Document:

EX-10.1

 Exhibit 10.1 

CAREDX, INC. 

2014 EQUITY INCENTIVE PLAN, AS AMENDED 

1. Purposes of the Plan. The purposes of this Plan are: 
  

	 	•	 	to attract and retain the best available personnel for positions of substantial responsibility, 

  

	 	•	 	to provide additional incentive to Employees, Directors and Consultants, and 

  

	 	•	 	to promote the success of the Company’s business. 

 The Plan permits the grant of
Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares. 

2. Definitions. As used herein, the following definitions will apply: 

(a) “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with
Section 4 of the Plan. 
 (b) “Applicable Laws” means the requirements relating to the administration of equity-based
awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction
where Awards are, or will be, granted under the Plan. 
 (c) “Award” means, individually or collectively, a grant under the
Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares. 
 (d)
“Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. 

(e) “Board” means the Board of Directors of the Company. 

(f) “Change in Control” means the occurrence of any of the following events: 

(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group
(“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power of the stock of the Company; provided, however,
that for purposes of this subsection, the acquisition of additional stock by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the stock of the Company will not be considered a Change in
Control; or 
 (ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is
replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this clause (ii), if any
Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or 

(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or
has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of
the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this 

 
subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by
the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s
stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the
total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this
subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with
such assets. 
 For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. 
 Notwithstanding
the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or
final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time. 

Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the
state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such
transaction. 
 (g) “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the
Code or regulation thereunder will include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or
regulation. 
 (h) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed
by the Board, or a duly authorized committee of the Board, in accordance with Section 4 hereof. 
 (i) “Common Stock”
means the common stock of the Company. 
 (j) “Company” means CareDx, Inc., a Delaware corporation, or any successor
thereto. 
 (k) “Consultant” means any natural person, including an advisor, engaged by the Company or a Parent or
Subsidiary to render bona fide services to such entity, provided the services (i) are not in connection with the offer or sale of securities in a capital-raising transaction, and (ii) do not directly promote or maintain a market for the
Company’s securities. 
 (l) “Director” means a member of the Board. 

(m) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the
case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time
to time. 
 (n) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or
Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. 

(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 

  
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 (p) “Exchange Program” means a program under which (i) outstanding Awards
are surrendered or cancelled in exchange for awards of the same type (which may have higher or lower exercise prices and different terms), awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any
outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is increased or reduced. The Administrator will determine the terms and conditions of
any Exchange Program in its sole discretion. 
 (q) “Fair Market Value” means, as of any date, the value of Common Stock
determined as follows: 
 (i) If the Common Stock is listed on any established stock exchange or a national market system, including
without limitation the New York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market of The NASDAQ Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of
a Share will be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported), as
reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
 (iii) For purposes of any Awards
granted on the Registration Date, the Fair Market Value will be the initial price to the public as set forth in the final prospectus included within the registration statement on Form S-1 filed with the Securities and Exchange Commission for
the initial public offering of the Common Stock; or 
 (iv) In the absence of an established market for the Common Stock, the Fair Market
Value will be determined in good faith by the Administrator. 
 (r) “Fiscal Year” means the fiscal year of the Company.

 (s) “Incentive Stock Option” means an Option that by its terms qualifies and is intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code. 
 (t) “Inside Director” means a Director who is an
Employee. 
 (u) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to
qualify as an Incentive Stock Option. 
 (v) “Officer” means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 
 (w) “Option” means a stock
option granted pursuant to the Plan. 
 (x) “Outside Director” means a Director who is not an Employee. 

(y) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code. 
 (z) “Participant” means the holder of an outstanding Award. 

  
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 (aa) “Performance Share” means an Award denominated in Shares which may be
earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine pursuant to Section 10. 

(bb) “Performance Unit” means an Award which may be earned in whole or in part upon attainment of performance goals or other
vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 10. 

(cc) “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to
restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the
Administrator. 
 (dd) “Plan” means this 2014 Equity Incentive Plan. 

(ee) “Registration Date” means the effective date of the first registration statement that is filed by the Company and
declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the Company’s securities. 
 (ff)
“Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 7 of the Plan, or issued pursuant to the early exercise of an Option. 

(gg) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share,
granted pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company. 
 (hh)
“Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. 

(ii) “Section 16(b)” means Section 16(b) of the Exchange Act. 

(jj) “Service Provider” means an Employee, Director or Consultant. 

(kk) “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan. 

(ll) “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to
Section 9 is designated as a Stock Appreciation Right. 
 (mm) “Subsidiary” means a “subsidiary
corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. 
 3. Stock Subject to the Plan.

 (a) Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares
that may be issued under the Plan is 3,866,995 Shares, plus the sum of (i) any Shares that, as of the Registration Date, have been reserved but not issued pursuant to any awards granted under the Company’s 2008 Equity Incentive Plan
(the “Existing Plan”) and are not subject to any awards granted thereunder, and (ii) any Shares subject to stock options or similar awards granted under the Existing Plan that, on or after the Registration Date, expire or
otherwise terminate without having been exercised in full and Shares issued pursuant to awards granted under the Existing Plan that are forfeited to or repurchased by the Company, with the maximum number of Shares to be added to the Plan from
previously granted awards under the Existing Plan equal to 865,252. The Shares may be authorized, but unissued, or reacquired Common Stock. 

  
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 (b) Automatic Share Reserve Increase. Subject to the provisions of Section 14 of the
Plan, the number of Shares available for issuance under the Plan will be increased on the first day of each Fiscal Year beginning with the 2015 Fiscal Year, in an amount equal to the least of (i) four percent (4%) of the outstanding
Shares on the last day of the immediately preceding Fiscal Year or (ii) such number of Shares determined by the Board; provided, however, that such determination under clause (ii) will be made no later than the last day of the immediately
preceding Fiscal Year. 
 (c) Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, is
surrendered pursuant to an Exchange Program, or, with respect to Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, is forfeited to, or repurchased by, the Company due to failure to vest, then the unpurchased Shares
(or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares), which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock
Appreciation Rights, only Shares actually issued (i.e., the net Shares issued) pursuant to a Stock Appreciation Right will cease to be available under the Plan; all remaining Shares under Stock Appreciation Rights will remain available for future
grant or sale under the Plan (unless the Plan has terminated). Shares that actually have been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided,
however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company, such Shares will become available for future grant
under the Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in
cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment as provided in Section 14, the maximum number of Shares
that may be issued upon the exercise of Incentive Stock Options will be 5,000,000 Shares, plus, to the extent allowable under Section 422 of the Code, any Shares that become available for issuance under the Plan pursuant to this
Section 3(c). 
 (d) Share Reserve. The Company, during the term of this Plan, will at all times reserve and keep available such
number of Shares as will be sufficient to satisfy the requirements of the Plan. 
 4. Administration of the Plan. 

(a) Procedure. 
 (i)
Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan. 

(ii) Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as
“performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two (2) or more “outside directors” within the meaning of Section 162(m) of the
Code. 
 (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the
transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3. 
 (iv) Other
Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws. 

(b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator will have the authority, in its discretion: 
 (i) to determine the Fair Market
Value; 

  
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 (ii) to select the Service Providers to whom Awards may be granted hereunder; 

(iii) to determine the number of Shares to be covered by each Award granted hereunder; 

(iv) to approve forms of Award Agreements for use under the Plan; 

(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine; 

(vi) to institute and determine the terms and conditions of an Exchange Program; 

(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; 

(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of satisfying applicable foreign laws or for qualifying for favorable tax treatment under applicable foreign laws; 

(ix) to modify or amend each Award (subject to Section 19 of the Plan), including but not limited to the discretionary authority to
extend the post-termination exercisability period of Awards and to extend the maximum term of an Option (subject to Section 6(b) of the Plan regarding Incentive Stock Options); 

(x) to allow Participants to satisfy tax withholding obligations in such manner as prescribed in Section 15 of the Plan; 

(xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted
by the Administrator; 
 (xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that otherwise
would be due to such Participant under an Award; and 
 (xiii) to make all other determinations deemed necessary or advisable for
administering the Plan. 
 (c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and
interpretations will be final and binding on all Participants and any other holders of Awards. 
 5. Eligibility. Nonstatutory Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 

6. Stock Options. 
 (a)
Limitations. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options
will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time
the Option with respect to such Shares is granted. 

  
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 (b) Term of Option. The term of each Option will be stated in the Award Agreement. In the
case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the
time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be
five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement. 
 (c) Option Exercise Price
and Consideration. 
 (i) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an
Option will be determined by the Administrator, subject to the following: 
 (1) In the case of an Incentive Stock Option 

(A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant. 

(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no
less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. 
 (2) In the case of a Nonstatutory
Stock Option, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. 

(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the
Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. 

(ii) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the
Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised. 
 (iii) Form of
Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of
consideration at the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the
Administrator determines in its sole discretion; (5) consideration received by the Company under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the
Plan; (6) by net exercise; (7) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (8) any combination of the foregoing methods of payment. 

(d) Exercise of Option. 

(i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the
Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. 

An Option will be deemed exercised when the Company receives: (i) a notice of exercise (in such form as the Administrator may specify
from time to time) from the person entitled to exercise the Option, 

  
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and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of
payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and
his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will
exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan. 

Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised. 
 (ii) Termination of Relationship as a Service Provider.
If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is
specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the
Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and
the Shares covered by such Option will revert to the Plan. 
 (iii) Disability of Participant. If a Participant ceases to be a
Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in
no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the
Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the
Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. 

(iv) Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the
Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option
as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been
designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the
laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the Administrator, if at the
time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will
terminate, and the Shares covered by such Option will revert to the Plan. 
 7. Restricted Stock. 

(a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time,
may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine. 

  
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 (b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an
Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, the Company
as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed. 
 (c) Transferability.
Except as provided in this Section 7 or the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction. 

(d) Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as
it may deem advisable or appropriate. 
 (e) Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of
Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine. The
Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed. 
 (f) Voting Rights.
During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. 

(g) Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions
on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. 
 (h) Return of Restricted
Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan. 

8. Restricted Stock Units. 

(a) Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the
Administrator determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units.

 (b) Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the
extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit, or
individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the Administrator in its discretion. 

(c) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout
as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout. 

(d) Form and Timing of Payment. Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s)
determined by the Administrator and set forth in the Award Agreement. The Administrator, in its sole discretion, may only settle earned Restricted Stock Units in cash, Shares, or a combination of both. 

  
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 (e) Cancellation. On the date set forth in the Award Agreement, all unearned Restricted
Stock Units will be forfeited to the Company. 
 9. Stock Appreciation Rights. 

(a) Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to
Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. 
 (b) Number of
Shares. The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Service Provider. 

(c) Exercise Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Stock
Appreciation Right will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. Otherwise, the Administrator, subject to the provisions of the Plan, will
have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan. 
 (d) Stock
Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and
conditions as the Administrator, in its sole discretion, will determine. 
 (e) Expiration of Stock Appreciation Rights. A Stock
Appreciation Right granted under the Plan will expire ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement, as determined by the Administrator, in its sole discretion. Notwithstanding the
foregoing, the rules of Section 6(d) relating to exercise also will apply to Stock Appreciation Rights. 
 (f) Payment of Stock
Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying: 

(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times 

(ii) The number of Shares with respect to which the Stock Appreciation Right is exercised. 

At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or
in some combination thereof. 
 10. Performance Units and Performance Shares. 

(a) Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and
from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant. 

(b) Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or
before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. 

  
 -10- 

 (c) Performance Objectives and Other Terms. The Administrator will set performance
objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares
that will be paid out to the Service Providers. The time period during which the performance objectives or other vesting provisions must be met will be called the “Performance Period.” Each Award of Performance Units/Shares will be
evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. The Administrator may set performance objectives based upon the achievement
of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion. 

(d) Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will
be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting
provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share. 

(e) Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon as
practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of
the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof. 
 (f) Cancellation
of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan. 

11. Outside Director Limitations. 

(a) Cash-settled Awards. No Outside Director may be granted, in any Fiscal Year, cash-settled Awards with a grant date fair value
(determined in accordance with U.S. generally accepted accounting principles) of greater than $300,000, increased to $500,000 in the Fiscal Year of his or her initial service as an Outside Director. 

(b) Stock-settled Awards. Subject to the provisions of Section 14 of the Plan, no Outside Director may be granted, in any Fiscal
Year, Awards covering more than 250,000 Shares, increased to 500,000 Shares in the Fiscal Year of his or her initial service as an Outside Director. 

Any Awards granted to an individual while he or she was an Employee, or while he or she was a Consultant but not an Outside Director, will not
count for purposes of the limitations under this Section 11. 
 12. Leaves of Absence/Transfer Between Locations. Unless the
Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or
(ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave any Incentive Stock Option held by the
Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option. 

13. Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate. 

  
 -11- 

 14. Adjustments; Dissolution or Liquidation; Change in Control. 

(a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure
of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of Shares that may be
delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits in Sections 3 and 11(b) of the Plan. 

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify
each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it previously has not been exercised, an Award will terminate immediately prior to the consummation of such proposed action. 

(c) Change in Control. In the event of a Change in Control, each outstanding Award will be treated as the Administrator determines,
including, without limitation, that (i) Awards may be assumed, or substantially equivalent Awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) with appropriate adjustments as to the number and kind
of shares and prices; (ii) upon written notice to a Participant, that the Participant’s Awards will terminate upon or immediately prior to the consummation of such Change in Control; (iii) outstanding Awards will vest and become
exercisable, realizable, or payable, or restrictions applicable to an Award will lapse, in whole or in part prior to or upon consummation of such Change in Control, and, to the extent the Administrator determines, terminate upon or immediately prior
to the effectiveness of such merger or Change in Control; (iv) (A) the termination of an Award in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the exercise of such Award or
realization of the Participant’s rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Administrator determines in good faith that no amount would
have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment), or (B) the replacement of such Award with other rights or property selected
by the Administrator in its sole discretion; or (v) any combination of the foregoing. In taking any of the actions permitted under this Section 14(c), the Administrator will not be required to treat all Awards similarly in the transaction.

 In the event that the successor corporation does not assume or substitute for the Award, the Participant will fully vest in and have the
right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse,
and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met. In addition, if an Option
or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be exercisable for a period of
time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period. 

For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the
right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for
each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, these type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such
consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the
exercise of an Option or Stock Appreciation Right 

  
 -12- 

 
or upon the payout of a Restricted Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent
equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control. 
 Notwithstanding
anything in this Section 14(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance
goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid
Award assumption. 
 (d) Outside Director Awards. With respect to Awards granted to an Outside Director, in the event of a Change in
Control, the Participant will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying such Award, including those Shares which otherwise would not be vested or exercisable, all
restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target
levels and all other terms and conditions met. 
 15. Tax. 

(a) Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier
time as any tax withholding obligations are due, the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes
(including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof). 
 (b)
Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without
limitation) (a) paying cash, (b) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, or (c) delivering to the Company
already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be
withheld. 
 (c) Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either
exempt from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A, except as
otherwise determined in the sole discretion of the Administrator. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Code Section 409A and will be construed and interpreted in accordance with such intent,
except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A, the Award will be granted, paid, settled or deferred in
a manner that will meet the requirements of Code Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. 

16. No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to
continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without
cause, to the extent permitted by Applicable Laws. 
 17. Date of Grant. The date of grant of an Award will be, for all purposes, the
date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of
such grant. 

  
 -13- 

 18. Term of Plan. Subject to Section 22 of the Plan, the Plan will become effective
upon the later to occur of (i) its adoption by the Board or (ii) the business day immediately prior to the Registration Date. It will continue in effect for a term of ten (10) years from the date adopted by the Board, unless
terminated earlier under Section 19 of the Plan. 
 19. Amendment and Termination of the Plan. 

(a) Amendment and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan. 

(b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to
comply with Applicable Laws. 
 (c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the
Plan will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will
not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. 

20. Conditions Upon Issuance of Shares. 

(a) Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance
and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance. 

(b) Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to
represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation
is required. 
 21. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having
jurisdiction or to complete or comply with the requirements of any registration or other qualification of the Shares under any state, federal or foreign law or under the rules and regulations of the Securities and Exchange Commission, the stock
exchange on which Shares of the same class are then listed, or any other governmental or regulatory body, which authority, registration, qualification or rule compliance is deemed by the Company’s counsel to be necessary or advisable for the
issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority, registration, qualification or rule compliance will not have been
obtained. 
 22. Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve
(12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws. 

  
 -14-Exhibit 10.39

 

STANDARD COMMERCIAL LEASE

 

THIS STANDARD COMMERCIAL
LEASE (this "Lease"), is made this 1st day of May 2018, by and between PMR Holdings, LLC. (hereinafter
called "Landlord"); and Sonoma Pharmaceuticals, Inc. (hereinafter called "Tenant").

 

W I T N E S S E T H:

 

Premises:

 

1.             The
Landlord, for and in consideration of the rents, covenants, agreements, and stipulations hereinafter mentioned, provided for and
contained to be paid, kept and performed by Tenant, has leased and rented and by these presents leases and rents unto the said
Tenant, and said Tenant hereby leases and takes upon the terms and conditions which hereinafter appear, the following described
property (hereinafter called the "Premises"), to wit:

 

414 Creekstone Ridge, Woodstock, GA 30188. The
Premises is approximately 1,190 square feet office condo.

 

No easement for light or air is included in
the Premises.

 

Term:

 

2.             The
Tenant shall have and hold the Premises for a term beginning on the 1st day of June 2018 and ending on the
31st day of August 2018 at midnight, unless sooner terminated as hereinafter provided (the "Initial
Term").

 

Rental:

 

3.             Tenant
agrees to pay to Landlord at the address of Landlord as stated in this Lease, 416 Creekstone Ridge, Woodstock, GA 30188,
promptly on the first day of each month, in advance, without offset or deduction, during the Initial Term of this Lease,
a monthly rental as set forth below:

 

June 1, 2018 to August 31, 2018          $1,300
per month

 

The CAM charge is included in the monthly lease
payment.

 

The payment for month of June
2018 in the amount of $1,300 (the security deposit in the amount of $1190 was paid June 2016)
shall be due at signing of this Lease.

 

Renewal Option:

 

4.             
Tenant shall have the right to extend this Lease for one additional renewal period of one (1) year from the end of the Initial
Term upon the following conditions:

 

(i)        
Tenant provides written notice to Landlord of its exercise of the Renewal Option at least three (3) months prior to the
expiration of the Initial Term.

 

(ii)      
No default exists at the time of the exercise or at the commencement of the Renewal Option or at the commencement of the
renewal term.

 

Upon the exercise of the Renewal Option
and the satisfaction of the conditions set forth above, monthly rental payments for the renewal term shall be at the then market
rate. If the parties are unable to agree on market rental rates prior to the commencement of the renewal term, Tenant shall be
deemed to have waived its renewal option.

 

 

 

    	 	1	 

     

    

 

Security Deposit:

 

5.               Upon
execution of this Lease Tenant shall deliver to Landlord One thousand three hundred dollars ($1,300.00) to be held
as security deposit. The Security Deposit shall be held by Landlord, without liability for interest thereon, as security for the
full and faithful performance by Tenant of each and every term, covenant and condition of this Lease of Tenant. If any of the
rents or other charges or sums payable by Tenant to Landlord shall be over-due and unpaid for more than 15 days from the due date
or should Landlord make payments on behalf of Tenant, or should Tenant fail to perform any of the terms of this Lease, then Landlord
may, at his option, appropriate and apply the Security Deposit, or so much thereof as may be necessary to compensate Landlord
toward the payment of the rents, charges or other sums due from Tenant, or towards any loss, damage or expense sustained by Landlord
resulting from such default on the part of Tenant; and in such event Tenant shall upon demand restore the Security Deposit to
the original sum deposited. In the event Tenant performs all of Tenant's obligations under this Lease, the Security Deposit shall
be returned in full to Tenant within thirty (30) days after the date of the expiration or sooner termination of the term of this
Lease and the surrender of the Premises by Tenant in compliance with the provisions of this Lease.

 

Utility Bills:

 

6.               Tenant
shall pay all utility bills, including, but not limited to gas and electricity, fuel, light and heat bills for the Premises which
are separately metered. See Special Stipulations for CAM charges.

 

Use of Premises:

 

7.               The
Premises shall be used solely for the offices of Tenant, as the space is currently configured, provided such activities do not
violate any applicable condominium association by-laws, rules or regulations. The Premises shall not be used for any illegal purposes,
or in any manner to create any nuisance or trespass or in any manner to violate the insurance or increase the rate of insurance
on the Premises.

 

Abandonment of the Premises:

 

8.                 
Tenant agrees not to abandon or vacate the Premises during the term of this Lease and agrees to use the Premises for the
purposes herein leased until the expiration hereof.

 

Repairs by Landlord:

 

9.               Landlord
agrees to keep in good repair the roof, foundations and exterior walls of the Premises (exclusive of all glass and exclusive of
all exterior doors) and underground utility and sewer pipes outside the exterior walls of the building, except repairs rendered
necessary by the negligence of Tenant, his agents, employees or invitees. Landlord will be responsible for HVAC repairs, including
labor, and Landlord shall be responsible for ordinary HVAC maintenance. If the Premises are part of a larger building or group
of buildings, then to the extent that the grounds are common area, either Landlord or the Owner/Declarant of the common areas
shall maintain the grounds surrounding the building, including paving, the mowing of grass, care of shrubs and general landscaping.
Tenant shall promptly report in writing to Landlord any defective condition known to him that Landlord is required to repair and
failure to do so shall be a waiver by Tenant of any claims against Landlord with respect thereto. Tenant shall allow the Landlord
and/or its representatives to enter the Premises from time to time during normal business hours to inspect for such defective
conditions.

 

Repairs by Tenant:

 

10.             With
the exceptions noted in Special Stipulations, Tenant accepts the Premises in their present "as is" condition, as of
Tenant's occupancy, and as suited for the uses intended by Tenant. Tenant shall, throughout the initial term of this Lease, and
any extension or renewal thereof, at his expense, maintain in good order and repair the interior spaces of Premises and other
improvements located thereon, except those repairs expressly required to be made by Landlord hereunder and except Tenant's leasehold
improvements after the date of possession which shall be Tenant's responsibility.

 

 

 

    	 	2	 

     

    

 

Tenant agrees to return the Premises to
Landlord at the expiration, or prior termination of this Lease, in as good of a condition and repair as when first received, natural
wear and tear, damage by storm, fire, lightning, earthquake or other casualty alone excepted unless said fire or other casualty
was caused by Tenant in which event Tenant shall be responsible for the restoration.

 

Alterations:

 

11.             (a)
Tenant shall not make any alterations, additions, or improvements to the Premises without Landlord's prior written consent,
which consent may be withheld in Landlord's sole discretion, and shall be conditioned upon proper insurance being in place
prior to any work. Tenant shall promptly remove any alterations, additions, or improvements constructed in violation of this
Paragraph 11 upon Landlord's written request. All approved alterations, additions, and improvements will be
accomplished in a good and workmanlike manner, in conformity with all applicable laws and regulations and by a contractor
approved by Landlord (such approval not to be unreasonably withheld), free of any liens or encumbrances.

 

    (b) All alterations,
additions and improvements shall become Landlord's property upon the termination of this Lease.

 

Tax, Insurance, and Association Fees Escalation:

 

12.            Tenant
shall pay upon demand as additional rental during the term of this Lease, and any extension or renewal thereof, the amount by
which all taxes (including but not limited to, special assessments and any other governmental charges) on the Premises for each
tax year exceed all taxes on the Premises for the tax year 2018, as well as the amount by which all condominium association
fees on the Premises for each calendar year exceed all condominium association fees on the Premises for the calendar year 2018.
In the event the Premises are less than the entire property assessed for such taxes for any such tax year, then the tax for
any such year applicable to the Premises shall be determined by proration on the basis that the rentable floor area of the Premises
bears to the rentable floor area of the entire property assessed. If the final year of the Lease term fails to coincide with the
tax year or calendar year, then any excess for the tax year or calendar year during which the term ends shall be reduced by the
pro rata part of such tax year or calendar year beyond the Lease term. If such taxes for the year in which the Lease terminates
are not ascertainable before payment of the last month's rental, then the amount of such taxes assessed against the property for
the previous tax year shall be used as a basis for determining the pro rata share, if any, to be paid by Tenant for that portion
of the last Lease year.

 

Tenant shall further pay, upon demand, his pro rata share of
the excess cost of fire and extended coverage insurance including any and all public liability insurance on the building over the
cost for the first year of the Lease term for each subsequent year during the term of this Lease. Tenant's pro rata portion of
increased taxes or share of excess cost of fire and extended coverage and liability insurance, as provided herein, shall be payable
within fifteen (15) days after receipt of notice from Landlord as to the amount due. If the property insurance premiums are increased
due to Tenant's use of the premises, Tenant's leasehold improvements, or an act or omission of Tenant, then Tenant shall pay the
entire increase as additional rental.

 

Destruction of or Damage to Premises:

 

13.            If
the Premises are totally destroyed by storm, fire, lightning, earthquake or other casualty (not the fault of Tenant), this
Lease shall terminate as of the date of such destruction and rental shall be accounted for as between Landlord and Tenant as
of that date. If the Premises are damaged but not wholly destroyed by any such casualties (not the fault of Tenant) and it is
still functionally practical for Tenant to use the Premises to conduct its business, rental shall abate in such proportion as
use of the Premises has been destroyed and Landlord shall restore Premises to substantially the same condition as before
damage as speedily as is practicable and provided sufficient insurance proceeds are available, whereupon full rental shall
commence. If the Premises are not restored within ninety (90) days, Tenant has as its sole option the right to cancel this
Lease within ten (10) days thereof.

 

 

 

    	 	3	 

     

    

 

Indemnity; Insurance: Coverage as per the Tenant's then existing
insurance policy terms.

 

14.           Tenant agrees to, and hereby does indemnify and save Landlord harmless against all claims for damages to persons or property
by reason of Tenant's negligence in its use or occupancy of the Premises and/or breach of any provision of this Lease (excepting
only for losses caused by Landlord's gross negligence), and all expenses incurred by Landlord in connection therewith, including,
without limitation, attorney's fees and court costs. Supplementing the foregoing and in addition thereto, Tenant shall, during
all times of this Lease, and any extension or renewal thereof, and at Tenant's expense, maintain in full force and effect comprehensive
general liability insurance with limits of $1,000,000.00 per person and $1,000,000.00 per accident, and property damage limits
of $300,000.00, which insurance shall contain a special endorsement recognizing and insuring any liability accruing to Tenant under
the first sentence of this Paragraph 14, and naming the Landlord as additional insured. Tenant shall also procure and maintain
property insurance, at full replacement value for any leasehold improvements of or for Tenant. Tenant shall provide evidence of
such insurance to Landlord prior to the commencement of the term of this Lease. Said Certificate of Insurance also shall provide
that Landlord will be given thirty (30) days' written notice prior to cancellation, or expiration of the insurance or material
amendment thereof Landlord and Tenant hereby release and relieve the other, and waive their entire right of recovery against the
other for loss or damage arising out of or incident to the perils insured against which perils occur in, on or about the Premises,
whether due to the negligence of Landlord or Tenant or their agents, employees, contractors and/or invites provided insurance proceeds
are paid for such loss or damage. Landlord and Tenant shall, upon obtaining the policies of insurance required, give notice to
the insurance carrier or carriers that the foregoing mutual waiver of subrogation is contained in this Lease.

 

Governmental Orders:

 

15.           Tenant
agrees, at his own expense, promptly to comply with all requirements of any legally constituted public authority made necessary
by reason of Tenant's occupancy of the Premises. Landlord agrees promptly to comply with any such requirements if not made necessary
by reason of Tenant's occupancy. It is mutually agreed, however, between Landlord and Tenant, that if in order to comply with
such requirements, the cost to Landlord or Tenant, as the case may be, shall exceed a sum equal to one year's rent, then Landlord
or Tenant who is obligated to comply with such requirements may terminate this Lease by giving written notice of termination to
the other party by registered mail, which termination shall become effective sixty (60) days after receipt of such notice and
which notice shall eliminate the necessity of compliance with such requirements by giving such notice unless the party receiving
such notice of termination shall, before termination becomes effective, pay to the party giving notice all costs of compliance
in excess of one year's rent, or secure payment of said sum in manner satisfactory to the party giving notice.

 

Condemnation:

 

16.           If the whole of the Premises, or such portion thereof as will make the Premises unusable for the purposes herein leased
be condemned by any legally constituted authority for any public use or purpose, then in either of said events the term hereby
granted shall cease from the date when possession thereof is taken by public authorities, and rental shall be accounted for as
between Landlord and Tenant as of said date. Such termination, however, shall be without prejudice to the rights of either Landlord
or Tenant to recover compensation and damage caused by condemnation from the condemnor. It is further understood and agreed that
neither the Tenant nor Landlord shall have any rights in any award made to the other by any condemnation authority notwithstanding
the termination of the Lease as herein provided.

 

Assignment and Subletting:

 

17.           Tenant
shall not, without the prior written consent of Landlord, which shall not be unreasonably withheld, assign this Lease or any interest
hereunder or sublet the Premises or any part thereof, or permit the use of the Premises by any party other than the Tenant. Transfers
of a majority ownership in Tenant shall be deemed assignments that require approval of Landlord. Consent to any assignment or
sublease shall not impair this provision and all later assignments or subleases shall be made likewise only on the prior written
consent of Landlord. Assignee or Tenant, at option of Landlord, shall become directly liable to Landlord for all obligations of
Tenant hereunder, but no sublease or assignment by Tenant shall relieve Tenant of any liability hereunder.

 

 

 

    	 	4	 

     

    

 

Removal of Fixtures:

 

18.           Tenant
may (if not in default hereunder) prior to the expiration of this Lease, or any extension or renewal thereof, remove all trade
fixtures and trade equipment which Tenant has placed in the Premises, provided Tenant repairs all damage to the Premises caused
by such removal.

 

Events of Default:

 

19.           The
happening of any one or more of the following events (hereinafter any one of which may be referred to as an "Event of Default")
during the term of this Lease, or any renewal or extension thereof, shall constitute a breach of this Lease on the part of the
Tenant: (1) Tenant fails to pay the rental as provided for herein or any other sums provided for herein; (2) Tenant abandons or
vacates the Premises for more than fifteen (15) days; (3) Tenant fails to comply with or abide by and perform any other obligation
imposed upon Tenant under this Lease; (4) Tenant is adjudicated bankrupt; (5) a permanent receiver is appointed for Tenant's property
and such receiver is not removed within sixty (60) days after written notice from Landlord to Tenant to obtain such removal; (6)
Tenant, either voluntarily or involuntarily, takes advantage of any debt or relief proceedings under any present or future law,
whereby the rent or any part thereof, is or is proposed to be, reduced or payment thereof deferred; (7) Tenant makes an assignment
for benefit of creditors; or (8) Tenant's effects are levied upon or attached under process against Tenant, which is not satisfied
or dissolved within thirty (30) days after written notice from Landlord to Tenant to obtain satisfaction thereof.

 

Remedies Upon Default:

 

20.           Upon
the occurrence of an Event(s) of Default, Landlord may pursue any one or more of the following remedies separately or concurrently,
without any notice (except as specifically provided hereafter) and without prejudice to any other remedy herein provided or provided
by law: (a) upon any Event of Default, Landlord may terminate this Lease by giving written notice to Tenant and upon such termination
shall be entitled to recover from Tenant damages (for loss of bargain and not as a penalty) in an amount equal to the present
value (discounted at ten percent (10%) per annum) of all rental which is then due and which would otherwise have become due throughout
the remaining term of this Lease, or any renewal or extension thereof (as if this Lease had not been terminated); or (b) upon
any Event of Default, Landlord at its option may, but shall not be obligated to, make any payment required of Tenant or perform
any obligation of Tenant, and the amount Landlord pays, or the cost of its performance, together with interest thereon at the
highest legal rate permitted, shall be deemed an additional charge payable by Tenant on demand; or (c) upon any Event of Default,
Landlord, as Tenant's agent, without terminating this Lease may enter upon and rent the Premises, in whole or in part, at the
best price obtainable by reasonable effort, without advertisement and by private negotiations and for any term Landlord deems
proper, with Tenant being liable to Landlord for the deficiency, if any, between Tenant's rent hereunder and the price obtained
by Landlord on reletting (for loss of bargain and not as a penalty), provided, however, that Landlord shall not be considered
to be under any duty by reason of this provision to take any action to mitigate damages by reason of Tenant's default. Suit or
suits for the recovery of the deficiency or damage or for any installment or installments of rent, additional rent or any other
charge due under this Lease may be brought by Landlord at any time or, at Landlord's election, from time to time, and nothing
in this Lease shall be deemed to require Landlord to wait until the original term expiration date to bring suit. Tenant hereby
expressly waives service of any notice of intention to reenter. Tenant hereby waives any and all rights to recover or to regain
possession of the Premises or to reinstate or to redeem this Lease as permitted or provided by any statute, law or decision now
or hereafter in force and effect. No receipt of moneys by Landlord from Tenant after the cancellation or termination of the Lease
shall reinstate, continue or extend the Lease, or affect any prior notice given to Tenant or operate as a waiver of the right
of Landlord to enforce the payment of rent and additional rent then due or subsequently falling due, or operate as a waiver of
the right of Landlord to recover possession of the Premises by suit, action, proceeding or other remedy, and any and all moneys
so collected shall be deemed to be payments on account of the use and occupancy of the Premises, or at the election of the Landlord,
on account of Tenant's liability under this Lease. Nothing in this Article shall limit or prejudice the right of Landlord to prove
and obtain as liquidated damages in any bankruptcy, insolvency, receivership, reorganization or dissolution proceeding an amount
equal to the maximum allowed by any statute or rule of law governing such proceeding, whether or not such amount is greater, equal
to or less than the amount of the damages referred to in any of the preceding sections. In the event of a breach or a threatened
breach by Tenant of any of its Lease obligations, Landlord shall have the right to enjoin and restrain the breach and to invoke
any remedy allowed by law or in equity, in addition to other remedies provided in this Lease. The rights and remedies of Landlord
are distinct, separate and cumulative, and no one of them, whether or not exercised by Landlord, shall be deemed to be to the
exclusion of any of the others. The failure of Landlord to insist upon strict performance of any of Tenant's obligations under
this Lease shall not be deemed a waiver of any rights or remedies that Landlord may have and shall not be deemed a waiver of any
subsequent breach or default by Tenant. Tenant agrees that notwithstanding anything contained in any statute, enactment or other
law of the state in which the Premises are located or of any other jurisdiction, none of the personal property located on the
Premises shall be exempt from levy for distress for rent in arrears, and that if Tenant makes any claim for such an exemption,
this agreement may be pleaded as an estoppel against Tenant in any appropriate action.

 

 

 

    	 	5	 

     

    

 

Exterior Signs:

 

21.             Tenant
shall place no signs upon the outside walls or roof of the Premises except with the written consent of the Landlord and approval
of the condominium association. Any and all signs placed on the Premises by Tenant shall be maintained in compliance with governmental
rules and regulations governing such signs and Tenant shall be responsible to Landlord for any damage caused by installation,
use or maintenance of said signs and to repair all damage evident to removal of said signs.

 

Rules and Regulations:

 

22.             Tenant
shall obey all rules and regulations of the office park and association within which the Premises is situated.

 

Late Charges:

 

23.            
If Landlord fails to receive any rent payment within fifteen (15) days after it becomes due, Tenant shall pay Landlord,
as additional rental, a late charge equal to ten percent (10%) of the overdue amount. The parties agree that such late charges
represent a fair and reasonable estimate of the costs Landlord will incur by reason of such late payment.

 

Entry for Carding, Etc.:

 

24.            
Landlord may card the Premises "For Rent" or "For Sale" sixty (60) days before the termination of this
Lease. Landlord may enter the Premises at reasonable hours upon prior notice to Tenant to exhibit same to prospective purchasers
or tenants and to make repairs required of Landlord under the terms hereof or to make repairs to Landlord's adjoining property,
if any.

 

Effect of Termination of Lease:

 

25.           No termination of this Lease prior to the normal ending thereof, by lapse of time or otherwise, shall affect Landlord's
right to collect rent for the period prior to termination thereof.

 

Mortgagee's Rights:

 

26.           Tenant's rights shall be subject to any bona fide mortgage or deed to secure debt which is now or may hereafter be placed
upon the Premises by Landlord. Tenant shall, if requested by Landlord, execute a separate agreement reflecting such subordination.

 

No Estate in Land:

 

27.           This Lease shall create the relationship of Landlord and Tenant between the parties hereto. No estate shall pass out of
Landlord. Tenant has only a usufruct not subject to levy and sale, and not assignable by Tenant except by Landlord's consent.

 

Holding Over:

 

28.          If
Tenant remains in possession of the Premises after expiration of the term hereof with Landlord's acquiescence and without any
express agreement of the parties, Tenant shall be a tenant at will, the rental rate will be 150% of the base rate for that year.
If Tenant remains in possession of the Premises after expiration of the term hereof without Landlord's acquiescence, Tenant shall
be a tenant at sufferance and commencing on the date following the date of such expiration, the rental rate shall be 200% of the
base lease rate for that year, or fraction thereof during which Tenant so remains in possession.

 

 

 

    	 	6	 

     

    

 

Attorney's Fees:

 

29.           In
the event that any action or proceeding is brought to enforce any term, covenant or condition of this Lease on the part of Landlord
or Tenant, the prevailing party in such litigation shall be entitled to reasonable attorney's fees to be fixed by the court in
such action or proceeding. Furthermore, the parties hereby agree to pay attorneys' fees and expenses in any litigation or negotiation
in which the other party shall, without its fault, become involved through or on account of this Lease.

 

Rights Cumulative:

 

30.          
All rights, powers and privileges conferred hereunder upon parties hereto shall be cumulative and not restrictive of those
given by law.

 

Waiver of Rights:

 

31.              No
failure of Landlord to exercise any power given Landlord hereunder or to insist upon strict compliance by Tenant of Tenant's obligations
hereunder and no custom or practice of the parties at variance with the terms hereof shall constitute a waiver of Landlord's right
to demand exact compliance with the terms hereof.

 

Environmental Laws:

 

32.              Landlord
represents to the best of Landlord's knowledge and belief (which knowledge and belief does not include any actual investigation
or inquiry) that the Premises are in compliance with all applicable environmental laws. Tenant represents and warrants that Tenant
shall be in compliance with all applicable environmental laws and that Tenant will not permit any of Tenant's employees, agents,
contractors or subcontractors, or any person present on the Premises to generate, manufacture, store, dispose or release on, about,
or under the Premises any hazardous substances which would result in the Premises not complying with any applicable environmental
laws.

 

Quiet Enjoyment:

 

33.              So
long as Tenant observes and performs the covenants and agreements contained herein, he shall at all times during the Lease term
peacefully and quietly have and enjoy possession of the Premises, but always subject to the terms hereof.

 

Time of Essence:

 

34.             
Time is of the essence of this Lease.

 

Definitions:

 

35.               "Landlord"
as used in this Lease shall include first party, his heirs, representatives, and successors in title to premises. "Tenant"
shall include second party, his heirs, and representatives; and if this Lease shall be validly assigned or sublet, shall include
also Tenant's assignees or sublessees as to the Premises covered by such assignment or sublease.

 

Notices:

 

36.            All
notices required or permitted under this Lease shall be in writing and shall be personally delivered or sent by U.S. Certified
Mail, return receipt requested, postage prepaid. Agent shall be copied with all required or permitted notices. Notices to Tenant
shall be delivered or sent to the address shown below, except that upon Tenant's taking possession of the Premises, then the Premises
shall be Tenant's address for notice purposes as shown in address below. Notices to Landlord shall be delivered or sent to the
address hereinafter stated, to wit:

 

		Landlord:	Pinion Mesa Ranch, LLC

416 Creekstone Ridge

Woodstock, GA 30188

 

		Tenant:	Sonoma Pharmaceuticals, Inc.

1129 North McDowell Blvd.

Petaluma, CA 94954

 

 

 

    	 	7	 

     

    

 

All notices shall
be effective upon delivery. Any party may change his notice upon written notice to the other parties.

 

Special Stipulations:

 

37.             In
so far as the following stipulations conflict with any of the foregoing provisions, the following shall control: The Special Stipulations
are attached and marked as Exhibit "A" and made a part of this contract by reference.

 

Entire Agreement:

 

38.             This
Lease and the exhibits attached hereto contain the entire agreement of the parties hereto and no representations, inducements,
promises or agreements, oral or otherwise, between the parties not embodied herein, shall be of any force or effect.

 

[SIGNATURES ON FOLLOWING PAGE]

 

 

 

 

 

 

    	 	8	 

     

    

IN WITNESS WHEREOF, the parties herein have hereunto set their
hands and seals, in triplicate, the date and year first above written.

 

 

	LANDLORD:
	 
	By: /s/ Andrea Henry
	  
	Date: 6/5/18
	 
	 
	TENANT:
	 
	By: Jim Shultz
	 
	Date: 6/5/18

 

 

 

    	 	9	 

     

    

EXHIBIT "A"

 

SPECIAL STIPULATIONS

 

1. Monthly CAM charge includes water,
sewer, landscape and parking maintenance, outside security lighting and the use of the dumpsters currently provided by the Landlord.
However, should the Tenant require any additional dumpster capacity, Tenant shall assume the expense. In addition, Tenant shall
be responsible for engaging the services of a hauling company to pick-up its unusual debris that does not fit in the dumpster.

 

2. 
Landlord and Tenant acknowledge that the CAM charge and property taxes for the base year are included in the $1,300.00
a month lease rate.

 

3. 
Tenant agrees to keep the heat on and operational in the winter months in order to keep the pipes from freezing.

 

4. 
Tenant, at Tenant's expense, is responsible for pest control, if needed.

 

5. 
Landlord will provide the following;

 

A). The Tenant will have
the right to use the Landlord owned furniture in the space during the term of the lease. No offset is allowed in the lease terms
if the Tenant decides to use their furniture. A list of the furniture and personal property that belongs to the Landlord will be
created that will be signed by the Tenant and the Landlord prior to the Tenant's occupation of the space.

 

6. 
If the Tenant damages the exterior glass or the exterior doors of the space, it will be the Tenant's responsibility to repair
the damage. The normal maintenance of the exterior doors will be the Tenant's responsibility.

 

IN
WITNESS WHEREOF, the parties hereto set their respective hands and affixed their seals on the day and year indicated
below.

 

	Tenant	Sonoma Pharmaceuticals, Inc.

                           1129 North McDowell Blvd.

                           Petaluma,
CA 94954

 

	Landlord	Pinion Mesa Ranch

416 Creekstone Ridge

Woodstock, GA 30188

 

 

	By: /s/ Jim Schutz	By: /s/ Andrea Henry
	 	Andrea Henry
	 	 
	          CEO          	Sole Member
	Title	Title
	 	 
	Date Executed: 6/5/18	Date Executed: 6/5/18

 

 

 

    	 	10

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