403 - the Landlord (Or Tenant) Wants Us to Sign What?
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ACC’s 2010 Annual Meeting Be the Solution. Monday, October 25 4:30pm-6:00pm 403 - The Landlord (or Tenant) Wants Us to Sign What? Linda Madway Vice President and Associate General Counsel Charming Shoppes, Inc. William Peltin General Counsel Ridge Property Trust Stacy Siegal Vice President and General Counsel rue21 This material is protected by copyright. Copyright © 2010 various authors and the Association of Corporate Counsel (ACC). Materials may not be reproduced without the consent of ACC. Reprint permission requests should be directed to ACC’s Legal Resources Department at ACC: +1 202.293.4103, x338; [email protected] ACC's 2010 Annual Meeting Be the Solution. Session 403 Faculty Biographies Linda Madway Linda Madway is vice president and associate general counsel of Charming Shoppes, Inc., a retail company located in Bensalem, Pennsylvania, which owns the Lane Bryant, Fashion Bug, and Catherines store chains. Her areas of practice include real estate, general corporate, technology and import matters. Since joining the company, Ms. Madway has negotiated hundreds of store leases as well as leases for office, warehouse and distribution center locations. Prior to joining Charming Shoppes, Ms. Madway was a real estate associate at Saul Ewing LLP, a Philadelphia law firm. Her practice at Saul Ewing included retail, office and industrial leasing, sales and purchases of commercial properties and real estate lending. Ms. Madway also taught business law at Immaculata College in Immaculata, Pennsylvania. Ms. Madway is currently the president of CSI Charities, Inc., created by Charming Shoppes to support children's charities. Ms. Madway served on ACC's DELVACCA Board for many years and was chapter president. She was a member of the Community Advisory Committee appointed by the Lower Merion Board of School Directors, and a volunteer with other groups including PALS for Life, an organization that provides companion animal programs. Ms. Madway received a BA summa cum laude from the University of Pennsylvania and a JD cum laude from Villanova University School of Law, where she was a Case and Comment Editor for the Villanova Law Review and a member of the Order of the Coif. William Peltin William J. Peltin currently serves as the executive vice president and general counsel of Ridge Property Trust ("Ridge"). Ridge is a private REIT specializing in the development of "state of the art" warehouse, distribution, and manufacturing facilities throughout the United States and Mexico. At Ridge, Mr. Peltin is responsible for the implementation and management of all legal matters relating to Ridge's ongoing day-to-day acquisition, development, construction, financing, and ownership activities, as well as all corporate legal matters relating to the operation of Ridge and its joint venture relationships. Mr. Peltin began his legal career as an associate in the real estate group at Rudnick & Wolfe (now DLA Piper) and then moved to the real estate group at Gardner, Carton & Douglas (now Drinker Beadle), where he was elected partner. He left Gardner, Carton to join Ridge Realty Group, LLC (a client and predecessor to Ridge) as general counsel and a principal. Up until joining Ridge, he was a partner with the Chicago law firm of Fox, Hefter, Swibel, Levin & Carroll. Copyright © 2010 Association of Corporate Counsel 2 of 287 ACC's 2010 Annual Meeting Be the Solution. Session 403 Mr. Peltin received his JD from the University of Wisconsin Law School where he served as an associate editor of the Wisconsin Law Review. Mr. Peltin received his BS with honors from the University of Illinois. Stacy Siegal Stacy Siegal is currently the vice president, general counsel, and corporate secretary of rue21, Inc., a fast growing retailer with over 600 stores in 44 states. Ms. Siegal joined rue21 as real estate counsel, and her responsibilities include managing the negotiation and execution of all of the Company's leases, as well as handling litigation management, corporate governance, and human resources matters. Ms. Siegal started her legal career as a law clerk to the Hon. Larnzell Martin Jr. in Prince George's County, MD, and then worked as an associate at Feldeman, Tucker in Washington, D.C. Ms. Siegal joined GNC in Pittsburgh, PA as corporate counsel doing primarily real estate work, a position she held until she left to raise her three children and do consulting work for local boards and retail companies in the Pittsburgh area. Ms. Siegal is currently a member of the Pennsylvania Bar and an inactive member of the Maryland Bar. She is also a member of the NRF's General Counsel's Forum, the Society for Human Resource Management, and of course, ACC. Ms. Siegal received a BA from Lehigh University and her JD from the George Washington University of Law in Washington, D.C. Copyright © 2010 Association of Corporate Counsel 3 of 287 ACC's 2010 Annual Meeting Be the Solution. I. “During Term Issues”/Documents A. From Landlord 1. Requirements of Landlord’s Lender. Landlord’s lender has a significant interest in the property that is being leased and therefore will impose on its borrower (being the Landlord) various requirements with respect to leasing matters. The Landlord will, in turn, include these requirements in its lease with the Tenant. a. SNDA (i) Lease Clause; What does it mean and why is it there? o Provides for Tenant to agree to subordination of Lease to lien of mortgage, as well as any renewals, replacements, supplements, amendments, modifications and extensions. o Provides for attornment (i.e. recognition of Lender as Landlord) upon foreclosure or deed-in-lieu of foreclosure. o Includes limitations on Lender’s liability/responsibility. o Standard requirement imposed by mortgage lenders. o Creates contractual privity between Lender and Tenant. (ii) Typical Tenant Concerns; the Tenant’s general concern is that it does not want to execute a document with the Landlord’s lender that could serve to increase the scope of the Tenant’s obligations under the Lease and/or expand the Landlord’s (being the successor Landlord) rights under the Lease. o Do not want to agree to additional representations and warranties. o Do not want to agree to additional reporting requirements. o Do not want to agree to additional indemnification obligations (e.g. environmental matters). Copyright © 2010 Association of Corporate Counsel 4 of 287 ACC's 2010 Annual Meeting Be the Solution. b. Estoppel Certificate (i) Lease Clause; What does it mean and why is it there? o Provides for Tenant to confirm salient provisions of the Lease, specific dates and absence of defaults, for the benefit of the Lender. o Standard requirement imposed by mortgage lenders. o Creates contractual privity between Lender and Tenant; information will be relied upon by Lender. (ii) Typical Tenant Concerns o Need to be accurate as to lease information; creating potential liability to a new party arising out of contractual privity. o Do not want to provide more information than what is required by the Lease. o Similar concerns to SNDA; do not want to expand obligations and/or rights since this may create an opportunity to expand representations and warranties, indemnifications and other similar matters. 2. Landlord Confirmations a. Memorandum of Lease (i) Lease Clause; What does it mean and why is it there? o Serves to confirm Commencement Date and Expiration Date; particularly important if Commencement Date is not a fixed date (e.g. if Landlord is building out spaces). o Provides record notice of Lease and certain critical provisions; intended to be a summary only. o Rent and other potentially confidential information would never typically be included in a Memorandum of Lease. Copyright © 2010 Association of Corporate Counsel 5 of 287 ACC's 2010 Annual Meeting Be the Solution. o Landlord may oppose filing of Memorandum of Lease; concerns include difficulty in having it removed of record. (ii) Typical Tenant Concerns o Need to be accurate and address any dispute as to dates since this will be a binding document; also, do not want to create any inconsistencies between the Lease and the Memorandum of Lease. o Do not want to place on the public record more than minimum amount necessary (goes to issue of not disclosing in the public record confidential information). o Make certain that document does get recorded. (Tenant is usually more interested in it being recorded than Landlord.) b. Estoppel Certificate (i) Lease Clause: What does it mean and why is it there? o Similar to requirement of Lender estoppel certificate, but this is for the benefit of the Landlord (or the Landlord’s purchaser, etc.). o Intended to address current status of the Lease and provide the applicable parties with important information regarding the Lease, including the Tenant’s (and the Landlord’s) performance of their respective obligations. (ii) Typical Tenant Concerns-same as Lender estoppel certificate; but the impact of missing information/inaccuracy can be potentially more significant. c. Verification of Insurance Requirements. Typically, a simple letter from the Landlord requesting the required certificate of insurance (naming Landlord, etc.). (i) Lease Clause: What does it mean and why is it there? Copyright © 2010 Association of Corporate Counsel 6 of 287 ACC's 2010 Annual Meeting Be the Solution. o Establishes obligation on the part of the Tenant to provide evidence of insurance coverages required under the Lease. o Landlord has economic interest in making certain that Tenant maintains requisite insurance coverage for (a) liability; (b) personal property; and (c) business interruption; requirements of business interruption and personal property insurance may be negotiable, while liability coverage generally is not. (ii) Typical Tenant Concerns o Specific requirements should have been negotiated as part of the Lease (not really the correct stage in the process to discuss insurance requirements).