10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Quarter Ended June 30, 2006

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-51624

DOVER SADDLERY, Inc.

(Exact name of registrant as specified in its charter)

DELAWARE
(State of other jurisdiction of
incorporation or organization) 04-3438294
(I.R.S. Employer Identification No.)

525 Great Road, Littleton, MA 01460
(Address of principal executive offices)

(978) 952-8062 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

YES þ    NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o    Accelerated filer o    Non-accelerated filer þ

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No þ

     Shares outstanding of the registrant’s common stock (par value $0.0001) at August 9, 2006: 5,074,344

DOVER SADDLERY, INC. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2006

			Page
PART I — FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements (unaudited)
		Condensed Consolidated Balance Sheets at June 30, 2006 and December 31, 2005		3
		Condensed Consolidated Statements of Income for the three months ended June 30, 2006 and June 30, 2005 and the six months ended June 30, 2006 and June 30, 2005		4
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2006 and June 30, 2005		5
		Notes to Condensed Consolidated Financial Statements		6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk
	Item 4.	Controls and Procedures
PART II — OTHER INFORMATION
	Item 1	Legal Proceedings
	Item 1A	Risk Factors
	Item 2	Use of Proceeds from Registered Securities
	Item 4	Submission of Matters to a Vote of Security Holders
	Item 6.	Exhibits
SIGNATURES
EX-10.39 Commercial Lease ex. as of 3/29/06 between Marvid Crabyl
EX-10.40 Stock Purchase Agreement 5/19/06
EX-10.41 Lease as of 6/06 Humphrey & Rodgers
EX-10.42 Agreement of Lease for Shopping Center 5/20/07
EX-10.43 LB's of Virginia Building Lease 11/1/00
EX-10.44 Lease Agreement 7/10/06 Hopkins Roads Associates
EX-10.45 Consent and Amendment # 2 Patriot Capital Funding, Inc.
EX-10.46 Waiver Letter dated June 27, 2006
EX-21.1 Subsidiaries of the Company
EX-31.1 Section 302 Certification of C.E.O.
EX-31.2 Section 302 Certification of C.F.O.
EX-32.1 Section 906 Certification of C.E.O. & C.F.O.

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

DOVER SADDLERY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	June 30, 2006			December 31, 2005
	(Unaudited)
Current assets:
Cash and cash equivalents	$	148		$	2,887
Accounts receivable		557			160
Inventory		11,612			10,072
Prepaid catalog costs		2,575			1,601
Prepaid expenses and other current assets		857			1,136
Total current assets		15,749			15,856
Property, Plant & Equipment		1,694			1,729
Other assets:
Deferred income tax assets		306			254
Goodwill and other assets, net		14,991			13,838
Total other assets		15,297			14,092
Total assets	$	32,740		$	31,677
Current liabilities:
Short term bank borrowing and Current portion of capital lease obligations	$	1,550		$	171
Accounts payable		2,370			2,629
Accrued expenses and other current liabilities		2,076			2,949
Deferred income tax liability		302			274
Total current liabilities		6,298			6,023
Long-term liabilities:
Revolving line of credit		5,250			5,000
Subordinated notes payable		3,000			3,000
Capital lease obligation, net of current portion		182			272
Total long-term liabilities		8,432			8,272
Stockholders’ equity:
Common Stock, par value $0.0001 per share; 15,000,000 shares authorized, issued 5,074,344 as of June 30, 2006 and December 31, 2005		1			1
Additional paid in capital		43,883			43,883
Accumulated other comprehensive income		33			48
Treasury Stock, 795,865 shares at cost		(6,082	)		(6,082	)
Retained deficit		(19,825	)		(20,468	)
		18,010			17,382
Total liabilities and stockholders’ equity	$	32,740		$	31,677

See accompanying notes.

DOVER SADDLERY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME — (unaudited)

(in thousands, except per share data)

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2006		2005		2006		2005
Net sales	$	17,781	$	16,334	$	34,814	$	30,580
Cost of products and merchandising		11,297		10,323		22,356		19,495
Gross margin		6,484		6,011		12,458		11,085
Selling, general and administrative expenses		5,501		4,682		10,934		9,228
Operating income		983		1,329		1,524		1,857
Interest income		11		—		37		—
Interest expense		234		409		469		801
Interest expense, net		223		409		432		801
Income before taxes		760		920		1,092		1,056
Income tax provision		312		405		449		505
Net income	$	448	$	515	$	643	$	551
Earnings per share:
Basic	$	0.09	$	0.16	$	0.13	$	0.16
Diluted	$	0.09	$	0.11	$	0.12	$	0.12
Weighted average shares outstanding:
Basic		5,074		3,023		5,074		3,023
Diluted		5,192		4,553		5,203		4,519

See accompanying notes.

DOVER SADDLERY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

(unaudited)

	June 30,
	2006			2005
Operating activities
Net income	$	643		$	551
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		297			321
Deferred income taxes		(15	)		267
Amortization of stock based compensation		—			97
Changes in current assets and liabilities:
Accounts receivable		(386	)		(650	)
Inventory		(896	)		(998	)
Prepaid catalog costs and other expenses		(719	)		(1,267	)
Accounts payable & short term borrowings		856			365
Accrued expenses and other current liabilities		(873	)		(644	)
Net cash used in operating activities		(1,093	)		(1,958	)
Investing activities
Acquisition of Dominion		(1,522	)		—
Purchases of property and equipment		(187	)		(585	)
Change in other assets		(73	)		(37	)
Cash used in investing activities		(1,782	)		(622	)
Financing activities
Borrowings under revolving line of credit		250			5,200
Payments under revolving line of credit		—			(2,700	)
Payments of commitment and financing fees		(24	)		—
Payments on capital leases		(90	)		68
Net cash provided by financing activities		136			2,568
Net decrease in cash and cash equivalents		(2,739	)		(12	)
Cash and cash equivalents at beginning of period		2,887			64
Cash and cash equivalents at end of period	$	148		$	52
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest	$	368		$	603
Income taxes	$	66		$	895
Supplemental disclosure of non-cash financing activities
Equipment acquired under capital leases	$	—		$	154

See accompanying notes.

DOVER SADDLERY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     A. Nature of business and basis of preparation:

          Dover Saddlery, Inc., a Delaware corporation (the “Company”), is a leading specialty retailer and the largest direct marketer of equestrian products in the United States. We sell our products through a multi-channel strategy, including catalogs, the Internet, and retail stores located in Massachusetts, New Hampshire, Delaware, Texas, Maryland and Virginia. The Company provides a complete line of products, as well as specially developed private label offerings from its direct marketing headquarters, warehouse, and call center facility in Littleton, Massachusetts.

          The accompanying condensed consolidated financial statements comprise those of the Company and its wholly owned subsidiaries, Dover Saddlery, Inc., a Massachusetts corporation, Dover Saddlery Retail, Inc., a Massachusetts corporation, Smith Brothers, Inc., a Texas corporation, and Old Dominion Enterprises, Inc., a Virginia corporation. All inter-company accounts and transactions have been eliminated in consolidation. The accompanying consolidated financial statements as of June 30, 2006 and for the three and six month periods ended June 30, 2006 and 2005 are unaudited. In our opinion, these unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2005 and include all adjustments, consisting of only usual recurring adjustments, necessary for a fair presentation of the results for such interim periods. The results of operations for the six-month period ended June 30, 2006 are not necessarily indicative of the results expected for the full year ending December 31, 2006.

          Certain footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to pertinent rules and regulations, although we believe that the disclosures in these financial statements are adequate to make the information presented not misleading.

     B. Acquisition:

          On June 29, 2006 we closed on a stock purchase agreement with the sole shareholder of Old Dominion Enterprises, Inc., doing business as Dominion Saddlery, where we agreed to acquire all of the outstanding share capital of Old Dominion Enterprises, Inc. for a net price of $1.5 million. Dominion Saddlery (Dominion) has been an equestrian retailer serving the Virginia and Maryland market for 30 years through several retail locations. As of June 30, 2006, the purchase price remains subject to a change as a result of the finalization of certain assets and liabilities in accordance with the terms of the purchase agreement. Included in the purchase price was $.3 million, which was deposited into an escrow account for the sole former shareholder. The escrow is held for any potential indemnification obligations discovered after closing, as well as to secure the seller’s representation on the quality of the inventory. At closing, Dominion became an indirect wholly owned subsidiary of the Company.

          The Dominion acquisition has been accounted for in accordance with FASB Statement No. 141 Business Combinations. The closing date of the Dominion acquisition was June 29, 2006, and as such, the Company’s consolidated financial statements reflect Dominion’s results of operations only from that date forward.

          The Company has not completed its final purchase price allocation. The preliminary values of the acquired assets and assumed liabilities from the acquisition of Dominion, as presented below, are based upon management’s estimates of fair value as of the date of the acquisition. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. However, the goodwill and asset values have not been finalized. Further, and as discussed above, the final purchase price is subject to certain purchase price adjustments which have not been finalized. The final purchase price allocations will be completed within one year of the acquisition and are not expected to have a material impact on the Company’s financial position or results of operations. The preliminary purchase price allocation is as follows (in thousands):

Total purchase price, including closing costs of approximately $56:	$	1,522
Inventories		644
Other Assets		11
Total assets acquired		655
Current liabilities		264
Total liabilities assumed		264
Net assets acquired		391
Excess purchase price over the fair value of net assets acquired	$	1,131

          The following table sets forth the unaudited pro forma results of operations of the Company for the six month periods ended June 30, 2006 and 2005 as if the Company had acquired Dominion as of January 1, 2005. These pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisition had occurred as of January 1, 2005 or that may be obtained in the future.

	Six months ended		Six months ended
(Pro forma, unaudited, in thousands, except per share data)	June 30, 2006		June 30 , 2005
Net Sales	$	36,214	$	31,980
Income before Extraordinary Items and cumulative effect of accounting changes		734		616
Net Income	$	734	$	616
Net Income per Share	$	0.14	$	0.14

          C. Accounting for stock-based compensation:

          Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123R, Share Based Payment (“SFAS 123R”). SFAS 123 R supersedes the Company’s previous accounting under Accounting Principles Board Opinion No. 25, Accounting for Stock issued to Employees (“APB”), for periods beginning in fiscal 2006. Under APB 25, the Company accounted for stock options under the intrinsic value method. Accordingly, the Company recognized $97,441 of compensation expense related to employee stock options during the six months ended June 30, 2005 because the exercise price of such options was less than the fair value of the underlying stock on the grant date. The Company previously disclosed the fair value of its stock options under the provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation (“SFAS 123”).

          Accordingly, the proforma information for the three and six months ended June 30, 2005 was as follows (in thousands):

	Three
	Months		Six Months
	Ended		Ended
	June 30,		June 30,
	2005		2005
Net income, as reported:	$	515	$	551
Add: Employee stock-based compensation expense included in reported net income		7		97
Deduct: Stock-based compensation expense determined under fair value-based method for all employee awards		90		180
Pro forma	$	432	$	468
Earnings per share:
Basic	$	0.13	$	0.13
Diluted		0.09		0.10

The above pro-forma expense was determined under the Black-Scholes calculation using assumptions consistent with those disclosed as of December 31, 2005.

The Company adopted SFAS 123R using the modified prospective transition method, which requires the application of the accounting standard as of January 1, 2006, the first day of the Company’s fiscal year 2006. The Company’s condensed consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123R. The adoption of SFAS 123R had no effect on the results of operations for the six months ended June 30, 2006 as there were no outstanding unvested options as of December 31, 2005. In addition, there have been no options awarded in the first six months of 2006.

     D. Inventory:

          Inventory consists of finished goods in the Company’s mail-order warehouse and retail stores. The Company’s inventories are stated at the lower of cost, with cost determined by the first-in, first-out method, or net realizable value. The Company maintains a reserve for excess and obsolete inventory. This reserve was $70,000 as of June 30, 2006 and December 31, 2005. The Company continuously monitors the salability to ensure adequate valuation of the related merchandise.

     E. Advertising:

          The costs of direct-response advertising materials, primarily catalog production and distribution costs, are deferred in accordance with Statement of Position (SOP) 93-7, Reporting on Advertising Costs. These costs are recognized over the period of expected future revenue, which is less than one year. Deferred costs as of June 30, 2006 and December 31, 2005 were $2.6 million and $1.6 million respectively. The combined marketing and advertising costs charged to selling, general, and administrative expenses for the six months ended June 30, 2006 and 2005 were approximately $4.6 million and $3.9 million respectively.

     F. Comprehensive Income:

          SFAS No. 130, Reporting Comprehensive Income, establishes standards for reporting and displaying comprehensive income and its components in the consolidated financial statements. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Other than reported net income, the only other item of comprehensive income is the effectively hedged interest rate swap adjustment.

	For the Six Months ended June 30
	(in thousands)
	2006			2005
Net income	$	643		$	551
Unrealized (loss)/gain on interest rate swap		(15	)		47
Net comprehensive income	$	628		$	598

     G. Earnings per share:

A reconciliation of the number of shares used in the calculation of basic and diluted net income per share is as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2006		2005		2006		2005
Basic weighted average common shares outstanding		5,074		3,023		5,074		3,023
Add: Dilutive effect of convertible preferred stock		—		1,338		—		1,338
Dilutive effect of assumed stock option and warrant exercises less potential incremental shares purchased under the treasury method		118		192		129		158
Diluted weighted average common shares outstanding		5,192		4,553		5,203		4,519
Earnings per share:
Basic	$	0.09	$	0.16	$	0.13	$	0.16
Diluted	$	0.09	$	0.11	$	0.12	$	0.12

          A reconciliation of the net income available to common stockholders used in the calculation of basic and diluted net income per share is as follows (in thousands):

	Three Months Ended					Six Months Ended
	June 30,		June 30,			June 30,		June 30,
	2006		2005			2006		2005
Net Income:		448		515			643		551
Preferred stock dividends		—		(40	)		—		(80	)
Net Income available to common stockholders		448		475			643		471

     H. Debt:

Revolving Credit Facility

          The $16,000,000 revolving credit facility, of which up to $2,000,000 can be in the form of letters of credit, shall bear interest at the base rate, announced from time to time by the bank plus an applicable margin determined by the Company’s funded debt ratio. As of June 30, 2006 and December 31, 2005, the bank rates were 8.25% and 8.25%, respectively. The applicable margins were 0.00% and 1.00%, respectively. Interest is payable quarterly on the last business day of each fiscal quarter.

          At its option, the Company may have all or a portion of the unpaid principal under the credit facility bear interest at a one, two, three, or six month LIBOR rate options. The LIBOR rate was 5.36% and 4.379% at June 30, 2006 and December 31, 2005 respectively, plus an applicable margin determined by the Company’s funded debt ratio. The margins were 1.75% and 3.25% at June 30, 2006 and December 31, 2005 respectively, and were fixed for the LIBOR rate option period. Interest related to LIBOR rate options are payable at the maturity of the LIBOR agreements. As of June 30, 2006 and December 31, 2005, $5,000,000 bore interest at the one month LIBOR rate option.

          The Company is obligated to pay commitment fees of 0.25% per annum on the average daily, unused amount of the line of credit during the preceding quarter on the revolving credit facility. All assets of the Company collateralize the revolving credit facility. Under the terms of the credit facility, the Company is subject to certain covenants including, among others, maximum funded debt ratios, operating cash flows, profitability, and capital expenditures. At June 30, 2006, the Company was in compliance with all covenants. The revolving line of credit is due in full in September 2008.

          At June 30, 2006 and December 31, 2005, the Company had the ability to borrow $16,000,000 on the revolving line of credit, of which $5,250,000 was outstanding on June 30, 2006 and $5,000,000 was outstanding on December 31, 2005.

Subordinated Notes Payable

          In September 2005, the Company issued $8.05 million of senior subordinated debt whereby the additional funds were used to pay off the previous subordinated note payable. The note may be prepaid at the Company’s option at 103%, 104% or 105% of its principal amount until September 16, 2006, 2007 or 2008, respectively. The note is payable at 106% of its principal amount by September 16, 2009.

          Under the terms of the credit facility, the Company is subject to certain covenants including, among others, maximum funded debt ratios, operating cash flows, profitability, and capital expenditures. At June 30, 2006 the Company was in compliance with all covenants. The remaining balance was $3,000,000 at June 30, 2006 and December 31, 2005.

     I. Commitments and contingencies:

Lease commitments

          The Company leases its facilities, as well as certain fixed assets that may be purchased for a nominal amount on the expiration of the leases, under non-cancelable operating and capital leases that extend through 2009. The facility leases, which may be renewed for periods ranging from one to five years, include fixed rental agreements as well as agreements with rent escalation clauses.

          In connection with retail locations, the Company enters into various operating lease agreements, which will further escalate rental payments in the future. The effects of variable rent disbursements have been expensed on a straight-line basis over the life of the lease in accordance with SFAS No. 13 “Accounting for Leases”. As of June 30, 2006 and December 31, 2005 there was approximately $56,000 and $46,000 of deferred rent recorded in other current liabilities.

Contingencies

          In February 2006, following the close of its 2005 fiscal year, the Company received an invoice for $2.1 million from Goldsmith, Agio, Helms & Linner LLC (GAH) seeking a success fee for financial advisory services purportedly due in connection with the Company’s initial public offering (IPO). In a cover letter accompanying its invoice, GAH asserted that if its invoice was not paid, GAH would pursue its claim in arbitration (herein, the “GAH Claim”).

          The Company has communicated emphatically to GAH that GAH did not have a valid claim for a success fee or other compensation in connection with the Company’s IPO. Nonetheless, on March 24, 2006, GAH filed a demand for arbitration with the American Arbitration Association for $2.1 million (plus interest and fees).

          The Company denies any and all liability for the GAH claim; plans to vigorously defend against such claim; and has filed a $3.0 million counterclaim against GAH for consequential and enhanced damages (plus costs and legal fees) that we suffered as the result of GAH’s breach of contract and of duties to us. Thus, no amounts have been accrued as of June 30, 2006 and December 31, 2005.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q, including the following discussion, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, the words “projected,” “anticipated,” “planned,” “expected” and similar expressions are intended to identify forward-looking statements. In particular, statements regarding future financial targets or trends are forward-looking statements. Forward-looking statements are not guarantees of our future financial performance, and undue reliance should not be placed on them. Our actual results, performance or achievements may differ significantly from the results, performance or achievements discussed in or implied by the forward-looking statements. Factors that could cause such a difference are detailed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (“fiscal 2005”). We disclaim any intent or obligation to update any forward-looking statements

Overview

          We are a leading specialty retailer and the largest direct marketer of equestrian products in the U.S. For over 20 years, Dover Saddlery has been a premier upscale marketing brand in the English-style riding industry. We sell our products through a multi-channel strategy, including catalogs, the Internet and retail stores. This multi-channel strategy has allowed us to use catalogs and our proprietary database of nearly two million names of equestrian enthusiasts as a primary marketing tool to increase catalog sales and to drive additional business to our e-commerce websites and retail stores.

          We are committed to expanding our retail store channel. On June 29, 2006 we acquired Dominion Saddlery, the largest equestrian retailer in the Virginia and Maryland market, which operates four stores. This strategic acquisition provides access to critical leased locations and established customer relationships, as well as the elimination of a significant retail competitor. Over the next six months, we will be converting, expanding, and launching these stores as Dover Saddlery stores, giving us the premier position in one of the most important regional markets in the country.

Results of Operations

The following table presents our unaudited condensed consolidated statements of operations expressed as a percentage of net sales:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2006			2005			2006			2005
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of products and merchandising		63.5			63.2			64.2			63.8
Gross margin		36.5			36.8			35.8			36.2
Selling, general and administrative expenses		30.9			28.7			31.4			30.1
Operating income		5.6			8.1			4.4			6.1
Interest income		0.1			0.0			0.1			0.0
Interest expense		1.4			2.5			1.3			2.6
Interest (income) expense, net		1.3			2.5			1.2			2.6
Income before taxes		4.3			5.6			3.2			3.5
Income tax provision		1.8			2.5			1.3			1.6
Net income		2.5	%		3.1	%		1.9	%		1.9	%

     The following table presents certain selected operating data on a unaudited basis:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2006			2005			2006			2005
Net sales:
Revenue, net — direct	$	14,893		$	13,443		$	29,856			26,319
Revenue, net – retail stores		2,888			2,891			4,958			4,261
Revenue, net – total	$	17,781		$	16,334		$	34,814			30,580
Other operating data:
Number of retail stores(2)		4			4			4			4
Capital expenditures		118			174			187			585
Gross profit margin(2)		36.5	%		36.8	%		35.8	%		36.2	%
EBITDA(1)		1,130			1,496			1,821			2,276
EBITDA margin(1)		6.36	%		9.16	%		5.23	%		7.44	%

(1)	When we use the term “EBITDA”, we are referring to net income minus interest income plus interest expense, income taxes and depreciation and amortization. We present EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
(2)	Excludes the acquisition of Dominion stores on June 29, 2006.

Comparison of Second Quarter Fiscal 2006 to Second Quarter Fiscal 2005

Revenues

          Our total revenues increased 8.9% to $17.8 million in the second quarter of 2006, from $16.3 million in 2005, a total increase of $1.5 million. Revenues in our direct sales channel increased $1.5 million, or 10.8%, and revenues in our retail store channel experienced no change. The increase in revenues from our direct sales channel was attributed to higher unit volumes through both the catalog and the internet channels, and from both the Dover Saddlery and the Smith Brothers annual books. The second quarter growth in our retail channel compares to a very strong prior year second quarter, which included the Plaistow, NH store grand opening.

Gross Profit

          Gross profit increased 7.9% to $6.5 million in the second quarter of 2006, from $6.0 million in the prior year Q2. Gross profit as a percentage of revenues decreased slightly to 36.5% in 2006, from 36.8% of revenues in 2005. The increase of $0.5 million in gross profit was due to increased revenues in our direct sales channel. The slight decrease in gross profit as a percentage of revenues was attributable to an increase in freight charges, as well as variations in overall product mix.

Selling, General and Administrative

          Selling, general and administrative expenses increased to $5.5 million (30.9% of revenues) in Q2, from $4.7 million (28.7% of revenues) in 2005. The $0.8 million increase includes $0.3 million in marketing costs, primarily catalog expense, internet advertising and new store support designed to drive increased revenues. Labor and related costs increased approximately $0.2 million, attributable to increased direct channel sales and increased merchandising support functions. New public company costs, consisting of legal, audit, and insurance fees increased by $0.2 over the second quarter of 2005.

Interest Expense

          Interest expense, including amortization of deferred financing costs attributed to our subordinated debt and revolving credit facility, decreased 46% to $0.2 million in the first quarter of 2006, compared to $0.4 million in 2005. Our debt levels were reduced substantially as the result of the interim application of the company proceeds from the IPO, resulting in decreased interest expense for both senior and remaining subordinated debt.

Income Tax Provision

          The provision for income taxes was $0.3 million in the second quarter of 2006, reflecting an effective tax rate of 41%, as compared to $0.4 million in 2005, reflecting an effective tax rate of 44%. The lower effective rate in 2006 versus 2005 is attributable to the recognition of non-deductible non-cash stock based compensation charges in 2005.

Net Income

          Net income for the second quarter was $448,000, a decrease of $67,000 over the $515,000 net income achieved in the second quarter of 2005. This decrease is due primarily to increased freight costs and the costs of being a public company in 2006.

Comparison of the Six Months Ended June 30, 2006 to the Six Months Ended June 30, 2005

Revenues

          Our total revenues increased 13.8% to $34.8 million in the six months ended in 2006, from $30.6 million in 2005, a total increase of $4.2 million. Revenues in our direct sales channel increased $3.5 million, or 13.4%, and revenues in our retail store channel increased $0.7 million, or 16.4%. The increase in revenues from our direct sales channel was attributed to higher unit volumes through both catalog and the Internet, and from both the Dover Saddlery and the Smith Brothers brands. Increase in our retail revenues was due mainly to the opening of the Plaistow store in April of 2005.

Gross Profit

          Gross profit increased 12.4% to $12.5 million for the six months ended in 2006, from $11.1 million in 2005. Gross profit as a percentage of revenues decreased slightly to 35.8% for the six months ended in 2006, from 36.2% of revenues in 2005. The increase of $1.4 million in gross profit was due to increased revenues, primarily in our direct sales channel. The slight decrease in gross profit as a percentage of revenues was attributable to variations in both overall product mix and the sales mix of our catalogs, as well as increased freight costs.

Selling, General and Administrative

          Selling, general and administrative expenses increased to $11.0 million (31.4% of revenues) for the six months ended in 2006, from $9.2 million (30.2% of revenues) in 2005. The $1.8 million increase includes $0.8 million in marketing costs, primarily catalog expense, internet advertising and new store support designed to drive increased revenues. Labor and related costs increased approximately $0.5 million to support the new Plaistow store, increased direct channel sales and increased merchandising support functions. New public company costs, consisting of legal, audit, and insurance fees increased by $0.5 over the six months ended in 2005.

Interest Expense

          Interest expense, including amortization of deferred financing costs attributed to our subordinated debt and revolving credit facility, decreased 41% to $0.5 million for the six months ended in 2006, compared to $0.8 million in 2005. Our debt levels were reduced substantially as the result of the interim application of the company proceeds from the IPO, resulting in decreased interest expense for both senior and remaining subordinated debt.

Income Tax Provision

          The provision for income taxes was $0.5 million for the six months ended in 2006, reflecting an effective tax rate of 41%, as compared to $0.5 million in 2005, reflecting an effective tax rate of 48%. The lower effective rate in 2006 versus 2005 is attributable to the recognition of non-deductible non-cash stock based compensation charges in 2005.

Net Income

          Net income for the six months ended in 2006 was $643,000, an increase of $92,000 over the $551,000 net income achieved in 2005. This increase is due to the substantial growth in our direct revenue and the investment in marketing, partially offset by increased freight costs, as well as costs of being a public company.

Seasonality and Quarterly Fluctuations

          Since 2001, our quarterly product sales have ranged from a low of approximately 20% to a high of approximately 32% of any calendar year’s results. The beginning of the spring outdoor riding season in the northern half of the country has typically generated a slightly stronger second quarter of the year, and the holiday buying season has generated additional demand for our normal equestrian product lines in the fourth quarter of the year. Revenues for the first and third quarters of the calendar year have tended to be somewhat lower than the second and fourth quarters. We anticipate that our revenues will continue to vary somewhat by season.

          The timing of our new retail store openings has had and is expected to continue to have a significant impact on our quarterly results. We will incur one-time expenses related to the opening of each new store. As we open new stores, (i) revenues may spike and then settle, and (ii) pre-opening expenses, including such expenses as occupancy and management overhead, are incurred, which may not be offset by correlating revenues during the same financial reporting period. As a result of these factors, new retail store openings may result in temporary declines in operating profit, both in dollars and as a percentage of sales.

Liquidity and Capital Resources

          In 2005, we generated net proceeds of $12.4 million through our initial public offering, which enhanced our other primary sources of liquidity which are cash flows generated from our operations and availability under our revolving credit facility. In addition to the balance of $2.8 million in net proceeds available from the offering as of the end of fiscal 2005, we intend to use the primary sources of liquidity to fund new retail store locations, our working capital requirements, capital expenditure requirements and third-party debt service requirements. We may in the future need to obtain additional financing from banks, or through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements.

Operating Activities

          The cash utilized in our operating activities in the six months ended in 2006 was $1.0 million, consisting primarily of net income and non-cash expenses totaling $0.9 million, increased by accounts payable of $0.9 million and offset by credit card receivables in transit of $0.4 million, increases in prepaid catalog expenses of $0.7 million, reductions of accrued expenses and gift certificates of $0.9 million, and inventory increases of $0.9 million. In the six months ended in 2005, cash utilized by our seasonal operating activities was primarily due to net income and non-cash expenses of $1.2 million, which were offset by increases in prepaid expenses of $1.3 million, credit card receivables of $0.7 million, and inventory of $1.0 million, due to the opening of the new Plaistow, NH store.

Investing Activities

          Cash used in our investing activities was $1.8 million in the six months ended in 2006 and $0.6 million in the six months ended in 2005. The Dominion acquisition was $1.5 million in 2006. Additional investment activities throughout these periods represent the purchase of capital equipment in support of our growth, including leasehold improvements, computer equipment, internal use software, furniture and fixtures, and the purchase of other assets and related deposits. Increases in investment activities can be expected in the balance of 2006 and in future years to fit out planned new retail stores with leasehold improvements, computer equipment, fixtures, furniture and other assets.

Financing Activities

          Net cash provided by our financing activities was $0.1 million in the six months ended in 2006, and $2.6 million was provided in the six months ended in June 2005. In the six months ended in June 2006, we funded our seasonal operating activities and investing activities with cash made available from the company portion of our offering. The proceeds of our offering remain available through our ability to draw on our senior credit facility. In the six months ended in 2005, net cash provided by our financing activities of $2.6 million consisted primarily of net borrowings under our revolving credit facility.

Revolving Credit Facility

          In September 2005, we renewed and increased our revolving credit facility with Bank of America, N.A., under which we can borrow up to $16.0 million, including $2.0 million for letters of credit. We amended that facility on March 30, 2006 to adjust various covenants. Interest accrues at a variable rate based on both prime and published LIBOR rates. The credit facility expires on September 16, 2008 at which time all advances will be immediately due and payable. As of June 30, 2006, the revolving credit facility borrowing limit was $16.0 million and the amount outstanding under the credit facility was $5.25 million at a blended rate of 6.3% and the unused amount available was $10.75 million. We maintain a derivative financial instrument to hedge the risk of interest rate fluctuations on a portion of our outstanding bank debt. Borrowings are secured by substantially all of our assets. Under the terms of our credit facility, we are subject to certain covenants including, among others, maximum funded debt ratios and capital expenditures, minimum operating cash flows and profitability, and certain restrictions on acquisition-related activity. At June 30, 2006, we were in compliance with all covenants under the credit facility. If a default ever occurs, the bank may require that we repay all amounts then outstanding. Any amounts which we may be required to repay prior to a scheduled repayment date, however, would reduce funds that we could otherwise allocate to other opportunities that we consider desirable.

Senior Subordinated Note and Warrant

          On September 16, 2005, we closed an Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement with Patriot Capital Funding, Inc., which provided for our issuance of a senior subordinated note payable, which is due in full on September 16, 2009 for aggregate proceeds of $8.05 million. Of such proceeds, $3.5 million was used to pay off a previously existing subordinated note payable and $4.0 million was used to pay a portion of a $6.0 million purchase price of 795,865 shares of our common stock. The note is a general senior subordinated obligation, is subordinated in right of payment to our existing and future senior debt, ranks equal in right of payment with any of our future senior subordinated debt and is senior in right of payment to any of our future subordinated debt. Interest at an annual rate of 11.5% is payable monthly on the fifth business day of the month. Prepayment on the principal amount due under the note may voluntarily be made at any time in multiples of $100,000, plus accrued and unpaid interest and a prepayment fee equal to the principal amount prepaid multiplied by 3.0% if prepayment is made prior to September 16, 2006, by 4.0% if prepayment is made prior to September 16, 2007, 5.0% if prepayment is made prior to September 16, 2008 and 6.0% if prepayment is made prior to September 16, 2009. Mandatory prepayment is required upon a change in control. Simultaneously with the issuance of this note, we issued a warrant to Patriot Capital Funding, Inc. exercisable at any time after March 31, 2006 for up to 30,974 shares of our common stock at an exercise price of $0.00759 per share. In December 2005, we utilized proceeds from our public offering to prepay $5.1 million of the debt due under the note, leaving a balance of $3,000,000. As of June 30, 2006 the balance of the Subordinated Note was $3,000,000, and we were in compliance with all of its covenants.

Working Capital and Capital Expenditure Needs

          We believe our existing cash, cash equivalents, expected cash to be provided by our operating activities, and funds available through our revolving credit facility (as increased by the net proceeds from our public offering) will be sufficient to meet our currently planned working capital and capital expenditure needs over at least the next 12 months. Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our marketing and sales activities, the expansion of our retail stores, the acquisition of new capabilities or technologies and the continuing market acceptance of our products. To the extent that existing cash, cash equivalents, cash from operations and cash from our revolving credit facility under the conditions and covenants of our credit facilities are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. As part of our growth strategy in the future, we may seek investments in or acquisitions of other businesses, services, or technologies, which could also require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

Contractual Obligations

          We generally do not enter into binding purchase commitments. Our principal commitments consist of obligations under our revolving credit facility and leases for our headquarters and distribution facility, as well as our retail stores and miscellaneous office space. The following table describes our commitments to settle contractual obligations in cash as of June 30, 2006, unless otherwise noted:

	Payments Due by June 30,
	2007		2008		2009		2010		2011		Total
	(in thousands)
Short-term bank borrowings	$	1,395	$	—	$	—	$	—	$	—	$	1,395
Capital leases		155		117		75		11		—		358
Operating leases		1,411		1,304		1,207		960		812		5,694
Revolving credit facility		—		5,250		—		—		—		5,250
Senior subordinated notes		—		—		3,000		—		—		3,000
Total	$	2,961	$	6,671	$	4,282	$	971	$	812	$	15,697

Critical Accounting Policies and Estimates

          Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates. A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in our 2005 Annual Report on Form 10-K, filed on March 30, 2006, in Note A of the Notes to the Consolidated Financial Statements and the “Critical Accounting Policies” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Recent Accounting Pronouncements

          In December 2004, the FASB issued SFAS No. 123R, which requires the measurement of all share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in our consolidated statement of operations. The accounting provisions of SFAS No. 123R are effective for fiscal years beginning after June 15, 2005, and we have adopted SFAS No. 123R for our fiscal quarter beginning January 1, 2006. The Company adopted SFAS 123R using the modified prospective transition method, which requires the application of the accounting standard as of January 1, 2006, the first day of the Company’s fiscal year 2006. The Company’s condensed consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123R. The adoption of SFAS 123R had no effect on the results of operations for the six months ended June 30, 2006 as there were no outstanding unvested options for the six months ending June 30, 2006. In addition, there have been no options awarded in the first six months of 2006.

          In June 2006, the FASB issued FASB Interpretation No. (“FIN”) 48, “Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109”, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 will be effective for fiscal years beginning after December 15, 2006. The Company has not yet completed its evaluation of the impact of adoption on the Company’s financial position or results of operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

          At June 30, 2006, there had not been a material change in any of the market risk information disclosed by us in our Annual Report on Form 10-K for the year ended December 31, 2005. More detailed information concerning market risk can be found in Item 7A under the sub-caption “Quantitative and Qualitative Disclosures about Market Risks” of the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 40-41 of our Annual Report on Form 10-K for the year ended December 31, 2005 .

          Our objective in managing our long-term exposure to interest rate and foreign currency rate changes is to limit the material impact of the changes on cash flows and earnings and to lower our overall borrowing costs. We have calculated the effect of a 10% change in interest rates over a month for both our debt obligations and our marketable securities investments and determined the effect to be immaterial. We do not foresee or expect any significant changes in the management of foreign currency or interest rate exposures or in the strategies we employ to manage such exposures in the near future.

Foreign Currency Risk

          Nearly all of our revenues are derived from transactions denominated in U.S. dollars. We purchase products in the normal course of business from foreign manufacturers. As such, we have exposure to adverse changes in exchange rates associated with those product purchases, but this exposure has not been significant.

Interest Rate Sensitivity

          We had cash and cash equivalents totaling $0.1 million at June 30, 2006. The unrestricted cash and cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes. Some of the securities in which we invest, however, may be subject to market risk. This means that a change in prevailing interest rates may cause the principal amount of the investments to fluctuate. To minimize this risk in the future, we intend to maintain our portfolio of cash equivalents and short-term investments in a variety of securities, including commercial paper, money market funds, debt securities and certificates of deposit. Due to the short-term nature of these investments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. As of June 30, 2006, all of our investments were held in money market and other short-term investment accounts.

          Our exposure to market risk also relates to the increase or decrease in the amount of interest expense we must pay on our outstanding debt instruments, primarily certain borrowings under our revolving credit facility. The advances under this revolving credit facility bear a variable rate of interest determined as a function of the prime rate and the published LIBOR rate at the time of the borrowing. We maintain a derivative financial instrument to hedge the risk of interest rate fluctuations on a portion of our outstanding bank debt. If interest rates were to increase by one percent, the additional interest expense as of June 30, 2006 would be approximately $50,000 annually prior to any potential benefit from our interest rate protection. At June 30, 2006 there was $5.25 million outstanding under our revolving credit facility.

Item 4. Controls and Procedures

          Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2006, to assure that information required to be disclosed by us in the reports we file or submit under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2006, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

We maintain certain internal controls over financial reporting that are appropriate, in management’s judgment with similar cost-benefit considerations, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. No change in our internal control over financial reporting occurred during the fiscal quarter ended June 30, 2006 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

          As previously disclosed in Item 3 under the caption “Legal Proceedings” on pages 23-24 of our Annual Report on Form 10-K for the fiscal year ending December 31, 2005, the Company received in February 2006 an invoice for $2,101,977.76 from Goldsmith, Agio, Helms & Linner LLC (GAH) seeking a success fee for financial advisory services purportedly due in connection with the Company’s initial public offering (IPO). GAH asserted that if its invoice was not paid, GAH would pursue its claim in arbitration (herein, the “GAH Claim”).

          We communicated emphatically to GAH that GAH did not have a valid claim for a success fee or other compensation in connection with the Company’s IPO. Nonetheless, on March 24, 2006, GAH filed a demand for arbitration with the American Arbitration Association for $2.1 million, plus interest and fees. In April 2006, the Company answered the arbitration demand, denying liability on all claims, and filed a $3 million counterclaim against GAH for consequential and enhanced damages (plus costs and legal fees) that we suffered as the result of GAH’s breach of contract and of duties to us. We deny any and all liability for the GAH Claim, plan to vigorously defend against such claim, and plan to vigorously pursue our counterclaim.

          From time to time, we may be exposed to litigation relating to our products and operations. Except as described above, we are not currently engaged in any legal proceedings that are expected, individually or in the aggregate, to have a material adverse effect on our financial conditions or results of operations.

Item 1A. Risk Factors

          An investment in our common stock involves a high degree of risk. You should carefully consider the specific risk factors listed under Part I, Item 1A of our Annual Report on Form 10-K filed on March 30, 2006, together with all other information included or incorporated in our reports filed with the Securities and Exchange Commission. Any such risks may materialize, and additional risks not known to us, or that we now deem immaterial, may arise. In such event, our business, financial condition, results of operations or prospects could be materially adversely affected. If that occurs, the market price of our common stock could fall, and you could lose all or part of your investment.

          This Quarterly Report on Form 10-Q includes or incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by the use of the words “believes”, “anticipates”, “plans”, “expects”, “may”, “will”, “would”, “intends”, “estimates” and other similar expressions, whether in the negative or affirmative. We cannot guarantee that we actually will achieve the plans, intentions or expectations disclosed in the forward looking statements made. We have included important factors in the cautionary statements below that we believe could cause actual results to differ materially from the forward-looking statements contained herein. The forward-looking statements do not reflect the potential impact of any future acquisitions, mergers or dispositions. We do not assume any obligation to update any forward-looking statements contained herein. In addition to the list of significant risk factors set forth in the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2005, the following supplemental information might also be considered material in evaluating the risks of our business and an investment in our common stock:

          Our market is highly competitive and we may not continue to compete successfully. We compete in a highly competitive marketplace with a variety of retailers, dealers and distributors. The equestrian products market is highly fragmented with approximately 10,000 retail store locations nationwide. Many of these are small businesses that have a loyal customer base. We may therefore not be able to generate sufficient sales to support our new retail store locations. We also compete directly with State Line Tack, which is owned by PetSmart and has greater financial resources than we have. There are also a significant number of sporting goods stores, mass merchandisers and other better funded companies that could decide to enter into or expand their equestrian products offerings. In addition, if our competitors reduce their prices, we may have to reduce our prices in order to compete. We may also be forced to increase our advertising or mail a greater number of catalogs in order to generate the same or even lower level of sales. Any one of these competitive factors could adversely affect our revenues and profitability. It is possible that increased competition or improved performance by our competitors may reduce our market share, may reduce our profit margin, and may adversely affect our business and financial performance in other ways.

          We may be unable to continue to open new stores and enter new markets successfully. An important part of our business plan is to increase our number of stores and enter new geographic markets. We opened one store last year and currently plan to open approximately up to two new stores in the second half of 2006. For our growth strategy to be successful, we must identify and lease or buy favorable store sites, hire and train associates and adapt management and operational systems to meet the needs of our expanded operations. These tasks may be difficult to accomplish successfully. If we are unable to open new stores as quickly as planned, our future sales and profits could be materially adversely affected. Even if we succeed in opening new stores, these new stores may not achieve the same sales or profit levels as our existing stores. Also, our expansion strategy includes opening new stores in markets where we already have a presence so we can take advantage of economies of scale in marketing, distribution and supervision costs. However, these new stores may result in the loss of sales in existing stores in nearby areas.

          Our growth may strain operations, which could adversely affect our business and financial results. Our business has grown and continues to grow through organic growth and acquisitions. Accordingly, sales, number of stores, number of countries in which we conduct business and number of associates have grown and will likely continue to grow. This growth places significant demands on management and operational systems. If we are not successful in continuing to support our operational and financial systems, expanding our management team and increasing and effectively managing our associate base, this growth is likely to result in operational inefficiencies and ineffective management of the business and associates, which may in turn adversely affect our business and financial performance.

          Our operating results may be impacted by changes in the economy. Our operating results are directly impacted by the health of and confidence in the North American economy. Current economic conditions may adversely affect our business and our results of operations.

          Our stock price may fluctuate based on market expectations. The public trading of our stock is based in large part on market expectations that our business will continue to grow and that we will achieve certain levels of net income. If the securities analysts that regularly follow our stock lower their ratings or lower their projections for future growth and financial performance, the market price of our stock is likely to drop significantly. In addition, if our quarterly financial performance does not meet the expectations of securities analysts, our stock price would likely decline. The decrease in the stock price may be disproportionate to the shortfall in our financial performance.

          Our quarterly operating results are subject to significant fluctuation. We experience seasonal fluctuation in our revenues and operating results. We typically realize a higher portion of our revenues and operating results during the fourth quarter. As a result of this seasonality, we believe that quarter to quarter comparisons of our operating results are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of future performance. Our operating results have fluctuated from quarter to quarter in the past, and we expect that they will continue to do so in the future. Our earnings may not continue to grow at rates similar to the growth rates achieved in recent years and may fall short of either a prior fiscal period or investors’ expectations. Factors that could cause these quarterly fluctuations include the following: the extent to which sales in new stores result in the loss of sales in existing stores; accrual or pre-opening store expenses in one or more new store locations, resulting in higher operating expenses without a corresponding increase in revenues; the transaction costs and goodwill associated with acquisitions; the mix of products sold; pricing actions of competitors; the level of advertising and promotional expenses; and seasonality, primarily because the sales and profitability of our stores are typically slightly lower in the first and second quarters of the fiscal year than in other quarters. Most of our operating expenses, such as rent expense, advertising expense and employee salaries, do not vary directly with the amount of sales and are difficult to adjust in the short term. As a result, if sales in a particular quarter are below expectations for that quarter, we may not proportionately reduce operating expenses for that quarter, and therefore this sales shortfall would have a disproportionately negative effect on our net income for the quarter.

          If businesses we acquire do not perform as well as we expect or have liabilities that we are not aware of, we could suffer consequences that would substantially reduce our revenues, earnings and cash flows. Our business strategy includes growth of our retail store channel, both through the development and opening of new Dover-branded store sites and the acquisition and conversion of existing retail stores to the Dover brand. Our financial performance may be adversely affected as the result of such acquisitions by such factors as: (1) difficulty in assimilating the acquired operations and employees, (2) inability to successfully integrate the acquired inventory and operations into our business and maintain uniform standards, controls, policies, and procedures; (3) lower-than-expected loyalty of the customer base of the acquired business to Dover-branded stores and products; (4) post-acquisition variations in the product mix offered by the stores of the acquired business, resulting in lower revenues and gross margins; and (5) declines in revenues of stores of the acquired business from historical levels and those projected. Further, businesses we acquire may have unknown or contingent liabilities that are in excess of the amounts that we have estimated. Although we have obtained indemnification, we may discover liabilities greater than the contractual limits or the financial resources of the indemnifying party. In the event that we are responsible for liabilities substantially in excess of any amounts recovered through rights to indemnification, we could suffer severe consequences that would substantially reduce our revenues, earnings and cash flows.

Item 2. Use of Proceeds from Registered Securities

The remaining proceeds from the initial public offering which were not utilized to pay down our subordinated debt and temporarily reduce our revolving loan balances totaled $2.8 million as of December 31, 2005. In the first six months of 2006, our cash management function utilized the remaining cash available from the company portion of the offering for normal seasonal working capital needs of the business. As of the end of the second quarter of 2006, the proceeds of our offering remain available through our improved ability to draw on our senior credit facility for other purposes, including new store growth.

Item 4. Submission of Matters to Vote of Security Holders

Dover Saddlery, Inc. held its Annual Meeting of Stockholders on May 3, 2006. For more information on the following proposals, see the Company’s proxy statement dated April 13, 2006, the relevant portions of which are incorporated herein by reference.

(1) The stockholders elected both Class I nominees to the Board of Directors for respective three-year terms expiring in 2009:

DIRECTOR	FOR		WITHHELD		ABSTAIN		BROKER NON-VOTES*
Gregory F. Mulligan		4,188,677		0		544,877
William F. Meagher, Jr.		4,728,574		0		4,980

* NASDAQ rules do not permit broker voting without specific instructions from beneficial owners but permit brokers that are members of a national securities exchange, such as brokers who are members of the New York Stock Exchange, to follow any alternative rules of that exchange. The Company has not been able to determine how many broker votes cast for Class I Directors were cast pursuant to specific instructions from beneficial owners versus how many were cast by brokers pursuant to the alternative rules of a national securities exchange such as NYSE.

The names, classes and terms of the Directors continuing to serve in office are as follows:

Class II Directors (with terms expiring at the 2007 Annual Meeting, or until their successors are duly elected and qualified):

David J. Powers
Jonathan A.R. Grylls

Class III Directors (with terms expiring at the 2008 Annual Meeting, or until their successors are duly elected and qualified):

Stephen L. Day
James F. Powers

(2) The stockholders ratified the appointment of Ernst & Young LLP as the Independent Registered Public Accounting Firm for the Company:

For	4,732,554
Against	1,000
Abstain	0
Total	4,733,554

Item 6. Exhibits

EXHIBIT LIST

Number	Description
*1.1	Form of Underwriting Agreement
*3.1	Amended and Restated Certificate of Incorporation of the Company
*3.2	Certificate of Amendment to Certificate of Incorporation of the Company
*3.3	Second Amended and Restated Certificate of Incorporation of the Company to be filed upon completion of this offering
*3.4	By-laws of the Company
*3.5	Amended and Restated By-laws of the Company to be effective upon completion of this offering
*4.1	Shareholders Agreement, dated as of September 17, 1998, by and among the Company, Stephen L. Day, Jonathan A.R. Grylls, David Post, Donald Motsenbocker, Thomas Gaines, David J. Powers, James F. Powers, and Michele R. Powers
*4.2	First Amendment to Shareholders Agreement, dated as of August 29, 2003, by and among the Company, Stephen L. Day, Jonathan A.R. Grylls, David Post, Thomas Gaines, David J. Powers, James F. Powers, and Michele R. Powers
*4.3	Second Amendment to Shareholders Agreement, dated as of August 25, 2005, by and among a majority in interest of the Purchasers (as defined therein) and a majority in interest of the Sellers (as defined therein)
*4.4	Instrument of accession, dated as of September 16, 2005, signed by Citizens Ventures, Inc. and accepted by the Company, to that certain Shareholders Agreement, dated as of September 17, 1998, by and among the Company and the Shareholders referenced therein, as amended
*4.5	Form of Common Stock Certificate
*4.6	Warrant to purchase common stock of the Company issued to Patriot Capital Funding, Inc.
*4.7	Amended and Restated 11.50% Senior Secured Subordinated Note, dated September 16, 2005, issued jointly by the Company, Dover Massachusetts and Smith Brothers, Inc. to Patriot Capital Funding, LLC I
*5.1	Opinion of Bingham McCutchen LLP
*5.2	Opinion of Preti Flaherty Beliveau Pachios & Haley LLP

Number	Description
*†10.1	1999 Stock Option Plan (the “1999 Plan”)
*†10.2	Form of Stock Option Agreement under the 1999 Plan
*10.3	2005 Equity Incentive Plan (the “2005 Plan”)
*10.4	Form of Stock Option Agreement under the 2005 Plan
*10.5	Form of Restricted Stock Award Agreement under the 2005 Plan
*10 .6	Lease, dated as of May 29, 1997, by and between Dover Massachusetts and CE Holman, LLP
*10 .7	Lease, dated as of October 12, 2001, by and between David F. Post and Dover Massachusetts
*10 .8	Lease, dated as of March 1, 2003, by and between Smith Brothers, Inc. and JDS Properties, LLC
*10.9	Letter dated February 9, 2005 from the Company to JDS Properties, LLC regarding lease extension
*10.10	Lease, dated as of June 22, 2002, by and between Hockessin Square, L.L.C. and Dover Massachusetts
*10.11	Letter dated January 25, 2005 from the Company to Hockessin Square, L.L.C. regarding lease extension
*10.12	Lease, dated as of November 24, 2003, by and between North Conway Holdings, Inc. and Dover Massachusetts
*10.13	Stock Purchase Agreement, dated as of August 14, 1998, by and among the Company, James F. Powers, David J. Powers and Michele R. Powers
*10.14	First Amendment to Stock Purchase Agreement, dated as of August 14, 1998, by and among the Company, James F. Powers, David J. Powers and Michele R. Powers
*10.15	Amendment to Stock Purchase Agreement, dated as of September 17, 1998, by and among the Company, James F. Powers, David J. Powers and Michele R. Powers
*10.16	Amended and Restated Loan Agreement, dated as of December 11, 2003, by and between Dover Massachusetts and Fleet National Bank
*10.17	Amendment to Loan Agreement, dated as of December 11, 2003, by and between Dover Massachusetts and Fleet National Bank
*10.18	Amended and Restated Security Agreement, dated as of December 11, 2003, by and between Dover Massachusetts and Fleet National Bank
*10.19	Amended and Restated Pledge Agreement, dated as of December 11, 2003, by and between the Company and Fleet National Bank
*10.20	Shareholder Pledge Agreement, dated as of September 17, 1998, by and among Stephen L. Day, Jonathan A.R. Grylls, David J. Powers, James F. Powers, Michele R. Powers and BankBoston, N.A.
*10.21	Amended and Restated Revolving Credit Note, dated as of December 11, 2003, by Dover Massachusetts for the benefit of Fleet National Bank
*10.22	Letter agreement, dated as of September 16, 2005, by and between Dover Massachusetts and Bank of America, N.A. (successor by merger to Fleet National Bank)
*10.23	Security Agreement, dated as of December 11, 2003, by and between Smith Brothers, Inc. and Fleet National Bank
*10.24	Guaranty, dated as of December 11, 2003, by Smith Brothers, Inc. to Fleet National Bank
*10.25	Redemption Agreement, dated as of August 25, 2005, by and between the Company and Citizens Ventures, Inc.
*10.26	Letter agreement, dated as of September 14, 2005, by and between the Company and Citizens Ventures, Inc., amending that certain Redemption Agreement, dated as of August 26, 2005, by and between the Company and Citizens Ventures, Inc.
*10.27	License Agreement, dated as of February 10, 2003, by and between Weatherbeeta PTY LTD and the Company

Number	Description
*10.28	Settlement Agreement, dated as of December 22, 2003, by and between Libertyville Saddle Shop, Inc. and the Company
†*10.29	Employment Agreement, dated as of September 1, 2005, by and between Stephen L. Day and the Company
†*10.30	Employment Agreement, dated as of September 1, 2005, by and between Jonathan A.R. Grylls and the Company
*10.31	Amended and Restated Subordination Agreement, dated as of September 16, 2005, by and among Bank of America, N.A. (successor by merger to Fleet National Bank), Patriot Capital Funding, Inc. (successor in interest to Wilton Funding, LLC) and Dover Massachusetts, acknowledged by the Company and Smith Brothers, Inc.
*10.32	Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement, dated as of September 16, 2005, by and among the Company, Dover Massachusetts, Smith Brothers, Inc., Patriot Capital Funding, Inc. and the Purchasers referenced therein
*10.33	Amended and Restated Security Agreement, dated as of September 16, 2005, by and among the Company, Dover Massachusetts, Smith Brothers, Inc. and Patriot Capital Funding, Inc.
#†10.34(1)	Amendment No. 1 to the Employment Agreement dated as of September 1, 2005 with Stephen L. Day
#†10.35(2)	Amendment No. 1 to the Employment Agreement dated as of September 1, 2005 with Jonathan A.R. Grylls
#10.36(4)	Second Amendment dated as of March 28, 2006 to Amended and Restated Loan Agreement with Bank of America.
#10.37(5)	Amendment No. 1 dated as of March 28, 2006 to Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement with Patriot Capital Funding, Inc.
^^10.38	Agreement of Lease dated March 29, 2006 by and between the Company and Sparks Lot Seven, LLC
^10.39	Commercial Lease executed as of March 9, 2001 between Marvid Crabyl, LLC and Dover Saddlery, Inc., as amended and extended
^10.40	Stock Purchase Agreement dated as of May 19, 2006 among Dover Saddlery, Inc., Dover Saddlery Retail, Inc., Old Dominion Enterprises, Inc. and Reynolds Young, as amended
^10.41	Lease made as of June, 2006 between Humphrey and Rodgers and Dover Saddlery Retail, Inc.
^10.42	Agreement of Lease for Shopping Center Space between Sequel Investors Limited Partnership and Old Dominion Enterprises, Inc. Dated as of May 20, 1997, as amended
^10.43	LB’s of Virginia Building Lease Agreement dated November 1, 2000, as amended
^10.44	Lease agreement made July 10, 2006 between Hopkins Roads Associates and Dover Saddlery Retail, Inc.
^10.45(6)	Consent and Amendment No. 2, dated June 29, 2006, to Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement with Patriot Capital Funding, Inc.
^10.46(7)	Waiver letter dated as of June 27, 2006 between Bank of America, N.A. and Dover Saddlery, Inc.
#14.1(3)	Code of Business Conduct and Ethics
^21.1	Subsidiaries of the Company
*23.1	Consent of Bingham McCutchen LLP (included in Exhibit 5.1)
**23.2	Consent of Ernst & Young LLP
*23.3	Consent of Preti Flaherty Beliveau Pachios & Haley PLLC (included in Exhibit 5.2)
*24.1	Power of Attorney
^31.1	Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
^31.2	Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
^32.1	Certification by Chief Executive Officer and Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350
*99.1	Consent of William F. Meagher, Jr.

^	Filed herewith
*	Incorporated by reference herein to the exhibits to the Company’s Registration Statement on Form S-1 (File No. 333-127888)
**	Incorporated by reference to the exhibit to the Company’s Registration Statement on Form S-8 on April 3, 2006
#	Filed with the Company’s Annual Report on Form 10-K for the Fiscal Year Ending December 31, 2005, on March 30, 2006
^^	Filed with the Company’s Quarterly Report on Form 10Q for the Fiscal Quarter Ending March 31, 2006, on May 15, 2006
†	Indicates a management contract or compensatory plan or arrangement
(1)	Amends Employment Agreement filed with the Company’s Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.30
(2)	Amends Employment Agreement filed with the Company’s Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.31

(3)	Amends and restates Code of Conduct and Ethics filed with the Company’s Registration Statement on Form S-1/ A on October 2, 2005 as Exhibit 14.1
(4)	Amends Amended and Restated Loan Agreement dated as of December 11, 2003, with Fleet National Bank, filed with the Company’s Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.16
(5)	Amends Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement dated as of September 16, 2005, with Patriot Capital Funding, Inc., filed with the Company’s Registration Statement on Form S-1/A on October 5, 2005 as Exhibit 10.32.
(6)	Amends Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement dated as of September 16, 2005, with Patriot Capital Funding, Inc., filed with the Company’s Registration Statement on Form S-1/A on October 5, 2005 as Exhibit 10.32.
(7)	Pertains to Amended and Restated Loan Agreement dated as of December 11, 2003, with Fleet National Bank, filed with the Company’s Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.16

	Certifications
31.1	Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
31.2	Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
32.1	Certification by Chief Executive Officer and Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350

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, thereunto duly authorized.

	DOVER SADDLERY, INC.
Dated: August 14, 2006	By:	/s/ Michael W. Bruns
		Michael W. Bruns, Chief Financial Officer
		(Principal Financial Officer and Duly Authorized Officer)

DOVER SADDLERY, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2006

EXHIBIT INDEX

*1.1	Form of Underwriting Agreement
*3.1	Amended and Restated Certificate of Incorporation of the Company
*3.2	Certificate of Amendment to Certificate of Incorporation of the Company
*3.3	Second Amended and Restated Certificate of Incorporation of the Company to be filed upon completion of this offering
*3.4	By-laws of the Company
*3.5	Amended and Restated By-laws of the Company to be effective upon completion of this offering
*4.1	Shareholders Agreement, dated as of September 17, 1998, by and among the Company, Stephen L. Day, Jonathan A.R. Grylls, David Post, Donald Motsenbocker, Thomas Gaines, David J. Powers, James F. Powers, and Michele R. Powers
*4.2	First Amendment to Shareholders Agreement, dated as of August 29, 2003, by and among the Company, Stephen L. Day, Jonathan A.R. Grylls, David Post, Thomas Gaines, David J. Powers, James F. Powers, and Michele R. Powers
*4.3	Second Amendment to Shareholders Agreement, dated as of August 25, 2005, by and among a majority in interest of the Purchasers (as defined therein) and a majority in interest of the Sellers (as defined therein)
*4.4	Instrument of accession, dated as of September 16, 2005, signed by Citizens Ventures, Inc. and accepted by the Company, to that certain Shareholders Agreement, dated as of September 17, 1998, by and among the Company and the Shareholders referenced therein, as amended
*4.5	Form of Common Stock Certificate
*4.6	Warrant to purchase common stock of the Company issued to Patriot Capital Funding, Inc.
*4.7	Amended and Restated 11.50% Senior Secured Subordinated Note, dated September 16, 2005, issued jointly by the Company, Dover Massachusetts and Smith Brothers, Inc. to Patriot Capital Funding, LLC I
*5.1	Opinion of Bingham McCutchen LLP
*5.2	Opinion of Preti Flaherty Beliveau Pachios & Haley LLP

*†10.1	1999 Stock Option Plan (the “1999 Plan”)
*†10.2	Form of Stock Option Agreement under the 1999 Plan
*10.3	2005 Equity Incentive Plan (the “2005 Plan”)
*10.4	Form of Stock Option Agreement under the 2005 Plan
*10.5	Form of Restricted Stock Award Agreement under the 2005 Plan
*10.6	Lease, dated as of May 29, 1997, by and between Dover Massachusetts and CE Holman, LLP
*10.7	Lease, dated as of October 12, 2001, by and between David F. Post and Dover Massachusetts
*10.8	Lease, dated as of March 1, 2003, by and between Smith Brothers, Inc. and JDS Properties, LLC
*10.9	Letter dated February 9, 2005 from the Company to JDS Properties, LLC regarding lease extension
*10.10	Lease, dated as of June 22, 2002, by and between Hockessin Square, L.L.C. and Dover Massachusetts
*10.11	Letter dated January 25, 2005 from the Company to Hockessin Square, L.L.C. regarding lease extension
*10.12	Lease, dated as of November 24, 2003, by and between North Conway Holdings, Inc. and Dover Massachusetts
*10.13	Stock Purchase Agreement, dated as of August 14, 1998, by and among the Company, James F. Powers, David J. Powers and Michele R. Powers
*10.14	First Amendment to Stock Purchase Agreement, dated as of August 14, 1998, by and among the Company, James F. Powers, David J. Powers and Michele R. Powers
*10.15	Amendment to Stock Purchase Agreement, dated as of September 17, 1998, by and among the Company, James F. Powers, David J. Powers and Michele R. Powers
*10.16	Amended and Restated Loan Agreement, dated as of December 11, 2003, by and between Dover Massachusetts and Fleet National Bank
*10.17	Amendment to Loan Agreement, dated as of December 11, 2003, by and between Dover Massachusetts and Fleet National Bank
*10.18	Amended and Restated Security Agreement, dated as of December 11, 2003, by and between Dover Massachusetts and Fleet National Bank

*10.19	Amended and Restated Pledge Agreement, dated as of December 11, 2003, by and between the Company and Fleet National Bank
*10.20	Shareholder Pledge Agreement, dated as of September 17, 1998, by and among Stephen L. Day, Jonathan A.R. Grylls, David J. Powers, James F. Powers, Michele R. Powers and BankBoston, N.A.
*10.21	Amended and Restated Revolving Credit Note, dated as of December 11, 2003, by Dover Massachusetts for the benefit of Fleet National Bank
*10.22	Letter agreement, dated as of September 16, 2005, by and between Dover Massachusetts and Bank of America, N.A. (successor by merger to Fleet National Bank)
*10.23	Security Agreement, dated as of December 11, 2003, by and between Smith Brothers, Inc. and Fleet National Bank
*10.24	Guaranty, dated as of December 11, 2003, by Smith Brothers, Inc. to Fleet National Bank
*10.25	Redemption Agreement, dated as of August 25, 2005, by and between the Company and Citizens Ventures, Inc.
*10.26	Letter agreement, dated as of September 14, 2005, by and between the Company and Citizens Ventures, Inc., amending that certain Redemption Agreement, dated as of August 26, 2005, by and between the Company and Citizens Ventures, Inc.
*10.27	License Agreement, dated as of February 10, 2003, by and between Weatherbeeta PTY LTD and the Company

Number	Description
*10.28	Settlement Agreement, dated as of December 22, 2003, by and between Libertyville Saddle Shop, Inc. and the Company
†*10.29	Employment Agreement, dated as of September 1, 2005, by and between Stephen L. Day and the Company
†*10.30	Employment Agreement, dated as of September 1, 2005, by and between Jonathan A.R. Grylls and the Company
*10.31	Amended and Restated Subordination Agreement, dated as of September 16, 2005, by and among Bank of America, N.A. (successor by merger to Fleet National Bank), Patriot Capital Funding, Inc. (successor in interest to Wilton Funding, LLC) and Dover Massachusetts, acknowledged by the Company and Smith Brothers, Inc.
*10.32	Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement, dated as of September 16, 2005, by and among the Company, Dover Massachusetts, Smith Brothers, Inc., Patriot Capital Funding, Inc. and the Purchasers referenced therein
*10.33	Amended and Restated Security Agreement, dated as of September 16, 2005, by and among the Company, Dover Massachusetts, Smith Brothers, Inc. and Patriot Capital Funding, Inc.
#†10.34(1)	Amendment No. 1 to the Employment Agreement dated as of September 1, 2005 with Stephen L. Day
#†10.35(2)	Amendment No. 1 to the Employment Agreement dated as of September 1, 2005 with Jonathan A.R. Grylls
#10.36(4)	Second Amendment dated as of March 28, 2006 to Amended and Restated Loan Agreement with Bank of America.
#10.37(5)	Amendment No. 1 dated as of March 28, 2006 to Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement with Patriot Capital Funding, Inc.
^^10.38	Agreement of Lease dated March 29, 2006 by and between the Company and Sparks Lot Seven, LLC
^10.39	Commercial Lease executed as of March 9, 2001 between Marvid Crabyl, LLC and Dover Saddlery, Inc., as amended and extended
^10.40	Stock Purchase Agreement dated as of May 19, 2006 among Dover Saddlery, Inc., Dover Saddlery Retail, Inc., Old Dominion Enterprises, Inc. and Reynolds Young, as amended
^10.41	Lease made as of June, 2006 between Humphrey and Rodgers and Dover Saddlery Retail, Inc.
^10.42	Agreement of Lease for Shopping Center Space between Sequel Investors Limited Partnership and Old Dominion Enterprises, Inc. Dated as of May 20, 1997, as amended
^10.43	LB’s of Virginia Building Lease Agreement dated November 1, 2000, as amended
^10.44	Lease agreement made July 10, 2006 between Hopkins Roads Associates and Dover Saddlery Retail, Inc.
^10.45(6)	Consent and Amendment No. 2, dated June 29, 2006, to Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement with Patriot Capital Funding, Inc.
^10.46(7)	Waiver letter dated as of June 27, 2006 between Bank of America, N.A. and Dover Saddlery, Inc.
#14.1(3)	Code of Business Conduct and Ethics
^21.1	Subsidiaries of the Company
*23.1	Consent of Bingham McCutchen LLP (included in Exhibit 5.1)
**23.2	Consent of Ernst & Young LLP
*23.3	Consent of Preti Flaherty Beliveau Pachios & Haley PLLC (included in Exhibit 5.2)
*24.1	Power of Attorney
^31.1	Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
^31.2	Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
^32.1	Certification by Chief Executive Officer and Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350
*99.1	Consent of William F. Meagher, Jr.

^	Filed herewith
^^	Filed with the Company’s Quarterly Report on Form 10Q for the Fiscal Quarter Ending March 31, 2006, on May 15, 2006
*	Incorporated by reference herein to the exhibits to the Company’s Registration Statement on Form S-1 (File No. 333-127888)
**	Incorporated by reference to the exhibit to the Company’s Registration Statement on Form S-8 on April 3, 2006
#	Filed with the Company’s Annual Report on Form 10-K for the Fiscal Year Ending December 31, 2005, on March 30, 2006
†	Indicates a management contract or compensatory plan or arrangement
(1)	Amends Employment Agreement filed with the Company’s Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.30
(2)	Amends Employment Agreement filed with the Company’s Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.31

(3)	Amends and restates Code of Conduct and Ethics filed with the Company’s Registration Statement on Form S-1/ A on October 2, 2005 as Exhibit 14.1
(4)	Amends Amended and Restated Loan Agreement dated as of December 11, 2003, with Fleet National Bank, filed with the Company’s Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.16
(5)	Amends Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement dated as of September 16, 2005, with Patriot Capital Funding, Inc., filed with the Company’s Registration Statement on Form S-1/A on October 5, 2005 as Exhibit 10.32.
(6)	Amends Amended and Restated Senior Subordinated Note and Warrant Purchase Agreement dated as of September 16, 2005, with Patriot Capital Funding, Inc., filed with the Company’s Registration Statement on Form S-1/A on October 5, 2005 as Exhibit 10.32.
(7)	Pertains to Amended and Restated Loan Agreement dated as of December 11, 2003, with Fleet National Bank, filed with the Company’s Registration Statement on Form S-1 on August 26, 2005 as Exhibit 10.16

Certifications:

31.1	Certification of Principal Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
31.2	Certification of Principal Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
32.1	Certification by Chief Executive Officer and Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350

EX-10.39

                                                                   EXHIBIT 10.39

                                COMMERCIAL LEASE

1. PARTIES

      MARVID CRABYL, LLC of PO Box 1544, Arlington, MA 02474-0023, Middlesex
County, Massachusetts (the "LANDLORD," which expression shall include its heirs,
successors and assigns where the context so admits), does hereby lease to DOVER
SADDLERY, INC., a Delaware Corporation of PO Box 5837, Holliston, MA 01746 (the
"TENANT," which expression shall include its successors, executor,
administrators and assigns where the context so admits), and the TENANT hereby
leases the following described premises:

2. PREMISES

      The +/- 68,000 sq. ft. office and warehouse building located at 525 Great
Road, Littleton, MA, as shown on the plan [date/title of plan; attached as
Exhibit A], together with all rights of access, parking areas, grounds, and
amenities serving such building (collectively, the "Leased Premises").

3. TERM; RENT

      (a) The terms of this Lease shall be for five years commencing on July 1,
2001 and ending on June 30, 2006. The commencement date of the Lease may be
deferred at TENANT's option until such time as the work described in Paragraphs
22(b) and 22(c) hereof has been accepted and approved by the Town of Littleton
as evidenced by the issuance of a certificate of occupancy.

      (b) The TENANT shall pay to the LANDLORD rent during the term of this
Lease at the rate of Four Hundred Eight Thousand and 00/100 Dollars
($408,000.00) per year payable in advance in monthly installments of Thirty-Four
Thousand and 00/100 Dollars ($34,000.00).

4. OPTION TO RENEW

      TENANT shall have the option to renew this Lease for an additional five
(5) year term, with rent for such renewal term to be set at the lesser of (i)
the rent specified in the preceding Paragraph 3(b), as adjusted by the net
change in the Consumer Price Index between March 1, 2001 and March 1, 2006 or
(ii) at the rate of Four Hundred Seventy-Six Thousand and 00/100 Dollars
$476,000.00) per year payable in advance in monthly installments of Thirty-Nine
Thousand Six Hundred Sixty-Seven and 00/100 Dollars ($39,667.00). TENANT shall
provide LANDLORD with notice of its intention to exercise the option to renew at
least 120 days prior to the expiration of the initial term of this Lease.



5. SECURITY DEPOSIT

      The LANDLORD acknowledges that the TENANT has paid to the LANDLORD the
amount of Thirty-Four Thousand and 00/100 Dollars ($34,000.00)., which shall be
held as a security for the TENANT's performance as herein provided and refunded
to the TENANT at the end of the term of this Lease subject to the TENANT's
satisfactory compliance with the conditions hereof.

6. ADDITIONAL RENT

      The TENANT shall pay to the LANDLORD one hundred percent (100%) of
operating expenses attributable to the Leased Premises, including, but not
limited to, building, liability and fire insurance, building and common area
maintenance (including, but not limited to, septic, HVAC, lawn and grounds
maintenance and snow plowing). TENANT's share of operating expenses is estimated
to be $15,000.00 per year and shall be paid monthly at the rate of $1,250.00,
with actual charges and any net payments or credits to be determined annually,
and estimated payments adjusted accordingly. LANDLORD will provide a detailed
accounting and copies of receipts for all actual operating charges no later than
February 15 of each year.

      The TENANT shall pay one hundred percent (100%) of all real estate taxes
levied against the land and building, of which the Leased Premises are a part;
provided, however, that the real estate tax payment will be prorated for the
first year and the last year of the Lease computed on the basis of the number of
days in each fiscal tax year that the TENANT occupies the Leased Premises.
TENANT shall also pay all water charges. TENANT shall pay all such real estate
tax and water charges no later than twenty (20) days after TENANT's receipt of
the Town of Littleton bills for those charges.

      This is a so-called triple net lease, in that the LANDLORD will be
responsible only for structural or major building, and parking area maintenance
and repairs and the TENANT will be responsible for the payment of all other
expenses related to the Leased Premises.

7. UTILITIES

      The LANDLORD shall provide and TENANT shall pay monthly for all charges
for electric and propane usage attributable to the buildings at the Leased
Premises.

8. USE OF LEASED PREMISES

      The TENANT shall use the Leased Premises only for the purpose of sales,
office and storage space.



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

9. COMPLIANCE WITH LAWS

      The TENANT acknowledges that no trade or occupation shall be conducted at
the Leased Premises or use made thereof which will be unlawful, improper, noisy
or offensive, or contrary to any law or any municipal by-law or ordinance in
force in the city or town in which the Leased Premises are situated. In the
event TENANT receives notice of a violation of law as to its use of the Leased
Premises, then TENANT will be allowed a reasonable period of time to promptly
and diligently contest such violation; provided that if any claim is made
against the property or LANDLORD for such alleged violation, then TENANT will
provide or post such bond or security as is reasonably requested by LANDLORD.

10. FIRE INSURANCE COMPLIANCE

      The TENANT shall not permit any use of the Leased Premises which will make
voidable any insurance on the property of which the Leased Premises are a part
or on the contents of said property or which shall be contrary to any law or
regulation from time to time established by the New England Fire Insurance
Rating Association, or any similar body succeeding to its powers. TENANT will be
promptly given any and all notices received by LANDLORD that affect LANDLORD's
insurance on the Leased Premises and in the event a period of time is given by
an insurance company prior to taking action on LANDLORD's insurance, then TENANT
will be given a reasonable period of time to cure any such matters as long as
TENANT diligently pursues such matters; provided, however, that LANDLORD will at
all times have the right to take all steps necessary to protects its insurance.

11. MAINTENANCE OF PREMISES

      LANDLORD will provide operational electrical, plumbing and HVAC systems
for the Leased Premises. The TENANT agrees (a) to maintain the non-structural
parts of the Leased Premises in the same condition as they are at the
commencement of the term or as they may be put in during the term of this Lease,
reasonable wear and tear, damage by fire and other casualty only excepted, (b)
whenever necessary, to replace plate glass and other glass therein, subject to
the pre-occupancy inspection and any necessary repairs to be made by LANDLORD
under Paragraph 22(f) below, acknowledging that the Leased Premises are now in
good order and the glass whole. The TENANT shall not permit the Leased Premises
to be overloaded, damaged, stripped, or defaced, nor suffer any waste. TENANT
shall obtain written consent of LANDLORD before erecting any sign on the Leased
Premises, which consent will not be unreasonably withheld or delayed. The TENANT
will be responsible for maintaining the electrical and plumbing systems within
the Leased Premises. LANDLORD shall be responsible for maintenance of all
propane tanks and septic systems serving the Leased Premises, and shall be
responsible for all necessary HVAC system replacements or repairs costing more
than $1,000 per occurrence.

                                        3



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

12. ALTERNATIONS; ADDITIONS

      The TENANT shall not make structural alterations or additions to the
Leased Premises, but may make non-structural alterations provided the LANDLORD
consents thereto in writing, which consent shall not be unreasonably withheld or
delayed. All such allowed alterations shall be at TENANT's expense and shall be
in quality at least equal to the present construction. TENANT shall not permit
any mechanic's liens or similar liens to remain upon the Leased Premises for
labor and material furnished to TENANT or claimed to have been furnished to
TENANT in connection with work of any character performed or claimed to have
been performed at the direction of TENANT and shall cause any such lien to be
released of record forthwith without cost to LANDLORD. Any alterations or
improvements made by the TENANT shall become the property of the LANDLORD at the
termination of occupancy as provided herein, except trade fixtures that can be
removed without doing damage to the Leased Premises, or for which TENANT agrees
to repair the damage of removal.

13. ASSIGNMENT; SUBLEASING

      The TENANT shall not assign its rights with respect to the whole or any
part of the Leased Premises without LANDLORD's prior written consent, which will
not be unreasonably withheld or delayed. Notwithstanding any such assignment or
consent, TENANT shall remain liable to LANDLORD for the payment of all rent and
for the full performance of the covenants and conditions of this Lease.

14. SUBORDINATION; ATTORNMENT; NOTICE OF LEASE

      This Lease shall be subject and subordinate to any and all mortgages,
deeds of the trust and other instruments in the nature of a mortgage, now or at
any time hereafter, or lien or liens on the property of which the Leased
Premises are a part and the TENANT shall, when requested, promptly execute and
deliver such written instruments as shall be necessary to confirm the
subordination of this Lease and to said mortgages, deeds of trust or other such
instruments in the nature of a mortgage. With respect to any mortgages that
LANDLORD has granted or hereafter grants on the Leased Premises, LANDLORD shall
secure the written attornment or account of the mortgagee that TENANT's
possession will not be disturbed as long as TENANT is in full and faithful
performance of its obligations hereunder and that in the event that such
mortgagee becomes the owner through foreclosure or offering if TENANT is not in
default hereunder, accept TENANT as tenant under this Lease and TENANT agrees to
accept mortgagee or its successor as LANDLORD. LANDLORD and TENANT will deliver
and execute appropriate instruments required to effectuate the provisions of
this paragraph. Upon execution of this Lease, LANDLORD shall execute and deliver
to TENANT a "Notice of Lease," suitable for recording, in substantially the form
attached as Exhibit B.

                                        4



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

15. LANDLORD'S ACCESS

      The LANDLORD or agents of the LANDLORD may, at reasonable times, during
regular business hours after no less than twenty-four (24) hours notice to
TENANT, enter to view the Leased Premises and may remove placards and signs not
approved and affixed as herein provided, and make repairs as LANDLORD should
elect to do and may show the leased premise to others, and at any time within
six (6) months before the expiration of the term, may affix to any suitable part
to the Leased Premises a notice for letting or selling the Leased Premises or
property of which the Leased Premises are a part and keep the same so affixed
without hindrance to molestation. If emergency conditions exist then LANDLORD
will not be required to have notice of LANDLORD's entry for purpose of repairs.

16. INDEMNIFICATION AND LIABILITY

      (a) The TENANT shall indemnify and save the LANDLORD harmless from all
loss and damage suffered on the Leased Premises due to any act, omission or
neglect of TENANT or TENANT's employees, agents or invitees. The removal of snow
and ice from the sidewalks bordering upon the Leased Premises shall be the
TENANT's responsibility as herein provided.

      (b) The LANDLORD shall indemnify and hold the TENANT harmless from all
loss and damage suffered on the Leased Premises due to any act, omission or
neglect of LANDLORD or LANDLORD's employees, agents or invitees.

17. TENANT'S LIABILITY INSURANCE

      The TENANT shall maintain with respect to the Leased Premises all-risk
casualty insurance with comprehensive public liability insurance in the amount
of ONE MILLION DOLLARS ($1,000,000.00) and property damage insurance in the
amount of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) with responsible companies
qualified to do business in Massachusetts and in good standing therein insuring
the LANDLORD as well as TENANT against injury to persons or damage to property
as provided. The TENANT shall deposit with the LANDLORD certificates for such
insurance at or prior to the commencement of the term of this Lease, and
thereafter within thirty (30) days prior to the expiration of any such policies.
All such insurance certificates shall provide that such policies shall not be
canceled without at least ten (10) days prior written notice to each insured
named therein.

18. LANDLORD'S OBLIGATION TO INSURE; FIRE, CASUALTY; EMINENT DOMAIN

      The LANDLORD will insure the building of which the Leased Premises are a
part for its full replacement value. Should a substantial portion of the Leased
Premises, or of the property of which they are a part, be substantially damaged
by fire or other casualty or be taken by eminent

                                        5



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

domain, the LANDLORD may elect to terminate this Lease. When such fire,
casualty, or taking renders the Leased Premises substantially unsuitable for
their intended use, a just and proportionate abatement of rent shall be made,
and the TENANT may elect to terminate this Lease if:

      (a) The LANDLORD fails to give written notice within thirty (30) days of
      intention to restore the Leased Premises; or (b) the LANDLORD fails to
      restore the Leased Premises to a condition substantially suitable for its
      intended use within ninety (90) days of said fire, casualty, or taking.

The LANDLORD reserves, and the TENANT grants to the LANDLORD, all rights which
the TENANT may have or damages or injury to the Leased Premises for any taking
by eminent domain, except for damage to the TENANT's fixtures, property or
equipment and any awards that would be made to TENANT for relocation.

19. DEFAULT AND BANKRUPTCY

      In the event that:

      (a) The TENANT shall default in the payment of any installment of rent or
      other sum herein specified and such default shall continue for ten (10)
      days after written notice thereof; or

      (b) The TENANT shall default in the observance or performance of any other
      of the TENANT's covenants, agreements, or obligations hereunder and such
      default shall not be corrected within thirty (30) days after written
      notice thereof; provided however, that the TENANT will be given such
      reasonable extensions of time as are necessary to cure if after the
      TENANT's receipt of the initial notice of default TENANT has taken prompt
      steps to cure such default and has diligently pursued the curing of such
      default and continues to do so; or

      (c) The TENANT shall be declared bankrupt or insolvent according to law,
      or if any assignment shall be made of TENANT's property for the benefit of
      creditors, and not discharged within thirty (30) days;

then the LANDLORD shall have the right thereafter, while such default continues,
to re-enter and take complete possession of the Leased Premises, to declare the
term of this Lease ended, and to remove the TENANT's effects, without prejudice
to any remedies which might be otherwise used for arrears or rent or other
default. The TENANT shall indemnify the LANDLORD against all loss of rent and
other payments which the LANDLORD may incur by reason of such termination during
the residue of the term. If the TENANT shall default, after reasonable notice
thereof, in the observance or performance of any conditions or covenants on

                                        6



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

TENANT's part to be observed or performed under or by virtue of any of the
provisions in any article of this Lease, the LANDLORD, without being under any
obligation to do so and without waiving such default, may remedy such default
for the account and at the expense of the TENANT. If the LANDLORD makes any
expenditures or incurs any obligations for the payment of money in connection
therewith, including but not limited to, reasonable attorney's fees in
instituting, prosecuting or defending any action or proceeding, such sums paid
or obligations incurred, with interest at the rate of six percent (6%) per annum
and costs, shall be paid to the LANDLORD by the TENANT as additional rent.

20. NOTICE

      Any notice from the LANDLORD to the TENANT relating to the Leased Premises
or the occupancy thereof, shall be deemed duly served only if mailed to the
president or the controller of the TENANT at PO Box 5837, Holliston, MA 01746
(until June 30, 2001), and thereafter to 525 Great Road, Littleton, MA 01460,
via registered or certified mail, return receipt requested, postage prepaid,
addressed to the TENANT. Any notice from the TENANT to the LANDLORD relating to
the Leased Premises or to the occupancy thereof, shall be deemed duly served,
only if mailed to the LANDLORD by registered or certified mail, return receipt
requested, postage prepaid, addressed to the LANDLORD at such address as the
LANDLORD may from time to time advise in writing. All rent and notices shall be
paid and sent to the LANDLORD c/o Marvid Crabyl, LLC, PO Box 1544, Arlington, MA
02472-0023.

21. SURRENDER

      The TENANT shall at the expiration or other termination of this Lease,
remove all TENANT's goods and effects from the Leased Premises (including,
without hereby limiting the generality of the foregoing, all signs and lettering
affixed or painted by the TENANT, either inside or outside the Leased Premises).
TENANT shall deliver to the LANDLORD the Leased Premises and all keys, locks
thereto, and other fixtures (excepting however TENANT's trade fixtures,
machinery and furniture), connected therewith and all alterations and additions
made to or upon the Leased Premises, in the same conditions as they were at the
commencement of the term, or as they were put in during the term hereof,
reasonable wear and tear and damage by fire or other casualty only excepted. In
the event of the TENANT's failure to remove any of TENANT's property from the
premises upon expiration of term or other termination, LANDLORD is hereby
authorized, without liability to TENANT for loss or damage thereto, and at the
sole risk of TENANT, to remove and store any of the property at TENANT's
expense, or to retain same under LANDLORD's control or to sell at public or
private sale, without notice, any or all of the property not so removed and to
apply the net proceeds to such sale to the payment of any sum due hereunder, or
to destroy such property. LANDLORD is aware that certain of TENANT's tangible
property is subject to a security interest in favor of TENANT's bank lender.

                                        7



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

22. OTHER PROVISIONS

      (a) EXPANSION OF PARKING AREA. On or before July 1, 2001, and subject to
any necessary approvals from the Town of Littleton (which LANDLORD shall use its
best efforts to timely obtain), LANDLORD shall expand the parking area for the
Leased Premises to accommodate parking for a total of 100 employees, at
LANDLORD's expense. LANDLORD will use its best efforts to locate such parking in
the front of the building on the side facing Route 119.

      (b) EXPANSION/RELOCATION OF SEPTIC SYSTEM. On or before July 1, 2001, and
subject to any necessary approval from the Nashoba Board of Health and Town of
Littleton (which approvals LANDLORD shall use its best efforts to timely
obtain), LANDLORD shall expand and/or relocate the existing septic system for
the Leased Premises to accommodate 100 employees, at LANDLORD's expense.

      (c) INTERIOR/EXTERIOR IMPROVEMENTS. LANDLORD will provide up to $210,000
to be used by TENANT to make interior and exterior improvements to the property,
in accordance with the plan and specifications attached as Exhibit C. TENANT
will specify the work to be done to Wayne Hinckley, general contractor, who will
complete the work in a manner satisfactory to LANDLORD and TENANT. Contractor
will present bills approved by TENANT to LANDLORD who will pay all such approved
bills up to the sum of $210,000. LANDLORD acknowledges and agrees that no
portion of said $210,000 shall be used toward payment of the parking lot
expansion, septic system expansion or relocation, or 32,000 s.f. building
expansion to be completed by LANDLORD under subparagraphs a, b, or e of this
Paragraph 22.

      (d) PRE-OCCUPANCY INSPECTION; DELIVERY OF LEASED PREMISES. On or before
June 1, 2001, LANDLORD and TENANT, together with any consultants they may
designate, shall do a joint "walk-through" inspection of the Leased Premises, to
confirm and agree upon the condition of the Leased Premises and any necessary
"punch list" items that will be completed at LANDLORD's expense. At the
commencement of the term of the Lease, LANDLORD shall have completed any such
punch list tasks in a workman like manner, and shall deliver possession of the
building and building systems, including the present HVAC, mechanical, and
electric, roof, exterior, and structure to TENANT in sound condition and good
working order.

      (e) EXPANSION OF BUILDING BY 32,000 S.F. On one occasion during the term
of this Lease, and subject to any necessary approvals from the Town of Littleton
or other authorities (which approvals LANDLORD shall use its best efforts to
timely obtain), upon the written request of TENANT, LANDLORD shall, at
LANDLORD's expense, expand the building to a maximum total area of 100,000 s.f.,
in accordance with plans to be presented and approved by TENANT prior to the
commencement of such construction. TENANT's one request shall be

                                        8



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

for an expansion of no less than 16,000 s.f. and no more than 32,000 s.f.

At least 10% of the additional space shall be designed as office space. Upon
completion of and TENANT's occupancy of the additional space, the term of the
Lease will be extended to provide at minimum a five year term. TENANT's monthly
rent will be increased commensurate with the increase in the square footage of
the Leased Premises. In the event TENANT's request for an expansion is made
during the renewal term described in Paragraph 4 and LANDLORD is unable or
unwilling to complete the expansion within fifteen (15) months of TENANT's
written notice, and notwithstanding anything in this Lease to the contrary,
TENANT shall have the right, upon six (6) months written notice to LANDLORD, to
terminate this Lease.

      (f) TENANT will provide LANDLORD with the first month's rent and security
deposit upon execution of this Lease.

23. QUIET ENJOYMENT

      LANDLORD covenants and agrees with TENANT that upon TENANT's ayment of
said rent and performing all of the covenants and conditions aforesaid on
TENANT's part to be observed and performed, TENANT shall and may peaceably and
quietly have, hold and enjoy the Leased Premises hereby leased, for the term
aforesaid, subject however, to the terms of any mortgage on the premises.

   (Remainder of this page intentionally left blank; signature page follows.)

                                        9



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

IN WITNESS WHEREOF, the LANDLORD and TENANT have hereto set their hands and
common seals this 9th day of March 2001.

WITNESS:                                    LANDLORD:

                                            /s/ Craig A. Foster
____________________________                ------------------------------------
                                            CRAIG A. FOSTER, MANAGER
                                            MARVID CRABYL, LLC

WITNESS:                                    TENANT:

                                            /s/ Stephen L. Day
____________________________                ------------------------------------
                                            STEPHEN L. DAY, PRESIDENT
                                            DOVER SADDLERY, INC.

                                       10



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

                                    EXHIBIT A
                                    TO LEASE

                            [Plan of Leased Premises]



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

                                                           Exhibit B To Lease of
                                                   525 Great Road, Littleton, MA

                                 NOTICE OF LEASE

      In accordance with the provisions of M.G.L. c. 183, Section 4, as amended,
notice is hereby given of the following described lease:

Parties to Lease:

         LANDLORD:           Marvid Crabyl, LLC
                             P.O. Box 1544
                             Arlington, MA 02474-0023

         TENANT:             Dover Saddlery, Inc.
                             P.O. Box 5837
                             Holliston, MA 01746

         DATE OF EXECUTION:  March 9, 2001

         DESCRIPTION OF
         LEASED PREMISES:    Approximately 68,000 square feet of office space
                             located at 525 Great Road, Littleton, Massachusetts

         TERMS OF LEASE:     Five (5) years commencing on July 1, 2001 and
                             ending on June 30, 2006, with option to renew for
                             an additional five (5) year term

         LANDLORD'S TITLE:   Book 27731, Page 277, South Middlesex County
                             Registry of Deeds.

      IN WITNESS WHEREOF, we have hereunto set our hands and seals this ________
day of ___________ 2001.

                                              MARVID CRABYL, LLC

                                       By:    ___________________________
                                              Craig A. Foster, Manager



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

                                              DOVER SADDLERY, INC.

                                       By:    ___________________________
                                              Stephen L. Day, President

                          COMMONWEALTH OF MASSACHUSETTS

Middlesex, ss.                                                ____________, 2001

      Then personally appeared Craig A. Foster, authorized Manager of Marvid
Crabyl, LLC, who acknowledged the foregoing to be his free act and deed and that
of Marvid Crabyl, LLC.

                                              __________________________________
                                              Notary Public
                                              Miss Commission Expires:

                          COMMONWEALTH OF MASSACHUSETTS

Middlesex, ss.                                                ____________, 2001

      Then personally appeared Stephen L. Day, President of Dover Saddlery,
Inc., a Delaware corporation, who acknowledged the foregoing to be his free act
and deed and that of Dover Saddlery, Inc.

                                              __________________________________
                                              Notary Public
                                              Miss Commission Expires:



Marvid Crabyl, LLC/Dover Saddlery, Inc. Commercial Lease

                                    EXHIBIT C
                                    TO LEASE

                          [Description of Improvements]


                              DOVER SADDLERY, INC.

                                 LEASE AMENDMENT

                                     BETWEEN

                               MARVIN CRABYL, LLC

                                       AND

                              DOVER SADDLERY, INC.

                                 MARCH 31, 2004



                                 LEASE AMENDMENT

      Reference is hereby made to the lease between Marvin Crabyl, LLC (the
"Lessor") and Dover Saddlery, Inc. (the "Lessee") dated March 9, 2001 (as the
same may have been amended from time to time, the "Lease") and for good and
valuable consideration, the receipt and sufficiency of which is hereby mutually
acknowledged, do hereby agree as follows:

      1. The parties hereby agree that the effective "Commencement Date" of the
Lease as that term may be defined in the Lease is and shall be for all purposes,
October 1, 2001.

      2. The parties agree that the Lessee shall for all purposes be deemed to
have taken occupancy of an additional 32,000 square feet of the Premises, as
that term is defined in the Lease, effective as of April 1, 2004 and that the
Lessee's total occupancy under the Lease as of April 1, 2004 was and shall be
100,000 square feet.

      3. All other terms and conditions of the Lease, except as specifically
modified hereby, shall remain in full force and effect.

DATED: March 31, 2004

                                       MARVID CRABYL, LLC ("Lessor")

                                       By  /s/ Craig A. Foster
                                           -------------------------------------
                                           Craig A. Foster
                                           Its Manager

                                       DOVER SADDLERY, INC. (Lessee")

                                       By  /s/ Stephen L. Day
                                           -------------------------------------
                                           Its President


                              DOVER SADDLERY, INC.

                           LEASE AMENDMENT (EXTENSION)

                                     BETWEEN

                               MARVIN CRABYL, LLC

                                       AND

                              DOVER SADDLERY, INC.

                                    JULY 2006



                                 LEASE AMENDMENT

      Reference is hereby made to the lease between Marvin Crabyl, LLC (the
"Lessor") and Dover Saddlery, Inc. (the "Lessee") dated March 9, 2001 (as the
same may have been amended from time to time, the "Lease") and for good and
valuable consideration, the receipt and sufficiency of which is hereby mutually
acknowledged, do hereby agree as follows:

      1. The parties hereby agree that the effective "Commencement Date" of the
Lease as that term may be defined in the Lease is and shall be for all purposes,
October 1, 2001.

      2. The parties agree that the Lessee shall for all purposes be deemed to
have taken occupancy of an additional 32,000 square feet of the Premises, as
that term is defined in the Lease, effective as of April 1, 2004 and that the
Lessee's total occupancy under the Lease as of April 1, 2004 was and shall be
100,000 square feet.

      3. The parties agree that the initial term of the Lease shall expire
effective September 30, 2006 and that the Tenant has provided notice to the
Landlord of its intent to renew for an additional five (5) year term commencing
on October 1, 2006 and ending on September 30, 2011. Base rent for said renewal
terms shall be equal to $664,000 per year, payable monthly, in advance in the
amount of $55,333 per month, representing the original base rent adjusted by the
parties' estimate of a percentage equal to the net change in the Consumer Price
Index between September 30, 2001 and September 30, 2006.

      4. The Tenant shall, so long as it is not in default of any of its
obligations under the Lease, have two additional five year options to extend the
Lease through September 30, 2016 and September 30, 2021, respectively. The base
rent for each extension term shall be the base rent for the term prior to such
renewal increased by a percentage equal to the net change in the Consumer Price
Index during the term immediately prior to the renewal. The Tenant shall provide
the Landlord with written notice of its intention to extend the term of the
Lease not less than one hundred and twenty (120) days prior to the expiration
date of any extended term of the Lease.



      5. All other terms and conditions of the Lease, including without
limitation, provisions regarding additional rent, except as specifically
modified hereby, shall remain in full force and effect.

DATED:   July     , 2006

                                   MARVID CRABYL, LLC ("Lessor")

                                   By  /s/ Craig A. Foster
                                       -----------------------------------------
                                       Craig A. Foster
                                       Its Manager

                                   DOVER SADDLERY, INC. (Lessee")

                                   By  /s/ Stephen L. Day
                                       ----------------------------------------
                                       Its President

EX-10.40

                                                                   EXHIBIT 10.40

                            STOCK PURCHASE AGREEMENT

                            DATED AS OF MAY 19, 2006

                                      AMONG

                              DOVER SADDLERY, INC.

                           DOVER SADDLERY RETAIL, INC.

                         OLD DOMINION ENTERPRISES, INC.

                                       AND

                                 REYNOLDS YOUNG



                                TABLE OF CONTENTS



                                                                                      Page
                                                                                   
       Definitions                                                                     1
 1.0   Purchase and Sale of Stock                                                      5
 1.1   Inventory                                                                       5
 2.0   Consideration                                                                   5
 2.1   Adjustment of Purchase Price                                                    5
 2.2   Adjustment Procedures                                                           6
 3.0   Escrow Accounts                                                                 7
 4.0   Closing                                                                         9
 4.1   Documents to be Delivered by Seller                                            10
 4.2   Documents to be Delivered By Buyer to Seller                                   10
 4.3   Documents to be Delivered by Seller, Buyer and Escrow Agent to Each Other      10
 4.4   Form and Substance of Documents                                                10
 5.0   Representations and Warranties by Seller                                       10
 5.1   Corporate Organization                                                         11
 5.2   Capitalization; Stock Ownership                                                11
 5.3   Subsidiaries and Other Equity Investments                                      11
 5.4   Authorization of Agreement; No Violation                                       11
 5.5   Financial Statements                                                           12
 5.6   No Undisclosed Liabilities, Etc.                                               12
 5.7   Absence of Certain Changes                                                     13
 5.8   Title to and Consolidation of Properties and Assets                            15
 5.9   Certain Properties                                                             15
5.10   Tax Matters                                                                    16
5.11   Contracts                                                                      18
5.12   Litigation                                                                     19
5.13   Patents and Trademarks                                                         19
5.14   Compliance with Laws                                                           19
5.15   Environmental Matters                                                          20
5.16   Governmental Authorizations and Regulations                                    21
5.17   SEC and Antitrust Filings                                                      22
5.18   Employee Benefit Plans and Arrangements                                        22
5.19   Certain Transactions                                                           26
5.20   Foreign Corrupt Practices Act                                                  26
5.21   Accounting Practices                                                           26
5.22   Minute Books                                                                   26
5.23   Insurance                                                                      26
5.24   Bank Accounts; Powers of Attorney                                              27
5.25   Product Warranties                                                             27
5.26   Certain Disclosures                                                            27


                                        i



                                                                                   
5.27   Brokers                                                                        27
5.28   No Untrue Statements                                                           27
 6.0   Representations and Warranties to Buyer                                        28
 6.1   Corporate Organization                                                         28
 6.2   Authorization of Agreement                                                     28
 6.3   Litigation                                                                     28
 6.4   Brokers                                                                        28
 6.5   Investment Representation                                                      28
 6.6   Financing                                                                      29
 6.7   No Untrue Statements                                                           29
 7.0   Covenants of Seller                                                            29
 7.1   Access, Information and Documents                                              29
 7.2   Conduct of Business Pending Closing                                            29
 7.3   Financial Statements and Certificate                                           31
 7.4   Cooperation with Respect to Financing                                          32
 7.5   Consents and Approvals                                                         32
 7.6   Resignation of Directors                                                       32
 7.7   Use of Name                                                                    32
 7.8   Exclusive Dealing                                                              32
 7.9   Non-Competition Agreements                                                     32
 8.0   Covenants of Buyer                                                             33
 8.1   Confidential Information                                                       33
 8.2   No Disclosure of Consideration                                                 33
 8.3   Consents and Approvals                                                         33
 8.4   No Unreasonable Interference                                                   33
 8.5   Burbank Business                                                               33
 9.0   Conditions Precedent to Seller's Obligation to Sell the Stock                  34
 9.1   Buyer's Performance                                                            34
 9.2   Opinion of Counsel                                                             34
 9.3   Consents and Approvals                                                         35
 9.4   10A Conditions                                                                 35
10.0   Conditions Precedent to Buyer's Obligations to Purchase the Stock              35
10.1   Seller's Performance                                                           35
10.2   Limited Procedures Report                                                      36
10.3   Due Diligence Investigation and Acquisition Audit                              36
10.4   Opinion of Counsel                                                             36
10.5   Consents and Approvals                                                         37
10.6   Properties and Leases                                                          37
10.7   Retention of Key Employees                                                     37
10.8   Resignation of Directors                                                       37
10.9   10A Conditions                                                                 37
11.0   Termination                                                                    38



                                       ii



                                                                                    
 11.1   Termination by Buyer                                                           38
 11.2   Termination by Seller                                                          39
 11.3   Effect of Termination                                                          38
 12.0   Intentionally Omitted                                                          39
 13.0   Survival of Representations and Warranties; Indemnification                    39
 13.1   Seller's Indemnification Obligations                                           39
 13.2   Limitation on Seller's Indemnification Obligations                             40
 13.3   Buyer's Indemnification Obligations                                            40
 13.4   Limitation on Buyer's Indemnification Obligations                              40
 13.5   Guaranty of Parent                                                             40
 13.6   Procedure of Indemnification Claims                                            40
 13.7   Insurance Tax Effects                                                          42
 13.8   Sole and Exclusive Remedy                                                      42
 14.0   Miscellaneous                                                                  43
 14.1   Assurance of Further Action                                                    43
 14.2   Expenses                                                                       43
 14.3   Public Disclosure                                                              43
 14.4   Waiver                                                                         43
 14.5   Notices                                                                        43
 14.6   Entire Agreement                                                               44
 14.7   Rights Under this Agreement; Nonassignability                                  44
 14.8   Governing Law                                                                  44
 14.9   Headings, References to Sections; Exhibits and Schedules                       44
14.10   Counterparts                                                                   44



                                       iii



                            STOCK PURCHASE AGREEMENT

      AGREEMENT dated as of this 19th day of May, 2006 among Dover Saddlery,
Inc., a corporation organized under the laws of the State of Delaware
("Parent"), Dover Saddlery Retail, Inc., a corporation organized under the laws
of the Commonwealth of Massachusetts ("Buyer"), Old Dominion Enterprises, Inc.
dba "Dominion Saddlery," a Virginia corporation (the "Company"), and Reynolds
Young ("Seller").

      WHEREAS Seller owns all of the outstanding shares of capital stock of
Company, and is only interested in selling such capital stock in a transaction
taxable as a long-term capital gain under Internal Revenue Code Section 1222(3);
and

      WHEREAS Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, all of the outstanding capital stock of the Company not otherwise
redeemed, all upon the terms and conditions hereinafter set forth.

      NOW, THEREFORE, the parties hereto agree as follows:

DEFINITIONS:

            Whenever they are used in, or in implementation of, this Agreement
with initial capital letters, the following terms have the definitions
hereinafter indicated:

            "ADJUSTMENT AMOUNT" shall have the meaning set forth in Section
2.1(A) hereof.

            "AGGRIEVED PARTY" shall have the meaning set forth in Section 13.4
hereof.

            "ASSUMED LIABILITIES" shall have the meaning set forth in Schedule
1.1.

            "BUYER" means Dover Saddlery Retail, Inc.

            "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9604, et seq.), as amended,
and rules, regulations, standards, guidelines and publications issued
thereunder.

            "CHARGES" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental taxes, levies, assessments and charges,
liens, claims or encumbrances upon or relating to (i) the Company's employees,
payroll, income or gross receipts; (ii) the Company's ownership or use of any of
its assets; or (iii) any other aspect of the Company's business, in each case
including any and all interest and penalties.

            "CLOSING" shall have the meaning set forth in Section 4.0 hereof.

                                        1



            "CLOSING DATE" shall have the meaning set forth in Section 4.0
hereof.

            "CLOSING DATE INVENTORY VALUE" shall have the meaning set forth in
Section 1.1 hereof.

            "CLOSING DATE TARGET ASSET AMOUNT" shall mean the amount equal to
(A) the sum of (i) the Closing Date Inventory Value, plus (ii) all cash,
accounts receivable, and deposits (up to $20,400) of the Company set forth on
the Closing Date Balance Sheet, minus (B) the sum of (i) up to $200,000 accounts
payable of the Company set forth on the Closing Date Balance Sheet, plus (ii) up
to $20,000 in store credits and gift certificates, in each case determined in
accordance with generally accepted accounting principles applied on a basis
consistent with Seller's past practices and policies in the preparation of the
Company's financial statements (except as otherwise noted therein).

            "CLOSING FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 2.2 hereof.

            "CODE" means the Internal Revenue Code of 1986, as amended.

            "COMPANY" means Old Dominion Enterprises, Inc. dba "Dominion
Saddlery."

            "CONDITION" means any condition, which results in or otherwise
relates to any Environmental Liability.

            "ENVIRONMENTAL LIABILITIES" means any obligations or liabilities
(including any notices, claims, complaints, suits or other assertions of
obligations or liabilities) that are:

            (a)   related to environmental, health or safety issues (including
                  on-site or off-site contamination by Pollutants of surface or
                  subsurface soil or water, and occupational safety and health);
                  and

            (b)   based upon or related to (i) any provision of past, present or
                  future United States or foreign Environmental Law (including
                  CERCLA and RCRA) or common law, or (ii) any judgment, order,
                  writ, decree, permit or injunction imposed by any court,
                  administrative agency, tribunal or otherwise.

            The term "Environmental Liabilities" includes: (A) fines, penalties,
judgments, awards, settlements, losses, damages, costs, fees (including
attorneys' and consultants' fees), expenses and disbursements; (B) defense and
other responses to any administrative or judicial action (including notices,
claims, complaints, suits and other assertions of liability); and (C) financial
responsibility for (1) cleanup costs and injunctive relief, including any
Removal, Remedial or other Response actions, and natural resource damages, and
(2) any other compliance or remedial measures.

                                       2



            "ENVIRONMENTAL LAWS" means all United States and foreign federal,
state and local laws, statutes, rules, regulations, ordinances, codes, orders,
requirements, standards, guidelines, and the like, which address, are related
to, or are otherwise concerned with environmental, health or safety issues
(including occupational safety and health).

            "ESCROW AGENT" means Preti Flaherty, PLLP.

            "ESCROW AGREEMENT" means the Escrow Agreement dated the date hereof
by and among Buyer, Seller and the Escrow Agent, in the form attached hereto as
EXHIBIT A.

            "INDEMNIFYING PARTY" shall have the meaning set forth in Section
13.4 hereof.

            "KNOWLEDGE" of Seller shall include (i) the actual knowledge of the
Seller and Virginia Davis Young Newton and (ii) those matters which the Seller
or Virginia Davis Young Newton could reasonably be expected to become aware of
in the course of conducting a reasonably comprehensive investigation of the
representations and warranties contained in this Agreement.

            "MANAGE" AND "MANAGEMENT" mean generation, production, handling,
distribution, processing, use, storage, treatment, operation, transportation,
recycling, reuse and/or disposal, as those terms are defined in CERCLA, RCRA and
other Environmental Laws (including as those terms are further defined,
construed, or otherwise used in rules, regulations, standards, guidelines and
publications issued pursuant to, or otherwise in implementation of, such
Environmental Laws).

            "MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, operations, liabilities, properties, assets or financial condition of
the Company; provided that none of the following shall be deemed to constitute,
and none of the following shall be taken into account in determining whether
there has been, or would reasonably be expected to be, a Material Adverse
Effect: any adverse change, event, development, or effect (a) arising from or
relating to general business or economic conditions, including any change event,
development or effect relating to any war, acts of terrorism or similar events,
unless such change, event, development or effect disproportionately affects the
Company, or (b) primarily and proximately resulting from the announcement of the
transactions contemplated by this Agreement.

            "PARENT" means Dover Saddlery, Inc.

            "POLLUTANT" includes any "hazardous substance" and any "pollutant or
contaminant" as those terms are defined in CERCLA; any "hazardous waste" as that
term is defined in RCRA; and any "hazardous material" as that term is defined in
the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), as
amended (including as those terms are further defined, construed, or otherwise
used in rules, regulations, standards, guidelines and publications issued
pursuant to, or otherwise in implementation of, said Environmental Laws); and
including without

                                       3



limitation any petroleum product or byproduct, solvent, flammable or explosive
material, radioactive material, asbestos, polychlorinated biphenyls (PCBs),
dioxins, dibenzofurans, heavy metals, and radon gas; and including any other
substance or material that is reasonably determined to present a threat, hazard
or risk to human health or the environment.

            "PURCHASE PRICE" shall have the meaning set forth in Section 2.0
hereof.

            "QUALIFIED PLAN" shall have the meaning set forth in Section 5.18(C)
hereof.

            "RCRA" means the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), as amended, and all rules, regulations, standards,
guidelines and publications issued thereunder.

            "REAL PROPERTIES" shall have the meaning set forth in Section 5.9
hereof.

            "RECEIVABLES" shall have the meaning set forth in Section 12.0(A)
hereof.

            "RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, placing,
discarding, abandonment, or disposing into the environment (including the
placing, discarding or abandonment of any barrel, container or other receptacle
containing any Pollutant or other material).

            "REMOVAL," "REMEDIAL" AND "RESPONSE" actions include the types of
activities covered by CERCLA, RCRA, and other comparable Environmental Laws, and
whether the activities are those which might be taken by a government entity or
those which a government entity or any other person might seek to require of
waste generators, handlers, distributors, processors, users, storers, treaters,
owners, operators, transporters, recyclers, reusers, disposers, or other persons
under "removal," "remedial," or other "response" actions.

            "SELLER" means Reynolds Young.

            "UST" means an underground storage tank, including as that term is
defined, construed and otherwise used in RCRA and in rules, regulations,
standards, guidelines and publications issued pursuant to RCRA and comparable
state and local laws.

            1.0 Purchase and Sale of Stock: Upon the terms and provisions of
this Agreement, Buyer agrees to purchase and accept delivery from Seller of, and
Seller agrees to sell, assign transfer and deliver to Buyer, at the Closing, the
number of capital stock of the Company set

                                       4



forth below opposite such Seller's name, free and clear of all liens, claims,
charges, restrictions or encumbrances of any kind:

      Seller:                        Number of Shares:
      -------                        -----------------
      Reynolds Young                 50,000 common shares (100% equity interest)

      The shares of Common Stock of the Company set forth above to be sold by
Seller to Buyer, constituting all of the outstanding shares of capital stock of
the Company, are hereinafter collectively called the "Stock."

      Notwithstanding the sale of the Stock, the Seller agrees to assume certain
liabilities of the Company set forth in SCHEDULE 1.1 (the "Assumed Liabilities")
and to indemnify the Buyer and the Company with respect thereto.

      1.1 Inventory: Immediately prior to Closing, RGIS Inventory Specialists or
another inventory specialist mutually agreeable to Buyer and Seller shall
perform a complete physical inventory of the Company's assets to determine (i)
the value of the Company's saleable inventory, (the "Closing Date Inventory
Value") (ii) the value of those items within the Company's inventory as of the
Closing Date that are presently sold by the Buyer through its mail order
catalog, and (iii) the value of those items within the Company's inventory as of
the Closing Date that are NOT presently sold by the Buyer through its mail order
catalog (the "non-Dover Inventory"). The Closing Date Inventory Value shall be
based on the Company's acquisition cost, meaning the invoice price for each item
without regard to any rebates, advertising allowances or similar credits or
amounts payable by the applicable vendor. Each of Buyer and Seller shall have
the right to have a representative present at such inventory and shall jointly
supervise such inventory. Buyer and Seller shall each be responsible for payment
of fifty percent (50%) of the fees and expenses of RGIS Inventory Specialists.

      2.0 Consideration: Buyer, at the Closing, will pay $1,625,000 in cash (the
"Purchase Price") to Seller. The Purchase Price is subject to adjustment as set
forth in Section 2.1 below. The Purchase Price shall be paid to Seller with a
portion placed in escrow as set forth in Section 3.0 below.

      2.1 Adjustment of Purchase Price: The Purchase Price set forth in Section
2.0 above shall be adjusted in the following manner:

            (A)   Based in part on the inventory calculations determined under
                  Section 1.1, the Purchase Price set forth above will be
                  adjusted to account for any variation in the Closing Date
                  Target Asset Amount from $1,000,400. If the Company's Closing
                  Date Target Asset Amount is less than $1,000,400, then the
                  Purchase Price will be reduced by the amount of the
                  difference. If the Company's Closing Date Target Asset Amount
                  is

                                       5



                  greater than $1,000,400, then the Purchase Price will be
                  increased by the difference. The adjustment pursuant to this
                  Section 2.1(A) (the "Adjustment Amount") shall be made on a
                  dollar for dollar basis.

      2.2 Adjustment Procedures:

            (A)   Buyer will cause certified public accountants selected by it
                  to prepare a balance sheet of the Company as of the Closing
                  Date (the "Closing Date Balance Sheet"), which, together with
                  the inventory calculation determined under Section 1.1 above,
                  shall be used for the computation of the Closing Date Target
                  Asset Amount (the "Target Assets Computation"). Buyer will
                  deliver the Closing Date Balance Sheet and the Target Assets
                  Computation (together with all work papers, schedules,
                  memorandums, and other documents used to prepare the same, in
                  each case, in whatever form they exist) to Seller within sixty
                  days after the Closing Date. The parties agree and acknowledge
                  that for purposes of preparing the Closing Date Balance Sheet,
                  the institutional debt and shareholder debt referenced in
                  clauses (ii) and (iii) of Schedule 1.1 shall not be included
                  as liabilities of the Company; provided, that such
                  institutional debt and shareholder debt is paid in full and/or
                  forgiven on the Closing Date. If within thirty days following
                  delivery of the Closing Date Balance Sheet and Target Assets
                  Computation Seller has not given Buyer notice of its objection
                  to the Target Assets Computation (such notice must contain a
                  statement of the basis of Buyer's objection), then the Closing
                  Date Target Asset Amount reflected in the Target Assets
                  Computation will be used in computing the Adjustment Amount.
                  If Seller gives such notice of objection, then Seller and
                  Buyer will use reasonable efforts to resolve any disagreements
                  as to the computation of the Closing Date Target Asset Amount,
                  but if they do not obtain a final resolution within thirty
                  (30) days after Seller delivers a notice of objection Notice,
                  Seller and Buyer will jointly retain an independent accounting
                  firm of recognized national or regional standing (the
                  "Accounting Firm") to resolve the issues in dispute. If Seller
                  and Buyer are unable to agree on the choice of the Accounting
                  Firm, the Accounting Firm will be an independent accounting
                  firm of recognized national or regional standing selected by
                  the firms designated by each of Seller and Buyer. If the
                  issues in dispute are submitted to the Accounting Firm for
                  resolution (i) each party will furnish to the Accounting Firm
                  selected work papers and other documents and information
                  relating to the disputed issues as the Accounting Firm may
                  request and are available to that party, and will be afforded
                  the opportunity to present to the Accounting Firm any material
                  relating to the determination and to discuss the determination
                  with the Accounting Firm; (ii) the determination by the
                  Accounting Firm, as set forth in a notice

                                       6



                  delivered to both parties by the Accounting Firm, will be
                  binding and conclusive on the parties; and (iii) Buyer and
                  Seller will each bear 50% of the fees of the Accounting Firm
                  for such determination.

            (B)   No later than the thirtieth day following the final
                  determination of the Adjustment Amount, (i) if the Purchase
                  Price increases, Buyer will pay the difference to Seller, (ii)
                  if the Purchase Price decreases, Seller will pay the
                  difference to Buyer. Payments must be made in immediately
                  available funds.

      3.0 Escrow Accounts:

            (A)   Indemnity Escrow. From the Purchase Price, $162,500.00 shall
                  be placed in an interest earning escrow account (the
                  "Indemnity Escrow"), accruing for the benefit of Seller, for a
                  period of twenty-four (24) months beginning from the Closing
                  Date as defined below. Said amount plus accrued interest
                  thereon shall secure Seller's indemnification obligations
                  under the Agreement. Any amount due to Buyer for
                  indemnification obligations in excess of the Indemnity Escrow
                  shall be promptly paid at the end of the twenty-four (24)
                  month period. The Indemnity Escrow shall be held and disbursed
                  by the Escrow Agent in accordance with the terms of Section 13
                  hereof and the Escrow Agreement, which shall provide that
                  fifty percent (50%) of the balance remaining in the Indemnity
                  Escrow will be disbursed to Seller eighteen (18) months after
                  Closing, with the remaining balance in the Indemnity Escrow
                  disbursed to Seller at the end of the twenty-four (24) month
                  period.

            (B)   Inventory Escrow. From the Purchase Price, $135,000 shall be
                  placed in a separate interest earning escrow (the "Inventory
                  Escrow") account, accruing for the benefit of Seller for a
                  period of twenty-four (24) months beginning from the Closing
                  Date as defined below. Said amount plus accrued interest
                  thereon shall secure Seller's representation that the
                  non-Dover Inventory is saleable within such 24-month period.
                  The Inventory Escrow shall be held and disbursed by the Escrow
                  Agent in accordance with the terms of Section 3 hereof and the
                  Escrow Agreement.

            (C)   Disbursements from the Inventory Escrow. On each of the dates
                  that are six (6) months, twelve (12) months, and eighteen (18)
                  months, respectively, following the Closing Date, Buyer shall
                  calculate the value at cost of the remaining non-Dover
                  Inventory as of such dates and shall deliver written notice of
                  such calculations to Seller and the Escrow Agent not later
                  than ten (10) days after each such date. Buyer shall also
                  provide

                                       7



                  Seller with other periodic inventory reports including any
                  physical inventory reports regarding the non-Dover Inventory
                  as and when created. If any such calculation determines that
                  the value for the remaining non-Dover Inventory exceeds
                  $270,000, then no disbursements from the Inventory Escrow
                  shall be made at such time to either party. If, however, any
                  such calculation determines that the value of the remaining
                  non-Dover Inventory is less than $270,000, then the Escrow
                  Agent shall distribute forthwith to Seller from the Inventory
                  Escrow on a dollar-for dollar basis the amount equal to (i)
                  the product of (1) the amount by which the non-Dover Inventory
                  is less than $270,000, multiplied by (2) 0.5, minus (ii) any
                  amounts previously disbursed to Seller from the Inventory
                  Escrow.

                        On the second anniversary of the Closing Date, Buyer
                  shall again calculate the value at cost of the remaining
                  non-Dover Inventory for the purpose of making the final
                  distributions from the Inventory Escrow and shall deliver
                  written notice of such calculation to Seller and the Escrow
                  Agent not later than ten (10) days after such date. Seller
                  shall have the right to conduct its own physical inventory of
                  the non-Dover Inventory at his sole expense at the end of the
                  twenty-four (24) month period, if Seller believes that there
                  are problems with the Buyer's analysis or reports. If such
                  calculation determines that the value of the remaining
                  non-Dover Inventory exceeds $270,000, then the balance of
                  principal and interest in Inventory Escrow shall be paid to
                  Buyer. If, however, such calculation determines that the value
                  of the remaining non-Dover Inventory is less than $270,000,
                  then the Escrow Agent shall distribute forthwith to Seller
                  from the Inventory Escrow on a dollar-for dollar basis the
                  amount equal to (i) the product of (1) the amount by which the
                  non-Dover Inventory is less than $270,000, multiplied by (2)
                  0.5, minus (ii) any amounts previously disbursed to Seller
                  from the Inventory Escrow, plus (iii) an allocable share of
                  the accrued interest earned on the Inventory Escrow, with the
                  remaining balance of principal and interest in the Inventory
                  Escrow to be paid to Buyer. Seller shall retain no ownership
                  rights in or other rights to reclaim the unsold non-Dover
                  Inventory; provided, however, that immediately following the
                  second anniversary of the Closing Date, if Seller has received
                  less than $135,000 from the Inventory Escrow, Buyer shall
                  retain a third party liquidator to place a
                  close-out/liquidation value on all of the remaining non-Dover
                  Inventory and shall pay to Buyer the lesser of (i) fifty
                  percent (50%) of such close-out/liquidation value; or (ii) the
                  unpaid amount from the Inventory Escrow.

            (D)   Agreements with Respect to the Inventory Escrow. Buyer
                  covenants and agrees that it will use commercially reasonable
                  efforts to sell the non-Dover Inventory. Buyer further
                  covenants and agrees that it will sell the

                                       8



                  non-Dover Inventory at no more than the retail prices in
                  effect as of the Closing Date for the nine (9) month period
                  after the Closing Date and thereafter will sell the non-Dover
                  Inventory at cost or less. Buyer covenants and agrees that it
                  will use commercially reasonable efforts to sell the non-Dover
                  Inventory. Buyer further covenants and agrees that it will
                  sell the non-Dover Inventory at no more than the retail prices
                  in effect as of the Closing Date for the nine (9) month period
                  after the Closing Date and thereafter will sell the non-Dover
                  Inventory at cost or less. Further, if at any time after
                  Closing, Buyer (or Parent) decides to carry one or more of the
                  non-Dover Inventory units in its catalogs (the "Adopted
                  Inventory"), then for purposes of calculating the remaining
                  non-Dover Inventory pursuant to Section 3.0(C), the non-Dover
                  Inventory shall be reduced by the Adopted Inventory, entitling
                  Seller to payment for the Adopted Inventory. Additionally, in
                  the event that Buyer (or Parent) without including a unit of
                  non-Dover Inventory in its catalogs decides to purchase
                  additional units of non-Dover Inventory (such additional
                  units, "Post-Closing non-Dover Inventory"), then sales of such
                  units shall be tracked by Buyer (or Parent) on an individual
                  SKU basis and sales of such units shall be deemed to be first
                  from the non-Dover Inventory until there are no such units of
                  non-Dover Inventory remaining. As an illustration of the
                  foregoing, if pursuant to the inventory count to be conducted
                  pursuant to Section 1.1, there are 100 units of a particular
                  non-Dover Inventory and after Closing, Buyer (or Parent)
                  decides without including a unit of non-Dover Inventory in its
                  catalogs to purchase in its inventory an additional 50 of such
                  units, then sales of such units would be applied first to
                  reduce the non-Dover Inventory until there are no such units
                  of non-Dover Inventory remaining (i.e., the next 50 sales of
                  such units would be applied to the non-Dover Inventory).

4.0 Closing: The Closing of the purchase and sale of the Stock (the "Closing")
shall take place at the offices of Venable, LLP, 8010 Towers Crescent Drive,
Suite 300, Vienna, Virginia at 12 noon, local time, on June 15 2006 (the
"Closing Date"). The Closing Date may be postponed to June 19, 2006. If the
Closing is postponed, all references to the Closing Date in this Agreement shall
refer to the postponed date. Under no circumstances, however, will the Closing
Date be postponed beyond June 19, 2006, without the consent of Seller.

      4.1 Documents to be Delivered by Seller: At the Closing, Seller will
deliver to Buyer:

            (A)   stock certificates for the Stock, free and clear of all liens,
                  claims, charges, restrictions, equities or encumbrances of any
                  kind, which certificates shall be duly endorsed respectively
                  to Buyer consistent with Section 1.0 or accompanied by duly
                  executed stock powers in form satisfactory to Buyer;

                                       9



            (B)   a certificate of Seller certifying the accuracy of Seller's
                  representations and warranties before and as of the Closing
                  and that Seller has performed and complied with all of the
                  terms, provisions and conditions to be performed and complied
                  with by Seller at or before the Closing;

            (C)   Non-Competition Agreement in form satisfactory to Buyer fully
                  executed by Seller; and

            (D)   certificates of corporate and tax good standing (to the extent
                  tax good standing certificates are available in the applicable
                  jurisdiction) for the Company, certified copies of the
                  corporate charter and such other certificates and documents as
                  Buyer or its counsel may reasonably request.

      4.2 Documents to be Delivered by Buyer to Seller: At the Closing, Seller
shall receive:

            (A)   wire transfers payable to the order of the Seller in the
                  following amount:

                  $1,327,500

            (B)   $297,500 to the Escrow Accounts described in Section 3.0
                  above;

            (C)   a certificate of Buyer certifying the accuracy of Buyer's
                  representations and warranties before and as of the Closing
                  and that Buyer has performed and complied with all of the
                  terms, provisions and conditions to be performed and complied
                  with by Buyer at or before the Closing;

            (D)   a certificate of Buyer certifying that the 10A Conditions have
                  been satisfied to Buyer's satisfaction;

            (E)   such other certificates and documents as Seller or his counsel
                  may reasonably request.

      4.3 Documents to be Delivered by Seller, Buyer and Escrow Agent to Each
Other: At the Closing, Seller, Buyer and Escrow Agent will deliver to each other
the Escrow Agreement.

      4.4 Form and Substance of Documents: The documents and instruments
referred to in Sections 4.1, 4.2 and 4.3 and shall be in form and substance
satisfactory to counsel for the party to whom they are delivered.

      5.0 Representations and Warranties by Seller: Seller represents and
warrants to Buyer as follows:

                                       10



      5.1 Corporate Organization: The Company is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Virginia and has the corporate power and authority to enter into and perform
this Agreement, to carry on its business as now being conducted and as proposed
to be conducted and to own and operate the properties and assets now owned and
being operated by it. Seller has delivered to Buyer complete and correct copies
of the Company's Articles of Incorporation and Bylaws as in effect on the date
hereof. The Company is not required to be qualified or licensed to do business
as a foreign corporation in any other jurisdiction except such jurisdictions, if
any, in which the failure to be so qualified or licensed will not have a
Material Adverse Effect on the Company. SCHEDULE 5.1 sets forth a true and
complete list of the names, addresses and titles of the directors and officers
of the Company.

      5.2 Capitalization; Stock Ownership: The authorized capital stock of the
Company consists of 100,000 shares of Common Stock of the par value of $0.01 per
share of which 50,000 shares are issued. All of such issued shares have been
duly authorized and validly issued and are fully paid and non-assessable and
none of them was issued in violation of any preemptive or other right. Except as
set forth in SCHEDULE 5.2, the Company is not a party to or bound by any
contract, agreement or arrangement to issue, sell or otherwise dispose of or
redeem, purchase or otherwise acquire any capital stock or any other security of
the Company or any other security exercisable or exchangeable for or convertible
into any capital stock or any other security of the Company, and, except for
this Agreement, there is no outstanding option, warrant or other right to
subscribe for or purchase, or contract, agreement or arrangement with respect
to, any capital stock or any other security of the Company or any other security
exercisable or convertible into any capital stock or any other security of the
Company.

      Seller owns all of the outstanding shares of Stock free and clear of all
liens, claims, charges, restrictions, equities and encumbrances of any kind and
has full power and legal right to sell, assign, transfer and deliver the same.

      5.3 Subsidiaries and Other Equity Investments: The Company does not own,
directly or indirectly, any shares of capital stock of any corporation or any
equity investment in any partnership, association or other business
organization.

      5.4 Authorization of Agreement; No Violation:

            (a) This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
Seller has the absolute and unrestricted right, power, and authority to execute
and deliver this Agreement and to perform his obligations hereunder.

            (b) Neither the execution, delivery or performance of this Agreement
nor the consummation of any of the transactions contemplated hereby (i) will
violate or conflict with the Articles of Incorporation or Bylaws of the Company;
(ii) will conflict with or result in any

                                       11



breach of or default under any provision of any contract or agreement of any
kind to which Seller or the Company is a party or by which Seller or the Company
is bound or to which any property or asset of any of them is subject; (iii) is
prohibited by or requires Seller or the Company to obtain or make any consent,
authorization, approval, registration or filing under any statute, law,
ordinance, regulation, rule, judgment, decree or order of any court or
governmental agency, board, bureau, body, department or authority, or of any
other person; (iv) except as disclosed on SCHEDULE 5.4, will cause any
acceleration of the maturity of any note, instrument or other obligation to
which the Company is a party or by which the Company is bound or with respect to
which the Company is an obligor or guarantor; or (v) will result in the creation
or imposition of any lien, claim, charge, restriction, equity or encumbrance of
any kind whatsoever upon or give to any other person any interest or right
(including any right of termination or cancellation) in or with respect to any
of the properties, assets, business, agreements or contracts of the Company.

      5.5 Financial Statements: Seller has delivered to Buyer copies of the
unaudited balance sheets of the Company as of December 31, 2005 and related
statements of income, for the year that ended on that date, together with
supporting schedules, certified by the Seller. Except as set forth in the notes
thereto, all of such financial statements are complete and correct and present
fairly and accurately the financial position of the Company as at the respective
dates of said balance sheets and the results of the operations and changes in
financial position of the Company for the respective periods then ended applied
on a basis consistent with that of the preceding period. No uncollectible
accounts receivable are reflected on said balance sheets without provision for
an adequate reserve for uncollectible amounts; inventories reflected on said
balance sheets represent only good and serviceable items priced at the lower of
cost or market value with adequate provision for obsolescence, shrinkage, excess
quantities, defective materials and deterioration; all inventories will be
valued based on the Company's acquisition cost, meaning the invoice price for
each item without regard to any rebates, advertising allowances or similar
credits or amounts payable by the applicable vendor; and as at December 31,
2005, there was no liability of any nature or in any amount that should properly
be reflected or reserved against in a balance sheet prepared in conformity with
generally accepted accounting principles applied on a basis consistent with that
of the preceding periods which is not fully reflected or reserved against in the
balance sheet of the Company as at December 31, 2005.

      5.6 No Undisclosed Liabilities, Etc.: Since December 31, 2005:

            (A)   The Company has not incurred any material liability or
                  obligation of any nature, other than liabilities and
                  obligations incurred in the ordinary course of business, that
                  would properly be reflected or reserved against in a balance
                  sheet prepared in conformity with generally accepted
                  accounting principles applied on a basis consistent with that
                  used in the preparation of the balance sheet of the Company as
                  at December 31, 2005 referred to in Section 5.5;

                                       12



            (B)   All inventories acquired or produced by the Company have been
                  acquired or produced in the ordinary course of its business in
                  quantities that are not materially greater or less than those
                  required for the current operation of its business and, except
                  for a reasonable allowance for defective materials and
                  deterioration, consist of good and serviceable items; and

            (C)   The Company has not acquired any material amount of accounts
                  receivable that are or are believed to be uncollectible, and
                  the frequency and amounts of payments received by the Company
                  with respect to the accounts receivable reflected on the
                  balance sheet of the Company as at December 31, 2005 referred
                  to in Section 5.5 do not, in retrospect, render inadequate the
                  reserve for uncollectible accounts set forth on such balance
                  sheet.

      5.7 Absence of Certain Changes: Since December 31, 2005 (except (i) for
the execution and delivery of this Agreement and (ii) as set forth in SCHEDULE
5.7), the Company has not:

            (i)   had any change in its condition, financial or otherwise,
                  operations, business, properties, assets, or liabilities,
                  other than changes in the ordinary course of business, none of
                  which will have a Material Adverse Effect on the Company;

            (ii)  suffered any damage, destruction or loss of physical property
                  which has had or could be reasonably expected to have a
                  Material Adverse Effect on the Company;

            (iii) issued, sold or otherwise disposed of, or agreed to issue,
                  sell or otherwise dispose of, any capital stock or any other
                  security of the Company and has not granted or agreed to grant
                  any option, warrant or other right to subscribe for or to
                  purchase any capital stock or any other security of the
                  Company;

            (iv)  incurred or agreed to incur any indebtedness for borrowed
                  money;

            (v)   paid or obligated itself to pay in excess of $5,000.00 in the
                  aggregate for any fixed assets;

            (vi)  suffered any substantial loss or waived any substantial right;

            (vii) sold, transferred or otherwise disposed of, or agreed to sell,
                  transfer or otherwise dispose of, any assets having a fair
                  market value at the time of sale, transfer or disposition of
                  $5,000.00 or more in the aggregate, or

                                       13



                    canceled, or agreed to cancel, any debts or claims, other
                    than in the ordinary course of business;

            (viii)  mortgaged, pledged or subjected to any charge, lien, claim
                    or encumbrance, or agreed to mortgage, pledge or subject to
                    any charge, lien, claim or encumbrance, any of its
                    properties or assets;

            (ix)    declared, set aside or paid any dividend or made any
                    distribution whether in cash, property or stock, with
                    respect to any of its capital stock or redeemed, purchased
                    or otherwise acquired, or agreed to redeem, purchase or
                    otherwise acquire, any of its capital stock;

            (x)     increased, or agreed to increase, the compensation or
                    bonuses or special compensation of any kind of any of its
                    officers, employees or agents over the rate being paid to
                    them on December 31, 2005, other than normal merit and/or
                    cost-of-living increases pursuant to customary arrangements
                    consistently followed, or adopted or increased any benefit
                    under any insurance, pension or other employee benefit plan,
                    payment or arrangement made to, for or with any such
                    officer, employee or agent;

            (xi)    lost any major customer or had any material order canceled
                    or knows of any threatened cancellation of any material
                    order;

            (xii)   made or permitted any material amendment or termination of
                    any material contract, agreement or license to which it is a
                    party other than in the ordinary course of business;

            (xiii)  had any resignation or termination of employment of any of
                    its key officers or employees or knows of any impending or
                    threatened resignation or resignations or termination or
                    terminations of employment that would reasonably be expected
                    to have a Material Adverse Effect on the Company;

            (xiv)   had any labor trouble with its employees or knows of any
                    impending or threatened labor trouble with its employees;

            (xv)    experienced any shortage or difficulty in obtaining any
                    products;

            (xvi)   made any change in its accounting methods or practices with
                    respect to its condition, operations, business, properties,
                    assets or liabilities;

            (xvii)  made any charitable or political contribution or pledge in
                    excess of $1,000.00 in the aggregate; or

                                       14



            (xviii) entered into any transaction not in the ordinary course of
                    its business.

      5.8 Title to and Condition of Properties and Assets: The Company has good
and marketable title to all of its properties and assets, including, without
limitation, (i) all those used in its business; and (ii) those reflected in the
balance sheet of the Company as at December 31, 2005 referred to in Section 5.5
(except as thereafter sold or otherwise disposed of in the ordinary course of
business) subject to no mortgage, pledge, conditional sales contract, lien,
security interest, right of possession in favor of any third party, claim or
other encumbrance, except (i) the lien of current taxes not yet due and payable
and (ii) as set forth in SCHEDULE 5.8. Subsequent to December 31, 2005, the
Company has not sold or disposed of any of its properties or assets or obligated
itself to do so except in the ordinary course of business. The facilities,
machinery, furniture, office and other equipment of the Company that is used in
its business are in good operating condition and repair, subject only to the
ordinary wear and tear, and neither the Company nor any property or asset owned
or leased by it is in material violation of any applicable ordinance, regulation
or building, zoning, environmental or other law in respect thereof of which
Seller has Knowledge or, whether or not Seller has Knowledge thereof, the
violation of which will not have a Material Adverse Effect on the Company.

      5.9 Certain Properties: SCHEDULE 5.9 sets forth all real estate leased to
the Company (collectively the "Real Properties") and all personal property
leased to the Company and specifies, in the case of real estate, the location of
each property, the use of the facility thereon, the name of the owner or the
names of the lessor and the lessee, the square footage of improvements and the
acreage of land. Seller has delivered to Buyer (i) a copy of the lease by which
the Company acquired its interest in the real estate described in SCHEDULE 5.9;
(ii) a copy of all title abstracts and title insurance policies the Company has
for the real estate described in SCHEDULE 5.9; (iii) a copy of the most recent
survey or surveys the Company has for the real estate described in SCHEDULE 5.9;
(iv) a copy of all certificates of occupancy for the improvements on the real
estate described in SCHEDULE 5.9 and a copy of any variance granted with respect
to any of such real estate described in SCHEDULE 5.9 pursuant to applicable
zoning laws or ordinances; and (v) a copy of each lease by which the Company
acquired its interest in the personal property described in SCHEDULE 5.9, all of
which documents are true and complete copies thereof as in effect on the date
hereof. The Company has not received any written notice from any governmental
agency, board, bureau, body, department or authority of any United States or
foreign jurisdiction, with respect to the ownership or use of any of the real
estate described in SCHEDULE 5.9. Except as set forth in SCHEDULE 5.9, there is
no easement, right-of-way agreement, license, sublease, occupancy agreement or
like instrument with respect to any of the real estate described in SCHEDULE
5.9. Each lease pursuant to which the Company leases any real or personal
property is in full force and effect and is valid and enforceable in accordance
with its terms. There is not under any such lease any default by the Company, or
any event that with notice or lapse of time or both would constitute such a
default by the Company and with respect to which the Company has not taken
adequate steps to prevent such default from occurring, all of such events, it
any, and the aforesaid steps taken by the Company are set forth in

                                       15



SCHEDULE 5.9 and to the best of Seller's knowledge, there is not under any such
lease any default or any event that with notice or lapse of time or both would
constitute such a default thereunder, by any other party. Each property used in
the business of the Company is reflected in the balance sheet of the Company as
at December 31, 2005 referred to in Section 5.5 in the manner and to the extent
required by generally accepted accounting principles. The building, plants,
structures, and equipment of the Company are sufficient for the continued
conduct of the Company's business after the Closing in substantially the same
manner as conducted prior to the Closing.

      5.10 Tax Matters:

            (A)   All federal, state, local and foreign tax returns, reports and
                  statements required to be filed by the Company have been filed
                  with the appropriate governmental agencies in all
                  jurisdictions in which such returns, reports and statements
                  are required to be filed, and all Charges (as hereinafter
                  defined) and other impositions shown thereon to be due and
                  payable have been paid prior to the date on which any fine,
                  penalty, interest, late charge or loss may be added thereto
                  for the nonpayment thereof, unless any such amounts are being
                  contested in good faith by appropriate proceedings and an
                  adequate reserve has been established therefor on the balance
                  sheet of the Company as at December 31, 2005 referred to in
                  Section 5.5, or any such fine, penalty, interest, late charge
                  or loss has been paid.

            (B)   The Company has paid when due and payable all Charges required
                  to be paid by it, except those contested in good faith, by
                  appropriate proceedings, if adequate reserves therefor have
                  been established on the balance sheet of the Company as at
                  December 31, 2005 referred to in Section 5.5 in accordance
                  with generally accepted accounting principles and where such
                  nonpayment would not have a Material Adverse Effect on the
                  Company. The provisions for taxes due by the Company in the
                  balance sheet of the Company as at December 31, 2005 referred
                  to in Section 5.5 are sufficient for all unpaid Charges,
                  whether or not disputed.

            (C)   SCHEDULE 5.10 sets forth, for the Company, those taxable years
                  for which its tax returns are currently being audited by the
                  Internal Revenue Service ("IRS"), any State taxing authority
                  or any other government authority. No issue has been raised or
                  settled in any such examination that, by application of
                  similar principles, reasonably may be expected to result in an
                  assertion of a material deficiency for any other taxable year
                  not so examined that has not been accrued on the balance sheet
                  of the Company as at December 31, 2005 referred to in Section
                  5.5, in accordance with generally accepted accounting
                  principles. The Company has not settled, issued, or entered
                  into a closing agreement with respect to any tax year for
                  which an audit or examination has been concluded that, by
                  application of

                                       16



                  similar principles, reasonably may be expected to result in a
                  material deficiency for any other taxable year not so examined
                  (or currently under examination) that has not been accrued on
                  the balance sheet of the Company as at December 31, 2005
                  referred to in Section 5.5 in accordance with generally
                  accepted accounting principles. There is no issue known to the
                  Company or Seller relating to any Charge (federal or
                  otherwise) that, if determined adversely to the Company, would
                  result in the assertion of any material deficiency for any
                  taxable year that has not been accrued on the balance sheet of
                  the Company as at December 31, 2005 referred to Section 5.5.

            (D)   Except as set forth in SCHEDULE 5.10, the Company has not
                  executed or filed with the IRS, any State taxing authority or
                  any other governmental authority any agreement or other
                  document extending, or having the effect of extending, the
                  period for assessment or collection of any Charge.

            (E)   Except as set forth in SCHEDULE 5.10, the Company has not
                  filed a consent pursuant to Section 341(f) of the Code, or
                  agreed to have Section 341(f)(2) of the Code apply to any
                  disposition of subsection (f) assets as such term is defined
                  in Section 341(f) (4) of the Code. The Company has not made
                  any payment, is not obligated to make any payment, and is not
                  a party to any agreement that could under certain
                  circumstances obligate it to make any payment, that will not
                  be deductible under Section 280C of the Code. The Company has
                  not disclosed on its federal income tax returns any positions
                  taken thereon that could give rise to a substantial
                  understatement of federal income tax within the meaning of
                  Section 6661 of the Code.

            (F)   Except as set forth in SCHEDULE 5.10, none of the property
                  owned by the Company is property which the Company is required
                  to treat as being owned by any other person pursuant to the
                  provisions of Section 168(f)(8) of the Internal Revenue Code
                  of 1954, as amended, and in effect immediately prior to the
                  enactment of the Tax Reform Act of 1986 or is "tax-exempt use
                  property" within the meaning of Section 168(h) of the Code.

            (G)   Except as set forth in SCHEDULE 5.10, the Company has not
                  agreed nor has been requested to make any adjustment under
                  Section 481(a) of the Code by reason of a change in accounting
                  method initiated by the Company and the Company has no
                  knowledge that the IRS has proposed any such adjustment or
                  change in accounting methods.

            (H)   Except as set forth in SCHEDULE 5.10, the Company has no
                  obligation under any written tax sharing agreement.

                                       17



      5.11 Contracts: Except as set forth in SCHEDULE 5.11, the Company is not a
party to any written or oral:

            (i)   contract with any labor union;

            (ii)  employment or consulting contract or other contract for
                  services involving a payment of more than $2,000.00 annually;

            (iii) lease, whether as lessee or lessor, with respect to any
                  property, real or personal, involving a payment of more than
                  $2,000.00 annually;

            (iv)  loan agreement or instrument relating to any indebtedness;

            (v)   contract of purchase or sale involving more than $5,000.00;

            (vi)  contract with any agent, dealer or distributor;

            (vii) stand-by letter of credit, guarantee or performance bond;

            (viii) contract or agreement restricting the ability of any person
                  from freely engaging in any business or competing anywhere in
                  the world;

            (ix)  contract not made in the ordinary course of business; or

            (xi)  other contract, except insubstantial contracts for supplies or
                  services not involving more than $2,000.00 and which can be
                  terminated within one year without cost.

Except as set forth in SCHEDULE 5.11, the Company is not a party to any material
contract with any governmental authority. The Company is not a party to any
contract that has a Material Adverse Effect on the Company. Each contract or
other agreement listed in SCHEDULE 5.11 is in full force and effect and is valid
and enforceable by the Company in accordance with its terms. Neither the Company
nor, to the Knowledge of the Seller, any other party is in default in the
observance or the performance of any term or obligation to be performed by it
under any contract listed in SCHEDULE 5.11. To the Seller's Knowledge, no other
person is in default in the observance or the performance of any term or
obligation to be performed by it under any material contract with the Company.
Seller knows of no bid or contract proposal made by the Company that, if
accepted or entered into, might reasonably be expected to result in a loss to
the Company. Seller has delivered to Buyer true and complete copies of all
contracts listed in SCHEDULE 5.11 as in effect on the date hereof.

                                       18



      5.12 Litigation: Except as set forth in SCHEDULE 5.12, there are no
actions, suits, proceedings or investigations, either at law or in equity, or
before any commission or other administrative authority in any United States or
foreign jurisdiction, of any kind now pending and, to the best of the Seller's
Knowledge, there are no circumstances which should or could reasonably form the
basis of any such action, suit, proceeding or investigation, involving Seller,
the Company or any of the properties or assets of the Company that (i) if
asserted and decided adversely to Seller or the Company, could have a Material
Adverse Effect on the Company; or (ii) questions the validity of this Agreement;
or (iii) seeks to delay, prohibit or restrict in any manner any action taken or
to be taken by the Seller under this Agreement. Except as set forth in SCHEDULE
5.12, there is no arbitration proceeding pending or, to the best of Seller's
Knowledge, threatened or proposed in any manner under any collective bargaining
agreement or other agreement or otherwise. Neither the Company nor any of its
properties or assets is subject to any judicial or administrative judgment,
order, decree or restraint.

      5.13 Patents and Trademarks: Except as set forth in SCHEDULE 5.13, the
Company owns no patent relating to any product which it sells or any process
used in the manufacture of any such product, nor has any license under any
patent been issued to it relating to any such product or any such process, and
there is no patent which would cover any such product or any such process; and
the Company owns no copyright, registered trademark or trade name, nor has any
license to use any copyright, trademark or trade name been issued to it, nor
does the Company use any copyright, registered trademark or trade name in its
operations or business.

      Each of the patents, registered trademarks and trade names listed in
SCHEDULE 5.13 has been validly issued and is owned by the Company, and the
Company has the exclusive rights to use all such patents, copyrights, registered
trademarks and trade names in its business and operations. Except as set forth
in SCHEDULE 5.13, the Company owns all patents, copyrights, trademarks, trade
names, know-how, trade secrets and other proprietary rights necessary to
manufacture and sell its products and to conduct its operations and business,
and Seller does not know of any claim, or any basis of any claim, that the
Company has infringed any patent, copyright, trademark, trade name, know-how,
trade secret or other proprietary right of any other person. The Seller knows of
no potential claim of infringement of any patent, copyright, trademark, trade
name, know-how, trade secret or other proprietary right of any other person that
has not been asserted but that, if asserted and determined adversely to the
Company, would have a Material Adverse Effect on the Company.

      5.14 Compliance with Laws: The Company has complied with and is in
compliance in all material respects with all federal, state, local and foreign
statutes, laws, ordinances, regulations, rules, permits, judgments, orders and
decrees applicable to it or any of its properties, assets, operations and
business, and there does not exist any basis for any claim of default under or
violation of any such statute, law, ordinance, regulation, rule, judgment, order
or decree except such defaults or violations or such bases for any claims of
such defaults or violations, if any, that in the aggregate do not and will not
have a Material Adverse Effect on the Company. The Company has not received any
opinion or memorandum or legal advice from any legal

                                       19



counsel to the effect that it is exposed to any liability or disadvantage that
is or may be material to the Company. The Company is in compliance in all
material respects with all applicable requirements of all United States and
foreign governmental authorities with respect to environmental protection,
including, without limitation, (i) regulations establishing quality criteria and
standards for air, water, land and hazardous materials; (ii) all applicable
requirements of the Occupational Safety and Health Act of 1970 within the United
States and comparable workplace-safety laws of all other jurisdictions and all
rules, regulations and orders thereunder; and (iii) all applicable laws and
related rules and regulations of all United States and foreign jurisdictions
affecting labor union activities, civil rights or employment, including without
limitation, in the United States, the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Equal Employment Opportunity Act
of 1972, the Employee Retirement Income Security Act of 1974, the Equal Pay Act
and the National Labor Relations Act.

      5.15 Environmental Matters:

            (A)   Except as disclosed in SCHEDULE 5.9 and SCHEDULE 5.15, the
                  Company does not currently own, lease, manage, use, hold,
                  control, or operate any real properties.

            (B)   Except as disclosed in SCHEDULE 5.15, there are no real
                  properties which the Company formerly owned, leased, managed,
                  controlled or operated and which the Company has ceased to
                  own, lease, manage, control or operate since January 1, 2000.

            (C)   With respect to the Real Properties, and except as disclosed
                  in SCHEDULE 5.15, neither the Company, nor to the knowledge of
                  the Seller, any prior owner or operator, has incurred in the
                  past, or is now subject to, any Environmental Liabilities.

            (D)   With respect to the Real Properties, and except as disclosed
                  in SCHEDULE 5.15, the Company has obtained, possesses, and is
                  in compliance in all material respects with all permits,
                  licenses, reviews, certifications, approvals, registrations,
                  consents, and any other authorizations required under any
                  Environmental Laws.

            (E)   Except as disclosed in SCHEDULE 5.15, all of the Real
                  Properties are in compliance in all material respects with all
                  Environmental Laws.

                                       20



            (F)   Except as disclosed in SCHEDULE 5.15, there are no liens,
                  encumbrances, defaults, equitable interests, covenants, deed
                  restrictions, notice or registration requirements, or other
                  limitations applicable to the Real Properties, based upon any
                  Environmental Laws or other legal obligations.

            (G)   There are no USTs located in, at, on, or under the Real
                  Properties other than those identified in SCHEDULE 5.15 as
                  USTs; and each of those USTs is in compliance in all material
                  respects with all Environmental Laws and other legal
                  obligations.

            (H)   There are no locations at which Pollutants have been released,
                  or otherwise come to be, in, at, on, under, a part of, or
                  otherwise related to the Real Properties, other than those
                  locations identified in SCHEDULE 5.15; and each such location
                  is in compliance in all material respects with all
                  Environmental Laws and other legal obligations.

            (I)   Except as disclosed in SCHEDULE 5.15, there are no Conditions
                  in, at, on, under, a part of, or otherwise related to the Real
                  Properties involving the presence of any Pollutant.

            (J)   Except as disclosed in SCHEDULE 5.15, there are no PCBs, lead
                  paint, asbestos (of any type or form), or materials, articles
                  or products containing PCBs, lead paint or asbestos, located
                  in, at, on, under, a part of, or otherwise related to the Real
                  Properties (including, without limitation, any building,
                  structure, or other improvement that is a part of the Real
                  Properties); and all of the PCBs, lead paint, asbestos, and
                  materials, articles and products containing PCBs, lead paint
                  or asbestos identified in SCHEDULE 5.15 are in compliance in
                  all material respects with all Environmental Laws and other
                  legal obligations.

            (K)   Except as disclosed in SCHEDULE 5.15, no on-site sources of
                  water for human consumption or other human contact in or at
                  the Real Properties, and no subsurface waters under the Real
                  Properties, contain a Pollutant at a level exceeding a level
                  which is established or recommended in Environmental Laws.

      5.16 Governmental Authorizations and Regulations: SCHEDULE 5.16 lists all
licenses, franchises, permits and other governmental authorizations held by the
Company material to the conduct of its business. Such licenses, franchises,
permits and other governmental authorizations are valid, and the Company has not
received any notice that any governmental authority intends to cancel, terminate
or not renew any such license, franchise, permit or other governmental

                                       21



authorization. The Company holds all licenses, franchises, permits and other
governmental authorizations the absence of any of which could have a Material
Adverse Effect on the Company. Except as set forth in SCHEDULE 5.16, the
business of the Company is not being conducted, and no properties or assets of
the Company relating thereto are owned or are being used by the Company, in
material violation of any statute, law, ordinance, regulation, rule or permit of
any governmental entity or any judgment, order or decree. All products
manufactured or sold by the Company comply in all material respects with all
statutes, laws, ordinances, regulations and rules and criteria governing the
design, manufacture and intended use thereof.

      5.17 SEC and Antitrust Filings: The Company has never issued any security
covered by a registration statement filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, or the Investment
Company Act of 1940, as amended, and no security issued by the Company has ever
been registered pursuant to the Securities Exchange Act of 1934, as amended.
Seller is not required to file a Schedule 13E-3 Transaction Statement or a
report under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or any
other antitrust law in respect to any action pursuant to or contemplated by this
Agreement.

      5.18 Employee Benefit Plans and Arrangements.

            (A)   Pension Benefit Plans Generally: The Company does not sponsor,
                  maintain or contribute to any plan, program, fund or
                  arrangement that constitutes an "employee pension benefit
                  plan," nor has the Company any obligation to contribute to or
                  accrue or pay any benefits under any deferred compensation or
                  retirement funding arrangement on behalf of any employee or
                  employees. For the purposes of this Agreement, the term
                  "employee pension benefit plan" shall have the same meaning as
                  is given that term in section 3(2) of ERISA. The Company has
                  not sponsored, maintained or contributed to any employee
                  pension benefit plan other than the Profit-Sharing Plan, nor
                  is the Company required to contribute to any retirement plan
                  (other than the Profit-Sharing Plan) pursuant to the
                  provisions of any collective bargaining agreement establishing
                  the terms and conditions or employment of any of the Company's
                  employees. Seller has delivered to Buyer true and complete
                  copies of the Profit-Sharing Plan.

            (B)   ERISA Title IV Considerations: The Company is not now, nor can
                  become, liable to the Pension Benefit Guaranty Corporation or
                  to any multi-employer employee pension benefit plan under the
                  provisions of Title IV of ERISA.

                                       22



            (C)   Common-Control Enterprises: The Company has not at any time
                  subsequent to September 1, 1974, formed, with any other entity
                  (other than the Company), a controlled group of corporations
                  within the meaning of Section 414(b) of the Code or a group of
                  trades or businesses under common control within the meaning
                  of Section 414(c) of the Code.

            (D)   Prohibited Transactions: The Company has not engaged in any
                  transaction with respect to the assets of any employee benefit
                  plan by reason of which the Company is or could be subject to
                  (i) the excise taxes imposed by Sections 4971 through 4980B of
                  the Code; or (ii) civil liability under Section 502(i) of
                  ERISA.

            (E)   Employee Benefit Plan Claims Liability: Seller has no
                  Knowledge of any action, claim or demand of any kind brought
                  or threatened by any potential claimant or representative of
                  such claimant under any employee benefit plan where the
                  Company may be (i) liable directly on such action, claim or
                  demand; (ii) liable to another party in connection with such
                  action, claim or demand; or (iii) obligated to indemnify any
                  person, group of persons or entity with respect to such
                  action, claim or demand. The Seller has no Knowledge of any
                  investigation or proceeding by any governmental agency or
                  quasi-governmental agency with respect to any employee benefit
                  plan sponsored or maintained by the Company.

            (F)   Reporting and Disclosure: The Company has filed or caused to
                  be filed on a timely basis every return, report, statement,
                  notice, declaration and other document required by any
                  government agency, federal, state and local (including,
                  without limitation, the Internal Revenue Service, the
                  Department of Labor, the Pension Benefit Guaranty Corporation
                  and the Securities and Exchange Commission) with respect to
                  each employee benefit plan sponsored or maintained by the
                  Company. The Company is in substantial compliance with all
                  disclosures to employees and beneficiaries required under
                  ERISA, including, without limitation, timely distribution of
                  summary plan descriptions and summary annual reports.

            (G)   Stock Option Arrangements: The Company does not sponsor and
                  has not granted any option under any stock option arrangement
                  for the benefit of any employee or former employee.

            (H)   Other Employee Benefit Plans and Arrangements: Except as set
                  forth in SCHEDULE 5.18, the Company does not sponsor,
                  maintain, or support, is not otherwise a party to, and does
                  not have any liability or contingent liability under any plan,
                  program, fund, arrangement or contractual undertaking, whether
                  for the benefit of a single individual or for more than one

                                       23



                  individual, and whether or not funded, which is in the nature
                  of (i) an employee pension benefit plan; (ii) an employee
                  welfare benefit plan as defined in Section 3(1) of ERISA; or
                  (iii) any incentive or other benefit arrangement for
                  employees, their dependents and/or their beneficiaries; or
                  (iv) any of the types of plans identified in the following
                  list, or plans similar in nature or intent thereto:

                  (1)   cash bonus or incentive pay arrangements (current or
                        deferred, earned or contingent);

                  (2)   debt forgiveness or low-interest (or interest free)
                        loans;

                  (3)   stock bonus plan arrangements (including, but not
                        limited to, arrangements known as ESOPs and/or TRASOPs);

                  (4)   employee stock purchase plans;

                  (5)   employee stock put options;

                  (6)   shadow or phantom stock arrangements;

                  (7)   stock appreciation rights, whether separate from or
                        associated with stock options;

                  (8)   performance share plans;

                  (9)   individual life insurance policies (including but not
                        limited to, "key man" and "split dollar" arrangements);

                  (10)  group life insurance programs;

                  (11)  retired life reserve programs;

                  (12)  surviving spouse's or survivor's benefits;

                  (13)  wage or salary continuation programs;

                  (14)  severance benefit plans;

                  (15)  short or long-term disability income programs;

                  (16)  travel insurance coverage;

                                       24



                  (17)  accidental death and/or dismemberment benefits;

                  (18)  medical expense reimbursement plans (insured or
                        self-insured);

                  (19)  medical/surgical insurance;

                  (20)  major medical expense programs;

                  (21)  health maintenance organization benefits;

                  (22)  capital accumulation arrangements;

                  (23)  optical and/or dental care benefits;

                  (24)  prepaid legal services;

                  (25)  Section 501(c)(9) "voluntary employee beneficial
                        associations";

                  (26)  day care centers;

                  (27)  apprenticeship training centers;

                  (28)  educational expense benefit plans subsidies;

                  (29)  layoff and/or vacation pay plans, or time banks;

                  (30)  furnishing goods or services on a discount or subsidized
                        basis;

                  (31)  non-cash incentive programs (such as trading stamps,
                        travel or merchandise award programs);

                  (32)  uniform or clothing allowances, eyeglass allowances,
                        safety equipment allowances, tool allowances, etc.;

                  (33)  "cafeteria plans";

                  (34)  recreation programs at total or partial employer
                        expense;

                  (35)  contributions to simplified employee pensions,
                        individual retirement accounts or individual retirement
                        annuities;

                  (36)  early retirement incentive or Social Security supplement
                        payments;

                                       25



                  (37)  retiree payments and bonuses (gratuitous, traditional or
                        contractual);

                  (38)  other benefits or policies in the nature of compensation
                        or otherwise of economic value to employees, their
                        dependents or their survivors; or

                  (39)  "golden parachute" arrangements.

      5.19 Certain Transactions: Except as set forth in SCHEDULE 5.19, there is
no transaction, and no transaction now proposed, to which the Company was or is
to be a party and in which any director or officer of the Company or any
associate of any such person had or has a direct or indirect material interest.

      5.20 Foreign Corrupt Practices Act: Neither the Company nor any director,
officer, agent, employee or other person associated with or acting on behalf of
the Company has used any corporate funds for any unlawful contribution, gift,
entertainment or other expense relating to political activity or made any direct
or indirect unlawful payment to any United States or foreign government official
or employee from corporate funds or violated or is in violation of any provision
of the Foreign Corrupt Practices Act of 1977 or paid or made any bribe, rebate,
payoff, influence payment, kickback, or other unlawful payment.

      5.21 Accounting Practices: The Company makes and keeps accurate books and
records reflecting its assets and maintains internal accounting controls that
provide reasonable assurance that (i) transactions are executed with
management's authorization; (ii) transactions are recorded as necessary to
permit preparation of the Company's financial statements and to maintain
accountability for the assets of the Company; (iii) access to the assets of the
Company is permitted only in accordance with management's authorization; and
(iv) the reported accountability of the assets of the Company is compared with
existing assets at reasonable intervals.

      5.22 Minute Books: The Company's minute books contain complete and
accurate records of all meetings and other corporate actions of its stockholders
and Board of Directors and committees thereof.

      5.23 Insurance: All properties and operations of the Company are insured
in amounts deemed adequate by the Company's Board of Directors or management,
against all risks usually insured against by persons operating similar
properties or conducting similar operations in the localities where such
properties are located or such operations are conducted under valid and
enforceable policies issued by insurers of recognized responsibility. SCHEDULE
5.23 lists all such policies. Seller made available to Buyer true and complete
copies of all such policies as in effect on the date hereof.

                                       26


      5.24 Bank Accounts; Powers of Attorney: SCHEDULE 5.24 sets forth (i) the
name of each bank in which the Company has an account or safe deposit box and
the names of all persons authorized to draw thereon or to have access thereto;
and (ii) the names of all persons, if any, holding powers of attorney from the
Company and a summary statement of the terms thereof.

      5.25 Product Warranties: Except as set forth in SCHEDULE 5.25, (i) the
Company has no unexpired, expressed, product warranty with respect to any
product that it manufactures or sells or that it has heretofore manufactured or
sold; (ii) the Company has not received any notice of any claim based on any
product warranty; and (iii) the Seller knows of no or has no reasonable grounds
to know of any claim actual or threatened based on any product warranty of which
the Company has not received notice. The Company does not make any other
warranties expressed or implied, with respect to any of the products that it
manufactures or sells.

      5.26 Certain Disclosures: SCHEDULE 5.26 contains:

            (i)   a list of all officers and other employees, agents and
                  consultants of the Company and their respective annual
                  compensation including any outstanding loans owing to the
                  Company;

            (ii)  a list of those suppliers that were the twenty largest
                  suppliers of the Company in terms of dollar amount of
                  purchases during the Company's fiscal year that ended December
                  31, 2005, and during the period from December 31, 2005 through
                  the date hereof, together with a statement for each such
                  supplier for each such period of the dollar amount of such
                  purchases;

            (iii) a list of all of the outstanding purchase orders and/or
                  blanket commitments of the Company involving more than $500 on
                  the date hereof;

            (iv)  a list of all of the outstanding sales orders of the Company
                  involving more than $5,000 on the date hereof; and

            (v)   a list of all machinery and equipment owned and leased by the
                  Company on the date hereof.

      5.27 Brokers: All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Company and Seller
directly with Buyer and without the intervention of any other person other than
Potomac Capital Group, LLP and in such manner as not to give rise to any valid
claim against any of the parties for any finder's fee, brokerage commission or
like payment to any party other than Potomac Capital Group, LLP.

      5.28 No Untrue Statements: No statement by Seller contained in this
Agreement and no written statement contained in any certificate or other
document required to be furnished by

                                       27


Seller or any officer, employee, counsel or other agent of Seller to Buyer
pursuant to or in connection with this Agreement contains or will contain any
untrue statement of a material fact, or omits or will omit a material fact
necessary in order to make the statements therein contained not misleading.

      6.0 Representations and Warranties by Buyer: Buyer represents and warrants
to the Seller as follows:

      6.1 Corporate Organization: Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and has the corporate power and authority to carry on its business
as now being conducted by it and to acquire and own the Stock.

      6.2 Authorization of Agreement:

            (a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Buyer has the absolute and unrestricted right, power, and authority to execute
and deliver this Agreement and to perform its obligations hereunder.

            (b) Neither the execution, delivery or performance of this Agreement
nor the consummation of any of the transactions contemplated hereby (i) will
violate or conflict with the Articles of Incorporation or Bylaws of Buyer; or
(ii) is prohibited by or requires Buyer to obtain or make any consent,
authorization, approval, registration or filing under any statute, law,
ordinance, regulation, rule, judgment, decree or order of any court or
governmental agency, board, bureau, body, department or authority, or of any
other person, other than the consents of Parent's senior lenders listed on
Schedule 6.2 hereto.

      6.3 Litigation: There are no actions, suits, proceedings or
investigations, either at law or in equity, or before any commission or other
administrative authority in any United States or foreign jurisdiction, of any
kind now pending or threatened or proposed in any manner, or any circumstances
which should or could reasonably form the basis of any such action, suit,
proceeding or investigation involving Buyer or any of its properties or assets
that (i) questions the validity of this Agreement; or (ii) seeks to delay,
prohibit or restrict in any manner any action taken or to be taken by Buyer
under this Agreement.

      6.4 Brokers: Except as set forth in SCHEDULE 6.4, all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by Buyer directly with Seller and the Company and without the
intervention of any other person other than Potomac Capital Group, LLP and in
such manner as not to give rise to any valid claim for a finder's fee, brokerage
commission or like payment to any party other than Potomac Capital Group, LLP.

      6.5 Investment Representation: Buyer is acquiring the Stock for investment
and not

                                       28


with a view to the distribution thereof or dividing all or any part of its
interest therein with any other person.

      6.6 Financing. Buyer has all funds necessary to consummate the
transactions contemplated by this Agreement, including payment of the Purchase
Price.

      6.7 No Untrue Statements: No statement by Buyer contained in this
Agreement and no written statement contained in any certificate or other
document required to be furnished by any officer, employee, counsel or other
agent of Buyer to Seller pursuant to this Agreement contains or will contain any
untrue statement of a material fact, or omits or will omit a material fact
necessary in order to make the statements therein contained not misleading.

      7.0 Covenants of Seller: Seller covenants and agrees with Buyer as
follows:

      7.1 Access, Information and Documents: Pending the Closing, Seller will
cause the Company to give to Buyer and to its agents and representatives
including, but not limited to, accountants, lawyers, appraisers and employees,
full and complete access during normal working hours to any and all of the
properties, assets, books, records and other documents of the Company to enable
Buyer to make such examination of the business, properties, assets, books,
records, and other documents of the Company as Buyer may determine. Seller will
furnish, and will cause the Company to furnish to Buyer such information and
copies of such documents and records as Buyer shall reasonably request. As part
of such examination Buyer may make such inquiries of such persons having
business relationships with the Company including, but not limited to,
suppliers, licensees, distributors and customers as Buyer shall determine and
Seller shall cooperate fully, and shall cause the Company to cooperate fully,
with Buyer in connection therewith.

      7.2 Conduct of Business Pending Closing: From the date hereof until the
Closing, except as consented to by Buyer in writing:

            (A)   Seller will cause the Company to maintain itself at all times
                  as a corporation duly organized, validly existing and in good
                  standing under the laws of the jurisdiction under which it is
                  incorporated;

            (B)   Seller will cause the Company to carry on its business and
                  operations in a good and diligent manner on an arm's-length
                  basis and substantially in the manner carried on as of the
                  date hereof and will not permit the Company to engage in any
                  activity or transaction or make any commitment to purchase or
                  spend other than in the ordinary course of its business as
                  heretofore conducted: provided, however, without the written
                  consent of Buyer, Seller will not permit the Company to make
                  any commitment to purchase or spend involving $2,000.00 or
                  more;

                                       29


            (C)   Except as contemplated as part of this Agreement, Seller will
                  not permit the Company to declare, authorize or pay any
                  distribution or dividend to its stockholders and will not
                  permit the Company to redeem, purchase or otherwise acquire,
                  or agree to redeem purchase or otherwise acquire, any shares
                  of its stock;

            (D)   Seller will not permit the Company to pay or obligate itself
                  to pay any compensation, commission or bonus to any director,
                  officer, employee or independent contractor as such, except
                  for the regular compensation and commissions payable to such
                  director, officer, employee or independent contractor at the
                  rate in effect on the date of this Agreement;

            (E)   Seller will cause the Company to continue to carry insurance
                  insuring its properties and operations in amounts deemed
                  adequate by its Board of Directors or management, against all
                  risks usually insured against by persons operating similar
                  properties or conducting similar operations in the localities
                  where such properties are located or such operations are
                  conducted under valid and enforceable policies issued by
                  insurers of recognized responsibility;

            (F)   Seller will cause the Company to use all commercially
                  reasonable efforts to preserve its business organization
                  intact, to keep available to Buyer the services of its
                  employees and independent contractors and to preserve for
                  Buyer its relationships with suppliers, licensees,
                  distributors and customers and others having business
                  relationships with it;

            (G)   Seller will not permit the Company to, or to obligate itself
                  to, sell or otherwise dispose of or pledge or otherwise
                  encumber, any of its properties or assets except in the
                  ordinary course of business and Seller will cause the Company
                  to maintain its facilities, machinery and equipment in good
                  operating condition and repair, subject only to ordinary wear
                  and tear;

            (H)   Seller will not permit the Company to amend its Articles of
                  Incorporation or Bylaws;

            (I)   Seller will not permit the Company to engage in any activity
                  or transaction other than in the ordinary course of its
                  business as heretofore conducted;

            (J)   Seller shall as soon as possible (i) cause all of its
                  inventory to be reloaded onto Seller's computer by SKU and
                  (ii) shall cause all of its inventory to be retagged with the
                  appropriate SKU information; and

                                       30


            (K)   Without limiting the foregoing, Seller will not fail to
                  consult with Buyer regarding all significant developments,
                  transactions and proposals relating to the business or
                  operations or any of the assets or liabilities of the Company.

      7.3 Financial Statements and Certificate: As soon as possible, Seller
shall prepare and deliver to and to be received by Buyer the balance sheet of
the Company as at April 30, 2006, all of which shall be in form and substance
satisfactory to Buyer. Seller will deliver at Closing a certificate executed by
Seller in which Seller shall represent and warrant to Buyer that:

            (A)   such balance sheet is complete and correct and presents fairly
                  and accurately the financial position of the Company as at
                  April 30, 2006;

            (B)   no uncollectible accounts receivable are reflected on said
                  balance sheet without provision for an adequate reserve for
                  uncollectible amounts;

            (C)   inventories reflected on said balance sheet represent only
                  good and serviceable items priced at the lower of cost or
                  market values with adequate provision for obsolescence,
                  shrinkage, excess quantities, defective materials and
                  deterioration;

            (D)   as at April 30, 2006, there was no material liability that
                  should properly be reflected or reserved against in a balance
                  sheet which is not fully reflected or reserved against in said
                  balance sheet ;

            (E)   there are no matters of material importance relating to the
                  condition, financial or otherwise, operations, business,
                  property, assets or liabilities of the Company which have not
                  been appropriately reflected or reserved against in said
                  balance sheet;

            (F)   the Company has good and marketable title to all of its
                  properties and assets, including those reflected in said
                  balance sheet except as sold or otherwise disposed of in the
                  ordinary course of business since the date of said balance
                  sheet, subject to no mortgage, pledge, conditional sales
                  contract, lien or other encumbrance, except the lien of
                  current taxes not yet due and payable and the security
                  interest of Cardinal Bank disclosed in Schedule 5.11;

            (G)   the provisions for taxes due by the Company in said balance
                  sheet are sufficient for all unpaid federal, state and local
                  taxes, whether or not disputed, in respect of their businesses
                  and operations for all periods that ended prior to or on April
                  30, 2006; and

                                       31


            (H)   Seller knows of no question relating to any of the tax or
                  information returns of the Company which if determined
                  adversely to the Company would result in the assertion of any
                  tax deficiency.

      7.4 Cooperation With Respect to Financing: Seller agrees to cooperate in
any reasonable manner with Buyer in connection with the obtaining of any
financing related to this transaction and, in connection therewith, at the
request of Buyer, will cause the Company to execute and deliver loan and/or
security agreements which at the Closing will obligate the full credit of the
Company and which will be secured by all of the assets of the Company, provided
that Seller is reasonably assured that such agreements will be fully discharged
in the event the Closing is not consummated.

      7.5 Consents and Approvals: Seller shall use his reasonable best efforts
to obtain prior to the Closing all consents, authorizations and approvals under
all statutes, laws, ordinances, regulations, rules, judgments, decrees and
orders of any court or governmental agency, board, bureau, body, department or
authority or of any other person required to be obtained by Seller in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.

      7.6 Resignation of Directors: Prior to or at the Closing, Seller will
cause each of the officers and directors of the Company to resign effective at
the Closing.

      7.7 Use of Name: Seller will not use the name "Dominion Saddlery" or any
derivative thereof in any way whatsoever at any time after the Closing.

      7.8 Exclusive Dealing: Seller will not offer the Stock for sale to any
person other than Buyer nor will Seller, or any of his representatives enter
into negotiation with any other party for the disposition of the Company or the
Stock during the pendency of this Agreement, between Buyer and Seller.

      Further, Seller will not, directly or indirectly, through any officer,
director, agent or otherwise, (i) solicit or initiate, directly or indirectly,
or encourage submission of inquiries, proposals, or offers from any potential
buyer relating to the disposition of the Company or the Stock, or any part
thereof, other than sales of inventory and the replacement of furniture,
fixtures and equipment, in the ordinary course of business; or (ii) actively
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, the disposition of the Company or the
Stock or any part thereof.

      7.9 Non-Competition Agreements: Seller and Virginia Davis Young Newton
will execute at Closing in favor of the Company and Buyer non-competition
agreements, which shall provide that for periods of five (5) years and three (3)
years respectively commencing on the Closing Date:

                                       32


            (A)   Seller and Virginia Davis Young Newton will agree to not,
                  directly or indirectly, be involved in the manufacture,
                  assembly, sale or distribution, within or without the United
                  States, of any product manufactured, furnished, assembled,
                  sold or distributed by the Company at any time during the
                  five-year period ending on the Closing Date or otherwise
                  attempt to compete with Buyer with respect to the business of
                  the Company.

            (B)   Seller and Virginia Davis Young Newton shall not enter into
                  the employ of, render services or advice to, or engage in or
                  become a proprietor, partner or stockholder of any business
                  that competes with or contemplates competing with the business
                  of the Company.

      8.0 Covenants of Buyer.

      8.1 Confidential Information: Buyer shall preserve and maintain all
proprietary information and trade secrets of the Company received or confirmed
in documentary form by Buyer from Seller and the Company and shall not disclose
to any third person or use any such proprietary information or trade secret for
personal advantage, except that Buyer shall be free to use and disclose all or
any of such proprietary information and trade secrets which (i) were already in
Buyer's possession at the time of disclosure to Buyer; (ii) are a matter of
public knowledge; (iii) have been or are hereafter published other than through
Buyer; or (iv) are lawfully obtained by Buyer from a third person without
restrictions of confidentiality.

      8.2 No Disclosure of Consideration: Unless otherwise required by any
statute, law, ordinance, regulation, rule, judgment, order or decree, Buyer will
not disclose to any third person the amount of the consideration for the Stock
referred to in Section 2.0.

      8.3 Consents and Approvals: Buyer shall use its reasonable best efforts to
obtain prior to the Closing all consents, authorizations and approvals under all
statutes, laws, ordinances, regulations, rules, judgments, decrees and orders of
any court or governmental agency, board, bureau, body, department or authority
or of any other person required to be obtained by Buyer in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby.

      8.4 No Unreasonable Interference: Pending the Closing, Buyer will not take
any action, which could reasonably be expected to interfere unreasonably with
the business or operations of the Company.

      8.5 Burbank Business: The Company is a party to that certain Licensing
Agreement dated September 20, 1993 with Kinnaman, Morse & Byassee (KMB)
(together with its successors and permitted assigns, the "Licensee"), pursuant
to which the Company has licensed to the Licensee the right to use certain
service marks of the Company and the tradename

                                       33


"Dominion Saddlery" in connection with a business located at the Los Angeles
Equestrian Center, 480 Riverside Drive, Burbank, California 91506 (the "Burbank
Business") for a term ending on September 20, 2013 (the "Term"). Buyer covenants
and agrees that if prior to September 20, 2013 it or any of its affiliates
enters into any agreement, arrangement or understanding to purchase or acquire
all or substantially all of the Burbank Business pursuant to an asset sale,
stock purchase, consolidation or merger, lease, exclusive license, transfer or
conveyance, statutory exchange of securities, or other business combination,
then Buyer shall pay an additional amount of $100,000.00 to Seller in
immediately available funds.

      9.0 Conditions Precedent to Seller's Obligation to Sell the Stock: The
obligation of Seller to sell the Stock is subject to the fulfillment prior to or
at the Closing of the following conditions:

      9.1 Buyer's Performance: There shall not be any material error,
misstatement or omission in the representations and warranties made by Buyer in
this Agreement; all representations and warranties by Buyer contained in this
Agreement or in any written statement delivered by Buyer to Seller pursuant to
this Agreement shall be true in all material respects at and as of the Closing
as though such representations and warranties were made at and as of said time;
and Buyer shall have performed and complied in all material respects with all
the terms, provisions and conditions of this Agreement to be performed and
complied with by Buyer at or before the Closing.

      9.2 Opinion of Counsel: Seller shall have received an opinion, dated the
Closing Date, of Preti Flaherty, PLLP, counsel for Buyer, in form and substance
satisfactory to counsel for Seller, to the effect that:

            (A)   Buyer is a corporation duly organized, validly existing and in
                  good standing under the laws of the Commonwealth of
                  Massachusetts and has the corporate power to carry on its
                  business now conducted and to acquire and own the Stock;

            (B)   This Agreement has been duly authorized, executed and
                  delivered by Buyer and is a valid and binding obligation of
                  Buyer enforceable against Buyer in accordance with its terms,
                  except (a) as the same may be limited by bankruptcy,
                  insolvency, reorganization or other laws or equitable
                  principles relating to or affecting the enforcement of
                  creditors' rights; and (b) that the granting of specific
                  performance is subject to the discretion of a court of equity;

            (C)   All corporate proceedings required to be taken by Buyer at or
                  before the Closing in connection with this Agreement and the
                  transactions contemplated hereby have been duly taken;

                                       34


            (D)   The execution and delivery of this Agreement by Buyer and the
                  consummation of the transactions provided for in this
                  Agreement will not violate or conflict with any provision of
                  the Articles of Incorporation or Bylaws of Buyer or, to the
                  best of the knowledge of such counsel, result in any breach of
                  any contract or agreement to which Buyer is a party or by
                  which Buyer is bound or to which the properties or assets of
                  Buyer are subject; and

            (E)   As to such other matters (including the form of all documents
                  and the validity of all proceedings) incident to the matters
                  herein contemplated as Seller and his counsel may reasonably
                  request.

      In rendering the opinion described above, Preti Flaherty, PLLP may rely on
an opinion or opinions, copies of which shall be furnished to Seller, of local
counsel satisfactory to Seller with respect to the laws of jurisdictions other
than the United States of America and the Common-wealth of Massachusetts. As
part of its opinion, Preti Flaherty, PLLP will advise Seller that, in their
opinion, Preti Flaherty, PLLP and Seller are justified in relying on the
opinions of such local counsel.

      9.3 Consents and Approvals: Seller and Buyer shall have obtained all
consents, authorizations and approvals under all statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any court or governmental
agency, board, bureau, body, department or authority or of any other person
required to be obtained by Seller or Buyer, as the case may be, in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.

      9.4 10A Conditions: Buyer's written 10A Determination concludes that the
10A Conditions have been satisfied.

      10.0 Conditions Precedent to Buyer's Obligation to Purchase the Stock: The
obligation of Buyer to purchase the Stock is subject to the fulfillment prior to
or at the Closing of the following conditions:

      10.1 Seller's Performance: There shall not be any material error,
misstatement or omission in the representations and warranties made by Seller in
this Agreement; all representations and warranties by Seller and the Company
contained in this Agreement or in any written statement delivered by Seller to
Buyer pursuant to this Agreement shall be true in all material respects at and
as of the Closing as though such representations and warranties were made at and
as of said time; and Seller shall have performed and complied in all material
respects with all the terms, provisions and conditions of this Agreement to be
performed and complied with by Seller at or before the Closing.

                                       35


      10.2 Limited Procedures Report. (a) Buyer shall have received a written
report, dated no earlier than ten (10) days before Closing, either from the
Company's independent accountant or an independent accountant introduced by
Seller or his legal counsel (herein, the "Reporting Accountant"), summarizing
its findings based on its undertaking the Specified Limited Procedures, as
defined in subsection 10.2(b) below (such a report herein the "Accounting
Report"). Buyer agrees to pay for the Reporting Accountant's services to a
maximum of $5,000.

      (b) As used herein, the term "Specified Limited Procedures" means the
activities in clauses (i-ii) undertaken by the Reporting Accountant for the
purpose of testing the accuracy of certain financial information shown in the
Company's income statement and balance sheet for the year ended December 31,
2005 and the Company's tax return for the 2005 tax year (collectively herein,
the "Company's Financial Statements"):

            (i) Documenting the Company's procedures and methodology for
reporting and controlling its accounts payable; and

            (ii) Documenting the Company's procedures and methodology for
assigning per item costs to individual inventory items by the Company.

      10.2A Accounting Report. If the Accounting Report reveals information
indicating a probability of material adverse discrepancies or errors in the
Company's Financial Statements, then Buyer shall have the right to terminate
this Agreement.

      10.3 Due Diligence Investigation and Acquisition Audit: Buyer's
investigation of Company's books, records, and documents regarding the financial
condition, assets, liabilities and potential liabilities of the Company shall
have been completed and produced results that are satisfactory to the Buyer.

      10.4 Opinion of Counsel: Buyer shall have received an opinion, dated the
Closing Date, of Venable LLP counsel for Seller, in form and substance
satisfactory to Preti Flaherty, PLLP, counsel for Buyer, to the effect that:

            (A)   The Company is a corporation duly organized, validly existing
                  and in good standing under the laws of the Commonwealth of
                  Virginia; and has full corporate power to carry on its
                  business as now conducted;

            (B)   The Company's entire authorized capital stock consists of
                  100,000 shares of Common Stock of the par value of $0.01 per
                  share, of which 50,000 shares are issued; all of such 50,000
                  issued shares of common stock of the Company have been validly
                  issued and are fully paid and non-assessable;

            (C)   This Agreement has been duly executed and delivered by the
                  Seller and is a legal, valid and binding obligation of the
                  Seller enforceable against the

                                       36


                  Seller in accordance with its terms, except as the same may be
                  limited by (i) bankruptcy, insolvency, reorganization or other
                  laws or equitable principles relating to or affecting the
                  enforcement of creditors' rights; and (ii) the exercise of
                  judicial discretion in accordance with general principles of
                  equity;

            (D)   The execution and delivery of this Agreement by the Seller and
                  the consummation of the transactions provided for in this
                  Agreement will not violate or conflict with any provision of
                  the Articles of Incorporation or Bylaws of the Company or, to
                  the best of the knowledge of such counsel, result in any
                  breach of any contract or agreement set forth on Schedule
                  5.11;

      10.5 Consents and Approvals: Seller and Buyer shall have obtained all
consents, authorizations and approvals under all statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any court or governmental
agency, board, bureau, body, department or authority or of any other person
required to be obtained by Seller or Buyer, as the case may be, in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.

      10.6 Properties and Leases: There shall have occurred no material damage
to or destruction or loss of (whether or not covered by insurance) any of the
Company's facilities, machinery, equipment or other assets, and Buyer shall have
obtained written extensions to all of the Company's store leases on terms
satisfactory to Buyer.

      10.7 Retention of Key Employees: Buyer's obligation to close shall be
conditioned on, among other things, the retention of certain employees of the
Company, specifically (i) Virginia Newton and (ii) David Revilla.

      10.8 Resignations of Directors: The directors and officers of the Company
shall have executed and delivered to the Buyer their resignations as directors
and officers of the Company effective at the Closing.

      10.9 10A Conditions: Buyer's written 10A Determination concludes that the
10A Conditions have been satisfied.

10A No Binding Obligation: Notwithstanding anything to the contrary in this
Agreement, Buyer shall not have a binding obligation, and Seller shall not have
the right to enforce Buyer's agreement to purchase the Company Stock pursuant to
Section 1.0 of this Agreement, unless and until Buyer decides, in the sole
discretion of Buyer and its advisors, on the basis of its review of the
Company's financial statements, tax returns and business records, that each and
all of the following conditions (jointly, the "10A Conditions") have been met:
(i) that the Company

                                       37


neither is nor would be deemed to be a "significant subsidiary" of Buyer
pursuant to Rule 1-02(w) of Regulation S-X promulgated by the United States
Securities and Exchange Commission (SEC); and (ii) in connection with the
consummation of the transactions contemplated by this Agreement, both (A) that
Rule 3-05 of Regulation S-X does not requires the Company to file with the SEC
audited financial statements of the Buyer, and (B) that Article 11 of Regulation
S-X does not require the Company to file pro forma financial information of the
combined businesses of the Company and Buyer. Further, unless and until Buyer
decides that the 10A conditions have been satisfied, the Buyer shall not have
the right to enforce the Seller's agreement to sell the Company stock pursuant
to Section 1.0 of this Agreement. Buyer shall use its best efforts to make its
determination (herein, the "10A Determination") whether the 10A Conditions have
been satisfied, and Buyer shall no later than five (5) days prior to the Closing
Date (the "Determination Deadline") give written notice to Seller and the
Company of its 10A Determination, which notice shall include Buyer's statement
whether the 10A Conditions have been satisfied. If Buyer does not provide
written notice to Seller and the Company of its 10A Determination on or before
the Determination Deadline, then the Buyer's rights arising under this Section
shall be waived and this Agreement shall become binding on the Buyer.

11.0 Termination: This Agreement may be terminated as follows:

      11.1 Termination by Buyer: Buyer may, without liability to Seller,
terminate this Agreement by notice to Seller (i) at any time prior to the
Closing if default shall be made by Seller in the observance or in the due and
timely performance of any of the terms hereof to be performed by Seller that
cannot be cured at or prior to the Closing; (ii) at the Closing if any of the
conditions precedent to the performance of Buyer's obligations at the Closing
shall not have been fulfilled, or on or prior to the Determination Date, if
Buyer concludes that the 10A Conditions have not been satisfied; (iii) at the
Closing if the Inventory described in Section 1.1 above reveals material
problems with respect to the value, condition or accounting for the Company's
saleable inventory or (iv) at any time prior to the Closing upon tender of the
break-up fee described in Section 14.2.

      11.2 Termination by Seller: Seller may, without liability to Buyer,
terminate this Agreement by notice to Buyer (i) at any time prior to the Closing
if default shall be made by Buyer in the observance or in the due and timely
performance of any of the terms hereof to be performed by Buyer that cannot be
cured at or prior to the Closing; or (ii) at the Closing if any of the
conditions precedent to the performance of Seller's obligations at the Closing
shall not have been fulfilled.

      11.3 Effect of Termination: If this Agreement is terminated, this
Agreement, except for Section 8.1, shall no longer be of any force or effect and
there shall be no liability on the part of any party or its respective
directors, officers or shareholders except, in the case of termination because
of a material default or material breach resulting from the willful fault of
another party, the aggrieved party or parties may recover from the defaulting
party the amount of expenses incurred by such aggrieved party or parties in
connection with this Agreement and the

                                       38


transactions contemplated hereby which the aggrieved party or parties would
otherwise have to bear pursuant to Section 14.2 of this Agreement. If this
Agreement shall be terminated, each party will (i) redeliver all documents, work
papers and other materials of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution of this
Agreement, to the party furnishing the same; and (ii) destroy all documents,
work papers and other materials developed by its accountants, agents and
employees in connection with the transactions contemplated hereby which embody
proprietary information or trade secrets furnished by any party hereto or
deliver such documents, work papers and other materials to the party furnishing
the same or excise such information or secrets therefrom and all information
received by any party hereto with respect to the business of any other party
(other than information which is a matter of public knowledge or which has
heretofore been or is hereafter published in any publication for public
distribution or filed as public information with any governmental authority)
shall not at any time be used for personal advantage or disclosed by such party
to any third person to the detriment of the party furnishing such information or
any of its subsidiaries.

      12.0 Intentionally Omitted.

      13.0 Survival of Representations and Warranties: All statements contained
in any certificate or other instrument delivered by or on behalf of Seller or
Buyer pursuant to this Agreement shall be deemed representations and warranties
hereunder by the party delivering such certificate or instrument. All
representations, warranties and agreements made by Seller or Buyer in this
Agreement or pursuant hereto shall survive the Closing for a period of three (3)
years, except for the representations, warranties and agreements contained in
Sections 5.2, 5.10, 5.15 or 5.18 survive for the longer of three (3) years or
the duration of the applicable statute of limitations.

      13.1 Seller's Indemnification Obligations: Subject to the terms and
conditions of this Section 11, Seller shall indemnify and hold harmless Buyer
from and against any and all losses, costs, expenses (including, without
limitation, reasonable legal and other expenses), actions, suits, demands,
assessments, judgments or claims actually suffered or incurred by it, excluding
any special, consequential or punitive damages (hereinafter, "Loss(es)"), except
as expressly limited by the terms of Section 13.2, arising out of or resulting
from:

            (a)   any misrepresentation or breach of warranty of Seller
                  contained in this Agreement or in any Schedule of Seller or in
                  any certificate delivered by Seller at the Closing; provided
                  that any claim for indemnification by Buyer under this
                  paragraph (a) may be made no later than the date three (3)
                  years from and after the Closing Date, except for the
                  representations, warranties and agreements contained in
                  Sections 5.2, 5.10; 5.15 or 5.18, for which a claim may be
                  made during the longer of three (3) years from and after the
                  Closing Date or the duration of the applicable statute of
                  limitations;

                                       39


            (b)   any breach of any covenant of Seller contained in this
                  Agreement; and

            (c)   the Assumed Liabilities.

      13.2 Limitation on Seller's Indemnification Obligations: Seller shall have
no obligation to provide indemnification pursuant to Section 13.1 for amounts in
excess of the amount equal to fifty percent (50%) of the Purchase Price and only
to the extent that the aggregate amount of indemnification to which Buyer shall
have become entitled hereunder shall exceed $5,000.

      13.3 Buyer's Indemnification Obligations: Subject to the terms and
conditions of this Section 13.3, Buyer agrees to indemnify and hold Seller
harmless against all Losses, except as expressly limited by the terms of Section
13.4, resulting from or relating to:

            (a)   any misrepresentation or breach of warranty of Buyer contained
                  in this Agreement or in any Schedule of Buyer or in any
                  certificate delivered by Buyer at the Closing; provided that
                  any claim for indemnification by Seller under this paragraph
                  (a) may be made no later than the date three (3) years from
                  and after the Closing Date; and

            (b)   any breach of any covenant of Buyer contained in this
                  Agreement.

      13.4 Limitation on Buyer's Indemnification Obligations: Buyer has no
obligation to provide indemnification pursuant to Section 13.3 except to the
extent that the aggregate amount of indemnification to which Seller otherwise
shall have become entitled hereunder shall exceed $5,000.

      13.5 Guaranty of Parent. Parent agrees to confirm in writing at Closing,
its guaranty of all of Buyer's obligations arising under the indemnifications
provisions provided in favor of Seller.

      13.6 Procedure for Indemnification Claims: The respective indemnification
obligations of Seller and Buyer pursuant to this Section 13.0 shall be
conditioned upon compliance by Seller and Buyer with the following procedures
for indemnification claims based upon or arising out of any claim, action or
proceeding by any person not a party to this Agreement:

            (a)   If at any time a claim shall be made or threatened, or an
                  action or proceeding shall be commenced or threatened, against
                  a party hereto (the "Aggrieved Party") which could result in
                  liability of the other party (the "Indemnifying Party") under
                  its indemnification obligations hereunder, the Aggrieved Party
                  shall give to the Indemnifying Party prompt notice of such
                  claim, action or proceeding. Such notice shall state the basis
                  for the

                                       40


                  claim, action or proceeding and the amount thereof (to the
                  extent such amount is determinable at the time when such
                  notice is given) and shall permit the Indemnifying Party to
                  assume the defense of any such claim, action or proceeding
                  (including any action or proceeding resulting from any such
                  claim). Failure by the Indemnifying Party to notify the
                  Aggrieved Party of its election to defend any such claim,
                  action or proceeding within a reasonable time, but in no event
                  more than fifteen days after notice thereof shall have been
                  given to the Indemnifying Party, shall be deemed a waiver by
                  the Indemnifying Party of its right to defend such claim,
                  action or proceeding; provided, however, that the Indemnifying
                  Party shall not be deemed to have waived its right to contest
                  and defend against any claim of the Aggrieved Party for
                  indemnification hereunder based upon or arising out of such
                  claim, action or proceeding.

            (b)   If the Indemnifying Party assumes the defense of any such
                  claim, action or proceeding, the obligation of the
                  Indemnifying Party as to such claim, action or proceeding
                  shall be limited to taking all steps necessary in the defense
                  or settlement thereof and, provided the Indemnifying Party is
                  held to be liable for indemnification hereunder, to holding
                  the Aggrieved Party harmless from and against any and all
                  Losses caused by or arising out of any settlement approved by
                  the Indemnifying Party or any judgment or award rendered in
                  connection with such claim, action or proceeding. The
                  Aggrieved Party may participate, at its expense, in the
                  defense of such claim, action or proceeding provided that the
                  Indemnifying Party shall direct and control the defense of
                  such claim, action or proceeding. The Aggrieved Party agrees
                  to cooperate and make available to the Indemnifying Party all
                  books and records and such officers, employees and agents as
                  are reasonably necessary and useful in connection with the
                  defense. The Indemnifying Party shall not, in the defense of
                  such claim, action or proceeding, consent to the entry of any
                  judgment or award, or enter into any settlement, except in
                  either event with the prior consent of the Aggrieved Party,
                  which does not include as an unconditional term thereof the
                  giving by the claimant or the plaintiff to the Aggrieved Party
                  of a release from all liability in respect of such claim,
                  action or proceeding.

            (c)   If the Indemnifying Party does not assume the defense of any
                  such claim, action or proceeding, the Aggrieved Party may
                  defend against such claim, action or proceeding in such manner
                  as it may deem appropriate. The Indemnifying Party agrees to
                  cooperate and make available to the Aggrieved Party all books
                  and records and such officers, employees and agents as are
                  reasonably necessary and useful in connection with the
                  defense.

                                       41


            (d)   In the event an Aggrieved Party or Indemnifying Party shall
                  cooperate in the defense or make available books, records,
                  officers, employees or agents, as required by the terns of
                  paragraphs (b) and (c), respectively, of this Section 13.6 the
                  party to which such cooperation is provided shall pay the
                  out-of-pocket costs and expenses (including legal fees and
                  disbursements) of the party providing such cooperation and of
                  its officers, employees and agents reasonably incurred in
                  connection with providing such cooperation, but shall not be
                  responsible to reimburse the party providing such cooperation
                  for such party's time or the salaries or costs of fringe
                  benefits or other similar expenses paid by the party providing
                  such cooperation to its officers and employees in connection
                  therewith.

      13.7 Insurance and Tax Effects:

            (a) If any Loss related to a claim by an Aggrieved Party is covered
by one or more third party insurance policies held by the Aggrieved Party and
the Aggrieved Party actually receives a full or partial recovery under such
insurance policies, the Aggrieved Party shall not be entitled to recover from
the Indemnifying Party (and shall refund amounts received from the Indemnifying
Party up to the amount of indemnification actually received from the
Indemnifying Party) with respect to such Loss to the extent Aggrieved Party
receives any insurance payment under such third party insurance with respect to
such Loss (net of (i) any costs of collecting such insurance payment, including
the amount of any co-payment or deductible, and (ii) that portion of any premium
increase in the next policy period of the applicable insurance policy or
replacement insurance policy that results directly from the assertion of such
claim, as determined by correspondence from the insurance carrier or insurance
broker to the Aggrieved Party, a copy which shall have been provided to the
Indemnifying Party).

            (b) The amount of any indemnification payable under this Agreement
shall be (i) treated as an adjustment to the Purchase Price for tax purposes and
(ii) net of any tax benefit actually realized by the Aggrieved Party (including,
where Buyer is the Aggrieved Party, the Company) by reason of the facts and
circumstances giving rise to the indemnification and (iii) increased by the
amount of any tax actually required to be paid by the Aggrieved Party on the
accrual or receipt of the indemnification payment (including any amount payable
pursuant to this clause (iii)). For purposes of the preceding sentence, the
amount of any state income tax benefit or cost shall take into account the
federal income tax effect of such benefit or cost.

      13.8 Sole and Exclusive Remedy: The indemnification obligations of Seller
and Buyer under this Section 13.0 shall constitute the sole and exclusive
remedies of Buyer and Seller, respectively, for the recovery of money damages
with respect to the matters described in Sections 13.1 and 13.3, respectively.
The terms of this Section 13.8 shall not be construed as limiting in any way
whatsoever any remedy other than for the recovery of money damages to which
Buyer or Seller may be entitled.

                                       42


      14.0 Miscellaneous:

      14.1 Assurance of Further Action: From time to time after the Closing and
without further consideration from Buyer, but at Buyer's expense, Seller shall
execute and deliver, or cause to be executed and delivered, to Buyer such
further instruments of sale, assignment, transfer and delivery and take such
other action as Buyer may reasonably request in order to more effectively sell,
assign, transfer and deliver and reduce to the possession of Buyer any and all
of the Stock and consummate the transactions contemplated hereby.

      14.2 Expenses: Whether or not the Closing is consummated, except as
otherwise provided in Section 11.3 and Section 10.2(a), each of the parties will
pay all of its own legal and accounting fees and other expenses incurred in the
preparation of this Agreement and the performance of the terms and provisions of
this Agreement. If Seller fails to perform any of his material obligations at
the Closing for any reason, absent a prior default by Buyer, Seller shall pay to
Buyer $50,000 to defray the costs incurred by Buyer in connection with the
transactions contemplated hereby. If Buyer fails to perform any of its material
obligations at the Closing for any reason, absent a prior default by Seller; or
Buyer opts to terminate this Agreement as provided in Section 11.1(iii), Buyer
shall pay to Seller $50,000 to defray the costs incurred by Seller in connection
with the transactions contemplated hereby.

      14.3 Public Disclosure: Before the Closing, neither Buyer nor Seller shall
make any public release of information regarding the matter contemplated herein
except (i) that a joint press release of agreed form may be issued by Buyer and
Seller to announce execution of this Agreement; (ii) that Buyer and Seller may
each continue such communications with employees, customers, suppliers, lenders,
lessors, shareholders, and other particular groups as may be legally required or
necessary or appropriate and not inconsistent with the best interests of the
other party directly in connection with consummation of this Agreement and (iii)
as required by law.

      14.4 Waiver: The parties hereto may by written agreement (i) extend the
time for or waive or modify the performance of any of the obligations or other
acts of the parties hereto; or (ii) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement.

      14.5 Notices: All notices, requests or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
sent by overnight delivery, facsimile followed by telephonic confirmation of
receipt and mailed first class certified mail postage prepaid addressed as
follows: if to Buyer, to Dover Saddlery, Inc., Attention: Stephen L. Day, 525
Great Road, Littleton, MA 01460 (with a copy to John M. Sullivan, Esq., Preti
Flaherty, PLLP, P.O. Box 1318, Concord, NH 03302-1318); if to Seller, to
Reynolds Young, 4520 32nd Road, Arlington, VA 22207-4459 (with a copy to Thomas
W. France, Esq., Venable LLP, 8010 Towers Crescent Drive, Suite 300, Vienna, VA
22182); or to such other address as may have been furnished in writing to the
party giving the notice by the party to whom notice is to be given.

                                       43


      14.6 Entire Agreement: This Agreement embodies the entire agreement among
the parties and there have been and are no agreements, representations or
warranties, oral or written among the parties other than those set forth or
provided for in this Agreement. This Agreement may not be modified or changed,
in whole or in part, except by a supplemental agreement signed by each of the
parties.

      14.7 Rights Under this Agreement; Nonassignability: This Agreement shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns, but shall not be assignable by any party without the
prior written consent of the other parties. Nothing contained in this Agreement
is intended to confer upon any person, other than the parties to this Agreement
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.

      14.8 Governing Law: This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia applicable to
agreements made and to be performed in the Commonwealth of Virginia and shall be
construed without regard to any presumption or other rule requiring the
construction of an agreement against the party causing it to be drafted.

      14.9 Headings; References to Sections;. Exhibits and Schedules: The
headings of the Sections, paragraphs and subparagraphs of this Agreement are
solely for convenience and reference and shall not limit or otherwise affect the
meaning of any of the terms or provisions of this Agreement. The references
herein to Sections, Exhibits and Schedules, unless otherwise indicated, are
references to sections of and exhibits and schedules to this Agreement.

      14.10 Counterparts: This Agreement may be executed in any number of
counterparts, each of which shall be an original, but which together constitute
one and the same instrument.

                            [SIGNATURE PAGE FOLLOWS]

                                       44


      IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.

Witnesses:

                                             DOVER SADDLERY, INC.

______________________                   By: ________________________________
                                             Its President, duly authorized

                                             DOVER SADDLERY RETAIL, INC.

______________________                   By: ________________________________
                                             Its President, duly authorized

                                             OLD DOMINION ENTERPRISES, INC.

______________________                   By: _________________________________
                                             Its President, duly authorized

                                             SELLER

______________________                       _________________________________
                                             Reynolds Young

                                       45


                                  SCHEDULE 1.1

                                ASSUMED LIABILITY

      Following the Closing, Buyer shall assume liability for (i) no more than
$200,000 in accounts payable of the Company as of the Closing Date; (ii) no more
than $20,000 in gift certificates and store credit amounts due for customers as
of the Closing Date; and (iii) any and all liabilities incurred by the Company
on or after the Closing Date. Seller shall retain liability for and Buyer will
NOT assume (i) any payables of the Company incurred prior to the Closing Date in
excess of $200,000; (ii) all institutional debt of the Company as of the Closing
Date, including all debts owing to Cardinal Bank; (iii) all shareholder debt of
the Company as of the Closing Date, previously designated as "loans payable" on
the Company's Balance Sheet; (iv) any liability related to litigation or claims
arising out of pre-Closing events, including any Environmental Liabilities; (v)
any pre-closing product liability claims; (vi) any of Seller's obligations
arising under the Agreement; (vii) all motor vehicle lease arrangements prior to
the Closing Date, previously designated as "capital leases(s) payable" on the
Company's Balance Sheet; and (viii) any accrued liabilities of the Company as of
the Closing Date to employees for paid time off.

                                       46


                                       5.1

                      DIRECTORS AND OFFICERS OF THE COMPANY

                                       47


                                  SCHEDULE 5.2

                       CAPITALIZATION AND STOCK OWNERSHIP

                                       48


                                  SCHEDULE 5.4

                    AUTHORIZATION OF AGREEMENT; NO VIOLATION

                                       49


                                  SCHEDULE 5.7

                           ABSENCE OF CERTAIN CHANGES

                                       50


                                  SCHEDULE 5.8

               TITLE TO AND CONSOLIDATION OF PROPERTIES AND ASSETS

                                       51


                                  SCHEDULE 5.9

                     REAL ESTATE AND PROPERTY OF THE COMPANY

                                       52


                                  SCHEDULE 5.10

                                   TAX MATTERS

                                       53


                                  SCHEDULE 5.11

                                    CONTRACTS

                                       54


                                  SCHEDULE 5.12

                               PENDING LITIGATION

                                       55


                                  SCHEDULE 5.13

                             PATENTS AND TRADEMARKS

                                       56


                                  SCHEDULE 5.15

                              ENVIRONMENTAL MATTERS

                                       57


                                  SCHEDULE 5.16

                   GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS

                                       58


                                  SCHEDULE 5.18

                     EMPLOYEE BENEFIT PLANS AND ARRANGEMENTS

                                       59


                                  SCHEDULE 5.19

                              CERTAIN TRANSACTIONS

                                       60


                                  SCHEDULE 5.23

                                    INSURANCE

                                       61


                                  SCHEDULE 5.24

                        BANK ACCOUNTS; POWERS OF ATTORNEY

                                       62


                                  SCHEDULE 5.25

                               PRODUCT WARRANTIES

                                       63


                                  SCHEDULE 5.26

                               CERTAIN DISCLOSURES

                                       64


                                  SCHEDULE 6.4

                                     BROKERS

Potomac Capital Group, LLP

                                       65

EX-10.41

                                                                   Exhibit 10.41

                                      LEASE

      THIS LEASE ("Lease") is made as of the ___ day of June, 2006, between
HUMPHREY & RODGERS, PO Box 1564, Middleburg, Virginia 20118-1564 (the
"Landlord") and DOVER SADDLERY RETAIL, INC., a Massachusetts corporation with a
principal place of business located at PO Box 1100, 525 Great Road, Littleton,
Massachusetts 01460 (the "Tenant").

                                   CONTINGENCY

      THIS LEASE SHALL BE CONTINGENT UPON THE CONSUMMATION OF THE ACQUISITION OF
THE BUSINESS OF "DOMINION SADDLERY" BY THE TENANT HEREUNDER, FAILING WHICH THIS
LEASE SHALL BE A NULLITY.

ARTICLE 1 - LEASED PREMISES

      The Landlord agrees to lease to the Tenant and the Tenant accepts the
lease from the Landlord of premises located along Route 50, Pleasant Valley,
Virginia, further described and identified in Exhibit A to this Lease (the
"Premises") under the terms of this Lease.

ARTICLE 2 - TERM

      The term of this Lease shall extend from the later to occur of April 1,
2006 or the Closing on the sale of "Dominion Saddlery" (the "Commencement Date")
until May 31, 2007 (the "Termination Date"). On the Termination Date, this Lease
will automatically renew for a one-year period. The Lease will continue to renew
for subsequent one-year periods upon the anniversary of the Termination Date,
unless either party provides twelve (12) months' notice, pursuant to the notice
provisions contained herein, of its desire to terminate the Lease.

ARTICLE 3 - RENT

      The Tenant shall pay the Landlord Gross Rent of Five Thousand Dollars
($5,000.00) per month, in advance, on the first day of each month. Payment shall
be made to Landlord at Braddock Supply Corporation, Chantilly, Virginia, or such
other place as Landlord may designate in writing.

ARTICLE 4 - SECURTY DEPOSIT

      The Tenant has deposited no security deposit with the Landlord.

ARTICLE 5 - USE OF PREMISES

      The premises may be used only in accordance with all applicable laws and
ordinances. Tenant shall keep the Premises free from all dangerous conditions.
Tenant will use said Premises actively and continuously for the full term hereof
as a tack shop.



ARTICLE 6 - UTILITIES, TAXES, INSURANCE

      Tenant shall pay all utility charges for utilities affecting the Premises.
The Landlord shall pay for all real estate taxes affecting the Premises and fire
insurance for the Premises. Tenant shall name Landlord as an additional insured
on its casualty and public liability insurance policies and shall be responsible
for insuring its equipment located at the Premises.

ARTICLE 7 - REPAIR AND MAINTENANCE

      The Tenant shall keep the Premises clean and in good repair and shall not
commit damage or waste. The Tenant shall be responsible for all maintenance
expenses of any kind with respect to the Premises, and shall repair any damage
to the Premises not caused by the Landlord's gross negligence or willful
misconduct.

ARTICLE 8 - LIABILITY/INDEMNITY

      Except as provided below, the Tenant assumes the entire risk of and sole
responsibility for any injury or harm of any kind to any person resulting from
the condition or use of the Premises. The Landlord shall not be liable to the
Tenant or any third party for any type of harm that occurs in connection with
the Premises, except for harm resulting from the Landlord's willful misconduct
or gross negligence. The Tenant shall indemnify and save the Landlord harmless
from all losses, costs, damages, and claims, including attorneys' fees for which
the Landlord may be held liable, arising from the Tenant's use and occupancy of
the Premises.

ARTICLE 9 - DAMAGE TO PREMISES; CONDEMNATION

      If fire or other casualty damages the Premises or any portion so as to be
unfit for use, or if so much of the Premises are taken as to render the Premises
to be unfit for use, the Tenant may terminate the Lease if it first delivers to
the Landlord all insurance payments, damages or other proceeds held by it with
respect to the damage to or taking of the Premises and an assignment of all its
rights to receive future proceeds, damages, or insurance payments.

ARTICLE 10 - ACCESS TO PREMISES

      The Landlord may enter and inspect the Premises, at reasonable times and
upon reasonable notice to the Tenant. In the event of an emergency, the Landlord
shall not need the Tenant's advance consent to enter the Premises.

ARTICLE 11 - ASSIGNMENT/SUBLETTING

      The Tenant shall not allow any other party to occupy the Premises. The
Tenant shall not assign the Lease or sublet the Premises without the Landlord's
prior written consent, which consent may be withheld in the Landlord's sole
discretion. The Landlord may assign its rights under the Lease.

                                       2


ARTICLE 12 - CONDITION AT TERMINATION OF LEASE

      At the end of the Lease:

            1.    The Premises shall be in as good and clean a condition as at
                  the beginning of the Lease, usual wear and tear and damage by
                  fire, storm or public enemies excepted.

            2.    Anything installed by the Tenant shall be removed, and any
                  damage caused by removal shall be repaired at Tenant's
                  expense.

            3.    Any improvements or alterations that are not detachable shall
                  become the Landlord's property; however, the Landlord may
                  require the Tenant to remove any unapproved improvement or
                  alteration and to return the Premises to their condition prior
                  to such alteration or improvement.

            4.    The Tenant shall remove all personal property from the
                  Premises.

            5.    The Tenant shall return all keys and copies of keys to the
                  Landlord.

      At the end of the Lease, if the Tenant or its representatives fail to
remove all of the Tenant's personal property from the Premises within a
reasonable period of time, any personal property remaining shall be deemed to be
the Landlord's property and may be disposed of by the Landlord as it sees fit.

ARTICLE 13 - DEFAULT

      Upon the Tenant's default under this Lease, the Landlord may, at any time,
terminate the Lease without giving up any rights under the Lease. The Landlord
acknowledges its obligation to comply with Virginia law in exercising its rights
to terminate the Tenant's tenancy and to retake possession of the Premises if
the Tenant abandons the property or defaults under this Lease.

ARTICLE 14 - WAIVER

      The Landlord's consent or inaction as to any breach of the Lease shall not
constitute a waiver of any prior or succeeding breach. Acceptance of rent with
knowledge of a breach shall not constitute waiver.

ARTICLE 15 -ACCEPTANCE OF PREMISES

      The Tenant's occupancy of the Premises constitutes the Tenant's acceptance
of the Premises, and places upon the Tenant the sole responsibility for the
upkeep and safety of the Premises set forth in the Lease.

ARTICLE 16 - SUBORDINATION AND ESTOPPEL CERTIFICATE

      Upon the Landlord's request, the Tenant shall subordinate this Lease to
any mortgage of the Premises granted by the Landlord to a lender to secure any
obligation of the Landlord to such lender, and the Tenant shall execute such
estoppel certificates and subordination agreements as may reasonably be required
by the Landlord's lender in connection with such financing. The

                                       3


Tenant hereby irrevocably appoints the Landlord its attorney-in-fact to execute
such documents, should the Tenant refuse to sign such documents.

ARTICLE 17 - NOTICE

      Whenever this Lease requires or permits notice, notice shall be sent
hand-delivered to the individual or address, or mailed, postage paid, registered
or certified, return receipt requested, to the Tenant and the Landlord at the
address written first above, unless the law requires a different means of
service. Each party is responsible for providing a current address. Failure to
notify the other party of a new address shall be at the failing party's sole
risk, and any notice sent or served to the current address shall be deemed
proper notice. The Tenant shall furnish the Landlord with a future address on
move out.

ARTICLE 18 - HOLDING OVER

      If the Tenant remains in possession of the Premises after the termination
of the Lease, Tenant will occupy the Premises as a tenant from month-to-month,
subject to all conditions provisions, and obligations of the Lease in effect on
the last day of the term and Tenant shall pay a rent equal to the fixed rent due
hereunder on the last month of the term or extended term plus ten percent (10%).

ARTICLE 19 - CUMULATIVE REMEDIES

      The remedies provided by this Lease are not exclusive of other remedies
available under present or future law.

ARTICLE 20 - GOVERNING LAW

      This Lease shall be governed by Virginia law.

ARTICLE 21 - SEVERABILITY

      If any provision of this Lease is contrary to law or is held invalid, the
remaining provisions shall remain effective. If the law changes and affects
rights under the Lease, the Lease shall be read to comply with or include such
laws.

ARTICLE 22 - BINDING EFFECT

      This Lease shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto.

                                       4


EXECUTED as of the day and year first written above.

                                    LANDLORD:

                                    HUMPHREY & RODGERS

                                    By:  ________________________________
                                    Name: _______________________________
                                    Title: ______________________________
                                    Duly Authorized

                                    TENANT:

                                    DOVER SADDLERY, RETAIL INC.

                                    By:  ________________________________
                                    Name: _______________________________
                                    Title: ______________________________
                                    Duly Authorized

COMMONWEALTH OF VIRGINIA
COUNTY OF ___________________

      The foregoing instrument was acknowledged me this ___ day of
________________, 2006 by ________________________, the
__________________________ of Humphrey & Rodgers, on behalf of said company.

                                    _____________________________________
                                    Justice of the Peace/Notary Public
                                    My Commission Expires: ______________

STATE OF ____________________
COUNTY OF ___________________

      The foregoing instrument was acknowledged me this ___ day of
________________, 2006 by ________________________, the
__________________________ of Dover Saddlery Retail, Inc., on behalf of said
company.

                                    _____________________________________
                                    Justice of the Peace/Notary Public
                                    My Commission Expires: ______________

                                       5


                                    EXHIBIT A

                        [DESCRIPTION OF LEASED PREMISES]

      The parties will attach prior to execution a site plan for the property,
which will designate that Tenant shall control the entire premises including all
parking and ingress/egress to edge of property line.

                                       6

EX-10.42

                                                                   Exhibit 10.42

                  AGREEMENT OF LEASE FOR SHOPPING CENTER SPACE

                                     BETWEEN

                      SEQUEL INVESTORS LIMITED PARTNERSHIP

                                       AND

                         OLD DOMINION ENTERPRISES, INC.

                                  DATED AS OF:

                                  MAY 20, 1997

                                 SEMINOLE SQUARE
                                 SHOPPING CENTER

                            CHARLOTTESVILLE, VIRGINIA

                            INDEX TO LEASE AGREEMENT

                                                                              
SECTION 1    Definitions...................................................          2
SECTION 2    Grant and Term................................................          3
SECTION 3    Rent..........................................................          4
SECTION 4    Construction of Improvements..................................          7
SECTION 5    Use of Premises...............................................          8
SECTION 6    Quiet Enjoyment and Landlord's Right of Entry.................          8
SECTION 7    Nuisance, Waste, Hazardous Materials, Rules and Regulations...          9
SECTION 8    Compliance with Law, Liens, Indemnity.........................         10
SECTION 9    Maintenance and Repair of Premises............................         11
SECTION 10   Common Areas and Charges......................................         12
SECTION 11   Fixtures, Signs and Alterations...............................         13
SECTION 12   Condemnation..................................................         14
SECTION 13   Insurance.....................................................         15
SECTION 14   Damage or Destruction.........................................         16
SECTION 15   Assignment, Subletting and Encumbrance........................         17
SECTION 16   Default.......................................................         18
SECTION 17   Estoppel Certificates, Subordination, Mortgages Protection....         23
SECTION 18   Surrender and Holdover........................................         24
SECTION 19   Security Deposit..............................................         25
SECTION 20   Promotion Fund and Advertising................................         26
SECTION 21   General Provisions............................................         26



                  
      EXHIBIT A      Shopping Center Site Plan
      EXHIBIT A-1    The Premises
      EXHIBIT B      Landlord and Tenant Improvements/Criteria Manual
      EXHIBIT C      Operating Hours
      EXHIBIT D      Sign Criteria
      EXHIBIT E      Tenant Covenants Relating to IRB Financing
      EXHIBIT F      Grand Opening
      EXHIBIT G      Guaranty
      EXHIBIT H      Keyman Insurance
      EXHIBIT I      Uniform Commercial Code Filing Form



                                        1


THIS LEASE AGREEMENT is made by and between Sequel Investors Limited
Partnership, a Virginia limited partnership (hereinafter called "Landlord"), and
Old Dominion Enterprises, Inc. TRADING AS Dominion Saddlery (hereinafter called
"Tenant").

                              SECTION 1 Definitions

This Section 1 is an integral part of this Lease and all of the terms hereof are
incorporated into this Lease in all respects. In addition to the other
provisions which are elsewhere defined herein, following whenever used in this
Lease shall have the meaning set forth in this Section, and only such meaning,
unless such meanings are expressly contradicted, limited or expanded elsewhere
herein:



Effective Date of
Lease:                  May 20, 1997
- --------------------    --------------------------------------------------------
                     
Shopping                Center: The real property or leasehold property shown on
                        the site plan outlined in green attached hereto as
                        Exhibit A, commonly known as The Seminole Square
                        Shopping Center, located at 242 Zan Road, as the same
                        may be modified from time to time pursuant to Section 6
                        hereof.

Premises:               The portion of the Shopping Center identified by
                        cross-hatching on Exhibit A-1, consisting of
                        approximately 3,000 square feet of "Leasable Space"
                        located at 242 Zan Road, Charlottesville, VA.

Leasable Space:         When used with respect to the Premises and all other
                        Leasable Space in the Shopping Center, means Landlord's
                        best estimate of the number of square feet of area in
                        all structural parts of the Shopping Center for
                        exclusive use of the Tenant thereof and its customers,
                        including without limitation, basements, mezzanines and
                        balconies used for the sale of goods and services; said
                        area shall be measured from the exterior face of
                        exterior walls and the center line of any walls which
                        Tenant shares with other tenants or occupants of the
                        Shopping Center, provided that no deduction from
                        Leasable Space shall be made for columns, stairs,
                        elevators or any interior construction or equipment
                        within the six (6) boundaries which demise the Leasable
                        Space. If the actual number of square fee within the
                        Premises is greater than Landlord's estimate, the number
                        of square feet shall be adjusted to the exact amount of
                        square feet within the Premises.

Commencement Date:      June 1, 1997, or as such date may be deferred by a
                        cause or causes as set forth in Section 4.

Term:                   A period 3 years and 0 months following (a) the
                        Commencement Date, or (b) if the Commencement Date is
                        not the first day of a month, the first day of the month
                        following the month in which the Commencement Date
                        occurs or as said period may be extended by any options
                        to renew granted. Each twelve (12) month period
                        beginning with the Commencement Date or, if the
                        Commencement Date is not the first day of the month, the
                        day of the month following the Commencement Date shall
                        be a "Lease Year." If the Lease does not commence
Lease Year:             on the first calendar day of a month, the period
                        from the Commencement Date to the first day of the first
                        full calendar month shall be the first "Lease Year"
                        although such Lease year will be, in actuality, less
                        than 31 calendar days, and the period from the end of
                        the last full Lease Year until the termination of the
                        Lease, shall be the last Lease Year.

Minimum Rent:           The fixed annual rent payable by Tenant during the
                        Term in monthly installments in advance without notice,
                        demand or setoff as follows:

                        From the Commencement Date through the last day of the
                        2nd month of the Term, $1,625 per month;

                        From the 1st day of the 3 month through the last day of
                        the 12 month of the Term, $3,250 per month;

                        From the 1st day of the 13 month through the last day of
                        the 24 month of the Term, $3,375 per month;


                        From the 1st day of the 25 month through the last day of
                        the 36 month of the Term, $3,500 per month;

Percentage Rent:        6% ("Percentage Rate") of the Gross Sales (as
                        defined in Section 3) occurring in any "Fiscal Period"
                        which exceed One Million Dollars ($1,000,000.00) ("Base
                        Sales").

Fiscal Period:          A period of time as designated by Landlord from
                        time to time, equal to a calendar year or other less
                        frequently recurring period within the Term, of such
                        portion thereof as is within the Term. The fiscal period
                        under this Lease shall initially be each Lease Year.

Security Deposit:       $3,250.00 to be paid in cash, certified funds or
                        cashier's check.

Permitted Uses:         Primarily the sale of the equipment and apparel of
                        the rider and horse both custom and stock, equestrian,
                        gifts, horse care products, equestrian consignment
                        items, equestrian related sportswear, books, magazines
                        and video tapes to be conducted under the Trade
                        Name/Trade Style Dominion Saddlery.

Tenant's                The fraction (expressed as a percentage) determined from
                        time to time by dividing the number of square


                                        2


                     
Proportionate Share     feet of Leasable Space in the Premises by the number of
                        square feet of Leasable Space in the Shopping Center
                        that is or shall be leased to tenants who shall be
                        burdened in the same manner and similarly subject to
                        proportionate shares of taxes, insurance, common area
                        maintenance and the like as hereafter provided; and
                        subject to adjustment as hereinafter provided. There are
                        or may be other Leasable Space in the Shopping Center
                        that will not be burdened in the same manner.

Guarantor:              Name:      Reynolds Young             SSN:  ###-##-####
                        Address:   43717 John Mosby Highway
                                   Chantilly, Virginia 22021

Broker's Name and       Great Eastern Management Company, PO Box 5525,
Address                 Charlottesville, VA 22905-5526 Rivanna Realty and
                        Investment Company, 3054-A Berkmar Drive,
                        Charlottesville, VA 22901 Brownfield Realty and
                        Investment, PO Box 6846, Charlottesville, VA 22906

Estimated Charges:      Estimated Tax Charge: $1,540.60 per annum, payable in
                        equal installments, in advance, at the rate of $128.80
                        per month, subject to annual adjustments.

                        Estimated Insurance Charge: $127.50 per annum, payable
                        in equal installments, in advance, at the rate of $10.62
                        per month, subject to annual adjustments.

                        Estimated Common Area Charge: $2,094.30 per annum,
                        payable in equal installments, in advance, at the rate
                        of $174.53 per month, subject to annual adjustments.

                        Estimated Water/Sewer Charge: $120.00 per annum, payable
                        in equal installments, in advance, at the rate of $10.00
                        per month, subject to annual adjustments.

                        Promotional Fund Charge: $1,500.00 per annum, payable in
                        equal installments, in advance, at the rate of $125.00
                        per month, subject to annual adjustments.

Exhibits:               This Lease includes the following Exhibits, Riders and
                        Addenda which are incorporated herein and made a party
                        hereof by this reference:

                           EXHIBIT A       Shopping Center Site Plan
                           EXHIBIT A-1     The Premises
                           EXHIBIT B       Landlord and Tenant Improvements/Criteria manual
                           EXHIBIT C       Operating Hours
                           EXHIBIT D       Sign Criteria
                           EXHIBIT E       Tenant Covenants Relating to IRB Financing
                           EXHIBIT F       Grand Opening
                           EXHIBIT G       Guaranty
                           EXHIBIT H       Keyman Insurance
                           EXHIBIT I       Uniform Commercial Code Filing Form



                            SECTION 2 Grant and Term

                     
Grant:                  In consideration of the rents agreed to be paid and of
                        the covenants and agreements made by the respective
                        parties hereto, Landlord demises and leases to Tenant
                        and Tenant hereby leases from Landlord the Premises,
                        upon the terms and conditions herein provided, together
                        with the right to use, in common with others entitled
                        thereto, the Common Areas (as hereinafter defined),
                        subject to the terms and conditions of this Lease and to
                        reasonable rules and regulations for the use thereof as
                        prescribed from time to time by Landlord.

Term:                   Subject to the terms, covenants and agreements contained
                        herein, Tenant shall have and hold the Premises for the
                        entire Term. Landlord and Tenant agree to execute and
                        deliver a supplement to this Lease setting forth the
                        dates of commencement and expiration of the term when
                        determinable or requested by either party. If the
                        Commencement Date has not occurred upon the expiration
                        of twelve months following the date hereof, then this
                        Lease shall thereupon become null and void and shall
                        have no further force and effect in law or in equity.




                                        3



                                 SECTION 3 Rent

                     
Minimum Rent:           Tenant covenants and agrees to pay to Landlord the
                        Minimum Rent specified in Section 1 in advance and
                        without notice, demand or setoff on the first day of
                        each month of the term; provided, however, that the
                        first and last payments due shall be made upon execution
                        and delivery of this Lease by Tenant. Acceptance of late
                        Rent at any time or times by Landlord shall in no way
                        waive Tenant's obligation to pay Rent in accordance with
                        this Section or be deemed a waiver of any of Landlord's
                        rights hereunder. If the Term commences on a day other
                        than the first day of the month, or ends on a day other
                        than the last day of the month, Tenant shall pay for the
                        fractional month within the Term on a per diem basis
                        (calculated on the basis of a thirty-day month).

Percentage              Rent: (a) Within twenty (20) days following the end of
                        each Fiscal Year, Tenant shall pay to Landlord the
                        Percentage Rate, if any, for such Fiscal Period or such
                        proration of the Fiscal Period during the first and last
                        years of the Term applicable. The acceptance by Landlord
                        of said payment shall be without prejudice to Landlord's
                        rights of examination and verification as hereinafter
                        provided.

                        (b) The term "Gross Sales" as used herein for the
                        purpose of determining Percentage Rent shall mean the
                        dollar aggregate of the entire amount of receipts from
                        gross sales of Tenant and all of licensees,
                        concessionaires and tenants of Tenant, from all business
                        conducted upon or from the Premises by Tenant and all
                        others, whether such sales be evidenced by check,
                        credit, charge accounts, exchange or otherwise, and
                        shall include but not be limited to, the amounts
                        received from the sale of goods, wares and merchandise
                        and for services performed on or at the Premises
                        (including the value of all goods accepted in lieu of
                        cash payment), together with the amount of all orders
                        taken or received at the Premises, mail or telephone
                        orders received or filled on the Premises, whether such
                        orders are filled from the Premises or elsewhere, and
                        whether such sales be made by means of merchandise or
                        other vending devices in the Premises. If any one or
                        more departments or other divisions of Tenant's business
                        gross sales of such departments or divisions, whether
                        such sales be filled at the premises or elsewhere, in
                        the same manner and with the same effect as if the
                        business or sales of such departments and visions of
                        Tenant's business had been conducted by Tenant. Gross
                        Sales shall not include sales of merchandise of which,
                        and to the extent that, cash has been refunded, or
                        allowances made on merchandise claimed to be defective
                        or unsatisfactory, provided they shall have originally
                        been included in Gross Sales; and three shall be deduced
                        from Gross Sales the sale price of merchandise returned
                        by customers for exchange, provided that the sale price
                        of merchandise delivered to the customer in exchange
                        shall be included in Gross Sales. Gross Sales shall not
                        include the amount of any sales, use, service, gross
                        receipts or other like tax imposed by any federal,
                        state, municipal or governmental authority directly on
                        sales and collected from customers, provided that the
                        amount thereof is added to the selling price or absorbed
                        therein, and paid by the Tenant to such government
                        authority. No franchise, capital stock or personal
                        property tax and no income tax or similar tax based upon
                        income or profits as such shall be deducted from Gross
                        Sales in any event whatsoever. Each charge or sale upon
                        installment or credit shall be treated as a sale for the
                        full price in the calendar month during which such
                        charge or sale shall initially be made, irrespective of
                        the time when Tenant shall receive payment (whether full
                        or partial) therefore. There shall be no deduction for
                        uncollected or uncollectible credit accounts or for bad
                        debts or other losses.

                        (c) On or before the 20th day of each calendar month
                        during the Term, Tenant shall deliver to Landlord a
                        statement in writing, certified as true and correct by
                        an executive officer of the Tenant, which statement
                        shall show Gross Sales during the immediately preceding
                        calendar month. The statement referred to in this
                        subsection shall be in such form and style and shall
                        contain such details and information as Landlord may
                        reasonably require from time to time. The acceptance by
                        Landlord of payment of Percentage Rent or reports
                        thereof shall be without prejudice and shall in no event
                        constitute a waiver of Landlord's right to claim a
                        deficiency in the payment of such Percentage Rent or to
                        audit Tenant's books and records, as hereafter set
                        forth. Tenant agrees to prepare, keep and maintain for a
                        period of not less than three years complete and
                        accurate books of account and records of all purchases
                        and receipts of merchandise, inventories and all sales
                        and other transactions by Tenant and its
                        concessionaires, licensees and tenants from which Gross
                        Sales can be determined. Tenant agrees to record all
                        sales, as the time each sale is made, whether for cash
                        or credit, in a cash register or registers containing
                        locked-in cumulative tapes



                                        4


                     
                        with accumulation capacity. Tenant shall keep for at
                        least three years all pertinent original sales records,
                        which records shall include (i) daily dated register
                        tapes; (ii) serially numbered sales checks and slips;
                        (iii) duplicate bank deposit slips and bank statements;
                        (iv) related computer records; (v) such other records as
                        would normally be required to be kept and examined by an
                        independent certified public accountant in accordance
                        with accepted auditing practices in performing an audit
                        of Tenant's Gross ales; and (vi) all income, sales and
                        occupation tax returns.

                        (d) Upon five days' prior written notice to Tenant,
                        Landlord shall have the right to cause a complete audit
                        to be made of business affairs conducted at, upon or
                        from the Premises by Tenant (and all concessionaires,
                        licensees or tenants of Tenant) and all books and
                        records pertaining thereto, including those specified in
                        subsection (c) of this Section, and Tenant will make all
                        such books and records available, or cause the same to
                        be made available for such examination at the Premises;
                        said audit shall be conducted by Landlord's authorized
                        representative. If the results of such audit shall show
                        that Tenant's statement of Gross Sales for any Fiscal
                        Period has been understated by 2% or more, then Tenant
                        agrees to pay Landlord the cost of such audit in
                        addition to any deficiency payment required as shown by
                        such audit with interest thereon as provided in the
                        Section titled "Method of Payment, Past Due Rents." A
                        report of the findings of Landlord's authorized
                        representative shall be biding and conclusive upon
                        Landlord and Tenant. The furnishing by Tenant of any
                        statement which understates Gross Sales by 5% or more
                        shall constitute a material breach of this Lease and
                        entitle Landlord at it election to all remedies herein
                        granted in the event of default by Tenant. Any
                        information obtained by Landlord as a result of such
                        audit shall be held in strict confidence by Landlord,
                        except in any action or proceeding by Landlord to
                        enforce its rights under this Lease, or in connection
                        with any prospective sale or financing of the Premises
                        or any part thereof.

                        (e) Tenant shall not directly or indirectly engage in,
                        own or operate any businesses similar to that authorized
                        to be conducted hereunder, or use or permit the use of
                        the same or a similar trade name, within a radius of
                        three miles of the nearest outside boundary of the
                        Shopping Center during the Term; provided, however, that
                        nothing herein shall be construed to prevent operation
                        of any of Tenant's existing stores under their present
                        tradenames. In the event of any violation of the
                        covenant contained in the previous sentence, and in
                        addition to all other remedies for default provided
                        hereunder, the Gross Sales, as defined in this Lese, of
                        any such businesses within the restricted radius shall
                        be included in the Gross Sales made from the Premises,
                        and the rent hereunder shall be computed upon the
                        aggregate of the Gross Sales made from the Premises and
                        from such other businesses. Under such circumstances,
                        Tenant agrees to make available to Landlord all sales
                        records from Tenant's other businesses within five (5)
                        days of Landlord's request. The audit provisions of
                        paragraph (d) above shall also apply to such other
                        businesses.

                        (f) Tenant agrees to cause the business located on the
                        Premises to be included in Tenant's advertising program
                        so that said business will receive at least equivalent
                        treatment with respect to advertising and publicity as
                        is afforded other businesses now owned, operated or
                        hereafter acquired by tenant and to cause mention of the
                        address, tradename and location of said business in such
                        advertising and publicity.

                        (g) In determining the rent payable by Tenant subsequent
                        to an event of default, as provided in Section 16, the
                        Percentage Rent for each year of the then unexpired term
                        shall be deemed to be equal to the average annual
                        Percentage Rent paid by Tenant from the Commencement
                        Date of the occurrence of such event of default, or
                        during the three Lease Years preceding such event of
                        default, whichever period is shorter, plus 10% per year
                        for each such year of the unexpired term.

                        (h) Landlord shall not become or be deemed a partner or
                        a joint venture with Tenant by reason of provision of
                        this Section 3.

                        (i) Intentionally deleted.

                        (j) Intentionally deleted.

                        (k) Should Tenant fail to furnish Landlord, when due,
                        with any Gross Sales Reports required herein, then
                        Landlord shall have the right to assess a minimum fee of
                        Twenty-five and No/100 Dollars ($25.00) per



                                        5


                     
                        day until the required report is furnished and such fee
                        shall be considered as additional rent hereunder.

                        (l) If the Lease year commences on any day other than
                        the first day of a full Fiscal Period, or terminates on
                        any day other than the last day of a full Fiscal Period,
                        then the First Fiscal Period shall be deemed to be those
                        days between the Commencement Date and the start of the
                        first full Fiscal Period, and the Last Fiscal Period
                        shall be those days from the end of the last full Fiscal
                        Period and the termination date of the Lease, and
                        Percentage Rent for those periods, if any is due, shall
                        be calculated according to the definition of Percentage
                        Rent in Section 1 of this Lease, and, just as in the
                        case of full Fiscal Periods, shall be due and payable on
                        the 20th of the month following the end of the Fiscal
                        Point.

Utility Charges:        Tenant shall arrange for utilities on its own account
                        and in its own name and shall be solely responsible for
                        and pay when due all charges for heat, water, gas,
                        electricity or any other utility services used or
                        consumed in the Premise beginning on the date Tenant
                        takes possession of the Premises for purposes of
                        fixturing or Tenant Improvements as set forth in Section
                        4. In the event separate bills are not obtainable for
                        any such expense, Tenant shall pay Landlord the Tenant's
                        Proportionate Share of such charges and expenses,
                        subject to adjustment based on any extraordinary use or
                        consumption of any utility by Tenant on the Premises,
                        within five days after billing therefor. In the event
                        such charges shall not be paid when due, Landlord shall
                        have the right to pay same, which amount so paid is
                        hereby declared to be additional rent due on demand with
                        interest as provided in Section 3.

Taxes:                  Tenant agrees to pay Landlord as additional rent
                        Tenant's Proportionate Share of (a) the total general
                        and special real estate taxes and assessments which are
                        levied and assessed on all land and buildings in the
                        Shopping Center, including the Premises and all common
                        areas, during the Term and (b) Landlord's expenses in
                        contesting the validity of, or seeking a reduction in,
                        or in seeking to prevent an increase in any such tax or
                        assessment, or attempting to obtain any refund thereof
                        or reassessment in the value of the Shopping Center or
                        any portion thereof. Tenant's

Insurance:              Landlord shall, during the Term, keep in full force and
                        effect public liability, property damage, fire, extended
                        coverage, casualty, rent loss and flood (if required)
                        insurance covering the Premises and the Shopping Center
                        (excluding the Tenant Improvements and property required
                        to be insured by Tenant pursuant to Section 13 hereof),
                        with coverage and in amounts as are customary with
                        respect to like properties in the area where the
                        Shopping Center is located. Tenant agrees to pay
                        Landlord as additional rent, Tenant's Proportionate
                        Share of the premiums charged Landlord for such
                        Insurance, prorated on a per diem basis for the first
                        and last Lease Years. Tenant's Proportionate Share shall
                        be paid in monthly installments on or before the first
                        day of each calendar month, in advance, in an amount
                        estimated by Landlord.

Additional Rent:        Tenant covenants to pay and discharge when the
                        same shall become due, as additional rent, all amounts,
                        liabilities and obligations which Tenant has assumed or
                        agreed to pay or discharge pursuant to this Lease
                        including those enumerated in this Section 3 and
                        elsewhere in this Lease, together with every fine,
                        penalty, interest and cost which may be added for
                        non-payment or late payment thereof.

Method of Payment,      The term "rent" as used in this Lease shall mean and
Past Due Rents:         include all Minimum Rent, Percentage Rent, Estimated
                        Charges and additional amounts payable hereunder. All
                        rent shall be paid to Landlord at the Rental Payment
                        Address specified in Section 21 or at such other place
                        or to such other person as Landlord may from time to
                        time direct in writing, or as is otherwise provided
                        herein, in lawful money of the United States of America.
                        If Tenant should fail to pay the Landlord when due any
                        installment of Minimum Rent or other sum to be paid
                        hereunder, Tenant will pay Landlord on demand a late
                        charge of ten percent (10%) thereof or Three Hundred and
                        No/100 Dollars ($300.00), whichever is greater. Failure
                        to pay such late charge upon demand thereof shall be an
                        event of default under this Lease. Provision for such
                        late charge shall be in addition to all other rights and
                        remedies available to Landlord hereunder or at law or in
                        equity and shall not be construed as liquidated damages
                        or limiting Landlord's remedies in any manner. In
                        addition, any and all sums remaining unpaid shall accrue
                        interest at the rate of twelve percent (12%) or Chase
                        Manhattan Bank Prime plus three percent (3%) per annum
                        whichever is the greater, commencing on the due date for
                        any such payment, provided however that the rate shall
                        not exceed that which is limited by law.

Net Lease:              This is a net lease and the rent, additional rent and
                        all other sums payable hereunder by Tenant shall be paid
                        without notice, demand, setoff, counterclaim, deduction,
                        or defense and, except as otherwise expressly provided
                        herein, without abatement or suspension. Except as
                        otherwise expressly provided in this Lease, this Lease
                        shall not terminate, nor shall Tenant have any right to
                        terminate this Lease nor shall Tenant be entitled to any
                        abatement or reduction of rent hereunder, nor shall the
                        obligations of Tenant



                                        6


                     
                        under this Lease be affected, by reason if (i) any
                        damage to or in the destruction of all or any part of
                        the Premises from whatever cause, (ii) the taking of the
                        Premises or any portion thereof by condemnation,
                        requisition or otherwise for any reason, (iii) the
                        prohibition, limitation or restriction of Tenant's use
                        of all or any part of the Premises, or any interference
                        with such use, by law or ordinance or other governmental
                        regulation or by injunction, (iv) any default on the
                        part of Landlord under this Lease, or under any other
                        agreement to which landlord and Tenant may be parties,
                        (v) the bankruptcy, insolvency, reorganization,
                        composition, readjustment, liquidation, dissolution,
                        winding up or other proceeding affecting Landlord or any
                        assignee of Landlord, or (vi) any other cause whether
                        similar or dissimilar to the foregoing. It is the
                        intention of the parties hereto that the obligations of
                        Tenant hereunder shall continue to be payable in all
                        events and that the obligations of Tenant hereunder
                        shall continue unaffected, unless the requirement to pay
                        or perform the same shall have been terminated pursuant
                        to an express provision of this Lease.



                     SECTION 4 Construction and Improvements

                     
Condition of            Landlord agrees that it will, at its sole cost and
Premises:               expense as soon as is practical after the execution of
                        this Lease, commence and pursue to completion the
                        improvements to been erected by Landlord to the extent
                        shown on the attached Exhibit B labeled "Description of
                        Landlord's Work and Tenant's Work." Tenant's taking
                        possession of the Premises shall be conclusive evidence
                        as against Tenant that the Premises were in satisfactory
                        condition when Tenant took possession. Tenant
                        acknowledges that it has inspected the Premises and
                        hereby accepts the Premises "AS IS" with no
                        representation or warranty by landlord as to the
                        condition of the Premises or their suitability for
                        tenant's proposed improvements thereto or use thereof or
                        the condition of the Shopping Center, and with no
                        promise by Landlord or its agent to improve or repair
                        the premises of the Shopping Center except as set forth
                        in Exhibit B attached hereto.

Tenant's Work:          Any additional improvements to the Premises necessary
                        for the Tenant's use or occupancy thereof and not listed
                        as Landlord's work in Exhibit B shall be completed by
                        Tenant, at Tenant's expense, and shall hereinafter be
                        referred to as "Tenant Improvements." The Tenant
                        Improvements shall be completed by Tenant in conformity
                        with the specifications in Exhibit B. Tenant agrees to
                        submit to Landlord plans and specifications covering the
                        Tenant Improvements in such detail as Landlord or
                        Managing Agent may require within fifteen (15) days of
                        execution of this Lease and Tenant agrees not to
                        commence any work on any of the Tenant Improvements
                        until Landlord has approved such plans and
                        specifications in writing. At all times during Tenant's
                        construction, Landlord and its representatives shall
                        have the right to enter upon the Premises for the
                        purpose of inspecting construction and progress of the
                        Tenant Improvements. Tenant agrees that its entry onto
                        and occupation of the Premises prior to the Commencement
                        Date shall be subject to all of the terms of this Lease,
                        except the covenants to pay the amounts as set forth in
                        Section 3 as rent, taxes or insurance. If Tenant
                        Improvements deviate from the plans and specifications
                        approved by the Landlord, Landlord can elect to (a)
                        approve the deviation in the Tenant's Improvements, (b)
                        have Tenant make corrections to correspond with the
                        approved plans and specifications, and (c) place Tenant
                        in default for material deviation in Tenant's
                        Improvements.

Excuse of performance   Anything in this Lease to the contrary notwithstanding,
                        neither Tenant nor Landlord shall be deemed in
                        Performance default with respect to the performance of
                        any of the terms of this Lease (except for payment of
                        money due hereunder) if a failure of performance is due
                        to any strike, lockout, boycott, labor dispute, civil
                        commotion, war-like operation, invasion, rebellion,
                        hostilities, military or usurped power, sabotage,
                        governmental regulation or control, inability to obtain
                        any material or service, Act of God, adverse weather
                        condition, energy shortage or any other cause whether
                        similar to dissimilar, beyond the reasonable control of
                        Tenant or Landlord; provided such cause is not due to
                        the willful act of Tenant or Landlord; and further
                        provided that delays or failures to perform resulting
                        from lack of funds shall not be deemed delays beyond the
                        reasonable control of a party; and further provided that
                        the foregoing shall not relieve Tenant from its
                        obligation timely to pay rent and other sums due under
                        this Lease. In order to claim the benefits of this
                        section, the party claiming any such excuse for its
                        performance hereunder must have given the other party
                        written notice of the cause and anticipated duration of
                        such failure of performance within 5 days of the
                        occurrence of said cause.

Failure of Tenant       In the event that the Tenant fails to take possession
to Open:                and to open the Premise for business fully improved, to
                        fixtured, stocked and staffed by the Commencement Date,
                        then the Landlord shall have, in addition to any and all
                        remedies herein provided, the right to its option to
                        collect not only the Minimum Rent and additional amounts
                        due in accordance with Section 3 hereof, but also
                        additional rent at the rate of $.03 per square foot of
                        Leasable Space in the Premises per day for each and
                        every day that the Tenant shall fail to



                                       7


                        commence to do business; said additional rent shall be
                        deemed to be liquidated damages for the benefit of
                        Landlord and shall be in lieu of any Percentage Rent if
                        applicable that might have been earned during such
                        period of the Tenant's failure to open.

                            SECTION 5 Use of Premises

                     
Use:                    (a) The Premises shall be occupied and used only for the
                        Permitted Uses and for no other purpose whatever unless
                        Landlord, in its sole right, discretion or with the
                        approval and consent of any other interested party who
                        has a right, consents to a change of such uses. Tenant
                        acknowledges and agrees that the Permitted Uses of the
                        Premises set forth herein are a critical element of the
                        bargain of the parties hereto and that actual and
                        substantial detriment will result to Landlord and the
                        other tenants and occupants of the Shopping Center in
                        the event that a change or deviation in such uses shall
                        occur or be permitted without the express written
                        consents herein required.

                        (b) Tenant agrees to keep the Premises open and
                        diligently, actively and continuously operate the
                        business conducted therein under the tradename specified
                        in Section 1, using a sufficient number of adequately
                        trained managers and personnel for efficient service,
                        during the minimum hours and days and evenings of the
                        week which are indicated on Exhibit C, provided that
                        such minimum hours of operation are subject to change
                        from time to time by Landlord so long as any such change
                        is applicable to substantially all tenants of the
                        Shopping Center. Tenant shall carry at all times in the
                        Premises a full stock of current season merchandise of
                        such quantity, character, and quality as to maximize
                        Gross Sales and shall operate 100% of the Premises.
                        Tenant shall install and maintain at all times display
                        windows on the Premises. Tenant agrees to conduct
                        Tenant's business at all times in a first-class,
                        high-grade manner consistent with reputable business
                        standards and practices in good faith and in such manner
                        that the high reputation of the Shopping Center is
                        furthered. Tenant agrees that storage and office space
                        in the Premises shall only exist to the extent required
                        for the permitted uses conducted on the Premises. No
                        auction, fire, liquidation or bankruptcy sales may be
                        conducted in the Premises without the prior written
                        consent of Landlord having been first obtained. Landlord
                        makes no warrant that the zoning of the Premises is
                        proper for Tenant's business purpose. Such determination
                        shall be the Tenant's sole responsibility. Tenant
                        acknowledges that the Shopping Center is an
                        Interdependent enterprise and its success is dependent
                        upon the opening and continued operation of Tenant's
                        business in accordance with the Lease. In the event
                        Tenant breaches the provisions of this subparagraph (b),
                        in addition to all other remedies contained in this
                        Lease, Landlord may assess a charge of $.05 per square
                        foot of Leasable Space for each day or portion thereof
                        that these provisions are violated. Such charge shall be
                        deemed additional rent hereunder and shall be due and
                        payable within ten (10) days of billing thereof.



                       SECTION 6 Quiet Enjoyment and Landlord's Right of Entry

                     
Quiet Employment:       If and so long as Tenant shall pay the rent specified
                        herein and observe and perform all covenants, agreements
                        and obligations required by it to be observed and
                        performed hereunder, Tenant shall peaceably and quietly
                        hold and enjoy the Premises for the Term without
                        hindrance or interruption by Landlord or any other
                        person or persons lawfully or equitably claiming by,
                        though or under Landlord, subject, nevertheless, to the
                        terms and conditions of this Lease and the mortgages and
                        other matters to which this Lease is subordinate.
                        Landlord expressly reserves the right as to the Shopping
                        Center at any time to do, or permit to be done, any or
                        all of the following: add or remove buildings or
                        structures; change the number and location of buildings
                        and structures; change building dimensions; change the
                        number of floors in any of the buildings or structures;
                        enclose any mall; add to, alter or remove partially or
                        wholly any structure or structures used to enclose any
                        plaza area; change the identity and type of stores and
                        tenancies and the dimensions thereof; change the name of
                        the Shopping Center in which the Premises are located;
                        change the address or designation of the Premises;
                        provide subterranean and multiple level parking decks;
                        convert common areas into leasable areas; change the
                        means of access to and egress from the Shopping Center,
                        and expand or reduce the size of the Shopping Center,
                        provided, however, that no such changes shall deny or
                        materially interfere with reasonable visibility of,
                        ingress to, or egress from the Premises.

Right of Entry:         Tenant agrees that Landlord, Managing Agent, their
                        agents, employees or servants or any person



                                       8


                     
                        authorized by Landlord may enter the Premises for the
                        purpose of inspecting the condition of the same and to
                        make such repairs, additions, improvements, changes or
                        alterations to the Premises or the building of which
                        they are a part as Landlord may elect to make, and to
                        exhibit the same to prospective purchasers, mortgagees
                        and, tenants of other areas of the Shopping Center and
                        to prospective tenants and to place in and upon the
                        Premises during the last six months of the Term as such
                        places as may be determined by Landlord "for rent" signs
                        or notices, and tenant undertakes and agrees that
                        neither Tenant nor any other person within Tenant's
                        control will interfere with such signs or notices. Such
                        entry, inspection and repairs, additions, improvements,
                        changes or alterations as Landlord may make of or to the
                        Premises or the building of which the Premises are a
                        part shall not constitute eviction of Tenant in whole or
                        in part, and the rent reserved shall in no wise abate
                        while such work is being done by reason of loss or
                        interruption of business of Tenant or otherwise. If
                        Tenant or Tenant's agents or employees shall not be
                        present to permit entry to the Premises at any time when
                        for any reason entry therein shall be necessary in the
                        reasonable judgment of the Landlord to prevent injury or
                        damage, Landlord, Managing Agent or their agents or
                        employees may enter same by or by forcible entry or
                        otherwise without liability therefor and without in any
                        manner affecting the obligations, covenants, terms or
                        conditions of this Lease. Nothing herein contained,
                        however, shall be deemed or construed to impose upon
                        Landlord any obligation or liability whatsoever for
                        care, supervision, repair, improvement, addition, change
                        or alteration of the Premises or the building of which
                        they are a part or the Shopping Center or any part
                        thereof other than herein expressly provided.



           SECTION 7 Nuisance, Waste, Hazardous Materials, Rules and Regulations

                     
Nuisance:               Tenant shall not perform any acts or carry on any
                        practices which may injure the building of which the
                        Premises are a part, violate any certificate of
                        occupancy affecting same, constitute a public or private
                        nuisance or a menace to other tenants in the Shopping
                        Center, produce undue noise, create obnoxious fumes or
                        odors or otherwise cause unreasonable interference with
                        other tenants of the Shopping Center.

Waste, Etc.:            Tenant agrees not to: (a) permit any unlawful or immoral
                        practice to be carried on or committed on the Premises;
                        (b) make any use of or allow the Premises to be used for
                        any purpose that might invalidate or increase the rates
                        of insurance therefor; (c) keep or use or permit to be
                        kept or used on the Premises any inflammable fluids or
                        explosives without the written permission of the
                        Landlord first had and obtained; (d) use the Premises
                        for any purpose whatsoever which might create a nuisance
                        or injure the reputation of the Premises or the Shopping
                        Center; (e) deface or injure the Premises or the
                        Shopping Center; (f) overload the floors; (g) sell or
                        consume or allow the sale or consumption of alcoholic
                        beverages on the Premises, unless the same is included
                        in the Permitted Uses and appropriate licenses and
                        insurance coverage has been secured; or (h) commit or
                        suffer any waste in or about the Premises. Tenant agrees
                        to pay as additional rent any increase in the cost of
                        insurance on the Premises to Landlord as a result of any
                        unauthorized use of the Premises by Tenant, but such
                        payment shall not constitute in any manner a waiver by
                        Landlord of its rights to enforce all of the covenants
                        and provisions of this Lease.

Hazardous               Material: Tenant shall not cause or permit any Hazardous
                        Material to be brought upon, kept or used in or about
                        the Premises by Tenant, its agents, employees,
                        contractors or invitees, without the prior written
                        consent of Landlord (which Landlord shall not
                        unreasonably withhold as long as Tenant demonstrates to
                        Landlord's reasonable satisfaction that such Hazardous
                        Material is necessary or useful to Tenant's business and
                        will be used, kept and stored in a manner that complies
                        with all laws regulating any such Hazardous Material so
                        brought upon or used or kept in or about the Premises).
                        If Tenant breaches the obligations in the preceding
                        sentence, or if the presence of Hazardous Material on
                        the Premises caused or permitted by Tenant results in
                        contamination of the Premises, or if contamination of
                        the Premises by Hazardous Material otherwise occurs for
                        which Tenant is legally liable to Landlord for damage
                        resulting therefrom, then Tenant shall identify, defend
                        and hold Landlord harmless from any and all claims,
                        judgments, damages, penalties, fines, costs, liabilities
                        or losses (including, without



                                       9


                     
                        limitation, diminution in value of the Premises, damages
                        for the loss or restriction on use of rentable or usable
                        space or if any amenity of the Premises, damages arising
                        from any adverse impact on marketing of space, and sums
                        paid in settlement of claims, attorney's fees,
                        consultant fees and expert fees) which arise during or
                        after the lease term as a result of such contamination.
                        This indemnification of Landlord by Tenant includes,
                        without limitation, costs incurred in connection with
                        any investigation of site conditions or any cleanup,
                        remedial, removal or restoration work required by any
                        federal, state or local governmental agency or political
                        subdivision because of Hazardous Material present in the
                        soil or ground water on or under the Premises. Without
                        limiting the foregoing, if the presence of any Hazardous
                        Material on the Premises caused or permitted by Tenant
                        results in any contamination of the Premises, Tenant
                        shall promptly take all actions at its sole expense as
                        are necessary to return the Premises to the condition
                        existing prior to the introduction of any such Hazardous
                        Material to the Premises; provided that Landlord's
                        approval of such actions shall first be obtained, which
                        approval shall not be unreasonably withheld so long as
                        such actions would not potentially have any material
                        adverse long-term or short-term effect on the Premises.

                        As used herein, the term "Hazardous Material" means any
                        hazardous or toxic substance, material or waste which is
                        or becomes regulated by any local government authority,
                        the state in which the Premises are located or the
                        United States Government. The provisions of this Section
                        shall remain in force after the termination of the
                        Lease.

Rules and               Tenant covenants and agrees with Landlord that:
Regulations:

                        (a) All loading and unloading of goods shall be done
                        only at such times, in the areas and through the
                        entrances designed for such purposes by Landlord.

                        (b) The delivery or shipping of merchandise, supplies,
                        furnishings and fixtures to and from the Premises shall
                        be subject to such rules and regulations as in the
                        judgment of Landlord are necessary for the proper
                        operation of the premises and the Shopping Center.

                        (c) All garbage and refuse shall be kept in the kind of
                        container specified by Landlord and shall be placed
                        outside of the Premises prepared for collection in the
                        manner and at the times and places specified by
                        Landlord. If Landlord shall provide or designate a
                        service for picking up refuse and garbage, Tenant shall
                        use same at Tenant's cost. Tenant shall pay the cost of
                        removal of all of Tenant's refuse or rubbish.

                        (d) No aerial or any other device or structure including
                        but not limited to T.V., disc, etc. shall be erected on
                        the roof or exterior walls of the Premises, or on the
                        Shopping Center, without in each instance, the written
                        consent of Landlord. Any aerial so installed without
                        such written consent shall be subject to removal without
                        notice at any time.

                        (e) Tenant shall keep the Premises at a temperature
                        sufficiently high to prevent freezing water in pipes and
                        fixtures.

                        (f) The areas immediately adjoining the Premises shall
                        be kept clean and free from dirt and rubbish by Tenant
                        to the satisfaction of Landlord, and Tenant shall not
                        place or permit any obstructions or merchandise in such
                        areas.

                        (g) Tenant and Tenant's employees shall park their cars
                        only in those portions of the parking areas designated
                        for that purpose by Landlord. Tenant shall from time to
                        time furnish Landlord with state automobile license
                        numbers assigned to Tenant's car or cars, and cars of
                        Tenant's employees.

                        (h) The plumbing facilities shall not be used for any
                        other purpose than that for which they were constructed,
                        and no foreign substance of any kind shall be disposed
                        of therein.

                        (i) Tenant shall not burn any trash or garbage of any
                        kind in or about the Premises or the Shopping Center.
                        Tenant shall sweep sidewalk in front of the store and
                        keep the windows and sills clean.

                        (j) Tenant shall keep the signs, exterior lights and
                        display window lights on the Premises lighted each and
                        every day of the Term during the hours designated by
                        Landlord.

                        (k) Tenant shall not use or allow the Premises to be
                        used for any unlawful or improper purpose, including,
                        but no limited to, the unlawful or improper use,
                        possession, sale or distribution of any illegal drugs or
                        controlled substances as prohibited by federal , state
                        or local law.

                        The term "Landlord" as used in (a) through (k) above
                        shall be deemed to include Landlord's Management Agent.



                                       10


                     
                        In the event any violation of any of the above rules and
                        regulations continues after five (5) days following
                        notice to the Tenant of such violation, beginning on
                        such fifth day tenant shall, in addition to any and all
                        other remedies of Landlord provided in this Lease for
                        default by Tenant, pay liquidated damages of Fifty
                        Dollars ($50.00) per day for each such violation for
                        each day such violation continues. Landlord reserves the
                        right to adopt additional rules and regulations in
                        respect to the conduct of Tenant's activities in the
                        Premises and the Shopping Center, which upon adoption
                        shall be deemed incorporated herein, provided that
                        Tenant is given notice thereof.


                             SECTION 8 Compliance with Law, Liens, Indemnity

                     
Compliance with         Tenant shall, at its expense, comply with and shall
Law and Contracts:      cause the Premises and Tenant's employees to comply with
                        all governmental statutes, laws, rules, orders,
                        regulations and ordinances including environmental laws
                        and regulations affecting the Premises or any part
                        thereof, or the use thereof, at any time during the
                        Term. Tenant shall, at its expense, comply with the
                        requirements of all policies of insurance which at any
                        time may be in force with respect to the Premises, and
                        with the provisions of all contracts, agreements and
                        restrictions affecting the Premises or any part hereof
                        or the occupancy or use thereof.

Title and Covenant      The Landlord's title is and always shall be paramount to
Against Liens:          the title of the Tenant and nothing in this contained
                        shall empower the Tenant to do any act which can, shall
                        or may encumber the title of the Landlord. Tenant
                        covenants and agrees not to suffer or permit any lien of
                        mechanics or materialmen to be placed upon or against
                        the Shopping Center or the Premises or against the
                        Tenant's leasehold interest in the Premises and, in case
                        of any such lien attaching, to immediately pay and
                        remove same. Tenant has no authority or power to cause
                        or permit any lien or encumbrance of any kind
                        whatsoever, whether created by act of Tenant, operation
                        of law or otherwise, to attach to or be placed upon the
                        Shopping Center or the Premises, and any and all liens
                        and encumbrances created by Tenant shall attach only to
                        Tenant's interest in the Premises. If any such liens so
                        attach and Tenant fails to pay and remove same within
                        ten (10) days, Landlord, at its election, may pay and
                        satisfy the same and in such event the sums so paid by
                        Landlord, with interest from the date of payment at the
                        rate set forth in Section 3 hereof for amounts owed
                        Landlord by Tenant, shall be deemed to be additional
                        rent due and payable by Tenant at once without notice or
                        demand and/or Landlord may place Tenant in Default under
                        this Lease.

Indemnification:        Tenant agrees to pay, and to protect, save harmless and
                        indemnify Landlord, agents and employees of Landlord,
                        from and against any and all liabilities, losses,
                        damages, costs, expenses (including all attorney's fees
                        and expenses of Landlord), causes of action, suits,
                        claims, demands or judgments of any nature whatsoever
                        (except those arising from the gross negligent acts of
                        Landlord, its agents or employees) arising from any of
                        the following: (a) any injury to, or the death of any
                        person or damages to property on the Premises; (b) any
                        injury to, or the death of any person or damage to
                        property upon adjoining sidewalks, parking areas,
                        streets or ways which arises out of or is in any manner
                        connected with any activity of Tenant or sponsored or
                        co-sponsored by Tenant, with or without Landlord
                        approval or which arises out of or is in any manner
                        connected with the use, condition or occupation of the
                        Premises or any part thereof by Tenant; (c) violation of
                        any agreement or condition of this Lease by Tenant; or
                        (d) violation by Tenant of any contract or agreement to
                        which Tenant is party or any restriction, statute,
                        ordinance or regulation, in each case affecting the
                        Premises or adjoining areas, or any part thereof.



                               SECTION 9 Maintenance and Repair of Premises

                     
Maintenance by Tenant   Tenant shall at all times maintain the entire Premises
                        (including maintenance of exterior entrances and all
                        glass and show window moldings) and all floors,
                        ceilings, interior walls, partitions, doors, fixtures,
                        equipment and appurtenances thereof (including, but not
                        limited to lighting, plumbing fixtures and heating, air
                        conditioning, ventilating, electrical and fire detection
                        and protection systems installed by landlord or tenant
                        exclusively serving the Premises and including leaks
                        around ducts, pipes, vents or other parts of the
                        heating, air conditioning, ventilating and plumbing
                        systems which protrude through the roof of the Premises)
                        in good order, appearance, condition and repair,
                        including all necessary replacements thereof. During the
                        entire term hereof, Tenant agrees to contract for the
                        regular maintenance and repair of the heating,
                        ventilating and air conditioning equipment with a
                        reputable service contractor acceptable to landlord and
                        to provide an executed copy of such agreement to
                        Landlord. If Landlord has not received a copy of such
                        agreement within ten (10) days of request therefor, in
                        addition to all other remedies



                                       11


                     
                        hereunder, Landlord may, but shall not have the
                        obligation to, contract for such services and bill the
                        Tenant the cost thereof plus 20% for administration and
                        overhead as additional rent payable upon demand.

Maintenance by          (a) Landlord covenants to maintain or cause to be
Landlord:               maintained only the foundation and roof of the Premises,
                        and the structural soundness of the concrete floors and
                        exterior and demising walls thereof in good order,
                        repair and condition, exclusive of any work required
                        because of damage caused by any act, omission or
                        negligence of Tenant, any subtenant or their respective
                        employees, agents, invitees, licensees or contractors.
                        Landlord shall not be required to commence any such
                        repair until ten (10) days after written notice from
                        Tenant that the same is necessary. The provisions of
                        this paragraph shall not apply in the case of damage or
                        destruction by fire or other casualty or a taking under
                        the power of eminent domain, in which events the
                        obligations of the Landlord shall be controlled by the
                        Sections of this Lease dealing therewith.

                        (b) If Landlord is required to make repairs to the
                        Premises by reason of Tenant's acts, omissions or
                        negligence, or if Tenant refuses or neglects to repair
                        as required hereunder to the reasonable satisfaction of
                        Landlord, Landlord may make such repairs without
                        liability to Tenant for any loss or damage that may
                        accrue to Tenant's merchandise, fixtures, or other
                        property or to Tenant's business by reason thereof. Upon
                        completion thereof, Tenant shall reimburse Landlord's
                        costs for making such repairs plus twenty percent (20%)
                        of such costs for overhead and supervision, upon
                        presentation of a bill therefor, as additional rent.



                                 SECTION 10 Common Areas and Charges

                     
Control of Common       All automobile parking areas, entrances and exits
Areas:                  thereto, and other facilities furnished by Landlord from
                        time to time in or near the Shopping Center, including
                        employee and customer parking areas, mall areas, the
                        truck way or ways, loading docks, package pick-up
                        stations, Shopping Center signs, pedestrian sidewalks
                        and ramps, landscaped areas, exterior and interior
                        stairways, facades, canopies, hallways, display and
                        exhibit areas and other areas and Improvements provided
                        by Landlord for general use, in common, by tenants of
                        the Shopping Center, their officers, agents, employees
                        and customers shall at all times be subject to the
                        exclusive control and management of Landlord or its
                        designees, and Landlord shall have the right from time
                        to time to establish, modify and enforce reasonable
                        rules and regulations with respect to all facilities and
                        areas mentioned in this Section. All facilities and
                        areas, including but not limited to the foundations,
                        concrete floors, exterior walls, and roofs of all
                        buildings within the Shopping Center and all ducts,
                        conduits and similar items, heating, ventilating, air
                        conditioning, plumbing, security and fire detection and
                        protection systems and storm, sanitary drainage and
                        other utility systems not installed by or exclusively
                        serving a single tenant of the Shopping Center, are
                        hereinafter collectively called the "Common Areas."
                        Landlord or its designees shall have the right to
                        construct, maintain and operate lighting and parking
                        facilities on all Common Areas; to police the same; from
                        time to time to change or reduce the area, level,
                        location, size and arrangement of parking areas and
                        other facilities hereinafter referred to; to restrict
                        parking by tenants, their officers, agents and employees
                        to employee parking areas; to close all or any portion
                        of said areas or facilities to such extent as may, in
                        the opinion of Landlord's counsel, be legally sufficient
                        to prevent a dedication thereof or the accrual of any
                        rights to any person or the public therein to close
                        temporarily all or any portion of the parking areas or
                        facilities; to erect improvements or buildings on such
                        parking areas for lease or sale purposes and other
                        common areas and to lease area improvements; to
                        discourage non-customer parking; and to do and perform
                        such other acts in and to said areas and improvements
                        as, in the use of good business judgment, the Landlord
                        shall determine to be advisable with a view to the
                        improvement of the convenience and use thereof by
                        tenants of the Shopping Center, their officers, agents,
                        employees and customers; provided that no such changes
                        shall deny or materially adversely interfere with the
                        reasonable visibility of, ingress to or egress from the
                        Premises.

License:                All Common Areas and facilities therein not within the
                        Premises which Tenant may be permitted to use and occupy
                        are to be used and occupied under a revocable license,
                        and if the amount of such areas be diminished, Landlord
                        shall not be subject to any liability nor shall Tenant
                        be entitled to any compensation or diminution or
                        abatement of rent, nor shall such diminution of such
                        areas be deemed constructive or actual eviction.

Maintenance             (a) Tenant agrees to pay as additional rent, monthly or
Charges:                less frequently as directed by Landlord, Tenant's
                        Proportionate Share of the Shopping Center's Common Area
                        Maintenance Cost (as hereinafter defined).



                                       12


                     
                        Such payments shall be based on Landlord's reasonable
                        estimates, subject to adjustment from time to time on
                        determination of the actual amount of the Shopping
                        Center's Common Area Maintenance Cost. The failure of
                        Tenant to pay any portion of Tenant's Proportionate
                        Share of the Shopping Center's Area Maintenance Cost on
                        or before the tenth (10th) day after notice from
                        landlord shall constitute a material default under this
                        Lease and shall be treated for all purposes as a default
                        in the payment of rent.

                        (b) "Shopping Center's Common Area Maintenance Cost"
                        shall be the total of all items of cost and expense
                        expended (including appropriate reserves) in operating,
                        managing, equipping, protecting, policing, lighting,
                        repairing, replacing and maintaining the Common Areas
                        and their facilities (less any insurance proceeds
                        collected with respect to any such repair or
                        replacement) including, but not limited to, all costs
                        and expenses of (1) maintaining and repairing the Common
                        Areas as shall be required in Landlord's judgment to
                        preserve the utility and condition of the Common Areas
                        in substantially the same condition and status though
                        not necessarily the same area or configuration as the
                        Common Areas were in as of the Commencement Date; (2)
                        security, fire detection and protection and traffic
                        direction and control; (3) cleaning and removal of
                        rubbish, dirt, debris, water, snow and ice (including
                        removal of water, snow and ice from rooftops); (4)
                        planting, replanting and replacing flowers and
                        landscaping; (5) water, drainage and sewage; (6)
                        liability, property damage, fire, extended coverage,
                        flood, rent loss, malicious mischief, vandalism,
                        worker's compensation and employees' liability, and any
                        other casualty and liability insurance; (7) wages,
                        health and welfare benefits, pension or profit sharing
                        benefits, union dues, vacations, unemployment taxes and
                        social security taxes; (8) personal property taxes; (9)
                        permits and licenses; (10) supplies; (11) the operation
                        of loud-speakers and any other equipment supplying
                        music; (12) utility services and lighting (including the
                        cost of light bulbs and electric current); (13)
                        patching, repairing, resurfacing, topping and marking of
                        all parking and drive areas; (14) filling, sealing and
                        supporting of sinkholes; (15) depreciation of machinery
                        and equipment used in the operation of the Common Areas
                        (but not including depreciation of the original cost of
                        acquiring Common Areas of the Shopping Center); (16)
                        administrative charges in an amount not to exceed
                        fifteen percent (15%) of the Shopping Center's Common
                        Area Maintenance Cost (exclusive of such administrative
                        charges); (17) the charges of any independent contractor
                        who, under contract with the Landlord or its
                        representatives, does any of the work of operating,
                        maintaining or repairing the Common Areas; and (18) any
                        other expense or charge, whether or not hereinbefore
                        mentioned, which in accordance with generally accepted
                        accounting and management principles, would be
                        considered as an expense of managing, operating,
                        maintaining or repairing the Common Areas.



                   SECTION 11 Fixtures, Signs and Alterations

                     
Fixtures:               All readily moveable furnishings, store fixtures and
                        equipment owned and used by Tenant in the Premises shall
                        at all time during the term be and remain the property
                        of the Tenant without regard to the means by which they
                        are installed in or attached to the Premises. Upon
                        expiration or termination of this Lease, Tenant shall
                        remove all such furnishings, fixtures, and equipment and
                        restore the Premises as provided in Section 18, provided
                        that Tenant shall not remove any equipment, conduits,
                        and fixtures providing water, plumbing, electrical,
                        heating, ventilation, air conditioning, lighting and
                        sewer service to the Premises, all of which, together
                        with any other furnishing, fixtures and equipment not
                        removed by Tenant as provided above, shall become the
                        property of Landlord upon expiration of the term or
                        termination of Tenant's right to possession of the
                        Premises pursuant to Section 16 and shall be
                        conclusively presumed to have been conveyed by Tenant to
                        Landlord under this Lease as a bill of sale without any
                        payment or credit by landlord to Tenant.

Signs:                  Tenant shall have the right to place signs and
                        advertisements on the exterior and interior of the
                        Premises and the Shopping Center in the locations and
                        subject to the conditions set forth in Exhibit D,
                        provided that the size, style and appearance of all
                        exterior signs and all interior signs visible from the
                        exterior of the Premises shall be subject to the
                        approval of Landlord or Managing Agent and shall be in
                        compliance with applicable law.

Contractual Lien:       All furnishings, fixtures (including trade), personal
                        property, equipment and merchandise ("secured property")
                        which have been, are, or may be, put into the Premises
                        either before or after the Effective Date of the Lease,
                        whether exempt or not from sale under execution and
                        attachment under the laws of the state where the
                        Premises are located, shall at all times be subject to a
                        first lien and security interest in favor of Landlord,
                        for the purpose of securing Tenant's performance under
                        this Lease including, but not limited to,



                                       13


                     
                        the payment of all rent, additional rent or other sums
                        which may become due to Landlord from Tenant hereunder.
                        Upon default or breach of any covenants of this Lease,
                        Landlord shall have all remedies available under the
                        Uniform Commercial Code enacted in the state where the
                        Premises are located including, but not limited to, the
                        right to take possession of the above mentioned secured
                        property and dispose of it by sale in a commercially
                        reasonably manner. Tenant hereby agrees to sign a
                        Uniform Commercial Code Filing Form similar to that
                        attached hereto as Exhibit C upon a request to do so by
                        the Landlord, for the purpose of serving notice to third
                        parties of the security interest herein granted, or
                        failing to do so upon request, does hereby appoint
                        Landlord or the Managing Agent as tenant's
                        attorney-in-fact for said purpose. In addition to any
                        statutory lien provided by law, this provision is
                        intended to provide a contractual lien and security
                        interest in the secured property and is intended by the
                        parties to be fully enforceable as between themselves
                        and all third parties in all events, including but not
                        limited to, any event of bankruptcy described herein.
                        Tenant hereby grants such lien and security interest to
                        Landlord and warrants that there are no prior liens
                        existing against the secured property. In accordance
                        with said lien herein granted by Tenant to Landlord,
                        tenant shall not remove from the Premises any of said
                        secured property without the written consent of Landlord
                        (except for normal repairs and replacements).

Alterations:            Tenant shall not make any alterations, additions,
                        improvements or changes in the Premises without in each
                        instance first obtaining the prior written consent of
                        Landlord, which consent shall not be unreasonably
                        withheld; provided that Tenant may make in a first-class
                        manner such interior additions, improvements and changes
                        in the Premises as Tenant may deem necessary or
                        desirable in connection with operation of its retail
                        store in the Premises so long as such alterations,
                        additions, improvements and changes are non-structural
                        and do not interfere with or otherwise affect any
                        heating, ventilating, air conditioning, plumbing,
                        security, fire detection and protection or utility
                        systems except those installed by Tenant or exclusively
                        serving the Premises. All such permitted alterations,
                        additions, improvements and changes in the Premises
                        shall be at Tenant's expense and shall conform to all
                        specifications set forth in Exhibit b and comply with
                        all insurance requirements and with applicable
                        governmental laws, and shall conform to all
                        specifications set forth in Exhibit B and comply with
                        all insurance requirements and with applicable
                        governmental laws, statutes, ordinances, rules and
                        regulations. Tenant shall be responsible for and shall
                        pay to Landlord, as additional rent, the entire amount
                        of any real estate taxes attributable to any
                        alterations, additions or improvements made by Tenant
                        pursuant to this Section. All such alterations,
                        additions, improvements and changes shall become upon
                        completion the property of the Landlord, unless
                        otherwise agreed to in writing by the Landlord.

Loss and Damage to      Landlord shall not be liable for any damages to property
Tenant's Property       of Tenant or of others located on the Premises, or for
                        the loss or damage to any property of Tenant or of
                        others by theft or otherwise. All property of tenant
                        kept or stored on the Premises shall be so kept or
                        stored by the risk of Tenant only, and Tenant shall hold
                        Landlord harmless from any claims arising out of damage
                        to the same, including subrogation claims by Tenant's
                        insurance carrier, unless such damage shall be caused by
                        the willful act or gross neglect of the Landlord.



                                          SECTION 12 Condemnation

                     
All of Premises         If the whole of the Premises shall be taken or condemned
Taken:                  either permanently or temporarily for any public or
                        quasi-public use or purpose by any competent authority
                        in appropriation proceedings or by any right of eminent
                        domain or by agreement or conveyance in lieu thereof
                        (each of the foregoing being hereinafter referred to as
                        "Condemnation"), this Lease shall terminate as of the
                        day before the date of such taking, and Tenant shall pay
                        rent and perform all of its other obligations under this
                        Lease up to such date with a proportionate refund by
                        Landlord of any rent which shall have been paid in
                        advance for periods subsequent to such date.

Less Than All of        If less than all but more than twenty-five percent of
Premises Taken:         the Leasable Space in the Premises is taken by
                        Condemnation, or if (regardless of the percentage of
                        Leasable Space in the Premises which is taken) the
                        remainder of the Premises cannot be used for Tenant's
                        continued use or occupancy for Tenant's business, in the
                        reasonable judgment of Landlord, then in either such
                        event Landlord or Tenant shall each have the right to
                        terminate this Lease upon notice to the other party
                        within sixty days after possession is taken by such
                        Condemnation. If this Lease is so terminated, it shall
                        terminate as of the day before the day of such taking,
                        and Tenant shall pay rent and perform all of its other
                        obligations under this Lease up to such date with a
                        proportionate refund by Landlord of any rent which shall
                        have been paid in advance for periods subsequent to such
                        date. If this Lease is not so terminated, it shall
                        terminate only with respect to the parts



                                       14


                     
                        of the Premises so taken as of the date possession shall
                        be taken by such authority, and Tenant shall pay rent up
                        to such date with a proportionate refund by Landlord of
                        any rent which shall have been paid in advance for
                        periods subsequent to such date. Thereafter, the Minimum
                        Rent and Estimated Charges shall be reduced in direct
                        proportion to the amount of Leasable Space of the
                        Premises taken, and Landlord agrees, at Landlord's cost
                        and expense, as soon as reasonably possible to restore
                        the remainder of the Premises to a complete unit of
                        similar quality and character as the condemnation award
                        received by Landlord (less all expenses, costs and legal
                        fees incurred by Landlord in connection with such award)
                        multiplied by a fraction the numerator of which is the
                        number of square feet of Leasable Space in the Premises
                        so taken and the denominator of which is the number of
                        square feet of Leasable Space in the Shopping Center so
                        taken will allow.

Shopping Center         If any part of the Shopping Center is taken by
Taken:                  Condemnation so as to render, in Landlord's sole
                        judgment, the remainder unsuitable for use as a retail
                        shopping center, Landlord shall have the right to
                        terminate this Lease upon notice to Tenant within 120
                        days after possession is taken by such Condemnation. If
                        Landlord so terminates this Lease, it shall terminate as
                        of the day before the day of such taking, by the
                        condemning authority, and Tenant shall pay rent and
                        perform all of its other obligations under this Lease up
                        to such date with a proportionate refund by Landlord of
                        any rent which shall have been paid in advance for
                        periods subsequent to such date.

Ownership of Award:     As between Landlord and Tenant, all damages
                        for any Condemnation of all or any part of the Shopping
                        Center, including without limitation all damages as
                        compensation for diminution in value of the leasehold,
                        reversion and fee of the Premises, and the Tenant
                        Improvements, shall belong to the Landlord without any
                        deduction therefrom for any present or future estate of
                        Tenant, and Tenant hereby assigns to Landlord all its
                        right, title and interest to any such award. Although
                        all damages in the event of any Condemnation are to
                        belong to Landlord, whether such damages are awarded as
                        compensation for diminution in value of the leasehold,
                        reversion or fee of the Premises, or the Tenant
                        Improvements, Tenant shall have the right to claim and
                        recover from the condemning authority, but not from
                        Landlord, such compensation as may be separately awarded
                        or recoverable by Tenant in Tenant's business by reason
                        of the Condemnation and for or on account of any cost or
                        loss which Tenant might incur in removing Tenant's
                        merchandise, furniture and fixtures, provided that the
                        effect of such award is not to reduce the award
                        otherwise payable to Landlord.



                                      SECTION 13 Insurance
                     
Insurance to be         Tenant shall maintain throughout the Term, at its
Provided by Tenant:     expense, insurance of the following character: (a)
                        casualty insurance against loss or damage by fire and
                        other risks from time to time included under "extended
                        coverage" policies with endorsements for vandalism and
                        malicious mischief, in the amount of the full
                        replacement cost of all Tenant Improvements, furniture,
                        trade fixtures, equipment, merchandise and all other
                        items of Tenant's property on the Premises; (b)
                        insurance against loss or damage to plate glass in or on
                        the Premises; (c) business interruption insurance
                        insuring that the monthly Minimum Rent and all other
                        payments due under this Lease will be paid for a period
                        of up to one year if the Premises are destroyed or
                        rendered inaccessible by a risk insured under (a) above;
                        (d) if the Permitted uses include sale and/or serving of
                        alcoholic beverages, insurance covering any claims
                        arising under applicable law relating to said uses which
                        could be asserted against Landlord, Tenant or the
                        Premises; (e) worker's compensation insurance in amounts
                        required by applicable law covering all personnel
                        employed in connection with any work done on or about
                        the Premises; (f) a policy of comprehensive, all risk
                        public liability insurance insuring Landlord and Tenant
                        against any liability arising out of the ownership, use,
                        occupancy or maintenance of the Premises and all areas
                        appurtenant thereto with initial basic limits of not
                        less than $500,000 for injury or death of one person in
                        any one accident or occurrence and with basic limits of
                        not less than $1,000,000 for injury or death of more
                        than one person in any one accident or occurrence. Such
                        insurance shall further initially insure Landlord and
                        Tenant against liability for property damage of not less
                        than $100,000 and not less than $100,000 for fire legal
                        liability; (g) such other insurance on the Premises in
                        such amounts and against such other insurable hazards
                        which at the time are commonly obtained in the case of
                        property similar to the Premises. In addition, Tenant
                        shall maintain throughout the Term, as its expense, a
                        standard umbrella insurance policy with initial limits
                        of $1,000,000. The limit of any of the insurance
                        required by this Section shall not limit the liability
                        of Tenant. Tenant may provide this insurance under a
                        blanket policy, provided that said insurance shall have
                        a Landlord's protective liability endorsement attached
                        thereto. The limits of all insurance required herein
                        shall be increased from



                                       15


                     
                        time to time to reflect the increase in the consumer
                        price index and as required by good business practice.

General Insurance       Each policy of insurance referred to in the preceding
Requirements:           paragraph shall be issued by companies of recognized
                        financial standing authorized to issue such insurance in
                        the state where the Premises are located, shall name as
                        the insured parties thereunder Landlord (including its
                        agent and other parties designated by Landlord) and
                        Tenant, as their interests may appear, and shall be
                        written as a primary policy which contains agreement by
                        the insurer that it will not cancel or fail to renew or
                        amend such policy or reduce the coverage thereunder
                        except after thirty days' prior written notice to
                        landlord and that any loss otherwise payable thereunder
                        shall be payable notwithstanding any act or negligence
                        of Tenant which might, absent such agreement, result in
                        a forfeiture of all or part of such insurance payment
                        and notwithstanding (a) the occupation or use of the
                        Premises for purposes more hazardous than permitted by
                        the terms of such policy; 9b) any foreclosure or other
                        action or proceeding taken by any mortgagee of the
                        Premises; or (c) any change in title of ownership of the
                        Premises. On or prior to the Commencement date, Tenant
                        shall deliver to Landlord certificates of the insurers,
                        evidencing all of the insurance which is required to be
                        maintained by Tenant hereunder together with evidence of
                        the payment of all premium therefore, and Tenant shall,
                        within thirty days prior to the expiration of any such
                        insurance, deliver other certificates of the insurers
                        evidencing the renewal or replacement of such insurance
                        together with evidence of the payment of all premiums
                        therefore. Should Tenant fail to maintain or renew any
                        insurance provided for in this Section, or to pay the
                        premium therefor, or to deliver to Landlord any of such
                        certificates, then and in any of said events, Landlord,
                        at its option, but without obligation to do so, may
                        procure such insurance, and any sums so expended by
                        Landlord (together with Landlord's reasonable
                        administrative expense in procuring such insurance)
                        shall be additional rent hereunder and shall be paid by
                        Tenant to Landlord on the first day of the month next
                        following the date on which such expenditure is made by
                        Landlord. If Tenant fails to furnish Landlord with a
                        copy of certificate of any insurance policy required to
                        be furnished by Tenant to Landlord when due, and such
                        failure continues for ten (10) days after written notice
                        from Landlord, Landlord may assess and collect a minimum
                        administrative fee of Ten and No/100 Dollars ($10.00)
                        for each day said policy or certificate has not been
                        received in the office of Landlord at the close of each
                        business day and such fee shall be considered as
                        additional rent hereunder and shall be in addition to
                        all other remedies hereunder.

Waiver of Claims:       Landlord and Landlord's agent and employers shall not be
                        liable for and Tenant waives all claims for damages to
                        person or property sustained by Tenant or any party
                        claiming through Tenant resulting from any accident or
                        occurrence in or upon the Premises, the building of
                        which they shall be a part, or the Shopping Center,
                        including but not limited to such claims for damage
                        resulting from: (i) any equipment or appurtenances
                        becoming out of repair; (ii) Landlord's failure to keep
                        the Shopping Center, said building of the Premises in
                        repair; (iii) injury done or occasioned by wind,
                        settling, earth movement or other natural causes; (iv)
                        any defect in or failure of plumbing, heating, or air
                        conditioning equipment, electric wiring of installation
                        thereof, gas, water, steam pipes, stairs, porches,
                        railings or walks; (v) broker glass, the backing up of
                        any water or sewer pipe or downspout; the bursting,
                        leaking or running of any tank, tub, washstand, water
                        closet, waste or water pipe, drain or any other pipe or
                        tank through the roof, skylight, trapdoor, stairs,
                        walks, Common Area or any other place upon or near such
                        building or the Premises or otherwise; (vii) the failing
                        of any fixtures, plaster, stucco or the like; and (viii)
                        any act, commission, or negligence of co-tenants or of
                        other persons or occupants of the Shopping Center.



                                  SECTION 14 Damage or Destruction

                     
Destruction of          In the event that the Premises are totally or partially
Premises:               damaged or destroyed or destroyed by fire or other
                        casualty or occurrence covered by insurance, the damage
                        shall be repaired and the Premises restored to the same
                        condition as they were in immediately before such damage
                        or destruction by Landlord at Landlord's expense to the
                        extent of insurance recovery. If such damage results
                        from a cause not insured, or the cost of repair of
                        restoration exceeds the amount of insurance proceeds
                        received by Landlord and available for restoration of
                        the Premises, Landlord may elect to either repair or
                        restore the Premises or to terminate this Lease upon
                        giving notice of such election in writing to Tenant
                        within thirty days after the occurrence of the event
                        causing the damage; provided that if Landlord elects to
                        terminate this Lease, Tenant may, within thirty days
                        after receiving Landlord's notice to terminate, elect to
                        pay to Landlord at the time Tenant notifies Landlord of
                        such election the difference between the amount of
                        insurance proceeds and the cost of repair and
                        restoration, in which case Landlord shall repair and
                        restore the Premises as aforesaid and shall provide
                        Tenant with satisfactory evidence that all sums
                        contributed by



                                       16


                     
                        Tenant as provided in this Section have been expended by
                        Landlord in paying the cost of such repair and
                        restoration; provided further that if Tenant does not
                        give Landlord notice of such election, this Lease shall
                        terminate upon the expiration and said thirty-day
                        period. If Landlord is required or elects to rebuild as
                        herein provided, Landlord shall rebuild with due
                        diligence and in any event within 270 days after the
                        casualty (subject to causes of the type set forth in
                        Section 4 and delays in the adjustment of insurance)
                        only that part of the Premises originally provided by
                        Landlord at its expense pursuant hereto, and Landlord
                        shall have no responsibility to rebuild or restore any
                        portion of the Premises constructed by Tenant at its
                        expense. If the casualty or the repairing or rebuilding
                        shall render the Premises untenantable in whole or in
                        part, a proportionate abatement of the Minimum Rent
                        shall be allowed from the date when the damage occurred
                        until the date when the Premises have been restored by
                        Landlord, said proportion to be computed on the basis of
                        the relation which the square foot leasable area of the
                        portion of the Premises rendered untenantable and not
                        occupied by Tenant bears to the aggregate square foot
                        leasable area of the Premises.

Destruction of          In the event that fifty percent (50%) or more of the
Shopping Center:        Leasable Space of the buildings in the Shopping Center
                        of which the Premises are a part shall be damaged or
                        destroyed by fire or other cause, notwithstanding that
                        the Premises may be unaffected by such fire or other
                        cause, Landlord may terminate this Lease and the tenancy
                        hereby created by giving to Tenant thirty days' prior
                        written notice of Landlord's election to terminate,
                        which notice shall be given, if at all, within the sixty
                        (60) days following the date of said occurrence.



                              SECTON 15 Assignment, Subletting and Encumbrance

                     
Assignment and          Tenant shall not assign this Lease or any interest
Subletting:             therein, whether voluntarily, involuntarily or by
                        operation of law, or sublet the Premises or any portion
                        thereof, without the prior written consent of Landlord,
                        which consent may be granted or withheld in the sole
                        discretion of Landlord, and no permitted assignment or
                        subletting shall relieve Tenant of Tenant's covenants
                        and agreements hereunder. The consent of Landlord to any
                        one assignment pursuant hereto shall not be deemed to be
                        a waiver of the provisions of this Section with respect
                        to any subsequent assignments or subleases. Each such
                        permitted sublease shall expressly be made subject to
                        the provisions of this Lease. If Tenant assigns any of
                        its rights and interests under this Lease, the assignee
                        under such assignment shall expressly assume all of the
                        obligations of Tenant hereunder in a written instrument
                        satisfactory to Landlord at the time of such assignment.
                        No assignment or sublease shall impose any obligations
                        on Landlord or otherwise affect any of the rights of
                        Landlord under this Lease nor shall it affect or reduce
                        any of the obligations of Tenant hereunder, and all such
                        obligations shall continue in full effect as obligations
                        of a principal and not as obligations of a guarantor or
                        surety to the same extent as though no assignment of
                        subletting had been made. In the event Tenant shall
                        assign this Lease or sublease the Premises for rent or
                        other consideration in excess of the rent payable
                        hereunder, Landlord shall receive all such excess rent
                        or other consideration as additional rent hereunder. The
                        assignee or sublessee shall be required to make all
                        payments due to Landlord and Landlord shall thereafter,
                        in a prompt manner, remit to Tenant any amounts that may
                        be due Tenant. Tenant shall, concurrently with the
                        execution and delivery of any such permitted assignment
                        or sublease, deliver a duplicate original thereof to
                        Landlord. A change in the beneficial or record ownership
                        of any class of capital stock of Tenant, a transfer of
                        partnership interests of the beneficial interest in
                        Tenant and a sale of substantially all of the
                        merchandise on the Premises to one purchaser shall be
                        treated as and deemed to be an event of assignment of
                        this Lease within the foregoing provisions of this
                        Section, if the effect of same shall be to result in a
                        change in management or control of Tenant which shall be
                        subject to the terms hereof. The Tenant shall pay
                        Landlord a minimum administrative fee of Five Hundred
                        and No/100 Dollars ($500.00) plus reasonable attorney's
                        fees for each proposed sublease or assignment of this
                        Lease. Upon any proposed sublease or assignment by
                        Tenant or its successor(s) which is not approved by
                        Landlord, the Landlord shall have the right to
                        unilaterally terminate this Lease within fifteen (15)
                        days of the proposed sublease or assignment.

Criteria for            The Landlord has retained the prior right of consent to
Assignment an           proposed assignment or sublease for several d
Subletting:             substantial business and equity reasons which were
                        considerations for this Lease, including, without
                        limitation, the fact that the success and continuation
                        thereof of the Shopping Center is directly related to
                        the use and operation of each particular store in the
                        concept of the overall and integrated merchandising
                        scheme of the Shopping Center, the obligations of
                        Landlord owed to mortgagees, major tenants, other nearby
                        shopping centers and the public; the direct economic
                        benefits to be derived to Landlord in the form



                                       17


                     
                        of Percentage Rent based upon Gross Sales; and the
                        reputation and expertise of Tenant. In evaluating and
                        determining whether or not to consent to a requested
                        assignment or sublease of the Premises by Tenant,
                        Landlord must be satisfied in its sole reasonable
                        determination that the criteria elements set forth above
                        must continue to be satisfied and the Landlord must
                        receive adequate assurance of (i) the financial
                        condition and stability of the proposed assignee,
                        sublessee or subtenant ("assignee"); (ii) the reputation
                        and expertise of the assignee; (iii) the ability and
                        likelihood of payment by assignee of all rents and other
                        amounts due hereunder; (iv) assignee's ability including
                        the expectation of Percentage Rate in amounts no less
                        than that previously received from Tenant and expected
                        to be received in the future based upon increased
                        reasonable sales projection, and such other assurances
                        as Landlord requires.

Encumbrances:           Neither this Lease nor the Term shall be mortgaged,
                        pledged or encumbered by Tenant, nor shall Tenant
                        mortgage, pledge or encumber the interest of Tenant in
                        and to any sublease of the Premises or the rental
                        payable thereunder, without the prior written consent of
                        Landlord, which consent may be granted or withheld in
                        the sole discretion of Landlord, and Tenant shall not
                        allow or permit any transfer of this Lease or any
                        interest hereunder by operation of law. Any such
                        mortgage, pledge, encumbrance, sublease, assignment or
                        transfer made in violation of this Section shall be
                        void.



                                     SECTION 16 Default

                     
Events of Default:      Any of the following occurrences or acts shall
                        constitute an event of default under this Lease:

                        (a) If Tenant, at any time during Term, shall (i) fail
                        to make any payment of rent, additional rent or other
                        sum herein required to be paid by Tenant for a period of
                        five days after delivery of Landlord of written notice
                        to Tenant that any such payment has become due; or (ii)
                        fail to pay rent, additional rent or other sums herein
                        required to be paid by Tenant when due on two or more
                        occasions during any twelve-month period; or (iii) fail
                        to cure, immediately after notice from Landlord, any
                        hazardous condition which Tenant has created or suffered
                        in violation of law or this Lease; or (iv) fail to
                        observe or perform any of the covenants in respect to
                        assignment, subletting and encumbrance set forth in
                        Section 15; or (v) fail to remove any liens attached to
                        the Premises for a period of ten (10) days after notice
                        by Landlord; or (vi) fail to observe or perform any
                        other provision hereof for thirty days after Landlord
                        shall have delivered to Tenant written notice of such
                        failure provided that in the case of any default
                        referred to in this clause (vi) which cannot be cured by
                        the payment of money and cannot with diligence be cured
                        within such thirty-day period, if Tenant shall commence,
                        to cure the same within such thirty-day period and
                        thereafter shall prosecute the curing of same with
                        diligence and continuity, then the time within which
                        such failure may be cured shall be extended for such
                        period not to exceed sixty days as may be necessary to
                        complete the curing of the same with diligence and
                        continuity; or

                        (b) to the full extent permissible under the Bankruptcy
                        Reform Act of 1978, or any successor thereto, (i) if
                        Tenant or any Guarantor shall file a petition in
                        bankruptcy or for reorganization or for an arrangement
                        pursuant to any present or future federal or state
                        bankruptcy law or under any similar federal or state
                        law, or shall to be adjudicated a bankrupt or insolvent
                        or shall make an assignment for the benefit of its
                        creditors or shall admit in writing its inability to pay
                        its debts generally as thy become due, or if a petition
                        or answer proposing the adjudication of Tenant or any
                        Guarantor as a bankrupt or its reorganization under any
                        present or future federal or state bankruptcy law or any
                        similar federal or state law shall be filed in any court
                        and such petition or answer shall not be discharged or
                        denied within thirty days after the filing thereof; or
                        (ii) if a receiver, trustee or liquidator of Tenant or
                        any Guarantor of all or substantially all of the assets
                        of Tenant or any Guarantor of the Premises or any
                        portion thereof shall be appointed in any proceeding
                        brought by or against Tenant or any Guarantor and shall
                        not be discharged within thirty days after such
                        appointment, or if Tenant or any Guarantor shall consent
                        to or acquiesce in such appointment; or

                        (c) if the Tenant, without prior notice and Landlord's
                        consent, transfers a substantial part of Tenant's
                        furnishings, fixtures, merchandise, equipment,
                        operations, business or personnel from Premises, or is
                        in the process of so transferring, the Tenant shall be
                        deemed to have abandoned the Premises, or to be in the
                        process of abandoning the Premises, and in either case,
                        in addition to all remedies under this Section 16,
                        Landlord shall have the right to take any lawful action
                        to preserve its security, including, but not limited to,
                        the implementation of the remedies set forth in Sections
                        11 and 16 of this Lease immediately and without notice;
                        or



                                       18


                     
                        (d) if Tenant fails to carry on its business at the
                        Premises for a period of five consecutive business days;
                        or

                        (e) if Tenant fails to take possession of the Premises
                        within ten (10) days after possession is tendered by
                        Landlord, or fails to submit plans or other information
                        regarding the Tenant improvements for Landlord's
                        approval or to commence and complete construction of the
                        Tenant Improvements to be constructed by Tenant when and
                        as required by the provisions of this Lease and open its
                        business therein promptly upon such completion.

Right to Terminate:     If an event of default shall have occurred, or with the
                        passage of time or the giving of notice would have
                        occurred, Landlord shall have the right at its election,
                        then or at any time thereafter, to give Tenant written
                        notice of Landlord's election to terminate this Lease on
                        a date specified in such notice. Upon the giving of such
                        notice, this Lease and estate hereby granted shall
                        expire and terminate on such date as fully and
                        completely and with the same effect as if such date were
                        the date hereinbefore fixed for the expiration of the
                        Term, and all rights of the Tenant hereunder shall
                        expire and terminate, but Tenant shall remain liable as
                        hereinafter provided. In the event the Tenant files any
                        bankruptcy proceeding, or any bankruptcy proceeding is
                        filed against the Tenant under the laws of the United
                        States, the Tenant shall elect (and shall make every
                        reasonable effort to cause the Trustee to elect) within
                        ten days of the entry of the Order of Relief whether to
                        accept or reject the terms of this Lease and perform the
                        same.

Right of Re-Entry:      If any event of default shall have occurred, or with the
                        passage of time or the giving of notice would have
                        occurred, Landlord shall have the immediate right,
                        whether or not this Lease shall have been terminated
                        pursuant to this Section 16, to re-enter and repossess
                        the Premises or any part thereof by force, summary
                        proceedings, ejectment or otherwise with the right to
                        remove all persons and property therefrom. Landlord
                        shall be under no liability for or by reason of any such
                        entry, repossession or removal. No such re-entry or
                        taking of possession of the Premises by Landlord shall
                        be construed as an election of Landlord's part to
                        terminate this Lease unless a written notice of such
                        election be given to Tenant pursuant to this Section 16
                        or unless the termination of this Lease be decreed by a
                        court of competent jurisdiction.

Right to Relet:         At any time or from time to time after the repossession
                        of the Premises or any part thereof pursuant to this
                        Section 16, whether or not this Lease shall have been
                        terminated pursuant to this Section 16, Landlord may
                        (but shall be under to obligation to) relet the Premises
                        or any other part thereof for the account of Tenant, in
                        the name of Tenant or landlord or otherwise, without
                        notice to Tenant, for such term or terms (which may be
                        greater or less than the which period would otherwise
                        have constituted the balance of the Term) and on such
                        conditions (which may include concessions or free rent)
                        and for uses as Landlord, in its absolute discretion,
                        and determine, and Landlord may collect and receive any
                        rents payable by reason of such reletting. Landlord
                        shall not be responsible or liable for any failure to
                        collect any rent due upon such reletting.

Tenant to Remain        No expiration or termination of this Lease pursuant to
Liable:                 this Section 16, by operation of law or otherwise, and
                        no repossession of the Premises or any part thereof
                        pursuant to this Section 16 or otherwise, and no
                        reletting of the Premises or any part thereof pursuant
                        to or any part thereof pursuant to this Section 16,
                        shall relieve Tenant of its liabilities and obligations
                        hereunder, all of which shall survive such expiration,
                        termination, repossession or reletting.

Current Damages:        In the event of any expiration or termination of this
                        Lease or repossession of the Premises or any part
                        thereof by reason of the occurrence of an event of
                        default, Tenant will pay to Landlord the rent,
                        additional rent and other sums required to be paid by
                        the Tenant for the period to and including the date of
                        such expiration, termination or repossession, and,
                        thereafter until the end of what would have been the
                        Term in the absence of such expiration, termination or
                        repossession, and whether or not the Premises or any
                        part thereof shall have been relet, Tenant shall be
                        liable to Landlord for, and shall pay to Landlord, as
                        liquidated and agreed current damages the rent,
                        additional rent and other sums which would be payable
                        under this Lease by Tenant in the absence of such
                        expiration, termination or repossession, less the net
                        proceeds, if any, of any reletting effected for the
                        account of Tenant pursuant to this Section 16, after
                        deducting from such proceeds all of Landlord's expenses
                        reasonably incurred in connection with such reletting
                        (including, without limitation, all repossession costs,
                        brokerage commissions, legal expenses, attorney's fees,
                        employee expenses, alteration costs and expenses of
                        preparation for such reletting). Tenant will pay such
                        current damages on the days on which rent would have
                        been payable under this Lease in the absence of such
                        expiration, termination or repossession, and Landlord
                        shall be entitled to recover the same from Tenant on
                        each such day.

Final Damages:          At any time after any such expiration or termination of
                        this Lease or repossession of the Premises or any



                                       19


                     
                        part thereof by reason of the occurrence of an event of
                        default, whether or not Landlord shall have collected
                        ant current damages pursuant to this Section 16,
                        Landlord shall be entitled to recover from Tenant, and
                        Tenant will pay to Landlord on demand, as and for
                        liquidated and agreed final damages for Tenant's default
                        and in lieu of all current damages beyond the date of
                        such demand (it being agreed that it would be
                        impracticable or extremely difficult to fix the actual
                        damages), a lump sum payment equal to the excess, if
                        any, of (a) the rent, additional rent and other sums
                        which would be payable under this Lease from the date of
                        such demand (or, if it be earlier, the date to which
                        Tenant shall have satisfied in full its obligations
                        under this Section 16 to pay current damages) for what
                        would be the then unexpired Term in the absence of such
                        expiration, termination or repossession, discounted to
                        present worth at an assumed interest rate of 5% per
                        annum, compounded annually over (b) the then net rental
                        value of the Premises discounted to present worth at an
                        assumed interest rate of 5% per annum, compounded
                        annually for the same period. Rental value shall be
                        established by reference to the terms and conditions
                        upon which Landlord relets the Premises if such
                        reletting is accomplished within a reasonable period of
                        time after such expiration, termination or repossession,
                        and otherwise established on the basis of Landlord's
                        estimated and assumptions of fact regarding market and
                        other relevant circumstances, which shall govern unless
                        shown to be erroneous by a court of competent
                        jurisdiction. If any statute or rule of law shall
                        validly limit the amount of such liquidated final
                        damages to less than the amount above agreed upon,
                        Landlord shall be entitled to the maximum amount
                        allowable under such statute or rule of law.

Event of                An "Event of Bankruptcy" means filing of a voluntary
Bankruptcy Defined:     petition by Tenant, or the entry of an order for relief
                        against Tenant, under Chapter 7, 11, or 13 of the
                        Bankruptcy Code (or the conversion to Chapter 11 or 13
                        proceeding of a proceeding that is filed by or against
                        Tenant under any other chapter of the Bankruptcy Code).
                        The parties hereto agree that the following provisions
                        of this section are and shall be deemed to be
                        commercially reasonable.

Assumption of           If an Event of Bankruptcy occurs, the trustee of
Lease:                  Tenant's bankruptcy estate, or Tenant as
                        debtor-in-possession, may assume the Lease, and may
                        subsequently assign the Lease, only if it: (i) files a
                        timely motion to assume in the appropriate court; (ii)
                        cures all monetary defaults within 10 days of date of
                        assumption and nonmonetary defaults within 60 days;
                        (iii) compensates Landlord for all pecuniary losses as a
                        result of the default of Tenant, trustee or
                        debtor-in-possession; (iv) provides Landlord with
                        Adequate Assurance of Future Performance as defined
                        herein within 60 days after the date of the filing of
                        the voluntary petition, the entry of the order for
                        relief or the date of conversion (or such additional
                        time as a court of competent jurisdiction may grant, for
                        cause, upon a motion made within the original 60-day
                        period); and (v) delivers to Landlord a written
                        statement that the conditions described herein have been
                        satisfied.

Adequate Assurance:     (a) For purposes only of Assumption of Lease above and
                        in addition to any other requirements under the
                        bankruptcy Code, any future federal bankruptcy law and
                        applicable case law, "Adequate Assurance" means at least
                        entering an order segregating sufficient cash to pay
                        Landlord as described above, and granting Landlord a
                        valid first lien and security interest in a form
                        acceptable to Landlord, in Tenant's property or
                        bankruptcy estate in order to secure the trustee's or
                        debtor-in-possession's obligations to cure defaults as
                        described herein.

                        (b) Adequate Assurance of Future Performance - For
                        purposes only of Assumption of the Lease provisions
                        above, and in addition to any other requirements under
                        the Bankruptcy Code, any future federal bankruptcy law
                        and applicable case law, "Adequate Assurance of Future
                        Performance" means at least: (i) the trustee or
                        debtor-in-possession depositing with Landlord, as
                        security for the timely payment of rent and other
                        monetary obligations, an amount equal to the amount of
                        two (2) months' Minimum Rent and one-sixth (1/6) of
                        Tenant's annual obligation under the Lease for the
                        immediately proceeding twelve (12) months for Common
                        Area Maintenance costs, Real Estate Tax payments,
                        insurance costs, promotional funds and similar charges;
                        (ii) the trustee or the debtor-in-possession providing
                        adequate assurance of the source of the rent and other
                        consideration due under the Lease; (iii) the trustee or
                        the debtor-in-possession providing adequate assurance
                        that the Percentage Rent due under the Lease will not
                        decline substantially; and (iv) Tenant's bankrupt estate
                        and the trustee or debtor-in-possession providing
                        adequate assurance that the bankrupt estate (and any
                        successor after the conclusion of the Tenant's
                        bankruptcy proceedings) will continue to have sufficient
                        unencumbered assets after the payment of all secured
                        obligations and administrative expenses to assure
                        Landlord that the bankruptcy estate (and any successor
                        after the conclusion of Tenant's bankruptcy proceedings)
                        will have sufficient funds to fulfill tenant's
                        obligations under the Lease and to keep the Premises
                        stocked with Merchandise and properly staffed with
                        sufficient



                                       20


                     
                        employees to conduct a fully-operational, actively
                        promoted business on the Premises, and as set forth in
                        the Lease.

Assignment of           (a) General - If the trustee or the debtor-in-possession
Lease after Event       assumes the Lease under Assumption of Lease above and
of Bankruptcy:          applicable bankruptcy law, it may assign its interest in
                        this Lease only if the proposed assignee first provides
                        Landlord with Adequate Assurance of Future Performance
                        of Assignee (see subparagraph (b) below) of all of
                        Tenant's obligations under the Lease and if Landlord
                        determines, in the exercise of its reasonable business
                        judgment, that the assignment of the Lease will not (i)
                        breach any other lease, mortgage, financing agreement,
                        or other agreement relating to the Shopping Center by
                        which Landlord is bound (and Landlord is not required to
                        obtain consents or waivers from any third party required
                        under any lease, mortgage, financing agreement, or other
                        agreement by which Landlord is bound); or (ii) disrupt
                        the tenant mix of the Shopping Center or any other
                        attempt by Landlord to provide a specific variety of
                        retail stores therein that, in landlord's reasonable
                        business judgment, would be most beneficial to all of
                        the tenants of the Shopping Center and would enhance its
                        image, reputation, and profitability.

                        (b) Adequate Assurance of Future Performance of Assignee
                        - For purposes only of subparagraph (a) above, and in
                        addition to any other requirements under the Bankruptcy
                        Code, any future federal bankruptcy law and applicable
                        case law, "Adequate Assurance of Future Performance of
                        Assignee" means at least the satisfaction of the
                        following conditions: (i) the proposed assignee
                        submitting a current financial statement, audited by a
                        certified public accountant, that shows a net worth and
                        working capital in amounts determined in the reasonable
                        business judgment of Landlord to be sufficient to assure
                        the future performance by the assignee of Tenant's
                        obligation under the Lease; (ii) if requested by
                        Landlord in the exercise of its reasonable business
                        judgment, the proposed assignee obtaining a guarantee
                        (in form and substance satisfactory to Landlord) from
                        one or more persons who satisfy Landlord's standards of
                        credit worthiest; and (iii) the proposed assignee
                        submitting written evidence, satisfactory to Landlord in
                        the exercise of its reasonable business judgment, of
                        substantial retailing experience in shopping centers of
                        comparable size to the Shopping Center and in the sale
                        of merchandise and services permitted under the Lease.

Rights Cumulative       No right or remedy herein conferred upon or reserved to
Non-Waiver:             Landlord or Tenant is intended to be exclusive of any
                        other right or remedy, and each and every right and
                        remedy shall be cumulative and in addition to any other
                        right or remedy given hereunder or now and hereafter
                        existing at law or in equity or by statute. The failure
                        of Landlord or Tenant to insist at any time upon the
                        strict performance of any covenant or agreement or to
                        exercise any option, right, power or remedy contained in
                        this Lease shall not be construed as a waiver or
                        relinquishment thereof for the future. The receipt by
                        Landlord of any rent, additional rent or any other sum
                        payable hereunder with knowledge of the breach of any
                        covenant or agreement contained in this Lease shall not
                        be deemed a waiver of such breach, and no waiver of any
                        provision of this Lease shall be deemed to have been
                        made unless expressed in writing and signed by Landlord
                        or Tenant. In addition to other remedies provided in
                        this Lease, Landlord or Tenant shall be entitled, to the
                        extent permitted by applicable law, to injunctive relief
                        in case of the violation, or attempted or threatened
                        violation, of any of the covenants, agreements,
                        conditions or provisions of this Lease, or to a decree
                        compelling performance of this Lease, or to any other
                        remedy allowed to Landlord or Tenant at law or in
                        equity.

Legal Expenses:         In the event Tenant shall be in default in the
                        performance of any of its obligations under this Lease,
                        or with the passage of time or the giving of notice
                        would be in default, and an action shall be brought for
                        the enforcement thereof in which it shall be finally and
                        with no further appeal determined that Tenant was in
                        default, the Tenant shall pay to Landlord all attorney's
                        fees and litigation expense incurred or paid by Landlord
                        in connection therewith. In the event Landlord shall,
                        without fault on its part, be made a party to any
                        litigation commenced against tenant, if Tenant, at its
                        expense, shall fail to provide Landlord with counsel
                        approved by Landlord, tenant shall pay as additional
                        rent all costs and attorney's fees incurred or paid by
                        Landlord in connection with such litigation or proposed
                        litigation.

Landlord's Right        Landlord may, but shall not be obligated to, cure any
to Cure:                default by Tenant after complying with the notice to
                        provisions herein set forth (but such notice provisions
                        shall not apply in the case of an emergency), and
                        whenever Landlord so elects, all costs and expenses paid
                        or incurred by Landlord in curing such default,
                        including without limitation reasonable attorney's fees,
                        shall be considered as additional rent due on demand
                        with interest as provided in Section 3.

Default by Landlord:    Landlord shall not be in default unless Landlord fails
                        to perform obligations required of Landlord within a
                        reasonable time, but in no event earlier than thirty
                        (30) days aft3er written notice by Tenant to Landlord
                        and to the holder of any first mortgage or deed of trust
                        covering the Premises whose name and address shall



                                       21


                     
                        have theretofore been furnished to Tenant in writing,
                        specifying wherein Landlord has failed to perform such
                        obligation; provided, however, that if the nature of
                        Landlord's obligation is such that more than thirty (30)
                        days are required for performance then Landlord shall
                        not be in default if Landlord commences performance
                        within such thirty (30) day period and thereafter
                        diligently prosecutes the same to completion. In no
                        event shall Tenant have the right to terminate this
                        Lease as a result of Landlord's default and Tenant's
                        remedies shall be limited to actual damages and in no
                        event shall Landlord ever have any liability or
                        responsibility whatever for any consequential or
                        indirect damages, whether proximately or remotely
                        related to a default by Landlord. The Landlord shall be
                        liable for the performance of its obligations hereunder
                        only to the extent of Landlord's equity in the Premises
                        and the respective owner or partners of Landlord, their
                        heirs, personal representatives, successors and assigns,
                        shall not be personally liable.

                        Landlord's default shall be waived by Tenant if Tenant
                        fails to provide Landlord with written notice of such
                        default within fifteen (15) days of such failure by
                        Landlord to perform any obligations required of Landlord
                        within this Lease.

Mitigation of           (a) Commercially Reasonable Efforts. Both Landlord and
Damages:                Tenant shall each use commercially reasonable efforts to
                        mitigate any damages resulting from a default of the
                        other party under this Lease.

                        (b) Criteria for Substitute Tenant. Landlord's
                        obligation to mitigate damages after a default by Tenant
                        under this Lease that results in Landlord regaining
                        possession of all or part of the Premises shall be
                        satisfied in full if Landlord undertakes to lease the
                        Premises to another tenant (a "Substitute Tenant") in
                        accordance with the following criteria: (i) Landlord
                        shall have no obligation to entertain negotiations with
                        any other prospective tenants for the Premises until
                        Landlord obtains full and complete possession of the
                        Premises including, without limitation, the final and
                        unappealable legal right to re-let the Premises free of
                        any claim of Tenant; (ii) Landlord shall not be
                        obligated to offer the Premises to any prospective
                        tenant when other premises in the Shopping Center
                        suitable for that prospective tenant's use are currently
                        available, or will be available within the next six
                        months; (iii) Landlord shall not be obligated to lease
                        the Premises to a Substitute Tenant for a rental less
                        than the current fair market rental then prevailing for
                        similar retail space in comparable shopping centers in
                        the same market area as the Shopping Center; (iv)
                        Landlord shall not be obligated to enter into a new
                        lease under terms and conditions that are unacceptable
                        to Landlord under the Landlord's then current leasing
                        policies for comparable space in the Shopping Center;
                        (v) Landlord shall not be obligated to enter into a
                        lease with any proposed Substitute Tenant that does not
                        have, in Landlord's reasonable opinion, sufficient
                        financial resources or operating experience to operate
                        the Premises in a first-class manner; (vi) Landlord
                        shall not be required to expend any amount of money to
                        specially advertise, alter, remodel, or otherwise make
                        the Premises suitable for use by a Substitute Tenant
                        unless Tenant pays any such sum to Landlord in advance
                        of such actions (which payment shall not be in lieu of
                        any damages or other sums to which Landlord may be
                        entitled to as a result of Tenant's default under this
                        Lease); or Landlord, in Landlord's sole discretion,
                        determines that any such expenditure is financially
                        justified in connection with entering into any lease
                        with such Substitute Tenant; (vii) Landlord shall not be
                        obligated to enter into a lease with any Substitute
                        Tenant whose use would: (a) disrupt the tenant mix or
                        balance of the Shopping Center; (b) violate any
                        restriction, covenant or requirement contained in the
                        lease of another tenant of the Shopping Center; (c)
                        adversely affect the reputation of the Shopping Center;
                        or (d) be incompatible with the operation of the
                        Shopping Center as a first-class shopping center.

                        (c) Mitigation Obligation Deemed Satisfied. Upon
                        compliance with the above criteria regarding the
                        reletting of the Premises after a default by Tenant,
                        Landlord shall be deemed to have fully satisfied
                        Landlord's obligation to mitigate damages under this
                        Lease and under any law or judicial ruling in effect on
                        the date of this Lease or at the time of Tenant's
                        default; and Tenant waives and releases, to the fullest
                        extent legally permissible, any right to assert in any
                        action by Landlord to enforce the terms of this lease,
                        any defense, counterclaim, or rights of setoff or
                        recoupment respecting the mitigation of damages by
                        Landlord, unless and to the extent Landlord maliciously
                        or in bad faith fails to act in accordance with the
                        requirements of this clause.

                        (d) Tenant's Mitigation Responsibility. Tenant's rights
                        to seek damages from Landlord as a result of a default
                        by Landlord, if allowed under this Lease, shall be
                        conditioned on Tenant taking all actions reasonably
                        required, under the circumstances, to minimize any loss
                        or damage to Tenant's property or



                                       22


                     
                        business, or to any of Tenant's officers, employees,
                        agents, invitees, or other third parties that may be
                        caused by any such default of Landlord.



         SECTION 17 Estoppel Certificates, Subordination, Mortgagee Protection

                     
Estoppel                Within ten (10) days after request therefor by Landlord,
Certificate:            Tenant agrees to execute and deliver a certificate in
                        the form presented by Landlord to any proposed mortgagee
                        or purchaser of the Premises, or to Landlord, certifying
                        (if such be the case) to matters requested by Landlord
                        including without limitation the following: (a) that
                        Tenant is in full and complete possession of the
                        Premises, such possession having been delivered by
                        Landlord or its predecessor and accepted by Tenant; (b)
                        that any improvements required to be furnished by
                        Landlord by the terms of this Lese have been completed
                        in all respects to the satisfaction of the Tenant; (c)
                        that this Lease is in full force and effect and has not
                        been amended, modified, supplemented or superseded
                        except as specifically noted; (d) that there is no
                        existing default on the part of Landlord in the
                        performance of any covenant, agreement or condition
                        contained in this Lease to be performed by Landlord; (e)
                        that the Tenant does not have any actual or pending
                        claim against the Landlord; (f) that no rents or other
                        charges have been prepaid by Tenant; and (g) that the
                        addressee of said certificate may rely on the
                        representations therein made; and certifying as to the
                        dates of commencement and termination of the Term, the
                        date on which rents commenced to accrue under this
                        Lease, and the date through which rents and other
                        charges hereunder have been paid. Failure of Tenant to
                        execute and deliver the requested certificate shall
                        constitute an event of default and Tenant agrees to pay
                        to Landlord as liquidated damages (and in addition to
                        all remedies available to Landlord under this Lease, at
                        law or in equity) $500.00 per day for each day Tenant
                        fails to so deliver such certificate to Landlord after
                        the expiration of the ten (10) day limit. Further, if
                        Tenant fails to execute any such certificate within said
                        ten (10) day period, Tenant hereby irrevocably appoints
                        Landlord as its attorney-in-fact, to execute such
                        instrument in Tenant's name.

Subordination/          The rights and interests of Tenant under this Lease
Superiority             shall be subject and subordinate to any mortgage, trust
                        deed or deed of trust that is or hereafter may be placed
                        upon the Shopping Center, or any part thereof containing
                        the Premises and to any and all advances to be made
                        thereunder and to the interest thereon and all renewals,
                        amendments, modifications, replacements and extensions
                        thereof, if the mortgagee or trustee or secured party
                        named in such mortgage, trust deed or deed of trust
                        shall elect to subject and subordinate the rights and
                        interests of Tenant under this Lease to the lien of its
                        mortgage, trust deed or deed of trust and shall agree by
                        instrument in writing to recognize this Lease in the
                        event of foreclosure, if and so long as Tenant is not in
                        default hereunder. Any mortgagee or trustee of the
                        Shopping Center or any part thereof containing the
                        Premises may elect to give certain rights and interests
                        of Tenant under this Lease priority over the lien of its
                        mortgage, trust deed or deed of trust. In the event of
                        either such election and upon notification by such
                        mortgagee or trustee of that effect, the rights and
                        interests of Tenant under this Lease shall be deemed to
                        be subordinate to or to have priority over, as the case
                        may be, the lien of said mortgage, trust deed, or deed
                        of trust whether this Lease is dated prior to or
                        subsequent to the date of said mortgage or trust deed.
                        Tenant shall, within ten (10) days following the request
                        of Landlord or such secured party, execute and deliver
                        whatever instruments may be required for such purpose.
                        Failure of Tenant to execute and deliver such
                        instruments shall constitute an event of default and
                        Tenant agrees to pay to Landlord as liquidated damages
                        (and in addition to all remedies available to Landlord
                        under this Lease, at law or in equity) $500.00 per day
                        for each day Tenant fails to so deliver such instruments
                        to Landlord after the expiration of the ten (10) day
                        limit. Further, if Tenant fails to execute any such
                        instruments within said ten (10) day period, Tenant
                        hereby irrevocably appoints Landlord as its
                        attorney-in-fact, to execute such instruments in
                        Tenant's name.

Mortgagee Protection:   Tenant agrees to give any mortgagee or trustee of trust
                        deed or deed of trust ("Mortgagee") of the Shopping
                        Center, by registered or certified mail, given at the
                        same time Tenant gives notice to Landlord, a copy of any
                        notice of default served upon the Landlord by Tenant,
                        provided that prior to such notice Tenant has been
                        notified in writing (by way of service on Tenant of a
                        copy of an Assignment of Rents and Leases, or otherwise)
                        of the address of such Mortgagee. Tenant further agrees
                        that if Landlord shall have failed to cure such default
                        within thirty (30) days after such notice to Landlord
                        (or if such default cannot be cured or corrected within
                        that time, then such



                                       23


                     
                        additional time as may be necessary if Landlord has
                        commenced within such thirty (30) days and is diligently
                        pursuing the remedies or steps necessary to cure or
                        correct such default), then the Mortgagee shall have an
                        additional thirty (30) days within which to cure or
                        correct such default (or if such default cannot be cured
                        or corrected within that time, then such additional time
                        as may be necessary if such Mortgagee has commenced
                        within such thirty (30) days and is diligently pursuing
                        the remedies or steps necessary to cure or correct such
                        default, including without litigation commencement of
                        foreclosure proceedings if necessary to effect such a
                        cure). Tenant shall have no right to, and shall not,
                        terminate this Lease on account of Landlord's default
                        and Tenant's remedies shall be as set forth in Section
                        16. Should any prospective mortgagee require a
                        modification or modifications of this Lease, which
                        modification or modifications will not cause an
                        increased cost or expense to Tenant or in any other way
                        substantially change the rights and obligations of
                        Tenant hereunder, then, and in such event, Tenant agrees
                        that this Lease may be so modified and agrees to
                        promptly execute whatever documents are required
                        therefor and failure to do so shall constitute an event
                        of default.



                                   SECTION 18 Surrender and Holdover

                     
Surrender:              Upon the expiration or earlier termination of this
                        Lease, Tenant shall peaceably leave and surrender the
                        Premises to Landlord broom-clean and otherwise in the
                        condition in which the Premises are required to be
                        maintained by the terms of this Lease. Tenant shall
                        surrender all keys for the Premises to Landlord at the
                        place then fixed for the payment of rent and shall
                        inform Landlord of all combinations on locks, safes, and
                        vaults, if any, in the Premises. Tenant shall, at its
                        expense, remove from the Premises on or prior to such
                        expiration or earlier termination all furnishings,
                        fixtures and equipment situated thereon (including all
                        exterior and interior signs) which are not the property
                        of Landlord as provided in Section 11, and Tenant shall,
                        at its expense, on or prior to such expiration or
                        earlier termination, repair any damage caused by such
                        removal. Any property not so removed shall become the
                        property of Landlord, and Landlord may thereafter cause
                        such property to be removed from the Premises and
                        disposed of, but the cost of any such removal and
                        disposition and the cost of repairing any damage caused
                        by such removal shall be borne by Tenant.

Holdover:               Should the Tenant or any party claiming under Tenant
                        hold over in possession at the expiration of the Term,
                        such holding over shall not be deemed to extend the Term
                        or renew this Lease, and such holding over shall be an
                        unlawful detainer and tenant or such parties shall be
                        subject to immediate eviction and removal. Tenant shall
                        pay upon demand to Landlord during any period while
                        Tenant shall hold the Premises after expiration of the
                        term, as liquidated damages, a sum equal to double the
                        highest monthly rate of Minimum Rent in effect during
                        the term or any extension thereof, plus double the
                        Percentage Rent (at the rate to be determined as set
                        forth in Section 3 hereof), and Tenant shall also pay
                        all damages, consequential as well as direct, sustained
                        by Landlord by reason of such holding over.



                                            SECTION 19 Security Deposit
                     
Security Deposit:       The Security Deposit, if any, specified in Section 1
                        shall be held by Landlord as security for the full and
                        faithful performance by Tenant of each and every term,
                        covenant and condition of this Lease on the part of
                        Tenant to be observed and performed, and Landlord shall
                        have no liability to pay interest thereon unless
                        required by law nor shall Landlord be required to keep
                        the Security Deposit separate from its general funds.
                        Landlord's obligations with respect to the Security
                        Deposit are those of a debtor and not a trustee. If any
                        rent or additional rent herein reserved or any other
                        sums payable by Tenant hereunder shall be overdue and
                        unpaid or should Landlord make payments on behalf of
                        Tenant, or should Tenant fail to perform any of the
                        terms of this Lease, then Landlord may, at its option,
                        and without prejudice to any other remedy which Landlord
                        may have on account thereof, apply the Security Deposit
                        or so much thereof as may be necessary to compensate
                        Landlord toward the payment of the rents or other sums
                        due from Tenant, or towards any loss, damage or expense
                        sustained by Landlord resulting from such default on the
                        part of Tenant; and in such event Tenant shall forthwith
                        upon demand restore the Security Deposit to its original
                        amount, and the sum required to so restore the Security
                        Deposit shall be additional rent hereunder. In the event
                        Tenant shall have fully and faithfully complied with all
                        of the terms, covenants and conditions of this Lease,
                        the Security Deposit shall be returned in full to Tenant
                        within thirty days following the end of the Term or
                        earlier termination of this Lease. In the event that any
                        bankruptcy, insolvency, reorganization or other
                        creditor-debtor proceedings shall be instituted by or
                        against Tenant or its successors or assigns, Landlord
                        may apply the Security Deposit first to the payment of
                        any rent, additional rent and other amounts due Landlord
                        hereunder, and the balance, if any, of the Security
                        Deposit may be retained by Landlord in partial
                        liquidation of Landlord's damages. Landlord may deliver
                        the



                                       24


                     
                        Security Deposit to the purchaser of Landlord's interest
                        in the Premises, in the event that such interest is
                        sold, and Landlord shall thereupon be discharged from
                        any further liability with respect to the Security
                        Deposit. Any interest earned on the Security Deposit
                        shall belong to Landlord.



                                     SECTION 20 Promotion Fund and Advertising

                     
Promotion Funds:        Tenant shall become and remain during the Term of this
                        Lease, a member in good standing in a Promotion Fund now
                        or hereafter established by the Landlord for the purpose
                        of advertising, public relations, sales promotions, and
                        other activities promoting the Shopping Center. Tenant
                        will contribute each month towards the Promotional Fund,
                        a sum in the amount specified in Section 1. Tenant
                        agrees to pay the Promotional Fund contribution in
                        advance on the first day of each month. The charge shall
                        increase/decrease annually effective the first January
                        of each year following the first full year of operation
                        by a percentage equal to the percentage change in the
                        U.S. Department of Labor Consumer Price Index for all
                        urban consumers. Such increase/decrease may be waived in
                        whole or in part at the discretion of Landlord.

                        Tenant agrees to pay to the Promotional Fund as an
                        Initial Assessment, in addition to the foregoing charge,
                        a sum in the amount specified in Section 1, for the
                        promotional expense incurred in connection with the
                        opening and/or ongoing marketing effort of the Shopping
                        Center, and its store. Said sum shall be paid within
                        thirty (30) days after a statement is rendered by
                        Landlord. Tenant shall pay such Initial Assessment
                        regardless of whether Tenant opens on the opening date
                        of the Shopping Center or on a subsequent date. Landlord
                        will contribute to the Fund an amount equal to 25% of
                        the total of Tenant's cash contribution as collected.

                        Landlord shall have the exclusive right to hire a
                        promotional director, secretary and other personnel,
                        which, in Landlord's sole judgment, are required to
                        carry out the purposes of the Promotional Fund. All such
                        personnel shall be under the exclusive control and
                        supervision of Landlord, who shall have the sole
                        authority to employ and discharge such personnel. The
                        Promotional Fund shall reimburse Landlord for all
                        expenses incurred by it on behalf of the promotional
                        programs of the Shopping Center, including any salary
                        and all reasonable expenses incurred by the promotional
                        director and other promotional personnel. Financial and
                        operating statements of the Promotional Fund shall be
                        made available for Tenant's review upon written request.
                        A violation of the provisions in this Section 20
                        (including non-payment of dues) shall constitute and
                        event of default of this Lease.

Advertising:            Unless required by law, Tenant shall not change its
                        Trade Name/Trade Style without the written permission of
                        Landlord, which Landlord shall not unreasonably withhold
                        or delay. Tenant, in all advertising, shall identify
                        that the Premises are located in the Shopping Center by
                        specifically setting forth the name of the Shopping
                        Center in all written and oral advertising engaged in by
                        Tenant concerning the Premises.

Solicitation of         Tenant and Tenant's employees and agents shall not
Business:               solicit business in the Common Areas, nor shall Tenant
                        place any handbills or other advertising matter in or on
                        automobiles parked in the parking area or in the Common
                        Areas.



                                          SECTION 21 - General Provisions

                     
Successors:             Subject to Section 15, all of the provisions hereof
                        shall be binding upon and inure to the benefit of the
                        parties hereto and their respective heirs, legal
                        representatives, successors and assigns.

No Option:              The submission of this Lease for examination
                        does not constitute an offer to enter into a lease, and
                        this Lease shall become effective only upon execution
                        and delivery hereof by Landlord and Tenant.

No Joint Venture:       The relationship of the parties is that
                        of Landlord and Tenant only, and nothing in this Lease
                        shall be construed as creating a partnership, joint
                        venture, principal-agent or any other relationship.
                        Except as expressly otherwise provided herein, neither
                        party shall have any right or power to create any
                        expense or liability chargeable to the other party.

Broker:                 Tenant represents and warrants to Landlord that Tenant
                        has not dealt with any broker or finder entitled to any
                        commission, fee or other compensation by reason of the
                        execution of this Lease except the Broker, if any,
                        specified in Section 1, and Tenant agrees to indemnify
                        and hold Landlord harmless from any charge,



                                       25


                     
                        liability or expense (including attorney's fees)
                        Landlord may suffer, sustain or incur in respect to any
                        claim for a commission, fee or other compensation by a
                        broker or finder claiming by, through or under Tenant,
                        other than Broker. Landlord will satisfy any obligation
                        to Broker in respect to this Lease.

Financial and           At the request of Landlord, Tenant shall, not later than
Other                   ninety (90) days following the close of each fiscal year
Information:            of Tenant during the Term, furnish to Landlord a balance
                        sheet of Tenant as of the end of such fiscal year and a
                        statement of income and expense for the fiscal year then
                        ended together with an opinion of an Independent
                        certified public accountant of recognized standing to
                        the effect that said financial statements have been
                        prepared in conformity with generally accepted
                        accounting principles consistently applied and fairly
                        present the financial condition and results of
                        operations of Tenant as of and for the periods covered.

                        Tenant warrants that financial and other information
                        provided and to be provided by Tenant to landlord (and
                        which will be relied upon by Landlord) relating to this
                        Lease does not and will not contain any statement which
                        at the time and in the light of circumstances under
                        which it is made, is false or misleading with respect to
                        any material fact, or omits to state any material fact
                        (which is known, or should have been known) necessary in
                        order to make any statement contained therein not false
                        or misleading in any material respect.

Headings and            The headings and captions contained in this Lease are
Captions:               inserted for convenience of reference only, and are not
                        to be deemed part of or to be used in construing this
                        Lease.

Use of Pronoun,         The necessary grammatical changes required to make the
Join and Several        provisions of this Lease apply in the plural sense where
Liability:              there is more than one Tenant and to either
                        corporations, associations, partnerships, or
                        individuals, males or females, shall in all instances be
                        assured as though in each case fully expressed. If there
                        be more than one Tenant, the liability of all such
                        parties for compliance with and performances of the
                        terms and covenants of this Lease shall be joint and
                        several.

Partial                 Invalidity If any term or provision of this Lease or the
                        application thereof to any person or circumstance shall,
                        to any extent, be invalid or unenforceable, the
                        remainder of this Lease, or the application of such term
                        or provision to persons or circumstances other than
                        those as to which it is held invalid or unenforceable,
                        shall not be affected thereby, and each term and
                        provision of this Lease shall be valid and enforced to
                        the fullest extent permitted by law.

Survival:               Any provision of this Lease which obligates the Landlord
                        or the Tenant to pay an amount or perform an obligation
                        before the commencement of the Term or after the
                        expiration of the Term shall be binding and enforceable
                        notwithstanding that payment or performance is not
                        within the Term, and the same shall survive.

Definition of           The term Landlord as used in this Lease, so far as the
Landlord, Exculpation:  covenants or obligations on the part of Landlord are
                        concerned, shall be limited to mean and include only the
                        owner or owners of the Premises at the time in question.
                        In event of any transfer or transfers of title thereto,
                        Landlord named herein (and in case of any subsequent
                        transfer or conveyance, the then grantor) shall be
                        automatically relieved from the performance of any
                        covenants or obligations of Landlord accruing after said
                        transfer date. It is expressly understood and agreed by
                        and between the parties hereto, anything herein to the
                        contrary notwithstanding, that all of the
                        representations, warranties, covenants, undertakings and
                        agreements herein made on the part of Landlord while in
                        form purporting to be the representations, warranties,
                        undertakings and agreements of Landlord are nevertheless
                        each and every one of them made and intended, not as
                        personal representations, warranties, covenants,
                        undertakings and agreements by Landlord or for the
                        purpose or with the intention of binding Landlord
                        personally, but are made and intended for the purpose
                        only of subjecting Landlord's interest in the Premises
                        to the terms of this Lease and for no other purpose
                        whatsoever, and that in the case of default hereunder by
                        Landlord, the Tenant shall look solely to the interest
                        of Landlord in the Premises for satisfaction of any
                        obligation of Landlord to Tenant.

Time of Essence:        Time is of the essence of this Lease, and all provisions
                        herein relating thereto shall be strictly construed.

Accord and              No payment by Tenant or receipt by Landlord of a lesser
Satisfaction:           amount than the rent or other amounts herein stipulated
                        shall be deemed to be other than on account of the
                        stipulated rent and amounts due, nor shall any
                        endorsement or statement on any check or any letter
                        accompanying any check or payment thereof be deemed an
                        accord and satisfaction, and Landlord may accept such
                        check of payment without prejudice to Landlord's right
                        to recover the balance of such amounts or pursue any
                        other remedy provided in this Lease.

Notices:                All notices, demands, requests, consents, approvals and
                        other instruments required or permitted to be



                                       26


                     
                        given pursuant to the terms of this Lease shall be in
                        writing and shall be deemed to have been properly given
                        if sent by registered or certified mail, postage
                        prepaid, return receipt required, or by recognized
                        overnight courier (such as United Parcel Service or
                        Federal Express, e.g.), addressed to Tenant at Tenant's
                        address or Landlord at Landlord's address, as the case
                        may be, and notice shall be deemed to have been
                        delivered on the second business day following deposit
                        in the mails in the case of registered or certified
                        mail, and shall be deemed to have been delivered on the
                        next business day in the case of overnight courier,
                        Landlord and Tenant shall each have the right from time
                        to time to specify as its address for the purposes of
                        this Lease any other addresses in the United States of
                        America upon three days' notice thereon, similarly
                        given, to the other party.

                        To Landlord at:  Sequel Investors Limited Partnership c/o Great Eastern Management Company
                                         P.O. Box 5526
                                         Charlottesville, VA  22905-5526

                        To Tenant at:    43717 John Mosby Highway
                                         Chantilly, Virginia 22021
                        (Contact Name)   Reynolds Young                (telephone)  (703) 327-4423
                        Registered Agent in the Commonwealth of Virginia:  Name ____________________________________
                        Address:  _____________________________________(telephone) _________________________________
                        I.R.S. Tax I.D. Number  54-1297372          Social Security Number
                        ###-##-####
                        Rental Payment Address (if different from Landlord)

Entire Agreement:       This Lease and the Exhibits, Riders, Addenda and
                        Guaranty, if any, attached hereto and forming a part
                        hereof, set forth all the covenants, promises,
                        agreements, conditions, and understandings between
                        Landlord and Tenant concerning the Premises, and there
                        are no covenants, promises, agreements, conditions or
                        understandings, either oral or written, between Landlord
                        and Tenant concerning the Premises except those herein
                        set forth, Except as otherwise provided herein, no
                        subsequent alteration, amendment, change or addition to
                        this Lease shall be binding upon Landlord or Tenant
                        unless reduced to writing and signed by them.

Recordation:            Tenant shall not record this Lease without the written
                        consent of Landlord.

Governing Law:          This Lease shall be construed and enforced in accordance
                        with the laws of the state where the Premises are
                        located.

Corporate               Tenants: In the event the Tenant hereunder is a
                        corporation, the persons executing this Lease on behalf
                        of the Tenant hereby covenant and warrant that: (i) the
                        Tenant is a duly constituted corporation qualified to do
                        business in the state in which the Shopping Center is
                        located; (ii) all Tenant's franchise and corporate taxes
                        have been paid to date; (iii) all future forms, reports,
                        fees and other documents necessary for Tenant to comply
                        with applicable laws will be filed by Tenant when due;
                        (iv) and such persons are duly authorized by the
                        governing body of such corporation to execute and
                        deliver this Lease on behalf of the corporation.



      IN WITNESS WHEREOF, Landlord and Tenant have signed this Lease as of the
day and year first written above.

                                  LANDLORD: SEQUEL INVESTORS LIMITED PARTNERSHIP

ATTEST WITNESS:                   By: GREAT EASTERN MANAGEMENT COMPANY, AGENT

                                  By:___________________________________________
- --------------------------

Title:____________________        Title:   V.P.

Date:   6-4-97                    Date: 6-4-97

ATTEST/WITNESS:                   TENANT:  Old Dominion Enterprises, Inc.

                                  By:   /s/ Reynolds Young
- --------------------------             ------------------------------------

                                       27


Title:____________________        Title:   President

Date: 5-30-97                     Date: 5-30-97

ATTEST/WITNESS:                   GUARANTOR:

__________________________
                                  By: /s/ Reynolds Young
                                      --------------------------------
                                      Reynolds Young

Date:    5-30-97                  Date:    5-30-97

                                       28


                                    EXHIBIT A

                            SHOPPING CENTER SITE PLAN

                                       29


                                   EXHIBIT A-1

                                  THE PREMISES

                                       30


                             FIRST ADDENDUM TO LEASE

This agreement evidences a First Addendum to an Agreement of Lease for Shopping
Center Space dated May 20, 1997, by and between Sequel Investors Limited
Partnership, a Virginia limited partnership ("Landlord") and Old Dominion
Enterprises, Inc. d/b/a Dominion Saddlery ("Tenant") and Reynolds Young
("Guarantor") for the Premises located at 242 Zan Road in the Seminole Square
Shopping Center, in Charlottesville, Virginia, 22901 (the "Lease").

Landlord and Tenant agree as follows:

      (1)   Renewal Options. Tenant shall have the option to renew the Lease for
            one (1) thirty-six- (36) month term ("Renewal Term"), provided that
            the Lease shall not have been previously terminated and that Tenant
            is not in violation or default either at the time of the exercise or
            at the effective date of such option, nor with the passage of time
            would Tenant be in violation or default under any of the terms,
            covenants and conditions in the lease; and, further provided, that
            Tenant shall have given Landlord written notice as set forth in the
            Lease of its election to exercise said option at least 190 days, but
            not more than 270 days prior to the expiration of the initial Term.
            The thirty-six- (36) month Renewal Term will commence upon the next
            day following the expiration of the initial Term.

            First Renewal Term Minimum Rent:

                           
Months 37 through 48          $3,625.00 per month
Months 49 through 72          $3,875.00 per month



      (2)   Landlord for the first three years of the Lease shall provide
            repairs to heating and cooling units, (excluding all Tenant
            appliances and/or fixtures) in excess of $250.00 per occurrence
            except for damage occasioned by negligence of Tenant, its agents or
            employees or items not covered by manufacturers' warranties. Tenant
            shall obtain Landlord's permission before incurring repair bills in
            excess of Two Hundred Fifty Dollars ($250.00). Should the Landlord
            elect to replace the heating and cooling system, Tenant will
            thereafter be responsible for the maintenance and repair of the
            systems as outlined in Section 9.

                       THIS SPACE INTENTIONALLY LEFT BLANK



      (3)   A violation of any of the provisions in this First Addendum shall
            constitute a Default under the terms of the Lease.

      (4)   Unless otherwise defined herein, all capitalized terms shall have
            the meaning set forth in the lease.

      (5)   In the event of a conflict between the terms of this First Addendum
            and any other provisions of the Lease as amended, the terms of this
            First Addendum shall prevail.

      (6)   Except as amended by this First Addendum, the provisions of the
            Lease shall remain in full force and effect.

WITNESS, the following signatures:

                                        LANDLORD:

                                          Sequel Investors Limited Partnership

                                          By:  Great Eastern Management Company,
                                               Agent

Date:       6/4/97                        By: ______________________________

                                              Its: _________________________

                                          TENANT:

                                          Old Dominion Enterprises, Inc.

Date:       5/31/97                       By: ______________________________

                                              Its: ________________________

                                          GUARANTOR:

Date:       5/30/97                       __________________________________
                                          Reynolds Young



                                    EXHIBIT B

1.    LANDLORD'S WORK

      Landlord will construct the building shell including outside walls, roof
      and ceiling/floor structure in multistory areas and windows and doors as
      shown on building shell plans. Landlord will also provide standard "grey
      box" interior finish for a typical retail space as outlined herein:

            a.    Use existing steel stud wall with a 3'0" x 6'8" walk door to
                  separate the "sales area" (80% of Leasable Space) from the
                  "service area" (20% of the Leasable Space). All wall surfaces
                  surrounding the sales area are to be hung and finished, ready
                  for painting, using 5/8" fire-rated gypsum board (regular 1/2"
                  on masonry walls). (Any additional walls located within the
                  sales area may utilize regular 1/2" gypsum or other
                  materials.) The back side of the dividing wall between the
                  sales and service areas and any additional walls built to
                  enclose the bathroom facilities are also to be hung and
                  finished using 5/8" fire-rated gypsum board. The interior
                  walls of the bathroom facilities will be either masonry or
                  gypsum, ready for paint.

            b.    The sales and bathroom areas will use existing acoustic
                  ceiling using 2' x 4' tile in a standard grid system.

            c.    Concrete floor slab ready to receive tenant floor covering or
                  finished.

            d.    Use existing 200-amp three-phase electrical service.

            e.    Receptacles will be provided at storefronts as required by
                  Code, and on approximate 20" centers on other walls in the
                  sales area. One outlet will be provided in the service area,
                  and one in each bathroom. Exit signs and emergency lights will
                  be installed as required by Code.

            f.    In the sales area, use existing overhead lighting. Use
                  existing fixture in the bathroom. In spaces with an exterior
                  rear door, a vandal-resistant light will be provided.

            g.    Use existing Heating, Ventilating and Air Conditioning (HVAC)
                  System, including all controls, duct work, diffusers and
                  grills. The cooling capacity shall be 1 ton per 400 square
                  feet of sales area.

            h.    Plumbing supplies will include a minimum of one utility or
                  janitor's sink, one water fountain, one five-gallon electric
                  water heater, one hand sink (lavatory) and one water closet.
                  If the size of Tenant's space is such that Code would require
                  additional plumbing facilities for retail use of the space,
                  the additional facilities will be furnished by the Landlord.
                  If, however, additional plumbing is desired or required
                  because of Tenant's use of the space, or if Tenant's use
                  requires that plumbing be located at other than the area most
                  convenient to the Landlord, such additional plumbing or cost
                  of relocation shall be at Tenant's expense.

            i.    Remove and cap plumbing fixtures from second bathroom and
                  extending wall approximately 5' into the sales area. Also, on
                  this wall provide and install a glass opening (approximately
                  3' x 3') into the sales area. This area is to be known as the
                  office.

            j.    Provide and construct two handicap dressing rooms. Use 3-5/8"
                  metal studs and 1/2" gypsum.

            k.    Provide and construct shelving and cabinets under front
                  windows.

            l.    Provide and install approximately 10 sheets of slotwall on
                  right demising wall. Remove small existing pieces of slotwall
                  above existing slotwall.

            m.    Use existing floor covering. (NOTE: Tenant to notify Great
                  Eastern Management Co. of carpet replacement near the right
                  window display area.)


            n.    Adapt existing overhead lighting to dressing rooms. Provide
                  and install electrical wall outlets in the area of the sales
                  counter.

            o.    Paint space.

            p.    Tenant shall not alter or modify the construction items
                  described herein during the Term of the Lease without
                  Landlord's prior written approval. For example, after
                  installation of floor slab, Tenant shall not install any "in
                  floor" items without prior written permission from Landlord.
                  If permission is granted, Landlord shall determine the method
                  of cutting and repairing. Any such work shall be at Tenant's
                  expense, which will include Landlord's cost of supervision of
                  such work.

            q.    If sprinklers are required by Code or otherwise installed by
                  Landlord, the standard system design shall be in accordance
                  with Code for the division of space into sales area and
                  service area as defined herein.

            r.    The above work is to be charged against the Tenant's $12,000
                  allowance. The estimated cost for the above work is between
                  $7,300 - $7,829.

2.    TENANT'S WORK

      Subject to Landlord's prior written approval as outlined herein, Tenant
      may, at its expense, construct within the Premises or furnish for the
      Premises:

            a.    deviations from standard storefront provided by Landlord.

            b.    ceiling material, other than that provided by Landlord.

            c.    wall material, other than that provided by Landlord.

            d.    paint and interior decoration of store space.

            e.    additional partitions.

            f.    enclosing of columns.

            g.    installation of all floor covering (no asbestos containing
                  material is permitted).

            h.    the penetration and flashing of all roof openings, which work
                  shall be performed by the Landlord's contractor at Tenant's
                  expense.

            i.    lighting fixtures, including lamps not provided by Landlord.
                  Surface-mounted or suspended fluorescent lights are not
                  permitted in sales area.

            j.    all signs, including such marquee, canopy, door signs or other
                  signs as may be required by Landlord and in accordance with
                  criteria as set forth in this Manual.

            k.    such fire extinguishers as required by Code and approved by
                  the fire preventions official having jurisdiction.

3.    STORE ARCHITECTS AND DESIGNERS

      Within ten (10) days after the date the Lease is fully executed by all
      parties, Tenant shall identify to Landlord the licensed architect or
      interior designer engaged by the Tenant to prepare its plans for the
      construction in the demised Premises by Tenant (herein "Tenant's Work").



4.    The Tenant and its contractor are responsible for compliance with all
      local, state and federal building code and all other applicable laws. It
      is strongly recommended that the Tenant's architect, designer and /or
      contractor consult with local building officials.

5.    CONTRACTOR

      Before entering into a contract for construction, Tenant must become
      familiar with the requirements of this Manual, all applicable local
      ordinances, the statewide building code, and all applicable federal
      regulations included but not limited to ADA, OSHA, and environmental
      requirements. Prior to commencement of construction, Tenant must notify
      Landlord of the identity of the contractor(s) engaged for construction in
      the Premises. Contractors employed by Tenant will not be permitted to
      start construction until all approvals required by this Manual are
      obtained and document submittals are complete. Contracts for construction
      are solely between Tenant and its contractor(s). The Landlord shall in no
      way be held liable for errors, omissions or performance by either Tenant
      or its Contractor(s).



                                    EXHIBIT C

                                 OPERATING HOURS

Tenant agrees to keep the Premises open as specified in Section 5 paragraph (b)
of the Lease from 8 o'clock a.m. to 5 o'clock p.m., Monday through Saturday.
Such minimum hours of operation are subject to change from time to time by
Landlord so long as any such change is applicable to substantially all tenants
of the Shopping Center.



                                    EXHIBIT D

                                  SIGN CRITERIA

A.    The advertising content of all signs shall be limited to individual
      letters designating the store name only and shall contain no advertising
      devices, slogans, symbols or marks other than logos, crests, or corporate
      seals universally used by national or regional tenants on all signs.
      Logos, crests or corporate shield designs must be submitted to Landlord
      for approval, which approval shall not be unreasonably withheld, provided
      that the proposed sign or symbol is compatible with the design intent of
      the shopping center.

B.    The location, character, design, color and layout of all signs shall be
      subject to Landlord's written approval and no sign will be placed in final
      position without same.

C.    All signs must be professional made, carry a U.L. approved label and be
      constructed of individual neon lit letters. The maximum letter height
      shall be 30" unless written exception is granted by Landlord. Each letter
      shall be fabricated from 22-gauge point grip steel with spot-welded
      construction, be 4" deep and mounted on an 8" by 8" raceway and use 15 mm.
      neon with 30 hertz normal power factor 120-volt transformers. Distance
      between tube and sign fact shall be no less than 1/2 the distance between
      the rows of neon. Plastic faces shall be 3/16" acrylic plastic. Exterior
      and interior of all letters shall be painted white; returns shall be baked
      enamel (bronze). The raceway shall be painted to match the color of the
      building. The following four letter styles will be acceptable.

      1.    Helvetica medium
      2.    Script
      3.    Optima semi-bold
      4.    Goudy

D.    Drawings submitted for approval by Landlord shall include:

      1.    dimensions of the sign as a whole and of each letter or symbol.
      2.    type of illumination. All signs shall be lit from the interior
            unless specific exception is granted by Landlord.
      3.    necessary electrical requirements. All sign circuits shall be tied
            into a clock-timer controlled from inside the premises to facilitate
            lighting of signs at night until the time specified by Landlord.
      4.    the name and/or stamp of the sigh contractor or sign company which
            shall not be exposed to view.

E.    The following are expressly prohibited:

      1.    Animation, moving signs or moving lights.
      2.    Temporary signs, irrespective of the composition of the sign or
            material used.
      3.    Box or cabinet type signs or signs with formed plastic letters.
      4.    Painted on or luminous letters.
      5.    Back-lit signs or letters.
      6.    Rooftop signs or banners or projection signs.
      7.    Free-standing signs or sandwich board signs.
      8.    Noise making devices, boxes, cabinets or frames.
      9.    Wooden backed signs or letters.
      10.   Signs above the roof line or on the roof.
      11.   Pop rivet contraction of signs.

F.    One sign is allowed per storefront unless there are two or more angled
      faces, such as a corner storefront, in which case a second sign may be
      allowed, subject to Landlord's approval.

G.    There will be one authorized suspended sign under the canopy. All Tenants
      will be required to install a suspended double-faced sign from the canopy
      ceiling over the store entry. The design, material and letter type is as
      follows:

      1.    Each sign shall be oval shaped 8 inches high by 40 inches long made
            from Dupont Lucite, Color BR 2418 (a medium brown).



      2.    The store name, which shall be the "trading as" name in the lease,
            (letters and numerals as appropriate) shall be written in Times
            Bold, using 2 .m. Arlon Cast #68 Beige (a beige color to match the
            drivit of the fascias).
      3.    East side of each sign shall carry a reproduction of the shopping
            center logo, located centrally along the length of the sign and
            rising vertically from the lower edge of the sign to a height of 1.5
            inches. The logo shall be Arlon Vinyl Cal-Plus #11 Green.
      4.    The sign shall have an oval border, one-half inch thick and of the
            same beige vinyl as the store name.
      5.    All sign requests and specifications shall be presented to the
            Landlord in writing for approval prior to the installation of any
            sign.



                                    EXHIBIT E

                    TENANT'S COVENANTS RELATING TO INDUSTRIAL
                           DEVELOPMENT BOND FINANCING

If Tenant is deemed to be a "principal user" of Sequel Investors Limited
Partnership's portion of Seminole Square Shopping Center with respect to the
hereinafter described Bonds, as the term "principal user" is defined in Section
103 of the Internal Revenue Code of 1954, as amended, Paragraph 1 hereof is
incorporated herein. If Tenant is not deemed to be a "principal user" of such
Bonds for the purposes hereof, Paragraph 2 hereof is incorporated herein.

Paragraph 1: Tenant acknowledges that Landlord is financing or may in the future
finance the shopping center (the demised Premises being a part thereof) through
the use of industrial development bonds (including refunding bonds) (the
"Bonds") to be issued by the local Industrial Development Authority of the
City/County of _________________ (the Authority). Tenant agrees that it shall
promptly upon a request from Landlord, submit and file all certificates,
representations and reports as may be, from time to time, required by Landlord,
the Authority, any letter of credit institution, or any purchaser of underwriter
of the Bonds. All quoted terms in this Section shall have the same meaning as
set forth in Section 103 of the Internal Revenue Code of 1954, as amended; and
in the regulations, rulings and pronouncements of the Internal Revenue Service
issued from time to time pursuant thereto (the "Code").

      a.    Tenant agrees that at no time within three years from the date of
            the issuance by the Authority of the Bonds will Tenant or any
            "related person" of Tenant pay or incur; or consent to the paying or
            incurring by others of "capital expenditures" with respect to the
            leased premises or any other facilities within City/County of
            ___________________________, "principal user" of which is Tenant or
            any "related person" of Tenant, or with respect to any facilities
            which are referred to as the "Restricted Facilities"), if the
            aggregate amount of such "capital expenditures" during a period
            beginning three years before the date of issuance of the Bonds and
            ending three years after the date of issuance of the Bonds (the
            "restricted Period") will be in excess of a total of _____________.

      b.    Tenant represents that other than the Bonds, there are, on the date
            of the execution of this Lease, no outstanding issues of obligations
            of any State, Territory or possession of the United States, or any
            political subdivision of the foregoing, or of the District of
            Columbia, the proceeds of which have been or will be used primarily
            with respect to facilities:

            i.    a "principal user" of which is or will be Tenant or a "related
                  person" of Tenant, and,

            ii.   which

                  (1)   are located in the City/County of __________________ or

                  (2)   are "contiguous or integrated" facilities located on
                        both sides of the border between the City of
                        Charlottesville and any adjoining political jurisdiction
                        (hereinafter collectively referred to as the "Restricted
                        Area").

      c.    Tenant further agrees that it shall file

            i.    with the income tax return of Tenant for the current taxable
                  year, a copy of the Authority's election required pursuant to
                  Section 103 (b) (6) (D) of the Code, and

            ii.   annually for three years following the date of the issuance of
                  the Bonds, with the office of the Internal Revenue Service
                  where Tenant's income tax return is required to be filed on
                  the date required for such filing, (without regard to any
                  extension of time), a supplemental statement showing all
                  "capital expenditures" paid or incurred by Tenant with respect
                  to any Restricted facilities (including any such "capital
                  expenditures" by each "related person" of Tenant) during the
                  preceding fiscal year of Tenant;

      d.    Neither Tenant nor any Related Person of tenant, within three years
            after the later of the date the project is placed in service or the
            date of issuance of the Bonds (the "Extended Restricted period"),
            will become an owner (in whole or in part) or Principal User of any
            facility ("new facility"), wherever located, financed (whether or
            not by or for the benefit of Tenant) in whole or in part by
            tax-exempt industrial development bonds unless Tenant's becoming
            such an owner or Principal User will not cause interest on the Bonds
            to become taxable because the inclusion of the "aggregate face
            amount" of all tax-exempt industrial development bonds allocated to
            Tenant and outstanding on the date of issuance of the Bonds in the
            calculation provided for in Section 103 (b)(15)(A) of the Code would
            not cause the authorized face amount of the Bonds to exceed
            $40,000,000.



      e.    In connection with the issuance of the Bonds, Tenant agrees to
            provide landlord; promptly upon a request, a list of all "capital
            expenditures" paid or incurred by Tenant or any "related person" of
            Tenant with respect to any Restrict Facilities within a period
            beginning three years before the date of the issuance of the Bonds
            and ending on the date of the issuance of the Bonds, such list to be
            broken down by date and amount of each such "capital expenditure."

      f.    Tenant agrees to provide Landlord with such information as may be
            necessary in order to make timely and proper filing of the
            Authority's election required pursuant to Section 103(b)(6)(D) of
            the Code. If required by Bond Counsel in order to determine the
            tax-exempt status of the Bonds, Tenant also agrees to provide
            Landlord information with respect to the aggregate outstanding
            amount of tax-exempt industrial development bonds allocated to
            Tenant as beneficiary.

      g.    If Tenant shall for any reason fail to file the information required
            in paragraphs C and E, above, or if Tenant's "capital expenditures"
            during the Restricted Period of the Extended Restricted Period
            (including any such capital expenditures by each "related person" of
            Tenant) shall exceed the amount specified in paragraphs A or D
            above, then Tenant shall, without further notice, immediately be in
            default of this lease and Landlord shall have the right, but not the
            obligation, in addition to all of its other rights and remedies, to
            terminate this lease. It is the understanding of the parties that
            the foregoing covenants by tenant are a material part of the
            consideration given to induce Landlord to execute this lease and
            that any breach thereof shall entitled Landlord to a claim for
            damages in addition to those set forth in the lease Agreement
            including

            i.    any prepayment of redemption penalty or premium;

            ii.   any increased interest expense to be incurred by Landlord in
                  the refinancing of all or portion of the outstanding Bonds
                  (calculated as an amount equal to the difference between the
                  interest on the Bonds which would have been paid by Landlord
                  on the Bonds and the interest to be paid by Landlord at the
                  per annum interest rate at which Landlord is able to refinance
                  the outstanding principal balance of the Bonds), which shall
                  be computed based on the principal balance and remaining term
                  of the Bonds outstanding at the time of the refinancing and

            iii.  all other costs of refinancing, including reasonable
                  attorneys' fees.

Paragraph 2: Tenant acknowledges that landlord is financing or may in the future
finance the shopping center (the Demised Premises being a part thereof) through
the use of industrial development bonds (including refunding bonds) (the
"Bonds") to be issued by the Industrial Development Authority of the City of
Charlottesville (the "Authority"). Tenant agrees that it shall, promptly upon
request from Landlord, submit and file all certificates, representations and
reports as may be, from time to time, required by landlord, the Authority, any
letter of credit institution, or any purchaser or underwriter of the Bonds. All
quoted terms in this Section shall have the same meaning as set forth in Section
103 of the Internal Revenue Code of 1954, as amended, and in the regulations,
rulings and pronouncements of the Internal Revenue Service issued from time to
time pursuant thereto (the "Code").

      a.    Tenant agrees that at no time within three years from the date of
            the issuance by the Authority of the bonds (the "Restricted Period")
            will Tenant or any "related person" of Tenant pay or incur, or
            consent to the paying or incurring by others of "capital
            expenditures" for improvements for which are deemed to be fixtures
            under Virginia law and which are made with respect to the Demised
            Premises without the prior written consent which shall be at the
            sole discretion of Landlord.

      b.    Tenant further agrees that it shall provide to landlord, annually,
            for three years following the date of issuance of the Bonds, a
            statement showing all "capital expenditures" paid or incurred by
            Tenant with respect to the Demised Premises during the preceding
            fiscal year of Tenant, such statement to be provided to Landlord
            within thirty days after the end of such fiscal year.

      c.    Tenant agrees to provide Landlord with such information as may be
            necessary in order to make timely and proper filing of the
            Authority's election required pursuant to Section 103(b)(6)(D) of
            the Code. If required by Bond Counsel in order to determine the
            tax-exempt status of the bonds, Tenant also agrees to provide
            Landlord information with respect to the aggregate outstanding
            amount of tax-exempt industrial development bonds allocated to
            Tenant as beneficiary.

      d.    If Tennant shall for any reason fail to provide Landlord with the
            information required in paragraphs B and C above, or if Tenant or
            any related person incurs "capital expenditures" with respect to the
            Demised Premises during the



            Restricted Period in violation of paragraph A above, then Tenant
            shall be in default of this Lease and Landlord shall have the right,
            but not the obligation, in addition to all of its other rights and
            remedies, to terminate this Lease. It is the understanding of the
            parties that the foregoing covenants by tenant are a material part
            of this consideration given to induce Landlord to execute this lease
            and that any breach thereof shall entitled Landlord to a claim for
            damages in addition to those set forth in the Lease Agreement
            including

            i.    any prepayment or redemption penalty or premium

            ii.   any increased interest expense to be incurred by Landlord in
                  the refinancing of all or portion of the outstanding Bonds
                  (calculated as an amount equal to the difference between the
                  interest on the Bonds which would have been paid by Landlord
                  at the per annum interest rate at which Landlord is able to
                  refinance the outstanding principal balance of the Bonds),
                  which shall be computed based on the time of the refinancing
                  and

            iii.  all other costs of refinancing, including reasonable
                  attorneys' fees.

      e.    If at any time during the term of this lease (including any
            renewals), the interest payable by Landlord on the Bonds increases
            as a result of changes in the Federal or State income tax laws, the
            Minimum Rent payable under Section 3 of the lease shall increase
            with Tenant responsible for a pro-rata amount of such increase
            determined by dividing Tenant's leasable space by the total amount
            of leasable space in the Shopping Center that is being financed with
            the Bonds. Landlord may elect to bill this increased rent on a
            quarterly or annual basis or estimate an amount to be payable by
            Tenant monthly in the same manner as taxes, insurance and common
            area maintenance, subject to year end adjustment.



                                    EXHIBIT F

                  PACKAGE C FOR 3,000 SQUARE FT RETAIL TENANTS

Orientation:      Consultation to introduce shopping center marketing, promotion
                  calendar, and grand opening package and to review the
                  individual tenant's projected marketing plans
                               2 hours, no charge

Media Kit:        $296 Value (16 hours @ $18.50) Plus expenses up to $120.00
                  Billable

                  Based on Interview and sent to all relevant local and regional
                  media and regional and national trade journals (min=12,
                  max=20)

                  Includes fact sheet, owner bio, business brief, background
                  color, if possible, list of story ideas, press release, and
                  photo

                  Follow-up phone calls to editors

                  Announcements: Sent to all other Great Eastern Management
                  Company Tenants

                  Temporary sign mention for one week

Media Campaign:   Value $555 (30 hours @ $18.50) plus up to $1,200 billable
                  media expense.

                  Concept, design, copywriting, typesetting, layout, supervision
                  of audio and video production, media planning for:

                  3 25" ads in Daily Progress, with one-half price pick-up rate
                                       OR
                  30 30-second radio ads on 3 stations, each to include on-air
                  giveaways of Remotes if offered at no additional charge
                                       OR
                  Approximately 80 30-second spots on up to 4 networks on
                  Adelphia Cable
                                       OR
                  Direct mailing of 6,000 coupon flyers 8-1/2" X 11"

Grand Opening Event:  Value $296 (16 hours @ $18.50) plus up to $500.00
                      billable expenses

                  Grand Opening Banner (2 weeks on location)
                            AND ONE OF THE FOLLOWING
                  Concept Development, coop negotiation, coordination, booking
                  of talent, Requisition of promotional items
                                       OR
                  Consultation, Print, TV or Radio Ad Format Development, Design
                  camera ready.

                  Computer Generated Logo and slicks: $296.00 Value (16 Hours @
                  $18.50)
                                       OR
Media Purchase or Promotional Event expenses as deemed appropriate for Grand
Opening by Landlord not to exceed $296.00 (to include 3 hours @ $18.50 for media
planning and placement) plus media time or space ($240.50).

PACKAGE C Value:  $3,263.00

Cost for PACKAGE C to Tenant - $1,200.00 Check due at the time of execution of
the Lease.



Cost of PACKAGE C to Landlord - $2,063.00

Provided the Tenant is not in violation or default, the Marketing Fund will
reimburse Tenant One Thousand Two Hundred ($1,200.00) Dollars during the
thirteenth (13th) month of the Lease following the Commencement Date.



                                    EXHIBIT G

                                 LEASE GUARANTY

In consideration of making a lease by and between Sequel Investors Limited
Partnership "Landlord" and Old Domain Enterprises, Inc. as "Tenant" dated as of
May 20, 1997 ("Lease") at the request of the guarantor(s) and in reliance on
this guarantee, the guarantor(s), hereby waive(s) the obligations of the
Homestead exemption laws as to the Lease and jointly and severally (if there is
more than one guarantor), guarantee the payment of all rent to be paid by the
Tenant and the performance by Tenant of all the terms, covenants and conditions
of the Lease including any extensions or renewals thereof. The guarantor(s)
promise(s) to pay all the Landlord's expenses, including reasonable attorney's
fees, incurred by the Landlord in enforcing all obligations of the Tenant under
the Lease or incurred by the Landlord in enforcing this guarantee. The
Landlord's consent to any assignment or assignments and successive assignments
by the Tenant and Tenant's assigns, of the Lease, made either with or without
notice to the guarantor(s) or a change or different use of the Premises, or
Landlord's forbearance delays or extensions of time or any other reason whether
similar to or different from the foregoing shall in no way or manner release the
undersigned from the liability as guarantor. The guarantor(s) agree(s) that the
default by Tenant or its successors or assigns shall create an immediate
liability on the part of the undersigned to Landlord and its successors or
assigns. Landlord does not need to first exhaust its legal remedies against
Tenant or successors or assigns before proceeding against the guarantor(s).
Landlord is not required to notify the undersigned of any default of Tenant
under the provisions of this Lease.

IN WITNESS WHEREOF, the undersigned has executed this lease Guaranty in the
presence of competent witness(es) as of this 30th day of May, 1997.

Witness:                                    Guarantor(s):

________________________________            ______________________________



                                    Exhibit I

                          PRINT OR TYPE ALL INFORMATION

THE SECURED PARTY DESIRES THIS FINANCING STATEMENT TO BE INDEXED AGAINST THE
RECORD OWNER OF THE REAL ESTATE NO (X) YES ( ) NAME OF RECORD OWNER
__________________________

                          STATE CORPORATION COMMISSION
             (Uniform Commercial Code Division, Box 1197, Richmond,
              Virginia 23209) FORM FOR ORIGINAL FINANCING STATEMENT
                            AND SUBSEAUENT STATEMENTS

The Commission stamps the File
Number on the Original Financing
Statement. The secured Party must
place this same number on all
subsequent statements.

Index numbers of subsequent
statements (For office use only)

Name & mailing address of all               Check the box indicating the kind
debtors, trade styles, etc.                 of statement.
No other name will be indexed.              Check only one box.

     Mailing Address:                       (X)  ORIGINAL FINANCING STATEMENT
            Mr. Reynolds Young
            43717 John Mosby Highway        ( )  CONTINUATION-ORIGINAL STILL
            Chantilly, VA 22021                  EFFECTIVE

                                            ( )  AMENDMENT

     Physical address of Secured
     Premises:
            Dominion Saddlery               ( )  ASSIGNMENT
            242 Zan Road
            Charlottesville, VA 22901       ( )  PARTIAL RELEASE OF COLLATERAL

                                            ( )  TERMINATION

Name & Address of Secured Party             Names & address of Assignee
     Sequel Investors Limited Partnership
     P.O. Box 5526 Charlottesville, VA
     22905-5526

Date of maturity if less than five years    Check if proceeds of collateral are
                                            covered.    (X)
Description of collateral covered by original financing statement

Space to record an amendment, assignment, release of collateral or a statement
to cover collateral brought into Virginia from another jurisdiction.

_________ Real Estate if applicable.

/s/ Reynolds Young                5/31/97

Signature of Debtor if applicable (Date)    Signature of Secured Party if
                                            applicable (Date)


                            SECOND ADDENDUM TO LEASE

This agreement evidences a Second Addendum to an Agreement of Lease for Shopping
Center Space dated May 20, 1997, for the Premises located at 242 Zan Road in the
Seminole Square Shopping Center, in Charlottesville, Virginia, 22901 ("Lease"),
by and between Sequel Investors Limited partnership, a Virginia limited
partnership ("Landlord"), and Old Dominion Enterprises, Inc. d/b/a Dominion
Saddlery ("Tenant") and Reynolds Young ("Guarantor"), as amended on June 4, 1997
by a First Addendum to Lease.

The Lease is hereby amended as follows:

(1)   The Term of the Lease is extended for an additional thirty-six (36) months
      to expire on May 31, 2003, subject to the provisions herein.

(2)   Minimum Rent shall be as follows:

      June 1, 2000 through May 31, 2002        $3,500.00 per month
      June 1, 2002 through May 31, 2003        $3,562.50 per month

(3)   If required by the City of Charlottesville, or any of its agencies or
      departments, or by any other authority having jurisdiction, the Tenant
      shall have the responsibility at its expense to provide, install and have
      inspected, a water backflow preventor. Tenant shall also be responsible
      for all future maintenance and annual inspections thereof.

(4)   A violation of any of the provisions in this Second Addendum shall
      constitute a Default under the terms of the Lease.

(5)   Unless otherwise defined herein, all capitalized terms shall have the
      meaning set forth in the Lease.

(6)   In the event of a conflict between the terms of this Second Addendum and
      any other provisions of the Lease as amended, the terms of this Second
      Addendum shall prevail.

(7)   Except as amended by this Second Addendum, the provisions of the Lease
      shall remain in full force and effect.

WITNESS, the following signatures:
                                           LANDLORD:

                                           Sequel Investors Limited Partnership

                                           By: Great Eastern Management Company,
                                               Agent

Date:    6/12/2000                             By    /s/
                                                  ------------------------------
                                                       Its:  V.P.

                                           TENANT:

                                           Old Dominion Enterprises, Inc.

Date:    6/1/00                                By:   /s/   Reynolds Young
                                                   ----------------------------
                                                       Its:     President

                                           GUARANTOR:

Date:    6/1/00                            /s/  Reynolds Young
                                           -------------------------------------
                                           Reynolds Young


                             THIRD ADDENDUM TO LEASE

This agreement evidences a Third Addendum to an Agreement of Lease for Shopping
Center Space dated May 20, 1997, for the Premises located at 242 Zan Road in the
Seminole Square Shopping Center in Charlottesville, Virginia 22901, by and
between Sequel Investors Limited Partnership, a Virginia limited partnership
("Landlord"), and Old Dominion Enterprises, Inc. d/b/a Dominion Saddlery
("Tenant") and Reynolds Young ("Guarantor"), as amended on June 4, 1997 by a
First Addendum to Lease and on June 12, 2000 by a Second Addendum to Lease
(collectively, the "Lease").

The Lease is hereby amended as follows:

1)    The Term of the Lease is extended for an additional twenty-four (24)
      months to expire on May 31, 2005, subject to the provisions herein.

2)    Minimum Rent shall be as follows:

                                 
June 1, 2003 through May 31, 2004   $3,562.50 per month
June 1, 2004 through May 31, 2005   $3,675.00 per month



3)    Tenant shall have the option, to be exercised as hereinafter provided, to
      extend this lease for one additional two (2) year term ("Renewal Term"),
      provided no violation is existing or continuing, nor with the lapse of
      time or the giving of notice or both would there be a violation, in the
      performance of any of the terms or conditions of this lease at the time of
      exercise, or at any time through the commencement of the Renewal Term.
      Tenant shall provide written notice of its intent to exercise the Renewal
      Term option not later than 180 days nor earlier than 360 days prior to the
      end of the Term of the Lease.

      Minimum Rent, during the Renewal Term shall be as follows:

                                 
June 1, 2005 through May 31, 2006   $3,675.00 per month



4)    Disclosure: Rivanna Realty represents the Landlord in this transaction.
      The General Partner of the Landlord, Great Eastern Management Company
      ("Great Eastern"), is a licensed real estate brokerage firm. Mr. Everett
      S. Hopkins, Jr., an employee of Great Eastern with an active real estate
      license, is an officer of Great Eastern. Mrs. Hopkins and Mrs. Dotty N.
      Hopkins, who is also employed by Great Eastern and has an active real
      estate license, are both limited partners in a partnership which owns a
      limited partnership interest in Landlord.

5)    Unless otherwise defined herein, all capitalized terms shall have the
      meaning set forth in the Lease.

6)    Except as amended by this Third Addendum, the provisions of the lease
      shall remain in full force and effect.

7)    A violation of any of the provisions in this Third Addendum shall
      constitute a Default under the terms of the lease.

8)    In the event of a conflict between the Terms of this Third Addendum and
      any other provisions of the Lease, the terms of this Third Addendum shall
      prevail.

WITNESS, the following signatures:

                                           LANDLORD:
                                           Sequel Investors Limited Partnership

                                           By: Great Eastern Management Company,
                                               Agent

Date: 6/10/03                              By: /s/
                                               ---------------------------------
                                                    Its: Pres.



                                     TENANT:
                                     Old Dominion Enterprises, Inc.

Date: 6/5/03                   By: /s/Reynolds Young
                                   ---------------------------------------------
                                      Its: President

                                      GRANTOR:

Date: 6/5/03                   /s/Reynolds Young
                               -------------------------------------------------
                                  Reynolds Young



                            FOURTH ADDENDUM TO LEASE

This agreement evidences a Fourth Addendum to an Agreement of Lease for Shopping
Center Space dated May 20, 1997, for the Premises located at 242 Zan Road in the
Seminole Square Shopping Center in Charlottesville, Virginia 22901, by and
between Sequel Investors Limited Partnership, a Virginia limited partnership
("Landlord"), and Old Dominion Enterprises, Inc. d/b/a Dominion Saddlery
("Tenant") and Reynolds Young ("Guarantor"), as amended on June 4, 1997 by a
First Addendum to lease, on June 12, 2000 by a Second Addendum to Lease and on
June 10, 2003 by a Third Addendum to Lease (collectively, the "Lease").

The Lease is hereby amended as follows:

1)    Tenant acknowledges that it has an outstanding past due balance in the
      amount of $759.07 as outlined in the attached Delinquency/Aging Report
      dated April 15, 2005.

2)    The Term of the Lease is extended for an additional twelve (12 months to
      expire on May 31, 2006, subject to the provisions herein.

3)    Minimum Rent shall be as follows:

                                 
June 1, 2005 through May 31, 2006   $3,737.50 per month



4)    Upon Tenant's written request, on or before December 31, 2005, Landlord
      will reimburse Tenant up to $250.00 spent by the Tenant for media
      advertising purposes which shall have included mention of Tenant's
      location in the Seminole Square Shopping Center. Tenant shall provide
      receipts and tear sheets from newspaper, notarized statements from radio
      stations, paid contracts from television stations, or evidence of direct
      costs associated with a direct mail campaign to Landlord or its agent
      prior to the above deadline in order to be reimbursed.

5)    Tenant acknowledges it has an affirmative duty to provide Landlord with
      written notice of a change in domicile thirty (30) days in advance of any
      such change. Change in domicile for this provisions refers to the location
      requirements for UCC filings which shall be one of the following: i) for
      an entity created by a filing with a state, the entity's location is that
      state; ii) for an entity not created by a filing, the entity's location is
      the place of its chief executive office; or iii) for an individual, the
      person's location is her/his principal residence. Failure of Tenant to
      provide this notice shall stop Tenant or any person or entity ascertaining
      claims on behalf of Tenant from raising the issue of location in any
      dispute concerning the priority of a UCC filing involving Tenant and
      Landlord.

6)    Disclosure: Rivanna Realty and Investment Company represents the Landlord
      in this transaction. The General Partner of the Landlord, Great Eastern
      Management Company ("Great Eastern"), is a licensed real estate brokerage
      firm and Mr. Everett S. Hopkins, Jr., holds an active real estate license
      and is employed by and is an officer of Great Eastern. Mr. Hopkins and
      Mrs. Dotty N. Hopkins, who is also employed by Great Eastern and holds an
      active real estate license, are limited partners in a partnership which
      owns a limited partnership interest in Landlord.

7)    Unless otherwise defined herein, all capitalized terms shall have the
      meaning set forth in the Lease.

8)    Except as amended by this Fourth Addendum, all other provisions of the
      Lease shall remain in full force and effect.

                            INTENTIONALLY LEFT BLANK



9)    A violation of any of the provisions in this Fourth Addendum shall
      constitute a Default under the terms of the Lease.

10)   In the vent of a conflict between the Terms of this Fourth Addendum and
      any other provisions of the Lease, the terms of this Fourth Addendum shall
      prevail.

WITNESS, the following signatures:

                                    LANDLORD:
                                    Sequel Investors Limited Partnership

                                    By: Great Eastern Management Company,
                                        Agent

Date: 5/17/05                       By: /s/
                                        ----------------------------------------
                                            its: V.P.

                                     TENANT:
                                     Old Dominion Enterprises, Inc.

Date: 5/10/05                 By:   /s/Reynolds Young
                                    --------------------------------------------
                                         its: President

                                   GUARANTOR:

Date: 5/10/05                 /s/Reynolds Young
                              --------------------------------------------------
                                 Reynolds Young



                             FIFTH ADDENUDM TO LEASE
                               EXTENSION AGREEMENT

This Fifth Addendum to Lease ("Extension Agreement"), dated as of this 12th day
of June, 2006 by and between Old Dominion Enterprises, Inc. d/b/a Dominion
Saddlery ("Tenant"), Dover Saddlery Retail, Inc. ("New Guarantor"), and Sequel
Investors Limited Partnership, a Virginia limited partnership ("Landlord"),
amends the Agreement of Lease for Shopping Center Space for the Premises in the
Seminole Square Shopping Center, Chartlottesville, Virginia dated May 20, 1997,
which was modified on June 4, 1997 by a First Addendum to Lease, on June 12,
2000 by a Second Addendum to Lease, on June 10, 2003 by a Third Addendum to
Lease, and on May 17, 2005 by a Fourth Addendum to Lease for the Premises (which
shall hereafter collectively be referred to as the "Lease"):

                                   WITNESSETH

WHEREAS, the Lease is in full force and effect and by its terms expires on May
31, 2006; and,

WHEREAS, Landlord and Tenant desire that the Lease be extended:

NOW, THEREFORE, in consideration of the mutual promises and obligations set
forth herein and in the Lease, the parties agree as follows:

1.    The Terms of the Lease is hereby extended for an additional eight (8)
      months to expire January 31, 2007, subject to the provisions herein.

2.    The Fiscal Period shall remain as the Lease year and shall run from June 1
      of any year through May 31st of the next. If Tenant does not exercise its
      option to renew as outlined in Paragraph 8 below, then the last Fiscal
      Period of the Lease shall be from June 1, 2006 through January 31, 2007,
      and any Percentage Rent due for this period shall be defined as follows:

      Percentage Rent: Six percent (6%) of the Gross Sales (as defined in
      Section 3) occurring in the last Fiscal period which exceed six-hundred
      sixty-seven thousand dollars ($667,000.00).

3.    The monthly Minimum Rent shall be $3,737.50.

4.    Tenant shall have the option, to be exercised as hereinafter provided, to
      extend this Lease for one additional two (2) year term ("Renewal Term"),
      provided no violation is existing or continuing, nor with the lapse of
      time or the giving of notice or both would there be a violation, in the
      performance of any of the terms or conditions of this Lease at the time of
      exercise, or at any time through the commencement of the Renewal Term.
      Tenant shall provide written notice of its intent to exercise the Renewal
      Term option not later than ninety (90) days prior to the end of the
      extended Term of the Lease.
      Renewal Term:
      From the first day of the 1st month through the last day of the 24th month
      of the Term, Minimum Rent shall be $3,775.00 per month.

5.    New Guarantor unites in this Extension Agreement to evidence its agreement
      to guarantee as Guarantor, the full and complete performance by Tenant of
      all of the terms and conditions of the Lease, as it may be amended.
      Reynolds Young, individually, is hereby removed as Guarantor under the
      Lease, such removal to be effective as of the date of final execution of
      this Extension Agreement by all parties, but shall continue to be
      responsible for any liability that may have occurred under this Lease
      prior to such date.

6.    SECTION 1, Definitions, "Permitted Uses:" is hereby amended in its
      entirety to read as follows:

            The sale of equipment and apparel for the rider and horse both
            customer and stock, equestrian gifts, horse care products,
            equestrian consignment items, books, magazines, videotapes and such
            other uses as may be hereinafter approved in writing by Landlord to
            be conducted under the Trade Name/Trade Style Dominion Saddlery or
            Dover Saddlery.



7.    Landlord agrees that Tenant may conduct a liquidation (but not
      going-out-of-business) sale commencing on or before August 1, 2006, and
      extending no longer than forty-five (45) days.

8.    Section 3, Percentage Rent, Paragraph (b) of the Lease shall be stricken
      in its entirety and replaced with the following:

            (b)   The term "Gross Sales" as used herein for the purpose of
                  determining Percentage Rent shall mean the dollar aggregate of
                  the entire amount of receipts from gross sales of Tenant and
                  of all licensees, concessionaires and tenants of Tenant, from
                  all business conducted upon or from the Premises by Tenant and
                  all others, whether such sales be evidenced by check, credit,
                  charge account, exchange or otherwise, and shall include, but
                  not be limited to, the amounts received from the sale of
                  goods, wares and merchandise and for services performed on or
                  at the Premises (including the value of all goods accepted in
                  lieu of cash payment), together with the amount of all orders
                  taken or received at the Premises, mail or telephone orders
                  received or filled on the Premises, whether such orders are
                  filled from the Premises or elsewhere, and whether such sales
                  be made by means of merchandise or other vending devices in
                  the Premises and shall also include, without limitation, all
                  orders by means of electronic, telephonic, video, computer, or
                  other technology-based system, whether existing now or
                  developed in the future, that are taken at or made from the
                  Premises, whether or not filled at the Premises, and all other
                  such orders received or filled at the Premises. At Tenant's
                  request, Landlord shall put a link to Tenant's web site on
                  Shopping Center's web site, which shall remain for the
                  duration of the Lease. Notwithstanding the foregoing, Landlord
                  reserves the right to remove such a link if Tenant breaches
                  the Lease or fails, in Landlord's sole judgment, to operate a
                  professional-looking web site focused on the sale of
                  merchandise from the Premises. If any one or more departments
                  or other divisions of Tenant's business shall be sublet by
                  Tenant or conducted by any person, firm, or corporation other
                  than Tenant, then there shall be included in Gross Sales all
                  the gross sales of such departments or divisions, whether such
                  sales be filled at the Premises or elsewhere, in the same
                  manner and with the same effect as if the business or sales of
                  such departments and divisions of Tenant's business had been
                  conducted by Tenant. Gross Sales shall not include sales of
                  merchandise for which, and to the extent that, cash has been
                  refunded, or allowances made on merchandise claimed to be
                  defective or unsatisfactory, provided they shall have
                  originally been included in Gross Sales; and there shall be
                  deducted from Gross Sales the sale price of merchandise
                  returned by customers for exchange, provided that the sale
                  price of merchandise delivered to the customer in exchange
                  shall be included in Gross Sales.

                  If Tenant charges its customers a restocking fee or any other
                  kind of fee, cost, or expense as part of processing a return
                  of an item of merchandise, then Tenant shall deduct from Gross
                  Sales the amount equal to the value of the refunded item minus
                  the total of such fees, costs, or expenses. Gross Sales shall
                  not include the amount of any sales, use, service, gross
                  receipts or other like tax imposed by any federal, state,
                  municipal or governmental authority directly on sales and
                  collected from customers, provided that the amount thereof is
                  added to the selling price or absorbed therein, and paid by
                  the Tenant to such governmental authority. No franchise,
                  capital stock or personal property tax and no income or
                  similar tax based upon income or profits as such shall be
                  deducted from Gross Sales in any event whatsoever. Each charge
                  or sale upon installment or credit shall be treated as a sale
                  for the full price in the calendar month during which such
                  charge or sale shall initially be made, irrespective of the
                  time when Tenant shall receive payment (whether full or
                  partial) therefor. There shall be no deduction for uncollected
                  or uncollectible credit accounts or for bad debts or other
                  losses.

9.    The following shall be added to Section 7 of the Lease:

                  (1) If Tenant's Use of the Premises includes any of the
                  following (restaurant, food preparation, sale of food prepared
                  in or from the Premises, catering or automotive service or
                  supply), Tenant shall be responsible for the installation,
                  servicing, maintenance and any replacement of a grease trap
                  system, the size of which shall effectively contain all grease
                  generated from the Premises. Tenant shall contract with a
                  recognized grease removal contractor approved by the Landlord
                  and ensure that the Landlord is at all times during the Term
                  or any extensions thereof provided with a copy of the then
                  current contract. Should a blockage occur because of the
                  discharge of fats, petroleum oil, non



                  biodegradable cutting oil, products of mineral oil origin or
                  grease from the Premises, Tenant shall be liable for all costs
                  to clean and clear the sewer line as well as the costs for
                  damage done to adjoining tenants' property. If Tenant's sewer
                  discharges violate any of the local, state or federal stream
                  standard ordinances regarding prohibited waste discharges or
                  creates a public nuisance, Tenant shall be solely responsible
                  for any and all fines levied against the Landlord, its Agent
                  or neighboring tenants. Noncompliance with any of the above
                  regulations shall result in a Default of the Lease and shall
                  be subject to monetary penalties contained herein.

      And the following shall replace the remainder of this Section:

                  The term "Landlord" as used in (a) through (1) above shall be
                  deemed to include Landlord's Managing Agent.

                  In the event any violation of any of the above rules and
                  regulations continues after five (5) days following notice to
                  the Tenant of such violation, beginning on such fifth day
                  Tenant shall, in addition to any and all other remedies of
                  Landlord provided in this lease for default by tenant, pay
                  liquidated damages of Fifty Dollars ($50.00) per day for each
                  such violation for each day such violation continues. Landlord
                  reserves the right to adopt additional rules and regulations
                  in respect to the conduct of Tenant's activities in the
                  Premises and the Shopping Center, which upon adoption shall be
                  deemed incorporate herein, provided that Tenant is given
                  notice thereof.

10.   The first sentence of SECTION 15, Assignment, Subletting and Encumbrance
      is hereby deleted in its entirety and replaced with the following:

                  Tenant has the right to assign this Lease or any interest
                  therein to any affiliate of Dover Saddlery, Inc. without the
                  necessity of obtaining written consent from the Landlord.
                  Tenant shall not assign this lease or any interest therein,
                  whether voluntarily, involuntarily or by operation of law, or
                  sublet the Premises or any portion thereof to any person or
                  entity other than an affiliate of Dover Saddlery, Inc. without
                  the prior written consent of the Landlord, which consent may
                  be granted or withheld in the sole discretion of the Landlord,
                  and no permitted assignment or subletting shall relieve Tenant
                  of Tenant's covenants and agreement hereunder.

11.   Paragraph Notices: Section 21 of the Lease is hereby deleted in its
      entirety and replaced with the following:

                  All notices, demands, requests, consents, approvals and other
                  instruments required or permitted to be given pursuant to the
                  terms of this Lease shall be deemed sufficiently given or
                  rendered if in writing and hand delivered, sent by registered
                  or certified mail, postage prepaid, return receipt required,
                  or deposited with a recognized overnight courier (such as
                  United Parcel Service or Federal Express, e.g.,), addressed to
                  Tenant at Tenant's address or Landlord at Landlord's address,
                  as the case may be, and any such notice shall be deemed to
                  have been delivered on the date received, refused or returned
                  for insufficient address. Landlord and Tenant shall each have
                  the right from time to time to specify as its address for the
                  purposes of this Lease any other addresses in the United
                  States of America upon three days' notice thereof, similarly
                  given, to the other party.

                  LANDLORD'S ADDRESS: c/o Great Eastern Management Company, P.O.
                  Box 5526, Charlottesville, VA 22905-5526 (Physical Address:
                  2619 Hydraulic Road, Charlottesville, VA 22901)

                  TENANT'S ADDRESS: Old Dominion Enterprises, Inc. c/o Dover
                  Saddlery, 525 Great Road, Littleton, MA 01460
                 (Contact Name) Stephen Day
                 (Telephone) 978-952-8062
                  Tax I.D. Number 20-4417762 Social Security Number N/A

                  ORGANIZATIONAL NUMBER FROM VIRGINIA SCC:  F166762-7
                  Registered Agent in the Commonwealth of Virginia: CT
                  Corporation System
                  Address: 4701 Cox Road, Suite 301, Glen Allen, VA 23060-6820
                  Phone: 804-217-7255


12.   Rivanna Realty and Investment Company represents the Landlord in this
      transaction. The General Partner of the Landlord, Great Eastern Management
      Company ("Great Eastern"), is a licensed real estate brokerage firm. Mr.
      Everett S. Hopkins, Jr., an employee and officer of Great Eastern, holds
      an active real estate license. Mr. Hopkins and Mrs. Dotty N. Hopkins, who
      is also employed by Great Eastern and holds an active real estate license,
      are limited partners in a partnership which owns a limited partnership
      interest in Landlord.

13.   The persons executing this Extension Agreement on behalf of the Tenant
      hereby covenant and warrant that with respect to such Extension, (i) the
      Tenant is a duly constituted corporation in good standing and currently
      qualified to do business in the state in which the Shopping Center is
      located; (ii) all Tenant's franchise and corporate taxes have been paid to
      date; (iii) all future forms, reports, fees and other documents necessary
      for Tenant to comply with applicable laws will be filed by Tenant when
      due; and (iv) such persons are duly authorized by the governing body of
      such corporation to execute and deliver the Extension Agreement on behalf
      of the corporation.

14.   Except as amended by this Extension Agreement, the provisions of the Lease
      shall otherwise remain in full force and effect.

15.   A violation of any of the provisions in this Extension Agreement shall
      constitute a Default under the terms of the Lease.

16.   Unless otherwise defined herein, all capitalized terms shall have the
      meaning set forth in the Lease.

17.   In the event of a conflict between the terms of this Extension Agreement
      and any other provisions of the Lease, the terms of this Extension
      Agreement shall prevail.

18.   This document may be signed via facsimile and/or in counterparts with the
      same full force and effect as if all signatures were original and on one
      document.

      WITNESS, the following signatures:

                                    LANDLORD:

                                    Sequel Investors Limited Partnership,
                                        a Virginia limited partnership

                                    By: Great Eastern Management Company, Agent
Witness/Attest:_______________      by:_________________________________________
Date:_________________________         its:_____________________________________

                                     TENANT:

                                     Old Dominion Enterprises, Inc.

Witness/Attest:_______________       By:________________________________________
Date:_________________________          its:____________________________________

                                   GUARANTOR:

Witness/Attest:_______________
Date:_________________________     _____________________________________________
                                   Reynolds Young



                                 NEW GUARANTOR:

                                 Dover Saddlery Retail, Inc.

Witness/Attest:______________    By:____________________________________________
Date:________________________       its:________________________________________

EX-10.43

                                                                   Exhibit 10.43

                                 LEASE AGREEMENT


         By and between Leon Barker and Phillip Barker DBA L.B.'s of Virginia
and Reynolds Young and Old Dominion Enterprises, Inc. DBA Dominion Saddlery.

         To lease store building at 484 Maury River Rod, Lexington, Virginia
24450, being the center section of the L.B.'s of Virginia building.

         This lease will be for a period of one year with four two-year options.

         This space to be approximately 3130 hundred square foot, more or less,
of heated floor space.

         Dominion Saddlery to pay all utilities and provide all maintenance of
leased area including any and all repairs to lighting, heat and air unit, floors
and walls, cleaning of area and front of the store.

         Dominion Saddlery to furnish own Fire and Public Liability Insurance.

         Dominion Saddlery to operate business with business hours at their
discretion.

         Dominion Saddlery to be responsible for any and all damages done by
employees or customers.

         Any defacing of building, walls, floors, or signs shall be repaired by
Dominion Saddlery.

         Dominion Saddlery to furnish all signs at their expense. The lighted
sign at the road will be allowed approximately twenty-five square feet. On the
front of the building, half the size of total allowed by county.

         The power is on a separate meter base and the gas is on separate
bottles.

         Dominion Saddlery to have use of the bathrooms during our normal
business hours of Monday-Saturday 9:00am-6:00pm.

         The lease payment shall be in the amount of the following:

         - The 1st year @ $6.00 per square foot in the amount of $1,565.00 for
the lease, $100.00 for insurance, and $200.00 for maintenance to be in the total
amount of $1,865.00.

         - The 2nd and 3rd year @ $6.50 per square foot in the amount of
$1,695.42 for the lease, $125.00 for insurance, and $225.00 for maintenance to
be in the total amount of $2,045.42.

         - The 4th and 5th year @ $7.00 per square foot in the amount of
$1,825.83 for the lease, $150.00 for insurance, and $250.00 for maintenance to
be in the total amount of $2,225.83.

         - The 6th & 7th and 8th & 9th years shall be increased by 3%.

         This agreement shall be entered into on the 1st day of November 2000.


   /s/ Leon Barker                          /s/ Reynolds Young
 -----------------------------            -----------------------------------
Leon Barker, Co-Owner                     Reynolds Young
L.B.'s of Virginia                        Dominion Saddlery


  /s/ Phillip Barker
- ------------------------------
Phillip Barker, Co-Owner
L.B.'s of Virginia


Notary Public:                            Notary Public:
              -------------------------                 ---------------------


                                                                   EXHIBIT 10.43

                                   AMENDMENT 1

                                       TO

                    LB's OF VIRGINIA BUILDING LEASE AGREEMENT

1. NAMES

This amendment to lease is made by LEON BARKER, doing business as LB's of
Virginia (Landlord), and DOVER SADDLERY RETAIL, INC., a Massachusetts
corporation with a principal place of business located at PO Box 1100, 525 Great
Road, Littleton, Massachusetts 01460 (Tenant).

2. TERMS AMENDED

The LB's of Virginia Building Lease Agreement dated November 1, 2000, covering
the premises at 484 Maury River Road, Lexington, Virginia is assumed by Dover
Saddlery Retail, Inc. and amended as follows: The lease is amended to add a
provision for an additional payment to cover a portion of the landlord's taxes
associated with the property. In addition to the payments outlined in the lease,
Dover Saddlery shall pay the landlord an additional sum of Two Hundred and
Twenty dollars ($220) per month for the remaining months of the current lease
year and per month for each subsequent year of the lease. This payment shall be
increased by 5% on the anniversary of each subsequent year for the life of the
lease.

3. EFFECTIVE DATE

This amendment will take effect on June 15, 2006.

                              AMENDMENT 1 - PAGE 1



4. OTHER TERMS OF LEASE

In all other respects, the terms of the original lease and any earlier
amendments remain in effect. If there is a conflict between this amendment and
the original lease or any earlier amendment, the terms of this amendment will
prevail.

LANDLORD

Dated: 6-2-06

By:    /s/ Leon Barker
       ----------------------------------------------------
       Leon Barker, doing business as LB's of Virginia

TENANT

Dover Saddlery Retail, Inc.

Dated: ____________________________________________________

By:    /s/ Stephen L. Day
       ----------------------------------------------------
       Its President, duly authorized

                              AMENDMENT 1 - PAGE 2

EX-10.44

                                                                   EXHIBIT 10.44

                          HOPKINS PLACE BUSINESS CENTER
                                 LEASE AGREEMENT

THIS LEASE AGREEMENT, is made this 10th day of July, 2006, by and between
HOPKINS ROADS ASSOCIATES, a Maryland General Partnership ("Landlord") and Dover
Saddlery Retail, Inc. ("Tenant"), a Massachusetts corporation.

      WITNESSETH: That for and in consideration of the rents, mutual promises
and covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
covenant, promise and agree as follows:

Section 1 - Demised Premises

      1.01. Demised Premises. Upon the terms and conditions hereinafter set
forth, and in consideration of the payment of the rent and the prompt
performance by Tenant of all of the covenants and agreements to be kept and
performed by Tenant, Landlord does lease, let, and demise to Tenant and Tenant
hereby leases from Landlord the following demised premises (hereinafter
"Premises"), situate, lying, and being in Anne Arundel County, State of
Maryland, and being a portion of the commercial improvements shown on Tax Map
No.36, Parcel 379, Liber 3529, Folio 60, being Suites "11, 12, & 13"., which has
an agreed area of 9000 square feet, a frontage of 90 linear feet, and a depth of
100 linear feet as outlined in red on Exhibit A attached hereto and incorporated
herein. The address of the premises is 1047 Maryland Route 3 North, HOPKINS
PLACE, Gambrills, Anne Arundel County, MD, 21054.

      1.02. Building. The term "Building" shall mean the building designated on
Exhibit A.

      1.03. Common Area. The term "Common Area" shall mean that designated as
such on Exhibit A.

                             Section 2 - Lease Term

      2.01. Term. Landlord leases to Tenant and Tenant hereby takes from
Landlord the Premises for the term of five years (5 years) at and for the Rent
set forth in Section 3 and such Additional Rent as set forth in this Lease.

      2.02. Commencement Date. The Commencement Date of this Lease shall be the
first day Tenant is provided access to the Premises. If the Commencement Date of
this Lease is not ascertainable at the date of the execution of this Lease,
Tenant and Landlord agree that when said date has been determined, the parties
shall enter into an amendment to this Lease specifying the Commencement Date of
the original term hereof.

      If the Commencement Date falls other than on the first day of a calendar
month, then all rents due hereunder for that month shall be pro-rated
proportionately for that month, and the full Lease term shall be equal to the
number of years set forth in Subsection 2.01 plus that portion of the month
remaining from the date of commencement through the last day of that month.

                                       1



      2.03. Lease Extension. Tenant may elect to extend the term of this Lease
for three (3) renewal terms of five (5) years by giving notice in writing to
Landlord of Tenant's intent to renew. Said notice shall be given no earlier than
one hundred eighty (180) nor later than ninety (90) days prior to the conclusion
of the initial term of this Lease for the first renewal term and no earlier than
one hundred eighty (180) nor later than ninety (90) days prior to the conclusion
of the first renewal term for the second renewal term. Default on any term or
condition of this Lease during the initial term terminates Tenant's right to
elect a renewal term.

      2.04. Termination. Unless written notice exercising the renewal term is
received by Landlord, this Lease shall terminate at the end of the initial term,
(or renewal term if applicable) without the necessity of any notice from either
Landlord or Tenant to terminate the same, and Tenant hereby waives notice to
vacate or quit the Premises. For the period of three months prior to expiration
of the term, Landlord shall have the right to display on the exterior of the
Premises a "For Rent" sign. During said period, Landlord may show the Premises
and all parts thereof to prospective tenants during normal business hours.

      2.05. Tenant Holding Over. If Tenant shall not immediately surrender
possession of the Premises at the termination of this Lease, Tenant shall become
a Tenant from month-to-month, provided Tenant first obtains the written consent
of Landlord and provided rent is paid to and accepted by Landlord in advance, at
the rate of rental payable hereunder just prior to the termination of this
Lease. Unless and until Landlord shall consent to Tenant's continued occupancy
and accepts such rent from Tenant, Landlord shall continue to be entitled to
re-take possession of the Premises without any prior notice whatever to Tenant.
If Tenant shall fail to surrender possession of the Premises immediately upon
the expiration of the term hereof, Tenant hereby agrees that all of the
obligations of Tenant and all rights of Landlord applicable during the term of
this Lease shall be equally applicable during such period of subsequent
occupancy, whether or not a month-to-month tenancy shall have been created as
aforesaid except that the monthly rent shall be 150% of the monthly rent for the
last month of the original term or renewal term of this Lease. In the event it
becomes necessary to Landlord to engage the services of an attorney, whether or
not legal proceedings are instituted against Tenant by Landlord as a result of
Tenant's holding over, either for payment of rent or for possession, then Tenant
agrees to pay all court costs associated with such proceedings, together with
all reasonable attorney's fees.

      Section 3 - Rent

      3.01. Minimum Rent. During the initial term of this Lease, Tenant
covenants and agrees to pay Landlord a total fixed minimum Rent of Six Hundred
Seventy Five Thousand and 00/100 Dollars ($675,000.00), paid at an annual
minimum rental rate of One Hundred Thirty Five thousand and 00/100 Dollars
($135,000.00), being Fifteen and no/100 Dollars per square foot ($15.00 /sq.
ft.) for the first year and as subsequently increased herein.

      Initial minimum Rent shall be payable in equal monthly installments of
_________________ Eleven Thousand Two Hundred Fifty Dollars and 00/100
($11,250), in advance, on the first day of each month during the term of this
Lease, or any renewal term, at the office of Landlord or such other place as
Landlord may designate, without any set off or deduction whatsoever.

                                       2



      If the Commencement Date shall be a date other than the first day of the
calendar month, Tenant shall, on the Commencement Date, pay to Landlord a sum
equal to one month's installment of rent, pro rated on the basis of the actual
number of days from the Commencement Date to the last day of the calendar month.

      3.02. Rent Increases. During the initial 5-year term of this Lease and the
first 5-year extension of the term of this Lease, the minimum annual rent
payable in twelve (12) equal monthly installments shall be increased each year
by three percent (3%), resulting in a minimum annual rent as follows:

      Year One: $135,000.00 annually or $11,250.00 per month

      Year Two: $139,050.00 annually or $11,587.50 per month

      Year Three: $143,221.50 annually or $11,935.13 per month

      Year Four: $147,518.15 annually or $12,293.18 per month

      Year Five: $151,943.69 annually or $12,661.97 per month

      Year Six: $156,502.00 annually or $13,041.83 per month

      Year Seven: $161,197.06 annually or $13,433.09 per month

      Year Eight: $166,032.97 annually or $13,836.08 per month

      Year Nine: $171,013.96 annually or $14,251.16 per month

      Year Ten: $176,144.38 annually or $14,678.70 per month

      In the event that the Tenant exercises its right to extend the Lease for a
second 5-year extension, the minimum annual rent applicable to the first year of
such second 5-year extension (i.e. the eleventh (11th) year of this Lease) shall
be calculated as follows: (a) a calculation shall be made to determine what the
minimum annual rent would have been during the first ten (10) years of this
Lease if the rent had been increased by the "CPI" as defined and described
below. The amount of the minimum annual rent that would have been payable during
the tenth (10th) year shall be determined; (b) if utilizing the CPI the minimum
annual rent that would have been payable during the tenth (10th) year would have
been three percent or more greater than the minimum annual rent actually paid
during the tenth year, then the minimum annual rent payable monthly for the
eleventh (11th) year shall be the amount that the minimum rent would have been
if the CPI had been utilized during the first ten (10) years but in no event
shall the minimum annual rent payable during the eleventh (11th) year utilizing
the CPI method of calculation be greater than six percent (6%) over the minimum
annual rent actually paid during the tenth (10th) year of this Lease; (c) if
utilizing the CPI the minimum annual rent that would have been payable during
the tenth (10th) year would have been less than three percent (3%) above the
annual minimum rent actually paid during the tenth (10th) year, then the minimum
annual rent commencing on the first day of the eleventh (11th) year, payable in
equal monthly installments, shall be a minimum of three percent (3%) greater
than $176,144.38. The minimum annual rent shall then be increased by three
percent (3%) per year for each year during the second 5-year extension term and
if the Tenant elects a third 5-year extension term, then the minimum annual rent
shall increase by three percent (3%) per year for each of those five

                                       3


(5) years. All minimum annual rent shall be paid in equal monthly installments
in advance on the first day of each calendar month throughout the next year of
this Lease.

      The "CPI" that shall be utilized to make the calculations set forth above
shall be the Consumer Price Index for Urban Wage Earners and Clerical Workers,
All Items, U.S. City Average (1982-84=100) (hereinafter called the "Index"),
printed monthly in the Monthly Labor Review published by the Bureau of Labor
Statistics, United States Department of Labor, PO Box 13309, Philadelphia, PA
19101. In the event of the discontinuance of this specified Consumer Price
Index, the Index most nearly approximate thereto shall be used.

      3.03. Operating Expenses. Tenant covenants and agrees to pay to Landlord
as Additional Rent Tenant's proportionate share of the cost for operating
expenses. Operating expenses shall mean the total costs and expenses paid or
incurred by Landlord in connection with the management, administration,
operation, maintenance, and repair of the Building and Common Area, including
without limitation, (i) the cost of public service electricity, water and other
utilities, (ii) the cost of repairs, supplies, equipment, maintenance, service
contracts and general maintenance cleaning of the Building and Common Area,
(iii) fees, charges, and other costs of all independent contractors engaged by
Landlord, or reasonably incurred in managing, administering, maintaining, and
repairing the Building and Common Area, including, but not limited to snow
removal and landscaping the Common Area, (iv) accounting, legal and other
professional fees incurred in the administration, operation, maintenance, repair
of the of the Building and Common Area . Notwithstanding the foregoing, the
operating expenses shall not include the cost, expenses and brokers fees
associated with locating tenants for the Building nor Landlord's collection
expenses incurred with delinquent Tenants nor accounting and other services
performed to solely benefit Landlord. Tenant shall pay in equal monthly
installments in advance on the first day of each month of the term of the Lease,
or any renewal term, or pro rata for a part of a month, if applicable, a
tentative monthly operating expense, which initially shall be Nine Hundred
Seventy Five and 00/100 Dollars ($ 975.00) as estimated by Landlord prior to the
term hereof and subject to adjustment as specified hereinafter.

                                       4



      The monthly installments paid by Tenant shall be adjusted within thirty
(30) days after Landlord, or its agent, determines the actual costs for any
fiscal period, (monthly, quarterly, semi-annually or annually, in the sole
discretion of Landlord), to reflect Tenant's actual share of such cost of
operating expenses; at which time, Tenant shall pay any balance owing on its
contribution or shall be refunded any excess, as the case may be; the monthly
payments made at the above specified rate shall also be adjusted (prospectively
or retroactively) to conform to any cost projection adopted by Landlord before
the initial accounting period ends.

      3.04 Real Estate Taxes. Tenant covenants and agrees to pay to Landlord as
Additional Rent Tenant's proportionate share of real estate taxes for the
Building and Common Area. Tenant shall pay in equal monthly installments, in
advance, on the first day of each month of the term of the Lease, or any renewal
term, or pro rata for a part of a month, if applicable, a monthly the pro rata
share of real estate taxes of Five Hundred Twenty Five 00/100 Dollars ($525.00)
and subject to adjustment as specified hereinafter.

      Real Estate Taxes shall include, without limitation, all general real
estate property taxes and general and special assessments, charges, fees, or
assessments for transit, housing, police, fire, or other governmental services
or purported benefits to the property, service payments in lieu of taxes, and
any tax, fee, or excise on the act of entering into this Lease on use or
occupancy of the Building or any part thereof or on the rent payable under any
Lease or connection with the business of renting space in the Building, that are
now or hereafter levied or assessed against Landlord by the United States of
America, or the State of Maryland, Anne Arundel County, or any other political
subdivision, public corporation, district, or other political or public
entities. Real Estate Taxes shall also include any other tax, fee, or other
excise however described, that may be levied or assessed as a substitute for or
in addition to, in whole or in part, any other real estate taxes, where they are
not now customary or in the contemplation of the parties on the date of the
signing of this Lease. Real Estate Taxes shall also include legal fees, costs
and disbursements incurred in connection with proceedings to contest, determine
or reduce real estate taxes. Tenant agrees to pay its proportionate share of any
increases in the real estate taxes in monthly installments upon notice of the
increase to Tenant from Landlord.

      3.05. Insurance. Tenant covenants and agrees to pay to Landlord as
Additional Rent Tenant's proportionate share of hazard and liability insurance
premiums on the Building and Common Areas. Tenant shall pay in equal monthly
installments, in advance, on the first day of each month of the term of the
Lease, or any renewal term, or pro rata for a part of a month, if applicable, a
monthly the pro rata share of insurance premiums of Two Hundred Twenty Five
00/100 Dollars ($225.00) and subject to adjustment as specified hereinafter.
Tenant further agrees to pay monthly as Additional Rent its proportionate share
of any increases of the said insurance premiums after notice of any such
increase in the proportionate share of insurance premium.

      3.06 Water and Sewer Charges. Water and sewer usage for the rental units
and the Common Area is billed to the Landlord based upon one central meter
serving the rental units and the Common Areas. Each rental unit, including
Tenant's Premises, has a separate private water and sewer meter for the water
and sewer usage by that rental unit. Water and sewer fees are billed by Anne
Arundel County quarterly. Tenant covenants and agrees to pay to Landlord as
Additional Rent Tenant's proportionate share of water and sewer fees based upon
its usage as reflected by its private water and sewer meter, together with its
proportionate share of water and sewer charges for the Common Areas, if any.
Tenant shall pay in equal monthly installments, in advance, on the first day of
each month of the term of the Lease, or any renewal term, or pro rata for a part
of a month, if applicable, an estimated monthly water and sewer charge of Fifty
and 00/100 Dollars ($ 50 .00) and subject to adjustment as specified
hereinafter.

                                       5



      The monthly installments paid by Tenant for water and sewer shall be
adjusted within thirty (30) days after Landlord, or its agent, determines the
actual costs for any fiscal period, (in this case quarterly), to reflect
Tenant's actual share of such cost of water and sewer fees; at which time,
Tenant shall pay any balance owing on its contribution or shall be refunded any
excess, as the case may be; the monthly payments made at the above specified
rate shall also be adjusted (prospectively or retroactively) to conform to any
cost projection adopted by Landlord before the initial accounting period ends.

      3.07. Tenant's Proportionate Share. Unless otherwise specifically
provided, Tenant's proportionate share of any Additional Rent and increases of
Additional Rent called for under this Lease for any period shall be Fifteen and
8/10 percent (15.8%) based upon Tenant's square footage and the total rentable
square footage of the Building, being approximately Fifty Seven Thousand
(57,000) square feet.

      3.08. Additional Rent. Whenever under the terms of this Lease any sum of
money is required to be paid by Tenant in addition to the annual and monthly
rental herein reserved, whether such payment is to be made to Landlord or to any
party, and said additional amount which Tenant is to pay is not designated as
"Additional Rent", or provision is not made for the collection of said amount as
"Additional Rent", said amount shall nevertheless be deemed "Additional Rent",
and shall be due and payable as such on the day the next installment of Minimum
Rent falls due hereunder or as otherwise specified in this Lease.

      3.09. Payment of Rent. Tenant shall pay all Rent and Additional Rent when
due and payable without any setoff, deduction or prior demand thereof
whatsoever. Any monthly rental payment, including, but not limited to, any
amounts due and payable as Additional Rent, which is not paid within seven (7)
days after the same is due and payable, shall bear a five (5%) percent late fee.
Additional Rent that shall become due shall be payable, unless otherwise
provided herein, with the next monthly installment of fixed Minimum Rent after
Tenant is notified of the amount of said Additional Rent. The acceptance by
Landlord of a check for a lesser amount with an endorsement or statement
thereon, or upon any letter accompanying such check, that such lesser amount is
payable in full, shall be given no effect, and Landlord may accept such check
without prejudice to any other rights or remedies which Landlord shall have
against Tenant. The failure of Tenant to pay any monthly installment of Rent or
Additional Rent, when due, for three (3) months during any twelve (12) month
period during the term of this Lease or any renewal term, shall constitute an
Event of Default of this Lease.

      3.10 Summary of Components of Monthly Rental. The monthly rental payment
due from Tenant upon the commencement of this Lease includes, but is not limited
to the following:

                                          
             (i) Minimum Rent:               $ 11,250.00______________________
             (ii) 3.03 Operating Expenses:   $    975.00
             (iii) 3.04 Real Estate Taxes:   $    525.00 _____________________
             (iv) 3.05 Insurance:            $    225.00______________________
             (v) 3.06 Water & Sewer:         $     50.00 _____________________



      In addition to the above are any charges elsewhere required by this Lease.

                       Section 4 - Intentionally Omitted.

                                       6



            Section 5 - Tenant's Use of Premises; Compliance with Law

      5.01. Tenant shall occupy the Premises upon commencement of the term and
thereafter will continuously use the Premises for the sales equestrian related
riding supplies and English riding equipment and related activities and for no
other purposes whatsoever. Tenant covenants that said use is expressly permitted
by C-4 zoning of the Anne Arundel County Zoning Code, which is the zoning
classification of the Property at the time of the signing of this Lease.

      5.02. Unless Landlord agrees to the contrary, Tenant shall conduct
business only under the following name or trade name: Dover Saddlery and or its
subsidiary trade names.

      5.03 Tenant, at Tenant's expense, shall comply with all laws, ordinances,
and regulations of federal, state and local authorities, including but not
limited to the Americans with Disabilities Act of 1990, if applicable,
pertaining to Tenant's use of the Premises and with recorded covenants,
conditions and restrictions, and restrictions, regardless of when they become
effective, including, without limitation, all applicable federal, state and
local laws, ordinances, or regulations pertaining to air and water quality,
Hazardous Material, waste disposal, air emissions, and other environmental
matters, all zoning and other land use matters, utility availability, and with
any direction of any public officers, pursuant to law, which shall impose any
duty upon the Landlord or Tenant with respect to the use or occupation of the
Premises.

      5.04 Tenant shall (i) not cause or permit any Hazardous Material to be
brought upon, kept, or used in or about the Premises by Tenant or its
contractors or subcontractors, or its or their agents, or employees, without the
prior written consent of Landlord, which Landlord shall not unreasonably
withhold as long as Tenant demonstrates to Landlord's reasonable satisfaction
that such Hazardous Material is necessary or useful to Tenant's business and
will be used, kept, and stored in a manner that complies with all laws
regulating any such Hazardous Material so brought upon, or used, or kept in or
about the Premises, (ii) generate no emissions to the ambient air other than
exhaust from the heating, ventilation, and air conditioning systems, (iii) use
no equipment requiring a permit to construct or operate under applicable air
pollution control statutes, ordinances, or regulations, (iv) not generate noise
at the property line in excess of allowable limits, (v) not install or use
incinerators or fuel-fired boilers, and (vi) not use or install any pipes,
solder, or flux that contain lead nor use any lead paint. If Tenant breaches the
obligations stated in the preceding sentence, or if the presence of Hazardous
Material on the Premises caused or permitted by Tenant results in contamination
of the Premises, or if contamination of the Premises by Hazardous Material
otherwise occurs for which Tenant is legally liable to Landlord for damage
resulting therefrom, then Tenant shall indemnity, defend, and hold Landlord
harmless from any and all claims, judgments, damages, penalties, fines, costs,
liabilities, or losses (including, without limitation, diminution in value of
the Premises, damages for the loss or restriction on use of rentable or usable
space or of any amenity of the Premises, damages arising from any adverse impact
on marketing of space, and sums paid in settlement of claims, attorneys' fees,
consultant fees, and expert fees) which arise during or after the lease term as
a result of such contamination. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any clean-up, remedial, removal, or
restoration work required by any federal, state, or local governmental agency or
political subdivision because of Hazardous Material present in the soil or
ground water on or under the Premises. Without limiting the foregoing, if the
presence of any Hazardous Material on the Premises caused or permitted by Tenant
results in any contamination of the Premises, Tenant shall promptly take all
actions at its sole expense as are necessary to return the

                                       7



Premises to the condition existing prior to the introduction of any such
Hazardous Material to the Premises; provided that Landlord's approval of such
actions shall first be obtained, which approval shall not be unreasonably
withheld so long as such actions would not potentially have any material adverse
long-term or short-term effect on the Premises. The foregoing indemnity shall
survive the expiration or earlier termination of this Lease.

      5.05 At the commencement of this Lease, and on January 1 of each year
thereafter, including January 1 of the year after the termination of this Lease,
Tenant shall disclose to Landlord the names and amounts of all Hazardous
Materials, or any combination thereof, which were stored, used, or disposed of
on the Premises, or which Tenant intends to store, use, or dispose of on the
Premises.

      5.06 For the purposes of this Lease, "Hazardous Material" shall mean any
hazardous or toxic substance, material, or waste including, but not limited to,
those substances, materials, and wastes listed in the United States Department
of Transportation Hazardous Materials Table (49 CFR 172. 101) or by the
Environmental Protection Agency as hazardous substances (40 CFR Part 302) and
amendments thereto, or such substances, materials, and wastes that are or become
regulated under any applicable federal, state, or local law, ordinance, or
regulation including, but not limited to, the Resource Conservation and Recovery
Act, the Toxic Substances Control Act, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA" or "Superfund"), the Clean Air Act, and
the Clean Water Act.

                            Section 6 - Improvements

      6.01 Tenant. Landlord agrees to authorize Tenant to perform the work set
forth in Exhibit B, at Tenant's own expense. During Tenant's performance of such
work Tenant shall, at its expense, remove from the property all trash, which may
accumulate. During such period of work, Tenant shall not unreasonably interfere
with Landlord's activities and shall maintain and provide certification of
workmen's compensation, liability, and builders risk insurance in amounts
satisfactory to Landlord. All work done by Tenant shall be done in accordance
with all applicable building codes, statutes, regulations, laws, ordinances of
federal, state, county and municipal authorities and with any direction or order
made pursuant to law by any public official or agency. All improvements (as
distinguished from trade fixtures) shall be the property of Landlord and may not
be removed without its consent. All cost for plans and permits shall be the
Tenant's responsibility.

      6.02. Acceptance. The Tenant accepts the Premises in "AS IS" condition

      6.03. Mechanic's Lien. No work which Landlord permits Tenant to do
pursuant to this Lease, whether in the nature of erection, construction,
alteration and repair, shall be deemed to be for the immediate use and benefit
of Landlord so that no mechanics lien or other lien shall be allowed against the
estate of Landlord by reason of any consent given by Landlord to improve the
Premises. Tenant shall provide to Landlord, prior to Tenant's occupancy of the
Premises, waivers or releases of mechanics liens from all subcontractors
performing any and all work on behalf of Tenant or at Tenant's request. Tenant
shall pay promptly all persons furnishing labor or materials with respect to any
work performed by Tenant or its contractors on or about the Premises. In the
event any proceedings shall at any time be filed against the Premises with
respect to mechanic's liens or any other lien by reason of work, labor, services
and materials performed or furnished, or alleged to be performed or furnished,
to Tenant or anyone holding the Premises through or under Tenant, Tenant shall,
within fifteen (15) days after said filing, forthwith cause the same to be
discharged of record


                                       8



or bonded to the satisfaction of Landlord. If Tenant shall fail to cause such
lien forthwith to be so discharged or bonded after being notified of the filing
thereof, then, in addition to any right or remedy of Landlord, Landlord may
discharge the same by paying the amount claimed to be due, and the amount so
paid by Landlord including reasonable attorneys fees incurred by Landlord in
procuring the discharge of such lien, together with interest thereon at eighteen
percent (18%) per annum shall be immediately due and payable by Tenant to
Landlord as Additional Rent.

      6.05. Tenant's Fixtures. All trade fixtures and apparatus (as
distinguished from Leasehold improvements) in which Tenant has an ownership
interest which are installed in the Premises shall remain the property of Tenant
and may be removed at any time, including upon the expiration of the term,
provided Tenant shall not at such time be in default of any terms or covenants
of this Lease, and provided further that Tenant shall repair any damage to the
Premises caused by the removal of said fixtures. If Tenant is in default of any
terms or covenants of this Lease at any time, Landlord shall have an automatic
security interest and lien upon such property located in or on the Premises and
as may be permitted under the laws of the State of Maryland. In the event such
lien develops or is asserted by Landlord, in any manner or by operation of law,
Tenant shall not remove or permit the removal of said property until the lien
has been removed and all defaults have been cured.

                         Section 7 - Tenant's Covenants

      7.01. In regards to the use and occupancy of the Premises, Tenant
covenants at its expense to: (a) keep the inside and outside of all glass on the
doors and windows to the Premises clean; (b) replace promptly any cracked or
broken glass of the Premises with glass of like kind and quality; (c) maintain
Premises in a clean and orderly condition and free of insects, rodents, vermin,
and other pests; (d) keep any garbage, trash, rubbish or other refuse in a
rodent proof container or containers within the interior of the Premises until
removed; (e) keep all mechanical apparatus free of vibration and noise which may
be transmitted beyond the Premises; (f) comply with and observe all rules and
regulations established by Landlord from time to time which apply generally to
all Tenants of the Building.

      7.02. If Tenant fails to comply with any covenant which requires payment
or work by Tenant under this Lease, in addition to any other rights that
Landlord may have against Tenant for such failure, Landlord may make such
payments or perform such work, at the expense of Tenant and upon receipt of an
invoice for the same from Landlord, Tenant shall pay the same as Additional
Rent.

                        Section 8 - Condition of Premises

      8.01. It is understood and agreed that Tenant's occupation of the Premises
is conclusive evidence that the Premises are in good and satisfactory condition
and in accordance with the terms of this Lease at the time such occupancy
occurs. Tenant agrees to accept the Premises in an "as is" condition and agrees
to maintain the Premises and all equipment in good and satisfactory operating
condition. The Landlord will warrant the operation of the heating, ventilating
and air conditioning (HVAC) system for three years (3), in so much as it was
installed by Landlord. Thereafter, Tenant shall be responsible for all repairs
and replacements to the HVAC system and shall maintain at its expense, a service
contract for the repairs to the same with a Maryland licensed HVAC contractor
acceptable to Landlord. Tenant shall provide Landlord with evidence of the
maintenance contract.

                                       9



                               Section 9 - Signage

      9.01. Tenant will not place or suffer to be maintained on either a
temporary or permanent basis any sign or other advertising matter on the
exterior of, nor on any part of, the Building or Common Area without the
previous written consent of Landlord, which consent may be withheld for any
reason. Any sign placed without Landlord's consent may be removed or caused to
be removed by Landlord at Tenant's expense. Tenant hereby agrees to utilize the
contractor named by Landlord for fabrication and installation of any sign
located on the exterior of the Premises, the Building , if so permitted, or on
the common pylon road sign. Tenant may obtain the name of the contractor from
the Landlord or Landlord's agent. Tenant shall be responsible for all costs
associated and arising out of the fabrication and installation of the said sign
or signs.

                              Section 10 - Repairs

      10.01. Landlord's Repairs. Landlord, at its expense, will make or cause to
be made repairs to: (i) any sprinkler system; (ii) structural repairs to
exterior walls, structural columns and structural floor which collectively
enclose the Premises, excluding, however, all doors, door frames, door fronts,
windows and glass, which enclose the Premises; (iii) the roof over the Premises;
and the resurfacing, striping and repairing of the parking areas. Landlord shall
be obligated to make the said repairs only if the necessity of such repair is
reasonable and Tenant shall have given Landlord notice of the necessity for such
repairs, and provided that the necessity for such repairs shall not arise from
or shall be caused by the negligence or willful acts of Tenant, its agents,
concessioners, officers, employees, licensees, invitees, or contractors, in
which case the cost of any such repairs shall be the responsibility of Tenant.
The costs set forth above shall be included in the Operating Expenses paid as
Additional Rent by tenants.

      10.02. Tenant's Repairs. All repairs to the Premises or any of the
installations, equipment or facilities therein, other than those repairs
required to be made by Landlord pursuant to Subsection 10.01 shall be made by
Tenant at its expense. Tenant shall be responsible, at its expense, to make or
cause to be made repairs to the heating, ventilating or air conditioning system
servicing the Premises. Without limitation of the foregoing, Tenant shall keep
the interior of the Premises, together with all electrical, plumbing and other
mechanical installations therein, other than those in Subsection 10.01, in good
order and repair and will make all replacements from time to time required
thereto at its expense, and will surrender the Premises at the expiration of the
term or such other time as it may vacate the Premises in as good condition as
when received, except depreciation caused by ordinary wear and tear, damage by
casualty (other than damage by casualty which is caused by the negligence of
Tenant, its agents, concessioners, officers, employees, contractors, licensees,
or invitees) or unavoidable accident or Act of God. Tenant will not overload the
electrical wiring servicing the Premises or within the Premises, and will
install at its expenses, subject to the prior written consent of Landlord, any
additional electrical wiring which may be required in connection with Tenant's
apparatus, occupation or use of the Premises. Any damage or injuries sustained
by any person because of mechanical, electrical, or plumbing or any other
equipment or installations, whose maintenance and repairs is the responsibility
of Tenant, shall be paid for by Tenant, and Tenant shall indemnify and hold
Landlord harmless from and against all claims, actions, damages, and liability
in connection therewith, including, but not limited to, attorneys and other
professional fees, and any other costs which Landlord may reasonably incur.
Should Tenant fail to properly repair the Premises as set forth above, Landlord,
in addition to any other remedies it may have available to it, may cause said
repairs to be made and charge the expenses to Tenant, and Tenant shall pay the
same as Additional Rent.

                                       10



                       Section 11 - Alterations by Tenant

      11.01. Tenant shall not make any alterations, renovations, improvements or
other installations in, on or to the Premises or any part thereof (including
without limitation, any alterations of the front or sides, structural
alterations, securing of any fixtures, apparatus, or equipment of any kind to
any part of the Premises) unless or until Tenant shall cause plans and
specifications therefore to have been prepared, at Tenant's expense, by an
architect or other duly qualified person determined in the sole discretion of
Landlord, and shall have obtained Landlord's prior written approval thereof,
which approval may be withheld for any reason.

                            Section 12 - Common Areas

      12.01. Landlord grants to Tenant and its agents, employees, and customers,
a non-exclusive license to use the Common Areas in common with others during the
term of this Lease and any renewal term thereof, subject to the exclusive
control and management thereof at all times by Landlord.

      12.02. Landlord will operate and maintain or will cause to be operated and
maintained the Common Areas in a manner deemed by Landlord to be reasonable and
appropriate and in the best interests of the Building and Common Area. Landlord
will have the right (i) to establish, modify and enforce reasonable rules and
regulations with respect to the Common Areas; (ii) to enter into, modify and
terminate easement and other agreements pertaining to the use and maintenance of
the parking and other Common Areas; (iii) to close temporarily any or all
portions of the Common Areas; (iv) to discourage non-customer parking; and (v)
to do and perform such other acts in and to said areas and improvements as, in
the exercise of good business judgment, Landlord shall determine to be
advisable.

      12.03 If parking spaces are provided under this Lease, Landlord reserves
the right to designate the type and location of the parking spaces, and the
right from time to time to change the type and location of parking spaces.
Parking spaces allocated to Tenant will be directly in front of Tenant's space.

      At Landlord's sole discretion, Tenant shall provide Landlord with the
license plate number, year, make, and model of the automobiles entitled to use
the parking spaces, and if requested by Landlord, such automobiles shall be
identified by stickers provided by Landlord, and only such designated
automobiles shall be entitled to use the parking spaces. If Landlord so desires
additional spaces may be provided for Tenant's business visitors and guests on a
daily basis.

      Landlord assumes no responsibility or liability to Tenant of any kind
whatsoever from any cause with respect to the use of the parking spaces or other
parking spaces, adjoining streets, sidewalks, driveways, property, and
passageways, or the use thereof by anyone entitled to the use the area.

                             Section 13 - Utilities

      13.01. Landlord will provide to the Premises connections so that Tenant
may obtain separately metered electricity. The water to the Premises is
furnished by a system monitored by Landlord and for which Landlord will provide
to Tenant a quarterly billing statement based on Tenant's actual or

                                       11



pro rata use and subject to modification based upon costs to Landlord, from time
to time. Tenant will be responsible for the cost of such utilities. Tenant will
arrange for electrical, telephone and other such services, in its own name and
indemnify Landlord for all charges or claims for such services, including
attorney's and other professional fees.

                          Section 14 - Indemnification

      14.01. Tenant agrees to indemnify Landlord from any and all claims,
actions, damages, liability and expense, including attorney's and other
professional fees, in connection with the loss of life, personal injury and/or
property damage arising out of the occupancy or use of the Premises by Tenant,
regardless of whether such claims are made by an employee, officer, agent,
contractor, licensee, invitee of Tenant or a third party. Tenant acknowledges
that the Premises are within its sole and exclusive control for purposes of this
Section.

                        Section 15 - Release of Landlord

      15.01. Landlord shall not be responsible or liable to Tenant, or to those
claiming by, through or under Tenant, for any loss or damage which may be
occasioned by or through the acts or omissions of persons occupying space
adjoining the Premises or any part of the Building adjacent to or connecting
with the Premises or any other part of the Building or Common Area.

                             Section 16 - Insurance

      16.01. At all times during the term of this Lease, Tenant will take out
and keep in force, for the protection of Landlord and Tenant, at its expense:

            (a) public liability insurance, including insurance against assumed
or contractual liability, with respect to the Premises to afford protection, for
each occurrence, to the limit of not less than Two Million Dollars ($2,000,000)
with respect to personal injury or death, and Five Hundred Thousand Dollars
($500,000) with respect to property damage;

            (b) all-risk casualty insurance, written at replacement cost value
and with replacement cost endorsement covering all of Tenant's personal property
in the Premises (including, without limitation, inventory, trade fixtures, floor
coverings, furniture and other property removable by Tenant under the provisions
of this Lease) and all Leasehold improvements installed in the Premises by or
for Tenant; and

            (c) if and to the extent required by law, workmen's compensation or
similar insurance in form and amounts required by law.

      Tenant shall provide Landlord with a certificate indicating that said
insurance and every renewal thereof has been purchased, is in full force and
effect, naming Landlord as an additional insured, and requiring that the insurer
provide Landlord with thirty (30) days notice of cancellation.

      16.02. Tenant will not 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 of hazard or liability insurance or which will prevent Landlord from
procuring such policies in companies acceptable to Landlord.

                                       12



      16.03. Waiver of Subrogation: Neither Landlord nor Tenant shall be liable
to the other for any business interruption or any loss or damage to the property
or the adjoining property, or in any manner growing out of or connected with the
Tenant's use and occupation of the leased premises, or the condition thereof or
of the adjoining property, whether or not caused by the negligence or other
fault of Landlord or Tenant or of their respective agents, employees,
subtenants, licenses or assignees. This release shall apply only to the extent
that such business interruption, loss or damage to property is covered by
insurance, regardless of whether such insurance is payable to or protects the
other of greater liability on either Landlord or Tenant than would have existed
in the absence of this paragraph. This release shall be in effect only so long
as the applicable insurance policies contain a clause to the effect that this
release shall not affect the rights of the insured to recover under such
policies.

     Section 17 - Casualty - Landlord's Obligation to Repair and Reconstruct

      17.01. Generally. If the Premises shall be damaged by fire, the elements,
accident or other casualty (any such causes being referred to herein as a
"Casualty"), but the Premises shall not be thereby rendered wholly or partially
untenantable, Landlord shall promptly cause such damage to be repaired and there
shall be no abatement of Rent. If, as the result of Casualty, the Premises shall
be rendered wholly or partially untenantable, then, subject to the provisions of
this Section, Landlord shall cause such damage to be repaired and all Rent
(other than any Additional Rent due Landlord by reason of Tenant's failure to
perform any of its obligations hereunder) shall be abated proportionately as to
the portion of the Premises rendered untenantable until such time as the repairs
are completed. All such repairs shall be made at the expense of Landlord, but
Landlord shall not be required to perform any work beyond that described in
Exhibit B and shall be limited to the amount of the insurance proceeds available
and paid to Landlord as a result of such Casualty. Landlord shall not be liable
for interruption to Tenant's business or for damage to or replacement or repair
of Tenant's personal property or to any leasehold improvements installed in the
Premises by or for Tenant, all of which damage, replacement or repair shall be
undertaken and completed by Tenant promptly.

      17.02. Landlord's Option to Terminate Lease. If the Premises are (i)
rendered wholly untenantable or (ii) damaged as a result of any cause which is
not covered by Tenant's or Landlord's insurance or (iii) damaged or destroyed in
whole or in part during the last three years of the Term, or (iv) if the
Building is damaged to the extent of fifty percent (50%) or more of the floor
area thereof, then in any of such events, Landlord may elect to terminate this
Lease by giving to Tenant notice of such election within ninety (90) days after
the occurrence of such event. If such notice is given, the rights and
obligations of the parties shall cease as of that date of such notice, and Rent
(other than any Additional Rent due Landlord by reason of Tenant's failure to
perform any of its obligations hereunder) shall be adjusted as of the date of
such termination.

                            Section 18 - Condemnation

      18.01. Condemnation Award. If the whole of the Premises shall be taken by
any public or quasi-public authority under the power of eminent domain,
condemnation, or expropriation or in the event of a conveyance in lieu thereof,
then this Lease shall terminate as of the date on which possession of the
Premises is required to be surrendered to the condemning authority, and Tenant
shall have no claim against Landlord or the condemning authority for any of the
condemnation proceeds or for the value of the unexpired Term of this Lease.

                                       13



      18.02. If only part of the Premises shall be so taken or conveyed, and if
such partial taking or conveyance shall render the Premises unsuitable for the
business of Tenant in the reasonable opinion of Landlord, then the Term of this
Lease shall cease and terminate as of the date on which possession of the part
of the Premises so taken or conveyed is required to be surrendered to the
condemning authority, and Tenant shall have no claim against Landlord or the
condemning authority for any of the condemnation proceeds or for the value of
any unexpired Term of this Lease. In the event such partial taking or conveyance
is not extensive enough to render the Premises unsuitable for the business of
Tenant, this Lease shall continue in full force and effect except that the
Annual Rent shall be reduced in the same proportion that the floor area of the
Premises so taken or conveyed bears to such floor area immediately prior to such
taking or conveyance, such reduction commencing as of the date Tenant is
required to surrender possession of such part of the Premises so taken or
conveyed. Landlord shall promptly restore the Premises, to the extent of
condemnation proceeds available for such purpose, as nearly as practicable to a
condition comparable to its condition at the time of such condemnation less the
part lost in the taking or conveyance, and thereafter Tenant shall promptly make
all necessary repairs, restoration, and alterations of Tenant's fixtures,
equipment, and furnishings and shall promptly re-enter the Premises. For
purposes of determining the amount of funds available for restoration of the
Premises from the condemnation award, said amount will be deemed to be that part
of the award which remains after payment of Landlord's reasonable expenses
incurred in recovering the condemnation award and of any amounts due to
Landlord's Mortgagee, and which represents a portion of the total sum so
available (excluding any award or other compensation for land) which is
equitably allocable to the Premises.

      18.03. If the whole or any part of the Building shall be so taken or
conveyed, then in such events notwithstanding the fact that the Premises in
whole or in part is not so taken or conveyed, Landlord shall have the right and
power, at its option to be exercised by written notice to Tenant, to terminate
this Lease effective either the date title vests in the condemning authority or
the date Landlord is required to deliver possession of the part so taken or
conveyed. In any event, Tenant shall have no claim against Landlord or the
condemning authority for the value of any unexpired Term of this Lease.

      18.04. In the event of any condemnation or taking as hereinbefore
provided, whether whole or partial, Tenant shall not be entitled to any part of
the award as damages or otherwise for such condemnation, and Landlord and
Landlord's Mortgagee are to receive the full amount of such award as their
respective interests may appear. Tenant hereby expressly waives any right or
claim to any part thereof and assigns to Landlord any such right or claim to
which Tenant might become entitled.

      18.05. Although all damages in the event of any condemnation are to belong
to Landlord and Landlord's Mortgagee as aforesaid, whether such damages are
awarded as full compensation for diminution in value of the Leasehold or to the
fee of the Premises, Tenant shall have the right, to the extent that same shall
not diminish Landlord's or such Mortgagee's award, to claim and recover from the
condemning authority, but not from Landlord or such Mortgagee, such compensation
as may be separately awarded or recoverable by Tenant under law in Tenant's own
right for or on account of, and limited solely to, any cost to which Tenant
might be put in removing Tenant's furniture, fixtures, leasehold improvements,
and equipment.

                     Section 19 - Assignment and Subletting

      19.01. Tenant will not assign this Lease, in whole or in part, nor sublet
all or any part of the

                                       14


Premises, nor license concessions or lease departments therein, without first
obtaining the written consent of Landlord, which consent may be withheld by
Landlord for any reason. Consent by Landlord to any assignment of subletting
shall not constitute a waiver of the requirement for such consent to any
subsequent assignment or subletting.

      19.02. No consent by Landlord to any assignment or sublease by Tenant
shall relieve Tenant of any obligations performed by Tenant under this Lease,
whether arising before or after the assignment or sublease. Any assignment or
sublease that is not in compliance with this sub-section shall be void and, at
the option of Landlord, shall constitute a material default by Tenant under this
Lease. Acceptance of any rent by Landlord from a proposed assignee or subtenant
or other transferee, shall not constitute consent by Landlord to an assignee or
subtenant.

      19.03. Each assignee, subtenant, or transferee shall assume all
obligations of Tenant under this Lease and shall be and remain jointly and
severally liable with Tenant under this Lease and shall be and remain jointly
and severally liable with Tenant for payment of Minimum Rent, Additional Rent
and the performance of all terms, covenants, conditions and agreements herein
contained on Tenant's part to be performed for the Term. No assignment shall be
binding on Landlord unless Tenant or other party to an assignment shall deliver
to Landlord a counterpart of the assignment and an instrument in recordable form
that contains the covenant of assumptions by the transferee, which is
satisfactory in substance and form to Landlord and consistent with the
requirements of this Lease. Tenant shall reimburse Landlord on demand for any
costs that may be incurred by Landlord in connection with any proposed
assignment or sublease, including, without limitation, the costs of
investigation of the proposed transferee and the legal costs incurred in
connection with the granting of any requested consent. In the event Landlord
consents to any assignment or sublease by Tenant and rents due under that
assignment or sublease is greater than the one due Landlord by Tenant under this
Lease then Tenant shall pay the excess to Landlord.

      19.04. If Tenant is a corporation, or limited liability company, the
filing of Articles of Transfer or Articles of Merger with the State Department
of Assessment and Taxation, or any merger, consolidation, or other transaction
constituting an assignment by operation of law, of the assets of the
corporation, will, at the election of Landlord constitute an unauthorized
assignment of this Lease.

                              Section 20 - Default

      20.01 Any one or more of the following events shall constitute an "Event
of Default":

            a. The levy upon or sale of Tenant's interest in the Premises under
attachment, execution or similar legal process; or

            b. The filing of a petition proposing the adjudication of Tenant or
any guarantor of Tenant's obligations hereunder as a bankrupt or insolvent or
the reorganization of Tenant or any such guarantor or an arrangement by Tenant
or any such guarantor with its creditors, whether pursuant to the Federal
Bankruptcy Code or any similar federal or state proceeding, unless such petition
is filed by a party other than Tenant or any such guarantor and is withdrawn or
dismissed within thirty (30) days after the date of its filing; or

            c. The admission in writing by Tenant or any such guarantor of its
inability to pay its debts when due; or

                                       15



            d. The appointment of a receiver or trustee for the business or
property of Tenant or any such guarantor, unless such appointment shall be
vacated within ten (10) days of its entry; or

            e. The making by Tenant or any such guarantor of an assignment for
the benefit of its creditors; or

            f. The failure of Tenant to pay any Rent, Additional Rent, or other
sum of money; or

            g. The failure of Tenant to pay any Rent or Additional Rent when
due, for three (3) months during any twelve (12) month period during the term or
renewal term of this Lease; or

            h. Default by Tenant in the performance or observance of any
covenant or agreement of this Lease, which default is not cured within ten (10)
days after the giving of notice thereof by Landlord, if required, unless such
default is of such nature that it cannot be cured within such ten (10) day
period in which case no Event of Default shall occur so long as Tenant shall
commence the curing of the default within such ten (10) day period and shall
thereafter diligently prosecute the curing of the same.

                              Section 21 - Remedies

      21.01. Upon the occurrence of an Event of Default, and continuance thereof
(if applicable), Landlord, without notice to Tenant (except where expressly
provided for below) may do any one or more of the following:

      a. Landlord may perform, on behalf and at the expense of Tenant, any
obligation of Tenant under this Lease which Tenant has failed to perform and of
which Landlord shall have given Tenant notice, the cost of which performance by
Landlord, together with interest thereon at 18% from the date of such
expenditure, shall be deemed Additional Rent and shall be payable by Tenant to
Landlord upon demand.

      b Landlord may elect to terminate this Lease and the tenancy created
hereby giving notice of such election to Tenant, and may re-enter the Premises,
by summary proceedings or otherwise, and may remove Tenant and all other persons
and property from the Premises, and may store such property in a public
warehouse or elsewhere at the cost of and for the account of Tenant without
resort to legal process and without Landlord being deemed guilty of trespass or
becoming liable for any loss or damage occasioned thereby.

      c. Landlord shall be entitled to possession of the Premises and to
re-enter the same without further demand of Rent and Additional Rent or demand
of possession of said Premises, and may, forthwith, recover possession thereof
by whatever process of law may be available in the jurisdiction

                                       16



in which the Premises may be located, any notice to quit or of intention to
re-enter being hereby expressly waived by the or Landlord may re-take possession
without process of law. In the event of such re-entry or re-taking, Tenant
shall, nevertheless, remain liable and answerable for the full rental to the
date of such re-taking or re-entry and for damages for the deficiency or loss of
Rent and Additional Rent which Landlord may thereby sustain in respect of the
balance of the term; and in such case, Landlord shall have the right to let the
Premises for the benefit of Tenant, in liquidation and discharge, in whole or in
part, as the case may be, of the liability of Tenant hereunder; and such damages
at the option of Landlord may be recovered at the time of the re-taking or
re-entry, or in separate actions from time to time as Tenant's obligation to pay
Rent and Additional Rent would have accrued if the term had continued, or from
time to time as said damages shall have been made more easily ascertainable by
re-lettings, or such action, at the option of Landlord, may be deferred until
the expiration of the term, or renewal term, in which latter event the cause of
action shall not be deemed to have accrued until the expiration of said term, or
renewal term. Landlord, however, may refrain from terminating Tenant's right of
possession, and in such case, may enforce against Tenant the provisions of this
Lease for the full term hereof, or renewal term.

      d. Landlord may exercise any other legal or equitable right or remedy
which it may have.

                                       17



      21.02. Notwithstanding the provisions of Subsection 21.01.(a) above and
regardless of whether an Event of Default shall have occurred, Landlord may
exercise the remedy described in Subsection 21.0l.(a) without any notice to
Tenant if Landlord, in its good faith judgment, believes it would be materially
injured by failure to take rapid action or if the unperformed obligation of
Tenant constitutes an emergency.

      21.03. In the event legal proceedings are instituted against Tenant by
Landlord, either for payment of Rent or Additional Rent or for possession of the
Premises, then Tenant agrees to pay all court costs associated with such
proceedings, together with all reasonable attorney's fees.

       Section 22 - Subordination and Attornment and Estoppel Certificate.

      22.01. Tenant agrees, at Landlord's discretion: (i) that, except as
hereinafter provided, this Lease is, and all of Tenant's rights hereunder are
and shall always be, subject and subordinate to any Mortgage now existing or
hereafter given by Landlord and to all advances made or to be made thereunder
and to the interest thereon, and all renewals, replacements, modifications,
consolidations, or extensions thereof; and (ii) that if any Landlord's Mortgagee
or if the purchaser at any foreclosure sale or at any sale under a power of sale
or assent to decree contained in any such Mortgage shall at its sole option so
request, Tenant will a (a) Tenant agrees, at Landlord's discretion: (i) that,
except as hereinafter provided, this Lease is, and all of Tenant's rights
hereunder are and shall always be, subject and subordinate to any Mortgage now
existing or hereafter given by Landlord and to all advances made or to be made
thereunder and to the interest thereon, and all renewals, replacements,
modifications, consolidations, or extensions thereof; and (ii) that if any
Landlord's Mortgagee or if the purchaser at any foreclosure sale or at any sale
under a power of sale or assent to decree contained in any such Mortgage shall
at its sole option so request, Tenant will attorn to, and recognize such
Mortgagee or purchaser, as the case may be, as landlord under this Lease for the
balance then remaining of the Term of this Lease, subject to all terms of this
Lease; and (iii) that the aforesaid provisions shall be self-operative, and no
further instrument or document shall be necessary unless required by any such
Mortgagee or purchaser.

      22.02 Notwithstanding anything to the contrary set forth above, any
Landlord's Mortgagee may at any time subordinate its Mortgage to this Lease,
without Tenant's consent, by execution of a written document subordinating such
Mortgage to this Lease to the extent set forth therein, and thereupon this Lease
shall be deemed prior to such Mortgage to the extent set forth in such written
document without regard to their respective dates of execution, delivery and/or
recording. In that event, to the extent set forth in such written document, such
Mortgagee shall have the same rights with respect to this Lease as though this
Lease had been executed and this Lease or memorandum thereof recorded prior to
the execution, delivery, and recording of the Mortgage. Should Landlord or any
Mortgagee or purchaser desire confirmation of either such subordination or such
attornment, as the case may be, Tenant upon written request, and from time to
time, will execute and deliver without charge and in form satisfactory to
Landlord, the Mortgagee, or the purchaser all instruments and/or documents that
may be requested to acknowledge such subordination and/ or agreement to attorn,
in recordable form, within fifteen (15) days of such request.

                                       18



      22.03 Tenant agrees that no Landlord's Mortgagee, Landlord's
Mortgagee-in-possession, or purchaser shall be bound by any payment of Rent made
more than thirty (30) days prior to its due date, and any such sum shall be due
and payable on the due date. Tenant further agrees that no Landlord's Mortgagee,
Landlord's Mortgagee in-possession, or purchaser shall be responsible for the
Security Deposit or other similar funds in respect of this Lease not actually
paid to it.

      22.04 In the event Tenant fails to execute and deliver the instruments and
documents as provided for in this Section within the time period set forth
Therein, Tenant does hereby make, constitute, and appoint Landlord or such
Mortgagee or purchaser, as the case may be, as Tenant's attorney-in-fact and in
its name, place, and stead to do so. The aforesaid power of attorney is given as
security coupled with an interest and is irrevocable.

      22.05. Estoppel Certificate. At any time, and from time to time, upon the
written request of Landlord or any Mortgagee, Tenant, within twenty (20) days of
the date of such written request, agrees to execute and deliver to Landlord
and/or couch Mortgagee, without charge and in a form satisfactory to Landlord
and/or such Mortgagee, a written statement: (a) ratifying this Lease; (b)
confirming the commencement and expiration dates of the Term of this Lease; (c)
certifying that Tenant is in occupancy of the Premises and that the Lease is in
full force and effect and has not been modified, assigned, subleased,
supplemented, or amended except by such writings as shall be stated; (d)
certifying that an conditions and agreements under this Lease to be satisfied or
performed by Landlord have been satisfied and performed except as shall be
stated; (e) certifying that Landlord is not in default under the Lease and there
are no defenses, set-offs, recoupments, or counterclaims against the enforcement
of this Lease by Landlord, or stating the defaults, defenses, set-offs,
recoupments and/or counterclaims claimed by Tenant; (f) reciting the amount of
advance Rent, if any, paid by Tenant and the date to which such Rent has been
paid; (g) reciting the amount of the Security Deposit held by Landlord, if any;
and (h) containing any other information that Landlord or the Mortgagee shall
require.

      The failure of Tenant to execute, acknowledge, and deliver to Landlord
and/or any Mortgagee a statement in accordance with the provisions of this
Section within the period set forth herein shall constitute an acknowledgment by
Tenant that may be relied upon by any person holding or intending to acquire any
interest whatsoever in the Premises or the Building, that this Lease has not
been assigned, amended, changed, or modified, is in full force and effect, and
that the annual Minimum Rent and Additional Rent have been duly and fully paid
not beyond the respective due dates immediately preceding the date of the
request for such statement. Such failure shall also constitute as to any persons
entitled to rely on such statements a waiver of any defaults by Landlord or
defenses, set-offs, recoupments, or counterclaims against the enforcement of
this Lease by Landlord which may exist prior to the date of the written request.

                            Section 23 - Severability

      23.01. If any term or provision, or portion thereof, of this Lease, or the
application thereof to any person or circumstances shall, to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be valid and be enforced to the fullest
extent permitted by law.

                                       19



                      Section 24 - Inspections By Landlord

      24.01. Tenant will permit Landlord, its agents, employees and contractors,
to enter all parts of the Premises during Tenant's business hours to inspect the
same and to enforce or carry out any provisions of this Lease. In the event of
an emergency as determined by the Landlord, during non-business hours or if the
Tenant is not in the Premises at the time, Landlord shall make one attempt to
notify Tenant, but may then immediately enter the Premises for the purposes of
resolving the emergency. Tenant hereby consents to such emergency entry and
Tenant shall be responsible for any repairs arising out of or necessitated by
such emergency entry.

                              Section 25 - Notices

      25.01. All notices required herein shall be in writing, mailed first
class, as follows:

           TO LANDLORD AT:      O'Meara Properties, Inc. c/o Brian O'Meara
                                277K Peninsula Farm Road Arnold, Maryland 21012

           TO TENANT AT:        Dover Saddlery Retail, Inc.
                                PO Box 1100
                                525 Great Road
                                Littleton, MA 04160

                Section 26 - Compliance With Laws and Regulations

      26.01. Tenant, at its sole cost and expense, shall comply with and shall
cause the Premises to comply with (a) all federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations and ordinances
affecting the Premises or any part thereof, and (b) all rules, orders and
regulations of the National Board of Fire Underwriters or Landlord's fire
insurance rating organization or other bodies exercising similar functions in
connection with the prevention of fire or the correction of hazardous conditions
which apply to the Premises.

            Section 27 - Corporate/ Limited Liability Company Tenants

      27.01. In the event Tenant is a corporation or limited liability company,
the person executing this Lease on behalf of Tenant hereby covenants and
warrants that: Tenant is a duly constituted corporation or limited liability
company qualified to do business in Maryland; all Tenant's franchises and
corporate taxes have been paid to date; all future forms, reports, fees and
other documents necessary for Tenant to comply with applicable laws will be
filed by Tenant when due; and such person is duly authorized by the board of
directors of such corporation or member of the limited liability company, to
execute and deliver this Lease on behalf of the corporation or limited liability
company.

                                       20



                  Section 28 - Successors and Included Persons

      28.01. All rights, obligations, and liabilities herein given to, or
imposed upon, the respective parties hereto shall extend to and bind the several
respective personal representatives, successors, and assigns of the parties; and
if Tenant shall consist of more than one person or entity, they shall all be
bound jointly and severally by the terms, covenants, and conditions herein. No
rights, however, shall inure to the benefit of any personal representative,
successor, or assign of Tenant unless the Assignment to such party has been
approved by Landlord in writing as provided in Section 19.

      28.02. In any provision of this Lease involving Landlord's being defended,
released from liability, indemnified, held harmless, or not being deemed to be
liable for any action, omission, or circumstance, the term "Landlord" shall
include Landlord and Landlord's contractors and subcontractors and its or their
present and future controlling persons, directors, officers, employees, and
agents.

         Section 29 - Performance of Landlord's Obligation by Mortgagee

      29.01. Tenant shall accept performance of any of Landlord's obligations
hereunder by any Mortgagee, including request for documents necessary to keep
the tax-free status of Landlord's financing.

                      Section 30 - Waiver of Trial by Jury

      30.01. LANDLORD AND TENANT HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER PARTY
HERETO AGAINST THE OTHER PARTY ON ANY AND EVERY MATTER, DIRECTLY OR INDIRECTLY,
ARISING OUT OF OR WITH RESPECT TO THIS LEASE.

                            Section 31 - Counterparts

      31.01. This Lease may be executed in multiple counterparts or in
duplicate, and when so executed by all parties shall constitute one agreement.

                          Section 32 - Entire Agreement

      32.01. This Lease and Exhibits contains the entire agreement between the
parties and cannot be changed or modified except by a written instrument
subsequently executed by the parties hereto.

                        Section 33 - Time of the Essence

      33.01. Time is of the essence in all provisions of this Lease to be
performed by or on behalf of Tenant.

                           Section 34 - Applicable Law

      34.01. This Lease and the rights and obligations of the parties hereunder
shall be construed in accordance with the laws of the State of Maryland.

                                       21



                           Section 35 - No Partnership

      35.01 Landlord does not, in any way or for any purpose, become a partner
of Tenant in the conduct of its business, or otherwise, or joint venturer or a
member of a joint enterprise with Tenant. This Lease establishes a relationship
solely of landlord and tenant.

                                       22



                        Section 36 - Brokerage Commission

      36.01 Tenant represents and warrants to Landlord that Tenant has had no
dealings, negotiations, or consultations with respect to the Premises, the
building, or this transaction with any real estate agent, broker, or finder and
that no real estate agent, broker, or finder called the Premises or any other
space in the building to Tenant's attention for lease. In the event that any
real estate agent, broker, or finder claims to have submitted the Premises or
any other spaces in the Building to Tenant, to have induced Tenant to lease the
Premises, or to have taken part in any dealings, negotiations, or consultations
with respect to the Premises, the building, or this transaction, Tenant will be
responsible for and will defend, indemnity, and save Landlord harmless from and
against all costs, fees (including without limitation attorney's fees),
expenses, liabilities, and claims incurred or suffered by Landlord as a result
thereof.

                           Section 37 - No Recordation

      37.01 Tenant shall not record this Lease.

                              Section 38 - Guaranty

      38.01 In order to induce Landlord to execute this Lease, Tenant agrees
that Landlord may, at its option, at the time of the execution of this Lease or
at any time during the Term hereof, require a guaranty of the obligations of the
Tenant hereunder by a person, firm, or corporation other than Tenant but with a
business interest in Tenant, acceptable to Landlord, which guaranty shall be in
a form satisfactory to Landlord.

                             Section 39 - Net Lease

      39.01 It is the intention of the parties that, except as specifically
provided herein, the Rent and Additional Rent shall be an absolute net return to
Landlord throughout the Term of this Lease free of any expenses, charges, or
either deduction of any nature whatsoever with respect to the Premises, and this
Lease shall be interpreted to impose upon the Tenant all such expenses and
charges.

                          Section 40 - Commercial Lease

      40.01 The parties stipulate that the Premises is being leased exclusively
for business, commercial, manufacturing, mercantile, or industrial purposes
within the meaning of Section 8-110(a) of the Real Property Article of the
Annotated Code of Maryland, and that the provisions of Section 8-110(b) of such
Article (or any future statute) pertaining to the redemption of reversionary
interests under leases shall be inapplicable to this Lease.

                                       23



      IN WITNESS WHEREOF, the parties hereto intending to be legally bound
hereby have executed this Lease as of the day and year first above written.
Signed in the presence of:

                                              LANDLORD:

Witness                                       HOPKINS ROADS ASSOCIATES

                                         By: ____________________     (SEAL)
__________________________                   Thomas I. Baldwin, Partner
Brian C. O'Meara

Witness                                       TENANT:

                                              DOVER SADDLERY RETAIL, INC.
__________________________
                                         By:_____________________
________(SEAL)                              Its officer, duly authorized

                                       Date:

                                       24



                                    Exhibit A

                       Building Footprint Showing Premises

                                       25



                                    Exhibit B

                             Summary of Tenants Work

1.    Pull permits with Tenants complete drawings to be furnished to Landlord by
      Tenant
2.    Perform work on Plans that would include:
      a.    Demising walls,
      b.    tear out, unwanted walls and
      c.    build new walls for back stock room.
      d.    Adjust size of bathroom per plans
3.    Perform electrical as needed. Plans supplied by Tenant
4.    New Door and front entrance
5.    Provide all architectural and Mechanical Drawings needed to complete job.
6.    Tenants shall provide all Lighting.
7.    Tenant shall provide all Flooring.
8.    Tenant shall provide the entire Trim Package for Dover interiors,
      including but not limited to:
      a.    Fixtures
      b.    Paint
      c.    Slatwall

                                       26

EX-10.45

                                                                   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)

EX-10.46

                                                                   EXHIBIT 10.46

                              BANK OF AMERICA, N.A.
                               100 Federal Street
                           Boston, Massachusetts 02110

                              As of: June 27, 2006

Dover Saddlery, Inc.
525 Great Road
Littleton, MA 01460
Attention:  Steven L. Day, President

      Re;   Dover Saddlery, Inc. Financing Arrangements

Dear Steve:

      We refer to the Amended and Restated Loan Agreement dated as of December
11, 2003 (as amended, the "Loan Agreement") between Dover Saddlery, Inc. and
Bank of America, N.A. (successor by merger to Fleet National Bank). Capitalized
terms used and not defined herein shall have the meanings ascribed to such terms
in the Loan Agreement.

      You have requested that the Bank waive the provisions of Section 5.7(vii)
of the Loan Agreement for the limited purpose of allowing the Borrower to
acquire, through Dover Saddlery Retail, Inc., a newly-formed wholly-owned
subsidiary, for a purchase price not in excess of $1,650,000, all of the capital
stock of Dominion Saddlery, Inc., such transaction to be upon the terms and
conditions set forth in the letter (and accompanying attachments) from Michael
Bruns to the Bank, dated June 9, 2006, and attached hereto a Annex A (the
"Purchase Notice").

      The undersigned hereby waives the provisions of Section 5.7(vii) of the
Loan Agreement for the limited purpose of allowing the Borrower to consummate
the above-described transaction upon the terms and conditions contained in the
Purchase Notice, it being expressly agreed that no other waiver, modification or
consent is hereby granted. It is further acknowledged and agreed that these
waivers will remain effective so long as (i) there are no material variations
from the terms and conditions contained in the Purchase Notice, (ii) the
Subordinated Lender provides its consent to such transaction on terms
satisfactory to the Bank, (iii) such transaction is consummated on or before
July 31, 2006, (iv) the Borrower promptly requires each of Dover Saddlery
Retail, Inc. and Dominion Saddlery, Inc. to become a party to the Loan Documents
as contemplated by Section 5.15 of the Loan Agreement, and (v) such transaction
meets all of the criteria of a Permitted Acquisition, except that the total
consideration therefore may exceed $500,000 (but not be more than $1,650,000).



      The Borrower hereby confirms, by its acceptance hereof, that the Loan
Agreement remains in full force and effect.

                                 Very truly yours,

                                 BANK OF AMERICA, N.A.
                                 (successor by merger to
                                 Fleet National Bank)


                                 By: /s/ John F. Lynch
                                     ----------------------------
                                     Title:  S.V.P.

EX-21.1

                                                                               .
                                                                               .
                                                                               .

                                                                    Exhibit 21.1

                         SUBSIDIARIES OF THE REGISTRANT



Name of Subsidiaries                        Jurisdiction of              Trade Name
                                            Incorporation
- --------------------------                  --------------------         ----------------------------
                                                                   
1.   Dover Saddlery, Inc.                      Massachusetts             "Dover" and "Dover Saddlery"

2.   Smith Brother, Inc.                       Texas                     "Smith Brother" and "Smith Brothers"

3.   Dover Saddlery Retail, Inc.               Massachusetts                 N/A

4.   Old Dominion Enterprises, Inc.            Virginia                  "Dominion Saddlery" and "Dominion"

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Stephen L. Day, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of DOVER SADDLERY, INC.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

     b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2006	/s/ Stephen L. Day
	Stephen L. Day
	President, Chief Executive Officer and
	Director
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Michael W. Bruns, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of DOVER SADDLERY, INC.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

     b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2006	/s/ Michael W. Bruns
	Michael W. Bruns
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

     In connection with the Quarterly Report on Form 10-Q of DOVER SADDLERY, INC. (the “Company”) for the fiscal quarter ended June 30, 2006,, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stephen L. Day	/s/ Michael W. Bruns
Stephen L. Day	Michael W. Bruns
President, Chief Executive Officer and	Chief Financial Officer
Director	(Principal Financial Officer)
(Principal Executive Officer)
Date: August 14, 2006	Date: August 14, 2006