BALLARD SPAHR ANDREWS & INGERSOLL, LLP BY: David H. Pittinsky, Esquire Attorney I.D. No. 04552 John C. Grugan, Esquire Attorney I.D. No.

83148 Alison Tanchyk Dante, Esquire Attorney I.D. No. 91627 1735 Market Street, 51st Floor Philadelphia, Pennsylvania 19103 Telephone No. (215) 665-8500 Attorneys for Plaintiffs

PENN SQUARE GENERAL CORPORATION, the General Partner of PENN SQUARE PARTNERS, a Pennsylvania Limited Partnership, and THE REDEVELOPMENT AUTHORITY OF THE CITY OF LANCASTER, Plaintiffs, vs. COUNTY OF LANCASTER, BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF LANCASTER, MOLLY HENDERSON, Commissioner, and, RICHARD SHELLENBERGER, Commissioner, Defendants. COMPLAINT 1.

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COURT OF COMMON PLEAS OF LANCASTER COUNTY, PENNSYLVANIA

CIVIL ACTION – LAW

Action for Equitable, Declaratory and Mandamus Relief

Plaintiffs bring this action for equitable, declaratory and mandamus relief to prevent

Defendants from destroying the Convention Center and Hotel project planned for the City and County of Lancaster (a) by repudiating and revoking an absolute, irrevocable and unconditional Guaranty of $40 million in Bonds, as originally issued and as remarketed, and (b) by reducing and diminishing the Hotel Room Tax revenues allocable to the Convention Center project pursuant to the County’s own Ordinance and the Commonwealth’s statutory authorization.

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A. 2.

The Parties

Plaintiff Penn Square General Corporation (“PSGC”), the general partner of Penn

Square Partners (“PSP”), a Pennsylvania limited partnership, brings this action on behalf of PSP. PSGC and PSP have their principal place of business at 1853 William Penn Way, Lancaster, PA 17605-0008. 3. Plaintiff The Redevelopment Authority of the City of Lancaster (“RACL”) is a public

body, corporate and politic, exercising the public powers of the Commonwealth of Pennsylvania as an agency thereof, organized and existing under the laws of the Commonwealth of Pennsylvania, having its principal office at 120 North Duke Street, Lancaster, PA 17608-1599. 4. Defendant County of Lancaster (the “County”) is a third-class county in the

Commonwealth of Pennsylvania, with its principal place of business located at 50 North Duke Street, Lancaster, PA 17602. 5. Defendant Board of County Commissioners of the County of Lancaster (the “Board”)

is a body politic and corporate in the Commonwealth of Pennsylvania, with its principal place of business located at 50 North Duke Street, Lancaster, PA 17602. 6. Defendant Molly Henderson is sued in her official capacity as an elected member of

the Board and maintains her official office at 50 North Duke Street, Lancaster, PA 17602. 7. Defendant Richard Shellenberger is sued in his official capacity as an elected member

of the Board and maintains his official office at 50 North Duke Street, Lancaster, PA 17602. B. 8. Jurisdiction And Venue

This action is brought under and in furtherance of certain pertinent provisions of the

Third Class County Convention Center Authority Act, 16 P.S. §§ 2399.51 et seq. (the “Convention Center Act”) and of the Local Government Unit Debt Act, 53 Pa.C.S. §§ 8101 et seq. (“LGUDA”), to prevent Defendants: 2

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(a)

from repudiating and revoking the absolute, irrevocable and unconditional

Guaranty Agreement dated as of December 15, 2003, by and among Defendant County, The Lancaster County Convention Center Authority (“LCCCA”) and Manufacturers and Traders Trust Company as Trustee; and (b) from reducing and diminishing the allocation of revenues to the LCCCA and

the Convention Center project from the Hotel Room Tax imposed pursuant to § 2399.72 of the Convention Center Act and County Ordinance No. 45. True and correct copies of the absolute, irrevocable and unconditional Guaranty Agreement and County Ordinance No. 45 are attached hereto and made a part hereof as Exhibits A and B, respectively. 9. Venue is proper herein, as follows: (a) (b) and (c) 10. With respect to the claim for mandamus, Pa. R. Civ. P. 1092. With respect to the claim for equitable relief, Pa. R. Civ. P. 1006 and 2103; With respect to the claim for declaratory relief, Pa. R. Civ. P. 1006 and 2103;

In this action, the declaratory relief is sought under and pursuant to Pa. R. Civ. P.

1602, the mandamus relief is sought under and pursuant to Pa. R. Civ. P. 1095 and 1098 and the equitable relief is sought in the nature of a preliminary and a permanent injunction to afford Plaintiffs full, complete and effective relief. C. 11. The Interests Of PSP And RACL In The Convention Center Project From its inception, the Convention Center project and the Hotel project in the historic

Watt & Shand building in the City of Lancaster have been joined at the hip. The Convention Center could not be built without the Hotel and the Hotel in the Watt & Shand building could not be built without the Convention Center.
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12.

Accordingly, PSP and LCCCA entered into a Joint Development Agreement dated

December 20, 2001 (the “2001 JDA”) for the purpose of jointly developing and operating the Convention Center and Hotel planned to be constructed in the City and County of Lancaster. A true and correct copy of the 2001 JDA, without exhibits, is attached hereto and made a part hereof as Exhibit C. 13. Thereafter, PSP, LCCCA and The Redevelopment Authority of the City of Lancaster

(“RACL”) entered into a Joint Development Agreement dated January 31, 2006 (the “2006 JDA”) for the purpose of jointly developing and operating the Convention Center and Hotel planned to be constructed in the City and County of Lancaster. The 2006 JDA superseded the 2001 JDA. A true and correct copy of the 2006 JDA, without exhibits except for the Purchase Option Agreement, is attached hereto and made a part hereof as Exhibit D. 14. In addition, PSP and RACL entered into an Agreement to Transfer and

Reimbursement Agreement dated January 31, 2006 (the “TRA”), pursuant to which RACL purchased the Watt & Shand building from PSP. A true and correct copy of the TRA, without exhibits, is attached hereto and made a part hereof as Exhibit E. 15. PSP and RACL also entered into a Hotel Tower Lease Agreement dated January 31,

2006 (the “Hotel Lease Agreement”), pursuant to which RACL, inter alia, agreed to finance and construct the Hotel and certain common areas for utilization by the Hotel and the Convention Center and entered into a long-term lease with PSP for the Hotel premises. A true and correct copy of the Hotel Lease Agreement, without exhibits, is attached hereto and made a part hereof as Exhibit F. 16. Under the 2006 JDA and the Hotel Lease Agreement, PSP, LCCCA and RACL have

agreed to create a condominium to be known as “The Penn Square Hotel and Convention Center”

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out of the Convention Center premises owned by LCCCA and the Hotel premises owned by RACL and leased by PSP. 17. Under the 2006 JDA, PSP has agreed to invest $10 million in cash in the Hotel to

fund the costs of developing, constructing, furnishing and opening the Hotel. 18. Under the 2006 JDA and an accompanying Purchase Option Agreement entered into

by RACL and LCCCA, LCCCA has an option to acquire the Watt & Shand building or the Hotel Unit (should the Watt & Shand building be subjected to the condominium regime) from RACL under certain terms and conditions specified in the Purchase Option Agreement. D. 19. The LCCCA

Pursuant to the Convention Center Act and County Ordinance No. 44, on

September 15, 1999, the LCCCA was formed for the purpose of, inter alia, developing, designing, constructing, managing, operating, financing and owning a convention center at a site adjacent to the historic Watt & Shand building in the City and County of Lancaster. A true and correct copy of Ordinance No. 44 is attached hereto and made a part hereof as Exhibit G. 20. Pursuant to the Convention Center Act and Ordinance No. 44, the LCCCA was

expressly authorized: (10) To borrow money for the purpose of paying the costs of a project and to evidence the same; make and issue negotiable bonds of the authority; secure payment of the bonds, or any part thereof, by pledge or deed of trust of all or any of its revenues (including any hotel room rental tax), rentals, receipts and contract rights; make such agreements with the purchasers or holders of the bonds or with other obligees of the authority in connection with the bonds, whether issued or to be issued, as the authority shall deem advisable, which agreements shall constitute contracts with the holders or purchasers; obtain such credit enhancement or liquidity facilities in connection with the bonds as the authority shall determine to be advantageous; and, in general, provide for the security of the bonds and the rights of the bondholders.

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*

*

*

(24) To do all acts and things necessary or convenient for the promotion of its purposes and the general welfare of the authority and to carry out the powers granted to it by this subdivision or by any other act. 16 P.S. § 2399.55(b)(10) and (24). E. 21. The Hotel Room Tax

Pursuant to the Convention Center Act, the County in which the Convention Center

was planned to be located – here Lancaster County – was expressly authorized “to impose an excise tax on the consideration received by each operator of a hotel within the market area from each transaction of renting a room or rooms to accommodate transients.” 16 P.S. § 2399.72(a). 22. Pursuant to County Ordinance No. 45, the County imposed a Hotel Room Rental Tax

of 3.9% as “an excise tax on the consideration received by each Operator of a Hotel within the Market Area, from each Transaction of renting a Room or Rooms to accommodate Transients” and the “Market Area” was defined as the “entire County of Lancaster” because the County determined that the “entire area within the County of Lancaster [would] derive a material benefit from the existence of the Convention Center within the County.” Ordinance No. 45 (Ex. B) at 3-5. 23. Pursuant to the Convention Center Act and Ordinance No. 45, 80% of the Hotel

Room Tax revenues are granted to LCCCA for the use of LCCCA for convention center purposes and the remaining 20% are granted to the County’s tourist promotion agency. 16 P.S. § 2399.72(c) and (d); Ordinance No. 45 (Ex. B) at 6. 24. Pursuant to the Convention Center Act, once the County has imposed an excise tax

and allocated 80% of the revenues to the LCCCA for convention center purposes and the LCCCA has pledged its share of the revenues as security for the payment of bonds issued by the LCCCA for convention center purposes, the County cannot “reduce the rate of tax imposed for convention center

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purposes until all bonds so secured by the pledge of the authority, together with interest, are fully met and discharged.” 16 P.S. § 2399.72(f)(2). F. 25. The Bond Issue

In order to partially finance the construction of the Convention Center, LCCCA

determined to issue Hotel Room Rental Tax Revenue Bonds, Series of 2003 (the “Bonds”) secured by the Hotel Room Rental Tax revenues. 26. In order to accomplish the issuance of the Bonds, LCCCA determined that it needed a

Guaranty issued by the County to support the contemplated bond issue which would partially finance the costs of the Convention Center project. G. 27. The County’s “Absolute, Irrevocable And Unconditional” Guaranty Pursuant to County Ordinance No. 73, the County authorized the execution of, and

did execute, the Guaranty Agreement. A true and correct copy of Ordinance No. 73 is attached hereto and made a part hereof as Exhibit H. 28. Pursuant to the Guaranty Agreement: • The County “guarantee[d], unconditionally and irrevocably, to the registered owners, from time to time, of the Bonds, the full and prompt payment” of the “replenish[ment of] a portion of the Debt Service Reserve Fund in order to maintain the appropriate Required Reserve Amount” in an amount not to exceed $1,506,960 in any fiscal year (Ex. A at § 1.01 [defining “County Obligation”] and § 3.01); and • The County agreed that its obligations under the Guaranty Agreement were “absolute, irrevocable and unconditional” (Ex. A at §§ 3.08 and 4.02).

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29.

In fact, in order to insure that the County’s obligations under the Guaranty Agreement

were “absolute, irrevocable and unconditional” in every conceivable respect, the Guaranty Agreement expressly provided that: The obligations of the County under this Guaranty Agreement shall be absolute, irrevocable and unconditional, irrespective of any other agreement or instrument to which the County shall be a party, and shall remain in full force and effect so long as the Bonds remain outstanding, and such obligations of the County shall not be affected, modified, diminished, or impaired upon the happening, from time to time, of any event, including, without limitation, any of the following (whether or not with notice to or the consent of the County in accordance with the provisions hereof unless such notice or consent is required hereunder): A. The failure of the Authority otherwise to perform any obligation contained in this Guaranty Agreement or in any other agreement, for any reason whatsoever, including, without limiting the generality of the foregoing, the occurrence of an insufficiency of funds, negligence or willful misconduct on the part of the Authority. ... * * *

E. The failure of the Authority to make any payment to the County under the Reimbursement Agreement; * * *

H. The compromise, settlement, release, alteration, indulgence or any other change or modification of any obligation or liability of the Authority under the Reimbursement Agreement or the Indenture, regardless of the nature of such obligation or liability and regardless of the extent to which such obligation or liability shall have been modified, compromised or otherwise changed; I. The waiver of the payment, performance or observance by the Authority, the Trustee or the County of any obligations, covenants or agreements contained in the Reimbursement Agreement or this Guaranty Agreement; * * *

O. The release or discharge of the County, to the extent permitted by law, from performance or observance of any obligation,

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covenant or agreement contained in this Guaranty Agreement, by operation of law; P. The default or failure of the County fully to perform any of its obligations set forth in this Guaranty Agreement. . . . Guaranty Agreement (Ex. A) at § 3.08. 30. Moreover, in order to protect the purchasers of the Bonds and to insure the

availability of the Hotel Room Tax revenues for performance of the County’s Guaranty, the County “agree[d] that, as long as any Bonds are Outstanding under the Indenture, the County shall not reduce, diminish or repeal the Hotel Room Rental Tax.” Guaranty Agreement (Ex. A) at § 3.18. 31. Similarly, the County agreed that the “Obligations of the County . . . shall arise

absolutely, irrevocably and unconditionally when the Bonds shall have been issued, sold and delivered by the [LCCCA].” Guaranty Agreement (Ex. A) at § 4.02. 32. Significantly, although the Defendant Commissioners now contend, for obviously

self-serving purposes, that the County’s Guaranty does not cover the Bonds when they are remarketed because the remarketed bonds will constitute a “new” issue of bonds, the County’s own Guaranty Agreement refutes their contention. Thus, the very first recital in the Guaranty Agreement defines the “Bonds” covered by the Guaranty to include not only the Series of 2003 bonds issued in December 2003 pursuant to the Trust Indenture, but also to include “any bonds subsequently issued under the Indenture . . . to refund said Series of 2003” bonds, i.e. the remarketed bonds. Guaranty Agreement (Ex. A) at 1. 33. Finally, to insure the finality of the Guaranty Agreement, the County agreed that it

“constitute[d] the entire agreement, and superseded all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.” Guaranty Agreement (Ex. A) at § 4.06.

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H. 34.

The Bond Indenture

In December 2003, the LCCCA issued $40 million in Bonds pursuant to a Trust

Indenture. A true and correct copy of the Trust Indenture is attached hereto and made a part hereof as Exhibit I. 35. The Trust Indenture expressly contemplated that, before construction of the

Convention Center and Hotel commenced, the Bonds would have to be remarketed as tax exempt bonds. 36. In fact, the Trust Indenture expressly provided that the remarketing of the Bonds as

tax exempt bonds was an essential prerequisite and indispensable precondition of the use of the bond proceeds for the construction of the Convention Center, as follows: No disbursements shall be made from the Construction Account of the Project Fund until the interest rate on the Bonds has been converted to a Tax-Exempt Variable Rate or a Tax-Exempt Term Rate pursuant to the provisions of this Indenture. * * *

On or before the Tax-Exempt Conversion Date, the Issuer shall cause to be delivered to the Trustee (1) complete plans and specifications with respect to layout, design, land area, and all other matters with respect to the Convention Center; (2) a project budget which shall include a detailed itemization of all construction costs to be incurred in connection with the Convention Center, including (without limitation) all architectural, engineering and consulting fees, and a detailed itemization of all non-construction costs to be incurred by the Issuer in connection therewith; (3) evidence satisfactory to the Issuer that financing for the adjacent headquarters hotel is available and that construction of the adjacent headquarters hotel will proceed to completion; (4) an opinion of Bond Counsel addressed to the Registered Owners of the Bonds to the effect that, as of the TaxExempt Conversion Date, the interest on the Bonds shall be excluded from gross income for federal income tax purposes, and (5) such certificates, agreements and instruments, which in the opinion of Bond Counsel shall be necessary to deliver the opinion required in the foregoing subsection (4). Trust Indenture (Ex. I) at § 5.02(c) and § 2.05(b) (boldface in original).

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37.

Indeed, the fact that the remarketing of the Bonds as tax exempt bonds was the

necessary second step in the use of the bond proceeds for the construction of the Convention Center was made crystal clear in that: • The entirety of Article IV of the Trust Indenture was devoted to the “Purchase and Remarketing of Bonds” (Ex. I at 40-47); and • $2 million of the initial bond proceeds were reserved “to be used by the [LCCCA] to pay the costs of remarketing of the Bonds” (Ex. I at § 5.02(a)). 38. Accordingly, it is indisputable that the remarketing of the Bonds pursuant to the Trust

Indenture was not a “new” issue of bonds but a remarketing of the initial issue of the Bonds. 39. Furthermore, under the Trust Indenture, LCCCA “pledge[d], assign[ed], transfer[ed]

and set[ ] over to the Trustee as [sic] first priority security interest in all of [LCCCA’s] right, title and interest in and to the Hotel Tax Revenue Fund. Ex. I at § 5.04(a). Hotel Rental Tax revenues were required to be deposited in the Hotel Tax Revenue Fund. Ex. I at § 5.04(a). The “[m]oney in the Hotel Tax Revenue Fund . . . [was] pledged by [LCCCA] for prompt and full satisfaction of all obligations of [LCCCA] under this Indenture” owed by LCCCA to the purchasers of the Bonds. Ex. I at § 5.04(a). 40. In sum, pursuant to § 5.04(a) of the Trust Indenture, LCCCA pledged its share of the

Hotel Room Tax revenues generated by Ordinance No. 45 to fully satisfy its obligations to the purchasers of the Bonds, as originally issued and as remarketed as tax exempt bonds. 41. Under § 2399.72(f)(2) of the Convention Center Act, the County is prohibited from

reducing LCCCA’s Hotel Room Tax revenues given the pledge of such revenues to secure the Bonds. 16 P.S. § 2399.72(f)(2).

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I.

Defendants’ Opposition To The Authority And The Convention Center Project 42. The Defendant Commissioners assumed office as of January 5, 2004, and since then

have been and continue to be avowed opponents of the Convention Center and the LCCCA. As their actions and statements conclusively demonstrate, the Defendant Commissioners are determined to destroy the Convention Center and Hotel project by doing anything and everything to accomplish their unlawful objective, including but not limited to: • Repudiating and revoking the County’s absolute, irrevocable and unconditional Guaranty of the Bonds, as originally issued and as remarketed; and • Reducing or diminishing the Hotel Room Tax revenues allocable to the Convention Center project and the Bonds. 43. In pursuing their unlawful objective, on May 10, 2006, the Defendant Commissioners

first enacted County Resolution No. 36, resolving that: (A) the County will consider any action by the LCCCA to: (I) remarket the LCCCA’s Hotel Room Rental Tax Revenue Bonds, Series of 2003 (the “2003 Bonds”) into a tax-exempt variable or fixed rate Bonds or enter into a Swap Agreement in which the 2003 Bonds are used as the notional amount, or otherwise attach the County Guaranty to any borrowing other than the existing Citizens’ Bank bond, to result in the issuance of a new County guarantee; and

(II) (III)

(B)

The County shall draft documents for review and approval by the Board of Commissioners of the County of Lancaster to advertise a special meeting of the Board of Commissioners to consider the following actions in the event the LCCCA takes steps to accomplish the new financing set forth in the previous paragraph: (I) not approve the new County guaranty, or, in the alternative (II) authorize the submission to the

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Department of Community and Economic Development of appropriate proceedings concerning the new County guaranty under the Local Government Unit Debt Act. A true and correct unsigned copy of Resolution No. 36 is attached hereto and made a part hereof as Exhibit J. 44. Apparently concluding that Resolution No. 36 would not be sufficient to prevent the

remarketing of the Bonds as tax exempt bonds, the Defendant Commissioners, only two weeks later on May 24, 2006, then enacted County Resolution No. 37, resolving that: (A) The County will consider any action by the LCCCA to: (I) (II) (III) remarket the LCCCA Borrowing into tax-exempt variable or fixed rate Bonds or enter into a Swap Agreement involving the LCCCA Borrowing or otherwise attempt to attach any County Guaranty to any LCCCA debt other than the existing Citizens Bank bond or otherwise terminate the Escrow, to result in the attempted creation of a new County guarantee; and

(B)

This Board of Commissioners resolves and determines: (I) (II) not to approve any such new County Guaranty; and not to allow the attachment of any County Guaranty to any LCCCA obligation other than the Citizens Bank Bond secured by the Escrow; and directs the Chief Clerk to advise the LCCCA, Bond Indenture Trustee, Citizens Bank, and other relevant parties of this determination of this Board of Commissioners.

A true and correct copy of Resolution No. 37 is attached hereto and made a part hereof as Exhibit K. 45. The Defendant Commissioners enacted Resolutions Nos. 36 and 37 to repudiate and

revoke the County’s absolute, irrevocable and unconditional Guaranty of the Bonds, as originally issued and as remarketed, and to cast a cloud over the enforceability and viability of the Guaranty as applied to the remarketing of the Bonds as tax exempt bonds.
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46.

The Defendant Commissioners’ attempt to repudiate and revoke the County’s

Guaranty Agreement as it applies to Bonds remarketed under the Trust Indenture breaches and violates, at a minimum, the following: • The “absolute, irrevocable and unconditional” nature of the Guaranty (Ex. A at § 1.01 [defining “County Obligation”], § 3.01, § 3.08 and § 4.02); • The Guaranty Agreement’s own recognition that the “Bonds” covered by the County’s Guaranty included “any bonds subsequently issued under the Indenture . . . to refund said Series of 2003” bonds, i.e. remarketed bonds (Ex. A at 1); • Section 3.08 of the Guaranty Agreement providing that the County’s Guaranty “shall remain in full force and effect so long as the Bonds [defined to include ‘bonds subsequently issued under the Indenture’] remain outstanding” (Ex. A at § 3.08); and • The remarketing provisions in the Trust Indenture requiring that the Bonds be remarketed as tax exempt bonds before the Bond proceeds can be used for the construction of the Convention Center and reserving $2 million of the initial Bond proceeds to be used to pay the costs of remarketing of the Bonds (Ex. I at § 2.05(b), Article IV, § 5.02(a) and § 5.02(c)). 47. In a further attempt to destroy the Convention Center and Hotel project, Defendant

Commissioner Henderson announced on May 31, 2006 her intention to reduce the portion of the Hotel Room Tax revenues provided to LCCCA and the Convention Center by arbitrarily and unlawfully reducing the Market Area – Lancaster County – from which the Hotel Room Tax is collected. By reducing the Market Area, defendant Commissioner Henderson seeks to eliminate the

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vast majority of the revenues supporting the LCCCA and the Convention Center project. Defendant Commissioner Henderson has placed her latest gambit to destroy the Convention Center and Hotel project on the Commissioner’s agenda for action on June 14, 2006. A true and correct copy of Commissioner Henderson’s statement is attached hereto and made a part hereof as Exhibit L. 48. Any attempt by the Defendant Commissioners to reduce the Market Area covered by

the Hotel Room Tax or to otherwise reduce or diminish the revenues allocated to the LCCCA and the Convention Center project from the Hotel Room Tax revenues would breach and violate, at a minimum, the following: • The determination in County Ordinance No. 45, which imposed the Hotel Room Tax, that the Market Area was the “entire County of Lancaster” (Ex. B at 3); • Section 2399.72(f)(2) of the Convention Center Act prohibiting the County from “reduc[ing] the rate of tax imposed for convention center purposes until all bonds so secured by the pledge of the authority, together with interest, are fully met and discharged” (16 P.S. § 2399.72(f)(2)); • Section 3.18 of the Guaranty Agreement, pursuant to which the County “agree[d] that, as long as any Bonds are outstanding under the Indenture, the County shall not reduce, diminish or repeal the Hotel Room Rental Tax” (Ex. A at 9); and • The use and pledge of the Hotel Room Tax revenues allocated to the LCCCA and the Convention Center project as a source of payment and security for the Bonds, as issued in 2003 and as remarketed as tax exempt bonds in 2006 (Ex. I at §§ 1.01 (defining “Revenues”), 2.07, 3.05 and 5.04(a)).

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COUNT ONE: COMPLAINT IN EQUITY 49. 50. Plaintiffs incorporate herein by reference paragraphs 1 through 48 of this Complaint. The 2006 JDA can be terminated under certain prescribed circumstances if

“[f]oundation construction has not commenced for both the Hotel and Convention Center by August 1, 2006.” Ex. D at §§ 4.1 and 4.1.9. Moreover, in order to fund the construction of the Convention Center, it is necessary to remarket the Bonds. Accordingly, it is necessary for the remarketing of the Bonds to commence as soon as possible. 51. Unless the Defendants are preliminarily and permanently enjoined and restrained

from repudiating and revoking the County’s Guaranty, casting a cloud over the enforceability and viability of the County’s Guaranty, reducing the Market Area covered by the Hotel Room Tax and otherwise seeking to reduce and diminish the revenues collected from the Hotel Room Tax which are provided to the LCCCA and the Convention Center project, the Convention Center and Hotel project will be destroyed. 52. If the Convention Center and Hotel project is destroyed, PSP and RACL will sustain

incalculable immediate and irreparable harm. 53. PSP’s and RACL’s rights to the requested relief are clear and the wrongs to be

remedied and restrained are manifest. 54. 55. Greater injury will result by refusing the requested relief than by granting it. The requested relief restores the parties to the status existing before Defendant

Commissioners embarked on their wrongful conduct. 56. 57. PSP and RACL do not have an adequate remedy at law. Given that RACL is an agency of the Commonwealth of Pennsylvania, no bond

should be required pursuant to Pa.R.Civ.P. 1531(b).

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WHEREFORE, Plaintiffs request that this Honorable Court enter preliminary and permanent injunctions in their favor and against Defendants, as follows: A. Enjoining and restraining Defendants and all persons acting in concert with them or at

their behest from: (i) 37; (ii) taking any action to withdraw, repudiate, revoke, impair, or in any way implementing any of the provisions of Resolution No. 36 or Resolution No.

compromise the Guaranty Agreement as it applies to the Bonds, as originally issued or as remarketed as tax exempt bonds; (iii) taking any action to interfere with, hinder, or in any way impair the LCCCA’s

efforts or ability to remarket the Bonds issued pursuant to the December 15, 2003 Trust Indenture; (iv) taking any action to interfere with, hinder, or in any way impair the LCCCA’s

efforts or ability to enter into a Swap Agreement involving the Bonds issued pursuant to the December 15, 2003 Trust Indenture; (v) taking any action to reduce, alter or redefine the Hotel Room Rental Tax

“Market Area,” as set forth and defined to cover the entire County of Lancaster in County Ordinance No. 45; and (vi) taking any action to reduce or diminish the Hotel Room Rental Tax revenues

allocable to the LCCCA and the Convention Center project pursuant to County Ordinance No. 45. B. C. circumstances. COUNT TWO: DECLARATORY JUDGMENT 58. Plaintiffs incorporate herein by reference paragraphs 1 through 48 of this Complaint. 17 Awarding Plaintiffs their reasonable attorneys’ fees and costs; and Granting such other and further relief as the Court deems appropriate under the

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59.

The County’s absolute, irrevocable and unconditional Guaranty Agreement cannot be

repudiated or revoked by any action taken by the Defendant Commissioners, including but not limited to County Resolutions Nos. 36 and 37. 60. The Hotel Room Tax Market Area cannot be changed or diminished by any action

taken by the Defendant Commissioners. 61. The revenues collected from the Hotel Room Tax and allocated to the LCCCA and

the Convention Center project cannot be reduced or diminished by any action taken by the Defendant Commissioners. 62. Given the Defendant Commissioners’ prior and threatened actions, an actual and

justiciable controversy exists between PSP and RACL, on the one hand, and the Defendants, on the other hand, as to (a) the terms, enforceability and inviolability of the Guaranty Agreement and (b) the allocation of the Hotel Room Tax revenues to the LCCCA and the Convention Center project. WHEREFORE, Plaintiffs request that this Honorable Court enter a judgment in their favor and against Defendants, as follows: A. Declaring that the Guaranty Agreement is absolute, irrevocable and unconditional and

cannot be revoked by Resolution No. 36 and Resolution No. 37; B. Declaring that the Guaranty Agreement applies to any remarketing of the Bonds

under the December 15, 2003 Trust Indenture; C. Declaring that the Hotel Room Rental Tax “Market Area,” as set forth and defined to

cover the entire County of Lancaster in County Ordinance No. 45, cannot be reduced, altered or redefined by the County;

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D.

Declaring that the County cannot reduce or diminish the Hotel Room Rental Tax

revenues allocated to the LCCCA and the Convention Center project pursuant to County Ordinance No. 45; E. F. circumstances. COUNT THREE: ACTION IN MANDAMUS 63. 64. Plaintiffs incorporate herein by reference paragraphs 1 through 48 of this Complaint. The Defendant Commissioners have a duty to uphold the absolute, irrevocable and Awarding Plaintiffs their reasonable attorneys’ fees and costs; and Granting such other and further relief as the Court deems appropriate under the

unconditional Guaranty Agreement and the allocation of the Hotel Room Tax revenues to the LCCCA and the Convention Center project as originally enacted. 65. The Defendant Commissioners have a duty to refrain from doing anything which

would prevent the remarketing of the Bonds as tax exempt bonds or to impair or undermine the use and pledge of the Hotel Room Tax revenues as a source of payment and security for the Bonds, as originally issued and as remarketed. 66. The Defendant Commissioners have a duty to refrain from doing anything which

would reduce or diminish the Hotel Room Tax revenues allocated to the LCCCA and the Convention Center project. 67. If the Defendant Commissioners are not required to uphold their duties, the

Convention Center and Hotel project will be destroyed and PSP and RACL will sustain incalculable immediate and irreparable harm. 68. 69. PSP and RACL do not have an adequate remedy at law. The Defendant Commissioners should be required to rescind County Resolutions

Nos. 36 and 37.
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WHEREFORE, Plaintiffs request that this Honorable Court enter a judgment in mandamus in their favor and against Defendants compelling Defendants, as follows: A. B. To rescind Resolution No. 36 and Resolution No. 37; To perform all of the County’s obligations under the Guaranty Agreement as it

applies to any bonds remarketed pursuant to the December 15, 2003 Trust Indenture; C. To apply the Guaranty Agreement and all of its terms and conditions to any bonds

remarketed pursuant to the December 15, 2003 Trust Indenture; D. To refrain from taking any action to reduce, alter or redefine the Hotel Room Rental

Tax “Market Area,” as set forth and defined to cover the entire County of Lancaster in County Ordinance No. 45; E. To refrain from taking any action to reduce or diminish the Hotel Room Rental Tax

revenues allocable to the LCCCA and the Convention Center project pursuant to County Ordinance No. 45; F. To reimburse Plaintiffs for their reasonable attorneys’ fee and costs; and

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G. circumstances.

To comply with such other and further relief as the Court deems appropriate under the

Respectfully submitted

/s/ David H. Pittinsky David H. Pittinsky Attorney I.D. No. 04552 John C. Grugan Attorney I.D. No. 83148 Alison Tanchyk Dante Attorney I.D. No. 91627 BALLARD SPAHR ANDREWS & INGERSOLL, LLP 1735 Market Street, 51st Floor Philadelphia, Pennsylvania 19103 Telephone No. (215) 665-8500 Attorneys for Plaintiffs Dated: June 13, 2006

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VERIFICATION I, Mark Fitzgerald, Executive Vice President and Chief Operating Officer of Penn Square General Corporation, the General Partner of Penn Square Partners, a Pennsylvania Limited Partnership, verify that I am authorized to make this verification on behalf of Plaintiff Penn Square Partners. I verify that the statements contained in the foregoing Complaint are true and correct to the best of my knowledge, information and belief. I understand that the statements herein are subject to the provisions set forth in 18 P.S. § 4904 relating to unsworn falsification to authorities.

Mark Fitzgerald Date: June 12, 2006

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VERIFICATION I, Charles H. Simms, Jr., Chairman of The Redevelopment Authority of the City of Lancaster (“RACL”), verify that I am authorized to make this verification on behalf of Plaintiff RACL. I verify that the statements contained in the foregoing Complaint are true and correct to the best of my knowledge, information and belief. I understand that the statements herein are subject to the provisions set forth in 18 P.S. § 4904 relating to unsworn falsification to authorities.

Charles H. Simms, Jr. Date: June 12, 2006

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