exv10w4






Exhibit 10.4




PetSmart, Inc.

Performance Share Unit Grant Notice

(2011 Equity Incentive Plan)




     PetSmart, Inc. (the “Company”), pursuant to its 2011 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 a “restricted stock unit” granted pursuant to
Section 7 of the Plan and is subject to all of the terms and conditions as set forth herein and the
Plan, which is attached hereto and incorporated herein in its entirety. Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Plan. Except as otherwise
expressly provided herein, in the event of any conflict between the terms in the PSU Grant Notice
and the Plan, the terms of the Plan shall control.



	 	 	 	 	 	 	 

	 

	 	Participant:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Date of Grant:
	 	                                        , 20     	 	 
	 

	 	Target Number of Performance Share Units (PSUs)	 	 	 	 
	 

	 	Minimum Number of Performance Share Units Granted
	 	 

50% of                    PSUs
	 	 
	 

	 	Maximum Number of Performance Share Units Granted
	 	150% of                    PSUs	 	 
	 

	 	Consideration:
	 	Participant’s services	 	 
	 

	 	Email Address:	 	 	 	 
	 

	 	 	 	 

	 	 






     This Grant Notice 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 the Participant 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 expressly herein.



     The details of your PSU Grant 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 above. 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 as follows:



          (a) The actual number of Performance Share Units to be awarded to you may not exceed the
Maximum Number of Performance Share Units Granted pursuant to this Grant Notice, as indicated
above. The number of Performance Share Units awarded to you 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”) and set
forth in writing prior to the granting of any Awards pursuant to this Notice.




          (b) 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 the number of
Performance Share Units subject to the PSU Grant to be awarded to you. 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 (i) the extent to which the designated
Performance Criteria are either exceeded or not met, and (ii) 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 your 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 you.




          (c) 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 15(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 15(b) 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.




          (d) 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.




          (e) 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, 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



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Conditions for
the Performance Share Units shall be satisfied if you retain your 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) upon any vesting acceleration of the PSU Grant provided by the
terms of this Grant Notice; (iv) if you are an Executive Participant, upon any vesting acceleration
of the PSU Grant provided by the Executive Severance Plan pursuant to its terms, or (v) upon any
vesting acceleration of the PSU Grant provided for pursuant to any Company plan or any agreement
between you and the Company, whether currently in effect or adopted or entered into hereafter. For
clarity, at no time shall the vesting of the PSU Grant be greater than one hundred percent (100%).
Any awarded Performance Share Units that have vested in accordance with the vesting criteria set
forth in this Section 3 are “Vested Units.” Your Continuous Status as an Employee, Director, or
Consultant shall not be considered terminated due to a change in the capacity in which you perform
services for the Company, provided you remain an Employee, Director, or Consultant of the Company.



          (a) Death or Disability. If your Continuous Status as an Employee, Director or Consultant
ends due to death or Disability, vesting of your Performance Share Units shall be prorated over the
vesting period by reference to the number of months of service you completed after the commencement
of the vesting period as a fraction against the number of months in the vesting period (with any
fractional or partial month eliminated), not to exceed one hundred percent (100%).




          (b) Retirement Termination. If you are an “Eligible Retiree” and incur 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 with respect to the percentage of the PSU Grant
as determined pursuant to the “Retirement Vesting Schedule” set forth below:





	 	•	 	You will be an “Eligible Retiree” if, at the time of termination of your Continuous
Status as an Employee, Director or Consultant, you (i) are an Employee; (ii) are at
least fifty-five (55) years of age; and (iii) have been continuously employed by the
Company or an Affiliate during the five (5) year period ending on the date of
termination.
	 
	 	•	 	“Retirement Termination” means a termination of your Continuous Status as an
Employee, Director or Consultant pursuant to voluntary termination but only if (i) such
voluntary termination has been designated by the Company, in its sole discretion, as a
retirement and (ii) you enter into a noncompetition agreement if requested by, and in a
form acceptable to, the Company. Notwithstanding the foregoing, the Company will not
designate your voluntary termination as a Retirement Termination 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, vesting shall be prorated
over the applicable vesting period by reference to the number of months of service you
completed after the commencement of the vesting period as a fraction against the




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	 	 	 	number
of months in the vesting period (with any fractional or partial month eliminated), not
to exceed one hundred percent (100%). If Retirement Termination occurs on or after the
end of the Performance Period, the Retirement Vesting Schedule will be applied against
the PSU Grant as modified for performance pursuant to Section 2(b) of this Notice. If
Retirement Termination occurs before the end of the Performance Period, then the
Retirement Vesting Schedule will be applied against the PSU Grant assuming that target
performance, as determined by the Committee, is achieved.





          (c) Forfeiture. Any awarded Performance Share Units that do not vest in accordance with this
Section 3 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 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, a) you may satisfy the tax withholding by submitting a
cash payment to the Company and such shares will be delivered to
you on the Original Distribution Date or b) 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



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delivery (e.g., a
stock certificate or electronic entry evidencing such shares) shall be determined by the Company.




     6. 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.



     7. 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 may be
issued to you in respect of the PSU Grant until the shares are issued to you in accordance with
Section 5 herein. 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 Grant Notice.



     8. Restrictive Legends. The shares issued in respect of your PSU Grant shall have
endorsed thereon appropriate legends as determined by the Company.



     9. 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.



     10. 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



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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.




     11. 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 Grant Notice. You shall not have
voting or any other rights as a stockholder of the Company with respect to the shares to be issued
pursuant to this Grant Notice until such shares are issued to you pursuant to Section 5 herein.
Upon such issuance, you will obtain full voting and other rights as a stockholder of the Company.
Nothing contained in this Grant Notice, 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.



     12. 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 Grant Notice. 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



     13. 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


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Plan through an
on-line or electronic system established and maintained by the Company or another third party
designated by the Company.




     14. 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.




          (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 and fully understand all provisions of your PSU
Grant.




          (d) This Grant Notice 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 Grant Notice 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.




     15. 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.



     16. Severability. If all or any part of this Grant Notice 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 Grant Notice or the Plan not declared to be unlawful
or invalid. Any Section of this Grant Notice (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.



     17. Effect on Other Employee Benefit Plans. The value of the PSU Grant subject to
this Grant Notice 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.



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The Company expressly
reserves its rights to amend, modify, or terminate any of the Company’s or any affiliate’s employee
benefit plans.



     18. Choice of Law. The interpretation, performance and enforcement of this Award and
Grant Notice will be governed by the law of the state of Arizona without regard to such state’s
conflicts of laws rules.



     19. Amendment. This Grant Notice 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 Grant Notice may be amended solely by the Committee by a
writing which specifically states that it is amending this Award, 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 Grant Notice 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, 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.



*     *     *









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Attachment I




2011 Equity Incentive Plan