Form 8-K
8-K — Rocky Mountain Chocolate Factory, Inc.
Accession: 0001213900-26-107214
Filed: 2026-10-06
Period: 2026-09-29
CIK: 0001616262
SIC: 2060 (SUGAR & CONFECTIONERY PRODUCTS)
Item: Entry into a Material Definitive Agreement
Item: Regulation FD Disclosure
Item: Financial Statements and Exhibits
Documents
8-K — ea0307800-8k_rocky.htm (Primary)
EX-10.1 — CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL), EFFECTIVE SEPTEMBER 30, 2026, BETWEEN ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. AND AMERICAN HERITAGE LEGACIES, LLC (ea030780001ex10-1.htm)
EX-10.2 — COMMERCIAL LEASE, DATED OCTOBER 1, 2026, BETWEEN AMERICAN HERITAGE LEGACIES, LLC AND ROCKY MOUNTAIN CHOCOLATE FACTORY, INC (ea030780001ex10-2.htm)
EX-99.1 — PRESS RELEASE, DATED OCTOBER 6, 2026 (ea030780001ex99-1.htm)
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GRAPHIC (ea030780001_ex99-1img1.jpg)
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8-K — CURRENT REPORT
8-K (Primary)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 29, 2026
Rocky Mountain Chocolate Factory, Inc.
(Exact name of registrant as specified in its charter)
Delaware
001-36865
47-1535633
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
265 Turner Drive
Durango, Colorado 81303
(Address of principal executive offices) (Zip Code)
(970) 259-0554
Registrant’s telephone number, including
area code:
N/A
(Former name or former address, if changed since
last report.)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.001 par value per share
RMCF
Nasdaq Capital Market
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b -2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by checkmark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Sale-Leaseback of the Durango Property
On September 29, 2026, the Board of Directors (the “Board”)
of Rocky Mountain Chocolate Factory, Inc. (the “Company”) approved a sale-leaseback of the Company’s property at 265 Turner
Drive, Durango, Colorado (the “Durango Property”) with American Heritage Legacies, LLC (“AHL”). AHL is a local company
controlled by the family of Allen Harper, the Company’s Interim Chief Executive Officer.
On September 30, 2026, the Company and AHL entered into a Contract
to Buy and Sell Real Estate (Commercial) (the “Purchase Agreement”). Under the Purchase Agreement, the Company agreed to sell
the Durango Property to AHL for $6.6 million. An independent appraisal of the Durango Property supported the purchase price. The Company
expects to use the net proceeds to repay an aggregate of $6.6 million of outstanding promissory notes to RMC Credit Facility LLC, a Colorado
limited liability company affiliated with Steven L. Craig who is currently a member of our Board, and RMCF2 Credit, LLC, a special purpose
investment entity affiliated with Jeffrey R. Geygan, our former Interim Chief Executive Officer and current member of our Board (the “Notes”).
The Notes accrue interest at 12% per annum. The Purchase Agreement also contains customary terms and conditions and is expected to close
on or about October 15, 2026.
On October 1, 2026, the Company, as tenant, and AHL, as landlord, entered
into a Commercial Lease for the Durango Property (the “Lease”). The Lease will commence on closing of the sale and has an initial
term of ten years, with an option to renew for an additional ten-year term. Annual base rent is $624,000 for the first year and will increase
by 2% annually thereafter. The Company will continue to pay all costs of owning, operating and maintaining the Durango Property, and the
Durango Property will continue to serve as the Company’s corporate headquarters and its production and warehouse facility.
If the Company undergoes a Change of Control (as defined in the Lease),
the Lease shall terminate in accordance with the terms of the Lease. In the event of a Change of Control, at AHL’s option, the Company
must buy back the Durango Property for the greater of $6.93 million or its appraised value. The Lease also includes other customary terms
for an agreement of this kind.
The agreements described in this Current Report on Form 8-K and the
transactions contemplated thereby were reviewed and approved by the disinterested members of the Board and the Audit Committee of the
Board in accordance with the Company’s Related Party Transaction Policy.
The foregoing description of the terms of the Purchase Agreement and
the Lease does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement
and the Lease, copies of which are included as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K, and are incorporated
herein by reference.
Item 7.01 Regulation FD.
On October 6, 2026, the
Company issued a press release (the “Release”) announcing the sale-leaseback of the Durango Property. A copy of the Release
is attached hereto as Exhibit 99.1.
The information contained
in this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, is furnished and shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject
to the liabilities of that Section, and shall not be deemed incorporated by reference into any other filing made by the Company under
the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language included in such
filing, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
Description
10.1
Contract to Buy and Sell Real Estate (Commercial), effective September 30, 2026, between Rocky Mountain Chocolate Factory, Inc. and American Heritage Legacies, LLC.
10.2
Commercial Lease, dated October 1, 2026, between American Heritage Legacies, LLC and Rocky Mountain Chocolate Factory, Inc.
99.1
Press Release, dated October 6, 2026.
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
1
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: October 6, 2026
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
By:
/s/
Carrie Cass
Carrie Cass
Chief Financial Officer
2
EX-10.1 — CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL), EFFECTIVE SEPTEMBER 30, 2026, BETWEEN ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. AND AMERICAN HERITAGE LEGACIES, LLC
EX-10.1
Filename: ea030780001ex10-1.htm · Sequence: 2
Exhibit 10.1
The printed portions of this form, except differentiated
additions, have been approved by the Colorado Real Estate Commission. (CBS3-6-24) (Mandatory 8-24)
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES
AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING.
CONTRACT TO BUY AND SELL
REAL ESTATE
(COMMERCIAL)
(☒ Property with No Residences)
(☐ Property
with Residences-Residential Addendum Attached)
Date: September 8, 2026
AGREEMENT
1. AGREEMENT. Buyer agrees to buy and Seller agrees
to sell the Property described below on the terms and conditions set forth in this contract (Contract).
2. PARTIES AND PROPERTY.
2.1. Buyer. American
Heritage Legacies, LLC (Buyer) will take title to the Property described below as ☐ Joint
Tenants ☐ Tenants In Common ☒ Other in
severalty.
2.2. No Assignability. This
Contract IS NOT assignable by Buyer unless otherwise specified in Additional Provisions.
2.3. Seller. ROCKY MOUNTAIN
CHOCOLATE FACTORY, INC. (Seller) is the current owner of the Property described below.
2.4. Property. The Property is the following legally
described real estate in the County of La Plata, Colorado (insert legal description):
Tract A of the BODO BUSINESS RANCHES, UNIT III, CRAIL LOT
CONSOLIDATION, PROJECT NO. 93-206, according to the plat thereof filed for record December 14, 1993 as Reception No. 659418.
known as:
265 Turner Drive
Durango
CO
81303,
Street Address
City
State
Zip
together with the interests, easements, rights,
benefits, improvements and attached fixtures appurtenant thereto and all interest of Seller in vacated streets and alleys adjacent thereto,
except as herein excluded (Property).
2.5. Inclusions. The Purchase
Price includes the following items (Inclusions):
2.5.1. Inclusions
– Attached. If attached to the Property on the date of this Contract, the following items are included unless excluded
under Exclusions: lighting, heating, plumbing, ventilating and air conditioning units, TV antennas, inside telephone, network and
coaxial (cable) wiring and connecting blocks/jacks, plants, mirrors, floor coverings, intercom systems, built-in kitchen appliances, sprinkler
systems and controls, built-in vacuum systems (including accessories) and garage door openers (including _______ remote controls). If
checked, the following are owned by the Seller and included: ☐ Solar Panels ☐ Water
Softeners ☒ Security Systems ☐ Satellite Systems
(including satellite dishes). Leased items should be listed under § 2.5.8. (Leased Items). If any additional items are attached to
the Property after the date of this Contract, such additional items are also included in the Purchase Price.
2.5.2. Inclusions – Not Attached.
If on the Property, whether attached or not, on the date of this Contract, the following items are included unless excluded under Exclusions:
storm windows, storm doors, window and porch shades, awnings, blinds, screens, window coverings and treatments, curtain rods, drapery
rods, fireplace inserts, fireplace screens, fireplace grates, heating stoves, storage sheds, carbon monoxide alarms, smoke/fire detectors
and all keys.
2.5.3. Other Inclusions. The following
items, whether fixtures or personal property, are also included in the Purchase Price: None.
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 1 of 21
2.5.4. Encumbered Inclusions. Any Inclusions
owned by Seller (e.g., owned solar panels) must be conveyed at Closing by Seller free and clear of all taxes (except personal property
and general real estate taxes for the year of Closing), liens and encumbrances, except: None.
Buyer ☐
Will ☐ Will Not assume the debt and obligations on
the Encumbered Inclusions subject to Buyer’s review under §10.6. (Encumbered Inclusion Documents) and Buyer’s receipt
of written approval by such lender before Closing. If Buyer does not receive such approval this Contract terminates.
2.5.5. Personal Property Conveyance. Conveyance
of all personal property will be by bill of sale or other applicable legal instrument.
2.5.6. Parking and Storage
Facilities. The use or ownership of the following parking facilities: ______________________; and the use or ownership
of the following storage facilities: ______________________. Note to Buyer: If exact rights to the parking and storage facilities is
a concern to Buyer, Buyer should investigate.
2.5.7. Trade Fixtures. With respect to
trade fixtures, Seller and Buyer agree as follows: Trade fixtures located at or attached to the Property shall remain the property of
the Seller, subject to the terms and conditions of the Commercial Lease from Buyer to Seller described in paragraph 30.
2.5.8. Leased Items. The following personal
property is currently leased to Seller which will be transferred to Buyer at Closing (Leased Items): None.
Buyer ☐
Will ☐ Will Not assume Seller’s debt and obligations
under such leases for the Leased Items subject to Buyer’s review under §10.6. (Leased Items Documents) and Buyer’s receipt
of written approval by such lender before Closing. If Buyer does not receive such approval this Contract terminates.
☐ 2.5.9. Solar
Power Plan. If the box is checked, Seller has entered into a solar power purchase agreement, regardless of the name or title, to authorize
a third-party to operate and maintain a photovoltaic system on the Property and provide electricity (Solar Power Plan) that will remain
in effect after Closing. Buyer ☐ Will ☐ Will Not
assume Seller’s obligations under such Solar Power Plan subject to Buyer’s review under §10.6. (Solar Power Plan) and
Buyer’s receipt of written approval by the third-party before Closing. If Buyer does not receive such approval this Contract terminates.
2.6. Exclusions. The following
items are excluded (Exclusions): All furniture, unattached equipment, and inventory of Seller.
2.7. Water Rights/Well Rights- intentionally
deleted.
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 2 of 21
3. DATES, DEADLINES AND APPLICABILITY.
3.1. Dates and Deadlines.
Item No.
Reference
Event
Date
or Deadline
1
§ 3
Time of Day Deadline
5:00 P.M.
2
§ 4
Alternative Earnest Money Deadline
Title
3
§ 8
Record Title Deadline (and Tax Certificate)
7 days after MEC
4
§ 8
Record Title Objection Deadline
14 days after MEC
5
§ 8
Off-Record Title Deadline
7 days after MEC
6
§ 8
Off-Record Title Objection Deadline
14 days after MEC
7
§ 8
Title Resolution Deadline
17 days after MEC
8
§ 8
Third Party Right to Purchase/Approve Deadline
N/A
Owners’ Association
9
§ 7
Association Documents Deadline
N/A
10
§ 7
Association Documents Termination Deadline
N/A
Seller’s Disclosures
11
§ 10
Seller’s Property Disclosure Deadline
7 days after MEC
12
§ 10
Lead-Based Paint Disclosure Deadline (if Residential Addendum attached)
N/A
Loan and Credit
13
§ 5
New Loan Application Deadline
At Buyer’s discretion
14
§ 5
New Loan Terms Deadline
14 days after MEC
15
§ 5
New Loan Availability Deadline
14 days after MEC
16
§ 5
Buyer’s Credit Information Deadline
N/A
17
§ 5
Disapproval of Buyer’s Credit Information Deadline
N/A
18
§ 5
Existing Loan Deadline
N/A
19
§ 5
Existing Loan Termination Deadline
N/A
20
§ 5
Loan Transfer Approval Deadline
N/A
21
§ 4
Seller or Private Financing Deadline
N/A
Appraisal
22
§ 6
Appraisal Deadline
Completed
23
§ 6
Appraisal Objection Deadline
14 days after MEC
24
§ 6
Appraisal Resolution Deadline
N/A
Survey
25
§ 9
New ILC or New Survey Deadline
14 days after MEC
26
§ 9
New ILC or New Survey Objection Deadline
17 days after MEC
27
§ 9
New ILC or New Survey Resolution Deadline
21 days after MEC
Inspection and Due Diligence
28
§ 2
Water Rights Examination Deadline
N/A
29
§ 8
Mineral Rights Examination Deadline
N/A
30
§ 10
Inspection Termination Deadline
14 days after MEC
31
§ 10
Inspection Objection Deadline
14 days after MEC
32
§ 10
Inspection Resolution Deadline
17 days after MEC
33
§ 10
Property Insurance Termination Deadline
14 days after MEC
34
§ 10
Due Diligence Documents Delivery Deadline
7 days after MEC
35
§ 10
Due Diligence Documents Objection Deadline
14 days after MEC
36
§ 10
Due Diligence Documents Resolution Deadline
17 days after MEC
37
§ 10
Environmental Inspection Termination Deadline
17 days after MEC
38
§ 10
ADA Evaluation Termination Deadline
17 days after MEC
39
§ 10
Conditional Sale Deadline
N/A
40
§ 10
Lead-Based Paint Termination Deadline (if Residential Addendum attached)
N/A
41
§ 11
Estoppel Statements Deadline
N/A
42
§ 11
Estoppel Statements Termination Deadline
N/A
Closing and Possession
43
§ 12
Closing Date
21 days after MEC
44
§ 17
Possession Date
At Closing
45
§ 17
Possession Time
At Closing
46
§ 27
Acceptance Deadline Date
October 1, 2026
47
§ 27
Acceptance Deadline Time
5:00 P.M.
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 3 of 21
3.2. Applicability of Terms. If
any deadline blank in § 3.1. (Dates and Deadlines) is left blank or completed with “N/A”, or the word “Deleted,”
such deadline is not applicable and the corresponding provision containing the deadline is deleted. Any box checked in this Contract means
the corresponding provision applies. If no box is checked in a provision that contains a selection of “None”, such provision
means that “None” applies.
The abbreviation “MEC” (mutual execution
of this Contract) means the date upon which both parties have signed this Contract. The abbreviation “N/A” as used in this
Contract means not applicable.
3.3. Day; Computation of Period of Days; Deadlines.
3.3.1. Day. As used in this
Contract, the term “day” means the entire day ending at 11:59 p.m., United States Mountain Time (Standard or Daylight Savings,
as applicable). Except however, if a Time of Day Deadline is specified in § 3.1. (Dates and Deadlines), all Objection Deadlines,
Resolution Deadlines, Examination Deadlines and Termination Deadlines will end on the specified deadline date at the time of day specified
in the Time of Day Deadline, United States Mountain Time. If Time of Day Deadline is left blank or “N/A” the
deadlines will expire at 11:59 p.m., United States Mountain Time.
3.3.2. Computation of Period of Days. In
computing a period of days (e.g., three days after MEC), when the ending date is not specified, the first day is excluded and the last
day is included.
3.3.3. Deadlines.
If any deadline falls on a Saturday, Sunday or federal or Colorado state holiday (Holiday), such deadline ☒ Will
☐ Will Not be extended to the next day that is not a Saturday, Sunday or Holiday. Should neither
box be checked, the deadline will not be extended.
4. PURCHASE PRICE AND TERMS.
4.1. Price and Terms. The Purchase
Price set forth below is payable in U.S. Dollars by Buyer as follows:
Item No.
Reference
Item
Amount
Amount
1
§ 4.1.
Purchase Price
$
6,600,000.00
2
§ 4.3.
Earnest Money
$
3
§ 4.5.
New Loan
$
6,600,000.00
4
§ 4.6.
Assumption Balance
$
5
§ 4.7.
Private Financing
$
6
§ 4.7.
Seller Financing
$
7
8
9
§ 4.4.
Cash at Closing
$
10
TOTAL
$
6,600,000.00
$
6,600,000.00
4.2. Seller Concession- intentionally deleted.
4.3. Earnest Money. The Earnest
Money set forth in this Section, in the form of a N/A, will be payable to and held by N/A (Earnest Money Holder), in its trust
account, on behalf of both Seller and Buyer. The Earnest Money deposit must be tendered, by Buyer, with this Contract unless the parties
mutually agree to an Alternative Earnest Money Deadline for its payment. The parties authorize delivery of the Earnest Money deposit
to the company conducting the Closing (Closing Company), if any, at or before Closing. In the event Earnest Money Holder has agreed to
have interest on Earnest Money deposits transferred to a fund established for the purpose of providing affordable housing to Colorado
residents, Seller and Buyer acknowledge and agree that any interest accruing on the Earnest Money deposited with the Earnest Money Holder
in this transaction will be transferred to such fund.
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 4 of 21
4.3.1. Alternative Earnest Money Deadline. The
deadline for delivering the Earnest Money, if other than at the time of tender of this Contract, is as set forth as the Alternative
Earnest Money Deadline.
4.3.2. Disposition of Earnest Money. If
Buyer has a Right to Terminate and timely terminates, Buyer is entitled to the return of Earnest Money as provided in this Contract. If
this Contract is terminated as set forth in § 24 and, except as provided in § 23 (Earnest Money Dispute), if the Earnest
Money has not already been returned following receipt of a Notice to Terminate, Seller agrees to execute and return to Buyer or Broker
working with Buyer, written mutual instructions (e.g., Earnest Money Release form), within three days of Seller’s receipt of such
form. If Seller is entitled to the Earnest Money, and, except as provided in § 23 (Earnest Money Dispute), if the Earnest Money has
not already been paid to Seller, following receipt of an Earnest Money Release form, Buyer agrees to execute and return to Seller or Broker
working with Seller, written mutual instructions (e.g., Earnest Money Release form), within three days of Buyer’s receipt.
4.3.2.1. Seller Failure to Timely Return Earnest
Money. If Seller fails to timely execute and return the Earnest Money Release Form, or other written mutual instructions, Seller is
in default and liable to Buyer as set forth in “If Seller is in Default”, § 20.2. and § 21, unless Seller
is entitled to the Earnest Money due to a Buyer default.
4.3.2.2. Buyer Failure to Timely Release Earnest
Money. If Buyer fails to timely execute and return the Earnest Money Release Form, or other written mutual instructions, Buyer is
in default and liable to Seller as set forth in “If Buyer is in Default, § 20.1. and § 21, unless Buyer is entitled
to the Earnest Money due to a Seller Default.
4.4. Form of Funds; Time of Payment; Available
Funds.
4.4.1. Good Funds. All amounts
payable by the parties at Closing, including any loan proceeds, Cash at Closing and closing costs, must be in funds that comply with all
applicable Colorado laws, including electronic transfer funds, certified check, savings and loan teller’s check and cashier’s
check (Good Funds).
4.4.2. Time of Payment. All
funds, including the Purchase Price to be paid by Buyer, must be paid before or at Closing or as otherwise agreed in writing between the
parties to allow disbursement by Closing Company at Closing OR SUCH NONPAYING PARTY WILL BE IN DEFAULT.
4.4.3. Available
Funds. Buyer represents that Buyer, as of the date of this Contract, ☐ Does ☒
Does Not have funds that are immediately verifiable and available in an amount not less than the
amount stated as Cash at Closing in § 4.1.
4.5. New Loan.
4.5.1. Buyer to Pay Loan Costs. Buyer,
except as otherwise permitted in § 4.2. (Seller Concession), if applicable, must timely pay Buyer’s loan costs, loan discount
points, prepaid items and loan origination fees as required by lender.
4.5.2. Buyer May Select Financing. Buyer
may pay in cash or select financing appropriate and acceptable to Buyer, including a different loan than initially sought, except as restricted
in § 4.5.3. (Loan Limitations) or § 30 (Additional Provisions).
4.5.3.
Loan Limitations. Buyer may purchase the Property using any of the following types of loans: ☐ Conventional
☒ Other Any loan acceptable to Buyer.
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 5 of 21
4.6. Assumption- intentionally deleted.
4.7. Seller or Private Financing- intentionally
deleted.
TRANSACTION PROVISIONS
5. FINANCING CONDITIONS AND OBLIGATIONS.
5.1. New Loan, Assumption Application. If
Buyer is to pay all or part of the Purchase Price by obtaining one or more new loans (New Loan), or if an existing loan is not to be released
at Closing, Buyer, if required by such lender, must make an application verifiable by such lender, on or before New Loan Application
Deadline and exercise reasonable efforts to obtain such loan or approval.
5.2. New Loan Terms; New Loan Availability.
5.2.1. New Loan Terms. If Buyer is to pay
all or part of the Purchase Price with a New Loan, this Contract is conditional upon Buyer determining, in Buyer’s sole subjective
discretion, whether the proposed New Loan’s payments, interest rate, conditions and costs or any other loan terms (New Loan Terms)
are satisfactory to Buyer. This condition is for the sole benefit of Buyer. Buyer has the Right to Terminate under § 24.1.,
on or before New Loan Terms Deadline, if the New Loan Terms are not satisfactory to Buyer, in Buyer’s sole subjective discretion.
5.2.2. New Loan Availability. If Buyer
is to pay all or part of the Purchase Price with a New Loan, this Contract is conditional upon Buyer’s satisfaction with the availability
of the New Loan based on the lender’s review and underwriting of Buyer’s New Loan Application (New Loan Availability). Buyer
has the Right to Terminate under § 24.1., on or before the New Loan Availability Deadline if the New Loan Availability is
not satisfactory to Buyer. Buyer does not have a Right to Terminate based on the New Loan Availability if the termination is based on
the New Loan Terms, Appraised Value (defined below), the Lender Property Requirements (defined below), Insurability (§ 10.5. below)
or the Conditional Upon Sale of Property (§ 10.7. below). IF SELLER IS NOT IN DEFAULT AND DOES NOT TIMELY RECEIVE BUYER’S
WRITTEN NOTICE TO TERMINATE, BUYER’S EARNEST MONEY WILL BE NONREFUNDABLE, except as otherwise provided in this Contract (e.g.,
Appraisal, Title, Survey).
5.3. Credit Information- intentionally deleted.
5.4. Existing Loan Review- intentionally deleted.
6. APPRAISAL PROVISIONS.
6.1. Appraisal Definition. An “Appraisal”
is an opinion of value prepared by a licensed or certified appraiser, engaged on behalf of Buyer or Buyer’s lender, to determine
the Property’s market value (Appraised Value). The Appraisal may also set forth certain lender requirements, replacements, removals
or repairs necessary on or to the Property as a condition for the Property to be valued at the Appraised Value.
6.2. Appraised Value. The applicable
appraisal provision set forth below applies to the respective loan type set forth in § 4.5.3., or if a cash transaction (i.e.,
no financing), § 6.2.1. applies.
6.2.1. Conventional/Other. Buyer
has the right to obtain an Appraisal. If the Appraised Value is less than the Purchase Price, or if the Appraisal is not received by Buyer
on or before Appraisal Deadline Buyer may, on or before Appraisal Objection Deadline:
6.2.1.1. Notice to Terminate. Notify
Seller in writing, pursuant to § 24.1., that this Contract is terminated; or
6.2.1.2. Appraisal Objection. Deliver
to Seller a written objection accompanied by either a copy of the Appraisal or written notice from lender that confirms the Appraised
Value is less than the Purchase Price (Lender Verification).
6.2.1.3. Appraisal Resolution. If
an Appraisal Objection is received by Seller, on or before Appraisal Objection Deadline and if Buyer and Seller have not agreed
in writing to a settlement thereof on or before Appraisal Resolution Deadline, this Contract will terminate on the Appraisal
Resolution Deadline, unless Seller receives Buyer’s written withdrawal of the Appraisal Objection before such termination, (i.e.,
on or before expiration of Appraisal Resolution Deadline).
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 6 of 21
6.3. Lender Property Requirements. If
the lender imposes any written requirements, replacements, removals or repairs, including any specified in the Appraisal (Lender Property
Requirements) to be made to the Property (e.g., roof repair, repainting), beyond those matters already agreed to by Seller in this Contract,
this Contract terminates on the earlier of three days following Seller’s receipt of the Lender Property Requirements, or Closing,
unless prior to termination: (1) the parties enter into a written agreement to satisfy the Lender Property Requirements; (2) the Lender
Property Requirements have been completed; or (3) the satisfaction of the Lender Property Requirements is waived in writing by Buyer.
6.4. Cost of
Appraisal. Cost of the Appraisal to be obtained after the date of this Contract must be timely paid by ☒ Buyer
☐ Seller. The cost of the Appraisal may include any and all fees paid to the appraiser,
appraisal management company, lender’s agent or all three.
7. OWNERS’ ASSOCIATIONS. This Section
is applicable if the Property is located within one or more Common Interest Communities and subject to one or more declarations (Association).
7.1. Common Interest Community Disclosure. THE
PROPERTY IS LOCATED WITHIN A COMMON INTEREST COMMUNITY AND IS SUBJECT TO THE DECLARATION FOR THE COMMUNITY. THE OWNER OF THE PROPERTY
WILL BE REQUIRED TO BE A MEMBER OF THE OWNERS’ ASSOCIATION FOR THE COMMUNITY AND WILL BE SUBJECT TO THE BYLAWS AND RULES AND REGULATIONS
OF THE ASSOCIATION. THE DECLARATION, BYLAWS AND RULES AND REGULATIONS WILL IMPOSE FINANCIAL OBLIGATIONS UPON THE OWNER OF THE PROPERTY,
INCLUDING AN OBLIGATION TO PAY ASSESSMENTS OF THE ASSOCIATION. IF THE OWNER DOES NOT PAY THESE ASSESSMENTS, THE ASSOCIATION COULD PLACE
A LIEN ON THE PROPERTY AND POSSIBLY SELL IT TO PAY THE DEBT. THE DECLARATION, BYLAWS AND RULES AND REGULATIONS OF THE COMMUNITY MAY PROHIBIT
THE OWNER FROM MAKING CHANGES TO THE PROPERTY WITHOUT AN ARCHITECTURAL REVIEW BY THE ASSOCIATION (OR A COMMITTEE OF THE ASSOCIATION) AND
THE APPROVAL OF THE ASSOCIATION. PURCHASERS OF PROPERTY WITHIN THE COMMON INTEREST COMMUNITY SHOULD INVESTIGATE THE FINANCIAL OBLIGATIONS
OF MEMBERS OF THE ASSOCIATION. PURCHASERS SHOULD CAREFULLY READ THE DECLARATION FOR THE COMMUNITY AND THE BYLAWS AND RULES AND REGULATIONS
OF THE ASSOCIATION.
7.2. Association Documents to Buyer. Seller
is obligated to provide to Buyer the Association Documents (defined below), at Seller’s expense, on or before Association Documents
Deadline. Seller authorizes the Association to provide the Association Documents to Buyer, at Seller’s expense. Seller’s
obligation to provide the Association Documents is fulfilled upon Buyer’s receipt of the Association Documents, regardless of who
provides such documents.
7.3. Association Documents. Association
documents (Association Documents) consist of the following:
7.3.1. All Association declarations, articles
of incorporation, bylaws, articles of organization, operating agreements, rules and regulations, party wall agreements and the Association’s
responsible governance policies adopted under § 38-33.3-209.5, C.R.S.;
7.3.2. Minutes of: (1) the annual owners’
or members’ meeting and (2) any executive boards’ or managers’ meetings; such minutes include those provided under the
most current annual disclosure required under § 38-33.3-209.4, C.R.S. (Annual Disclosure) and minutes of meetings, if any, subsequent
to the minutes disclosed in the Annual Disclosure. If none of the preceding minutes exist, then the most recent minutes, if any (§§
7.3.1. and 7.3.2., collectively, Governing Documents); and
7.3.3. List of all Association insurance
policies as provided in the Association’s last Annual Disclosure, including, but not limited to, property, general liability, association
director and officer professional liability and fidelity policies. The list must include the company names, policy limits, policy deductibles,
additional named insureds and expiration dates of the policies listed (Association Insurance Documents);
7.3.4. A list by unit type of the Association’s
assessments, including both regular and special assessments as disclosed in the Association’s last Annual Disclosure;
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7.3.5. The Association’s most recent
financial documents which consist of: (1) the Association’s operating budget for the current fiscal year, (2) the Association’s
most recent annual financial statements, including any amounts held in reserve for the fiscal year immediately preceding the Association’s
last Annual Disclosure, (3) the results of the Association’s most recent available financial audit or review, (4) list of the fees
and charges (regardless of name or title of such fees or charges) that the Association’s community association manager or Association
will charge in connection with the Closing including, but not limited to, any fee incident to the issuance of the Association’s
statement of assessments (Status Letter), any rush or update fee charged for the Status Letter, any record change fee or ownership record
transfer fees (Record Change Fee), fees to access documents, (5) list of all assessments required to be paid in advance, reserves or working
capital due at Closing and (6) reserve study, if any (§§ 7.3.4. and 7.3.5., collectively, Financial Documents);
7.3.6. Any written notice from the Association
to Seller of a “construction defect action” under § 38-33.3-303.5, C.R.S. within the past six months and the result of
whether the Association approved or disapproved such action (Construction Defect Documents). Nothing in this Section limits the Seller’s
obligation to disclose adverse material facts as required under § 10.2. (Disclosure of Adverse Material Facts; Subsequent Disclosure;
Present Condition) including any problems or defects in the common elements or limited common elements of the Association property.
7.4. Conditional on Buyer’s Review. Buyer
has the right to review the Association Documents. Buyer has the Right to Terminate under § 24.1., on or before Association
Documents Termination Deadline, based on any unsatisfactory provision in any of the Association Documents, in Buyer’s sole subjective
discretion. Should Buyer receive the Association Documents after Association Documents Deadline, Buyer, at Buyer’s option,
has the Right to Terminate under § 24.1. by Buyer’s Notice to Terminate received by Seller on or before ten days after
Buyer’s receipt of the Association Documents. If Buyer does not receive the Association Documents, or if Buyer’s Notice to
Terminate would otherwise be required to be received by Seller after Closing Date, Buyer’s Notice to Terminate must be received
by Seller on or before Closing. If Seller does not receive Buyer’s Notice to Terminate within such time, Buyer accepts the provisions
of the Association Documents as satisfactory and Buyer waives any Right to Terminate under this provision, notwithstanding the provisions
of § 8.6. (Third Party Right to Purchase/Approve).
8. TITLE INSURANCE, RECORD TITLE AND OFF-RECORD TITLE.
8.1. Evidence of Record Title.
☒ 8.1.1. Seller
Selects Title Insurance Company. If this box is checked, Seller will select the title insurance company to furnish the
owner’s title insurance policy at Seller’s expense. On or before Record Title Deadline, Seller must furnish to Buyer,
a current commitment for an owner’s title insurance policy (Title Commitment), in an amount equal to the Purchase Price, or if this
box is checked, ☐ an Abstract of Title certified to a current date. Seller will cause the
title insurance policy to be issued and delivered to Buyer as soon as practicable at or after Closing.
☐ 8.1.2. Buyer
Selects Title Insurance Company. If this box is checked, Buyer will select the title insurance company to furnish the owner’s
title insurance policy at Buyer’s expense. On or before Record Title Deadline, Buyer must furnish to Seller, a current commitment
for owner’s title insurance policy (Title Commitment), in an amount equal to the Purchase Price.
If neither box in § 8.1.1. or § 8.1.2. is checked, §
8.1.1. applies.
8.1.3. Owner’s
Extended Coverage (OEC). The Title Commitment ☒ Will ☐ Will
Not contain Owner’s Extended Coverage (OEC). If the Title Commitment is to contain OEC, it will commit to delete or insure over
the standard exceptions which relate to: (1) parties in possession, (2) unrecorded easements, (3) survey matters, (4) unrecorded
mechanics’ liens, (5) gap period (period between the effective date and time of commitment to the date and time the deed is recorded)
and (6) unpaid taxes, assessments and unredeemed tax sales prior to the year of Closing. Any additional premium expense to obtain OEC
will be paid by ☐ Buyer ☒ Seller ☐ One-Half
by Buyer and One-Half by Seller ☐ Other__________________________.
Regardless of whether the Contract requires OEC,
the Title Insurance Commitment may not provide OEC or delete or insure over any or all of the standard exceptions for OEC. The Title Insurance
Company may require a New Survey or New ILC, defined below, among other requirements for OEC. If the Title Insurance Commitment is not
satisfactory to Buyer, Buyer has a right to object under § 8.7. (Right to Object to Title, Resolution).
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8.1.4. Title Documents. Title
Documents consist of the following: (1) copies of any plats, declarations, covenants, conditions and restrictions burdening the Property
and (2) copies of any other documents (or, if illegible, summaries of such documents) listed in the schedule of exceptions (Exceptions)
in the Title Commitment furnished to Buyer (collectively, Title Documents).
8.1.5. Copies of Title Documents.
Buyer must receive, on or before Record Title Deadline, copies of all Title Documents. This requirement pertains only to documents
as shown of record in the office of the clerk and recorder in the county where the Property is located. The cost of furnishing copies
of the documents required in this Section will be at the expense of the party or parties obligated to pay for the owner’s title
insurance policy.
8.1.6. Existing Abstracts of Title. Seller
must deliver to Buyer copies of any abstracts of title covering all or any portion of the Property (Abstract of Title) in Seller’s
possession on or before Record Title Deadline.
8.2. Record Title. Buyer has
the right to review and object to the Abstract of Title or Title Commitment and any of the Title Documents as set forth in § 8.7.
(Right to Object to Title, Resolution) on or before Record Title Objection Deadline. Buyer’s objection may be based on any
unsatisfactory form or content of Title Commitment or Abstract of Title, notwithstanding § 13, or any other unsatisfactory title
condition, in Buyer’s sole subjective discretion. If the Abstract of Title, Title Commitment or Title Documents are not received
by Buyer on or before the Record Title Deadline, or if there is an endorsement to the Title Commitment that adds a new Exception
to title, a copy of the new Exception to title and the modified Title Commitment will be delivered to Buyer. Buyer has until the earlier
of Closing or ten days after receipt of such documents by Buyer to review and object to: (1) any required Title Document not timely received
by Buyer, (2) any change to the Abstract of Title, Title Commitment or Title Documents, or (3) any endorsement to the Title Commitment.
If Seller receives Buyer’s Notice to Terminate or Notice of Title Objection, pursuant to this § 8.2. (Record Title), any
title objection by Buyer is governed by the provisions set forth in § 8.7. (Right to Object to Title, Resolution). If Seller
has fulfilled all Seller’s obligations, if any, to deliver to Buyer all documents required by § 8.1. (Evidence of Record Title)
and Seller does not receive Buyer’s Notice to Terminate or Notice of Title Objection by the applicable deadline specified above,
Buyer accepts the condition of title as disclosed by the Abstract of Title, Title Commitment and Title Documents as satisfactory.
8.3. Off-Record Title. Seller
must deliver to Buyer, on or before Off-Record Title Deadline, true copies of all existing surveys in Seller’s possession
pertaining to the Property and must disclose to Buyer all easements, liens (including, without limitation, governmental improvements approved,
but not yet installed) or other title matters not shown by public records, of which Seller has actual knowledge (Off-Record Matters).
This Section excludes any New ILC or New Survey governed under § 9 (New ILC, New Survey). Buyer has the right
to inspect the Property to investigate if any third party has any right in the Property not shown by public records (e.g., unrecorded
easement, boundary line discrepancy or water rights). Buyer’s Notice to Terminate or Notice of Title Objection of any unsatisfactory
condition (whether disclosed by Seller or revealed by such inspection, notwithstanding § 8.2. (Record Title) and § 13 (Transfer
of Title)), in Buyer’s sole subjective discretion, must be received by Seller on or before Off-Record Title Objection Deadline.
If an Off-Record Matter is received by Buyer after the Off-Record Title Deadline, Buyer has until the earlier of Closing or ten
days after receipt by Buyer to review and object to such Off-Record Matter. If Seller receives Buyer’s Notice to Terminate or Notice
of Title Objection pursuant to this § 8.3. (Off-Record Title), any title objection by Buyer is governed by the provisions set
forth in § 8.7. (Right to Object to Title, Resolution). If Seller does not receive Buyer’s Notice to Terminate or Notice
of Title Objection by the applicable deadline specified above, Buyer accepts title subject to such Off-Record Matters and rights, if any,
of third parties not shown by public records of which Buyer has actual knowledge.
8.4. Special Taxing and Metropolitan Districts. Intentionally
Deleted.
8.5. Tax Certificate.
A tax certificate paid for by ☒ Seller ☐ Buyer,
for the Property (Tax Certificate) must be delivered to Buyer on or before Record Title Deadline. If the content of the Tax Certificate
is unsatisfactory to Buyer, in Buyer’s sole subjective discretion, Buyer may terminate, on or before Record Title Objection Deadline.
Should Buyer receive the Tax Certificate after Record Title Deadline, Buyer, at Buyer’s option, has the Right to Terminate
under § 24.1. by Buyer’s Notice to Terminate received by Seller on or before ten days after Buyer’s receipt of the
Tax Certificate. If Buyer does not receive the Tax Certificate, or if Buyer’s Notice to Terminate would otherwise be required to
be received by Seller after Closing Date, Buyer’s Notice to Terminate must be received by Seller on or before Closing. If
Seller does not receive Buyer’s Notice to Terminate within such time, Buyer accepts the content of the Tax Certificate as satisfactory
and Buyer waives any Right to Terminate under this provision. If Buyer’s loan specified in §4.5.3. (Loan Limitations) prohibits
Buyer from paying for the Tax Certificate, the Tax Certificate will be paid for by Seller.
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8.6. Third Party Right to Purchase/Approve-
intentionally deleted.
8.7. Right to Object to Title, Resolution. Buyer
has a right to object or terminate, in Buyer’s sole subjective discretion, based on any title matters including those matters set
forth in § 8.2. (Record Title), § 8.3. (Off-Record Title), § 8.5. (Tax Certificate) and § 13 (Transfer of Title).
If Buyer exercises Buyer’s rights to object or terminate based on any such title matter, on or before the applicable deadline, Buyer
has the following options:
8.7.1. Title Objection, Resolution. If
Seller receives Buyer’s written notice objecting to any title matter (Notice of Title Objection) on or before the applicable deadline
and if Buyer and Seller have not agreed to a written settlement thereof on or before Title Resolution Deadline, this Contract will
terminate on the expiration of Title Resolution Deadline, unless Seller receives Buyer’s written withdrawal of Buyer’s
Notice of Title Objection (i.e., Buyer’s written notice to waive objection to such items and waives the Right to Terminate for that
reason), on or before expiration of Title Resolution Deadline. If either the Record Title Deadline or the Off-Record Title Deadline,
or both, are extended pursuant to § 8.2. (Record Title) or § 8.3. (Off-Record Title) the Title Resolution Deadline also will
be automatically extended to the earlier of Closing or fifteen days after Buyer’s receipt of the applicable documents; or
8.7.2. Title Objection, Right to Terminate. Buyer
may exercise the Right to Terminate under § 24.1., on or before the applicable deadline, based on any title matter unsatisfactory
to Buyer, in Buyer’s sole subjective discretion.
8.8. Title Advisory. The Title
Documents affect the title, ownership and use of the Property and should be reviewed carefully. Additionally, other matters not reflected
in the Title Documents may affect the title, ownership and use of the Property, including, without limitation, boundary lines and encroachments,
set-back requirements, area, zoning, building code violations, unrecorded easements and claims of easements, leases and other unrecorded
agreements, water on or under the Property and various laws and governmental regulations concerning land use, development and environmental
matters.
8.8.1.
Oil, Gas, Water and Mineral Disclosure. The surface estate of the Property may be owned separately from the underlying mineral estate
and transfer of the surface estate may not necessarily include transfer of the mineral estate or water rights. Third parties may own or
lease interests in oil, gas, other minerals, geothermal energy or water on or under the surface of the Property, which interests may give
them rights to enter and use the surface of the Property to access the mineral estate, oil, gas or water.
8.8.2.
Surface Use Agreement. The use of the surface estate of the Property to access the oil, gas or minerals may be governed by a surface use
agreement, a memorandum or other notice of which may be recorded with the county clerk and recorder.
8.8.3.
Oil and Gas Activity. Oil and gas activity that may occur on or adjacent to the Property may include, but is not limited to, surveying,
drilling, well completion operations, storage, oil and gas, or production facilities, producing wells, reworking of current wells and
gas gathering and processing facilities.
8.8.4.
Additional Information. Buyer is encouraged to seek additional information regarding oil and gas activity on or adjacent to the Property,
including drilling permit applications. This information may be available from the Colorado Oil and Gas Conservation Commission.
8.8.5. Title Insurance Exclusions. Matters
set forth in this Section and others, may be excepted, excluded from, or not covered by the owner’s title insurance policy.
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8.9. Mineral Rights Review- intentionally deleted.
9. NEW ILC, NEW SURVEY.
9.1. New ILC
or New Survey. If the box is checked, (1) ☐ New Improvement Location Certificate (New ILC);
or, (2) ☒ New Survey in the form of survey sufficient for Owner’s Extended Coverage;
is required and the following will apply:
9.1.1. Ordering
of New ILC or New Survey. ☐ Seller ☒ Buyer
will order the New ILC or New Survey. The New ILC or New Survey may also be a previous ILC or survey that is in the above-required form,
certified and updated as of a date after the date of this Contract.
9.1.2. Payment
for New ILC or New Survey. The cost of the New ILC or New Survey will be paid, on or before Closing, by: ☐ Seller
☒ Buyer or:
9.1.3. Delivery of New ILC or New Survey. Buyer,
Seller, the issuer of the Title Commitment (or the provider of the opinion of title if an Abstract of Title) and Buyer’s attorney
will receive a New ILC or New Survey on or before New ILC or New Survey Deadline.
9.1.4. Certification of New ILC or New Survey.
The New ILC or New Survey will be certified by the surveyor to all those who are to receive the New ILC or New Survey.
9.2. Buyer’s Right to Waive or Change
New ILC or New Survey Selection. Buyer may select a New ILC or New Survey different than initially specified in this Contract if there
is no additional cost to Seller or change to the New ILC or New Survey Objection Deadline. Buyer may, in Buyer’s sole subjective
discretion, waive a New ILC or New Survey if done prior to Seller incurring any cost for the same.
9.3. New ILC or New Survey Objection. Buyer
has the right to review and object based on the New ILC or New Survey. If the New ILC or New Survey is not timely received by Buyer or
is unsatisfactory to Buyer, in Buyer’s sole subjective discretion, Buyer may, on or before New ILC or New Survey Objection Deadline,
notwithstanding § 8.3. or § 13:
9.3.1. Notice to Terminate. Notify
Seller in writing, pursuant to § 24.1, that this Contract is terminated; or
9.3.2. New ILC or New Survey Objection. Deliver
to Seller a written description of any matter that was to be shown or is shown in the New ILC or New Survey that is unsatisfactory and
that Buyer requires Seller to correct.
9.3.3. New ILC or New Survey Resolution. If
a New ILC or New Survey Objection is received by Seller, on or before New ILC or New Survey Objection Deadline and if Buyer
and Seller have not agreed in writing to a settlement thereof on or before New ILC or New Survey Resolution Deadline, this Contract
will terminate on expiration of the New ILC or New Survey Resolution Deadline, unless Seller receives Buyer’s written withdrawal
of the New ILC or New Survey Objection before such termination (i.e., on or before expiration of New ILC or New Survey Resolution Deadline).
DISCLOSURE, INSPECTION AND DUE DILIGENCE
10. PROPERTY DISCLOSURE, INSPECTION, INDEMNITY,
INSURABILITY, DUE DILIGENCE AND SOURCE OF WATER.
10.1. Seller’s Property Disclosure. On
or before Seller’s Property Disclosure Deadline, Seller agrees to deliver to Buyer the most current version of the applicable
Colorado Real Estate Commission’s Seller’s Property Disclosure form completed by Seller to Seller’s actual knowledge
and current as of the date of this Contract.
10.2. Disclosure of Adverse Material Facts; Subsequent
Disclosure; Present Condition. Seller must disclose to Buyer any adverse material facts actually known by Seller as of the date
of this Contract. Seller agrees that disclosure of adverse material facts will be in writing. In the event Seller discovers an adverse
material fact after the date of this Contract, Seller must timely disclose such adverse fact to Buyer. Buyer has the Right to Terminate
based on the Seller’s new disclosure on the earlier of Closing or five days after Buyer’s receipt of the new disclosure. Except
as otherwise provided in this Contract, Buyer acknowledges that Seller is conveying the Property and Inclusions to Buyer in an “As
Is” condition, “Where Is” and “With All Faults.”
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10.3. Inspection. Unless otherwise
provided in this Contract, Buyer, acting in good faith, has the right to have inspections (by one or more third parties, personally or
both) of the Property, Leased Items, and Inclusions (Inspection), at Buyer’s expense. If (1) the physical condition of the Property,
including, but not limited to, the roof, walls, structural integrity of the Property, the electrical, plumbing, HVAC and other mechanical
systems of the Property, (2) the physical condition of the Inclusions and Leased Items, (3) service to the Property (including utilities
and communication services), systems and components of the Property (e.g., heating and plumbing), (4) any proposed or existing transportation
project, road, street or highway, or (5) any other activity, odor or noise (whether on or off the Property) and its effect or expected
effect on the Property or its occupants is unsatisfactory, in Buyer’s sole subjective discretion, Buyer may:
10.3.1. Inspection Termination. On
or before the Inspection Termination Deadline, notify Seller in writing, pursuant to § 24.1., that this Contract is terminated
due to any unsatisfactory condition, provided the Buyer did not previously deliver an Inspection Objection. Buyer’s Right to Terminate
under this provision expires upon delivery of an Inspection Objection to Seller pursuant to § 10.3.2.; or
10.3.2. Inspection Objection. On
or before the Inspection Objection Deadline, deliver to Seller a written description of any unsatisfactory condition that Buyer
requires Seller to correct.
10.3.3. Inspection Resolution. If
an Inspection Objection is received by Seller, on or before Inspection Objection Deadline and if Buyer and Seller have not agreed
in writing to a settlement thereof on or before Inspection Resolution Deadline, this Contract will terminate on Inspection Resolution
Deadline unless Seller receives Buyer’s written withdrawal of the Inspection Objection before such termination (i.e., on or
before expiration of Inspection Resolution Deadline). Nothing in this provision prohibits the Buyer and the Seller from mutually
terminating this Contract before the Inspection Resolution Deadline passes by executing an Earnest Money Release.
10.4. Damage, Liens and Indemnity. Buyer,
except as otherwise provided in this Contract or other written agreement between the parties, is responsible for payment for all inspections,
tests, surveys, engineering reports, or other reports performed at Buyer’s request (Work) and must pay for any damage that occurs
to the Property and Inclusions as a result of such Work. Buyer must not permit claims or liens of any kind against the Property for Work
performed on the Property. Buyer agrees to indemnify, protect and hold Seller harmless from and against any liability, damage, cost or
expense incurred by Seller and caused by any such Work, claim, or lien. This indemnity includes Seller’s right to recover all costs
and expenses incurred by Seller to defend against any such liability, damage, cost or expense, or to enforce this Section, including Seller’s
reasonable attorney fees, legal fees and expenses. The provisions of this Section survive the termination of this Contract. This §
10.4. does not apply to items performed pursuant to an Inspection Resolution.
10.5. Insurability. Buyer has
the Right to Terminate under § 24.1., on or before Property Insurance Termination Deadline, based on any unsatisfactory
provision of the availability, terms and conditions and premium for property insurance (Property Insurance) on the Property, in Buyer’s
sole subjective discretion.
10.6. Due Diligence.
10.6.1. Due Diligence Documents. Seller
agrees to deliver copies of the following documents and information pertaining to the Property and Leased Items (Due Diligence Documents)
to Buyer on or before Due Diligence Documents Delivery Deadline:
10.6.1.1. Occupancy Agreements. All current
leases, including any amendments or other occupancy agreements, pertaining to the Property. Those leases or other occupancy agreements
pertaining to the Property that survive Closing are as follows (Leases): None.
10.6.1.2. Leased Items Documents. If
any lease of personal property (§ 2.5.8., Leased Items) will be transferred to Buyer at Closing, Seller agrees to deliver copies
of the leases and information pertaining to the personal property to Buyer on or before Due Diligence Documents Delivery Deadline.
10.6.1.3. Encumbered Inclusions Documents. If
any Inclusions owned by Seller are encumbered pursuant to § 2.5.4. (Encumbered Inclusions) above, Seller agrees to deliver copies
of the evidence of debt, security and any other documents creating the encumbrance to Buyer on or before Due Diligence Documents Delivery
Deadline.
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10.6.1.4. Solar Power Plan. Copy of any
Solar Power Plan not included in Leased Items (regardless of its name or title).
10.6.1.5. Septic Use Permit. If
required by the local health department or other applicable government entity, on or before the local health department’s applicable
deadline, Seller must pay for and furnish to Buyer a Septic Use Permit.
10.6.1.6. Other Documents. If the respective
box is checked, Seller agrees to additionally deliver copies of the following:
☒ 10.6.1.6.1.
All contracts relating to the operation, maintenance and management of the Property;
☒ 10.6.1.6.2.
Property tax bills for the last 2 years;
☐ 10.6.1.6.3.
As-built construction plans to the Property and the tenant improvements, including architectural, electrical, mechanical and structural
systems; engineering reports; and permanent Certificates of Occupancy, to the extent now available;
☐ 10.6.1.6.4.
A list of all Inclusions to be conveyed to Buyer;
☐ 10.6.1.6.5.
Operating statements for the past _____________ years;
☐ 10.6.1.6.6.
A rent roll accurate and correct to the date of this Contract;
☐ 10.6.1.6.7.
A schedule of any tenant improvement work Seller is obligated to complete but has not yet completed and capital improvement work either
scheduled or in process on the date of this Contract;
☒ 10.6.1.6.8.
All insurance policies pertaining to the Property and copies of any claims which have been made for the past 2 years;
☐ 10.6.1.6.9.
Soils reports, surveys and engineering reports or data pertaining to the Property (if not delivered earlier under § 8.3.);
☐ 10.6.1.6.10.
Any and all existing documentation and reports regarding Phase I and II environmental reports, letters, test results, advisories and similar
documents respective to the existence or nonexistence of asbestos, PCB transformers, or other toxic, hazardous or contaminated substances
and/or underground storage tanks and/or radon gas. If no reports are in Seller’s possession or known to Seller, Seller warrants
that no such reports are in Seller’s possession or known to Seller;
☐ 10.6.1.6.11.
Any Americans with Disabilities Act reports, studies or surveys concerning the compliance of the Property with said Act;
☐ 10.6.1.6.12.
All permits, licenses and other building or use authorizations issued by any governmental authority with jurisdiction over the Property
and written notice of any violation of any such permits, licenses or use authorizations, if any; and
☐ 10.6.1.6.13.
Other:
(1) Any existing surveys of the Property
(2) Any notice, demand or communication from any governmental
or quasi-governmental entity, commission, or authority alleging any violation of any law, statute, code, ordinance, or regulation, or
requesting information as part of an investigation into any such alleged violation.
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10.6.2. Due Diligence Documents Review and
Objection. Buyer has the right to review and object based on the Due Diligence Documents. If the Due Diligence Documents
are not supplied to Buyer or are unsatisfactory, in Buyer’s sole subjective discretion, Buyer may, on or before Due Diligence
Documents Objection Deadline:
10.6.2.1. Notice to Terminate. Notify
Seller in writing, pursuant to § 24.1., that this Contract is terminated; or
10.6.2.2. Due Diligence Documents Objection. Deliver
to Seller a written description of any unsatisfactory Due Diligence Documents that Buyer requires Seller to correct.
10.6.2.3. Due Diligence Documents Resolution. If
a Due Diligence Documents Objection is received by Seller, on or before Due Diligence Documents Objection Deadline and if Buyer
and Seller have not agreed in writing to a settlement thereof on or before Due Diligence Documents Resolution Deadline, this Contract
will terminate on Due Diligence Documents Resolution Deadline unless Seller receives Buyer’s written withdrawal of the Due
Diligence Documents Objection before such termination (i.e., on or before expiration of Due Diligence Documents Resolution Deadline).
10.6.2.4. Automatic Due Diligence Extension.
If a Due Diligence Document is not delivered on or before the Due Diligence Documents Deadline, Buyer has until the earlier of Closing
or ten days after receipt by Buyer to review and object to such Due Diligence Document. If Buyer’s right to review and object to
such Due Diligence Document is extended due to such Due Diligence Document not being delivered on or before the Due Diligence Documents
Deadline, the Due Diligence Document Resolution Deadline will also be extended to the earlier of Closing or fifteen days after Buyer’s
receipt of such Due Diligence Document.
10.6.3. Zoning. Buyer has the Right to
Terminate under § 24.1., on or before Due Diligence Documents Objection Deadline, based on any unsatisfactory zoning and any
use restrictions imposed by any governmental agency with jurisdiction over the Property, in Buyer’s sole subjective discretion.
10.6.4. Due Diligence
– Environmental. Buyer has the right to obtain environmental inspections of the Property including a Phase I Environmental Site
Assessment. ☐ Seller ☐ Buyer will order or
provide a current Phase I Environmental Site Assessment (compliant with the most current version of the applicable ASTM E1527 standard
practices for Environmental Site Assessments) and/or , at the expense of ☐ Seller
☐ Buyer (Environmental Inspection).
If
the Phase I Environmental Site Assessment recommends a Phase II Environmental Site Assessment, the Environmental Inspection
Termination Deadline will be extended by _____________________ days (Extended Environmental Inspection Termination Deadline) and
if such Extended Environmental Inspection Termination Deadline extends beyond the Closing Date, the Closing Date will
be extended a like period of time. In such event, ☐ Seller ☐ Buyer
must pay the cost for such Phase II Environmental Site Assessment.
Notwithstanding Buyer’s right to obtain
additional environmental inspections of the Property in this § 10.6.4., Buyer has the Right to Terminate under § 24.1., on or
before Environmental Inspection Termination Deadline, or if applicable, the Extended Environmental Inspection Termination Deadline,
based on any unsatisfactory results of Environmental Inspection, in Buyer’s sole subjective discretion.
10.6.5. Due Diligence – ADA. Buyer,
at Buyer’s expense, may also conduct an evaluation whether the Property complies with the Americans with Disabilities Act
(ADA Evaluation). All such inspections and evaluations must be conducted at such times as are mutually agreeable to minimize the interruption
of Seller’s and any Seller’s tenants’ business uses of the Property, if any.
Buyer has the Right to Terminate under §
24.1., on or before ADA Evaluation Termination Deadline, based on any unsatisfactory ADA Evaluation, in Buyer’s sole subjective
discretion.
10.7. Conditional Upon Sale of Property- intentionally
deleted.
10.8. Source of Potable Water (Residential
Land and Residential Improvements Only). [Intentionally Deleted - See Residential Addendum if applicable]
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 14 of 21
10.9. Existing Leases; Modification of Existing
Leases; New Leases. Seller states that none of the Leases to be assigned to the Buyer at the time of Closing contain any rent concessions,
rent reductions or rent abatements except as disclosed in the Lease or other writing received by Buyer. Seller will not amend, alter,
modify, extend or cancel any of the Leases nor will Seller enter into any new leases affecting the Property without the prior written
consent of Buyer, which consent will not be unreasonably withheld or delayed.
10.10. Lead-Based Paint. [Intentionally Deleted - See Residential
Addendum if applicable]
10.11. Carbon Monoxide Alarms. [Intentionally
Deleted - See Residential Addendum if applicable]
10.12. Methamphetamine Disclosure. [Intentionally
Deleted - See Residential Addendum if applicable]
11. TENANT ESTOPPEL STATEMENTS- intentionally
deleted.
CLOSING PROVISIONS
12. CLOSING DOCUMENTS, INSTRUCTIONS AND CLOSING.
12.1. Closing Documents and Closing Information. Seller
and Buyer will cooperate with the Closing Company to enable the Closing Company to prepare and deliver documents required for Closing
to Buyer and Seller and their designees. If Buyer is obtaining a loan to purchase the Property, Buyer acknowledges Buyer’s lender
is required to provide the Closing Company, in a timely manner, all required loan documents and financial information concerning Buyer’s
loan. Buyer and Seller will furnish any additional information and documents required by Closing Company that will be necessary to complete
this transaction. Buyer and Seller will sign and complete all customary or reasonably required documents at or before Closing.
12.2. Closing
Instructions. Colorado Real Estate Commission’s Closing Instructions ☐ Are
☒ Are Not executed with this Contract.
12.3. Closing. Delivery of deed
from Seller to Buyer will be at closing (Closing). Closing will be on the date specified as the Closing Date or by mutual agreement
at an earlier date. At Closing, Seller must provide Buyer with the ability to access the Property (e.g. keys, access code, garage door
opener). The hour and place of Closing will be as designated by Title Company conducting closing.
12.4. Disclosure of Settlement Costs. Buyer
and Seller acknowledge that costs, quality and extent of service vary between different settlement service providers (e.g., attorneys,
lenders, inspectors and title companies).
12.5. Assignment of Leases. Seller
must assign to Buyer all Leases at Closing that will continue after Closing and Buyer must assume Seller’s obligations under such
Leases. Further, Seller must transfer to Buyer all Leased Items and assign to Buyer such leases for the Leased Items accepted by Buyer
pursuant to § 2.5.8. (Leased Items).
13. TRANSFER
OF TITLE. Subject to Buyer’s compliance with the terms and provisions of this Contract, including the tender of any payment
due at Closing, Seller must execute and deliver the following good and sufficient deed to Buyer, at Closing: ☐ special
warranty deed ☒ general warranty deed ☐ bargain and sale
deed ☐ quit claim deed ☐ personal representative’s
deed ☐ ____________________________ deed. Seller, provided another deed is not selected, must execute
and deliver a good and sufficient special warranty deed to Buyer, at Closing.
Unless otherwise specified in § 30 (Additional
Provisions), if title will be conveyed using a special warranty deed or a general warranty deed, title will be conveyed “subject
to statutory exceptions” as defined in §38-30-113(5)(a), C.R.S.
14. PAYMENT OF LIENS AND ENCUMBRANCES. Unless
agreed to by Buyer in writing, any amounts owed on any liens or encumbrances securing a monetary sum against the Property and Inclusions,
including any governmental liens for special improvements installed as of the date of Buyer’s signature hereon, whether assessed
or not, and previous years’ taxes, will be paid at or before Closing by Seller from the proceeds of this transaction or from any
other source.
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 15 of 21
15. CLOSING COSTS, FEES, ASSOCIATION STATUS
LETTER AND DISBURSEMENTS, TAXES AND WITHHOLDING.
15.1. Closing Costs. Buyer and
Seller must pay, in Good Funds, their respective closing costs and all other items required to be paid at Closing, except as otherwise
provided herein.
15.2.
Closing Services Fee. The fee for real estate closing services must be paid at Closing by ☐ Buyer
☒ Seller ☐ One-Half by Buyer and
One-Half by Seller ☐ Other.
15.3. Association Fees and Required Disbursements. At
least fourteen days prior to Closing Date, Seller agrees to promptly request that the Closing Company or the Association deliver
to Buyer a current Status Letter, if applicable. Any fees associated with or specified in the Status Letter will be paid as follows:
15.3.1. Status Letter Fee. Any fee incident
to the issuance of Association’s Status Letter must be paid by Seller.
15.3.2. Record
Change Fee. Any Record Change Fee must be paid by ☐ Buyer ☐ Seller
☐ One-Half by Buyer and One-Half by Seller ☒ N/A.
15.3.3. Reserves
or Working Capital. Unless agreed to otherwise, all reserves or working capital due (or other similar cost not addressed in §
16.2. (Association Assessments)) at Closing must be paid by ☐ Buyer ☐ Seller
☐ One-Half by Buyer and One-Half by Seller ☒ N/A.
15.3.4. Other
Fees. Any other fee listed in the Status Letter as required to be paid at Closing will be paid by ☐ Buyer
☐ Seller ☐ One-Half by Buyer and One-Half by Seller ☒
N/A.
15.4. Local Transfer
Tax. Any Local Transfer Tax must be paid at Closing by ☐ Buyer ☐
Seller ☐ One-Half by Buyer and One-Half by Seller ☒
N/A.
15.5. Sales and
Use Tax. Any sales and use tax that may accrue because of this transaction must be paid when due by ☐ Buyer
☒ Seller ☐ One-Half by Buyer and One-Half by Seller ☐
N/A.
15.6.
Private Transfer Fee. Any private transfer fees and other fees due to a transfer of the Property, payable at Closing,
such as community association fees, developer fees and foundation fees, must be paid at Closing by ☐ Buyer
☐ Seller ☐ One-Half by Buyer and One-Half
by Seller ☒ N/A.
15.7. Water Transfer Fees. Water Transfer
Fees can change. The fees, as of the date of this Contract, do not exceed $____________ for:
☐ Water District/Municipality
☐ Water Stock
☐ Augmentation Membership
☐ Small Domestic Water Company
☐ __________________________
and must be paid
at Closing by ☐ Buyer ☐ Seller ☐
One-Half by Buyer and One-Half by Seller ☒ N/A.
15.8. Utility
Transfer Fees. Utility transfer fees can change. Any fees to transfer utilities from Seller to Buyer must be paid by ☐
Buyer ☒ Seller ☐ One-Half
by Buyer and One-Half by Seller ☐ N/A.
15.9. FIRPTA and Colorado Withholding.
15.9.1. FIRPTA.
The Internal Revenue Service (IRS) may require a substantial portion of the Seller’s proceeds be withheld after Closing when Seller
is a foreign person. If required withholding does not occur, the Buyer could be held liable for the amount of the Seller’s tax,
interest and penalties. If the box in this Section is checked, Seller represents that Seller ☐ IS
a foreign person for purposes of U.S. income taxation. If the box in this Section is not checked, Seller represents that Seller is
not a foreign person for purposes of U.S. income taxation. Seller agrees to cooperate with Buyer and Closing Company to provide any reasonably
requested documents to verify Seller’s foreign person status. If withholding is required, Seller authorizes Closing Company to withhold
such amount from Seller’s proceeds. Seller should inquire with Seller’s tax advisor to determine if withholding applies or
if an exemption exists.
15.9.2. Colorado Withholding. The Colorado
Department of Revenue may require a portion of the Seller’s proceeds be withheld after Closing when Seller will not be a Colorado
resident after Closing, if not otherwise exempt. Seller agrees to cooperate with Buyer and Closing Company to provide any reasonably requested
documents to verify Seller’s status. If withholding is required, Seller authorizes Closing Company to withhold such amount from
Seller’s proceeds. Seller should inquire with Seller’s tax advisor to determine if withholding applies or if an exemption
exists.
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 16 of 21
16. PRORATIONS AND ASSOCIATION ASSESSMENTS.
16.1. Prorations. The following will be
prorated to the Closing Date, except as otherwise provided:
16.1.1. Taxes- intentionally deleted.
16.1.2. Rents- intentionally deleted.
16.1.3. Other Prorations. None.
16.1.4. Final Settlement. Unless otherwise specified
in Additional Provisions, these prorations are final.
16.2. Association Assessments- intentionally
deleted.
17. POSSESSION. Possession of
the Property and Inclusions will be delivered to Buyer on Possession Date at Possession Time, subject to the Leases as set
forth in § 10.6.1.1.
If Seller, after Closing occurs, fails to deliver
possession as specified, Seller will be subject to eviction and will be additionally liable to Buyer, notwithstanding § 20.2. (If
Seller is in Default), for payment of $1,000.00 per day (or any part of a day notwithstanding § 3.3., Day) from Possession
Date and Possession Time until possession is delivered. Additionally, Buyer may pursue a claim against Seller for any of Buyer’s
actual additional damages incurred by Buyer in excess of such amount.
GENERAL PROVISIONS
18. CAUSES OF LOSS, INSURANCE; DAMAGE TO INCLUSIONS
AND SERVICES; CONDEMNATION; AND WALK-THROUGH. Except as otherwise provided in this Contract, the Property and Inclusions
will be delivered in the condition existing as of the date of this Contract, ordinary wear and tear excepted.
18.1. Causes of Loss, Insurance. In
the event the Property or Inclusions are damaged by fire, other perils or causes of loss prior to Closing (Property Damage) in an amount
of not more than ten percent of the total Purchase Price and if the repair of the damage will be paid by insurance (other than the deductible
to be paid by Seller), then Seller, upon receipt of the insurance proceeds, will use Seller’s reasonable efforts to repair the Property
before Closing Date. Buyer has the Right to Terminate under § 24.1., on or before Closing Date, if the Property
is not repaired before Closing Date, or if the damage exceeds such sum. Should Buyer elect to carry out this Contract despite such
Property Damage, Buyer is entitled to a credit at Closing for all insurance proceeds that were received by Seller (but not the Association,
if any) resulting from damage to the Property and Inclusions, plus the amount of any deductible provided for in the insurance policy.
This credit may not exceed the Purchase Price. In the event Seller has not received the insurance proceeds prior to Closing, the parties
may agree to extend the Closing Date to have the Property repaired prior to Closing or, at the option of Buyer, (1) Seller must
assign to Buyer the right to the proceeds at Closing, if acceptable to Seller’s insurance company and Buyer’s lender; or (2)
the parties may enter into a written agreement prepared by the parties or their attorney requiring the Seller to escrow at Closing from
Seller’s sale proceeds the amount Seller has received and will receive due to such damage, not exceeding the total Purchase Price,
plus the amount of any deductible that applies to the insurance claim.
18.2. Damage, Inclusions and Services. Should
any Inclusion or service (including utilities and communication services), system, component or fixture of the Property (collectively
Service) (e.g., heating or plumbing), fail or be damaged between the date of this Contract and Closing or possession, whichever is earlier,
then Seller is liable for the repair or replacement of such Inclusion or Service with a unit of similar size, age and quality, or an equivalent
credit, but only to the extent that the maintenance or replacement of such Inclusion or Service is not the responsibility of the Association,
if any, less any insurance proceeds received by Buyer covering such repair or replacement. If the failed or damaged Inclusion or Service
is not repaired or replaced on or before Closing or possession, whichever is earlier, Buyer has the Right to Terminate under § 24.1.,
on or before Closing Date, or, at the option of Buyer, Buyer is entitled to a credit at Closing for the repair or replacement of
such Inclusion or Service. Such credit must not exceed the Purchase Price. If Buyer receives such a credit, Seller’s right for any
claim against the Association, if any, will survive Closing.
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 17 of 21
18.3. Condemnation. In the event
Seller receives actual notice prior to Closing that a pending condemnation action may result in a taking of all or part of the Property
or Inclusions, Seller must promptly notify Buyer, in writing, of such condemnation action. Buyer has the Right to Terminate under § 24.1.,
on or before Closing Date, based on such condemnation action, in Buyer’s sole subjective discretion. Should Buyer elect to
consummate this Contract despite such diminution of value to the Property and Inclusions, Buyer is entitled to a credit at Closing for
all condemnation proceeds awarded to Seller for the diminution in the value of the Property or Inclusions, but such credit will not include
relocation benefits or expenses or exceed the Purchase Price.
18.4. Walk-Through and Verification of Condition. Buyer,
upon reasonable notice, has the right to walk through the Property prior to Closing to verify that the physical condition of the Property
and Inclusions complies with this Contract.
19. RECOMMENDATION OF LEGAL AND TAX COUNSEL. By
signing this Contract, Buyer and Seller acknowledge that their respective broker has advised that this Contract has important legal consequences
and has recommended: (1) legal examination of title; (2) consultation with legal and tax or other counsel before signing this Contract
as this Contract may have important legal and tax implications; (3) to consult with their own attorney if Water Rights, Mineral Rights
or Leased Items are included or excluded in the sale; and (4) to consult with legal counsel if there are other matters in this transaction
for which legal counsel should be engaged and consulted. Such consultations must be done timely as this Contract has strict time limits,
including deadlines, that must be complied with.
20. TIME OF ESSENCE, DEFAULT AND REMEDIES. Time
is of the essence for all dates and deadlines in this Contract. This means that all dates and deadlines are strict and absolute. If any
payment due, including Earnest Money, is not paid, honored or tendered when due, or if any obligation is not performed timely as provided
in this Contract or waived, the non-defaulting party has the following remedies:
20.1. If Buyer is in Default:
☐ 20.1.1. Specific
Performance. Seller may elect to cancel this Contract and all Earnest Money (whether or not paid by Buyer) will be paid
to Seller and retained by Seller. It is agreed that the Earnest Money is not a penalty, and the parties agree the amount is fair and reasonable.
Seller may recover such additional damages as may be proper. Alternatively, Seller may elect to treat this Contract as being in full force
and effect and Seller has the right to specific performance or damages, or both.
20.1.2. Liquidated Damages, Applicable. This
§ 20.1.2. applies unless the box in § 20.1.1. is checked. Seller may cancel this Contract. All Earnest
Money (whether or not paid by Buyer) will be paid to Seller and retained by Seller. It is agreed that the Earnest Money amount specified
in § 4.1. is LIQUIDATED DAMAGES and not a penalty, which amount the parties agree is fair and reasonable and (except as provided
in §§ 10.4. and 21), such amount is SELLER’S ONLY REMEDY for Buyer’s failure to perform the obligations of
this Contract. Seller expressly waives the remedies of specific performance and additional damages.
20.2. If Seller is in Default:
20.2.1. Specific Performance, Damages or Both.
Buyer may elect to treat this Contract as canceled, in which case all Earnest Money received hereunder will be returned to Buyer and
Buyer may recover such damages as may be proper. Alternatively, in addition to the per diem in § 17 (Possession) for failure of Seller
to timely deliver possession of the Property after Closing occurs, Buyer may elect to treat this Contract as being in full force and effect
and Buyer has the right to specific performance or damages, or both.
20.2.2. Seller’s Failure to Perform.
In the event Seller fails to perform Seller’s obligations under this Contract, to include, but not limited to, failure to timely
disclose Association violations known by Seller, failure to perform any replacements or repairs required under this Contract or failure
to timely disclose any known adverse material facts, Seller remains liable for any such failures to perform under this Contract after
Closing. Buyer’s rights to pursue the Seller for Seller’s failure to perform under this Contract are reserved and survive
Closing.
21. LEGAL FEES, COST AND EXPENSES. Anything
to the contrary herein notwithstanding, in the event of any arbitration or litigation relating to this Contract, prior to or after Closing
Date, the arbitrator or court must award to the prevailing party all reasonable costs and expenses, including attorney fees, legal
fees and expenses.
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 18 of 21
22. MEDIATION. If a dispute
arises relating to this Contract (whether prior to or after Closing) and is not resolved, the parties must first proceed, in good faith,
to mediation. Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and
confidentially. Mediators cannot impose binding decisions. Before any mediated settlement is binding, the parties to the dispute must
agree to the settlement, in writing. The parties will jointly appoint an acceptable mediator and will share equally in the cost of such
mediation. The obligation to mediate, unless otherwise agreed, will terminate if the entire dispute is not resolved within thirty days
of the date written notice requesting mediation is delivered by one party to the other at that party’s last known address (physical
or electronic as provided in § 26). Nothing in this Section prohibits either party from filing a lawsuit and recording a lis pendens
affecting the Property, before or after the date of written notice requesting mediation. This Section will not alter any date in this
Contract, unless otherwise agreed.
23. EARNEST MONEY DISPUTE. Except
as otherwise provided herein, Earnest Money Holder must release the Earnest Money following receipt of written mutual instructions, signed
by both Buyer and Seller. In the event of any controversy regarding the Earnest Money, Earnest Money Holder is not required to release
the Earnest Money. Earnest Money Holder, in its sole subjective discretion, has several options: (1) wait for any proceeding between Buyer
and Seller; (2) interplead all parties and deposit Earnest Money into a court of competent jurisdiction (Earnest Money Holder is entitled
to recover court costs and reasonable attorney and legal fees incurred with such action); or (3) provide notice to Buyer and Seller that
unless Earnest Money Holder receives a copy of the Summons and Complaint or Claim (between Buyer and Seller) containing the case number
of the lawsuit (Lawsuit) within one hundred twenty days of Earnest Money Holder’s notice to the parties, Earnest Money Holder is
authorized to return the Earnest Money to Buyer. In the event Earnest Money Holder does receive a copy of the Lawsuit and has not interpled
the monies at the time of any Order, Earnest Money Holder must disburse the Earnest Money pursuant to the Order of the Court. The parties
reaffirm the obligation of § 22 (Mediation). This Section will survive cancellation or termination of this Contract.
24. TERMINATION.
24.1. Right to Terminate. If
a party has a right to terminate, as provided in this Contract (Right to Terminate), the termination is effective upon the other party’s
receipt of a written notice to terminate (Notice to Terminate), provided such written notice was received on or before the applicable
deadline specified in this Contract. If the Notice to Terminate is not received on or before the specified deadline, the party with the
Right to Terminate accepts the specified matter, document or condition as satisfactory and waives the Right to Terminate under such provision.
Any Notice to Terminate delivered after the applicable deadline specified in the Contract is ineffective and does not terminate this Contract.
24.2. Effect of Termination. In
the event this Contract is terminated, all Earnest Money received hereunder must be timely returned to Buyer and the parties are then
relieved of all obligations hereunder, subject to §§ 10.4. and 21.
25. ENTIRE AGREEMENT, MODIFICATION, SURVIVAL;
SUCCESSORS. This Contract, its exhibits and specified addenda, constitute the entire agreement between the parties relating
to the subject hereof and any prior agreements pertaining thereto, whether oral or written, have been merged and integrated into this
Contract. No subsequent modification of any of the terms of this Contract is valid, binding upon the parties, or enforceable unless made
in writing and signed by the parties. Any right or obligation in this Contract that, by its terms, exists or is intended to be performed
after termination or Closing survives the same. Any successor to a party receives the predecessor’s benefits and obligations of
this Contract.
26. NOTICE, DELIVERY AND CHOICE OF LAW.
26.1. Physical Delivery and Notice. Any
document or notice to Buyer or Seller must be in writing, except as provided in § 26.2. and is effective when physically received
by such party, any individual named in this Contract to receive documents or notices for such party, Broker, or Brokerage Firm of Broker
working with such party (except any notice or delivery after Closing must be received by the party, not Broker or Brokerage Firm).
26.2. Electronic Notice. As
an alternative to physical delivery, any notice may be delivered in electronic form to Buyer or Seller, any individual named in this Contract
to receive documents or notices for such party, Broker or Brokerage Firm of Broker working with such party (except any notice or delivery
after Closing, cancellation or Termination must be received by the party, not Broker or Brokerage Firm) at the electronic address of the
recipient by facsimile, email or _________________________________.
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 19 of 21
26.3. Electronic Delivery. Electronic Delivery
of documents and notice may be delivered by: (1) email at the email address of the recipient, (2) a link or access to a website or server
provided the recipient receives the information necessary to access the documents, or (3) facsimile at the facsimile number (Fax No.)
of the recipient.
26.4. Choice of Law. This Contract
and all disputes arising hereunder are governed by and construed in accordance with the laws of the State of Colorado that would be applicable
to Colorado residents who sign a contract in Colorado for real property located in Colorado.
27. NOTICE OF ACCEPTANCE, COUNTERPARTS. This
proposal will expire unless accepted in writing, by Buyer and Seller, as evidenced by their signatures below and the offering party receives
notice of such acceptance pursuant to § 26 on or before Acceptance Deadline Date and Acceptance Deadline Time.
If accepted, this document will become a contract between Seller and Buyer. A copy of this Contract may be executed by each party, separately
and when each party has executed a copy thereof, such copies taken together are deemed to be a full and complete contract between the
parties.
28. GOOD FAITH. Buyer and Seller
acknowledge that each party has an obligation to act in good faith including, but not limited to, exercising the rights and obligations
set forth in the provisions of Financing Conditions and Obligations; Title Insurance, Record Title and Off-Record Title;
New ILC, New Survey; and Property Disclosure, Inspection, Indemnity, Insurability and Due Diligence.
29. BUYER’S BROKERAGE FIRM COMPENSATION-
intentionally deleted.
ADDITIONAL PROVISIONS AND ATTACHMENTS
30. ADDITIONAL PROVISIONS. (The
following additional provisions have not been approved by the Colorado Real Estate Commission.)
(1) In the event that Buyer has the right to terminate under
any Section of this Contract in Buyer’s sole subjective discretion, Buyer shall not be required to provide any further explanation
or documentation if its reason for termination in order for such termination to be effective under Section 24.
(2) Buyer is represented by Josh W. Mack of The Law Office of
Josh W. Mack, PLLC and any notices to Buyer must be copied to mack@joshmack-law.com in order to be effective.
(3) Each party warrants to the other party that no real estate
broker is entitled to claim a commission related to this transaction. Each party agrees to indemnify the other for any commission or
fee claimed by any real estate broker through or based upon the action of that party.
(4) At closing, Buyer and Seller shall execute a Commercial Lease
for the Property from Buyer as Landlord to Seller as Tenant on the terms set forth in the attached Commercial Lease, the term of which
shall commence at closing.
(5) The Buyer, American Heritage Legacies, LLC is owned by family
members of Interim Chief Executive Officer and Principal Executive Officer Al Harper. This Contract and the Commercial Lease described
above may only be executed if Seller’s Board of Directors approves Contract and the Commercial Lease at a duly noticed meeting
where a quorum is present after an opportunity to review the Contract and the Commercial Lease and any other relevant information about
the financial implications of this transaction with the assistance of such legal and financial counsel as the Board deems necessary,
finds that Al Harper’s actions in facilitating the Contract and the Commercial Lease were taken in good faith, with care, and in
a manner that is in the best interests of the Seller corporation, and authorizes the Board Chair to execute the Contract and the Commercial
Lease. Minutes evidencing such approval shall be provided by Seller to Buyer within 14 days of execution of this Contract. If the Board
votes not to approve this Contract or the Commercial Lease, this Contract shall terminate.
31. OTHER DOCUMENTS.
31.1. Documents Part of Contract. The following
documents are a part of this Contract:
Commercial Lease for the Property from Buyer as
Landlord to Seller as Tenant.
.2. Documents Not Part of Contract. The following documents
have been provided but are not a part of this Contract:
None.
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 20 of 21
SIGNATURES
Buyer’s Name:
American Heritage Legacies, LLC
Buyer’s Name:
/s/ John Harper
9/30/2026
By: John Harper, Managing Member
Date
Buyer’s Signature
Date
Address:
479 Main Avenue
Address:
Durango, CO 81301
Phone No.:
Phone No.:
Fax No.:
Fax No.:
Email Address:
Email Address:
[NOTE: If this offer is being countered
or rejected, do not sign this document.]
Seller’s Name:
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
Seller’s Name:
/s/ Mel Keating
9/30/2026
Mel Keating, Director and Board Chair
Date
Seller’s Signature
Date
Address:
265 Turner Drive
Address:
Durango, CO 81303
Phone No.:
Phone No.:
Fax No.:
Fax No.:
Email Address:
Email Address:
END
OF CONTRACT TO BUY AND SELL REAL ESTATE
CBS3-6-24. CONTRACT TO BUY AND SELL REAL ESTATE (COMMERCIAL) Page 21 of 21
EX-10.2 — COMMERCIAL LEASE, DATED OCTOBER 1, 2026, BETWEEN AMERICAN HERITAGE LEGACIES, LLC AND ROCKY MOUNTAIN CHOCOLATE FACTORY, INC
EX-10.2
Filename: ea030780001ex10-2.htm · Sequence: 3
Exhibit 10.2
COMMERCIAL LEASE
BETWEEN
AMERICAN HERITAGE LEGACIES, LLC
AND
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
THIS COMMERCIAL LEASE (the
“Lease”) is made as of the date of the last party to sign below, by and between AMERICAN HERITAGE LEGACIES, LLC. (“Landlord”)
and ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. (“Tenant”) (each, a “party”, and together, the “parties”).
RECITALS
A. Landlord
is the owner of that certain real property legally described as follows (the “Premises”):
Tract A of the BODO BUSINESS RANCHES, UNIT III, CRAIL LOT
CONSOLIDATION, PROJECT NO. 93-206, according to the plat thereof filed for record December 14, 1993 as Reception No. 659418.
Also known by street address
as: 265 Turner Street, Durango, CO 81303.
C. Landlord
desires to lease the Premises to Tenant.
D. Tenant
desires to lease the Premises from Landlord upon the terms and conditions set forth in this Lease.
NOW, THEREFORE, in
consideration of the terms, covenants, and conditions set forth below, Landlord and Tenant agree as follows:
1. Demise
of Premises. In consideration of the rents, covenants and agreements contained herein, Landlord hereby leases to Tenant and Tenant
hereby rents from Landlord the Premises, subject to the terms and conditions as set forth in this Lease.
2. Condition
of Premises. The Premises shall be delivered to Tenant by Landlord in “as-is” condition. Tenant’s occupancy
of the Premises shall constitute acceptance of the condition of the Premises. Tenant shall be responsible for all improvements to the
Premises desired by Tenant (the “Tenant Improvements”), and which shall be performed by Tenant at its own cost and expense.
Landlord does not warrant the suitability of the Premises for the Tenant Improvements, and Tenant assumes responsibility for determining
the feasibility of the Tenant Improvements. Tenant shall be responsible for obtaining all necessary permits required by the City of Durango
for such Tenant Improvements and shall provide copies thereof to Landlord before commencing the Tenant Improvements. Tenant agrees to
submit to Landlord for Landlord’s prior approval, plans and specifications describing the Tenant Improvements, which approval shall
be in Landlord’s sole and absolute discretion. Tenant covenants and agrees to install the Tenant Improvements only as set forth
in plans and specifications that have been approved by Landlord in writing upon submission thereof by Tenant. All improvements to the
interior structure of the Premises, including the walls, floors, electrical system, and plumbing shall become the sole property of the
Landlord, and Tenant shall not be entitled to any setoff or credit for such improvements. Landlord reserves the right to enter the Premises
for the purpose of posting such notices of non-responsibility prior to installation of the Tenant Improvements as may be permitted by
law, or desired by Landlord.
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3. Term.
(a) Lease
Term. The term of this Lease shall commence at the closing of the Contract to Buy and Sell Real Estate (Commercial) between Tenant
and Landlord (the “Commencement Date”). The Lease Term shall terminate ten (10) years from the first day of the month following
the Commencement Date. Each twelve-month period after the first day of the month following the Commencement Date shall be considered a
“Lease Year.”
(b) Renewal
Term. If Tenant is not in default of any of its obligations under this Lease, Tenant shall have the option to renew the Lease for
one additional ten (10) year renewal term by providing written notice to Landlord at least six (6) months in advance of the termination
of the Primary Term.
(c) Termination
upon Change in Control. Upon the occurrence of a Change of Control of Tenant, this Lease shall terminate upon the earlier of: (1)
closing on the sale of the Premises from Landlord to Tenant as described in paragraph 29; or (2) 90 days from the Change in Control.
4. Rent.
Tenant covenants and agrees to pay to Landlord, as rental for the Premises, the following:
(a) Base
Rent. Base Rent (“Base Rent”) at the rate of Six Hundred Twenty Four Thousand Dollars ($624,000) for the First Lease Year,
payable in equal monthly payments of Fifty Two Thousand Dollars ($52,000) for each rental month of this Lease, due on the first day of
each calendar month without any set-off or deduction. Payment of the Base Rent shall commence on the Commencement Date. If the Commencement
Date is not the first day of a calendar month, rent shall be prorated for the month of the Commencement Date. Each successive Lease Year,
the Base Rent shall increase by two percent (2%) over the Base Rent for the previous Lease Year.
(b) Additional Rent.
Tenant shall pay to Landlord Additional Rent sufficient to reimburse Landlord for all expenses, costs and disbursements of every kind
and nature associated with ownership of the Premises which may arise or become due during the Lease Term including appropriate reserves
in the timeframes specified for reimbursement in this Lease. Tenant shall pay prior to delinquency all other costs associated with the
operation and maintenance of the Premises. It is the express intent of Tenant and Landlord that the return to Landlord under this
lease shall be absolutely “Net”.
5. Late
Fees. If a payment of Base Rent is not received by Landlord on or before the fifth day of the month, Tenant will pay Landlord
a late fee (“Late Fee”) of ten percent (10%) of the monthly Base Rent. Landlord and Tenant hereby agree that the Late Fee
amount represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment of Base Rent by Tenant. Acceptance
of such Late Fee shall not constitute a waiver by Landlord of Tenant’s default with respect to the overdue amount and shall not
prevent Landlord from exercising any of the other rights and remedies available to Landlord for any other breach of Tenant under this
Lease.
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6. Use
of the Premises.
(a) Business
Use. The Premises shall be used and occupied for Tenant’s corporate headquarters and production and warehouse facility and for
no other purpose. Tenant shall, at its sole expense, comply with all laws applicable to its use of the Premises and shall obtain all permits
or licenses required for the transaction of business at the Premises. Tenant will not use, permit or suffer the use of the Premises for
any other business than that hereinabove stated, and will not use or permit any use of the Premises.
(b) Compliance
with Governmental Regulations. Tenant shall, at its own cost and expense, promptly and properly observe and comply with all present
and future orders, regulations, directions, rules, laws, ordinances, and requirements of all governmental authorities (including, without
limitation, state, municipal, county and federal governments and their departments, bureaus, boards and officials) and arising from Tenant’s
use or occupancy of the Premises or privileges appurtenant to or in connection with the enjoyment of the Premises.
(c) Nondiscrimination.
Tenant, with respect to its use of the Premises, and the parties in connection with the performance of their respective obligations under
this Lease Agreement, agree that they will not discriminate against anyone with respect to race, color, creed, sex, age, national origin,
religion, handicap, disability, veteran status, any other legally protected category of persons.
(d) Limitations
on Use. Tenant shall not overload or abuse the floors, walls, or ceiling of the Premises, or make any use of the Premises which would
render insurance void or increase Landlord’s risk for insurance purposes. No act shall be done in or about the Premises that is
unlawful or that will increase the existing rate of insurance on any or all of the Land or Building. To Landlord’s knowledge, Landlord
acknowledges that Tenant’s permitted use will not increase the existing rate of insurance. Tenant shall not commit or allow to be
committed or exist: (a) any waste upon the Premises, (b) any public or private nuisance, or (c) any act or condition which interferes
with the business of Landlord or with the rights or privileges of any contractors, subcontractors, licensees, agents, concessionaires,
subtenants, servants, employees, customers, guests, invitees or visitors or any other persons lawfully in and upon the Land or Building,
or causes any impairment or reduction of the good will or reputation of the Building. Tenant shall not, without the prior consent of Landlord,
use any apparatus, machinery, device or equipment in or about the Premises which will cause any unreasonable substantial noise or vibration
or any increase in the normal consumption level of electric power.
7. Quiet
Enjoyment; Subordination; Estoppel Certificates.
(a) Quiet
Enjoyment. Landlord hereby covenants and agrees that so long as Tenant complies with all the terms, covenants and provisions of this
Lease, Tenant shall have the peaceful and quiet use of the Premises without let or hindrance on the part of Landlord and Landlord shall
warrant and defend Tenant in such peaceful and quiet use and possession against the claims of all persons claiming by, through or under
Landlord.
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(b) Subordination.
Tenant’s rights under this Lease are however, and shall always be subordinate to the operation and effect of any mortgage, deed
of trust or similar security instrument (a “Security Instrument”) now or hereafter placed upon the land or buildings of which
the Premises are a part, or any part thereof, by Landlord, or any renewal, modification, consolidation, replacement or extension of any
such Security Instrument, unless such secured party elects to have Tenant’s interest hereunder superior to the lien of such Security
Instrument; this clause shall be self-operative and no further instrument of subordination shall be required. In confirmation of such
subordination, Tenant shall execute promptly any certificate that Landlord may request. Tenant hereby constitutes and appoints Landlord
as Tenant’s attorney-in-fact to execute any such certificate or certificates for and on behalf of Tenant.
(c) Estoppel
Certificate. Tenant agrees, at any time, and from time to time, upon not less than ten (10) days’ prior written request by Landlord,
to execute, acknowledge and deliver to Landlord a statement in writing certifying the commencement and termination dates of the term of
this Lease, that this Lease is unmodified and in full force and effect (or if there have been modifications, that this Lease is in full
force and effect as modified and stating the modifications), and the dates to which rent and other charges have been paid, and any default
or claimed default on the part of Landlord under this Lease, it being intended that any such statement delivered pursuant to this provision
may be relied upon by any prospective purchaser of Landlord’s interest or holder of a Security Instrument or assignee of any Security
Interest upon Landlord’s estate in the Premises.
8. Assignment
and Subletting.
(a) Consent
Required. Tenant covenants and agrees not to assign this Lease in whole or in part, nor to sublease all or any part of the Premises
nor permit other persons to occupy the Premises or any part thereof, nor to grant any license or concession for all or any part of the
Premises, without the written consent of Landlord in each instance first had and obtained, which consent shall be in Landlord’s
sole and absolute discretion, which may include the conditions set forth in subsection (b) below. Any consent by Landlord to an assignment
or subletting of this Lease shall not constitute a waiver of the necessity of such consent as to any subsequent assignment or subletting.
An assignment for the benefit of the Tenant’s creditors or otherwise by operation of law shall not be effective to transfer or assign
Tenant’s interest under this Lease unless Landlord shall have first consented thereto in writing. Upon any permitted assignment,
Tenant shall remain fully liable on this Lease and shall not be released from performing any of the terms, covenants and conditions of
this Lease.
(b) Conditions
of Transfer. Landlord may withhold its consent to any proposed assignment, sublease, license or concession (each, a “Transfer”)
under subsection (a) above for any reason, including without limitation the following conditions:
(i) the proposed
transferee’s financial condition is not reasonably satisfactory to Landlord or does not evidence the ability to pay Tenant’s
obligations under this Lease when due;
(ii) the
transferee’s use of the Premises conflicts with the permitted use described in Section 6(a); or
(iii) the use,
nature, business, activities or reputation in the business community of the transferee (or its principals, employees or invitees)
are not acceptable to Landlord.
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(c) Termination.
If Tenant subleases or assigns the Lease in whole or in part without Landlord’s prior written consent, then Landlord shall have
the option to terminate this Lease at any time after actual notice of such change by giving Tenant at least sixty (60) days’ prior
written notice, and on the date fixed in such notice for termination of this Lease, this Lease shall expire and come to an end with the
same effect as if said date were originally set forth in this Lease for expiration of the term. The mere receipt by Landlord of rent from
a party other than Tenant shall not be deemed actual notice of an assignment or sublease.
9. Maintenance
and Repairs.
(a) Tenant’s
Obligations: Exterior of the Premises. Tenant covenants and agrees to keep and maintain the exterior of the Premises, including the
roof of the Premises, exterior walls, exterior doors and windows, parking lot, curbs, grounds, and landscaping in good condition and repair.
In the event of any damage to the exterior of the Premises, Tenant shall cause such damages to be repaired. Landlord shall not be liable
for repair or maintenance of the Premises, or any part thereof.
(b) Tenant’s
Obligations: Interior of the Premises. Tenant covenants and agrees to keep the entire interior of the Premises, together with all
electrical, plumbing, coolers, freezers, heating, air-conditioning, foundation, and other mechanical installations and equipment used
by, or in connection with, the Premises, in good order and repair at its own expense and to promptly replace at its own expense, any interior
finishes, interior plate glass doors, windows and mirrors which may be broken or damaged; and to surrender the Premises at the expiration
of the term in as good condition as when received. Tenant will not overload the electrical wiring or plumbing and will not install any
additional electrical wiring or plumbing unless it has first obtained Landlord’s written consent thereto, and, if such consent is
given, Tenant will install the same at its own cost and expense. Tenant will repair promptly at its own expense any damage to the Premises
caused by bringing into the Premises any property for Tenant’s use, or by the installation or removal of such property, regardless
of fault or by whom such damage shall be caused unless caused by Landlord, its agents, employees or contractors.
(c) In
the event Tenant shall not proceed promptly and diligently to make any repairs or perform any obligation imposed upon it in this Section
9 within forty-eight (48) hours after receiving written notice from Landlord to make such repairs or perform such obligation, then and
in such event, Landlord may at its option, enter the Premises and do and perform the things specified in said notice, without liability
on the part of Landlord for any loss or damage resulting from any such action by Landlord and Tenant agrees to pay within five (5) days
of Landlord’s demand any cost or expense incurred by Landlord in taking such action.
10. Utilities.
Landlord shall not be responsible for providing any services to the Premises. Tenant shall be responsible for providing its own gas, water,
electric, telephone, or other utility services which it requires on the Premises together with the costs of maintaining the grounds at
its sole cost and expense. Tenant shall directly pay for such services, including the establishment and connection thereof, at the rates
charged for such services by said authority or utility, and the failure of Tenant to obtain or to continue to receive such services for
any reason whatsoever shall not relieve Tenant of any of its obligations under this Lease.
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11. Tenant’s
Operations.
(a) Alterations.
Tenant covenants and agrees not to make any alterations, additions, or improvements to the exterior of the Premises and not to make any
structural alterations to the Premises, or any part thereof, without Landlord’s prior written consent in each instance first had
and obtained; and Tenant agrees that any alterations, additions or improvements made by it shall immediately become the property of Landlord
and shall remain upon the premises in the absence of any agreement to the contrary; provided, however, that Landlord shall have the right
to require the restoration of the Premises to their original condition, in which event Tenant agrees to comply with such requirement prior
to the expiration or other termination of this Lease. Tenant further agrees that it will not cut or drill into or secure any fixtures,
apparatus or equipment of any kind in or to any part of the Premises without first obtaining Landlord’s written consent.
(b) Exterior
of Premises. Tenant covenants and agrees not to place, or suffer to be placed, or maintain, any sign, billboard, marquee, awning,
decoration, placard, lettering, advertising matter or other thing of any kind, whether permanent or temporary, on the exterior of the
Premises or on the glass or any window or door of the Premises, without first obtaining Landlord’s written approval thereof, and
without first obtaining all necessary approvals and permits from the City of Durango. Tenant further agrees to maintain any sign, billboard,
marquee, awning, decoration, placard, lettering or advertising matter or other thing of any kind as may be approved by Landlord in good
condition and repair at all times.
(c) Compliance
with Fire Laws. Tenant covenants and agrees to execute and comply with all laws, rules, orders, directions and requirements of all
governmental departments, bodies, bureaus, agencies and officers, and with all rules, directions, requirements and recommendations of
the local board of fire underwriters and the fire insurance rating organizations having jurisdiction over the area in which the Premises
are situated, in any manner pertaining to the Premises or the use and occupancy thereof. In the event Tenant shall fail or neglect to
comply with any of the aforesaid laws, rules, orders, directions, requirements, or recommendations upon twenty-four (24) hours prior written
notice, or without advance notice in the event of an emergency, Landlord or its agents may enter the Premises and take all such action
and do all such work in or to the Premises as may be necessary in order to cause compliance with such laws, rules, orders, directions,
requirements or recommendations, and Tenant covenants and agrees to reimburse Landlord promptly upon demand for the expense incurred by
Landlord in taking such action and performing such work. Tenant further covenants and agrees not to do or suffer to be done, or keep or
suffer to be kept anything in, upon or about the Premises which will contravene Landlord’s policies insuring against loss or damage
by fire or other hazards, including, but not limited to, public liability or which will prevent Landlord from procuring such policies
in companies reasonably acceptable to Landlord; and if anything done, omitted to be done or suffered to be done by Tenant, or kept, or
suffered by Tenant to be kept, in, upon or about the Premises shall cause the rate of fire or other insurance on the Premises, or other
property of Landlord, in companies reasonably acceptable to Landlord, to be increased beyond the minimum rate from time to time applicable
to the Premises, or any adjoining stores or to other property of Landlord for the use or uses made thereof, Tenant will pay the amount
of such increase promptly upon Landlord’s demand.
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(d) Mechanic’s
Liens. Tenant shall at all times keep the Premises free from any liens arising out of any work performed or allegedly performed, materials
furnished or allegedly furnished, or obligations incurred or allegedly incurred, by Tenant or its contractors. Landlord reserves the right
to enter the Premises for the purpose of posting such notices of non-responsibility as may be permitted by law, or desired by Landlord.
Prior to commencing any Alterations, repairs or any other work in the Premises or incurring any obligations in connection therewith, Tenant
shall provide Landlord with at least ten (10) business days’ notice with respect thereto so that Landlord may post notices of non-responsibility.
Tenant covenants and agrees that if any mechanics’
or materialmen’s lien or other lien shall be filed against the Premises, or any other part of the Building, by reason of or arising
out of any labor or material furnished or alleged to have been furnished, to or for the Premises or any occupant thereof, or for or by
reason of any change, alteration or addition made by Tenant thereto, Tenant shall in any of such events, cause the same to be canceled
and discharged of record by bond or otherwise as allowed by law, at Tenant’s expense, within ten (10) days after the filing thereof;
and Tenant shall also defend on Landlord’s behalf, at Tenant’s sole cost and expense, any action, suit or proceeding which
may be brought thereon or for the enforcement of any such lien, and Tenant will pay any damages and satisfy and discharge any judgment
entered thereon and save Landlord harmless from any claim or damage resulting therefrom. If at any time, Tenant does not comply with the
covenants made in this subparagraph, Landlord may, at its option, after giving Tenant three (3) days’ prior written notice of its
intention to do so, cause such lien to be canceled and discharged of record by bond or otherwise as allowed by law, and Tenant shall pay
all costs thereof, including reasonable attorney’s fees, as additional rent, payable with the next ensuing installment of Base Rent.
12. Indemnification;
Insurance.
(a) Indemnification.
Tenant covenants and agrees to indemnify Landlord and save it harmless from and against any and all claims, actions, damages, liability
and expenses in connection with loss of life, personal injury, or damage to property arising from or out of Tenant’s occupancy or
use of the Premises or any part thereof, or any other part of Landlord’s property, or occasioned wholly or in part by any act or
omission of Tenant, its agents, contractors or employees.
(b) Insurance.
Tenant shall, at its sole cost and expense, maintain and keep in full force with responsible companies licensed to do business in Colorado
and acceptable to Landlord, insurance policies naming Landlord, Tenant and any mortgagee of Landlord as insureds, as their respective
interests may appear, and providing not less than the following protection:
(i) Property insurance in an amount sufficient
to cover not less than 100% of the full replacement cost of the Premises and all improvements located thereon, including the entire interior
of the Premises, all electrical, plumbing, heating, air-conditioning and other mechanical installations and equipment against destruction
from any cause, including without limitation, fire or water damage; as well as any other coverages on the Premises and improvements as
Landlord or its Lender deems necessary or desirable;
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(ii) General commercial liability insurance
with minimum limits of coverage of $1,000,000.00 per person and $2,000,000.00 per occurrence, or with such greater limits as Landlord
may specify;
(iii) Personal property insurance against
Special Causes of Loss (including theft) covering all of Tenant’s stock in trade, fixtures, personal property and all installations
and improvements made by Tenant (including Tenant’s installations and improvements which become the property of Landlord) in, on
or about the Premises in an amount of not less than the then full insurable value (actual replacement cost without deduction for physical
deprecation), with such value to be determined by Tenant;
(iv) Business Interruption Insurance sufficient
to compensate Tenant for closure of business for a period of up to 120 days.
(c) General
Insurance Requirements.
(i) Landlord (and its lender, if applicable)
shall be listed as loss payee or additional insured or on all of Tenant’s insurance policies (except for its Business Interruption
policy). Landlord shall be entitled to collect the proceeds of all property insurance and may apply such proceeds to repair or replacement
of the improvements on the Premises in its sole discretion.
(ii) Tenant’s
policies shall provide that, in the case of fire or other casualty affecting the Premises, any loss shall be adjusted jointly with Landlord
and Tenant and that to the extent Landlord’s insurance policies and Tenant’s insurance policies provide coverage for the same
risks, Tenant’s insurance shall be primary.
(iii) The
insurance policies or duly executed certificates thereof, together with satisfactory evidence that the premium has been paid, shall be
deposited with the Landlord on or before delivery of possession and thereafter evidence of continuing insurance and premium payments shall
be delivered to Landlord not less than ten (10) days prior to the expiration of each policy required to be in force hereunder and at any
other time requested by Landlord.
(iv) All
insurance carried by Tenant shall be in form satisfactory to Landlord and shall provide that the policy shall not be subject to cancellation,
termination or modification except after at least ten (10) days’ prior written notice to the Landlord and to any Mortgagee to whom
a loss thereunder may be payable.
(v) If
Tenant fails to maintain the required insurance, Landlord may, but shall not be obligated to, obtain such insurance and Tenant shall pay
Landlord the premium on demand.
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(ii) Each
party hereby releases the other party with respect to any claim (including a claim for negligence) which it might otherwise have against
the other party for loss, damage or destruction with respect to its property occurring during the term of this Lease to the extent to
which such claim is insured under a policy or policies containing a waiver of subrogation or permission to release liability or naming
the above party as an additional insured as provided above.
13. Trade
Fixtures. All trade fixtures installed by Tenant in the Premises, other than improvements to the Premises made by Tenant, shall
remain the property of the Tenant and shall be removable from time to time and also at the expiration of the term of this Lease or other
termination thereof, provided that Tenant shall not at such time be in default under any covenant or agreement contained in this Lease;
otherwise such property shall not be removable and Landlord shall have a lien on said fixtures to secure itself against loss and damage
resulting from said default or defaults by Tenants.
14. Inspection
of Premises. Tenant covenants and agrees to permit Landlord, its agents, employees and contractors to enter the Premises and all
parts thereof at all reasonable times to inspect the Premises and to enforce and carry out any provision or provisions of this Lease.
15. Holding
Over. The parties hereto covenant and agree that this Lease and the tenancy hereby created shall cease and terminate at the end
of the Lease Term (or Renewal Term as applicable) without the necessity of any notice from either Landlord or Tenant to terminate the
same. In the event Tenant remains in possession of the Premises after termination of this Lease and in the absence of renewal in accordance
with to the terms of Section 3 or any written agreement with Landlord permitting Tenant to do so, Tenant shall be deemed a month-to-month
tenant of the Premises at a rental equal to one hundred and twenty-five percent (125%) of the Base Monthly Rent for the expiring term
of the Lease.
16. Showing
of Premises. Tenant covenants and agrees that for the period of six (6) months prior to the end of the Lease Term (or Renewal
Term as applicable), Landlord shall have the right to display on the exterior of the Premises or within the windows visible from the exterior
of the Premises the customary sign “For Rent” and that during such period, Landlord may show the Premises and all parts thereof
to prospective tenants during normal operating hours on any day except any legal holiday on which Tenant shall not be open for business.
17. Damage
or Destruction. If the Premises shall be damaged by fire, the elements, unavoidable accidents or other casualty, whether or not
the Premises are rendered untenantable in whole or in part, Landlord shall promptly at its own expense cause such damage to be repaired,
and the rent shall not be abated. If the Premises cannot in Landlord’s opinion, be repaired within one hundred and twenty (120)
days of such occurrence, Landlord shall give Tenant written notice of such determination, in which event this Lease and the tenancy hereby
created shall terminate as of the date of said occurrence, the rental to be adjusted as of such date.
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18. Eminent
Domain. If the whole or any part of the Premises shall be taken under the power of eminent domain, then this Lease shall terminate
as to the part so taken on the day when Tenant is required to yield possession thereof, and Landlord shall make such repairs and alterations
as may be necessary in order to restore the part not taken to useful condition; pending the restoration by Landlord of the portion of
the Premises not so taken, the rental shall be reduced proportionately to the portion of the Premises not taken. If the amount of the
Premises not taken is such as to substantially impair the usefulness of said Premises for the purposes for which the same are hereby leased,
then either party shall have the option to terminate this Lease as of the date when Tenant is required to yield possession. The compensation
awarded for such taking, both as to Landlord’s reversionary interest and Tenant’s interest under this Lease, shall belong
to and be the property of Landlord; provided, however, that Landlord shall not be entitled to any portion of the award made to Tenant
for loss of Tenant’s business or for the cost of removal of its stock and Tenant’s fixtures, if so separately stated and valued.
19. Events
of Default. The occurrence or existence of any one or more of the following events or circumstances shall constitute an “Event
of Default” under this Lease:
(a) Failure
in Payment. The failure by Tenant to pay when due any installment of Base Rent, Additional Rent (including Additional Rent payable
to third parties), or Late Fee due under the terms of this Lease.
(b) Failure
in Performance. The failure by Tenant to perform or observe all of the covenants on Tenant’s part to be performed or observed
under this Lease, if Tenant fails to remedy that failure within ten (10) days after Landlord gives written notice of the breach to Tenant;
provided, however, that in the event the breach arises from Tenant’s violation of any applicable law, ordinance or similar governmental
restriction, and if the agency enforcing the restriction allows a shorter period for the cure of the breach, then Tenant shall be obligated
to effect the cure of the breach within that shorter period.
(c) Attachment.
The taking of this Lease or the Premises or any part thereof upon execution or by other process of law directed against Tenant, or upon
or subject to any attachment at the instance of any creditor of or claimant against Tenant, if such attachment shall not be discharged
or disposed of within fifteen (15) days after the levy of same.
(d) Vacating
or Abandonment. The vacating or abandonment of the Premises (which shall be defined to include, but not be limited to, any absence
by Tenant from the Premises for ten (10) or more consecutive days without prior written consent from Landlord), or Tenant’s locking
the Premises so as to prevent the entry by Landlord, or its representatives as permitted by the terms of this Lease.
(e) Assignment
without Consent. The assignment or subletting of the Premises or any portion of the Premises without the consent of Landlord.
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(f) Insolvency
Filing. An action by Tenant or any guarantor of Tenant’s obligations under this Lease to (i) admit in writing its inability
to pay its debts generally as they become due; (ii) make an assignment of all or a substantial part of its property for the benefit of
creditors; (iii) apply for or consent to or acquiesce in the appointment of a receiver, trustee or liquidator of Tenant or such guarantor
or of all or a substantial part of Tenant’s or such guarantor’s property or of the Premises or of Tenant’s interest
in this Lease; or (iv) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization under any bankruptcy
or insolvency law or an arrangement with creditors, or take advantage of any insolvency law or file an answer admitting the material allegations
of a petition filed against Tenant or such guarantor in any bankruptcy, reorganization or insolvency proceedings.
(g) Insolvency
Adjudication. The entry of a court order, judgment or decree without the application, approval or consent of Tenant or any guarantor
of Tenant’s obligations under this Lease, as the case may be, approving a petition seeking reorganization of Tenant or such guarantor
under any bankruptcy or insolvency law or appointing a receiver, trustee or liquidator of Tenant or such guarantor, or of all or a substantial
part of Tenant’s or such guarantor’s property, or of the Premises, or of Tenant’s interest in this Lease, or adjudicating
Tenant or such guarantor a bankrupt or insolvent, if such order, judgment or decree shall not be vacated, set aside or stayed within thirty
(30) days from the date of entry.
(h) Other
Default. Default by Tenant or any guarantor on any other obligation to Landlord.
20. Landlord’s
Remedies. Upon the occurrence of an Event of Default, Landlord shall have the right, at its election, then or at any time thereafter
and while any such Event of Default shall continue, either:
(a) To
give Tenant written notice of Landlord’s intention to terminate this Lease on the date such notice is given or on any later date
specified therein, whereupon, on the date specified in such notice, Tenant’s right to possession of the Premises shall cease and
this Lease shall thereupon be terminated; or
(b) To
re-enter and take possession of the Premises or any part thereof and repossess the same as Landlord’s former estate and expel Tenant
and those claiming through or under Tenant, and remove the effects of both or either, using such force for such purposes as may be reasonably
necessary, without being liable for prosecution thereof, without being deemed guilty of any manner of trespass and without prejudice to
any remedies for arrears of rent or preceding breach of covenants or conditions. Should Landlord elect to re-enter the Premises as provided
in this Section 20(b) or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided for by law,
Landlord may, from time to time, without terminating this Lease, re-let the Premises or any part thereof in Landlord’s or Tenant’s
name, but for the account of Tenant, for such term or terms (which may be greater or less than the period which would otherwise have constituted
the balance of the term) and on such conditions and upon such other terms (which may include concessions of free rent and alteration and
repair of the Premises) as Landlord, in its discretion, may determine, and Landlord may collect and receive the rents therefor. Landlord
shall in no way be responsible or liable for any failure to re-let the Premises or any part thereof or for any failure to collect any
rent due upon such re-letting. No such re-entry or taking possession of the Premises by Landlord shall be construed as an election on
Landlord’s part to terminate this Lease unless a written notice of such intention be given to Tenant. No notice from Landlord hereunder
or under a forcible entry and detainer statute or similar law shall constitute an election by Landlord to terminate this Lease unless
such notice specifically so states. Landlord reserves the right following any such re-entry and/or re-letting, to exercise its right to
terminate this Lease by giving Tenant such written notice, in which event, this Lease will terminate as specified in said notice.
11
(c) In
the event that Landlord does not elect to terminate this Lease as permitted in Section 20(a) hereof, but on the contrary, elects to take
possession as provided in Section 20(b), Tenant shall pay to Landlord the rent and other sums as herein provided, which would be payable
hereunder if such repossession had not occurred, less the net proceeds, if any, of any reletting of the Premises after deducting all Landlord’s
expenses in connection with such reletting, including but without limitation, all repossession costs, brokerage commissions, legal expenses,
attorneys’ fees, expenses of employees, alteration and repair costs and expenses of preparation for such reletting. If, in connection
with any reletting, the new lease term extends beyond the existing term, or the premises covered thereby include other premises not part
of the Premises, a fair apportionment of the rent received from such reletting and the expenses incurred in connection therewith as provided
aforesaid will be made in determining the net proceeds from such reletting. Tenant shall pay such rent and other sums to Landlord monthly
on the days on which the rent would have been payable hereunder if possession had not been retaken.
(d) In
the event this Lease is terminated, Tenant shall remain liable to Landlord for damages in an amount equal to the total of the following:
(i) the cost, including reasonable
attorneys’ fees, of demanding and recovering the Premises;
(ii) all unpaid Base Rent, Additional
Rent, Late Fee and any other rent earned at the time of termination of this Lease, plus interest thereon at eighteen percent (18%) per
annum;
(iii) all other money and damages owed
by Tenant to Landlord.
(iv) Base Rent, Additional Rent, Late
Fee, and other rent and sums which would have been owing by Tenant hereunder for the balance of the term had this Lease not been terminated,
less the net proceeds, if any, received by Landlord from any reletting of the Premises by Landlord subsequent to such termination, after
deducting all Landlord’s expenses in connection with finding a new tenant and such recovery of possession and reletting, including
tenant improvements, remodeling and refinishing space for a new tenant, reasonable and customary tenant inducements and abatements, brokerage
fees or agents’ commissions in connection therewith, redecorating costs, reasonable attorneys’ fees, and other costs and expenses
incident to recovering and reletting the Premises; and Landlord shall be entitled to collect and receive such damages from Tenant on the
days on which the Base Rent, Additional Rent, Late Fee, and other rent and sums would have been payable if this Lease had not been terminated.
(e) Suit
or suits for the recovery of the amounts and damages set forth above may be brought by Landlord, from time to time, at Landlord’s
election and nothing herein shall be deemed to require Landlord to await the date whereon this Lease or the term hereof would have expired
had there been no such default by Tenant or no such termination, as the case may be.
12
(f) After
an Event of Default by Tenant, Landlord may sue for or otherwise collect all rents, issues and profits payable under all subleases on
the Premises, including those past due and unpaid.
(g) After
an Event of Default by Tenant, Landlord may without terminating this Lease, enter upon the Premises, with force if necessary, without
being liable for prosecution of any claim for damages, without being deemed guilty of any manner of trespass and without prejudice to
any other remedies, and do whatever Tenant is obligated to do under the terms of this Lease. Tenant agrees to reimburse Landlord on demand
for any expenses which Landlord may incur in effecting compliance with the Tenant’s obligations under this Lease; further, Tenant
agrees that Landlord shall not be liable for any damages resulting to Tenant from effecting compliance with Tenant’s obligations
under this subparagraph caused by the negligence of Landlord or otherwise.
(h) Injunction
and Specific Performance. In the event of a breach or threatened breach by Tenant of any of the terms, covenants, or conditions of
this Lease, Landlord shall also have the right of injunction and specific performance. Tenant agrees to pay the premium for any bond required
in connection with any injunction.
(i) Compliance
with Applicable Law. Notwithstanding any of the foregoing, in exercising its remedies under this Lease, Landlord shall comply with
all applicable Colorado law, including but not limited to, the forcible entry and detainer statutes.
(j) Attorneys’
Fees. In the event of any legal proceeding arising under this Lease, the prevailing party shall be entitled to an award of its reasonable
attorneys’ fees (including legal assistants’ fees) and costs. For the purposes of this Lease, the term “prevailing party”
shall include a party who withdraws or moves for dismissal of a claim in consideration of payment allegedly due, performance allegedly
owed or other consideration in substantial satisfaction of the claim withdrawn or dismissed.
(k) Landlord’s
Lien. Landlord shall have at all times a security interest and a lien for all rent and other sums of money becoming due hereunder
from Lessee, subordinate only to a purchase money security interest, upon all goods, wares, equipment, fixtures, furniture, other personal
property and licenses situated in or pertaining to the Premises belonging to Tenant, and such property shall not be removed therefrom
without the consent of Landlord until all arrearages in rent and other sums of money then due to Landlord hereunder shall first have been
paid. Upon the occurrence of any event of default by Tenant, Landlord may foreclose in the manner provided by law for the foreclosure
of a security interest and may dispose of any property subject to the lien through public or private sale. Tenant agrees that Landlord
may record such financing statements as Landlord may deem necessary to perfect the security interest in the lien granted to Landlord pursuant
to this Section.
13
21. Remedies
Cumulative and Waiver.
(a) Each right and
remedy provided for in this Lease shall be cumulative and shall be in addition to every other right or remedy provided for in this
Lease now or hereafter existing at law or in equity or by statute or otherwise, including, but not limited to, suits for injunctive
or declaratory relief and specific performance. No mention in this Lease of any specific right or remedy shall preclude Landlord
from exercising any other right or from having any other remedy or from maintaining any action to which it may otherwise be entitled
either at law or in equity; and the failure of Landlord to insist in any one or more instances upon a strict performance of any
covenant of Tenant under this Lease or to exercise any option or right herein contained shall not be construed as a waiver or
relinquishment for the future of such covenant, right or option, but the same shall remain in full force and effect unless the
contrary is expressly waived in writing by Landlord.
(b) The
waiver by Landlord of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition on any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance
of the rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition
of this Lease, other than the failure of Tenant to pay the particular rental so accepted, regardless of Landlord’s knowledge of
such preceding breach at the time of acceptance of such rent. No covenant, term or condition of this Lease shall be deemed to have been
waived by Landlord, unless such waiver be in writing and signed by Landlord.
22. Injury
from Leakage, etc. Landlord shall not be liable for any injury or damage to persons or property resulting from falling
plaster, steam, gas, electricity, water, rain or snow which may leak or issue from any part of the Premises or from pipes, appliances
or plumbing, or from sewers or the street or subsurface, or from any other place, by dampness or other cause of whatever nature.
23. Recording.
This Lease shall not be recorded in the public records of La Plata County, Colorado.
24. Property
and Sales Taxes.
(a) Real
Property Taxes. Tenant will pay before delinquency (and provide Landlord with reasonable evidence thereof) all Real Property Taxes
that may be levied or imposed during the Term against all of part of the Premises. “Real Property Taxes” means all general
real estate taxes, ad valorem taxes, general and special assessments, surcharges and other similar governmental charges levied against
or applicable to the Premises for each calendar year.
(b) Personal
Property Taxes. Tenant shall pay all personal property taxes assessed on the personal property located on or used in connection with
the Premises (whether owned by Landlord or Tenant). All such taxes shall be paid as and when they become due and prior to delinquency.
14
(c) Sales
Taxes. Tenant shall pay all sales taxes assessed against the business operating on or in connection with the Premises. All such taxes
shall be paid as and when they become due and prior to delinquency. Tenant shall not allow any lien to attached to personal property or
fixtures located at the premises due to failure to timely pay such taxes and shall immediately discharge any such lien.
(d) Payroll
Taxes. Tenant shall pay all federal and state taxes due and owing by reason of wages or other benefits paid to agents, employees,
or servants. Tenant shall not allow any lien to attached to personal property or fixtures located at the premises due to failure to timely
pay such taxes and shall immediately discharge any such lien.
(e) Proof
of Payment. Tenant shall promptly provide to Landlord reasonable proof of payment of personal property taxes and real property
taxes on or before the due date for such tax payment. Reasonable proof may include certification of payment by a certified public accountant.
(f) Default.
If Tenant fails to make the payments in strict compliance with the provisions of this Section, Landlord may, but shall not be required
to, make the payment on Tenant’s behalf and to be reimbursed therefore with interest at the rate of 18% per annum.
25. Successors
and Assigns. Except as herein provided, this Lease and the covenants and conditions herein contained shall inure to the benefit
of and be binding upon Landlord, its successors and assigns, and shall be binding upon Tenant, its successors and assigns, and shall inure
to the benefit of Tenant and only such assignees of Tenant to whom an assignment by Tenant has been consented to in writing by Landlord.
In the event more than one person, firm or corporation is named herein as Tenant, the liability of all parties named herein as Tenant
shall be joint and several.
In the event Landlord’s interest under this
Lease is transferred or assigned and written notice thereof is given to Tenant, the Landlord herein named (or any subsequent assignee
or transferee of Landlord’s interest under this Lease who gives such notice to Tenant) shall automatically be relieved and released
from and after the date of such transfer or conveyance from all liability hereunder except with respect to liability to refund or return
to Tenant any security deposit by Tenant with Landlord hereunder. Further, the liability of Landlord, its successors and assigns, under
this Lease shall at all times be limited solely to Landlord’s interest in the Premises and in the event the owner of Landlord’s
interest in this Lease is at any time a partnership, joint venture or unincorporated association, Tenant agrees that the members or partners
of such partnership, joint venture or unincorporated association shall not be personally or individually liable or responsible for the
performance of any of Landlord’s obligations hereunder.
26. Entire
Agreement. This Lease contains the entire agreement between the parties hereto, and shall upon the Commencement Date replace and
supersede any existing lease for the Premises; provided however, that Tenant shall remain liable to Landlord for any amounts due under
any existing lease prior to the Commencement Date. Any agreement hereafter or heretofore made shall not operate to change, modify, terminate
or discharge this Lease in whole or in part unless such agreement is in writing and signed by each of the parties hereto. Landlord has
made no representations or promises with respect to the Premises except as are herein expressly set forth.
15
27. Surrender
and Notice. Upon the expiration or earlier termination of this Lease, Tenant shall promptly quit and surrender to Landlord the
Premises broom clean, in good order and condition, ordinary wear and tear and loss by fire or other casualty or condemnation excepted,
and Tenant shall remove all of its movable furniture and other effects and such alterations, additions and improvements as Landlord shall
require Tenant to remove. In the event Tenant fails to so vacate the Premises on a timely basis as required, Tenant shall be responsible
to Landlord for all costs and damages, including but not limited to any amounts required to be paid to third parties who were to have
occupied the Premises, incurred by Landlord as a result of such failure, plus interest thereon at the rate of twelve percent (18%) per
annum on all amounts not paid by Tenant within five (5) days of demand, until paid in full.
28. Environmental
Provisions.
(a) As
used in this section, “Environmental Legal Requirements” shall mean any applicable law relating to public health, safety or
the environment, including, without limitation, relating to releases, discharges or omissions to air, water, land or groundwater, to the
withdrawal or use of groundwater, to the use and handling of polychlorinated biphenyls (“PCB’s”) or asbestos, or asbestos
containing products, to the disposal, treatment, storage or management of solid or other hazardous or harmful wastes or to exposure to
toxic, hazardous or other harmful materials (collectively “Hazardous Substances”) to the handling, transportation, discharge
or release of gaseous or liquid substance and any regulation or final order or directive issues pursuant to such statute or ordinance,
in each case applicable to the premises, the building or its operation, construction or modification, including without limitation the
following: the Clean Air Act, the Federal Water Pollution Control Act (“FWPCA”), the Safe Drinking Water Act, the Toxic Substances
Control Act, the Comprehensive Environmental Response Compensation and Liability Act, as amended by the Solid and Hazardous Waste Amendments
of 1984 (“RCRA”), the Occupational Safety and Health Act, the Emergency Planning and Community Right-to-Know Act of 1986,
the Solid Waste Disposal Act, and any state statutes addressing similar matters, and any state statute providing for financial responsibility
for clean-up or other actions with respect to the release or threatened release of any of the above-referenced substances.
(b) Tenant
represents and warrants that no Hazardous Substances have been used, stored, or placed on the Premises, and that it has not received any
notice of violation any Environmental Legal Requirements or notice or order to take any remedial action under any Environmental Legal
Requirements with respect to the Property before or during its period of ownership of the Premises.
(c) Tenant
and its successors and assigns shall use and operate the Premises at all times during the term hereof, under and in compliance with the
laws of the State of Colorado and in compliance with all applicable Environmental Legal Requirements.
(d) Tenant
hereby indemnifies and saves Landlord harmless from all liabilities, claims, expenses, and causes of action arising from the use, storage
or placement of any Hazardous Substances upon the Premises, if brought or placed thereon by Tenant, its agents, employees, contractors
or invitees, or previously existing on the Premises. Tenant acknowledges the reasonableness of this indemnity based on its prior ownership
of the Premises. Tenant shall (i) within fifteen (15) days after written notice thereof, take or cause to be taken, at its sole expense,
such actions as may be necessary to comply with all Environmental Legal Requirements and (ii) within fifteen (15) days after written demand
therefor, reimburse Landlord for any amounts expended by Landlord to comply with any Environmental Requirements with respect to the premises
or with respect to any other portions of Landlord’s Building or property as the result of the placement or storage of Hazardous Substances
by Tenant, its agents, employees, contractors or invitees, or in connection with any judicial or administrative investigation or proceeding
relating thereto, including, without limitation, reasonable attorneys’ fees, fines or other penalty payments. The indemnification provided
herein shall survive the termination of the Lease.
16
(e) For
purposes of this provision, Tenant shall be conclusively deemed to have violated the Environmental Legal Requirements if (i) any notice
or order is directed to either Landlord or Tenant by any governmental agency, body, or court alleging that such violation has occurred;
or (ii) if Landlord obtains and delivers to Tenant a report prepared by an engineer or other party engaged in the business of testing
or determining the existence of Hazardous Substances, which report states that there are Hazardous Substances used, stored or placed upon
the Premises. In the event Tenant is deemed to have violated any of the Environmental Legal Requirements as set forth in the preceding
sentence, Landlord shall have the right and option, after fifteen (15) days prior written notice to Tenant, to terminate this Lease by
written notice thereof to Tenant, in which event Landlord shall retain all rights and remedies, and Landlord shall be entitled to all
remedies set forth in Section 20 of this Lease notwithstanding such termination.
(f) Tenant
hereby grants Landlord, and Landlord’s agents and employees (including but not limited to, any engineers or other parties engaged in the
testing of Hazardous Substances) the right to enter upon the Premises for the purpose of determining whether Tenant, its agents, employees,
contractors or invitees, has violated any of the provisions of this Section. Landlord does not assume any duty to undertake any testing
for or remediation of Hazardous Substances.
29. Purchase
of Property upon Change in Control.
(a) Upon
the occurrence of a Change of Control of Tenant, Tenant or the surviving corporation in a merger of Tenant shall purchase the Premises
at the landlords option for the price of $6,930,000.00, or the appraised value of the Premises (Tenant shall pay the cost of an appraisal),
whichever is greater. Landlord and Tenant shall execute a Contract to Buy and Sell (Commercial) on Form CBS3-6-24 providing for a closing
date on or before 90 days after the Change in Control, with Tenant/Buyer to pay all fees for title insurance, closing costs, any inspections
or other due diligence desired by Tenant/Buyer, and no prorations other than Base Rent under this Lease. Landlord and Tenant shall cooperate
to execute all closing instructions, resolutions, consents, statements, and affidavits reasonably requested by the other party or the
title company to complete closing on or before the closing date.
(b) For
purposes of this Lease, a “Change of Control” means: (i) a dissolution, liquidation or sale of all or substantially all
of the assets of Tenant; (ii) a merger or consolidation in which the Tenant is not the surviving corporation; (iii) a reverse
merger in which Tenant is the surviving corporation but the shares of Tenant’s common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property, whether in the form of securities,
cash or otherwise; or (iv) the acquisition by any person, entity or group within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by Tenant or any Affiliate
of Tenant) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act,
or comparable successor rule) of securities of Tenant representing at least fifty percent (50%) of the combined
voting power entitled to vote in the election of directors.
17
30. Notices.
(a)
All notices from Tenant to Landlord required or permitted by any provision in this Lease,
shall be hand delivered or sent by overnight delivery or same-day messenger or certified mail, return receipt requested to Landlord at:
AMERICAN HERITAGE LEGACIES,
LLC
479 Main Avenue
Durango, CO 81301
(b) All
notices from Landlord to Tenant required or permitted by any provision in this Lease shall be hand delivered or sent by overnight delivery
or same-day messenger or certified return receipt requested to Tenant at the Premises, or in the alternative to the address as follows:
ROCKY MOUNTAIN CHOCOLATE FACTORY,
INC.
265 Turner Drive
Durango, CO 81303
Either party may, at any time, or from time to
time, designate in writing a substitute address for that above set forth, and thereafter all notices to such party shall be sent in accordance
with the above.
31. Captions.
The captions in this Lease are for convenience only and are not a part of this Lease.
32. Waiver
of Jury Trial.
TENANT WAIVES ALL RIGHTS
TO A TRIAL BY JURY IN ANY ACTION, COUNTERCLAIM, OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS LEASE. THIS WAIVER
APPLIES TO ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS AND PROCEEDINGS, INCLUDING PARTIES WHO ARE NOT PARTIES TO THIS LEASE. THIS WAIVER
IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY TENANT AND TENANT ACKNOWLEDGES THAT NEITHER LANDLORD, NOR ANY PERSON ACTING ON BEHALF
OF LANDLORD, HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.
TENANT FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS LEASE AND
IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, IN THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS
THIS WAIVER WITH COUNSEL.
18
THE LANDLORD AGREES THAT, IF THE LESSEE FINDS A BUYER FOR THE LEASED
PROPERTY WITHIN 120 DAYS FROM THE EXECUTION OF THIS LEASE, THE LANDLORD WILL SELL THE PROPERTY FOR $6,930,000 PLUS ALL CLOSING COSTS,
REASONABLE ATTORNEYS FEES AND PREPAYMENT PENALTIES, IF ANY.
IN WITNESS WHEREOF,
the parties hereto have executed this Lease on the day and year first above written.
Landlord:
Tenant:
AMERICAN HERITAGE LEGACIES, LLC
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
/s/ John Harper
/s/ Mel Keating
By: John Harper, Managing Member
By: Mel Keating, Director and Board Chair
DATE: 10/1/2026
DATE: 10/1/2026
19
EX-99.1 — PRESS RELEASE, DATED OCTOBER 6, 2026
EX-99.1
Filename: ea030780001ex99-1.htm · Sequence: 4
Exhibit 99.1
Rocky
Mountain Chocolate Factory Announces $6.6 Million Sale-Leaseback of Durango Property
DURANGO,
Colo., October 6, 2026 (GLOBE NEWSWIRE) -- Rocky
Mountain Chocolate Factory, Inc. (Nasdaq: RMCF) (the “Company” or “RMCF”), America’s Chocolatier® since
1981, today announced it has signed a $6.6 million sale-leaseback agreement with American Heritage Legacies, LLC, involving its Durango,
Colorado property. American Heritage Legacies, LLC, is a local company controlled by the family of Allen Harper, the Company’s Interim
Chief Executive Officer. As such, the sale-leaseback transaction constitutes a “related party transaction” for the Company.
The Company expects to use the net proceeds from
the transaction to repay its existing $6.6 million promissory note, which accrues interest at a rate of 12% per annum. The lease has an
initial term of 10 years, with an option to renew for an additional 10 years. Annual rent will be $624,000 during the first year, representing
9.45% of the $6.6 million purchase price, and will increase by 2% annually. The lease will allow the Company to continue using the Durango
facility as its corporate headquarters and production and warehouse facility.
“We are focused on making thoughtful financial
decisions that strengthen Rocky Mountain Chocolate Factory and create a more sustainable foundation for the business,” said Mel
Keating, Chairman of the Board of Directors of Rocky Mountain Chocolate Factory. “This transaction allows us to significantly reduce
our existing debt while securing our continued operations at the Durango facility under a long-term lease.”
The transaction was reviewed and approved by the
Company’s Audit Committee and the disinterested members of the Board of Directors, with Mr. Harper recusing himself from the review
process. The purchase price was supported by an independent appraisal of the property.
About Rocky Mountain Chocolate Factory, Inc.
Rocky Mountain Chocolate Factory, Inc. is a leading
franchisor, manufacturer and retailer of premium chocolates and other confectionery products. As America’s Chocolatier® since
1981, the Company produces an extensive assortment of premium chocolates, gourmet caramel apples and other handcrafted confections. Headquartered
in Durango, Colorado, Rocky Mountain Chocolate Factory is ranked among Entrepreneur’s Franchise 500® for 2026. Together with
its franchisees and licensees, the Company operates approximately 250 Rocky Mountain Chocolate Factory locations across the United States
and internationally. The Company’s common stock is listed on the Nasdaq Global Market under the symbol “RMCF.”
Forward-Looking Statements
This press release contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company’s anticipated
use of proceeds and repayment of the promissory note, expected benefits of the transaction, anticipated interest expense savings, financial
position, operating performance, strategic priorities and future growth. These forward-looking statements are based on current expectations
and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or
implied. These risks and uncertainties include, among others, the Company’s financial condition and operating results, and other
risks described in the Company’s filings with the Securities and Exchange Commission, including its most recent Annual Report on
Form 10-K and subsequent Quarterly Reports on Form 10-Q. The Company undertakes no obligation to update any forward-looking statements
except as required by applicable law.
Investor Contact
Sean Mansouri, CFA
Elevate IR
(720) 330-2829
RMCF@elevate-ir.com
Media Contact
Raymond Barrett
Director of Marketing
(305) 801-5641
rbarrett@rmcf.net
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Sep. 29, 2026
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Entity Incorporation, State or Country Code
DE
Entity Address, Address Line One
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The type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
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No definition available.
+ Details
Name:
dei_DocumentType
Namespace Prefix:
dei_
Data Type:
dei:submissionTypeItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Address Line 1 such as Attn, Building Name, Street Name
+ References
No definition available.
+ Details
Name:
dei_EntityAddressAddressLine1
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Name of the City or Town
+ References
No definition available.
+ Details
Name:
dei_EntityAddressCityOrTown
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Code for the postal or zip code
+ References
No definition available.
+ Details
Name:
dei_EntityAddressPostalZipCode
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Name of the state or province.
+ References
No definition available.
+ Details
Name:
dei_EntityAddressStateOrProvince
Namespace Prefix:
dei_
Data Type:
dei:stateOrProvinceItemType
Balance Type:
na
Period Type:
duration
X
- Definition
A unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityCentralIndexKey
Namespace Prefix:
dei_
Data Type:
dei:centralIndexKeyItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Indicate if registrant meets the emerging growth company criteria.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityEmergingGrowthCompany
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Commission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
+ References
No definition available.
+ Details
Name:
dei_EntityFileNumber
Namespace Prefix:
dei_
Data Type:
dei:fileNumberItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Two-character EDGAR code representing the state or country of incorporation.
+ References
No definition available.
+ Details
Name:
dei_EntityIncorporationStateCountryCode
Namespace Prefix:
dei_
Data Type:
dei:edgarStateCountryItemType
Balance Type:
na
Period Type:
duration
X
- Definition
The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityRegistrantName
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
The Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityTaxIdentificationNumber
Namespace Prefix:
dei_
Data Type:
dei:employerIdItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Local phone number for entity.
+ References
No definition available.
+ Details
Name:
dei_LocalPhoneNumber
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 13e
-Subsection 4c
+ Details
Name:
dei_PreCommencementIssuerTenderOffer
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14d
-Subsection 2b
+ Details
Name:
dei_PreCommencementTenderOffer
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Title of a 12(b) registered security.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b
+ Details
Name:
dei_Security12bTitle
Namespace Prefix:
dei_
Data Type:
dei:securityTitleItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Name of the Exchange on which a security is registered.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection d1-1
+ Details
Name:
dei_SecurityExchangeName
Namespace Prefix:
dei_
Data Type:
dei:edgarExchangeCodeItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14a
-Subsection 12
+ Details
Name:
dei_SolicitingMaterial
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Trading symbol of an instrument as listed on an exchange.
+ References
No definition available.
+ Details
Name:
dei_TradingSymbol
Namespace Prefix:
dei_
Data Type:
dei:tradingSymbolItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
+ Details
Name:
dei_WrittenCommunications
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration