1017-00009 · Aurelius Global Media Group · Lease Negotiation

mid-negotiation-status-letter.docx DOCUMENT Real Estate

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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION

CALDERWOOD & HARKNESS LLP Counsellors at Law 425 Park Avenue, 18th Floor New York, NY 10022

Telephone: (212) 554-8000 Facsimile: (212) 554-8001 www.calderwoodharkness.com

June 5, 2023

Via Email and First Class Post

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 Negotiations — Greystone Tower (787 Seventh Avenue, New York, NY 10019) Landlord: Greystone Metropolitan Realty LLC Tenant: Aurelius Media Holdings Inc. Calderwood & Harkness Matter No. 1017-00009

Dear Tariq and Vivienne:

I. Introduction and Purpose of This Letter

We write to provide you with a mid-negotiation status update on the proposed long-term headquarters lease at Greystone Tower, 787 Seventh Avenue, New York, NY 10019 (the "Building"), between Greystone Metropolitan Realty LLC ("Landlord") and Aurelius Media Holdings Inc. ("Tenant"), a wholly owned subsidiary of Aurelius Global Media Group PLC ("Aurelius PLC" or the "Parent").

As you know, Calderwood & Harkness LLP was formally engaged on April 6, 2023, to negotiate and document a fifteen (15)-year lease (the "Lease") for approximately 185,000 rentable square feet ("RSF") located on Floors 34 through 38 of the Building, with an approximate aggregate deal value of $90,000,000 in base rent over the initial Lease Term. Since our engagement, the negotiation has progressed through several significant phases.

Landlord's counsel, Pemberton Locke & Strauss LLP (lead partner Diane Ashford; associate Kevin Mulcahy), delivered the initial draft Lease to our office on April 18, 2023. Following a thorough review and internal consultation with the Aurelius team, Calderwood & Harkness transmitted Tenant's first comprehensive redline and accompanying comment letter to Pemberton Locke & Strauss on May 2, 2023. That redline addressed all material business and legal terms, encompassing approximately 240 discrete comments across the body of the Lease and its proposed exhibits.

Since the delivery of Tenant's initial redline, the parties have engaged in multiple rounds of negotiation, including two in-person sessions at Pemberton Locke & Strauss's offices, several telephone conferences, and the exchange of revised drafts and term sheets. We are pleased to report that good progress has been made on a number of key terms, and the parties are aligned on the fundamental economics and structure of the transaction. That said, certain material provisions remain under active discussion, as described in detail in Section III below.

We also wish to note the receipt of the Aurelius PLC Board authorization for the U.S. lease commitment, dated May 15, 2023, which has been helpful in advancing discussions and has allowed us to negotiate with greater authority on behalf of Tenant. We appreciate the Board's timely consideration of the matter.

This letter is organized as follows: Section II summarizes the terms that have been agreed or substantially agreed between the parties; Section III identifies the terms that remain under active negotiation and describes the parties' respective positions; Section IV addresses the status of subordination, non-disturbance and attornment agreement ("SNDA") negotiations with the Building's mortgagee; Section V provides updates on ongoing due diligence matters; Section VI addresses broker matters; Section VII sets forth a projected timeline and next steps; Section VIII provides a brief update on budget and fee status; and Section IX requests certain direction from Aurelius.

II. Summary of Agreed and Substantially Agreed Terms

Set forth below is a summary of the key terms that have been agreed or substantially agreed between Tenant and Landlord. Unless otherwise noted, "agreed" means that the relevant lease language has been settled and accepted by both parties' counsel, subject only to conforming edits in the final draft.

A. Premises and Term

The parties have agreed that the Premises shall consist of Floors 34, 35, 36, 37, and 38 of the Building, each floor comprising approximately 37,000 RSF, for a total of approximately 185,000 RSF. The measurement methodology (BOMA 2017 ANSI/BOMA Z65.1-2017, Method B) has been agreed by the parties, and Landlord has confirmed the floor measurements.

The Lease Term shall be fifteen (15) years (180 months), commencing on the Commencement Date, which is targeted for August 1, 2023, subject to Landlord's delivery of possession of the Premises in broom-clean, vacant condition in accordance with the delivery conditions specified in the Lease. The Rent Commencement Date has been agreed as February 1, 2024, providing Tenant with a six (6)-month rent-free period to permit Tenant's initial build-out and fit-up of the Premises. Both sides have agreed to this structure. The Expiration Date of the initial Lease Term will be July 31, 2038.

The permitted use has been confirmed as general office, studio and production, and ancillary uses consistent with a global media, entertainment, and e-commerce headquarters. Landlord has confirmed that this use description is acceptable and consistent with the Building's certificate of occupancy and applicable zoning. Ancillary uses will include, without limitation, a cafeteria and pantry facility, a fitness center for employees and invitees, conference and event facilities, and server/data rooms in support of Tenant's operations.

B. Base Rent

The parties have agreed on the following escalating base rent schedule for the initial Lease Term:

The foregoing base rent reflects the parties' agreed economics and is consistent with the range discussed in the preliminary term sheet. In addition, the parties have agreed to a six (6)-month rent abatement period (the period from the Commencement Date through the day immediately preceding the Rent Commencement Date), during which Tenant shall not be obligated to pay base rent. The agreed rent abatement has an approximate value of $2,590,000, based on the Year 1–5 base rent rate.

C. Operating Expense and Tax Escalations

The Lease will utilize a base year structure for operating expense and tax escalations. The base year has been agreed as calendar year 2023. Tenant's proportionate share of the Building has been agreed at 12.76%, calculated by dividing the 185,000 RSF of the Premises by the total Building area of 1,450,000 RSF. Operating expenses and real estate taxes in excess of the amounts incurred during the base year will be passed through to Tenant on a full pass-through basis (i.e., there is no operating expense stop).

Of particular note, Landlord has agreed, following initial pushback during the first redline round, to a five percent (5%) cumulative annual cap on controllable operating expenses. "Controllable operating expenses" will be defined to exclude real estate taxes, insurance premiums, utility costs, costs imposed by governmental mandate enacted after the Lease Date, and certain other customarily excluded categories. This cap was a meaningful concession by Landlord and represents a favorable outcome for Tenant, as it limits Tenant's exposure to discretionary increases in building operating costs.

D. Electricity. The parties have agreed that electricity shall be provided on a direct-metering basis. Tenant will be responsible for its own electric usage as measured by dedicated submeters installed on each floor of the Premises. The cost of electricity is not included in base rent and is not subject to the operating expense escalation structure. For informational and budgeting purposes, Landlord has estimated Tenant's electricity cost at approximately $3.15 per RSF per year based on current utility rates and typical office consumption. We note that this estimate is for informational purposes only and is not a cap or guarantee, and actual costs will depend on Tenant's usage and prevailing utility rates.

E. Tenant Improvement Allowance

The Tenant Improvement ("TI") allowance has been agreed at $85.00 per RSF, yielding a total allowance of $15,725,000 ($85.00 × 185,000 RSF). This amount is in line with current market standards for long-term Class A Manhattan office leases of this scale. The TI allowance will be disbursed via monthly progress payments against architect-certified requisitions submitted by Tenant's construction manager, subject to standard lien waiver and insurance documentation requirements.

In addition, the parties have agreed to an excess TI option, pursuant to which Tenant may elect to utilize up to an additional $15.00 per RSF ($2,775,000 in the aggregate) beyond the base TI allowance. Any excess TI amounts drawn by Tenant will be amortized into base rent at an interest rate of 7.5% per annum over the remaining Lease Term from the date of disbursement. This structure provides Tenant with meaningful flexibility to invest in a higher-quality build-out without requiring upfront capital deployment, while providing Landlord with an appropriate return on the incremental investment.

As Vivienne is aware, Tenant has engaged Ashworth Patel Design Studio LLC (Principal Architect: Rohan Patel, AIA) as the architect of record for the build-out, and Pinnacle Build Group LLC has been engaged as the construction manager. Both firms have been introduced to Landlord's building management team, and initial coordination meetings have taken place.

The Work Letter, which will be attached to the Lease as Exhibit C, is substantially agreed. Minor comments remain regarding the timeline for Landlord's approval of Tenant's construction drawings. Specifically, Tenant has proposed that Landlord have fifteen (15) business days to approve or disapprove Tenant's plans (with disapproval limited to matters that affect the Building's structure, systems, or exterior appearance), while Landlord has proposed twenty (20) business days. We expect this difference to be resolved in the current round of negotiations and do not anticipate it becoming a significant impediment.

F. Security Deposit

Tenant's security deposit obligation will be satisfied by the delivery of an irrevocable standby letter of credit ("L/C") in the initial amount of $5,180,000, which is equal to one (1) year of initial base rent (Years 1–5). The L/C shall be issued by Caledonian National Bank PLC, London (New York branch), in favor of Landlord. Landlord has confirmed that Caledonian National Bank is an acceptable issuing institution.

The parties have agreed to the following burn-down schedule for the L/C amount, subject to the condition that no uncured Event of Default exists at the applicable reduction date:

Accordingly, the L/C will reduce to zero by the end of Lease Year 13, provided that Tenant is not in default. The form of the L/C, to be attached to the Lease as Exhibit D, has been substantially agreed between the parties and Caledonian National Bank's New York branch counsel.

G. Expansion Option

Tenant will have a one-time option to expand into Floors 39 and 40 of the Building, each comprising approximately 37,000 RSF, for a total of 74,000 RSF of expansion space (the "Expansion Space"). The exercise window for the expansion option has been agreed as 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. Both parties have now agreed to this exercise window following Tenant's request that the window be widened from the original twelve-month period proposed by Landlord.

The term for the Expansion Space will be co-terminous with the initial Lease Term, expiring on July 31, 2038. An Expansion TI Allowance of $50.00 per RSF has been agreed, yielding a total expansion TI allowance of $3,700,000 ($50.00 × 74,000 RSF). The lower TI allowance for the Expansion Space (relative to the initial Premises) reflects the fact that the Expansion Space term will necessarily be shorter than the full fifteen-year initial Lease Term, depending on the timing of exercise.

Rent for the Expansion Space shall be at Fair Market Rent ("FMR") at the time of exercise, subject to a floor equal to not less than ninety-five percent (95%) of the then-current base rent per RSF on the initial Premises. By way of illustration, if the expansion option is exercised during Lease Years 6 through 10, the minimum expansion rent would be 95% × $33.00/RSF = $31.35/RSF. This floor mechanism protects Landlord from a below-market rental scenario while ensuring that the expansion rent remains reasonably competitive for Tenant.

The FMR for the Expansion Space will be determined in accordance with the baseball-style arbitration procedure to be set forth in Exhibit G to the Lease. We address the current status of Exhibit G negotiations in Section III.D below.

H. Renewal Options

Tenant will have two (2) consecutive five (5)-year renewal options, for a potential total occupancy of twenty-five (25) years if both renewal options are exercised. Renewal is at Tenant's sole election, exercisable by delivery of irrevocable written notice to Landlord not less than eighteen (18) months prior to the expiration of the then-current Lease Term. Accordingly, the deadline for exercise of the first renewal option would be January 31, 2036 (i.e., 18 months before the July 31, 2038 expiration of the initial term). The deadline for the second renewal option would be similarly calculated based on the expiration of the first renewal term.

Renewal rent for each renewal term shall be at Fair Market Rent, determined in accordance with the Exhibit G arbitration procedure. This structure has been agreed.

I. Signage. The parties have agreed that Tenant shall have the following signage rights: (i) a listing on the Building lobby directory; (ii) one elevator bank placard designating the Aurelius elevator bank serving Floors 34–38; and (iii) one exterior building-top sign position on the Building's roofline or upper facade, subject to the prior receipt of all applicable governmental approvals, permits, and consents, including approvals from the New York City Department of Buildings and the Landmarks Preservation Commission, if applicable. Tenant shall be responsible for all costs associated with the design, fabrication, installation, maintenance, and removal of its signage. Landlord has confirmed that no other tenant currently has an exclusive or preferential right to the building-top signage position.

J. Insurance Requirements

The insurance requirements under the Lease have been agreed and are summarized as follows:

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

• Property Coverage: Full replacement value of Tenant's personal property, fixtures, and improvements

• Umbrella/Excess Liability: $25,000,000

• Carrier Rating Minimum: A.M. Best A-VIII or equivalent

Caldecott Risk Advisors Ltd. (London) is acting as Tenant's insurance broker in connection with the procurement of the required policies. The anticipated carriers are Northbridge Mutual Insurance Company for CGL and property coverage, and Sovereign Assurance Group PLC for the umbrella/excess liability policy. Calderwood & Harkness has confirmed that both carriers meet the A.M. Best A-VIII minimum rating threshold specified in the Lease. Landlord, Greystone Metropolitan Realty LLC, and its designated managing agent shall be named as additional insureds on the CGL and umbrella policies, and the Lease will include standard waiver of subrogation provisions.

III. Terms Under Active Negotiation / Open Issues

While considerable progress has been made, a number of material terms remain under active discussion. We set forth below the status of each open item, together with the parties' respective positions and our recommendations for next steps.

A. Change of Control Assignment Right

This provision remains the most significant open negotiation point, and we expect it to be the primary focus of the next round of discussions with Landlord and Landlord's counsel.

Tenant's Position (as set forth in the May 2, 2023 redline): Tenant has proposed that, upon a "change of control" of either Aurelius Media Holdings Inc. (the Tenant entity) or Aurelius Global Media Group PLC (the ultimate parent), Tenant shall have the right to assign the Lease to the successor entity without Landlord's prior written consent, subject to the following conditions:

(i) The successor entity (or its parent guarantor) has a tangible net worth, calculated in accordance with U.S. 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 is approximately $3.1 billion based on Aurelius PLC's most recent audited financial statements;

(ii) The successor entity assumes all obligations under the Lease pursuant to an assumption agreement in a form reasonably acceptable to Landlord;

(iii) Tenant provides Landlord with not less than thirty (30) days' prior written notice of the change of control, together with reasonable evidence of the successor entity's financial condition, including audited financial statements for the two most recent fiscal years; and

(iv) The successor entity or its parent executes a replacement guaranty on substantially the same terms as the Aurelius PLC Parent Guaranty (discussed below), at which point Aurelius PLC shall be released from its guaranty obligations on a prospective basis.

Tenant has proposed that the term "Control" be defined as the direct or indirect ownership of more than fifty percent (50%) of the voting equity interests in Tenant, or the power to direct or cause the direction of the management and policies of Tenant, whether through the ownership of voting securities, by contract, or otherwise.

In connection with the change of control provision, Tenant has also sought a waiver of Landlord's recapture right in the case of a change of control assignment. Under Tenant's proposal, Landlord's recapture right would be retained only for voluntary assignments to unrelated third parties (i.e., non-change-of-control assignments), with Landlord having thirty (30) days from receipt of Tenant's assignment request to elect to recapture the Premises by terminating the Lease.

Upon a change of control assignment, Tenant has proposed that the successor entity or its parent be required to execute a replacement guaranty on substantially the same terms as the Aurelius PLC Parent Guaranty, which is subject to a guaranty cap of $18,000,000 (approximately two years of average base rent over the Lease Term). Upon delivery of the replacement guaranty, Aurelius PLC would be released from its guaranty obligations prospectively.

Landlord's Current Position: Greystone Metropolitan Realty LLC, through its counsel Diane Ashford at Pemberton Locke & Strauss, has expressed concern regarding the automatic assignment right (i.e., assignment without Landlord's consent) in the change of control context. In the most recent round of comments, Landlord initially proposed that Landlord's consent still be required for change of control assignments, though Landlord would agree that such consent would not be unreasonably withheld, conditioned, or delayed. Additionally, Landlord has pushed back on the proposed tangible net worth threshold of $3.1 billion, suggesting that a higher threshold—potentially $4.0 billion—would be more appropriate given the scale and duration of the lease commitment.

Calderwood & Harkness's Assessment and Approach: We have provided Landlord's counsel with market comparables demonstrating that the proposed automatic assignment structure is consistent with recent Class A Manhattan office leases involving publicly traded tenants of comparable size and creditworthiness. Specifically, we have cited analogous provisions in three recent transactions in the Midtown and Hudson Yards submarkets, each of which permits assignment without landlord consent upon a change of control, subject to financial condition requirements similar to those proposed by Tenant. We are continuing to press for Tenant's proposed formulation and believe that the $3.1 billion tangible net worth threshold is reasonable and defensible.

Recommended Next Steps: A conference call has been scheduled for the week of June 12, 2023 with Diane Ashford (Pemberton Locke & Strauss) and Catherine Ng (Senior Vice President, Leasing at Greystone Metropolitan Realty) to discuss the change of control provision further. We recommend that Vivienne Caldwell participate in this call if her schedule permits, as the Landlord team has indicated that a direct conversation with Tenant's business principals on this point may be productive in advancing the discussion.

B. Right of First Offer (ROFO) — Subordination

The Lease will provide Tenant with a right of first offer ("ROFO") on any full floor on Floors 30 through 33 of the Building that becomes available during the Lease Term. Under the ROFO, Landlord is required to offer any such floor to Tenant before marketing it to third parties, and Tenant will have fifteen (15) business days from receipt of the offer to accept at the offered terms.

Subordination Issue: Landlord's draft lease subordinates Tenant's ROFO to the existing rights of Kestrel Insurance Holdings Inc. ("Kestrel"), the current tenant on Floors 30 through 32 of the Building, as of the Lease Date. Calderwood & Harkness has confirmed that Kestrel holds an existing renewal option on Floors 30–32 under its current lease with Landlord. However, we have not yet received confirmation from Landlord or Landlord's counsel regarding the precise scope of Kestrel's rights—specifically, whether Kestrel holds only a renewal option or whether Kestrel also holds expansion, contraction, or other preferential rights that could further limit Tenant's ROFO.

We have made a formal request to Pemberton Locke & Strauss to confirm the scope of Kestrel's existing rights and to confirm that Tenant's ROFO will be superior to any rights granted to future tenants on those floors (i.e., that the subordination applies only to pre-existing rights and not to rights granted after the date of the Lease).

Floor 33: Landlord has confirmed in writing that there are no existing third-party preferential rights on Floor 33. Accordingly, Tenant's ROFO with respect to Floor 33 should be unencumbered and not subject to any subordination.

Outstanding: We are awaiting Landlord's confirmation of the precise scope of Kestrel's existing rights. Once received, we will assess whether the subordination language in the Lease requires narrowing or additional qualification, and we will advise Aurelius accordingly.

C. Parent Guaranty

The structure of the Parent Guaranty has been substantially agreed. Aurelius Global Media Group PLC will guarantee all obligations of Aurelius Media Holdings Inc. under the Lease, subject to a guaranty cap of $18,000,000, which represents approximately two (2) years of average base rent over the initial Lease Term. The guaranty will be a continuing guaranty of payment and performance, absolute and unconditional, subject to the agreed cap.

Open Issue — Release Mechanics upon Change of Control: As noted in Section III.A above, the parties have not yet agreed on the release mechanics applicable to the Parent Guaranty upon a change of control assignment. Tenant's position is that Aurelius PLC's guaranty obligations should be released upon delivery of a replacement guaranty by the successor entity or its parent, on substantially the same terms as the original guaranty (including the $18,000,000 cap). Landlord has initially proposed that Aurelius PLC's release not become effective until the expiration of a twelve (12)-month "seasoning period" following delivery of the replacement guaranty, during which both Aurelius PLC and the successor guarantor would remain liable under their respective guaranties. Calderwood & Harkness has countered with a proposal for release upon delivery of the replacement guaranty, without any seasoning period, on the basis that the financial condition requirements applicable to the successor entity provide adequate protection for Landlord. This point is being negotiated in tandem with the change of control assignment provision discussed in Section III.A, and we expect that resolution of one will inform resolution of the other.

D. Fair Market Rent Determination Procedure (Exhibit G)

The parties have agreed in principle to a baseball-style (or "final offer") arbitration mechanism for determining FMR in connection with the expansion option and renewal options. Under this procedure, each party will submit its final determination of FMR to a panel of arbitrators, and the arbitrators will select the submission that is closest to their independent determination of FMR without modification.

Remaining Open Items:

(i) Timeline for Appointment of Arbitrators: Tenant has proposed that each party have ten (10) business days from the triggering notice to designate its arbitrator; Landlord has proposed fifteen (15) business days. The two designated arbitrators would then have ten (10) business days (agreed by both sides) to select a neutral third arbitrator.

(ii) Qualifications of Arbitrators: Both sides agree that each arbitrator shall be a licensed MAI-designated appraiser with not less than ten (10) years of experience appraising Class A office properties in the Borough of Manhattan.

We expect the remaining items under Exhibit G to be resolved shortly, as the differences are procedural in nature and not substantive. We will continue to advocate for Tenant's preferred ten-business-day designation timeline, as a shorter timeline ensures a more efficient resolution of any FMR dispute.

E. Assignment and Subletting (General)

Apart from the change of control assignment right discussed in Section III.A, the general assignment and subletting provisions of the Lease are largely agreed. The parties have confirmed the following framework:

(i) No assignment of the Lease or subletting of the Premises (in whole or in part) shall be permitted without Landlord's prior written consent, which shall not be unreasonably withheld, conditioned, or delayed.

(ii) Landlord shall have a recapture right for voluntary assignments to unrelated third parties. Upon receipt of a request to assign, Landlord shall have thirty (30) days to elect to recapture the Premises by terminating the Lease. If Landlord does not exercise the recapture right within such period, Landlord's consent to the assignment shall not be unreasonably withheld.

Remaining Issue — De Minimis Subletting Exception: Tenant has proposed that subletting of less than one full floor (i.e., less than 37,000 RSF) should be exempt from the consent and recapture provisions, provided that the sublease covers 10,000 RSF or less and meets certain additional conditions (e.g., the subtenant is of a character consistent with a Class A office building, and the sublease is on arms'-length terms). Landlord has not yet responded to this proposal. We believe this exception is reasonable and consistent with market practice, particularly for a tenant of this scale, and we intend to continue pursuing it in the next round of negotiations.

IV. Status of SNDA Negotiations with Atlas Continental Bank, N.A.

The Building is subject to a first mortgage lien held by Atlas Continental Bank, N.A. (the "Lender"), recorded on January 15, 2019, against the Building and the underlying real property. We understand that the outstanding principal balance of the mortgage is approximately $620,000,000.

Negotiations on a Subordination, Non-Disturbance and Attornment Agreement ("SNDA") between Lender and Tenant have commenced as of the date of this letter. Calderwood & Harkness expects to receive Lender's initial form of SNDA this week. Lender's outside counsel is Halsted & Brinkley LLP (lead attorney: Thomas Brinkley, 200 Park Avenue, Suite 2400, New York, NY 10166). The bank's designated contact for this transaction is Patricia Delgado, Vice President, Commercial Real Estate Lending, at Atlas Continental Bank's New York office.

The delivery of an executed SNDA in a form reasonably acceptable to Tenant is a condition precedent to the Commencement Date under the Lease. Based on our experience with institutional lender SNDA negotiations, we anticipate that the SNDA process will require approximately three to four (3–4) weeks from receipt of the initial draft, assuming a reasonably cooperative process. This timeline is reflected in the projected schedule set forth in Section VII below.

The key tenant protections that Calderwood & Harkness will seek in the SNDA include the following:

(i) Non-Disturbance: Lender's agreement that, in the event of a foreclosure or acceptance of a deed-in-lieu of foreclosure, Tenant's occupancy and rights under the Lease shall not be disturbed, and the Lease shall remain in full force and effect, so long as Tenant is not in default beyond applicable notice and cure periods.

(ii) Preservation of Tenant's Options: Confirmation that Tenant's expansion option, ROFO, renewal options, and other preferential rights under the Lease shall survive and be binding upon any successor-in-interest to Landlord following a foreclosure or transfer.

(iii) Adequate Cure Rights: Reasonable provisions permitting Tenant to cure any alleged default under the Lease before the successor landlord may terminate the Lease, including appropriate notice requirements and cure periods.

(iv) Insurance and Condemnation Proceeds: Appropriate handling of insurance and condemnation proceeds to protect Tenant's interests in its leasehold improvements and to ensure that the Premises are restored in the event of a casualty, to the extent required under the Lease.

We will keep Aurelius apprised as the SNDA negotiations progress and will separately circulate any SNDA drafts that raise material issues for your review and comment.

V. Due Diligence Updates

A. Environmental. The Phase I Environmental Site Assessment for the Building was completed by Greenfield Environmental Sciences LLC (Dr. Nadine Bertram, P.E., project lead) on June 2, 2023. We are pleased to report that the assessment identified no Recognized Environmental Conditions ("RECs"), no Controlled RECs, and no Historical RECs in connection with the subject property or the Premises floors.

In addition, Landlord has represented in the draft Lease that all asbestos-containing materials ("ACMs") on the Premises floors (Floors 34–38) have been fully abated in accordance with applicable federal, state, and local regulations. The Lease will include Landlord's indemnification of Tenant for any pre-existing environmental conditions affecting the Premises, including but not limited to any ACMs not previously identified or abated. This indemnity has been agreed by both sides.

Environmental due diligence is now complete, and no further action is required at this time.

B. Title. A title commitment has been ordered from Commonwealth Fidelity Title Insurance Co. under Policy No. LTP-2023-07842. As of the date of this letter, issuance of the commitment is expected on or about June 9, 2023. Upon receipt, Calderwood & Harkness will conduct a thorough review of the commitment, identify all permitted exceptions, and confirm that required endorsements are available, including endorsements relating to the Atlas Continental Bank mortgage lien. We note that the issuance of the leasehold title insurance policy will be conditioned upon receipt of an executed SNDA from Atlas Continental Bank, N.A., which is consistent with standard title insurance underwriting requirements.

We will circulate a summary of the title commitment findings upon completion of our review and will flag any exceptions that may require further discussion or negotiation with Landlord.

C. Survey and Zoning

An ALTA/NSPS land title survey for 787 Seventh Avenue (Block 1024, Lot 18, Borough of Manhattan) has been obtained and is currently under review by our team. Preliminary review confirms that the Building's zoning classification under the New York City Zoning Resolution (as amended) permits the intended office, studio/production, and ancillary uses described in the Lease. We have not identified any zoning non-conformities, encroachments, or other survey issues of concern at this time, although our review is ongoing. A full survey and zoning memorandum will follow under separate cover.

VI. Broker Matters

We note for completeness that Blackmoor Advisory Group LLC (Dennis Rourke, Principal Broker) continues to serve as Tenant's exclusive broker in connection with this transaction. Pursuant to a separate commission agreement between Blackmoor Advisory Group and Landlord, Blackmoor is entitled to a commission equal to 2.25% of aggregate base rent, which amounts to approximately $2,025,000. This commission is payable by Landlord and not by Tenant.

Landlord's broker is Mercer Houghton Real Estate Services Inc. (Simone Archer, Managing Director). Mercer Houghton's commission is 1.50% of aggregate base rent, or approximately $1,350,000, also payable by Landlord.

No action is required by Aurelius with respect to broker commissions. The Lease will include standard broker representation and indemnification provisions, and we will confirm that the commission agreements are in place prior to lease execution.

VII. Projected Timeline and Next Steps

Based on the current pace of negotiations and the items remaining to be resolved, we propose the following target timeline:

We note that the current timeline anticipates lease execution on or around July 13, 2023, which is consistent with the parties' mutual objective of an August 1, 2023 Commencement Date. This timeline assumes continued good-faith engagement by all parties and a reasonably efficient SNDA process. We will advise promptly of any delays or developments that could affect the projected schedule.

VIII. Budget and Fee Status

Fees incurred by Calderwood & Harkness through May 31, 2023 are within the estimated range of $475,000 to $575,000 (exclusive of disbursements) communicated to Aurelius in our fee estimate memorandum dated April 7, 2023. We will provide a more detailed budget update, including a breakdown of time by attorney and task category, with our next invoice.

We wish to note that if the SNDA negotiations with Atlas Continental Bank or the change of control assignment provision discussions prove to be more protracted than currently anticipated, total fees could trend toward the higher end of the estimated range. In the event that we determine a revision to the fee estimate may be warranted, we will provide advance notice to Tariq and the Aurelius finance team before any such revision becomes necessary.

IX. Request for Client Direction

In light of the foregoing, we respectfully request the following from Aurelius:

1. June 12 Call — Availability: Please confirm Vivienne Caldwell's availability for the conference call scheduled for the week of June 12, 2023 regarding the change of control assignment provision. We believe that Vivienne's participation would be valuable in advancing this discussion with Landlord's business team.

2. ROFO Subordination — Strategic Guidance: We would appreciate Aurelius's updated views on the ROFO subordination to Kestrel Insurance Holdings Inc., particularly regarding the strategic importance of Floors 30 through 32 for future expansion beyond the dedicated expansion option space on Floors 39 and 40. Understanding Aurelius's long-term space planning objectives will help us calibrate our negotiation strategy on this point—specifically, whether we should press for a narrower subordination or accept the existing language, provided that Landlord confirms the ROFO is superior to any future third-party rights.

3. Additional Comments: We invite any additional comments, questions, or concerns that Aurelius may have before we enter the next round of lease negotiations. If there are any changes to the business terms or strategic priorities since our last discussion, please advise so that we can incorporate them into our approach.

We remain fully committed to bringing this transaction to a successful close within the projected timeline and are available at your convenience to discuss any aspect of this update in greater detail. Please do not hesitate to contact me directly at (212) 554-8112 or at dfairchild@calderwoodharkness.com with any questions.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Douglas Fairchild Partner, Real Estate 425 Park Avenue, 18th Floor New York, NY 10022 Telephone: (212) 554-8112

Email: dfairchild@calderwoodharkness.com

cc:

Sir Marcus Hale, CBE, Chief Executive Officer, Aurelius Global Media Group PLC Eleanora Voss, Chief Financial Officer, Aurelius Global Media Group PLC Angela Fontaine, Billing Partner, Calderwood & Harkness LLP Rafael Dominguez, Calderwood & Harkness LLP Cynthia Ho, Calderwood & Harkness LLP Dennis Rourke, Blackmoor Advisory Group LLC

Enclosures: None (status letter only; referenced memoranda circulated separately)

Lease Years	Base Rent (per RSF per annum)	Annual Base Rent	Monthly Base Rent
Years 1–5 (months 1–60)	$28.00	$5,180,000.00	$431,666.67
Years 6–10 (months 61–120)	$33.00	$6,105,000.00	$508,750.00
Years 11–15 (months 121–180)	$38.00	$7,030,000.00	$585,833.33
End of Lease Year	Reduction Amount	Remaining L/C Balance
Year 5	$1,036,000	$4,144,000
Year 7	$1,036,000	$3,108,000
Year 9	$1,036,000	$2,072,000
Year 11	$1,036,000	$1,036,000
Year 13	$1,036,000	$0
Target Date	Milestone
Week of June 12, 2023	Conference call with Landlord / Landlord's counsel (Diane Ashford, Catherine Ng) regarding change of control assignment right and ROFO subordination issues. Recommend Vivienne Caldwell's participation.
Mid-June 2023	Receive and review title commitment from Commonwealth Fidelity Title Insurance Co.; complete survey and zoning review; circulate findings.
Late June 2023	Target for resolution of all remaining open business and legal terms, including change of control, ROFO subordination, parent guaranty release mechanics, Exhibit G arbitration procedure, and de minimis subletting exception. Commence SNDA negotiation in earnest with Atlas Continental Bank / Halsted & Brinkley LLP.
Early July 2023	Target for final agreed lease form and finalization of all exhibits (Exhibits A through G, inclusive).
Mid-July 2023	Target for lease execution by both parties, issuance of the L/C by Caledonian National Bank, and execution of the SNDA by Atlas Continental Bank.
August 1, 2023	Targeted Commencement Date; Landlord delivers possession of Premises in accordance with delivery conditions.

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP Counsellors at Law 425 Park Avenue, 18th Floor New York, NY 10022
Telephone: (212) 554-8000 Facsimile: (212) 554-8001 www.calderwoodharkness.com
June 5, 2023
Via Email and First Class Post
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 Negotiations — Greystone Tower (787 Seventh Avenue, New York, NY 10019) Landlord: Greystone Metropolitan Realty LLC Tenant: Aurelius Media Holdings Inc. Calderwood & Harkness Matter No. 1017-00009
Dear Tariq and Vivienne:
I. Introduction and Purpose of This Letter
We write to provide you with a mid-negotiation status update on the proposed long-term headquarters lease at Greystone Tower, 787 Seventh Avenue, New York, NY 10019 (the "Building"), between Greystone Metropolitan Realty LLC ("Landlord") and Aurelius Media Holdings Inc. ("Tenant"), a wholly owned subsidiary of Aurelius Global Media Group PLC ("Aurelius PLC" or the "Parent").
As you know, Calderwood & Harkness LLP was formally engaged on April 6, 2023, to negotiate and document a fifteen (15)-year lease (the "Lease") for approximately 185,000 rentable square feet ("RSF") located on Floors 34 through 38 of the Building, with an approximate aggregate deal value of $90,000,000 in base rent over the initial Lease Term. Since our engagement, the negotiation has progressed through several significant phases.
Landlord's counsel, Pemberton Locke & Strauss LLP (lead partner Diane Ashford; associate Kevin Mulcahy), delivered the initial draft Lease to our office on April 18, 2023. Following a thorough review and internal consultation with the Aurelius team, Calderwood & Harkness transmitted Tenant's first comprehensive redline and accompanying comment letter to Pemberton Locke & Strauss on May 2, 2023. That redline addressed all material business and legal terms, encompassing approximately 240 discrete comments across the body of the Lease and its proposed exhibits.
Since the delivery of Tenant's initial redline, the parties have engaged in multiple rounds of negotiation, including two in-person sessions at Pemberton Locke & Strauss's offices, several telephone conferences, and the exchange of revised drafts and term sheets. We are pleased to report that good progress has been made on a number of key terms, and the parties are aligned on the fundamental economics and structure of the transaction. That said, certain material provisions remain under active discussion, as described in detail in Section III below.
We also wish to note the receipt of the Aurelius PLC Board authorization for the U.S. lease commitment, dated May 15, 2023, which has been helpful in advancing discussions and has allowed us to negotiate with greater authority on behalf of Tenant. We appreciate the Board's timely consideration of the matter.
This letter is organized as follows: Section II summarizes the terms that have been agreed or substantially agreed between the parties; Section III identifies the terms that remain under active negotiation and describes the parties' respective positions; Section IV addresses the status of subordination, non-disturbance and attornment agreement ("SNDA") negotiations with the Building's mortgagee; Section V provides updates on ongoing due diligence matters; Section VI addresses broker matters; Section VII sets forth a projected timeline and next steps; Section VIII provides a brief update on budget and fee status; and Section IX requests certain direction from Aurelius.
II. Summary of Agreed and Substantially Agreed Terms
Set forth below is a summary of the key terms that have been agreed or substantially agreed between Tenant and Landlord. Unless otherwise noted, "agreed" means that the relevant lease language has been settled and accepted by both parties' counsel, subject only to conforming edits in the final draft.
A. Premises and Term
The parties have agreed that the Premises shall consist of Floors 34, 35, 36, 37, and 38 of the Building, each floor comprising approximately 37,000 RSF, for a total of approximately 185,000 RSF. The measurement methodology (BOMA 2017 ANSI/BOMA Z65.1-2017, Method B) has been agreed by the parties, and Landlord has confirmed the floor measurements.
The Lease Term shall be fifteen (15) years (180 months), commencing on the Commencement Date, which is targeted for August 1, 2023, subject to Landlord's delivery of possession of the Premises in broom-clean, vacant condition in accordance with the delivery conditions specified in the Lease. The Rent Commencement Date has been agreed as February 1, 2024, providing Tenant with a six (6)-month rent-free period to permit Tenant's initial build-out and fit-up of the Premises. Both sides have agreed to this structure. The Expiration Date of the initial Lease Term will be July 31, 2038.
The permitted use has been confirmed as general office, studio and production, and ancillary uses consistent with a global media, entertainment, and e-commerce headquarters. Landlord has confirmed that this use description is acceptable and consistent with the Building's certificate of occupancy and applicable zoning. Ancillary uses will include, without limitation, a cafeteria and pantry facility, a fitness center for employees and invitees, conference and event facilities, and server/data rooms in support of Tenant's operations.
B. Base Rent
The parties have agreed on the following escalating base rent schedule for the initial Lease Term:
The foregoing base rent reflects the parties' agreed economics and is consistent with the range discussed in the preliminary term sheet. In addition, the parties have agreed to a six (6)-month rent abatement period (the period from the Commencement Date through the day immediately preceding the Rent Commencement Date), during which Tenant shall not be obligated to pay base rent. The agreed rent abatement has an approximate value of $2,590,000, based on the Year 1–5 base rent rate.
C. Operating Expense and Tax Escalations
The Lease will utilize a base year structure for operating expense and tax escalations. The base year has been agreed as calendar year 2023. Tenant's proportionate share of the Building has been agreed at 12.76%, calculated by dividing the 185,000 RSF of the Premises by the total Building area of 1,450,000 RSF. Operating expenses and real estate taxes in excess of the amounts incurred during the base year will be passed through to Tenant on a full pass-through basis (i.e., there is no operating expense stop).
Of particular note, Landlord has agreed, following initial pushback during the first redline round, to a five percent (5%) cumulative annual cap on controllable operating expenses. "Controllable operating expenses" will be defined to exclude real estate taxes, insurance premiums, utility costs, costs imposed by governmental mandate enacted after the Lease Date, and certain other customarily excluded categories. This cap was a meaningful concession by Landlord and represents a favorable outcome for Tenant, as it limits Tenant's exposure to discretionary increases in building operating costs.
D. Electricity. The parties have agreed that electricity shall be provided on a direct-metering basis. Tenant will be responsible for its own electric usage as measured by dedicated submeters installed on each floor of the Premises. The cost of electricity is not included in base rent and is not subject to the operating expense escalation structure. For informational and budgeting purposes, Landlord has estimated Tenant's electricity cost at approximately $3.15 per RSF per year based on current utility rates and typical office consumption. We note that this estimate is for informational purposes only and is not a cap or guarantee, and actual costs will depend on Tenant's usage and prevailing utility rates.
E. Tenant Improvement Allowance
The Tenant Improvement ("TI") allowance has been agreed at $85.00 per RSF, yielding a total allowance of $15,725,000 ($85.00 × 185,000 RSF). This amount is in line with current market standards for long-term Class A Manhattan office leases of this scale. The TI allowance will be disbursed via monthly progress payments against architect-certified requisitions submitted by Tenant's construction manager, subject to standard lien waiver and insurance documentation requirements.
In addition, the parties have agreed to an excess TI option, pursuant to which Tenant may elect to utilize up to an additional $15.00 per RSF ($2,775,000 in the aggregate) beyond the base TI allowance. Any excess TI amounts drawn by Tenant will be amortized into base rent at an interest rate of 7.5% per annum over the remaining Lease Term from the date of disbursement. This structure provides Tenant with meaningful flexibility to invest in a higher-quality build-out without requiring upfront capital deployment, while providing Landlord with an appropriate return on the incremental investment.
As Vivienne is aware, Tenant has engaged Ashworth Patel Design Studio LLC (Principal Architect: Rohan Patel, AIA) as the architect of record for the build-out, and Pinnacle Build Group LLC has been engaged as the construction manager. Both firms have been introduced to Landlord's building management team, and initial coordination meetings have taken place.
The Work Letter, which will be attached to the Lease as Exhibit C, is substantially agreed. Minor comments remain regarding the timeline for Landlord's approval of Tenant's construction drawings. Specifically, Tenant has proposed that Landlord have fifteen (15) business days to approve or disapprove Tenant's plans (with disapproval limited to matters that affect the Building's structure, systems, or exterior appearance), while Landlord has proposed twenty (20) business days. We expect this difference to be resolved in the current round of negotiations and do not anticipate it becoming a significant impediment.
F. Security Deposit
Tenant's security deposit obligation will be satisfied by the delivery of an irrevocable standby letter of credit ("L/C") in the initial amount of $5,180,000, which is equal to one (1) year of initial base rent (Years 1–5). The L/C shall be issued by Caledonian National Bank PLC, London (New York branch), in favor of Landlord. Landlord has confirmed that Caledonian National Bank is an acceptable issuing institution.
The parties have agreed to the following burn-down schedule for the L/C amount, subject to the condition that no uncured Event of Default exists at the applicable reduction date:
Accordingly, the L/C will reduce to zero by the end of Lease Year 13, provided that Tenant is not in default. The form of the L/C, to be attached to the Lease as Exhibit D, has been substantially agreed between the parties and Caledonian National Bank's New York branch counsel.
G. Expansion Option
Tenant will have a one-time option to expand into Floors 39 and 40 of the Building, each comprising approximately 37,000 RSF, for a total of 74,000 RSF of expansion space (the "Expansion Space"). The exercise window for the expansion option has been agreed as 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. Both parties have now agreed to this exercise window following Tenant's request that the window be widened from the original twelve-month period proposed by Landlord.
The term for the Expansion Space will be co-terminous with the initial Lease Term, expiring on July 31, 2038. An Expansion TI Allowance of $50.00 per RSF has been agreed, yielding a total expansion TI allowance of $3,700,000 ($50.00 × 74,000 RSF). The lower TI allowance for the Expansion Space (relative to the initial Premises) reflects the fact that the Expansion Space term will necessarily be shorter than the full fifteen-year initial Lease Term, depending on the timing of exercise.
Rent for the Expansion Space shall be at Fair Market Rent ("FMR") at the time of exercise, subject to a floor equal to not less than ninety-five percent (95%) of the then-current base rent per RSF on the initial Premises. By way of illustration, if the expansion option is exercised during Lease Years 6 through 10, the minimum expansion rent would be 95% × $33.00/RSF = $31.35/RSF. This floor mechanism protects Landlord from a below-market rental scenario while ensuring that the expansion rent remains reasonably competitive for Tenant.
The FMR for the Expansion Space will be determined in accordance with the baseball-style arbitration procedure to be set forth in Exhibit G to the Lease. We address the current status of Exhibit G negotiations in Section III.D below.
H. Renewal Options
Tenant will have two (2) consecutive five (5)-year renewal options, for a potential total occupancy of twenty-five (25) years if both renewal options are exercised. Renewal is at Tenant's sole election, exercisable by delivery of irrevocable written notice to Landlord not less than eighteen (18) months prior to the expiration of the then-current Lease Term. Accordingly, the deadline for exercise of the first renewal option would be January 31, 2036 (i.e., 18 months before the July 31, 2038 expiration of the initial term). The deadline for the second renewal option would be similarly calculated based on the expiration of the first renewal term.
Renewal rent for each renewal term shall be at Fair Market Rent, determined in accordance with the Exhibit G arbitration procedure. This structure has been agreed.
I. Signage. The parties have agreed that Tenant shall have the following signage rights: (i) a listing on the Building lobby directory; (ii) one elevator bank placard designating the Aurelius elevator bank serving Floors 34–38; and (iii) one exterior building-top sign position on the Building's roofline or upper facade, subject to the prior receipt of all applicable governmental approvals, permits, and consents, including approvals from the New York City Department of Buildings and the Landmarks Preservation Commission, if applicable. Tenant shall be responsible for all costs associated with the design, fabrication, installation, maintenance, and removal of its signage. Landlord has confirmed that no other tenant currently has an exclusive or preferential right to the building-top signage position.
J. Insurance Requirements
The insurance requirements under the Lease have been agreed and are summarized as follows:
• Commercial General Liability (CGL): $5,000,000 per occurrence / $10,000,000 aggregate
• Property Coverage: Full replacement value of Tenant's personal property, fixtures, and improvements
• Umbrella/Excess Liability: $25,000,000
• Carrier Rating Minimum: A.M. Best A-VIII or equivalent
Caldecott Risk Advisors Ltd. (London) is acting as Tenant's insurance broker in connection with the procurement of the required policies. The anticipated carriers are Northbridge Mutual Insurance Company for CGL and property coverage, and Sovereign Assurance Group PLC for the umbrella/excess liability policy. Calderwood & Harkness has confirmed that both carriers meet the A.M. Best A-VIII minimum rating threshold specified in the Lease. Landlord, Greystone Metropolitan Realty LLC, and its designated managing agent shall be named as additional insureds on the CGL and umbrella policies, and the Lease will include standard waiver of subrogation provisions.
III. Terms Under Active Negotiation / Open Issues
While considerable progress has been made, a number of material terms remain under active discussion. We set forth below the status of each open item, together with the parties' respective positions and our recommendations for next steps.
A. Change of Control Assignment Right
This provision remains the most significant open negotiation point, and we expect it to be the primary focus of the next round of discussions with Landlord and Landlord's counsel.
Tenant's Position (as set forth in the May 2, 2023 redline): Tenant has proposed that, upon a "change of control" of either Aurelius Media Holdings Inc. (the Tenant entity) or Aurelius Global Media Group PLC (the ultimate parent), Tenant shall have the right to assign the Lease to the successor entity without Landlord's prior written consent, subject to the following conditions:
(i) The successor entity (or its parent guarantor) has a tangible net worth, calculated in accordance with U.S. 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 is approximately $3.1 billion based on Aurelius PLC's most recent audited financial statements;
(ii) The successor entity assumes all obligations under the Lease pursuant to an assumption agreement in a form reasonably acceptable to Landlord;
(iii) Tenant provides Landlord with not less than thirty (30) days' prior written notice of the change of control, together with reasonable evidence of the successor entity's financial condition, including audited financial statements for the two most recent fiscal years; and
(iv) The successor entity or its parent executes a replacement guaranty on substantially the same terms as the Aurelius PLC Parent Guaranty (discussed below), at which point Aurelius PLC shall be released from its guaranty obligations on a prospective basis.
Tenant has proposed that the term "Control" be defined as the direct or indirect ownership of more than fifty percent (50%) of the voting equity interests in Tenant, or the power to direct or cause the direction of the management and policies of Tenant, whether through the ownership of voting securities, by contract, or otherwise.
In connection with the change of control provision, Tenant has also sought a waiver of Landlord's recapture right in the case of a change of control assignment. Under Tenant's proposal, Landlord's recapture right would be retained only for voluntary assignments to unrelated third parties (i.e., non-change-of-control assignments), with Landlord having thirty (30) days from receipt of Tenant's assignment request to elect to recapture the Premises by terminating the Lease.
Upon a change of control assignment, Tenant has proposed that the successor entity or its parent be required to execute a replacement guaranty on substantially the same terms as the Aurelius PLC Parent Guaranty, which is subject to a guaranty cap of $18,000,000 (approximately two years of average base rent over the Lease Term). Upon delivery of the replacement guaranty, Aurelius PLC would be released from its guaranty obligations prospectively.
Landlord's Current Position: Greystone Metropolitan Realty LLC, through its counsel Diane Ashford at Pemberton Locke & Strauss, has expressed concern regarding the automatic assignment right (i.e., assignment without Landlord's consent) in the change of control context. In the most recent round of comments, Landlord initially proposed that Landlord's consent still be required for change of control assignments, though Landlord would agree that such consent would not be unreasonably withheld, conditioned, or delayed. Additionally, Landlord has pushed back on the proposed tangible net worth threshold of $3.1 billion, suggesting that a higher threshold—potentially $4.0 billion—would be more appropriate given the scale and duration of the lease commitment.
Calderwood & Harkness's Assessment and Approach: We have provided Landlord's counsel with market comparables demonstrating that the proposed automatic assignment structure is consistent with recent Class A Manhattan office leases involving publicly traded tenants of comparable size and creditworthiness. Specifically, we have cited analogous provisions in three recent transactions in the Midtown and Hudson Yards submarkets, each of which permits assignment without landlord consent upon a change of control, subject to financial condition requirements similar to those proposed by Tenant. We are continuing to press for Tenant's proposed formulation and believe that the $3.1 billion tangible net worth threshold is reasonable and defensible.
Recommended Next Steps: A conference call has been scheduled for the week of June 12, 2023 with Diane Ashford (Pemberton Locke & Strauss) and Catherine Ng (Senior Vice President, Leasing at Greystone Metropolitan Realty) to discuss the change of control provision further. We recommend that Vivienne Caldwell participate in this call if her schedule permits, as the Landlord team has indicated that a direct conversation with Tenant's business principals on this point may be productive in advancing the discussion.
B. Right of First Offer (ROFO) — Subordination
The Lease will provide Tenant with a right of first offer ("ROFO") on any full floor on Floors 30 through 33 of the Building that becomes available during the Lease Term. Under the ROFO, Landlord is required to offer any such floor to Tenant before marketing it to third parties, and Tenant will have fifteen (15) business days from receipt of the offer to accept at the offered terms.
Subordination Issue: Landlord's draft lease subordinates Tenant's ROFO to the existing rights of Kestrel Insurance Holdings Inc. ("Kestrel"), the current tenant on Floors 30 through 32 of the Building, as of the Lease Date. Calderwood & Harkness has confirmed that Kestrel holds an existing renewal option on Floors 30–32 under its current lease with Landlord. However, we have not yet received confirmation from Landlord or Landlord's counsel regarding the precise scope of Kestrel's rights—specifically, whether Kestrel holds only a renewal option or whether Kestrel also holds expansion, contraction, or other preferential rights that could further limit Tenant's ROFO.
We have made a formal request to Pemberton Locke & Strauss to confirm the scope of Kestrel's existing rights and to confirm that Tenant's ROFO will be superior to any rights granted to future tenants on those floors (i.e., that the subordination applies only to pre-existing rights and not to rights granted after the date of the Lease).
Floor 33: Landlord has confirmed in writing that there are no existing third-party preferential rights on Floor 33. Accordingly, Tenant's ROFO with respect to Floor 33 should be unencumbered and not subject to any subordination.
Outstanding: We are awaiting Landlord's confirmation of the precise scope of Kestrel's existing rights. Once received, we will assess whether the subordination language in the Lease requires narrowing or additional qualification, and we will advise Aurelius accordingly.
C. Parent Guaranty
The structure of the Parent Guaranty has been substantially agreed. Aurelius Global Media Group PLC will guarantee all obligations of Aurelius Media Holdings Inc. under the Lease, subject to a guaranty cap of $18,000,000, which represents approximately two (2) years of average base rent over the initial Lease Term. The guaranty will be a continuing guaranty of payment and performance, absolute and unconditional, subject to the agreed cap.
Open Issue — Release Mechanics upon Change of Control: As noted in Section III.A above, the parties have not yet agreed on the release mechanics applicable to the Parent Guaranty upon a change of control assignment. Tenant's position is that Aurelius PLC's guaranty obligations should be released upon delivery of a replacement guaranty by the successor entity or its parent, on substantially the same terms as the original guaranty (including the $18,000,000 cap). Landlord has initially proposed that Aurelius PLC's release not become effective until the expiration of a twelve (12)-month "seasoning period" following delivery of the replacement guaranty, during which both Aurelius PLC and the successor guarantor would remain liable under their respective guaranties. Calderwood & Harkness has countered with a proposal for release upon delivery of the replacement guaranty, without any seasoning period, on the basis that the financial condition requirements applicable to the successor entity provide adequate protection for Landlord. This point is being negotiated in tandem with the change of control assignment provision discussed in Section III.A, and we expect that resolution of one will inform resolution of the other.
D. Fair Market Rent Determination Procedure (Exhibit G)
The parties have agreed in principle to a baseball-style (or "final offer") arbitration mechanism for determining FMR in connection with the expansion option and renewal options. Under this procedure, each party will submit its final determination of FMR to a panel of arbitrators, and the arbitrators will select the submission that is closest to their independent determination of FMR without modification.
Remaining Open Items:
(i) Timeline for Appointment of Arbitrators: Tenant has proposed that each party have ten (10) business days from the triggering notice to designate its arbitrator; Landlord has proposed fifteen (15) business days. The two designated arbitrators would then have ten (10) business days (agreed by both sides) to select a neutral third arbitrator.
(ii) Qualifications of Arbitrators: Both sides agree that each arbitrator shall be a licensed MAI-designated appraiser with not less than ten (10) years of experience appraising Class A office properties in the Borough of Manhattan.
We expect the remaining items under Exhibit G to be resolved shortly, as the differences are procedural in nature and not substantive. We will continue to advocate for Tenant's preferred ten-business-day designation timeline, as a shorter timeline ensures a more efficient resolution of any FMR dispute.
E. Assignment and Subletting (General)
Apart from the change of control assignment right discussed in Section III.A, the general assignment and subletting provisions of the Lease are largely agreed. The parties have confirmed the following framework:
(i) No assignment of the Lease or subletting of the Premises (in whole or in part) shall be permitted without Landlord's prior written consent, which shall not be unreasonably withheld, conditioned, or delayed.
(ii) Landlord shall have a recapture right for voluntary assignments to unrelated third parties. Upon receipt of a request to assign, Landlord shall have thirty (30) days to elect to recapture the Premises by terminating the Lease. If Landlord does not exercise the recapture right within such period, Landlord's consent to the assignment shall not be unreasonably withheld.
Remaining Issue — De Minimis Subletting Exception: Tenant has proposed that subletting of less than one full floor (i.e., less than 37,000 RSF) should be exempt from the consent and recapture provisions, provided that the sublease covers 10,000 RSF or less and meets certain additional conditions (e.g., the subtenant is of a character consistent with a Class A office building, and the sublease is on arms'-length terms). Landlord has not yet responded to this proposal. We believe this exception is reasonable and consistent with market practice, particularly for a tenant of this scale, and we intend to continue pursuing it in the next round of negotiations.
IV. Status of SNDA Negotiations with Atlas Continental Bank, N.A.
The Building is subject to a first mortgage lien held by Atlas Continental Bank, N.A. (the "Lender"), recorded on January 15, 2019, against the Building and the underlying real property. We understand that the outstanding principal balance of the mortgage is approximately $620,000,000.
Negotiations on a Subordination, Non-Disturbance and Attornment Agreement ("SNDA") between Lender and Tenant have commenced as of the date of this letter. Calderwood & Harkness expects to receive Lender's initial form of SNDA this week. Lender's outside counsel is Halsted & Brinkley LLP (lead attorney: Thomas Brinkley, 200 Park Avenue, Suite 2400, New York, NY 10166). The bank's designated contact for this transaction is Patricia Delgado, Vice President, Commercial Real Estate Lending, at Atlas Continental Bank's New York office.
The delivery of an executed SNDA in a form reasonably acceptable to Tenant is a condition precedent to the Commencement Date under the Lease. Based on our experience with institutional lender SNDA negotiations, we anticipate that the SNDA process will require approximately three to four (3–4) weeks from receipt of the initial draft, assuming a reasonably cooperative process. This timeline is reflected in the projected schedule set forth in Section VII below.
The key tenant protections that Calderwood & Harkness will seek in the SNDA include the following:
(i) Non-Disturbance: Lender's agreement that, in the event of a foreclosure or acceptance of a deed-in-lieu of foreclosure, Tenant's occupancy and rights under the Lease shall not be disturbed, and the Lease shall remain in full force and effect, so long as Tenant is not in default beyond applicable notice and cure periods.
(ii) Preservation of Tenant's Options: Confirmation that Tenant's expansion option, ROFO, renewal options, and other preferential rights under the Lease shall survive and be binding upon any successor-in-interest to Landlord following a foreclosure or transfer.
(iii) Adequate Cure Rights: Reasonable provisions permitting Tenant to cure any alleged default under the Lease before the successor landlord may terminate the Lease, including appropriate notice requirements and cure periods.
(iv) Insurance and Condemnation Proceeds: Appropriate handling of insurance and condemnation proceeds to protect Tenant's interests in its leasehold improvements and to ensure that the Premises are restored in the event of a casualty, to the extent required under the Lease.
We will keep Aurelius apprised as the SNDA negotiations progress and will separately circulate any SNDA drafts that raise material issues for your review and comment.
V. Due Diligence Updates
A. Environmental. The Phase I Environmental Site Assessment for the Building was completed by Greenfield Environmental Sciences LLC (Dr. Nadine Bertram, P.E., project lead) on June 2, 2023. We are pleased to report that the assessment identified no Recognized Environmental Conditions ("RECs"), no Controlled RECs, and no Historical RECs in connection with the subject property or the Premises floors.
In addition, Landlord has represented in the draft Lease that all asbestos-containing materials ("ACMs") on the Premises floors (Floors 34–38) have been fully abated in accordance with applicable federal, state, and local regulations. The Lease will include Landlord's indemnification of Tenant for any pre-existing environmental conditions affecting the Premises, including but not limited to any ACMs not previously identified or abated. This indemnity has been agreed by both sides.
Environmental due diligence is now complete, and no further action is required at this time.
B. Title. A title commitment has been ordered from Commonwealth Fidelity Title Insurance Co. under Policy No. LTP-2023-07842. As of the date of this letter, issuance of the commitment is expected on or about June 9, 2023. Upon receipt, Calderwood & Harkness will conduct a thorough review of the commitment, identify all permitted exceptions, and confirm that required endorsements are available, including endorsements relating to the Atlas Continental Bank mortgage lien. We note that the issuance of the leasehold title insurance policy will be conditioned upon receipt of an executed SNDA from Atlas Continental Bank, N.A., which is consistent with standard title insurance underwriting requirements.
We will circulate a summary of the title commitment findings upon completion of our review and will flag any exceptions that may require further discussion or negotiation with Landlord.
C. Survey and Zoning
An ALTA/NSPS land title survey for 787 Seventh Avenue (Block 1024, Lot 18, Borough of Manhattan) has been obtained and is currently under review by our team. Preliminary review confirms that the Building's zoning classification under the New York City Zoning Resolution (as amended) permits the intended office, studio/production, and ancillary uses described in the Lease. We have not identified any zoning non-conformities, encroachments, or other survey issues of concern at this time, although our review is ongoing. A full survey and zoning memorandum will follow under separate cover.
VI. Broker Matters
We note for completeness that Blackmoor Advisory Group LLC (Dennis Rourke, Principal Broker) continues to serve as Tenant's exclusive broker in connection with this transaction. Pursuant to a separate commission agreement between Blackmoor Advisory Group and Landlord, Blackmoor is entitled to a commission equal to 2.25% of aggregate base rent, which amounts to approximately $2,025,000. This commission is payable by Landlord and not by Tenant.
Landlord's broker is Mercer Houghton Real Estate Services Inc. (Simone Archer, Managing Director). Mercer Houghton's commission is 1.50% of aggregate base rent, or approximately $1,350,000, also payable by Landlord.
No action is required by Aurelius with respect to broker commissions. The Lease will include standard broker representation and indemnification provisions, and we will confirm that the commission agreements are in place prior to lease execution.
VII. Projected Timeline and Next Steps
Based on the current pace of negotiations and the items remaining to be resolved, we propose the following target timeline:
We note that the current timeline anticipates lease execution on or around July 13, 2023, which is consistent with the parties' mutual objective of an August 1, 2023 Commencement Date. This timeline assumes continued good-faith engagement by all parties and a reasonably efficient SNDA process. We will advise promptly of any delays or developments that could affect the projected schedule.
VIII. Budget and Fee Status
Fees incurred by Calderwood & Harkness through May 31, 2023 are within the estimated range of $475,000 to $575,000 (exclusive of disbursements) communicated to Aurelius in our fee estimate memorandum dated April 7, 2023. We will provide a more detailed budget update, including a breakdown of time by attorney and task category, with our next invoice.
We wish to note that if the SNDA negotiations with Atlas Continental Bank or the change of control assignment provision discussions prove to be more protracted than currently anticipated, total fees could trend toward the higher end of the estimated range. In the event that we determine a revision to the fee estimate may be warranted, we will provide advance notice to Tariq and the Aurelius finance team before any such revision becomes necessary.
IX. Request for Client Direction
In light of the foregoing, we respectfully request the following from Aurelius:
1. June 12 Call — Availability: Please confirm Vivienne Caldwell's availability for the conference call scheduled for the week of June 12, 2023 regarding the change of control assignment provision. We believe that Vivienne's participation would be valuable in advancing this discussion with Landlord's business team.
2. ROFO Subordination — Strategic Guidance: We would appreciate Aurelius's updated views on the ROFO subordination to Kestrel Insurance Holdings Inc., particularly regarding the strategic importance of Floors 30 through 32 for future expansion beyond the dedicated expansion option space on Floors 39 and 40. Understanding Aurelius's long-term space planning objectives will help us calibrate our negotiation strategy on this point—specifically, whether we should press for a narrower subordination or accept the existing language, provided that Landlord confirms the ROFO is superior to any future third-party rights.
3. Additional Comments: We invite any additional comments, questions, or concerns that Aurelius may have before we enter the next round of lease negotiations. If there are any changes to the business terms or strategic priorities since our last discussion, please advise so that we can incorporate them into our approach.
We remain fully committed to bringing this transaction to a successful close within the projected timeline and are available at your convenience to discuss any aspect of this update in greater detail. Please do not hesitate to contact me directly at (212) 554-8112 or at dfairchild@calderwoodharkness.com with any questions.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Fairchild Partner, Real Estate 425 Park Avenue, 18th Floor New York, NY 10022 Telephone: (212) 554-8112
Email: dfairchild@calderwoodharkness.com
cc:
Sir Marcus Hale, CBE, Chief Executive Officer, Aurelius Global Media Group PLC Eleanora Voss, Chief Financial Officer, Aurelius Global Media Group PLC Angela Fontaine, Billing Partner, Calderwood & Harkness LLP Rafael Dominguez, Calderwood & Harkness LLP Cynthia Ho, Calderwood & Harkness LLP Dennis Rourke, Blackmoor Advisory Group LLC
Enclosures: None (status letter only; referenced memoranda circulated separately)
Lease Years | Base Rent (per RSF per annum) | Annual Base Rent | Monthly Base Rent
Years 1–5 (months 1–60) | $28.00 | $5,180,000.00 | $431,666.67
Years 6–10 (months 61–120) | $33.00 | $6,105,000.00 | $508,750.00
Years 11–15 (months 121–180) | $38.00 | $7,030,000.00 | $585,833.33
End of Lease Year | Reduction Amount | Remaining L/C Balance
Year 5 | $1,036,000 | $4,144,000
Year 7 | $1,036,000 | $3,108,000
Year 9 | $1,036,000 | $2,072,000
Year 11 | $1,036,000 | $1,036,000
Year 13 | $1,036,000 | $0
Target Date | Milestone
Week of June 12, 2023 | Conference call with Landlord / Landlord's counsel (Diane Ashford, Catherine Ng) regarding change of control assignment right and ROFO subordination issues. Recommend Vivienne Caldwell's participation.
Mid-June 2023 | Receive and review title commitment from Commonwealth Fidelity Title Insurance Co.; complete survey and zoning review; circulate findings.
Late June 2023 | Target for resolution of all remaining open business and legal terms, including change of control, ROFO subordination, parent guaranty release mechanics, Exhibit G arbitration procedure, and de minimis subletting exception. Commence SNDA negotiation in earnest with Atlas Continental Bank / Halsted & Brinkley LLP.
Early July 2023 | Target for final agreed lease form and finalization of all exhibits (Exhibits A through G, inclusive).
Mid-July 2023 | Target for lease execution by both parties, issuance of the L/C by Caledonian National Bank, and execution of the SNDA by Atlas Continental Bank.
August 1, 2023 | Targeted Commencement Date; Landlord delivers possession of Premises in accordance with delivery conditions.

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