Exhibit 10.1
PetSmart, Inc.
Performance Share Unit Grant Notice
(2006 Equity Incentive Plan)
PetSmart, Inc. (the “Company”), pursuant to its 2006 Equity Incentive Plan (the
“Plan”) hereby grants to Participant the Maximum Number of Performance Share
Units as set forth below (the “PSU Grant”). This PSU Grant is subject to all of
the terms and conditions as set forth herein and in the Performance Share Unit
Agreement, and the Plan, each of which are attached hereto and incorporated
herein in their entirety. This PSU Grant is a “restricted stock unit” granted
pursuant to Section 7 of the Plan. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Plan or the Performance Share
Unit Agreement. Except as otherwise expressly provided herein, in the event of
any conflict between the terms in the PSU Grant and the Plan, the terms of the
Plan shall control.

     
Participant:
   
 
   
Date of Grant:
  _________________________, 20___________
Target Number of Performance Share Units:
   
Minimum Number of Performance Share Units Granted (50% of Target):
   
 
   
Maximum Number of Performance Share Units Granted (150% of Target):
   
 
   
Consideration:
  Participant’s services
Email Address:
   
 
   

     
PSU Award and Vesting Criteria:
  The actual number of Performance Share Units to be awarded to Participant and
that may vest will be determined in accordance with conditions specified on
Attachment I to this Grant Notice (the “PSU Award and Vesting Criteria”).
 
   
Issuance Schedule:
  Delivery of one share of common stock for each Performance Share Unit awarded
to Participant that vests shall occur in accordance with the issuance schedule
set forth in Section 5 of the Performance Share Unit Agreement.

Additional Terms/Acknowledgements: The undersigned Participant acknowledges
receipt of, and understands and agrees to, this Grant Notice, the Performance
Share Unit Agreement and the Plan. Participant also acknowledges receipt of the
PetSmart, Inc. 2006 Equity Incentive Plan Prospectus. Participant further
acknowledges that as of the Date of Grant, this Grant Notice, the Performance
Share Unit Agreement and the Plan set forth the entire understanding between
Participant and the Company regarding the PSU Grant and supersede all prior oral
and written agreements on that subject. Notwithstanding the foregoing, if
Participants is eligible to participate in the Executive Change in Control and
Severance Benefit Plan (an “Executive Participant”), the PSU Grant shall be
subject to the terms of the Executive Change in Control and Severance Benefit
Plan (the “Executive Severance Plan”) to the extent provided on Attachment I to
this Grant Notice.

              PetSmart, Inc.   Participant:
 
           
By:
           
 
           
 
  Signature       Signature
 
           
Title:
      Date:    
 
           
 
           
Date:
           
 
           

Attachments:    PSU Award and Vesting Criteria, Performance Share Unit Agreement
and the Plan

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Attachment I
PSU Award and Vesting Criteria
Capitalized terms used herein but not defined shall have the meanings set forth
in the Grant Notice or the Company’s 2006 Equity Incentive Plan, as applicable.
Award Criteria
The actual number of Performance Share Units to be awarded to Participant may
not exceed the Maximum Number of Performance Share Units Granted, as indicated
on the Grant Notice. The number of Performance Share Units awarded to
Participant will be determined by the Company’s Compensation Committee or its
designee (the “Committee”) subject to the performance conditions as determined
by the Committee (the “Performance Conditions”) as set forth below:
The Performance Conditions for a target award of the Performance Share Units
shall be: [          ].
No later than thirty (30) days after the receipt by the Committee of the audited
financial statements for the Performance Period applicable to the PSU Grant, the
Committee shall determine whether the established Performance Criteria for the
PSU Grant were achieved, and what number of Performance Share Units subject to
the PSU Grant will be awarded to the Participant. Performance Share Units shall
not be awarded based upon the attainment of Performance Criteria unless and
until the Committee makes such determination. The Committee shall have
discretion to reduce the number of Performance Share Units that are awarded
depending on (a) the extent to which the designated Performance Criteria are
either exceeded or not met, and (b) the extent to which other objectives, e.g.
subsidiary, division, department, unit or other performance objectives are
attained. The Committee shall have full discretion to reduce the number of
Performance Share Units that are awarded based on individual performance or
other factors as it considers appropriate in the circumstances. The Committee
shall not have discretion to increase the number of Performance Share Units that
are awarded to the Participant.
For purposes of satisfaction of the Performance Conditions, the term “Change of
Control Transaction” means a transaction that qualifies as one or more of the
following: (i) a transaction described in Section 13(b) of the Plan, where the
surviving corporation will not assume or continue the PSU Grant, or substitute a
similar award for the PSU Grant, or (ii) a “Change of Control” as such term is
defined in Section 13(c) the Plan. Additionally, if Participant is an Executive
Participant, the Performance Conditions shall be satisfied upon a “Change of
Control, as defined in Executive Change in Control and Severance Benefit Plan
(“Severance Plan”); provided that the Executive Participant is employed by the
Company on any date within the three (3) month period preceding such Change of
Control. If the Performance Conditions are satisfied due to a Change of Control
Transaction or Change of Control under the Severance Plan as provided in this
paragraph, then 100% of Target Number of Performance Share Units will be
awarded.
For purposes of satisfaction of the Performance Conditions, no subsequent
agreement shall be effective to amend, alter or waive satisfaction of the
Performance Conditions applicable to the PSU Grant unless such agreement
specifically provides for amendment of the Performance Conditions applicable to
the PSU Grant.
Vesting Criteria
Any Performance Share Units that are awarded by the Committee based upon
satisfaction of the Performance Conditions will vest if the “Time-Based Vesting
Conditions” are satisfied. The Time-Based Vesting Conditions for the Performance
Share Units shall be satisfied if the Participant remains in Continuous Status
as an Employee, Director or Consultant through the earlier of (i) the expiration
of the three-year period that commences on the Date of Grant, (ii) upon any
vesting acceleration of the PSU Grant provided by the Plan pursuant to its
terms, (iii) if Participant is an Executive Participant, upon any vesting
acceleration of the PSU Grant provided by the Executive Severance Plan pursuant
to its terms, (iv) if the Participant is an Eligible Retiree (as defined below)
upon any vesting acceleration pursuant to the Retirement Vesting Schedule (as
defined below), or (v) upon any vesting

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acceleration of the PSU Grant provided for pursuant to any Company plan or any
agreement between the Company and Participant, whether currently in effect or
adopted or entered into hereafter.
If a Participant is an “Eligible Retiree” and incurs a “Retirement Termination”
prior to the expiration of the three-year period that commences on the Date of
Grant, the PSU Grant will automatically accelerate vesting pursuant with respect
to the percentage of the PSU Grant as determined pursuant to the “Retirement
Vesting Schedule” set forth below:

  •   A Participant will be an “Eligible Retiree” if, at the time of termination
of Continuous Status as an Employee, Director or Consultant (i) the Participant
is an Employee, (ii) the Participant is at least fifty-five (55) years of age,
(iii) the Participant has been continuously employed by the Company or an
Affiliate during the five (5) year period ending on the date of termination and
(iv) the sum of the Participant’s age and the number of years the Participant
was continuously employed by the Company or an Affiliate ending on the date of
termination is at least sixty-two (62).

  •   “Retirement Termination” means a termination of an Eligible Retiree’s
Continuous Status as an Employee, Director or Consultant either (i) as a result
of death or Disability or (ii) pursuant to voluntary termination but only if
(A) such voluntary termination has been designated by the Company, in its sole
discretion, as a retirement and (B) the Eligible Retiree enters into a
noncompetition agreement in a form acceptable to the Company. Notwithstanding
the foregoing, the Company shall not designate a voluntary termination as a
retirement if the Company determines that such termination is detrimental to the
Company.

  •   “Retirement Vesting Schedule” shall be determined as follows. Unless and
until there is a Retirement Termination, the vesting percentage for the
Retirement Vesting Schedule shall be zero. If a Retirement Termination occurs,
the vesting percentage for the Retirement Vesting Schedule shall be thirty-three
and one-third percent (33 1/3%) for each completed full year of employment
following the commencement of the Performance Period until the date of the
Retirement Termination (with any fractional or partial year eliminated), not to
exceed one hundred percent (100%).

For clarity, at no time shall the vesting of the PSU Grant be greater than one
hundred percent (100%). If the vesting of the PSU Grant accelerates for any
reason, then the shares in respect of the PSU Grant will be immediately issued
in connection with such vesting pursuant to Section 5 of the Performance Share
Unit Agreement.

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Attachment II
PetSmart, Inc.
Performance Share Unit Agreement
     PetSmart, Inc. (the “Company”) hereby grants to the Participant (“you”)
named in the attached Performance Share Unit Grant Notice (“Grant Notice”), and
you hereby accept, the grant of Performance Share Units (the “PSU Grant”)
pursuant to the terms set forth in the Grant Notice, its attached PSU Award and
Vesting Criteria, the Plan and this Performance Share Unit Agreement
(“Agreement”). A copy of the PSU Award and Vesting Criteria is attached to the
Grant Notice as Attachment I, and a copy of the Plan is attached to the Grant
Notice as Attachment III. Capitalized terms not explicitly defined in this
Agreement but defined in the Plan or the PSU Award and Vesting Criteria shall
have the same definitions as in the Plan or PSU Award and Vesting Criteria, as
applicable.
     The details of your PSU Grant, in addition to those set forth in the Grant
Notice, the PSU Award and Vesting Criteria and the Plan are as follows:
     1. PSU Grant. This PSU Grant represents the right to be awarded on a future
date a number of Performance Share Units not exceeding the Maximum Number of
Performance Share Units indicated in the Grant Notice. This PSU Grant was
granted in consideration of your services to the Company. Except as otherwise
provided herein, you will not be required to make any payment to the Company
(other than past and future services to the Company) with respect to your
receipt of the PSU Grant, the award of Performance Share Units, the vesting of
the Performance Share Units, or the delivery of common stock in respect of the
PSU Grant.
     2. Number of Awarded Performance Share Units. The actual number of
Performance Share Units to be awarded to you will be determined in accordance
with the Award Criteria set forth on Attachment I to the Grant Notice. The
number of Performance Share Units subject to your PSU Grant (and the
corresponding number of shares of common stock issuable at a future date) may be
adjusted from time to time for capitalization adjustments as set forth in the
Plan. No fractional Performance Share Units shall be created, and the Committee
shall, in its discretion, determine an equivalent benefit for any fractional
Performance Share Units that might be created by such adjustments Any
Performance Share Units subject to your PSU Grant that are not awarded to you by
the Committee will be automatically forfeited, will revert to the Plan, and you
will have no rights with respect to such forfeited Performance Share Units.
     3. Vesting. Subject to the limitations contained herein, your awarded
Performance Share Units will vest, if at all, in accordance with the Vesting
Criteria set forth on Attachment I to the Grant Notice. Any awarded Performance
Share Units that have vested in accordance with the Vesting Criteria are “Vested
Units.” Any awarded Performance Share Units that do not vest in accordance with
the Vesting Criteria will be automatically forfeited, will revert to the Plan,
and you will have no rights with respect to such forfeited Performance Share
Units.
     4. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, you may not be issued any shares of common stock in respect of
your PSU Grant unless either (i) the shares of common stock are then registered
under the Securities Act; or (ii) if the shares of common stock are not then so
registered, the Company has determined that such purchase and issuance would be
exempt from the registration requirements of the

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Securities Act. Your PSU Grant also must comply with other applicable laws and
regulations governing your PSU Grant, and you may not receive such shares if the
Company determines that such receipt would not be in material compliance with
such laws and regulations.
     5. Date of Issuance.
          (a) The Company will deliver to you a number of shares of the
Company’s common stock equal to the number of Vested Units subject to your PSU
Grant within thirty (30) days following the applicable vesting date(s). However,
if a scheduled delivery date falls on a date that is not a business day, such
delivery date shall instead fall on the next following business day.
          (b) Notwithstanding the foregoing, in the event that (i) you are
subject to the Company’s policy permitting officers and directors to sell shares
only during certain “window” periods, in effect from time to time or you are
otherwise prohibited from selling shares of the Company’s common stock in the
public market and any shares in respect of your PSU Grant are scheduled to be
delivered on a day (the “Original Distribution Date”) that does not occur during
an open “window period” applicable to you, as determined by the Company in
accordance with such policy, or does not occur on a date when you are otherwise
permitted to sell shares of the Company’s common stock on the open market, and
(ii) the Company elects not to satisfy its tax withholding obligations by
withholding shares from your distribution, then such shares shall not be
delivered on such Original Distribution Date and shall instead be delivered on
the first business day of the next occurring open “window period” applicable to
you pursuant to such policy (regardless of whether you are still providing
continuous services at such time) or the next business day when you are not
prohibited from selling shares of the Company’s common stock in the open market,
but in no event later than the fifteenth (15th) day of the third calendar month
of the calendar year following the calendar year in which the Original
Distribution Date occurs. The form of such delivery (e.g., a stock certificate
or electronic entry evidencing such shares) shall be determined by the Company.
     6. Execution of Documents. You hereby acknowledge and agree that the manner
selected by the Company by which you indicate your consent to your Grant Notice
is also deemed to be your execution of your Grant Notice and of this Agreement.
You further agree that such manner of indicating consent may be relied upon as
your signature for establishing your execution of any documents to be executed
in the future in connection with your PSU Grant.
     7. Dividends. You shall receive no benefit or adjustment to your PSU Grant
with respect to any cash dividend, stock dividend or other distribution that
does not result from a capitalization adjustment as provided in the Plan;
provided, however, that this sentence shall not apply with respect to any shares
of common stock that are delivered to you in connection with your PSU Grant
after such shares have been delivered to you.
     8. Non-transferability of the PSU Grant. Your PSU Grant is not
transferable, except by will or by the laws of descent and distribution. In
addition to any other limitation on transfer created by applicable securities
laws, you agree not to assign, hypothecate, donate, encumber or otherwise
dispose of any interest in any of the shares of common stock that

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may be issued to you in respect of the PSU Grant until the shares are issued to
you in accordance with Section 5 of this Agreement. After the shares have been
issued to you, you are free to assign, hypothecate, donate, encumber or
otherwise dispose of any interest in such shares provided that any such actions
are in compliance with the provisions herein and applicable securities laws.
Notwithstanding the foregoing, by delivering written notice to the Company, in a
form satisfactory to the Company, you may designate a third party who, in the
event of your death, shall thereafter be entitled to receive any distribution of
common stock to which you were entitled at the time of your death pursuant to
this Agreement.
     9. Restrictive Legends. The shares issued in respect of your PSU Grant
shall have endorsed thereon appropriate legends as determined by the Company.
     10. PSU Grant not a Service Contract. Your PSU Grant is not an employment
or service contract, and nothing in your PSU Grant shall be deemed to create in
any way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your PSU Grant shall obligate the Company or
an Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.
     11. Withholding Obligations.
     (a) On or before the time you receive a distribution of the shares in
respect of your PSU Grant, or at any time thereafter as requested by the
Company, you hereby authorize any required withholding from the common stock
issuable to you and/or otherwise agree to make adequate provision in cash for
any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or any affiliate which arise in
connection with your PSU Grant (the “Withholding Taxes”). Additionally, the
Company may, in its sole discretion, satisfy all or any portion of the
Withholding Taxes obligation relating to your PSU Grant by any of the following
means or by a combination of such means: (i) withholding from any compensation
otherwise payable to you by the Company; (ii) causing you to tender a cash
payment; or (iii) withholding shares of common stock from the shares of common
stock issued or otherwise issuable to you in connection with the PSU Grant with
a Fair Market Value (measured as of the date shares of common stock are issued
to pursuant to Section 5) equal to the amount of such Withholding Taxes;
provided, however, that the number of such shares of common stock so withheld
shall not exceed the amount necessary to satisfy the Company’s required tax
withholding obligations using the minimum required statutory withholding rates
for federal, state, local and foreign tax purposes, including payroll taxes,
that are applicable to supplemental taxable income.
     (b) Unless the tax withholding obligations of the Company or any Affiliate
are satisfied, the Company shall have no obligation to deliver to you any common
stock.
     12. Unsecured Obligation. Your PSU Grant is unfunded, and as a holder of a
vested PSU Grant, you shall be considered an unsecured creditor of the Company
with respect to the Company’s obligation, if any, to issue shares pursuant to
this Agreement. You shall not have voting or any other rights as a stockholder
of the Company with respect to the shares to be issued

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pursuant to this Agreement until such shares are issued to you pursuant to
Section 5 of this Agreement. Upon such issuance, you will obtain full voting and
other rights as a stockholder of the Company. Nothing contained in this
Agreement, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind or a fiduciary relationship between you
and the Company or any other person.
     13. Tax Consequences. You have reviewed with your own tax advisors the
federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement. You are relying solely on such
advisors and not on any statements or representations of the Company or any of
its agents. You understand that you (and not the Company) shall be responsible
for your own tax liability that may arise as a result of your PSU Grant
     14. Notices. Any notice or request required or permitted hereunder shall be
given in writing to each of the other parties hereto and shall be deemed
effectively given on the earlier of (a) the date of personal delivery, including
delivery by express courier, or (b) the date that is five days after deposit in
the United States Post Office (whether or not actually received by the
addressee), by registered or certified mail with postage and fees prepaid,
addressed at the following addresses, or at such other address(es) as a party
may designate by ten days’ advance written notice to each of the other parties
hereto:

     
Company:
  PetSmart Inc.
19601 North 27th Avenue
Phoenix, AZ 85027
Attn: General Counsel
 
   
You:
  Your address as on file with the Company’s Human Resources Department at the
time notice is given

Notwithstanding the foregoing, the Company may, in its sole discretion, decide
to deliver any documents related to participation in the Plan and this PSU Grant
by electronic means or to request your consent to participate in the Plan by
electronic means. You hereby consent to receive such documents by electronic
delivery and, if requested, to agree to participate in the Plan through an
on-line or electronic system established and maintained by the Company or
another third party designated by the Company.
     15. Miscellaneous.
          (a) The rights and obligations of the Company under your PSU Grant
shall be transferable to any one or more persons or entities, and all covenants
and agreements hereunder shall inure to the benefit of, and be enforceable by,
the Company’s successors and assigns. Your rights and obligations under your PSU
Grant may only be assigned with the prior written consent of the Company.
          (b) You agree upon request to execute any further documents or
instruments necessary or desirable in the sole determination of the Company to
carry out the purposes or intent of your PSU Grant.

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          (c) You acknowledge and agree that you have reviewed your PSU Grant in
its entirety, have had an opportunity to obtain the advice of counsel prior to
executing and accepting your PSU Grant and fully understand all provisions of
your PSU Grant.
          (d) This Agreement shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
          (e) All obligations of the Company under the Plan and this Agreement
shall be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the
Company.
     16. Governing Plan Documents. Your PSU Grant is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
PSU Grant, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. Except as otherwise expressly provided herein in the event of any
conflict between the terms in the PSU Grant and the Plan, the terms of the Plan
shall control.
     17. Severability. If all or any part of this Agreement or the Plan is
declared by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not invalidate any portion of this Agreement or
the Plan not declared to be unlawful or invalid. Any Section of this Agreement
(or part of such a Section) so declared to be unlawful or invalid shall, if
possible, be construed in a manner which will give effect to the terms of such
Section or part of a Section to the fullest extent possible while remaining
lawful and valid.
     18. Effect on Other Employee Benefit Plans. The value of the PSU Grant
subject to this Agreement shall not be included as compensation, earnings,
salaries, or other similar terms used when calculating the Employee’s benefits
under any employee benefit plan sponsored by the Company or any affiliate,
except as such plan otherwise expressly provides. The Company expressly reserves
its rights to amend, modify, or terminate any of the Company’s or any
affiliate’s employee benefit plans.
     19. Choice of Law. The interpretation, performance and enforcement of this
Agreement will be governed by the law of the state of Arizona without regard to
such state’s conflicts of laws rules.
     20. Amendment. This Agreement may not be modified, amended or terminated
except by an instrument in writing, signed by you and by a duly authorized
representative of the Company. Notwithstanding the foregoing, this Agreement may
be amended solely by the Committee by a writing which specifically states that
it is amending this Agreement, so long as a copy of such amendment is delivered
to you, and provided that no such amendment adversely affecting your rights
hereunder may be made without your written consent. Without limiting the
foregoing, the Committee reserves the right to change, by written notice to you,
the provisions of this Agreement in any way it may deem necessary or advisable
to carry out the purpose of the grant as a result of any change in applicable
laws or regulations or any future law, regulation,

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ruling, or judicial decision, provided that any such change shall be applicable
only to rights relating to that portion of the PSU Grant which is then subject
to restrictions as provided herein.
* * * * *
     This Performance Share Unit Agreement shall be deemed to be signed by the
Company and the Participant upon the signing by the Participant of the
Performance Share Unit Grant Notice to which it is attached in the manner
permitted by Section 6.

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[Non-ESTIP Awards]
Attachment III
2006 Equity Incentive Plan