EXHIBIT 10.45
PATRIOT CAPITAL FUNDING, INC.
274 RIVERSIDE AVENUE
WESTPORT, CT 06880
June 29, 2006
Dover Saddlery, Inc.
525 Great Road
Littleton, MA 01460
Attn: Stephen L. Day
Re: Consent and Amendment No. 2 to the Amended and Restated Senior
Subordinated Note and Warrant Purchase Agreement ("Amendment No. 2")
Stephen:
Reference is made to the Amended and Restated Senior Subordinated Note and
Warrant Purchase Agreement, dated as of September 16, 2005 (as amended by that
certain Amendment No. 1 dated March 28, 2006, the "Note Purchase Agreement"),
among Dover Saddlery, Inc., a Delaware corporation (the "Parent"), Dover
Saddlery, Inc., a Massachusetts corporation and wholly-owned subsidiary of
Parent d/b/a "Nashoba Valley Service Co." ("Operating Company #1"), Smith
Brothers, Inc., a Texas corporation and wholly-owned subsidiary of Parent
("Operating Company #2" and, together with Parent and Operating Company #1, the
"Loan Parties"), Patriot Capital Funding, LLC I ("Purchaser") and the
undersigned ("Servicer"). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Note Purchase
Agreement.
The parties to the Note Purchase Agreement desire to (i) consent to the
transactions contemplated by that certain Stock Purchase Agreement dated May 19,
2006 (the "Stock Purchase Agreement") among Parent, Dover Saddlery Retail, Inc.,
a Massachusetts corporation and wholly-owned subsidiary of Parent formed for the
purpose of consummating the transactions contemplated by the Stock Purchase
Agreement ("Operating Company #3"), Old Dominion Enterprises, Inc. d/b/a
"Dominion Saddlery," a Virginia corporation ("Old Dominion") and Reynolds Young,
sole stockholder of Old Dominion ("Sole Stockholder") and (ii) make certain
amendments to the Note Purchase Agreement. Pursuant to Sections 9.10(b) and 10.2
of the Note Purchase Agreement, such consent and amendments must be in a written
instrument signed by the Loan Parties, Servicer and Purchaser, as sole holder of
the Notes.
Therefore, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. CONSENT TO THE TRANSACTIONS CONTEMPLATED BY THE STOCK PURCHASE AGREEMENT.
Effective upon satisfaction of all conditions to effectiveness of this Amendment
No. 2 set forth in Section 6 below, Purchaser and Servicer hereby consent to the
transactions contemplated by the Stock Purchase Agreement including, without
limitation, as required by (i) Sections 7.2(f) and 7.2(i) of the Note Purchase
Agreement, in connection with the acquisition of all of the issued and
outstanding capital stock of Old Dominion from the Sole Stockholder and (ii)
7.2(l) of the Note Purchase Agreement, in connection with the establishment of
Operating Company #3 as a Subsidiary of Parent and the acquisition of Old
Dominion as a wholly-owned Subsidiary of Operating Company #3 and an indirect
Subsidiary of Parent.
This Amendment No. 2 relates solely to the consent to the transactions
contemplated by the Stock Purchase Agreement described in this Section 1 and no
other consent or waiver is granted or intended. This consent shall not apply in
the event that the acquisition of Old Dominion is consummated on terms
other than those set forth in the Stock Purchase Agreement including, without
limitation, for total consideration in excess of $1,650,000.
2. AMENDMENT TO NOTE PURCHASE AGREEMENT. All of the terms and provisions of the
Note Purchase Agreement shall remain in full force and effect except as follows:
(I) PREAMBLE. The definition of "Loan Parties" in the Preamble of the Note
Purchase Agreement is hereby terminated in its entirety.
(II) RECITALS. The references to "Loan Parties" in the Recitals are each
revised to read "Loan Parties, other than Operating Company #3."
(III) AMENDED AND RESTATED DEFINITIONS. The following definitions in
Section 1.1 of the Note Purchase Agreement are hereby amended and restated in
their entirety to read as follows:
"Change of Control" means the occurrence of any of the following:
(a) any transaction or series of related transactions
resulting in the sale or issuance of securities or any rights to securities of
Parent by Parent, or any transaction or series of related transactions resulting
in the sale, transfer, assignment or other conveyance or disposition of any
securities or any rights to securities of Parent by any holder or holders
thereof and, as a result thereof in either case, Stephen L. Day holds less than
80% of the voting securities of Parent owned by him as of the Closing Date or
less than 80% of the total equity securities of Parent owned by him as of the
Closing Date (or, subsequent to the consummation of the IPO, holding less than
5% of the voting securities of Parent or less than 5% of the total equity
securities of Parent), in all cases computed on a fully diluted basis;
(b) a merger, consolidation, reorganization, recapitalization
or share exchange in which the equity holders of Parent immediately prior to
such transaction receive, in exchange for securities of Parent owned by them,
cash, property, securities or securities of the resulting or surviving entity
and as a result thereof Persons who were holders of voting securities of Parent
and hold less than 50% of the capital stock, calculated on a Fully Diluted
Basis, of the resulting corporation entitled to vote in the election of
directors;
(c) the Parent owns beneficially and of record and controls
less than 100% of the capital stock of Operating Company #1, Operating Company
#2 or Operating Company #3;
(d) a sale, transfer or other disposition of all or
substantially all of the assets of Operating Company #1, Operating Company #2 or
Operating Company #3; or
(e) Stephen L. Day shall cease to be an Executive Officer, or
shall not devote substantially all of his business time and efforts to the
business and affairs of the Parent, Operating Company #1, Operating Company #2
and Operating Company #3 for any reason other than his death or Disability.
(IV) ADDITIONAL DEFINITIONS. The following definitions are added to
Section 1.1 of the Note Purchase Agreement to read as follows:
"Amendment No. 2" means Amendment No. 2 to the Agreement dated as of
the Amendment No. 2 Effective Date by and among Parent, Operating Company #1,
Operating Company #2, Purchaser and Servicer.
"Amendment No. 2 Effective Date" means June __, 2006, the closing
date of the transactions contemplated by Amendment No. 2.
"Loan Parties" means, collectively, Parent, Operating Company #1,
Operating Company #2 and Operating Company #3 and "Loan Party" means any of
Parent, Operating Company #1, Operating Company #2 or "Operating Company #3"
individually, as the context requires.
"Operating Company #3" means Dover Saddlery Retail, Inc., a
Massachusetts corporation and wholly owned subsidiary of Parent formed for the
purposes of consummating the Stock Purchase Agreement.
"Stock Purchase Agreement" means that certain Stock Purchase
Agreement dated May 19, 2006 among Parent, Operating Company #3, Old Dominion
and Reynolds Young, an individual and, prior to the Amendment No. 2 Effective
Date, the sole stockholder of Old Dominion.
"Subsidiary Guarantor" means Old Dominion Enterprises, Inc. d/b/a
"Dominion Saddlery," a Virginia corporation and, as of the Amendment No. 2
Effective Date, a wholly owned subsidiary of Operating Company #3.
"Subsidiary Guaranty" has the meaning assigned to such term in
Section 4.1(r) hereof.
(V) SECTION 4.1(R). Section 4.1(r) is hereby added to the Note Purchase
Agreement to read as follows:
(R) CONSUMMATION OF STOCK PURCHASE AGREEMENT TRANSACTIONS. As of the
Amendment No. 2 Effective Date, (i) the transactions contemplated by the Stock
Purchase Agreement shall have been consummated and (ii) Operating Company No. 3
shall have delivered a joinder agreement, substantially in the form attached
hereto as Exhibit F ("Joinder Agreement") pursuant to which Operating Company #3
joins and agrees to be bound by the terms of this Agreement and to each of the
Purchase Documents to which the Loan Parties are parties, and (iii) the
Subsidiary Guarantor shall have delivered the guaranty, substantially in the
form attached hereto as Exhibit G ("Subsidiary Guaranty"):
(VI) SECTION 5.1(B). Section 5.1(b) of the Note Purchase Agreement is
hereby amended and restated in its entirety to read as follows:
(B) PRINCIPAL BUSINESS. Each of Operating Company #1, Operating
Company #2 and Operating Company #3 is engaged in the business of the offer and
sale of tack and equine products for mail order, retail and online purchase, and
Parent's only activity is ownership of Operating Company #1, Operating Company
#2 and Operating Company #3 (collectively, the "Business"). Purchasers'
investment in the Securities will not be characterized as a "United States real
property interest" within the meaning of Section 897(c) of the Code.
(VII) SECTION 7.2(F). Section 7.2(f) of the Note Purchase Agreement is
hereby amended and restated in its entirety to read as follows:
(F) MERGERS, ETC. The Loan Parties shall not merge into or
consolidate or combine with any other Person, or purchase, lease or, otherwise
acquire (in one transaction or a series of related transactions) all or any part
of the property or assets of any Person, other than purchases or other
acquisitions of inventory, materials, leases, property and equipment in the
ordinary course of business. Except (i) for sales of inventory in the ordinary
course of business, (ii) the sale of assets that are obsolete or no longer used
or useful in the Loan Parties' business, (iii) "Permitted Acquisitions" as
described in Section 5.7 of the Senior Credit Agreement, or (iv) as expressly
permitted by the Security Documents, the Loan Parties shall not sell, transfer
or otherwise dispose of any of its assets, including the collateral under the
respective Security Documents. Parent shall at all times own one hundred percent
(100%) of the capital stock of each of Operating Company #1, Operating Company
#2 and Operating Company #3.
(VIII) SECTION 7.2(I)(XI). Section 7.2(i)(xi) of the Note Purchase
Agreement is hereby amended and restated in its entirety to read as follows:
(xi) shares of capital stock in Operating Company #1, Operating Company #2
and Operating Company #3 held by Parent; and
(IX) EXHIBIT F. Exhibit F to the Note Purchase Agreement, the Joinder
Agreement, is hereby added in the form of Attachment I to this Amendment No. 2.
(X) EXHIBIT G. Exhibit F to the Note Purchase Agreement, the Subsidiary
Guaranty, is hereby added in the form of Attachment II to this Amendment No. 2.
3. EXPENSES. In consideration of the Servicer's and Purchaser's execution and
delivery of this Amendment No. 2 and the consent and amendments contained
herein, the Loan Parties shall pay all reasonable expenses incurred by the
Servicer and Purchaser in the drafting, review, negotiation and closing of the
documents and transactions contemplated hereby, including the reasonable fees
and disbursements of Servicer's special counsel.
4. REAFFIRMATION. Except for the consent and amendments specifically provided
herein, the Note Purchase Agreement shall remain unmodified and in full force
and effect and is hereby reaffirmed. In addition, except as specifically
provided in Section 1 above, this Amendment No. 2 shall not be deemed a consent
or waiver of any term or condition of the Note Purchase Agreement or any other
Purchase Document, and shall not be deemed to prejudice any right or rights
which any party may now have or may have in the future under or in connection
with the Note Purchase Agreement or any other Purchase Document, as the same may
be amended from time to time.
5. REPRESENTATIONS. To induce Servicer and Purchaser to enter into this
Amendment No. 2, the Loan Parties, jointly and severally, represent and warrant
to Servicer and Purchaser that: (i) each Loan Party has the full power and
authority to enter into and perform its obligations under this Amendment No. 2;
and (ii) the consummation of the events and transactions contemplated by this
Amendment No. 2 do not conflict with, or result in any violation of or default
under any agreements with any third parties.
6. CONDITIONS TO EFFECTIVENESS. This Amendment No. 2 shall not be effective
until such date as the Servicer shall have received the following, all in form,
scope and content acceptable to Servicer and Purchaser in their sole discretion:
(I) this Amendment No. 2, duly executed by the parties hereto;
(II) the Stock Purchase Agreement, duly executed by the parties thereto,
together with all disclosure schedules, exhibits and transaction agreements
executed or delivered by the parties as contemplated therein;
(III) the Joinder Agreement, duly executed by the Operating Company #3,
together with such financing statements and other instruments as Servicer shall
require in order to perfect and maintain the continued perfection of the
security interest created therein;
(IV) the Subsidiary Guaranty, duly executed by the parties thereto;
(V) certificates of good standing dated as of a recent date for Parent,
Operating Company #3 and Subsidiary Guarantor issued by their respective
jurisdictions of organization and each jurisdiction where they are qualified to
operate as a foreign corporation or its equivalent;
(VI) a copy of the Charter Documents of Operating Company #3 and
Subsidiary Guarantor, certified by the appropriate governmental official of the
jurisdiction of its organization as of a recent date;
(VII) a copy of the By-laws of Operating Company #3 and Subsidiary
Guarantor, as in effect as of the Amendment No. 2 Effective Date;
(VIII) a consent to the transactions contemplated by the Stock Purchase
Agreement duly executed by the Senior Lender; and
(IX) such other documents relating to the transactions contemplated by
this Amendment No. 2 as Servicer or its special counsel may reasonably request.
7. MISCELLANEOUS. This Amendment No. 2 shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts of law. This Amendment No. 2 may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
signature page to this Amendment No. 2 by facsimile transmission shall be as
effective as delivery of a manually signed counterpart hereof or thereof.
[Signature page follows]
Very truly yours,
PATRIOT CAPITAL FUNDING, INC.
By: ______________________________
Matthew Colucci
Managing Director
By: ______________________________
Clifford L. Wells
Chief Investment Officer
ACKNOWLEDGED and AGREED
this ____ day of June, 2006
PURCHASER
PATRIOT CAPITAL FUNDING, LLC I
By: ______________________________
Matthew Colucci
Managing Director
By: ______________________________
Clifford L. Wells
Chief Investment Officer
LOAN PARTIES
PARENT:
DOVER SADDLERY, INC.
By: ______________________________
Stephen L. Day
President
OPERATING COMPANY #1
DOVER SADDLERY, INC. D/B/A NASHOBA VALLEY SERVICE CO.
By: ______________________________
Stephen L. Day
Director
OPERATING COMPANY #2
SMITH BROTHERS, INC.
By: ______________________________
Stephen L. Day
Director
OPERATING COMPANY #3
DOVER SADDLERY RETAIL, INC.
By: ______________________________
Stephen L. Day
Director
ATTACHMENT I
TO AMENDMENT NO. 2
EXHIBIT F
JOINDER AGREEMENT
The undersigned is executing and delivering this Joinder Agreement
pursuant to the Amended and Restated Senior Subordinated Note and Warrant
Purchase Agreement, dated as of September 16, 2005 (as amended by that certain
Amendment No. 1 dated March 28, 2006 and Amendment No. 2 dated as of the date
hereof, the "Note Purchase Agreement"), among Dover Saddlery, Inc., a Delaware
corporation (the "Parent"), Dover Saddlery, Inc., a Massachusetts corporation
and wholly-owned subsidiary of Parent d/b/a "Nashoba Valley Service Co."
("Operating Company #1"), Smith Brothers, Inc., a Texas corporation and
wholly-owned subsidiary of Parent ("Operating Company #2") and the undersigned
("Operating Company #3" and, together with Parent, Operating Company #1 and
Operating Company #2, the "Loan Parties"), Patriot Capital Funding, LLC I
("Purchaser") and Patriot Capital Funding, Inc. ("Servicer").
By executing and delivering this Joinder Agreement to Servicer, for itself
and on behalf of Purchaser, the undersigned hereby agrees to become a party to,
to be bound by, and to comply with the provisions of the Note Purchase Agreement
as a "Loan Party" and to each other Purchase Document to which a Loan Party is a
party, in the same manner as if the undersigned were an original signatory to
each such agreement.
By executing and delivering this Joinder Agreement to Servicer, for itself
and on behalf of Purchaser, the undersigned hereby represents and warrants to,
and covenants and agrees with the Servicer, for itself and the benefit of the
Purchasers, that:
1) Former Names. All corporate or fictitious names and tradenames used by
the undersigned or by which the undersigned has been known during the preceding
five years is set forth in Schedule 1 of Exhibit A to this Joinder Agreement.
2) Locations of Offices and Collateral Change of Locations and Names. Set
forth on Schedule 2 of Exhibit A to this Joinder Agreement is the following:
(a) the state, including the addresses of each location where any of
the Collateral (including without limitation Equipment and Inventory) is or may
hereafter be located (each a "Collateral State");
(b) exact legal name of the undersigned;
(c) state of incorporation of the undersigned (each a "Loan Party
State"); and
(d) state in which the chief executive office of the undersigned is
located (each a "Chief Executive Office State".
The undersigned shall not change (w) the location where Inventory or
Equipment that constitute Collateral are kept from the locations listed on
Schedule 2 of Exhibit A to this Joinder Agreement, (x) its name, identity or
corporate structure, (y) the state of incorporation, or (z) its Chief Executive
Office State unless (i) the undersigned shall have given the Servicer at least
thirty (30) days' prior written notice, (ii) the undersigned shall have executed
and delivered such financing statements and other agreements, instruments,
certificate and other documents, and taken such other actions, as may be
necessary or desirable, in the opinion of the Servicer, to perfect or preserve
the Liens created by the Security
Agreement, (iii) such financing statements refereed to in clause (ii) shall have
been duly filed under the UCC of each jurisdiction necessary or desirable to
perfect or preserve the Liens created by the Security Agreement in favor of the
Servicer and (iv) such change will not, assuming the actions listed in clauses
(ii) and (iii) are taken, impair in any respect the grant, perfection or
priority of the Liens created by the Security Agreement.
[Joinder Signature Page Follows]
Accordingly, the undersigned has executed and delivered this Joinder
Agreement as of the __ day of June, 2006.
OPERATING COMPANY #3
DOVER SADDLERY RETAIL, INC.
By:
--------------------------------------
Name:
Title:
EXHIBIT A
to Joinder Agreement
Schedule 1 (Former Names of Operating Company #3)
None
Schedule 2 (Locations of Officers, State of Incorporation and Collateral of
Operating Company #3)
Collateral Locations:
43717 John Mosby Highway
Chantilly, VA 20152
1041 Rte. 3 North, #10-11
Gambrills, MD 21054
484 Maury River Rd.
Lexington, VA 24450
242 Zan Rd.
Charlottesville, VA 22901
683-693 Yorklyn Rd.
Hockessin, DE 19707
595 Washington St.
Wellesley, MA 02181
10 Fila Way
Sparks, MD 21152
Route 121
Plaistow, NH 03865
Identifying Information:
1. Dover Saddlery Retail, Inc. - Massachusetts ("Operating Company #3")
(i) Mailing address: P.O. Box 1100, Littleton, MA 01460
(ii) Type of Organization: Massachusetts corporation
(iii) Jurisdiction of Organization: Commonwealth of Massachusetts
(iv) Organizational Identification Number: 000918119
(v) EIN: 20-4417762
ATTACHMENT II
TO AMENDMENT NO. 2
EXHIBIT G
SUBSIDIARY GUARANTY
(Attached)