July 30, 1997
VIA TELECOPIER (610) 260-0268
Mr. Ken Goldenberg
The Goldenberg Group
350 Sentry Parkway
Building 630, Suite 300
Blue Bell, PA 19422-2136
Re: Goldenberg/Rubin Projects
Dear Ken:
To follow up on the various Goldenberg/Rubin conversations, we would
clarify and confirm the following matters:
1. Retail Management Fees. With respect to Oxford Valley and
Cherry Hill, retail management fees will be calculated in accordance with the
Letter Agreement which imputes rent for pad sales, but does not impute rent
for ground leases. With respect to the other projects envisioned, i.e.,
Lancaster, Blue Route and the two matching Rubin projects, the Letter
Agreement is hereby modified to provide that an imputed charge of $4/PSF rent
will be added to the actual ground lease rents for purposes of computing the
retail management fee.
2. Put Rights. You have expressed an interest in acquiring
the right to put your interests in some or all of the various Goldenberg/Rubin
projects into PREIT, or its affiliated operating partnership. PREIT is very
interested in discussing these items. However, PREIT, on the one hand, and
Goldenberg, on the other hand, cannot agree on the terms of any put agreement
over the next day or two. Rather, we suggest that when the PREIT Proxy becomes
available, PREIT will deliver it to you. If you are interested in acquiring an
interest in PREIT, after reviewing the Proxy, you may enter into negotiations
regarding the acquisition of such Goldenberg interests as you desire to
transfer to PREIT or its operating partnership.
3. Distributions from Equity Fund. In a matter that related
to Oxford Valley, we agree that the attached schedule illustrates the
methodology used to reconcile the equity fund. The exact accounting is subject
to a final audit utilizing this method.
Mr. Ken Goldenberg
July 30, 1997
Page 2
4. Reimbursement of In-House Costs. With respect to all
projects, you have asked for clarification that the development projects will
not pay overhead, administrative or in-house legal or consulting fees to
employees or entities controlled by the managing partner. We agree with this
statement. However, we have agreed to the reimbursement of in-house legal fees
for the preparation and negotiation of leases at Cherry Hill and reimbursement
of the direct payroll costs, as previously presented to us, for your on-site
construction supervision at Oxford Valley. In the future, in-house legal or
other charges will only be reimbursable if approved by each of us, in advance.
5. Funding Goldenberg Projects. The intent of the Letter
Agreement was that if funds in excess of the Equity Fund are needed for
Lancaster and Blue Route, that Rubin and Goldenberg will each put up such
necessary funds equally and in a timely fashion (within fifteen (15) days of a
requisition). That obligation and procedure is hereby confirmed.
6. Non-Retail Fees. At Blue Route, there is a significant
possibility that a parcel of land will be used for non-retail purposes. You
have asked for clarification on how development, leasing and management fees
will be paid on the non-retail portion of the project. We confirm our
understanding that you would be entitled to a development fee of $1 per square
foot of GLA (which is shared with Rubin) and a leasing fee of $2 per square
foot of GLA as provided in the Letter Agreement with respect to the non-retail
GLA of an office building or hotel (not including parking structures or
parking areas). In terms of management, you would be entitled to a 4%
management fee for an office property as per the Letter Agreement if you build
and lease space to tenants. For a land lease or sale of an office building or
hotel, you will be entitled to management fees only if your contract with the
office or hotel user, or owner, provides that you will be the managing entity
or property manager, in which case you will be paid whatever the tenant or
purchaser agrees to pay you, so long as such fees are reasonable.
7. Construction Financing. You have asked that construction
financing on Goldenberg projects be guaranteed by PREIT. Ron has explained to
Ken, in great detail, the limitations placed upon PREIT. The operating
partnership, as referenced in the Proxy, will obligate itself to guarantee
construction financing on the Goldenberg projects, as long as this financing
is with "Required Lenders." "Required Lenders" will have the definition to be
given in the Loan Agreement between PREIT and CoreStates Bank, as lead lender,
which is
Mr. Ken Goldenberg
July 30, 1997
Page 3
currently under negotiation. We believe that Required Lenders will mean those
Lenders holding 2/3 by commitment amounts of the amount of the CoreStates loan
to PREIT. We have agreed to both work with PREIT to approach CoreStates to
allow the operating partnership to guarantee construction financing with other
lenders. In the event that Goldenberg desires to utilize another lender, and
if PREIT cannot obtain CoreStates' consent for the operating partnership loan
to guarantee such a construction loan, Ron Rubin will sign personally to
guarantee such loan if required by the construction lender. Conversely, you
have asked us to agree that Ken will not be required to guarantee construction
financing for projects by Rubin or the operating partnership if Ken elects to
forsake his general partner status. This is agreeable, in principle, with us.
However, if a lender requires Ken's signature, we ask that Ken work with us,
in a similar manner to how Ken Goldenberg worked with Rubin with respect to
Hillview.
8. Accounting Fees. This will confirm that Rubin will pay
Zelenkofske Axelrod fees incurred in connection with the proposed PREIT
transaction in an amount not to exceed $50,000.
9. York Project. This will confirm that if Rubin, or the
operating partnership as successor to Rubin, desires to go forward with a
shopping center development at York, that it will be a 50/50 joint venture
with Goldenberg outside the scope of the Letter Agreement. Further, the
respective responsibilities will be discussed and decided upon between
Goldenberg, on the one hand, and Rubin and/or the operating partnership, on
the other hand. However, no agreements have yet been signed with respect to
York, Pennsylvania, and this is not a commitment by Rubin or the operating
partnership to go forward with the ownership of a power center development in
York, Pennsylvania. However, should we decide not to go forward, we will give
you timely notice.
10. Affiliate Obligations. It is expressly agreed that
neither party hereto, nor its successors and assigns, may use affiliates to
avoid their obligations under the Letter Agreement.
Mr. Ken Goldenberg
July 30, 1997
Page 4
If you agree that this letter accurately sets forth our
understandings, please sign and return a copy to me.
Very truly yours,
/s/ Ronald Rubin
---------------------------
RONALD RUBIN
cc: Mr. Alan Feldman
Mr. Edward Glickman
Jonathan B. Weller, President
Lawrence J. Arem, Esquire
Agreed and Accepted this 30th
day of July, 1997.
THE GOLDENBERG GROUP
By:/s/ Ken Goldenberg
-------------------------
Ken Goldenberg