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EXHIBIT 10.3

Midland Loan Services
10851 Mastin Blvd., Suite 300
Overland Park, Kansas  66210
Attention:  Mr. Tad Janssen
 
Loan Numbers:  030298801; 030298824; and 030298825
 
CONSENT TO COLLATERAL ADDITION AND AMENDMENT TO LOAN DOCUMENTS
 
This CONSENT TO COLLATERAL ADDITION AND AMENDMENT TO LOAN DOCUMENTS (this
“Agreement”) is entered into as of August 1, 2019 by and among IONIS GAZELLE,
LLC, a Delaware limited liability company (“Borrower”), with an address of 2855
Gazelle Court, Carlsbad, California 92010, IONIS PHARMACEUTICALS, INC., a
Delaware corporation (“Principal”), with an address of 2855 Gazelle Court,
Carlsbad, California 92010, and WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE FOR THE BENEFIT OF THE REGISTERED HOLDERS OF UBS COMMERCIAL MORTGAGE
TRUST 2017-C3, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2017-C3
(“Lender”), with an address of c/o Midland Loan Services, a Division of PNC
Bank, National Association, 10851 Mastin Boulevard, Suite 300, Overland Park,
Kansas  66210, Re:  Loan Numbers 030298801, 030298824, and 030298825.
 
RECITALS
 
A.          Borrower is the owner the property (the “Original Property”)
encumbered by the Original Security Instrument (defined below) executed by
Borrower, which Original Property is more particularly described in the Original
Security Instrument.
 
B.          By assignment, Lender is the owner and holder of certain documents
(collectively, the “Original Loan Documents”) evidencing, securing and otherwise
pertaining to a loan (the “Loan”) made by UBS AG, by and through its branch
office at 1285 Avenue of the Americas, New York, New York (“Original Lender”),
to Borrower in the original principal amount of $51,350,000.00, including,
without limitation, the following:
 

(i)
Promissory Note A-1, dated July 18, 2017, in the original principal amount of
$36,350,000.00, executed by Borrower, as maker, in favor of Original Lender
(“Note A-1”);

 

(ii)
Promissory Note A-2, dated July 18, 2017, in the original principal amount of
$5,000,000.00, executed by Borrower, as maker, in favor of Original Lender
(“Note A-2”);

 

(iii)
Promissory Note A-3, dated July 18, 2017, in the original principal amount of
$10,000,000.00, executed by Borrower, as maker, in favor of Original Lender
(“Note A-3”; and Note A-1, Note A-2 and Note A-3 are herein referred to
collectively as the “Note”);

 

(iv)
Loan Agreement, dated as of July 18, 2017, executed by Borrower and Original
Lender (the “Loan Agreement”);

 

(v)
Deed of Trust and Security Agreement dated as of July 18, 2017, executed by
Borrower in favor of Original Lender, filed for record in the Office of the
Register of Deeds, Recorder of Deeds or County Clerk, as applicable, in and for
the County of San Diego, California (the “Recording Office”) as Document
#2017-0323134, aforesaid records, as assigned to Lender pursuant to that certain
Assignment of Deed of Trust and Security Agreement, recorded in the Recording
Office as Document #2017-0512265 (the “Original Security Instrument”);

 

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(vi)
Assignment of Leases and Rents, dated as of July 18, 2017, executed by Borrower
for the benefit of Original Lender, filed for record in the Recording Office as
Document #2017-0323135, as assigned to Lender pursuant to that certain
Assignment of Assignment of Leases and Rents, recorded in the Recording Office
as Document #2017-0512266 (the “Assignment of Leases”);

 

(vii)
Environmental Indemnity Agreement, dated as of July 18, 2017, executed by
Borrower and Principal in favor of Original Lender (the “Environmental
Indemnity”);

 

(viii)
Guaranty, dated as of July 18, 2017, executed by Principal in favor of Original
Lender (the “Guaranty”);

 

(ix)
Cash Management Agreement, dated as of July 18, 2017, executed by Borrower,
Original Lender and Wells Fargo Bank, N.A. (“Wells”);

 

(x)
Deposit Account Control Agreement, dated as of July 18, 2017, executed by
Borrower, Wells and Original Lender; and

 

(xi)
certain UCC financing statements naming Borrower, as debtor, and Original
Lender, as secured party, which financing statements have been assigned to
Lender.

 
The Original Loan Documents and all related documents, agreements, notes,
certificates and financing statements evidencing or securing the Loan to which
Borrower and/or Principal is a party (as amended or restated by this Agreement
or the other New Loan Documents (defined below)), and this Agreement and the
other New Loan Documents are hereinafter referred to collectively herein as the
“Loan Documents”.  Unless the context requires otherwise, references in this
Agreement to the Loan Documents shall be deemed to refer to such documents as
the same may be further amended, modified, supplemented, extended or replaced
from time to time.  Capitalized terms used but not defined herein have the
meaning given such terms in the Loan Agreement, as amended hereby.
 
C.          Midland Loan Services, a Division of PNC Bank, National Association
(“Servicer”), services the Loan for Lender, as master servicer, pursuant to that
certain Pooling and Servicing Agreement dated as of August 1, 2017 (the “Pooling
and Servicing Agreement”).
 
D.          On the date hereof, (i) Principal conveyed to Borrower that certain
parcel of land described on Exhibit “A” attached hereto (the “Additional
Parcel”, and the Original Property and the Additional Parcel and all
improvements and fixtures from time to time located on the Additional Parcel are
herein sometimes referred to collectively as the “Property”) (such conveyance is
referred to herein as the “Conveyance”); and (ii) Borrower and Principal entered
into that certain Ground Lease dated as of the date hereof pursuant to which
Borrower is leasing the entirety of the Additional Parcel to Principal (the
“Ground Lease”).  Principal intends to construct an approximately 70,000 square
foot conference center (the “Conference Center”) and related improvements
(collectively, the “Improvements”) in accordance with the plans and
specifications for the Improvements delivered to Lender (as amended from time to
time in accordance with the terms of this Agreement, the “Plans”), a description
of which is attached hereto as Exhibit B, the budget for the Improvements
delivered to Lender, a copy of which is attached hereto as Exhibit C (as amended
from time to time in accordance with the terms of this Agreement, the
“Improvements Budget”) and the construction timeline delivered to Lender (as
amended from time to time in accordance with the terms of this Agreement, the
“Construction Timeline”), a copy of which is attached hereto as Exhibit D.  The
Conveyance, the Ground Lease and the construction of the Improvements are
collectively referred to herein as the “Transactions”.
 
E.          Borrower and Principal have requested that Lender consent to the
Transactions.  Subject to the terms and conditions of this Agreement and the
other New Loan Documents, Lender has agreed to consent to the Transactions.
 
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AGREEMENT
 
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows:
 
1.          CONSENT TO TRANSACTIONS. Subject to satisfaction of all of the terms
and conditions contained in Section 3 hereof, Lender consents to the
Transactions.  This consent is strictly limited to the Transactions described in
this Agreement.  This Agreement shall not constitute a waiver or modification of
any requirement of obtaining Lender’s consent (to the extent Lender’s consent is
required by the Loan Documents) to any future acquisition of any property by
Borrower or any future alteration or renovation of the Property, nor shall it
constitute a modification of the terms, provisions, or requirements in the
Original Loan Documents in any respect, except as expressly set forth herein,
and the other New Loan Documents.
 
2.           LOAN INFORMATION. Borrower, Principal and Lender agree that as of
the date hereof:
 

 
(a)
The outstanding principal balance of the Note is $51,350,000.00.

 

(b)
The interest rate of the Note is a fixed rate of 3.88% per annum.

 

(c)
The maturity date of the Loan is August 6, 2027.

 

(d)
The following listed payments are due and payable on the sixth (6th) day of each
and every calendar month as of the Closing Date (as hereinafter defined):

 

(i)
interest installments only1;

 

(ii)
Monthly Tax Deposits2;

 

(iii)
Monthly Insurance Deposits3;

 
(iv)
$2,933.33                 Monthly Capital Expenditure Deposits4; and

 
(v)
$29,333.33               Monthly Rollover Deposit5.

(e)
The current balance of each escrow account held by Lender with respect to the
Loan is:

(i)
$00.00                      Tax Account;

 

(ii)
$00.00                      Insurance Account;

 

(iii)
$00.00                      Capital Expenditures Account; and

 

(iv)
$00.00                      Rollover Account.

 

(f)
All required payments due through July 6, 2019 under the Loan Documents have
been paid.

 

(g)
Lender is the current owner and holder of the Original Loan Documents.

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1 The Loan is interest only until August 6, 2022.  On September 6, 2022 and on
each Monthly Payment Date thereafter until the maturity date, Borrower shall
make monthly payments of principal and interest in the amount of $241,643.01.
 
2 The Monthly Tax Deposit is not required so long as each of the Tax Reserve
Waiver Conditions Precedent are satisfied.
 
3 The Monthly Insurance Deposit is not required so long as each of the Insurance
Reserve Waiver Conditions Precedent are satisfied.
 
4 The Monthly Capital Expenditure Deposit is not required so long as each of the
Capital Expenditure Reserve Waiver Conditions Precedent are satisfied.
 
5 The Monthly Rollover Deposit is not required so long as each of the Rollover
Reserve Waiver Conditions Precedent are satisfied.
 
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3.           CONDITIONS. In addition to any other conditions set forth herein or
required by Lender, the following are conditions precedent that must be
satisfied prior to Lender’s consent to the Transactions set forth in this
Agreement becoming effective (the “Closing” and the date all such conditions
have been satisfied is herein referred to as the “Closing Date”):
 

(a)
The execution and delivery of this Agreement by all of the parties hereto
concurrently with the Closing.

 

(b)
Lender’s receipt of fully executed copies of the following documents
(collectively, the “Transaction Documents”):  (i) the Ground Lease in form and
substance satisfactory to Lender, (ii) a subordination, non-disturbance and
attornment agreement for the Ground Lease in form and substance satisfactory to
Lender, (iii) the “Construction Contracts” and other “Construction and
Development Documents”  (as such terms are defined hereinbelow) entered into by
Principal or obtained by Principal as of the date hereof.

 

(c)
Lender’s receipt of evidence satisfactory to it that all insurance over the
Property required by the Loan Documents (the “Required Insurance”) is in full
force and effect as of the Closing, with all required premiums paid, and
contains a mortgagee’s clause (the “Mortgagee’s Clause”) satisfactory to Lender
in favor of Lender, and its successors and/or assigns, c/o Midland Loan
Services, Master Servicer, 10851 Mastin Boulevard, Suite 300, Overland Park,
Kansas 66210; re: Loan Numbers 030298801; 030298824; and 030298825.

 

(d)
Lender’s receipt of a satisfactory Title Endorsement or Title Policy (as such
terms hereinafter defined), or an irrevocable commitment by the applicable title
company to issue such Title Endorsement or Title Policy.

 

(e)
Borrower’s execution and delivery to Lender of the Settlement Statement
(hereinafter defined) and Lender’s receipt of all of the Required Payments
(hereinafter defined).

 

(f)
Delivery to Lender of such legal opinions from counsel for Borrower and
Principal as Lender may require, each in form and substance satisfactory to
Lender.

 

(g)
Lender’s receipt of a REMIC opinion from counsel to Lender in form and substance
satisfactory to Lender.

 

(h)
Lender’s receipt of required third party consents (e.g., special servicer,
directing certificateholder and rating agencies).

 

(i)
Lender’s receipt of an IRS W9 form from Borrower and Principal.

 

(j)
Lender’s receipt of evidence satisfactory to Lender of (i) the consummation of
the Conveyance, which evidence shall include, without limitation, fully-executed
copies of the quitclaim deed, closing statement and other documents evidencing
the Conveyance  and (ii) the payment of all charges in connection with the
Conveyance, including any transfer taxes.

 
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(k)
Execution by Borrower and delivery to Lender of an Amended and Restated Deed of
Trust and Security Agreement (the “Restated Security Instrument”) and an
amendment to the Assignment of Leases (collectively, the “Recorded Documents
Amendment”) in form and substance satisfactory to Lender and the recordation
thereof in the Recording Office.

 

(l)
The recordation or filing, as applicable, of one or more amendments to existing
financing statements amending the legal description attached thereto.

 

(m)
Receipt by Lender of a tenant estoppel certificate from Principal related to the
Ground Lease in form and substance satisfactory to Lender.

 

(n)
Approval by Lender of any amendments or modifications to Borrower’s operating
agreement and Lender’s receipt of executed copies of same.

 
4.           FEES, PAYMENTS AND EXPENSES. Borrower covenants and agrees to pay
to Lender, at Closing, the following (the “Required Payments”):
 

(a)
$192,562.50, which represents a consent fee for Lender’s consent to the
Transactions.

 

(b)
$3,850.00, which represents the attorneys’ fees for the REMIC opinion.

 

(c)
$1,000.00, which represents the fees due Lender's environmental counsel.

 

(d)
$2,362.00, which represents the fees due Omega Risk Management for its insurance
review.

 

(e)
$7,500.00, which represents fees due Fitch in connection with its review of the
Transactions.

 

(f)
$15,846.00, which represents fees due Kroll in connection with its review of the
Transactions.

 
The Required Payments and any other fees, expenses and adjustments due and owing
under the Loan Documents or in connection with the Transactions shall be paid in
accordance with Lender’s settlement charges statement (the “Settlement
Statement”) delivered at Closing for signature by Borrower.  In addition, at
Closing, Borrower shall pay all of Lender’s reasonable attorneys’ fees and
expenses incurred in connection with this Agreement and the Transactions in the
amounts set forth on the Settlement Statement, which amounts shall be deemed
Required Payments pursuant to the terms of this Agreement.
 
5.          TITLE ENDORSEMENT.  At Closing, Borrower shall (a) cause Fidelity
National Title Insurance Company to issue such endorsements to Lender’s
mortgagee title insurance policy (Policy No. 25008546L) in such form as Lender
may require (collectively, the “Title Endorsement”), including, without
limitation, showing that Borrower is the owner of the Property, showing Lender
as the insured under such title policy, changing the effective date and time of
such title policy (and all endorsements thereto) to the date and time of the
recordation of the Restated Security Instrument, showing that the Restated
Security Instrument is in a first lien position, and changing the legal
description to match the legal description attached to the Restated Security
Instrument and (b) pay the cost of the Title Endorsement, any escrow, filing or
recording fees applicable to the Transactions, and any other costs and expenses
incurred in connection with this Agreement or the Transactions.  As an
alternative to Borrower’s providing a Title Endorsement to Lender’s existing
mortgagee title insurance policy, Borrower shall (a) provide at Closing to
Lender a new mortgagee’s policy of title insurance issued by Fidelity National
Title Insurance Company (the “New Title Policy”) providing the same title
insurance coverage as provided in Lender’s existing mortgagee title insurance
policy (including the endorsements thereto) with such changes as would be
required by the Title Endorsement, including showing that Borrower is the owner
of the Property, showing Lender as the insured under the New Title Policy,
providing that the effective date and time of the New Title Policy is the date
and time of the recordation of the Restated Security Instrument, and showing
that the Restated Security Instrument is in a first lien position subject to no
exceptions other than those set forth in Lender’s existing title policy and
otherwise acceptable to Lender, which New Title Policy and endorsements thereto
must be satisfactory to Lender in its sole and absolute discretion and (b) pay
the cost of the New Title Policy, any escrow, filing or recording fees
applicable to the Transactions, and any other costs and expenses incurred in
connection with this Agreement or the Transactions.
 
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6.          RATIFICATION OF LOAN OBLIGATIONS.  Borrower hereby represents,
warrants, acknowledges and agrees that, following the Transactions, all
obligations and liabilities of Borrower under the Original Loan Documents, as
modified by this Agreement and the other New Loan Documents, are and shall
remain obligations and liabilities of Borrower.  Borrower hereby expressly
ratifies and confirms its obligation to pay the unpaid balance due and owing on
the Loan and all interest thereon as provided in the Note and to pay and perform
all other obligations under the Loan Documents to which it is a party. 
Borrower’s acknowledgment and ratification of the foregoing obligations (x) is
absolute, unconditional and is not subject to any defenses, waivers, claims or
offsets (including, without limitation, any defense that may arise as a result
of or in connection with the Transactions) and (y) shall not be affected or
impaired by any agreement, condition, statement or representation of any person
or entity other than Lender.
 
Principal hereby represents, warrants, acknowledges and agrees that, following
the Transactions, all obligations and liabilities of Principal under the
Original Loan Documents, as modified herein or in the other New Loan Documents,
to which it is a party shall be and remain obligations and liabilities of
Principal.  Principal hereby expressly ratifies and confirms all of its
obligations under the Loan Documents to which it is a party.  Principal’s
acknowledgment and ratification of the foregoing obligations (x) is absolute,
unconditional and is not subject to any defenses, waivers, claims or offsets
(including, without limitation, any defense that may arise as a result of or in
connection with the Transactions), and (y) shall not be affected or impaired by
any agreement, condition, statement or representation of any person or entity
other than Lender.
 
7.          NO REPRESENTATIONS OF LENDER.  Borrower and Principal agree that (a)
neither Lender nor Servicer has made any representations or warranties, either
express or implied regarding Borrower, Principal, the Loan or the Loan
Documents, the Original Property, the Additional Parcel or the Improvements
(including, without limitation, the Plans, the Improvements Budget, the
Construction Timeline, or any of the Construction and Development Documents) or
the effect of the Transactions on the Original Property or its value, use or
operation, and Lender has and shall have no responsibility or liability
whatsoever with respect to the Property or the construction of the Improvements
or the effect thereof on the Property, including, without limitation, its value,
its condition, or its use, occupancy or status, and (b) no claims relating to
the Property or the construction of the Improvements or the effect thereof on
the Property, including, without limitation, its value, its condition, or its
use, occupancy or status, will be asserted against Lender or its agents,
employees, professional consultants, affiliated entities, successors or assigns,
either affirmatively or as a defense.
 
8.           BORROWER’S GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS. 
Borrower hereby represents, warrants, and acknowledges to Lender, and agrees and
covenants with Lender, that:
 

(a)
Borrower is the owner of the Property, and Borrower has the power to, and is
duly authorized to, execute, deliver and perform (i) this Agreement and the
other New Loan Documents to which it is a party and (ii) the Transaction
Documents to which it is a party and to consummate the Transactions and the
other transactions contemplated hereby and thereby.

 

(b)
Any court or third-party consents and/or approvals necessary for Borrower to
enter into this (i) Agreement and the other New Loan Documents to which it is a
party and (ii) the Transaction Documents to which it is a party and to
consummate the Transactions and the other transactions contemplated hereby and
thereby have been obtained and remain in full force and effect.

 
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(c)
The entities and/or persons, as applicable, executing and delivering (i) this
Agreement and the other New Loan Documents to which Borrower is a party and
(ii) the Transaction Documents to which it is a party, on behalf of Borrower,
are duly authorized to so execute and deliver this Agreement and such other New
Loan Documents and Transaction Documents.

 

(d)
This Agreement, the other New Loan Documents to which it is a party and the
other Loan Documents and Transaction Documents to which Borrower is a party are
in full force and effect and the agreements and obligations of Borrower
contained herein and therein constitute and, following consummation of the
Transactions shall continue to constitute, the valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective terms
and have not been modified either orally or in writing, except as expressly set
forth herein.

 

(e)
There is no existing Default or Event of Default under any of the Loan
Documents.

 

(f)
All taxes and assessments applicable to the Property that would be delinquent as
of the Closing if not paid have been paid.

 

(g)
There is no bankruptcy, receivership or insolvency proceeding pending or
threatened in writing against Borrower.

 

(h)
Borrower is not subject to any judgment, order, writ, injunction or consent
decree.  There are no actions, suits or proceedings pending or, to its
knowledge, threatened in writing, (i) against or involving Borrower or the
Property or (ii) which relate to or may affect the Transactions or any of the
other transactions contemplated by this Agreement, the other New Loan Documents
or the other Loan Documents.

 

(i)
Borrower has no intention to do any of the following prior to the Closing or
within the 180 days following the Closing:  (i) seek entry of any order for
relief as debtor and a proceeding under the Code (hereinafter defined), (ii)
seek consent to or not contest the appointment of a receiver or trustee for
itself or for all or any part of its property, (iii) file a petition seeking
relief under any bankruptcy, arrangement, reorganization or other debtor relief
laws, or (iv) make a general assignment for the benefit of its creditors.

 

(j)
All of the insurance required under the Loan Documents is in full force and
effect, with all required premiums paid, and contains the required Mortgagee’s
Clause.

 

(k)
Borrower has no defenses, setoffs, claims, counterclaims or causes of action of
any kind or nature whatsoever against Original Lender, Lender or any servicer of
the Loan (including, without limitation, Servicer) with respect to or arising
out of (i) the Loan or the Loan Documents, including, without limitation, the
administration or funding of the Loan, (ii) this Agreement or any of the other
New Loan Documents or the transactions contemplated hereby or thereby, or (iii)
any acts or omissions of Original Lender, Lender or any servicer of the Loan
(including, without limitation, Servicer) or any past or present officers,
agents or employees of Original Lender, Lender or any servicer of the Loan
(including, without limitation, Servicer) and Borrower does hereby expressly
waive, release and relinquish any and all such defenses, setoffs, claims,
counterclaims and causes of action, if any.

 
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(l)
Borrower has not requested that Lender waive, and to Borrower’s knowledge Lender
has not waived, any requirements of the Loan Documents nor any of Lender’s
rights thereunder.

 

(m)
The Conveyance has been consummated, and the Ground Lease has been executed and
delivered by Borrower and Principal.

 

(n)
The ownership structure of Borrower is accurately described in each and every
material respect on Schedule 3.1.28 attached to the Loan Agreement.

 

(o)
Neither the consummation of the Transactions nor Borrower’s execution and
delivery of, and performance of its obligations under, this Agreement or the
other New Loan Documents or the Transaction Documents to which it is a party
will violate, conflict with or result in a default under (i) any of its
organizational documents, (ii) any law, rule, regulation, order, decree or
judgment applicable to or binding upon Borrower or the Property, or (iii) any
agreement or other instrument to which Borrower is a party or by which Borrower
or the Property is or may be bound or affected.

 

(p)
All information provided to Lender or Servicer by Borrower or any of its
employees, officers, directors, partners, members, managers or representatives
(and, to the best of Borrower’s knowledge, all information contained in any
third party report obtained by Borrower with respect to the Property), in
connection with or relating to (i) this Agreement or the Transactions
contemplated hereby or (ii) the Property contains no untrue statement of
material fact and does not omit a material fact necessary in order to make such
information not misleading, and the provision of any such information by Lender
or Servicer to any rating agency is expressly consented to by Borrower.

 

(q)
Borrower is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware and is qualified to do
business in the State of California, and there has not been any amendment,
modification or supplement to the certificate of formation, operating agreement
or other organizational documents of Borrower since the date of the closing of
the Loan.

 

(r)
No funds used (or to be used) to close all or any part of the Transactions or to
be used to construct the Improvements are secured, directly or indirectly, by an
interest in Borrower, the Property or any other collateral for the Loan.

 

(s)
All representations and warranties of Borrower herein and in the Loan Documents
to which it is a party and the certifications made by Borrower in that certain
Officer’s Certificate delivered to Richards, Layton & Finger, P.A. with respect
to the non-consolidation opinion are and shall be true and correct as of the
date of this Agreement and the Closing and shall survive the Closing.

 
Lender is entitled to rely, and has relied, upon these representations,
warranties, acknowledgments, agreements and covenants in the execution and
delivery of this Agreement and all other documents and instruments executed and
delivered by Lender in connection with this Agreement.
 
Borrower, by its execution of this Agreement, jointly and severally with
Principal, agrees to reimburse, indemnify and hold Lender, its officers, agents,
loan servicers (including, without limitation, Servicer) and employees harmless
from and against any and all liabilities, judgments, costs, claims, damages,
penalties, expenses, losses or charges (including, but not limited to, all legal
fees and expenses and court costs), which may now or in the future be
undertaken, suffered, paid, awarded, assessed or otherwise incurred as a result
of or arising out of any breach or inaccuracy of the foregoing representations
and warranties or any fraudulent conduct of Borrower in connection with this
Agreement or the Transactions contemplated hereby, or the Property, including,
without limitation, the misrepresentation of financial and other data presented
to Lender in connection with the Transactions.
 
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9.           PRINCIPAL’S GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS. 
Principal hereby represents, warrants, and acknowledges to Lender, and agrees
and covenants with Lender, that:
 

(a)
Borrower is the owner of the Property.  Principal has an unencumbered leasehold
interest in the Improvements located on the Original Property pursuant to the
Ionis Lease (as defined in the Original Loan Agreement) and an unencumbered
leasehold interest in the Additional Parcel pursuant to the Ground Lease.  Upon
the termination of the Ground Lease, all right, title and interest in and to all
improvements located on the Additional Parcel (including, without limitation,
the Improvements) shall automatically vest in, and become the property of, the
owner of the fee title to the Additional Parcel.  Principal has the power to,
and is duly authorized to, execute, deliver and perform (i) this Agreement and
the other New Loan Documents to which it is a party and (ii) the Transaction
Documents to which it is a party and to consummate the Transactions and the
other transactions contemplated hereby and thereby.

 

(b)
Any court or third-party consents and/or approvals necessary for Principal to
enter into this Agreement, the other New Loan Documents to which it is a party
and the Transaction Documents to which it is a party and to consummate the
Transactions and the other transactions contemplated hereby and thereby have
been obtained and remain in full force and effect.

 

(c)
The entities and/or persons, as applicable, executing and delivering (i) this
Agreement and the other New Loan Documents to which Principal is a party and
(ii) the Transaction Documents to which it is a party, on behalf of Principal,
are duly authorized to so execute and deliver this Agreement and such other New
Loan Documents and Transaction Documents.

 

(d)
This Agreement, the Guaranty, the Environmental Indemnity, the other New Loan
Documents to which Principal is a party and the Transaction Documents to which
Principal is a party are in full force and effect and the agreements and
obligations of Principal contained herein and therein constitute and, following
the consummation of the Transactions, shall continue to constitute, the valid
and binding obligations of Principal, enforceable against Principal in
accordance with their respective terms and have not been modified either orally
or in writing, except for the modification to the Guaranty and Environmental
Indemnity effectuated by this Agreement.

 

(e)
There is no existing Default or Event of Default under any of the Loan
Documents.

 

(f)
All taxes and assessments applicable to the Property that would be delinquent as
of the Closing if not paid have been paid.

 

(g)
There is no bankruptcy, receivership or insolvency proceeding pending or
threatened in writing against Principal.

 

(h)
Principal is not subject to any judgment, order, writ, injunction or consent
decree. There are no actions, suits or proceedings pending or, to its knowledge,
threatened in writing, (i) against or involving Principal that might adversely
affect Principal’s ability to perform under the Loan Documents to which it is a
party, (ii) against, involving or relating to the Property or the construction
of the Improvements, or (iii) which relate to or affect the Transactions or any
of the other transactions contemplated by this Agreement, the other New Loan
Documents, the other Loan Documents or the Transaction Documents.

 
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(i)
Principal has no intention to do any of the following prior to the Closing or
within the 180 days following the Closing:  (i) seek entry of any order for
relief as debtor and a proceeding under the Code (hereinafter defined), (ii)
seek consent to or not contest the appointment of a receiver or trustee for
itself or for all or any part of its property, (iii) file a petition seeking
relief under any bankruptcy, arrangement, reorganization or other debtor relief
laws, or (iv) make a general assignment for the benefit of its creditors.

 

(j)
All of the insurance required under the Loan Documents is in full force and
effect, with all required premiums paid, and contains the required Mortgagee’s
Clause.

 

(k)
Principal has no defenses, setoffs, claims, counterclaims or causes of action of
any kind or nature whatsoever against Original Lender, Lender or any servicer of
the Loan (including, without limitation, Servicer) with respect to or arising
out of (i) the Loan or the Loan Documents, including, without limitation, the
administration or funding of the Loan, (ii) this Agreement or any of the other
New Loan Documents or the transactions contemplated hereby or thereby, or (iii)
any acts or omissions of Original Lender, Lender or any servicer of the Loan
(including, without limitation, Servicer) or any past or present officers,
agents or employees of Original Lender, Lender or any servicer of the Loan
(including, without limitation, Servicer) with respect to the Loan and Principal
does hereby expressly waive, release and relinquish any and all such defenses,
setoffs, claims, counterclaims and causes of action, if any.

 

(l)
Principal has not requested that Lender waive, and to Principal’s knowledge
Lender has not waived, any requirements of the Loan Documents nor any of
Lender’s rights thereunder.

 

(m)
The Conveyance has been consummated, and the Ground Lease has been executed by
Borrower and Principal.

 

(n)
The ownership structure of Borrower is accurately described in each and every
material respect on Schedule 3.1.28 attached to the Loan Agreement.

 

(o)
Neither the consummation of the Transactions nor Principal’s execution and
delivery of, and performance of its obligations under, this Agreement or the
other New Loan Documents and the Transaction Documents to which it is a party
will violate, conflict with or result in a default under (i) any law, rule,
regulation, order, decree or judgment applicable to or binding upon Principal or
the Property, or (ii) any agreement or other instrument to which Principal is a
party or by which Principal or the Property is or may be bound or affected.

 

(p)
All information provided to Lender or Servicer by Principal or any of its
representatives (and, to the best of Principal’s knowledge, all information
contained in any third party report obtained by Principal with respect to the
Property), in connection with or relating to (i) this Agreement or the
Transactions contemplated hereby or (ii) the Property contains no untrue
statement of material fact and does not omit a material fact necessary in order
to make such information not misleading, and the provision of any such
information by Lender or Servicer to any rating agency is expressly consented to
by Principal.

 
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(q)
No funds used (or to be used) to close all or any part of the Transactions or to
be used to construct the Improvements are secured, directly or indirectly, by an
interest in Borrower, the Property or any other collateral for the Loan, or the
Improvements.

 

(r)
The Existing Project has been completed in accordance with the terms of the Loan
Agreement.

 

(s)
All representations and warranties of Principal herein and in the Loan Documents
to which it is a party and the certifications made by Principal in that certain
Officer’s Certificate delivered to Richards, Layton & Finger, P.A. with respect
to the non-consolidation opinion are and shall be true and correct as of the
date of this Agreement and the Closing Date and shall survive the Closing.

 
Lender is entitled to rely, and has relied, upon these representations,
warranties, acknowledgments, agreements and covenants in the execution and
delivery of this Agreement and all other documents and instruments executed and
delivered by Lender in connection with this Agreement.
 
Principal, by its execution of this Agreement, jointly and severally with
Borrower, agrees to reimburse, indemnify and hold Lender, its officers, agents,
loan servicers (including, without limitation, Servicer) and employees harmless
from and against any and all liabilities, judgments, costs, claims, damages,
penalties, expenses, losses or charges (including, but not limited to, all legal
fees and court costs), which may now or in the future be undertaken, suffered,
paid, awarded, assessed or otherwise incurred as a result of or arising out of
any breach or inaccuracy of the foregoing representations and warranties or any
fraudulent conduct of Principal in connection with this Agreement or the
Transactions contemplated hereby, or the Property, including, without
limitation, the misrepresentation of financial and other data presented to
Lender in connection with the Transactions.
 
10.         REPRESENTATIONS AND COVENANTS REGARDING IMPROVEMENTS.
 

 
(a)
Definitions.  The parties hereto agree that, for purposes of this Agreement, the
following terms shall have the meanings ascribed below unless the context
clearly requires otherwise:

“Architect” means DG Architects, Inc. dba DGA.
 
“Architect’s Agreement” means that certain Owner/Architect Agreement dated
November 28, 2018, entered into between Principal and the Architect, as the same
has been amended and supplemented by Additional Service Requests 1-4.
 
“Construction and Development Documents” means the Construction Contracts, the
Architect’s Agreement, the Plans, the Governmental Approvals, and all other
instruments, documents and rights relating to the design, construction and
development of the Improvements, together with all exhibits and attachments
thereto.
 
“Construction Contracts” means the General Construction Contract and the
Construction Management Agreement.
 
“Construction Management Agreement” means that certain letter agreement dated
January 30, 2018, revised March 2, 2018 between Principal and Construction
Manager relating to construction management services with respect to the
Improvements.
 
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“Construction Manager” means Project Management Advisors, Inc., or such other
construction manager as may be approved in writing by Lender prior to
Principal’s engagement of such other construction manager.
 
“Contractor” means DPR Construction, a General Partnership.
 
“Engineer” means Pasco Larent Suitor & Associates, Inc.
 
“General Construction Contract” means that certain Standard Form of Agreement
Between Owner and Construction Manager as Constructor where the basis of payment
is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price, dated August
28, 2018, between Principal and the Contractor.
 
“Governmental Approvals” means all consents, licenses, permits and all other
authorizations or approvals required by any Governmental Authority, including,
without limitation, that certain letter dated December 13, 2018 from Teri
Delcamp, Principal Planner for the City of Carlsbad, California to Mr. Jon Olson
of DGA Architects and all agreements entered into with any Governmental
Authority, with respect to or in connection with the development, construction,
completion, use and occupancy of the Improvements.
 

(b)
Covenants.  Borrower and Principal covenant and agree with Lender as follows:

 

(i)
Construction.  Principal is and shall be solely responsible for the design,
construction and completion of the Improvements and the payment of all costs and
expenses in connection therewith and Borrower shall have no obligations or
liability under any Construction and Development Document or any other agreement
relating to the design or construction of the Improvements.

 

(ii)
Payment of Costs.  Principal agrees to, and Borrower agrees to cause Principal
to, promptly pay all costs and expenses incurred in connection with the
development of the Additional Parcel and the design and construction of the
Improvements as and when the same become due and payable.

 

(iii)
Compliance With Construction and Development Documents and Other Agreements. 
Principal agrees to, and Borrower agrees to cause Principal to, comply with the
Construction and Development Documents to which Principal is a party.  Principal
agrees to, and Borrower agrees to cause Principal to, deliver to Lender copies
of any notices of default sent by or to Principal under or with respect to the
Construction Contracts, the Architect’s Agreement, any Governmental Approvals
and any other agreement relating to the design, construction or development of
the Improvements requiring payments of $500,000.00 or more, or under any REA in
connection with or related to the design or construction of the Improvements.

 
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(iv)
Construction and Completion of Improvements.  Principal has commenced
construction of the Improvements but has ceased construction activity. 
Principal agrees to, and Borrower agrees to cause Principal to, recommence
construction of the Improvements on or before August 31, 2019 and thereafter
Principal agrees to, and Borrower agrees to cause Principal to, diligently and
continuously (subject to commercially reasonable reasons for delay (such as
force majeure events and unknown geological conditions)) prosecute the
completion of construction of the Improvements in accordance with the Plans in a
good and workmanlike matter, free of all defects (other than immaterial
“punchlist” items) and liens (other than those being contested in accordance
with the terms hereof), and in compliance with the Construction and Development
Documents, the Improvements Budget (as the same may be increased as permitted
hereunder) and all Legal Requirements including, without limitation, the REAs. 
The Improvements shall be completed in accordance with the terms of this
Agreement prior to  August 6, 2022.  The Improvements shall comply with all
Governmental Approvals, all applicable Legal Requirements of all Governmental
Authorities having jurisdiction over the Additional Parcel and all applicable
insurance requirements (including, without limitation, applicable building
codes, special use permits, environmental regulations, and requirements of
insurance underwriters) and any other restrictions encumbering the Additional
Parcel, including, without limitation, the REAs.

 

(v)
Changes in Construction and Development Documents.  Lender’s approval shall not
be required for changes in the Plans, the Improvements Budget, the Construction
Timeline or the other Construction and Development Documents, provided that
Principal has obtained, and delivers to Lender with the quarterly reporting
required hereunder copies of, all Governmental Approvals and other approvals
required by or under any Legal Requirements (including the REA) in connection
with any changes in the Plans, the Improvements Budget, the Construction
Timeline or other Construction and Development Documents and, with respect to
amendments to the Construction Timeline, the completion date does not extend
beyond August 6, 2022.  Principal shall (and Borrower agrees to cause Principal
to) deliver to the Lender documentation as reasonably required by Lender
pertaining to any change referred to in this Section.

 

(vi)
Insurance.  In addition to any insurance required under the Loan Documents, at
all times during the construction of the Improvements, Principal shall require
that the general contractor name the Lender as additional insured for ongoing
and completed operations of the general contractors liability insurance. 
Principal shall deliver to Lender written evidence confirming its compliance
herewith as requested by Lender from time to time.

 

(vii)
Intentionally Omitted.

 

(viii)
Quarterly Deliverables.  Within ten (10) days after the end of each calendar
quarter, Principal shall furnish to Lender and directly to Servicer at
mlsassetmanagement@midlandls.com with a copy to Chuck Hendricks, of Servicer, at
chendric@midlandls.com, the following documents:

 

(a)
a report prepared by Construction Manager or the senior officer of Principal
responsible for the oversight of the construction of the Improvements detailing
the status of construction of the Improvements, including whether construction
is on, ahead of or behind the Construction Timeline and whether the construction
of the Improvements is on budget and the cost to complete the Improvements in
accordance with the Plans, all Legal Requirements and all Governmental
Approvals.  Additionally, if any significant dispute arises between or among
Principal, Contractor, Architect, or any subcontractor, supplier or any other
party to a contract requiring payments, individually or in the aggregate, equal
to or greater than $500,000.00, said report will contain a written summary of
the nature of such dispute;

 
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(b)
copies of all Governmental Approvals obtained for the construction of the
Improvements in the prior calendar quarter;

 

(c)
copies of AIA Forms G702/703 for costs and invoices for all soft costs relating
to the design or construction of the Improvements, in each case received by
Principal in the prior calendar quarter and, upon Lender’s request, Contractor
and subcontractor invoices;

 

(d)
payment receipts and lien releases/waivers from the Contractor and all
subcontractors under contracts having an aggregate payment obligation of
$500,000.00 or more covering all payments in the prior calendar quarter;

 

(e)
copies of any (i) contracts relating to the design or construction of the
Improvements for amounts equal to or greater than $500,000.00 entered into in
the prior calendar quarter and (ii) changes to the Plans, Construction
Contracts, Architect’s Agreement or any construction or supply agreements having
payments (individually or in the aggregate) equal to or greater than $500,000.00
(including change orders) made in the prior calendar quarter; and

 

(f)
copies of any amendments made to the Improvements Budget or Construction
Timeline in the prior calendar quarter.

 

(ix)
Liens.  Notwithstanding anything to the contrary contained in any Loan Document,
any lien claimed or filed against any part of the Property for labor done or
materials or services furnished in connection with the construction of the
Improvements shall be discharged, by bond or otherwise, within thirty (30) days
after the date of Borrower’s or Principal’s receipt of actual notice of the
filing thereof.  Notwithstanding the foregoing, after prior notice to Lender
provided with said 30 day period, Principal, at its own expense, may contest by
appropriate legal proceeding, conducted in good faith and with due diligence,
the amount or validity of any claims (including claims for labor, services,
materials and supplies) for sums that have become due and payable and that by
law have or may become a lien upon the Property (collectively, “Contestable
Liens”); provided that (i) no Event of Default has occurred and remains uncured;
(ii) such proceeding shall be permitted under and be conducted in accordance
with all applicable statutes, laws and ordinances, and the terms, conditions and
provisions of any applicable document encumbering the Property; (iii) neither
the Property nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, canceled or lost; (iv) Principal shall promptly
upon final determination thereof pay the amount of any such Contestable Liens,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of such
Contestable Liens from the Property; and (vi) Principal shall deposit with
Lender cash, or other security as may be reasonably approved by Lender, in an
amount equal to 110% of the contested amount (or such higher amount as may be
required by applicable law), to insure the payment of any such Contestable
Liens, together with all interest and penalties thereon.  Lender may pay over
any such cash or other security held by Lender to the claimant entitled thereto
at any time when, in the reasonable judgment of Lender, the entitlement of such
claimant is established.  If Principal shall fail promptly to either
(i) discharge any such lien, or (ii) post a bond which fully removes such lien
within said thirty (30) day period after the date of the filing thereof or (iii)
contest such lien in accordance with the terms of this subsection, Lender may,
at its election (but shall not be required to), procure the release and
discharge of any such claim and any judgment or decree thereon and, further, may
in its sole discretion effect any settlement or compromise of the same, or may
furnish such security or indemnity to the title insurer, and any amounts so
expended by Lender, including premiums paid or security furnished in connection
with the issuance of bonds, shall be added to the Debt, shall be immediately due
and payable, and shall bear interest at the Default Rate from the date of
disbursement until paid in full.  In settling, compromising or discharging any
claims for lien, Lender shall not be required to inquire into the validity or
amount of any such claim.

 
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(x)
Notices.  Within ten (10) days after Borrower or Principal acquires knowledge of
or receives notice of a defect in the Improvements or any departure from the
Plans, or any other requirement of this Agreement, Borrower or Principal, as
applicable, will notify Lender and Principal shall proceed with diligence to
correct all such defects and departures in accordance with the requirements
contained herein.

 

(xi)
Cessation in Construction.  Once commenced, construction of the Improvements
shall not be abandoned for a period of thirty (30) consecutive days or more,
absent a commercially reasonable reason for doing so.  Principal shall promptly
notify Lender if construction has stopped for a period of thirty (30) or more
consecutive days and the reason therefor.

 

(xii)
No Security Interest.  No materials, equipment, fixtures or articles of personal
property placed in or on the Additional Parcel in connection with the
construction of the Improvements shall be purchased by or installed under any
security agreement, financing lease or other agreement whereby the seller
reserves or purports to reserve title, a lien, a security interest, the right of
removal or repossession or the right to consider such items personal property
after their incorporation into the Improvements, unless previously authorized by
Lender in writing.

 

(xiii)
Governmental and Other Approvals.  Principal is and shall be solely responsible
for obtaining all necessary approvals in connection with all site work and
construction of the Improvements, including, without limitation, any approvals
required under any REA and all Governmental Approvals, including, without
limitation, certificates of completion and occupancy, required by any
Governmental Authority or otherwise necessary for the construction, use,
occupancy and operation of the Improvements.

 

(xiv)
Construction and Development Documents.  Other than the New Loan Documents to
which it is a party, Borrower has not entered into, and will not enter into, any
contract or agreement (whether written or oral) in connection with the
development, construction or provision of labor, materials or design or
supervisory services with respect to the Improvements.

 
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(xv)
Obligation upon Completion.  Upon completion of the Improvements, (i) Principal
shall deliver to Lender a certificate from the Architect that the Improvements
have been completed in accordance with the Plans (in all material respects), all
applicable Governmental Approvals and all Legal Requirements, (ii) Principal
shall provide to Lender written evidence reasonably acceptable to Lender in all
respects that the Property continues to comply with all applicable insurance
requirements (including, without limitation, applicable building codes, special
use permits, environmental regulations, and requirements of insurance
underwriters) and any other restrictions encumbering the Property, including,
without limitation, the REAs; (iii) Borrower or Principal shall deliver to
Lender a copy of the certificate of occupancy with respect to the Improvements
and any other evidence obtained by Borrower or Principal that the Improvements
comply with all applicable Legal Requirements; (iv) Borrower shall cause to be
issued and delivered to Lender an endorsement to the Title Insurance Policy
insuring the continued priority of the Lien of the Restated Security Instrument
and evidence of payment of any premium payable in connection with such
endorsement; (v) Principal shall deliver to Lender notice of such completion of
the Improvements, together with an Officer’s Certificate certifying that all of
the requirements of this Section 10(b) have been satisfied; and (vi) within
forty-five (45) days of the completion of the Improvements, Borrower or
Principal shall deliver to Lender a Survey of the Additional Parcel and the
improvements thereon (including the Improvements) reasonably acceptable to
Lender in all respects.

 

(xvi)
Net Worth and Liquidity.  Principal agrees that until the Improvements have been
completed in accordance with this Agreement, Principal shall maintain (x) a Net
Worth of not less than $51,350,000.00 plus the estimated cost of the
Improvements (excluding Principal’s interest in the Original Property,
Additional Parcel and Improvements) and (y) Liquid Assets of not less than
$5,135,000.00 plus the estimated cost of the Improvements.

 

(c)
Representation and Warranties.   Borrower and Principal represent and warrant to
Lender as follows:

 

(i)
Governmental and Other Approvals.  All Governmental Approvals necessary to
construct the Improvements in accordance with the Plans have been or will be
obtained by Principal and are or will be valid and in full force and effect, and
in each case will remain as such.  Principal has delivered true, correct and
complete copies of all Governmental Approvals obtained by Principal to Lender as
of the date hereof.  The Improvements comply with all applicable requirements
set forth in the REAs, and all approvals required pursuant to the terms of any
REA have been obtained by Borrower or Principal, as applicable, and copies of
any such approvals have been provided to Lender.  To Borrower’s and Principal’s
knowledge, the Improvements, if completed in accordance with the Plans, will
comply with all applicable Governmental Approvals, all applicable Legal
Requirements of all Governmental Authorities having jurisdiction over the
Additional Parcel and all applicable insurance requirements (including, without
limitation, applicable building codes, special use permits, environmental
regulations, and requirements of insurance underwriters) and any other
restrictions encumbering the Additional Parcel, including, without limitation,
the REAs.  Neither the construction nor use of the Improvements as a conference
center with office and uses ancillary thereto constitutes or will constitute or
cause a violation, breach or default by Borrower or Principal under any
Governmental Approval, Legal Requirement or document or agreement to which
Borrower or Principal is a party or the Original Property or Additional Parcel
is bound. The Plans submitted to the City of Carlsbad, California (the “City”)
and approved by the City are the same Plans heretofore delivered to Lender.

 
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(ii)
Plans.  As of the date hereof, the Plans (y) are satisfactory to Borrower and
Principal and (z) have been approved by each Governmental Authority having
jurisdiction over the Property and any others whose approval of the Plans, in
whole or in part, is required by any applicable Legal Requirement (including the
REA).

 

(iii)
Construction and Development Documents.  Lender has been furnished true, correct
and complete copies of all Construction and Development Documents entered into
or obtained, as applicable, by Principal as of the date hereof.  As of the date
hereof, the Architect’s Agreement and the Construction Contracts constitute all
agreements executed by or for the benefit of Principal in connection with the
design or construction of the Improvements.  As of the date hereof, the
Architect’s Agreement and the Construction Contracts cover all work and services
necessary or desirable for the design and construction of the Improvements,
including all work and services necessary for the Improvements to be completed
in accordance with all Governmental Approvals and any and all requirements of
all applicable Legal Requirements.

 

(iv)
Improvement Budget.  As of the date hereof, to the best of Principal’s knowledge
after consultation with the Architect and Contractor, the Improvements Budget
attached hereto as Exhibit C (x) is true, correct and complete in all material
respects, (y) shows all sources and uses of funds and (z) provides for all costs
and expenses to be incurred in connection with the construction and equipping of
the Improvements, and all other items of cost and expense to be incurred in
connection with the design and construction of the Improvements, including,
without limitation, all costs and expenses to be incurred pursuant to the
Construction and Development Documents.  As of the date hereof, neither 
Borrower nor Principal is aware of any other costs, expenses or fees which are
material to the completion of the Improvements and are not covered by the
Improvements Budget.  The amount required to complete the Improvements as set
forth on the Improvements Budget ($54,718,029.00) is available and has been
allocated by Principal in advance of the commencement of the construction of the
Improvements and such amount shall be used solely to complete the Improvements.

 

(v)
Utilities.  No utility or other municipal services necessary for the use and
occupancy of the Original Property and improvements located thereon will be
adversely affected by the construction of the Improvements.  All utility and
municipal services necessary for the use and occupancy of the Improvements are
currently available to the Adjacent Parcel.

 

(vi)
Construction Timeline. As of the date hereof, to the best of Principal’s
knowledge after consultation with the Architect and Contractor, the Construction
Timeline attached hereto as Exhibit D (y) is true, correct and complete in all
material respects, and (z) is a fair and reasonable timeline for completing the
Improvements in accordance with the terms of this Agreement.

 
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(d)
Right to Complete/Raze Improvements.  In addition to, and without limiting, any
of Lender’s other rights and remedies under the Loan Documents, at law or in
equity, Lender shall have the further right upon an Event of Default under the
Loan Agreement or any of the other Loan Documents, to enter the Property and
take any and all actions necessary, in its judgment, to secure, protect and
preserve the Improvements and any materials or supplies located on the Property,
to complete in part or in full the construction of the Improvements, including,
but not limited to, making changes in the Plans (but not to the scope of the
Improvements or the quality of the Improvements), and entering into, and,
subject to the terms thereof, modifying or terminating the Construction and
Development Documents and other contractual arrangements.  Alternatively, upon
the occurrence of an Event of Default, Lender may elect to demolish and remove
any partially completed Improvements in accordance with all Legal Requirements. 
If Lender elects to continue with the construction of the Improvements or to
demolish such Improvements, Lender will not assume any liability to Borrower,
Principal or any other Person for completing the Improvements or for the manner
or quality of construction of the Improvements or for demolishing and removal of
the Improvements and Borrower and Principal each expressly waive any such
liability, except to the extent that such liability shall be caused directly by
the gross negligence or willful misconduct of Lender.  Borrower and Principal
each irrevocably appoint Lender  as its attorney-in-fact, with full power of
substitution, to complete, upon exercise of the Lender's rights following an
Event of Default, the Improvements in Borrower’s or Principal's name or the
Lender may elect to complete construction of the Improvements or demolish and
remove the Improvements in the name of Lender or a subsidiary of Lender.  In any
event, all sums actually expended by Lender, or its subsidiary, in completing
construction of the Improvements, demolishing and removing the Improvements or
otherwise exercising its rights hereunder or under the other Loan Documents will
be part of the Debt, be secured by the Security Instrument and all other Loan
Documents and shall bear interest at the Default Rate.

 

(e)
Visitation and Inspection.  Borrower and Principal agree that the officers or
authorized employees and agents (including any construction consultant engaged
by Lender) of Lender or Servicer will have the right, upon not less than
forty-eight hours prior notice and at any reasonable time, to enter upon the
Additional Parcel and inspect the construction work and all materials, plans,
specifications and other matters relating to construction of the Improvements.
Borrower and Principal further agree that (i) neither Lender nor Servicer has
any duty to examine, supervise or inspect the Plans, the Construction and
Development Documents or the construction of the Improvements, (ii) any
inspection or examination by Lender, Servicer or their employees or agents is
for the sole purpose of protecting the security interests granted in favor of
the Lender and preserving its rights under this Agreement and the other Loan
Documents, (iii) no default or breach of Principal or Borrower will be waived by
any inspection by Lender, Servicer or their employees or agents, nor will any
such inspection constitute a representation that there has been or will be
compliance with the Plans or any other Construction and Development Documents or
any Legal Requirement, or that the construction of the Improvements is free from
defective materials or workmanship, (iv) no inspection of the construction of
the Improvements or any other inspection constitutes a warranty or
representation by Lender or Servicer (or any of their employees or agents) as to
the adequacy or safety of construction or any physical condition or feature of
the Additional Parcel or the Improvements and (v) neither Borrower nor Principal
shall assert any position contrary to any of the foregoing

 
11.       NO RELEASE OF BORROWER OR PRINCIPAL.  Each of Borrower and Principal
hereby acknowledges, covenants and agrees that nothing contained in this
Agreement or any other New Loan Document, the consummation of the Transactions
or otherwise, shall be deemed or construed to release Borrower or Principal from
any liability or other obligations under the Loan Documents to which it is a
party, including, without limitation, Borrower’s liability under the terms of
the Note and Security Instrument and Principal’s liability under the Guaranty.
Each of Borrower’s and Principal’s acknowledgement of the foregoing obligations
(i) is absolute, unconditional and is not subject to any defenses, waivers,
claims or offsets, and (ii) shall not be affected or impaired by any agreement,
condition, statement or representation of any person or entity.
 
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12.        RELEASE OF LENDER.  Each of Borrower and Principal, for itself and
for its agents, employees, representatives, officers, directors, general
partners, limited partners, members, managers, shareholders, beneficiaries,
trustees, administrators, subsidiaries, affiliates, servants, attorneys, heirs,
successors and assigns (collectively, the “Releasing Parties”) jointly and
severally release and forever discharge Original Lender, Lender and Servicer and
each other servicer under the Pooling and Servicing Agreement, and their
respective predecessors, successors, assigns, managers, partners, directors,
officers, employees, agents, attorneys, administrators, trustees, subsidiaries,
affiliates, beneficiaries, shareholders and representatives from all
liabilities, obligations, costs, expenses, claims and damages, at law or in
equity, known or unknown, which any of the Releasing Parties may now or
hereafter hold or claim to hold under common law, statutory right or otherwise,
arising in any manner out of, or relating to, any matters of any kind or nature
whatsoever in connection with (x) the Property (including, without limitation,
the ownership or operation thereof), the Loan (including, without limitation,
the funding, administration or servicing thereof), any of the Loan Documents or
any of the documents, instruments or any other transactions relating thereto or
(y) the Ground Lease, the construction of the Improvements and the other
transactions contemplated by the Loan Documents.  Without limiting the
generality of the foregoing, this release shall include the following matters:
all aspects of this Agreement, the other New Loan Documents and the other Loan
Documents and the transactions contemplated hereby and thereby, any
negotiations, demands or requests with respect hereto or thereto.  The Releasing
Parties agree that this release is a full, final and complete release and that
it may be pleaded as an absolute bar to any or all suit or suits pending or
which may thereafter be filed or prosecuted by any of the Releasing Parties, or
anyone claiming by, through or under any of the Releasing Parties.  The
Releasing Parties agree that this release is binding upon each of them and their
respective agents, employees, representatives, officers, directors, general
partners, limited partners, members, managers, shareholders, beneficiaries,
trustees, administrators, subsidiaries, affiliates, servants, attorneys, heirs,
successors and assigns.  Lender agrees that the foregoing release does not apply
to any act or omission of Lender first occurring after the Closing Date.
 
13.         REFERENCES IN THE LOAN DOCUMENTS.  The parties hereto hereby
acknowledge and agree that the terms “Lender” and/or “Indemnitee” that may be
contained in any of the Loan Documents shall be deemed to refer to Lender and
its successors and/or assigns.  From and after the date of this Agreement, this
Agreement and the other New Loan Documents shall each be deemed a “Loan
Document” for all purposes under the Loan Agreement and the other Loan
Documents.
 
14.         RATIFICATION AND CONFIRMATION OF THE LOAN.  Borrower and Principal
agree to perform each and every obligation under the Loan Documents to which it
is a party, as specifically modified by this Agreement or the other New Loan
Documents, and under any other loan documents to which it is a party executed on
or about the date of this Agreement and evidencing, securing or otherwise
relating to the Loan (this Agreement and such other loan documents being
executed in connection herewith, collectively, the “New Loan Documents”) in
accordance with their respective terms and conditions.  Borrower and Principal
ratify, affirm, reaffirm, acknowledge, confirm and agree that the Original Loan
Documents to which it is a party or by which it is bound, as specifically
modified by this Agreement or the other New Loan Documents, remain in full force
and effect and, together with this Agreement and all other New Loan Documents to
which it is a party or by which it is bound, represent legal, valid and binding
obligations of each of Borrower and Principal, as applicable, enforceable
against Borrower and Principal, as applicable, in accordance with their terms. 
Borrower and Principal hereby restate, ratify and confirm, as of the date hereof
and after giving effect to each of the Transactions, each of the representations
and warranties of Borrower or Principal, as applicable, under the Original Loan
Documents, after giving effect to the modification affected by this Agreement
and the other New Loan Documents, as if fully set forth herein.  Without
limiting the foregoing, Borrower acknowledges that the foregoing restatement of
the representations and warranties in the Original Loan Documents (as so
modified or restated) regarding the “Property” includes the Additional Parcel
and the representations and warranties regarding the “Improvements” includes the
Improvements (as defined herein).  Borrower and Principal agree that neither
this Agreement nor any other New Loan Document diminishes, impairs, releases or
relinquishes the liens, powers, titles, security interests and rights securing
or guaranteeing payment of the Loan, including the validity or first priority of
the liens and security interests encumbering the Property granted Lender by the
Loan Documents or the New Loan Documents.
 
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15.         NONWAIVER.  The parties hereto acknowledge and agree that (a) any
performance or non-performance of the Original Loan Documents prior to the date
of this Agreement or Closing does not affect or diminish Lender’s ability to
require future compliance with the Loan Documents, as the same may be modified
from time to time in accordance with the terms thereof, and (b) in the future,
Lender will require strict compliance with and performance of the Loan
Documents, as the same may be modified from time to time in accordance with the
terms thereof.  Nothing contained herein shall be construed as a waiver of any
of Lender’s rights or remedies with respect to any default, “Default” or “Event
of Default” under this Agreement, any other New Loan Document and/or any other
Loan Document.
 
16.        FURTHER ASSURANCES.  The parties hereto agree to do any act or
execute any additional documents required by Lender, from time to time, to
correct errors in the documenting of the Transactions, to effectuate the
purposes of this Agreement or to better assure, convey, assign, transfer,
perfect or confirm unto Lender the property and rights intended to be given it
in the Loan Documents.
 
17.         LIABILITY.  If any party hereto consists of more than one person
and/or entity, (a) the obligations and liabilities of each such person and/or
entity hereunder shall be joint and several, (b) the representations, covenants
and agreements of such party shall be deemed made by each person and/or entity
comprising such party, and (c) each reference to such party shall be deemed a
reference to each person and/or entity comprising such party. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, estates, legal representatives (acting on behalf of such party
or its estate), successors and assigns forever.
 
18.        SEVERABILITY.  If any term, covenant or condition of this Agreement
is held to be invalid, illegal or unenforceable in any respect, this Agreement
shall be construed without such term, covenant or condition and the validity or
enforceability of the remaining terms, covenants or conditions shall not in any
way be affected.
 
19.        APPLICABLE LAW; JURISDICTION.  This Agreement shall be governed and
construed in accordance with the laws of the State of New York.  The parties
hereto submit to personal jurisdiction in the state courts located in said state
and the federal courts of the United States of America located in said state for
the enforcement of any obligations hereunder and waive any and all personal
rights under the law of any other state to object to jurisdiction within such
state for the purposes of any action, suit, proceeding or litigation to enforce
such obligations.
 
20.         DEFINITIONS. Unless the context clearly indicates a contrary intent
or unless otherwise specifically provided herein, words used in this Agreement
(including pronouns) shall include the corresponding masculine, feminine or
neuter forms, and the singular form of such words shall include the plural and
vice versa. The words “included”, “includes” and “including” shall each be
deemed to be followed by the phrase, “without limitation.”  The words “herein”,
“hereby”, “hereof”, and “hereunder” shall each be deemed to refer to this entire
Agreement and not to any particular paragraph, article or section hereof. 
Notwithstanding the foregoing, if any law is amended so as to broaden the
meaning of any term defined in it, such broader meaning shall apply subsequent
to the effective date of such amendment.  Where a defined term derives its
meaning from a statutory reference, any regulatory definition is broader than
the statutory reference and any reference or citation to a statute or regulation
shall be deemed to include any amendments to that statute or regulation and
judicial and administrative interpretations of it.
 
21.         COMPLIANCE WITH ERISA.  As of the date of this Agreement, Borrower
does not maintain any employee benefit plan which requires compliance with the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  If at
any time Borrower shall institute any employee benefit plans, it shall at all
times comply with the requirements of ERISA.  Principal shall at all times
comply with the requirements of ERISA.
 
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22.        SOLE DISCRETION OF LENDER.  Wherever pursuant to this Agreement,
Lender exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Lender, Lender’s decision to
approve or disapprove or to decide that arrangements or terms are satisfactory
or not satisfactory shall be in the sole and absolute discretion of Lender and
shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
 
23.         HEADINGS, ETC. The headings and captions of various paragraphs of
this Agreement are for convenience of reference only and are not to be construed
as defining or limiting, in any way, the scope or intent of the provisions
hereof.
 
24.         COUNTERPARTS.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement.
 
25.         INTEGRATION, SURVIVAL.  This Agreement, the other New Loan Documents
and the Original Loan Documents, as modified or restated hereby or by another
New Loan Document, embody the entire agreement by and between the parties hereto
with respect to the Loan, and any and all prior correspondence, discussions or
negotiations are deemed merged therein.  Except as otherwise specifically
provided herein, all obligations of any party contained in this Agreement, the
other New Loan Documents or the Loan Documents, as modified hereby or by another
New Loan Document, shall survive the Closing, and Lender hereby preserves all of
its rights against all persons or entities and all collateral securing the Loan,
including, without limitation, the Property.
 
26.         NO ORAL CHANGE.  This Agreement, and any provisions hereof, may not
be modified, amended, waived, extended, changed, discharged or terminated orally
or by any act or failure to act on the part of any party hereto, but only by an
agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought. In addition, nothing contained in any document submitted for Lender’s
review, including, without limitation any organizational documents of Borrower,
Principal or any of their respective managers/members, partners, trustees or
officers, shall modify, amend, waive, extend, change, discharge or terminate any
term or provision of the Loan Documents or constitute Lender’s consent to any
matter in the Loan Documents requiring Lender’s consent unless and until such
time, if any, as an agreement specifically allowing such modification,
amendment, waiver, extension, change, discharge or termination or consenting to
such matter has been executed in writing by Lender.  Furthermore,
notwithstanding the delivery to Lender of any current title examinations and/or
commitments for the Property, (a) this Agreement shall not constitute Lender’s
consent or approval to the existence of any matters reflected in such title
examinations and/or commitments to the extent such matters are not also
reflected in the Lender’s mortgagee title insurance policy issued in connection
with the Transactions and (b) Lender does not waive, shall not be deemed to have
waived and hereby reserves, any and all rights it has under the Loan Documents,
with respect to any lien or encumbrance on the Property not expressly permitted
under the Loan Documents.
 
27.         NOTICES.  Except as otherwise specified herein, any notice, consent,
request or other communication required or permitted hereunder shall be in
writing and shall be deemed properly given if delivered in accordance with the
notice requirements contained in the Loan Agreement using the address for a
party hereto set forth at the top of the first page of this Agreement (as each
such address may be changed from time to time by any such party by delivering
notice thereof to the other parties hereto in the manner provided herein). Any
notices or other communications required or permitted under any of the other
Loan Documents shall be provided in accordance with the requirements therefor as
set forth in each such Loan Document; provided, however, that from and after the
date hereof the address of Lender, shall, subject to change as provided in the
Loan Documents, be as set forth at the top of the first page of this Agreement.
 
28.        WAIVER OF JURY TRIAL.  THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON THE LOAN OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE OTHER NEW LOAN DOCUMENTS, OR THE OTHER LOAN DOCUMENTS, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR
ACTION OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER’S
CONSENT TO THE TRANSACTIONS.  EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.
 
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29.         AMENDMENTS TO LOAN AGREEMENT.  The following amendments to the Loan
Agreement shall be effective as of the Closing Date:
 

(a)
Section 1.1 of the Loan Agreement is amended as follows:

 

(i)
By inserting the following new defined term and definition thereof after the
defined term “Condemnation”:

 
“”Consent to Additional Collateral” shall mean that certain Consent to
Collateral Addition and Amendment to Loan Documents dated August 1, 2019 by and
among Borrower, Guarantor and Lender.”
 

(ii)
By deleting the definition of “Ionis Lease” and inserting in lieu thereof the
following new definition:

 
““Ionis Lease” shall mean, collectively, (i) that certain Lease Agreement, dated
as of the date hereof, between Ionis, as tenant and Borrower, as landlord,
demising the Original Property (as defined in the Consent to Additional
Collateral) to Ionis, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time in accordance with the
terms of this Agreement and (ii) that certain Ground Lease, dated as of August
1, 2019, between Ionis, as tenant and Borrower, as landlord, demising the
Additional Parcel (as defined in the Consent to Additional Collateral) to Ionis,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time in accordance with the terms of this Agreement.”
 

(iii)
By inserting at the end of the definition of “Loan Documents” the following:
“Loan Documents shall specifically include the Consent to Additional Collateral
and any “New Loan Document” (as defined in the Consent to Additional
Collateral.”

 

(iv)
By inserting at the end of the definition of the “Property” the following: 
“Notwithstanding anything to the contrary contained herein or in any other Loan
Document, “Property” shall include the “Additional Parcel” (as defined in the
Consent to Additional Collateral) and all right, title and interest of Borrower
in the improvements now or hereafter erected, situated or installed thereon and
the personal property located therein.”

 

(v)
By deleting the definition of “Security Instrument” and inserting in lieu
thereof the following new definition:

 
““Security Instrument” shall mean that certain first priority Amended and
Restated Deed of Trust, Assignment of Leases and Rents, Security Agreement and
Fixture Filing, dated as of August 1, 2019, executed and delivered by Borrower
as security for the Loan and encumbering the Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.”
 
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(b)
Section 3.1.45 of the Loan Agreement is amended by inserting the following at
the end thereof: “Additionally, upon completion of same, the Property will
consist of an approximately 70,000 square foot conference center as contemplated
by the Consent to Additional Collateral.”

 

(c)
Section 10.1 of the Loan Agreement is amended (x) by deleting “or” at the end of
clause (xviii), (y) by deleting the period at the end of clause (xix) and
inserting “; or” in lieu thereof, and (z) inserting the following new clauses
(xx) and (xxi):

 
“(xx)        If any of the representations and warranties made by Borrower or
Guarantor in Section 10(c) of the Consent to Additional Collateral shall have
been false or misleading in any material respect at the time such representation
or warranty was made.
 
(xxi)          If (I) Borrower or Guarantor shall default in the performance of
any covenant contained in clauses (i), (iii) (with respect to delivery of
notices only), (vi), (ix), (x), (xi), (xii), (xiv) or (xvi) of Section 10(b) of
the Consent to Additional Collateral or (II) Guarantor shall default in the
performance of the covenant contained in clause (viii) of Section 10(b) of the
Consent to Additional Collateral and such default shall continue for more than
ten (10) days after written notice to Guarantor from Lender; provided, however,
notwithstanding the foregoing, Guarantor shall only be entitled to one notice of
a default under Section 10(b)(viii) per 365 day period and any subsequent
default under section 10(b)(viii) within such 365 day period shall be an
immediate Event of Default or (III) Borrower or Guarantor shall default in the
performance of any covenant contained in Section 10(b) of the Consent to
Additional Collateral other than those contained in clauses (i), (iii) (with
respect to delivery of notices only), (vi), (viii), (ix), (x), (xi), (xii),
(xiv) or (xvi) of Section 10(b), and if Borrower or Guarantor, as applicable,
shall continue to be in default (y) for ten (10) days after written notice to
Borrower or Guarantor, as applicable, from Lender, in the case of any default
which can be cured by the payment of a sum of money, or (z) for thirty (30) days
after written notice from Lender in the case of any other default; provided,
however, that if such non-monetary default is susceptible of cure but cannot
reasonably be cured within such thirty (30) day period and provided further that
Borrower or Guarantor, as applicable, shall have commenced to cure such default
within such thirty (30) day period and thereafter diligently and expeditiously
proceeds to cure the same, such thirty (30) day period shall be extended for
such time as is reasonably necessary for Borrower or Guarantor, as applicable,
in the exercise of due diligence to cure such default, such additional period
not to exceed sixty (60) days.”
 

(d)
Section 11.22 of the Loan Agreement is amended by (i) inserting the following at
the end of clause (xii) thereof:  “including specifically, but without
limitation, the “Improvements” (as defined in the Consent to Additional
Collateral), (ii) by deleting clause (xviii) in its entirety and inserting the
following new clause (xviii) in lieu thereof: “(xviii) any indemnification
and/or other obligations to the City of Carlsbad or any other Governmental
Authority or Person under any indemnification agreement, hold harmless
agreement, maintenance agreement, notice of restrictions or other agreement of
any kind or nature whatsoever executed by Guarantor and/or Borrower in
connection with or pursuant to any Governmental Approval or other consents and
approvals issued in connection with the construction of the Improvements (as
defined in the Consent to Additional Collateral) or the conveyance of the
Additional Parcel (as defined in the Consent to Additional Collateral)” (and
(iii) by (x) deleting “or” at the end of clause (9) of the penultimate paragraph
of Section 11.22, (y) deleting the period at the end of clause (10) of said
paragraph and inserting “; or” in lieu thereof and (z) inserting the following
new clause (11): “(11) the “Improvements” (as defined in the Consent to
Additional Collateral) have not been completed in accordance with the terms of
the Consent to Collateral Addition as of the date that is the earlier to occur
of (A) August 6, 2025 or (B) the date Lender notifies Borrower in writing of the
occurrence of an Event of Default under Sections 10.1(a)(i), (ii), (iii) or (iv)
of this Agreement”.

 
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(e)
Schedule 3.1.22 attached to the Loan Agreement is hereby deleted in its entirely
and is replaced with Schedule 3.1.22 attached hereto.

 

(f)
Schedule 3.1.28 attached to the Loan Agreement is hereby deleted in its entirely
and is replaced with Schedule 3.1.28 attached hereto.

 
All references to the Loan Agreement in the Loan Documents shall be references
to the Loan Agreement, as amended by this Agreement.
 
30.         AMENDMENT TO ENVIRONMENTAL INDEMNITY.  The following amendments to
the Environmental Indemnity shall be effective as of the Closing Date:
 

(a)
All references in the Environmental Indemnity to “Environmental Report” shall be
deemed to include references to that certain Phase I Environmental Site
Assessment Report dated May 1, 2019, prepared by AEI Consultants in respect of
Lot 25.

 

(b)
All references in the Environmental Indemnity to “Property” shall mean the
Original Property and the Additional Parcel and improvements located thereon.

31.          INTENTIONALLY OMITTED.
 

32.          ANTI-MONEY LAUNDERING PROVISIONS.
 

(a)
For purposes of this Section 32:

 

(i)
“Advances” shall mean any and all disbursement of proceeds of the Loan funded by
Lender to or for the benefit of Borrower in accordance with the terms and
conditions set forth in the Loan Documents; provided, that Lender has no further
obligation to so disburse any such proceeds.

 

(ii)
“Anti-Terrorism Laws” shall mean any Laws relating to terrorism, trade sanctions
programs and embargoes, import/export licensing, money laundering or bribery,
and any regulation, order, or directive promulgated, issued or enforced pursuant
to such Laws, all as amended, supplemented or replaced from time to time.

 

(iii)
“Collateral” shall mean all real property and personal property now or hereafter
securing the Loan, including, without limitation, the Property.

 

(iv)
“Covered Entity” shall mean (a) Borrower, each of Borrower’s subsidiaries, all
guarantors under the Loan and all pledgors of Collateral and (b) each Person
that, directly or indirectly, is in control of a Person described in clause (a)
above. For purposes of this definition, control of a Person shall mean the
direct or indirect (x) ownership of, or power to vote, twenty-five percent (25%)
or more of the issued and outstanding equity interests having ordinary voting
power for the election of directors of such Person or other Persons performing
similar functions for such Person, or (y) power to direct or cause the direction
of the management and policies of such Person whether by ownership of equity
interests, contract or otherwise.

 
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(v)
“Governmental Body” shall mean any nation or government, any state or other
political subdivision thereof or any entity, authority, agency, division or
department exercising the executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to a government
(including any supra-national bodies such as the European Union or the European
Central Bank) and any group or body charged with setting financial accounting or
regulatory capital rules or standards (including, without limitation, the
Financial Accounting Standards Board, the Bank for International Settlements or
the Basel Committee on Banking Supervision or any successor or similar authority
to any of the foregoing).

 

(vi)
“Law(s)” shall mean any law(s) (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling,
order, executive order, injunction, writ, decree, bond, judgment, authorization
or approval, lien or award of or any settlement arrangement, by agreement,
consent or otherwise, with any Governmental Body, foreign  or domestic.

 

(vii)
“Person” shall mean any individual, corporation, partnership (whether general or
limited), joint venture, limited liability company, limited liability
partnership, estate, trust, joint stock company, unincorporated association, any
federal, state, county or municipal government or political subdivision or any
bureau, department or agency thereof and any fiduciary acting in such capacity
on behalf of any of the foregoing or any other entity.

 

(viii)
“Reportable Compliance Event” shall mean that any Covered Entity becomes a
Sanctioned Person, or is charged by indictment, criminal complaint or similar
charging instrument, arraigned, or custodially detained in connection with any
Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has
knowledge of facts or circumstances to the effect that it is reasonably likely
that any aspect of its operations is in actual or probable violation of any
Anti-Terrorism Law.

 

(ix)
“Sanctioned Country” shall mean a country subject to a sanctions program
maintained under any Anti-Terrorism Law.

 

(x)
“Sanctioned Person” shall mean any individual person, group, regime, entity or
thing listed or otherwise recognized as a specially designated, prohibited,
sanctioned or debarred person, group, regime, entity or thing, or subject to any
limitations or prohibitions (including but not limited to the blocking of
property or rejection of transactions), under any Anti-Terrorism Law.

 

(b)
Borrower and Principal hereby warrant and represent to Lender that no Covered
Entity is a Sanctioned Person, and that no Covered Entity, either in its own
right or through any third party, (i) has any of its assets in a Sanctioned
Country or in the possession, custody or control of a Sanctioned Person in
violation of any Anti-Terrorism Law; (ii) does business in or with, or derives
any of its income from investments in or transactions with, any Sanctioned
Country or Sanctioned Person in violation of any Anti-Terrorism Law; or (iii)
engages in any dealings or transactions prohibited by any Anti-Terrorism Law.

 
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(c)
Borrower and Principal hereby covenant and agree with Lender that no Covered
Entity will become a Sanctioned Person, and that no Covered Entity, either in
its own right or through any third party, will (i) have any of its assets in a
Sanctioned Country or in the possession, custody or control of a Sanctioned
Person in violation of any Anti-Terrorism Law; (ii) do business in or with, or
derive any of its income from investments in or transactions with, any
Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law;
(iii) engage in any dealings or transactions prohibited by any Anti-Terrorism
Law; or (iv) use the Advances to fund any operations in, finance any investments
or activities in, or, make any payments to, a Sanctioned Country or Sanctioned
Person in violation of any Anti-Terrorism Law. Borrower and Principal hereby
further covenant and agree with Lender that the funds used to repay the Debt
will not be derived from any unlawful activity, and that each Covered Entity
shall comply with all Anti-Terrorism Laws. Borrower covenants and agrees with
Lender that Borrower shall promptly notify Lender in writing upon the occurrence
of a Reportable Compliance Event.

 

(d)
It shall be an Event of Default under the Loan Documents if (i) any
representation or warranty contained in Section 32(b) above is or becomes false
or misleading at any time, or (ii) any covenant or agreement of Borrower or
Principal contained in Section 32(c) above is breached by Borrower or Principal,
and, notwithstanding any provision to the contrary contained in any of the other
Loan Documents, none of the Borrower or Principal shall be entitled to (x) any
notice of any such false or misleading warranty or representation or of any
breach of any such covenant or agreement, nor to (y) any grace period or any
cure right with respect to any such false or misleading warranty or
representation or any breach of any such covenant or agreement.

 

(e)
If and to the extent that any of the other Loan Documents contain any anti-money
laundering provisions, same are hereby deleted and shall be deemed to be
replaced by the terms and provisions set forth in this Section 32.

 
34.          CFIUS.
 

(a)
Borrower hereby represents and warrants to Lender that neither Borrower’s
acquisition of the Additional Parcel nor the Ground Lease is a Covered
Transaction (as defined below).

 

(b)
Borrower and Principal agree that during the term of the Loan, Borrower and
Principal shall, and shall cause the holders of direct and/or indirect, legal
and/or beneficial, interests in Borrower (other than public shareholders of
Principal for so long as Principal is a publicly traded company on a recognized
stock exchange in the United States of America) to, (a) within five (5) days of
receipt of the same, notify Lender, and provide Lender with a copy of, any
inquiry received from CFIUS (as defined herein) or any other Governmental
Authority related to each of the Borrower’s acquisition of the Additional Parcel
and/or the Ground Lease, (b) make any filing requested by CFIUS related to the
Borrower’s acquisition of the Property and/or the Ground Lease, (c) cooperate
with, and fully respond to any CFIUS Review related to the Borrower’s
acquisition of the Property and/or the Ground Lease, in each case within the
time permitted by CFIUS or such Governmental Authority, as applicable, and (d)
subject to the terms and conditions of the Loan Documents, take any mitigation
measures requested by CFIUS and/or any Governmental Authority in connection with
the CFIUS Review.

 
For purposes of this Section:
 
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“CFIUS” shall mean (i) the Committee on Foreign Investment in the United States
first established pursuant to Executive Order 11858 of May 7, 1975, and (ii) any
replacement or successor thereto, including, without limitation, pursuant to
FIRRMA.
 
“CFIUS Review” shall mean CFIUS’s review and/or investigation, including any
inquiries received from, CFIUS or any Governmental Authority related to CFIUS’s
review and/or investigation.
 
“Covered Transaction” shall have the meaning set forth in the DPA.
 
“DPA” shall mean the Defense Production Act of 1950, 50 U.S.C. § 4565, as
amended by FIRRMA, H. R. 5515-538 (as the same may have been or may hereafter be
amended, restated, supplemented or otherwise modified), all laws and regulations
related thereto and all mandates, requirements, powers and similar requirements
imposed or exercised thereunder (including, without limitation, any of the
foregoing implemented by and/or otherwise relating to CFIUS), as the foregoing
may be amended from time to time, any successor statute or statutes and all
rules and regulations from time to time promulgated in connection with the
foregoing.
 
“FIRRMA” shall mean the Foreign Investment Risk Review Modernization Act of
2018.
 
“Governmental Authority” shall mean any court, board, agency, commission, office
or authority of any nature whatsoever or any governmental unit (federal, state,
county, district, municipal, city, foreign or otherwise) whether now or
hereafter in existence.
 
[remainder of page intentionally left blank]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
under seal by their duly authorized representatives as of the day, month and
year first above written.
 

 
BORROWER:
     
IONIS GAZELLE, LLC, a Delaware limited liability company
     
By:
Ionis Pharmaceuticals, Inc., a Delaware corporation, its sole member

 
By:
/s/ Elizabeth L. Hougen
 
Name:
Elizabeth L. Hougen
 
Title:
Senior Vice President, Finance and Chief
   
Financial Officer

[signatures continue on next page]
 
[SIGNATURE PAGE TO CONSENT TO COLLATERAL ADDITION AND AMENDMENT TO LOAN
DOCUMENTS]

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PRINCIPAL:
     
IONIS PHARMACEUTICALS, INC., a Delaware corporation
       
By:
/s/ Elizabeth L. Hougen
 
Name:
Elizabeth L. Hougen
 
Title:
Senior Vice President, Finance and Chief
   
Financial Officer

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LENDER:
     
WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE BENEFIT OF THE
REGISTERED HOLDERS OF UBS COMMERCIAL MORTGAGE TRUST 2017-C3, COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES, SERIES 2017-C3
         
By:
Midland Loan Services, a Division of PNC Bank, National Association, its
Attorney-in-Fact
           
By:
/s/ Alan H. Torgler
   
Name:
Alan H. Torgler
   
Title:
Vice President, Servicing Officer

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EXHIBIT “A”
 
Additional Parcel
 
LOT 25 OF CARLSBAD TRACT NO. 97-13-03, CARLSBAD OAKS NORTH PHASE 3, ACCORDING TO
MAP THEREOF NO. 16145, RECORDED IN THE OFFICE OF THE COUNTY RECORDER OF SAN
DIEGO COUNTY, CALIFORNIA, ON OCTOBER 13, 2016 AS DOCUMENT NO. 2016-7000438 OF
OFFICIAL RECORDS.

APN: 209-120-27-00

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EXHIBIT “B”
 
Plans
 

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EXHIBIT “C”
 
Improvements Budget
 

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EXHIBIT “D”
 
Construction Timeline
 

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SCHEDULE 3.1.22
 
RENT ROLL
 

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SCHEDULE 3.1.28
 
ORGANIZATIONAL CHART
 

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