Tobacco Documents Online

COMPROMISE AGREEMENT This agreement is made this day of ~ . 1982, by and between the President and Fellows of Harvard College, a corporation duly organized and existing under the Constitution and ~ law of The Commonwealth of Massachusetts, on behalf of itself and the Harvard Medical School (collectively "Harvard"), and the corporations set forth in Exhibit A to this Compromise Agreement (the "Tobacco Companies" ), each of which is duly organized and existing in the state identified therewith in that exhibit. 1. Recitals. Harvard has previously entered into agreements between itself, on the one hand, and the Tobacco Companies and Liggett Group, Inc., formerly known as Liggett & Myers Incorporated ("Liggett" ), on the other (Liggett not being a party to this Compromise Agreement, nor an intended beneficiary thereof). These agreements are attached as Exhibit B. Pursuant to these agreements Harvard'was to provide adequate facilities and certain services in connection with certain research known as the "Smoking and Health Research Program" (the "Research" ) to be conducted by Dr. Gary L. Huber (the "Principal Investigator"), and the Tobacco Companies and Liggett were to provide monies for (i) direct project costs as approved by the Principal Investigator ("direct costs"), plus (ii) an amount equal to 10% of those direct costs as

supplemental funds. Pursuant to these agreements Harvard has provided'facilities, the adequacy of which is disputed, and has rend'ered services, and the Tobacco Companies, but not Liggett, have made certain payments to Harvard. The Research has now terminated~. A controversy has arisen between Harvard and the Tobacco Companies concerning (i) amounts claimed by Harvard' from the signa- tories to Exhibit B for direct costs, plus 10% supplemental funds and ( ii ) the liability of the Tobacco Companies for that portion of such amounts which have been previously approved by the Principal Investigator and billed, but not paid and which, according to the Tobacco Companies, was to be the share to be paid by Liggett. It is the intention of the parties to this Compromise Agreement forever to compromise and settle the controversy among them in respect of the Research. 2. Payment. In settlement of the controversy, the Tobacco Companies agree to pay Harvard'the sum of $349,311.00, and Harvard agrees that, upon full payment of that sum, and except as provided in Sections 4 and 6 hereof, it will forever forebear from asserting against the Tobacco Companies any claims or liabilities in respect of the Research, except as provided in Sections 4 and 6 hereof, and reserving its rights against Liggett. For administrative purposes, the foregoing sum is comprised~ as set forth in Column 3 of Exhibit C to this Compromise Agreement. The Tobaccc ' CD t~^ . 2 La

Companies shall be individually responsible only for payment of their respective proportionate share of the amount specified in this paragraph. Each company's proportionate share is set forth in Exhibit A. 3. Releases. Upon the receipt by Harvard of the full amount set forth in Section 2 hereof, Harvard will deliver to each of the Tobacco Companies a covenant not to sue in the form attached hereto as Exhibit D. 4. Indemnity. The parties acknowledge that subsequent to the date hereof, one or more claims may be asserted against Harvard by persons claiming amounts due on account of goods or services rendered to the Principal Investigator as direct costs in connection with the Research. Each party further acknowledges that it does not know of any such claims at the time it executes this Agreement. The Tobacco Companies agree that during a period not to exceed six (6) years from and after August 31, 1981, and to the extent of the proportionate shares hereinafter set forthin this Section 4, they will indemnify and hold Harvard harmless from and against any and all costs, including judgments, interest, attachment dissolution bond fees, and counsel fees, on account of any and' all such~ claims, except as otherwise provided in this Section 4. Harvard'agrees that it will promptly give the Tobacco Companies notice of the assertion of any such claims against it, 3

that it will offer to the Tobacco Companies the right, at their own expense, to conduct and control the defense or settlement of any such claims and will cooperate fully with the Tobacco Companies in the defense or settlement of any such claims. The liability of the Tobacco Companies under this Section is individual, not joint and several, for their respective proportionate shares, which proportions are stated in the following percentages: American Brands, Inc. - 11.512% Brown & Williamson! Tobacco Corporation - 14.364% Lorillard, A Division of Loew''s Theatres, Inc. - 9.622% Philip Morris - 28.718% R.J. Reynolds Industries, Inc. - 32.382% United States Tobacco Company - 0.662% The indemnity provisions of this Section 4 shall specifically exclude any claims made by the Beth Israel Hospital, the Mount Auburn Hospital, the H'arvard School of Public Health, and any other persons or entities affiliated in any manner with Harvard or with the above-named entities. In order to give effect to this indemnity, the Tobacco Companies, and each of them, hereby agree to be subject to, and do submit themselves to, the jurisdiction of the courts of the O ~., ~ w a~. wow W ~ :0 4

Commonwealth of Massachusetts, such submission being limited to an action by Harvard to enforce the obligations of this indemnity provision~, and no other. This submission to the jurisdiction of the courts of the Commonwealth of Massachusetts shall not limit the obli~gati~on of the Tobacco Companies to indemnify Harvard with respect to any claims described in this Section 4 which may be asserted against Harvard'in~any other jurisdiction. 5. Reservation of Rights. Nothing in this agreement, in the covenants not to sue to be delivered pursuant hereto, in the payments to be made by the Tobacco Companies hereunder, or arising or occurring in any other manner shall be construed as releasing Liggett from all or any portion of the amount claimed by Harvard under agreements to which Liggett is a party, but rather Harvard reserves its rights against Liggett in their entirety. 6. Equipment. There is presently in storage in Boston, Massachusetts, and' in~ Lexington, Kentucky, certain equipment purchased by Harvard in connection with the Research, which, under the terms of the previous agreements between Harvard and the Tobacco Companies and Liggett (Exhibit B) is to belong to the Tobacco Companies and Liggett. The parties agree that, upon the receipt by Harvard of the full amount set forth in Section 2 hereof, the equipment will be released to the order of the Tobacco Companies. The Tobacco Companies agree that any and all storage charges 5

incurred in respect of the equipment after the provisions of Sections 2 and 3 have been performed, shall be paid by the Tobacco Companies. The Tobacco Companies agree to indemnify and hold Harvard harmless from and against any and all claims made by Liggett in respect of any equipment heretofore or hereafter delivered to the order of the Tobacco Companies, under the terms set forth in Section 4 hereof. 7. Notice. With respect to this Agreement, notice or instruction from the Tobacco Companies shall be given by William W. Shinn or Lee E. Stanford~ of the firm of Shook, Hardy & Bacon, each of whom the Tobacco Companies each hereby irrevocably appoints as its general agent and attorney-in-fact in connection with this Compromise Agreement; notice or instruction frorn Harvard shall be given by G. Marshall Moriarty of the firm of Ropes & Gray, whom Harvard hereby irrevocably appoints as its general agent and attorney-in-fact in connection with this Compromise Agreement. Notice to Harvard shall be given as follows: ith copy to: Dean Henry C. Meadow Harvard Medical School 25 Shattuck Street Boston, Massachusetts 02115, G. Marshall Moriarty, Esg. Ropes & Gray - 225 Franklin Street Boston, Massachusetts 02110. O : .. 6

Notice to the Tobacco Companies shall be given as follows: Lee E. Stanford, Esq. Shook, Hardy & Bacon 1101 Walnut, 20th Floor Kansas City, Missouri 64106 8. Miscellaneous. This agreement shall be governed by the law of The Commonwealth of MassachUsetts, shall take effect as a sealed instrument made therein,- and shall be construed as an executory accord and not a substituted contract. This agreement shall be dated as of the date the last of the signatories executes it. PRESIDENT AND FELLOWS OF HARVARD COLLEGE Date: By_ Mitchell Adams Dean of Finance, H.M.S. AMERICAN BRANDS, INC. Date : January 25, 1982 By Senior Vice President and General Counsel BROWN & WILLIAMSON TOBACCO CORPORATION Date: January 27, 1982 Byy ~ -~ Senior Vice Presidetft/& General Counsel 7

LORILLARD, A DIVISION OF LOEW'S THEATRES, INC. Date: Date: Date: Date : C3 \ ~J-LJ U_ „ .,. ,~ ior Vice President, &neral Counsel Secretary C ~,. CG C~^ .. ..~ dG-.4 I-^ Af 41, opmsasil.Y - C-114 -le PHILIP°MORRIS INCORPORATED By UNITED STATES TOBACCO COMPANY 8

EXHIBIT A Name of Company State of Incorporation Share Pursuant to Section 2 AMERICAN BRANDS, INC. : New Jersey $42,954 BROWN & WILLIAMSON TOBACCO CORPORATION Delaware ~ $54,329 LORILLARD, A DIVISION OF ; LOEW'S THEATRES, INC. : New York ° $32,978 PHILIP MORRIS INCORPORATED Virginia $99,156 R.J. REYNOLDS ~ INDUSTRIES, INC. ~ Delaware $117,511 UNITED STATES TOBACCO COMPANY New Jersey $2,383 $349,311

. EXHIBIT B HARVARD SMOKING AND HEALTH RESEARCH PROGRAM - EXTENSION AGREEMENT In 1972, a commitment was made by the undersigned Grantors to provide funding for a Smoking and Health Research Program de- veloped by Harvard Medical School. Pursuant to the provisions of the commitment, funding would expire in 1977. However, the under- signed Grantors and Harvard Medical School wish to provide further funding of the program for the three (3) academic_xears of July 1, 1977, through June 30, 1980, as follows: "-' . , 1. Grantors shall provide additional monies in the aggregate principal amount of One Million Nine Hundred Fifty-eigbt Thousand Two Hundred Ninety-three and No/100 Dollars ($1,956,293.00) to be applied to the Smoking and Health Research Program for direct costs only. A budget is attached as Appendix A. An additional sum of ten percent (10%) of any semiannual payment made hereunder will be paid to Harvard Medical School as supplemental funds not as project costs. If,-in accordance with paragraph 1 of the original agree- ment, the sponsoring companies do not approve a substitute investi- gator, reasonable and necessary expenses required to terminate the work in progress in an orderly but expeditious manner shall be pay- able from project monies available or to be made available during the current fiscal year. Any monies not required for such purpose shall be held for disposition as directed by the Grantors. 2. Harvard Medical School shall continue to be respon- sible for the project. This responsibility shall include providing or arranging for adequate housing, services and the like. Harvard Medical School shall determine the proportion of supplemental funds paid by Grantors that should be paid.over to any other institution that may be providing for the project and shall pay such amount. 3. All equipment purchased with funds from either the original or the extended grant is and shall be the exclusive property of the Grantors, as they determine their respective in- terests, and utilization of such equipment shall be only for purposes of the Smoking and Health Research program. 0 01- ,.f1-19 4. Harvard Me!lical School shall cause financial records to be maintained respecting all funds made available by Grantors. Said records shall be maintained consistent with generally accepted accounting principles and shall be made available for audit.by Grantorsi accountants upon reasonable notice from Grantors. Harvard Medical School shall require similar records (and acccss to thenm by