On Thursday, January 17, 2007, the Lancaster County Convention Center Authority's Public Relations, Marketing, and Hospitality committee held a meeting where selling the naming rights of the convention center was briefly discussed.

At this meeting, committee chairman Joe Morales commented on the "Declaration of Condominium" agreement which dictates the terms of selling the naming rights by saying:

"For those unfamiliar, we have what is called a Condominium Document that was drawn-up very early on in the preparation of this project. And I think I'll be as diplomatic as I can in saying that there are a couple of provisions of this agreement that I think are not entirely in the best interest of this authority."

Joe Morales went on to say:

"I think that it will only by the - what's a good word here, largesse - of Mr. S. Dale High that any changes are made or even entertained so I would encourage this Board and this particular committee to enter such conversations with Mr. High to maybe allow this authority a greater deal of flexibility in negotiating naming rights."

Here is the passage in question, taken directly from the "Declaration of Condominium" agreement dated March 27, 2007. Please note the highlighted passages:

Section 5.3 Naming Rights.

(a) The Unit Owner of the Convention Center Unit shall have the exclusive right to sell, lease or license naming rights to the convention center facility to be constructed and operated within the Convention Center Unit (the "Naming Rights"), provided that all fees, charges and other revenues arising from the sale, lease or license of the Naming Rights shall first be used to fund any working capital or similar fund required by the Manager and the balance shall be distributed to the Unit Owners (a) in accordance with the Joint Development Agreement, and (b) if the Joint Development Agreement is no longer in effect, then, fifty percent (50%) to the Unit Owner of the Convention Center Unit and fifty percent (50%) to the Unit Owner of the Hotel Unit. The Unit Owner of the Convention Center Unit may enter into an agreement with a third party pursuant to which such third party will obtain a lease, license or similar right to designate the name of the Convention Center Unit (the "Naming Rights Agreement"), provided, however, that the Naming Rights Agreement shall provide that all marketing, promotional and advertising materials and all signage at the Convention Center Unit and Common Elements that is to include a reference to "Convention Center" shall be styled as follows: "Lancaster Marriott and Convention Center" when the convention center facility is marketed, promoted, advertised or referenced in conjunction with the Lancaster Marriott and Convention Center" when the convention center facility is marketed, promoted, advertised or referenced without the Lancaster Marriott. The Naming Rights Agreement may include, among other terms and conditions, provisions regarding (i) the payment of fees for the Naming Rights and (ii) the right to include the designated name on all signage, marketing, advertising, contracts and other communications and designations of recognition regarding the Convention Center Unit and to otherwise publicize the designated name of the convention center facility. If the Unit Owner of the Convention Center Unit enters into a Naming Rights Agreement, all signage at the Convention Center Unit and Common Elements that is to include a reference to "Convention Center" may also include the name designated by the holder of the Naming Rights under the Naming Rights Agreement.

(b) S. Dale High (who may nominate High Industries or any affiliate thereof to exercise the rights granted in this Section 5.3(b)) shall have a right of first offer with respect to all Naming Rights. If any time the Unit Owner of the Convention Center Unit desires to sell, lease or license the Naming Rights, then the Unit Owner of the Convention Center Unit shall send a written notice to S. Dale High at High Real Estate Group, 1853 William Penn Way, P.O. Box 10008, Lancaster, PA 17605-0008 (or such other address as the Unit Owner of the Convention Center Unit has been notified of in writing) stating all of the terms upon which the Naming Rights will be marketed (the "Naming Rights Notice"). S. Dale High shall, within fifteen (15) days of his receipt of the Naming Rights Notice, notify the Unit Owner of the Convention Center Unit in writing of his acceptance or rejection of the terms of the Naming Rights Notice. S. Dale High's failure to respond within such fifteen (15) day period shall be deemed a rejection of the terms of the Naming Rights Notice. If S. Dale High shall reject the terms of the Naming Rights Notice or be deemed to have rejected the terms of the Naming Rights Notice, the Unit Owner of the Convention Center Unit may market and sell, lease or license the Naming Rights for a period of six (6) months on the same terms (or terms more favorable) as set forth in the Naming Rights Notice. After the expiration of such six-month period, if the Unit Owner of the Convention Center Unit has not sold, leased or licensed the Naming Rights during such six-month period, then the right of first offer granted herein shall be reinstated and the Unit Owner of the Convention Center Unit shall not market, sell, lease or license the Naming Rights except in accordance with the provisions of this Section 5.3(b).

The above document references the "Joint Development Agreement", where section 2.1.7 addresses this issue:

(b) RACL, PSP and LCCCA shall work cooperatively and make commercially reasonable efforts to secure additional funds for the Project by (i) selling naming rights to the Convention Center Unit, (ii) selling air rights above the Hotel Unit and Convention Center Unit, (iii) reducing LCCCA expenditures on parking, (iv) secure inducement from Manager for rights to manage the Condo Association, (v) secure additional State Grants for the Project, all which shall be used within the terms and conditions of this agreement.

(c) The parties acknowledge, that in addition to (a) above, additional grants from the Commonwealth of Pennsylvania and the IFIP Grant are required in order to construct the Project.

(d) In the event the Final Budget is less than the available funds shown on Exhibit D, plus any funds secured in 2.1.7 (b), any surplus funds shall be equally allocated to RACL (to be utilized in accordance with the Hotel Tower Lease Agreement between RACL and PSP) and LCCCA as an additional contingency.

The "Hotel Tower Lease Agreement" mentioned in the "Joint Development Agreement" does not directly address selling the naming rights. This excerpt from section 4.2 seems to be the only appropriate provision:

"The utilization of cost savings with respect to the Hotel shall be determined by Lessee in its sole discretion and shall be used by Lessee to construction finance maintain and operate the Hotel. Lessor shall not be entitled to use cost savings for any other purpose."

This legalese seems to confirm that any additional funds provided to RACL (as mentioned in the "Joint Development Agreement") are to be given to the Penn Square Partners to reduce their costs (and increase their profit margin). This is consistent with the statements in the "Declaration of Condominium".