EXHIBIT 4.3
SECOND AMENDMENT TO SHAREHOLDERS' AGREEMENT
This Second Amendment (this "Amendment") is made as of August 25, 2005 to
the Shareholders' Agreement, dated as of September 17, 1998, as amended, by and
among Dover Saddlery, Inc., a Delaware corporation (the "Company"), a majority
in interest of the Purchasers (as defined therein) and a majority in interest of
the Sellers (as defined therein) (as amended, the "Shareholders' Agreement").
Capitalized terms used, but not otherwise defined, herein shall have the
respective meanings assigned to such terms in the Shareholders' Agreement.
WHEREAS, the Company and the Shareholders entered into the Shareholders'
Agreement and now the parties wish to amend certain provisions of the
Shareholders' Agreement;
WHEREAS, Section 16 of the Shareholders' Agreement allows for such
amendments by written consent of the Company, a majority in interest of the
Purchasers and a majority in interest of the Sellers;
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Shareholders' Agreement is hereby amended as follows:
1. The first paragraph (the preamble) of the Shareholders' Agreement
shall be amended by including Citizens in the definition of the term
"Sellers" if and when Citizens shall become a party to the
Shareholders' Agreement by executing an Instrument of Accession in the
form attached hereto as Exhibit A, provided that such Instrument of
Accession is accepted and executed by the Company.
2. The form of instrument of accession attached to this Amendment as
Exhibit A shall become Exhibit A to the Shareholders' Agreement.
3. A new definition of the term "Change in Control" shall be added to
Section 1(a) of the Shareholders' Agreement as follows:
""Change in Control" shall mean the first to occur of the
following (i) the merger or consolidation of the Company with or
into another corporation or entity where the Company is not the
surviving entity, (ii) the sale of all or substantially all of
the assets of the Company, (iii) the sale of voting securities of
the Company to an acquiror which, immediately prior to the
transaction, held less than 10% of the voting control of the
Company, in a transaction or series of transactions after which
such acquiror owns, directly or indirectly, in excess of 50% of
the voting control of the Company, (iv) a transaction or related
series of transactions or reorganization of the Company in which
the holders of the Company's capital stock immediately prior to
the transaction or related series of transactions hold less than
a majority of the capital
stock of the surviving company, and (v) a liquidation or winding
up of the Company."
4. The definition of the term "Citizens" in Section 1(a) of the
Shareholders' Agreement shall be deleted and replaced in its entirety
with the following sentence:
""Citizens" shall mean Citizens Ventures, Inc."
5. The definitions of the terms "Citizens Agreement" and "Citizens
Stockholders and Registration Rights Agreement" in Section 1(a) of the
Shareholders' Agreement shall each be deleted.
6. The definition of "Common Stock" in Section 1(a) of the Shareholders'
Agreement shall be deleted and replaced in its entirety with the
following definition:
"Common Stock" shall mean the class A common stock of the
Company, par value $0.0001 per share, and shall include any stock
into which such Common Stock shall have been changed and any
stock resulting from any reclassification of such Common Stock."
7. The definition of "Fair Market Value" in Section 1(a) of the
Shareholders' Agreement shall be deleted and replaced in its entirety
with the following definition:
"Fair Market Value" as of any date shall mean the per share fair
market value of the capital stock of the Company or any
applicable portion thereof, determined in good faith by valuing
the Company assuming the Company is sold to an independent third
party as a going concern with no discount for lack of liquidity
of the Company's common stock or the minority ownership discount
and assuming exercise of all "in the money" warrants and any
other rights to purchase shares which may be outstanding (i.e.
warrants and other rights where the strike price is less than the
Fair Market Value of the shares that issue on exercise), as
determined by an independent investment banking firm reasonably
acceptable to the Company and the interested Shareholder(s);
provided that, in the event the Company and the interested
Shareholder(s) cannot agree to appoint a single such firm within
10 days of the date first giving rise to the need to appoint such
a firm, the Company on the one hand, and the interested
Shareholder(s) on the other hand, shall each select one such firm
within 5 days following the expiration of such 10 day period, and
the two firms so selected shall promptly select a third such firm
which firm shall be responsible for the determination of the fair
market value of the Common Stock The
Company shall pay all of the fees, costs and expenses of all such
firms."
8. The definition of the term "Liquidity Event" in Section 1(a) of the
Shareholders' Agreement shall be deleted and replaced in its entirety
with the following definition:
""Liquidity Event" shall mean the closing of an initial public
offering of the Common Stock of the Company which yields
aggregate gross proceeds to the Company and selling shareholders
of not less than $25,000,000."
9. The definition of the term "Put Period" in Section 1(a) of the
Shareholders' Agreement shall be deleted and replaced in its entirety
with the following definition:
""Put Period" shall mean the period (i) commencing at the earlier
of (A) 9:00 a.m., Eastern Standard Time, on December 31, 2006 or
(B) a Change in Control, and (ii) ending at the earlier of (A)
5:00 p.m., Eastern Standard Time, on December 31, 2007 or (B) a
Liquidity Event."
10. Section 2(a)(ii)(1) of the Shareholders' Agreement shall be deleted
and replaced in its entirely with the following:
"(1) at all times prior to a Liquidity Event, two individuals
designated by holders of a majority in interest of all shares of
Common Stock then held by JP, DP and MP."
11. Section 2(a)(ii)(3) of the Shareholders' Agreement shall be deleted
and replaced in its entirely with the following:
"(3) an individual (the "Fifth Director") mutually agreeable to
(A) Day and (B) the holders of a majority in interest of all
shares of Common Stock then held by JP, DP and MP."
12. Section 2(a)(iii) of the Shareholders' Agreement shall be deleted and
replaced in its entirely with the following:
"(iii) in the event the Shareholders vote to increase the size of
the Board in order to add one or more independent directors, the
size of the Board may be so increased and such independent
members of the Board (each an "Independent Director") shall be
elected by the Shareholders."
13. Section 2(a)(iv) of the Shareholders' Agreement shall be deleted and
replaced in its entirely with the following:
"(iv) the removal from the Board (with or without cause) of any
representative designated hereunder by the Person(s) entitled to
make such designation hereunder, upon such Person's written
request for removal as to its designee, but only upon such
written request; provided that (i) no director may be removed by
any Person(s) not entitled to designate such director hereunder,
except that (ii) any Independent Director may be removed with
cause or without cause by a majority vote of the Shareholders."
14. Section 2(a)(vi) of the Shareholders' Agreement shall be deleted and
replaced in its entirety with following:
"(vi) upon the resignation, removal or death of the Fifth
Director, his replacement will be filled by an individual
approved by the vote of a majority of the members of the Board
who have been designated pursuant to clauses 2(a)(ii)(1) and
2(a)(ii)(2)."
15. Section 2(f) shall be added to the Shareholders' Agreement and shall
read as follows:
"(f) Until a Liquidity Event shall have occurred, the Company
shall permit a Person designated by Citizens to attend, but not
vote at, all meetings of the Board and shall provide notice to
such Person of each meeting of the Board as provided to other
directors."
16. Section 3 of the Shareholders' Agreement shall be deleted in its
entirety and replaced with the following:
"Section 3. Certain Consents and Rights of Sellers (other than
Citizens). Notwithstanding anything in this Agreement to the
contrary, for purposes of this Section 3, Citizens shall not be
included in the definition of "Seller". At all times prior to the
earlier to occur of (a) a Liquidity Event, or (b) (1) in the case
of clauses (i) and (ii) of this Section 3, the earliest date on
which none of the individual Sellers remains a member of the
Board (other than by reason of the death, disability or
incapacity of all of the Sellers) and (2) in the case of clauses
(iii), (iv) and (v), the first date on which none of the
individual Sellers remains a Shareholder, the consent of the
Sellers (which consent will be deemed to have been obtained if,
within ten days following a request therefore, a majority in
interest of the Sellers shall have (x) consented in writing to,
(y) voted in favor of, or (z) not
objected in writing to or voted against, such request) must be
obtained with respect to the taking of any of the following
actions by the Company:
(i) an acquisition which is not a Permitted Acquisition;
(ii) the guarantee by the Company of the obligations of third
parties, except as permitted by the Senior Loan Documents;
(iii) the issuance of any new equity securities other than (A)
issuances pursuant to the Company's incentive plans authorized by
Section 13 hereof, (B) pursuant to offerings to which the
Sellers' preemptive rights under this Agreement are applicable,
and (C) pursuant to stock for stock mergers with an unrelated
third party where such securities are issued at a value which
reasonably approximates Fair Market Value, provided that if, for
the purposes of this clause (iii)(C) of Section 3 only, the
Company is in compliance with all of its financial covenants
under the Senior Loan Documents, the Sellers shall be deemed to
have given their consent (as a Seller but not as a director of
the Company) to such issuance if such issuance was approved by
the Board;
(iv) a merger of the Company with or into an entity controlled by
Day or the Company or under common control with the Company or
which is not an Unrelated Person; and
(v) an acquisition by the Company of the stock or assets of an
entity controlled by Day or the Company or under common control
with the Company or which is not an Unrelated Person.
The consent rights set forth in this Section 3 are personal to
Sellers and may not be transferred to any Person other than a
Permitted Transferee.
17. The following Section 3.1 shall be inserted immediately following the
new Section 3 of the Shareholders' Agreement:
"Section 3.1. Certain Consents and Rights of Citizens. At all
times prior to the earlier to occur of (a) a Liquidity Event, or
(b) (1) in the case of clauses (i) and (ii) of this Section 3.1,
the earliest date on which Citizens no longer has observation
rights on the Board and (2) in the case of clauses (iii), (iv)
and (v), the first date on which Citizens does not remain a
Shareholder, the consent of Citizens must be obtained with
respect to the taking of any of the following actions by the
Company:
(i) an acquisition which is not a Permitted Acquisition;
(ii) the guarantee by the Company of the obligations of third
parties, except as permitted by the Senior Loan Documents;
(iii) the issuance of any new equity securities other than (A)
issuances pursuant to the Company's incentive plans authorized by
Section 13 hereof, (B) pursuant to offerings to which Citizens'
preemptive rights under this Agreement are applicable, and (C)
pursuant to stock for stock mergers with an unrelated third party
where such securities are issued at a value which reasonably
approximates Fair Market Value, provided that if, for the
purposes of this clause (iii)(C) of Section 3.1 only, the Company
is in compliance with all of its financial covenants under the
Senior Loan Documents, Citizens shall be deemed to have given its
consent to such issuance if such issuance was approved by the
Board;
(iv) a merger of the Company with or into an entity controlled by
Day or the Company or under common control with the Company or
which is not an Unrelated Person; and
(v) an acquisition by the Company of the stock or assets of an
entity controlled by Day or the Company or under common control
with the Company or which is not an Unrelated Person.
The consent rights set forth in this Section 3.1 are personal to
Citizens and may not be transferred to any Person other than a
Permitted Transferee.
18. The following phrase in Section 6(c) of the Shareholders' Agreement
shall be deleted:
", Citizens (to the extent it is electing to sell shares pursuant
to any tag along right it may have),"
19. Section 10(b)(i) of the Shareholders' Agreement shall be deleted and
replaced in its entirety with the following:
"(i) The Sellers hereby waive any requirement of the Company to
give the Sellers notice of the currently proposed offering, as of
the date of this Amendment, of the Company's common stock in an
underwritten public offering; the Company shall not be required
to give notice to the Sellers or include the Common Stock of the
Sellers in any registration if the proposed registration is a
registration made after the Company has registered Common Stock
under the Securities Act and such subsequent registration is (A)
of a stock option or other compensation plan or dividend
reinvestment plan or a registration of Common Stock issued or
issuable pursuant to any such plan, or (B) a registration of
Common Stock proposed to be issued in exchange for securities or
assets of, or in connection with a merger or consolidation with,
another Person;"
20. Section 10(c) of the Shareholders' Agreement shall be deleted and
replaced in its entirety with the following:
"The Sellers shall be afforded, and are hereby granted the right
to receive the benefit of the most favorable "piggyback"
registration rights granted or afforded to any other
Shareholder."
21. The following phrase in Section 11(a) and in Section 12(a) of the
Shareholders' Agreement shall be deleted:
"and the Citizens Agreement"
22. Section 16 of the Shareholders' Agreement shall be amended by adding
the following phrase to the end of the first sentence thereof:
", provided, however, that the written agreement of Citizens
shall also be required for any amendment resulting in, or that
would result in, an adverse effect on the rights of Citizens (i)
set forth in Section 2(f), Section 6, Section 9 or Section 11 or
(ii) in a manner that is different from the other Shareholders
who are also adversely affected by such amendment."
23. The contact information set forth in Section 23 of the Shareholders'
Agreement with respect to the Sellers shall be amended by adding
thereto the following:
"Citizens Ventures, Inc.,
28 State Street, 15th Floor
Boston, Massachusetts 02109
Attention: Bradley Stewart
Telecopy No.: 617-725-5630"
24. A new section shall be added to the end of the Shareholders' Agreement
that reads as follows:
"Section 28. Termination Upon a Liquidity Event. Upon the
consummation of a Liquidity Event, this Agreement and all rights
and obligations of all parties hereto as set forth in this
Agreement shall immediately terminate."
25. Other than the changes set forth above, the terms of the Shareholders'
Agreement shall remain in full force and effect and the undersigned
hereby acknowledge the continued legal and binding effect of the
Shareholders' Agreement and all of its terms and provisions.
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IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
to Shareholders' Agreement as of the date first written above.
COMPANY:
DOVER SADDLERY, INC.
By: /s/ Stephen L. Day
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Name: Stephen L. Day
Title: President
PURCHASERS:
/s/ Stephen L. Day
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Stephen L. Day
/s/ Jonathan A.R. Grylls
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Jonathan A.R. Grylls
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David Post
/s/ Donald Motsenbocker
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Donald Motsenbocker
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Thomas Gaines
SELLERS:
/s/ James F. Powers
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James F. Powers
/s/ David J. Powers
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David J. Powers
/s/ Michele R. Powers
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Michele R. Powers
Exhibit A
INSTRUMENT OF ACCESSION
The undersigned, Citizens Ventures, Inc., as a holder of 411,111 shares of
the Class A Common Stock, $0.0001 par value per share, of Dover Saddlery, Inc.,
a Delaware corporation (the "Company"), hereby agrees that by execution hereof
the undersigned hereby agrees to become a party to, and become subject to the
benefits and burdens set forth in, the Shareholders' Agreement, dated September
17, 1998, by and among the Company, the Shareholders (as defined therein), as
amended by the First Amendment to Shareholders' Agreement, dated as of August
29, 2003 and by the Second Amendment to Shareholders' Agreement, dated as of
August 25, 2005 (as so amended, the "Shareholders' Agreement") as a "Seller" (as
defined therein). This Instrument of Accession shall take effect and shall
become a part of the Shareholders' Agreement immediately upon execution by the
undersigned and acceptance by execution thereof by the Company.
Executed as of the date set forth below under the laws of the Commonwealth
of Massachusetts.
CITIZENS VENTURES, INC.
By:
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Name:
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Title:
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Address:
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Date: [____________], 2005
Agreed and Accepted:
DOVER SADDLERY, INC.
By:
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Name:
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Title:
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Date: [____________], 2005