AGREEMENT OF LEASE
between
GREYSTONE METROPOLITAN REALTY LLC, a Delaware limited liability company
as Landlord
and
AURELIUS MEDIA HOLDINGS INC., a Delaware corporation
as Tenant
Premises: Floors 34, 35, 36, 37, and 38 787 Seventh Avenue New York, New York 10019
Dated: July 13, 2023
TABLE OF CONTENTS
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AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE (this "Lease") is made and entered into as of July 13, 2023 (the "Lease Date"), by and between:
GREYSTONE METROPOLITAN REALTY LLC, a Delaware limited liability company, having its principal office at 600 Lexington Avenue, 32nd Floor, New York, New York 10022 ("Landlord"),
and
AURELIUS MEDIA HOLDINGS INC., a Delaware corporation, Delaware File No. 7318294, a wholly owned subsidiary of Aurelius Global Media Group PLC, a public limited company incorporated in England and Wales (Company No. 04291837), having its registered office at 14 Cavendish Square, London W1G 0DW, United Kingdom ("Tenant").
RECITALS
WHEREAS, Landlord is the owner of the building known as Greystone Tower (also known as 787 Seventh Avenue), New York, New York 10019 (the "Building"), situated on Block 1024, Lot 18, Borough of Manhattan, City, County and State of New York;
WHEREAS, the Building is a Class A, LEED Gold certified office tower comprising fifty-two (52) floors above grade with a total rentable area of approximately one million four hundred fifty thousand (1,450,000) rentable square feet ("RSF");
WHEREAS, Landlord desires to lease to Tenant, and Tenant desires to lease from Landlord, certain premises consisting of approximately one hundred eighty-five thousand (185,000) RSF located on Floors 34, 35, 36, 37, and 38 of the Building (the "Premises"), upon the terms and conditions set forth herein;
WHEREAS, simultaneously with the execution and delivery of this Lease, Aurelius Global Media Group PLC, the ultimate parent of Tenant, is executing and delivering a Guaranty of Lease (the "Guaranty") in favor of Landlord, guaranteeing the obligations of Tenant hereunder; and
WHEREAS, in consideration of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
NOW, THEREFORE, for good and valuable consideration, the mutual receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:
ARTICLE 1 — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Lease, the following terms shall have the meanings set forth below. Other capitalized terms used herein shall have the meanings ascribed to them elsewhere in this Lease.
"Additional Rent" shall mean all sums payable by Tenant under this Lease other than Base Rent, including, without limitation, Tenant's Proportionate Share of Operating Expense Escalations, Tenant's Proportionate Share of Tax Escalations, and all other charges, fees, costs, expenses, and amounts that Tenant is required to pay hereunder.
"Affiliate" shall mean, with respect to any person or entity, any other entity that Controls, is Controlled by, or is under common Control with such person or entity or such person's or entity's parent. Without limiting the generality of the foregoing, any direct or indirect subsidiary of Aurelius Global Media Group PLC shall be deemed an Affiliate of Tenant.
"Base Rent" shall mean the base rental amounts payable by Tenant pursuant to Section 3.1 and the Base Rent Schedule set forth therein.
"Base Year" shall mean calendar year 2023.
"Building" shall mean the building known as Greystone Tower, also known as 787 Seventh Avenue, New York, New York 10019, situated on Block 1024, Lot 18, Borough of Manhattan, City, County and State of New York, together with all common areas, appurtenances, fixtures, and facilities serving such building.
"Change of Control" shall have the meaning set forth in Section 12.6(a).
"Commencement Date" shall mean August 1, 2023.
"Control" (including the terms "Controlled by" and "Controls") shall mean the direct or indirect ownership of more than fifty percent (50%) of the voting equity interests of an entity, or the power, whether by contract, equity ownership, or otherwise, to direct or cause the direction of the management and policies of such entity.
"Controllable Operating Expenses" shall mean all Operating Expenses other than (a) Taxes, (b) insurance premiums, (c) utility costs, (d) snow and ice removal costs, and (e) costs imposed by governmental authorities, changes in applicable law, or collective bargaining agreements.
"Expiration Date" shall mean July 31, 2038, subject to extension pursuant to Article 14 or earlier termination in accordance with the terms of this Lease.
"Expansion Space" shall mean Floors 39 and 40 of the Building, each comprising approximately thirty-seven thousand (37,000) RSF, for a total of approximately seventy-four thousand (74,000) RSF, as more particularly described in Exhibit E attached hereto.
"Fair Market Rent" or "FMR" shall mean the fair market rental value of the applicable space, as determined pursuant to the procedures set forth in Exhibit G attached hereto.
"Guarantor" shall mean Aurelius Global Media Group PLC, a public limited company incorporated in England and Wales (Company No. 04291837).
"Guaranty" shall mean the Guaranty of Lease executed by Guarantor simultaneously with the execution and delivery of this Lease, guaranteeing the obligations of Tenant hereunder, subject to the terms and conditions set forth therein, including the cap described in Article 27.
"Landlord" shall mean Greystone Metropolitan Realty LLC, a Delaware limited liability company, and its successors and assigns.
"Lease" shall mean this Agreement of Lease, including all exhibits and schedules attached hereto and incorporated herein by reference, as the same may be amended, modified, or supplemented from time to time in accordance with the terms hereof.
"Lease Term" or "Term" shall mean the period commencing on the Commencement Date and expiring on the Expiration Date, unless sooner terminated or extended pursuant to the terms of this Lease, including any Renewal Term exercised in accordance with Article 14.
"Lease Year" shall mean each consecutive twelve (12) month period during the Lease Term. Lease Year 1 shall commence on the Commencement Date (August 1, 2023) and shall expire on July 31, 2024. Each subsequent Lease Year shall commence on the anniversary of the first day of Lease Year 1.
"Letter of Credit" shall mean the irrevocable standby letter of credit described in Section 5.2 hereof.
"Operating Expenses" shall have the meaning set forth in Section 4.2.
"Permitted Use" shall mean general office, studio and production, and ancillary uses consistent with a global media, entertainment, and e-commerce headquarters, as more particularly described in Article 6.
"Premises" shall mean approximately one hundred eighty-five thousand (185,000) RSF of rentable area located on Floors 34, 35, 36, 37, and 38 of the Building (each floor comprising approximately thirty-seven thousand (37,000) RSF), as more particularly shown on the floor plans attached as Exhibit A hereto.
"Rent" shall mean, collectively, Base Rent and Additional Rent.
"Rent Commencement Date" shall mean February 1, 2024.
"Rent-Free Period" shall mean the period commencing on the Commencement Date (August 1, 2023) and ending on January 31, 2024, a period of six (6) months.
"ROFO Space" shall mean any full floor on Floors 30 through 33 of the Building, as more particularly described in Exhibit F attached hereto.
"Taxes" shall have the meaning set forth in Section 4.3.
"Tenant" shall mean Aurelius Media Holdings Inc., a Delaware corporation, and its permitted successors and assigns.
"Tenant's Proportionate Share" shall mean twelve and seventy-six hundredths percent (12.76%), which is the quotient of (a) 185,000 RSF (the rentable area of the Premises) divided by (b) 1,450,000 RSF (the total rentable area of the Building), expressed as a percentage.
"Work Letter" shall mean the Work Letter Agreement attached as Exhibit C hereto and incorporated herein by reference.
ARTICLE 2 — PREMISES, TERM, AND DELIVERY
Section 2.1 — Demise and Premises
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises consisting of approximately one hundred eighty-five thousand (185,000) RSF located on Floors 34, 35, 36, 37, and 38 of the Building, as depicted on the floor plans attached hereto as Exhibit A and incorporated herein by reference. Each floor of the Premises comprises approximately thirty-seven thousand (37,000) RSF. The five (5) floors constituting the Premises are contiguous and shall be served by a common elevator bank. The Premises includes all improvements and fixtures therein as of the Commencement Date (other than Tenant's personal property and trade fixtures), together with the right to use the common areas, lobbies, elevators, stairways, loading docks, and other common facilities of the Building in common with Landlord and other tenants and occupants of the Building, subject to the Rules and Regulations attached hereto as Exhibit B.
Section 2.2 — Lease Term
The Lease Term shall commence on the Commencement Date (August 1, 2023) and shall expire on the Expiration Date (July 31, 2038), constituting a period of fifteen (15) years (one hundred eighty (180) months), unless sooner terminated or extended in accordance with the terms of this Lease. The Lease Term is subject to extension by two (2) consecutive renewal terms of five (5) years each pursuant to Article 14 hereof. For the avoidance of doubt, the Lease Term shall include any extension or renewal period duly exercised by Tenant in accordance with the provisions of this Lease.
Section 2.3 — Delivery of Possession
Landlord shall deliver possession of the Premises to Tenant on the Commencement Date in broom-clean condition, free of all tenancies, occupants, and personal property of prior occupants, and in compliance with all applicable laws, codes, ordinances, rules, and regulations (collectively, "Applicable Laws"). Landlord represents and warrants that, as of the Commencement Date, all base building systems serving the Premises (including, without limitation, heating, ventilation, and air conditioning ("HVAC"), plumbing, electrical, fire safety and sprinkler, and elevator systems) shall be in good working order and condition and shall be adequate to serve the Premises for the Permitted Use. If Landlord fails to deliver possession of the Premises on the Commencement Date for any reason (including, without limitation, the holdover of a prior tenant or occupant), (a) Tenant's obligation to pay Rent shall be deferred until the date on which Landlord actually delivers possession of the Premises to Tenant in the condition required by this Section 2.3, (b) the Rent Commencement Date shall be extended day-for-day by the number of days of such delay, (c) the Expiration Date shall not be extended, and (d) such failure shall not constitute a default by Landlord under this Lease.
Section 2.4 — Commencement Date Confirmation
Within thirty (30) days after the Commencement Date, Landlord and Tenant shall execute a Commencement Date Confirmation Letter, substantially in the form to be agreed upon by the parties, confirming (a) the Commencement Date, (b) the Rent Commencement Date, (c) the Expiration Date, and (d) the rentable square footage of the Premises. The failure of either party to execute such confirmation letter shall not affect the validity of the dates and terms established in this Lease.
Section 2.5 — Condition of Premises; As-Is
Except as expressly set forth in Section 2.3 above and in the Work Letter (Exhibit C), Tenant accepts the Premises in their "as-is" condition as of the Commencement Date, and Landlord makes no representations or warranties, express or implied, as to the condition, suitability, or fitness of the Premises for any particular purpose. Landlord's obligation to deliver the Premises in the condition described in Section 2.3 and to perform Landlord's Work (if any) described in the Work Letter shall not be diminished by Tenant's acceptance of the Premises. Tenant acknowledges that Tenant has had a full and complete opportunity to inspect the Premises prior to the execution of this Lease and that Tenant is not relying on any statements, representations, or warranties by Landlord or any agent or employee of Landlord concerning the condition of the Premises except as expressly set forth in this Lease.
ARTICLE 3 — BASE RENT
Section 3.1 — Base Rent Schedule
Commencing on the Rent Commencement Date (February 1, 2024), Tenant shall pay to Landlord Base Rent in the amounts set forth below, payable in equal monthly installments in advance on the first (1st) day of each calendar month during the Lease Term. If the Rent Commencement Date falls on a date other than the first day of a calendar month, the Base Rent for the partial month in which the Rent Commencement Date falls shall be prorated on a per diem basis and shall be paid on the Rent Commencement Date.
For the avoidance of doubt, the aggregate Base Rent payable over the initial fifteen (15) year Lease Term (commencing on the Rent Commencement Date and ending on the Expiration Date) is approximately Eighty-Nine Million Seven Hundred Fifty Thousand Dollars ($89,750,000.00) (calculated as the sum of sixty (60) months at $431,666.67, sixty (60) months at $508,750.00, and sixty (60) months at $585,833.33, and subject to proration for partial months, if applicable, and adjustment for the Rent-Free Period).
Section 3.2 — Rent-Free Period
During the Rent-Free Period (August 1, 2023 through January 31, 2024, inclusive), Tenant shall not be required to pay Base Rent. The Rent-Free Period shall consist of six (6) full calendar months. During the Rent-Free Period, Tenant shall remain responsible for the payment of all Additional Rent, including, without limitation, Tenant's Proportionate Share of Operating Expense Escalations and Tax Escalations, and all other sums payable by Tenant under this Lease. The value of the abated Base Rent during the Rent-Free Period is approximately Two Million Five Hundred Ninety Thousand Dollars ($2,590,000.00), calculated as six (6) months multiplied by $431,666.67 per month. Notwithstanding the foregoing, if an Event of Default occurs during the Lease Term and is not cured within the applicable notice and cure periods set forth in Article 21, and Landlord elects to terminate this Lease as a result thereof, then in addition to all other remedies available to Landlord, Landlord shall have the right to recapture the full amount of the abated Base Rent during the Rent-Free Period as liquidated damages and not as a penalty, and such amount shall be deemed immediately due and payable by Tenant.
Section 3.3 — Manner of Payment
All Rent shall be paid by wire transfer or electronic funds transfer of immediately available funds to an account designated by Landlord from time to time by written notice to Tenant, without demand, deduction, abatement, or set-off (except as expressly provided in this Lease). All Rent shall be paid in lawful money of the United States. Landlord's initial wire transfer instructions are as follows:
Bank: Atlas Continental Bank, N.A. ABA Routing Number: 021-000-128 Account Name: Greystone Metropolitan Realty LLC — Operating Account Account Number: 4830-2917-6541 Reference: Aurelius Media Holdings Inc. — 787 Seventh Avenue, Floors 34–38
Landlord may change its wire transfer instructions upon not less than thirty (30) days' prior written notice to Tenant.
Section 3.4 — Late Charge and Interest
If any installment of Rent is not received by Landlord within five (5) business days after the date on which such installment is due, Tenant shall pay to Landlord a late payment charge equal to four percent (4%) of the amount of such overdue installment. The parties acknowledge that the late payment charge represents a fair and reasonable estimate of the costs Landlord will incur as a result of Tenant's late payment, and is not intended as a penalty. In addition, any installment of Rent that remains unpaid for more than ten (10) days after the date on which such installment is due shall bear interest from the due date through the date of payment at a rate equal to the lesser of (a) one and one-half percent (1.5%) per month (eighteen percent (18%) per annum) or (b) the maximum rate of interest permitted by applicable law. The imposition of late charges and interest shall not constitute a waiver by Landlord of any other remedy available to Landlord for Tenant's failure to timely pay Rent.
ARTICLE 4 — ADDITIONAL RENT; OPERATING EXPENSES AND TAXES
Section 4.1 — Additional Rent Generally
All sums payable by Tenant under this Lease other than Base Rent shall constitute "Additional Rent." Additional Rent includes, without limitation, Tenant's Proportionate Share of Operating Expense Escalations and Tax Escalations, electricity charges, after-hours HVAC charges, insurance premiums, amortization payments for any Excess TI Allowance, and any other charges, costs, or expenses that Tenant is obligated to pay under this Lease. Landlord shall have the same remedies for the non-payment of Additional Rent as Landlord has for the non-payment of Base Rent, including the right to impose late charges and interest pursuant to Section 3.4. Unless otherwise specified in this Lease, Additional Rent shall be due and payable within thirty (30) days after Landlord's delivery of an invoice or statement therefor.
Section 4.2 — Operating Expenses Defined
"Operating Expenses" shall mean all costs and expenses of every kind and nature incurred by Landlord in the operation, management, maintenance, repair, and insurance of the Building and the land on which it is situated (the "Land"), including, without limitation, all common areas, plazas, sidewalks, and other areas and facilities appurtenant to the Building. Operating Expenses shall include, but shall not be limited to, the following:
(a) wages, salaries, and benefits (including payroll taxes, insurance, and retirement contributions) of all personnel engaged in the operation, management, maintenance, and security of the Building;
(b) costs of all utilities furnished to the Building's common areas and base building systems (but not utilities separately metered and paid by tenants);
(c) costs of cleaning, janitorial, and waste removal services for the Building's common areas;
(d) costs of maintenance, repair, and replacement of base building systems, including HVAC, plumbing, electrical, fire safety, sprinkler, elevator, and life safety systems;
(e) costs of landscaping, snow and ice removal, and exterior maintenance;
(f) insurance premiums for all insurance maintained by Landlord with respect to the Building, including property, liability, rental loss, and umbrella coverage;
(g) management fees payable to Landlord's property manager, provided that management fees included in Operating Expenses shall not exceed three percent (3%) of gross rental income of the Building;
(h) costs of compliance with Applicable Laws (other than capital expenditures, except as set forth below);
(i) costs of maintaining and operating the Building's security systems and security personnel;
(j) costs of maintaining and operating the Building's lobby, elevators, stairways, loading docks, and other common areas;
(k) accounting, auditing, and legal fees incurred in connection with the operation and management of the Building;
(l) capital expenditures required by Applicable Laws enacted or first interpreted to apply to the Building after the Lease Date, amortized over the useful life of the applicable improvement (determined in accordance with generally accepted accounting principles ("GAAP")), together with interest on the unamortized balance at the rate of seven percent (7%) per annum;
(m) capital expenditures made with the reasonable expectation that such expenditures will reduce Operating Expenses, amortized over the useful life of the applicable improvement (determined in accordance with GAAP), together with interest on the unamortized balance at the rate of seven percent (7%) per annum, provided that the annual amortization included in Operating Expenses shall not exceed the actual savings achieved; and
(n) all other costs and expenses customarily included in operating expenses for comparable Class A office buildings in Midtown Manhattan.
Notwithstanding the foregoing, Operating Expenses shall expressly exclude the following:
(i) capital expenditures, except as specifically set forth in clauses (l) and (m) above;
(ii) leasing commissions, brokerage fees, advertising costs, and other costs incurred in connection with the leasing of space in the Building;
(iii) Landlord's financing costs, including mortgage principal and interest payments, ground rent, and fees payable to Landlord's lenders;
(iv) depreciation of the Building (as distinct from amortization of permitted capital expenditures);
(v) costs of correcting latent defects in the Building's structure or base building systems;
(vi) costs attributable to Landlord's negligence or willful misconduct;
(vii) costs of repairs or restoration to the extent reimbursed by insurance proceeds, condemnation awards, or warranties;
(viii) costs incurred in connection with disputes with tenants or enforcement of leases;
(ix) charitable or political contributions;
(x) costs of any items for which Landlord is reimbursed by tenants as direct charges (other than through Operating Expense escalations);
(xi) costs of removing, encapsulating, or remediating Hazardous Materials in the Building to the extent not caused by Tenant;
(xii) salaries and compensation of Landlord's officers, partners, and members above the level of building manager; and
(xiii) any fines, penalties, or interest resulting from Landlord's failure to timely pay Taxes or comply with Applicable Laws.
Section 4.3 — Taxes Defined
"Taxes" shall mean (a) all real estate taxes, assessments (including special assessments), sewer rents, water charges, and governmental charges of every kind and nature levied, assessed, or imposed upon or with respect to the Building and the Land, (b) business improvement district ("BID") charges, (c) any tax, fee, or charge imposed by any governmental authority in lieu of or in addition to any of the foregoing, and (d) all reasonable costs and expenses (including attorneys' fees and expert witness fees) incurred by Landlord in contesting or seeking a reduction of any of the foregoing. If at any time during the Lease Term, the methods of taxation prevailing at the Lease Date are altered so that any new tax, assessment, levy, or charge is imposed upon or measured by the rents or income received by Landlord from the Building, such tax, assessment, levy, or charge shall be included in Taxes to the extent that it is imposed in substitution for or in addition to any tax that would otherwise constitute Taxes as defined herein.
Section 4.4 — Tenant's Proportionate Share of Escalations
(a) Base Year. The "Base Year" for purposes of this Lease is the calendar year 2023.
(b) Tenant's Proportionate Share. Tenant's Proportionate Share is twelve and seventy-six hundredths percent (12.76%), calculated by dividing the rentable square footage of the Premises (185,000 RSF) by the total rentable square footage of the Building (1,450,000 RSF).
(c) Escalation Payments. Commencing on January 1, 2024 (or, if later, the Commencement Date), Tenant shall pay to Landlord, as Additional Rent, Tenant's Proportionate Share of the amount by which (i) Operating Expenses for each calendar year (or portion thereof) during the Lease Term exceed (ii) Operating Expenses for the Base Year (such excess, the "Operating Expense Escalation"), and Tenant's Proportionate Share of the amount by which (x) Taxes for each calendar year (or portion thereof) during the Lease Term exceed (y) Taxes for the Base Year (such excess, the "Tax Escalation"). There shall be no operating expense "stop" or other limitation on Tenant's obligation to pay escalations above the Base Year amount, except as expressly provided in Section 4.5 with respect to Controllable Operating Expenses.
(d) Estimated Payments. Prior to the commencement of each calendar year during the Lease Term, Landlord shall furnish to Tenant a statement setting forth Landlord's reasonable estimate of Operating Expenses and Taxes for such calendar year and the estimated monthly amount payable by Tenant as Tenant's Proportionate Share of Operating Expense Escalations and Tax Escalations. Tenant shall pay such estimated amounts monthly, in advance, together with the monthly installments of Base Rent. If Landlord does not deliver such estimate prior to the commencement of a calendar year, Tenant shall continue to pay the estimated amounts applicable to the prior calendar year until Landlord delivers such estimate, at which time an appropriate adjustment shall be made.
(e) Year-End Reconciliation. Within one hundred twenty (120) days after the end of each calendar year (or as soon thereafter as reasonably practicable), Landlord shall furnish to Tenant a statement (an "Expense Statement") setting forth (i) the actual Operating Expenses and Taxes for such calendar year, (ii) the Operating Expense Escalation and Tax Escalation for such calendar year, (iii) Tenant's Proportionate Share of such escalations, and (iv) the amount of any overpayment or underpayment by Tenant. If the Expense Statement shows that Tenant's estimated payments exceeded Tenant's actual obligation, Landlord shall credit the excess against the next monthly installment(s) of Additional Rent (or, if the Lease Term has expired and Tenant has no outstanding obligations, refund such excess to Tenant within thirty (30) days). If the Expense Statement shows that Tenant's actual obligation exceeded Tenant's estimated payments, Tenant shall pay the deficiency within thirty (30) days after receipt of the Expense Statement.
(f) Audit Rights. Tenant shall have the right, upon not less than thirty (30) days' prior written notice to Landlord, to audit Landlord's books and records relating to Operating Expenses and Taxes for any calendar year, provided that (i) such audit is conducted during Landlord's normal business hours at Landlord's offices (or at such other location as Landlord's records are maintained), (ii) such audit is conducted by a reputable certified public accounting firm that is not engaged on a contingency fee basis, (iii) such audit is commenced within one hundred eighty (180) days after Tenant's receipt of the applicable Expense Statement, and (iv) the results of such audit shall be kept confidential by Tenant and its auditors (except to the extent disclosure is required by law or regulation). If such audit reveals that Landlord overstated Operating Expenses or Taxes for the applicable calendar year by more than five percent (5%), Landlord shall reimburse Tenant for the reasonable out-of-pocket costs of such audit, in addition to refunding any overpayment to Tenant with interest at the rate set forth in Section 3.4 from the date of overpayment through the date of refund.
Section 4.5 — Controllable Operating Expense Cap
Controllable Operating Expenses (as defined in Section 1.1) included in Operating Expenses for any calendar year shall not exceed the Controllable Operating Expenses for the Base Year increased at a rate of five percent (5%) per annum on a cumulative, compounding basis. For the avoidance of doubt, this cap applies to Controllable Operating Expenses only and does not apply to Taxes, insurance premiums, utility costs, snow and ice removal costs, or costs imposed by governmental authorities, changes in Applicable Laws, or collective bargaining agreements.
Section 4.6 — Gross-Up
If the Building is less than ninety-five percent (95%) occupied during the Base Year or during any subsequent calendar year, Operating Expenses for such year shall be adjusted (i.e., "grossed up") to the amount that Landlord reasonably estimates would have been incurred had the Building been ninety-five percent (95%) occupied and all tenants utilizing standard services. The purpose of this gross-up provision is to avoid distortion of Tenant's Proportionate Share of Operating Expense Escalations due to fluctuations in occupancy levels. The gross-up adjustment shall apply only to those components of Operating Expenses that vary with occupancy (e.g., cleaning, utilities, management fees), and shall not be applied to components of Operating Expenses that do not vary with occupancy (e.g., insurance premiums, real estate taxes).
ARTICLE 5 — SECURITY DEPOSIT
Section 5.1 — Security Deposit Amount
Tenant shall deliver to Landlord, on or prior to the Commencement Date, a security deposit in the amount of Five Million One Hundred Eighty Thousand Dollars ($5,180,000.00), which amount is equal to one (1) year of initial Base Rent (the "Security Deposit"). The Security Deposit shall be held by Landlord as security for the faithful performance by Tenant of all of the terms, covenants, and conditions of this Lease.
Section 5.2 — Form of Security Deposit — Letter of Credit
The Security Deposit shall be in the form of an irrevocable standby letter of credit (the "Letter of Credit") substantially in the form attached hereto as Exhibit D. The Letter of Credit shall be issued by Caledonian National Bank PLC, London (New York branch), or another bank reasonably acceptable to Landlord having a long-term unsecured credit rating of at least A- (or its equivalent) from a nationally recognized statistical rating organization (e.g., Standard & Poor's, Moody's, or Fitch). The initial Letter of Credit shall bear L/C Number SNLC-2023-08015. The Letter of Credit shall be (a) freely transferable by Landlord (and its successors and assigns) without the consent of, or charge by, the issuing bank, (b) shall permit partial draws, (c) shall have an initial expiration date not earlier than one (1) year from the date of issuance, and (d) shall provide for automatic annual renewals (i.e., "evergreen" renewals) through a date not earlier than sixty (60) days after the Expiration Date (as the same may be extended by any duly exercised Renewal Term). The Letter of Credit shall be governed by ISP98 (International Standby Practices 1998, ICC Publication No. 590) or, at Tenant's option, UCP 600 (Uniform Customs and Practice for Documentary Credits, ICC Publication No. 600). If the issuing bank notifies Landlord or Tenant that it will not renew the Letter of Credit, or if the issuing bank fails to renew the Letter of Credit at least thirty (30) days prior to its stated expiration date, Landlord shall have the right to draw upon the full amount of the Letter of Credit and hold the proceeds as a cash security deposit pending Tenant's delivery of a replacement Letter of Credit satisfying the requirements of this Section 5.2.
Section 5.3 — Letter of Credit Burn-Down Schedule
Provided that no uncured Event of Default then exists and no Event of Default has occurred during the immediately preceding Lease Year, the face amount of the Letter of Credit shall be reduced in accordance with the following schedule:
At each reduction date, Tenant shall have the right to deliver to Landlord either (a) an amendment to the existing Letter of Credit reducing the face amount to the applicable reduced amount or (b) a replacement Letter of Credit in the applicable reduced amount, in either case satisfying all of the requirements of Section 5.2 above. Upon the reduction of the Letter of Credit to $0.00 at the end of Lease Year 13, Landlord shall return the Letter of Credit to Tenant within ten (10) business days. If at any time after a reduction, an Event of Default occurs and Landlord draws upon the Letter of Credit, Tenant's obligation to replenish the Letter of Credit pursuant to Section 5.4 shall apply, and the burn-down schedule shall be suspended until all such Events of Default are cured and the Letter of Credit is fully restored.
Section 5.4 — Draws on Letter of Credit
Landlord may draw on the Letter of Credit upon the occurrence and during the continuance of an Event of Default (as defined in Section 21.1), after the expiration of all applicable notice and cure periods set forth in this Lease. Landlord's draw on the Letter of Credit may be in an amount equal to the sums then due and owing by Tenant under this Lease or, in the case of an Event of Default resulting in termination of this Lease, in the full amount of the Letter of Credit. Landlord may apply the proceeds of any draw to cure any default or to compensate Landlord for any damages, costs, or losses incurred as a result of Tenant's default, without prejudice to any other remedy available to Landlord under this Lease or at law or in equity. If Landlord draws on the Letter of Credit in whole or in part, Tenant shall, within fifteen (15) business days after written notice from Landlord, replenish the Letter of Credit to the amount then required under the burn-down schedule set forth in Section 5.3 (or, if no reduction has yet occurred, to the initial face amount of $5,180,000.00). Tenant's failure to timely replenish the Letter of Credit shall constitute an Event of Default under this Lease.
Section 5.5 — Return of Security Deposit
Provided that no uncured Event of Default then exists, Landlord shall return the Letter of Credit (or the remaining balance thereof, whether in letter of credit or cash form) to Tenant within thirty (30) days after the later of (a) the expiration or earlier termination of the Lease Term and (b) Tenant's surrender of the Premises in accordance with Article 22 of this Lease. Landlord shall have the right to deduct from the Security Deposit any amounts owed by Tenant to Landlord under this Lease, including any amounts for restoration obligations, unpaid Rent, or other damages, in each case after the expiration of applicable notice and cure periods.
ARTICLE 6 — USE OF PREMISES
Section 6.1 — Permitted Use
Tenant shall use and occupy the Premises solely for general office, studio and production, and ancillary uses consistent with a global media, entertainment, and e-commerce headquarters (the "Permitted Use"). The Permitted Use shall include, without limitation, executive and administrative offices, creative studios, recording and production studios, screening rooms, editing suites, server and data rooms, test kitchens, cafeterias and pantries, fitness facilities, lounges and amenity spaces, and other uses customarily associated with the operation of a global media and entertainment company's principal offices, in each case to the extent permitted by Applicable Laws and the certificate of occupancy for the Building. Tenant's use of the Premises shall at all times comply with all Applicable Laws, including, without limitation, the New York City Zoning Resolution, the New York City Building Code, and all regulations and requirements of governmental authorities having jurisdiction over the Building and the Premises.
Section 6.2 — Prohibited Uses
Tenant shall not use or permit the Premises to be used for any purpose that would (a) violate the certificate of occupancy for the Building or the Premises, (b) constitute a public or private nuisance, (c) cause damage to the Building or its systems, (d) unreasonably interfere with the use and enjoyment of the Building by other tenants or occupants, or (e) increase the rate of insurance on the Building beyond levels attributable to standard Class A office use. Without limiting the foregoing, Tenant shall not use the Premises for retail sales to the general public, residential purposes, or manufacturing operations without Landlord's prior written consent, which may be withheld in Landlord's sole discretion. Tenant shall not permit the Premises to be used by more than one (1) person per one hundred fifty (150) RSF of the Premises at any time (approximately 1,233 occupants at full capacity) without Landlord's prior written consent.
Section 6.3 — Compliance with Laws
Tenant shall, at Tenant's sole cost and expense, comply with all Applicable Laws relating to Tenant's particular use and occupancy of the Premises, including, without limitation, the Americans with Disabilities Act, the Occupational Safety and Health Act, and all fire, safety, and health codes and regulations applicable to the Premises. Landlord shall be responsible for compliance with all Applicable Laws relating to the base Building structure, common areas, and base building systems, including any obligation to make alterations or improvements required by Applicable Laws that are not attributable to Tenant's particular use of the Premises.
ARTICLE 7 — TENANT IMPROVEMENTS AND ALTERATIONS
Section 7.1 — Tenant Improvement Allowance
Landlord shall provide Tenant with a tenant improvement allowance in the amount of Eighty-Five Dollars ($85.00) per RSF of the Premises, totaling Fifteen Million Seven Hundred Twenty-Five Thousand Dollars ($15,725,000.00) (calculated as $85.00 multiplied by 185,000 RSF) (the "TI Allowance"), to be applied toward the cost of Tenant's initial improvements to the Premises (the "Tenant Improvements"). The TI Allowance shall be used solely for the design and construction of Tenant Improvements, including, without limitation, architectural and engineering fees, construction costs, permits and filing fees, furniture, fixtures, and equipment (to the extent constituting permanent improvements), cabling and technology infrastructure, and project management fees. The terms and conditions governing the disbursement and application of the TI Allowance and the design and construction of Tenant's initial improvements are set forth in the Work Letter attached hereto as Exhibit C and incorporated herein by reference.
Section 7.2 — Excess TI Allowance
At Tenant's election, exercisable by written notice to Landlord delivered prior to the commencement of construction of the Tenant Improvements, Landlord shall provide an additional allowance of up to Fifteen Dollars ($15.00) per RSF of the Premises, totaling up to Two Million Seven Hundred Seventy-Five Thousand Dollars ($2,775,000.00) (calculated as $15.00 multiplied by 185,000 RSF) (the "Excess TI Allowance"). The Excess TI Allowance shall be subject to the same terms and conditions as the TI Allowance, as set forth in the Work Letter. The Excess TI Allowance (to the extent drawn by Tenant) shall be amortized into Base Rent at a rate of seven and one-half percent (7.5%) per annum over the remaining Lease Term from the date of each disbursement, and the resulting amortization payment shall be payable monthly as Additional Rent, commencing on the first day of the month following the date of disbursement. By way of example only, if the full Excess TI Allowance of $2,775,000.00 were disbursed on February 1, 2024 (the Rent Commencement Date), the monthly amortization payment would be approximately $26,268.00 per month (based on a fourteen (14) year, six (6) month amortization at 7.5% per annum).
Section 7.3 — Subsequent Alterations
After completion of the initial Tenant Improvements, Tenant may from time to time make alterations, additions, improvements, and decorations to the Premises (collectively, "Alterations"), subject to the following conditions:
(a) Non-Structural Alterations Not Requiring Consent. Tenant may make non-structural Alterations that do not affect any base building systems and that cost less than Two Hundred Fifty Thousand Dollars ($250,000.00) per project (in the aggregate, including all related trades and soft costs) without Landlord's prior written consent, provided that Tenant delivers to Landlord not less than ten (10) business days' prior written notice of such Alterations, together with reasonably detailed plans and specifications therefor.
(b) Alterations Requiring Consent. All other Alterations, including, without limitation, structural Alterations, Alterations affecting any base building systems, and non-structural Alterations costing $250,000.00 or more per project, shall require Landlord's prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. Landlord shall respond to Tenant's request for consent within fifteen (15) business days after receipt of complete plans and specifications for the proposed Alteration.
(c) Compliance. All Alterations shall be performed in compliance with all Applicable Laws, the Building's rules and regulations (Exhibit B), and such other reasonable requirements as Landlord may impose, and in a good and workmanlike manner using materials of a quality at least equal to those in the Building. All contractors and subcontractors performing work in the Premises shall carry the insurance coverages required by the Work Letter.
Section 7.4 — Architect and Construction Manager
Tenant has designated the following professionals for the design and construction of the initial Tenant Improvements:
Architect of Record: Ashworth Patel Design Studio LLC (Rohan Patel, AIA, Principal Architect), 20 West 22nd Street, 7th Floor, New York, New York 10010
Construction Manager: Pinnacle Build Group LLC, 330 West 42nd Street, Suite 1500, New York, New York 10036
Landlord acknowledges and approves the foregoing designations. Tenant may change its architect or construction manager upon prior written notice to Landlord, provided that any replacement architect or construction manager shall be reputable and experienced in the design and construction of Class A office improvements in the New York metropolitan area.
Section 7.5 — Removal; Restoration
Upon the expiration or earlier termination of the Lease Term, Tenant shall remove all Specialty Alterations (as defined in the Work Letter) that Landlord designated at the time of Landlord's consent as requiring removal at the end of the Lease Term, and Tenant shall restore the affected areas of the Premises to their prior condition, reasonable wear and tear excepted. All other Alterations and Tenant Improvements shall, at Landlord's election, either remain in the Premises and become the property of Landlord or be removed by Tenant at Tenant's expense, provided that Landlord shall notify Tenant of its election not later than ninety (90) days prior to the Expiration Date (or within thirty (30) days after earlier termination of the Lease). If Tenant fails to remove any Specialty Alterations or personal property required to be removed within thirty (30) days after the Expiration Date (or such earlier termination date), Landlord may remove such items and restore the Premises, and the costs thereof shall be borne by Tenant as Additional Rent.
ARTICLE 8 — REPAIRS AND MAINTENANCE
Section 8.1 — Landlord's Obligations
Landlord shall, at Landlord's expense (subject to inclusion in Operating Expenses to the extent permitted by Section 4.2), maintain, repair, and replace (as necessary) the following: (a) the structural components of the Building, including the foundation, structural columns, beams, exterior walls, and roof; (b) the base building mechanical, electrical, plumbing, HVAC, fire safety, sprinkler, elevator, and life safety systems; (c) all common areas of the Building, including lobbies, corridors, stairways, restrooms, elevators, loading docks, and parking areas; and (d) the Building's exterior facade, windows, and plaza areas. Landlord shall maintain the Building in a manner consistent with the standards of comparable Class A office buildings in Midtown Manhattan, and shall use commercially reasonable efforts to minimize disruption to Tenant's business operations in performing any maintenance, repairs, or replacements. Notwithstanding the foregoing, Landlord shall not be responsible for the maintenance, repair, or replacement of any Tenant Improvements, Alterations, or items installed by or on behalf of Tenant within the Premises.
Section 8.2 — Tenant's Obligations
Tenant shall, at Tenant's sole cost and expense, maintain the interior of the Premises (including all Tenant Improvements and Alterations) in good order, condition, and repair throughout the Lease Term, ordinary wear and tear and damage by casualty or condemnation (subject to the provisions of Articles 10 and 11) excepted. Tenant shall be responsible for all repairs and maintenance within the Premises necessitated by Tenant's particular use, negligence, or willful misconduct, or the negligence or willful misconduct of Tenant's agents, employees, contractors, invitees, or licensees. Tenant shall promptly notify Landlord of any condition in the Premises requiring repair by Landlord pursuant to Section 8.1, and Tenant shall provide Landlord with reasonable access to the Premises for such repair. If Tenant fails to maintain the Premises as required by this Section 8.2 and such failure continues for thirty (30) days after written notice from Landlord (or such longer period as may be reasonably necessary to effect a cure, provided Tenant commences cure within such 30-day period and diligently prosecutes to completion), Landlord may, at its option, perform such maintenance and charge the reasonable costs thereof to Tenant as Additional Rent.
ARTICLE 9 — INSURANCE
Section 9.1 — Tenant's Insurance Obligations
Tenant shall obtain and maintain, at Tenant's sole cost and expense, throughout the entire Lease Term, the following insurance coverages, each of which shall be in form and substance reasonably satisfactory to Landlord:
(a) Commercial General Liability Insurance. A policy of commercial general liability insurance (including contractual liability, personal injury and advertising liability, products and completed operations liability, and broad form property damage liability) with limits of not less than Five Million Dollars ($5,000,000.00) per occurrence and Ten Million Dollars ($10,000,000.00) in the annual aggregate.
(b) Property Insurance. All-risk property insurance covering all of Tenant's personal property, furniture, fixtures, equipment, Tenant Improvements, and Alterations in the Premises at their full replacement value, with no coinsurance penalty.
(c) Umbrella/Excess Liability Insurance. Umbrella or excess liability insurance with limits of not less than Twenty-Five Million Dollars ($25,000,000.00) per occurrence and in the aggregate, providing coverage excess of the commercial general liability, employer's liability, and automobile liability policies maintained by Tenant.
(d) Workers' Compensation Insurance. Workers' compensation insurance providing statutory benefits as required by the laws of the State of New York, and employer's liability insurance with limits of not less than One Million Dollars ($1,000,000.00) per accident, One Million Dollars ($1,000,000.00) per employee for disease, and One Million Dollars ($1,000,000.00) aggregate for disease.
(e) Business Interruption Insurance. Business interruption insurance providing coverage for a period of not less than twelve (12) months of Tenant's operating expenses and continuing charges (including Rent payable under this Lease).
All insurance required to be maintained by Tenant shall be written by insurance companies having an A.M. Best rating of A-VIII or better (or an equivalent rating from another nationally recognized rating agency). Tenant's insurance broker is Caldecott Risk Advisors Ltd., 71 Fenchurch Street, London EC3M 4BS, United Kingdom. Tenant's commercial general liability and property insurance shall be written by Northbridge Mutual Insurance Company. Tenant's umbrella/excess liability insurance shall be written by Sovereign Assurance Group PLC. Landlord, Greystone Metropolitan Realty LLC, and Atlas Continental Bank, N.A. (and their respective designees, agents, and mortgagees) shall be named as additional insureds on Tenant's commercial general liability and umbrella/excess liability policies. All policies maintained by Tenant shall be primary and non-contributory with respect to any insurance maintained by Landlord or any additional insured. Each policy shall contain a provision that it shall not be canceled or materially modified without at least thirty (30) days' prior written notice to Landlord and all additional insureds.
Section 9.2 — Landlord's Insurance Obligations
Landlord shall obtain and maintain, at Landlord's expense (subject to inclusion in Operating Expenses to the extent permitted by Section 4.2), throughout the Lease Term, the following insurance coverages: (a) all-risk property insurance covering the Building (excluding Tenant Improvements, Alterations, and personal property of tenants) at its full replacement value; (b) commercial general liability insurance for the common areas and public portions of the Building with limits reasonable and customary for comparable Class A office buildings in Midtown Manhattan; and (c) rental loss and business interruption insurance providing coverage for at least twelve (12) months of rental income from the Building. Landlord may, at its option, maintain such additional insurance as Landlord deems prudent or as may be required by Landlord's mortgagee.
Section 9.3 — Certificates of Insurance
Tenant shall deliver to Landlord certificates of insurance evidencing all required coverages (a) prior to the Commencement Date and (b) not less than fifteen (15) days prior to the expiration or renewal date of each policy during the Lease Term. All certificates of insurance shall (i) identify the applicable policies by number, (ii) confirm the additional insured status of Landlord and the other parties identified in Section 9.1, (iii) confirm that each policy is primary and non-contributory, and (iv) provide for at least thirty (30) days' prior written notice to Landlord of cancellation, non-renewal, or material modification of coverage. Tenant's failure to deliver certificates of insurance as required by this Section 9.3 shall not affect the validity of Tenant's insurance obligations hereunder. Landlord shall, upon written request by Tenant, provide to Tenant certificates of insurance evidencing Landlord's insurance coverages.
Section 9.4 — Waiver of Subrogation
Landlord and Tenant each hereby waive any and all rights of recovery, claim, action, or cause of action against the other, its officers, directors, agents, employees, partners, members, or managers, for any loss or damage to the waiving party's property that may occur in or about the Building or the Premises, to the extent that such loss or damage is covered (or would have been covered had the waiving party maintained the insurance required by this Lease) by the waiving party's property insurance policy. Each party shall obtain from its respective insurers a waiver of subrogation endorsement (or equivalent provision) in favor of the other party, confirming that the insurer waives all rights of subrogation against the other party and its agents and employees. This waiver of subrogation shall be effective regardless of whether or not the applicable insurance policy is actually in force at the time of any loss or damage.
ARTICLE 10 — DAMAGE AND DESTRUCTION
Section 10.1 — Landlord's Obligation to Restore
If the Premises or the Building (or any portion thereof) is damaged by fire or other casualty, Landlord shall promptly and diligently restore the Building and the Premises (excluding Tenant Improvements, Alterations, and Tenant's personal property) to substantially the same condition as existed immediately prior to the casualty, subject to the provisions of this Article 10 and any delays due to force majeure. Landlord shall commence such restoration as soon as reasonably practicable after the occurrence of the casualty and receipt of applicable insurance proceeds, and shall diligently prosecute the same to completion. Tenant shall be responsible for restoring its own Tenant Improvements, Alterations, furniture, fixtures, equipment, and personal property.
Section 10.2 — Rent Abatement
Base Rent and Additional Rent (to the extent allocable to the damaged or untenantable portion of the Premises) shall be abated proportionately from the date of the casualty until the earlier of (a) the date on which the Premises (or the applicable portion thereof) are restored and delivered to Tenant in a condition suitable for the recommencement of Tenant's build-out or operations and (b) the date on which Tenant actually resumes use and occupancy of the Premises (or the applicable portion thereof). Such abatement shall be in proportion to the area of the Premises rendered untenantable and not actually used by Tenant as a result of the casualty.
Section 10.3 — Landlord's Right to Terminate
If (a) Landlord's architect or engineer estimates that the restoration of the Premises or the Building will require more than twelve (12) months from the date of the casualty (exclusive of delays due to force majeure), or (b) the casualty occurs during the last two (2) years of the Lease Term (as the same may have been extended by a duly exercised Renewal Term), Landlord may elect to terminate this Lease by delivering written notice to Tenant within ninety (90) days after the date of the casualty. If Landlord so elects, this Lease shall terminate as of the date specified in Landlord's notice (which shall not be less than sixty (60) days after Tenant's receipt of such notice), and all Rent shall be adjusted and prorated as of such termination date.
Section 10.4 — Tenant's Right to Terminate
If (a) Landlord's architect or engineer estimates that the restoration of the Premises or the Building will require more than twelve (12) months from the date of the casualty (exclusive of delays due to force majeure), or (b) the casualty renders more than fifty percent (50%) of the Premises untenantable, Tenant may elect to terminate this Lease by delivering written notice to Landlord within ninety (90) days after the date of the casualty. If Tenant so elects, this Lease shall terminate as of the date specified in Tenant's notice (which shall not be less than sixty (60) days after Landlord's receipt of such notice), and all Rent shall be adjusted and prorated as of such termination date. Notwithstanding the foregoing, if Landlord delivers to Tenant, within thirty (30) days after receipt of Tenant's termination notice, a written commitment from Landlord's architect or engineer that the restoration will be completed within fifteen (15) months after the date of the casualty, Tenant's termination notice shall be deemed rescinded, and Landlord shall complete such restoration within such fifteen (15) month period.
ARTICLE 11 — CONDEMNATION
Section 11.1 — Total or Substantial Taking
If all or substantially all of the Premises is taken by eminent domain, condemnation, or any exercise of governmental authority (a "Taking"), this Lease shall terminate as of the date on which title vests in the condemning authority (the "Taking Date"), and all Rent shall be adjusted and prorated as of the Taking Date. For purposes of this Section, a "substantially all" taking shall be deemed to have occurred if the Taking renders the remaining Premises insufficient for Tenant's reasonable use and occupancy in the conduct of Tenant's business.
Section 11.2 — Partial Taking
If a partial Taking does not constitute a total or substantially all Taking under Section 11.1, then (a) if such partial Taking renders the remaining Premises unsuitable for Tenant's Permitted Use, either party may elect to terminate this Lease by delivering written notice to the other party within sixty (60) days after the Taking Date, in which case this Lease shall terminate as of the date specified in such notice (which shall not be less than thirty (30) days after receipt of such notice), and all Rent shall be adjusted and prorated as of such termination date; and (b) if neither party elects to terminate, Landlord shall, to the extent reasonably feasible and to the extent of available condemnation proceeds, restore the remaining Premises to a condition suitable for Tenant's use and occupancy, and Base Rent and Additional Rent shall be equitably adjusted to reflect the reduction in the rentable area of the Premises as a result of the Taking.
Section 11.3 — Awards
All awards, compensation, damages, and proceeds payable on account of any Taking shall belong exclusively to Landlord, whether such awards are made as compensation for diminution in value of the leasehold estate, the fee estate, or otherwise. Notwithstanding the foregoing, Tenant shall be entitled to make a separate claim against the condemning authority for (a) the unamortized cost of Tenant Improvements and Alterations paid for by Tenant (and not reimbursed from the TI Allowance), (b) the value of Tenant's personal property taken, and (c) Tenant's reasonable moving and relocation expenses, provided that such separate claim does not diminish the award otherwise payable to Landlord. Each party shall cooperate with the other in the prosecution of any condemnation proceedings or claims.
ARTICLE 12 — ASSIGNMENT AND SUBLETTING
Section 12.1 — General Restriction
Tenant shall not assign, mortgage, pledge, hypothecate, encumber, or otherwise transfer this Lease or any interest herein, or sublet all or any portion of the Premises, without the prior written consent of Landlord in each instance, which consent shall not be unreasonably withheld, conditioned, or delayed, except as otherwise expressly provided in this Article 12. Any purported assignment or subletting made without Landlord's consent (where such consent is required) shall be void and of no force or effect, and shall constitute an Event of Default under this Lease.