IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Mervyn's Holdings, LLC., et al., Debtors.

) ) ) ) ) ) Chapter 11 Case No. 08-11586 (KG) (Jointly Administered) Re: D.I. 620

OBJECTION OF DEVELOPERS DIVERSIFIED REALTY CORP., JONES LANG LASALLE AMERICAS, INC., WEINGARTEN REALTY INVESTORS AND GREGORY GREENFIELD & ASSOCIATES, LTD. TO THE DEBTORS MOTION APPROVING AUCTION PROCEDURES, AGENCY AGREEMENT, STORE CLOSING SALES AND RELATED RELIEF Developers Diversified Realty Corp., Jones Lang LaSalle Americas, Inc., Weingarten Realty Investors and Gregory Greenfield & Associates, Ltd. (collectively, the Landlords), by and through their attorneys, Kelley Drye & Warren LLP, hereby object (the Objection) to the above-captioned debtors (the Debtors) motion for entry of an order, inter alia, approving (a) bid protections to stalking horse bidder, (b) the commencement of store closing sales (the Closing Sales) at certain of the Debtors stores (the Closing Stores), (c) the Closing Sales, and (d) related relief [D.I. 620] (the Motion). In support of the Objection, the Landlords respectfully state as follows: PRELIMINARY STATEMENT 1. The Landlords are the owners of numerous shopping centers located

throughout the United States. The Debtors lease retail space from the Landlords pursuant to written leases (collectively, the Leases) at, inter alia, the locations identified on the chart annexed hereto as Exhibit A (the Leased Premises). The Leased Premises are located in shopping centers as that term is defined in section 365(b)(3) the Bankruptcy Code. See In re

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Joshua Slocum, Ltd., 922 F.2d 1081 (3d Cir. 1990). Each of the Leased Premises have been designated a Closing Store by the Debtors. 2. The Landlords recognize the Debtors need to conduct Closing Sales to

maximize the value of their estates. The Debtors needs, however, must be balanced against the rights and obligations of the Landlords in operating their shopping centers. The Landlords object to the Motion because the proposed Closing Sales guidelines (the Closing Sales Guidelines) require modification to adequately protect the interests of the Landlords. Specifically, the Landlords object to: Any deviation from normal prepetition store operating hours. Any auctions being held during the Closing Sales. No limits on sizing, quantity and colors for signs and banners. Use of neon or day-glo colors on signs or banners. Use of banners in enclosed malls or upscale non-enclosed shopping centers. Banners wider than existing signage. Banners and signs in any language other than English. Multiple banners on a single side of a store. Use of sign-walkers or persons wearing sandwich boards on shopping center property or immediately adjacent ring-roads or sidewalks. Use of any signage or banners in common areas of a shopping center. Use of balloons, blimps or other inflatable devices to advertise the Closing Sales. Tent or sidewalk sales unless allowed by terms of the lease. Excessive notice and waiting periods prior to an expedited hearing to resolve a breach or default under the Closing Sales Guidelines. Augmentation of inventory during the Closing Sales. Insufficient notice of the conclusion of the Closing Sales and no defined end-date for the Closing Sales.

3.

Finally, the Landlords request that any order approving the Motion make

clear that nothing in the order or the Closing Sales Guidelines (i) effects the Debtors obligations to timely pay rent and other obligations and maintain all insurance as required under the terms of the Leases or (ii) extends the term of the Leases or authorizes the Debtors or the Agent1 to remain in possession of the Leased Premises any longer than is allowed under the terms of the respective Leases. OBJECTION A. The Debtors Closing Sales Guidelines 4. By the Motion, the Debtors or a court approved Agent seek the authority

to conduct Closing Sales without otherwise complying with state or local laws, statutes, rules and/or ordinances governing store closing, liquidation or going out of business sales. The Motion further requests that the Court authorize the Debtors to conduct the Closing Sales without any interference by the Landlords and without having to comply with certain applicable restrictions in the Leases. 5. While the Landlords recognize that the Debtors may need to liquidate their

inventory for the benefit of all creditors, the Court must balance the rights of the Landlords, and the other tenants, as well as the economic impact the proposed Closing Sales will have on their interests. Moreover, under Section 363(e) of the Bankruptcy Code, the Landlords are entitled to adequate protection in connection with the Debtors use of their property outside of the ordinary course of business.2 A landlords right to adequate protection seems to follow clearly from the
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Capitalized terms otherwise defined herein shall have the same meaning ascribed to them in the Motion. Section 363(e) of the Bankruptcy Code provides in relevant part: Notwithstanding any other provision of this section, at any time, on request of an entity that has an interest in property used, sold, or leased, or proposed to be used, sold, or leased, by the trustee, the court, with or without a hearing, shall prohibit or condition such use, sale, or lease as is necessary to provide adequate protection of such interest.

language of 363(e) of the Bankruptcy Code . . . . In re P.J. Clarkes Restaurant Corp., 265 B.R. 392, 404 (Bankr. S.D.N.Y. 2001); see Ames Dept. Stores, 136 B.R. at 359; see also In re Friedmans Inc., et. al, 336 B.R. 880, 884 (Bankr. D. Ga. 2005) (landlords who are compelled by an order pursuant to section 363 of the Bankruptcy Code to permit a use prohibited by their leases are entitled to adequate protection beyond regular rental payments). 6. Thus, the Landlords request that the Closing Sales be conditioned upon the

Debtors timely performance of all obligations arising under the Leases until such time as the Leases are assumed or rejected pursuant to section 365(d)(3) of the Bankruptcy Code, and the Debtors compliance with revised Closing Sales Guidelines that adequately protect the Landlords interests in their Leases and their shopping centers. B. The Proposed Closing Sales Guidelines Do Not Adequately Protect the Interests of the Landlords and the Other Shopping Center Tenants 7. The Landlords have several critical issues that are not adequately

addressed by the proposed guidelines, as well as several objections to the proposed guidelines themselves. Accordingly, the Landlords request that the Court deny the relief requested in the Motion unless the Debtors agree to amend the Closing Sales Guidelines as set forth below. (i) Signage and Advertising 8. The Landlords are particularly concerned with the Debtors or the Agents

use of signage and specifically object to any use of exterior banners or other exterior signage not otherwise permitted by the Leases, whether or not the stores are located in enclosed malls. Furthermore, all signage and banners should be limited to three (3) colors on a white background. Window signs should be limited to one per window not to exceed 36 x 60 inches and be set back at least twelve (12) inches from the glass. In addition to window signs, no more
11 U.S.C. 363(e).

than four (4) hanging signs for each 1,000 square feet of sales floor space should be allowed in the interior of a store, each sign not to exceed 30 by 28 inches. Toppers should not exceed 8 by 11 inches, should be of the similar colors as the store signs, and should be limited to one for each rack, counter or shelf. Finally, no neon or day-glo colors should be allowed on any signs, toppers or banners. 9. The appearance and image of the Landlords retail shopping centers is

crucial to both the Landlords and the other retailers operating their businesses in the Landlords properties. Agents frequently attempt to distinguish enclosed malls from non-enclosed shopping centers, and request authorization to use large unattractive banners at any non-enclosed shopping centers. The use of exterior banners and other unauthorized signage at any shopping center gives the impression that the shopping centers, and Debtors co-tenants, are in financial distress. Many upscale premier shopping centers are not enclosed for aesthetic, climate related, and demographic reasons. In particular, the appeal and success of lifestyle centers and village-type premium factory outlet centers is dependent on their appearance. These non-enclosed shopping centers should be afforded the same protections as enclosed malls. In most instances the leases for the premium factory outlets prohibit the landlord from using any part of the exterior of the buildings for advertising. As such, the Debtors have no interest in the exterior of the buildings that would provide the Court with jurisdiction to authorize the use of an exterior banner that is wider than existing signage. 10. If the Court determines that exterior banners may be employed, such

banners must be properly secured to prevent injury to any party, and the use of such banners should be limited to community, strip, or convenience shopping centers. Further, the banners should be no larger than existing signage or 75% of the width of the storefront,

whichever is less, should only be placed in the proximity of the existing exterior sign. Only one banner per side of a store should be allowed, and all signage must be in English. Multiple banners and multiple languages will detract from the appearance of the shopping centers and simply are not necessary. No drilling into the building should be allowed when hanging signs or banners, and the Debtors or Agent must be liable to the Landlords for any damage caused by their signs or banners. 11. The Landlords are entitled to the benefit of bargained for provisions in the

Leases that are intended to maintain the image of the Leased Premises as premier shopping centers. The potential harm to the Landlords interest in their shopping centers greatly outweighs any benefit to the Debtors estate in the event that this Court permits the Debtors to utilize any exterior signage in violation of the express provisions of the Leases. 12. The Closing Sale Guidelines allow the Debtors or the Agent to utilize

sign walkers, A-frame, interior and exterior banners and similar signage, notwithstanding any state, county or local law or ordinance. See Closing Sale Guidelines 3. The Landlords object to the use of sign walkers, persons wearing sandwich boards, or carrying placard signs advertising the sales on shopping center property, including in the shopping center common areas, parking lots, or on any ring roads on the streets or access ways immediately adjacent to any of the Landlords shopping center premises. In addition, the Landlords object to any items attached to the exterior of the Leased Premises, or to the roof of the shopping centers. Finally, the Closing Sales Guidelines should make clear the customers shall not be solicited on mall property outside the Leased Premises unless permitted by the applicable Lease. 13. If the Debtors or the Landlords are notified that the signage employed by

the Debtors or the Agent violate any local ordinances or statutes, or are cited with regard to

such violation, the Debtors or the Agent should immediately remove any non-conforming signs unless, upon presentation of this Courts order, the governmental unit accepts the order and agrees that the affected Landlords shall have no liability with regard to such signage. Additionally, the order should make clear that any injunction prohibiting third-party interference with the Closing Sales also includes any actions against the Landlords. In the event that any governmental unit imposes any fines with regard to non-conforming signage, the Landlords request that the Debtors and the Agent be liable to the Landlords, and indemnify the Landlords, with regard to all fines/penalties imposed and all costs, including all attorneys fees and costs, associates therewith. (ii) Dispute Resolution 14. If a dispute regarding the conduct of the Closing Sales arises and cannot

be consensually resolved, the Landlords should have the right to schedule an expedited hearing to resolve the dispute on three (3) days notice. (iii) Augmentation 15. The purpose of the Closing Sales is to efficiently liquidate the Debtors

inventory. Thus, the Landlords object to any augmentation of inventory during the Closing Sales. If augmentation of inventory is allowed, such inventory must be of like kind and quality as that sold by the Debtors in the stores prior to the commencement of these cases. (iv) Debtors or Their Agents Must Coordinate With the Landlords for Removal of Owned FF&E3 16. The Closing Sale Guidelines provide that the Debtors and/or the Agent

may sale their Owned FF&E, and the purchaser of any Owned FF&E may be permitted to remove such property only through back shipping areas or through other areas after business
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Capitalized terms not otherwise defined herein shall have the same meaning ascribed to them in the Motion.

hours. While the Landlord understands that this necessary, the Landlords only request that such removal is coordinated with the Landlords. (v) Duration and Notice of Conclusion of Closing Sales 17. Neither the Motion nor Sale Guidelines establish an end date or any other

timing for the Closing Sales. The Landlords request that the Closing Sales be limited to sixty days, and that the Debtors should not be permitted to extend the duration of the Closing Sales at any of the Leased Premises without the written consent of the Landlords. Additionally, the Debtors should provide the Landlords with not less than two weeks advance notice of the date the Closing Sales will conclude and when the Debtors will relinquish possession of the premises. (vi) Auctions 18. The Sale Guidelines fail to prohibit the Debtors or Agent from conducting

auctions during the Closing Sales. The Closing Stores are located within shopping centers and conducting any type of auction during the Closing Sales will be disruptive to the other tenants and shoppers in the shopping centers. Moreover, a prohibition against auctions in store closing guidelines is common in this district. See In re Hancock Fabrics, Inc., Case No. 07-10353 (BLS), Docket No. 208, April 5, 2007.

WHEREFORE, the Landlords respectfully request that the Court enter an order (i) denying the Motion as set forth above, unless the Debtors agree to the Landlords requested relief, and (ii) granting such other and further relief as this Court deems just and proper. Dated: October 27, 2008 New York, New York KELLEY DRYE & WARREN LLP By: /s/ Robert L. LeHane James S. Carr (JC 1603) Robert L. LeHane (RL 9422) Gilbert R. Saydah Jr. (DE Bar No. 4304) 101 Park Avenue New York, New York 10178 Tel: (212) 808-7800 Fax: (212) 808-7897 ATTORNEYS FOR DEVELOPERS DIVERSIFIED REALTY CORP., JONES LANG LASALLE AMERICAS, INC., WEINGARTEN REALTY INVESTORS, AND GREGORY GREENFIELD & ASSOCIATES, LTD.

EXHIBIT A
Diversified Developers Realty Corp. Store No. Mall Name 34 46 51 54 55 68 85 93 103 125 185 189 217 226 231 232 234 248 249 250 251 264 266 267 284 321 20928 20933 20937 20954 Santa Rosa Plaza College Grove S/C Loma Vista S/C West Covina S/C Deer Valley Northridge Plaza Garden Grove Center Nellis Crossing Santa Cruz Plaza Shasta Center Chino Town Square Mervyn's Valencia Sierra Vista Mall Westfield Shopping Town Ukiah Madera Superstition Springs Burbank Town Center North Fullerton Arbor Faire S/C Porterville Marketplace Mission Plaza Antelope Valley Mall Anaheim Hills Festival Ctr Sonora Crossroads Slatten Ranch S/C Southland Plaza Mervyn's Plaza Town Center West Folsom Square Location Santa Rosa, CA San Diego, CA Las Vegas, NV West Covina, CA Phoenix, AZ Northridge, CA Garden Grove, CA Las Vegas, NV Tucson, AZ Redding, CA Chino, CA Valencia, CA Clovis, CA El Cajon, CA Ukiah, CA Madera, CA Mesa, AZ Burbank, CA North Fullerton, CA Tulare, CA Porterville, CA Lompac, CA Palmdale, CA Anaheim, CA Sonora, CA Folsom, CA San Diego, CA Chandler, AZ Santa Maria, CA Folsom, CA

Jones Lang LaSalle Americas, Inc. Store No. Mall Name 14 Serramonte Center

Location Daly City, California

Weingarten Realty Investors Store No. Mall Name 331 271 Jess Ranch Marketplace Las Tiendas

Location Apple Valley, CA McAllen, TX

Gregory Greenfield& Associates, Ltd. Store No. Mall Name 146 Santa Fe Place

Location Santa Fe, NM

CERTIFICATE OF SERVICE I, Nii-Amar Amamoo, hereby certify that I am not less than 18 years old and that a copy of the foregoing pleading was served on the 27th day of October 2008, on the parties and by the methods listed below. /s/ Nii-Amar Amamoo Nii-Amar Amamoo VIA FAX Mark Collins, Esq. Richards, Layton & Finger, P.A. One Rodney Square 920 North King Street Wilmington, DE 19801 Fax: (302) 498-7531 Howard Beltzer, Esq. Neil Herman, Esq. Morgan, Lewis & Bockius LLP 101 Park Avenue New York, NY 10178-0060 Fax: (212)-309-6001 Jay R Indyke, Esq. Cathy Hershcopf, Esq. Cooley Goodward Kronish LLP 1114 Avenue of the Americas New York, NY 10036-7998 Fax: (212)-479-6275 William Bowden, Esq. Karen Skomorucha, Esq. Ashby & Geddes, P.A. 500 Delaware Avenue, 8th Floor Wilmington, DE 19801 Fax: (302) 654-2067 VIA OVERNIGHT MAIL Amanda Riley, Esq. Mervyns Holdings, LLC 22301 Foothill Blvd. Hayward, CA 95541