SOUTHEAST REGION DELAWARE-MARYLAND APPEALS OFFICE WILMINGTON, DE COLLATERAL AGREEMENT Princeton Prospect Foundation (the Foundation) (RIN:22-K0759€¢) , 5 Prospect Avenue, Princeton, MJ” 0Bsi0, ‘The undersigned, in consideration of the resolution of the issue(s) before’ the Delavare-Naryland Appeals Office and for the retention of its exempt status under code Section s01(a) as an organization described in Code Section 501(c) (3), hereby agrees (1) The Foundation will retain ali existing and future monetary contributions in a youndation bank account or investment account and will make disbursenents only ae approved by the Foundation. Donors may contribute to the Foundation with an expressed preference that the contribution be used for the educational purposes of a particular Princeton University ing Club (Club), but the Foundation will not be obligated to use the contribution in accordance with the donation’ s designation. Educational purposes and activities as used in this agreement are those peruitted by code Section 501 (ce) (3) and the appropriate Internal Revenue Reguiat ions (2) The Foundation may use those contributions which cannot be expended for a designated Club for the educational expenditures of other Clubs or the Foundation may donate those contributions to Princeton University. The Foundation must pay over to Princeton University all contributions which are not expended within 20 years fron date of receipt ‘This time limitation will not apply to contributions which are restricted for scholarships or other endowment -type funds. (3) The Foundation’s Board of Trustees or a Committee of that Board shall approve all grants and other disbursenents (other than the Foundation’s administrative expenses). However, any Trustee who is alan a menber of the proposca recipient Club shall abstain from voting. (4) Tf a grant benefits both the educational and non-educational functions of a particular Club, the Fotndation may make the grant only if a minimum of 50%/of the project. ig ax will (immediately upon completion of the project) be used solely and entirely for educational activities or functions Further, the Foundation’s grant ia limited to the educational percentage. For instance, if a new roof is Page 1 of 2Proposed and required for a 5000 square foot Club building and only 2000 square feet of the Club are used solely and entirely for educational purposes, the Foundation may not contribute to the cost of the new roof. However, 4f 5, 000 square feet: of the same Club are used solely and entively for educational purposes, the Foundation may pay 60% (or 3,000/5,000) of the cost of the roof. The eduextional percentage is deternined by calculating the ratio which the square footage of building space dedicated to the sole and entize educational purpose haa to the square footage of The entire Club putiaing. or ‘The Foundation may not expend funda for a Club’s food and rink, f00d and drink services and/or any other Club social activity or function unless and unt!l the Foundation receives a favorable determination by private letter ruling or other appropriate Internal Revenue Service procedure, 6 om () Ag a condition of any future grant, the Foundation will reguize the grantee Club to allow the Foundation to examine, review and audit the Club's facilities and books and records to determine if the Club is using the grant for educational Purposes. The Foundation will complete this examination, review and audit within 12 montha of making the grant As a further condition of any future grant, should the Foundation deternine or discover that a Club has not used a gant for educational purposes, the Foundation will requize the Club to return the grant along with interest calculated at the current interest rate. The operational conditions set forth in paragraphs (1), (2), (3), above, are effective with the Foundation's fiscal’ year beginning July 2, 1998. ‘The operational conditions set forth in paragraphs (4) through (7), above, aze effective as Of the date the foundation signs this agreement, Princeton Prospect Foundation By. mitie Affi, pate Wiki Page 2 of 2