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AIR COMMERCIAL REAL ESTATE ASSOCIATION STANDARD INDUSTRIAL/COMMERCIAL
SINGLE-TENANT LEASE – GROSS (DO NOT USE THIS FORM FOR MULTl-TENANT BUILDINGS) 1.
Basic Provisions ("Basic Provisions"). 1.1 Parties: This Lease ("Lease"), dated
for reference purposes only March 28, 2008 is made by and between Richard G.
Henderson ("Lessor") and Reshape Medical, Inc., a Delaware Corporation
("Lessee"), (collectively the "Parties," or individually a "Party"). 1.2
Premises: That certain real property, including all improvements therein or to
be provided by Lessor under the terms of this Lease, and commonly known as 100
Calle Iglesia, San Clemente located in the County of Orange, State of California
and generally described as (describe briefly the nature of the property and, if
applicable, the "Project", if the property is located within a Project) an
approximate 7,500 SF portion of a 8,040 SF office and industrial building
("Premises"). (See also Paragraph 2) 1.3 Term: 3 years and 2 months ("Original
Term") commencing June 1, 2008 ("Commencement Date") and ending July 31, 2011
("Expiration Date"). (See also Paragraph 3) 1.4 Early Possession: upon a fully
executed lease, payment of first month's rent and security deposit and evidence
of insurance. Lessee shall not interfere with Lessor or Lessor's contractors
during the (“Early Possession period “)  (See also Paragraphs 3.2 and 3.3) 1.5
Base Rent:  $9,750.00 per month ("Base Rent"), payable on the first day of each
month commencing June 1, 2008 (See also Paragraph 4) ☑ If this box is checked,
there are provisions in this Lease for the Base Rent to be adjusted. 1.6 Base
Rent and Other Monies Paid Upon Execution: (a) Base Rent: $9,750.00 for the
period of June 1 - June 30, 2008 (b) Security Deposit: $ 31,500.00 (“Security
Deposit”). (See also Paragraph 5) (c) Association Fees: $ for the period (d)
Other: $ (e) Total Due Upon Execution of this Lease: $41,250.00 1.7 Agreed Use:
general office and uses consistent with a medical device company (See also
Paragraph 6) 1.8 Insuring Party: Lessor is the "Insuring Party". The annual
"Base Premium" is $3,211.00 (See also Paragraph 8) 1.9 Real Estate Brokers: (See
also Paragraph 15) (a) Representation: The following real estate brokers (the
"Brokers") and brokerage relationships exist in this transaction (check
applicable boxes): ☑ CB Richard Ellis - Steve Wagner represents Lessor
exclusively ("Lessor's Broker"); ☑ Voit Commercial Brokerage - Hayden
Socci/Robert Socci represents Lessee exclusively ("Lessee's Broker''): or ☐
represents both Lessor and Lessee ("Dual Agency"). (b) Payment to Brokers: Upon
execution and delivery of this Lease by both Parties, Lessor shall pay to the
Broker the fee agreed to in their separate written agreement (or if there is no
such agreement, the sum of or 6 % of the total Base Rent) for the brokerage
services rendered by the Brokers. 1.10 Guarantor.  The obligations of the Lessee
under this Lease are to be guaranteed by N/A ("Guarantor'').  (See also
Paragraph 37) 1.11 Attachments. Attached hereto are the following, all of which
constitute a part of this Lease: an Addendum consisting of Paragraphs 51 through
53; a plot plan depicting the Premises; a current set of the Rules and
Regulations; a Work Letter; other (specify): AIR Option to Extend INITIALS Page
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2. Premises. 2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease.  Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating Rent, is an approximation which the Parties agree is
reasonable and any payments based thereon are not subject to revision whether or
not the actual size is more or less.  Note: Lessee is advised to verify the
actual size prior to executing this Lease. 2.2 Condition. Lessor shall deliver
the Premises to Lessee broom clean and free of debris on the Commencement Date
or the Early Possession Date, whichever first occurs ( "Start Date"), and, so
long as the required service contracts described in Paragraph 7.1(b) below are
obtained by Lessee and in effect within thirty days following the Start Date,
warrants that the existing electrical, plumbing, fire sprinkler, lighting,
heating, ventilating and air conditioning systems ( "HVAC"), loading doors, sump
pumps, if any, and all other such elements in the Premises, other than those
constructed by Lessee, shall be in good operating condition on said date and
that the surface and structural elements of the roof, bearing walls and
foundation of any buildings on the Premises (the "Building") shall be free of
material defects, and that the Unit does not contain hazardous levels of any
mold or fungi defined as toxic under applicable state or federal law. If a
non-compliance with said warranty exists as of the Start Date, or if one of such
systems or elements should malfunction or fail within the appropriate warranty
period, Lessor shall, as Lessor's sole obligation with respect to such matter,
except as otherwise provided in this Lease, promptly after receipt of written
notice from Lessee setting forth with specificity the nature and extent of such
non-compliance, malfunction or failure, rectify same at Lessor's expense. The
warranty periods shall be as follows: (i) 6 months as to the HVAC systems, and
(ii) 30 days as to the remaining systems and other elements of the Building. If
Lessee does not give Lessor the required notice within the appropriate warranty
period, correction of any such non-compliance, malfunction or failure shall be
the obligation of Lessee at Lessee's sole cost and expense, except for the roof,
foundations, and bearing walls which are handled as provided in paragraph 7. 2.3
Compliance. Lessor warrants that to the best of its knowledge the improvements
on the Premises comply with the building codes, applicable laws, covenants or
restrictions of record, regulations, and ordinances ("Applicable Requirements")
that were in effect at the time that each improvement, or portion thereof, was
constructed. Said warranty does not apply to the use to which Lessee will put
the Premises, modifications which may be required by the Americans with
Disabilities Act or any similar laws as a result of Lessee's use (see Paragraph
50), or to any Alterations or Utility Installations (as defined in Paragraph
7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the Applicable Requirements, and especially the
zoning, are appropriate for Lessee's intended use, and acknowledges that past
uses of the Premises may no longer be allowed. If the Premises do not comply
with said warranty, Lessor shall, except as otherwise provided, promptly after
receipt of written notice from Lessee setting forth with specificity the nature
and extent of such non-compliance, rectify the same at Lessor's expense. If
Lessee does not give Lessor written notice of a non-compliance with this
warranty within 6 months following the Start Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense. If the Applicable Requirements are hereafter changed so as to require
during the term of this Lease the construction of an addition to or an
alteration of the Premises and/or Building, the remediation  of  any Hazardous
Substance, or the reinforcement or other physical modification of the Unit,
Premises and/or Building ( "Capital Expenditure"), Lessor and Lessee shall
allocate the cost of such work as follows: (a) Subject to Paragraph 2.3(c)
below, if such Capital Expenditures are required as a result of the specific and
unique use of the Premises by Lessee as compared with uses by tenants in
general, Lessee shall be fully responsible for the cost thereof, provided,
however that if such Capital Expenditure is required during the last 2 years of
this Lease and the cost thereof exceeds 6 months' Base Rent, Lessee may instead
terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days
after receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and an amount equal to 6 months' Base
Rent. If Lessee elects termination, Lessee shall immediately cease the use of
the Premises which requires such Capital Expenditure and deliver to Lessor
written notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure. (b) If such Capital Expenditure is not the result of the specific
and unique use of the Premises by Lessee (such as, governmentally mandated
seismic modifications), then Lessor shall pay for such Capital Expenditure and
Lessee shall only be obligated to pay, each month during the remainder of the
term of this Lease, on the date that on which the Base Rent is due, an amount
equal to 144th of the portion of such costs reasonably attributable to the
Premises.  Lessee shall pay Interest on the balance but may prepay its
obligation at any time. If, however, such Capital Expenditure is required during
the last 2 years of this Lease or if Lessor reasonably determines that it is not
economically feasible to pay its share thereof, Lessor shall have the option to
terminate this Lease upon 90 days prior written notice to Lessee unless Lessee
notifies Lessor, in writing, within 10 days after receipt of Lessor's
termination notice that Lessee will pay for such Capital Expenditure. If Lessor
does not elect to terminate, and fails to tender its share of any such Capital
Expenditure, Lessee may advance such funds and deduct same, with Interest, from
Rent until Lessor's share of such costs have been fully paid. If Lessee is
unable to finance Lessor's share, or if the balance of the Rent due and payable
for the remainder of this Lease is not sufficient to fully reimburse Lessee on
an offset basis, Lessee shall have the right to terminate this Lease upon 30
days written notice to Lessor. (c) Notwithstanding the above, the provisions
concerning Capital Expenditures are intended to apply only to non-voluntary,
unexpected, and new Applicable Requirements. If the Capital Expenditures are
instead triggered by Lessee as a result of an actual or proposed change in use,
change in intensity of use, or modification to the Premises then, and in that
event, Lessee shall either: (i) immediately cease such changed use or intensity
of use and/or take such other steps as may be necessary to eliminate the
requirement for such Capital Expenditure, or (ii) complete such Capital
Expenditure at its own expense. Lessee shall not, however, have any right to
terminate this Lease. 2.4 Acknowledgements. Lessee acknowledges that: (a) it has
been advised by Lessor and/or Brokers to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical, HVAC and
fire sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements and the Americans with Disabilities Act), and their
suitability for Lessee's intended use, (b) Lessee has made such investigation as
it deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to its occupancy of the Premises, and (c) neither
Lessor, Lessor's agents, nor Brokers have made any oral or written
representations or warranties with respect to said matters other than as set
forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have
made no representations, promises or warranties concerning Lessee's ability to
honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor's
sole responsibility to investigate the financial capability and/or suitability
of all proposed tenants. 2.5 Lessee as Prior Owner/Occupant. The warranties made
by Lessor in Paragraph 2 shall be of no force or effect if immediately prior to
the Start Date Lessee was the owner or occupant of the Premises. In such event,
Lessee shall be responsible for any necessary corrective work. 3. Term. 3.1
Term. The Commencement Date, Expiration Date and Original Term of this Lease are
as specified in Paragraph 1.3. 3.2 Early Possession. If Lessee totally or
partially occupies the Premises prior to the Commencement Date, the obligation
to pay Base Rent shall be abated for the period of such early possession. All
other terms of this Lease (including but not limited to the obligations to pay
Real Property Taxes and insurance premiums and to maintain the Premises) shall
be in effect during such period. Any such early possession shall not affect the
Expiration Date. 3.3 Delay In Possession. Lessor agrees to use its best
commercially reasonable efforts to deliver possession of the Premises to Lessee
by the Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession by such date, Lessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease. Lessee shall not,
however, be obligated to pay Rent or perform its other obligations until Lessor
delivers possession of the Premises and any period of rent abatement that Lessee
would otherwise have enjoyed shall run from the date of delivery of possession
and continue for a period equal to what Lessee would otherwise have enjoyed
under the terms hereof, but minus any days of delay caused by the acts or
omissions of Lessee.  If possession is not delivered within 60 days after the
Commencement Date, Lessee may, at its option, by notice in writing within 10
days after the end of such 60 day period, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder. If such written
notice is not received by Lessor within said 10 day period, Lessee's right to
cancel shall terminate. If possession of the Premises ls not delivered within
120 days after the Commencement Date, this Lease shall terminate unless other
agreements are reached between Lessor and Lessee, in writing. 3.4 Lessee
Compliance. Lessor shall not be required to deliver possession of the Premises
to Lessee until Lessee compiles with its obligation to provide evidence of
insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be
required to perform all of its obligations under this Lease from and after the
Start Date, including the payment of Rent, notwithstanding Lessor's election to
withhold possession pending receipt of such evidence of insurance. Further, if
Lessee is required to perform any other conditions prior to or concurrent with
the Start Date, the Start Date shall occur but Lessor may elect to withhold
possession until such conditions are satisfied. 4. Rent. 4.1.Rent Defined. All
monetary obligations of Lessee to Lessor under the terms of this Lease (except
for the Security Deposit) are deemed to be rent ("Rent"). 4.2 Payment. Lessee
shall cause payment of Rent to be received by Lessor in lawful money of the
United States, without offset or deduction (except as specifically permitted in
this Lease), on or before the day on which it is due. All monetary amounts shall
be rounded to the nearest whole dollar. In the event that any invoice prepared
by Lessor is inaccurate such inaccuracy shall not constitute a waiver and Lessee
shall be obligated to pay the amount set forth in this Lease. Rent for any
period during the term hereof which is for less than one full calendar month
shall be prorated based upon the actual number of days of said month. Payment of
Rent shall be made to Lessor at its address stated herein or to such other
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place as Lessor may from time to time designate in writing. Acceptance of a
payment which is less than the amount then due shall not be a waiver of Lessor's
rights to the balance of such Rent, regardless of Lessor's endorsement of any
check so stating. In the event that any check, draft, or other instrument of
payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to
pay to Lessor the sum of $25 in addition to any Late Charge and Lessor, at its
option, may require all future payments to be made by Lessee to be by cashier's
check. Payments will be applied first to accrued late charges and attorney's
fees, second to accrued interest, then to Base Rent and Operating Expense
Increase, and any remaining amount to any other outstanding charges or costs.
4.3 Association Fees. In addition to the Base Rent, Lessee shall pay to Lessor
each month an amount equal to any owner's association or condominium fees levied
or assessed against the Premises. Said monies shall be paid at the same time and
in the same manner as the Base Rent. 5. Security Deposit. Lessee shall deposit
with Lessor upon execution hereof the Security Deposit as security for Lessee's
faithful performance of its obligations under this Lease. If Lessee fails to pay
Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
already due Lessor, for Rents which will be due in the future, and/ or to
reimburse or compensate Lessor for any liability, expense, loss or damage which
Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or
any portion of the Security Deposit, Lessee shall within 1O days after written
request therefor deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. If the Base Rent increases
during the term of this Lease, Lessee shall, upon written request from Lessor,
deposit additional monies with Lessor so that the total amount of the Security
Deposit shall at all times bear the same proportion to the increased Base Rent
as the initial Security Deposit bore to the initial Base Rent. Should the Agreed
Use be amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor's reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor's reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on such change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within 90 days after the expiration or termination of this
Lease, Lessor shall return that portion of the Security Deposit not used or
applied by Lessor. No part of the Security Deposit shall be considered to be
held in trust, to bear interest or to be prepayment for any monies to be paid by
Lessee under this Lease. 6. Use. 6.1 Use. Lessee shall use and occupy the
Premises only for the Agreed Use, or any other legal use which is reasonably
comparable thereto, and for no other purpose. Lessee shall not use or permit the
use of the Premises in a manner that is unlawful, creates damage, waste or a
nuisance, or that disturbs occupants of or causes damage to neighboring premises
or properties. Other than guide, signal and seeing eye dogs, Lessee shall not
keep or allow in the Premises any pets, animals, birds, fish, or reptiles.
Lessor shall not unreasonably withhold or delay its consent to any written
request for a modification of the Agreed Use, so long as the same will not
impair the structural integrity of the improvements on the Premises or the
mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall
within 7 days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in the Agreed
Use. 6.2 Hazardous Substances. (a) Reportable Uses Require Consent. The term
"Hazardous Substance" as used in this Lease shall mean any product, substance,
or waste whose presence, use, manufacture, disposal, transportation, or release,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for potential liability of Lessor to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substances shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products
or fractions thereof. Lessee shall not engage in any activity in or on the
Premises which constitutes a Reportable Use of Hazardous Substances without the
express prior written consent of Lessor and timely compliance (at Lessee's
expense) with all Applicable Requirements. "Reportable Use" shall mean (i) the
installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a Hazardous
Substance that requires a permit from, or with respect to which a report,
notice, registration or business plan is required to be filed with, any
governmental authority, and/or (iii) the presence at the Premises of a Hazardous
Substance with respect to which any Applicable Requirements requires that a
notice be given to persons entering or occupying the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may use any ordinary and
customary materials reasonably required to be used in the normal course of the
Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.)
and common household cleaning materials, so long as such use is in compliance
with all Applicable Requirements, is not a Reportable Use, and does not expose
the Premises or neighboring property to any meaningful risk of contamination or
damage or expose Lessor to any liability therefor. In addition, Lessor may
condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public,
the Premises and/or the environment against damage, contamination, injury and/or
liability, including, but not limited to, the installation (and removal on or
before Lease expiration or termination) of protective modifications (such as
concrete encasements) and/or increasing the Security Deposit (b) Duty to Inform
Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous
Substance has come to be located in, on, under or about the Premises, other than
as previously consented to by Lessor, Lessee shall immediately give written
notice of such fact to Lessor, and provide Lessor with a copy of any report,
notice, claim or other documentation which it has concerning the presence of
such Hazardous Substance. (c) Lessee Remediation. Lessee shall not cause or
permit any Hazardous Substance to be spilled or released in, on, under, or about
the Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, comply with all Applicable Requirements and take
all investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party. (d) Lessee
Indemnification.  Lessee shall indemnify,  defend and hold Lessor, its agents,
employees, lenders and ground lessor, if any, harmless from and against any and
all loss of rents and/or damages, liabilities, judgments, claims, expenses,
penalties, and attorneys' and consultants' fees arising out of or involving any
Hazardous Substance brought onto the Premises by  or for  Lessee,  or any  third
party (provided, however, that Lessee shall have no liability under this Lease
with respect to underground migration of any Hazardous Substance under the
Premises from adjacent properties not caused or contributed to by Lessee).
Lessee's obligations shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances, unless specifically so agreed by Lessor in
writing at the time of such agreement. (e) Lessor Indemnification. Lessor and
its successors and assigns shall indemnify, defend, reimburse and hold Lessee,
its employees and lenders, harmless from and against any and all environmental
damages, including the cost of remediation, which result from Hazardous
Substances which existed on the Premises prior to Lessee's occupancy or which
are caused by the gross negligence or willful misconduct of Lessor, its agents
or employees. Lessor's obligations, as and when required by the Applicable
Requirements, shall include, but not be limited to, the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease. (f) Investigations and Remediations.
Lessor shall retain the responsibility and pay for any investigations or
remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises prior to
Lessee's occupancy, unless such remediation measure is required as a result of
Lessee's use (including "Alterations", as defined in paragraph 7.3(a) below) of
the Premises, in which event Lessee shall be responsible for such payment.
Lessee shall cooperate fully in any such activities at the request of Lessor,
including allowing Lessor and Lessor's agents to have reasonable access to the
Premises at reasonable times in order to carry out Lessor's investigative and
remedial responsibilities. (g) Lessor Termination Option. If a Hazardous
Substance Condition (see Paragraph 9.1(e)) occurs during the term of this Lease,
unless Lessee is legally responsible therefor (in which case Lessee shall make
the investigation and remediation thereof required by the Applicable
Requirements and this Lease shall continue in full force and effect, but subject
to Lessor's rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at
Lessor's option, either (i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to remediate such condition exceeds 12 times the then monthly
Base Rent or $100,000, whichever is greater, give written notice to Lessee,
within 30 days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition, of Lessor's desire to terminate this Lease as of
the date 60 days following the date of such notice. In the event Lessor elects
to give a termination notice, Lessee may, within 10 days thereafter, give
written notice to Lessor of Lessee's commitment to pay the amount by which the
cost of the remediation of such Hazardous Substance Condition exceeds an amount
equal to 12 times the then month Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with said funds or satisfactory assurance thereof
within 30 days following such commitment. In such event, this Lease shall
continue in full force and effect, and Lessor shall proceed to make such
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as soon as reasonably possible after the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof
within the time provided, this Lease shall terminate as of the date specified in
Lessor's notice of termination. 6.3 Lessee's Compliance with Applicable
Requirements. Except as otherwise provided in this Lease, Lessee shall, at
Lessee's sole expense, fully, diligently and in a timely manner, materially
comply with all Applicable Requirements, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants which relate in any manner to the such
Requirements, without regard to whether such Requirements are now in effect or
become effective after the Start Date. Lessee shall, within 10 days after
receipt of Lessor's written request, provide Lessor with copies of all permits
and other documents, and other information evidencing Lessee's compliance with
any Applicable Requirements specified by Lessor, and shall immediately upon
receipt, notify Lessor in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with
any Applicable Requirements. Likewise, Lessee shall immediately give written
notice to Lessor of: (i) any water damage to the Premises and any suspected
seepage, pooling, dampness or other condition conducive to the production of
mold; or (ii) any mustiness or other odors that might indicate the presence of
mold in the Premises. 6.4 Inspection; Compliance. Lessor and Lessor's "Lender"
(as defined in Paragraph 30) and consultants shall have the right to enter into
Premises at any time, in the case of an emergency, and otherwise at reasonable
times after reasonable notice, for the purpose of inspecting the condition of
the Premises and for verifying compliance by Lessee with this Lease.  The cost
of any such inspections shall be paid by Lessor, unless a violation of
Applicable Requirements, or a Hazardous Substance Condition (see paragraph 9.1)
is found to exist or be imminent, or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request reimburse Lessor
for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination. In addition, Lessee shall provide
copies of all relevant material safety data sheets (MSDS) to Lessor within 10
days of the receipt of a written request therefor. 7.Maintenance; Repairs;
Utility Installations; Trade Fixtures and Alterations.7.1 Lessee's Obligations.
(a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3
(Compliance), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2
(Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee
shall, at Lessee's sole expense, keep the Premises, Utility Installations
(intended for Lessee's exclusive use, no matter where located), and Alterations
in good order, condition  and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing, HVAC equipment, electrical, lighting facilities, boilers,
pressure vessels, fire protection system, fixtures, walls (interior and
exterior), ceilings, floors, windows, doors, plate glass, skylights,
landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks
and parkways located in, on, or adjacent to the Premises. Lessee is also
responsible for keeping the roof and roof drainage clean and free of debris.
Lessor shall keep the surface and structural elements of the roof, foundations,
and bearing walls in good repair (see paragraph 7.2). Lessee, in keeping the
Premises in good order, condition and repair, shall exercise and perform good
maintenance practices, specifically including the procurement and maintenance of
the service contracts required by Paragraph 7.1(b) below. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair. Lessee shall, during the term of this Lease, keep the
exterior appearance of the Building in a first-class condition (including, e.g.
graffiti removal) consistent with the exterior appearance of other similar
facilities of comparable age and size in the vicinity, including, when
necessary, the exterior repainting of the Building. (b) Service Contracts.
Lessee shall, at Lessee's sole expense, procure and maintain contracts, with
copies to Lessor, in customary form and substance for, and with contractors
specializing and experienced in the maintenance of the following equipment and
improvements, if any, if and when installed on the Premises: (i) HVAC equipment,
(ii) boiler, and pressure vessels, (iii) fire extinguishing systems, including
fire alarm and/or smoke detection, (iv) landscaping and irrigation systems, and
(v) clarifiers.  However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain any or all of such service contracts, and Lessee shall
reimburse Lessor, upon demand, for the cost thereof. (c) Failure to Perform. If
Lessee fails to perform Lessee's obligations under this Paragraph 7.1, Lessor
may enter upon the Premises after 10 days' prior written notice to Lessee
(except in the case of an emergency, in which case no notice shall be required),
perform such obligations on Lessee's behalf, and put the Premises in good order,
condition and repair, and Lessee shall promptly pay to Lessor a sum equal to
115% of the cost thereof. (d) Replacement. Subject to Lessee's indemnification
of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of
liability resulting from Lessee's failure to exercise and perform good
maintenance practices, if an item described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing
such item, then such item shall be replaced by Lessor, and the cost thereof
shall be prorated between the Parties and Lessee shall only be obligated to pay,
each month during the remainder of the term of this Lease, on the date on which
Base Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of
which is 144 (i.e. 1/144th of the cost per month). Lessee shall pay Interest on
the unamortized balance but may prepay its obligation at any time. 7.2 Lessor's
Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance), 9 (Damage or Destruction) and 14 (Condemnation), it is intended by
the Parties hereto that Lessor have no obligation, in any manner whatsoever, to
repair and maintain the Premises, or the equipment therein, all of which
obligations are intended to be that of the Lessee, except for the surface and
structural elements of the roof, foundations and bearing walls, the repair of
which shall be the responsibility of Lessor upon receipt of written notice that
such a repair is necessary. It is the intention of the Parties that the terms of
this Lease govern the respective obligations of the Parties as to maintenance
and repair of the Premises, and they expressly waive the benefit of any statute
now or hereafter in effect to the extent it is inconsistent with the terms of
this Lease. 7.3 Utility Installations; Trade Fixtures; Alterations. (a)
Definitions. The term "Utility Installations" refers to all floor and window
coverings, air and/or vacuum lines, power panels, electrical distribution,
security and fire protection systems, communication cabling, lighting fixtures,
HVAC equipment, plumbing, and fencing in or on the Premises. The term "Trade
Fixtures" shall mean Lessee's machinery and equipment that can be removed
without doing material damage to the Premises. The term "Alterations" shall mean
any modification of the improvements, other than Utility Installations or Trade
Fixtures, whether by addition or deletion. "Lessee Owned Alterations and/or
Utility Installations" are defined as Alterations and/or Utility Installations
made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).
(b) Consent. Lessee shall not make any Alterations or Utility Installations to
the Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises (excluding
the roof) without such consent but upon notice to Lessor, as long as they are
not visible from the outside, do not involve puncturing, relocating or removing
the roof or any existing walls, will not affect the electrical, plumbing, HVAC,
and/or life safety systems, and the cumulative cost thereof during this Lease as
extended does not exceed a sum equal to 3 month's Base Rent in the aggregate or
a sum equal to one month's Base Rent  in any one year.  Notwithstanding the
foregoing, Lessee shall not make or permit any roof penetrations and/or install
anything on the roof without the prior written approval of Lessor. Lessor may,
as a precondition to granting such approval, require Lessee to utilize a
contractor chosen and/or approved by Lessor. Any Alterations or Utility
Installations that Lessee shall desire to make and which require the consent of
the Lessor shall be presented to Lessor in written form with detailed plans.
Consent shall be deemed conditioned upon Lessee's: (i) acquiring all applicable
governmental permits, (ii) furnishing Lessor with copies of both the permits and
the plans and specifications prior to commencement of the work, and (iii)
compliance with all conditions of said permits and other Applicable Requirements
in a prompt and expeditious manner. Any Alterations or Utility Installations
shall be performed in a workmanlike manner with good and sufficient materials.
Lessee shall promptly upon completion furnish Lessor with as-built plans and
specifications. For work which costs an amount in excess of one month's Base
Rent, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to 150% of the estimated cost of such
Alteration or Utility Installation and/or upon Lessee's posting an additional
Security Deposit with Lessor. (c) Liens; Bonds. Lessee shall pay, when due, all
claims for labor or materials furnished or alleged to have been furnished to or
for Lessee at or for use on the Premises, which claims are or may be secured by
any mechanic's or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than 10 days notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post notices of non-responsibility. If Lessee shall contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises against the same and
shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof. If Lessor shall require, Lessee shall furnish a
surety bond in an amount equal to 150% of the amount of such contested lien,
claim or demand, indemnifying Lessor against liability for the same. If Lessor
elects to participate in any such action, Lessee shall pay Lessor's attorneys'
fees and costs.7.4 Ownership; Removal; Surrender; and Restoration. (a)
Ownership. Subject to Lessor's right to require removal or elect ownership as
hereinafter provided, all Alterations and Utility Installations made by Lessee
shall be the property of Lessee, but considered a part of the Premises. Lessor
may, at any time, elect in writing to be the owner of all or any specified part
of the Lessee Owned Alterations and Utility Installations. Unless otherwise
instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility
Installations shall, at the expiration or termination of this Lease, become the
property of Lessor and be surrendered by Lessee with the Premises. (b) Removal.
By delivery to Lessee of written notice from Lessor not earlier than 90 and not
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the term of this Lease, Lessor may require that any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or termination
of this Lease. Lessor may require the removal at any time of all or any part of
any Lessee Owned Alterations or Utility Installations made without the required
consent. (c) Surrender; Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. "Ordinary
wear and tear" shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if
this Lease is for 12 months or less, then Lessee shall surrender the Premises in
the same condition as delivered to Lessee on the Start Date with NO allowance
for ordinary wear and tear. Lessee shall repair any damage occasioned by the
installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations
and/or Utility Installations, furnishings, and equipment as well as the removal
of any storage tank installed by or for Lessee. Lessee shall completely remove
from the Premises any and all Hazardous Substances brought onto the Premises by
or for Lessee, or any third party (except Hazardous Substances which were
deposited via underground migration from areas outside of the Premises, or if
applicable, the Premises) even if such removal would require Lessee to perform
or pay for work that exceeds statutory requirements. Trade Fixtures shall remain
the property of Lessee and shall be removed by Lessee. Any personal property of
Lessee not removed on or before the Expiration Date or any earlier termination
date shall be deemed to have been abandoned by Lessee and may be disposed of or
retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate
the Premises pursuant to this Paragraph 7.4(c) without the express written
consent of Lessor shall constitute a holdover under the provisions of Paragraph
26 below. 8. Insurance; Indemnity. 8.1 Payment of Premium Increases. (a) Lessee
shall pay to Lessor any insurance cost increase ("Insurance Cost Increase")
occurring during the term of this Lease. Insurance Cost Increase is defined as
any increase in the actual cost of the insurance required under Paragraph
8.2(b), 8.3(a) and 8.3(b) ("Required Insurance"), over and above the Base
Premium as hereinafter defined calculated on an annual basis. Insurance Cost
Increase shall include but not be limited to increases resulting from the nature
of Lessee's occupancy, any act or omission of Lessee, requirements of the holder
of mortgage or deed of trust covering the Premises, increased valuation of the
Premises and/or a premium rate increase. The parties are encouraged to fill in
the Base Premium in paragraph 1.8 with a reasonable premium for the Required
Insurance based on the Agreed Use of the Premises. If the parties fail to insert
a dollar amount in Paragraph 1.8, then the Base Premium shall be the lowest
annual premium reasonably obtainable for the Required Insurance as of the
commencement of the Original Term for the Agreed Use of the Premises. In no
event, however, shall Lessee be responsible for any portion of the increase in
the premium cost attributable to liability insurance carried by Lessor under
Paragraph 8.2(b) in excess of $2,000,000 per occurrence. (b) Lessee shall pay
any such Insurance Cost Increase to Lessor within 30 days after receipt by
Lessee of a copy of the premium statement or other reasonable evidence of the
amount due. If the insurance policies maintained hereunder cover other property
besides the Premises, Lessor shall also deliver to Lessee a statement of the
amount of such Insurance Cost Increase attributable only to the Premises showing
in reasonable detail the manner in which such amount was computed. Premiums for
policy periods commencing prior to, or extending beyond the term of this Lease,
shall be prorated to correspond to the term of this Lease. 8.2 Liability
Insurance. (a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor as
an additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000 per occurrence with an annual aggregate of not less than
$2,000,000. Lessee shall add Lessor as an additional insured by means of an
endorsement at least as broad as the Insurance Service Organization's
"Additional Insured-Managers or Lessors of Premises" Endorsement. The policy
shall not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an " insured contract" for the performance of Lessee's indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee shall
provide an endorsement on its liability policy(ies) which provides that its
insurance shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance only.
(b) Carried by Lessor. Lessor shall maintain liability insurance as described in
Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to
be maintained by Lessee. Lessee shall not be named as an additional insured
therein. 8.3 Property Insurance - Building, Improvements and Rental Value. (a)
Building and Improvements. The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor, with loss payable to Lessor, any
ground-lessor, and to any Lender insuring loss or damage to the Premises. The
amount of such insurance shall be equal to the full insurable replacement cost
of the Premises, as the same shall exist from time to time, or the amount
required by any Lender, but in no event more than the commercially reasonable
and available insurable value thereof. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's
personal property shall be insured by Lessee under Paragraph 8.4 rather than by
Lessor. If the coverage is available and commercially appropriate, such policy
or policies shall insure against all risks of direct physical loss or damage
(except the perils of flood and/or earthquake unless required by a Lender or
included in the Base Premium), including coverage for debris removal and the
enforcement of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located. If such insurance coverage has a deductible clause,
the deductible amount shall not exceed $1,000 per occurrence, and Lessee shall
be liable for such deductible amount in the event of an Insured Loss. (b) Rental
Value. The Insuring Party shall obtain and keep in force a policy or policies in
the name of Lessor with loss payable to Lessor and any Lender, insuring the loss
of the full Rent for one year with an extended period of indemnity for an
additional 180 days (" Rental Value insurance"). Said insurance shall contain an
agreed valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected Rent otherwise
payable by Lessee, for the next 12 month period. Lessee shall be liable for any
deductible amount in the event of such loss. (c) Adjacent Premises. If the
Premises are part of a larger building, or of a group of buildings owned by
Lessor which are adjacent to the Premises, the Lessee shall pay for any increase
in the premiums for the property insurance of such building or buildings if said
increase is caused by Lessee's acts, omissions, use or occupancy of the
Premises. 8.4 Lessee's Property; Business Interruption Insurance. (a) Property
Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee's
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility
Installations. Such insurance shall be full replacement cost coverage with a
deductible of not to exceed $1,000 per occurrence. The proceeds from any such
insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in force. (b)
Business Interruption. Lessee shall obtain and maintain loss of income and extra
expense insurance in amounts as will reimburse Lessee for direct or indirect
loss of earnings attributable to all perils commonly insured against by prudent
lessees in the business of Lessee or attributable to prevention of access to the
Premises as a result of such perils. (c) No Representation of Adequate Coverage.
Lessor makes no representation that the limits or forms of coverage of insurance
specified herein are adequate to cover Lessee's property, business operations or
obligations under this Lease. 8.5 Insurance Policies. Insurance required herein
shall be by companies duly licensed or admitted to transact business in the
state where the Premises are located, and maintaining during the policy term a
"General Policyholders Rating" of at least A-, VI, as set forth in the most
current issue of "Best's Insurance Guide", or such other rating as may be
required by a Lender. Lessee shall not do or permit to be done anything which
invalidates the required insurance policies. Lessee shall, prior to the Start
Date, deliver to Lessor certified copies of policies of such insurance or
certificates evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable or subject to modification except after 30 days
prior written notice to Lessor. Lessee shall, at least 1O days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same. 8.6 Waiver of Subrogation. Without affecting any other rights
or remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages against the other, for loss of or
damage to its property arising out of or incident to the perils required to be
insured against herein. The effect of such releases and waivers is not limited
by the amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.8.7 Indemnity.  Except for Lessor's gross negligence or
willful misconduct, Lessee shall indemnify, protect, defend and hold harmless,
Lessor and its agents, Lessor's master or ground lessor, partners and Lenders,
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damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses
and/or liabilities arising out of, involving, or in connection with, the use
and/or occupancy of the Premises by Lessee. If any action or proceeding is
brought against Lessor by reason of any of the foregoing matters, Lessee shall
upon notice defend the same at Lessee's expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense.
Lessor need not have first paid any such claim in order to be defended or
indemnified. 8.8 Exemption of Lessor and its Agents from Liability.
Notwithstanding the negligence or breach of this Lease by Lessor or its agents,
neither Lessor nor its agents shall be liable under any circumstances for: (i)
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, indoor air quality,
the presence of mold or from the breakage, leakage, obstruction or other defects
of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting
fixtures, or from any other cause, whether the said injury or damage results
from conditions arising upon the Premises or upon other portions of the building
of which the Premises are a part, or from other sources or places, (ii) any
damages arising from any act or neglect of any other tenant of Lessor or from
the failure of Lessor or its agents to enforce the provisions of any other lease
in the Project, or (iii) injury to Lessee's business or for any loss of income
or profit therefrom. Instead, it is intended that Lessee's sole recourse in the
event of such damages or injury be to file a claim on the insurance policy(i.es)
that Lessee is required to maintain pursuant to the provisions of paragraph 8.
8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on its
part to obtain or maintain the insurance required herein will expose Lessor to
risks and potentially cause Lessor to incur costs not contemplated by this
Lease, the extent of which will be extremely difficult to ascertain.
Accordingly, for any month or portion thereof that Lessee does not maintain the
required insurance and/or does not provide Lessor with the required binders or
certificates evidencing the existence of the required insurance, the Base Rent
shall be automatically increased, without any requirement for notice to Lessee,
by an amount equal to 10% of the then existing Base Rent or $100, whichever is
greater. The parties agree that such increase in Base Rent represents fair and
reasonable compensation for the additional risk/ costs that Lessor will incur by
reason of Lessee's failure to maintain the required insurance. Such increase in
Base Rent shall in no event constitute a waiver of Lessee's Default or Breach
with respect to the failure to maintain such insurance, prevent the exercise of
any of the other rights and remedies granted hereunder, nor relieve Lessee of
its obligation to maintain the insurance specified in this Lease. 9. Damage or
Destruction. 9.1 Definitions. (a) "Premises Partial Damage" shall mean damage or
destruction to the improvements on the Premises, other than Lessee Owned
Alterations and Utility Installations, which can reasonably be repaired in 6
months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within 30 days from the date of the damage or destruction as
to whether or not the damage is Partial or Total. Notwithstanding the foregoing,
Premises Partial Damage shall not include damage to windows, doors, and/or other
similar items which Lessee has the responsibility to repair or replace pursuant
to the provisions of Paragraph 7.1. (b) "Premises Total Destruction" shall mean
damage or destruction to the Premises, other than Lessee Owned Alterations and
Utility Installations and Trade Fixtures, which cannot reasonably be repaired in
6 months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within 30 days from the date of the damage or destruction as
to whether or not the damage is Partial or Total. (c) "Insured Loss" shall mean
damage or destruction to improvements on the Premises, other than Lessee Owned
Alterations and Utility Installations and Trade Fixtures, which was caused by an
event required to be covered by the insurance described in Paragraph 8.3(a),
irrespective of any deductible amounts or coverage limits involved. (d)
"Replacement Cost" shall mean the cost to repair or rebuild the improvements
owned by Lessor at the time of the occurrence to their condition existing
immediately prior thereto, including demolition, debris removal and upgrading
required by the operation of Applicable Requirements, and without deduction for
depreciation. (e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises which requires repair, remediation, or restoration. 9.2 Partial Damage
- Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs,
then Lessor shall, at Lessor's expense, repair such damage (but not Lessee's
Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as
reasonably possible and this Lease shall continue in full force and effect;
provided, however, that Lessee shall, at Lessor's election, make the repair of
any damage or destruction the total cost to repair of which is $10,000 or less,
and, in such event, Lessor shall make any applicable insurance proceeds
available to Lessee on a reasonable basis for that purpose. Notwithstanding the
foregoing, if the required insurance was not in force or the insurance proceeds
are not sufficient to effect such repair, the Insuring Party shall promptly
contribute the shortage in proceeds (except as to the deductible which is
Lessee's responsibility) as and when required to complete said repairs. In the
event, however, such shortage was due to the fact that, by reason of the unique
nature of the improvements, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the unique aspects of
the Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within 10 days following receipt of written notice
of such shortage and request therefor. If Lessor receives said funds or adequate
assurance thereof within said 10 day period, the party responsible for making
the repairs shall complete them as soon as reasonably possible and this Lease
shall remain in full force and effect. If such funds or assurance are not
received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this Lease
shall remain in full force and effect, or (ii) have this Lease terminate 30 days
thereafter. Lessee shall not be entitled to reimbursement of any funds
contributed by Lessee to repair any such damage or destruction.  Premises
Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party. 9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a  negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
30'days after receipt by Lessor of knowledge of the occurrence of such damage.
Such termination shall be effective 60 days following the date of such notice.
In the event Lessor elects to terminate this Lease, Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice to
Lessor of Lessee's commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this Lease
shall terminate as of the date specified in the termination notice. 9.4 Total
Destruction. Notwithstanding any other provision hereof, if a Premises Total
Destruction occurs, this Lease shall terminate 60 days following such
Destruction. If the damage or destruction was caused by the gross negligence or
willful misconduct of Lessee, Lessor shall have the right to recover Lessor's
damages from Lessee, except as provided in Paragraph 8.6. 9.5 Damage Near End of
Term. If at any time during the last 6 months of this Lease there is damage for
which the cost to repair exceeds one month's Base Rent, whether or not an
Insured Loss, Lessor may terminate this Lease effective 60 days following the
date of occurrence of such damage by giving a written termination notice to
Lessee within 30 days after the date of occurrence of such damage.
Notwithstanding the foregoing, if Lessee at that time has an exercisable option
to extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, (a) exercising such option and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the repairs
on or before the earlier of (i) the date which is 10 days after Lessee's receipt
of Lessor's written notice purporting to terminate this Lease, or (ii) the day
prior to the date upon which such option expires. If Lessee duly exercises such
option during such period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's
commercially reasonable expense, repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect. If Lessee fails
to exercise such option and provide such funds or assurance during such period,
then this Lease shall terminate on the date specified in the termination notice
and Lessee's option shall be extinguished. 9.6 Abatement of Rent; Lessee's
Remedies. (a) Abatement. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein. (b) Remedies. If Lessor is obligated to
repair or restore the Premises and does not commence, in a substantial and
meaningful way, such repair or restoration within 90 days after such obligation
shall accrue, Lessee may, at any time prior to the commencement of such repair
or restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee's election to terminate this Lease on a date not
less than 60 days following the giving of such notice. If Lessee gives such
notice and such repair or restoration is not commenced within 30 days Lease
shall terminate as of the date specified in said notice.  If the repair or
restoration is commenced within such 30 days, this lease INITIALS Page 6 of 13
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shall continue in full force and effect. "Commence" shall mean either the
unconditional authorization of the preparation of the required plans. or the
beginning of the actual work on the Premises, whichever first occurs. 9.7
Termination; Advance Payments. Upon termination of this Lease pursuant to
Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor. 10. Real
Property Taxes. 10.1 Definition. As used herein, the term "Real Property Taxes"
shall include any form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Premises or the
Project, Lessor's right to other income therefrom, and/or Lessor's business of
leasing, by any authority having the direct or indirect power to tax and where
the funds are generated with reference to the Building address and where the
proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. Real
Property Taxes shall also include any tax, fee, levy, assessment or charge, or
any increase therein: (i) imposed by reason of events occurring during the term
of this Lease, including but not limited to, a change in the ownership of the
Premises, and (ii) levied or assessed on machinery or equipment provided by
Lessor to Lessee pursuant to this Lease. 10.2 (a) Payment of Taxes. Lessor shall
pay the Real Property Taxes applicable to the Premises provided, however, that
Lessee shall pay to Lessor the amount, if any, by which Real Property Taxes
applicable to the Premises increase over the fiscal tax year during which the
Commencement Date Occurs ("Tax Increase"). Payment of any such Tax Increase
shall be made by Lessee to Lessor within 30 days after receipt of Lessor's
written statement setting forth the amount due and computation thereof. If any
such taxes shall cover any period of time prior to or after the expiration or
termination of this Lease, Lessee's share of such taxes shall be prorated to
cover only that portion of the tax bill applicable to the period that this Lease
is in effect. In the event lessee incurs a late charge on any Rent payment,
Lessor may estimate the current Real Property Taxes, and require that the Tax
Increase be paid in advance to Lessor by Lessee monthly in advance with the
payment of the Base Rent. Such monthly payment shall be an amount equal to the
amount of the estimated installment of the Tax Increase divided by the number of
months remaining before the month in which said installment becomes delinquent.
When the actual amount of the applicable Tax Increase is known. the amount of
such equal monthly advance payments shall be adjusted as required to provide the
funds needed to pay the applicable Tax Increase. If the amount collected by
Lessor is insufficient to pay the Tax Increase when due, Lessee shall pay
Lessor, upon demand, such additional sums as are necessary to pay such
obligations. Advance payments may be intermingled with other moneys of Lessor
and shall not bear interest. In the event of a Breach by Lessee in the
performance of its obligations under this Lease, then any such advance payments
may be treated by Lessor as an additional Security Deposit. (b) Additional
Improvements. Notwithstanding anything to the contrary in this Paragraph 10.2,
Lessee shall pay to Lessor upon demand therefor the entirety of any increase in
Real Property Taxes assessed by reason of Alterations or Utility Installations
placed upon the Premises by Lessee or at Lessee's request or by reason of any
alterations or improvements to the Premises made by Lessor subsequent to the
execution of this Lease by the Parties. 10.3 Joint Assessment. If the Premises
are not separately assessed, Lessee's liability shall be an equitable proportion
of the Tax Increase for all of the land and improvements included within the tax
parcel assessed, such proportion to be conclusively determined by Lessor from
the respective valuations assigned in the assessor's work sheets or such other
information as may be reasonably available. 10.4 Personal Property Taxes. Lessee
shall pay, prior to delinquency, all taxes assessed against and levied upon
Lessee Owned Alterations, Utility Installations, Trade Fixtures, furnishings,
equipment and all personal property of Lessee. When possible, Lessee shall cause
its Lessee Owned Alterations and Utility Installations, Trade Fixtures,
furnishings, equipment and all other personal property to be assessed and billed
separately from the real property of Lessor. If any of Lessee's said property
shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes
attributable to Lessee's property within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee's property. 11. Utilities
and Services. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered or billed to Lessee, Lessee shall pay a reasonable
proportion, to be determined by Lessor, of all charges jointly metered or
billed. There shall be no abatement of rent and Lessor shall not be liable in
any respect whatsoever for the inadequacy, stoppage, interruption or
discontinuance of any utility or service due to riot, strike, labor dispute,
breakdown, accident, repair or other cause beyond Lessor's reasonable control or
in cooperation with governmental request or directions. 12. Assignment and
Subletting. 12.1 Lessor's Consent Required. (a) Lessee shall not voluntarily or
by operation of law assign, transfer, mortgage or encumber (collectively,
"assign or assignment") or sublet all or any part of Lessee's interest in this
Lease or in the Premises without Lessor's prior written consent. (b) Unless
Lessee is a corporation and its stock is publicly traded on a national stock
exchange, a change in the control of Lessee shall constitute an assignment
requiring consent. The transfer, on a cumulative basis, of 25% or more of the
voting control of Lessee shall constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or series of
transactions (by way of merger, sale, acquisition, financing, transfer,
leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation  of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, whichever was or is greater, shall be considered an
assignment of this Lease to which Lessor may withhold its consent. "Net Worth of
Lessee" shall mean the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles. (d) An assignment or
subletting without consent shall, at Lessor's option, be a Default curable after
notice per Paragraph 13.1(c), or a non-curable Breach without the necessity of
any notice and grace period. If Lessor elects to treat such unapproved
assignment or subletting as a non-curable Breach, Lessor may either: (i)
terminate this Lease, or (ii) upon 30 days written notice, increase the monthly
Base Rent to 110% of the Base Rent then in effect. Further, in the event of such
Breach and rental adjustment, (i) the purchase price of any option to purchase
the Premises held by Lessee shall be subject to similar adjustment to 110% of
the price previously in effect, and (ii) all fixed and non-fixed rental
adjustments scheduled during the remainder of the Lease term shall be increased
to 110% of the scheduled adjusted rent. (e) Lessee's remedy for any breach of
Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or
injunctive relief. (f) Lessor may reasonably withhold consent to a proposed
assignment or subletting if Lessee is in Default at the time consent is
requested. (g) Notwithstanding the foregoing, allowing a de minims portion of
the Premises, ie.20 square feet or less, tube used by a third party vendor in
connection with the installation of a vending machine or payphone shall not
constitute a subletting. 12.2 Terms and Conditions Applicable to Assignment and
Subletting. (a) Regardless of Lessor's consent, no assignment or subletting
shall: (i) be effective without the express written assumption by such assignee
or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee
of any obligations hereunder, or (iii) alter the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lessee. (b) Lessor may accept Rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for Lessee's Default or Breach. (c)
Lessor's consent to any assignment or subletting shall not constitute a consent
to any subsequent assignment or subletting. (d) In the event of any Default or
Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or
anyone else responsible for the performance of Lessee's obligations under this
Lease, including any assignee or sublessee, without first exhausting Lessor's
remedies against any other person or entity responsible therefor to Lessor, or
any security held by Lessor. (e) Each request for consent to an assignment or
subletting shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any,
together with a fee of $500 as consideration for Lessor's considering and
processing said request. Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be reasonably requested. (See
also Paragraph 36) (f) Any assignee of, or sublessee under, this Lease shall, by
reason of accepting such assignment, entering into such sublease, or entering
into possession of the Premises or any portion thereof, be deemed to have
assumed and agreed to conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing. (g) Lessor's consent to any assignment
or subletting shall not transfer to the assignee or sublessee any Option granted
to the original Lessee by this Lease unless such transfer is specifically
consented to by Lessor in writing. (See Paragraph 39.2) .12.3 Additional Terms
and Conditions Applicable to Subletting. The following terms and conditions
shall apply to any subletting by Lessee of all or any part of the Premises and
shall be deemed included in all subleases under this Lease whether or not
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(a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest in
all Rent payable on any sublease, and Lessor may collect such Rent and apply
same toward Lessee's obligations under this Lease; provided, however, that until
a Breach shall occur in the performance of Lessee's obligations, Lessee may
collect said Rent. In the event that the amount collected by Lessor exceeds
Lessee's then outstanding obligations any such excess shall be refunded to
Lessee. Lessor shall not, by reason of the foregoing or any assignment of such
sublease, nor by reason of the collection of Rent, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee's
obligations to such sublessee. Lessee hereby irrevocably authorizes and directs
any such sublessee, upon receipt of a written notice from Lessor stating that a
Breach exists in the performance of Lessee's obligations under this Lease, to
pay to Lessor all Rent due and to become due under the sublease. Sublessee shall
rely upon any such notice from Lessor and shall pay all Rents to Lessor without
any obligation or right to inquire as to whether such Breach exists,
notwithstanding any claim from Lessee to the contrary. (b) In the event of a
Breach by Lessee, Lessor may, at its option require sublessee to attorn to
Lessor, in which event Lessor shall undertake the obligations of the sub less or
under such sublease from the time of the exercise of said option to the
expiration of such sublease; provided, however, Lessor shall not be liable for
any prepaid rents or security deposit paid by such sublessee to such sub lessor
or for any prior Defaults or Breaches of such sub lessor. (c) Any matter
requiring the consent of the sub lessor under a sublease shall also require the
consent of Lessor. (d) No sublessee shall further assign or sublet all or any
part of the Premises without Lessor's prior written consent. (e) Lessor shall
deliver a copy of any notice of Default or Breach by Lessee to the sublessee,
who shall have the right to cure the Default of Lessee within the grace period,
if any, specified in such notice. The sublessee shall have a right of
reimbursement and offset from and against Lessee for any such Defaults cured by
the sublessee. 13. Default; Breach; Remedies. 13.1 Default; Breach. A  "Default"
is defined as a failure by the Lessee to comply with or perform any of the
terms, covenants, conditions or Rules and Regulations under this Lease. A
"Breach" is defined as the occurrence of one or more of the following Defaults,
and the failure of Lessee to cure such Default within any applicable grace
period: (a) The abandonment of the Premises; or the vacating of the Premises
without providing a commercially reasonable level of security, or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized as
a result thereof, or without providing reasonable assurances to minimize
potential vandalism. (b) The failure of Lessee to make any payment of Rent or
any Security Deposit required to be made by Lessee hereunder, whether to Lessor
or to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of 3
business days following written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A
PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY
OF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF THE
PREMISES. (c) The failure of Lessee to allow Lessor and/or its agents access to
the Premises or the commission of waste, act or acts constituting public or
private nuisance, and/or an illegal activity on the Premises by Lessee, where
such actions continue for a period of 3 business days following written notice
to Lessee. (d) The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable Requirements, (ii) the service contracts, (iii)
the rescission of an unauthorized assignment or subletting, (iv) an Estoppel
Certificate or financial statements, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested
under Paragraph 42, (viii) material safety data sheets (MSDS), or (ix) any other
documentation or information which Lessor may reasonably require of Lessee under
the terms of this Lease, where any such failure continues for a period of 10
days following written notice to Lessee. (e) A Default by Lessee as to the
terms, covenants, conditions or provisions of this Lease, or of the rules
adopted under Paragraph 40 hereof, other than those described in subparagraphs
13.1(a), (b), (c) or (d), above, where such Default continues for a period of 30
days after written notice; provided, however, that if the nature of Lessee's
Default is such that more than 30 days are reasonably required for its cure,
then it shall not be deemed to be a Breach if Lessee commences such cure within
said 30 day period and thereafter diligently prosecutes such cure to completion.
(f) The occurrence of any of the following events: (i) the making of any general
arrangement or assignment for the benefit of creditors; (ii) becoming a "debtor"
as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the
case of a petition filed against Lessee, the same is dismissed within 60 days);
(iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within 30 days;
provided, however, in the event that any provision of this subparagraph (e) is
contrary to any applicable law, such provision shall be of no force or effect,
and not affect the validity of the remaining provisions. (g) The discovery that
any financial statement of Lessee or of any Guarantor given to Lessor was
materially false. (h) If the performance of Lessee's obligations under this
Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the
guaranty, or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory basis, and Lessee's failure, within 60 days following written
notice of any such event, to provide written alternative assurance or security,
which, when coupled with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease. 13.2 Remedies. If Lessee fails
to perform any of its affirmative duties or obligations, within 10 days after
written notice (or in case of an emergency, without notice), Lessor may, at its
option, perform such duty or obligation on Lessee's behalf, including but not
limited to the obtaining of reasonably required bonds, insurance policies, or
governmental licenses, permits or approvals. Lessee shall pay to Lessor an
amount equal to 115% of the costs and expenses incurred by Lessor in such
performance upon receipt of an invoice therefor. In the event of a Breach,
Lessor may, with or without further notice or demand, and without limiting
Lessor in the exercise of any right or remedy which Lessor may have by reason of
such Breach: (a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent. Efforts by Lessor to mitigate damages
caused by Lessee's Breach of this Lease shall not waive Lessor's right to
recover damages under Paragraph 12.  If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1.  In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute. (b) Continue the Lease and Lessee's right to possession and recover the
Rent as it becomes due, in which event Lessee may sublet or assign, subject only
to reasonable limitations. Acts of maintenance, efforts to relent, and/or the
appointment of a receiver to protect the Lessor's interests, shall not
constitute a termination of the Lessee's right to possession. (c) Pursue any
other remedy now or hereafter available under the laws or judicial decisions of
the state wherein the Premises are located. The expiration or termination of
this Lease and/or the termination of Lessee's right to possession shall not
relieve Lessee from liability under any indemnity provisions of this Lease as to
matters occurring or accruing during the term hereof or by reason of Lessee's
occupancy of the Premises. 13.3 Inducement Recapture. Any agreement for free or
abated rent or other charges, or for the giving or paying by Lessor to or for
Lessee of any cash or other bonus, inducement or consideration for Lessee's
entering into this Lease, all of which concessions are hereinafter referred to
as "Inducement Provisions," shall be deemed conditioned upon Lessee's full and
faithful performance of all of the terms, covenants and conditions of this
Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall
automatically be deemed deleted from this Lease and of no further force or
effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an inducement Provision
shall be immediately due and payable by Lessee to Lessor, notwithstanding any
subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or
the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lessor at the time of such acceptance.
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13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of
Rent will cause Lessor to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs include,
but are not limited to, processing and accounting charges, and late charges
which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall
not be received by Lessor within 5 days after such amount shall be due, then,
without any requirement for notice to Lessee, Lessee shall immediately pay to
Lessor a one-time late charge equal to 10% of each such overdue amount or $100,
whichever is greater. The Parties hereby agree that such late charge represents
a fair and reasonable estimate of the costs Lessor will incur by reason of such
late payment. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's Default or Breach with respect to such overdue
amount, nor prevent the exercise of any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for 3 consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance. 13.5 Interest. Any monetary payment
due Lessor hereunder, other than late charges, not received by Lessor, when due
as to scheduled payments (such as Base Rent) or within 30 days following the
date on which it was due for non-scheduled payment, shall bear interest from the
date when due, as to scheduled payments, or the 31st day after it was due as to
non-scheduled payments. The interest ("Interest") charged shall be computed at
the rate of 10% per annum but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4. 13.6 Breach by Lessor. (a) Notice of Breach. Lessor shall not be
deemed in breach of this Lease unless Lessor fails within a reasonable time to
perform an obligation required to be performed by Lessor. For purposes of this
Paragraph, a reasonable time shall in no event be less than 30 days after
receipt by Lessor, and any Lender whose name and address shall have been
furnished Lessee in writing for such purpose, of written notice specifying
wherein such obligation of Lessor has not been performed; provided, however,
that if the nature of Lessor's obligation is such that more than 30 days are
reasonably required for its performance, then Lessor shall not be in breach if
performance is commenced within such 30 day period and thereafter diligently
pursued to completion. (b) Performance by Lessee on Behalf of Lessor. In the
event that neither Lessor nor Lender cures said breach within 30 days after
receipt of said notice, or if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent the actual and reasonable cost to perform such
cure, provided however, that such offset shall not exceed an amount equal to the
greater of one month's Base Rent or the Security Deposit, reserving Lessee's
right to seek reimbursement from Lessor for any such expense in excess of such
offset. Lessee shall document the cost of said cure and supply said
documentation to Lessor. 14. Condemnation.  If the Premises or any portion
thereof are taken under the power of eminent domain or sold under the threat of
the exercise of said power (collectively "Condemnation"), this Lease shall
terminate as to the part taken as of the date the condemning authority takes
title or possession, whichever first occurs. If more than 10% of the Building,
or more than 25% of that portion of the Premises not occupied by any building,
is taken by Condemnation, Lessee may, at Lessee's option, to be exercised in
writing within 10 days after Lessor shall have given Lessee written notice of
such taking (or in the absence of such notice, within 10 days after the
condemning authority shall have taken possession) terminate this Lease as of the
date the condemning authority takes such possession. If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease shall remain
in full force and effect as to the portion of the Premises remaining, except
that the Base Rent shall be reduced in proportion to the reduction in utility of
the Premises caused by such Condemnation. Condemnation awards and/or payments
shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold, the value of the part
taken, or for severance damages; provided, however, that Lessee shall be
entitled to any compensation paid by the condemner for Lessee's relocation
expenses, loss of business goodwill and/or Trade Fixtures, without regard to
whether or not this Lease is terminated pursuant to the provisions of this
Paragraph. All Alterations and Utility Installations made to the Premises by
Lessee, for purposes of Condemnation only, shall be considered the property of
the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation. 15. Brokerage Fees. 15.1 Additional Commission. In addition to the
payments owed pursuant to Paragraph 1.9 above, and unless Lessor and the Brokers
otherwise agree in writing, Lessor agrees that: (a) if Lessee exercises any
Option, (b) if Lessee or anyone affiliated with Lessee acquires any rights to
the Premises or other premises owned by Lessor and located within the same
Project, if any, within which the Premises is located, (c) if Lessee remains in
possession of the Premises, with the consent of Lessor, after the expiration of
this Lease, or (d) if Base Rent is increased, whether by agreement or operation
of an escalation clause herein, then, Lessor shall pay Brokers a fee in
accordance with the schedule of the Brokers in effect at the time of the
execution of this Lease. 15.2 Assumption of Obligations. Any buyer or transferee
of Lessor's interest in this Lease shall be deemed to have assumed Lessor's
obligation hereunder. Brokers shall be third party beneficiaries of the
provisions of Paragraphs 1.9, 15, 22 and 31. If Lessor fails to pay to Brokers
any amounts due as and for brokerage fees pertaining to this Lease when due,
then such amounts shall accrue Interest. In addition, if Lessor fails to pay any
amounts to Lessee's Broker when due, Lessee's Broker may send written notice to
Lessor and Lessee of such failure and if Lessor fails to pay such amounts within
10 days after said notice, Lessee shall pay said monies to its Broker and offset
such amounts against Rent. In addition, Lessee's Broker shall be deemed to be a
third party beneficiary of any commission agreement entered into by and/or
between Lessor and Lessor's Broker for the limited purpose of collecting any
brokerage fee owed. 15.3 Representations and Indemnities of Broker
Relationships. Lessee and Lessor each represent and warrant to the other that it
has had no dealings with any person, firm, broker or finder (other than the
Brokers, if any) in connection with this Lease, and that no one other than said
named Brokers is entitled to any commission or finder's fee in connection
herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend
and hold the other harmless from and against liability for compensation or
charges which may be claimed by any such unnamed broker, finder or other similar
party by reason of any dealings or actions of the indemnifying Party, including
any costs, expenses, attorneys' fees reasonably incurred with respect thereto.
16. Estoppel Certificates. (a) Each Party (as "Responding Party") shall within
10 days after written notice from the other Party (the "Requesting Party")
execute, acknowledge and deliver to the Requesting Party a statement in writing
in form similar to the then most current "Estoppel Certificate" form published
by the AIR Commercial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party. (b) If the Responding Party shall fail to execute or deliver the Estoppel
Certificate within such 1O day period, the Requesting Party may execute an
Estoppel Certificate stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party, (ii)
there are no uncured defaults in the Requesting Party's performance, and (iii)
if Lessor is the Requesting Party, not more than one month's rent has been paid
in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate. (c)
If Lessor desires to finance, refinance, or sell the Premises, or any part
thereof, Lessee and all Guarantors shall within 10 days after written notice
from Lessor deliver to any potential lender or purchaser designated by Lessor
such financial statements as may be reasonably required by such lender or
purchaser, including but not limited to Lessee's financial statements for the
past 3 years.  All such financial statements shall be received by Lessor and
such lender or purchaser in confidence and shall be used only for the purposes
herein set forth. 17. Definition of Lessor. The term "Lessor" as used herein
shall mean the owner or owners at the time in question of the fee title to the
Premises, or, if this is a sublease, of the Lessee's interest in the prior
lease. In the event of a transfer of Lessor's title or interest in the Premises
or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor. Upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined. 18.
Severability. The invalidity of any provision of this Lease, as determined by a
court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof. 19. Days. Unless otherwise specifically indicated to the
contrary, the word "days" as used in this Lease shall mean and refer to calendar
days. 20. Limitation on Liability. The obligations of Lessor under this Lease
shall not constitute personal obligations of Lessor or its partners, members,
directors, officers or shareholders, and Lessee shall look to the Premises, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease, and shall not seek recourse against Lessor's
partners, members, directors, officers or shareholders, or any of their personal
assets for such satisfaction. 21. Time of Essence. Time is of the essence with
respect to the performance of all obligations to be performed or observed by the
Parties under this Lease. 22. No Prior or Other Agreements; Broker Disclaimer.
This Lease contains all agreements between the Parties with respect to any
matter mentioned herein, and no other prior or contemporaneous agreement or
understanding shall be effective. Lessor and Lessee each represents and warrants
to the Brokers that it has made, and is relying solely upon, its own
investigation as to the nature, quality, character and financial responsibility
of the other Party to this Lease and as to the use, nature, quality and
character of the Premises. Brokers have no responsibility with respect thereto
or with respect t to any default or breach hereof by either Party. INITIALS Page
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23. Notices. 23.1 Notice Requirements. All notices required or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing of
notices. Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for notice. A copy of all notices
to Lessor shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate in writing. 23.2
Date of Notice. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular
mail the notice shall be deemed given 72 hours after the same is addressed as
required herein and mailed with postage prepaid. Notices delivered by United
States Express Mail or overnight courier that guarantee next day delivery shall
be deemed given 24 hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means shall be
deemed delivered upon telephone confirmation of receipt (confirmation report
from fax machine is sufficient), provided a copy is also delivered via delivery
or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall
be deemed received on the next business day. 24. Waivers. (a) No waiver by
Lessor of the Default or Breach of any term, covenant or condition hereof by
Lessee, shall be deemed a waiver of any other term, covenant or condition
hereof, or of any subsequent Default or Breach by Lessee of the same or of any
other term, covenant or condition hereof. Lessor's consent to, or approval of,
any act shall not be deemed to render unnecessary the obtaining of Lessor's
consent to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or provisions of
this Lease requiring such consent. (b) The acceptance of Rent by Lessor shall
not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be
accepted by Lessor on account of moneys or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment. (c) THE PARTIES AGREE THAT THE TERMS OF THIS
LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE
THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE
IS INCONSISTENT WITH THIS LEASE. 25. Disclosures Regarding The Nature of a Real
Estate Agency Relationship. (a) When entering into a discussion with a real
estate agent regarding a real estate transaction, a Lessor or Lessee should from
the outset understand what type of agency relationship or representation it has
with the agent or agents in the transaction. Lessor and Lessee acknowledge being
advised by the Brokers in this transaction, as follows: (i) Lessor's Agent. A
Lessor's agent under a listing agreement with the Lessor acts as the agent for
the Lessor only. A Lessor's agent or subagent has the following affirmative
obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty,
and loyalty in dealings with the Lessor. To the Lessee and the Lessor: a.
Diligent exercise of reasonable skills and care in performance of the agent's
duties. b. A duty of honest and fair dealing and good faith.  c. A duty to
disclose all facts known to the agent materially affecting the value or
desirability of the property that are not known to, or within the diligent
attention and observation of, the Parties. An agent is not obligated to reveal
to either Party any confidential information obtained from the other Party which
does not involve the affirmative duties set forth above. (ii) Lessee's Agent. An
agent can agree to act as agent for the Lessee only. In these situations, the
agent is not the Lessor's agent, even if by agreement the agent may receive
compensation for services rendered, either in full or in part from the Lessor.
An agent acting only for a Lessee has the following affirmative obligations. To
the Lessee: A fiduciary duty of utmost care, integrity, honesty, and loyalty in
dealings with the Lessee. To the Lessee and the Lessor: a. Diligent exercise of
reasonable skills and care in performance of the agent's duties. b. A duty of
honest and fair dealing and good faith. c. A duty to disclose all facts known to
the agent materially affecting the value or desirability of the property that
are not known to, or within the diligent attention and observation of, the
Parties. An agent is not obligated to reveal to either Party any confidential
information obtained from the other Party which does not involve the affirmative
duties set forth above. (iii) Agent Representing Both Lessor and Lessee. A real
estate agent, either acting directly or through one or more associate licenses,
can legally be the agent of both the Lessor and the Lessee in a transaction, but
only with the knowledge and consent of both the Lessor and the Lessee. In a dual
agency situation, the agent has the following affinitive obligations to both the
Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity, honesty
and loyalty in the dealings with either Lessor or the Lessee. b. Other duties to
the Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In
representing both Lessor and Lessee, the agent may not without the express
permission of the respective Party, disclose to the other Party that the Lessor
will accept rent in an amount less than that indicated in the listing or that
the Lessee is willing to pay a higher rent than that offered. The above duties
of the agent in a real estate transaction do not relieve a Lessor or Lessee from
the responsibility to protect their own interests. Lessor and Lessee should
carefully read all agreements to assure that they adequately express their
understanding of the transaction. A real estate agent is a person qualified to
advise about real estate. If legal or tax advice is desired, consult a competent
professional. (b) Brokers have no responsibility with respect to any default or
breach hereof by either Party. The Parties agree that no lawsuit or other legal
proceeding involving any breach of duty, error or omission relating to this
Lease may be brought against Broker more than one year after the Start Date and
that the liability (including court costs and attorneys' fees), of any Broker
with respect to any such lawsuit and/or legal proceeding shall not exceed the
fee received by such Broker pursuant to this Lease; provided, however, that the
foregoing limitation on each Broker's liability shall not be applicable to any
gross negligence or willful misconduct of such Broker. (c) Lessor and Lessee
agree to identify to Brokers as "Confidential" any communication or information
given Brokers that is considered by such Party to be confidential. 26. No Right
To Holdover. Lessee has no right to retain possession of the Premises or any
part thereof beyond the expiration or termination of this Lease. In the event
that Lessee holds over, then the Base Rent shall be increased to 150% of the
Base Rent applicable immediately preceding the expiration or termination.
Nothing contained herein shall be construed as consent by Lessor to any holding
over by Lessee. 27. Cumulative Remedies. No remedy or election hereunder shall
be deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity. 28. Covenants and Conditions; Construction of
Agreement. All provisions of this Lease to be observed or performed by Lessee
are both covenants and conditions. In construing this Lease, all headings and
titles are for the convenience of the Parties only and shall not be considered a
part of this Lease. Whenever required by the context, the singular shall include
the plural and vice versa. This Lease shall not be construed as if prepared by
one of the Parties, but rather according to its fair meaning as a whole, as if
both Parties had prepared it. 29. Binding Effect; Choice of Law. This Lease
shall be binding upon the Parties, their personal representatives, successors
and assigns and be governed by the laws of the State in which the Premises are
located. Any litigation between the Parties hereto concerning this Lease shall
be initiated in the county in which the Premises are located. 30. Subordination;
Attornment; Non-Disturbance. 30.1 Subordination.  This Lease and any Option
granted hereby shall be subject and subordinate to any ground lease, mortgage,
deed of trust, or other hypothecation or security device (collectively,
"Security Device"), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals, modifications, and
extensions thereof. Lessee agrees that the holders of any such Security Devices
(in this Lease together referred to as "Lender") shall have no liability or
obligation to perform any of the obligations of Lessor under this Lease. Any
Lender may elect to have this Lease and/or any Option granted hereby superior to
the lien of its Security Device by giving written notice thereof to Lessee,
whereupon this Lease and such Options shall be deemed prior to such Security
Device, notwithstanding the relative dates of the documentation or recordation
thereof. 30.2 Attornment. In the event that Lessor transfers title to the
Premises, or the Premises are acquired by another upon the foreclosure or
termination of a Security Devise to which this Lease is subordinated (i) Lessee
shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn to
such new owner, and upon request, enter into a new lease, containing all of the
terms and provisions of this Lease, with such new owner for the remainder of the
term hereof, or, at the election of the new owner, this Lease will automatically
become a new lease between Lessee and such new owner, and (ii) Lessor shall
thereafter be relieved of any further obligations hereunder and such new owner
shall assume all of Lessor's obligations, except that such new owner shall not:
(a) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership; (b) be subject to any
offsets or defenses which Lessee might have against any prior lessor, (c) be
bound by prepayment of more than one month's rent, or (d) be liable for the
return of any security deposit paid to any prior lessor which was not paid or
credited to such new owner. 30.3 Non-Disturbance. With respect to Security
Devices entered into by Lessor after the execution of this Lease, Lessee's of
this Lease shall be subject to receiving a commercially reasonable
non-disturbance agreement (a "Non-Disturbance Agreement")der which
Non-Disturbance Agreement provides that Lessee's possession of the Premises, and
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the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises. Further, within 60 days after
the execution of this Lease, Lessor shall, if requested by Lessee, use its
commercially reasonable efforts to obtain a Non-Disturbance Agreement from the
holder of any pre-existing Security Device which is secured by the Premises. In
the event that Lessor is unable to provide the Non-Disturbance Agreement within
said 60 days, then Lessee may, at Lessee's option, directly contact Lender and
attempt to negotiate for the execution and delivery of a Non-Disturbance
Agreement. 30.4 Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31. Attorneys' Fees.  If any Party or Broker brings an action or proceeding
involving the Premises whether founded in tort, contract or equity, or to
declare rights hereunder, the Prevailing Party (as hereafter defined) in any
such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys' fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision
or judgment. The term, "Prevailing Party" shall include, without limitation, a
Party or Broker who substantially obtains or defeats the relief sought, as the
case may be, whether by compromise, settlement, judgment, or the abandonment by
the other Party or Broker of its claim or defense. The attorneys' fees award
shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys' fees reasonably incurred. In addition,
Lessor shall be entitled to attorneys' fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in connection
with such Default or resulting Breach ($200 is a reasonable minimum per
occurrence for such services and consultation). 32. Lessor's Access; Showing
Premises; Repairs. Lessor and Lessor's agents shall have the right to enter the
Premises at any time, in the case of an emergency, and otherwise at reasonable
times after reasonable prior notice for the purpose of showing the same to
prospective purchasers, lenders, or tenants, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary
or desirable and the erecting, using and maintaining of utilities, services,
pipes and conduits through the Premises and/or other premises as long as there
is no material adverse effect to Lessee's use of the Premises. All such
activities shall be without abatement of rent or liability to Lessee. 33.
Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon
the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction. 34. Signs. Lessor may place on the Premises ordinary "For
Sale" signs at any time and ordinary "For Lease" signs during the last 6 months
of the term hereof. Except for ordinary "for sublease" signs, Lessee shall not
place any sign upon the Premises without Lessor's prior written consent. All
signs must comply with all Applicable Requirements. 35. Termination; Merger.
Unless specifically stated otherwise in writing by Lessor, the voluntary or
other surrender of this Lease by Lessee, the mutual termination or cancellation
hereof, or a termination hereof by Lessor for Breach by Lessee, shall
automatically terminate any sublease or lesser estate in the Premises; provided,
however, that Lessor may elect to continue any one or all existing subtenancies.
Lessor's failure within 10 days following any such event to elect to the
contrary by written notice to the holder of any such lesser interest, shall
constitute Lessor's election to have such event constitute the termination of
such interest. 36. Consents. Except as otherwise provided herein, wherever in
this Lease the consent of a Party is required to an act by or for the other
Party, such consent shall not be unreasonably withheld or delayed. Lessor's
actual reasonable costs and expenses (including but not limited to architects',
attorneys', engineers' and other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including but not limited to consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an invoice and supporting documentation therefor. Lessor's consent to any
act, assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent be
deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent.
The failure to specify herein any particular condition to Lessor's consent shall
not preclude the imposition by Lessor at the time of consent of such further or
other conditions as are then reasonable with reference to the particular matter
for which consent is being given. In the event that either Party disagrees with
any determination made by the other hereunder and reasonably requests the
reasons for such determination, the determining party shall furnish its reasons
in writing and in reasonable detail within 10 business days following such
request. 37. Guarantor. 37.1 Execution. The Guarantors, if any, shall each
execute a guaranty in the form most recently published by the AIR Commercial
Real Estate Association. 37.2 Default. It shall constitute a Default of the
Lessee if any Guarantor fails or refuses, upon request to provide: (a) evidence
of the execution of the guaranty, including the authority of the party signing
on Guarantor's behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such guaranty, (b) current financial statements, (c)
an Estoppel Certificate, or (d) written confirmation that the guaranty is still
in effect. 38. Quiet Possession. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee's part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof. 39.
Options. If Lessee is granted an Option, as defined below, then the following
provisions shall apply: 39.1 Definition. "Option" shall mean: (a) the right to
extend or reduce the term of or renew this Lease or to extend or reduce the term
of or renew any lease that Lessee has on other property of Lessor; (b) the right
of first refusal or first offer to lease either the Premises or other property
of Lessor; (c) the right to purchase, the right of first offer to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this
Lease is personal to the original Lessee, and cannot be assigned or exercised by
anyone other than said original Lessee and only while the original Lessee is in
full possession of the Premises and, if requested by Lessor, with Lessee
certifying that Lessee has no intention of thereafter assigning or subletting.
39.3 Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later Option cannot be exercised unless the prior
Options have been validly exercised. 39.4 Effect of Default on Options. (a)
Lessee shall have no right to exercise an Option: (i) during the period
commencing with the giving of any notice of Default and continuing until said
Default is cured, (ii) during the period of lime any Rent is unpaid (without
regard to whether notice thereof is given Lessee), (iii) during the time Lessee
is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or
more notices of separate Default, whether or not the Defaults are cured, during
the 12 month period immediately preceding the exercise of the Option. (b) The
period of time within which an Option may be exercised shall not be extended or
enlarged by reason of Lessee's inability to exercise an Option because of the
provisions of Paragraph 39.4(a). (c) An Option shall terminate and be of no
further force or effect, not with standing Lessee's due and timely exercise of
the Option, if, after such exercise and prior to the commencement of the
extended term or completion of the purchase, (i) Lessee fails to pay Rent for a
period of 30 days after such Rent becomes due (without any necessity of Lessor
to give notice thereof), or (ii) if Lessee commits a Breach of this Lease. 40.
Multiple Buildings. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by and conform to all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, and care of said properties, including the care and
cleanliness of the grounds and including the parking, loading and unloading of
vehicles, and to cause its employees, suppliers, shippers, customers,
contractors and invitees to so abide and conform. Lessee also agrees to pay its
fair share of common expenses incurred in connection with such rules and
regulations. 41. Security Measures. Lessee hereby acknowledges that the Rent
payable to Lessor hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of
third parties. 42. Reservations. Lessor reserves to itself the right, from time
to time, to grant, without the consent or joinder of Lessee, such easements,
rights and dedications that Lessor deems necessary, and to cause the recordation
of parcel maps and restrictions, so long as such easements, rights, dedications,
maps and restrictions do not unreasonably interfere with the use of the Premises
by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions. 43.
Performance Under Protest. If at any time a dispute shall arise as to any amount
or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay. A Party who does not initiate
suit for the recovery of sums paid "under protest" within 6 months shall be
deemed to have waived its right to protest such payment. 44. Authority; Multiple
Parties; Execution. (a) If either Party hereto is a corporation,  trust, limited
liability company, partnership, or similar entity, each individual executing
Lease on behalf of such entity represents and warrants that he or she is duly
authorized to execute and deliver this Lease on its behalf. INITIALS Page 11 of
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Each Party shall, within 30 days after request, deliver to the other Party
satisfactory evidence of such authority. (b) If this Lease is executed by more
than one person or entity as "Lessee", each such person or entity shall be
jointly and severally liable hereunder. It is agreed that any one of the named
Lessees shall be empowered to execute any amendment to this Lease, or other
document ancillary thereto and bind all of the named Lessees, and Lessor may
rely on the same as if all of the named Lessees had executed such document. (c)
This Lease may be executed by the Parties in counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same instrument. 45. Conflict. Any conflict between the printed provisions of
this Lease and typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions. 46. Offer. Preparation of this Lease by
either Party or their agent and submission of same to the other Party shall not
be deemed an offer to lease to the other Party. This Lease is not intended to be
binding until executed and delivered by all Parties hereto. 47. Amendments. This
Lease may be modified only in writing, signed by the Parties in interest at the
time of the modification.  As long as they do not materially change Lessee's
obligations hereunder, Lessee agrees to make such reasonable non-monetary
modifications to this Lease as may be reasonably required by a Lender in
connection with the obtaining of normal financing or refinancing of the
Premises. 48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR
ARISING OUT OF THIS AGREEMENT. 49. Mediation and Arbitration of Disputes.  An
Addendum requiring the Mediation and/or the Arbitration of disputes between the
Parties and/or Brokers arising out of this Lease is is not attached to this
Lease. 50. Americans with Disabilities Act. Since compliance with the Americans
with Disabilities Act (ADA) is dependent upon Lessee's specific use of the
Premises, Lessor makes no warranty or representation as to whether or not the
Premises comply with ADA or any similar legislation. In the event that Lessee's
use of the Premises requires modifications or additions to the Premises in order
to be in ADA compliance, Lessee agrees to make any such necessary modifications
and/or additions at Lessee's expense. LESSOR AND LESSEE HAVE CAREFULLY READ AND
REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE
EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE
PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS
LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF
LESSOR AND LESSEE WITH RESPECT TO THE PREMISES. ATTENTION: NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY
BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS
LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO: 1. SEEK
ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. 2. RETAIN
APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES.
SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE
OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY,
THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE
PREMISES FOR LESSEE'S INTENDED USE. WARNING: IF THE PREMISES IS LOCATED IN A
STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE
REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures. Executed at Executed at On: On: By
LESSOR: Richard G. Henderson By LESSEE: Reshape Medical, Inc, a Delaware
Corporation By: By: Name Printed: Name Printed: Title: Title: By: By: Name
Printed: Name Printed: Title: Title: Address: Address: Telephone: ( ) Telephone:
( ) Facsimile: ( ) Facsimile: ( ) Federal ID No. Federal ID No. BROKER: BROKER:
CB Richard Ellis Voit  Commercial Brokerage Att: Steve Wagner Att: Hayden Socci/
Robert Socci Title: Senior Associate Title: Address: 3501 Jamboree Road, Suite
100 Address: 3500 W. Orangewood Ave. Newport Beach, CA 92660 Orange, CA 92686
Telephone:(949)725-8616 Telephone:(714)978-7880 Facsimile:(949)725-8545
Facsimile:( ) Federal ID No. Federal ID No. NOTICE: These forms are often
modified to meet changing requirements of law and industry needs. Always write
or call to make sure you are utilizing the most current form: AIR Commercial
Real Estate Association, 800 W 6th Street, Suite 800, Los Angeles, CA 90017.
Telephone No. (213)687-8777. Fax No.: (213) 687-8616. INITIALS Page 12 of 13
INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STG-11-6/07E

 

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© Copyright 2001 - By AIR Commercial Real Estate Association. All rights
reserved. No part of these works may be reproduced in any form without
permission in writing. BLANK ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM
STG-11-6/07E

INITIALS Page 13 of 13 INITIALS

 

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ADDENDUM TO THAT CERTAIN STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE
GROSS DATED MARCH  28, 2008 BY AND BETWEEN RICHARD G. HENDERSON ("LESSOR") AND
RESHAPE MEDICAL, INC., A DELAWARE CORPORATION ("LESSEE") 51. Base Rent Schedule:
The Monthly Base Rent for the Premises shall be as follows: Months June 1, 2008
- May 30, 2009 June 1, 2009 - June 30, 2009 July 1, 2009- June 30, 2010 July 1,
2010 -  July 30, 2010 August 1, 2010 - July 31, 2011 52. Tenant Improvements:
Lessor, at Lessor's sole cost and expense, shall Monthly Rent $9,750 Free
$10,125 Free $10,500 a) Install new carpet in the office areas
(commercial  grade) b) Remove hanging lights in the back office c) Clean and
seal the pebble flooring in the office areas d) Repair  cabinet below sink e)
Remove storage container  behind the building The location of the walls shall
53. Signage: g) Install new base board in warehouse h) Apply fresh paint to the
warehouse walls. Lessor has already applied fresh paint to the office walls. i)
Extend wall per exhibit A Lessee, at Lessee's sole cost and expense, shall be
allowed to install building signage per the Rancho San Clemente Business Park
and City of San Clemente Requirements.

INITIALS INITIALS N:\Team-Haly\Support\SRWagner\Addendum\2008\Henderson-100
Calle lglesia-Sgl Tm Gross.doc CBRE CB RICHARD ELLIS

 

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AIR OPTION(S) TO EXTEND STANDARD LEASE ADDENDUM Dated March 28, 2008 By and
Between (Lessor)  Richard G Henderson By and Between (Lessee) Reshape Medical,
Inc., a Delaware Corporation Address  of  Premises:  100 Calle Iglesia
San  Clemente,  California Paragraph 54 A. OPTION(S) TO EXTEND: Lessor hereby
grants to Lessee the option to extend the term of this Lease for  one   (
1)additional thirty-six  (36)month period(s) commencing when the prior term
expires upon each and all of the following terms and conditions: (i) In order to
exercise an option to extend, Lessee must give written notice of such election
to Lessor and Lessor must receive the same at least 6 but not more than 9
months  prior to the date that the option period would  commence,  time being
of  the essence.  If proper notification of the exercise of an option is not
given and/or received, such option shall automatically expire. Options  (if
there are more than one) may only be exercised consecutively. (ii) The
provisions of paragraph 39, including those  relating to Lessee's Default set
forth in paragraph  39.4 of this Lease, are conditions  of this Option. (iii)
Except for the provisions of this Lease granting an option or options to extend
the term, all of  the terms and conditions of  this  Lease except where
specifically modified by this option shall apply. (iv) This Option is personal
to the original Lessee, and cannot be assigned or exercised  by anyone  other
than  said original Lessee and  only  while the original Lessee is in full
possession of the Premises and without the intention of thereafter assigning or
subletting. (v)    The monthly rent  for each  month of the option period shall
be calculated as follows,  using the method(s)indicated below: (Check Method(s)
to be Used and Fill in Appropriately) ☐  I.     Cost  of Living
Adjustment(s)(COLA) a. On  (Fill  in  COLA Dates): the Base Rent shall be
adjusted by the change, if any, from the Base Month specified below, in the
Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of
Labor for (select one): ☐ CPI W (Urban Wage Earners and Clerical Workers) or ☐
CPI U (All Urban Consumers), for (Fill in Urban Area): All Items (1982-1984 =
100), herein referred to as "CPI". b. The monthly rent payable in accordance
with paragraph A.I.a. of this Addendum shall be calculated as follows: the Base
Rent set forth in paragraph 1.5 of the attached Lease, shall be multiplied by a
fraction the numerator of which shall be the CPI of the calendar month 2 months
prior to the month(s) specified in paragraph A.I.a. above during which the
adjustment is to take effect, and the denominator of which shall be the CPI of
the calendar month which is 2 months prior to (select one): ☐  the first month
of the term of this Lease as set forth in paragraph 1.3 ("Base Month") or  ☐
(Fill in Other "Base Month"): The sum so calculated shall constitute the new
monthly rent hereunder, but in no event, shall any such new monthly rent be less
than the rent payable for the month immediately preceding the rent adjustment.
c. In the event the compilation and/or publication of the CPI shall be
transferred to any other governmental department or bureau or agency or  shall
be discontinued, then the index most nearly the same as the CPI shall be used to
make such calculation. In the event that the Parties cannot  agree on such
alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance  with the then rules of said
Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitration shall be paid equally by the Parties. ☑
 II.    Market Rental Value Adjustment(s) (MRV) a. On (Fill in MRV
Adjustment   Date(s)) the Base Rent shall be adjusted to the "Market Rental
Value" of the property as follows: 1) Four months prior to each Market Rental
Value Adjustment Date described above. the Parties  shall attempt  to agree
upon  what the new  MRV will be on the adjustment date. If agreement cannot be
reached, within thirty days, then: (a)Lessor and Lessee shall immediately
appoint a mutually acceptable appraiser or broker to establish the new MRV
within the next30 days. Any associated costs will be split equally between the
Parties, or (b) Both  Lessor and   Lessee shall   each immediately  make
a   reasonable determination  of the  MRV and  submit such  determination in
PAGE 1 OF 2 INITIALS INITIALS ©2000 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM
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writing, to arbitration in accordance with the following provisions: (i) Within
15 days thereafter, Lessor and Lessee shall each select an ☐  appraiser or ☐
broker ("Consultant" check one) of their choice to act as an arbitrator. The two
arbitrators so appointed shall immediately select a third mutually acceptable
Consultant to act as a third arbitrator. (ii) The 3arbitrators shall
within  30days  of the  appointment of  the third  arbitrator reach  a
decision  as to  what the  actual MRV  for the Premises is, and whether Lessor's
or Lessee's submitted MRV is the closest thereto.  The decision of a majority of
the arbitrators shall be binding on the Parties. The submitted MRV which is
determined to be the closest to the actual MRV shall thereafter be used by the
Parties. (iii) If either of the Parties fails to appointan arbitrator within the
specified  15days,  the arbitrator  timely appointed  by one  of them shall
reach a decision on his or her own, and said decision shall be binding on the
Parties. (iv) The entire cost of such arbitration shall be paid by the party
whose submitted MRV is not selected, i.e. the one that is NOT the closest to the
actual MRV. 2) Notwithstanding the foregoing, the new MRV shall not be less than
the rent payable for the month immediately preceding the rent adjustment. b.
Upon the  establishment of each New Market Rental Value: 1) the new MRV will
become the new "Base Rent" for the purpose of calculating any further
Adjustments, and 2) the first month of each Market Rental Value term shall
become the new "Base Month" for the purpose of calculating any further
Adjustments. ☐ III.   Fixed Rental Adjustment(s) (FRA) The Base Rent shall be
increased to the following amounts on the dates set forth below: On (Fill in FRA
Adjustment Date(s)): The New Base Rent shall be: B. NOTICE: Unless specified
otherwise herein, notice of any rental adjustments, other than Fixed Rental
Adjustments, shall be made as specified in paragraph 23 of the Lease. C.
BROKER'S FEE: The Brokers shall be paid a Brokerage Fee for each adjustment
specified above in accordance with paragraph 15 of the Lease. NOTICE: These
forms are often modified to meet changing requirements of law and industry
needs. Always write or call to make sure you are utilizing the most current
form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite 800, Los
Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.: (213) 687-8616. PAGE 2
OF 2 INITIALS INITIALS ©2000 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM
OE-3-8/00E

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Exhibit A NOT FOR LEASE Extent wall approx 4

 

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AMENDMENT NO. 1 TO LEASE I. PARTIES AND DATE This Amendment No. 1 to lease (this
"Amendment") dated as of March 30, 2011 (the "Effective Date"), is entered into
by and between Reshape Medical, Inc., a Delaware corporation ("Lessee"), and
Richard G. Henderson ("Lessor"). lL RECITALS A. Lessor and Lessee entered into
that certain Standard Industrial/Commercial SingleTenant Lease—Gross dated as of
March 28, 2008 (the "Lease"), for certain premises defined in the Lease (the
"Premises"), which consists of approximately 7,500 square feet of space as
generally shown on the floor plans attached to the original Lease as Exhibit
"A," located in the building whose address is 100 Calle Iglesia, San Clemente,
California ("Building"). B. Lessee and Lessor desire to extend the term of Lease
and make such other modifications to the Lease as are set forth in "III.
MODIFICATIONS" next below. III MODIFICATIONS. Effective as of the Effective
Date, the Lease is hereby amended as follows: A. Expiration Date: The date on
which the term of the Lease ("Term") shall end is hereby extended from July 31,
2011 to July 31, 2012. B. Base Rent: The monthly Base Rent during the period
beginning on August 1, 2011 and ending on July 31, 2012 will be as follows:
August 1, 2011 - July 31, 2012 Monthly Base Rent/Gross $8,250 C. Reduction of
Security Deposit: A portion of Lessee's Security Deposit of $31,500 currently
held by Lessor shall be applied by it to Base Rent as follows: (i) for monthly
Base Rent for August 1, 2011- August 31, 2011, $8,250 from the Security Deposit
shall be applied for rent due; and (ii) for monthly Base Rent due for January 1,
2012-January 31, 2012, $8,250 from the Security Deposit shall be applied for
rent due. As of February 1, 2012, (a) the Security Deposit held by Lessor shall
be $15,000, and (b) Lessee shall not be obligated to maintain more than $15,000
as the Security Deposit. D. Option Lo Extend: Provided Lessee is not in default
beyond any applicable notice and cure period, Lessee shall have (2) two options
to extend the lease for twelve (12) months each at the then fair market value
("FMV") for comparable properties in South Orange County. Lessee shall exercise
each right to extend by giving Lessor written notice of such exercise at least
thirty (30) days prior to the expiration of the then-existing Term. Other than
the potential change in the Base Rent, all other terms of the Lease shall remain
in effect during each extended term.

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E. Commissions to Brokers: Lessor shall pay a leasing commission equal to $3,960
(4% of the total consideration of the extension term) split 50/50 between
Lessor's broker, 360 Commercial Partners and Lessee's broker. Voit Real Estate
Services. Said leasing commissions shall be payable upon mutual execution of
this Amendment. IV.GENERAL A. Effect of Amendment: The Lease shall remain in
full force and effect except to the extent modified or amended by this
Amendment. B. Entire Agreement: This Amendment and the Lease embody the entire
understanding between Lessor and Lessee with respect to Lessee's lease of the
Premises from Lessor and can be changed only by a writing signed by Lessor and
Lessee. C. Counterparts/Facsimile: This Amendment may be executed in
counterparts, and it shall be binding upon the parties as if all of said parties
executed the original hereof. It is agreed that a facsimile transmission of an
executed copy of this Amendment may be relied upon as conclusive evidence of the
execution of this Amendment by the party whose signature is show below on such
facsimile transmission. D. Defined Terms: All words commencing with initial
capital letters in this Amendment and defined in the Lease shall have the same
meaning in this Amendment as in the Lease, unless they are otherwise defined in
this Amendment. E. Corporate, Partnership, etc. Authority: If either party is a
corporation, limited liability company, partnership or other entity, or is
comprised of any or all of them, each individual executing this Amendment for
the corporation, limited liability company, partnership or other entity
represents that he or she is duly authorized to execute and deliver this
Amendment on behalf of the respective corporation, limited liability company,
partnership or other entity in accordance with its terms. F. Attorney's Fees:
The provisions of this Lease respecting payment of attorney's fees shall also
apply to this amendment. G. Time of the Essence: Time is of the essence of each
and every provision of this Amendment.

 

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V. EXECUTION Landlord and Tenant have executed this Amendment as of the date set
forth in "I. PARTIES AND DATE" above. LESSEE: RESHAPE MEDICAL, INC., LESSOR:
RICHARD G. HENDERSON By:  By: Name:  Name: Title:  Title: Date:  Date:

 

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AMENDMENT NO. 2 TO LEASE I. PARTIES AND DATE This Amendment No. 2 to Lease (the
"Amendment No. 2") dated as of March 29, 2012 (the "Effective Date"), is by and
between Reshape Medical, Inc., a Delaware Corporation ("Lessee"), and Richard G.
Henderson ("Lessor"). II. RECITALS A. Lessor and Lessee entered into that
certain Lease on March 28, 2008, and amended by that certain Amendment No. 1
dated March 30, 2011, as for the Premises (the "Premises") which consists of
approximately 7,500 square feet of space as generally shown on the floor plans
attached to the original Lease as Exhibit "A," located in the building whose
address is 100 Calle Iglesia, San Clemente, California ("Building"). B. Lessee
and Lessor desire to extend the term of Lease and make such other modifications
to the Lease as are set forth in "Ill. MODIFICATIONS" next below. Ill.
MODIFICATIONS. Effective as of the Effective Date, the Lease is hereby amended
as follows: A. Expiration Date: The date on which the term of the Lease ("Term")
shall end is hereby extended from July 31, 2012 to July 31, 2014. B. Premises:
As of July 1, 2012, Lessee shall expand in the approximately 500 Square foot
portion ("Expansion Space") of the property that Lessor currently occupies and
any reference to Premises hereafter shall refer to the entire property,
approximately 8,000 Square Feet. Prior to July 1, 2012, Lessor shall remove
existing mezzanine in the Expansion Space and deliver the space broom clean,
free of debris with no fixtures attached. Lessee shall have use of the Expansion
Space free of Rent from July 1, 2012 through July 31, 2012. C. Basic Rent:  The
monthly rent schedule shall be amended as follows: August 1, 2012 - July 31,
2013 August 1, 2013-July 31, 2014 Monthly Rent/Gross $7,920 $8,160 D.
Commissions to Brokers: Lessor shall pay a leasing commission equal to $7,718
(4% of the total consideration of the extension term) split 50/50 between
Lessor's broker, 360 Commercial Partners and Lessee's broker, Voit Real Estate
Services. Said leasing commissions shall be payable upon mutual execution of
this Amendment. IV. GENERAL A. Effect of Amendment: This Lease shall remain in
full force and effect except to the extent modified or amended by this
Amendment.

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B. Entire Agreement: This Amendment, Amendment No. 1, and the Lease embody the
entire understanding between Lessor and Lessee with respect to Lessee's lease of
the Premises from Lessor and can be changed only by a writing signed by Lessor
and Lessee.  C. Counterparts/Facsimile: This Amendment may be executed in
counterparts, and it shall be binding upon the parties as if all of said parties
executed the original hereof. It is agreed that a facsimile transmission of an
executed copy of this Amendment may be relied upon as conclusive evidence of the
execution of this Amendment by the party whose signature is show below on such
facsimile transmission.  D. Defined Terms: All words commencing with initial
capital letters in this Amendment and defined in the Lease shall have the same
meaning in this Amendment as in the Lease, unless they are otherwise defined in
this Amendment.  E. Corporate Partnership, etc. Authority: If either party is a
corporation, limited liability company, partnership or other entity, or is
comprised of any or all of them, each individual executing this Amendment for
the corporation, limited liability company, partnership or other entity
represents that he or she is duly authorized to execute and deliver this
Amendment on behalf of the respective corporation, limited liability company,
partnership or other entity in accordance with its terms.  F. Attorney's Fees:
The provisions of this Lease respecting payment of attorney's fees shall also
apply to this amendment.  G. Time of the Essence: Time is of the essence of each
and every provision of this Amendment.  V. EXECUTION Landlord and Tenant have
executed this Amendment as of the date set forth in "I. PARTIES AND DATE"
above.  LESSEE:    RESHAPE MEDICAL, INC. LESSOR:  RICHARD G. HENDERSON By: By:
Name: Name:  Title: Title: Date: Date:

 

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AMENDMENT NO. 3 TO LEASE I. PARTIES AND DATE This Amendment No. 3 to Lease (the
“Amendment No. 3”) dated as of April 3, 2014 (the “Effective Date”), is by and
between Reshape Medical, Inc., a Delaware Corporation (“Lessee”), and Richard G.
Henderson (“Lessor”).  II. RECITALS A. Lessor and Lessee entered into that
certain Lease on March 28, 2008, and amended by that certain Amendment No. 1
dated March 30, 2011, and Amendment No. 2 dated March 29, 2012, as for the
Premises (the "Premises") which consists of approximately 8,000 square feet of
space as generally shown on the floor plans attached to the original Lease as
Exhibit "A," located in the building whose address is 100 Calle Iglesia, San
Clemente, California ("Building''). B. Lessee and Lessor desire to extend the
term of Lease and make such other modifications to the lease as are set forth in
“III. MODIFICATIONS” next below.  III MODIFICATIONS. Effective as of the
Effective Date, the Lease is hereby amended as follows:  A. Expiration Date: The
date on which the term of the Lease ("Term") shall end is hereby extended from
July 31, 2014 to October 31. 2014. B. Basic Rent: The monthly rent schedule
shall be amended as follows:  August 1, 2014 - October 31, 2014 $8,976.00/Gross
IV. GENERAL A. Effect of Amendment: This Lease shall remain in full force and
effect except to the extent modified or amended by this Amendment. B. Entire
Agreement: This Amendment, Amendment No. 1 Amendment No. 2, and the Lease embody
the entire understanding between Lessor and Lessee with respect to Lessee's
lease of the Premises from Lessor and can be changed only by a writing signed by
Lessor and Lessee. C. Counterparts/Facsimile: This Amendment may be executed in
counterparts, and it shall be binding upon the parties as if all of said parties
executed the original hereof. It & agreed that a facsimile transmission of an
executed copy of this Amendment may be relied upon as conclusive evidence of the
execution of this Amendment by the party whose signature is show below on such
facsimile transmission. D. Defined Terms: All words commencing with initial
capital letters in this Amendment and defined in the Lease shall have the same
meaning in this Amendment as in the Lease, unless they are otherwise defined in
this Amendment.

 

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E. Corporate, Partnership, etc. Authority: If either party is a corporation,
limited liability company. partnership or other entity, or is comprised of any
or all of them, each individual executing this Amendment for the corporation,
limited liability company, partnership or other entity represents that he or she
is duly authorized to execute and deliver this Amendment on behalf of the
respective corporation. limited liability company, partnership or other entity
ii accordance with its terms. F. Attorney's Fees: The provisions of this Lease
respecting payment of attorney's fees shall also apply to this amendment. G.
Time of the Essence: Time is of the essence of each and every provision of this
Amendment.  V. EXECUTION Landlord and Tenant have executed this Amendment as of
the date set forth in “I. PARTIES AND DATE” above.  LESSEE: RESHAPE MEDICAL,
INC, LESSOR: RICHARD G. HENDERSON By: By: Name: Name:  Title: Title: Date: Date:

 

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AMENDMENT NO, 4 To LEASE  L PARTIES AND DATE  This Amendment No. 4 to Lease (the
"Amendment No. 4") dated as of April 21, 2014 (the "Effective Date"), is by and
between Reshape Medical, Inc., a Delaware Corporation ("Lessee"), and Richard G.
Henderson ("Lessor").  IL RECITALS  A. Lessor and Lessee entered into that
certain Lease on March 28, 2008, and amended by that certain Amendment No.
1dated March 30, 2011, Amendment No. 2 dated March 29, 2012, and Amendment No. 3
dated April 3, 2014, as for the Premises (the "Premises") which consists of
approximately 8,000square feet of space as generally shown on the floor plans
attached to the original Lease as Exhibit "A," located in the building whose
address is 100 Calle Iglesia, San Clemente, California ("Building"). B. Lessee
and Lessor desire to extend the term of Lease and make such other modifications
to the Lease as are set forth in "Ill. MODIFICATIONS" next below.  Ill. 
MODIFICATIONS. Effective as of the Effective Date, the Lease Is hereby amended
as follows:  A. Expiration Date: The date on which the term of the Lease
("Term") shall end is hereby extended from October 31, 2014 to October 31,
2016.  B. Basic Rent: The monthly rent schedule shall be amended as
follows:  November 1, 2014- October 31, 2015 $10,000.00/Gross November 1,
2015-0ctober 31, 2016   $10,288.00/Gross C. Commission to Broker: Lessor shall
pay a leasing commission equal to $9,738.00 (4% of the total lease consideration
of the extension term) to be split equally between Lessor's Broker (Jones Lang
LaSalle) and Lessee's Broker (Voit Real Estate Services). Said leasing
commission shall be payable upon mutual execution of this Amendment.  IV.
GENERAL A. Effect of Amendment: This Lease shall remain in full force and effect
except to the extent modified or amended by this Amendment.  B. Entire
Agreement: This Amendment, Amendment No.1, Amendment No. 2, Amendment No. 3, and
the Lease embody the entire understanding between Lessor and Lessee with respect
to Lessee's lease of the Premises from Lessor and can be changed only by a
writing signed by Lessor and Lessee.  C. Counterparts/Facsimile: This Amendment
may be executed in counterparts, and it shall be binding upon the parties as if
all of said parties executed the original hereof. It’s agreed that a facsimile
transmission of an executed copy of this Amendment may be relied upon as
conclusive evidence of the execution of this Amendment by the party whose
signature is show below on such facsimile

 

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transmission.  D. Defined Terms: All words commencing with initial capital
letters in this Amendment and defined in the Lease shall have the same meaning
in this Amendment as in the Lease, unless they are otherwise defined in this
Amendment. E. Corporate, Partnership, etc. Authority: If either party is a
corporation, limited liability company, partnership or other entity, or is
comprised of any or all of them, each individual executing this Amendment for
the corporation, limited liability company, partnership or other entity
represents that he or she is duly authorized to execute and deliver this
Amendment on behalf of the respective corporation, limited liability company,
partnership or other entity in accordance with its terms. F. Attorney's Fees:
The provisions of this Lease respecting payment of attorney's fees shall also
apply to this amendment.  G. Time of the Essence: Time is of the essence of each
and every provision of this Amendment.  V. EXECUTION Landlord and Tenant have
executed this Amendment as of the date set forth in "I. PARTIES AND DATE" above.
LESEE: RESHAPE MEDICL, INC LESSOR RICHARD G. HENDERSON By: By: Name: Name:
Title: Title: Date: Date:

 

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AMENDMENT NO 5 TO LEASE  I PARTIES AND DATE This Amendment No. 5 to Lease (the
·Amendment No. 5"} dated as of October 12, 2015 (the "Effective Data"), is by
and between Reshape Medical, Inc., a Delaware Corporation ("Lessee"), end
Richard G, Henderson ("Lessor"), II RECITALS  A. Lessor and lessee entered into
that certain lease on March 28, 2008, and amended by that certain Amendment No.
1 dated March 30, 2011 Amendment No. 2 dated March 29, 2012, Amendment No. 3
dated April 3, 2014 and Amendment No. 4 dated April 24, 2014, as for the
Premises (the "Premises") which consists of approximately 8,000 square feet of
space as generally shown on the floor plans attached to the original Lease as
Exhibit "A," located in the building whose address is 100 Calle Iglesia, San
Clamente, California ("Building").  B. Lessee and Lessor desire to extend the
term of Lease and make such other modifications to the Lease as are set forth in
“III. MODIFICATIONS" next below. III. MODIFICATIONS. Effective as of the
Effective Date, the Lease is hereby amended as follows: A. Expiration Date: The
date on which the term of the Lease ("Term") shall and is hereby extended from
October 31, 2016 to October 31, 2017.  B. Basic Rent: The monthly rent schedule
shall be amended as follows:  November 1, 2016-October 31, 2017
$10,700.00/Gross  C. Commission to Broker: Lessor shall pay a leasing commission
equal to $4,938 (4% of the total lease consideration of the extension term) to
be split equally between Lessor's Broker (Jones Lang LaSalle) and Lessee's
Broker (Voit Real Estate Services). Said leasing commission shall be payable
upon mutual execution of this Amendment.  IV. GENERAL   A. Effect of Amendment:
This Lease, shall remain in full force and effect except to the extent modified
or amended by this Amendment. B. Entire Agreement: This Amendment, Amendment
No.1, Amendment No. 2, Amendment No. 3, Amendment No. 4 and the Lease embody the
entire understanding between Lessor and Lessee with respect to Lessee’s lease of
the Premises from Lessor and can be changed only by a writing signed by Lessor
and Lessee.  C. Counterparts/Facsimile: This Amendment may be executed in
counterparts, and shall be binding upon the parties as if all of said parties
executed the original hereof. It is agreed that a facsimile transmission of an
executed copy of this Amendment may be relied upon as conclusive evidence of the
execution of this Amendment by the party whose signature is show below on such
facsimile

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transmission.  D. Defined Terms: All words commencing with Initial capital
letter in this Amendment and defined in the Lease Shall have the same meaning in
this Amendment as in the Lease, unless they are otherwise defined in this
Amendment  E. Corporate, Partnership, etc., Authority: If either party is a
corporation, limited liability company, Paner5hfp, partnership or other entity,
or is comprised of any or all of them, each individual executing this Amendment
for the corporation, limited liability company, partnership or other entity
represents that he or she is duly authorized to execute and deliver this
Amendment on behalf of the respective corporation, limited liability company,
partnership or other entity in accordance with as terms.  F. Attorney's Fees;
The provisions of this Lease respecting payment of attorney’s fees shall also
apply to this amendment G. Time of the Essence: Time is of the essence of each
and every provision of this Amendment.  EXECUTION Landlord and Tenant have
executed this Amendment as of the date set forth in "I. PARTIES AND DATE"
above.  LESSEE: RESHAPE MEDICAL, INC LESSOR: RICHARD G HENDERSON By: By: Name:
Name: Title: Title: Date: Date: 

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AMENDMENT NO. 6 To LEASE    I. PARTIES AND DATE  This Amendment No. 6 to Lease
(the "Amendment No. 6") dated as of January 4, 2017 (the "Effective Date"), is
by and between Reshape Medical, Inc., a Delaware Corporation ("Lessee"), and the
Richard G. Henderson Trust, successor in interest to Richard G. Henderson,
("Lessor").  II. RECITALS  A. Lessor and Lessee entered into  that certain Lease
on March 28, 2008, and amended by that certain Amendment No. 1 dated March 30,
2011, Amendment No. 2 dated March 29, 2012, Amendment No. 3 dated April 3, 2014,
Amendment No. 4 dated April 24, 2014, and Amendment No. 5 dated October 12, 2015
as for the Premises {the "Premises") which consists of approximately 8,000
square feet of space as generally shown on the floor plans attached to the
original Lease as Exhibit "A," located in the building whose address is 100
Calle Iglesia, San Clemente, California ("Building").  B. Lessee and Lessor
desire to extend the term of Lease and make such other modifications to the
Lease as are set forth in "III. MODIFICATIONS" next below.  Ill.  MODIFICATIONS.
Effective as of the Effective Date, the Lease is hereby amended as follows:  A.
Expiration Date: The date on which the term of the Lease ("Term") shall end is
hereby extended from October 31, 2017 to October 31, 2019.  B. Basic Rent: The
monthly rent schedule shall be amended as follows: November 1, 2017 -  October
31, 2019 $10,877.00/Gross C. Option to Extend: Provided Lessee is not in default
of the lease, Lessee shall have the option to extend the lease for one (1)
additional twelve (12) month period. The lease rate for the extension term shall
be at a mutually agreed upon rate but shall not be lower than the monthly rent
for the proceeding period ($10,877.00) and shall not increase by more than five
percent (5%) over the month rent for the proceeding period.  D. Commission to
Broker: Lessor shall pay a leasing commission equal to $5,220.96 (2% of the
total lease consideration of the extension term) to Lessor's Broker (Jones Lang
LaSalle).Said leasing commission shall be payable upon mutual execution of this
Amendment.  IV. GENERAL  A. Effect of Amendment: This Lease shall remain in full
force and effect except to the

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extent modified or amended by this Amendment.  B. Entire Agreement: This
Amendment, Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4,
Amendment No. 5 and the Lease embody the entire understanding between Lessor and
Lessee with respect to Lessee's lease of the Premises from Lessor and can be
changed only by a writing signed by Lessor and Lessee.  C.
Counterparts/Facsimile: This Amendment may be executed in counterparts, and it
shall be binding upon the parties as if all of said parties executed the
original hereof. It is agreed that a facsimile transmission of an executed copy
of this Amendment may be relied upon as conclusive evidence of the execution of
this Amendment by the party whose signature is show below on such facsimile
transmission.  D. Defined Terms: All words commencing with initial capital
letters in this Amendment and defined in the Lease shall have the same meaning
in this Amendment as in the Lease, unless they are otherwise defined in this
Amendment.  E. Corporate, Partnership, etc. Authority: If either party is a
corporation, limited liability company, partnership or other entity, or is
comprised of any or all of them, each individual executing this Amendment for
the corporation, limited liability company, partnership or other entity
represents that he or she is duly authorized to execute and deliver this
Amendment on behalf of the respective corporation, limited liability company,
partnership or other entity in accordance with its terms.  F. Attorney's Fees:
The provisions of this Lease respecting payment of attorney's fees shall also
apply to this amendment.  G. Time of the Essence: Time is of the essence of each
and every provision of this Amendment.  V. EXECUTION Landlord and Tenant have
executed this Amendment as of the date set forth in "I. PARTIES AND DATE"
above.  LESSEE: RESHAPE MEDICAL, INC. LESSOR: RICHARD G. HENDERSON TRUST By: By:
Name: Name: Title: Title:

 

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