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, : COURT OF COMMON PLEAS

the General Partner of PENN SQUARE PARTNERS, : OF LANCASTER COUNTY,
a Pennsylvania Limited Partnership, and PENNSYLVANIA
THE REDEVELOPMENT AUTHORITY :
OF THE CITY OF LANCASTER, :
:
Plaintiffs, :
: CIVIL ACTION – LAW
vs. :
:
COUNTY OF LANCASTER, :
BOARD OF COUNTY COMMISSIONERS OF : Action for Equitable, Declaratory
THE COUNTY OF LANCASTER, : and Mandamus Relief
MOLLY HENDERSON, Commissioner, and, :
RICHARD SHELLENBERGER, :
Commissioner, :
:
Defendants. :

COMPLAINT

1. 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. The Parties

2. 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. Jurisdiction And Venue

8. 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:

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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) With respect to the claim for equitable relief, Pa. R. Civ. P. 1006 and 2103;

(b) With respect to the claim for declaratory relief, Pa. R. Civ. P. 1006 and 2103;

and

(c) With respect to the claim for mandamus, Pa. R. Civ. P. 1092.

10. 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. The Interests Of PSP And RACL In The Convention Center Project

11. 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. The LCCCA

19. 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. The Hotel Room Tax

21. 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. The Bond Issue

25. 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. The County’s “Absolute, Irrevocable And Unconditional” Guaranty

27. 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. The Bond Indenture

34. 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 Tax-
Exempt 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

(II) enter into a Swap Agreement in which the 2003

Bonds are used as the notional amount, or

(III) 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

(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) remarket the LCCCA Borrowing into tax-exempt

variable or fixed rate Bonds or

(II) enter into a Swap Agreement involving the LCCCA

Borrowing or

(III) 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) not to approve any such new County Guaranty; and

(II) 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

DMEAST #9541319 v4 14
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)).

DMEAST #9541319 v4 15
 COUNT ONE: COMPLAINT IN EQUITY

49. Plaintiffs incorporate herein by reference paragraphs 1 through 48 of this Complaint.

50. 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. Greater injury will result by refusing the requested relief than by granting it.

55. The requested relief restores the parties to the status existing before Defendant

Commissioners embarked on their wrongful conduct.

56. PSP and RACL do not have an adequate remedy at law.

57. Given that RACL is an agency of the Commonwealth of Pennsylvania, no bond

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

DMEAST #9541319 v4 16
 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) implementing any of the provisions of Resolution No. 36 or Resolution No.

37;

(ii) taking any action to withdraw, repudiate, revoke, impair, or in any way

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. Awarding Plaintiffs their reasonable attorneys’ fees and costs; and

C. Granting such other and further relief as the Court deems appropriate under the

circumstances.

COUNT TWO: DECLARATORY JUDGMENT

58. Plaintiffs incorporate herein by reference paragraphs 1 through 48 of this Complaint.

DMEAST #9541319 v4 17
 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. Awarding Plaintiffs their reasonable attorneys’ fees and costs; and

F. Granting such other and further relief as the Court deems appropriate under the

circumstances.

COUNT THREE: ACTION IN MANDAMUS

63. Plaintiffs incorporate herein by reference paragraphs 1 through 48 of this Complaint.

64. The Defendant Commissioners have a duty to uphold the absolute, irrevocable and

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. PSP and RACL do not have an adequate remedy at law.

69. 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. To rescind Resolution No. 36 and Resolution No. 37;

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

circumstances.

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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