Form of PETCO Animal Supplies, Inc. Stock Option Agreement



 Exhibit 4.3 
  

			
	 OPTION NUMBER
	 	OPTION SHARES
	(merge)	 	(merge)                  

  
 THIS AGREEMENT, dated
            ,      (“Effective Date”), is made by and between PETCO Animal Supplies, Inc., a Delaware corporation hereinafter referred to as
“Company,” and «FIRST_NAME» «LAST_NAME», hereinafter referred to as “Optionee”: 
  
 WHEREAS, the Company wishes to afford the Optionee the opportunity to purchase «OPTION» shares of its $0.001 par value Common Stock (the “Option
Shares”) at a purchase price of $             per share (the “Purchase Price”); 
  
 WHEREAS, the Company wishes to carry out the Plan (the terms of which are hereby incorporated by reference and made a part of this
Agreement); and 
  
 WHEREAS, the Administrator, appointed to administer the Plan,
has determined that it would be to the advantage and best interest of the Company and its stockholders to grant the Option provided for herein to the Optionee as an inducement to enter into or remain in the service of the Company or its Subsidiaries
and as an incentive for increased efforts during such service, and has advised the Company thereof and instructed the undersigned officer to issue said Option. 
  

WHEREAS, this Option is [not] intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code. 

 
 NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree to all of the terms and conditions set forth on the reverse side hereof. 
  

			
	In witness whereof, this Agreement has been executed by the Company by one of its duly authorized officers as of the Effective Date:	 	I hereby acknowledge receipt of the foregoing Option as of the Effective Date and agree to all of the terms and conditions set forth in this Agreement:
		
	 PETCO Animal Supplies, Inc.
  

	 	  


	Name	 	Optionee

  







 Whenever the following terms are used in this Agreement, they shall have the meaning specified below
unless the context clearly indicates to the contrary. All capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Plan. 
  
 1.1 Incentive Stock Option. “Incentive Stock Option” shall mean an option which conforms to the applicable
provisions of Section 422 of the Code and which is designated as an Incentive Stock Option by the Administrator. 
  
 1.2 Non-Qualified Stock Option” shall mean an Option which is not designated as an Incentive Stock Option by the Administrator. 
  
 1.3 Option. “Option” shall mean the stock option to purchase
Common Stock of the Company granted under this Agreement. 
  
 1.4 Plan. “Plan” shall mean The 2002 Incentive Award Plan of PETCO Animal Supplies, Inc. 
  
 1.5 Retirement. “Retirement” shall mean a Termination of Employment other than a discharge for good cause (as determined by the
Administrator) if the sum of (i) Optionee’s age as of the date of termination plus (ii) the number of full years of Optionee’s service with the Company as of the date of termination, is equal to or greater than seventy (70);
provided, however, that Optionee’s Retirement shall not be deemed to have occurred unless Optionee has at least five (5) full years of service with the Company. 
  
 2.1 Grant of Option. In consideration of the Optionee’s agreement to provide services to the Company or its
Subsidiaries, and for other good and valuable consideration, on the date set forth on the front of this Agreement, the Company irrevocably grants to the Optionee the option to purchase from the Company any part or all of an aggregate of the number
of Option Shares set forth on the front of this Agreement upon the terms and conditions set forth in this Agreement. 
  
 2.2 Purchase Price. The purchase price of the shares of stock covered by the Option shall be the Purchase Price set forth on the front of this
Agreement without commission or other charge. 
  
 2.3
Consideration to Company. In consideration of the granting of this Option by the Company, the Optionee agrees to render faithful and efficient services to the Company or a Subsidiary, with such duties and responsibilities as the Company shall
from time to time prescribe, for a period of at least one (1) year from the date this Option is granted. Nothing in this Agreement or in the Plan shall confer upon the Optionee any right to continue in the employ of the Company or any Subsidiary, or
shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at any time for any reason whatsoever, with or without cause. 
  
 2.4 Adjustments in Option. The Administrator shall make adjustments
with respect to the Option in accordance with the provisions of Section 11.3 of the Plan. 
  
 3.1 Commencement of Exercisability. 
  
 (a) Subject to subsections (b) below, the Option shall become 100% vested and fully exercisable on the third anniversary of the Effective Date. 
  
 (b) Subject to subsection (c) below, no portion of the Option which is unexercisable at Termination of Employment shall
thereafter become exercisable. 
  
 (c) Notwithstanding subsection
(b) above, if the Optionee incurs a Termination of Employment as a result of the Optionee’s Retirement, the Option shall continue to vest following the date of the Optionee’s Retirement in accordance with Section 3.1(a). 
  
 3.2 Duration of Exercisability. The Option shall remain exercisable as
provided in Section 3.1 until it becomes unexercisable under Section 3.3. 
  
 3.3 Expiration of Option. The Option may not be exercised to any extent by anyone after the first to occur of the following events: 
  
 (a) The expiration of ten (10) years from the date the Option was granted; or 
  
 (b) The expiration of three (3) months from the date of the Optionee’s
Termination of Employment unless such Termination of Employment results from Optionee’s death, disability (within the meaning of Section 22(e)(3) of the Code) or Retirement, provided that if the Optionee dies within said three (3) month
period, the period shall be extended to end twelve (12) months from the date of the Optionee’s death; 
  
 (c) Subject to Section 3.3(e) below, to the extent the Optionee incurs a Termination of Employment as a result of the Optionee’s Retirement as set
forth in Section 3.1(c), the third anniversary of the date of Optionee’s Termination of Employment as a result of the Optionee’s Retirement; or 
  
 (d) The expiration of twelve (12) months from the date of the Optionee’s Termination of Employment by reason of his disability (within the meaning of
Section 22(e)(3) of the Code) or death, provided that if the Optionee dies within said twelve (12) month period, the period shall be extended to end twelve (12) months from the date of the Optionee’s death. 
  
 (e) In the event that there shall be in effect any Company-imposed blackout
or window-period limitation at the time the Option expires pursuant to Section 3.3(c) above, or the Optionee is otherwise precluded from exercising the Option or selling the stock issuable hereunder pursuant to any applicable securities laws, such
expiration date shall be automatically extended until the date that is ten (10) days following the termination or expiration of such blackout or window-period limitation or the date on which such securities law restrictions no longer apply.

  
 3.4 Special Tax Consequences for Incentive Stock
Options. The Optionee acknowledges that, if the Option is an Incentive Stock Option, to the extent that the aggregate Fair Market Value of stock with respect to which “incentive stock options” (within the meaning of Section 422 of the
Code, but without regard to Section 422(d) of the Code), including the Option, are exercisable for the first time by the Optionee during any calendar year (under the Plan and all other incentive stock option plans of the Company, any Subsidiary and
any parent corporation thereof (within the meaning of Section 422 of the Code)) exceeds $100,000, the Option and such other options shall be treated as not qualifying under Section 422 of the Code but rather shall be taxed as non-qualified stock
options. The Optionee further acknowledges that the rule set forth in the preceding sentence shall be applied by taking options into account in the order in which they were granted. For purposes of these rules, the Fair Market Value of stock shall
be determined as of the time the option with respect to such stock is granted. In addition, the Optionee acknowledges that, if the Option is an Incentive 








 
Stock Option, to the extent the Option is exercised more than three (3) months following the Optionee’s Termination of Employment, pursuant to Section
422 of the Code the Option will cease to be an Incentive Stock Option and will be taxed as a Non-Qualified Stock Option (unless such Termination of Employment occurs as a result of the Optionee’s death or disability (within the meaning of
Section 422 of the Code), or the Optionee dies within three (3) months following the Optionee’s Termination of Employment), in which case the Option may be exercised for twelve (12) months following the date of the Optionee’s death or
disability and still qualify as an Incentive Stock Option). 
  
 4.1 Person Eligible to Exercise. Except as provided in Section 5.2, during the lifetime of the Optionee, only he may exercise the Option or any portion thereof. After the death of the Optionee, any exercisable portion of the Option
may, prior to the time when the Option becomes unexercisable under Section 3.3, be exercised by his personal representative or by any person empowered to do so under the deceased Optionee’s will or under the then applicable laws of descent and
distribution. 
  
 4.2 Partial Exercise. Any exercisable
portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Section 3.3; provided, however,
that each partial exercise shall be for whole shares only. 
  
 4.3 Manner of Exercise. The Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary or his office of all of the following prior to the time when the Option or such portion becomes
unexercisable under Section 3.3: 
  
 (a) A written notice
complying with the applicable rules established by the Administrator stating that the Option, or a portion thereof, is exercised. The notice shall be signed by the Optionee or other person then entitled to exercise the Option or such portion; and

  
 (b) Full cash payment to the Secretary of the Company for the
shares with respect to which such Option or portion is exercised; or 
  
 (i) With the consent of the Administrator, a delay in payment of up to 30 days from the date the Option, or portion thereof, is exercised; or 
  
 (ii) With the consent of the Administrator, (A) shares of the Company’s Common Stock owned by the Optionee for at least six months, duly endorsed for
transfer to the Company, with a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof, or (B) shares of the Company’s Common Stock issuable to the Optionee upon exercise of
the Option, with a Fair Market Value on the date of exercise of the Option or any portion thereof equal to the aggregate exercise price of the Option or exercised portion thereof; or 
  
 (iii) With the consent of the Administrator, a full recourse promissory note bearing interest (at no less than such rate as
shall then preclude the imputation of interest under the Code or successor provision) and payable upon such terms as may be prescribed by the Administrator. The Administrator may also prescribe the form of such note and the security to be given for
such note. The Option may not be exercised, however, by delivery of a promissory note or by a loan from the Company when or where such loan or other extension of credit is prohibited by law; or 
  
 (iv) With the consent of the Administrator, property of any kind which
constitutes good and valuable consideration; or 
  
 (v) With the
consent of the Administrator, a notice that the Optionee has placed a market sell order with a broker with respect to shares of the Company’s Common Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price; or 
  
 (vi) With the consent of the Administrator, any combination of the consideration provided in the foregoing subparagraphs (i), (ii), (iii), (iv) and (v);
and 
  
 (c) A bona fide written representation and agreement, in a
form satisfactory to the Administrator, signed by the Optionee or other person then entitled to exercise such Option or portion, stating that the shares of stock are being acquired for his own account, for investment and without any present
intention of distributing or reselling said shares or any of them except as may be permitted under the Securities Act and then applicable rules and regulations thereunder, and that the Optionee or other person then entitled to exercise such Option
or portion will indemnify the Company against and hold it free and harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the shares by such person is contrary to the representation and agreement
referred to above. The Administrator may, in its sole discretion, take whatever additional actions it deems appropriate to insure the observance and performance of such representation and agreement and to effect compliance with the Securities Act
and any other federal or state securities laws or regulations. Without limiting the generality of the foregoing, the Administrator may require an opinion of counsel acceptable to it to the effect that any subsequent transfer of shares acquired on an
Option exercise does not violate the Securities Act, and may issue stop-transfer orders covering such shares. Share certificates evidencing stock issued on exercise of this Option shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and agreement referred to in the first sentence of this subsection (c) shall, however, not be required if the shares to be issued pursuant to such exercise have been registered
under the Securities Act, and such registration is then effective in respect of such shares; and 
  
 (d) Full payment to the Company (or other employer corporation) of all amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; with the consent of the Administrator in the form of, (i) shares of the Company’s Common Stock owned by the Optionee, duly endorsed for transfer, with a Fair Market Value on the date of delivery equal to the sums
required to be withheld, or (ii) shares of the Company’s Common Stock issuable to the Optionee upon exercise of the Option with a Fair Market Value on the date of exercise of the Option or any portion thereof equal to the sums required to be
withheld, may be used to make all or part of such payment; provided that the number of shares of Common Stock which may be withheld with respect to the issuance, vesting, exercise or payment of any Option (or which may be repurchased from the
Optionee of such Option within six months after such shares of Common Stock were acquired by the Optionee from the Company) in order to satisfy the Optionee’s federal and state income and payroll tax liabilities with respect to the issuance,
vesting, exercise or payment of the Option shall be limited to the number of shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding
rates for federal and state tax income and payroll tax purposes that are applicable to such supplemental taxable income; and 







 (e) In the event the Option or portion shall be exercised pursuant to Section 4.1 by any person or
persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option. 
  
 4.4 Conditions to Issuance of Stock Certificates. The shares of stock deliverable upon the exercise of the Option, or any portion thereof, may be
either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. Such shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of the Option or portion thereof prior to fulfillment of all of the following conditions: 
  
 (a) The admission of such shares to listing on all stock exchanges on which such class of stock is then listed; and 
  
 (b) The completion of any registration or other qualification of such shares
under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental body, which the Administrator shall, in its sole discretion, deem necessary or advisable; and 
  
 (c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Administrator shall, in its sole discretion, determine to be necessary or advisable; and 
  
 (d) The receipt by the Company of full payment for such shares, including payment of all amounts which, under federal, state or local tax law, the Company
(or other employer corporation) is required to withhold upon exercise of the Option; and 
  
 (e) The lapse of such reasonable period of time following the exercise of the Option as the Administrator may from time to time establish for reasons of administrative convenience. 
  
 4.5 Rights as Stockholder. The holder of the Option shall not be, nor
have any of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the exercise of any part of the Option unless and until certificates representing such shares shall have been issued by the Company to
such holder. 
  
 5.1 Administration. The Administrator
shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken
and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon the Optionee, the Company and all other interested persons. No member of the Administrator shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or the Option. In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Administrator under the Plan and this
Agreement except with respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations or rules issued thereunder, are required to be determined in the sole discretion of the Committee. 
  
 5.2 Option Not Transferable. Neither the Option nor any interest or
right therein or part thereof shall be sold, pledged, assigned, or transferred in any manner other than by will or the laws of descent and distribution, unless and until such Option has been exercised, or the shares underlying such Option have been
issued, and all restrictions applicable to such shares have lapsed. Notwithstanding the foregoing, unless the Option is an Incentive Stock Option, the Option may be transferred by the Optionee, in writing and with prior written notice to the
Administrator, by gift, without the receipt of any consideration, to a member of the Optionee’s immediate family, as defined in Rule 16a-1 under the Exchange Act, or to a trust for the exclusive benefit of, or any other entity owned solely by,
such members, provided that the Option shall continue to be subject to all of the terms and conditions as applicable to the original Optionee, and the transferee shall execute any and all such documents requested by the Administrator in
connection with the transfer, including, without limitation, to evidence the transfer and to satisfy any requirements for an exemption for the transfer under applicable federal and state securities laws. Except as set forth above, neither the Option
nor any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Optionee or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence. 
  
 5.3 Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Secretary,
and any notice to be given to the Optionee shall be addressed to him at the address given beneath his signature hereto. By a notice given pursuant to this Section 5.3, either party may hereafter designate a different address for notices to be given
to him. Any notice which is required to be given to the Optionee shall, if the Optionee is then deceased, be given to the Optionee’s personal representative if such representative has previously informed the Company of his status and address by
written notice under this Section 5.3. Any notice shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained
by the United States Postal Service; provided, however, that any notice to be given by the Optionee relating to the exercise of the Option or any portion thereof shall be deemed duly given upon receipt by the Secretary of the Company
or his office. 
  
 5.4 Conformity to Securities Laws.
Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to all provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission thereunder. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and
regulations. 
  
 5.5 Miscellaneous. This Agreement and the
Plan may be amended without the consent of the Optionee, provided that such amendment would not impair any rights of the Optionee under this Agreement. The invalidity or unenforceability of any particular provision hereof shall not affect the
other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted. This Agreement shall be administered, interpreted and enforced under the internal laws of the 








 
State of California without regard to conflicts of laws thereof. This Agreement may be executed simultaneously in two or more counterparts. Except as
otherwise provided herein, the Company’s rights and obligations hereunder may be assigned to any Company Subsidiary or to any successor pursuant to a merger, consolidation or similar event. Subject to the foregoing, this Agreement and the
respective rights and obligations of the parties hereto shall inure to the benefit of and be binding upon, the successors and assigns of the parties. 
  
 5.6 Notification of Disposition. If the Option is an Incentive Stock Option, the Optionee shall give prompt notice to the Company of any
disposition or other transfer of any shares of stock acquired under this Agreement if such disposition or transfer is made (a) within two (2) years from the Effective Date or (b) within one (1) year after the transfer of such shares to him. Such
notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Optionee in such disposition or other transfer.