Cross Over Crossville

AN OPEN LETTER TO BEATRIZ MARINELLO
July 26, 2005

Dear Beatriz:

With slightly over two weeks remaining before the Delegates meet in Phoenix and the new Executive Board takes office, you have declared your intention to sign a contract with a builder to construct USCF's new headquarters in Crossville, and to arrange a mortgage to fund this construction cost.

The estimated cost of this construction is about $550,000. The real cost is likely to be more, as such projects frequently run over budget. There will also be interest charges.

The five signers of this letter will be on the new Executive Board that takes office August 14, a majority of that seven person Board. None of us supports moving USCF out of Crossville, but all are concerned that the Federation is about to commit to spending a great deal of money without having carefully considered alternatives. Randy Bauer, a current Board member who you supported for re-election, has expressed the same concern and suggested that you not sign the construction contract.

There appear to be appropriately sized office buildings in Crossville advertised for sale at prices well below what it will cost to construct this building. Especially if we are able to obtain compensation for returning or selling the land we currently own, it is possible that USCF might save a great deal of money by purchasing in Crossville rather than building. While this is not certain, we do not feel it is prudent to eliminate this possibility by the immediate signing of a contract, nor do we understand why such signing is so urgent that it justifies shutting the Delegates and the new Board out of the process only about two weeks before the meetings.

Too often in the past, USCF has signed contracts without adequate consideration and it has cost us money. Maybe the arrangements currently negotiated are desirable for USCF and maybe not, but analysis of our options before taking a fateful step is surely appropriate at this time.

Joel Channing, Bill Goichberg, Don Schultz, Greg Shahade, Robert Tanner

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

The following e-mail was sent to the Executive Board and upcoming members of the EB. I am posting a copy of this e-mail for all our members information.

The keys of the financial recovery of the USCF were that we were able to greatly reduce expenses, the outsourcing of the B&E and the relocation of the USCF's HQ to Crossville, TN. The USCF has about $800,000 in liquidated assess and a functional model to continue financial viability.

The City of Crossville donated $264,000 worth in a piece of property that will be used as a down payment for the building of the new Headquarters. The LMA Committee authorized the use of a $100,000 additional down payment for the permanent loan. If everything is done correctly by our leadership in 15 years from now we will have a full paid building and healthy reserves in investments. This is for the future of our organization.

Yours for Chess,

Beatriz Marinello
President
US Chess Federation

Dear All:

The construction loan's contract, as well as the contract with the construction company selected by the Executive Board have been signed.
Today, the construction company started to break ground on the land.

Section 9 of the bylaws, item B states: 'The building and land cannot be encumbered, liened or mortgaged in any way without action by the Delegates at a regular meeting or special meeting called for that purpose except as in Section 10 below;

Section 10 states that:

1. The ED certifies that there is a need for such borrowing. This was done.

2. The EB approves. I am enclosing a copy of the resolution passed by the Executive Board on July 20, 2005 at 7pm.

3. The LMA Assets Management Committee approves The same resolution enclosed was passed 5-0 by the LMA Committee prior to passing this
motion by the Executive Board. Bill Hall has a copy
of this doc.

4. A report should be to the Delegates in the Annual report describing the funds borrowed and paid during the year. A report from Bill Hall will be enclosed in the Delegates' packets along with a copy of the resolutions, legal advise from Harold Winston, Harry Sabine and Mike Matzler. I am attaching a copy of the legal advise.

Have a good day!

Beatriz Marinello
President
US Chess Federation

CORPORATE RESOLUTION

WHEREAS, at the United States of America Chess Federation (USCF) Delegates meeting held on August 3-4, 2002, in Cherry Hill, New Jersey, a motion was passed (DM02-15 - NDM 02-54) to authorize the Executive Board and the Executive Director to sell the building in New Windsor, New York, and to obtain alternative facilities; and

WHEREAS, the Executive Board voted by conference call on June 9, 2003, to move the USCF office to Crossville, Tennessee, said vote being ratified by the Executive Board by conference call on October 17, 2004 (EB 05-15), and the Executive Director has approved of the move to Crossville, Tennessee; and

WHEREAS, the City of Crossville, Tennessee has donated three acres of land to the USCF on which the USCF proposes to construct a new building; and

WHEREAS, Progressive Savings Bank of Crossville, Tennessee, has made a commitment to make a construction loan to the USCF to construct the building and the Executive Director of the USCF has certified the need for such borrowing; and

NOW, THEREFORE, BE IT RESOLVED by the Executive Board of the USCF, acting by conference call on , as follows:

1. The borrowing of up to $561,000.00 as a construction loan from Progressive Savings Bank is hereby authorized to build the new building. The interest rate for the one-year term of the construction loan is to be 5.75%.

2. The land and building is to be collateral for the loan with a deed of trust and other appropriate documents to be executed.

3. The note, deed of trust, and all other loan documents are to be signed by any two of the following: Beatriz Marinello-President, Tim Hanke-Vice President for Finance, or Bill Hall-Executive Director.

The undersigned Executive Director of the United States of America Chess Federation certifies that the foregoing is a true, full and correct copy of the resolution adopted by the Executive Board of the USCF acting by conference call on , at which a quorum was present and voting throughout, and that the resolution is on this day in full force and effect, and has not been changed in any way, modified or rescinded, and do further certify that the foregoing resolution is in accordance with and authorized by the bylaws of the corporation.

This day of July, 2005.

Bill Hall, Executive Director