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PURDUE PHARMA L.P. ABATEMENT PLAN TERM SHEET SUMMARY OF TERMS AND CONDITIONS THIS TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER, AGREEMENT OR COMMITMENT' Issue Description 1. APPLICABILITY These terms (once agreed) shall apply to the allocation of value received OF AGREEMENT under, and shall be incorporated into,�any plan of reorganization (the "Chapter 11 Plan") in the chapter 11 cases of•Pur e,Pharma L.P. and its affiliates (collectively, "Purdue�)_pending\in the;U.S. Bankruptcy Court for the Southern District of New`Y..ork (the "Barikr'uptcy IN between the states, territories and the District oeColumb a (each a "State") on the one hand, each county, ity; town, pari'sh\vil age, municipality that functions as a political 'subdivision under State law or a governmental entity that has the authority to bring 'Drug Dealer Liability Act ("DDLA `(collectively; Claims") under State law the ` Local Governments"), and each federallyrrecognized Native American Native Alaskan or American Indian Tribe ('each a `Tribe") on thn other. 2. PURPOSE Virtually' all credit rs and the Court itself in the Purdue bankruptcy recogmze the need sand value m developing a comprehensive abatement crisis strategy to ddress the opioid as the most effective use of the funds -that < can\be derived from the Purdue estate (including without limitation msurance,proceeds_and,/if included in the Chapter 11 Plan, payments by third-parhes,seeking releases). Because of the unique impact the crisis has � had thio ugliout all regions of the country, and as repeatedly recognized by IJudge Drain, d'iv'ision of a substantial portion of the bankruptcy estate `should occur,through an established governmental structure, with the use ofd uch funds strictly limited to abatement purposes as provided herein.' Asaoc ndit n to parrtticipating in this abatement structure, the settlements that the states of Kentucky and Oklahoma separately entered into with Purdue must be taken into account in any allocation to them or flowing through them. Potential adjustments may include a different Government Participation Mechanism structure for the disbursement of fundsto benefit Local Governments in those states or some redirection of funds, which would still be used solely for abatement purposes. z See, e.g., Hrg. Tr at 149:22-150:5 (Oct. 11, 2019)(` "I would hope that those public health steps, once the difficult allocation issues that the parties have addressed here, can be largely left up to the states and municipalities so that they can use their own unique knowledge about their own citizens and how to address them. It may be that some states think it's more of a law enforcement issue, i.e. interdicting illegal opioids at this point. Others may think education is more important. Others may think treatment is more important."); id. At 175:24-176:6 ("I also think, and again, I didn't say this lightly, that my hope in the allocation process is that there would be an understanding between the states and the municipalities and localities throughout the whole process that[,] subject to general guidelines on how the money should be used, specific ways to use it would be left up to the states and the municipalities, with guidance from the states primarily."); Hr'g Tr. At 165:3-165:14 (Nov. 19, 2019) ("I continue to believe that the states play a major role in [the allocation] process. The role I'm envisioning for them is not one where they say we get everything. 4812-5294-4831 A 1 90