UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE ---------------------------------------------------------------x : In re : : MERVYNS HOLDINGS, et al., : : Debtors.

: : ---------------------------------------------------------------x

Chapter 11 Case No. 08-11586-KG (Jointly Administered)

Hearing Date: August 26, 2008 at 10:00 a.m.

REPLY MEMORANDUM OF LAW OF WACHOVIA CAPITAL FINANCE CORPORATION (WESTERN) IN FURTHER SUPPORT OF DEBTORS MOTION TO OBTAIN POST-PETITION FINANCING

WOMBLE CARLYLE SANDRIDGE & RICE, PLLC 222 Delaware Avenue, Suite 1501 Wilmington, Delaware 19801 (302) 252-4340 OTTERBOURG, STEINDLER, HOUSTON & ROSEN, P.C. 230 Park Avenue New York, New York 10169 (212) 661-9100 Attorneys for Wachovia Capital Finance Corporation (Western)

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TABLE OF CONTENTS Page TABLE OF AUTHORITIES ......................................................................................................... iii PRELIMINARY STATEMENT .....................................................................................................1 A. The Committee Objections ............................................................................................2 B. The Landlords Objections ............................................................................................7 C. The Reclamation Claimants Objections .......................................................................8 D. The Prior Permitted Lien Claimants Objections ..........................................................9 POINT I THE TERMS OF THE DIP FACILITY ARE FAIR, REASONABLE AND CUSTOMARY AND ENTERING INTO THE DIP FACILITY IS A PROPER EXERCISE OF THE DEBTORS BUSINESS JUDGMENT.................................9 1. The Roll-up Provisions of the DIP Are Proper and Necessary....................................10 2. The Section 506(c) Waiver Provisions are Enforceable ..............................................12 3. Liens on Avoidance Actions Are Appropriate ............................................................14 4. The Adequate Protection Provisions of the DIP Facility Are Appropriate ...........................................................................................................15 5. The Committees Laundry List of Miscellaneous Objections Should Be Overruled....................................................................................................15 POINT II THE LANDLORD OBJECTIONS SHOULD BE OVERRULED BECAUSE (A) SECURITY INTERESTS IN THE SILENT LEASESARE PERMISSIBLE, (B) A LIEN DOES NOT DEPRIVE THE LANDLORDS OF THEIR RIGHTS UNDER SECTION 365, AND (C) THE DIP LENDERS WILL PAY FOR ANY ACTUAL USE OF THE PREMISES BY THE DIP LENDERS POST-DEFAULT.............................................................................................17

A. Leases Which Do Not Restrict Assignments Are Fully Transferable Under Applicable Law.................................................................................................17 B. A Lien on the Leases Would Not Eliminate the Protections Given to Landlords Under the Bankruptcy Code or Otherwise...................................21 -i-

C. The Access Rights Requested in the DIP Motion Does Not Violate Section 365 of the Bankruptcy Code ...........................................................................22 POINT III THE RECLAMATION OBJECTIONS ARE WITHOUT MERIT BECAUSE, AS A MATTER OF LAW, SUCH CLAIMS ARE SUBORDINATE TO THE SECURED LENDERS CLAIMS ....................................................22 THE RIGHTS OF PERMITTED CREDITORS CLAIMS ARE FULLY PROTECTED UNDER THE PROPOSED FINAL ORDER................................................................................................26

POINT IV

CONCLUSION..............................................................................................................................27

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TABLE OF AUTHORITIES Page Cases Campbell v. Westdahl, 148 Ariz. 432, 715 P.2d 288 (1985).........................................................18 Economy Rentals v. Garcia, 112 N.M. 748, 819 P.2d 1306 (1991) ..............................................18 Ellingsen MacLean Oil Co., Inc., 834 F.2d 599 (6th Cir. 1987) ...................................................10 Funk v. Funk, 102 Idaho 521, 633 P.2d 586 (1981) ......................................................................18 Hartford Underwriters Ins. Co. v. Union Planters Bank, 530 U.S. 1, 120 S. Ct. 1942 (2000) ........................................................................................................ 13-14 In re Ames Dept. Stores, Inc., 115 B.R. 34 (Bankr. S.D.N.Y. 1990) ..............................................9 In re Antico Mfg. Co., 31 B.R. 103 (Bankr. E.D.N.Y. 1983)........................................................13 In re Arlco, Inc., 239 B.R. 261 (Bankr. S.D.N.Y. 1999) ...............................................................24 In re Beker Industries Corp., 58 B.R. 725 (Bankr. S.D.N.Y. 1986) ..............................................10 In re Bradlees Stores, Inc., 2001 U.S. Dist LEXIS 14755 (S.D.N.Y. 2001) .................................21 In re Dairy Mart, 302 B.R. 128 (S.D.N.Y. 2003) .................................................................... 23-26 In re Enron Corp., 2001 Bankr. LEXIS 1563 (Bankr. S.D.N.Y. Dec. 3, 2001) ............................13 In re FCX, Inc., 54 B.R. 833 (Bankr. E.D.N.C. 1985)...................................................................10 In re Film Equip. Rental Co., 1991 U.S. Dist. LEXIS 17956 (S.D.N.Y. Dec. 12, 1991)..........................................................................................................13 In re General Oil Distributors, Inc., 20 B.R. 873 (Bankr. E.D.N.Y. 1982) ...................................10 In re Global Home Products, LLC (No. 06-10340, Bankr. D. Del. May 4, 2006) .......................................................................................................................12, 14 In re Global Home Products, LLC, 2006 Bankr. LEXIS 3608, 57 Collier Bankr. Cas. 2d 475 (Bankr. D. Del. 2006).........................................................14, 23 In re Gunninson Ctr. Apts., 320 B.R. 391 (Bankr. D. Colo. 2005) ...............................................14 In re Hancock Fabrics, Inc., (No. 07-10353, Bankr. D. Del. 2007)...............................................12 In re Levitz Home Furnishings, Inc., Case No. 05-45189 (Bankr. S.D.N.Y. Oct. 10, 2005 Hrg Tr. at 32-3) ........................................................................................... 15-16 - iii -

In re Lillian Vernon (No. 08-10323, Bankr. D. Del. March 20, 2008)......................................6, 12 In re Musicland Holdings (No.06-10064, S.D.N.Y. 2006)............................................................14 In re Simasko Prod. Co., 47 B.R. 444 (D. Col. 1985) .....................................................................9 In re Sobiech, 125 B.R. 110 (Bankr. S.D.N.Y. 1991)....................................................................14 In re Trans World Airlines, Inc., 163 B.R. 964 (Bankr. D. Del. 1994) ...........................................9 In re Vanguard Diversified, Inc., 31 B.R. 364 (Bankr. E.D.N.Y. 1983) .................................10, 11 In re Victory Markets Inc., 212 B.R. 738 (Bankr. N.D.N.Y. 1997) ..............................................24 Inteliquest Media Corp. v. Miller (In re Inteliquest Media Corp.), 326 B.R. 825 (B.A.P. 10th Cir. 2005).......................................................................................12 Powerline Co. v. Russell's, 103 Utah 441, 135 P.2d 906 (1943)............................................. 18-19 Statutes 11 U.S.C. 363..............................................................................................................................21 11 U.S.C. 364.............................................................................................................. 9-10, 13, 14 11 U.S.C. 365..............................................................................................................................20 11 U.S.C. 503..........................................................................................................................8, 22 11 U.S.C. 506..................................................................................................................12, 13, 15 11 U.S.C. 507......................................................................................................................8, 9, 22 11 U.S.C. 546....................................................................................................................8, 22, 24 California Civil Code Section 1995.020........................................................................................17 California Civil Code Section 1995.210........................................................................................16 Local Bankruptcy Rule 4001-2 (DIP Financing Guidelines for the District Court of Delaware) ..................................................................................... 11-12 Uniform Commercial Code 2-702 .................................................................................................24 Treatises 3 Collier on Bankruptcy 364.04[2][e], p. 364-16 (15th ed. 2005)..........................................11, 14 Friedman on Leases, Vol. 1, para. 7:2, pp. 7-10 (5th ed. 2008) ....................................................16 - iv -

REPLY MEMORANDUM OF LAW OF WACHOVIA CAPITAL FINANCE CORPORATION (WESTERN) IN FURTHER SUPPORT OF DEBTORS MOTION TO OBTAIN POST-PETITION FINANCING

Wachovia Capital Finance Corporation (Western) (Wachovia), by its attorneys, Otterbourg, Steindler, Houston & Rosen, P.C. and Womble Carlyle, respectfully submits this Reply Memorandum of Law to the various objections filed in response to the Debtors Emergency Motion for Interim and Final Financing Orders Authorizing, Among Other Things, Debtors to Obtain Post-Petition Financing and Utilize Cash Collateral (the DIP Motion), which seeks, inter alia, authority to obtain post-petition financing from Wachovia, as administrative and collateral agent (in such capacities, the Agent) for itself and the other financial institutions from time to time party to the pre and post petition credit arrangements (collectively, the Lenders and together with, the DIP Lenders). The Objections threaten the Debtors ability to continue to reorganize in these Chapter 11 cases, and attempt to contravene the proper exercise of the Debtors business judgment in obtaining the DIP Facility, the Debtors only and best available source of post-petition financing. which they need to maintain liquidity and operate pre-confirmation. As such, the Objections should be overruled. PRELIMINARY STATEMENT On July 30, 2008 the Court granted the DIP Motion on an interim basis, authorizing the Debtors, among other things, to borrow under a $465 million lending facility from the DIP Lenders, including necessary revolving credit and a $25 million Term Loan. The undisputed evidence establishes that this facility is better for the Debtors than any the Debtors could obtain from any other source. Eleven objections were filed to the entry of an order approving the DIP Motion on a final basis. The objectors can be grouped into four groups: (1)

The Official Committee of Unsecured Creditors (the Committee); (2) landlords; (3) putative reclamation claimants; and (4) and certain Prior Permitted Liens (as defined in the proposed Final Order). A. The Committee Objections On page three of what the Committee styles its Limited Objection, the Committee unequivocally concedes that the Debtors require DIP financing. Yet, the

Committee, by its objections, is willing to sacrifice the only financing now available to the Debtors, in an unabashed effort to have this Court substitute its business judgment for that of the Debtors. Unable to point to any better terms or options available to the Debtors, the Committee asks this Court to rewrite the deal between the Debtors and the Lenders that was indisputably the product of arms-length negotiations without the protections the DIP Lenders require as essential elements of a unified loan package, and without which the DIP Lenders are unwilling to proceed. Because no other more favorable form of financing is available, the consequence of the Committees objections, if sustained, would either be the Debtors demise as an operating entity (with untold consequences to the more than 18,000 individuals it employs) or the subsequent request, by necessity, of a new facility, with some other lenders at some later date on less favorable terms than those before the Court. Indeed, as explained by the Debtors, they need this facility, and they need it now. The Debtors business judgment establishes that absent approval, the estate would be far worse off and at much greater risk than under the DIP Facility now before this Court, as there is no other way to get vendor support and put goods on the shelves. It is important, therefore to recall the circumstances which resulted in the bankruptcy filing and present application. According to the First Day Affidavit of Charles R. -2-

Kurth, the Debtors CFO, continuing and worsening housing crises and recent upheavals and tightening in the credit markets resulted in substantial declines in discretionary consumer spending, directly impacting the Debtors ability to pay its suppliers and furnish their stores with inventory essential to their continuing operations. Simply put, the Debtors lost their vendor and factor support and were unable to put inventory on the shelves, including goods for the critical back-to-school season. In the Debtors business judgment, they need the certainty of a final approved DIP Facility in order to obtain the confidence of the market necessary to pursue reorganization. The imploding crises resulted in, among other things, the retention by Debtors of Miller Buckfire & Co., LLC (Miller Buckfire) as their financial advisors prior to filing. The Debtors thereupon determined that no alternative existed to a Chapter 11 filing and a search for DIP financing ensued. During that process the Debtors entered into extensive discussions with numerous lenders, entering into confidentiality agreements with Bank of America, N.A., JPMorgan Chase Bank, N.A., General Electric Capital Corporation, Credit Suisse, Wells Fargo Bank, N.A., Sun Capital Partners, Inc., Kimco Realty Corporation, Gordon Brothers Group LLC, and Crystal Capital Fund, L.P. While each of those entities possesses the resources, knowledge and systems necessary to provide the financing, none was willing to do so on a basis comprehensive enough to meet the Debtors needs, nor on terms as favorable to those proposed by the DIP Lenders under the DIP facility. The DIP Facility itself not only constitutes the result of lengthy and complicated arms-length negotiations between the DIP Lenders and the Debtors, it is the product of similar negotiations between the DIP Lenders themselves. Seven financial institutions are involved and each needed to be satisfied that the terms proposed protected their interests going forward, with -3-

due consideration for the perilous and uncertain nature of the present economic environment and the tightened credit market. Indisputably, the DIP Lenders do not need to make these loans. At the time of filing, the Lenders were oversecured with respect to the approximately $329 million prepetition indebtedness. It is the Debtors who seek the $465 million DIP Facility to enable them to pursue reorganization under Chapter 11. Nevertheless, the DIP Lenders agreed to many terms of substantial benefit to the Debtors and at substantial risk to themselves. That includes an over 90 percent advance rate on inventory, well beyond traditional asset based lending standards, where lenders will often not lend more than 50 percent. In addition the DIP Lenders agreed to make an additional

$25 million in capital available to the Debtors, which the Debtors needed and continue to need in order to reassure their suppliers going into the busy going back to school selling season. That money is based on a new Term Loan secured by the unencumbered leases. Moreover, the DIP Lenders agreed to provide the Term Loan immediately and without the benefit of full appraisals of the Leases, because the Lenders recognized and accommodated the Debtors need for additional availability at the outset of these cases. The DIP Lenders are providing a $465 million credit facility, including a substantial $4 million carve out that will be in place for the Debtors and Committees professionals, whose claims would otherwise be subordinate to the secured lenders. In exchange for the $465 million facility, the DIP Lenders required terms, conditions and fees designed to protect their risks and which are not atypical of DIP facilities routinely approved in this District and other courts. The Committees objections are an attempt to rewrite the proposed DIP Facility on terms unacceptable to the DIP Lenders. Without citing each of their kitchen sink

objections, the Committee objects to numerous elements of the DIP Facility, essentially urging -4-

that the Court require the DIP Lenders to make loans on terms that were not agreed to and which are not acceptable to the DIP Lenders. The Committee seeks to retain the terms it likes in the DIP facility, while scuttling those provisions to which it objects. However, the DIP Facility is not a menu from which the Committee can pick and choose. Rather, it is an integrated

agreement in which all material terms stand or fall together. Notably, the Committee (which is comprised of many sophisticated entities, including lenders, and is represented by experienced counsel and advisors) has not suggested that a better deal exists. If there were a better deal available, the Debtors, in the exercise of their fiduciary duty, would and should have taken it. It appears as if the Committee would prefer to see an immediate liquidation, as they offer no better choice. The Committees objections, furthermore, mischaracterize the DIP Facility and inaccurately and unfairly impugn the DIP Lenders motivations. The Committee claims, for example, that the DIP Facility only provides Debtors with approximately $53 million in availability in exchange for approximately $10 million in commitment and unused line fees. This argument reflects either a misunderstanding of revolving credit (which we doubt) or is just an attempt to avoid the truth. Availability changes on a daily basis -- some days there could be no availability, while on other days, if there are collections or inventory purchases, availability could be $100 million. The Debtors bargained for the entire facility, and the entire facility was priced and documented accordingly. Thus, as payments are made, additional availability is freed up, allowing the Debtors to continue to purchase inventory, supplying their stores, on an ongoing basis. Moreover, availability will increase in relation to the Debtors ability to reduce their expenses and increase their profits.

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Nor is it accurate to assert, as the Committee does, that the commitment and unused line fees are to be measured solely against the $25 million Term Loan. The commitment fee is the agreed fee in exchange for the entire $465 million DIP Facility. The unused line fee is the customary Fee the DIP Lenders require in order to compensate them for the money they cannot otherwise put to use. The fees charged here are reasonable and customary, and form an integral part of the financing package. For example, the Committee challenged the unused line fee of 0.5%. However, that very rate was recently approved in In re Lillian Vernon, (No. 0810323), another case in which the same counsel represented the committee. Absent the fees at the agreed amount in this facility, the interest rate and other charges would have to be renegotiated and repriced. In an attempt to illustrate the costs of the DIP Facility, the Committee provides a chart adding up to $28.5 million on page 12 of its objection. This chart is totally misguided. In particular, sizeable interest components would remain an obligation of the Debtors even were there no DIP facility, and even if there were no further lending. Because the pre-petition debt is fully secured, the lenders would get this money in any event. The Committees assertion that the DIP Facility is structured to force the Debtors into a liquidation on more favorable terms is particularly inappropriate and erroneous. First, it appears that it is the Committee who wants liquidation, as there is no better alternative to this DIP Proposal. Second, the DIP Lenders are oversecured and do not need to position themselves in order to be repaid. This facility is designated to accommodate the Debtors business plan and business judgment. The Term Loan is not intended to leverage the Debtors, as the Committee asserts. Rather, it was structured to relieve the Debtors liquidity crisis through an immediate injection of capital, help the Debtors reestablish vendor confidence and place the Debtors on a -6-

path to reorganization. It was timed to meet the Debtors needs going into the back-to-school selling season. The due date of the lease component, November 15, 2008, was chosen and agreed to with due regard for the fact that a limited window exists under which the Debtors must decide whether to assume or reject leases, a decision which will impact on the Term Loan repayment and the nature of the Debtors reorganization plans. The Debtors, in an exercise of their business judgment, determined that the DIP Facilities terms are fair, reasonable and offer the Debtors the capital structure they need to reorganize and to accomplish the business plan set forth in their 13-week budget. The Debtors business judgment, informed by the advice of highly-skilled professionals, including counsel and Miller Buckfire, should not be second-guessed by the Committee. B. The Landlords Objections In order to support the Debtors with the full, proposed, lending facility on an interim basis the DIP Lenders agreed to accept a lien as to proceeds, with designation rights, as to the Silent Leases (i.e., those which neither expressly permit nor prohibit assignment), reserving their rights at the Final Hearing to require liens on all leases where not prohibited. As set forth below, as a matter of law, in the absence of an express restriction, the Debtors are free to provide a lien (or otherwise assign or sublet) their interest in the Silent Leases, and those liens should be allowed. Various of the Debtors Landlords have filed objections to the proposed Final Order. With the exception of Inland Western Real Estate Trust, Inc. (Inland), the Landlords, in the guise of bankruptcy court objections, are seeking to obtain protections that the Silent Leases do not provide them and to which they are not entitled under controlling principles of state and bankruptcy law. -7-

Contrary to the assertions of certain objecting Landlords, the DIP Lenders are not seeking, through the lien grant in the Debtors real property leasehold interests, any rights greater than the Debtors rights in such leases. The DIP Lenders are merely seeking to have a lien and enforcement rights in all of the same rights and interests that the Debtors have in respect of such leases. By granting the DIP Lenders liens and enforcement rights, the Landlords are not being stripped of their rights under their leases in any respect. In addition, the collateral access rights granted to the DIP Lenders do not prejudice the rights of the Landlord because the proposed financing order expressly provides that the DIP Lenders shall pay the costs or expenses provided for in the leases for the period of time that the DIP Lenders actually occupy or use the premises. C. The Reclamation Claimants Objections The reclamation claimants assert in general terms that they have priority claims pursuant to 11 U.S.C. 503(b)(a) and 507(a)(2) and object to the DIP Motion to the extent it seeks to, prime, prejudice or otherwise impair the reclamation creditors 503(b)(a) claims. However, pursuant to the express terms of Bankruptcy Code 546(c), reclamation creditors take subject to secured creditor claims, and pursuant to Bankruptcy Code 507, the reclamation claimants are entitled only to a second priority administrative claim and possess no right to prime the DIP Lenders secured claim. In any event, there is no valid basis raised by the reclamation objectors to deny approval of the DIP Motion. Even if this Court were persuaded to find that the reclamation claims have value, any remedy that this Court would ultimately grant any such reclamation creditors would be junior and subordinate in all respects to the senior secured, superpriority administrative expense claims of the DIP Lenders because no provision of the Bankruptcy Code, applicable case law or state law affords any reclamation creditor with a superpriority administrative expense claim or senior lien.

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D. The Prior Permitted Lien Claimants Objections Finally, creditors with valid senior liens cannot be adversely affected by the Final Order. Their rights will not be prejudiced. Moreover, a hearing on DIP Financing is not the proper forum for ruling on the allowance of allegedly preferred claims, and these objections, to the extent they attempt an end run around the claims allowance process, such as by seeking a declaration in the Final Order of their alleged rights, should be denied. POINT I THE TERMS OF THE DIP FACILITY ARE FAIR, REASONABLE AND CUSTOMARY AND ENTERING INTO THE DIP FACILITY IS A PROPER EXERCISE OF THE DEBTORS BUSINESS JUDGMENT Bankruptcy courts routinely defer to a debtors business judgment on the decision to enter into a post-petition financing arrangement. See In re Trans World Airlines, Inc., 163 B.R. 964, 974 (Bankr. D. Del. 1994)(noting that an interim loan, receivables facility and assetbased facility were approved because they reflect[ed] sound and prudent business judgment . . . [were] reasonable under the circumstances and in the best interest of [the debtor] and its creditors); see also In re Ames Dept. Stores, Inc., 115 B.R. 34, 40 (Bankr. S.D.N.Y. 1990) ([A] courts discretion under section 364 is to be utilized on grounds that permit reasonable business judgment to be exercised so long as the financing agreement does not contain terms that leverage the bankruptcy process and powers or its purpose is not so much to benefit the estate as it is to benefit a party-in-interest.). As one Bankruptcy Court has stated, business judgments should be left to the board room and not to [the] court. In re Simasko Prod. Co., 47 B.R. 444, 449 (D. Col. 1985). The Debtors decision to enter into the DIP Facility is a sound exercise of their business judgment and should not be disturbed. -9-

1.

The Roll-up Provisions of the DIP Are Proper and Necessary The roll-up provisions of the DIP Facility and Interim Financing Order are

customary and are routinely granted by this and other Courts in circumstances similar to those in this case. It is undisputed that the Lenders are presently oversecured and the gradual roll-up here causes no economic detriment to the estates or any of their other creditors. Indeed, here, the roll up is essentially based on sales of pre-petition inventory, so it makes sense to reduce the prepetition indebtedness with the proceeds of such sales. Unlike cases where roll ups have been challenged, here the Lenders are fully secured and are not using the roll up to try to cover unsecured prepetition exposure. Approval of a DIP facility and financing order containing cross-collateralization and roll-up is permissible if: (i) absent the proposed financing, the debtors business operations will not survive; (ii) the debtor is unable to obtain alternative financing on acceptable terms; (iii) the proposed lender will not accede to less preferential terms; and (iv) the proposed financing is in the best interests of the general creditor body. In re Vanguard Diversified, Inc., 31 B.R. 364, 366 (Bankr. E.D.N.Y. 1983); see also Ellingsen MacLean Oil Co., Inc., 834 F.2d 599, 601 (6th Cir. 1987); In re Beker Industries Corp., 58 B.R. 725 (Bankr. S.D.N.Y. 1986); In re FCX, Inc., 54 B.R. 833, 837 (Bankr. E.D.N.C. 1985); In re General Oil Distributors, Inc., 20 B.R. 873 (Bankr. E.D.N.Y. 1982). The DIP Facility and Interim Financing Order satisfy the requirements under Vanguard for approval of the provisions for cross-collateralization and roll-up contained therein: (i) The DIP Facility is Essential to the Debtors Business Operation. The DIP Facility is essential to the Debtors ability to stay in business and provides the best opportunity available for them to reorganize. The financing under the DIP - 10 -

Facility will provide the Debtors with the necessary liquidity to conduct their business and sell their assets in an orderly manner. Moreover, given that the Lenders are oversecured, the roll-up has no negative effect on the estate. 3 Collier on Bankruptcy 364.04[2][e], p. 364-16 (15th ed. 2005) (Neither [a gradual nor immediate roll-up] should be controversial from the perspective of the priority or satisfaction of liens if the pre-petition lender is fully secured on the petition date.) (ii) The Debtors Are Unable to Obtain Alternative Financing On Acceptable Terms. The Debtors have represented to the Lenders and this Court that no viable financing options other than the DIP Facility existed as of the Petition Date. (iii) The Lenders Will Not Advance Funds Without the Protections of a Roll-up. The Lenders will not agree to advance funds under the DIP Facility without the rollup, cross-collateralization and the other protections set forth in the Ratification Agreement and Final Order. Nor will the Lenders agree to the use of cash collateral - - which even the Debtors recognize would be insufficient to meet their respective daily cash needs or to provide the ability to pursue reorganization. Under the circumstances of this case, granting the Lenders the protection they seek is also consistent with the DIP Financing Guidelines for the District Court of Delaware, Local Bankruptcy Rule 4001-2 (the Guidelines), which contemplates such protections, but requires that these provisions must be disclosed conspicuously in the motion and order and that the motion and order justify the inclusion therein of such provisions. Local Bankruptcy Rule 4001-2 (a)(ii). In addition, DIP financing guidelines of other Bankruptcy Courts (such as the Central District of California, Southern District of New York and District of New Jersey), also - 11 -

contemplate such protections. Accordingly, the grant of such protections is neither novel nor impermissible and Wachovia submits that the facts and circumstances of this case justify the grant of protections that the DIP Lenders seek in exchange for its agreement to fund the DIP Facility. 2. The Section 506(c) Waiver Provisions are Enforceable The Debtors waiver of any Section 506(c) claims is likewise not an unusual term in DIP financing orders and should be approved for several reasons. First, the Debtors prepared a Budget, which specifies the post-petition costs and expenses the Debtors intend to incur and pay. The DIP Lenders have agreed to provide the Debtors with the funding necessary to cover the expenses set forth in the Budget. If the Debtors determined to use the proceeds of their loans to pay other expenses, the Lenders should not be surcharged for such expenses or effectively forced to pay twice. Second, the Debtors are well within their business judgment to agree to waive Section 506(c) claims in order to obtain the DIP Facility and there are numerous examples where courts have entered orders approving a debtors exercise of its business judgment to grant Section 506(c) waivers in connection with DIP financing. See, e.g., In re Lillian Vernon

(No. 08-10323, Bankr. D. Del. March 20, 2008); In re Hancock Fabrics, Inc., (No. 07-10353, Bankr. D. Del. 2007); In re Global Home Products, LLC (No. 06-10340, Bankr. D. Del. May 4, 2006); Inteliquest Media Corp. v. Miller (In re Inteliquest Media Corp.), 326 B.R. 825 (B.A.P. 10th Cir. 2005) (rejecting appellants argument that the Section 506(c) waiver in the financing order violated public policy); In re Enron Corp., 2001 Bankr. LEXIS 1563, at *10 (Bankr. S.D.N.Y. Dec. 3, 2001) (approving a post-petition financing arrangement where the debtors debtor-in-possession loan obligations took priority over any and all administrative expenses or - 12 -

other claims under Section 506(c)); In re Film Equip. Rental Co., 1991 U.S. Dist. LEXIS 17956 (S.D.N.Y. December 12, 1991) (upholding the bankruptcy courts cash collateral order and enforcing Section 506(c) waiver when debtors counsel later sought to surcharge the secured creditors collateral for fees). Indeed, many courts have recognized that a Section 506(c) waiver can be an integral part of the financing arrangement reached between a debtor and its debtor-in-possession lenders. See, e.g., In re Antico Mfg. Co., 31 B.R. 103, 106 n.1 (Bankr. E.D.N.Y. 1983) (regarding an objection to a 506(c) waiver, court noted that [c]ertainly, the paragraph in question is not so detrimental or improper as to jeopardize the loss of the entire financing package). Accordingly, more than ample authority exists for this Court to permit the Section 506(c) waiver set forth in the Interim Financing Order. Finally, the Committees citation to Hartford Underwriters Ins. Co. v. Union Planters Bank, 530 U.S. 1, 120 S. Ct. 1942 (2000) (objection, p. 22) is misplaced. In Hartford Underwriters, the issue was whether an insurer could surcharge a secured creditors collateral in the absence of the trustees attempt to do so. The Supreme Court limited its review to the question of standing and held that the language of section 506(c) permitted only the trustee to surcharge the collateral. The Supreme Court did not decide, or even address, whether section 506(c) waivers are enforceable. In that regard, case law both pre- and post-Hartford Underwriters supports this Courts authority to approve a debtors waiver of section 506(c) surcharge claims as part of a comprehensive negotiated post-petition financing arrangement. Hartford Underwriters, 530 U.S. at 6. To the extent that the Committee cites Hartford Underwriting to argue postpetition roll ups are not authorized Under Bankruptcy Code 364, the argument makes no sense

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whatsoever, as Hartford Underwriters does not, in any respect, address Bankruptcy Code 364, nor is Section 364 analogous to Section 506(c) of the Bankruptcy Code. 3. Liens on Avoidance Actions Are Appropriate The Lenders are also entitled to request liens on avoidance actions -- as well as the other protections set forth in the Bankruptcy Code -- as a condition to making a DIP loan. See 11 U.S.C. 364(c). As Collier explains, the trustee (or debtor in possession) may offer more than one of the protections described in section 364(c). 3 Collier on Bankruptcy,

364.04[1], at p. 364-11-12 (15th ed. rev. 2005); see also In re Sobiech, 125 B.R. 110, 115 (Bankr. S.D.N.Y. 1991) (stating that, [a]lthough the subdivisions contained in Code 364(c) appear in the alternative, creditors often seek the super-priority of Code 364(c)(1) in conjunction with the lien protection of Code 364(c)(2)). Whether or not such liens are necessary or appropriate is up to the Lenders and the Debtors in the context of their good faith negotiations. Courts in this District and elsewhere regularly allow liens on avoidance actions in both consented and contested DIP facilities. See, e.g., In re Global Home Products, LLC (No. 06-10340, Bankr. D. Del. May 4, 2006); In re Musicland Holdings (No. 06-10064, S.D.N.Y. 2006). 4. The Adequate Protection Provisions of the DIP Facility Are Appropriate As the Committee itself acknowledges in its objections, a showing of either a decline in value, or threat of such a decline, is sufficient to support a request for adequate protection (p. 26, citing, In re Gunninson Ctr. Apts., 320 B.R. 391 (Bankr. D. Colo. 2005)). In the present case, evidence of the sharp decline in Debtors liquidity caused by a loss of vendor confidence, the deleterious effects of a declining housing market and tight credit market on - 14 -

consumer spending and the uncertain and precarious economic conditions generally and to retail businesses specifically more than justify the adequate protection provisions of the DIP Facility. Such protections are commonly provided for and routinely granted where prepetition asset-based lenders provide post-petition DIP financing and should be granted in this case. 5. The Committees Laundry List of Miscellaneous Objections Should Be Overruled It is clear from the Committees objection that the Committee would like carte blanche authority to rewrite the deal, as it offers a list of supposedly objectionable terms. As set forth above, it is not the role of the Committee to negotiate the terms. Its concession that a DIP is necessary and its failure to show that this facility violates the Debtors fiduciary duty or business judgment or that another, better, deal is available, dooms its objection. The Committee peppers it objection with certain buzzwords, like roll up and 506(c) waiver in an attempt to get the Court to pick and choose the terms of the deal. However, two facts are apparent and should override the objection. First, we are not dealing with theory, or with a hypothetical law school examination question. We are dealing with a real company, real people, real jobs and real problems. This company will be out of business without a DIP facility -- and there is no viable alternative, despite the Debtors best efforts to find one. Second, the Committee has an opportunity to investigate the Lenders liens, and to the extent those liens are not valid, then many of the protections will not be available. The Committees challenge to unequal bargaining power relies upon an out-ofcontext quotation from the bench several years ago. Thus, the Committees citation to In re Levitz Home Furnishings, Inc., Case No. 05-45189 (Bankr. S.D.N.Y. October 10, 2005 Hrg Tr. at 32-3) is totally misleading. The Levitz Court approved a DIP financing agreement containing many similar protections requested by the DIP Lenders, including cross-collateralization, - 15 -

superpriority claim rights, adequate protection and waivers on 506(c) claims. The remarks by Judge Lifland, quoted by the Committee, relating to lender bargaining advantages were in the context of a junior bondholders request for the early payment of attorneys fees as adequate protection. Notwithstanding any bargaining power of the DIP Lenders here, they did not use it to strong-arm the Debtors, who had the opportunity to shop the loan to many other potential lenders. In fact, because of the Debtors use of its bargaining power, the Lenders agreed to provide more funds to the Debtors, at a competitive rate. This is funding that will give these Debtors a chance to pursue their own budget, created and implemented by their own professionals, in the exercise of their own business judgment. Thus, when the Committee suggests that this case is solely for the benefit of the Lenders, it appears that the Committee is speaking out of both sides of its mouth. We need do nothing more than observe the

Committees support for payment of some $25 million of pre-petition unsecured trade debt -some of which, we believe, will be going to members of the Committee. POINT II THE LANDLORD OBJECTIONS SHOULD BE OVERRULED BECAUSE (A) SECURITY INTERESTS IN THE SILENT LEASES ARE PERMISSIBLE, (B) A LIEN DOES NOT DEPRIVE THE LANDLORDS OF THEIR RIGHTS UNDER SECTION 365, AND (C) THE DIP LENDERS WILL PAY FOR ANY ACTUAL USE OF THE PREMISES BY THE DIP LENDERS POST-DEFAULT A. Leases Which do not Restrict Assignments are Fully Transferable Under Applicable Law Contrary to the Landlords unsupported arguments, the grant of a security interest in the Debtors leases is permissible pursuant to fundamental common law principles where no

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express provision exists prohibiting such a transfer. As stated in Friedman on Leases, Vol. 1, para. 7:2, pp. 7-10 (5th ed. 2008): unless the lease provides otherwise, with few exceptions, a Tenant may transfer his interest in the lease in whole or in part. Tenant may do this by assigning, subletting, mortgaging, or hypothecating his lease in some other way. Or tenant may give some third person a sign privilege or other license. Sale of a tenants assets includes tenants interest in a lease. Tenant is under no duty to use care in selecting an assignee. Property interests are generally freely transferable, in the absence of express restrictions to the contrary. In California, where the substantial majority of the Silent Leases are situated, the outcome of this matter is determined by statute. expressly provides as follows: (a) Subject to the limitations in this chapter, a lease may include a restriction on a tenants interest in the lease. (b) Unless a lease includes a restriction on transfer, a tenants rights under the lease include unrestricted transfer of tenants interest in the lease. (Emphasis added.) Furthermore Section 1995.020 (e) expressly defines transfer to include, an assignment, sublease, or other voluntary or involuntary transfer or encumbrance of all or part of a tenants interest in the lease. Decisions from the other relevant jurisdictions are similarly supportive of the Debtors position and contravene the unsupported position of the Landlords that the Silent Leases cannot be assigned or mortgaged. California Civil Code Section 1995.210

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A.

New Mexico: Economy Rentals v. Garcia, 112 N.M. 748, 819 P.2d 1306

(1991) (standing for the proposition that even express restrictions on the transfer of a tenants leasehold interest are unenforceable and may give rise to damages where commercially unreasonable or a pretext); B. Idaho: Funk v. Funk, 102 Idaho 521, 523, 633 P.2d 586, 588 (1981) (the

Supreme Court of Idaho adopted the rule prohibiting unreasonable restrictions on assignments or subletting; in so ruling the Supreme Court also stated the common law rule that, A tenant holding under a lease for a definite period may sublet the premises in whole or in part in the absence of restrictions placed thereon by the parties or by statute.); C. Arizona: Campbell v. Westdahl, 148 Ariz. 432,436, 715 P.2d 288, 292

(1985) ([i]t should be noted at the outset that, in the absence of a restrictive clause as set out in 15(a), the lessee generally has the right, without consent of the lessor, to assign his interest under the lease, or to sublet the premises, because the law looks with disfavor on restraints on alienation); D. Utah: Powerline Co. v. Russells, 103 Utah 441, 135 P.2d 906, 913

(1943) (finding that, [i]t is an almost universal rule that a lease of real property is assignable, unless some special circumstances are present, but holding for the landlord where revisions to the lease at issue imposed restrictions); E. Nevada: While Nevada case law does not appear to address this issue,

there is no decision suggesting that Nevada deviates from the common law or statutory principles of its sister states.

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Given the foregoing authority, the Landlords inveigh against granting the DIP Lenders a lien against the Silent Leases based on a series of rationalizations and unsubstantiated assertions. Thus, without a legal basis for doing so, the Landlords seek to jeopardize a lending facility which the Debtors need in order to successfully reorganize. The Greenberg objectors, for example, claim that in other cases bankruptcy courts have limited lenders to security interests in lease proceeds rather than the leases themselves. This is merely an anecdotal argument which seeks to divert attention from the controlling legal issues before this Court. The Silent Leases before this Court allow for the liens requested. They thereby afford the Debtors the same right to grant a lien as those leases in which liens are expressly authorized. Since the tenants rights are the same in either instance, no principled basis exists for treating the Silent Leases differently in the Final Order. Greenberg has not demonstrated that any of the other bankruptcy cases it refers to (but does not cite as legal authority on the issue at hand) involved silent leases in the jurisdictions at issue on this application. The Greenberg objectors also suggest that a tenants right to create a lien should be more limited than its right to assign the lease itself. That argument is wholly illogical. A lien is a far less draconian right, as the tenancy will remain intact unless there is a default. Only then could an assignment occur. As the California statute makes plain, all forms of transfer are permitted with respect to the Silent Leases. Certain Landlords also argue that the DIP Lenders do not need liens in the leases to protect their interests, suggesting their economic view that liens in the proceeds should offer adequate security. However, the DIP Lenders disagree, and as a matter of business judgment are unwilling to provide the proposed lending facility without liens on the Silent Leases as collateral. - 19 -

The Landlords executed leases which did not restrict the tenants ability to create such liens. They may not, now, substitute their business judgment for that of the Debtors and DIP Lenders, thereby gaining contractual rights they did not bargain for in the underlying leases. Finally, the Centro objectors assert that a substantial number of its mortgages with its own lenders prohibit the Landlord from allowing liens on their tenants leases. If so, the Centro landlords were remiss in executing leases which allowed for such liens. The Centro Landlords would be the first to object to any actions by the Debtors which limited the Landlords rights under the Silent Leases, regardless of theoretical hardship. There is no reason why the Debtors rights in those leases should be limited in order to protect the Landlords from potential claims from their lenders, where the Landlords did not protect their own rights. To the extent that the Landlords also claim that their leases expressly prohibit assignments, that is not a basis for objecting to liens on the Silent Leases. The DIP Lenders agreed that they would only create liens on the Silent Leases or those Leases which expressly allow it, not those leases where liens are expressly prohibited. The law in the jurisdictions at issue authorize the creation of liens in the absence of an express prohibition to the contrary. No legal basis exists for the Landlords objection to the creation of such liens on the Silent Leases at issue. B. A Lien on the Leases Would Not Eliminate the Protections Given to Landlords Under the Bankruptcy Code or Otherwise By granting a lien in the Debtors rights under their leases, the DIP Lenders are not requiring that the Debtors grant them any more rights vis--vis the Landlords than what is otherwise available to the Debtors under the leases, applicable law and the Bankruptcy Code. For example, in the event that the DIP Lenders were to enforce their rights and liens with respect - 20 -

to the leases following the Debtors default under the DIP credit facility, the DIP Lenders bargained for and expect to have the same rights and interests as the Debtors in such leases. Accordingly, if the DIP Lenders sought to sell and assign any lease through the Bankruptcy Court in connection with exercising their rights under the financing order and the DIP credit facility, the Landlords would have an opportunity to be heard at such time to assert their rights under their respective leases, Section 365 of the Bankruptcy Code and applicable law. The exercise by a third party of the Debtors lease designation rights is not uncommon when value has been provided to the estate for such rights. See, e.g., In re Bradlees Stores, Inc., 2001 U.S. Dist LEXIS 14755 (S.D.N.Y. 2001). In this regard, the DIP Lenders would essentially step into the shoes of the Debtors in connection with realizing on the leases and the Debtors rights with respect thereto. Similarly, in the unlikely event that the DIP Lenders opted to lift the automatic stay and foreclose on their lien in the leases in state court, the Landlords would be entitled to all of the rights and protections afforded to them under applicable state law foreclosure proceedings. In short, the grant of a security interest in the leases and Debtors designation rights with respect thereto does not reduce any of the Landlords rights, whether such rights arise under the leases, Bankruptcy Code, applicable law or otherwise. Certain Landlords also claim that they are entitled to the protections given to shopping center landlords under Section 365(b)(3) of the Bankruptcy Code. For the reasons discussed above, a lien on the leases would not eliminate the protections currently afforded to the Landlords.

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C. The Access Rights Requested in the DIP Motion Does Not Violate Section 365 of the Bankruptcy Code As collateral security for providing a $465 million credit facility, the Debtors are granting the DIP Lenders security interests in substantially all of their assets, including leasehold interests. Just like any other asset based lender, the DIP Lenders are entitled to take measures to protect their collateral. To the extent the DIP Lenders are forced to enter onto any leased premises in order to liquidate the collateral located there, the proposed order would require the DIP Lenders to pay the Landlord rent in connection with the DIP Lenders actual use of the leased premises, including rental charges. Accordingly, there is no prejudice to the Landlords during the time in which the DIP Lenders would access the leased premises to retrieve or recover their collateral. In the unlikely event that the DIP Lenders opted to run going out of business sales at various leased locations of the Debtors stores, it is understood that the DIP Lenders would obtain a sale order under Section 363 of the Bankruptcy Code to conduct such sales, at which time the Landlords would receive notice of the proceedings and would have an opportunity to raise any concerns they may have to the sale process at such time. Therefore, any objection based upon prejudice to the Landlords should be overruled. POINT III THE RECLAMATION OBJECTIONS ARE WITHOUT MERIT BECAUSE, AS A MATTER OF LAW, SUCH CLAIMS ARE SUBORDINATE TO THE SECURED LENDERS CLAIMS The creditors purportedly holding reclamation claims (collectively, the Reclamation Objectors) have filed objections to the entry of the proposed order approving the DIP Motion on a final basis, and several other creditors have filed reclamation claims in this case. However, the Reclamation Objectors set forth no basis for obtaining priority over the DIP Lenders, and provide no valid basis to reject the proposed DIP order and no such basis exists. To - 22 -

the contrary, pursuant to the express terms of Bankruptcy Code 546(c), a reclamation creditors claim is, subject to the prior rights of a holder of a security interest in such goods or the proceeds thereof. Pursuant to Bankruptcy Code 503(b)(9) and 507(a)(2), reclamation creditors that properly exercise their reclamation rights are only entitled to a secured priority administrative claim. That, by definition, is subject to and subordinate to the rights of secured lenders possessing pre- and post petition liens on all of the Debtors collateral. This Court, in In re Global Home Products, LLC, 2006 Bankr. LEXIS 3608, 57 Collier Bankr. Cas. 2d 475 (Bankr. D. Del. 2006) recognized and upheld the general rule that reclamation creditors get only get paid on confirmation along with administrative creditors of equal priority, implicitly upholding the rights of the secured lender. The proposed early payment in Global threatened the Debtors ability to access its credit line by reducing available credit and was therefore denied. The well-reasoned pre-amendment decision in In re Dairy Mart, 302 B.R. 128 (S.D.N.Y. 2003) dispenses with all of the objections of the Reclamation Objectors. In Dairy Mart, the Chapter 11 debtors moved to reclassify as general unsecured claims, alleged priority reclamation claims asserted by pre-petition merchandise suppliers. The Bankruptcy Court held that the putative reclamation claims were rendered valueless, and thus were properly reclassified as general unsecured claims. This Court can undertake the same analysis as in Dairy Mart and likewise find that the Reclamation Objectors and other parties who have asserted reclamation claims against the Debtors do not have any entitlement to a secured claim status in respect of such reclamation claims. Under the new Code allowed reclamation creditors claims are

afforded second priority administrative claim status, subordinate and subject to the rights of secured creditors. - 23 -

As in the case at bar, prior to Dairy Marts bankruptcy filing, Dairy Marts prepetition secured revolving credit lenders, whose agent was Citizens Bank (Citizens), were granted a floating lien on, among other things, all of Dairy Marts inventory. After the

commencement of Dairy Marts Chapter 11 case, Dairy Mart and Citizens entered into a stipulation for the use of cash collateral. Citizens was granted replacement liens on all of the pre-petition collateral and the proceeds thereof, and all of the types of property that constituted pre-petition collateral coming into existence post-petition. Id. at 130-31. Dairy Mart also filed a first day motion seeking entry of an order approving a post-petition secured facility to be provided by Foothill Capital Corporation (Foothill). The Foothill DIP credit facility was secured by a first priority lien on and a security interest in all property of Dairy Mart subject and subordinate to, among other things, valid and perfected liens and security interests of Citizens in its pre-petition collateral. The Court approved the Foothill credit facility on both an interim and a final basis. The final order approving the Foothill DIP facility approved the use of a portion of the Foothill loan proceeds to repay in full all pre-petition debt owing to Citizens (except for letters of credit outstanding which were transferred to and deemed issued under the Foothill DIP facility), and that contemporaneous with such repayment of all amounts outstanding under the pre-petition credit facility, Dairy Mart would obtain an immediate and complete release from Citizens of all of its pre-petition liens and security interests. Id. at 131. In response to various reclamation claims, Dairy Mart maintained that, because such claims were subject to the interest of a holder of a prior perfected floating lien on the Debtors inventory, when that lienholders interest was paid, the interests of the respective

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reclamation claimants were rendered valueless.

As such, Dairy Mart contended that the

reclamation claimants were not entitled to an administrative expense priority. Id. at 132. The Court explained that the purpose of Section 546(c) of the Bankruptcy Code is to recognize any legitimate right to reclamation that a seller may have under applicable nonbankruptcy law. Id. What Section 546(c) does not do, however, is to create a new, independent right to reclamation. Id. Pursuant to Section 546(c), a seller may reclaim goods it has sold to an insolvent debtor only if it establishes each of the following: (1) that is has a statutory or common law right to reclaim the goods; (2) that the goods were sold in the ordinary course of the sellers business; (3) that the debtor was insolvent at the time the goods were received; and (4) that it made a written demand for reclamation within the statutory time limit after the debtor received the goods. Id. at 133 (citing In re Victory Markets Inc., 212 B.R. 738, 741 (Bankr. N.D.N.Y. 1997) (denying reclamation claimants request for an administrative expense claim where the reclamation claim did not have value beyond the secured lenders lien)). The reclaiming seller has the burden of establishing each element of Section 546(c) by a preponderance of the evidence. Dairy Mart, 302 B.R. at 133. UCC Section 2-702(3) makes a sellers right to reclamation expressly subject to the rights of a good faith purchaser. Id. at 133 (citing, UCC 2-702 and In re Arlco, Inc., 239 B.R. 261, 267 (Bankr. S.D.N.Y. 1999)). A holder of a prior perfected floating lien on inventory such as Wachovia and the Lenders here, is treated as a good faith purchaser with rights superior to those of a reclaiming seller. Dairy Mart, 302 B.R. at 133. Moreover, as in the case of Dairy Mart, among the conditions to the post-petition financing arrangements between the Debtors and the DIP Lenders was that the DIP Lenders be granted first priority floating liens in, among other things, all of the Debtors inventory, - 25 -

including the inventory that was the subject of the Pre-Petition Lenders liens and the demands of the Reclamation Objectors. Absent a senior lien in the inventory subject to Wachovias lien, to hold otherwise would result in the Debtors having less credit availability under the terms of the DIP Lenders financing arrangements, because the inventory collateral subject to the Reclamation Objectors claims would be rendered ineligible for borrowing purposes. For all of the foregoing reasons, the objections of the Reclamation Objectors should be overruled. Finally, to the extent that this Court is persuaded that the Reclamation Objectors and the other reclamation creditors claims should be allowed, no administrative expense claim or other benefit granted to any reclamation creditor can prime or subordinate the liens and superpriority claims of the DIP Lenders. We raise this because the Reclamation Objectors have suggested, albeit without citing any authority, that their reclamation claim rights may somehow be senior to the liens and claims of the DIP Lenders. We are aware of no legal support for that proposition, and the Reclamation Objections offer none. POINT IV THE RIGHTS OF PERMITTED CREDITORS CLAIMS ARE FULLY PROTECTED UNDER THE PROPOSED FINAL ORDER Other objecting creditors include: (i) Local Texas taxing authorities for various counties and for the Midland Central District, asserting secured claims under the Texas Constitution and Texas Tax Code; (ii) Fifth Third Leasing Co., Key Equipment Finance Company and IDB Leasing, Inc., asserting secured creditors rights pursuant to equipment leases and a subordination agreement; and (iii) Fisher Development Inc., asserting a mechanics lien claim under California law. Those objectors seek to preserve their alleged rights as secured creditors. However, they are fully protected to the extent of any priority they enjoy in specific

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assets of the Debtors under the proposed terms of the Final Order. To the extent they are seeking additional rights, including a declaration as to their alleged secured status, their objections should be denied. Issues pertaining to the extent, amount and validity of their claims should, rather, be addressed in the claims allowance process. CONCLUSION For all of the foregoing reasons, this Court should overrule all of the objections and enter the proposed order approving the DIP Motion on a final basis on the terms and conditions set forth therein. Dated: August 25, 2008 Wilmington, Delaware WOMBLE CARLYLE SANDRIDGE & RICE, PLLC /s/ Michael. G. Busenkell Francis A. Monaco, Jr. (DE Bar # 2078) Michael G. Busenkell (DE Bar #3933) 222 Delaware Avenue, Suite 1501 Wilmington, Delaware 19801 Tel: (302) 252-4340 Fax: (302) 661-7730 OTTERBOURG, STEINDLER, HOUSTON & ROSEN, P.C. 230 Park Avenue New York, New York 10169 Tel: (212) 661-9100 Fax: (212) 682-6104 Attorneys for Wachovia Capital Finance Corporation (Western)

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