Dec—14—2006 0G:52pm From—WACHOVIA GOVERNkENT BANKING 267—321—1649 1—945 P.

002/009 F—101

PA 19109

F'ax 215 6704480

mU Free 868 5654593

WACHOV]A
December 14, 2006

Mr. David Hixson

Executive Director
Lancaster County Convention Center Authority
B North Queen Street
Suite 1102
Lancaster, PA 17603

Mr. Thomas Beckett Mr. Jay Wenger

Senior Vice President Susquehanna Group Advisors Inc.
George K. Baum & Company 830 Sir Thomas Court
4 Tower Bridge Suite 150
200 Barr Harbor Drive, Suite 400 Harrisburg, PA 17109
West Conshohocken, PA 19428

Gentlemen:

Bank, National Association is pleased to offer the following credit commitment to

provide credit enhancement and liquidity for the Authority's proposed bond issuance for the
construction of a new convention center in downtown Lancaster.
This proposal provides for two Irrevocable Direct Pay Letters of Credit in the aggregate amount of
$61,960,000 which will provide credit enhancement for the bonds. The first letter of credit in the
amount of $40,000,000 will enhance a remarketing of the 2003 Bonds. A second Letter of Credit
will support a new issue of variable rate bonds in the approximate amount of $21,980,000.
In addition, this proposal provides for a $2,000,000 line of credit available to the Authority for
working capital needed to operate the convention center.
We look forward to your acceptance of this commitment and the beginning of a banking
relationship with the Authority.
Should you have any questions, please call me at 215-670-6579.

Thomas Easer
Senior Vice President
Dec—14—2006 06:52pn, From—WACHOVIA BANKING 261—321—1649 T945 P.003/009 F101

Summary of Terms and Conditions

Obligorl
Borrower: Lancaster County Corivenhion Center Authority (the

Bank: Wachovia Bank, NA (the Banlc")

Commitment Initial Commitment not to exceed to $63,000,000 as follows

Amount: (1) Up to $40,000,000.
(2) Up to $22,000,000
(3)Upto $1,000,000

Upon completion of a review and satisfactory outcome of those due

diligence items listed in Conditions Precedent to Closing (a, b, c and d) the
Bank wilt increase the overall commitment by $2,000,000 in the form of Facility
#2 above which will increase from $22,000,000 to $24,000,000.

Credit Facility: (1) A direct pay letter of credit 2003 DPLC")

(2) A direct pay letter of credit 2007 DPLC)
(3) Line of Credit

Bank Ratings: Lana Term Short Term

Moody's Aa2 P-I
S&P M- A-i
Fitch F1+

Purpose: (1) and (2) To credit enhance the Series 2003 tax exempt variable
rate refunding bonds in the approximate amount of $40,000,000, to be
remarketed concurrently with a Series 2007 tax exempt variable rate
bonds in the approximate amount of $19,000,000. The proceeds of both
bond issues together with other Authority funds and certain
Commonwealth of Pennsylvania Grants will (I) provide funds for
construction and equipping a 220,000 square foot Convention and
Exhibition Facility, (ii) capitalize approximately 2 years of interest, (iii)
fund a debt service reserve fund equal to MADS and, (iv) finance the
costs of issuance of the Series 2003 and 2007 Bonds.

(3) To provide seasonal working capital for the Authority

Expiry Date: (1) and (2) The expiry date for both the Series 2003 DPLC and the
Series 2007 DPLC Is five (6) years from closing
(3) The Line of Credit will mature initially in 12 months and be subject to
and renewal annually thereafter

Bond Amortization: The amortization schedule of the bonds enhanced by the Series 2003
DPLC and the Series 2007 IDPLC will be satisfactory to the Bank.

Bond Proceeds: The Borrower will place the Bond proceeds Into a construction fund with
the Bond Trustee at closing to be spent down as necessary for
construction. Payments from the construction fund will be made monthly

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Dec—14—2006 06:52pm From—WACHOVIA GOVERNIIENT BANKING 261—321—7649 1—945 P.004/009 F101

upoti approval by the Bank for disbursements of direct construction Costs

incurred by the Borrower that are part of the approved budget. The Bank
will hire an inspector to visit the job site on a monthly basis in order to
validate that the work has been performed in accordance with the project
cost budget before approving the requisition for funding.

Letter of Credit Fees: Letter of Credit Fees will include: (I) a nonrefundable fee, payable
quarterly in advance at a fee rate per annum set forth below calculated
as of the first day of each quarterly period on an actualI36O day basis;
and (ii) customary transaction fees for processing draws, amendments,
etc.

$40,000,000 Series 2003 95 b .P.

$1 9, 300,000 Series 2007 125 b. p.

if at any time during the term of this letter of credit, the County Guaranty
is dropped from the 2003 Bonds1 the pricing on the $40 Million DPLC will
increase from 95 b.p. to 125 b. p.

if tht Borrower terminates the Letter of Credit prior to the first year
anniversary date of the letter of credit issuance, Borrower shall pay to
Bani: at time of termination the remaining unpaid quarterly fees up to the
first year anniversary date

Line of Credit Prime plus % of 1%, to float

Commitment Fee: (1) and (2) Fifteen (15) basis points on the face amount of the Letters of
Credit due at closing.
(3) None.

Security: Applies to all facilities: (1) and (2) and (3)

A pledge of Hotel Room Tax Revenues.
The Bonds are further secured by a debt service reserve fully funded by
bond proceeds.
All facilities shall be secured by a first mortgage lien on all land and
improvements thereon that will become the Lancaster County
Convention Center.

(The line of credit is cross collateralized with the letter of credit).

Guarantor: Facility (1) only

The Authority's obligation to replenish the debt service reserve fund
applicable to the 2003 Bonds shall be partially guaranteed by the full
faith and credit of the County of Lancaster. The amount of this guarantee
shall be limited to the lesser of $1,500,000 per annum or 50% of the
annual debt service.

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Dec—14—2006 06:52pm From—WACHOVIA BANKING 26T—321—T649 T—945 P.005/009 F—101

Covenants: In addition to the covenants customarily required by the Bank for similar
credit accommodations, the following covenants are applicable to
Facilities (1), (2), and (3) and will include, but are not limited to the
following:

(a) Debt Service Coveraae Ratio: The Authority wiD agree that if
debt service tested quarterly tells below I .25x on a rolling 12-
month basis it will be considered an event of default. Debt
Service Coverage is defined as: (1) Total amount of Hotel Tax
Revenues Fees Collected adjusted by the net swap payments,
divided by (2) the sum of Interest Expense and Prior Year
Current Maturities of Long Term Debt.
(b) Subordination: Interstate Hotel will agree to subordinate one half
of their management fee earned in any year until such time as it
can be determined following the close of such year that sufficient
hotel tax has been collected to provide for the full year's debt
service and Bank and Borrower agree that the revenues and
operating expenses of the Convention Center and administrative
expenses of the Authority are in keeping with the approved
budget. Such subordination shall not be applicable for any year
immediately following any two successive years in which the
project generates a surplus of $250,000 after Debt Service and
Convention Center operations and payment of Authority
administrative expenses.
(C) PermittedAddifional Debt: the final amounts of the Series 2003
and Series 2007 Bonds that are to be issued will be subject to
the Bank's approval and thereafter the Bank must approve the
incurrence of any other debt which, together with any prior other
debt then outstanding, will exceed the sum of $500,000 in
aggregate.
(d) The Developers Contingent Fee of $546,000 will not be paid
until the completion of construction of the project and such time
that the Renewal and Replacement Fund maintained by the
Authority reaches a balance of $2,000,000.
(e) Other customarily required covenants addressing permItted
liens, increased Bank costs, transfers of assets, merger and
consolidation and maintenance of Insurance

Flow of Funds:
Upon receipt of the Hotel Tax Revenues, the Authority will be required to
deposit such funds into the Hotel Tax Revenue Fund held by the
Trustee. The Authority will covenant to instruct the Trustee to transfer
funds from the Hotel Tax Revenue Fund In the following order and the
following priority:

I. for the payment of principal and interest on the 2003 and 2007
Bonds and for the payment of the annual fee on the direct pay

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Dec—14—2000 06:53pm From—WACHOVIA GOVERNIENT BANKING 207—321—7649 1—945 P.006/009 F—101

letters of credit, and for the payment of any regularly scheduled

swap payments,
2. to the Debt Service Reserve Fund to replenish any draws from
this fund,
3. to reimburse the County for any draws under the Guaranty
Agreement,
4. an amount up to $450,000 to fund a debt service stabilization
which will be held under the surplus funds after It is fully funded
5. surplus fund which will contain the following:
• Administrative Expense Account
• Operating Expense Account
• WorkJng Capital Fund-max of $1,450,000
• Renewal and Replacement Fund -max of $2,000,000

Financial
Reporting: The financial reporting requirements will include, but not be limited to the
lbllowing:

(a) Audited fiscal year end financial statements of the Authority;

(b) Management prepared quarterly financial statements for the
Convention Center Project
(c) Quarterly statements showing the amount of Hotel Tax Revenue
collected on a monthly basis;
(d) Annual operating budget for the Convention Center project
(e) Annual covenant compliance

Costs: shall pay all costs, expenses and fees (including, without
limitation, any plan and cost reviews, monthly inspections, appraisals,
insurance, environmental assessment, searches, recording and
attorneys' fees) associated with this transaction. The Bank's choice of
counsel will be Eckert Sea mans.

Conditions
Precedent to
Closing: Satisfactory completion of Bank's Due Diligence, including but not limited
to the fellowing,

(a) Review of the Joint Development Agreement which must contain

terms and conditions with respect to project construction and
funding that is satisfactory to be Bank.
(b) Satisfactory review of the Professional Services Development
Agreement.
(c) Satisfactory review of the Declaration of Condominium documents.
(d) Satisfactory review of the Lancaster County Convention Center
Authority management agreement with Interstate Hotel.
(e) Evidence satisfactory to Bank that all past and present Hotel
Operator lawsuits have been withdrawn or settled. For the
purposes of the Commitment, Hotel Operator lawsuits shall mean
the cases previously brought against the Authority and others and

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Dec—14—2006 0C:53ps Froe—WACHOVIA GOVERNIENT BANKING 267—321—1649 1—945 P.001/009 F—101

referred to as Bold I and Bold II and the Horst/Ephrata Motels

case.
(f) Opinion of Authority's Counsel regarding the validity of the Hotel
Tax Revenue to be pledged as security for these Letters of Credit
and furthermore that this Hotel tax is treated as "Speclar Revenue
and the continuation of this revenue would not be affected by any
filing under the Bankruptcy Code.
(g) Opinion of Legal Counsel addressing the enforceability of the
County (which may be a reasoned opinion) and the
validity of the 2003 Bond documents. The Bank recognizes that the
Authority has received a permanent injunction from the Court of
Common please in Lancaster County on October 23, 2006.
(h) Opinion of Counsel attesting to the validity of issuance of $19
Million of new Bond debt on parity with the hotel tax revenue
pledged to the 2003 Bond debt.
(i) Borrower will provide satisfactory documentation to the Bank
that the Project (both Hotel and Convention Center)
has balanced sources and uses and that both can be certified.
U) The Authority will provide documentation satisfactory to the Bank
validating their equity contribution to the Project.
(k) The Bank will hire a consultant to perform a Plan and cost review
of the Project pursuant to which the inspector shall review and
advise the Bank with respect to all plans and specifications, the
adequacy of the budget and other matters related to design,
construction, operation and use of the Project
(I) Maximum Fixed Price Construction Contract for the Project on
terms reasonably acceptable to the Bank
(m) Bank's satisfaction with general contractor and all bonding
requirements
(n) Evidence that the Hotel has both construction and long term
financing commitments
(a) Review of all construction related documents to the Bank's
satisfaction
(p) Satisfactory resolution of existing debt of the Authority
(q) Closing certificate as to accuracy of Representations and
Warranties, compliance with covenants and absence of Event of
Default or Potential Event of Default
(r) Certified resolutions, incumbency certificate and corporate
documents.
(a) Negotiation, execution and delivery of all definitive credit
documentation subject to the satisfaction.
(t) No material adverse change in the information or
feasibility information upon which this commitment is based.
(U) No material litigation.
(v) Evidence of required insurance,
(w) Payment of all fees and expenses subject to reimbursement
(x) Other Conditions Precedent to Closing as appropriate.

A preliminary due diligence list is attached with respect to items (I, (j),
and (n).

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Dec—14—2006 0C:53pm From—WACHOVIA GOVERNIENT BANKING 267—321—7649 T—945 P.008/009 F101

Other: Obligor will establish their primarydeposit and operating accounts with
the Bank .within 30 days of closing and maintain those accounts for the
life of this commitment.
All documents shall be satisfactory in form and substance to the Bank.

AcceDtance

We hereby accept this financing proposal and request that you proceed with your due
diligence
needed to complete those conditions required precedent to Closing.

Lancaster County Convention Center Authority ("Obligor')

By: - Date

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Dec—14—2006 06:E3pm From—WACHOVIA GOVERNIENT BANKING 267—321—1649 1—945 P.009/009 F101

Preliminaiy Due Diligence List

County Convention Center Authority

Sources of Funds:

Historic Preservation Trust - $3,000,000

Review line of credit documents
Agreement with Authority re availability of funds for Project

PS? Hotel Construction Funding - $24,000,000

Review of construction loan documents and permanent take-out commitment
Agreement with LCCCA re availability of funds for Project

All Commonwealth Grant Sources - $36,374,371

Review of Grant Agreements
Confirmations of availability of funds
Review of interIm linancing documents, as applicable

RACL Revenue BOndS, Series 2006 — $24,000,000

Review of Bond Deouments
Confirmation of availabUity of funds for Project

WI? Bonds - $13,600,000

Review of Bond Documents
Confirmation of availability of funds for Project

Sale of King Street Properties -$2,556,400

Review of Sales Agreements or confirmation of closings
Provisions for disposition of sale proceeds

Accumulated Tax Revenues - $7,507,209

Confirmation of deposit to Project Fund

Equity - $11,000,000
Evidence of deposit of money to Project Fund or Letter of Credit