The Global Opioid Settlement will be implemented through the Plan, consistent with the terms of (a) this Term Sheet, and (b) the Restructuring Support Agreement, through the Chapter 11 Cases. The Global Opioid Settlement shall constitute a compromise and settlement of all disputed issues between and among the Parties relating to the Plan including, among other things, the Additional Insurance Rights and scope of Assigned Third-Party Claims related to Co-Defendant Claims.

In consideration of the compromises and settlements set forth herein, (a) the OCC will (i) support the Plan and (ii) encourage all holders of Opioid Claims entitled to vote on the Plan to vote in favor of the Plan (including by transmitting to holders of Opioid Claims a letter supporting the Plan), in each case, so long as the Plan and any related Definitive Documents are not inconsistent with this Global Opioid Settlement and (b) the GAHC and MSGE Group each reaffirm their obligations under the Restructuring Support Agreement (as expressly modified hereby). Such letter shall also be filed on the docket of the Debtors’ bankruptcy case and be made available on the Debtors’ restructuring website and the OCC’s website, and the OCC’s prior letter regarding the Plan shall be removed from such websites. The OCC shall take an active role in defending the Plan, including, among other things, presenting evidence and filing pleadings, as necessary, to support both the settlement as well as the value allocated to non-opioid creditors.

On the Plan Effective Date, and other than as set forth herein, in addition to the Trust Consideration described in the Opioid Settlement Term Sheet and contemplated by the Plan as of the date of this Global Opioid Settlement, the Opioid MDT II will receive:

•   $125 million in Cash payable on the eighth anniversary of the Effective Date; and

•   50% of the Debtors’ interest in any Claims and Causes of Action against present or former shareholders that are not Released Parties arising from the Debtors’ share repurchase program between 2015-2018 (the “Share Repurchase Claims”); and the Opioid MDT II shall control the decision–making, prosecution, settlement, monetization, and ultimate disposition of such Share Repurchase Claims (it being understood and agreed that any such settlement, monetization, or disposition cannot treat holders of such interests in such Share Repurchase Claims inconsistently without such holders’ consent or, if applicable, without

offering such holders the right to participate in such settlement, monetization, or disposition); additionally the Plan shall include provisions regarding cooperation and document sharing by the Company for the benefit of the Opioid MDT II to allow the Opioid MDT II to maximize the value of these causes of action and, if appropriate, agreed information sharing and consultation rights in favor of the GUC Trustee, if applicable.

The relevant Plan definitions related to the Prepayment Option shall be amended and restated by the following:

292. “Prepayment Option” means the right to prepay, in full or in part, the Opioid Deferred Cash Payments, at any time on or prior to eighteen (18) months after the Effective Date, at (a) for full prepayments (with no prior prepayments having been made) as of the end of each of the 18 months after the Effective Date, the prepayment cost set forth on Annex A hereto or (b) to the extent a prepayment is partial, is made following an earlier prepayment, or occurs other than at the end of a month, a price equal to the present value of the amounts to be prepaid, at the date of prepayment, discounted at the discount rate that would be required for (i)(A) the present value of the then-remaining scheduled Opioid Deferred Cash Payments at the prepayment date (without giving effect to any prior prepayments), excluding the payment due on the eighth anniversary of the Effective Date, plus (B) $450,000,000 to equal (ii)(A) the present value of the payments that would have been remaining under the Original Payment Schedule at the prepayment date (excluding the initial $300,000,000 payment provided for in the Original Payment Schedule and any other payments that would have been made by such date, but without giving effect to any prior prepayments), discounted at a discount rate of 12% per annum, plus (B) $300,000,000.

240. “Opioid Deferred Cash Payments” means the right of the Opioid MDT II to receive Cash payments on the Opioid Deferred Cash Payments Terms in the following amounts and on the following dates: (a) $200,000,000 on each of the first and second anniversaries of the Effective Date; (b) $150,000,000 on each of the third through seventh anniversaries of the Effective Date; and (c) $125,000,000 on the eighth anniversary of the Effective Date; provided, that at any time on or prior

The Debtors will designate the holders of Co-Defendant Claims with alleged contractual indemnity rights against the Debtors to which the Debtors will offer and negotiate full mutual releases (including full releases by Released Co-Defendants of all claims against any Opioid Insurance Policies transferred to the Opioid MDT II, irrespective of whether such Released Co-Defendants may be insured under such insurance policies) as of the Effective Date (the “Released Co-Defendants”), which holders shall be disclosed to the Supporting Parties and the OCC.

The Released Co-Defendant Claims shall not be channeled to the Opioid MDT II and the Assigned Third-Party Claims shall not include any Causes of Action held by the Debtors against the Released Co-Defendants.

For the avoidance of doubt, the Released Co-Defendants will not include any other Co-Defendants, including but not limited to Medtronic or any successors, predecessors, or affiliated entities of Medtronic.

Months after Plan

Effective Date

        (end of Month)         

Amounts shown in annex above show the prepayment cost at the end of each of the 18 months after the Effective Date for the remaining unpaid Opioid Deferred Cash Payments at such time. To the extent a prepayment occurs other than at the end of the month, the prepayment cost shall be calculated as of such prepayment date pursuant to the formula set forth in the Prepayment Option.

Month twelve includes $200,000,000 payment due at such time.

Prepayment right may be exercised on or prior to eighteen months after the Effective Date.

Greater of:

•   (i) 1L debt outstanding under Existing Credit Agreement as of the Plan Effective Date and as such amount is reduced by any repayments or prepayments (excluding repayments or prepayments in connection with a refinancing) plus $200MM of incremental 1L Indebtedness, and

•   (ii) Indebtedness that does not cause Adusted 1L SLR, pro forma for then most recently ended Test Period, to exceed 3.25x, while Qualified Ratings¹ apply, otherwise 2.75x; provided, that Adjusted 1L SLR shall be calculated based on the aggregate amount of all 1L debt and all junior debt that is secured pursuant to the ratio lien basket below

All Indebtedness outstanding under the Existing Credit Agreement on the Plan Effective Date shall at all times be deemed to have been incurred pursuant to this basket

For secured Indebtedness, total SLR shall not exceed (i) 3.25x on a pro forma basis while Qualified Ratings apply, otherwise 2.75x, or (ii) total SLR immediately prior

For all such Indebtedness, FCCR shall not be less than 2.25x on a pro forma basis, or not be less, on a pro forma basis, than FCCR immediately prior

Deleted, replaced by existing First Lien Notes, existing Second Lien Notes and Settlement Second Lien Notes

•   To include takeback debt and cram-down notes, if any, issued pursuant to the Plan

Uncapped so long as (i) no Default or EOD, and (ii) pro forma FCCR is not less than 2.75x, stepping down to 2.50x upon such time Opioid Deferred Cash Payments is $625MM or less, and 2.25x if $375MM or less

Limited to debt of a Borrower or a domestic loan party that is not secured on a pari passu basis

Up to greater of $400MM and [TBD]% of CTA

•   $100MM sublimit, shared with Builder Basket, for investments in unrestricted subsidiaries (other than ordinary course investments)

Builder Basket

(Shared Basket Between Restricted Payments and Permitted Investments)

Sum of (i) $50MM, plus (ii) 50% of Cumulative Retained Excess Cash Flow amount beginning with first full fiscal quarter post-closing, plus (iii) other customary adjustments as set forth in existing credit agreement; availability of Builder Basket subject to Total Net Leverage < 3.50x

May not be used for Restricted Payments if more than $600MM of Opioid Deferred Cash Payments remain unpaid

JVs: Greater of $200MM and [TBD]% of CTA

Guarantee of Debt of JVs: Greater of $100MM and [TBD]% of CTA

Qualified Ratings means public corporate family ratings (or equivalent) that include at least two of the following: a rating equal to or higher than B2 from Moody’s, a rating equal to or higher than B from S&P or a rating equal to or higher than B from Fitch.

Basket is separate and incremental to general debt basket and qualified receivables facilities basket.

Builder Basket

(Shared Basket Between Restricted Payments and Permitted Investments)

Sum of (i) $50MM, plus (ii) 50% of Cumulative Retained Excess Cash Flow amount beginning with first full fiscal quarter post-closing, plus (iii) other customary adjustments as set forth in existing credit agreement; availability of Builder Basket subject to Total Net Leverage < 3.50x

May not be used for Restricted Payments if more than $600MM of Opioid Deferred Cash Payments remain unpaid

Calculation of all leverage ratios for purposes of debt, lien, RP and investment covenants shall be be pro forma, on a consolidated basis, and include only EBITDA of Subsidiaries (i.e., EBITDA of Unrestricted Subsidiaries is excluded from calculations), provided that net distributions from Unrestricted Subsidiaries to the Company or Restricted Subsidiaries are included in EBITDA (if greater than zero)

Leverage ratios to be calculated excluding capitalization of opioid and Acthar settlements in all cases

Other

% of CTA baskets to be set as equivalent to fixed dollar prong, based on Company’s balance sheet upon emergence

Transactions pursuant to the Plan (including refinancing of some or all of the existing debt at exit) are permitted

Baskets calculated on fixed dollar or % of CTA will be deemed not utilized at exit

Definition of Investment to be consistent with existing and modified debt documents

The Opioid Trust Deferred Payment Obligations shall have the benefit of all of the affirmative covenants in the Takeback TL Credit Agreement except that:

•   The Opioid Trust will not be listed as a co-loss payee on any property or casualty policies or as an additional insured on any general liability policy (5.02)

•   The Opioid Trust Obligors will not be required to deliver any Perfection Certificate (5.04(f))

•   The covenant relating to use of proceeds will be deleted (5.08)

•   The covenant relating to additional security will be deleted (5.10), but future borrowers, issuers, pledgers and guarantors of any of the Reorganized Debtors’ principal credit agreement and other indebtedness covered under analogous security documentationfrom time to time will automatically become Opioid Trust Obligors

•   The requirement to obtain and maintain a rating will be deleted (5.11)

Exceptions per takeback TL agreement.

•   The post-closing obligations covenants (5.12), which related to security arrangements, will be deleted.

•   The covenant relating to account control agreements (5.13) will be deleted

•   For the avoidance of doubt, there shall be no covenants relating to the Cadence IP Licensee

Reporting requirements are under evaluation and TBD, but will be no less comprehensive than those included in the Parent’s new credit agreement.

In the event of any bankruptcy or other proceeding with respect to any Opioid Trust Obligor under or pursuant to any Debtor Relief Laws, the Opioid Trust shall be entitled to assert the full unpaid amount of the Opioid Trust Deferred Payments, without discount or reduction of any kind, including without limitation any discount or reduction that might otherwise be imposed by law, including Debtor Relief Laws or any court administering any such proceeding, as a result of, or in connection with, the payment of any of the Opioid Trust Deferred Payments prior to their originally scheduled payment dates

Event of Default triggers consistent with Events of Default in existing notes.

Occurrence of a Change of Control shall not constitute an EoD. If the Change of Control leads to a ratings downgrade, then such Change of Control shall trigger a put right against the Company based on the undiscounted amount of remaining Opioid Deferred Cash Payments

The GUC Settlement will be implemented through the Plan, as amended as appropriate, consistent with the terms of (a) this GUC Settlement Term Sheet, and (b) Restructuring Support Agreement (including all exhibits thereto). The GUC Settlement shall constitute a compromise and settlement of all disputed issues between and among the Parties relating to the Plan.

In consideration of the compromises and settlements set forth herein, the UCC will (i) support the Plan and (ii) encourage all holders of GUC Claims entitled to vote on the Plan to vote in favor of the Plan (including by transmitting to holders of GUC Claims a letter, in form and substance reasonably acceptable to the Parties supporting the Plan), in each case, so long as the Plan and any related Definitive Documents are not inconsistent with this GUC Settlement. Such letter shall also be filed on the docket of the Debtors’ bankruptcy case and be made available on the Debtors’ restructuring website, and the UCC’s prior letter regarding the Plan shall be removed from such website.

The Plan will provide for the establishment of the GUC Trust, which will receive the GUC Trust Consideration (as defined below) and such other consideration it may obtain post-emergence from third-parties subject to the reasonable consent right of the Debtors or Reorganized Debtors, as applicable. All GUC Claims will be deemed assumed by the GUC Trust and be discharged, released, and enjoined as to the Debtors and the other Released Parties. The GUC Trust will be solely responsible for any and all costs, expenses, fees, taxes, disbursements, debts or obligations incurred from the operation and administration of the GUC Trust.

As of the Plan Effective Date, Mallinckrodt’s liability for all GUC Claims shall automatically, and without further act, deed, or court order, be assumed by the GUC Trust, as described herein. Each GUC Claim shall be resolved in accordance with the terms, provisions, and procedures of the GUC Trust Documents; provided, that allocations of the GUC Trust Consideration (as defined below) and distributions on account of GUC Claims shall satisfy the requirements of the Bankruptcy Code and Bankruptcy Rules; provided, further, that any settlement that results in allowance of any Acthar Claims shall require the reasonable consent of the Debtors and shall not include any direct or indirect admission of fault or liability as to Mallinckrodt or any Released Party and shall not include any terms that allow for, establish, or tend to establish any legal or factual predicate for postpetition or post- emergence claims, liabilities, or obligations, including as to any form of legal or equitable relief, against Mallinckrodt or any Released Party; provided, further, that the Debtors shall have the right to control the defense of and settle, with the reasonable consent of and at the expense of the GUC Trust, Acthar Claims to the extent such Claims are the subject of litigation.

For the avoidance of doubt, (a) all administrative, secured, and priority claims, including any GUC Claim where a portion thereof is asserted to be an administrative, secured, or priority claim and (b) any GUC Claim seeking injunctive relief, shall be resolved by the Debtors in accordance with the terms, provisions, and procedures of the Plan; provided, however, that if such GUC Claim is later determined not to be an administrative, secured, or priority claim, or any request for injunctive relief has been dismissed, such GUC Claim shall be resolved by the GUC Trust in accordance with the terms, provisions, and procedures of the GUC Trust Documents and shall be controlled by the GUC Trustee, with the reasonable consent of the Debtors.

On the GUC Trust Settlement Date, the Debtors shall agree to forbear from (a) filing additional objections to GUC Claims, (b) prosecuting the Second Omnibus Claims Objection [D.I. 3189]; Third Omnibus Claims Objection [D.I. 3190]; and Fourth Omnibus Claims Objection [D.I. 3191], and (c) deeming any Claims to be allowed Claims without the UCC’s consent; provided, however, that: (x) forbearance would not impact or hinder, in the Debtors’ discretion, (i) the Debtors’ ability to confirm the Plan or (ii) the Reorganized Debtors; and (y) the UCC agrees to the terms set forth herein and agrees to support the Plan.

The GUC Trust shall be funded in accordance with the provisions of this Term Sheet. The sole recourse of any GUC Claimant on account of such GUC Claim shall be to the GUC Trust, and each such GUC Claimant shall have no right whatsoever at any time to assert its GUC Claim against any Released Party.

For the avoidance of doubt, allowed Asbestos Late Claims shall be included in the definition of GUC Claims, but Asbestos Claims shall be excluded from the GUC Trust.

In lieu of the current consideration provided for under the Plan, on the Plan Effective Date, the GUC Trust will receive consideration (the “GUC Trust Consideration”) comprised of the following forms of consideration:

•  A cash payment of $135 million on the Effective Date;

•  the Assigned Preference Claims;

•  the Terlivaz Contingent Value Rights;

•  the Assigned Sucampo Avoidance Claims;

•  the Share Repurchase Claims;

•  the VTS PRV Share; and

•  the StrataGraft PRV Share.

As of the Plan Effective Date, the Debtors’ liability, if any, for all Asbestos Claims timely filed by the February 16, 2021 at 4:00 pm (et) bar date shall automatically, and without further act, deed, or court order, be assumed by the Asbestos Trust, as described herein. For the avoidance of doubt, litigations concerning asbestos commenced against the Debtors after the Effective Date will be addressed by the Reorganized Debtors; provided, that, this does not affect the Asbestos Trust’s obligation to resolve Asbestos Late Claims.

Each Asbestos Claim shall be resolved in accordance with the terms, provisions, and procedures of the Asbestos Trust Documents; provided, that allocations of the Asbestos Trust Consideration and distributions on account of Asbestos Claims shall satisfy the requirements of the Bankruptcy Code and Bankruptcy Rules. The Asbestos Claims shall be excluded from the Treatment of GUC Claims and shall be exclusively resolved through the Asbestos Trust. Asbestos Late Claims will be resolved by the GUC Trust. On the Effective Date, the Asbestos Trust shall be established, and the Asbestos Trustee shall be appointed, as selected by the UCC in consultation with the Debtors.

Pursuant to the UCC Settlement Implementation (defined below), the Asbestos Trust Consideration shall be $18 million, to be paid from the GUC Trust cash payment by the GUC Trust to the Asbestos Trust, payable as follows:

•  The initial cash payment shall be $[] million payable on the Effective Date; and

•  The remaining cash payment shall be provided within 90 days of the Effective Date.

The Asbestos Cost Sharing Agreement and the Asbestos Insurance Policies shall be excluded from the Asbestos Trust and remain with the Reorganized Debtors. The Asbestos Trustee shall be responsible for management and distribution of the Asbestos Trust Consideration, including the resolution of the Asbestos Claims.

After the Debtors’ contributions to the Asbestos Trust set forth above have been made in full, the Reorganized Debtors shall retain all proceeds of any Asbestos Insurance Policies, including those that are part of the Asbestos Cost Sharing Agreement. To the extent the Asbestos Trustee comes into possession of any proceeds of Asbestos Insurance Policies, the Asbestos Trust shall turn such proceeds over to the reorganized Debtors, and if for any reason the Asbestos Trust is required to pursue any such proceeds, it shall do so at the sole cost and expense of the reorganized Debtors. In the event of any default of the Debtors’ contribution obligations set forth above, the Asbestos Trustee shall be deemed to have succeeded to the Debtors rights as the insured under the Asbestos Cost Sharing Agreement and any and all Asbestos Insurance Policies, and may pursue and retain such insurance proceeds for the benefit of the beneficiaries of the Asbestos Trust.

At no point will the Asbestos Trust Consideration be commingled with the GUC Trust Consideration on or after the Effective Date. Prior to the Effective Date, the Asbestos Trust Documents shall be filed.

The GUC Settlement and the Asbestos Settlement shall be implemented with the objective of maximizing tax efficiency to (i) Mallinckrodt, including with respect to the availability, location and timing of tax deductions and (ii) to the GUC Claimants and Asbestos Claimants, including with respect to the tax classification of the GUC Trust and Asbestos Trust, respectively.

The GUC Trust and the Asbestos Trust will be treated as a qualified settlement funds for tax purposes.

During the pendency of the Chapter 11 Cases and after the Plan Effective Date, the Debtors shall cooperate with professionals retained by the UCC or the GUC Trust, as applicable, in connection with the investigation and preservation of the Assigned Preference Claims and Assigned Sucampo Avoidance Claims, including by providing non-privileged information (including, without limitation, documents, emails and access to individuals with information), at the request of professionals retained by the UCC or the GUC Trust.

The Debtors shall provide all available, non-privileged information relating to the Assigned Preference Claims and Assigned Sucampo Avoidance Claims to professionals retained by the UCC during the Debtors’ bankruptcy cases.

On and after the Plan Effective Date, the Reorganized Debtors shall provide reasonable cooperation to the GUC Trust in connection with the GUC Trust’s investigation, preservation and pursuit of Assigned Preference Claims and Assigned Sucampo Avoidance Claims.

[NTD: Subject to LW tax review]

The Plan and/or Confirmation Order will provide for, among other things, the following:

•  Payment in full on the Effective Date of all reasonable, documented fees, expenses, and disbursements incurred by the Indenture Trustee (including reasonable, documented professional fees, expenses and disbursements) whether prior to or after the Petition Date and whether prior to or after the Effective Date, and the Plan shall include customary language, protections and rights of indenture trustees under chapter 11 plans for the benefit of the Indenture Trustee (for example, as currently provided under the Plan to/for the Guaranteed Unsecured Notes Indenture Trustee).

•  The UCC will be responsible for selecting the GUC Trustee and members of the GUC Trust Oversight Committee with the reasonable consent of the Debtors.

•  Any attorney-client privilege, work-product privilege, or other privilege or immunity attaching to any documents or communications (whether written or oral) associated with the Assigned Preference Claims and Assigned Sucampo Avoidance Claims shall be transferred to the GUC Trust and shall vest in the GUC Trust, and the Debtors or the Reorganized Debtors, as the case may be, and the GUC Trust shall take all necessary actions to effectuate the transfer of such privileges; provided, that (a) such privileges shall be transferred to the GUC Trust for the sole purpose of enabling, and to the extent necessary to enable, the GUC Trust to investigate and/or pursue such Assigned Preference Claims and Assigned Sucampo Avoidance Claims and (b) no documents or communications subject to a privilege shall be publicly disclosed by the GUC Trust or communicated to any person not entitled to receive such information or in a manner that would diminish the protected status of such information, unless such disclosure or communication is reasonably necessary to preserve, secure, prosecute, or obtain the benefit of the Assigned Preference Claims and Assigned Sucampo Avoidance Claims; provided, further, that the Confirmation Order shall provide that the GUC Trust’s receipt of transferred privileges shall be without waiver in recognition of the joint and/or successorship interest in prosecuting claims on behalf of the Debtors’ estates.

•  The GUC Trust shall be authorized to conduct Rule 2004 examinations, to the fullest extent permitted thereunder, to investigate the Assigned Preference Claims and Assigned Sucampo Avoidance Claims, without the requirement of filing a motion for such authorization; provided, however, that no such Rule 2004 examinations shall be taken of the Debtors, the Reorganized Debtors, any Released Party or any of their respective then-current employees, officers, directors, representatives or agents, without further order of the Bankruptcy Court after notice and an opportunity to object and be heard.

•  The exercise of remedies (including, without limitation, rights of setoff and/or recoupment) by non-Mallinckrodt third parties against Mallinckrodt on account of any Assigned Preference Claims and Assigned Sucampo Avoidance Claims shall be enjoined and barred, to the extent permitted by applicable law.

The Debtors and the Supporting Parties take no position with respect to the proposed Allocation. The Debtors and the UCC are still in discussion on the implementation mechanics.

Term

Meaning

$18 million, to be paid from the GUC Trust cash payment by the GUC Trust, payable as follows:

•  The initial cash payment shall be $[ ] million payable on the Effective Date; and

•  The remaining cash payment shall be provided within 90 days of the Effective Date.

The documents, to be drafted by UCC Professionals and reasonably acceptable to the Debtors, the Supporting Parties (solely to the extent of each Supporting Parties’ consent rights pursuant to the Restructuring Support Agreement) governing: (i) the Asbestos Trust; (ii) the flow of consideration from the Debtors’ estates to the Asbestos Trust; (iii) submission, resolution, and distribution procedures in respect of all Asbestos Claims; (iv) the flow of distributions, payments or flow of funds made from the Asbestos Trust on or after the Plan Effective Date; and (v) the process for the resolution of Asbestos Claims.

Prior to the Effective Date, the Asbestos Trust Documents shall be filed. The material terms of the Asbestos Trust will be described in the Plan Supplement and the Asbestos Trust Documents shall be included in the Plan Supplement.

The Asbestos Trustee shall be selected by the UCC in consultation with the Debtors.

The Asbestos Trustee shall be responsible for management and distribution of the Asbestos Trust Consideration, including the resolution of the Asbestos Claims in accordance with the Asbestos Trust Distribution Procedures or other governing documents.

Class 6 Creditors—>

Initial $125.0 Cash Distribution (“ICD”)¹:

ICD Payable To:

Subsequent Cash Distributions (“SCD”):

Total Settlement Consideration¹ —>

4.75% Notes

Legacy Debentures

Other

Acthar Litigation

Generics Price-Fixing Litigation

Asbestos Litigation

Total

Reflects $135 million of cash consideration less $10 million reserved for GUC Trust administration    

•  $322,868,000 (i.e., current outstanding principal amount of existing Second Lien Notes)

•  Senior Secured Second Lien Notes

•  Mallinckrodt International Finance S.A. and Mallinckrodt CB LLC (i.e., same issuers as the existing Second Lien Notes)

•  Same as the obligors on the existing Second Lien Notes, provided that all obligors under the New Term Loan Facility, New Takeback Term Loan Facility (as applicable), First Lien Notes and Takeback Second Lien Notes shall be Obligors hereunder

•  Payable in cash at 10.00% (i.e., current interest rate of existing Second Lien Notes)

•  April 15, 2025 (i.e., current maturity of existing Second Lien Notes)

•  Liens on the same collateral as secures the existing Second Lien Notes that will rank pari passu with the second lien security interests that will secure the Takeback Second Lien Notes, provided that any and all collateral securing the First Lien Notes and Takeback Second Lien Notes shall also secure the Second Lien Notes

•  Puttable to the Issuers at 101% of par upon a change of control

•  On or prior to April 15, 2022, Issuers may redeem up to 40% of Settlement Second Lien Notes at a redemption price of 110% of par with the proceeds of an equity offering (i.e., same terms as under existing Second Lien Notes)

•  Same as under existing Second Lien Notes

•  To generally match the existing First Lien Notes Indenture, as adjusted to reflect Settlement Second Lien Notes structure and transactions contemplated by the Plan (i.e., covenants substantially equivalent to the covenants under the Takeback Second Lien Notes Indenture)

Subject to such matters as the Debtors, the settling holders of Second Lien Notes and the Second Lien Notes Trustee have separately agreed:

•  Debtors will pay the reasonable and documented out-of-pocket fees and expenses of counsel and financial advisors, as applicable, to Deerfield and the trustee and collateral agent for existing Second Lien Notes through the effective date of the Plan under the Plan pursuant to Bankruptcy Rule 9019 and/or Bankruptcy Code sections [1123, 1129(a)(4), and/or 506] and/or applicable reimbursement agreements. Such payments shall be final and not subject to disgorgement, turnover, re-characterization or other similar claim.

•  Debtors will not settle disputes regarding the treatment of the existing First Lien Notes unless such settlement provides for a full release of the holders of the existing Second Lien Notes (as well as the trustee and collateral agent for the existing Second Lien Notes) from any and all claims (including, without limitation, for turnover of payments) by the settling holders of the existing First Lien Notes under the existing intercreditor agreement.

•  The Debtors shall use reasonable best efforts to cause the Plan and the related Confirmation Order to provide that treatment of First Lien Note claims under the Plan constitutes recovery of all amounts to which First Lien Noteholders are entitled and therefore, that First Lien Noteholders have no claims (including, without limitation, for turnover of payments) against the holders of the existing Second Lien Notes (or the trustee or the collateral agent for the existing Second Lien Notes) under the existing intercreditor agreement in any way arising from, relating to or as a result of the Debtors’ restructuring (including, without limitation, of the First Lien Notes and Second Lien Notes), the Plan (including, without limitation, the treatment of the existing First Lien Notes or Second Lien Notes under the Plan or the making of distributions to the holders of the existing First Lien Notes or Second Lien Notes in accordance with the Plan), the distribution of property by the Debtors under the Plan, any related document or any order of the Bankruptcy Court, or any other transaction, agreement, event, omission or other occurrence taking place on or before the Effective Date related or relating to any of the foregoing (collectively, the “Relevant Matters”).¹

The Guaranteed Unsecured Notes Ad Hoc Group takes no position on the interpretation of the existing intercreditor agreement.

•  The Second Lien Indenture shall be terminated and extinguished on the Effective Date; provided that the termination and cancellation of the Second Lien Indenture shall be subject to Article IV.F of the Plan (as it may be amended, supplemented or otherwise modified from time to time), and all provisions thereof relating to cancellation of the Second Lien Indenture, including, without limitation, provisions relating to indemnification by holders, distributions to holders, and the charging lien, shall be no less favorable to the Second Lien Indenture Trustee and holders of Second Lien Notes than the provisions thereof relating to cancellation of the Guaranteed Unsecured Notes Indentures or Legacy Unsecured Notes Indentures.

•  Debtors shall provide notice to holders of Second Lien Notes of the amended Plan reflecting this settlement, in accordance with the Bankruptcy Code.

Holders of approximately 84% of the Company’s guaranteed unsecured notes;

An ad hoc group of first lien term lenders holding approximately $1.3 billion of the Company’s outstanding first lien term loans;

50 states and territories and the Plaintiffs’ Executive Committee in the opioid multidistrict litigation, which will recommend that more than 1,000 plaintiffs in multi-district litigation against the Company support the Amended Plan and RSA;

The Multi-State Governmental Entities Group (the “MSGE Group”), which represents more than 1,300 counties, municipalities, tribes and other governmental entities, across 38 states and territories, with opioid-related litigation against the Company;

An ad hoc group of second lien noteholders holding a majority of the outstanding second lien notes;

Excluding a previously disclosed 2020 excess cash flow sweep of approximately $114 million to First Lien Term Loan Lenders.

The UCC; and

The OCC.