22-153.00 Washington State & Settling Distributors: Opioid Allocation Agreement 22- i ;3
ALLOCATION AGREEMENT GOVERNING THE ALLOCATION OF FUNDS PAID
BY THE SETTLING OPIOID DISTRIBUTORS IN WASHINGTON STATE
AUGUST 8,2022
This Allocation Agreement Governing the Allocation of Funds Paid by the Settling
Opioid Distributors in Washington State(the "Allocation Agreement") governs the distribution
of funds obtained from AmerisourceBergen Corporation, Cardinal Health, Inc., and McKesson
Corporation(the"Settling Distributors") in connection with its resolution of any and all claims
by the State of Washington and the counties,cities, and towns in Washington State ("Local
Governments")against the Settling Distributors (the"Distributors Settlement"). The Distributors
Settlement including any amendments are attached hereto as Exhibit 1.
1. This Allocation Agreement is intended to be a State-Subdivision Agreement as
defined in Section I.VVV of the Global Settlement(the "Global Settlement"),
which is Exhibit H of the Distributors Settlement. This Allocation Agreement
shall be interpreted to be consistent with the requirements of a State-Subdivision
Agreement in the Global Settlement.
2. This Allocation Agreement shall become effective only if all of the following
occur:
A. All Litigating Subdivisions in Washington and 90% of Non-Litigating
Primary Subdivisions in Washington as the terms are used in Section
II.C.1 of the Distributors Settlement must execute and return the
Subdivision Settlement Participation Form, Exhibit F of the Distributors
Settlement(the"Participation Form")by September 23,2022. This form
is also attached hereto as Exhibit 2.
B. The Consent Judgment and Stipulation of Dismissal with Prejudice,
Exhibit G of the Distributors Settlement, is filed and approved by the
Court.
C. The number of Local Governments that execute and return this Allocation
Agreement satisfies the participation requirements for a State-Subdivision
Agreement as specified in Exhibit 0 of the Global Settlement.
3. Requirements to become a Participating Local Government. To become a
Participating Local Government that can participate in this Allocation Agreement,
a Local Government must do all of the following:
A. The Local Government must execute and return this Allocation
Agreement.
B. The Local Government must release their claims against the Settling
Distributors and agree to by bound by the terms of the Distributors
Settlement by timely executing and returning the Participation Form. This
form is attached hereto as Exhibit 2.
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C. Litigating Subdivisions must dismiss the Settling Distributors with
prejudice from their lawsuits. The Litigating Subdivisions are listed on
Exhibit B of the Distributors Settlement.
D. The Local Government must execute and return the One Washington
Memorandum of Understanding Between Washington Municipalities
("MOU") agreed to by the Participating Local Governments in
Washington State,which is attached hereto as Exhibit 3. As specified in
Paragraph 10.A of this Allocation Agreement,the Local Government may
elect in its discretion to execute the MOU for purposes of this Allocation
Agreement only.
A Local Government that meets all of the conditions in this paragraph shall be
deemed a"Participating Local Government."Alternatively, if the requirements of
Paragraphs 2(A), 2(B), and 2(C) of this Allocation Agreement are satisfied and
this Allocation Agreement becomes effective,then all Local Governments that
comply with Paragraph 3(B)of this Allocation Agreement shall be deemed a
"Participating Local Government."
4. This Allocation Agreement applies to the Washington Abatement Amount as
defined in Section IV.A of the Distributors Settlement. The maximum possible
Washington Abatement Amount for the Distributors Settlement is
$430,249,769.02. As specified in the Global Settlement, the Washington
Abatement Amount varies dependent on the percentage of Primary Subdivisions
that choose to become Participating Local Governments and whether there are
any Later Litigating Subdivisions as defined in Section I.EE of the Global
Settlement.
5. This Allocation Agreement does not apply to the Washington Fees and Costs as
defined in Section V of the Distributors Settlement. After satisfying its obligations
to its outside counsel for attorneys' fees and costs,the State estimates that it will
receive approximately $46 million for its own attorneys' fees and costs pursuant
to Section V.B.1 of the Distributors Settlement. The State shall utilize any and all
amounts it receives for its own attorneys' fees and costs pursuant to Section V.B.1
of the Distributors Settlement to provide statewide programs and services for
Opioid Remediation as defined in Section I.SS of the Global Settlement.
6. While this Allocation Agreement does not apply to the Washington Fees and
Costs as defined in Section V of the Distributors Settlement, Section V.B.2 of the
Distributors Settlement estimates that the Settling Distributors shall pay
$10,920,914.70 to Participating Litigating Subdivisions' attorneys for fees and
costs. The actual amount may be greater or less. This Allocation Agreement and
the MOU are a State Back-Stop Agreement. The total contingent fees an attorney
receives from the Contingency Fee Fund pursuant to Section II. D in Exhibit R
the Global Settlement,the MOU,and this Allocation Agreement combined cannot
exceed 15%of the portion of the LG Share paid to the Litigating Local
Government that retained that firm (i.e., if City X filed suit with outside counsel
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on a contingency fee contract and City X receives $1,000,000 from the
Distributors Settlement, then the maximum that the firm can receive is $150,000
for fees.)
7. No portion of the Washington Fees and Costs as defmed in Section V of the
Distributors Settlement and/or the State Share as defmed in Paragraph 8.A of this
Allocation Agreement shall be used to fund the Government Fee Fund("GFF")
referred to in Paragraph 10 of this Allocation Agreement and Section D of the
MOU, or in any other way to fund any Participating Local Government's
attorneys' fees, costs, or common benefit tax other than the aforementioned
payment by the Settling Distributors to Participating Litigating Subdivisions'
attorneys for fees and costs in Section V.B.2 of the Distributors Settlement.
8. The Washington Abatement Amount shall and must be used by the State and
Participating Local Governments for Opioid Remediation as defined in Section
I.SS of the Global Settlement,except as allowed by Section V of the Global
Settlement. Exhibit 4 is a non-exhaustive list of expenditures that qualify as
Opioid Remediation. Further,the Washington Abatement Amount shall and must
be used by the State and Participating Local Governments as provided for in the
Distributors Settlement.
9. The State and the Participating Local Governments agree to divide the
Washington Abatement Amount as follows:
A. Fifty percent(50%)to the State of Washington("State Share").
B. Fifty percent(50%)to the Participating Local Governments("LG Share").
10. The LG Share shall be distributed pursuant to the MOU attached hereto as Exhibit
3 as amended and modified in this Allocation Agreement.
11. For purposes of this Allocation Agreement only,the MOU is modified as follows
and any contrary provisions in the MOU are struck:
A. The MOU is amended to add new Section E.6,which provides as follows:
A Local Government may elect in its discretion to execute the
MOU for purposes of this Allocation Agreement only. If a Local
Governments executes the MOU for purposes of this Allocation
Agreement only,then the MOU will only bind such Local
Government and be effective with respect to this Allocation
Agreement and the Distributors Settlement, and not any other
Settlement as that term is defmed in Section A.14 of the MOU. To
execute the MOU for purposes of this Allocation Agreement only,
the Local Government may either(a)check the applicable box on
its signature page of this Allocation Agreement that is returned or
(b)add language below its signature lines in the MOU that is
returned indicating that the Local Government is executing or has
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executed the MOU only for purposes of the Allocation Agreement
Governing the Allocation of Funds Paid by the Settling Opioid
Distributors in Washington State.
B. Exhibit A of the MOU is replaced by Exhibit E of the Global Settlement,
which is attached as Exhibit 4 to this Agreement.
C. The definition of"Litigating Local Governments" in Section A.4 of the
MOU shall mean Local Governments that filed suit against one or more of
the Settling Defendants prior to May 3, 2022. The Litigating Local
Governments are listed on Exhibit B of the Distributors Settlement, and
are referred to as Litigating Subdivisions in the Distributors Settlement.
D. The definition of"National Settlement Agreement"in Section A.6 of the
MOU shall mean the Global Settlement.
E. The definition of"Settlement"in Section A.14 of the MOU shall mean the
Distributors Settlement.
F. The MOU is amended to add new Section C.4.g.vii, which provides as
follows:
"If a Participating Local Government receiving a direct payment
(a)uses Opioid Funds other than as provided for in the Distributors
Settlement, (b) does not comply with conditions for receiving
direct payments under the MOU,or(c) does not promptly submit
necessary reporting and compliance information to its Regional
Opioid Abatement Counsel ("Regional OAC") as defined at
Section C.4.h of the MOU,then the Regional OAC may suspend
direct payments to the Participating Local Government after
notice, an opportunity to cure, and sufficient due process. If direct
payments to Participating Local Government are suspended, the
payments shall be treated as if the Participating Local Government
is foregoing their allocation of Opioid Funds pursuant to Section
C.4.d and C.4 j.iii of the MOU. In the event of a suspension, the
Regional OAC shall give prompt notice to the suspended
Participating Local Government and the Settlement Fund
Administrator specifying the reasons for the suspension, the
process for reinstatement, the factors that will be considered for
reinstatement, and the due process that will be provided. A
suspended Participating Local Government may apply to the
Regional OAC to be reinstated for direct payments no earlier than
five years after the suspension."
G. Consistent with how attorney fee funds for outside counsel for
Participating Local Subdivisions are being administered in most states
across the country, the Government Fee Fund("GFF") set forth in the
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MOU shall be overseen by the MDL Fee Panel (David R. Cohen, Randi S.
Ellis and Hon. David R. Herndon(ret.)). The Fee Panel will preside over
allocation and disbursement of attorney's fees in a manner consistent with
the Motion to Appoint the Fee Panel to Allocate and Disburse Attorney's
Fees Provided for in State Back-Stop Agreements and the Order
Appointing the Fee Panel to Allocate and Disburse Attorney's Fees
Provided for in State Back-Stop Agreements, Case No. 1:17-md-02804-
DAP Doc#: 4543 (June 17, 2022).
H. The GFF set forth in the MOU shall be funded by the LG Share of the
Washington Abatement Amount only. To the extent the common benefit
tax is not already payable by the Settling Distributors as contemplated by
Section D.8 of the MOU, the GFF shall be used to pay Litigating Local
Government contingency fee agreements and any common benefit tax
referred to in Section D of the MOU,which shall be paid on a pro rata
basis to eligible law firms as determined by the Fee Panel.
To fund the GFF, fifteen percent(15%)of the LG Share shall be deposited
in the GFF from each LG Share settlement payment until the Litigating
Subdivisions contingency fee agreements and common benefit tax (if any)
referred to in Section D of the MOU are satisfied. Under no circumstances
will any Non-Litigating Primary Subdivision or Litigating Local
Government be required to contribute to the GFF more than 15%of the
portion of the LG Share allocated to such Non-Litigating Primary
Subdivision or Litigating Local Government. In addition,under no
circumstances will any portion of the LG Share allocated to a Litigating
Local Government be used to pay the contingency fees or litigation
expenses of counsel for some other Litigating Local Government.
J. The maximum amount of any Litigating Local Government contingency
fee agreement(from the Contingency Fee Fund pursuant to Section II. D
in Exhibit R the Global Settlement)payable to a law firm permitted for
compensation shall be fifteen percent(15%) of the portion of the LG
Share paid to the Litigating Local Government that retained that firm(i.e.,
if City X filed suit with outside counsel on a contingency fee contract and
City X receives$1,000,000 from the Distributors Settlement,then the
maximum that the firm can receive is $150,000 for fees.) The firms also
shall be paid documented expenses due under their contingency fee
agreements that have been paid by the law firm attributable to that
Litigating Local Government. Consistent with the Distributors Settlement
and Exhibit R of the Global Settlement, amounts due to Participating
Litigating Subdivisions' attorneys under this Allocation Agreement shall
not impact(i) costs paid by the subdivisions to their attorneys pursuant to
a State Back-Stop agreement, (ii) fees paid to subdivision attorneys from
the Common Benefit Fund for common benefit work performed by the
attorneys pursuant to Section II.0 of Exhibit R of the Global Settlement,
or(iii)costs paid to subdivision attorneys from the MDL Expense Fund
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for expenses incurred by the attorneys pursuant to Section II.E of the
Global Settlement.
K. Under no circumstances may counsel receive more for its work on behalf
of a Litigating Local Government than it would under its contingency
agreement with that Litigating Local Government. To the extent a law
firm was retained by a Litigating Local Government on a contingency fee
agreement that provides for compensation at a rate that is less than fifteen
percent(15%) of that Litigating Local Government's recovery, the
maximum amount payable to that law firm referred to in Section D.3 of
the MOU shall be the percentage set forth in that contingency fee
agreement.
L. For the avoidance of doubt, both payments from the GFF and the payment
to the Participating Litigating Local Governments' attorneys for fees and
costs referred to in Paragraph 6 of this Allocation Agreement and Section
V.B.2 Distributors Settlement shall be included when calculating whether
the aforementioned fifteen percent(15%)maximum percentage(or less if
the provisions of Paragraph 10.K of this Allocation Agreement apply) of
any Litigating Local Government contingency fee agreement referred to
above has been met.
M. To the extent there are any excess funds in the GFF, the Fee Panel and the
Settlement Administrator shall facilitate the return of those funds to the
Participating Local Governments as provided for in Section D.6 of the
MOU.
12. In connection with the execution and administration of this Allocation
Agreement,the State and the Participating Local Governments agree to abide by
the Public Records Act, RCW 42.56 eq seq.
13. All Participating Local Governments, Regional OACs, and the State shall
maintain all non-transitory records related to this Allocation Agreement as well as
the receipt and expenditure of the funds from the Distributors Settlement for no
less than five (5) years.
14. If any party to this Allocation Agreement believes that a Participating Local
Government, Regional OAC, the State, an entity, or individual involved in the
receipt, distribution, or administration of the funds from the Distributors
Settlement has violated any applicable ethics codes or rules, a complaint shall be
lodged with the appropriate forum for handling such matters, with a copy of the
complaint promptly sent to the Washington Attorney General, Complex Litigation
Division, Division Chief, 800 Fifth Avenue, Suite 2000, Seattle, Washington
98104.
15. To the extent(i) a region utilizes a pre-existing regional body to establish its
Opioid Abatement Council pursuant to the Section 4.h of the MOU, and (ii)that
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pre-existing regional body is subject to the requirements of the Community
Behavioral Health Services Act, RCW 71.24 et seq., the State and the
Participating Local Governments agree that the Opioid Funds paid by the Settling
Distributors are subject to the requirements of the MOU and this Allocation
Agreement.
16. Upon request by the Settling Distributors, the Participating Local Governments
must comply with the Tax Cooperation and Reporting provisions of the
Distributors Settlement and the Global Settlement.
17. Venue for any legal action related to this Allocation Agreement(separate and
apart from the MOU,the Distributors Settlement, or the Global Settlement) shall
be in King County, Washington.
18. Each party represents that all procedures necessary to authorize such party's
execution of this Allocation Agreement have been performed and that such person
signing for such party has been authorized to execute this Allocation Agreement.
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FOR THE STATE OF WASHINGTON:
ROBERT W. FERGUSON
Attorney General
JEF Y G. UP
Div ion Chi
Date: / a a ��
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FOR THE PARTICIPATING LOCAL GOVERNMENT:
Name of Participating Local Government: C i ut 0- S p°Ica v vU 11 ei
Authorized signature:
Name: E! I lC. Z. Loin 1
Title: ' tndC 641 N IC/YNG
Date: St rt. ZOZZ
A Local Government may elect in its discretion to execute the MOU for purposes of this
Allocation Agreement only by checking this box(see Paragraph 10.A of this Allocation
Agreement):
9( Local Government is executing the MOU in the form attached hereto as Exhibit 3,but
which is further amended and modified as set forth in this Allocation Agreement,only for
purposes of this Allocation Agreement.
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EXHIBIT 1
Distributors Settlement
DISTRIBUTORS WASHINGTON
SETTLEMENT AGREEMENT
Table of Contents
I. Overview 1
II. Conditions to Effectiveness of Agreement 1
III. Participation by Subdivisions 3
IV. Settlement Payments 3
V. Plaintiffs' Attorneys' Fees and Costs 4
VI. Release 6
VII. Miscellaneous 6
Exhibit A Primary Subdivisions A-1
Exhibit B Litigating Subdivisions 13-1
Exhibit C ABC IRS Form 1098-F C-1
Exhibit D Cardinal Health IRS Form 1098-F 1)-1
Exhibit E McKesson IRS Form 1098-F E-1
Exhibit F Subdivision Settlement Participation Form F-1
Exhibit G Consent Judgment and Stipulation of Dismissal with Prejudice G-1
Exhibit H Distributor Global Settlement Agreement H-1
DISTRIBUTORS—WASHINGTON SETTLEMENT AGREEMENT
I. Overview
This Distributors Washington Settlement Agreement("Agreement") sets forth the terms
and conditions of a settlement agreement between and among the State of Washington,
McKesson Corporation("McKesson"), Cardinal Health, Inc. ("Cardinal") and
AmerisourceBergen Corporation("Amerisource") (collectively, the "Agreement Parties")to
resolve opioid-related Claims against McKesson, Cardinal, and/or Amerisource (collectively,
"Settling Distributors").
By entering into this Agreement,the State of Washington and its Participating
Subdivisions agree to be bound by all terms and conditions of the Distributor Global Settlement
Agreement dated July 21, 2021 (including its exhibits) ("Global Settlement"), which(including
its exhibits) is incorporated into this Agreement as Exhibit H.' By entering this Agreement, and
upon execution of an Agreement Regarding the State of Washington and the Distributor Global
Settlement Agreement("Enforcement Committee Agreement"),unless otherwise set forth in this
Agreement,the Settling Distributors agree to treat the State of Washington for all purposes as if
it were a Settling State under the Global Settlement and its Participating Subdivisions for all
purposes as if they were Participating Subdivisions under the Global Settlement. Unless stated
otherwise in this Agreement,the terms of this Agreement are intended to be consistent with the
terms of the Global Settlement and shall be construed accordingly. Unless otherwise defined in
this Agreement, all capitalized terms in this Agreement shall be defined as they are in the Global
Settlement.
The Settling Distributors have agreed to the below terms for the sole purpose of
settlement, and nothing herein, including in any exhibit to this Agreement, may be taken as or
construed to be an admission or concession of any violation of law,rule, or regulation, or of any
other matter of fact or law, or of any liability or wrongdoing, or any misfeasance, nonfeasance,
or malfeasance, all of which the Settling Distributors expressly deny. No part of this Agreement,
including its statements and commitments, and its exhibits, shall constitute or be used as
evidence of any liability, fault, or wrongdoing by the Settling Distributors. Unless the contrary is
expressly stated,this Agreement is not intended for use by any third party for any purpose,
including submission to any court for any purpose.
II. Conditions to Effectiveness of Agreement
A. Global Settlement Conditions to Effectiveness.
1. The Agreement Parties acknowledge that certain deadlines set forth in
Section VIII of the Global Settlement passed before the execution of this Agreement. For
'The version of the Global Settlement as updated on March 25, 2022 is attached to this
Agreement as Exhibit H. Further updates to the Global Settlement shall be deemed incorporated
into this Agreement and shall supersede all earlier versions of the updated provisions.
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that reason, (i) Settling Distributors agree to treat the State of Washington as satisfying the
deadlines set forth in Section VIII of the Global Settlement provided that the State of
Washington satisfies its obligations set forth in this Section II and(ii)the State of
Washington agrees to treat Settling Distributors as having satisfied all notice obligations
under Section VIII.B of the Global Settlement as to the State of Washington.
2. The State of Washington shall deliver all signatures and releases required
by the Agreement to be provided by the Settling States to the Settling Distributors by
September 30, 2022. This Section II.A.2 supersedes the deadline for delivering those
signatures and releases set forth in Section VIII.A.1 of the Global Settlement.
B. Agreement with Enforcement Committee. This Agreement shall not become
effective unless the Enforcement Committee and the Settling Distributors execute the Enforcement
Committee Agreement. If the Enforcement Committee Agreement is not executed by June 1, 2022,
the State of Washington and Settling Distributors will promptly negotiate an agreement that mirrors
the Global Settlement to the extent possible and with a credit of$1,000,000 to Settling Distributors
to account for possible credits the Settling Distributors would have received under Section V of this
Agreement from the State Cost Fund and the Litigating Subdivision Cost Fund of the Global
Settlement and to be deducted from the Year 7 payment described in Section V.B.1 and Section
V.C.g of this Agreement.
C. Participation by Subdivisions. If the condition in Section II.B has been satisfied,
this Agreement shall become effective upon one of the following conditions being satisfied:
1. All Litigating Subdivisions in the State of Washington and ninety percent
(90%) of Non-Litigating Primary Subdivisions (calculated by population pursuant to the
Global Settlement) in the State of Washington must become Participating Subdivisions by
September 23, 2022.
2. If the condition set forth in Section II.C.1 is not met,the Settling
Distributors shall have sole discretion to accept the terms of this Agreement, which shall
become effective upon notice provided by the Settling Distributors to the State of
Washington. If the condition set forth by Section II.C.1 is not met and Settling Distributors
do not exercise discretion to accept this Agreement, this Agreement will have no further
effect and all releases and other commitments or obligations contained herein will be void.
D. Dismissal of Claims. Provided that the conditions in Sections II.B and II.0 have
been satisfied,the State of Washington shall file the Consent Judgment described in Section I.N of
the Global Settlement and attached hereto as Exhibit G("Washington Consent Judgment")with the
King County Superior Court("Washington Consent Judgment Court")on or before November 1,
2022. This Section II.C.2 supersedes the deadline for submitting a Consent Judgment set forth in
Section VIII.B of the Global Settlement. In the event that the Court declines to enter the
Washington Consent Judgment, each Settling Distributor shall be entitled to terminate the
Agreement as to itself and shall be excused from all obligations under the Agreement, and if a
Settling Distributor terminates the Agreement as to itself, all releases and other commitments or
obligations contained herein with respect to that Settling Distributor will be null and void. The date
of the entry of the Washington Consent Judgment shall be the effective date of this Agreement
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("Washington Effective Date"). Within the later of forty-five (45)days after the Washington
Effective Date or December 31, 2022, each Settling Distributor will certify to the State that all
medical claims data provided to it during the litigation(including Medicaid, PMP, LNI claims, and
PEBB data)has been destroyed by the party and its agents, including all retained experts.
III. Participation by Subdivisions
A. Notice. The Office of the State of Washington Attorney General in consultation
with the Settling Distributors shall send individual notice of the opportunity to participate in this
Agreement and the requirements for participation to all Subdivisions eligible to participate who
have not returned an executed Subdivision Settlement Participation Form within fifteen(15) days of
the execution of this Agreement. The Office of the State of Washington Attorney General may also
provide general notice reasonably calculated to alert Subdivisions, including publication and other
standard forms of notification. Nothing contained herein shall preclude the State of Washington
from providing further notice to, or from contacting any of its Subdivision(s) about, becoming a
Participating Subdivision.
B. Trigger Date for Later Litigating Subdivisions. Notwithstanding Sections I.EE and
I.GGGG of the Global Settlement, as to the State of Washington, Settling Distributors and the State
of Washington agree to treat the Trigger Date for Primary Subdivisions as September 23, 2022 and
the Trigger Date for all other Subdivisions as May 3, 2022.
C. Initial and Later Participating Subdivisions. Notwithstanding Sections I.BB, I.CC,
I.FF and Section VII.D and E of the Global Settlement, any Participating Subdivision in
Washington that meets the applicable requirements for becoming a Participating Subdivision set
forth in Section VII.B or Section VII.0 of the Global Settlement on or before September 23, 2022
shall be considered an Initial Participating Subdivision. Participating Subdivisions that are not
Initial Participating Subdivisions but meet the applicable requirements for becoming Participating
Subdivisions set forth in Section VII.B or Section VII.0 of the Global Settlement after September
23, 2022 shall be considered Later Participating Subdivisions.
D. Subdivision Settlement Participation Forms. Each Subdivision Settlement
Participation Form submitted by a Participating Subdivision from the State of Washington shall be
materially identical to Exhibit F to this Agreement. Nothing in Exhibit F is intended to modify in
any way either the terms of this Agreement or the terms of the Global Settlement, both of which the
State of Washington and Participating Subdivisions agree to be bound. To the extent that any
Subdivision Settlement Participation Form submitted by any Participating Subdivision is worded
differently from Exhibit F to this Agreement or interpreted differently from the Global Agreement
and this Agreement in any respect, the Global Agreement and this Agreement control.
IV. Settlement Payments
A. Schedule. Annual Payments under this Agreement shall be calculated as if the
State of Washington were a Settling State under the Global Settlement and shall be made pursuant
to the terms of Section IV of the Global Settlement except that, as to the State of Washington,the
Payment Date for Payment Year 1 shall be December 1, 2022 and the Payment Date for Payment
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Year 2 shall be December 1, 2022. For the avoidance of doubt,the sole component of the State of
Washington's Annual Payment is the portion of the Net Abatement Amount allocated to the State
of Washington under the Global Settlement("Washington Abatement Amount"). The maximum
possible Washington Abatement Amount is $430,249,769.02.
B. Use of Payment. The Washington Abatement Amount paid under this Agreement
shall be used as provided for in Section V of the Global Settlement.
C. Nature of Payment. The State of Washington and its Participating Subdivisions
agree that payments made to the State of Washington and its Participating Subdivisions under this
Agreement are properly characterized as described in Section V.F of the Global Settlement.
V. Plaintiffs' Attorneys' Fees and Costs
A. Interaction with Global Settlement. Notwithstanding any contrary provision in the
Global Settlement, payments to cover attorneys' fees and costs under this Agreement("Washington
Fees and Costs") shall be made pursuant to this Section V.
B. Amounts. The total amount to cover of all Washington Fees and Costs is
$87,750,230.98. That total consists of the categories of attorneys' fees and costs set forth in this
Section V.B and shall be paid on the schedule set forth in Section V.C.
1. State Outside and Inside Counsel Fees and Costs. Settling Distributors shall
pay $76,829,316.21 to cover in-house fees and costs and outside counsel fees and costs to
the Washington Attorney General's Office, which shall be used for any lawful purpose in
the discharge of the Attorney General's duties at the sole discretion of the Attorney General.
The amount shall be paid in increments as specified in Section V.0 (Payment Year 1 —20%,
Payment Year 2—20%, Payment Year 3— 15%, Payment Year 4— 15%, Payment Year 5—
15%, Payment Year 6— 10%, Payment Year 7—5%.)
2. Fees and Costs for Participating Litigating Subdivisions' Attorneys.
Settling Distributors shall pay $10,920,914.70 to Participating Litigating Subdivisions'
attorneys for fees and costs into a single account as directed by the Washington Attorney
General's Office,which then shall be paid as agreed between the State of Washington and
attorneys for Participating Litigating Subdivisions. Participating Litigating Subdivisions'
attorneys shall be paid in accordance with the schedule in Section V.0 and V.D.5 of this
Agreement.
C. Schedule. Washington Fees and Costs shall be paid according to the following
schedule:
a. Payment Year 1: Twenty percent(20%) of the total Washington
Fees and Costs amount($17,550,046.20),to be paid on or before December 1,
2022.
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b. Payment Year 2: Twenty percent(20%)of the total Washington
Fees and Costs amount($17,550,046.20),to be paid on or before December 1,
2022.
c. Payment Year 3: Fifteen percent(15%) of the total Washington
Fees and Costs amount($13,162,534.65),to be paid on or before July 15, 2023.
d. Payment Year 4: Fifteen percent (15%)of the total Washington
Fees and Costs amount($13,162,534.65),to be paid on or before July 15, 2024.
e. Payment Year 5: Fifteen percent (15%) of the total Washington
Fees and Costs amount($13,162,534.65),to be paid on or before July 15, 2025.
f. Payment Year 6: Ten percent(10%)of the total Washington Fees
and Costs amount($8,775,023.10),to be paid on or before July 15, 2026.
g. Payment Year 7: Five percent(5%) of the total Washington Fees
and Costs amount($4,387,511.55),to be paid on or before July 15, 2027.
D. Remittance. So that Settling Distributors do not pay the same fees and costs under
both the Global Settlement and this Agreement, Washington and its Participating Litigating
Subdivisions and their respective counsel shall do as follows:
1. Participating Litigating Subdivisions in Washington and their counsel shall
apply to the Attorney Fee Fund and the Litigating Subdivision Cost Fund created pursuant
to Exhibit R of the Global Settlement for all fees, costs and expenses for which they may be
eligible and shall instruct the Fee Panel and the Cost and Expense Fund Administrator to
remit to Settling Distributors the full amount awarded to such Participating Litigating
Subdivision,with each Settling Distributor receiving the percentage of that amount
corresponding to the allocation set forth in Section IV.I of the Global Settlement.
2. Counsel for Participating Subdivisions shall instruct the Fee Panel created
by the MDL Court pursuant to Exhibit R of the Global Settlement to remit to Settling
Distributors the Contingency Fee Amount for their Participating Subdivisions in the State of
Washington, with each Settling Distributor receiving the percentage of that amount
corresponding to the allocation set forth in Section IV.I of the Global Settlement.
3. The State of Washington shall instruct the Fee Fund Administrator selected
pursuant to Exhibit S of the Global Settlement that the Settling Distributors shall not pay the
Fixed Amount for the State of Washington, and the State of Washington will not be eligible
to receive funds from the State Outside Counsel Fee Fund under the Global Settlement.
4. The State of Washington shall submit documented costs, as provided for in
Exhibit T of the Global Settlement,to the Global Settlement State Cost Fund created
pursuant to Exhibit T of the Global Settlement for all costs and expenses for which it may
be eligible and shall instruct the State Cost Fund Administrator to remit to Settling
Distributors the full amount awarded to the State of Washington, with each Settling
5
Distributor receiving the percentage of that amount corresponding to the allocation set forth
in Section IV.I of the Global Settlement.
5. No Participating Litigating Subdivision shall receive any payment due
under this Agreement, including but not limited to the portion of the Washington Abatement
Amount allocable to the Participating Subdivision, until it and/or its outside counsel, as
applicable, fulfill their obligations under Sections V.D. 1-2.
VI. Release
A. Scope. As of the Washington Effective Date, Section XI of the Global Settlement
is fully binding on, and effective with respect to, all Releasors under this Agreement. Accordingly,
as of the Washington Effective Date,the Released Entities are hereby released and forever
discharged from all Released Claims of Releasors, including the State of Washington and its
Participating Subdivisions.
VII. Miscellaneous
A. No Admission. The Settling Distributors do not admit liability, fault, or
wrongdoing. Neither this Agreement nor the Washington Consent Judgment shall be considered,
construed or represented to be (1) an admission, concession or evidence of liability or wrongdoing
or(2) a waiver or any limitation of any defense otherwise available to the Settling Distributors. It is
the understanding and intent of the Agreement Parties that no portion of the Agreement shall be
entered into evidence in any other action against the Settling Distributors, among other reasons,
because it is not relevant to such action. For the avoidance of any doubt, nothing herein shall
prohibit a Settling Distributor from entering this Agreement into evidence in any litigation or
arbitration concerning a Settling Distributor's right to coverage under an insurance contract.
B. Tax Cooperation and Reporting. The State of Washington and its Participating
Subdivisions will be bound by Section V.F and Section XIV.F of the Global Settlement, except
(i) as set forth in the final sentence of this Section VII.B and(ii)that the State of Washington shall
be its own Designated State and shall designate its own"appropriate official"within the meaning of
Treasury Regulations Section 1.6050X-1(f)(1)(ii)(B) (the"Appropriate Official"). The IRS Forms
1098-F to be filed with respect to this Agreement are attached as Exhibit C, Exhibit D, and Exhibit
E. The State of Washington and its Participating Subdivisions agree that any return, amended
return, or written statement filed or provided pursuant to Section XIV.F.4 of the Global Settlement
with respect to this Agreement, and any similar document, shall be prepared and filed in a manner
consistent with reporting each Settling Distributor's portion of the aggregate amount of payments
paid or incurred by the Settling Distributors hereunder as the "Total amount to be paid"pursuant to
this Agreement in Box 1 of IRS Form 1098-F, each Settling Distributor's portion of the amount
equal to the aggregate amount of payments paid or incurred by the Settling Distributors hereunder
less the Compensatory Restitution Amount as the "Amount to be paid for violation or potential
violation"in Box 2 of IRS Form 1098-F and each Settling Distributor's portion of the
Compensatory Restitution Amount as"Restitution/remediation amount" in Box 3 of IRS Form
1098-F, as reflected in Exhibit C, Exhibit D, and Exhibit E.
6
C. 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 State of Washington or a Released Entity. The State of Washington may not assign or
otherwise convey any right to enforce any provision of this Agreement.
D. Cooperation. Each Agreement Party and each Participating Subdivision agrees to
use its best efforts and to cooperate with the other Agreement Parties and Participating Subdivisions
to cause this Agreement 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 Agreement Party and each
Participating Subdivision agrees that it will not directly or indirectly assist or encourage any
challenge to this Agreement or the Washington Consent Judgment by any other person, and will
support the integrity and enforcement of the terms of this Agreement and the Washington Consent
Judgment.
E. Enforcement. All disputes between Settling Distributors and the State of
Washington and/or the Participating Subdivisions in the State of Washington shall be handled as
specified in Section VI of the Global Settlement, including the referral of relevant disputes to the
National Arbitration Panel.
F. No Violations of Applicable Law. Nothing in this Agreement shall be construed to
authorize or require any action by Settling Distributors in violation of applicable federal, state, or
other laws.
G. Modification. This Agreement may be modified by a written agreement of the
Agreement Parties. For purposes of modifying this Agreement or the Washington Consent
Judgment, Settling Distributors may contact the Washington Attorney General for purposes of
coordinating this process. The dates and deadlines in this Agreement may be extended by written
agreement of the Agreement Parties, which consent shall not be unreasonably withheld.
H. No Waiver. Any failure by any Agreement Party to insist upon the strict
performance by any other party of any of the provisions of this Agreement shall not be deemed a
waiver of any of the provisions of this Agreement, and such party, notwithstanding such failure,
shall have the right thereafter to insist upon the specific performance of any and all of the
provisions of this Agreement.
I. Entire Agreement. This Agreement, including the Global Settlement(and its
exhibits), represents the full and complete terms of the settlement entered into by the Agreement
Parties, except as provided herein. In any action undertaken by the Agreement Parties, no prior
versions of this Agreement and no prior versions of any of its terms may be introduced for any
purpose whatsoever.
J. Counterparts. This Agreement may be executed in counterparts, and a facsimile or
.pdf signature shall be deemed to be, and shall have the same force and effect as, an original
signature.
K. Notice. All notices or other communications under this Agreement shall be
provided to the following via email and overnight delivery to:
7
Copy to AmerisourceBergen Corporation's attorneys at:
Michael T. Reynolds
Cravath, Swaine&Moore LLP
825 8th Avenue
New York,NY 10019
mreynolds@cravath.com
Copy to Cardinal Health, Inc. 's attorneys at:
Elaine Golin
Wachtell, Lipton, Rosen& Katz
51 West 52"d Street
New York,NY 10019
epgolin@wlrk.com
Copy to McKesson Corporation's attorneys at:
Thomas J. Perrelli
Jenner& Block LLP
1099 New York Avenue,NW, Suite 900
Washington, DC 20001-4412
TPerrelli@jenner.com
Copy to the State of Washington at:
Shane Esquibel
Jeffrey Rupert
Laura Clinton
Washington Attorney General's Office
1125 Washington Street SE
PO Box 40100
Olympia, WA 98504-0100
Shane.Esquibel@atg.wa.gov
Jeffrey.Rupert@atg.wa.gov
Laura.Clinton@atg.wa.gov
[Signatures begin on next page.]
8
Authorized and agreed to by:
Dated: '/ off — ROBERT W. FERGUSON
Attorney General, State • . .t. 'ngton
/00r
By: 01 ,411
Name: JET ' RUPERT
Title: Division Chief
9
Authorized and agreed to by:
Dated: May 2, 2022 AMERISOURCEBERGEN CORPORATION
littie ..,
By:
Elizabeth Campbell
Executive Vice President and Chief Legal Officer
Authorized and agreed to by:
Dated: 04/29/2022 CARDINAL HEALTH,INC.
By: r- . 46
Name: Jessica Mayer
Title: Chief Legal and Compliance Officer
Authorized and agreed to by:
Dated: 45124 2-'7' MCKESSON CORPORATION
By:
Name: Ea fa it-Jat C- Ora t�
Title: Q"Pv rah- SeC're. i 7't-'r j