Chris Bruner

From: Kathy Fox

Sent: Tuesday, November 23, 2010 1:41 PM
To: Rohr, Jeffrey L.
Cc: Buttress, Christine A.; National Underground Railroad Freedom Center (594
@ocfcsp.oasfc.local); Tony Capaci; Chris Bruner
Subject: RE: John Pepper Guaranty / Freedom Center

Jeff, 
Thank you for your email message conveying your questions on the Guaranty for the Freedom Center.  Here are our 
responses based upon review with our legal counsel: 
 
1. The Commission uses payment guaranties; our legal counsel advises that a collection guaranty will not suffice. 
2. The Guaranty is limited to the amount being approved by the Commission for disbursal to the Freedom Center.  
At this time, the Freedom Center is requesting approval for release of an $850K appropriation and 
approximately $460K we are holding in escrow.  The Commission staff does not yet have all the information 
requested from the Freedom Center staff in order to be able to complete our staff report to recommend 
approval for release of the appropriation, or to recommend whether any of the escrow should be released at 
this time. 
3. Commission counsel is recommending the Commission not turn this decision over to a third party.  It may be 
possible to include language allowing a request to the Commission to review the need for the Guaranty at a 
future point in time and to take into consideration a written expert opinion. 
4. Our legal counsel advises that the Guaranty document effectively works as you have outlined. 
 
When Mr. Pepper has made a decision as to whether he wishes to proceed with the Guaranty document, please advise 
us.  If his decision is to proceed, we will prepare the Guaranty document in counterparts for his signature.  The 
Commission would not execute the Guaranty until the Commission votes to approve it along with the legal agreements 
the Freedom Center would sign, and approval to release the funds. 
 
Thank you, 
 
Kathy 
 
Kathleen M. Fox, FASLA
Executive Director
Ohio Cultural Facilities Commission
100 E. Broad Street, Suite 300
Columbus, OH 43215-3661

Vox: 614.752.2770
Fax: 614-752-2775
e-mail: kfox@culture.ohio.gov
kfox@post.harvard.edu

visit our website: www.culture.ohio.gov

Building Culture in Ohio's Communities: The Ohio Cultural Facilities Commission, formerly the Ohio Arts & Sports Facilities Commission, oversees
capital improvement funds appropriated by the Ohio General Assembly and Governor for community cultural facility projects including non-profit
theaters, museums, historical sites and publicly owned professional sports venues. You are invited to visit www.culture.ohio.gov or call (614) 752-2770
for more information on the Commission or to learn how we can assist your cultural facility project.
 
From: Rohr, Jeffrey L. [mailto:JRohr@Graydon.com]
Sent: Friday, November 19, 2010 12:35 PM
To: Kathy Fox
Cc: Rohr, Jeffrey L.; Buttress, Christine A.
Subject: John Pepper Guaranty / Freedom Center
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Kathy,
Thank you for taking the time to talk with me today. As requested, here are some thoughts and discussion
points for your consideration.

1. I would repeat Mr. Pepper's desire for the Guaranty to be a "collection" guaranty, rather than a payment
guaranty (as currently drafted). The essence of a collection guaranty is that the beneficiary of the Guaranty will
have exhausted its rights and remedies against the Borrower and its assets prior to demanding payment or
pursuing any right or remedy for any resulting deficiency against the Guarantor.

2. Regardless of the form of the Guaranty, our understanding is that the Guaranty would be limited in amount
to the roughly $1,300,000 that has been appropriated but not yet disbursed to the Freedom Center.

3. If the form of Guaranty is to remain as has been proposed (a payment guaranty), then Mr. Pepper has
suggested that the Guaranty contain a specific termination clause. This clause would provide for the
termination of the Guaranty upon a mutually agreeable third party certification as the :financial sustainability"
of the Freedom Center. In our discussion, you indicated that you did not feel this clause would be acceptable to
the Commission as a definitive termination. Rather, you indicated that this type of certification may be
something that the Commission would consider (but not be bound to) upon a request in the future by the
Guarantor for termination of the Guaranty.

4. In our discussion, you explained to me that these appropriated funds are only contemplated to be repaid to
the State upon a failure of the cultural entity (here the Freedom Center) from fulfilling its obligations under the
Agreement pursuant to which the funds were disbursed. I understand that there is a 15 year term to that
Agreement. One additional suggestion that I discussed with you was to have the Guaranty and the amount
payable by the Guarantor under the Guaranty reduce on a dollar for dollar basis as funds (if any) were required
to be repaid under the Agreement. Taking that analysis one step further than we discussed, as the amounts that
could be required to be repaid under the Agreement may decrease over time, then likewise there could be a
dollar for dollar reduction in the limitation of the amount payable under the Guaranty.

This final discussion point has not been discussed in detail with Mr. Pepper, but is provided here for mutual
consideration.

Thank you again for taking the time to talk to me today. Please let me know if you have any questions.

Jeff Rohr
Graydon Head & Ritchey LLP
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Phone: (513) 629-2852
Fax: (513) 651-3836
E-mail: Jrohr@graydon.com

The following information is from the law firm of Graydon Head & Ritchey LLP and may be protected by attorney/client
privilege. If you believe it has been sent to you in error, do not read it. Please reply to the sender that you have received
the message in error, then delete the message.

Do not retain a copy. Thank you.

**********************************
11-19-10
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Jeff Rohr
Graydon Head & Ritchey LLP
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Phone: (513) 629-2852
Fax: (513) 651-3836
E-mail: Jrohr@graydon.com

The following information is from the law firm of Graydon Head & Ritchey LLP and may be protected by attorney/client
privilege. If you believe it has been sent to you in error, do not read it. Please reply to the sender that you have received
the message in error, then delete the message.

Do not retain a copy. Thank you.

**********************************

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