releasor and Hikma taken pursuant to
paragraph (c) must, in combination, ensure Hikma is not required to pay
more with respect to Covered Conduct than the amounts owed to the
Releasor by Hikma under this Agreement.
e.
In the event of any dispute over the sufficiency of the actions
taken pursuant to paragraph (c), the Releasor and Hikma 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 Releasor 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, Hikma shall have a claim for breach of
this Agreement by Releasor, with the remedy being payment of sufficient
funds to hold Hikma harmless from the Claim-Over up to the amount that
Releasor has obtained, may obtain, or has authority to control from such
Non-Released Entity. For the avoidance of doubt, the prior sentence does
not limit or eliminate any other remedy that Hikma may have.
6. 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, distributor or
dispenser of Products, a manufacturer that sold Products, a consultant, and/or a
pharmacy benefit manager or other third-party payor. Hikma shall notify the Settling
States, to the extent permitted by applicable law, in the event that any of these types
of Non-Released Entities asserts a Claim-Over arising out of contractual indemnity
against it.
C.
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.
D.
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 (for itself and its Releasors)
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.

E.
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 Hikma (whether derivatively or otherwise), under any legal or equitable
theory, including for indemnification, contribution, or subrogation, the 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
Hikma.
F.
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.
G.
Representation and Warranty. The signatories hereto on behalf of their
respective Settling States and its Participating Subdivisions expressly represent and
warrant that they will obtain on or before the Effective Date (or have obtained) 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) any of the respective Settling State’s past and present
executive
departments,
state
agencies,
divisions,
boards,
commissions
and
instrumentalities with the regulatory authority to enforce state and federal controlled
substances acts; (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; and (4) any
Participating Subdivisions. For the purposes of clause (3) above, executive departments,
agencies, divisions, boards, commission, 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 as set forth in Exhibit X is sufficient to
demonstrate that the appropriate releases have been obtained.
H.
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.
I.
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 a Released Entity to secure the prompt
dismissal of any and all Released Claims, including suits brought by non-Releasors based
on Released Claims. Releasors will meet and confer and make reasonable efforts to resolve
any action that is filed by a Subdivision against Hikma on or after the date the Preliminary
Agreement Date. This provision shall not require a Settling State to make any monetary
payment or adjustment to allocation or incur other obligation.

J.
Non-Released Claims. Notwithstanding the foregoing or anything in the
definition of Released Claims, the Agreement does not waive, release or limit any criminal
liability, Claims for any outstanding liability under any tax or securities law, Claims against
parties who are not Released Entities, Claims by private individuals, Claims for Medicaid
rebates, Claims asserted, or that could be asserted, by any State or Subdivision, related to
the causes of action in In re: Generic Pharmaceuticals Pricing Antitrust Litigation, in the
United States District court for the District of Pennsylvania, MDL No. 2724; Connecticut
et al v. Aurobindo Pharma USA, Inc. et al., in the United States District Court for the
District of Connecticut, Case No. 3:16-cv-2056-NPS; Connecticut et al. v. Teva
Pharmaceuticals USA, Inc., in the United States District Court for the District of
Connecticut, Case No. 3:19-cv-710-NPS; Connecticut et al v. Sandoz, Inc. et al., in the
United States District Court for the District of Connecticut, Case No. 3:20-cv-802-NPS;
and any related action (such excluded claims include, but are not limited to, all antitrust
claims and any claims related to any non-opioid generic drugs), and any claims arising
under the Agreement for enforcement of the Agreement.
XII.
Later Litigating Subdivisions
A.
Released Claims against Released Entities. If a Later Litigating Subdivision
in a Settling State maintains a lawsuit for a Released Claim against a Released Entity after
the Reference Date, the following shall apply subject to Section XII.B:

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. Hikma shall give the relevant Settling State a
reasonable opportunity to extinguish the Released Claims without any payment or
any other obligations being imposed upon any Released Entities (apart from the
Global Settlement Amount payable by Hikma under the Agreement or the Injunctive
Relief Terms incurred by it). The relevant Settling State and Hikma shall confer and
use reasonable efforts to promptly resolve the lawsuit so that it is dismissed with
prejudice. Nothing in this subsection creates an obligation for a Settling State to
make a monetary payment or incur any other obligation to an entity filing a lawsuit.
2. If the lawsuit asserting a Released Claim is resolved with finality on terms
requiring payment by the Released Entity, Hikma shall receive a dollar-for-dollar
offset against Incentive Payment D for the amount paid. The offset shall be applied
against the relevant portion of Incentive Payment D to be released on the last
Incentive Payment D Release Date and working backwards.
3. “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, except as expressly
provided therein.
2. 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.
C.
No Effect on Other Provisions. An offset under Section XII.A shall not
affect the Injunctive Relief Terms or the Consent Judgment.
D.
No Effect on Other States. An offset under Section XII.A applicable to one
State shall not affect the allocation or payment of the Remediation Payment to other
Settling States.

E.
Litigating Subdivisions in Non-Eligible States. The Settling States will not
encourage, facilitate, or assist in any manner whatsoever claims for Covered Conduct
against Hikma in any Settling, Non-Settling, or Non-Eligible State, regardless of whether
those claims were filed against Hikma prior to, on, or after the Effective Date.
XIII.
Offset
A.
Revoked Bar or Case-Specific Resolution. If Hikma’s Remediation
Payment included any incentive payments earned as a result of the existence of a Bar or
Case-Specific Resolution in a Settling State, and there is subsequently a Revocation Event
with respect to that Bar or Case-Specific Resolution after the Payment Calculation Date
but before provision of Settlement Product or payment of the Settlement Product Cash
Conversion Amount, Hikma shall receive a dollar-for-dollar offset against the Settlement
Product or Settlement Product Cash Conversion Amount that would be allocated to that
Settling State and its Subdivisions. This offset or reimbursement will be calculated as the
dollar amount difference between (1) the total amount of incentive payments paid by
Hikma by virtue of the Bar or Case-Specific Resolution subject to the Revocation Event
and (2) the total amount of incentive payments that would have been due from Hikma
during that time had the Bar or Case-Specific Resolution subject to the Revocation Event
not been in effect. 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 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. At no point will the offset be greater than the Settlement Product or Settlement
Product Cash Conversion Amount for such Settling State.
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 V.E.4.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. 8 For the avoidance of doubt, this means that California healthcare
districts will be measured at ten percent (10%) of their membership. Hikma and the

8 The estimates for counties and parishes were accessed at https://www.census.gov/data/datasets/time-
series/demo/popest/2010s-counties-total.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.

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.
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. Hikma does 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 Hikma.
E.
Tax Cooperation and Reporting.
1. Upon request by Hikma, 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 Hikma to establish the statements set forth in
Section VI.F to the satisfaction of their tax advisors, their independent financial
auditors, the Internal Revenue Service, or any other governmental authority,
including as contemplated by 26 C.F.R § 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.E.1, each Settling State and
Participating Subdivision shall cooperate in good faith with Hikma with respect to
any tax claim, dispute, investigation, audit, examination, contest, litigation, or other
proceeding relating to this Agreement.
3. Pursuant to 26 C.F.R. § 1.6050X-1(a) and (b), the Designated State, 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 26
C.F.R. § 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 with respect to Hikma and (ii) any legally required forms,
returns or amended returns with any applicable governmental authority, or any
returns requested by Hikma, and (b) provides to Hikma a copy of (i) the IRS Form
1098-F filed with respect to Hikma 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 forms, returns, or statements shall be prepared and filed in a manner
fully consistent with Section VI.F. and as set forth in Section XIV.E.4.
4. Any form, return, amended return, or written statement filed or provided
pursuant to Section XIV.E.3, and any similar document, shall be prepared and filed
in a manner consistent with reporting the Global Settlement Amount as the “Total
amount to be paid” pursuant to this Agreement in Box 1 of IRS Form 1098-F and
the Compensatory Restitution Amount as “Restitution/remediation amount” in Box
3 of IRS Form 1098-F, as reflected in the attached Exhibit U. If the Designated State

or Appropriate Official shall be required to file any form, return, amended return, or
written statement contemplated by this Section XIV.E other than an IRS Form 1098-
F in the form attached as Exhibit U, the Designated State shall direct and ensure that
the Appropriate Official provides to Hikma a draft of such form, return, amended
return, or written statement no later than sixty (60) calendar days prior to the due
date thereof, and shall accept any reasonable revisions from Hikma on the return,
amended return, or written statement.
5. For the avoidance of doubt, neither Hikma 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).
F.
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 the Settling State or Released Entity. Settling States may
not assign or otherwise convey any right to enforce any provision of this Agreement.
G.
Calculation. Any figure or percentage referred to in this Agreement shall
be carried to seven decimal places.
H.
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.
I.
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.
J.
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.
K.
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.
L.
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.
M.
Legal Obligations. Nothing in this Agreement shall be construed as
relieving Hikma 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.
N.
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.
O.
Waive Challenge. 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 or in any litigation or arbitration
concerning Hikma’s right to coverage under an insurance contract.
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:

Josh Stein, Attorney General
North Carolina Department of Justice
Attn: Daniel Mosteller, Deputy General Counsel

PO Box 629
Raleigh, NC 27602
Dmosteller@ncdoj.gov

Jonathan Skrmetti, Attorney General
Tennessee Attorney General’s Office
Attn: Michael Leftwich, Senior Deputy Attorney General
Hamilton Millwee, Assistant Attorney General
P.O. Box 20207
Nashville, TN 37202
Michael.Leftwich@ag.tn.gov
Hamilton.Millwee@ag.tn.gov

Letitia James, Attorney General
New York State Attorney General
Attn: Jennifer Levy, First Deputy Attorney General
Monica Hanna, Special Counsel
Matthew Conrad, Assistant Attorney General

28 Liberty Street, New York, NY 10005

Jennifer.Levy@ag.ny.gov

Monica.Hanna@ag.ny.gov

Matthew.Conrad@ag.ny.gov

For the Plaintiffs’ Executive Committee:
Co-leads
Jayne Conroy

Simmons Hanly Conroy LLC
112 Madison Avenue
7th Floor
New York, NY 10016-7416
JConroy@simmonsfirm.com

Joseph F. Rice
Motley Rice LLC
28 Bridgeside Blvd.
Mount Pleasant, SC 29464
jrice@motleyrice.com

Paul T. Farrell, Jr.
Farrell & Fuller, LLC
270 Munzo Rivera Ave, Suite 201
San Juan, Puerto Rico 00918
paul@farrellfuller.com

For Hikma:

Hikma Pharmaceuticals USA Inc.
200 Connell Drive
Berkeley Heights, NJ 07922
Attn: Legal Department
Email: USLegal@hikma.com

With a copy to Hikma’s counsel:

Christopher Essig

Winston & Strawn LLP

35 W. Wacker Dr.
Chicago, IL 60601
T: (312) 399-4334

Email: CEssig@winston.com

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.Q.
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, Hikma
and its respective successors and assigns.
2. Hikma 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 Hikma (other than sales or transfers of
inventories, or sales or transfers to an entity owned directly or indirectly by Hikma)
where the sale or transfer is announced after the Reference Date, is not for fair
consideration, and would foreseeably and unreasonably jeopardize Hikma’s ability
to make the payments under this Agreement or its obligations regarding Settlement

Product under Section XV following the close of a sale or transfer transaction, unless
Hikma obtains the acquiror’s agreement that it will be either a guarantor of or
successor to the percentage of Hikma’s remaining Payment Obligations under this
Agreement equal to the percentage of Hikma’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 Hikma’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 Settling States, and any objection under this
Section XIV.T not raised within sixty (60) calendar days of the announcement of the
relevant transaction is waived.
U.
Modification, Amendment, Alteration. In the event the Plaintiffs’ Executive
Committee, the Executive Committee of the State Attorneys General, or Hikma concludes
prior to the Reference Date that technical corrections are required to this Agreement, the
Plaintiffs’ Executive Committee, the Executive Committee of the State Attorneys General,
and Hikma shall meet and confer and make such amendments as they agree are appropriate.
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 Hikma, along with
the signature of at least two-thirds of those then serving as 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 VI.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 Settling 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 Hikma and the Settling States, 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 a
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 and its
Subdivisions 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 Hikma and the Settling State 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.
Hikma and the Settling State and its Participating
Subdivisions 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 Hikma
and the Settling State and its Participating Subdivisions 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 Hikma and the Enforcement Committee agree otherwise, this
Agreement, with the exception of the Injunctive Relief Terms that have their own
provisions on duration, shall terminate as of May 15, 2027, provided that Hikma has
performed its payment and Settlement Product obligations under the Agreement as
of that date. 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 as (1) 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 Hikma or against which Hikma is 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 Hikma enters
bankruptcy and (i) the Hikma 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 Hikma pursuant to 11 U.S.C. § 365:
1. In the event that the 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 State Allocation Percentages as set forth on Exhibit F equal to at
least seventy-five percent (75%) of the total aggregate State Allocation Percentages
assigned to all Settling States deem (by written notice to Hikma) that the financial
obligations of this Agreement have been terminated and rendered null and void
(except as provided in Section XIV.X.1.a) due to a material breach by Hikma,
whereupon:
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 Hikma; 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 Hikma and the
Settling States shall have the right to assert any and all claims against Hikma
in the bankruptcy or otherwise 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 Hikma itself; and (ii) in the event the
Settling State asserts any Released Claim against Hikma after the rejection
and/or termination of this Agreement 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 the Settling State has
previously received from Hikma 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 the Settling State is required
to disgorge or repay to Hikma’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 Hikma subject to all
defenses and rights of the Hikma.
Y.
Waiver. Hikma, for good and valuable consideration the receipt of which is
acknowledged, hereby (a) waives, foregoes and relinquishes all rights to utilize and/or seek
relief under any of the following laws of the State of Texas for the restructuring of its debts
or liabilities related to Released Claims, Claims that would have been Released Claims if
they had been brought by a Releasor against a Released Entity before the Effective Date,

or this Agreement: Tex. Bus. Orgs. Code § 10.003 (Contents of Plan of Merger: More Than
One Successor) or any other statute of Subchapter A of Chapter 10 of Tex. Bus. Orgs. Code
to the extent such statute relates to multi-successor mergers (and/or any other similar laws
or statutes in any other state or territory); Tex. Bus. Orgs. Code §§ 11.01–11.414 (Winding
Up and Termination of Domestic Entity); or Tex. Bus. & Com. Code §§ 23.01–23.33
(Assignments for the Benefit of Creditors) (collectively, the “Texas Statutes”), and (b)
agrees, warrants and represents that it will not file, request or petition for relief under the
Texas Statutes related to its debts or liabilities related to Released Claims, Claims that
would have been Released Claims if they had been brought by a Releasor against a
Released Entity before the Effective Date, or this Agreement, in each case until such time
as all of Hikma’s payment obligations incurred hereunder are satisfied in full. The
foregoing waiver and relinquishment includes, without limitation, until such time as all of
Hikma’s payment obligations incurred hereunder are satisfied in full, Hikma’s rights to
execute a divisional merger or equivalent transaction or restructuring related to its debts or
liabilities related to Released Claims, Claims that would have been Released Claims if they
had been brought by a Releasor against a Released Entity before the Effective Date, or this
Agreement that in each case has the intent or foreseeable effect of (i) separating material
assets from material liabilities and (ii) assigning or allocating all or a substantial portion of
those liabilities to any subsidiary or affiliate that files for relief under chapter 11 of the
Bankruptcy Code, or pursuant to which such subsidiary or affiliate that files for relief under
chapter 11 of the Bankruptcy Code would be assuming or retaining all or a substantial
portion of those liabilities.
XV.
Settlement Product
A. The Settlement Product is Kloxxado (naloxone HCl) nasal spray 8mg, a medication that
counteracts the life-threatening effects of opioid overdose and significantly reduces opioid-
overdose mortality.

B. For the purposes of this agreement, Hikma has agreed to provide the Settling States
Settlement Product valued at $34,720,371, which equals 277,763 cartons of Settlement
Product (each carton contains two devices), valued at a fixed Wholesale Acquisition Cost
(WAC) of $125 per carton, allocated in accordance with the allocation percentage as
reflected in Exhibit D-1. Hikma shall cover the cost of the Settlement Product distribution
set forth in this Agreement. For the avoidance of doubt, Participating Subdivisions and
Special Districts are not eligible to make a Settlement Product election pursuant to this
agreement.

C. Hikma shall provide the full Settlement Product to Settling States by May 15, 2027.

D. Consistent with the Settlement Product Election Form contained in Exhibit D, each Settling
State shall have the discretion to convert any portion of the Settlement Product allocated
to the Settling State into a cash value equaling twenty percent (20%) of the WAC value of
the Settling State’s allocated Settlement Product. Such decision must be made prior to the
Settlement Product Election Date; Settling States will have no ability to convert any portion
of the Settlement Product to Settlement Product Cash Conversion Amount following the
Settlement Product Election Date. Unless cash conversion amounts are specifically

addressed in a State-Subdivision Agreement or Allocation Statute, a Settling State’s
Settlement Product Cash Conversion Amount shall be disbursed to the Settling State in the
same manner as its Remediation Accounts Fund payments are made pursuant to Section
VI. This cash conversion payment is due by May 15, 2027.

E. Within thirty (30) days of the Effective Date, each Settling State shall notify Hikma and
the Settlement Fund Administrator of its Settlement Product election by submitting the
Settlement Product Election Form reflected in Exhibit D.

F. Settling States that do not make a Settlement Product Election within 30 days of the
Effective Date shall be deemed to have elected to receive full Settlement Product and to
have elected not to convert any portion of the Settlement Product into Settlement Product
Cash Conversion Amount. Commencing within thirty (30) days of the Effective Date, the
Settling States that have submitted a Settlement Product Election Form may place periodic
orders for Settlement Product consistent with Section XV and Exhibit D.

G. The Parties understand that the provision of Settlement Product constitutes compensatory
restitution within the meaning of 26 U.S.C. § 162(f)(2)(A) and that the receipt of Settlement
Product must be reported on IRS Form 1098-F consistent with subsection XIV.E.

H. In addition to offering Kloxxado (naloxone HCl) nasal spray 8mg per this Section XV and
Exhibit D, Hikma, at its sole discretion, may also offer Settling States different versions or
greater amounts of Settlement Product or different products that can be accepted by the
Settling State in lieu of its full allotment of the Settlement Product or Settlement Product
Cash Conversion Amount. Distribution and other terms related to such substitute product
shall be set out in Hikma’s offer. Nothing in this subsection changes the terms of this
Agreement regarding the provision of Settlement Product or the calculation or availability
of the Settlement Product Cash Conversion Amount.

I. In the event of a Force Majeure Event, Hikma shall promptly provide written notice to the
Settling States. Hikma and the States shall meet and confer within seven (7) days of such
written notice to establish a commercially reasonable plan to resolve any inability to supply
as quickly as reasonably possible, it being understood that, unless otherwise agreed to by
the Parties, it is Hikma’s obligation to use reasonable efforts which are consistent with
accepted industry practices to resume performance as soon as practicable under the
circumstances.

J. Settling States shall not be permitted to return to Hikma any Settlement Product under any
circumstances other than a recall of the Settlement Product initiated by Hikma or FDA, in
which case Hikma’s sole obligation shall be to supply the same number of Settlement
Product units to replace the recalled product.