EXHIBIT 4.1
FIRST AMENDMENT TO PURCHASE AGREEMENT
This First Amendment is dated June 15, 1998 for reference purposes only and
is made to that Purchase Agreement dated as of May 29, 1998 between the
undersigned identified as "Seller" and "Buyer" regarding the purchase of
approximately 36.55 acres commonly known as the Xxxxx Ranch, XXX Xxxxxxx 000,
Xxxxxxxxxx, Xxxxxxxx, as amended by that letter agreement dated June 1, 1998
(the "Purchase Agreement").
1. The purpose of this First Amendment is to implement the provisions of
Paragraph 15 entitled "Use of Unrestricted Stock as Cash at Closing" of Exhibit
C to the Purchase Agreement.
2. Buyer shall have the option to pay up to $2,500,000 of the Purchase
Price in the form of common stock of Buyer, whose stock is traded on NASDAQ
under the symbol of TNFI. This First Amendment shall apply if, at any time
prior to close of escrow, Buyer notifies Seller in writing of Buyer's election
to pay a portion of the Purchase Price with common stock of TNFI. The amount of
Purchase Price that Buyer elects to pay with TNFI common stock is referred to
herein as the "Purchase Price Balance."
3. The parties acknowledge that: (i) the common stock that Buyer intends
to use to pay the Purchase Price Balance must be registered with the Securities
and Exchange Commission on Form S-3; (ii) the form S-3 registration statement
cannot be effective until the Seller has rights in the shares (i.e., the
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registration statement may not become effective, and the stock may not be
traded, before close of escrow); and (iii) Buyer agrees to use reasonable
efforts to cause the registration statement to be filed on or immediately after
the closing date and to diligently manage the SEC registration process. If, for
any reason, Buyer cannot cause a registration statement to be filed on or
immediately after close of escrow, Buyer may pay the Purchase Price entirely in
cash. If a registration statement for such stock does not become effective so
such stock can be freely traded within thirty (30) days after close of escrow,
then (i) Buyer shall pay to Seller through escrow, the balance of the Purchase
Price in cash (with interest thereon at 6% per annum from close of escrow date
of payment to Seller), and (ii) all TNFI stock shall be returned to Buyer.
4. If Buyer deposits TNFI common stock in escrow for the purpose of
paying the Purchase Price Balance, then (i) the value of such shares may not
exceed $2,500,000, and (ii) Buyer shall deposit into escrow such additional
amount of cash as is necessary, when added to the value of such shares, to pay
the Purchase Price and all closing costs to be paid by Buyer (taking into
account the deposits previously made by Buyer which are to be credited to the
Purchase Price). For purposes of this paragraph only, the value of the shares
deposited in escrow will be based upon the closing trading price of the common
stock of TNFI on the business day immediately preceding the closing date.
5. TNFI common stock placed in escrow to pay the Purchase Price may not
be released to Seller from escrow, or traded or sold by anyone, until a
registration statement for such shares becomes effective. As soon as a
registration statement for such TNFI common stock becomes
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effective, Seller shall have the right to receive, retain, and sell for its
own account such shares in full satisfaction of Buyer's obligation to pay the
Purchase Price Balance, provided however, that the provisions of Paragraph 6
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hereof (including Buyer's share price guaranty) shall apply if Seller notifies
Buyer in writing of Seller's election to be governed by Paragraph 6 prior to
the later to occur of the date of close of escrow or the effective date of the
registration statement for such TNFI common stock.
6. If Seller timely elects to be governed by this Paragraph 6, the
following provisions shall apply:
A. Upon close of escrow, the TNFI common stock shall immediately be
transferred to an account in Seller's name with BT Xxxx Xxxxx (or such other
national stock broker as is selected by Buyer). Such broker shall be instructed
to sell all of such TNFI common stock during the first five (5) trading days
immediately following the effective date of such registration statement, in such
amounts and at such times as that broker determines, in its sole discretion, are
appropriate to maximize net stock sale proceeds.
B. Stock sale proceeds shall be distributed to Seller upon
completion of sales of all stock and otherwise in accordance with the broker's
customary practice.
C. If the sale of all of such TNFI common stock has been made in
accordance with the foregoing, the following adjusting payment shall be made by
Seller or Buyer, as appropriate:
(i) For purposes of the following, the term "Adjusted Purchase
Price Balance" shall mean an amount equal to the Purchase Price Balance with
interest thereon at the rate of 6% per annum from close of escrow until the
payment required by this paragraph has been made.
(ii) If the Adjusted Purchase Price Balance exceeds the amount
of net proceeds (after commissions) paid to Seller from the sale of TNFI
common stock, Buyer shall immediately pay such excess to Seller in cash.
(iii) If the amount of net proceeds (after commissions) paid
to Seller from the sale of TNFI common stock exceeds the Adjusted Purchase Price
Balance, Seller shall immediately pay such excess to Buyer in cash.
(iv) Any payment required by Buyer or Seller pursuant to this
subparagraph 6C shall, if not paid when due, bear interest at 12% per annum from
its due date until paid.
D. The obligation of Buyer to make an additional payment of cash
toward the Purchase Price Balance pursuant to Paragraph 6C(ii) hereof shall be
secured by a first lien deed of trust encumbering the Property in form
reasonably acceptable to Buyer and Seller, which deed of trust shall be executed
by Buyer in recordable form and recorded immediately following recordation of
the Warranty Deed at Close of Escrow. Upon satisfaction of Buyer's obligations
to make an additional payment of cash toward the Purchase Price Balance pursuant
to Paragraph 6C(ii) of this First Amendment, such deed of trust shall be
reconveyed. Buyer shall cause the title insurer to
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provide to Seller a lender's policy of title insurance with coverage in the
estimated amount of 10% of the value of common stock in TNFI deposited in
escrow (using the method of valuation described in Paragraph 4 hereof),
showing the lien of such deed of trust subject only to the same exceptions to
title that are shown in the policy of title insurance to be obtained by Buyer
at the closing. The cost of such title insurance shall be paid by Buyer.
E. If Seller elects to engage in a real property tax deferred
exchange transaction involving the Property through the use of a qualified
intermediary designated by Seller (the "Intermediary"), then all references in
subparagraphs 6A, B, C, and D to "Seller" shall refer to the Intermediary.
Notwithstanding the foregoing, Seller shall remain personally liable for the
obligations of Seller under the Purchase Agreement, including without limitation
the obligation set forth in subparagraph 6C(iii).
7. Any real property exchange transaction in which Seller elects to
engage which requires the cooperation or participation of Buyer shall not in any
way affect or alter the right of Buyer to cause the Purchase Price Balance to
paid with common stock of TNFI in accordance with the provisions of this First
Amendment. However, Seller may cause Buyer to have cash and common stock of
TNFI delivered to an accommodation party selected by Seller who is assisting
Seller in the implementation of a tax deferred exchange, and Buyer shall
cooperate with Seller to the extent described in the June 1, 1998 letter
amendment and in a manner consistent with the provisions of this First
Amendment.
Except as modified by this First Amendment, the Purchase Agreement shall
continue in full force and effect in accordance with its terms.
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BUYER:
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THE NORTH FACE, INC.
By:______________________________
SELLER:
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GIANINETTI INVESTMENT CORPORATION
By:______________________________
Xxxxxx Xxxxxxxxxx, President
X. X. XXXXXX & COMPANY, a Colorado Partnership
By:______________________________
Xxxxx X. Xxxxxx
______________________________
Xxxxxxx X. Xxxxxxx
______________________________
Xxxxx X. Xxxxxxxxx
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