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<br />policy. The coverage provided by the insured (Lessee) shall
<br />be primary and non-contributing.
<br />
<br />(c) The insurance coverage specified in this Lease shall be
<br />in effect at all times during the Lease term and subsequently
<br />until all of the Lease Premises have been either accepted as
<br />improved, by Lessor, or restored by Lessee as provided
<br />elsewhere in this Lease.
<br />
<br />9.
<br />
<br />SÍJRETY BOND
<br />(a) Lessee shall provide a surety bond or other security
<br />device acceptable to Lessor, for the specified amount, and
<br />naming the State of California as the assured, to guarantee to
<br />Lessor the f'ajthful observance and performance by Lessee of
<br />all of the tenns, covenants and conditions of this Lease.
<br />
<br />(b) Lessor may require an increase in the amount of the
<br />surety bond or other security device to cover any additionally
<br />authorized improvements, alterations or purposes and any
<br />modification of consideration.
<br />
<br />(c) The surety bond or other security device shall be
<br />maintained in full force and effect at all times during the
<br />Lease term and subsequently until all of the Lease Premises
<br />have been either accepted as improved, by Lessor, or restored
<br />by Lessee as provided elsewhere in this Lease.
<br />
<br />10. ASSIGNMENT, ENCUMBRANCING OR SUBLEITING
<br />(a) Lessee shall not either voluntarily or by operation of law,
<br />assign, transfer, mortgage, pledge, hypothecate or encumber
<br />this Lease and shall not sublet the Lease Premises, in whole
<br />or in part, or allow any person other than the Lessee's
<br />employees. agents, servants and invitees to occupy or use all
<br />or any portion of the Lease Premises without the prior written
<br />consent of Lessor, which consent shall not be unreasonably
<br />withheld.
<br />
<br />(b) The following shall be deemed to be an assignment or
<br />transfer within the meaning of this Lease:
<br />
<br />(1) If Lessee is a corporation, any dissolution, merger,
<br />cònsolidation or other reorganization of Lessee or sale or
<br />other transfer of a percentage of capital stock of Lessee
<br />which results in a change of controlling persons. or the
<br />sale or other transfer of substantially all the assets of
<br />Lessee;
<br />
<br />(2) If Lessee is a partnership, a transfer of any interest
<br />of a general partner. a withdrawal of any general partner
<br />fmm the partm:rship. or the dissolution of the
<br />partnership,
<br />
<br />(c) If this Lease is for sovereign lands, it shall be
<br />appurtenant to aåjoiIÙng linoral or riparian land and Lessee
<br />shall nO! transfer or assign its ownership interest or use rights
<br />in such adjoining lands separately from the leasehold rights
<br />granted herein without the prior wrinen consent of Lessor.
<br />
<br />(d) If Lessee desires to assign, sublet, encumber or otherwise
<br />
<br />Page 3
<br />
<br />7. '-.A9
<br />
<br />ttmsfcr all or any ponion of the Lease Premis:s. Lessee shall
<br />do all of the following:
<br />
<br />(1) Give prior written notice to Lessor;
<br />
<br />(2) Provide the name and complete business
<br />organization and operational structure of the proposed
<br />assignee, sublessee, secured third Piny or other
<br />transferee; and the nature of the use of and interest in the
<br />Lease Premises proposed by the assignee. sublessee,
<br />secured third Piny or other transferee. If the proposed
<br />assignee, sublessee or secured third party is a general or
<br />limited partnership, or a joint venture, provide a copy of
<br />the parmership agreement or joint venture agreement, as
<br />applicable;
<br />
<br />(3) Provide the tenDS and conditions of the proposed
<br />assignment, sublease, or encumbrancing or other
<br />transfer;
<br />
<br />(4) Provide audited financial statements for the tWo
<br />most recently completed fiscal years of the proposed
<br />assignee, sublessee, secured party or other transferee;
<br />and provide pro forma financial statements showing the
<br />projected income, expense and financial condition
<br />resulting from use of the Lease Premises; and
<br />
<br />(5) Provide such additional or supplemental information
<br />as Lessor may reasonably request concerning the
<br />proposed assignee, sublessee, secured party or other
<br />transferee.
<br />
<br />Lessor will evaluate proposed assignees, sublessees,
<br />secured third parties and other transferees and grant
<br />approval or disapproval according to standards of
<br />commercial reasonableness considering the following
<br />factors within the context of the proposed use: the
<br />proposed party's financial strength and reliability, their
<br />business experience and expertise, their personal and
<br />business reputation, their managerial and operational
<br />skills, their proposed use and projected rental, as well as
<br />other relevant factors.
<br />
<br />(e) Lessor shall have a reasonable period of time from the
<br />receipt of all documents and other information required under
<br />this provision to grant or deny its approval of the proposed
<br />party.
<br />
<br />(f) Lessee's mortgage or hypothecation of this Lease, if
<br />approved by Lessor, shall be subject to terms and conditions
<br />found in a separately drafted standard form (Agreement and
<br />Consent to Encumbrancing of Lease) available from Lessor
<br />upon request.
<br />
<br />(g) Upon the express written assumption of all obligations
<br />and duties under this Lease by an assignee approved by
<br />Lessor, the Lessee may be released from all liability under
<br />this Lease arising after the effective date of assignment and
<br />not associated with Lessee's use, possession or occupation of
<br />
<br />Fonn 51. ¡ 5 (Rev. 4/96)
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