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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
STIPULATION AND AGREEMENT of settlement, compromise, and release
This Stipulation and Agreement of Settlement, Compromise, and Release, dated August 15, 2025 (the "Stipulation"), is entered into by and among the following parties, by and through their respective undersigned counsel: (i) plaintiffs Lebanon County Employees' Retirement Fund and Teamsters Local 443 Health Services & Insurance Plan ("Plaintiffs"), derivatively on behalf of Cencora, Inc. (f/k/a AmerisourceBergen Corporation) ("Cencora" or the "Company"); (ii) defendants Steven H. Collis, Richard W. Gochnauer, Lon R. Greenberg, Jane E. Henney, M.D., Kathleen W. Hyle, Michael J. Long, Henry W. McGee, Ornella Barra, D. Mark Durcan, Chris Zimmerman (the "Individual Defendants"); (iii) nominal defendant Cencora (together with the Individual Defendants, "Defendants"); and (iv) Werner Baumann, Lauren Tyler, and Dr. Redonda G. Miller, comprising the Special Litigation Committee of Cencora (the "SLC," and together with Plaintiffs and Defendants, the "Parties" and each a "Party"). 1 Upon the terms and subject to the conditions set forth herein and the approval of the Court of Chancery of the State of Delaware (the "Court") under Delaware Court of Chancery Rule 23.1, the Settlement embodied in this Stipulation is intended to be a full and final disposition of the claims asserted on behalf of Cencora against the Individual Defendants in the above-captioned stockholder derivative action (the "Action") and to fully, finally, and forever compromise, resolve, discharge, and settle all Released Plaintiffs' Claims as against the Released Defendants' Persons and all Released Defendants' Claims as against the Released Plaintiffs' Persons (as defined below).
1 All terms herein with initial capitalization shall, unless defined elsewhere in this Stipulation, have the meanings given to them in paragraph 1 below.
A. On December 17, 2019, Andrea Rosner ("Rosner"), a purported Cencora stockholder, sent a demand pursuant to 8 Del. C. 220 ("Section 220") to inspect certain of Cencora's books and records to investigate potential breaches of fiduciary duty relating to Cencora's compliance with the Controlled Substances Act ("CSA") in connection with the Company's distribution of opioid medications, among other matters (the "Rosner 220 Demand").
B. On May 21, 2019, Plaintiffs, purported Cencora stockholders, sent a demand pursuant to Section 220 to inspect certain of Cencora's books and records to investigate potential breaches of fiduciary duty in connection with the Company's distribution of opioid medications ("Plaintiffs' 220 Demand").
C. On May 30, 2019, Cencora and Rosner entered into an agreement whereby Cencora would provide Rosner certain of the formal books and records of the Board of Directors (the "Board") of Cencora concerning the sale or distribution of controlled substances, including opioids.
D. On June 7, 2019, Cencora rejected Plaintiffs' Section 220 demand in its entirety.
E. On July 8, 2019, Plaintiffs filed a complaint against Cencora to compel the inspection of books and records pursuant to Section 220 (the "Section 220 Action").
F. On October 15, 2019, the Court held a trial on the Section 220 Action.
G. On January 13, 2020, the Court issued its Memorandum Opinion ordering Cencora to produce certain categories of the Company's books and records for Plaintiffs' inspection and granting Plaintiffs leave to take a Rule 30(b)(6) deposition to determine what additional types of books and records exist (the "Section 220 Opinion").
H. On January 23, 2020, Cencora filed an application for certification of an interlocutory appeal of the Section 220 Opinion.
I. On February 5, 2020, Rosner filed a stockholder derivative action on behalf of nominal defendant Cencora in the United States District Court for the District of Delaware, alleging that certain of Cencora's officers and directors breached their fiduciary duties of oversight in connection with Cencora's distribution of opioid medications and alleged violations of the CSA (the "Rosner Derivative Action").
J. On February 7, 2020, Cencora moved for a stay of the Section 220 Action pending its appeal of the Section 220 Opinion, which was opposed by Plaintiffs.
K. On February 12, 2020, the Court certified the interlocutory appeal of the Section 220 Opinion.
L. On March 26, 2020, the Court granted a limited stay of the Section 220 Opinion, but ordered Cencora to produce to Plaintiffs the same documents it produced to Rosner (the "Section 220 Subset").
M. On April 6, 2020, Cencora filed a motion to stay the production of the Section 220 Subset with the Delaware Supreme Court.
N. On April 29, 2020, the Delaware Supreme Court issued an opinion denying Cencora's motion to stay the production of the Section 220 Subset.
O. On June 30, 2020, Rosner filed a notice of voluntary dismissal of the Rosner Derivative Action without prejudice.
P. On July 17, 2020, CCAR Investments, Inc. ("CCAR Investments"), a purported Cencora stockholder, filed a stockholder derivative action on behalf of nominal defendant Cencora in the United States District Court for the District of Delaware, alleging that certain of Cencora's officers and directors breached their fiduciary duties of oversight in connection with Cencora's distribution of opioid medications and alleged violations of the CSA (the "CCAR Investments Action").
Q. On July 30, 2020, Plaintiffs filed a motion to intervene and stay in the CCAR Investments Action (the "CCAR Motion to Stay").
R. On October 13, 2020, the Court denied without prejudice the CCAR Motion to Stay.
S. On December 10, 2020, the Delaware Supreme Court affirmed the Section 220 Opinion.
T. On December 30, 2020, the Court entered a Stipulation and Proposed Interim Order providing for the production of certain documents as set forth in the Section 220 Opinion.
U. On January 29, 2021, Cencora produced to Plaintiffs more than 26,000 pages of responsive documents, including Board-level minutes and materials.
V. On July 20, 2021, it was publicly announced that Cencora and certain other opioid distributors had reached a nationwide settlement that resolved the majority of the opioid related lawsuits filed by state and local government entities across the United States. As part of the nationwide settlement, Cencora agreed to pay up to approximately $6.4 billion over 18 years. The settlement amount allocated to Cencora was determined based on its share of the relevant market, rather than any finding or admission of liability. In addition to the monetary component, the nationwide settlement also required the implementation of several injunctive relief measures, which Cencora has implemented or is in the process of implementing pursuant to the terms of the agreement.
W. On December 30, 2021, Plaintiffs commenced this Action by filing a 148-page, 309-paragraph, Verified Stockholder Derivative Complaint derivatively on behalf of Cencora against the Defendants (the "Complaint"). The Complaint alleged that the Defendants breached their fiduciary duties by failing to adopt, implement, or oversee reasonable policies and practices to prevent the unlawful distribution of opioids and failed to act when presented with evidence of widespread illegal opioid sales. The Complaint sought damages against Defendants for their alleged misconduct, which the Complaint alleged cost the Company more than $7 billion.
X. On March 29, 2022, Defendants filed a motion to dismiss the Complaint. Defendants argued in that motion that Plaintiffs' claims lack merit, and they continue to assert that (i) the Individual Defendants at all times acted in good faith, (ii) the Individual Defendants did not disregard any alleged red flags, knowingly or otherwise, and (iii) the factual record is replete with evidence that the Individual Defendants took deliberate and affirmative action to ensure that the Company complied with all relevant laws. Defendants further assert that the Board was actively engaged, relied in good faith on expert advice, and had no improper financial motive with respect to the distribution of opioids. Defendants likewise assert that the executive Individual Defendants at all times acted in good faith, relied on the advice of experts, had no improper financial motive with respect to the distribution of opioids, and sought to ensure that the Company complied with the law. Additionally, Defendants maintain that the Company did in fact meet all applicable legal obligations, including those related to suspicious order reporting.
Y. On May 2, 2022, the parties in the CCAR Investments Action filed a stipulation of dismissal with prejudice, which was granted by the Court the same day.
Z. On September 23, 2022, following briefing by the parties, the Court held a hearing on Defendants' motion to dismiss and took the matter under advisement.
AA. On December 14, 2022, the Parties participated in a full-day mediation, which ended without a settlement agreement.
BB. On December 15, 2022, the Court issued an opinion denying Defendants' motion to dismiss the Complaint as to their argument that the claims were time barred.
CC. On December 22, 2022, the Court issued an opinion granting Defendants' motion to dismiss pursuant to Rule 23.1 (the "Dismissal Opinion").
DD. On December 29, 2022, the United States Department of Justice filed a civil action against the Company alleging violations of the CSA in the United States District Court for the Eastern District of Pennsylvania.
EE. On January 9, 2023, Plaintiffs moved for relief from the Court's judgment entered along with the Dismissal Opinion pursuant to Rule 60(b) (the "Rule 60(b) Motion").
FF. On January 23, 2023, Plaintiffs filed their notice of appeal, with respect to the Dismissal Opinion, in the Delaware Supreme Court (the "Notice of Appeal").
GG. On March 21, 2023, the Court issued an opinion denying Plaintiffs' Rule 60(b) Motion.
HH. On March 22, 2023, the Delaware Supreme Court granted Plaintiffs' emergency motion to extend time and amend the Notice of Appeal to include an appeal from the Court's dismissal of the Rule 60(b) Motion.
II. On August 30, 2023, the Company officially changed its name to Cencora, Inc.
JJ. On December 18, 2023, the Delaware Supreme Court issued an opinion reversing the Court of Chancery's dismissal under Rule 23.1.
KK. On January 12, 2024, Plaintiffs served their First Set of Requests for the Production of Discovery Materials to Cencora and the Individual Defendants, comprised of 62 requests.
LL. On January 12, 2024, Plaintiffs served their First Set of Interrogatories directed to Cencora and the Individual Defendants, comprised of 75 interrogatories (65 interrogatories directed to the Company, 4 directed to all Individual Defendants, and 6 directed to the Company and the Individual Defendants).
MM. On January 16, 2024, Plaintiffs served subpoenas duces tecum and ad testificandum on Ernst & Young LLP, Walgreens Boots Alliance, Inc., and FTI Consulting, LLC.
NN. On February 9, 2024, the Company's Board adopted resolutions creating the SLC, which was comprised of Werner Baumann, Lauren Tyler, and Dr. Redonda G. Miller. The resolutions delegated to the SLC the full authority to investigate the factual allegations and legal claims in this Action and to take such further action that the SLC, in its sole discretion, determines is in the best interests of the Company.
OO. On March 4, 2024, the SLC filed a motion to stay all proceedings in this Action for 180 days so that it could conduct its investigation, to which the Plaintiffs consented (the "Stay"). The Court granted the Stay that same day (the "Stay Order"). The Stay Order further provided that the SLC would produce to Plaintiffs the documents, testimony, and expert reports provided or produced by Cencora in connection with certain related underlying actions and government investigations into the Company.
PP. Between March 4, 2024 and April 3, 2024, the SLC produced to Plaintiffs more than 100,000 documents and deposition transcripts, consisting of more than 14 million pages.
QQ. On May 10, 2024, the Court entered the parties' Stipulation and Proposed Order for the Production and Exchange of Confidential and Highly Confidential Information.
RR. On July 1, 2024, October 14, 2024, and January 21, 2025, the SLC provided status reports to the Court.
SS. On August 27, 2024, the parties filed a Stipulation and Proposed Order seeking a 90-day extension of the Stay, which the Court granted on August 29, 2024.
TT. On December 3, 2024, the parties filed a Stipulation and Proposed Order seeking a 90-day extension of the Stay, which the Court granted on December 4, 2024.
UU. On December 17, 2024, Plaintiffs' counsel met in person with the members of the SLC and their counsel to discuss the SLC's investigation of the factual allegations and legal claims in the Action and to facilitate information sharing between Plaintiffs and the SLC regarding the topics of the SLC's investigation.
VV. On March 3, 2025, the parties filed a Stipulation and Proposed Order seeking a 90-day extension of the Stay, which the Court granted that same day.
WW. On March 24, 2025, the parties filed a Stipulation and Order Under Delaware Rule of Evidence 510(f) (the "510(f) Stipulation"), so that the SLC or Defendants could disclose information and other materials that the SLC, Company, or Defendants believed contained information protected by the attorney-client privilege, work-product doctrine, or other applicable privileges to Plaintiffs, their insurers, and a mediator without waiving any privilege or immunity. The Court granted the proposed order that same day.
XX. On March 26, 2025, Plaintiffs' counsel met in person with counsel for the SLC, who made a full-day presentation to Plaintiffs' counsel regarding the SLC's investigation, including the results of witness interviews and other privileged documents and communications.
YY. On May 23, 2025, the parties filed a Stipulation and Proposed Order seeking a 60-day extension of the Stay, until August 1, 2025, which the Court granted on May 27, 2025.
ZZ. On April 29 and 30, 2025, five attorneys representing Plaintiffs conducted a document review of additional documents provided by the SLC at the offices of the SLC's counsel, collectively spending approximately 70 total hours on the review.
AAA. On June 24, 2025, counsel for Plaintiffs, the Individual Defendants, the Company, the SLC, and the Company's insurers participated in an all-day in-person mediation session before the Hon. Layn R. Phillips (Ret.) of Phillips ADR Enterprises ("Judge Phillips"). In advance of that session, the Parties exchanged detailed opening and reply mediation statements, which addressed issues of alleged liability and damages. At the conclusion of the mediation session, Judge Phillips issued a mediator's proposal to settle the Action in exchange for a cash payment of $111,250,000.00 for the benefit of the Company, which all Parties accepted. The Parties' agreement-in-principle to settle the Action, which was subject to the execution of a formal, final stipulation and agreement of settlement and related papers, was memorialized in a Settlement Term Sheet executed on June 24, 2025 (the "Term Sheet").
BBB. On July 25, 2025, the Parties informed the Court of their agreement in principle to settle the Action and agreed to suspend all upcoming deadlines in the Action.
CCC. This Stipulation (together with the exhibits hereto) reflects the final and binding agreement among the Parties with respect to the Settlement and supersedes the Term Sheet.
DDD. In connection with settlement discussions and negotiations leading to the proposed Settlement set forth in this Stipulation, counsel for the Parties did not discuss the appropriateness or amount of any application for an award of attorneys' fees and expenses.
EEE. Plaintiffs maintain that they brought their claims in good faith and continue to believe that their claims have merit but, based upon Plaintiffs' and Plaintiffs' Counsel's investigation, discussions with the SLC, and taking into consideration the risks of continued litigation and the relative costs and benefits to the Company of continuing this Action, Plaintiffs and Plaintiffs' Counsel have determined that the Settlement is fair, reasonable, adequate, and in the best interests of the Company and its stockholders. Based on Plaintiffs' direct oversight of the prosecution of this Action, and with the advice of their counsel, Plaintiffs have agreed to settle, compromise, and release the claims asserted in the Action pursuant to the Settlement, after considering (i) the substantial financial benefit provided under the proposed Settlement; (ii) the uncertain outcome and significant risks of continued litigation; and (iii) the desirability of permitting the Settlement to be consummated as provided by the terms of this Stipulation.
FFF. Defendants have denied, and continue to expressly deny, each and all of the claims and contentions alleged by Plaintiffs, including any and all allegations of fault, wrongdoing, liability, and the existence of any damages asserted in the Complaint. Without limiting the generality of the foregoing, Defendants have denied, and continue to expressly deny, that they have committed any breach of fiduciary duty or wrongdoing, have aided or abetted any such breach or wrongdoing, or have violated any law or statutory duty whatsoever, and each Defendant expressly maintains that he, she, or it has acted properly and in good faith and has diligently and scrupulously complied with his, her, or its statutory, fiduciary, and other legal duties, to the extent such duties exist, or that the Company or its stockholders suffered any damages or were harmed as a result of any conduct alleged in the Complaint or otherwise. Defendants have further asserted and continue to assert that at all relevant times, they acted in good faith and in a manner that they reasonably believed to be in the best interests of the Company and its stockholders. Defendants are entering into this Stipulation and the Settlement solely to eliminate the burden, expense, disruption, and distraction inherent in further litigation, and thus have concluded that it is desirable that the claims against them be settled on the terms reflected in this Stipulation. This Stipulation shall in no event be construed or deemed to be evidence of or an admission or concession on the part of any of the Defendants, with respect to any claim or allegation of any fault or liability or wrongdoing or damage whatsoever, or any infirmity in the defenses that Defendants have, or could have, asserted in the Action.
GGG. The Parties recognize that the Action has been filed and prosecuted by Plaintiffs in good faith and defended by Defendants in good faith and further that the Settlement Amount to be paid, and the other terms of the Settlement as set forth herein, were negotiated at arms' length, in good faith, and reflect an agreement that was reached voluntarily after consultation with experienced legal counsel.
NOW THEREFORE , IT IS STIPULATED AND AGREED , by and among Plaintiffs, the Individual Defendants, the Company, and the SLC, that, subject to the approval of the Court under Rule 23.1 of the Rules of the Court of Chancery of the State of Delaware, for good and valuable consideration set forth herein and conferred on the Company, the sufficiency of which is acknowledged, the claims asserted in the Action shall be finally and fully compromised, settled, resolved, discharged, and dismissed with prejudice, and the Releases under this Stipulation shall be effectuated as set forth in paragraphs 3-5 of this Stipulation.
1. In addition to the terms defined elsewhere in this Stipulation, the following capitalized terms, used in this Stipulation and the exhibits attached hereto and made a part hereof, shall have the meanings given to them below:
(a) "Action" is defined in the Preamble.
(b) "Additional Plaintiffs' Counsel" means Levi & Korsinsky, LLP and Robbins LLP.
(c) "CCAR Investments Action" is defined in the Recitals.
(d) "Cencora" is defined in the Preamble.
(e) "Company" is defined in the Preamble.
(f) "Complaint" means Plaintiffs' Verified Stockholder Derivative Complaint dated December 30, 2021.
(g) "Defendants" is defined in the Preamble.
(h) "Defendants' Counsel" means Dechert LLP and Abrams & Bayliss LLP, counsel for the Individual Defendants, and Morgan Lewis & Bockius LLP and Potter Anderson & Corroon LLP, counsel for the Company.
(i) "Effective Date" means the first date by which all of the events and conditions specified in paragraph 21 of this Stipulation have been met and have occurred or have been waived.
(j) "Escrow Account" means the interest-bearing escrow account maintained by Bernstein Litowitz Berger & Grossmann LLP, on behalf of all Plaintiffs' Counsel, and into which the Settlement Amount shall be deposited.
(k) "Escrow Agent" means Citibank, N.A.
(l) "Final," when referring to the Judgment or any other court order, means (i) if no appeal is filed, the expiration date of the time provided for filing or noticing any motion for reconsideration, reargument, appeal, or other review of the order; or (ii) if there is an appeal from the Judgment or order, (a) the date of final dismissal of all such appeals, or the final dismissal of any proceeding on certiorari, reconsideration, or otherwise, or (b) the date the judgment or order is finally affirmed on an appeal, the expiration of the time to file a petition for a writ of certiorari, reconsideration, reargument, or other form of review, or the denial of a writ of certiorari, reconsideration, reargument, or other form of review, and, if certiorari, reconsideration, or other form of review is granted, the date of final affirmance following review pursuant to that grant; provided, however, that any disputes or appeals relating solely to the amount, payment, or allocation of attorneys' fees and expenses shall have no effect on finality for purposes of determining the date on which the Judgment becomes Final and shall not otherwise prevent, limit or otherwise affect the Judgment, or prevent, limit, delay, or hinder entry of the Judgment.
(m) "Individual Defendants" is defined in the Preamble.
(n) "Judgment" means the Final Order and Judgment, substantially in the form attached hereto as Exhibit D, to be entered by the Court approving the Settlement.
(o) "Litigation Expenses" means any and all costs and expenses incurred by Plaintiffs' Counsel in connection with commencing, prosecuting, and settling the Action, for which Plaintiffs' Counsel intend to apply to the Court for payment from the Settlement Fund.