1017-00009 · Aurelius Global Media Group · Lease Negotiation

first-comment-letter.docx DOCUMENT Real Estate

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CALDERWOOD & HARKNESS LLP Attorneys at Law

425 Park Avenue, 18th Floor New York, NY 10022 Telephone: (212) 448-7600 Facsimile: (212) 448-7601 www.calderwoodharkness.com

Douglas Fairchild, Partner Direct Dial: (212) 448-7644 dfairchild@calderwoodharkness.com

May 2, 2023

Matter Number: 1017-00009

VIA EMAIL AND HAND DELIVERY

Diane Ashford, Esq. Partner, Real Estate Pemberton Locke & Strauss LLP 1 World Financial Center, Suite 3800 New York, NY 10281

Re: Proposed Agreement of Lease between Greystone Metropolitan Realty LLC ("Landlord") and Aurelius Media Holdings Inc. ("Tenant") — 787 Seventh Avenue, Floors 34–38, New York, NY 10019

Dear Ms. Ashford:

This firm represents Aurelius Media Holdings Inc., a Delaware corporation ("Tenant"), and its parent company, Aurelius Global Media Group PLC, a public limited company incorporated in England and Wales ("Parent" or "Guarantor"), in connection with the above-referenced proposed lease transaction. We write to transmit Tenant's first marked draft (redline) of the proposed Agreement of Lease (the "Lease") for approximately 185,000 rentable square feet ("RSF") comprising the entirety of Floors 34, 35, 36, 37, and 38 (collectively, the "Premises") at the building commonly known as Greystone Tower, located at 787 Seventh Avenue, New York, NY 10019 (the "Building").

As you know, our office received Landlord's initial draft of the proposed Lease from Pemberton Locke & Strauss LLP on April 18, 2023. Since that time, we have conducted a comprehensive review of the draft Lease in consultation with our client's general counsel and its global real estate and facilities team. The enclosed redline reflects Tenant's proposed revisions, additions, and comments to the initial draft. We have endeavored to be thorough in our markup, and we believe the enclosed draft, if accepted, would result in a balanced agreement that reflects market terms appropriate for a transaction of this size, duration, and caliber. We respectfully request that Landlord's counsel review the markup in its entirety and that we schedule a call at the parties' earliest mutual convenience to discuss the principal areas of revision and any open points.

Summary of Principal Areas of Revision

While the enclosed redline is comprehensive and counsel should review all marked changes carefully, we wish to highlight below certain material areas of revision for Landlord's attention. Tenant's comments are organized by topic for ease of reference, and the section numbers below correspond generally, though not precisely, to the relevant articles and sections of the draft Lease. We note that many of these revisions reflect market practice in Class A Manhattan office lease transactions and are consistent with precedent for tenants of comparable size, creditworthiness, and stature.

1. Assignment, Subletting, and Change of Control

Landlord's draft imposes a blanket prohibition on any assignment or subletting of the Lease or the Premises, in whole or in part, without Landlord's prior written consent, which consent may be withheld in Landlord's sole and absolute discretion. Tenant has revised these provisions in several important respects.

Reasonableness Standard. As an initial matter, Tenant has revised the consent standard to provide that Landlord's consent to any assignment or subletting shall not be unreasonably withheld, conditioned, or delayed. This is a threshold requirement and reflects the prevailing standard in negotiated Class A Manhattan office leases. The Lease as revised includes customary parameters for what constitutes reasonable withholding of consent, including consideration of the proposed assignee's or subtenant's financial condition, business reputation, and intended use of the Premises.

Change of Control Assignment Right. Critically, Tenant has inserted a new provision addressing change of control transactions. Given Aurelius's status as a publicly traded company listed on the London Stock Exchange (LSE: AUGM) and cross-listed on the New York Stock Exchange (NYSE: AUGM), the possibility of future corporate transactions — including mergers, acquisitions, restructurings, and reorganizations — is an inherent feature of Tenant's corporate structure, and flexibility with respect to such transactions is essential.

Under the revised provisions, upon a "Change of Control" of either Aurelius Media Holdings Inc. or Aurelius Global Media Group PLC, Tenant shall have the right to assign the Lease to the successor entity without Landlord's consent, subject to satisfaction of the following conditions:

(i) the successor entity shall 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, which, based on Aurelius's most recent audited consolidated financial statements (FY2022), is approximately $3.1 billion;

(ii) the successor entity shall assume all of Tenant's obligations under the Lease pursuant to an assumption agreement in form and substance reasonably satisfactory to Landlord; and

(iii) Tenant shall provide Landlord with not less than thirty (30) days' prior written notice of the 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 and interim financial statements for the most recently completed fiscal quarter.

For purposes of these provisions, "Change of Control" is defined as any transaction or series of related transactions — including, without limitation, any merger, consolidation, stock sale, asset sale, or reorganization — resulting in a change in the identity of the person or entity that Controls the Tenant, where "Control" means direct or indirect ownership of more than fifty percent (50%) of the voting equity interests of the Tenant or the power to direct or cause the direction of the management and policies of the Tenant, whether through ownership of voting securities, by contract, or otherwise.

Waiver of Recapture Right. Tenant's revision further provides that Landlord's recapture right shall be waived in the case of any Change of Control assignment. Landlord's recapture right is to be retained only with respect to voluntary assignments to unrelated third parties, in which case Landlord shall have thirty (30) days following receipt of Tenant's request for consent to elect to recapture the Premises (or the applicable portion thereof).

Replacement Guaranty and Release. In connection with any Change of Control assignment, the successor entity or its parent shall execute and deliver to Landlord a replacement guaranty on substantially the same terms as the original Parent Guaranty (as described further in Section 4 below). Upon delivery of such replacement guaranty, Aurelius Global Media Group PLC shall be released from its guaranty obligations on a prospective basis, effective as of the date of such delivery. This structure ensures that Landlord maintains continuous credit support throughout the Lease Term while permitting Aurelius to complete corporate transactions without encumbrance.

We note that the approach reflected in Tenant's revisions is increasingly the market standard in Class A Manhattan office leases for investment-grade, publicly traded tenants, and is consistent with precedent transactions involving tenants of comparable creditworthiness and stature. We are happy to discuss specific deal precedent on our call.

2. Expansion Option

Tenant has substantially revised the expansion option provisions contained in the Landlord's draft. Landlord's initial draft contemplated a more limited expansion right with respect to a single floor, on terms that did not adequately address the mechanics, timing, or economic parameters of such an expansion. Tenant's revisions are as follows:

Expansion Floors. The expansion option shall cover Floors 39 and 40 of the Building (the "Expansion Space"), each comprising approximately 37,000 RSF, for a total of approximately 74,000 RSF. This is consistent with Tenant's business plan, which contemplates the potential for significant headcount growth over the initial years of the Lease Term, and Tenant's desire to maintain contiguous occupancy within the Building as its operations expand.

Exercise Window. Tenant may exercise the expansion option by delivering written notice to Landlord at any time during the period between the thirty-sixth (36th) month and the forty-eighth (48th) month of the Lease Term (i.e., from August 1, 2026 through July 31, 2027). This window provides Tenant with sufficient time to assess its space needs following the initial build-out and ramp-up period, while providing Landlord with reasonable visibility into the availability of the Expansion Space.

Expansion Rent. The annual base rent for the Expansion Space shall be the Fair Market Rent ("FMR") at the time of exercise, as determined pursuant to the FMR determination procedure set forth in the Lease; provided, however, that the Expansion Rent shall not be less than ninety-five percent (95%) of the then-current base rent per RSF payable by Tenant with respect to the initial Premises. By way of illustration, if Tenant exercises the expansion option during Years 6–10 of the Lease Term, when the base rent on the initial Premises is $33.00 per RSF, the minimum Expansion Rent would be 95% × $33.00 = $31.35 per RSF. This floor protects Landlord's economic interest while ensuring that the Expansion Rent reflects prevailing market conditions.

Co-Terminous Term. The term of the Expansion Space lease shall be co-terminous with the initial Lease Term, expiring on July 31, 2038. Tenant's renewal options, as described in Section 9 below, shall apply to the Expansion Space on the same terms as the initial Premises.

Expansion TI Allowance. Tenant has inserted a tenant improvement allowance for the Expansion Space in the amount of $50.00 per RSF, yielding a total expansion TI allowance of $3,700,000 (74,000 RSF × $50.00). This allowance is appropriate and market-standard given the shell condition of the Expansion Space and the anticipated scope of build-out required to bring the Expansion Space into condition consistent with the initial Premises.

3. Right of First Offer (ROFO)

Tenant has added a right of first offer ("ROFO") with respect to any full floor on Floors 30 through 33 of the Building (the "ROFO Space") that becomes available for leasing during the Lease Term. This right is critical to Tenant's long-term occupancy planning and its interest in maintaining the option to consolidate additional operations within the Building.

Landlord's Notification Obligation. Prior to marketing any ROFO Space to third parties, Landlord shall deliver written notice to Tenant specifying the ROFO Space and the material economic terms upon which Landlord proposes to offer such space (including base rent, tenant improvement allowance, free rent, and lease term). Tenant shall have fifteen (15) business days from receipt of Landlord's notice within which to accept the ROFO Space on the terms specified in Landlord's notice by delivering written notice of acceptance to Landlord.

Subordination to Existing Rights. Tenant acknowledges that the ROFO shall be subordinate to the existing lease and any renewal, extension, or expansion rights of Kestrel Insurance Holdings Inc. ("Kestrel"), the current tenant on Floors 30, 31, and 32 of the Building, as of the Lease Date. However, Tenant's revisions ensure that the ROFO shall not be subordinate to any rights granted by Landlord to any other tenant or occupant of the Building after the date of the Lease. This is an important protection against Landlord's ability to circumvent Tenant's ROFO by granting preferential rights to future tenants.

Waiver and Reinstatement. If Tenant declines to exercise the ROFO with respect to any particular ROFO Space, Tenant's ROFO with respect to that space shall be reinstated if Landlord fails to execute a binding lease with a third party within nine (9) months following Tenant's declination, or if Landlord subsequently proposes to lease such space on material economic terms that are more favorable to the third-party tenant than those offered to Tenant by more than five percent (5%) in the aggregate.

4. Parent Guaranty Cap

Tenant has revised the Parent Guaranty provisions to include a cap on the guaranty obligations of Aurelius Global Media Group PLC. Specifically, the aggregate liability of the Guarantor under the Parent Guaranty shall not exceed $18,000,000 (the "Guaranty Cap"). This cap represents approximately two (2) years of average annual base rent over the fifteen (15)-year Lease Term (aggregate base rent of approximately $90,000,000 ÷ 15 years = $6,000,000 average annual rent × 3 ≈ $18,000,000), providing Landlord with meaningful credit support while appropriately limiting Guarantor's exposure.

Landlord's initial draft contemplated an unlimited, unconditional parent guaranty of all of Tenant's obligations under the Lease for the entire Lease Term. This is not consistent with market practice for tenants of Aurelius's creditworthiness. Aurelius Global Media Group PLC is a publicly traded company with a current market capitalization of approximately $11.2 billion and fiscal year 2022 revenue of approximately £4.87 billion (approximately $6.05 billion at prevailing exchange rates). The company maintains investment-grade credit ratings. Under these circumstances, an uncapped parent guaranty is both unnecessary from a credit perspective and commercially unreasonable.

In addition, and as described in Section 1 above, the Parent Guaranty provisions include mechanics for release of the Guarantor upon delivery of a conforming replacement guaranty in connection with a Change of Control assignment. These provisions work in tandem with the Change of Control assignment right to provide a seamless transition of guaranty obligations in the event of a corporate transaction.

5. Tenant Improvement Allowance

Tenant has revised the tenant improvement allowance ("TI Allowance") provisions to reflect the scope and cost of the anticipated build-out of the Premises. The Premises are intended to serve as the North American headquarters of Aurelius Global Media Group PLC and its subsidiaries, encompassing general office space, studio and production facilities, screening rooms, a media lab, executive conference and event space, and ancillary amenities. The build-out will be designed by Ashworth Patel Design Studio LLC as architect of record, with Pinnacle Build Group LLC serving as construction manager.

TI Allowance Amount. Tenant has revised the TI Allowance to $85.00 per RSF, yielding a total allowance of $15,725,000 (185,000 RSF × $85.00). Landlord's draft provided a lower TI Allowance amount that is insufficient given the intended build-out scope, which includes specialized studio and production infrastructure not typical of a standard office build-out. The revised allowance is consistent with recent comparable transactions in the Midtown Manhattan Class A office market for tenants undertaking headquarters-quality installations of similar scope and complexity.

Disbursement. The TI Allowance shall be disbursed by Landlord on a monthly basis as construction progresses, against architect-certified requisitions submitted by Tenant (or Tenant's construction manager) in accordance with AIA G702/G703 format. Each requisition shall be accompanied by conditional lien waivers from all contractors and subcontractors for the current draw and unconditional lien waivers for the prior draw. Landlord shall fund each approved requisition within thirty (30) days of receipt of a complete draw package.

Excess TI Option. Tenant has added an option to draw upon an additional TI allowance of up to $15.00 per RSF (the "Excess TI Allowance"), yielding a maximum additional amount of $2,775,000 (185,000 RSF × $15.00). The Excess TI Allowance, to the extent drawn, shall be amortized into base rent at an interest rate of 7.5% per annum over the remaining Lease Term, with such amortized amounts payable as additional rent on a monthly basis. This mechanism provides Tenant with additional build-out flexibility while compensating Landlord for the carrying cost of the additional allowance. Tenant's right to elect the Excess TI Allowance shall be exercised, if at all, prior to the date that is eighteen (18) months following the Commencement Date.

6. Security Deposit and Letter of Credit

Tenant accepts Landlord's proposed concept of an irrevocable standby letter of credit ("L/C") as the form of security deposit under the Lease. The initial L/C amount shall be $5,180,000, which is equal to one (1) year of initial base rent at $28.00 per RSF (185,000 RSF × $28.00 = $5,180,000). The L/C shall be issued by Caledonian National Bank PLC, London (New York branch), a financial institution with assets in excess of $200 billion, and shall be in form and substance reasonably satisfactory to Landlord.

Burn-Down Schedule. Tenant has inserted a burn-down schedule pursuant to which the L/C amount shall be reduced incrementally over the Lease Term, provided that no uncured Event of Default exists as of the applicable reduction date. The burn-down schedule is as follows:

Upon the reduction of the L/C balance to zero following the end of Lease Year 13, the L/C shall be returned to Tenant in full. Each reduction shall be implemented by Tenant's delivery of an amended or replacement L/C in the reduced amount, and Landlord shall cooperate in returning or consenting to the cancellation of the prior L/C.

Landlord's draft did not include a burn-down mechanism, effectively requiring Tenant to maintain the full $5,180,000 L/C for the entire fifteen (15)-year Lease Term. Tenant's position is that a gradual reduction is standard for long-term lease transactions with creditworthy tenants and provides appropriate incentive for Tenant's continued performance under the Lease while reducing carrying costs as the landlord-tenant relationship matures and the economic risk profile of the remaining Lease Term diminishes.

7. Rent Schedule and Rent-Free Period

Tenant's redline reflects the base rent schedule that we understand to have been agreed in principle during the business negotiations between the parties. For clarity and completeness, the base rent schedule is as follows:

The aggregate base rent over the fifteen (15)-year Lease Term is approximately $90,000,000 (calculated as: ($5,180,000 × 5) + ($6,105,000 × 5) + ($7,030,000 × 5) = $25,900,000 + $30,525,000 + $35,150,000 = $91,575,000, less the rent-free period credit described below).

Rent-Free Period. Tenant shall be entitled to a rent-free period of six (6) months from the Commencement Date (anticipated to be August 1, 2023) through the Rent Commencement Date (anticipated to be February 1, 2024), during which period Tenant shall not be obligated to pay base rent. This rent-free period is intended to permit Tenant to undertake its initial build-out and fit-out of the Premises. During the rent-free period, Tenant shall be responsible for Tenant's proportionate share of operating expenses and real estate taxes above the base year, as well as for electricity charges attributable to the Premises.

8. Operating Expense Escalations and Controllable Expense Cap

Tenant's redline addresses the operating expense escalation provisions as follows:

Base Year. The base year for operating expense escalations shall be calendar year 2023. Tenant shall be responsible for its proportionate share of increases in operating expenses above the base year amount, without an operating expense stop.

Proportionate Share. Tenant's proportionate share shall be 12.76%, calculated as 185,000 RSF (Premises) ÷ 1,450,000 RSF (total Building rentable area).

Controllable Expense Cap. Tenant has inserted a cap on the annual increase in controllable operating expenses of five percent (5%) on a cumulative, compounding basis (i.e., the controllable operating expenses allocable to Tenant in any given calendar year shall not exceed the controllable operating expenses allocable to Tenant in the immediately preceding calendar year multiplied by 1.05). For purposes of this provision, "controllable operating expenses" shall mean all operating expenses other than real estate taxes, insurance premiums, utility costs, snow and ice removal, and costs imposed by governmental authorities or otherwise beyond Landlord's reasonable control.

Landlord's draft contained no cap or limitation on controllable operating expenses, which would expose Tenant to potentially unlimited and unpredictable escalations over the course of a fifteen (15)-year Lease Term. The controllable expense cap inserted by Tenant provides essential budget predictability while preserving Landlord's ability to pass through actual increases in non-controllable costs, including real estate taxes, insurance, and utilities.

9. Renewal Options

Tenant's revisions provide for two (2) consecutive renewal terms of five (5) years each (the "First Renewal Term" and "Second Renewal Term," respectively), exercisable at Tenant's option. The renewal rent for each renewal term shall be the Fair Market Rent as of the commencement date of the applicable renewal term, determined in accordance with the FMR arbitration procedure to be set forth in Exhibit G to the Lease.

Tenant shall exercise each renewal option by delivering written notice to Landlord not less than eighteen (18) months prior to the expiration of the then-current term (i.e., not later than January 31, 2037 for the First Renewal Term and not later than January 31, 2042 for the Second Renewal Term, assuming the initial Lease Term expires on July 31, 2038).

Tenant's revisions clarify and expand the FMR determination timeline and arbitration mechanics, including provisions for the selection and qualification of arbitrators, the timeline for exchange of FMR proposals, and the "baseball" arbitration format in which each party submits a final FMR figure and the arbitrator selects one of the two proposals. These mechanics are designed to ensure a fair and expeditious resolution of any FMR dispute and to minimize the risk of an unresolved rent determination at the commencement of a renewal term.

10. Electricity. The Lease provides for direct metering of electricity to the Premises. Tenant shall be responsible for the cost of its own electric usage, billed directly by the applicable utility provider (currently Consolidated Edison Company of New York, Inc.). The estimated cost of electricity is approximately $3.15 per RSF per year, based on typical usage patterns for a Class A office tenancy of this type; this estimate is provided for informational purposes only and is not incorporated into base rent.

Tenant's revisions clarify that direct metering shall be the sole method of measuring and billing electric consumption for the Premises. Landlord shall not have the right to convert the metering arrangement to submetering, rent inclusion, or any other method during the Lease Term without Tenant's prior written consent. This is an important protection for Tenant, as direct metering provides the most transparent and cost-effective approach to electricity procurement and allows Tenant to negotiate directly with the utility provider and to explore alternative energy procurement options as they become available.

11. Subordination, Non-Disturbance, and Attornment (SNDA)

Tenant requires, as a condition precedent to the Commencement Date, the execution and delivery of a Subordination, Non-Disturbance, and Attornment Agreement ("SNDA") from Atlas Continental Bank, N.A., the holder of the existing first mortgage lien on the Building. We understand that the mortgage was recorded on January 15, 2019, and that the outstanding principal balance is approximately $620 million. The SNDA shall be in a negotiated tri-party form (Landlord, Tenant, and Atlas Continental Bank, N.A.), providing that Tenant's occupancy and lease rights will not be disturbed in the event of foreclosure, deed-in-lieu of foreclosure, or any other enforcement action by the mortgagee, so long as Tenant is not in default under the Lease.

Tenant's revisions add a specific delivery deadline for the SNDA and make the delivery of an executed SNDA a condition to the Commencement Date. In the event that the SNDA has not been delivered within ninety (90) days following the date of full execution of the Lease, Tenant shall have the right to terminate the Lease upon thirty (30) days' prior written notice to Landlord, without penalty or liability, and to receive a full refund of any security deposit or prepaid rent.

We understand that Atlas Continental Bank, N.A. is represented by Halsted & Brinkley LLP in connection with the mortgage and related loan documents. We anticipate that SNDA negotiations will need to proceed in parallel with the lease negotiations, and we would appreciate receiving contact information for the appropriate attorney at Halsted & Brinkley LLP at your earliest convenience.

12. Insurance Requirements

Tenant has revised the insurance provisions of the Lease to reflect market-appropriate coverage levels. Tenant proposes the following minimum coverage requirements:

• Commercial General Liability (CGL): $5,000,000 per occurrence / $10,000,000 aggregate

• Property Insurance: Full replacement value of Tenant's property, furniture, fixtures, equipment, and improvements (including any Tenant Improvements paid for by Tenant or out of the TI Allowance)

• Umbrella/Excess Liability: $25,000,000 per occurrence and in the aggregate

• Carrier Rating Minimum: A.M. Best rating of A-VIII or equivalent (S&P, Moody's, or Fitch equivalent rating accepted)

Landlord's draft required higher thresholds on certain coverages, including a $10,000,000 per occurrence CGL requirement and a $50,000,000 umbrella/excess liability requirement, which exceed market norms for Class A Manhattan office tenancies. Tenant's revisions bring these requirements into alignment with prevailing market practice. Tenant's insurance program is administered by Aurelius's global insurance broker, and Tenant is prepared to provide evidence of coverage promptly upon Lease execution.

13. Signage. Tenant has revised the signage provisions to provide for the following Aurelius signage rights:

• Lobby Directory Listing: Tenant shall be entitled to a prominent listing on the Building's lobby directory, including the Aurelius name and logo.

• Elevator Bank Placard: Tenant shall be entitled to one (1) identifying placard or sign panel at the elevator bank serving Floors 34–38, in a size, design, and location to be mutually agreed upon by Landlord and Tenant, consistent with the Building's signage standards.

• Exterior Building-Top Sign Position: Tenant shall be entitled to one (1) exterior building-top sign position on the Building, subject to (a) all applicable governmental approvals, permits, and authorizations, (b) compliance with all applicable zoning and signage regulations, and (c) Landlord's reasonable approval of the size, design, materials, illumination, and installation method of such signage. Tenant shall be responsible for all costs associated with the design, fabrication, installation, maintenance, repair, and removal of such signage.

Landlord's draft was silent on exterior building-top signage. Given that Aurelius will be one of the Building's largest tenants, occupying five full contiguous floors representing approximately 12.76% of the Building's total rentable area, building-top signage rights are appropriate and consistent with the branding expectations of a major publicly traded global media company. We note that comparable tenants in Class A Midtown Manhattan towers routinely receive building-top signage rights in connection with leases of this scale.

14. Use Clause

Tenant has broadened the permitted use clause to read as follows:

"General office, studio/production, and ancillary uses consistent with a global media, entertainment, and e-commerce headquarters, including without limitation administrative offices, content production and post-production studios, screening and viewing rooms, media labs, conference and event facilities, employee amenities (including a cafeteria, fitness center, and lounge areas), and such other lawful uses as are customary in first-class office buildings in the Midtown Manhattan submarket."

Landlord's initial draft contained a narrower "general office" use clause that did not contemplate the studio, production, or ancillary uses integral to Aurelius's business operations. The revised use clause is necessary to ensure that the Premises can accommodate Aurelius's full range of headquarters functions without triggering a use restriction or requiring a future consent process.

15. Environmental Provisions

Tenant has inserted environmental provisions addressing pre-existing conditions at the Building and the Premises. Specifically:

Landlord's Asbestos Representation. Tenant has added a representation by Landlord that all asbestos-containing materials ("ACM") on the Premises floors (Floors 34–38) have been fully abated in accordance with all applicable federal, state, and local laws, rules, and regulations, including without limitation the regulations of the New York City Department of Environmental Protection and the United States Environmental Protection Agency. Landlord shall provide Tenant with copies of all abatement reports, clearance certificates, and related documentation.

Pre-Existing Condition Indemnification. Landlord shall indemnify, defend, and hold harmless Tenant, its officers, directors, employees, agents, and affiliates from and against any and all claims, damages, losses, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to any pre-existing environmental conditions at or affecting the Premises or the Building, including without limitation the presence of hazardous materials, mold, lead-based paint, or any other environmental contamination existing as of the Commencement Date.

Phase I ESA. Tenant notes for Landlord's information that a Phase I Environmental Site Assessment is currently being conducted on the Building by Greenfield Environmental Sciences LLC, an environmental consulting firm engaged by Tenant. We anticipate that the Phase I ESA will be completed in early June 2023. If the Phase I ESA identifies any Recognized Environmental Conditions or other matters of concern, we will raise those matters with Landlord's counsel promptly and may propose additional environmental provisions in the Lease.

Additional Comments

In addition to the material revisions summarized above, the enclosed redline contains numerous additional revisions of a more customary nature. These include, without limitation, revisions to the following provisions:

• Default and Cure Periods: Tenant has revised the monetary default cure period from five (5) days to ten (10) business days and the non-monetary default cure period from fifteen (15) days to thirty (30) days (with an additional reasonable period for defaults that cannot be cured within such thirty (30)-day period provided Tenant commences cure within such period and diligently prosecutes the same to completion).

• Casualty and Condemnation: Tenant has revised the casualty restoration and condemnation provisions to provide for mutual termination rights in the event of a material casualty or a partial taking affecting more than twenty percent (20%) of the Premises, and to clarify the allocation of condemnation awards and insurance proceeds.

• Holdover Provisions: Tenant has revised the holdover rental rate from 200% of the then-current base rent (as provided in Landlord's draft) to 150% of the then-current base rent for the first sixty (60) days of any holdover period, increasing to 200% thereafter.

• Landlord Access: Tenant has revised the landlord access provisions to require not less than forty-eight (48) hours' prior written notice (except in the case of emergency) and to require that Landlord's access be exercised in a manner that minimizes disruption to Tenant's business operations, including any studio or production activities.

• Building Services: Tenant has revised the building services provisions to specify minimum HVAC, elevator, and cleaning service levels consistent with Class A Manhattan office building standards, and to provide for after-hours HVAC at a rate not to exceed $75.00 per hour per zone.

We respectfully request that Landlord's counsel review all marked changes comprehensively, as the foregoing summary is intended to highlight principal areas of revision and does not purport to describe every modification reflected in the enclosed redline.

Proposed Next Steps and Schedule

We propose that the parties schedule a telephone conference during the week of May 8, 2023, to discuss material open points and the overall direction of the lease negotiation. We are generally available on May 9, 10, and 11, and would be pleased to accommodate Landlord's counsel's schedule. Please let us know your availability and we will circulate a dial-in or video conference link.

We note that Aurelius Board of Directors authorization for the United States lease commitment is anticipated in mid-May 2023, in connection with the Board's regularly scheduled meeting. Tenant is proceeding with diligence on all workstreams in anticipation of receiving such authorization.

The parties share the goal of reaching agreement on the final form of the Lease by early July 2023, with Lease execution to follow promptly thereafter. To that end, we propose the following indicative timeline:

• Week of May 8: Initial call to discuss principal open points

• Week of May 22: Landlord's revised draft (counter-redline) circulated

• Weeks of May 29–June 12: Exchange of further drafts and negotiation sessions

• Mid-June 2023: Receipt of Phase I ESA from Greenfield Environmental Sciences LLC

• Late June–Early July 2023: Finalization of Lease form and ancillary documents (Parent Guaranty, SNDA, Work Letter, etc.)

• Early–Mid July 2023: Lease execution and delivery of security deposit L/C

• August 1, 2023 (target): Commencement Date

We further note that SNDA negotiations with Atlas Continental Bank, N.A., through its counsel at Halsted & Brinkley LLP, will need to proceed in parallel with the lease negotiations to ensure that the SNDA delivery condition can be satisfied by the target Commencement Date. We would appreciate your assistance in facilitating an introduction to the appropriate contact at Halsted & Brinkley LLP so that we may commence those discussions at the earliest opportunity.

We look forward to your response and to productive discussions as we work toward execution of the Lease. Please do not hesitate to contact me or my colleague Rafael Dominguez (rdominguez@calderwoodharkness.com; direct: (212) 448-7651) with any questions or to discuss any aspect of the enclosed redline.

Enclosure:

Tenant's First Marked Draft (Redline) of Proposed Agreement of Lease between Greystone Metropolitan Realty LLC (as Landlord) and Aurelius Media Holdings Inc. (as Tenant) — 787 Seventh Avenue, Floors 34–38, New York, NY 10019

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Douglas Fairchild, Partner 425 Park Avenue, 18th Floor New York, NY 10022 Direct: (212) 448-7644 dfairchild@calderwoodharkness.com

cc (via email):

Tariq Nassar, General Counsel, Aurelius Global Media Group PLC Vivienne Caldwell, SVP, Global Real Estate & Facilities, Aurelius Global Media Group PLC Kevin Mulcahy, Esq., Pemberton Locke & Strauss LLP Rafael Dominguez, Esq., Calderwood & Harkness LLP Cynthia Ho, Esq., Calderwood & Harkness LLP Dennis Rourke, Blackmoor Advisory Group LLC

Reduction Date	Reduction Amount	L/C Balance After Reduction
End of Lease Year 5	$1,036,000 (20%)	$4,144,000
End of Lease Year 7	$1,036,000 (20%)	$3,108,000
End of Lease Year 9	$1,036,000 (20%)	$2,072,000
End of Lease Year 11	$1,036,000 (20%)	$1,036,000
End of Lease Year 13	$1,036,000 (20%)	$0 (L/C returned)
Lease Year(s)	Annual Base Rent per RSF	Annual Base Rent (185,000 RSF)	Monthly Base Rent
Years 1–5	$28.00	$5,180,000	$431,666.67
Years 6–10	$33.00	$6,105,000	$508,750.00
Years 11–15	$38.00	$7,030,000	$585,833.33

CALDERWOOD & HARKNESS LLP Attorneys at Law
425 Park Avenue, 18th Floor New York, NY 10022 Telephone: (212) 448-7600 Facsimile: (212) 448-7601 www.calderwoodharkness.com
Douglas Fairchild, Partner Direct Dial: (212) 448-7644 dfairchild@calderwoodharkness.com
May 2, 2023
Matter Number: 1017-00009
VIA EMAIL AND HAND DELIVERY
Diane Ashford, Esq. Partner, Real Estate Pemberton Locke & Strauss LLP 1 World Financial Center, Suite 3800 New York, NY 10281
Re: Proposed Agreement of Lease between Greystone Metropolitan Realty LLC ("Landlord") and Aurelius Media Holdings Inc. ("Tenant") — 787 Seventh Avenue, Floors 34–38, New York, NY 10019
Dear Ms. Ashford:
This firm represents Aurelius Media Holdings Inc., a Delaware corporation ("Tenant"), and its parent company, Aurelius Global Media Group PLC, a public limited company incorporated in England and Wales ("Parent" or "Guarantor"), in connection with the above-referenced proposed lease transaction. We write to transmit Tenant's first marked draft (redline) of the proposed Agreement of Lease (the "Lease") for approximately 185,000 rentable square feet ("RSF") comprising the entirety of Floors 34, 35, 36, 37, and 38 (collectively, the "Premises") at the building commonly known as Greystone Tower, located at 787 Seventh Avenue, New York, NY 10019 (the "Building").
As you know, our office received Landlord's initial draft of the proposed Lease from Pemberton Locke & Strauss LLP on April 18, 2023. Since that time, we have conducted a comprehensive review of the draft Lease in consultation with our client's general counsel and its global real estate and facilities team. The enclosed redline reflects Tenant's proposed revisions, additions, and comments to the initial draft. We have endeavored to be thorough in our markup, and we believe the enclosed draft, if accepted, would result in a balanced agreement that reflects market terms appropriate for a transaction of this size, duration, and caliber. We respectfully request that Landlord's counsel review the markup in its entirety and that we schedule a call at the parties' earliest mutual convenience to discuss the principal areas of revision and any open points.
Summary of Principal Areas of Revision
While the enclosed redline is comprehensive and counsel should review all marked changes carefully, we wish to highlight below certain material areas of revision for Landlord's attention. Tenant's comments are organized by topic for ease of reference, and the section numbers below correspond generally, though not precisely, to the relevant articles and sections of the draft Lease. We note that many of these revisions reflect market practice in Class A Manhattan office lease transactions and are consistent with precedent for tenants of comparable size, creditworthiness, and stature.
1. Assignment, Subletting, and Change of Control
Landlord's draft imposes a blanket prohibition on any assignment or subletting of the Lease or the Premises, in whole or in part, without Landlord's prior written consent, which consent may be withheld in Landlord's sole and absolute discretion. Tenant has revised these provisions in several important respects.
Reasonableness Standard. As an initial matter, Tenant has revised the consent standard to provide that Landlord's consent to any assignment or subletting shall not be unreasonably withheld, conditioned, or delayed. This is a threshold requirement and reflects the prevailing standard in negotiated Class A Manhattan office leases. The Lease as revised includes customary parameters for what constitutes reasonable withholding of consent, including consideration of the proposed assignee's or subtenant's financial condition, business reputation, and intended use of the Premises.
Change of Control Assignment Right. Critically, Tenant has inserted a new provision addressing change of control transactions. Given Aurelius's status as a publicly traded company listed on the London Stock Exchange (LSE: AUGM) and cross-listed on the New York Stock Exchange (NYSE: AUGM), the possibility of future corporate transactions — including mergers, acquisitions, restructurings, and reorganizations — is an inherent feature of Tenant's corporate structure, and flexibility with respect to such transactions is essential.
Under the revised provisions, upon a "Change of Control" of either Aurelius Media Holdings Inc. or Aurelius Global Media Group PLC, Tenant shall have the right to assign the Lease to the successor entity without Landlord's consent, subject to satisfaction of the following conditions:
(i) the successor entity shall 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, which, based on Aurelius's most recent audited consolidated financial statements (FY2022), is approximately $3.1 billion;
(ii) the successor entity shall assume all of Tenant's obligations under the Lease pursuant to an assumption agreement in form and substance reasonably satisfactory to Landlord; and
(iii) Tenant shall provide Landlord with not less than thirty (30) days' prior written notice of the 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 and interim financial statements for the most recently completed fiscal quarter.
For purposes of these provisions, "Change of Control" is defined as any transaction or series of related transactions — including, without limitation, any merger, consolidation, stock sale, asset sale, or reorganization — resulting in a change in the identity of the person or entity that Controls the Tenant, where "Control" means direct or indirect ownership of more than fifty percent (50%) of the voting equity interests of the Tenant or the power to direct or cause the direction of the management and policies of the Tenant, whether through ownership of voting securities, by contract, or otherwise.
Waiver of Recapture Right. Tenant's revision further provides that Landlord's recapture right shall be waived in the case of any Change of Control assignment. Landlord's recapture right is to be retained only with respect to voluntary assignments to unrelated third parties, in which case Landlord shall have thirty (30) days following receipt of Tenant's request for consent to elect to recapture the Premises (or the applicable portion thereof).
Replacement Guaranty and Release. In connection with any Change of Control assignment, the successor entity or its parent shall execute and deliver to Landlord a replacement guaranty on substantially the same terms as the original Parent Guaranty (as described further in Section 4 below). Upon delivery of such replacement guaranty, Aurelius Global Media Group PLC shall be released from its guaranty obligations on a prospective basis, effective as of the date of such delivery. This structure ensures that Landlord maintains continuous credit support throughout the Lease Term while permitting Aurelius to complete corporate transactions without encumbrance.
We note that the approach reflected in Tenant's revisions is increasingly the market standard in Class A Manhattan office leases for investment-grade, publicly traded tenants, and is consistent with precedent transactions involving tenants of comparable creditworthiness and stature. We are happy to discuss specific deal precedent on our call.
2. Expansion Option
Tenant has substantially revised the expansion option provisions contained in the Landlord's draft. Landlord's initial draft contemplated a more limited expansion right with respect to a single floor, on terms that did not adequately address the mechanics, timing, or economic parameters of such an expansion. Tenant's revisions are as follows:
Expansion Floors. The expansion option shall cover Floors 39 and 40 of the Building (the "Expansion Space"), each comprising approximately 37,000 RSF, for a total of approximately 74,000 RSF. This is consistent with Tenant's business plan, which contemplates the potential for significant headcount growth over the initial years of the Lease Term, and Tenant's desire to maintain contiguous occupancy within the Building as its operations expand.
Exercise Window. Tenant may exercise the expansion option by delivering written notice to Landlord at any time during the period between the thirty-sixth (36th) month and the forty-eighth (48th) month of the Lease Term (i.e., from August 1, 2026 through July 31, 2027). This window provides Tenant with sufficient time to assess its space needs following the initial build-out and ramp-up period, while providing Landlord with reasonable visibility into the availability of the Expansion Space.
Expansion Rent. The annual base rent for the Expansion Space shall be the Fair Market Rent ("FMR") at the time of exercise, as determined pursuant to the FMR determination procedure set forth in the Lease; provided, however, that the Expansion Rent shall not be less than ninety-five percent (95%) of the then-current base rent per RSF payable by Tenant with respect to the initial Premises. By way of illustration, if Tenant exercises the expansion option during Years 6–10 of the Lease Term, when the base rent on the initial Premises is $33.00 per RSF, the minimum Expansion Rent would be 95% × $33.00 = $31.35 per RSF. This floor protects Landlord's economic interest while ensuring that the Expansion Rent reflects prevailing market conditions.
Co-Terminous Term. The term of the Expansion Space lease shall be co-terminous with the initial Lease Term, expiring on July 31, 2038. Tenant's renewal options, as described in Section 9 below, shall apply to the Expansion Space on the same terms as the initial Premises.
Expansion TI Allowance. Tenant has inserted a tenant improvement allowance for the Expansion Space in the amount of $50.00 per RSF, yielding a total expansion TI allowance of $3,700,000 (74,000 RSF × $50.00). This allowance is appropriate and market-standard given the shell condition of the Expansion Space and the anticipated scope of build-out required to bring the Expansion Space into condition consistent with the initial Premises.
3. Right of First Offer (ROFO)
Tenant has added a right of first offer ("ROFO") with respect to any full floor on Floors 30 through 33 of the Building (the "ROFO Space") that becomes available for leasing during the Lease Term. This right is critical to Tenant's long-term occupancy planning and its interest in maintaining the option to consolidate additional operations within the Building.
Landlord's Notification Obligation. Prior to marketing any ROFO Space to third parties, Landlord shall deliver written notice to Tenant specifying the ROFO Space and the material economic terms upon which Landlord proposes to offer such space (including base rent, tenant improvement allowance, free rent, and lease term). Tenant shall have fifteen (15) business days from receipt of Landlord's notice within which to accept the ROFO Space on the terms specified in Landlord's notice by delivering written notice of acceptance to Landlord.
Subordination to Existing Rights. Tenant acknowledges that the ROFO shall be subordinate to the existing lease and any renewal, extension, or expansion rights of Kestrel Insurance Holdings Inc. ("Kestrel"), the current tenant on Floors 30, 31, and 32 of the Building, as of the Lease Date. However, Tenant's revisions ensure that the ROFO shall not be subordinate to any rights granted by Landlord to any other tenant or occupant of the Building after the date of the Lease. This is an important protection against Landlord's ability to circumvent Tenant's ROFO by granting preferential rights to future tenants.
Waiver and Reinstatement. If Tenant declines to exercise the ROFO with respect to any particular ROFO Space, Tenant's ROFO with respect to that space shall be reinstated if Landlord fails to execute a binding lease with a third party within nine (9) months following Tenant's declination, or if Landlord subsequently proposes to lease such space on material economic terms that are more favorable to the third-party tenant than those offered to Tenant by more than five percent (5%) in the aggregate.
4. Parent Guaranty Cap
Tenant has revised the Parent Guaranty provisions to include a cap on the guaranty obligations of Aurelius Global Media Group PLC. Specifically, the aggregate liability of the Guarantor under the Parent Guaranty shall not exceed $18,000,000 (the "Guaranty Cap"). This cap represents approximately two (2) years of average annual base rent over the fifteen (15)-year Lease Term (aggregate base rent of approximately $90,000,000 ÷ 15 years = $6,000,000 average annual rent × 3 ≈ $18,000,000), providing Landlord with meaningful credit support while appropriately limiting Guarantor's exposure.
Landlord's initial draft contemplated an unlimited, unconditional parent guaranty of all of Tenant's obligations under the Lease for the entire Lease Term. This is not consistent with market practice for tenants of Aurelius's creditworthiness. Aurelius Global Media Group PLC is a publicly traded company with a current market capitalization of approximately $11.2 billion and fiscal year 2022 revenue of approximately £4.87 billion (approximately $6.05 billion at prevailing exchange rates). The company maintains investment-grade credit ratings. Under these circumstances, an uncapped parent guaranty is both unnecessary from a credit perspective and commercially unreasonable.
In addition, and as described in Section 1 above, the Parent Guaranty provisions include mechanics for release of the Guarantor upon delivery of a conforming replacement guaranty in connection with a Change of Control assignment. These provisions work in tandem with the Change of Control assignment right to provide a seamless transition of guaranty obligations in the event of a corporate transaction.
5. Tenant Improvement Allowance
Tenant has revised the tenant improvement allowance ("TI Allowance") provisions to reflect the scope and cost of the anticipated build-out of the Premises. The Premises are intended to serve as the North American headquarters of Aurelius Global Media Group PLC and its subsidiaries, encompassing general office space, studio and production facilities, screening rooms, a media lab, executive conference and event space, and ancillary amenities. The build-out will be designed by Ashworth Patel Design Studio LLC as architect of record, with Pinnacle Build Group LLC serving as construction manager.
TI Allowance Amount. Tenant has revised the TI Allowance to $85.00 per RSF, yielding a total allowance of $15,725,000 (185,000 RSF × $85.00). Landlord's draft provided a lower TI Allowance amount that is insufficient given the intended build-out scope, which includes specialized studio and production infrastructure not typical of a standard office build-out. The revised allowance is consistent with recent comparable transactions in the Midtown Manhattan Class A office market for tenants undertaking headquarters-quality installations of similar scope and complexity.
Disbursement. The TI Allowance shall be disbursed by Landlord on a monthly basis as construction progresses, against architect-certified requisitions submitted by Tenant (or Tenant's construction manager) in accordance with AIA G702/G703 format. Each requisition shall be accompanied by conditional lien waivers from all contractors and subcontractors for the current draw and unconditional lien waivers for the prior draw. Landlord shall fund each approved requisition within thirty (30) days of receipt of a complete draw package.
Excess TI Option. Tenant has added an option to draw upon an additional TI allowance of up to $15.00 per RSF (the "Excess TI Allowance"), yielding a maximum additional amount of $2,775,000 (185,000 RSF × $15.00). The Excess TI Allowance, to the extent drawn, shall be amortized into base rent at an interest rate of 7.5% per annum over the remaining Lease Term, with such amortized amounts payable as additional rent on a monthly basis. This mechanism provides Tenant with additional build-out flexibility while compensating Landlord for the carrying cost of the additional allowance. Tenant's right to elect the Excess TI Allowance shall be exercised, if at all, prior to the date that is eighteen (18) months following the Commencement Date.
6. Security Deposit and Letter of Credit
Tenant accepts Landlord's proposed concept of an irrevocable standby letter of credit ("L/C") as the form of security deposit under the Lease. The initial L/C amount shall be $5,180,000, which is equal to one (1) year of initial base rent at $28.00 per RSF (185,000 RSF × $28.00 = $5,180,000). The L/C shall be issued by Caledonian National Bank PLC, London (New York branch), a financial institution with assets in excess of $200 billion, and shall be in form and substance reasonably satisfactory to Landlord.
Burn-Down Schedule. Tenant has inserted a burn-down schedule pursuant to which the L/C amount shall be reduced incrementally over the Lease Term, provided that no uncured Event of Default exists as of the applicable reduction date. The burn-down schedule is as follows:
Upon the reduction of the L/C balance to zero following the end of Lease Year 13, the L/C shall be returned to Tenant in full. Each reduction shall be implemented by Tenant's delivery of an amended or replacement L/C in the reduced amount, and Landlord shall cooperate in returning or consenting to the cancellation of the prior L/C.
Landlord's draft did not include a burn-down mechanism, effectively requiring Tenant to maintain the full $5,180,000 L/C for the entire fifteen (15)-year Lease Term. Tenant's position is that a gradual reduction is standard for long-term lease transactions with creditworthy tenants and provides appropriate incentive for Tenant's continued performance under the Lease while reducing carrying costs as the landlord-tenant relationship matures and the economic risk profile of the remaining Lease Term diminishes.
7. Rent Schedule and Rent-Free Period
Tenant's redline reflects the base rent schedule that we understand to have been agreed in principle during the business negotiations between the parties. For clarity and completeness, the base rent schedule is as follows:
The aggregate base rent over the fifteen (15)-year Lease Term is approximately $90,000,000 (calculated as: ($5,180,000 × 5) + ($6,105,000 × 5) + ($7,030,000 × 5) = $25,900,000 + $30,525,000 + $35,150,000 = $91,575,000, less the rent-free period credit described below).
Rent-Free Period. Tenant shall be entitled to a rent-free period of six (6) months from the Commencement Date (anticipated to be August 1, 2023) through the Rent Commencement Date (anticipated to be February 1, 2024), during which period Tenant shall not be obligated to pay base rent. This rent-free period is intended to permit Tenant to undertake its initial build-out and fit-out of the Premises. During the rent-free period, Tenant shall be responsible for Tenant's proportionate share of operating expenses and real estate taxes above the base year, as well as for electricity charges attributable to the Premises.
8. Operating Expense Escalations and Controllable Expense Cap
Tenant's redline addresses the operating expense escalation provisions as follows:
Base Year. The base year for operating expense escalations shall be calendar year 2023. Tenant shall be responsible for its proportionate share of increases in operating expenses above the base year amount, without an operating expense stop.
Proportionate Share. Tenant's proportionate share shall be 12.76%, calculated as 185,000 RSF (Premises) ÷ 1,450,000 RSF (total Building rentable area).
Controllable Expense Cap. Tenant has inserted a cap on the annual increase in controllable operating expenses of five percent (5%) on a cumulative, compounding basis (i.e., the controllable operating expenses allocable to Tenant in any given calendar year shall not exceed the controllable operating expenses allocable to Tenant in the immediately preceding calendar year multiplied by 1.05). For purposes of this provision, "controllable operating expenses" shall mean all operating expenses other than real estate taxes, insurance premiums, utility costs, snow and ice removal, and costs imposed by governmental authorities or otherwise beyond Landlord's reasonable control.
Landlord's draft contained no cap or limitation on controllable operating expenses, which would expose Tenant to potentially unlimited and unpredictable escalations over the course of a fifteen (15)-year Lease Term. The controllable expense cap inserted by Tenant provides essential budget predictability while preserving Landlord's ability to pass through actual increases in non-controllable costs, including real estate taxes, insurance, and utilities.
9. Renewal Options
Tenant's revisions provide for two (2) consecutive renewal terms of five (5) years each (the "First Renewal Term" and "Second Renewal Term," respectively), exercisable at Tenant's option. The renewal rent for each renewal term shall be the Fair Market Rent as of the commencement date of the applicable renewal term, determined in accordance with the FMR arbitration procedure to be set forth in Exhibit G to the Lease.
Tenant shall exercise each renewal option by delivering written notice to Landlord not less than eighteen (18) months prior to the expiration of the then-current term (i.e., not later than January 31, 2037 for the First Renewal Term and not later than January 31, 2042 for the Second Renewal Term, assuming the initial Lease Term expires on July 31, 2038).
Tenant's revisions clarify and expand the FMR determination timeline and arbitration mechanics, including provisions for the selection and qualification of arbitrators, the timeline for exchange of FMR proposals, and the "baseball" arbitration format in which each party submits a final FMR figure and the arbitrator selects one of the two proposals. These mechanics are designed to ensure a fair and expeditious resolution of any FMR dispute and to minimize the risk of an unresolved rent determination at the commencement of a renewal term.
10. Electricity. The Lease provides for direct metering of electricity to the Premises. Tenant shall be responsible for the cost of its own electric usage, billed directly by the applicable utility provider (currently Consolidated Edison Company of New York, Inc.). The estimated cost of electricity is approximately $3.15 per RSF per year, based on typical usage patterns for a Class A office tenancy of this type; this estimate is provided for informational purposes only and is not incorporated into base rent.
Tenant's revisions clarify that direct metering shall be the sole method of measuring and billing electric consumption for the Premises. Landlord shall not have the right to convert the metering arrangement to submetering, rent inclusion, or any other method during the Lease Term without Tenant's prior written consent. This is an important protection for Tenant, as direct metering provides the most transparent and cost-effective approach to electricity procurement and allows Tenant to negotiate directly with the utility provider and to explore alternative energy procurement options as they become available.
11. Subordination, Non-Disturbance, and Attornment (SNDA)
Tenant requires, as a condition precedent to the Commencement Date, the execution and delivery of a Subordination, Non-Disturbance, and Attornment Agreement ("SNDA") from Atlas Continental Bank, N.A., the holder of the existing first mortgage lien on the Building. We understand that the mortgage was recorded on January 15, 2019, and that the outstanding principal balance is approximately $620 million. The SNDA shall be in a negotiated tri-party form (Landlord, Tenant, and Atlas Continental Bank, N.A.), providing that Tenant's occupancy and lease rights will not be disturbed in the event of foreclosure, deed-in-lieu of foreclosure, or any other enforcement action by the mortgagee, so long as Tenant is not in default under the Lease.
Tenant's revisions add a specific delivery deadline for the SNDA and make the delivery of an executed SNDA a condition to the Commencement Date. In the event that the SNDA has not been delivered within ninety (90) days following the date of full execution of the Lease, Tenant shall have the right to terminate the Lease upon thirty (30) days' prior written notice to Landlord, without penalty or liability, and to receive a full refund of any security deposit or prepaid rent.
We understand that Atlas Continental Bank, N.A. is represented by Halsted & Brinkley LLP in connection with the mortgage and related loan documents. We anticipate that SNDA negotiations will need to proceed in parallel with the lease negotiations, and we would appreciate receiving contact information for the appropriate attorney at Halsted & Brinkley LLP at your earliest convenience.
12. Insurance Requirements
Tenant has revised the insurance provisions of the Lease to reflect market-appropriate coverage levels. Tenant proposes the following minimum coverage requirements:
• Commercial General Liability (CGL): $5,000,000 per occurrence / $10,000,000 aggregate
• Property Insurance: Full replacement value of Tenant's property, furniture, fixtures, equipment, and improvements (including any Tenant Improvements paid for by Tenant or out of the TI Allowance)
• Umbrella/Excess Liability: $25,000,000 per occurrence and in the aggregate
• Carrier Rating Minimum: A.M. Best rating of A-VIII or equivalent (S&P, Moody's, or Fitch equivalent rating accepted)
Landlord's draft required higher thresholds on certain coverages, including a $10,000,000 per occurrence CGL requirement and a $50,000,000 umbrella/excess liability requirement, which exceed market norms for Class A Manhattan office tenancies. Tenant's revisions bring these requirements into alignment with prevailing market practice. Tenant's insurance program is administered by Aurelius's global insurance broker, and Tenant is prepared to provide evidence of coverage promptly upon Lease execution.
13. Signage. Tenant has revised the signage provisions to provide for the following Aurelius signage rights:
• Lobby Directory Listing: Tenant shall be entitled to a prominent listing on the Building's lobby directory, including the Aurelius name and logo.
• Elevator Bank Placard: Tenant shall be entitled to one (1) identifying placard or sign panel at the elevator bank serving Floors 34–38, in a size, design, and location to be mutually agreed upon by Landlord and Tenant, consistent with the Building's signage standards.
• Exterior Building-Top Sign Position: Tenant shall be entitled to one (1) exterior building-top sign position on the Building, subject to (a) all applicable governmental approvals, permits, and authorizations, (b) compliance with all applicable zoning and signage regulations, and (c) Landlord's reasonable approval of the size, design, materials, illumination, and installation method of such signage. Tenant shall be responsible for all costs associated with the design, fabrication, installation, maintenance, repair, and removal of such signage.
Landlord's draft was silent on exterior building-top signage. Given that Aurelius will be one of the Building's largest tenants, occupying five full contiguous floors representing approximately 12.76% of the Building's total rentable area, building-top signage rights are appropriate and consistent with the branding expectations of a major publicly traded global media company. We note that comparable tenants in Class A Midtown Manhattan towers routinely receive building-top signage rights in connection with leases of this scale.
14. Use Clause
Tenant has broadened the permitted use clause to read as follows:
"General office, studio/production, and ancillary uses consistent with a global media, entertainment, and e-commerce headquarters, including without limitation administrative offices, content production and post-production studios, screening and viewing rooms, media labs, conference and event facilities, employee amenities (including a cafeteria, fitness center, and lounge areas), and such other lawful uses as are customary in first-class office buildings in the Midtown Manhattan submarket."
Landlord's initial draft contained a narrower "general office" use clause that did not contemplate the studio, production, or ancillary uses integral to Aurelius's business operations. The revised use clause is necessary to ensure that the Premises can accommodate Aurelius's full range of headquarters functions without triggering a use restriction or requiring a future consent process.
15. Environmental Provisions
Tenant has inserted environmental provisions addressing pre-existing conditions at the Building and the Premises. Specifically:
Landlord's Asbestos Representation. Tenant has added a representation by Landlord that all asbestos-containing materials ("ACM") on the Premises floors (Floors 34–38) have been fully abated in accordance with all applicable federal, state, and local laws, rules, and regulations, including without limitation the regulations of the New York City Department of Environmental Protection and the United States Environmental Protection Agency. Landlord shall provide Tenant with copies of all abatement reports, clearance certificates, and related documentation.
Pre-Existing Condition Indemnification. Landlord shall indemnify, defend, and hold harmless Tenant, its officers, directors, employees, agents, and affiliates from and against any and all claims, damages, losses, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to any pre-existing environmental conditions at or affecting the Premises or the Building, including without limitation the presence of hazardous materials, mold, lead-based paint, or any other environmental contamination existing as of the Commencement Date.
Phase I ESA. Tenant notes for Landlord's information that a Phase I Environmental Site Assessment is currently being conducted on the Building by Greenfield Environmental Sciences LLC, an environmental consulting firm engaged by Tenant. We anticipate that the Phase I ESA will be completed in early June 2023. If the Phase I ESA identifies any Recognized Environmental Conditions or other matters of concern, we will raise those matters with Landlord's counsel promptly and may propose additional environmental provisions in the Lease.
Additional Comments
In addition to the material revisions summarized above, the enclosed redline contains numerous additional revisions of a more customary nature. These include, without limitation, revisions to the following provisions:
• Default and Cure Periods: Tenant has revised the monetary default cure period from five (5) days to ten (10) business days and the non-monetary default cure period from fifteen (15) days to thirty (30) days (with an additional reasonable period for defaults that cannot be cured within such thirty (30)-day period provided Tenant commences cure within such period and diligently prosecutes the same to completion).
• Casualty and Condemnation: Tenant has revised the casualty restoration and condemnation provisions to provide for mutual termination rights in the event of a material casualty or a partial taking affecting more than twenty percent (20%) of the Premises, and to clarify the allocation of condemnation awards and insurance proceeds.
• Holdover Provisions: Tenant has revised the holdover rental rate from 200% of the then-current base rent (as provided in Landlord's draft) to 150% of the then-current base rent for the first sixty (60) days of any holdover period, increasing to 200% thereafter.
• Landlord Access: Tenant has revised the landlord access provisions to require not less than forty-eight (48) hours' prior written notice (except in the case of emergency) and to require that Landlord's access be exercised in a manner that minimizes disruption to Tenant's business operations, including any studio or production activities.
• Building Services: Tenant has revised the building services provisions to specify minimum HVAC, elevator, and cleaning service levels consistent with Class A Manhattan office building standards, and to provide for after-hours HVAC at a rate not to exceed $75.00 per hour per zone.
We respectfully request that Landlord's counsel review all marked changes comprehensively, as the foregoing summary is intended to highlight principal areas of revision and does not purport to describe every modification reflected in the enclosed redline.
Proposed Next Steps and Schedule
We propose that the parties schedule a telephone conference during the week of May 8, 2023, to discuss material open points and the overall direction of the lease negotiation. We are generally available on May 9, 10, and 11, and would be pleased to accommodate Landlord's counsel's schedule. Please let us know your availability and we will circulate a dial-in or video conference link.
We note that Aurelius Board of Directors authorization for the United States lease commitment is anticipated in mid-May 2023, in connection with the Board's regularly scheduled meeting. Tenant is proceeding with diligence on all workstreams in anticipation of receiving such authorization.
The parties share the goal of reaching agreement on the final form of the Lease by early July 2023, with Lease execution to follow promptly thereafter. To that end, we propose the following indicative timeline:
• Week of May 8: Initial call to discuss principal open points
• Week of May 22: Landlord's revised draft (counter-redline) circulated
• Weeks of May 29–June 12: Exchange of further drafts and negotiation sessions
• Mid-June 2023: Receipt of Phase I ESA from Greenfield Environmental Sciences LLC
• Late June–Early July 2023: Finalization of Lease form and ancillary documents (Parent Guaranty, SNDA, Work Letter, etc.)
• Early–Mid July 2023: Lease execution and delivery of security deposit L/C
• August 1, 2023 (target): Commencement Date
We further note that SNDA negotiations with Atlas Continental Bank, N.A., through its counsel at Halsted & Brinkley LLP, will need to proceed in parallel with the lease negotiations to ensure that the SNDA delivery condition can be satisfied by the target Commencement Date. We would appreciate your assistance in facilitating an introduction to the appropriate contact at Halsted & Brinkley LLP so that we may commence those discussions at the earliest opportunity.
We look forward to your response and to productive discussions as we work toward execution of the Lease. Please do not hesitate to contact me or my colleague Rafael Dominguez (rdominguez@calderwoodharkness.com; direct: (212) 448-7651) with any questions or to discuss any aspect of the enclosed redline.
Enclosure:
Tenant's First Marked Draft (Redline) of Proposed Agreement of Lease between Greystone Metropolitan Realty LLC (as Landlord) and Aurelius Media Holdings Inc. (as Tenant) — 787 Seventh Avenue, Floors 34–38, New York, NY 10019
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Fairchild, Partner 425 Park Avenue, 18th Floor New York, NY 10022 Direct: (212) 448-7644 dfairchild@calderwoodharkness.com
cc (via email):
Tariq Nassar, General Counsel, Aurelius Global Media Group PLC Vivienne Caldwell, SVP, Global Real Estate & Facilities, Aurelius Global Media Group PLC Kevin Mulcahy, Esq., Pemberton Locke & Strauss LLP Rafael Dominguez, Esq., Calderwood & Harkness LLP Cynthia Ho, Esq., Calderwood & Harkness LLP Dennis Rourke, Blackmoor Advisory Group LLC
Reduction Date | Reduction Amount | L/C Balance After Reduction
End of Lease Year 5 | $1,036,000 (20%) | $4,144,000
End of Lease Year 7 | $1,036,000 (20%) | $3,108,000
End of Lease Year 9 | $1,036,000 (20%) | $2,072,000
End of Lease Year 11 | $1,036,000 (20%) | $1,036,000
End of Lease Year 13 | $1,036,000 (20%) | $0 (L/C returned)
Lease Year(s) | Annual Base Rent per RSF | Annual Base Rent (185,000 RSF) | Monthly Base Rent
Years 1–5 | $28.00 | $5,180,000 | $431,666.67
Years 6–10 | $33.00 | $6,105,000 | $508,750.00
Years 11–15 | $38.00 | $7,030,000 | $585,833.33

CALDERWOOD & HARKNESS LLP Attorneys at Law

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