UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE IN RE: MERVYNS HOLDINGS, LLC, et al., Debtors ) ) ) ) ) ) ) ) ) ) Case No.

08-11586(KG) Chapter 11 Courtroom 3 824 Market Street Wilmington, Delaware 19801 July 30, 2008 1:06 P.M.

TRANSCRIPT OF FIRST DAY HEARING BEFORE HONORABLE KEVIN GROSS UNITED STATES BANKRUPTCY JUDGE APPEARANCES: For the Debtors: Richards Layton & Finger, PA By: DAN DeFRANCESCHI, ESQ. MARK COLLINS, ESQ. One Rodney Square, P.O. Box 551 Wilmington, Delaware 19899 Morgan Lewis & Bochius By: WENDY WALKER, ESQ. HOWARD BELTZER, ESQ. NEIL HERMAN, ESQ. 101 Park Avenue New York, NY 10178-0060 ECRO: TRANSCRIPTION SERVICE: Jennifer Pasierb TRANSCRIPTS PLUS 435 Riverview Circle New Hope, Pennsylvania 18938 Telephone: 215-862-1115 Facsimile: 215-862-6639 e-mail CourtTranscripts@aol.com

Proceedings recorded by electronic sound recording, transcript produced by transcription service.

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2 APPEARANCES: (Continued) For Cerberus Mervyns Investors, LLC: Landis Rath & Cobb By: ADAM LANDIS, ESQ. The Brandywine Building 1000 West Street, Suite 1410 Wilmington, Delaware 19801 Schulte Roth & Zabel By: DAVID HILLMAN, ESQ. MEGHAN BREEN, ESQ. 919 Third Avenue New York, New York 10022 Ashby & Geddes By: AMANDA M. WINFREE, 222 Delaware Avenue, 17th Floor Wilmington, Delaware 19801 Klehr Harrison Harvey Branzburg & Ellers By: DOMENIC PACITTI, ESQ. 919 Market Street, Suite 1000 Wilmington, Delaware 19801 Paul Weiss Rifkind Wharton & Garrison By: DOUGLAS DAVIS, ESQ. CLAUDIA TOBLER, ESQ. 1285 Avenue of the Americas New York, New York 10019-6064 For SCSF Mervyns Inc. Young Conaway Stargatt & Taylor, LLP and SCSCF Mervyns, LLC, By: ROBERT BRADY, ESQ. Affiliates of Sun SHARON ZIEG, ESQ. Capital: The Brandywine Building 1000 West Street, 17th Floor Wilmington, Delaware 19899-0391 Kirkland & Ellis LLP By: JOSHUA SUSSBERG, ESQ. Citigroup Center 153 East 53rd Street New York, New York 10022-4611

For Cerberus Partners, L.P.:

For GE Moneybank, Inc.:

For Lybert-Adler

3 APPEARANCES: (Continued) For Centro Properties Group, General Growth Management, et al.: Ballard Spahr Andrews & Ingersoll By: DAVID L. POLLACK, ESQ. 51st Floor 1735 Market Street Philadelphia, PA 19103-7599 Cooch and Taylor By: SUSAN KAUFMAN, ESQ. 824 North Market Street, No. 1000 P.O. Box 1680 Wilmington, Delaware 19899-1680 Connolly Bove Lodge & Hutz, LLP By: CHRISTINA THOMPSON, ESQ. The Nemours Building 1007 North Orange Street P.O. Box 2207 Wilmington, Delaware 19899 United States Department of Justice Office of the U.S. Trustee By: JANE LEAMY, ESQ. 844 King Street Wilmington, Delaware 19899 Womble Carlyle Sandridge & Rice, PLLC By: FRANK MONACO, ESQ. 222 Delaware Avenue, Suite 1501 Wilmington, DE 19801 Otterbourg, Steindler, Houston & Rosen, P.C By: JONATHAN M. HELFAT, ESQ. RICHARD G. HADDAD, ESQ. LON M. SINGER, ESQ. 230 Park Avenue New York, New York 10169-0075 For OneSource: Cozen OConnor By: MARK FELGER, ESQ. Chase Manhattan Centre 1201 North Market Street, Suite 1400 Wilmington, Delaware 19801

For Taubsman Landlords:

For Inland Western:

The U.S. Trustee:

For Wachovia:

4 APPEARANCES: (Continued) For Westfield, LLC and Affiliates: Seitz Van Ogtrop & Green, PA By: PATRICIA McGONIGLE, ESQ. 222 Delaware Avenue, Suite 1500 Post Office Box 68 Wilmington, Delaware 19899

TELEPHONIC APPEARANCES: For Westfields, LLC: Tyler Cooper & Alcon By: ILAN MARKUS, ESQ. Katten Muchin Rosenman, LLP By: DUSTIN BRANCH, ESQ. THOMAS J. LEANSE, ESQ. Kelley Drye & Warren, LLP By: GILBERT R. SAYDAH, ESQ. Duane Morris, LLP By: MARGERY N. REED, ESQ. Sidley Austin By: ALEX R. ROVIRA, ESQ.

For Macerich:

For Gregory Greenfield Associates: For Ace:

For Sidley Austin:

5 1 2 seated. THE COURT: Thank you. Good afternoon, everyone. Please be

Mr. DeFranceschi, let us begin with what I

3 hope will be a successful reorganization of a valued business 4 here. 5 MR. DeFRANCESCHI: We appreciate that, Your Honor.

6 Well certainly do our best. 7 Thank you, first and foremost, Your Honor, for We appreciate the Courts

8 hearing us on such short notice.

9 efforts, and are very grateful for that. 10 11 THE COURT: Thank you. Is it safe to assume that Your

MR. DeFRANCESCHI:

12 Honor has obtained a copy of all the first day papers? 13 14 15 16 17 them. 18 19 20 THE COURT: Yes, thank you, Mr. DeFranceschi. Thank you. THE COURT: Yes, it is. And that --

MR. DeFRANCESCHI: THE COURT:

And have gone through them thoroughly. -- youve had a chance to review

MR. DeFRANCESCHI:

MR. DeFRANCESCHI:

Before we get started, I wanted to make a few

21 introductions, and then let you know how we intend to proceed 22 today. 23 THE COURT: Excellent. And let me just say at the

24 beginning that for purposes of this hearing, any visiting 25 counsel are admitted for purposes of this hearing pro hac vice.

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6 1 2 3 MR. DeFRANCESCHI: THE COURT: Yes. First I wanted to introduce my coThank you, Your Honor.

MR. DeFRANCESCHI:

4 counsel, and Im sure Your Honors familiar with them, but Ill 5 make the introductions. 6 7 8 9 10 Lewis. 11 12 13 case. 14 15 THE COURT: Welcome again, Mr. Herman. And youll see all of them in this THE COURT: Mr. Beltzer, Howard Beltzer.

Mr. Beltzer, welcome. Wendy Walker.

MR. DeFRANCESCHI: THE COURT:

Ms. Walker, welcome to you. And Neil Herman. All from Morgan

MR. DeFRANCESCHI:

MR. DeFRANCESCHI:

Of course my partner, Mark Collins. THE COURT: Yes, Mr. Collins. And there are numerous other

MR. DeFRANCESCHI:

16 attorneys here, but Ill spare the Court with all the 17 introductions. 18 he is the -19 20 THE COURT: Mr. Kurth, good afternoon. Hes the Executive Vice President, But I did also want to introduce Charles Kurth,

MR. DeFRANCESCHI:

21 Chief Financial and Administrative Officer of the debtors, and 22 he provided the first day affidavit. 23 24 THE COURT: Yes. Since Your Honors already

MR. DeFRANCESCHI:

25 approved the pro hac motions, weve got paper copies of those

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7 1 on file for my co-counsel, which Im sure Your Honor will 2 address in due course. 3 4 THE COURT: Yes. What I propose we do is have Mr. He certainly wont

MR. DeFRANCESCHI:

5 Beltzer provide an overview of the case.

6 get into every nuance in the first day affidavit, but hell 7 make a record on that. 8 day affidavit. 9 10 THE COURT: Yes. After hes concluded with that, And then after that, Were going to be proffering the first

MR. DeFRANCESCHI:

11 Ill address the first day motions.

12 perhaps it would make sense if we take a short five-minute 13 recess to finalize the changes back and forth on the DIP order. 14 15 THE COURT: That will be fine. Thank you. Then Ill cede the

MR. DeFRANCESCHI:

16 podium to Mr. Beltzer. 17 18 afternoon. 19 MR. BELTZER: Good afternoon, Your Honor. And I also THE COURT: All right. Thank you. Mr. Beltzer, good

20 wanted to add my appreciation for your accommodating us on such 21 short notice today. 22 23 THE COURT: MR. BELTZER: Its a privilege. Thank you, sir.

Your Honor, before we turn to the

24 customary package of the first day motions, I just wanted to 25 provide a very brief background in regard to the company. And

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8 1 as Mr. DeFranceschi noted, Mr. Kurth is here in the courtroom 2 and could testify as to any of these materials or in connection 3 with the first day motions, as well. 4 proceed by proffer. 5 6 THE COURT: MR. BELTZER: Thats fine. Mervyns, Your Honor, is a CaliforniaIt has But wed propose to

7 based department store chain which was founded in 1949. 8 carved out an important role in the retail economy of the 9 southwestern U.S. It has 177 stores with over 18,000

10 employees, most of whom are store-level employees. 11 The majority of the stores are in California, and So, one

12 other important markets include Phoenix and Las Vegas.

13 does not have to be a business school professor, Your Honor, to 14 understand why were here today. 15 Mervyns finds itself at the geographic and industry

16 epicenter of some of the problems that are roiling our economy 17 today. The decline in the housing market, and the tightening

18 of the credit markets have led both to a decline in 19 discretionary consumer spending and also to a tightening of 20 credit terms by the suppliers to companies like Mervyns, as 21 well as their factors. 22 These conditions have been especially pronounced,

23 especially on the housing side, in Mervyns home markets, 24 including California. 25 As a result, Mervyns ability to ensure an

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9 1 uninterrupted flow of merchandise into the stores and to 2 maintain adequate liquidity have suffered, and we find 3 ourselves here today. But this is no flash in the pan company,

4 Your Honor, with an untested or speculative business model. 5 This is a long established industry player with dedicated 6 employs, an experienced and creative management team, and 7 historically excellent relations with our vendors, which we 8 hope to continue and expand in this process. 9 With the support of our $465 million DIP loan, which

10 we anticipate will restore the confidence of our vendors, as 11 well as other partners, we look forward to building on our 12 strengths and hoping to emerge as a profitable and reorganized 13 entity. 14 I would also note that we anticipate at this point I do note, and

15 continuing to operate at most of our locations.

16 the papers do note, that in connection with our DIP loan, which 17 well discuss in a bit, as Mr. DeFranceschi noted, we have 18 agreed to come up with a list of not fewer than 15 locations in 19 the early weeks of these cases as to which were going to be 20 seeking to conduct store closing sales. 21 But otherwise, while we look forward to a

22 consultative process with the committee and all other 23 constituencies in all of these matters, were planning no other 24 store closures in the immediate term. 25 Let me now just say a few words about the capital

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10 1 structure here. Mervyns was purchased by affiliates of Those firms being Sun

2 several private equity firms in 2004.

3 Capital, Klaff, Lubert-Adler and Cerberus. 4 In connection with the acquisition, the retail real Only

5 operations of Mervyns were generally separated from the 6 -- excuse me -- the real estate leaseholds of Mervyns.

7 the retail entities are debtors in these proceedings, Your 8 Honor. 9 The real estate entities, which we collectively refer

10 to as MDS, have not filed. 11 The Sun entities are the controlling equity owner of

12 the retail entities, the debtors, with the Klaff/Lubert-Adler 13 entities being a minority position in there. And its

14 basically the converse on the real estate side, Your Honor, the 15 non-filed entities, with Klaff/Lubert-Adler having the 16 predominant role, Sun and Cerberus having a minority position. 17 And as an aside, I would note that this demarcation

18 is not complete between the retail operations and the real 19 estate leaseholds because certain of the leases, you may hear 20 them referred to as restricted lease, stayed with Mervyns on 21 the retail side. 22 In terms of the debt, Your Honor, and now, again, Im The

23 only referring to the debt of the companies before you. 24 MDS entities have their own debt arrangements.

The debtors

25 have an asset-backed loan facility from a bank syndicate

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11 1 agented by Wachovia, which was approximately $29 million 2 yesterday as of the filing. 3 That is the first lien debt.

We also have a second lien note in the amount of

4 approximately -- excuse me -- in the amount of $30 million 5 owing to the Sun equity owners here. 6 And the final thing that I would note, just by way of

7 background, Your Honor, before turning it back to Mr. 8 DeFranceschi, is that no leasehold mortgages have been filed in 9 respect of either the prepetition first lien debt or the 10 prepetition second lien debt. 11 But Id now propose to turn it back to Mr.

12 DeFranceschi, and Ill be back on the DIP. 13 14 THE COURT: Thank you, Mr. Beltzer. Your Honor, first and foremost on

MR. DeFRANCESCHI:

15 this portion of the hearing, did want to advise the Court that 16 we have had discussions with the Office of the United States 17 Trustee on each of the first day motions. And Im happy to

18 report that I believe weve worked out all issues, and have 19 answered all questions. So, I do believe that the relief that

20 well be seeking is not only standard, and I think in a case of 21 this nature, ordinary and routine, but also consensual. 22 THE COURT: Excellent. Ms. Leamy, if you hear

23 anything that you wish to be heard on, dont hesitate to rise. 24 MR. DeFRANCESCHI: The first two items -- and I

25 propose to just follow the index or the agenda.

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12 1 2 THE COURT: Yes. The first two items are the

MR. DeFRANCESCHI:

3 administrative motions, one dealing with joint admin and the 4 other dealing with the retention of KCC as claims and noticing 5 agent. 6 Both of these motions tie in together, and are for

7 the convenience, largely of the Court and the parties in the 8 case, and will -- are very noncontroversial. I dont intend to

9 say anymore on them, unless Your Honor has any questions. 10 11 THE COURT: I was certainly content with them. Thank you, Your Honor. And what I

MR. DeFRANCESCHI:

12 would propose is that at the end of the hearing, to hand up a 13 set of orders. 14 THE COURT: Good, that will be (indiscernible -

15 interruption in recording) flow more smoothly. 16 MR. DeFRANCESCHI: Thank you. The next item that we As we go through the

17 have is -- I should add one other thing.

18 motions where weve made changes to accommodate the Office of 19 the United States Trustee, Ill point those out specifically. 20 21 THE COURT: Okay. Thank you. The next agenda item is the

MR. DeFRANCESCHI:

22 debtors motion for entry of an order authorizing the debtor to 23 honor customer programs. Were not seeking in this motion,

24 Your Honor, to pay any prepetition amounts, but merely to honor 25 the programs that we have in effect, fairly standard for the

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13 1 industry, gift cards, private label credit card, refunds and 2 exchanges, and other miscellaneous promotions. And essentially

3 what were asking is to authorize the continued use of these 4 programs. We think its necessary to keep customer support.

5 Again, noncontroversial, and we havent heard any issues on 6 these. 7 THE COURT: Unless anyone wishes to be heard, I was It is routine, and I will approve

8 satisfied with the motion. 9 the order. 10 Enter the order. MR. DeFRANCESCHI:

Thank you, Your Honor.

The next

11 item is the utility motion.

And by this motion, we are seeking

12 to implement what I also believe has become standard in this 13 jurisdiction. In terms of setting up a two-week -- essentially

14 a two-week escrow deposit, which, in this case, amounts to 15 about $1.6 million, to cover adequate assurance of future 16 payment, that coupled with, of course, the DIP facility that we 17 hope to have approved and cash flow. We believe that, you

18 know, there is adequate assurance of future payment. 19 But, Your Honor, we also seek to adopt the standard

20 procedures pursuant to which utilities can request additional 21 adequate assurance of payment, and then there is the typical 22 process whereby the debtors and the utility can either reach 23 agreements on that, or we would file a determination motion to 24 determine whether any additional adequate assurance is 25 necessary.

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14 1 Again, Your Honor, I believe fairly standard. And

2 although, admittedly, notice is what it is on a first day 3 hearing, we have discussed it with the United States Trustees 4 Office and I dont believe there are any issues at this point. 5 6 that. 7 THE COURT: Well, I note that the debtors have And we would ask Your Honor if you would approve

8 thousand (indiscernible -interruption in recording) accounts, 9 which obviously would make it very, very difficult for the 10 debtor to proceed otherwise here. 11 the order on the motion. 12 MR. DeFRANCESCHI: Thank you, Your Honor. Your Honor And I am prepared to enter

13 raises a good point. 14 motions is -15 16 THE COURT:

The factual support for each of the

Yes. -- is contained in the first day And Mr.

MR. DeFRANCESCHI:

17 affidavit, which we do, of course, proffer in support.

18 Kurth is here to testify, if anyone needs to cross examine him. 19 THE COURT: Absolutely. And I also should have

20 added, I think, Mr. DeFranceschi, that to the extent these are 21 non-administrative motions, theyre substantive motions, I -- I 22 view the standard to be applied as -- whereby the debtor would 23 suffer immediately and irreparable harm were the Court not to 24 take action at this point. So, that will be the standard that

25 will be applied to these motions.

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15 1 MR. DeFRANCESCHI: Thank you, Your Honor. And we

2 have made, I believe, the appropriate factual support for that, 3 Rule 6003, for the prepetition payments on that. 4 5 THE COURT: Yes, I agree. Thank you, Your Honor. The next

MR. DeFRANCESCHI:

6 item on the agenda is the debtors motion for an order 7 authorizing the debtors to pay prepetition sales and use taxes 8 and related obligations. 9 Another motion standard in a case of this nature.

10 Weve discussed it with the Office of the United States 11 Trustee. The number -- the amount, I should say, which is

12 approximately $10,500,000, for a company of this size, with the 13 number of locations, is not, in our view, large; it is what it 14 is. 15 Due to timing, though, particularly in the State of

16 California, these obligations are coming due at the end of this 17 month. And given the timing what it is, we do need to make And, for example, we believe that were And we dont

18 payments on these.

19 required obviously by State law to do this.

20 believe this is a controversial motion and, again, would ask 21 that Your Honor approve this. 22 THE COURT: Yes, Ive reviewed the motion and Im

23 prepared to approve it. 24 25 MR. DeFRANCESCHI: Thank you, Your Honor.

That brings us to the debtors motion for the entry

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16 1 of an order authorizing the debtors to pay prepetition amounts 2 owed to common carriers and customs brokers. In this motion, These

3 were seeking to pay common carriers up to $1.8 million. 4 are parties that are holding, somewhere along the chain,

5 merchandise thats been ordered, either in transit or awaiting 6 transit, approximating $31 million. Its particularly

7 necessarily and critical at this early stage of the case that 8 we have access to that inventory. And in many instances, the

9 only way well be able to do that is to make these payments. 10 Its the usual, Your Honor. Many times there are

11 liens that could be asserted.

The warehousemen and common

12 carriers can hold onto the product, making it very difficult. 13 The last thing we need at this stage of the case is to not be 14 able to have our product, particularly with the back to school 15 season coming. And, again, weve had discussions with the

16 Office of the United States Trustee and believe there are no 17 issues remaining, and we would ask if Your Honor would approve 18 this. 19 THE COURT: I will grant the motion. I find clearly

20 that there would be immediate irreparable harm here were the 21 product not to be delivered on a timely basis. 22 23 MR. DeFRANCESCHI: Thank you, Your Honor.

The next item on the agenda is our motion for entry

24 of an order authorizing the debtors to continue the use of 25 existing cash management systems, bank accounts and business

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17 1 forms, authorizing the debtors to open new debtor in possession 2 accounts, and extending the debtors time to comply with 3 Section 345(b) of the Bankruptcy Code. 4 Your Honor may think I sound like a broken record,

5 but, again, fairly standard and routine and ordinary in a case 6 of this nature. There were two issues that we did address and

7 make clear with the Office of the United States Trustee, in 8 that: One relates to when we use up our check stock, we will

9 indicate that, you know, our D-I-P status on the new stock, but 10 we will use the existing stock until its exhausted. 11 12 13 order. 14 Originally also, we had been looking for a 60-day And based on an agreement with THE COURT: Yes. And that is set forth in the

MR. DeFRANCESCHI:

15 extension of the 345 period.

16 the Office of the United States Trustee, have limited -17 THE COURT: Oh, you know whats happening, Mr.

18 DeFranceschi, we have a plate there -19 20 MR. DeFRANCESCHI: THE COURT: Oh, I see it.

And when you touch it, thats the noise

21 were hearing. 22 23 apologize. 24 Weve limited that to a 45-day interim waiver with, MR. DeFRANCESCHI: Gotcha. Sorry about that. I

25 of course, the ability to ask for additional time by motion, or

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18 1 by agreement with the Office of the United States Trustee. 2 Other than that, Your Honor, I mean its a fairly We take money in at the store

3 standard cash management system.

4 level, and depository accounts, which is then flowed into a 5 concentration account. The concentration accounts then used

6 to fund various other accounts, as need be, swept by, I 7 believe, Wachovia. Its maintained at Wachovia. Its the

8 usual ancillary relief that we would seek in a motion of this 9 nature. 10 I dont think theres anything controversial. Im

11 happy to answer any questions, but we would ask that Your Honor 12 approve this. 13 THE COURT: It certainly is what we see in almost all

14 of the cases, and particularly with the review of the United 15 States Trustee and the approval with the modifications. 16 motion is granted. 17 MR. DeFRANCESCHI: Thank you, Your Honor. The next The

18 item is the debtors motion for entry of an order authorizing 19 the debtors to pay certain prepetition employee obligations and 20 continue certain employee obligations in the ordinary course 21 post petition, and authorizing the -- authorizing and directing 22 financial institution to honor all related checks and 23 electronic payment requests. 24 Your Honor, we have approximately 18,000 employees.

25 I believe of those, approximately 4,000 or so are salaried

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19 1 employees. 2 Needless to say, amongst the most critical aspects of They are the ones that will make So, this motion is geared

3 this case is our employees.

4 this reorganization a success.

5 towards making this landing into Chapter 11 as smooth as 6 possible. What we are essentially seeking to do is avoid any

7 real burden to the employees. 8 Weve done -- weve had significant discussion with We

9 the Office of the United States Trustee on this motion.

10 have agreed to various changes from what we -- were in our 11 initial drafts. And I think we now have a consensual order.

12 Let me tell Your Honor what those are, and then Ill make a few 13 additional comments. 14 First, we have agreed to add into the order a

15 provision that says that the orders granted -- the motion is 16 granted subject to limitations in 507(a)(4) and (a)(5). Weve

17 agreed to breakout, and Your Honor will see them in the file 18 documents, the pre- and post petition figures that we are 19 addressing and seeking authorization on. 20 We have agreed to seek approval of accrued vacation

21 payouts on a capped interim basis, unless applicable State law 22 requires us to make certain payments in excess of the cap. And

23 I think the order as drafted is that -- currently that was in 24 the binder is going to have a modification thats probably 25 going to be handwritten in.

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20 1 2 THE COURT: Thats fine. Ill tell Your Honor what I

MR. DeFRANCESCHI:

3 believe its going to essentially state, and then when we get 4 to it, well make sure it says that. But essentially, this

5 accrued vacation time is in an amount of, I think, $6.7 million 6 for the interim period. The accrued vacation really -- the

7 number is not so much that we intend to pay that amount out. 8 Employees are only paid under the policy upon termination, 9 whether voluntary or involuntarily. 10 There are certain states, as Your Honor, Im sure, is

11 aware, such as California, that have State law provisions 12 requiring that when an employee is termed out, that they 13 receive, as part of their back wages owing, the vacation time 14 thats accrued in dollars. 15 So, realistically, the payment of these amounts is

16 only going to occur if employees are terminated. 17 There are no issues with the continued use of Thats not at all controversial.

18 vacation time. 19

What we have agreed, though, is that number being the

20 number that it is, 6.7 million, I believe, and also having said 21 at the outset that weve agreed not to exceed the 507(a)(4) and 22 (a)(5) caps, what weve agreed to do is, if Ive got this 23 straight, is during the interim period, not to exceed those 24 caps for any employees that may be terminated that have accrued 25 vacation time, but only pay an amount up to the cap.

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21 1 However, if its in a state, such as California, that

2 mandates that payment, I believe during the interim period we 3 would be permitted to make those payments. For other states,

4 well essentially be seeking similar relief on the final 5 hearing. So, that if, during that period of time, an employee

6 was owed an amount above the cap, it would either have to wait 7 until the final hearing. Or, if need be, and well try not to

8 burden the Court, we would, you know, use our best judgment as 9 to whether a separate motion would be required to do that. 10 I dont anticipate that at this point, I just wanted to make 11 that clarification. 12 13 14 15 caution. 16 MR. DeFRANCESCHI: Very good, Your Honor. Weve also THE COURT: And its only a few weeks -Correct. But

MR. DeFRANCESCHI: THE COURT:

-- potentially and -- but its a good

17 agreed to seek approval of the employee relocation program on a 18 capped interim basis. We have also provided in the order that

19 nothing in the motion or the order shall be deemed to violate 20 or permit a violation of Section 503(c) of the Bankruptcy Code. 21 I believe those are the revisions that weve agreed to with the 22 Office of the United States Trustee. 23 Essentially, Your Honor, you know, again, although in

24 different cases, the programs and wage amounts vary, very, very 25 similar to what Im sure Your Honor has seen in other cases, I

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22 1 dont believe theres anything controversial here. And Im

2 more than happy to address specific questions if Your Honor has 3 any. But Im content to rest on the papers and ask for

4 approval of this. 5 6 7 THE COURT: Does anyone wish to be heard?

(No audible response heard) THE COURT: Well, I was -- I also noted a little bit

8 of a question about the cap, but thats now been addressed. 9 And I appreciate the United States Trustees Office addressing 10 that matter. 11 And with that, certainly the employees are the

12 backbone of this organization, and are entitled to be paid in 13 the normal course, and I am prepared to approve the motion. 14 MR. DeFRANCESCHI: We appreciate that, Your Honor, as

15 do our employees. 16 The next item is the debtors motion for authority to

17 pay prepetition obligations regarding our workers compensation 18 and self-insured general liability insurance programs, to 19 continue insurance programs, and honor post petition 20 obligations in respect thereof, and to continue certain premium 21 financing arrangements and honor post petition obligations in 22 respect thereof. 23 Your Honor, the -- I should add that were not

24 seeking here to really make any payments on premiums other than 25 with respect to the insurance premium financing. Our insurance

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23 1 policies, I believe, are all paid up at this point essentially, 2 with the property premium financing caveat. 3 But what we are doing is -- and Ill address that

4 first, is we want to continue with our insurance premium 5 financing arrangement with AFCO (phonetic) that covers our 6 property -- various property policies. In this instance, its

7 really to -- were current on the obligations under that, its 8 a approximately $342,000 monthly payment, and we seek to 9 continue to make those payments in the ordinary course of 10 business post petition as they come due. 11 In addition to that, Your Honor, we have two workers

12 comp programs: 13 One is essentially -- its a legacy program that we -

14 - back when the acquisition was done, we took this on as an 15 assumed liability from Target. 16 workers comp program. 17 And then the other for current employees is what we And that is the self-insured

18 refer to as the high deductible workers comp program. 19 Needless to say, we need to maintain our workers And what were essentially asking is

20 compensation programs.

21 to continue covering our obligations that we owe under these 22 programs in the various states that we have them and continue 23 the ability to fund -- deposit funds into the account used by 24 the claims administrator for these. 25 And we dont believe that there are any prepetition

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24 1 premiums or anything like that outstanding on this. Its

2 essentially to continue to pay post petition obligations as the 3 come due in the ordinary course. 4 We also have a self-insured general liability

5 insurance program with a self-insured retention up to $250,000, 6 which is -- we have a mechanism with the administrator on that 7 program whereby we, again, deposit amounts into an account on a 8 -- essentially a weekly basis. We want to continue to make

9 those deposits into that account to fund it on the ordinary 10 course of business. 11 Again, Your Honor, I believe very noncontroversial.

12 We didnt receive any comments on this motion, and we would ask 13 that Your Honor approve it. 14 THE COURT: And I will. I do approve it. It is

15 certainly necessary and appropriate here, and I grant the 16 motion. 17 18 MR. DeFRANCESCHI: Your Honor, thank you.

This brings us to, I guess, the main event in many And if --

19 respects, and that is the DIP financing portion.

20 what Id suggest if we take a brief recess, maybe ten minutes, 21 and that will give us the change to finalize that employee 22 order and the rest of the orders, and then make the 23 presentation on this. 24 THE COURT: Thats fine. And Im in good shape this

25 afternoon, so if you need a little bit of additional time, take

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25 1 it and hopefully resolve any issues and just let us know when 2 youre ready for us to come back. 3 4 5 6 7 8 9 MR. DeFRANCESCHI: THE COURT: Thank you, Your Honor. Well stand in recess.

Thank you.

(Recess 1:32 P.M./Reconvene 2:02 P.M.) THE COURT: Mr. Beltzer? MR. BELTZER: THE COURT: Thank you, Your Honor. Mr. Beltzer, Ill ask you the same thing Well have to do something about that. Okay. No, I -Thank you, everyone. Please be seated.

10 with Mr. DeFranceschi. 11 12 13 14 MR. BELTZER: THE COURT: MR. BELTZER: THE COURT:

But for todays purposes -Counsel was so occupied with -Well, thats the problem. Really I cant

15 expect counsel to be that aware of it. 16 MR. BELTZER: Your Honor, I briefly discussed

17 Mervyns debt structure in my opening remarks. 18 19 THE COURT: MR. BELTZER: Yes. Id now like to describe our proposed

20 DIP facility which is being provided by our existing first lien 21 lenders, agented by Wachovia, with the consent of our existing 22 second lien lenders, the Sun entities. 23 Let me start with the need for the DIP facility.

24 And, again, Id like to proceed by proffer. 25 THE COURT: Yes, sir.

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26 1 2 available. 3 4 THE COURT: MR. BELTZER: Yes. Your Honor, I described the debtors MR. BELTZER: Although Mr. Kurth is here, and

5 very difficult liquidity posture in my opening remarks. 6 Reduced consumer spending and sharply curtailed terms from our 7 vendors have put our availability under a severe pressure. 8 As such, we have an immediate need to access our cash

9 collateral, but also to access incremental liquidity under our 10 credit facility in order to preserve our going concern value by 11 acquiring product, paying our employees in the ordinary course, 12 and restoring the competence of vendors, employees and 13 customers. 14 Our liquidity needs at the moment are particularly

15 immediate and acute given that although this is July 30, and 16 this is something that I really didnt know before this matter, 17 we are in back to school season, Your Honor, which has 18 historically been of critical importance to the operating and 19 financial performance of this company. Because of this, we

20 need full access to our incremental liquidity on an urgent 21 basis in connection with this interim hearing. 22 Let me now briefly turn to the process which the

23 company undertook in searching for an appropriate DIP facility. 24 And here, in addition to Mr. Kurth, who Mr. DeFranceschi 25 introduced earlier, we have Stuart Erickson in the courtroom,

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27 1 from Miller Buckfire, whos the companys financial advisor. 2 And he would also be available to testify as to this process. 3 But, again, wed propose to proceed by proffer. 4 The debtors engaged in an extensive and wide ranging We entered into confidentiality

5 search for DIP financing.

6 agreements and engaged in discussions with many prospective 7 lenders, and I will name them here: Bank of America, JPMorgan

8 Chase, General Electrical Capital Corporation, Credit Suisse, 9 Wells Fargo, Sun, Kimpko, Gordon Brothers and Crystal Capital. 10 We did receive at least two other term sheets for But no

11 financing, other than the one were proposing today.

12 alternative lender proposed as comprehensive a facility against 13 both our current assets and our leases, or could move as 14 quickly as could Wachovia, our current agent, along with our 15 current lending group. 16 In deciding in their business judgment to go forward

17 with the Wachovia facility, the debtors took into account the 18 amount of the facility, the speed and certainty of execution, 19 and the knowledge that our existing agent and lenders have, 20 both of the company, the business, and of the collateral for 21 the facility. 22 Additionally, Your Honor, none of the alternative

23 lenders was willing to go forward on an unsecured junior or 24 pari passu basis with our existing lenders. So, any choice

25 other than the one we made would have involved a complex,

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28 1 uncertain and potentially lengthy priming fight. 2 Your Honor, having been cut off by many, if not most,

3 of our vendors in the days and weeks before today, we did not 4 have the luxury of rolling the dice in that matter. 5 Let me now turn to the specific terms of the DIP.

6 First, as I mentioned, under the order, we get consensual 7 access to the cash collateral, both of our first and second 8 lien lenders. 9 Second, there is a $465 million revolving component

10 which includes a letter of credit sublimit of $125 million, 11 with a term ending on December 31, 09. 12 we hope to reorganize much more quickly. Although, of course, This will be

13 implemented via a so-called creeping roll-up of the prepetition 14 facility. 15 Additionally, and extremely importantly in this case,

16 the lenders have agreed to go beyond their existing collateral, 17 principally the current assets, to also make a $25 million term 18 loan advanced immediately against our real property leases. 19 This loan matures on November 15th of 08, but its the source 20 of the immediate incremental liquidity, which were confident 21 will provide significant comfort to our vendors in starting to 22 ship us again, hopefully on or near historical terms. 23 Your Honor, we believe that the interest rate and And, in fact, weve been able to

24 fees are at market levels.

25 negotiate a partial deferral of the two percent facility fee so

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29 1 that less than half of the fee is payable at closing, with the 2 remainder spread over a schedule going through December 15th of 3 this year. 4 well. 5 Weve negotiated a carve-out to be available equally And thats obviously a boost to our liquidity, as

6 both for the debtor and for committee professionals, and weve 7 negotiated adequate protection on a consensual basis, both for 8 our first and second lien lenders. 9 The first lien lenders will be getting replacement

10 liens, a 507(b) superpriority claim, and the payment of 11 reasonable -- excuse me -- the payment of reasonable fees and 12 costs, including professional fees. 13 The second lien lenders will also get replacement

14 liens and 507(b) claims, although both on a junior basis to the 15 first lien, as well as professional fees up to $75,000 per 16 month. And I should note that those will only be fees incurred

17 in their capacity as second lien lenders, and not in their 18 capacity as equity holders. 19 And the payment of fees to the second lien lenders is

20 subject to a full reservation of rights under 506(b), both by 21 the company and by the committee, once appointed. 22 Briefly, turning to the Local Rule 4001-2 provisions, This is a -- several of those provisions are This is a creeping roll with cross There is a lien on avoiding actions,

23 Your Honor.

24 implicated here. 25 collateralization.

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30 1 although subject to the final hearing. There is a 506(c) And Im going to

2 waiver, again, subject to a final hearing.

3 hand up in a moment some changes which have been negotiated 4 over the last 12 hours or so. In the copy that is before Your

5 Honor, there is a proposed 506(c) waiver at the interim hearing 6 solely as to expenses accruing between the interim and final 7 hearing; that has now been deleted. 8 at the final hearing. 9 Finally, there is a 60-day challenge period for the So, its only going to be

10 committee from the date of its appointment, and a 75-day period 11 for other parties in interest from the date of entry of this 12 interim order, if no committee is appointed within 30 days. 13 Your Honor, we believe that these provisions are

14 reasonable, especially as modified overnight, in the context of 15 this facility, which is the most comprehensive and expeditious 16 DIP facility available to the debtors. And we also note that

17 many other facilities with similar features have been approved 18 by the Court. 19 And, again, we note that various of these provisions

20 have been conditioned on a final hearing in our transaction. 21 Your Honor, I would now like to hand up, if I could,

22 clean and black line copies, both of the order and of the 23 ratification agreement, which is the term given to the DIP loan 24 agreement -25 THE COURT: Yes.

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31 1 MR. BELTZER: -- that I think describes some of the

2 more substantive changes. 3 4 5 6 you. 7 MR. BELTZER: Turning to the order first, Your Honor, THE COURT: MR. BELTZER: THE COURT: Thank you, Mr. Beltzer. May I approach? Yes, of course. Thank you, sir. Thank Thank you.

8 there have been a number of changes made with the -- obviously 9 with the concurrence of our DIP lender, at the suggest -- to 10 accommodate comments made by the United States Trustee here. 11 Im not certain if there are any remaining issues on that 12 score, well hear. But I think at least the great bulk of

13 their comments have been accommodated. 14 And there was also one change made to the order, Your And,

15 Honor, to accommodate prospective landlord objections.

16 again, I cannot vouch that there will not be others that are 17 raised, but I just wanted to point that out to Your Honor. 18 19 The most substantive changes are as follows: If youll look at the black lined version, Your

20 Honor, at the bottom of Page 21, the real property -- the -21 the real property term loan, which I described, in the amount 22 of $25 million, had been stated to be secured by all of the 23 leaseholds. Wachovia has now agreed to this insertion, and I To the extent that any of the

24 will read it into the record:

25 real property leases expressly prohibit the granting of liens

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32 1 and security interest in favor of agent and lenders to secure 2 the obligations in accordance with the term of this interim 3 order and the financing agreement, and such prohibition is 4 enforceable by its terms, in accordance with applicable 5 bankruptcy law and other applicable law, then for purposes of 6 this interim order, the liens and security interest of agent 7 and lenders with respect to such real property leases shall 8 attach to and be fully enforceable against the proceeds and 9 products of such real property leases. 10 So, I think thats a materially helpful provision in

11 respect of the usual landlord concerns about leasehold 12 mortgages. 13 14 THE COURT: MR. BELTZER: Exactly. Next, Your Honor, I would turn to

15 Section 4.4.2 on Page 40, and this is hot off the press, so it 16 reflects -- it reflects Mr. Collins penmanship, I believe, in 17 interlineation. And this is about another issue that typically

18 comes up about access rights for the lender in respect of the 19 leaseholds. And we have now inserted, with Wachovias

20 concurrence, that those will be in accordance with applicable 21 law, or as otherwise ordered by the Court. Again, I think that

22 that moots many of the arguments that otherwise come up in this 23 context. 24 Similarly in terms of hot off the press, on Page 42,

25 the end -- the beginning of Section 4.5 of the release

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33 1 provision, that had a component relating to the interim, and 2 thats been made clear now at the urging of the United States 3 Trustee that thats only contingent upon the permanent order, 4 as well, which I think is helpful. 5 And finally, Your Honor, the only other, what I would

6 deem, substantive point in terms of changes to the order is in 7 Section 5.10, I have not discussed this previously in my 8 remarks. JPMorgan Chase, besides being a member of the bank

9 group, also provides a facility where the company -- the 10 employees of the company are issued company credit cards for 11 purposes of making business purchases, and also actually 12 provides the coin, if you will, that goes into the cash 13 registers at the individual locations. And obviously its

14 incumbent on us to continue that facility, that arrangement. 15 And there had been language in that regard, and there was 16 further lawyering this morning, which only a lawyer could 17 really love. But we have agreed more substantively to issue a

18 letter of credit in the amount of $500,000 as further credit 19 enhancement, and obviously that arrangement is of material 20 importance to the company. 21 Turning to the ratification agreement for a moment, I

22 believe there is only one real substantive change, Your Honor, 23 the rest really is wordsmithing. The substantive change, which

24 is really a clarification, is new Section 2.5 on Page 13, which 25 just confirms what we already understood, which is that the DIP

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34 1 lenders will have full dominion rights over the cash of the 2 company, and that was always part of the deal. 3 So, with that, Your Honor, I will see if my

4 colleague, Mr. Helfat would like to speak, and then well see 5 if there are any objections. 6 7 8 9 THE COURT: MR. BELTZER: THE COURT: MR. MONACO: Thank you. Thank you, Your Honor. Mr. Monaco? Good afternoon, Your Honor. Frank

10 Monaco of Womble Carlyle. 11 Corporation.

I represent Wachovia Capital Finance

Id like to introduce and move the admission pro

12 hac vice of my co-counsel, Jonathan Helfat of the Otterbourg 13 firm. 14 THE COURT: Thank you, Mr. Monaco. Mr. Helfat needs

15 no introduction, and you are admitted for this hearing, sir. 16 MR. HELFAT: Thank you, Your Honor. I guess the most

17 important point I could make to the Court in support of the 18 DIP, Your Honor, is no one lends $465 million without some 19 terms and conditions. And Im sure youre going to hear some but it has taken

20 opposition this afternoon to this DIP order,

21 -- while Mr. Beltzer, I have empathy for him, he has had to not 22 only negotiate with his clients and the lenders, but on our 23 side of the ledger, we have had to negotiate with our lending 24 group, which are -- lets say sometimes unfocused. And it has

25 been a hard week and weekend trying to put this all together.

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35 1 And so some -- while some of the terms may sound to the Court 2 to be at first blush difficult, they are certainly the result 3 of arms length negotiation that has been going on for the 4 better part of a week. 5 Your Honor, obviously this is a slow roll. As the

6 collections come in, we pay back the prepetition debt. 7 8 THE COURT: MR. HELFAT: Yes. The debt right now is about 320 odd

9 million dollars, assuming that there is collateral, it will go 10 to in excess of $400 million. 11 million on the leases. 12 As things stand now, on the date of the filing, They And then there is a piece of $25

13 Wachovia has a lien on all the assets of the company.

14 have the I.P., theyve got the inventory, they have all the 15 assets of the company, and they, in addition, are contemplating 16 under the terms of the DIP order putting in another $25 million 17 against the leases, which are the only unencumbered asset in 18 the estate. 19 While Mr. Beltzer didnt say so, I dont want this We are fully

20 cross collateralization to get too far afield.

21 secured, there is no -- there is no shortfall here under 22 anyones analysis; there is collateral to pay the Wachovia 23 agented credit. 24 While we have made some concessions to the U.S.

25 Trustee this afternoon, I would like to advise the Court that

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36 1 we are going to advance over -- that we are going to advance 90 2 percent on the inventory. For a Chapter 11 debtor to get a 90

3 percent advance on inventory is something that I havent done, 4 and I think is a credit to Mr. Beltzer and to the company with 5 regard to their negotiations with Wachovia. 6 Clearly the issue thats going to come before you in

7 the next few minutes, Your Honor, is the leases. 8 9 THE COURT: MR. HELFAT: Yes. And what Wachovias position is, and I

10 think its fairly -- I mean I would think its fair, but I 11 think its fairly reasonable is that we would like liens on -12 we would like to take leasehold mortgages on the leases. 13 are 177 leases. There

Well, some of the leases prohibit leasehold And for those leases that

14 mortgages, we understand that.

15 prohibit leasehold mortgages, all were looking to is the 16 proceeds and the superpriority claim that we would be granted 17 under this order and the designation rights. 18 As to those leases that do not prohibit leasehold

19 mortgages, and are silent, then we would like to take those 20 mortgages. And those mortgages that allow us to take leasehold To give you an

21 mortgages, well, we would like to take them.

22 idea, probably 100 plus of the leases are either silent or 23 allow leasehold mortgages. And probably 50 plus, maybe less, We wont take the ones

24 dont allow us to take those leases. 25 that prohibit it.

And the ones that are either silent or allow

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37 1 us, we would like the right to take a leasehold mortgage in 2 exchange for advancing an additional $25 million to the 3 company. 4 Now, some people have come to us on the question of I would like to say that were certainly not

5 access rights.

6 going to enter the premises between now and the final order. 7 And, therefore, we are willing to encourage having some 8 dialogue with all the landlords, hopefully as a group, so we 9 dont have to do each landlord separately, but negotiate some 10 common ground on access rights so we can come back to you at 11 the final hearing. 12 access rights. 13 on the premises. 14 So, its -- as Mr. Collins put it as suggested There is no reason to fight today about

In the next 14 or 20 days, were not entering

15 language, this is perfectly fine for us, further order of the 16 Court is certainly agreeable to us. 17 The -- I believe that with regard to the rest of the And

18 order, theres a substantial carve-out for professionals. 19 the DIP fee is two percent which is, we dont think out of 20 market.

And I think that other than what Mr. Beltzer has said,

21 that is sort the highlights of the DIP order. 22 THE COURT: Thank you, Mr. Helfat. Who would like to

23 be heard or to cross examine anyone from the company? 24 25 Mr. Pollack, good afternoon. MR. POLLACK: Your Honor, David Pollack -- round the

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38 1 spot. 2 3 4 MR. POLLACK: THE COURT: Were going to have to move te podium. (Laughter) David Pollack for General Growth

5 Properties, Centro Properties Group, and other landlords noted 6 of record. 7 8 THE COURT: MR. POLLACK: Yes. Your Honor, were faced unfortunately

9 with the same situation that we have been faced with many times 10 before Your Honor and your brethren on this Court with regard 11 to liens on leases. 12 Fortunately in virtually all of the recent cases, it

13 has no longer become an issue, but it is still an issue in this 14 case, and that is the issue of liens on leases. The revised

15 order does take one step, it doesnt quite go far enough, but 16 it does take one step. The usual practice that has arisen in

17 this District, especially for an interim order on a first day 18 motion, is that there is no lien on leases. Many of the

19 judges, including Your Honor, have made that clear before. 20 There are obviously exceptions, but on a first day order with 21 virtually no notice, less than 24-hour notice to the landlords 22 in general, you dont get a lien on leases. You get a lien on

23 the proceeds, which should fully protect what the bank group 24 really needs in this case, especially with the cross 25 collateralization, especially with the fact that they did not

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39 1 have a lien on any of the leases prepetition, as Mr. 2 DeFranceschi indicated. 3 And so with the cross collateralization, the excess

4 over, or whatever they might be able to get from having a lien 5 on leases, rather than just the proceeds from all the leases 6 for that 14- or 20-day period should not be an issue, 7 especially with no notice. 8 The issue is not quite as simple as counsel would First let me go back one second, Your

9 have the Court believe. 10 Honor. 11 12

On the issue of the access. THE COURT: MR. POLLACK: Yes. Mr. Helfat and I did speak before, and I had the one that

13 we have -- I havent seen the language.

14 still had the ink that was wet, not the one that Mr. Collins 15 was still writing on. But based on the representations that

16 Mr. Helfat has made on the record, and what Mr. Beltzer said, 17 as well, were fine with the access. I dont think thats an

18 issue, especially for the short period of time. 19 20 an issue. But the issue of the lien on the leases is, in fact, Once this order is entered, there is, in fact, a These are not twenty-five

21 lien, and it is a public record.

22 hundred square foot in-line stores; these are department 23 stores. 24 As Your Honor will see as this case develops, there

25 will be some very interesting issues because we dont simply

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40 1 have in many cases a landlord and tenant relationship between a 2 shopping center owner and Mervyns or the Mervyns op co 3 (phonetic). 4 (phonetic). We have the intermediary of the real co We have, over the years, other developers who have We have REAs that apply to maybe

5 purchased groups of stores.

6 the real co, maybe the op co, maybe both, other relationships, 7 et cetera. So, its not just a simple matter of, oh, well

8 take the lien and then maybe well get rid of it and, well, 9 maybe there are 100, or maybe there are not. Yesterday I had

10 heard that there were six, nine, 12 that prohibited liens on 11 leases. I havent reviewed all of ours. One client has

12 approximately 20.

I have looked at the lease summaries for the We have

13 ones that are leased because theyre not all leased.

14 some that are leased, some that are owned, and are subject to 15 REAs, some that are owned by a third party and are subject to 16 different REAs. 17 But Ive looked at the ones that are leased and five

18 out of the six of those prohibit, at least in the language that 19 Ive seen, prohibit taking a lien on leases. 20 21 included. Now, the simple answer is, okay, well, theyre not Well, I dont know about the others. I dont know

22 whether or not the fact that there is not a specific 23 prohibition in the lease doesnt mean that there is not a 24 prohibition in some other document. 25 have lots of different documentation. All of these properties

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41 1 I acknowledge that some of the documentation that we

2 were presented with yesterday indicated that there were 3 previous leasehold mortgages, including on at least one 4 property where the lease prohibits a mortgage. Now, that may

5 very well be that Mervyns or the predecessor, Dayton Hudson, 6 or whomever, came to the landlord and said, we need this in 7 this case, will you give it to us; and they said, yes. 8 does that mean in that particular case that the lien is 9 prohibited or not prohibited? 10 Its a factual issue. Well,

And I know everybody is very familiar with what Your

11 Honor had to deal with in Whitehall the other day about 12 evidentiary hearings and whatever. But right now, we have

13 nothing on the record to say it is or it is not prohibited. 14 And to have something go of record that, in fact, creates a 15 lien that may, if Im in the midst of a sale of a property, 16 create a title problem is simply unfair. There is no reason

17 that Wachovia cant simply take the lien on the proceeds for 18 this short 14- or 20-day period. I dont think that anybody

19 would argue that any of these stores are going to be sold in 20 that period of time, or that anything else is going to happen 21 to trigger that kind of event in the short period of time 22 between the interim and the final order. 23 Moreover, the language in the black line also is

24 quite unusual in that it refers to other enforceable in 25 accordance with bankruptcy law and this and that and whatever.

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42 1 Either the lien prohibits -- the lease prohibits it or it 2 doesnt. And going into these other interpretations just

3 brings a controversy back that who knows, its going to take 4 how long to determine, with or without notice. 5 today with barely no notice. 6 The bottom line is that what Your Honor entered in Were here

7 Sharper Image, what Judge Shannon has issued -- entered Buffets 8 -- Im sorry, Judge Walrath in Buffets, what Judge Sontchi has 9 entered in Linens and in Whitehall and in Friedmans, all of 10 the cases that have come down as a first day order, you dont 11 get a lien on leases. 12 thats it. 13 Were happy to work with Mr. Helfat and the debtors You get a lien on the proceeds, and

14 to try and figure this out in whatever short period is 15 necessary. It wont take that long to have our clients look at

16 the documents and tell us those where they think its clear one 17 way or the other, and well come to an agreement. Those that

18 are in dispute -- and there may be state law issues as to 19 whether or not theyre enforceable. Those may have to come

20 back to the Court or go elsewhere for a determination. 21 But for the purpose of an interim order on less than

22 24 hours notice, there should not be a lien on leases. 23 24 Thank you. THE COURT: Thank you, Mr. Pollack. Does anyone else

25 wish to be heard on any issues other than what Mr. Pollack has

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43 1 addressed to the Court? 2 3 4 5 6 MR. LEANSE: THE COURT: MR. LEANSE: THE COURT: MR. LEANSE: Your Honor, this is Tom Leanse. Yes, Mr. Leanse? How are you, Your Honor? Very well. Good afternoon. Your Honor, our

Thank you, Your Honor.

7 firm represents the Macerich Company, which is a landlord of 8 approximately 40 leases, as well as Plaza Alicio -- Im sorry

9 -- Park Alicio (phonetic), which is managed Wall (phonetic) 10 Commercial Properties. And in the interest of time, Im going

11 to do a proverbial me, too to Mr. Pollacks comments. 12 13 THE COURT: MR. SAYDAH: All right. Thank you, Mr. Leanse.

Your Honor, this is Gilbert Saydah of

14 Kelley Drye, we represent Gregory Greenfield. 15 I will also do a me, too to Mr. Pollacks comments.

16 I would also note that Section 2.1.4 of the proposed order 17 would seem to invalidate any provisions in the leases that 18 would restrict the granting of an assignment thereon. I know

19 that theyre adding language to reflect the agreements that 20 Wachovias made on the record. But I assume that that

21 provision is going to be stricken from the interim order. 22 I would also ask that while theyre adding

23 provisions, that I dont think Mr. Collins language is exactly 24 consistent with what Mr. Helfat said with respect to them not 25 entering onto the premises. If we could just add a provision

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44 1 that says prior to the entry of a final order, the agent will 2 not enter onto the premises, I think well be happy. 3 4 5 Thank you, Your Honor. THE COURT: MR. HELFAT: Thank you. Anyone else?

I certainly cant argue with the But we are in a

6 hypotheticals that Mr. Pollack raised.

7 situation where were offering up to $25 million of new money 8 so that the company can feed and buy the inventory necessary 9 for its back to school season. 10 hearing and not make an advance. We can wait until the final But the only party who will The

11 be adversely affected by that wont be the landlords.

12 party that will be adversely affected by that will be the 13 company because the understanding we have with the company is 14 very clear that we want to get liens on the leaseholds that can 15 be encumbered, either that theyre silent or that they have the 16 ability to be encumbered. And its $25 million, the company

17 has a back to school program, I dont think were hurting any 18 landlord because were not asking the landlord to have this 19 encumbrance to change their position. 20 But to say that, you know, the bank group doesnt get This case is $25 million

21 this in other cases is not this case.

22 on liens that -- on leases that can, in fact, be encumbered or 23 are silent. And I havent heard an argument that a -- that any Because if it is allowed under

24 landlord is being hurt by that.

25 state law, or it allows -- or it can be encumbered by its

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45 1 terms, I dont see what landlord is being adversely affected. 2 3 THE COURT: MS. LEAMY: Well, let me -- yes, Ms. Leamy? Good afternoon, Your Honor. Jane Leamy

4 for the U.S. Trustee. 5 I concur with the landlords comments in that I think Bu

6 it is -- well, it should be subject to enter a final order. 7 it would note I dont believe the debtors have filed a budget 8 or presented one to the Court.

That would probably be helpful

9 to Your Honors determination with respect to, you know, the 10 creeping -- the nature of the creeping roll-up -11 12 13 14 15 16 17 THE COURT: MS. LEAMY: THE COURT: MS. LEAMY: MR. BELTZER: THE COURT: MR. BELTZER: I agree. -- and the leasehold. Thank you, Ms. Leamy. Thank you. If I may just for a moment? Yes, Mr. Beltzer. First of all, if I may approach, we

18 will -- were delighted to presented -19 20 THE COURT: MR. BELTZER: Good. Thank you.

Second, Your Honor, I think we really

21 do have quite a bit of skin in the game in this dispute between 22 Mr. Helfat and the landlords. We rise, Your Honor, to express

23 the acute need of the debtors for the incremental liquidity 24 which will be provided under the leasehold term loan. Again,

25 that is really the sole incremental liquidity that were

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46 1 getting in connection with the filing, and we think this is of 2 crucial importance to restore vendor confidence particularly in 3 this case. 4 I heard Mr. Pollack talk about the unfairness of Well, its liens on the debtors

5 liens being granted.

6 property, Your Honor, its not liens on landlord property, I 7 would note that. 8 The leaseholds are the debtors property.

Wed note that relief of the sort that were seeking

9 is often granted at a final -- am I doing it again? 10 11 THE COURT: MR. BELTZER: Yes. Im so sorry. That relief of the sort

12 that were seeking is often granted at the final DIP hearing 13 based on 365(f) and similar grounds, but that in the unique 14 circumstances of this case where we require access to the 15 leasehold facility on day one, we would submit that such relief 16 is warranted at the interim hearing, particularly with the 17 amendment that Mr. Helfat and his client have agreed to where 18 if there are enforceable restrictions on leasehold mortgages, 19 those will not be included. 20 And by the way, on that score, Your Honor, we will

21 have to hand up yet another interlineation in a few minutes 22 because weve noted that the same restriction that Ive just -23 Im doing it again -24 THE COURT: If youd just move your foot, I think

25 well be okay.

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47 1 MR. BELTZER: I may have to stand in the back with a

2 -- some type of pulley mechanism to address the Court. 3 4 5 THE COURT: MR. BELTZER: (Laughter) Right. The same restriction on the granting of

6 a liens where the lease is prohibited would also have to be 7 added for the adequate protection liens, the replacement liens, 8 and we will mark out the order in that regard. 9 And finally I would note that the -- in terms of

10 notice, Your Honor, yes, this is the first day, and yes we 11 filed 22 hours ago, or what have you. But the reason that

12 were having this vigorous discussion today is that we did do 13 what we could, we gave telephonic notice of this hearing to the 14 various landlord counsel who promptly filed notices of 15 appearance yesterday. 16 to the extent we could. 17 18 19 response? 20 21 feedback. 22 23 24 MR. POLLACK: THE COURT: Clean living. (Laughter) Your Honor, just a couple of points. Yes, Mr. Pollack? MR. BELTZER: I dont know why he doesnt get the Thank you, Your Honor. THE COURT: Thank you, Mr. Beltzer. Mr. Pollack, any So, we did try to mimic a final hearing,

25 Number one, because of the nature of real estate, the lien is

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48 1 on the landlords property. If the landlord wants to try to

2 sell its property with a lien on a leasehold, it is an 3 encumbrance on the property that does affect the landlord. 4 Number two, there has been absolutely no evidence

5 whatsoever as to the difference in the value between a lien on 6 the proceeds of the sale or other disposition of these leases, 7 and the lien on the leases themselves. It is hard to believe

8 that the leases themselves have any more value to the lender 9 than the value in the sale of those leases or other disposition 10 for the period of time, especially that we were talking about. 11 Finally, Your Honor, the landlords are here. But

12 then, again, as Judge Shannon said, were always here. 13 14 Thank you. THE COURT: One question, Mr. Pollack, and I was How

15 going to ask Mr. Helfat this, but let me ask you instead. 16 about those leases which specifically permit -17 MR. POLLACK: I have no problem.

In fact, we -- I

18 meant -- Im sorry, I meant to say that.

If a lease

19 specifically permits because the landlord has already entered 20 into a subordination agreement or whatever, we have no problem 21 with the lien extending to those leases. 22 permits it. 23 24 THE COURT: MR. POLLACK: Right. The ones that dont permit it, theyve Its really If it permits it, it

25 already said, okay, we wont take a lien on those.

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49 1 the ones in the middle that -2 3 THE COURT: MR. POLLACK: The ones that are silent. Well, they may or may not be silent.

4 Thats the interpretation issue that we get into, and thats 5 the troublesome part. 6 In -- and Mr. Herman has told me that he conferred And in

7 with his real estate counsel in California today.

8 California, if the lease is silent, you can take a lien on the 9 lease. That may very well be the case, I wouldnt doubt it. I dont know about the I

10 know that is the case in Pennsylvania.

11 other states, and I dont know about the other documentation, 12 and thats the issue that we need to get into. 13 If it says you can have a lien, no problem. Its the

14 ones really in the middle, and that may be, or may not be the 15 majority of them. 16 THE COURT: Thank you. Anything further? I think And, you

17 the issue has been clearly presented at this point.

18 know, I did enough real estate law in my day to know that a 19 lien can be a nightmare for a property owner. And it seems to

20 me that based upon this very abbreviated notice in a first day 21 hearing, I am not prepared to permit liens on leases where the 22 leases are silent as to the permissibility of placing a lien. 23 I think that the lenders here have more than Theyre prepared to fund, besides the

24 sufficient protection.

25 $25 million, theyre prepared to fund this debtor in an

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50 1 extremely significant amount. And we ought to really hear more

2 on the -- as far as Im concerned, silence doesnt necessarily 3 constitute an admission that a lien is permissible. And I am

4 prepared to approve the DIP financing motion on any number of 5 grounds. The necessity, I think its obviously an arms length But I am not prepared,

6 transaction, its fair, its necessary.

7 at a first day hearing, on an interim basis, to even -- to 8 permit a lien on leasehold interest where either its not 9 permissible, as is already covered in the papers, or the leases 10 are silent as to its permissibility. 11 And I do think that the lender has sufficient

12 protection here based upon a lien on proceeds. 13 14 15 MR. BELTZER: THE COURT: MR. BELTZER: Your Honor, if I might? Yes, you may, Mr. Beltzer. I guess the question then becomes with

16 Your Honors input and ruling whether, in fact, Wachovia is 17 prepared to fund the $25 million term loan on that basis, Your 18 Honor. Because without being unduly dramatic, to the extent

19 that that $25 million number is reduced, then the landlords 20 will not have acted in their enlightened self-interest because 21 that would be, I am assured from a business perspective both by 22 the company and by its financial advisor, that that liquidity 23 is essential to restore vendor confidence where we have been 24 totally cut off by many, if not most, of our suppliers. 25 So, I completely hear Your Honors admonition, but I

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51 1 think we do have to hear from our lender. 2 THE COURT: Okay. Fair. And if the lender would

3 like a few minutes to discuss with the parties in the 4 courtroom, Im certainly prepared to permit that, as well. 5 MR. HELFAT: Well, Your Honor, one -- a

6 representative of our client is here in court today, and of 7 course I will talk to them. But this is a lender group

8 decision, this is an agent (indiscernible -interruption in 9 recording) -10 11 THE COURT: MR. HELFAT: This is a mess. Im not going to get there. Its an

12 agented facility, there are six other lenders.

That was one of

13 the terms of our term sheet that we get liens on the leases. 14 Clearly Mr. Beltzer is correct. There is going to be some

15 number less than $25 million that we are going to advance 16 because the requirement under our term sheet was liens on the 17 leases, and at this point in time, if were not going to take 18 the leases that are silent, there will be incrementally less 19 money on that $25 million facility. I will gladly talk to the

20 client, but I dont want to mislead the Court, that number will 21 not be 25 million. 22 THE COURT: Well, talk to the client and well come

23 back in ten or 15 minutes. 24 25 Thank you, Counsel. MR. BELTZER: Thank you, Judge.

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52 1 2 (Recess 2:41 P.M./Reconvene 5:16 P.M.) THE COURT: Thank you, Counsel. Please be seated.

3 Mr. Collins? 4 5 6 MR. COLLINS: THE COURT: MR. COLLINS: Good evening, Your Honor. Good evening. First of all, Your Honor, thank you

7 very much for giving us the additional time, and I apologize 8 for our late -- even late start following the delay. 9 THE COURT: I wanted to give everyone an opportunity

10 to see if some arrangement couldnt be made. 11 MR. COLLINS: Yes, and we appreciate that. I do

12 think weve made a lot of progress.

Weve worked on language

13 that would somehow bridge the concerns raised by the landlords 14 with the obvious economic concerns of the lenders regarding 15 this additional leasehold facility. And I think weve made

16 good progress, were just not there yet given that the lenders 17 and the lenders counsel needs to reach out to the individual 18 lenders, explain Your Honors ruling and the way in which we 19 hope to proceed, and thats going to take a little bit of time. 20 We expect the balance of the evening will be spent educating 21 the other lenders. 22 23 we can -24 25 MR. COLLINS: THE COURT: Yes. -- take up these issues. THE COURT: We would -- you see, at a final hearing,

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53 1 2 MR. COLLINS: THE COURT: But what -But my concern is placing a lien on the

3 rights -- on property of others. 4 MR. COLLINS: We understand. And the language that

5 we have proposed to the landlords, we think, is acceptable to 6 them, and were hoping will be acceptable to the lenders. 7 In addition to giving liens on certain of the

8 leaseholds, we would also -- are talking about providing them 9 with designation rights such that if there is a default under 10 the facility, they would then have the ability to determine how 11 those leases that they dont have liens on, how the company 12 would go about maximizing the value of those leasehold 13 interests in order to repay the amounts due under the DIP 14 facility. 15 16 THE COURT: MR. COLLINS: Okay. So, we think that that is a good

17 solution -18 19 THE COURT: MR. COLLINS: Yes. -- to this issue, so it protects the

20 landlords economic concerns, as well as the landlords 21 concerns. 22 So, were working on that language. What we would

23 propose, Your Honor, is for Your Honor to so order the record 24 with respect to the DIP facility absent approval of the $25 25 million leasehold facility.

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54 1 And if Your Honor would so order the record for

2 purposes of approval of the DIP for that specific purpose, 3 again, the DIP facility absent the $25 million leasehold 4 facility. 5 6 THE COURT: MR. COLLINS: Right. Almost at the end of todays hearing.

7 We would then have the ability to pay payroll, which is 8 actually due to be funded today. 9 THE COURT: So, its critical --

Yes, Im always concerned about the

10 payroll, obviously. 11 MR. COLLINS: -- that we have access to the balance

12 of our facility.

And then we would ask that we come back

13 before Your Honor as early as tomorrow for approval of a fully 14 order that hopefully would have the complete language on the 15 leasehold facility and the resolution that were talking about 16 between the lenders and the landlords. 17 18 19 THE COURT: MR. COLLINS: THE COURT: We can do that. Okay. And Ill also say Im available, you But in

20 know, into the evening if that would be at all helpful. 21 the meantime, certainly I will so order. I had made the

22 findings that I thought that the financing arrangement was 23 necessary and appropriate, and obviously in the best business 24 judgment of the debtor, and that it had been very appropriately 25 and aggressively shopped. I am prepared to make all of those

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55 1 findings, and approve all of the other terms, with the 2 exception of what is continuing to be discussed, namely the 3 landlord -- the landlord issue and the lease issue. 4 5 MR. COLLINS: THE COURT: Thank you, Your Honor. Mr. Pollack, I know -- I see you rising. Mr.

6 And Mr. Haddad. 7 Haddad?

Who should I hear from first here?

Let me hear from Mr. Haddad first, only because what

8 he says may require a response. 9 MR. HADDAD: Thank you, Your Honor. Richard Haddad

10 Otterbourg, Steindler, Houston and Rosen for Wachovia. 11 We do appreciate the additional time that the Court We, unfortunately, have not been able

12 gave us this afternoon.

13 to get -- reach conclusion on the issues with respect to the 14 leases and the $25 million lease facility. 15 I would want to be clear that during the past couple

16 of hours, we had lots of phone calls, lots of e-mails and lot 17 of drafting, theres a lot of back and forth internally and 18 back and forth with the debtor and the debtors advisors. It

19 is more than just the process of educating the co-lenders with 20 respect to the developments today. There are also the

21 economics, and what impact a different facility would have on 22 the proposal. So, its not just an issue of us reaching out

23 and getting approval from the co-lenders, but rather coming to 24 grips with the entirety of the economics and how that plays 25 out.

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56 1 We are hopeful, as Mr. Collins indicated, that we

2 will be able to reach some type of an agreement by tomorrow, 3 but its by no means a done deal subject to bank group 4 approval. 5 6 7 THE COURT: Mr. Pollack? MR. POLLACK: Thank you, Your Honor. I just wanted I understand, Mr. Haddad. Thank you.

8 to let the Court know that we have reviewed the language that 9 was drafted by Mr. Herman and Mr. Collins with regard to the 10 lien language, the designation rights, et cetera. And to the

11 extent that the bank group will buy into what we think is an 12 equivalent remedy to them. We are fine with that language, and

13 if it comes to that, and the bank group does, were satisfied 14 with submitting the order on certification of counsel. 15 THE COURT: Thank you, Mr. Pollack. Let me just make

16 sure that I dont forget to say that my ruling is so ordered on 17 the record pending the submission of a final order. 18 19 20 21 MR. POLLACK: MR. LEANSE: THE COURT: MR. LEANSE: Thank you, Your Honor. Your Honor, this is Tom Leanse. Yes, Mr. Leanse? I have not -- because I have not had the

22 privilege of being in Wilmington today, I have not seen the 23 language that has been circulated. But I suspect, given my

24 respect for Mr. Pollack, that once we review it, I suspect 25 well be able to take a similar position.

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57 1 2 3 4 THE COURT: MR. LEANSE: MR. COLLINS: MR. SAYDAH: Okay. Thank you.

Thank you, Your Honor. Your Honor -Your Honor, this is Gilbert Saydah of

5 Kelley Drye, again, on behalf of developers first right of 6 realty, Gregory Greenfield and Weingarten Realty Investors. 7 Your Honor, we would also appreciate the opportunity

8 to be able to review that language. 9 Your Honor, there was one additional issue which I Its

10 had raised, which I dont believe the Court ruled on.

11 related to the liens on leases issue, and its the inclusion of 12 Section 2.1.4 in the proposed order. 13 14 15 MR. COLLINS: Your --

MR. SAYDAH: Your Honor, we had some correspondence -THE COURT: Let Mr. -- lets let Mr. Collins address

16 that, I think he was prepared to. 17 MR. COLLINS: Yes, Your Honor. I think it would be

18 helpful for Your Honor to see how we modified 2.1.4 that I know 19 Mr. Saydah is about to go into. 20 So, what I would do, Your Honor, is hand up a black Again, not agreed to

21 line which reflects the current changes.

22 by the lenders, but this way Your Honor will get a sense as to 23 what Mr. Saydahs talking about. 24 THE COURT: Excellent. Thank you. Thank you, Mr. Collins,

25 please come forward.

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58 1 2 3 4 THE COURT: MR. COLLINS: THE COURT: (Pause) All right. I am with you.

Its on Page 18 of the black line. Yes. Mr. Saydah, you dont have this in

5 front -- well, Mr. Saydah doesnt -6 7 MR. SAYDAH: THE COURT: No, I dont, Your Honor. -- at this point, but you will, I assume,

8 at some point, fax it to him? 9 MR. COLLINS: Yes, Your Honor, I did e-mail with Mr. To

10 Saydah about what we would include at the outset of 2.1.4.

11 make clear, that paragraph would not deal with the whole issue 12 of granting of liens on leasehold interest because it is a 13 broad paragraph that deals with overriding other types of 14 contracts that would somehow prohibit the granting of the liens 15 and security interest to the lenders, which I believe is a very 16 routine order or paragraph in DIP orders. 17 But he was concerned, I think rightly so, that this

18 would undo exactly what Your Honor just ruled on, and thats 19 why we put at the outset that its, except with regard to the 20 prohibited, quote/unquote, prohibited leases. 21 22 THE COURT: MR. SAYDAH: Okay. Thank you.

Your Honor, with respect -- I obvious However, Your Honor, my

23 dont have the changes in front of me.

24 concerns extend not only to the language with respect to the 25 liens on leases, but to the overall breadth and uncertainty of

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59 1 this entire provision. Mr. Collins states it is the common

2 provision in DIP orders, but its much more broad than what 3 Ive seen in anything recently. 4 And effectively, Your Honor, it would invalidate

5 anything in any prepetition agreement, contract, lease, 6 document, no instrument, that would in any way restrict, limit 7 or impair the debtors from complying with the terms of not only 8 this order, but the hundreds of pages of financing agreements 9 and their obligations thereunder. 10 Your Honor, honestly, I dont know what that does.

11 In theory, Your Honor, the -- under this revised deal where 12 theres designation rights, this invalidation provision could 13 invalidate a use restriction in the lease that would prevent 14 the assignment of the lease under 365 that the agent designate 15 that the lease be assigned to whoever. Theres some -- the use

16 provision in the lease restricts that, but it would be 17 invalidated by this provision. 18 And honestly, Your Honor, I dont know where they get Theyre not moving under 365 to

19 the authority to do that.

20 invalidate anti-assignment clauses, theres nothing in 364 that 21 allows them to do that. 22 In mean in addition to the lack of specificity as to

23 what exactly is being invalidated, theres the notice issue. 24 Theres the opportunity to respond. 25 injunction against I dont know what. Its essentially an And to the -- we believe

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60 1 it would be inappropriate in a final order. I think its

2 wholly inappropriate in an interim order just to simply say 3 anything that in any way affects the DIP financing is 4 invalidated. 5 6 THE COURT: MR. COLLINS: Mr. Collins? Yes, Your Honor. This provision, I If you have

7 think, is really a restatement of what the law is.

8 a prepetition agreement that prohibits a company from obtaining 9 financing, for whatever reason, that, in our view, is not 10 enforceable against a debtor in possession whos seeking to 11 obtain financing under Section 364. Were not talking about

12 use clauses in leases, were talking about provisions in third 13 party contracts, a note indenture, for example -14 15 THE COURT: MR. COLLINS: Right. -- that would somehow prohibit the

16 company from obtaining additional senior financing or junior 17 financing without noteholders consent. That is obviously not

18 enforceable in Chapter 11, 364 would override that, and thats 19 what this is really going to. 20 So, I would agree on the record that this is not

21 seeking to invalidate a use clause in a nonresidential real 22 property lease. 23 24 order. 25 THE COURT: Yes. And, again, Your Honor, this is simply an interim

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61 1 MR. COLLINS: This will go out on notice. Any

2 landlord or third party that has concerns about the 3 applicability of this provision going forward, we obviously 4 will stand ready to deal with that at the final hearing. 5 MR. SAYDAH: Your Honor, to the extent its an It would

6 interim order, Im not sure why thats relevant. 7 still purport to invalidate anything. 8

And to the extent its a restatement of the law, Im Im just concerned that being

9 not sure why its necessary. 10 used in the future -11 12 financing. THE COURT:

Well, it eliminates restrictions to the

It does not, it appears to me, otherwise invalidate

13 terms in a lease. 14 15 16 MR. SAYDAH: THE COURT: MR. SAYDAH: I -Other than those --- think that there is broad language.

17 It could, Your Honor. 18 THE COURT: Other than those that would adversely

19 affect the financing itself. 20 MR. SAYDAH: Correct, Your Honor. But Im not sure Makes it more Perhaps puts

21 what adversely affect the financing means.

22 difficult for the debtors to obtain financing?

23 the debtors in default under the terms of their borrowing base 24 because they cant sell certain leases? 25 what that means. I honestly dont know

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62 1 2 it -3 MR. SAYDAH: Your Honor, wed be happy to work with THE COURT: Well, I understand your issue. I guess

4 the debtors to try and revise the language, but -5 THE COURT: I think that may be beyond the scope of

6 what the debtors are working on at this point, and I 7 acknowledge your objection and Ill overrule it, Mr. Saydah. 8 9 MR. SAYDAH: MR. COLLINS: Thank you, Your Honor. Thank you, Your Honor. What I would

10 propose, Your Honor, is that we hand to Your Honor a clean 11 version of this order. 12 13 THE COURT: MR. COLLINS: Yes. Your Honor, I think, has the black

14 line, along with some additional interlineations that weve 15 made. And were hopeful, Your Honor, that we could somehow If -You can. -- the lenders review what we have put

16 reach you tonight. 17 18

THE COURT: MR. COLLINS:

19 together, and after much time and discussion, they agree to it, 20 we could then contact Your Honor and say, this order is ready 21 to go, and we would ask Your Honor to sign it as soon as 22 possible. 23 24 25 THE COURT: MR. COLLINS: THE COURT: And I would. Could we -Thats fine.

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63 1 MR. COLLINS: -- interfere with Your Honors schedule

2 this evening to -3 4 5 THE COURT: MR. COLLINS: THE COURT: Im available all evening. Okay. Mr. DeFranceschi knows my cell phone

6 number, I think. 7 mail me. 8 9 10 11 12 mails. 13 order. 14

And I give you permission to call or to e-

MR. COLLINS: THE COURT: MR. COLLINS: THE COURT:

Okay, thats what we will do. And I think you have my e-mail address. I think -- I do, Your Honor. And I have a Blackberry, so I get the e-

And then I would certainly be prepared to enter this

I appreciate the significance of it.

I just thought

15 that what was being requested went a little bit too far for a 16 first day hearing. 17 MR. COLLINS: We understand, Your Honor. And, again,

18 were hopeful that the changes weve made would be acceptable 19 to all parties to allow us to move forward, and we appreciate 20 Your Honor being available this morning should circumstances so 21 warrant that we could contact Your Honor and say were good to 22 go. 23 THE COURT: And I stay up late, so dont be concerned I mean that.

24 about reaching out late in the evening. 25 MR. COLLINS:

Your Honor, may I hand up the clean

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64 1 version of this order, as well as ask Your Honor to give us a 2 final hearing date -3 4 5 THE COURT: MR. COLLINS: THE COURT: Yes. -- if Your Honor would do so now? And if the parties have some issues and

6 need a conference call, you know, please call me. 7 Go ahead, do you need to conference for a minute

8 while Im looking at the calendar? 9 10 11 THE COURT: MR. COLLINS: One moment, Your Honor. (Pause) Tell me what else might be on this -- the For example, Im just thinking in

12 calendar for that date. 13 terms of time. 14 MR. COLLINS:

Yes, Your Honor.

We looking at And

15 probably around the week of the 25th of August, I believe. 16 it would be our second day hearing, so wed have a final 17 hearing on certain issues with respect to the wage motion, 18 retention applications -19 20 21 22 THE COURT: MR. COLLINS: THE COURT: MR. COLLINS: Right. The landlord --

-- potential procedures -Lease terminations? -- regarding lease terminations or

23 sales with respect to up to 15 stores that Mr. Beltzer spoke 24 about earlier. 25 So, it could be a fairly full hearing. How about the 26th? Tuesday, August

THE COURT:

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65 1 26th, ten oclock? 2 3 MR. COLLINS: THE COURT: Thats great, Your Honor. And Ill allot a good bit of time for

4 that day, maybe even give people a chance to have lunch if 5 necessary. 6 MR. COLLINS: Thank you, Your Honor. And for the

7 objection deadline, Your Honor, should we -8 9 THE COURT: MR. COLLINS: Oh, forgive me. Should we do August 19th or sometime

10 later than that? 11 12 one. 13 14 MR. COLLINS: THE COURT: Okay. At four P.M. Now, the only problem is THE COURT: Lets see. Lets say the 20th on this

15 late at night, theres no one around to docket an order, but at 16 least you would have the comfort of knowing that it had been 17 signed. 18 MR. COLLINS: Im sorry. The objection deadline

19 again was what date, Your Honor? 20 21 THE COURT: MR. COLLINS: The 20th, August 20th at four P.M. Thank you. Your Honor, we understand

22 that, Your Honor. 23 May I present, again, with Mr. Haddads comments that

24 the language in here is not yet acceptable to the lenders, we 25 understand. This is really means to facilitate a hopeful

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66 1 resolution. 2 THE COURT: I understand that, yes. Mr. Haddad, is

3 that sufficient? 4 5 6 Collins. 7 8 Is there anything else? MR. COLLINS: Your Honor, it may make sense -- may I MR. HADDAD: THE COURT: Yes. Okay. Thank you. Thank you, Mr.

9 have one moment? 10 11 12 MR. COLLINS: THE COURT: Sure. (Pause) Your Honor, I dont know if Your Honor

13 has time tomorrow morning, just in case we dont reach 14 resolution -15 16 THE COURT: MR. COLLINS: I do. -- this evening, there might be an

17 issue or two that we would have to present to Your Honor. 18 THE COURT: I do. I could do it at ten oclock

19 tomorrow morning if thats -- I could do it earlier, if parties 20 would be in town overnight, I could do it a little bit later. 21 22 23 24 25 MR. COLLINS: THE COURT: MR. COLLINS: THE COURT: MR. COLLINS: Could we say 10:30, Your Honor? 10:30. Great. Thats perfect. I will -Well contact

Thank you, Your Honor.

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67 1 chambers if we dont need to go forward at 10:30. 2 THE COURT: Okay. Wonderful. Presumably we may know

3 tonight if we do or not. 4 5 6 MR. COLLINS: THE COURT: MR. LEANSE: Exactly. Okay, good. Thank you, all, for your --

Your Honor, may I ask Mr. Collins advise And I

7 us by e-mail tonight so that we can call in tomorrow?

8 assume that we have the Courts permission to advise CourtCall 9 to do it on shortened notice? 10 THE COURT: Yes, you do have that permission. And,

11 yes, we will -12 13 14 15 16

you will be notified. And Mr. -That was Mr. Leanse, I believe. Yes, it was. Yes, well -Thank you, Your Honor, I apologize for

MR. COLLINS: THE COURT: MR. LEANSE: MR. COLLINS: MR. LEANSE:

17 not announcing myself. 18 19 20 21 22 23 recess. 24 25 THE COURT: MR. COLLINS: THE COURT: MR. COLLINS: THE COURT: Thats quite all right. Well do that, Your Honor. Thank you. Thank you. All right, everyone, well stand in

And Ill wait to hear from someone this evening. MR. COLLINS: Thank you, Your Honor.

(Proceedings Adjourn at 5:34 P.M.)

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68 1 2 3 4 I, Karen Hartmann, certify that the foregoing is a C E R T I F I C A T I O N

5 correct transcript to the best of my ability, from the 6 electronic sound recording of the proceedings in the above7 entitled matter. 8 9 /s/ Karen Hartmann Date: August 4, 2008

10 TRANSCRIPTS PLUS 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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69

$ $1.6- 13:15 $1.8- 16:3 $10,500,00015:12 $125- 28:10 $25- 28:17 31:22 35:10,16 37:2 44:7,16,21 49:25 50:17,19 51:15,19 53:24 54:3 55:14 $250,000- 24:5 $29- 11:1 $30- 11:4 $31- 16:6 $342,000- 23:8 $400- 35:10 $465- 9:9 28:9 34:18 $500,000- 33:18 $6.7- 20:5 $75,000- 29:15 ' '08- 28:19 '09- 28:11 / /S/- 68:10 1 100- 36:22 40:9 10:30- 66:21,22 67:1 11- 19:5 36:2 60:18 12- 30:4 40:10 13- 33:24 14- 37:12 39:6 41:18 15- 9:18 51:23 64:23 15TH- 28:19 29:2 177- 8:9 36:13 18- 58:3 18,000- 8:9 18:24 1949- 8:7 19TH- 65:9 1:32- 25:5 2 2.1.4- 43:16 57:12,18 58:10 2.5- 33:24 20- 37:12 40:12 2004- 10:2 2008- 68:10 20DAY- 39:6 41:18 20TH- 65:11,20 21- 31:20 22- 47:11 24- 42:22 24HOUR- 38:21 25- 51:21 25TH- 64:15 26TH- 64:25 65:1 2:02- 25:5 2:41- 52:1

3 30- 26:15 30:12 31- 28:11 320- 35:8 345- 17:15 345B- 17:3 364- 59:20 60:11,18 365- 59:14,19 365F- 46:13 4 4- 68:10 4,000- 18:25 4.4.2- 32:15 4.5- 32:25 40- 32:15 43:8 40012- 29:22 42- 32:24 45DAY- 17:24 5 5.10- 33:7 50- 36:23 503C- 21:20 506B- 29:20 506C- 30:1,5 507A4- 19:16 20:21 507B- 29:10,14 5:16- 52:1 5:34- 67:25 6 6.7- 20:20 6003- 15:3 60DAY- 17:14 30:9 7 75DAY- 30:10 9 90- 36:1,2 A A5- 19:16 20:22 ABBREVIATED49:20 ABILITY- 8:25 17:25 23:23 44:16 53:10 54:7 68:6 ABLE- 16:9,14 28:24 39:4 55:12 56:2,25 57:8 ABOVE- 21:6 68:7 ABSENT- 53:24 54:3 ABSOLUTELY- 14:19 48:4 ACCEPTABLE53:5,6 63:18 65:24 ACCESS- 16:8 26:8,9,20 28:7 32:18 37:5,10,12 39:10,17 46:14 54:11 ACCOMMODATE-

12:18 31:10,15 ACCOMMODATED31:13 ACCOMMODATING7:20 ACCORDANCE32:2,4,20 41:25 ACCOUNT- 18:5 23:23 24:7,9 27:17 ACCOUNT'S- 18:5 ACCOUNTS- 14:8 16:25 17:2 18:4,6 ACCRUED- 19:20 20:5,6,14,24 ACCRUING- 30:6 ACKNOWLEDGE- 41:1 62:7 ACQUIRING- 26:11 ACQUISITION- 10:4 23:14 ACTED- 50:20 ACTION- 14:24 ACTIONS- 29:25 ACUTE- 26:15 45:23 ADD- 7:20 12:17 19:14 22:23 43:25 ADDED- 14:20 47:7 ADDING- 43:19,22 ADDITION- 23:11 26:24 35:15 53:7 59:22 ADDITIONAL13:20,24 17:25 19:13 24:25 37:2 52:7,15 55:11 57:9 60:16 62:14 ADDRESS- 7:2,11 17:6 22:2 23:3 47:2 57:15 63:9 ADDRESSED- 22:8 43:1 ADDRESSING- 19:19 22:9 ADEQUATE- 9:2 13:15,18,21,24 29:7 47:7 ADJOURN- 67:25 ADMIN- 12:3 ADMINISTRATIVE6:21 12:3 ADMINISTRATOR23:24 24:6 ADMISSION- 34:11 50:3 ADMITTED- 5:25 34:15 ADMITTEDLY- 14:2 ADMONITION- 50:25 ADOPT- 13:19 ADVANCE- 36:1,3 44:10 51:15 ADVANCED- 28:18 ADVANCING- 37:2 ADVERSELY44:11,12 45:1 61:18,21 ADVISE- 11:15

35:25 67:6,8 ADVISOR- 27:1 50:22 ADVISORS- 55:18 AFCO- 23:5 AFFECT- 48:3 61:19,21 AFFECTED44:11,12 45:1 AFFECTS- 60:3 AFFIDAVIT- 6:22 7:6,8 14:17 AFFILIATES- 10:1 AFIELD- 35:20 AFTERNOON- 5:1 6:19 7:18,19 24:25 34:9,20 35:25 37:24 43:5 45:3 55:12 AGAINST- 27:12 28:18 32:8 35:17 59:25 60:10 AGENDA- 11:25 12:21 15:6 16:23 AGENT- 12:5 27:14,19 32:1,6 44:1 51:8 59:14 AGENTED- 11:1 25:21 35:23 51:12 AGGRESSIVELY54:25 AGREE- 15:4 45:11 60:20 62:19 AGREEABLE- 37:16 AGREED- 9:18 19:10,14,17,20 20:19,21,22 21:17,21 28:16 31:23 33:17 46:17 57:21 AGREEMENT- 17:15 18:1 30:23,24 32:3 33:21 42:17 48:20 56:2 59:5 60:8 AGREEMENTS- 13:23 27:6 43:19 59:8 AHEAD- 64:7 ALICIO- 43:8,9 ALLOT- 65:3 ALLOW36:20,23,24,25 63:19 ALLOWED- 44:24 ALLOWS- 44:25 59:21 ALTERNATIVE27:12,22 AMENDMENT- 46:17 AMERICA- 27:7 AMONGST- 19:2 AMOUNT- 11:3,4 15:11 20:5,7,25 21:6 27:18 31:21 33:18 50:1 AMOUNTS- 12:24 13:14 16:1 20:15 21:24 24:7 53:13 ANALYSIS- 35:22

ANCILLARY- 18:8 ANNOUNCING- 67:17 ANSWER- 18:11 40:20 ANSWERED- 11:19 ANTI-ASSIGNMENT59:20 ANTICIPATE9:10,14 21:10 ANYMORE- 12:9 ANYONE'S- 35:22 APOLOGIZE- 17:23 52:7 67:16 APPEARANCE- 47:15 APPEARS- 61:12 APPLICABILITY61:3 APPLICABLE- 19:21 32:4,5,20 APPLICATIONS64:18 APPLIED- 14:22,25 APPLY- 40:5 APPOINTED- 29:21 30:12 APPOINTMENT30:10 APPRECIATE- 5:5,8 22:9,14 52:11 55:11 57:7 63:14,19 APPRECIATION7:20 APPROACH- 31:4 45:17 APPROPRIATE- 15:2 24:15 26:23 54:23 APPROPRIATELY54:24 APPROVAL- 18:15 19:20 21:17 22:4 53:24 54:2,13 55:23 56:4 APPROVE- 13:8 14:5 15:21,23 16:17 18:12 22:13 24:13,14 50:4 55:1 APPROVED- 6:25 13:17 30:17 APPROXIMATELY11:1,4 15:12 18:24,25 23:8 40:12 43:8 APPROXIMATING16:6 ARGUE- 41:19 44:5 ARGUMENT- 44:23 ARGUMENTS- 32:22 ARISEN- 38:16 ARM'S- 35:3 50:5 ARRANGEMENT- 23:5 33:14,19 52:10 54:22 ARRANGEMENTS10:24 22:21 ASPECTS- 19:2 ASSERTED- 16:11 ASSET- 35:17

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ASSET-BACKED10:25 ASSETS- 27:13 28:17 35:13,15 ASSIGNED- 59:15 ASSIGNMENT- 43:18 59:14 ASSUME- 5:11 43:20 58:7 67:8 ASSUMED- 23:15 ASSUMING- 35:9 ASSURANCE13:15,18,21,24 ASSURED- 50:21 ATTACH- 32:8 ATTORNEYS- 6:16 AUGUST- 64:15,25 65:9,20 68:10 AUTHORITY- 22:16 59:19 AUTHORIZATION19:19 AUTHORIZE- 13:3 AUTHORIZING12:22 15:7 16:1,24 17:1 18:18,21 AVAILABILITY26:7 AVAILABLE- 26:2 27:2 29:5 30:16 54:19 63:3,20 AVOID- 19:6 AVOIDING- 29:25 AWAITING- 16:5 AWARE- 20:11 25:15 B BACK- 7:13 11:7,11,12 16:14 20:13 23:14 25:2 26:17 35:6 37:10 39:9 42:3,20 44:9,17 47:1 51:23 54:12 55:17,18 BACKBONE- 22:12 BACKGROUND- 7:25 11:7 BALANCE- 52:20 54:11 BANK- 10:25 16:25 27:7 33:8 38:23 44:20 56:3,11,13 BANKRUPTCY- 17:3 21:20 32:5 41:25 BARELY- 42:5 BASE- 61:23 BASED- 8:7 17:15 39:15 46:13 49:20 50:12 BASIS- 16:21 19:21 21:18 24:8 26:21 27:24 29:7,14 50:7,17 BECOME- 13:12 38:13 BECOMES- 50:15

BEGINNING- 5:24 32:25 BETWEEN- 10:18 30:6 37:6 40:1 41:22 45:21 48:5 54:16 BINDER- 19:24 BIT- 9:17 22:7 24:25 45:21 52:19 63:15 65:3 66:20 BLACK- 30:22 31:19 41:23 57:20 58:3 62:13 BLACKBERRY- 63:11 BLUSH- 35:2 BOOST- 29:3 BORROWING- 61:23 BOTH- 8:18 12:6 27:13,20 28:7 29:6,7,14,20 30:22 40:6 50:21 BOTTOM- 31:20 42:6 BREADTH- 58:25 BREAKOUT- 19:17 BRETHREN- 38:10 BRIDGE- 52:13 BRIEF- 7:25 24:20 BRINGS- 15:25 24:18 42:3 BROAD- 58:13 59:2 61:16 BROKEN- 17:4 BROKERS- 16:2 BROTHERS- 27:9 BU- 45:6 BUCKFIRE- 27:1 BUDGET- 45:7 BUFFETS- 42:7,8 BUILDING- 9:11 BULK- 31:12 BURDEN- 19:7 21:8 BUSINESS- 5:3 8:13 9:4 16:25 23:10 24:10 27:16,20 33:11 50:21 54:23 BUY- 44:8 56:11 C CALENDAR- 64:8,12 CALIFORNIA8:6,11,24 15:16 20:11 21:1 49:7,8 CALL- 63:6 64:6 67:7 CALLS- 55:16 CAN- 13:20,22 16:12 37:10 44:8,9,14,22,25 49:8,13,19 52:23 54:17 62:17 67:7 CAN'T- 25:14 41:17 44:5 61:24 CANNOT- 31:16 CAP- 19:22 20:25 21:6 22:8 CAPACITY29:17,18

CAPITAL- 9:25 10:3 27:8,9 34:10 CAPPED- 19:21 21:18 CAPS- 20:22,24 CARD- 13:1 CARDS- 13:1 33:10 CARLYLE- 34:10 CARRIERS16:2,3,12 CARVED- 8:8 CARVE-OUT- 29:5 37:18 CASE- 6:13 7:5 11:20 12:8 13:14 15:9 16:7,13 17:5 19:3 28:15 38:14,24 39:24 41:7,8 44:21 46:3,14 49:9,10 66:13 CASES- 9:19 18:14 21:24,25 38:12 40:1 42:10 44:21 CASH- 13:17 16:25 18:3 26:8 28:7 33:12 34:1 CAUTION- 21:15 CAVEAT- 23:2 CEDE- 7:15 CELL- 63:5 CENTER- 40:2 CENTRO- 38:5 CERBERUS- 10:3,16 CERTAIN- 10:19 18:19,20 19:22 20:10 22:20 31:11 53:7 61:24 64:17 CERTAINLY- 5:6 7:5 12:10 18:13 22:11 24:15 35:2 37:5,16 44:5 51:4 54:21 63:12 CERTAINTY- 27:18 CERTIFICATION56:14 CERTIFY- 68:5 CETERA- 40:7 56:10 CHAIN- 8:7 16:4 CHALLENGE- 30:9 CHAMBERS- 67:1 CHANCE- 5:16 65:4 CHANGE- 24:21 31:14 33:22,23 44:19 CHANGES- 7:13 12:18 19:10 30:3 31:2,8,18 33:6 57:21 58:23 63:18 CHAPTER- 19:5 36:2 60:18 CHARLES- 6:17 CHASE- 27:8 33:8 CHECK- 17:8 CHECKS- 18:22 CHIEF- 6:21 CHOICE- 27:24 CIRCULATED- 56:23

CIRCUMSTANCES46:14 63:20 CLAIM- 29:10 36:16 CLAIMS- 12:4 23:24 29:14 CLARIFICATION21:11 33:24 CLAUSE- 60:21 CLAUSES- 59:20 60:12 CLEAN- 30:22 47:22 62:10 63:25 CLEAR- 17:7 33:2 38:19 42:16 44:14 55:15 58:11 CLEARLY- 16:19 36:6 49:17 51:14 CLIENTS- 34:22 42:15 CLOSING- 9:20 29:1 CLOSURES- 9:24 CO- 6:3 40:2,3,6 CO-COUNSEL- 7:1 34:12 CODE- 17:3 21:20 COIN- 33:12 CO-LENDERS55:19,23 COLLATERAL- 26:9 27:20 28:7,16 35:9,22 COLLATERALIZATION 29:25 35:20 38:25 39:3 C COLLEAGUE- 34:4 COLLECTIONS- 35:6 COLLECTIVELY10:9 COLLINS'- 32:16 43:23 COME- 9:18 23:10 24:3 25:2 32:22 35:6 36:6 37:4,10 42:10,17,19 51:22 54:12 57:25 COMES- 32:18 56:13 COMFORT- 28:21 65:16 COMING- 15:16 16:15 55:23 COMMENTS- 19:13 24:12 31:10,13 43:11,15 45:5 65:23 COMMERCIAL- 43:10 COMMITTEE- 9:22 29:6,21 30:10,12 COMMON- 16:2,3,11 37:10 59:1 COMP- 23:12,16,18 COMPANIES- 8:20

10:23 COMPANY'S- 27:1 COMPENSATION22:17 23:20 COMPETENCE- 26:12 COMPLETE- 10:18 54:14 COMPLETELY- 50:25 COMPLEX- 27:25 COMPLY- 17:2 COMPLYING- 59:7 COMPONENT- 28:9 33:1 COMPREHENSIVE27:12 30:15 CONCENTRATION18:5 CONCERN- 26:10 53:2 CONCERNED- 50:2 54:9 58:17 61:9 63:23 CONCERNS- 32:11 52:13,14 53:20,21 58:24 61:2 CONCESSIONS35:24 CONCLUDED- 7:10 CONCLUSION- 55:13 CONCUR- 45:5 CONCURRENCE- 31:9 32:20 CONDITIONED30:20 CONDITIONS- 8:22 34:19 CONDUCT- 9:20 CONFERENCE64:6,7 CONFERRED- 49:6 CONFIDENCE- 9:10 46:2 50:23 CONFIDENT- 28:20 CONFIDENTIALITY27:5 CONFIRMS- 33:25 CONNECTION- 8:2 9:16 10:4 26:21 46:1 CONSENSUAL- 11:21 19:11 28:6 29:7 CONSENT- 25:21 60:17 CONSISTENT- 43:24 CONSTITUENCIES9:23 CONSTITUTE- 50:3 CONSULTATIVE9:22 CONSUMER- 8:19 26:6 CONTACT- 62:20 63:21 66:25 CONTAINED- 14:16 CONTEMPLATING35:15 CONTENT- 12:10 22:3 CONTEXT- 30:14

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32:23 CONTINGENT- 33:3 CONTINUE- 9:8 16:24 18:20 22:19,20 23:4,9,21,22 24:2,8 33:14 CONTINUED- 13:3 20:17 CONTINUING- 9:15 55:2 CONTRACT- 59:5 CONTRACTS- 58:14 60:13 CONTROLLING10:11 CONTROVERSIAL15:20 18:10 20:18 22:1 CONTROVERSY- 42:3 CONVENIENCE- 12:7 CONVERSE- 10:14 COPIES- 6:25 30:22 COPY- 5:12 30:4 CORPORATION- 27:8 34:11 CORRECT- 21:13 51:14 61:20 68:6 CORRESPONDENCE57:14 COSTS- 29:12 COULDN'T- 52:10 COUNSEL- 5:25 6:4 25:13,15 39:8 47:14 49:7 51:24 52:2,17 56:14 COUPLE- 47:24 55:15 COUPLED- 13:16 COURSE- 6:13 7:2 13:16 14:17 17:25 18:20 22:13 23:9 24:3,10 26:11 28:11 31:5 51:7 COURT'S- 5:8 67:8 COURTCALL- 67:8 COURTROOM- 8:1 26:25 51:4 COVER- 13:15 COVERED- 50:9 COVERING- 23:21 COVERS- 23:5 CREATE- 41:16 CREATES- 41:14 CREATIVE- 9:6 CREDIT- 8:18,20 13:1 26:10 27:8 28:10 33:10,18 35:23 36:4 CREEPING- 28:13 29:24 45:10 CRITICAL- 16:7 19:2 26:18 54:8 CROSS- 14:18 29:24 35:20 37:23 38:24 39:3 CRUCIAL- 46:2 CRYSTAL- 27:9

CURRENT- 23:7,17 27:13,14,15 28:17 57:21 CURRENTLY- 19:23 CURTAILED- 26:6 CUSTOMARY- 7:24 CUSTOMER- 12:23 13:4 CUSTOMERS- 26:13 CUSTOMS- 16:2 CUT- 28:2 50:24 D DATE- 30:10,11 35:12 64:2,12 65:19 68:10 DAVID- 37:25 38:4 DAY- 5:12 6:22 7:6,8,11,24 8:3 11:17 14:2,16 38:17,20 41:11 42:10 46:15 47:10 49:18,20 50:7 63:16 64:16 65:4 DAYS- 28:3 30:12 37:12 DAYTON- 41:5 DEADLINE- 65:7,18 DEAL- 34:2 41:11 56:3 58:11 59:11 61:4 DEALING- 12:3,4 DEALS- 58:13 DEBT- 10:22,23,24 11:2,9,10 25:17 35:6,8 DEBTOR- 12:22 14:10,22 17:1 29:6 36:2 49:25 54:24 55:18 60:10 DEBTORS- 6:21 10:7,12,24 13:22 14:7 15:7 16:1,24 17:1 18:19 27:4,17 30:16 42:13 45:7,23 59:7 61:22,23 62:4,6 DEBTORS'- 12:22 15:6,25 17:2 18:18 22:16 26:4 46:5,7 55:18 DECEMBER- 28:11 29:2 DECIDING- 27:16 DECISION- 51:8 DECLINE- 8:17,18 DEDICATED- 9:5 DEDUCTIBLE- 23:18 DEEM- 33:6 DEEMED- 21:19 DEFAULT- 53:9 61:23 DEFERRAL- 28:25 DELAY- 52:8 DELETED- 30:7 DELIGHTED- 45:18 DELIVERED- 16:21 DEMARCATION-

10:17 DEPARTMENT- 8:7 39:22 DEPOSIT- 13:14 23:23 24:7 DEPOSITORY- 18:4 DEPOSITS- 24:9 DESCRIBE- 25:19 DESCRIBED- 26:4 31:21 DESCRIBES- 31:1 DESIGNATE- 59:14 DESIGNATION36:17 53:9 56:10 59:12 DETERMINATION13:23 42:20 45:9 DETERMINE- 13:24 42:4 53:10 DEVELOPERS- 40:4 57:5 DEVELOPMENTS55:20 DEVELOPS- 39:24 DIALOGUE- 37:8 DICE- 28:4 DIDN'T- 24:12 26:16 35:19 DIFFERENCE- 48:5 DIFFERENT- 21:24 40:16,25 55:21 DIFFICULT- 14:9 16:12 26:5 35:2 61:22 DIRECTING- 18:21 DISCRETIONARY8:19 DISCUSS- 9:17 51:3 DISCUSSED- 14:3 15:10 25:16 33:7 55:2 DISCUSSION- 19:8 47:12 62:19 DISCUSSIONS11:16 16:15 27:6 DISPOSITION48:6,9 DISPUTE- 42:18 45:21 DISTRICT- 38:17 DOCKET- 65:15 DOCUMENT- 40:24 59:6 DOCUMENTATION40:25 41:1 49:11 DOCUMENTS- 19:18 42:16 DOESN'T- 38:15 40:23 42:2 44:20 47:20 50:2 58:5 DOLLARS- 20:14 35:9 DOMINION- 34:1 DOUBT- 49:9 DRAFTED- 19:23 56:9 DRAFTING- 55:17 DRAFTS- 19:11

DRAMATIC- 50:18 DRYE- 43:14 57:5 DUE- 7:2 15:15,16 23:10 24:3 53:13 54:8 E EACH- 11:17 14:13 37:9 EARLIER- 26:25 64:24 66:19 EARLY- 9:19 16:7 54:13 ECONOMIC- 52:14 53:20 ECONOMICS55:21,24 ECONOMY- 8:8,16 EDUCATING- 52:20 55:19 EFFECT- 12:25 EFFECTIVELY- 59:4 EFFORTS- 5:9 ELECTRICAL- 27:8 ELECTRONIC- 18:23 68:7 ELIMINATES- 61:11 ELSEWHERE- 42:20 EMAIL- 58:9 63:9 67:7 EMAILS- 55:16 EMERGE- 9:12 EMPATHY- 34:21 EMPLOYEE18:19,20 20:12 21:5,17 24:21 EMPLOYEES- 8:10 18:24 19:1,3,7 20:8,16,24 22:11,15 23:17 26:11,12 33:10 EMPLOYS- 9:6 ENCOURAGE- 37:7 ENCUMBERED44:15,16,22,25 ENCUMBRANCE44:19 48:3 ENDING- 28:11 ENFORCEABLE32:4,8 41:24 42:19 46:18 60:10,18 ENGAGED- 27:4,6 ENHANCEMENT33:19 ENLIGHTENED50:20 ENSURE- 8:25 ENTER- 13:9 14:10 37:6 44:2 45:6 63:12 ENTERED- 27:5 39:20 42:6,7,9 48:19 ENTERING- 37:12 43:25 ENTIRE- 59:1 ENTIRETY- 55:24 10:7,9,11,12,13,1

5,24 ENTITIES- 25:22 ENTITLED- 22:12 68:8 ENTITY- 9:13 ENTRY- 12:22 15:25 16:23 18:18 30:11 44:1 EPICENTER- 8:16 EQUALLY- 29:5 EQUITY- 10:2,11 11:5 29:18 EQUIVALENT- 56:12 ERICKSON- 26:25 ESCROW- 13:14 ESPECIALLY8:22,23 30:14 38:17,24,25 39:7,18 48:10 ESSENTIAL- 50:23 ESSENTIALLY13:2,13 19:6 20:3,4 21:4,23 23:1,13,20 24:2,8 59:24 ESTABLISHED- 9:5 ESTATE10:6,9,14,19 35:18 47:25 49:7,18 ET- 40:7 56:10 EVENING52:4,5,20 54:20 63:2,3,24 66:16 67:23 EVERYBODY- 41:10 EVERYONE- 5:1 25:6 52:9 67:22 EVIDENCE- 48:4 EVIDENTIARY41:12 EXACTLY- 32:13 43:23 58:18 59:23 67:4 EXAMINE- 14:18 37:23 EXAMPLE- 15:18 60:13 64:12 EXCEED- 20:21,23 EXCELLENT- 5:23 9:7 11:22 57:24 EXCEPT- 58:19 EXCEPTION- 55:2 EXCEPTIONS- 38:20 EXCESS- 19:22 35:10 39:3 EXCHANGE- 37:2 EXCHANGES- 13:2 EXCUSE- 10:6 11:4 29:11 EXECUTION- 27:18 EXECUTIVE- 6:20 EXHAUSTED- 17:10 EXISTING- 16:25 17:10 25:20,21 27:19,24 28:16 EXPAND- 9:8 EXPECT- 25:15 52:20

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EXPEDITIOUS30:15 EXPENSES- 30:6 EXPERIENCED- 9:6 EXPLAIN- 52:18 EXPRESS- 45:22 EXPRESSLY- 31:25 EXTENDING- 17:2 48:21 EXTENSION- 17:15 EXTENSIVE- 27:4 EXTENT- 14:20 31:24 47:16 50:18 56:11 61:5,8 F FACED- 38:8,9 FACILITATE- 65:25 FACILITIES- 30:17 FACTORS- 8:21 FAIR- 36:10 50:6 51:2 FAIRLY- 12:25 14:1 17:5 18:2 36:10,11 64:24 FAR- 35:20 38:15 50:2 63:15 FARGO- 27:9 FAVOR- 32:1 FAX- 58:8 FEATURES- 30:17 FEE- 28:25 29:1 37:19 FEED- 44:8 FEEDBACK- 47:21 FEES- 28:24 29:11,12,15,16,19 FIGHT- 28:1 37:11 FIGURE- 42:14 FIGURES- 19:18 FILE- 7:1 13:23 19:17 FILED- 10:10 11:8 45:7 47:11,14 FILING- 11:2 35:12 46:1 FINAL- 11:6 21:4,7 30:1,2,6,8,20 37:6,11 41:22 44:1,9 45:6 46:9,12 47:15 52:22 56:17 60:1 61:4 64:2,16 FINALIZE- 7:13 24:21 FINALLY- 30:9 33:5 47:9 48:11 FINANCE- 34:10 FINANCIAL- 6:21 18:22 26:19 27:1 50:22 FINANCING22:21,25 23:2,5 24:19 27:5,11 32:3 50:4 54:22 59:8 60:3,9,11,16,17 61:12,19,21,22

FIND- 9:2 16:19 FINDINGS- 54:22 55:1 FINDS- 8:15 FINE- 7:14 8:5 20:1 24:24 37:15 39:17 56:12 62:25 FIRM- 34:13 43:7 FIRMS- 10:2 FIVE- 40:17 FIVE-MINUTE- 7:12 FLASH- 9:3 FLOW- 9:1 12:15 13:17 FLOWED- 18:4 FOLLOW- 11:25 FOLLOWING- 52:8 FOLLOWS- 31:18 FOOT- 39:22 46:24 FOREGOING- 68:5 FOREMOST- 5:7 11:14 FORGET- 56:16 FORGIVE- 65:8 FORMS- 17:1 FORTH- 7:13 17:12 55:17,18 FORTUNATELY38:12 FORWARD- 9:11,21 27:16,23 57:25 61:3 63:19 67:1 FOUNDED- 8:7 FOUR- 65:14,20 FRANK- 34:9 FRIEDMAN'S- 42:9 FRONT- 58:5,23 FULL- 26:20 29:20 34:1 64:24 FULLY- 32:8 35:20 38:23 54:13 FUND- 18:6 23:23 24:9 49:24,25 50:17 FUNDED- 54:8 FUNDS- 23:23 FURTHER- 33:16,18 37:15 49:16 FUTURE- 13:15,18 61:10 G GAME- 45:21 GAVE- 47:13 55:12 GEARED- 19:4 GENERAL- 22:18 24:4 27:8 38:4,22 GENERALLY- 10:5 GEOGRAPHIC- 8:15 GET- 5:20 7:6 20:3 28:6 29:13 35:20 36:2 38:22 39:4 40:8 42:11 44:14,20 47:20 49:4,12 51:11,13 55:13 57:22 59:18 63:11 GIFT- 13:1 GILBERT- 43:13

57:4 GIVE- 24:21 36:21 41:7 52:9 63:6 64:1 65:4 GIVEN- 15:17 26:15 30:23 52:16 56:23 GLADLY- 51:19 GO- 12:17 27:16,23 28:16 35:9 38:15 39:9 41:14 42:20 53:12 57:19 61:1 62:21 63:22 64:7 67:1 GONE- 5:15 GOOD- 5:1 6:19 7:17,19 12:14 14:13 21:14,16 24:24 34:9 37:24 43:5 45:3,19 52:4,5,16 53:16 63:21 65:3 67:5 GORDON- 27:9 GOT- 6:25 20:22 35:14 GOTCHA- 17:22 GRANT- 16:19 24:15 GRANTED- 18:16 19:15,16 36:16 46:5,9,12 GRANTING- 31:25 43:18 47:5 58:12,14 GRATEFUL- 5:9 GREENFIELD- 43:14 57:6 GREGORY- 43:14 57:6 GRIPS- 55:24 GROUND- 37:10 GROUNDS- 46:13 50:5 GROUP- 27:15 33:9 34:24 37:8 38:5,23 44:20 51:7 56:3,11,13 GROUPS- 40:5 GROWTH- 38:4 GUESS- 24:18 34:16 50:15 62:1 H HAC- 5:25 6:25 34:12 HADDAD- 55:6,7,9 56:5 66:2,4 HADDAD'S- 65:23 HALF- 29:1 HAND- 12:12 30:3,21 46:21 57:20 62:10 63:25 HANDWRITTEN19:25 HAPPENING- 17:17 HAPPY- 11:17 18:11 22:2 42:13 44:2 62:3 HARD- 34:25 48:7

HARM- 14:23 16:20 HAVEN'T- 13:5 36:3 39:13 40:11 44:23 HE'LL- 7:6 HE'S- 6:20 7:10 HEAR- 10:19 11:22 31:12 34:19 50:1,25 51:1 55:6,7 67:23 HEARD- 11:23 13:5,7 22:5,6 37:23 40:10 42:25 44:23 46:4 HEARINGS- 41:12 HELFAT34:4,12,14,16 35:8 36:9 37:22 39:12,16 42:13 43:24 44:5 45:22 46:17 48:15 51:5,11 HELPFUL- 32:10 33:4 45:8 54:20 57:18 HERMAN- 6:9,11 49:6 56:9 HESITATE- 11:23 HIGH- 23:18 HIGHLIGHTS- 37:21 HISTORICAL- 28:22 HISTORICALLY- 9:7 26:18 HOLD- 16:12 HOLDERS- 29:18 HOLDING- 16:4 HOME- 8:23 HONESTLY59:10,18 61:24 HONOR'S- 6:4,24 45:9 50:16,25 52:18 63:1 HOPE- 5:3 9:8 13:17 28:12 52:19 HOPEFUL- 56:1 62:15 63:18 65:25 HOPEFULLY- 25:1 28:22 37:8 54:14 HOPING- 9:12 53:6 HOT- 32:15,24 HOURS- 30:4 47:11 55:16 HOURS'- 42:22 HOUSING- 8:17,23 HOUSTON- 55:10 HOWARD- 6:5 HUDSON- 41:5 HUNDRED- 39:22 HUNDREDS- 59:8 HURT- 44:24 HURTING- 44:17 HYPOTHETICALS44:6 I I'D- 11:11 24:20 25:19,24 34:11 I'LL- 6:4,16 7:11,15 11:12

12:19 19:12 20:2 23:3 25:9 54:19 62:7 65:3 67:23 I'VE- 15:22 20:22 40:17,19 46:22 59:3 IMAGE- 42:7 IMMEDIATE- 9:24 16:20 26:8,15 28:20 IMMEDIATELY14:23 28:18 IMPACT- 55:21 IMPAIR- 59:7 IMPLEMENT- 13:12 IMPLEMENTED28:13 IMPLICATED- 29:24 IMPORTANCE- 26:18 33:20 46:2 IMPORTANT- 8:8,12 34:17 IMPORTANTLY28:15 INAPPROPRIATE60:1,2 INCLUSION- 57:11 INCREMENTAL26:9,20 28:20 45:23,25 INCREMENTALLY51:18 INCUMBENT- 33:14 INCURRED- 29:16 INDENTURE- 60:13 INDEX- 11:25 INDICATED- 39:2 41:2 56:1 INDISCERNIBLE12:14 14:8 51:8 INDUSTRY- 8:15 9:5 13:1 INITIAL- 19:11 INJUNCTION- 59:25 INK- 39:14 INLINE- 39:22 INPUT- 50:16 INSERTED- 32:19 INSERTION- 31:23 INSTITUTION18:22 INSTRUMENT- 59:6 INSURANCE22:18,19,25 23:4 24:5 INTEND- 5:21 12:8 20:7 INTEREST- 28:23 30:11 32:1,6 43:10 50:8 58:12,15 INTERESTING39:25 INTERESTS- 53:13 INTERFERE- 63:1 INTERIM- 17:24 19:21 20:6,23 21:2,18 26:21 30:5,6,12 32:2,6

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33:1 38:17 41:22 42:21 43:21 46:16 50:7 60:2,23 61:6 INTERLINEATION32:17 46:21 INTERLINEATIONS62:14 INTERMEDIARY40:3 INTERNALLY- 55:17 INTERPRETATION49:4 INTERPRETATIONS42:2 INTERRUPTION12:15 14:8 51:8 INTRODUCE- 6:3,17 34:11 INTRODUCED- 26:25 INTRODUCTION34:15 INTRODUCTIONS5:21 6:5,17 INVALIDATE- 43:17 59:4,13,20 60:21 61:7,12 INVALIDATED59:17,23 60:4 INVALIDATION59:12 INVENTORY- 16:8 35:14 36:2,3 44:8 INVESTORS- 57:6 INVOLUNTARILY20:9 IP- 35:14 IRREPARABLE14:23 16:20 ISSUED- 33:10 42:7 ISSUES- 11:18 13:5 14:4 16:17 17:6 20:17 25:1 31:11 39:25 42:18,25 52:25 55:13 64:5,17 ITEM- 12:16,21 13:11 15:6 16:23 18:18 22:16 ITEMS- 11:24 12:2 J JANE- 45:3 JOINT- 12:3 JONATHAN- 34:12 JPMORGAN- 27:7 33:8 JUDGE- 42:7,8 48:12 51:25 JUDGES- 38:19 JUDGMENT- 21:8 27:16 54:24 JULY- 26:15 JUNIOR- 27:23 29:14 60:16 JURISDICTION13:13

K KAREN- 68:5,10 KCC- 12:4 KELLEY- 43:14 57:5 KIMPKO- 27:9 KLAFF- 10:3 10:12,15 KNOWING- 65:16 KNOWLEDGE- 27:19 KNOWS- 42:3 63:5 KURTH- 6:17,19 8:1 14:18 26:1,24 L LABEL- 13:1 LACK- 59:22 LANDING- 19:5 LANDLORD- 31:15 32:11 37:9 40:1 41:6 43:7 44:18,24 45:1 46:6 47:14 48:1,3,19 55:3 61:2 64:19 LANDLORD'S- 45:5 48:1 LANDLORDS- 37:8 38:5,21 44:11 45:22 48:11 50:19 52:13 53:5 54:16 LANDLORDS'- 53:20 LANGUAGE- 33:15 37:15 39:13 40:18 41:23 43:19,23 52:12 53:4,22 54:14 56:8,10,12,23 57:8 58:24 61:16 62:4 65:24 LARGE- 15:13 LARGELY- 12:7 LAS- 8:12 LATE- 52:8 63:23,24 65:15 LATER- 65:10 66:20 LAUGHTER- 38:3 47:3,23 LAWYER- 33:16 LAWYERING- 33:16 LEAMY- 11:22 45:2,3,12,13,14 LEANSE43:2,3,4,6,12 56:19,20,21 57:2 67:6,13,14,16 LEASE- 10:20 40:12,23 41:4 42:1 47:6 48:18 49:8,9 55:3,14 59:5,13,14,15,16

60:22 61:13 64:21,22 LEASED40:13,14,17 LEASEHOLD- 11:8 36:12,13,15,18,20 ,23 32:11 37:1 41:3 45:12,24 46:15,18 48:2 50:8 52:15 53:12,25 54:3,15 58:12 LEASEHOLDS10:6,19 31:23 32:19 44:14 46:7 53:8 LED- 8:18 LEDGER- 34:23 LEGACY- 23:13 LENDER- 27:12 31:9 32:18 48:8 50:11 51:1,2,7 LENDERS'- 52:17 LENDING- 27:15 34:23 LENDS- 34:18 LENGTH- 35:3 50:5 LENGTHY- 28:1 LET'S- 34:24 57:15 65:11 LETTER- 28:10 33:18 LEVEL- 18:4 LEVELS- 28:24 LEWIS- 6:10 LIABILITY- 22:18 23:15 24:4 LIMIT- 59:6 LIMITATIONS19:16 LIMITED- 17:16,24 LINE- 30:22 41:23 42:6 57:21 58:3 62:14 LINED- 31:19 LINENS- 42:9 LIQUIDITY- 9:2 26:5,9,14,20 28:20 29:3 45:23,25 50:22 LIST- 9:18 LOAN- 9:9,16 10:25 28:18,19 30:23 31:21 45:24 50:17 LOCAL- 29:22 LOCATIONS9:15,18 15:13 33:13 LONG- 9:5 42:4,15 LONGER- 38:13 LOOK- 9:11,21 31:19 42:15 LOOKED- 40:12,17 LOOKING- 17:14 36:15 64:8,14 LOT- 52:12 55:16,17 LOTS- 40:25 55:16

LOVE- 33:17 LUBERT-ADLER-10:3 LUNCH- 65:4 LUXURY- 28:4 M MACERICH- 43:7 MAIL- 63:7 MAILS- 63:12 MAIN- 24:18 MAINTAIN- 9:2 23:19 MAINTAINED- 18:7 MAJORITY- 8:11 49:15 MAKING- 16:12 19:5 33:11 MANAGED- 43:9 MANAGEMENT- 9:6 16:25 18:3 MANDATES- 21:2 MANY- 16:8,10 24:18 27:6 28:2 30:17 32:22 38:9,18 40:1 50:24 MARK- 6:13 47:8 MARKET- 8:17 28:24 37:20 MARKETS8:12,18,23 MATERIAL- 33:19 MATERIALLY- 32:10 MATERIALS- 8:2 MATTERS- 9:23 MATURES- 28:19 MAXIMIZING- 53:12 MDS- 10:10,24 MEANS- 56:3 61:21,25 65:25 MEANT- 48:18 MEANTIME- 54:21 MECHANISM- 24:6 47:2 MEMBER- 33:8 MERCHANDISE- 9:1 16:5 MERELY- 12:24 MERVYN'S8:6,15,20,23,25 10:1,5,6,20 25:17 40:2 41:5 MESS- 51:10 MIDST- 41:15 MILLER- 27:1 MIMIC- 47:15 MINORITY10:13,16 MISCELLANEOUS13:2 MISLEAD- 51:20 MODEL- 9:4 MODIFICATION19:24 MODIFICATIONS18:15 MODIFIED- 30:14 57:18 MONACO-

34:8,9,10,14 MONEY- 18:3 44:7 51:19 MONTH- 15:17 29:16 MONTHLY- 23:8 MOOTS- 32:22 MOREOVER- 41:23 MORGAN- 6:9 MORNING- 33:16 63:20 66:13,19 MORTGAGE- 37:1 41:4 MORTGAGES- 11:8 36:12,14,15,19,20 ,21,23 32:12 41:3 46:18 MOTIONS- 6:25 7:11,24 8:3 11:17 12:3,6,18 14:14,21,25 MOVE- 27:13 34:11 38:2 46:24 63:19 MOVING- 59:19 MUCH- 20:7 28:12 52:7 59:2 62:19 N NEAR- 28:22 NECESSARY13:4,25 24:15 42:15 44:8 50:6 54:23 61:9 65:5 NECESSITY- 50:5 NEEDLESS- 19:2 23:19 NEGOTIATE- 28:25 34:22,23 37:9 NEGOTIATED29:5,7 30:3 NEGOTIATION- 35:3 NEGOTIATIONS36:5 NEIL- 6:9 NEW- 17:1,9 33:24 44:7 NIGHT- 65:15 NIGHTMARE- 49:19 NINE- 40:10 NOISE- 17:20 NONADMINISTRATIVE - 14:21 NONCONTROVERSIAL12:8 13:5 24:11 NONFILED- 10:15 NONRESIDENTIAL60:21 NORMAL- 22:13 NOTE- 9:14,15,16 10:17 11:3,6 14:7 29:16 30:16,19 43:16 45:7 46:7,8 47:9 60:13 NOTED- 8:1 9:17

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22:7 38:5 46:22 NOTEHOLDERS'60:17 NOTICE- 5:8 7:21 14:2 38:21 39:7 42:4,5,22 47:10,13 49:20 59:23 61:1 67:9 NOTICES- 47:14 NOTICING- 12:4 NOTIFIED- 67:11 NOVEMBER- 28:19 NUANCE- 7:6 O OBJECTION- 62:7 65:7,18 OBJECTIONS- 31:15 34:5 OBLIGATIONS15:8,16 18:19,20 22:17,20,21 23:7,21 24:2 32:2 59:9 OBTAIN- 60:11 61:22 OBTAINED- 5:12 OBTAINING60:8,16 OCCUPIED- 25:13 OCCUR- 20:16 ODD- 35:8 OFFERING- 44:7 OFFICE- 11:16 12:18 14:4 15:10 16:16 17:7,16 18:1 19:9 21:22 22:9 OFFICER- 6:21 OFTEN- 46:9,12 ONES- 19:3 36:24,25 40:13,17 48:24 49:1,2,14 OP- 40:2,6 OPEN- 17:1 OPENING- 25:17 26:5 OPERATE- 9:15 OPERATING- 26:18 OPERATIONS10:5,18 OPPOSITION- 34:20 ORDER'S- 19:15 ORDERED- 16:5 32:21 56:16 ORDERS- 12:13 24:22 58:16 59:2 ORGANIZATION22:12 ORIGINALLY- 17:14 OTHERWISE- 9:21 14:10 32:21,22 61:12 OTTERBOURG- 34:12 55:10 OURS- 40:11 OURSELVES- 9:3 OUTSET- 20:21 58:10,19

OUTSTANDING- 24:1 OVERNIGHT- 30:14 66:20 OVERRIDE- 60:18 OVERRIDING- 58:13 OVERRULE- 62:7 OVERVIEW- 7:5 OWE- 23:21 OWED- 16:2 21:6 OWING- 11:5 20:13 OWN- 10:24 OWNED- 40:14,15 OWNER- 10:11 40:2 49:19 OWNERS- 11:5 P PACKAGE- 7:24 PAID- 20:8 22:12 23:1 PAN- 9:3 PAPERS- 5:12 9:16 22:3 50:9 PARI- 27:24 PARK- 43:9 PARTIAL- 28:25 PARTICULARLY15:15 16:6,14 18:14 26:14 46:2,16 PARTIES- 12:7 16:4 30:11 51:3 63:19 64:5 66:19 PARTNER- 6:13 PARTNERS- 9:11 PARTY- 40:15 44:10,12 60:13 61:2 PASSU- 27:24 PAST- 55:15 PAUSE- 58:1 64:10 66:11 PAY- 12:24 15:7 16:1,3 18:19 20:7,25 22:17 24:2 35:6,22 54:7 PAYABLE- 29:1 PAYING- 26:11 PAYMENT13:16,18,21 18:23 20:15 21:2 23:8 29:10,11,19 PAYMENTS- 15:3,18 16:9 19:22 21:3 22:24 23:9 PAYOUTS- 19:21 PAYROLL- 54:7,10 PENDING- 56:17 PENMANSHIP- 32:16 PENNSYLVANIA49:10 PEOPLE- 37:4 65:4 PERCENT- 28:25 36:2,3 37:19 PERFECT- 66:24 PERFECTLY- 37:15 PERFORMANCE26:19 PERHAPS- 7:12

61:22 PERIOD- 17:15 20:6,23 21:2,5 30:9,10 39:6,18 41:18,20,21 42:14 48:10 PERMANENT- 33:3 PERMISSIBILITY49:22 50:10 PERMISSIBLE50:3,9 PERMISSION- 63:6 67:8,10 PERMIT- 21:20 48:16,24 49:21 50:8 51:4 PERMITS48:19,21,22 PERMITTED- 21:3 PERSPECTIVE50:21 PETITION- 18:21 19:18 22:19,21 23:10 24:2 PHOENIX- 8:12 PHONE- 55:16 63:5 PIECE- 35:10 PLACING- 49:22 53:2 PLANNING- 9:23 PLATE- 17:18 PLAYER- 9:5 PLAYS- 55:24 PLAZA- 43:8 PM- 25:5 52:1 65:14,20 67:25 PM/RECONVENE25:5 52:1 PODIUM- 7:16 38:2 POINTS- 47:24 POLICIES- 23:1,6 POLICY- 20:8 POLLACK- 37:24,25 38:4,8 39:12 42:24,25 44:6 46:4 47:18,22,24 48:14,17,24 49:3 55:5 56:6,7,15,18,24 POLLACK'S43:11,15 PORTION- 11:15 24:19 POSITION10:13,16 36:9 44:19 56:25 POSSESSION- 17:1 60:10 POST- 18:21 19:18 22:19,21 23:10 24:2 POSTURE- 26:5 POTENTIAL- 64:20 POTENTIALLY21:14 28:1 PRACTICE- 38:16 PRE- 19:18 PREDECESSOR- 41:5 PREDOMINANT-

10:16 PREMISES- 37:6,13 43:25 44:2 PREMIUM- 22:20,25 23:2,4 PREMIUMS- 22:24 24:1 PREPARED- 14:10 15:23 22:13 49:21,24,25 50:4,6,17 51:4 54:25 57:16 63:12 PREPETITION11:9,10 12:24 15:3,7 16:1 18:19 22:17 23:25 28:13 35:6 39:1 59:5 60:8 PRESENT- 65:23 66:17 PRESENTATION24:23 PRESENTED- 41:2 45:8,18 49:17 PRESERVE- 26:10 PRESIDENT- 6:20 PRESS- 32:15,24 PRESSURE- 26:7 PRESUMABLY- 67:2 PREVENT- 59:13 PREVIOUS- 41:3 PREVIOUSLY- 33:7 PRIMING- 28:1 PRINCIPALLY28:17 PRIOR- 44:1 PRIVATE- 10:2 13:1 PRIVILEGE- 7:22 56:22 PRO- 5:25 6:25 34:11 PROBABLY- 19:24 36:22,23 45:8 64:15 PROBLEM- 25:14 41:16 48:17,20 49:13 65:14 PROBLEMS- 8:16 PROCEDURES- 13:20 64:20 PROCEED- 5:21 8:4 14:10 25:24 27:3 52:19 PROCEEDINGS- 10:7 67:25 68:7 PROCEEDS- 32:8 36:16 38:23 39:5 41:17 42:11 48:6 50:12 PROCESS- 9:8,22 13:22 26:22 27:2 55:19 PRODUCT16:12,14,21 26:11 PRODUCTS- 32:9 PROFESSIONAL29:12,15 PROFESSIONALS-

29:6 37:18 PROFESSOR- 8:13 PROFFER- 8:4 14:17 25:24 27:3 PROFFERING- 7:7 PROFITABLE- 9:12 PROGRAM- 21:17 23:13,16,18 24:5,7 44:17 PROGRAMS12:23,25 13:4 21:24 22:18,19 23:12,20,22 PROGRESS52:12,16 PROHIBIT- 31:25 36:13,15,18,25 40:18,19 58:14 60:15 PROHIBITED- 40:10 41:9,13 47:6 58:20 PROHIBITION- 32:3 40:23,24 PROHIBITS- 41:4 42:1 60:8 PROMOTIONS- 13:2 PROMPTLY- 47:14 PRONOUNCED- 8:22 PROPERTIES- 38:5 40:24 43:10 PROPERTY- 23:2,6 28:18 31:20,21,25 32:7,9 41:4,15 46:6,7 48:1,2,3 49:19 53:3 60:22 PROPOSAL- 55:22 PROPOSE- 7:4 8:3 11:11,25 12:12 27:3 53:23 62:10 PROPOSED- 25:19 27:12 30:5 43:16 53:5 57:12 PROPOSING- 27:11 PROSPECTIVE- 27:6 31:15 PROTECT- 38:23 PROTECTION- 29:7 47:7 49:24 50:12 PROTECTS- 53:19 PROVERBIAL- 43:11 PROVIDE- 7:5,25 28:21 PROVIDED- 6:22 21:18 25:20 45:24 PROVIDES- 33:9,12 PROVIDING- 53:8 PROVISION- 19:15 32:10 33:1 43:21,25 59:1,2,12,16,17 60:6 61:3 PROVISIONS- 20:11 29:22,23 30:13,19 43:17,23 60:12 PUBLIC- 39:21 PULLEY- 47:2 PURCHASED- 10:1 40:5

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PURCHASES- 33:11 PURPORT- 61:7 PURSUANT- 13:20 PUTS- 61:22 PUTTING- 35:16 Q QUICKLY- 27:14 28:12 QUOTE/UNQUOTE58:20 R RAISED- 31:17 44:6 52:13 57:10 RAISES- 14:13 RANGING- 27:4 RATE- 28:23 RATHER- 39:5 55:23 RATIFICATION30:23 33:21 REA'S- 40:5,15,16 REACH- 13:22 52:17 55:13 56:2 62:16 66:13 REACHING- 55:22 63:24 READY- 25:2 61:4 62:20 REALISTICALLY20:15 REALTY- 57:6 REASON- 37:11 41:16 47:11 60:9 REASONABLE- 29:11 30:14 36:11 RECEIVE- 20:13 24:12 27:10 RECENT- 38:12 RECENTLY- 59:3 RECORDING- 12:15 14:8 51:9 68:7 REDUCED- 26:6 50:19 REFERRED- 10:20 REFERS- 41:24 REFLECT- 43:19 REFLECTS- 32:16 57:21 REFUNDS- 13:1 REGISTERS- 33:13 RELATIONS- 9:7 RELATIONSHIP40:1 RELATIONSHIPS40:6 RELEASE- 32:25 RELIEF- 11:19 18:8 21:4 46:8,11,15 RELOCATION- 21:17 REMAINDER- 29:2 REMAINING- 16:17 31:11 REMARKS- 25:17 26:5 33:8 REMEDY- 56:12 REORGANIZATION-

5:3 19:4 REORGANIZE- 28:12 REORGANIZED- 9:12 REPAY- 53:13 REPLACEMENT29:9,13 47:7 REPORT- 11:18 REPRESENTATIONS39:15 REPRESENTATIVE51:6 REQUEST- 13:20 REQUESTED- 63:15 REQUESTS- 18:23 REQUIRE- 46:14 55:8 REQUIRED- 15:19 21:9 REQUIREMENT51:16 REQUIRES- 19:22 REQUIRING- 20:12 RESERVATION29:20 RESOLUTION- 54:15 66:1,14 RESOLVE- 25:1 RESPECT- 11:9 22:20,22,25 32:7,11,18 43:24 45:9 53:24 55:13,20 56:24 58:22,24 64:17,23 RESPECTS- 24:19 RESPOND- 59:24 RESPONSE- 22:6 47:19 55:8 RESTATEMENT- 60:7 61:8 RESTORE- 9:10 46:2 50:23 RESTORING- 26:12 RESTRICT- 43:18 59:6 RESTRICTED- 10:20 RESTRICTION46:22 47:5 59:13 RESTRICTIONS46:18 61:11 RESTRICTS- 59:16 RESULT- 8:25 35:2 RETAIL- 8:8 10:4,7,12,18,21 RETENTION- 12:4 24:5 64:18 REVIEWED- 15:22 40:11 56:8 REVISE- 62:4 REVISED- 38:14 59:11 REVISIONS- 21:21 REVOLVING- 28:9 RICHARD- 55:9 RID- 40:8 RIGHTLY- 58:17 RIGHTS- 29:20 32:18 34:1 36:17 37:5,10,12 53:3,9 56:10 59:12

RISE- 11:23 45:22 RISING- 55:5 ROILING- 8:16 ROLE- 8:8 10:16 ROLL- 29:24 35:5 ROLLING- 28:4 ROLL-UP- 28:13 45:10 ROSEN- 55:10 ROUND- 37:25 ROUTINE- 11:21 13:8 17:5 58:16 RULE- 15:3 29:22 RULED- 57:10 58:18 RULING- 50:16 52:18 56:16 S SAFE- 5:11 SALARIED- 18:25 SALE- 41:15 48:6,9 SALES- 9:20 15:7 64:23 SATISFIED- 13:8 56:13 SAYDAH- 43:13 57:4,14,19 58:4,5,6,10,22 61:5,14,16,20 62:3,7,8 SAYDAH'S- 57:23 SCHEDULE- 29:2 63:1 SCHOOL- 8:13 16:14 26:17 44:9,17 SCOPE- 62:5 SCORE- 31:12 46:20 SEARCH- 27:5 SEARCHING- 26:23 SEASON- 16:15 26:17 44:9 SEATED- 5:2 25:6 52:2 SECOND- 11:3,10 25:22 28:7,9 29:8,13,17,19 39:9 45:20 64:16 SECURE- 32:1 SECURED- 31:22 35:21 SECURITY- 32:1,6 58:15 SEE- 6:12 17:19 18:13 19:17 34:3,4 39:24 45:1 52:10,22 55:5 57:18 65:11 SEEK- 13:19 18:8 19:20 21:17 23:8 SEEKING- 9:20 11:20 12:23 13:11 16:3 19:6,19 21:4 22:24 46:8,12 60:10,21 SEEN- 21:25 39:13

40:19 56:22 59:3 SELF-INSURED22:18 23:15 24:4,5 SELF-INTEREST50:20 SELL- 48:2 61:24 SENIOR- 60:16 SEPARATE- 21:9 SEPARATED- 10:5 SEPARATELY- 37:9 SET- 12:13 17:12 SETTING- 13:13 SEVERAL- 10:2 29:23 SEVERE- 26:7 SHALL- 21:19 32:7 SHANNON- 42:7 48:12 SHAPE- 24:24 SHARPER- 42:7 SHARPLY- 26:6 SHEET- 51:13,16 SHEETS- 27:10 SHIP- 28:22 SHOPPED- 54:25 SHOPPING- 40:2 SHORTENED- 67:9 SHORTFALL- 35:21 SIDE- 8:23 10:14,21 34:23 SIGN- 62:21 SIGNED- 65:17 SIGNIFICANCE63:14 SIGNIFICANT- 19:8 28:21 50:1 SILENCE- 50:2 SILENT36:19,22,25 44:15,23 49:2,3,8,22 50:10 51:18 SIMILAR- 21:4,25 30:17 46:13 56:25 SIMILARLY- 32:24 SIMPLE- 39:8 40:7,20 SIMPLY- 39:25 41:16,17 60:2,23 SITUATION- 38:9 44:7 SIX- 40:10,18 51:12 SIZE- 15:12 SKIN- 45:21 SLOW- 35:5 SMOOTH- 19:5 SMOOTHLY- 12:15 SO-CALLED- 28:13 SOLD- 41:19 SOLE- 45:25 SOLELY- 30:6 SOLUTION- 53:17 SONTCHI- 42:8 SOUND- 17:4 35:1 68:7 SOURCE- 28:19 SOUTHWESTERN- 8:9

SPARE- 6:16 SPECIFIC- 22:2 28:5 40:22 54:2 SPECIFICITY59:22 SPECULATIVE- 9:4 SPEED- 27:18 SPENDING- 8:19 26:6 SPENT- 52:20 SPOT- 38:1 SPREAD- 29:2 SQUARE- 39:22 STAGE- 16:7,13 STAND- 25:4 35:12 47:1 61:4 67:22 STANDARD- 11:20 12:25 13:12,19 14:1,22,24 15:9 17:5 18:3 START- 25:23 52:8 STARTED- 5:20 STARTING- 28:21 STATE- 15:15,19 19:21 20:3,11 21:1 42:18 44:25 STATUS- 17:9 STAY- 63:23 STAYED- 10:20 STEINDLER- 55:10 STEP- 38:15,16 STOCK- 17:8,9,10 STORE- 8:7 9:20,24 18:3 STORE-LEVEL- 8:10 STORES- 8:9,11 9:1 39:22,23 40:5 41:19 64:23 STRAIGHT- 20:23 STRENGTHS- 9:12 STRICKEN- 43:21 STRUCTURE- 10:1 25:17 STUART- 26:25 SUBLIMIT- 28:10 SUBMISSION- 56:17 SUBMITTING- 56:14 SUBORDINATION48:20 SUBSTANTIAL37:18 SUBSTANTIVE14:21 31:2,18 33:6,22,23 SUBSTANTIVELY33:17 SUCCESS- 19:4 SUCCESSFUL- 5:3 SUFFER- 14:23 SUFFERED- 9:2 SUFFICIENT- 49:24 50:11 66:3 SUGGESTED- 37:14 SUISSE- 27:8 SUMMARIES- 40:12 SUN- 10:2,11,16 11:5 25:22 27:9 SUPERPRIORITY29:10 36:16

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SUPPLIERS- 8:20 50:24 SUPPORT- 9:9 13:4 14:13,17 15:2 34:17 SUSPECT- 56:23,24 SWEPT- 18:6 SYNDICATE- 10:25 SYSTEM- 18:3 SYSTEMS- 16:25 T TAKING- 40:19 TARGET- 23:15 TAXES- 15:7 TE- 38:2 TEAM- 9:6 TELEPHONIC- 47:13 TEN- 24:20 51:23 65:1 66:18 TENANT- 40:1 TERM- 9:24 27:10 28:11,17 30:23 31:21 32:2 45:24 50:17 51:13,16 TERMED- 20:12 TERMINATED20:16,24 TERMINATION- 20:8 TERMINATIONS64:21,22 TERMS- 8:20 10:22 13:13 26:6 28:5,22 32:4,24 33:6 34:19 35:1,16 45:1 47:9 51:13 55:1 59:7 61:13,23 64:13 THEORY- 59:11 THERE'S- 18:10 22:1 37:18 55:17 59:12,15,20,23,24 65:15 THEREFORE- 37:7 THEREOF- 22:20,22 THEREON- 43:18 THEREUNDER- 59:9 THEY'RE- 14:21 40:13,20 42:19 43:19,22 44:15 49:24,25 59:19 THEY'VE- 35:14 48:24 THIRD- 40:15 60:12 61:2 THOROUGHLY- 5:15 THOUSAND- 14:8 TIE- 12:6 TIGHTENING8:17,19 TIME- 17:2,25 20:5,13,18,25 21:5 24:25 39:18 41:20,21 43:10 48:10 51:17 52:7,19 55:11 62:19 64:13 65:3 66:13 TIMELY- 16:21

TIMES- 16:10 38:9 TIMING- 15:15,17 TITLE- 41:16 TODAY- 5:22 7:21 8:14,17 9:3 27:11 28:3 37:11 42:5 47:12 49:7 51:6 54:8 55:20 56:22 TODAY'S- 25:12 54:6 TOM- 43:2 56:19 TOMORROW- 54:13 56:2 66:13,19 67:7 TONIGHT- 62:16 67:3,7 TOOK- 23:14 27:17 TOUCH- 17:20 TOWARDS- 19:5 TOWN- 66:20 TRANSACTION30:20 50:6 TRANSCRIPT- 68:6 TRANSCRIPTS68:11 TRANSIT- 16:5,6 TRIGGER- 41:21 TROUBLESOME- 49:5 TRUSTEE- 11:17 12:19 15:11 16:16 17:7,16 18:1,15 19:9 21:22 31:10 33:3 35:25 45:4 TRUSTEE'S- 14:3 22:9 TUESDAY- 64:25 TURN- 7:23 11:11 26:22 28:5 32:14 TURNING- 11:7 29:22 31:7 33:21 TWENTY-FIVE-39:21 TWO- 11:24 12:2 17:6 23:11 27:10 28:25 37:19 48:4 66:17 TWO-WEEK-13:13,14 TYPES- 58:13 TYPICAL- 13:21 TYPICALLY- 32:17 U UNCERTAIN- 28:1 UNCERTAINTY58:25 UNDERSTOOD- 33:25 UNDERTOOK- 26:23 UNDO- 58:18 UNDULY- 50:18 UNENCUMBERED35:17 UNFAIR- 41:16 UNFAIRNESS- 46:4 UNFOCUSED- 34:24 UNFORTUNATELY38:8 55:12 UNINTERRUPTED9:1 UNIQUE- 46:13 UNITED- 11:16

12:19 14:3 15:10 16:16 17:7,16 18:1,14 19:9 21:22 22:9 31:10 33:2 UNLESS- 12:9 13:7 19:21 UNSECURED- 27:23 UNTESTED- 9:4 UNUSUAL- 41:24 URGENT- 26:20 URGING- 33:2 USED- 18:5 23:23 61:10 UTILITIES- 13:20 UTILITY- 13:11,22 V VACATION- 19:20 20:5,6,13,18,25 VALUE- 26:10 48:5,8,9 53:12 VALUED- 5:3 VARY- 21:24 VEGAS- 8:12 VENDOR- 46:2 50:23 VENDORS- 9:7,10 26:7,12 28:3,21 VERSION- 31:19 62:11 64:1 VIA- 28:13 VICE- 5:25 6:20 34:12 VIEW- 14:22 15:13 60:9 VIGOROUS- 47:12 VIOLATE- 21:19 VIOLATION- 21:20 VISITING- 5:24 VOLUNTARY- 20:9 VOUCH- 31:16 W WACHOVIA- 11:1 18:7 25:21 27:14,17 31:23 34:10 35:13,22 36:5 41:17 50:16 55:10 WACHOVIA'S- 32:19 36:9 43:20 WAGE- 21:24 64:17 WAGES- 20:13 WAIT- 21:6 44:9 67:23 WAIVER- 17:24 30:2,5 WALKER- 6:7,8 WALL- 43:9 WALRATH- 42:8 WANTS- 48:1 WAREHOUSEMEN16:11 WARRANT- 63:21 WARRANTED- 46:16 WE'D- 8:3 27:3 46:8 62:3 64:16 WE'LL- 5:6 9:17

11:20 16:9 20:4 21:4,7 25:4,10 31:12 34:4 40:7,8 42:17 44:2 46:25 51:22 56:25 66:25 67:15,19,22 WE'VE- 6:25 11:18 12:18 15:10 16:15 17:24 19:8,16 20:21,22 21:16,21 28:24 29:5,6 46:22 52:12,15 62:14 63:18 WEEK- 34:25 35:4 64:15 WEEKEND- 34:25 WEEKLY- 24:8 WEEKS- 9:19 21:12 28:3 WEINGARTEN- 57:6 WELCOME- 6:6,8,11 WELLS- 27:9 WENDY- 6:7 WET- 39:14 WHAT'S- 17:17 WHATSOEVER- 48:5 WHEREBY- 13:22 14:22 24:7 WHITEHALL- 41:11 42:9 WHO'S- 27:1 60:10 WHOLE- 58:11 WHOLLY- 60:2 WIDE- 27:4 WILLING- 27:23 37:7 WILMINGTON- 56:22 WISH- 11:23 22:5 42:25 WISHES- 13:7 WOMBLE- 34:10 WON'T- 7:5 36:24 42:15 44:11 48:25 WONDERFUL- 67:2 WORDS- 9:25 WORDSMITHING33:23 WORK- 42:13 62:3 WORKED- 11:18 52:12 WORKERS'- 22:17 23:11,16,18,19 WORKING- 53:22 62:6 WOULDN'T- 49:9 WRITING- 39:15 Y YEAR- 29:3 YEARS- 40:4 YESTERDAY- 11:2 40:9 41:2 47:15 YOU'D- 46:24 YOU'LL- 6:12 31:19 YOU'RE- 25:2 34:19