horwonce Bouse Te, 8-647 We, ew ese OTE 6747 Fax 908-647 «77 1002 HEROLD AND HAINES Tel Ext 114 thaines@heroldhaines.com May 15, 2006 George W.C. MeCarter, Esq, McCarter & Higgins 48 Drs. James Parker Boulevard Red Bank, NJ 07701 Re: Princeton Prospect Foundation - Dining Facilities Dear Bill: As you know, as a result of an IRS tax audit of Princeton Prospect Foundation (the “Foundation”) during 1997-1998, a “Collateral Agreement” was included as part of the settlement with the IRS. The Collateral Agreement set forth certain conditions and procedures to be followed by the Foundation. This provision does not bar the funding of dining facilities provided that the work on the dining facilities is at least 50% “educational;” in other words, if the dining facilities include a bar area or other social area, the 50% test would be applied and then, if the “educational” component was at least 50% but less than 100%, only the educational percentage could be funded by the Foundation. 1 specifically raised this issue with the IRS and, based on my analysis of the then existing law, including Rev. Ruling 67-291, the Collateral A, funding “f “Drink facilities” (ie., tap rooms) are “social limitations in the Collateral Agreement. Itis, therefore, our opinion that the Foundation can fund dining room facilities. Very truly yours, Robert B. Haines ce: Princeton Prospect Foundation Attn.: Gordon Harrison hAtemplsbites-igippfemeearter do