CALDERWOOD & HARKNESS LLP Attorneys at Law
425 Park Avenue, 18th Floor New York, New York 10022
Telephone: (212) 554-7000 Facsimile: (212) 554-7001 www.calderwoodharkness.com
August 15, 2023
VIA EMAIL AND Sundial Data Systems
Tariq Nassar, Esq. General Counsel Aurelius Global Media Group PLC 14 Cavendish Square London W1G 0DW United Kingdom
Vivienne Caldwell Senior Vice President, Global Real Estate & Facilities Aurelius Global Media Group PLC 14 Cavendish Square London W1G 0DW United Kingdom
Re: Headquarters Lease — 787 Seventh Avenue, New York, NY 10019 (Greystone Tower), Floors 34–38 Calderwood & Harkness Matter No. 1017-00009
Dear Tariq and Vivienne:
1. Introduction and Purpose
We are pleased to confirm that all closing conditions under the Agreement of Lease dated July 13, 2023 (the "Lease"), by and between Greystone Metropolitan Realty LLC, a Delaware limited liability company (the "Landlord"), and Aurelius Media Holdings Inc., a Delaware corporation (the "Tenant"), have been fully satisfied, and the closing of the transaction is now complete. As you are aware, Aurelius Global Media Group PLC executed the Guaranty of Lease (defined below) in connection with this transaction, providing the Landlord with the credit support required as a condition to execution of the Lease.
We further confirm that occupancy of Floors 34 through 38 at 787 Seventh Avenue, New York, New York 10019, commonly known as Greystone Tower, encompassing approximately 185,000 rentable square feet ("RSF"), was confirmed on August 10, 2023, following the delivery of all remaining closing deliverables, the satisfaction of all pre-occupancy conditions, and the completion of the Landlord's base building work.
The purpose of this letter is to provide you and your team with a comprehensive post-closing summary covering the following areas:
(i) all executed transaction documents and their principal terms;
(ii) key dates and deadlines arising under the Lease and ancillary agreements;
(iii) ongoing obligations of the Tenant and the Guarantor;
(iv) option exercise windows, including the expansion option, right of first offer, and renewal options; and
(v) a description of the enclosed closing binder index and the location of original executed documents.
We encourage you to circulate this letter to all relevant members of the Aurelius team responsible for real estate portfolio management, finance, and legal compliance, so that each critical milestone and obligation is properly docketed in Aurelius's internal tracking systems. This letter is intended as a summary reference and does not modify, amend, or supplement the terms of the Lease or any ancillary document. In the event of any conflict between this summary and the executed transaction documents, the executed documents shall govern.
2. Summary of Executed Transaction Documents
The following is a summary of each principal document executed and delivered in connection with the closing of the Lease transaction.
2.1 Agreement of Lease
The execution version of the Agreement of Lease is dated July 13, 2023. The principal parties and terms are as follows:
Landlord: Greystone Metropolitan Realty LLC, a limited liability company organized and existing under the laws of the State of Delaware.
Tenant: Aurelius Media Holdings Inc., a corporation organized and existing under the laws of the State of Delaware (Delaware Secretary of State File No. 7318294).
Premises: The entire rentable area of Floors 34, 35, 36, 37, and 38 at 787 Seventh Avenue, New York, New York 10019, designated as Block 1024, Lot 18, in the Borough of Manhattan, City, County, and State of New York (the "Premises"). The Premises comprise approximately 185,000 RSF in the aggregate, with each floor containing approximately 37,000 RSF.
Permitted Use: General office use, studio and production use, and ancillary uses consistent with the operation of a global media, entertainment, and e-commerce headquarters, including but not limited to executive offices, content production studios, technology and engineering workspaces, conference and meeting facilities, employee amenity areas, and such other lawful uses as are customarily incidental to the foregoing, in each case subject to applicable zoning, building codes, and governmental regulations.
Governing Law and Forum: The Lease is governed by and shall be construed in accordance with the laws of the State of New York, without regard to conflicts-of-law principles. The parties have consented to the exclusive jurisdiction of the Supreme Court of the State of New York, County of New York, for the resolution of any disputes arising under or in connection with the Lease.
2.2 Lease Exhibits
The Lease incorporates the following exhibits, each of which is attached to and forms an integral part of the executed Lease:
Exhibit A — Floor Plans of the Premises. Exhibit A contains detailed architectural floor plans for each of Floors 34 through 38, identifying the demised Premises on each floor. Each floor comprises approximately 37,000 RSF. The floor plans were prepared by the Landlord's architect and verified by the Tenant's architect of record, Ashworth Patel Design Studio LLC, in connection with the space measurement confirmation process.
Exhibit B — Rules and Regulations for Greystone Tower. Exhibit B sets forth the building rules and regulations applicable to all tenants of Greystone Tower, including provisions governing building access and security, freight elevator scheduling, loading dock procedures, signage standards, and common area use. The Landlord retains the right to amend the rules and regulations from time to time in a non-discriminatory manner, provided that no amendment shall materially interfere with the Tenant's permitted use of the Premises.
Exhibit C — Work Letter Agreement. Exhibit C governs the construction of Tenant's initial improvements to the Premises. Key provisions include the following:
• Tenant Improvement Allowance: The Landlord shall provide a tenant improvement allowance ("TI Allowance") of $85.00 per RSF, for a total of $15,725,000 (based on 185,000 RSF), to be applied toward the cost of designing, permitting, and constructing the Tenant's initial improvements to the Premises.
• Architect of Record: Ashworth Patel Design Studio LLC, under the direction of Rohan Patel, AIA, has been designated as the Tenant's architect of record for the initial buildout.
• Construction Manager: Pinnacle Build Group LLC, located at 330 West 42nd Street, Suite 1500, New York, New York 10036, has been engaged as the Tenant's construction manager for the initial buildout.
• Disbursement of the TI Allowance is made via monthly progress payments against architect-certified requisitions, subject to the detailed procedures and conditions set forth in the Work Letter.
Exhibit D — Form of Letter of Credit. Exhibit D contains the approved form of the irrevocable standby letter of credit to be delivered by the Tenant as security for its obligations under the Lease. The letter of credit was required to be in the initial amount of $5,180,000 and issued by a financial institution meeting the creditworthiness criteria specified in the Lease (as further described in Section 2.5 below).
Exhibit E — Expansion Option Terms. Exhibit E sets forth the terms and conditions of the Tenant's option to expand into Floors 39 and 40 of Greystone Tower, as summarized in Section 8 of this letter.
Exhibit F — Right of First Offer Terms. Exhibit F sets forth the terms and conditions of the Tenant's right of first offer with respect to available space on Floors 30 through 33, as summarized in Section 9 of this letter.
Exhibit G — Fair Market Rent Determination Procedure. Exhibit G establishes the procedure for determining Fair Market Rent for purposes of the expansion option, right of first offer, and renewal options, employing a "baseball-style" arbitration mechanism. Under this procedure, each party designates an independent MAI-certified appraiser, and if the two appraisers' determinations differ, each party submits a final rental determination, and the arbitrator selects the determination closest to the arbitrator's own independent assessment of fair market rent. This procedure is designed to incentivize reasonable proposals from both parties.
2.3 Guaranty of Lease
The Guaranty of Lease (the "Guaranty") was executed on July 13, 2023, by Aurelius Global Media Group PLC, a public limited company incorporated and registered in England and Wales under Company No. 04291837 (the "Guarantor"), in favor of the Landlord, Greystone Metropolitan Realty LLC. The principal terms of the Guaranty are as follows:
• The Guarantor unconditionally guarantees the full and punctual performance by the Tenant of all of its obligations under the Lease, including without limitation the payment of all rent, additional rent, and other sums due thereunder.
• The Guarantor's liability under the Guaranty is subject to a cap of $18,000,000, which represents approximately two years' average base rent over the initial Lease Term.
• The Guaranty includes a provision permitting the release of the Guarantor upon a change of control assignment (as described in Section 6 of this letter), provided that the successor entity or its parent delivers a replacement guaranty on substantially the same terms, including the $18,000,000 cap.
• The Guaranty is a continuing guaranty and shall remain in full force and effect until the earlier of (a) the satisfaction in full of all of the Tenant's obligations under the Lease and the expiration or earlier termination of the Lease, or (b) the delivery of a qualifying replacement guaranty in connection with a change of control assignment.
2.4 Subordination, Non-Disturbance and Attornment Agreement (SNDA)
The Subordination, Non-Disturbance and Attornment Agreement (the "SNDA") was executed on July 10, 2023. The SNDA is a tri-party agreement among the following parties:
• First Mortgagee: Atlas Continental Bank, N.A., with offices at 277 Park Avenue, New York, New York 10172, as holder of a first mortgage lien on the property at 787 Seventh Avenue, recorded with the Office of the City Register of the City of New York on January 15, 2019 (the "Mortgage"). The outstanding principal balance of the Mortgage as of the date of execution was approximately $620,000,000.
• Landlord: Greystone Metropolitan Realty LLC.
• Tenant: Aurelius Media Holdings Inc.
Under the terms of the SNDA, the Tenant's leasehold estate, its right to occupancy, and all of the Tenant's rights under the Lease will not be disturbed, diminished, or interfered with by Atlas Continental Bank, N.A. in the event of any foreclosure of the Mortgage or acceptance of a deed-in-lieu of foreclosure, so long as the Tenant is not then in default under the Lease beyond any applicable notice and cure period. The Tenant, in turn, has agreed to attorn to any successor landlord and to recognize such successor as the landlord under the Lease. The SNDA provides critical protection for the Tenant's leasehold interest and was a condition to the Tenant's obligation to close under the Lease.
2.5 Letter of Credit
The irrevocable standby letter of credit (the "Letter of Credit") was issued on July 14, 2023, and bears designation No. SNLC-2023-08015. The principal terms are as follows:
• Issuing Bank: Caledonian National Bank PLC, London (New York branch).
• Initial Amount: $5,180,000, which is equal to one year of the initial base rent under the Lease.
• Beneficiary: Greystone Metropolitan Realty LLC.
• Term: The Letter of Credit is required to be maintained for the duration of the Lease Term (subject to the burn-down schedule set forth in Section 7 of this letter) and must be renewed or replaced not less than 30 days prior to its stated expiration date, failing which the Landlord is entitled to draw on the full outstanding amount.
• Form: The Letter of Credit is in the form approved as Exhibit D to the Lease.
The burn-down schedule applicable to the Letter of Credit is described in detail in Section 7 of this letter.
2.6 Insurance Certificates
Certificates of insurance evidencing the Tenant's required insurance coverages were transmitted to the Landlord on July 28, 2023, and were accepted as satisfying the Lease's insurance requirements. The required coverages, carriers, and limits are as follows:
Commercial General Liability Insurance:
• Carrier: Northbridge Mutual Insurance Company
• Per-Occurrence Limit: $5,000,000
• General Aggregate Limit: $10,000,000
• Greystone Metropolitan Realty LLC and Atlas Continental Bank, N.A. are named as additional insureds.
Property Insurance (Tenant's Property and Improvements):
• Carrier: Northbridge Mutual Insurance Company
• Coverage: Full replacement value of Tenant's personal property, trade fixtures, and leasehold improvements installed in the Premises.
Umbrella/Excess Liability Insurance:
• Carrier: Sovereign Assurance Group PLC
• Limit: $25,000,000 excess over underlying primary policies.
Carrier Ratings: All insurance carriers meet or exceed the minimum financial strength rating of A-VIII as assigned by A.M. Best Company, as required by the Lease.
Broker of Record: All coverages were placed through Caldecott Risk Advisors Ltd., 71 Fenchurch Street, London EC3M 4BS, United Kingdom. We recommend that Vivienne Caldwell's team coordinate directly with Caldecott Risk Advisors to ensure that renewal certificates are transmitted to the Landlord annually prior to each policy expiration date.
2.7 Leasehold Title Insurance
A leasehold owner's title insurance policy was issued by Commonwealth Fidelity Title Insurance Co. under Policy No. LTP-2023-07842. The title commitment underlying the policy is dated June 9, 2023, and the final policy was issued following the execution and delivery of the SNDA. The policy insures the Tenant's leasehold estate in the Premises, subject to the standard printed exceptions and the special exceptions set forth in Schedule B of the policy. We have reviewed the final policy and are satisfied that it provides the customary protections for a leasehold interest of this nature. A copy of the policy is included in the closing binder.
2.8 Environmental Report
A Phase I Environmental Site Assessment (the "Phase I ESA") of Greystone Tower was completed on June 2, 2023, by Greenfield Environmental Sciences LLC, under the direction of Dr. Nadine Bertram, P.E. The Phase I ESA was conducted in accordance with ASTM Standard E1527-21 and included a review of historical use records, federal and state environmental databases, prior environmental reports, and a physical site inspection.
• Findings: No Recognized Environmental Conditions ("RECs"), Controlled Recognized Environmental Conditions, or Historical Recognized Environmental Conditions were identified in connection with the Premises or the building.
• Asbestos: The Landlord has represented and warranted in the Lease that all known asbestos-containing materials on Floors 34 through 38 have been fully abated in accordance with applicable federal, state, and local regulations.
• Environmental Indemnity: The Landlord has agreed to indemnify, defend, and hold harmless the Tenant from and against all claims, liabilities, and costs arising from pre-existing environmental conditions at the building or on the Premises, including any conditions not disclosed in the Phase I ESA.
A copy of the Phase I ESA is included in the closing binder for your records.
2.9 Corporate Authority Documents
The following corporate authority documents were delivered in connection with the closing:
• Tenant Officer's Certificate: An Officer's Certificate of Aurelius Media Holdings Inc., executed by an authorized officer of the Tenant, certifying that the execution and delivery of the Lease and all ancillary documents have been duly authorized by all necessary corporate action, and that the persons executing such documents on behalf of the Tenant are duly authorized to do so.
• Board Resolutions of the Tenant: Certified copies of the resolutions of the Board of Directors of Aurelius Media Holdings Inc. authorizing the execution, delivery, and performance of the Lease, the Work Letter Agreement, and all related transaction documents.
• Board Minutes Extract — Guarantor: An extract of the minutes of the Board of Directors of Aurelius Global Media Group PLC, dated May 15, 2023, evidencing the Board's approval of the U.S. lease commitment and the execution and delivery of the Guaranty of Lease.
• Certificate of Good Standing — Tenant: A Certificate of Good Standing for Aurelius Media Holdings Inc. issued by the Delaware Secretary of State (File No. 7318294), dated within 30 days of the Lease execution date.
• Certificate of Good Standing — Guarantor: A Certificate of Good Standing (or equivalent Companies House confirmation statement) for Aurelius Global Media Group PLC, registered with Companies House under Company No. 04291837, confirmed as of a recent date prior to closing.
2.10 Commencement Date Confirmation
A Commencement Date Confirmation Letter, dated August 1, 2023, was delivered by Calderwood & Harkness LLP to Pemberton Locke & Strauss LLP (counsel to the Landlord) confirming the following dates as established under the Lease:
• Lease Commencement Date: August 1, 2023
• Rent Commencement Date: February 1, 2024
• Lease Expiration Date: July 31, 2038
The Commencement Date Confirmation Letter was countersigned by Pemberton Locke & Strauss LLP on behalf of the Landlord and is included in the closing binder.
2.11 Possession Delivery Acknowledgment
A Possession Delivery Acknowledgment Letter, dated August 1, 2023, was executed by the Tenant acknowledging the Landlord's delivery of possession of Floors 34 through 38 in the condition required under the Lease. The letter expressly reserves the Tenant's rights with respect to certain identified punchlist items that remain to be completed by the Landlord. A list of the outstanding punchlist items was attached to the letter as a schedule, and we recommend that Vivienne Caldwell follow up with the Landlord's designated contact, Brendan T. Kozlowski, Vice President, Asset Management, to confirm a timeline for the completion of all such items.
3. Key Dates Calendar
The following table summarizes the critical dates and deadlines arising under the Lease and the ancillary transaction documents. We strongly recommend that each of these dates be entered into Aurelius's internal calendar and docketing systems, with appropriate advance reminders set for dates requiring affirmative action.
Note: Lease Years are measured from the Commencement Date (August 1, 2023). The dates shown above for L/C burn-down milestones are calculated accordingly. Please verify exact dates against the Lease provisions.
4. Rent Obligations Summary
4.1 Rent-Free Period
The Lease provides for a rent-free period of six (6) months, commencing on the Commencement Date and ending on the day immediately preceding the Rent Commencement Date. The rent-free period runs from August 1, 2023 through January 31, 2024. During this period, the Tenant is not obligated to pay base rent, although the Tenant remains responsible for its proportionate share of operating expenses and real estate taxes to the extent that such amounts exceed the base year levels, as well as for electricity and any other charges payable by the Tenant under the Lease.
The estimated value of the abated base rent during the rent-free period is approximately $2,590,000, based on the initial annual base rent of $5,180,000 ($431,666.67 per month × 6 months).
4.2 Base Rent Schedule
The following table summarizes the Tenant's base rent obligations over the initial 15-year Lease Term, commencing on the Rent Commencement Date:
The approximate aggregate base rent payable over the full 15-year initial Lease Term (exclusive of the rent-free period) is approximately $90,000,000. This figure does not include escalations for operating expenses, real estate taxes, or electricity charges, which are addressed separately below.
4.3 Operating Expense and Tax Escalations
The Lease provides for the Tenant's payment of its proportionate share of increases in operating expenses and real estate taxes above the base year levels, as follows:
Base Year: Calendar year 2023 (January 1, 2023 through December 31, 2023).
Tenant's Proportionate Share: 12.76%, calculated as the ratio of the Premises area (185,000 RSF) to the total rentable area of the building (1,450,000 RSF).
Escalation Structure: The Lease employs a full pass-through structure above the base year, meaning that there is no operating expense "stop" or fixed escalation cap. The Tenant is responsible for paying 12.76% of all operating expenses and real estate taxes in excess of the base year amounts.
Controllable Expense Cap: Notwithstanding the foregoing, the Lease includes a cap on increases in "controllable" operating expenses (generally defined to exclude real estate taxes, insurance premiums, utility costs, and costs imposed by governmental authorities), limiting the cumulative annual increase in controllable operating expenses to 5% per year on a compounding basis.
Audit Rights: The Tenant has the right, exercisable within 120 days following receipt of the Landlord's annual operating expense statement, to audit the Landlord's books and records relating to operating expenses and real estate taxes. We recommend that Aurelius establish procedures to review each annual statement promptly upon receipt and exercise its audit rights if any material discrepancies are identified.
4.4 Electricity. Electricity for the Premises is provided on a direct-metered basis. The Tenant is responsible for the cost of its own electrical consumption, billed directly by the applicable utility provider. For informational and budgeting purposes, the estimated cost of electricity for the Premises is approximately $3.15 per RSF per year, based on current utility rates and estimated usage for a mixed office and studio environment. This estimate is provided for planning purposes only and does not constitute a guarantee or cap on actual electricity costs.
5. Tenant Improvement Allowance
The Landlord has agreed to provide the Tenant with a tenant improvement allowance to fund the design and construction of the Tenant's initial improvements to the Premises. The key terms of the TI Allowance are as follows:
TI Allowance Amount: $85.00 per RSF × 185,000 RSF = $15,725,000.
Disbursement Mechanism: The TI Allowance is disbursed by the Landlord via monthly progress payments against architect-certified requisitions submitted by the Tenant in accordance with the procedures set forth in the Work Letter Agreement (Exhibit C to the Lease). Each requisition must be accompanied by the architect's certification that the work described therein has been completed in accordance with the approved plans and specifications, together with lien waivers from all contractors and subcontractors for the amounts covered by the preceding requisition.
Architect of Record: Ashworth Patel Design Studio LLC, under the direction of Rohan Patel, AIA, serves as the Tenant's architect of record for the initial buildout and is responsible for preparing all construction documents, filing all required permits, and certifying each progress requisition.
Construction Manager: Pinnacle Build Group LLC, 330 West 42nd Street, Suite 1500, New York, New York 10036, has been engaged by the Tenant as its construction manager and is responsible for day-to-day oversight of the construction process, including contractor coordination, schedule management, and cost control.
Excess TI Option: In addition to the base TI Allowance, the Lease provides the Tenant with the option to access up to an additional $15.00 per RSF (an additional $2,775,000 based on 185,000 RSF), subject to the following terms:
• The excess TI amount elected by the Tenant is amortized into base rent at an interest rate of 7.5% per annum over the remaining Lease Term from the date of disbursement.
• The Tenant must elect to utilize the excess TI option by written notice to the Landlord, and the amortized rent adjustment will be documented by a supplemental rent schedule.
We recommend that Vivienne Caldwell and Rohan Patel coordinate on a requisition submission schedule to ensure that the TI Allowance is drawn down efficiently and that construction milestones are met. Please note that any unused portion of the TI Allowance not requisitioned within 18 months of the Commencement Date will be forfeited, and we encourage timely submission of all requisitions.
6. Change of Control Assignment Right
The Lease contains provisions governing the Tenant's right to assign the Lease in connection with a "change of control" of Aurelius Media Holdings Inc. or Aurelius Global Media Group PLC. Given the strategic importance of this provision to Aurelius's corporate planning and potential future transactions, we set forth the key terms below in detail.
Assignment Right. Upon a "change of control" (as defined below) of the Tenant or the Guarantor, the Tenant has the right to assign the Lease to the successor entity without the prior written consent of the Landlord, subject to the satisfaction of the following conditions:
(i) Net Worth Requirement. The successor entity must have a tangible net worth, calculated in accordance with United States Generally Accepted Accounting Principles ("GAAP"), equal to or greater than the tangible net worth of Aurelius Global Media Group PLC as of the Lease Date. The Guarantor's tangible net worth as of the Lease Date is $3,100,000,000.
(ii) Assumption of Obligations. The successor entity must execute and deliver to the Landlord a written instrument, in form and substance reasonably satisfactory to the Landlord, assuming all of the obligations of the Tenant under the Lease from and after the date of the assignment.
(iii) Prior Notice. The Tenant must provide the Landlord with not less than 30 days' prior written notice of the proposed change of control assignment, together with reasonable evidence of the successor entity's financial condition, including audited financial statements for the most recently completed fiscal year.
Definition of "Control." For purposes of the Lease, "Control" is defined as the direct or indirect ownership of more than 50% of the voting equity interests in an entity, or the power, whether by contract, equity ownership, or otherwise, to direct or cause the direction of the management and policies of such entity.
Definition of "Change of Control." A "change of control" includes any transaction or series of related transactions — including, without limitation, any merger, consolidation, stock sale, asset sale, recapitalization, or corporate reorganization — that results in a change in the identity of the person or entity that Controls the Tenant.
Waiver of Landlord's Recapture Right. In the case of a change of control assignment, the Landlord has waived its right to recapture the Premises. The Landlord's recapture right is retained only for voluntary assignments to unrelated third parties (i.e., assignments that do not arise from a change of control), in which case the Landlord has 30 days from receipt of the Tenant's assignment request to elect to recapture the Premises and terminate the Lease.
Replacement Guaranty and Release. Upon a change of control assignment, the successor entity (or its parent or affiliate) must execute and deliver to the Landlord a replacement guaranty on substantially the same terms as the original Guaranty, including the $18,000,000 liability cap. Upon delivery and acceptance of the replacement guaranty, Aurelius Global Media Group PLC shall be released from all guaranty obligations arising under the original Guaranty prospectively from the date of such delivery. The original Guaranty shall remain in effect with respect to any obligations of the Tenant that accrued prior to the effective date of the replacement guaranty.
Voluntary Assignments and Subletting. For any assignment or subletting that does not arise from a change of control (i.e., a voluntary assignment to an unrelated third party or a sublease of all or a portion of the Premises), the prior written consent of the Landlord is required. The Lease provides that the Landlord's consent to such assignments or subleases shall not be unreasonably withheld, conditioned, or delayed, and specifies the criteria against which the Landlord's reasonableness will be evaluated.
7. Security Deposit — Letter of Credit Burn-Down Schedule
The Tenant has delivered the Letter of Credit (L/C No. SNLC-2023-08015, issued by Caledonian National Bank PLC) in the initial amount of $5,180,000, which serves as the Tenant's security deposit under the Lease. The Lease provides for a scheduled reduction ("burn-down") of the outstanding Letter of Credit amount at specified milestones during the Lease Term, subject to the condition that no uncured event of default by the Tenant exists at the time of any scheduled reduction. The burn-down schedule is as follows:
Each reduction of $1,036,000 represents 20% of the initial Letter of Credit amount. At the end of Lease Year 13, assuming no uncured default, the Letter of Credit will be fully reduced to zero and the Letter of Credit (or any replacement thereof) will be returned to the Tenant.
We recommend that Aurelius calendar each burn-down date and coordinate with Caledonian National Bank PLC well in advance of each scheduled reduction to arrange for the issuance of an amended Letter of Credit (or a replacement Letter of Credit) reflecting the reduced amount. The Landlord's cooperation is required in connection with each amendment, and we recommend initiating the process at least 60 days prior to each milestone date to allow adequate processing time.
Please also note that the Letter of Credit must be renewed or replaced not less than 30 days prior to its stated expiration date in each instance. If the Tenant fails to timely renew or replace the Letter of Credit, the Landlord is entitled to draw on the full outstanding amount and hold the proceeds as a cash security deposit under the Lease.
8. Expansion Option
The Lease grants the Tenant an option to expand the Premises to include Floors 39 and 40 of Greystone Tower (the "Expansion Space"), subject to the following terms and conditions:
Expansion Space: Floors 39 and 40, each containing approximately 37,000 RSF, for a total of approximately 74,000 RSF.
Exercise Window: The Tenant may exercise the expansion option at any time during the period beginning on the 36th month of the Lease Term (August 1, 2026) and ending on the 48th month of the Lease Term (July 31, 2027). The option must be exercised by delivery of written notice to the Landlord within this window. Time is of the essence with respect to the exercise deadline, and any failure to deliver written notice on or before July 31, 2027 will result in the irrevocable lapse of the expansion option.
Expansion Rent: The rent for the Expansion Space will be the Fair Market Rent at the time of exercise, determined in accordance with the Fair Market Rent Determination Procedure set forth in Exhibit G to the Lease. However, in no event shall the Expansion Rent be less than 95% of the then-current base rent per RSF applicable to the initial Premises. By way of example, if the expansion option is exercised during Lease Years 6 through 10 (when the base rent on the initial Premises is $33.00 per RSF), the minimum Expansion Rent floor would be 95% × $33.00 = $31.35 per RSF.
Expansion Term: The term for the Expansion Space will be co-terminous with the initial Lease Term, expiring on July 31, 2038. The Tenant's renewal options, if exercised, would also extend to the Expansion Space.
Expansion TI Allowance: The Landlord will provide a tenant improvement allowance for the Expansion Space in the amount of $50.00 per RSF × 74,000 RSF = $3,700,000, to be applied toward the design and construction of the Tenant's improvements to the Expansion Space, subject to the same disbursement procedures as the initial TI Allowance.
We strongly recommend that Aurelius calendar the opening of the exercise window (August 1, 2026) and the exercise deadline (July 31, 2027) with ample advance reminders — ideally six months before the window opens — to allow sufficient time for internal planning, space needs analysis, financial evaluation, and, if appropriate, the initiation of the Fair Market Rent determination process.
9. Right of First Offer (ROFO)
The Lease grants the Tenant a right of first offer (the "ROFO") with respect to certain additional space in Greystone Tower, subject to the following terms:
ROFO Space: The ROFO applies to any full floor on Floors 30 through 33 of Greystone Tower that becomes available during the Lease Term. Space is deemed to become "available" when the Landlord determines that such space will be offered for lease to third parties, whether as a result of lease expiration, tenant vacatur, termination, or otherwise.
Landlord's Obligation to Offer: Before marketing any available ROFO Space to third parties, the Landlord must provide the Tenant with written notice (a "ROFO Notice") identifying the available space and specifying the material economic terms (including rent, tenant improvement allowance, free rent, and term) on which the Landlord is prepared to lease the space.
Tenant's Response Period: The Tenant has fifteen (15) business days from receipt of the ROFO Notice to deliver written notice to the Landlord accepting the ROFO Space on the terms specified in the ROFO Notice. If the Tenant does not accept within the 15-business-day period, the Landlord is free to market and lease the ROFO Space to third parties on terms no more favorable than those offered to the Tenant (subject to customary tolerances as set forth in the Lease).
Subordination: The Tenant's ROFO is expressly subordinate to the existing expansion and renewal rights of Kestrel Insurance Holdings Inc., which is the current tenant on Floors 30 through 32 as of the Lease Date. This means that the Landlord is not required to provide a ROFO Notice to the Tenant with respect to any space on Floors 30 through 32 until any existing rights of Kestrel Insurance Holdings Inc. with respect to such space have expired or been waived.
We recommend that Aurelius monitor the status of the Kestrel Insurance Holdings Inc. tenancy on Floors 30 through 32, as the expiration or non-renewal of Kestrel's lease on those floors could present a significant expansion opportunity for Aurelius.
10. Renewal Options
The Lease provides the Tenant with two (2) consecutive renewal options, each for a term of five (5) years, subject to the following terms and conditions:
Renewal Terms: Each renewal term is five (5) years in duration. If both renewal options are exercised, the total occupancy period under the Lease would be 25 years (the initial 15-year term plus two 5-year renewal terms).
Renewal Rent: The rent for each renewal term will be the Fair Market Rent at the commencement of the applicable renewal term, determined in accordance with the Fair Market Rent arbitration procedure set forth in Exhibit G to the Lease (the same baseball-style arbitration mechanism described in Section 2.2 above).
Notice Requirements: The Tenant must exercise each renewal option by delivering written notice to the Landlord not less than 18 months prior to the expiration of the then-current term.
First Renewal Option Notice Deadline: January 31, 2036 (18 months prior to the July 31, 2038 expiration of the initial Lease Term).
Second Renewal Option Notice Deadline: January 31, 2041 (18 months prior to the expiration of the first renewal term on July 31, 2043, assuming the first renewal option is exercised).
Conditions to Exercise: The renewal options are subject to the condition that no uncured event of default by the Tenant exists at the time of exercise and at the commencement of the renewal term.
As with the expansion option, we strongly recommend that the renewal option notice deadlines be docketed in Aurelius's internal systems with advance reminders of not less than six months, to allow adequate time for financial analysis, space planning, and, if necessary, the initiation of the Fair Market Rent determination process.
11. Signage Rights
The Lease grants the Tenant the following signage rights at Greystone Tower:
• Lobby Directory Listing: The Tenant is entitled to a listing on the building's lobby directory, identifying Aurelius Media Holdings Inc. (and, at the Tenant's election, Aurelius Global Media Group PLC) as a tenant of the building.
• Elevator Bank Placard: The Tenant is entitled to one (1) placard in the elevator bank serving Floors 34 through 38, displaying the Tenant's name and logo in a style and format consistent with the building's design standards.
• Exterior Building-Top Sign Position: The Tenant is entitled to one (1) exterior building-top sign position on Greystone Tower, subject to (a) the Tenant's obtaining all required governmental approvals and permits, including approvals from the New York City Department of Buildings, the Landmarks Preservation Commission (if applicable), and any other governmental authority with jurisdiction, and (b) the Landlord's prior approval of the sign design, size, materials, and installation method, such approval not to be unreasonably withheld.
The terms and conditions governing signage, including maintenance obligations and removal at lease expiration, are set forth in the Lease. We recommend that Aurelius begin the governmental approval process for the exterior building-top sign at its earliest convenience, as the permitting timeline can be lengthy.
12. Ongoing Obligations and Action Items
The following is a summary of the Tenant's principal ongoing obligations and recommended action items following closing. We recommend that this section be distributed to the responsible personnel within Aurelius and that each item be assigned an owner and tracked through completion.
Rent Payments. The first base rent payment of $431,666.67 is due on the Rent Commencement Date, February 1, 2024. Thereafter, base rent is payable in advance on the first day of each calendar month. We recommend that Aurelius confirm wire transfer instructions with the Landlord's property management office to ensure timely payment and avoid any risk of a late-payment default.
Insurance. The Tenant is required to maintain the insurance coverages described in Section 2.6 above continuously throughout the Lease Term. Updated certificates of insurance must be provided to the Landlord annually upon each policy renewal and upon any material change in coverage, carrier, or limits. We recommend establishing a standing reminder with Caldecott Risk Advisors Ltd. to transmit renewal certificates directly to the Landlord not less than 15 days prior to each policy expiration date.
Operating Expense Reconciliation. The Landlord is required to deliver an annual statement of operating expenses and real estate taxes within a specified period after the end of each calendar year. The Tenant should carefully review each statement upon receipt, verify the calculation of the Tenant's proportionate share (12.76%), and, if any discrepancies or irregularities are identified, consider exercising the Tenant's audit rights within the 120-day window provided under the Lease.
TI Construction. The Tenant should continue coordinating with Ashworth Patel Design Studio LLC and Pinnacle Build Group LLC on the design and construction of the initial tenant improvements. Requisitions for disbursement of the TI Allowance should be submitted on a regular monthly basis in accordance with the procedures set forth in the Work Letter Agreement. We note again that any unused portion of the TI Allowance must be requisitioned within 18 months of the Commencement Date (i.e., by February 1, 2025) or it will be forfeited.
Punchlist Items. Vivienne Caldwell and her team should follow up with Brendan T. Kozlowski, Vice President, Asset Management, at Greystone Metropolitan Realty LLC regarding the completion of the punchlist items identified in the Possession Delivery Acknowledgment Letter dated August 1, 2023. We recommend establishing a regular cadence of communications with Mr. Kozlowski and documenting all punchlist completion milestones in writing.
Letter of Credit Maintenance. The Tenant must ensure that the Letter of Credit remains in full force and effect at all times during the Lease Term and is timely renewed or replaced not less than 30 days prior to its stated expiration date. At each scheduled burn-down milestone (as set forth in Section 7 above), the Tenant should coordinate with Caledonian National Bank PLC to arrange for the issuance of an amended or replacement Letter of Credit in the reduced amount, and should deliver the amended Letter of Credit to the Landlord promptly.
Calendar All Deadlines. As noted throughout this letter, the following dates and windows should be docketed in Aurelius's internal tracking systems with appropriate advance reminders:
• Expansion Option exercise window: August 1, 2026 through July 31, 2027
• First Renewal Option notice deadline: January 31, 2036
• Second Renewal Option notice deadline: January 31, 2041 (if applicable)
• L/C burn-down dates: End of Lease Years 5, 7, 9, 11, and 13
• Annual insurance renewal and certificate delivery
• Annual operating expense statement review and audit window
• TI Allowance requisition deadline: February 1, 2025
13. Broker Acknowledgment
The following real estate brokers were involved in the transaction. All brokerage commissions are payable by the Landlord pursuant to separate commission agreements between the Landlord and the respective brokers. The Tenant has no obligation to pay any brokerage commission in connection with this transaction.
Tenant's Broker: Blackmoor Advisory Group LLC (Dennis Rourke, Managing Director). Commission: $2,025,000, representing 2.25% of the aggregate base rent payable over the initial Lease Term. Payable by the Landlord pursuant to a separate commission agreement between the Landlord and Blackmoor Advisory Group LLC.
Landlord's Broker: Mercer Houghton Real Estate Services Inc. (Simone Archer, Executive Vice President). Commission: $1,350,000, representing 1.50% of the aggregate base rent payable over the initial Lease Term. Payable by the Landlord pursuant to a separate commission agreement between the Landlord and Mercer Houghton Real Estate Services Inc.
We confirm that, based on our review of the transaction documents and the representations of the parties, the Tenant has no further broker obligations in connection with this Lease transaction.
14. Enclosed Materials
Enclosed with this letter, you will find the Index to the Closing Binder, which enumerates all executed originals and copies organized by tab number. The complete closing binder includes the following documents:
1. Agreement of Lease (execution version, with all Exhibits A through G)
2. Guaranty of Lease
3. Subordination, Non-Disturbance and Attornment Agreement (SNDA)
4. Letter of Credit (L/C No. SNLC-2023-08015)