The foundation will give out an annual prize of $45,000 for an unproduced play. The prize, which will be called the Relentless Award, is formed in memory of Hoffman's determination to achieve artistic truth.

The establishment of the foundation and the prize follows the publication of a false interview in The National Enquirer stating that Katz and Hoffman were lovers and had taken cocaine together the night before his death. The article also reported that Katz said he had seen Hoffman using heroin repeatedly.

The Times reports that Katz had never spoken to The National Enquirer, nor had he witnessed Hoffman using drugs in his presence; instead, he said he had communicated with Hoffman frequently about his addiction and determination to remain sober.

The final text messages Katz had received from Hoffman were sent the night before Hoffman died, inviting Katz to watch the second half of a Knicks game. Katz did not respond until late that night and did not receive a reply from Hoffman.

Katz, whose works include The Atmosphere of Memory; Burning, Burning, Burning, Burning; and Philip Roth in Khartoum, was a longtime friend of Hoffman's. He was also one of the two people who had found Hoffman's body at his apartment following an apparent heroin overdose. "The fact that he wanted me to come over for the Knick game meant that he did not want to be doing the drugs, because he never did them in my presence," Katz told the Times. "He once said to me, 'Addiction is when you do the thing you really, really most don't want to be doing.' He was rigorously sober and had an awful relapse."

Katz filed a libel suit shortly after the publication of the story, and The Enquirer withdrew the article and apologized within two days.

The Times reported that the foundation and Relentless Award are being paid for by The Enquirer and its publisher, American Media Incorporated, under a settlement of the lawsuit. The agreement also stipulated that The Enquirer buy a full-page advertisement in the main news section of The New York Times that ran Feb. 26.

The text of the advertisement follows:

"On February 5, 2014, the National Enquirer released an article about Philip Seymour Hoffman and David Bar Katz that purported to be an exclusive interview with Mr. Katz. Following a lawsuit brought by Mr. Katz, the Enquirer investigated further and learned that it had made a good faith error by publishing an interview with a person who falsely and convincingly claimed to be Mr. Katz. The Enquirer promptly and responsibly acknowledged its error and publicly apologized to Mr. Katz, his family and Mr. Hoffman's family. Mr. Katz acknowledges his appreciation for the Enquirer's apology for its error, and accepts that apology.

"Instead of seeking a purely personal reward for the harm done to him, Mr. Katz brought the lawsuit as a vehicle to let the truth be known, and at the same time create something positive out of this unfortunate turn of events. The Enquirer understood and agreed with these goals, and, after extensive discussions with Mr. Katz's attorney, Judd Burstein, agreed to take complete responsibility for its error."

The Times reports that Katz has filed papers to dismiss the lawsuit.

"The issue was never me being outraged at being accused of being gay — we're theater guys, who cares?" the Times quoted Katz as saying. "The issue was lying about the drugs, that I would betray my friend by telling confidences."

Katz did not receive or seek any personal payments following the publication of the article and instead sought to find a settlement that would be meaningful to Hoffman. The selection committee for the Relentless Award will include Katz, Eric Bogosian, John Patrick Shanley and Jonathan Marc Sherman.

"We had talked so often that it's a tragedy playwrights can't survive being playwrights — about how nice it would be if you could make your rent and still have an occasional steak," the Times quotes Katz as saying.

Hoffman's performances in three Broadway plays led to three Tony Award nominations, most recently for portraying Willy Loman in the 2012 revival of Arthur Miller’s Death of a Salesman. He was also nominated for Best Leading Actor in Sam Shepard’s True West in 2000 and for Best Featured Actor in Eugene O’Neill’s Long Day's Journey Into Night in 2003.

Read Playbill.com's obituary for Hoffman here.

The settlement also required that The Enquirer provide Judd Burstein, Katz's lawyer, with contact information for the person it interviewed.