Diane,
Thank you for the productive discussion on our call earlier today. As we discussed, I wanted to memorialize in writing the material business terms agreed upon between Greystone Metropolitan Realty LLC ("Landlord") and Aurelius Media Holdings Inc. ("Tenant") for the lease of premises at 787 Seventh Avenue, New York, NY 10019 (Greystone Tower). This confirmation is intended to facilitate the preparation of the final lease form and is subject in all respects to the negotiation and execution of definitive documentation. No binding obligation shall arise until such documentation has been fully executed and delivered by both parties.
Set forth below is a summary of the agreed business terms:
**1. Premises:** Floors 34, 35, 36, 37, and 38, comprising approximately 185,000 rentable square feet ("RSF") (approximately 37,000 RSF per floor).
**2. Lease Term:** Fifteen (15) years (180 months).
**3. Commencement Date:** August 1, 2023.
**4. Rent Commencement Date:** February 1, 2024 (following a six-month rent-free period for Tenant's build-out).
**5. Expiration Date:** July 31, 2038.
**6. Base Rent:**
- Years 1–5: $28.00 per RSF ($5,180,000 per annum; $431,666.67 per month) - Years 6–10: $33.00 per RSF ($6,105,000 per annum; $508,750.00 per month) - Years 11–15: $38.00 per RSF ($7,030,000 per annum; $585,833.33 per month)
**7. Rent Abatement:** Six (6) months of base rent abatement from the Commencement Date through January 31, 2024.
**8. Operating Expenses and Tax Escalations:** Full pass-through above a 2023 base year. Tenant's proportionate share shall be 12.76% (185,000 RSF ÷ 1,450,000 RSF building). Controllable operating expenses subject to a cumulative annual increase cap of 5%.
**9. Electricity:** Direct metering. Tenant shall be responsible for its own electric usage.
**10. Tenant Improvement Allowance:** $85.00 per RSF ($15,725,000 in the aggregate), to be disbursed via monthly progress payments against architect-certified requisitions. Tenant shall have the option to elect an excess TI allowance of up to $15.00 per RSF ($2,775,000), which shall be amortized into base rent at a rate of 7.5% per annum over the remaining lease term.
**11. Security Deposit:** An irrevocable standby letter of credit in the amount of $5,180,000 (equal to one year's initial base rent), issued by Caledonian National Bank PLC in favor of Landlord. The letter of credit shall burn down by $1,036,000 at the end of each of Lease Years 5, 7, 9, 11, and 13 (reducing to zero at the end of Lease Year 13), subject to no uncured default by Tenant.
**12. Parent Guaranty:** Aurelius Global Media Group PLC ("Aurelius PLC") shall guaranty all obligations of Aurelius Media Holdings Inc. under the Lease, subject to an aggregate liability cap of $18,000,000.
**13. Expansion Option:** Tenant shall have the option to expand into Floors 39 and 40 (approximately 74,000 RSF total). The exercise window shall run between the 36th and 48th month of the Lease Term (August 1, 2026 through July 31, 2027). Expansion rent shall be at Fair Market Rent, provided that in no event shall the expansion rent be less than 95% of the then-current base rent per RSF payable on the initial Premises. The expansion term shall be co-terminous with the initial Lease Term. Landlord shall provide an expansion TI allowance of $50.00 per RSF ($3,700,000).
**14. Right of First Offer (ROFO):** Tenant shall have a right of first offer on any full floor on Floors 30 through 33 that becomes available during the Lease Term. Landlord shall provide Tenant with written notice prior to marketing any such space. Tenant shall have fifteen (15) business days from receipt of such notice to accept at the terms offered by Landlord. The ROFO shall be subordinate to existing rights held by Kestrel Insurance Holdings Inc.
**15. Renewal Options:** Two (2) consecutive five-year renewal terms. Tenant shall provide notice of exercise not less than eighteen (18) months prior to the expiration of the then-current term. Renewal rent shall be at Fair Market Rent, determined in accordance with the FMR arbitration procedure to be set forth in the Lease.
**16. Change of Control Assignment Right:** Upon a change of control of Aurelius Media Holdings Inc. or Aurelius Global Media Group PLC — defined as a transaction or series of related transactions resulting in a change in the entity that directly or indirectly owns more than 50% of the voting equity interests of such entity or has the power to direct the management and policies thereof — Tenant shall have the right to assign the Lease to the successor entity without Landlord consent, provided that: (i) the successor entity has a tangible net worth (determined in accordance with GAAP) equal to or greater than $3.1 billion (representing Aurelius PLC's tangible net worth as of the Lease Date); (ii) the successor entity assumes in writing all obligations of Tenant under the Lease; and (iii) Tenant provides Landlord with not less than thirty (30) days' prior written notice of such assignment, accompanied by reasonable evidence of the successor entity's financial condition. Landlord's recapture right shall be waived with respect to change of control assignments (such recapture right being retained only for voluntary assignments to unrelated third parties). Upon a qualifying change of control assignment, the successor entity (or its parent) shall deliver a replacement guaranty on substantially the same terms as the initial Parent Guaranty, and Aurelius PLC shall be released from its guaranty obligations prospectively from and after the effective date of such replacement guaranty.
**17. Use:** General office, studio/production, and ancillary uses consistent with a global media, entertainment, and e-commerce headquarters.
**18. Signage:** Lobby directory listing, one elevator bank placard, and one exterior building-top sign position (the building-top position subject to all required governmental approvals).
**19. SNDA:** Atlas Continental Bank, N.A. (existing first mortgagee) shall execute a negotiated Subordination, Non-Disturbance and Attornment Agreement in favor of Tenant, as a condition precedent to the Commencement Date.
**20. Insurance:** Tenant shall maintain commercial general liability coverage of not less than $5,000,000 per occurrence / $10,000,000 aggregate, together with umbrella/excess liability coverage of not less than $25,000,000. All carriers shall maintain a minimum rating of A.M. Best A-VIII or equivalent.
**21. Governing Law:** State of New York.
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With the business terms now agreed, our team — Rafael and I, along with our associates — will begin preparing the final lease form reflecting the foregoing. Please let us know whether Pemberton Locke & Strauss intends to circulate a corresponding revised draft or whether you would prefer that we prepare the next turn for your review.
I would ask that you and Kevin review this summary at your earliest convenience and confirm your agreement or flag any discrepancies. Given that this will serve as the basis for our drafting instructions, I want to make certain we are fully aligned before pen goes to paper.
On a parallel track, SNDA negotiations with Atlas Continental Bank and its counsel at Halsted & Brinkley (Thomas Brinkley) are proceeding. We should coordinate timing between the lease execution and the SNDA delivery to ensure we do not create any gap that would delay the Commencement Date. I would welcome a brief call next week among the four of us to align on scheduling.
As an additional update, title and environmental diligence are substantially complete and should not present any obstacles to closing on the anticipated timeline.
Diane, I appreciate the collaborative approach you and Kevin have brought to these negotiations throughout. This has been a constructive process, and I look forward to moving toward execution in the coming weeks.
Best regards,
Douglas Fairchild Partner Calderwood & Harkness LLP 425 Park Avenue, 18th Floor New York, NY 10022 T: (212) 471-6300 E: dfairchild@calderwoodharkness.com
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