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/ .-i. ~ _ . R. J Reynolds Indu5tri95, InC Winston-Sa!em, N. C 2't02 H C. Roemer SCntof Vice FrCS,Oent CMnciral CounSN and SC:iCtmry May 5, 1980 Stanley B. Prusiner, M.D. Department of Neurology M-794 University of California School of Medicine San Francisco, California 94143 Dear Dr. Prusiner: This will confirm to you that R. J. Reynolds Industries, Inc. will support through a gift to the University of California School of Medicine, San Francisco, California, your research program set forth in the undated proposal titled Slow Viruses Causing Degenerative Diseases, copy attached hereto, on the terms and conditions set forth below. This support will be a maximum gift of $872,500 over a three- year period, consisting of three annual payments of $250,000 each plus a one-time grant in the first year in the amount of $122,500 for the purchase of equipment as itemized on page 43 of the proposal. It is understood that proposed budgets for the second and third years will be subject to prior review, six months in advance, and the money will be drawn down only as required over the remaining years of the program. As the money is thus required, you vill so certify in writing to Reynolds. All of these amounts are given on the understanding that they will be expended for direct project costs, it being Reynolds' general policy not to contribute for indirect costs. The gift is also subject to the following: 1. The qift is to the University of California School of Medicine, San Francisco, California, to be used for the purposes noted above; you are to be the principal investigator. In the event you become unavailable prior to the completion of the term of this research program, a substitute principal investigator with appropriate qualifications will

Stanley B. Prusiner, lS.D. Page 2 May 5, 1980 be selected by the University of California School of Medicine, San Francisco, California. Reynolds' continued support shall be contingent upon its approving any such substitute investigator. 2. The design and conduct of the research program will be generally along the lines indicated in the proposal Slow Viruses Causing Degenerative Dis- eases, copy attached hereto, but with freedom for the principal investigator to make such changes as he, with consultation of his participating col- leagues, may consider advisable. The principal investigator shall also have freedom to make such changes in the yearly allocations of the gift set forth above to various aspects of the program as he, with consultation of his participating colleagues, may consider advisable, either for flexibility of timing of expenditures (with later readjustment being made) or, if circumstances warrant, to reflect more enduring shifts in research emphasis. In the latter event, Reynolds should be advised of the proposed reallocations. 3. All researchers are free to publish results and data developed in the program at such times and in such scientific journals as they may elect. Copies of any published results and data are to be given or sent to Reynolds. 4. The principal investigator will invite an appro- priate number of scientists (perhaps 4 or 5), nationally recognized as experts in the areas of contemplated research, to act as an advisory group. They will be invited to meet shortly after the commencement of the gift and at least annually approximately a month before each annual renewal. The function of the group is to be advisory and not controlling. It will be asked to offer such advic- and criticism as its members may deem appropriate and to render a brief status report to the principal investigator and to Reynolds. Its members shall be selected by mutual agreement of the principal investigator and Reynolds; their expenses, and such honoraria as the principal investigator may deem appropriate, shall be paid

Stanley B. Prusiner, M.D. Pd{tc 3 hay 5, 1980 from the gift. Individual members of the group need not be invited to serve for the entire three- year period, nor is it necessary that all be invited at the outset. Rather, flexibility should be retained to assure both continuity and freedom to make such changes in the group as circumstances require. 5. The principal investigator shall render reports to Reynolds at appropriate intervals, and in any case at least semi-annually with the midyear report in an abbreviated form. Semi-annual reports shall cover progress, expenditures, and plans of the program. The annual reports shall include justi- fication for expenditures reported in the various aspects of the program, as they relate to the aims of the program. 6. The commencement date of the gift shall be as of July 1, 1980. The project will operate on a fiscal year basis with installments payable in approximately equal amounts on or after each July 1 and January 1 during the t.:rm of the gift. All monies contributed shall be expended in the furtherance of the program, as directed by the principal investigator. Statements so certifying shall be included in the principal investigator's reports. No disbursement of the monies contrib- uted may be made without the written approval of the principal investigator or his duly designated delegate in his absence. At its election and expense, Reynoids may arrange for an independent audit of the program at any time, but not more often than annually. 7. All equipment purchased with funds from this gift shall be utilized only for the purposes of the program as the principal investigator may direct. At any time the principal investigator shall dete.mine that any equipment is no longer required for the program, he shall discuss with Reynolds the appropriate disposition of such equipment, and Reynolds shall have the right to designate the disposition of such equipment, but only for elee- musynary purposes.

Stanley B. Prusiner, M.D. Page 4 May 5, 1980 I If the above is satisfactory, please indicate your approval by signing and having the appropriate representative of the University of California School of Medicine, San Francisco, California sign the enclosed copy of this letter in the places indicated therefor and returning same to me. Very truly yours, 1~ i1 L-._ c W, N. C. Roemer Senior Vice President General Counsel and Secretary Enclosures cc: Frederick Seitz, Ph.D. Approved: -•Stanley B. Prusiner, M.D., Principal Investigator Name : - ' Title. . University of California School San Francisco, California of Medicine , t