Document:

exv10w10

 

Exhibit 10.10

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

THE TERMS OF THIS PLAN ARE SUBJECT TO THE COMPANY’S

RESERVED AMENDMENT RIGHTS.

 

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	BACKGROUND
	 	 	1	 
	 
	 	 	 	 
	PURPOSE
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 1 DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 ELIGIBILITY
	 	 	9	 
	 
	 	 	 	 
	2.1 Selection by Plan Committee
	 	 	9	 
	2.2 Frozen Plan Participants
	 	 	9	 
	2.3 Other Employees and Directors
	 	 	9	 
	2.4 Enrollment Requirements
	 	 	9	 
	2.5 Commencement of Participation
	 	 	9	 
	2.6 Termination of Active Participation by Plan Committee
	 	 	10	 
	2.7 Termination of Active Participation by Grandfathered Participant
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 3 DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING/TAXES
	 	 	10	 
	 
	 	 	 	 
	3.1 Minimum and Maximum Deferrals
	 	 	11	 
	3.2 Time of Deferral Elections
	 	 	12	 
	3.3 Elections As to Time and Form of Payment
	 	 	12	 
	3.4 Changing Elections (“Subsequent Elections”)
	 	 	13	 
	3.5 Crediting of Annual Deferral Amounts
	 	 	14	 
	3.6 Annual Performance Matching Amount
	 	 	14	 
	3.7 Annual 401(k) Restoration Matching Amount
	 	 	15	 
	3.8 Investment of Trust Assets
	 	 	15	 
	3.9 Vesting
	 	 	15	 
	3.10 Crediting/Debiting of Account Balances
	 	 	17	 
	3.11 Tax Withholding and Reporting
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 4 SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES
	 	 	20	 
	 
	 	 	 	 
	4.1 Short-Term Payout
	 	 	20	 
	4.2 Other Occurrences Take Precedence
	 	 	20	 
	4.3 Unforeseeable Financial Emergencies
	 	 	20	 

i

 

 PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

TABLE OF CONTENTS 
(continued)

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 5 RETIREMENT BENEEFIT
	 	 	21	 
	 
	 	 	 	 
	5.1 Valuation Date(s)
	 	 	21	 
	5.2 Payment upon Retirement
	 	 	21	 
	5.3 Death after Retirement
	 	 	24	 
	 
	 	 	 	 
	ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT
	 	 	24	 
	 
	 	 	 	 
	6.1 Pre-Retirement Survivor Benefit
	 	 	24	 
	6.2 Payment of Pre-Retirement Survivor Benefit
	 	 	24	 
	 
	 	 	 	 
	ARTICLE 7 TERMINATION BENEFIT
	 	 	24	 
	 
	 	 	 	 
	7.1 Termination Benefit
	 	 	24	 
	7.2 Form of Payment
	 	 	24	 
	7.3 Valuation Date for Payments
	 	 	25	 
	7.4 Payment of Termination Benefit
	 	 	26	 
	7.5 Death after Termination of Employment
	 	 	26	 
	 
	 	 	 	 
	ARTICLE 8 DISTRIBUTIONS UPON DISABILITY
	 	 	27	 
	 
	 	 	 	 
	8.1 Payment Upon Disability
	 	 	27	 
	8.2 Elections/Credits
	 	 	27	 
	8.3 Payment of Final Credits
	 	 	27	 
	8.4 Death after Disability
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 9 BENEFICIARY DESIGNATION
	 	 	27	 
	 
	 	 	 	 
	9.1 Beneficiary
	 	 	27	 
	9.2 Beneficiary Designation; Change; Spousal Consent
	 	 	28	 
	9.3 Acknowledgment
	 	 	28	 
	9.4 No Beneficiary Designation
	 	 	28	 
	9.5 Doubt as to Beneficiary
	 	 	28	 
	9.6 Discharge of Obligations
	 	 	28	 

 ii

 

 PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

TABLE OF CONTENTS 
(continued)

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 10 LEAVES OF ABSENCE
	 	 	28	 
	 
	 	 	 	 
	10.1 Paid Leave of Absence
	 	 	28	 
	10.2 Unpaid Leave of Absence
	 	 	29	 
	 
	 	 	 	 
	ARTICLE 11 PERMISSIBLE ACCELERATION
	 	 	29	 
	 
	 	 	 	 
	11.1 In General No Acceleration
	 	 	29	 
	11.2 Death
	 	 	29	 
	11.3 Disability
	 	 	29	 
	11.4 Unforeseeable Financial Emergency
	 	 	29	 
	11.5 Change in Control
	 	 	29	 
	11.6 Section 409A Violation
	 	 	29	 
	11.7 Termination of Plan
	 	 	30	 
	11.8 Domestic Relations Orders
	 	 	30	 
	 
	 	 	 	 
	ARTICLE 12 TERMINATION, AMENDMENT, OR MODIFICATION
	 	 	30	 
	 
	 	 	 	 
	12.1 Termination
	 	 	30	 
	12.2 Effect of Termination
	 	 	30	 
	12.3 Amendment
	 	 	30	 
	12.4 Effect of Payment
	 	 	30	 
	 
	 	 	 	 
	ARTICLE 13 ADMINISTRATION
	 	 	30	 
	 
	 	 	 	 
	13.1 Administrative and Plan Committee Duties
	 	 	30	 
	13.2 Administration upon Change in Control
	 	 	31	 
	13.3 Agents
	 	 	31	 
	13.4 Binding Effect of Decisions
	 	 	32	 
	13.5 Indemnity of Committees
	 	 	32	 
	13.6 Employer Information
	 	 	32	 
	 
	 	 	 	 
	ARTICLE 14 OTHER BENEFITS AND AGREEMENTS
	 	 	32	 
	 
	 	 	 	 
	14.1 Coordination with Other Benefits
	 	 	32	 

iii

 

 PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

TABLE OF CONTENTS 
(continued)

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 15 CLAIMS PROCEDURES
	 	 	32	 
	 
	 	 	 	 
	15.1 Presentation of Claim
	 	 	32	 
	15.2 Notification of Decision
	 	 	33	 
	15.3 Review of a Denied Claim
	 	 	33	 
	15.4 Decision on Review
	 	 	33	 
	15.5 Legal Action
	 	 	34	 
	 
	 	 	 	 
	ARTICLE 16 TRUST
	 	 	34	 
	 
	 	 	 	 
	16.1 Establishment of the Trust
	 	 	34	 
	16.2 Interrelationship of the Plan and the Trust
	 	 	35	 
	16.3 Distributions from the Trust
	 	 	35	 
	 
	 	 	 	 
	ARTICLE 17 MISCELLANEOUS
	 	 	35	 
	 
	 	 	 	 
	17.1 Status of Plan
	 	 	35	 
	17.2 Unsecured General Creditor
	 	 	35	 
	17.3 Liability
	 	 	35	 
	17.4 Nonassignability
	 	 	35	 
	17.5 Not a Contract of Employment
	 	 	36	 
	17.6 Furnishing Information
	 	 	36	 
	17.7 Terms
	 	 	36	 
	17.8 Captions
	 	 	36	 
	17.9 Governing Law
	 	 	36	 
	17.10 Notice
	 	 	36	 
	17.11 Successors
	 	 	37	 
	17.12 Spouse’s Interest
	 	 	37	 
	17.13 Validity
	 	 	37	 
	17.14 Incompetent
	 	 	37	 
	17.15 Court Order
	 	 	37	 
	17.16 Tax Treatment
	 	 	37	 
	17.17 Insurance
	 	 	38	 
	17.18 Legal Fees to Enforce Rights after Change in Control
	 	 	38	 
	17.19 Effective Date
	 	 	39	 

iv

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

PETSMART, INC.

2005 DEFERRED COMPENSATION PLAN

Effective as of January 1, 2005

BACKGROUND

     PetSmart, Inc. (“Company”) has taken certain actions with respect to its certain of its
nonqualified deferred compensation plans in order to comply with Section 409A of the Code.

     The terms of the PetSmart, Inc. Amended and Restated Deferred Compensation Plan, as in effect
on October 3, 2004 (“Frozen Plan”), have been frozen and shall not be modified, except as permitted
under Section 409A of the Code so as to preserve the grandfathered status of deferrals and related
earnings thereunder. Deferrals retained under the Frozen Plan are those employee and director
deferrals and Company credits that were earned and vested as of December 31, 2004, and income
attributable to such grandfathered deferrals.

     The PetSmart, Inc. 2005 Deferred Compensation Plan has been established, effective January 1,
2005, for compliance with Section 409A of the Code. Deferrals and Company credits that were earned
or vested after December 31, 2004, including those for Plan Years 2005, 2006, and 2007, were made
and administered in good faith in accordance with the requirements of Section 409A of the Code.
Such non-grandfathered deferrals, Company credits, and related earnings, to the extent they were
technically made under the Frozen Plan, have been transferred to, and have become part of, accounts
under this Plan. Deferrals of Participants, as well as Company credits, for Plan Years 2007, 2008,
and later Plan Years have been and/or shall be made under this Plan.

PURPOSE

     The purpose of the Plan is to provide specified benefits to a select group of management and
highly compensated Employees and Directors who contribute materially to the continued growth,
development, and future business success of PetSmart, Inc., a Delaware corporation, and its
subsidiaries, if any, that sponsor this Plan. The Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.

ARTICLE 1

Definitions

     For purposes of the Plan, unless otherwise clearly apparent from the context, the following
phrases or terms shall have the following indicated meanings:

-1-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	1.1.	 	“Account Balance” shall mean, with respect to a Participant or Former Participant, a credit
on the records of the Employer equal to the sum of (i) the Deferral Account balance, (ii) the
Performance Matching Account balance, and (iii) the 401(k) Restoration Matching Account
balance. The Account Balance and each other specified account balance shall be a bookkeeping
entry only and shall be utilized solely as a device for the measurement and determination of
the amounts to be paid to a Participant, Former Participant, or Beneficiary pursuant to the
Plan.
	 
	1.2.	 	“Administrative Committee” shall mean the 401(k)/Deferred Compensation Committee as described
in Section 13.1.
	 
	1.3.	 	“Affiliate” shall mean all employers with whom the Company would be considered a single
employer under Sections 414(b) and 414(c) of the Code, using eighty percent (80%) as the
percentage of ownership required under such Code sections.
	 
	1.4.	 	“Annual Base Salary” shall mean, for any particular Plan Year, the annual cash compensation
relating to services performed during the calendar year and designated as “base salary” by the
Employer, whether or not paid in such calendar year or included on the federal income tax Form
W-2 for such calendar year, and excluding bonuses, commissions, overtime, fringe benefits,
income from equity incentive plans (including stock options, restricted stock, stock
appreciation rights, and stock bonuses), relocation reimbursements, incentive payments,
non-monetary awards, directors’ fees and other fees, automobile and other allowances (whether
or not such allowances are included in the Employee’s gross income) paid to an Employee for
employment services rendered. Annual Base Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by a Participant pursuant to all qualified or
nonqualified plans of the Employer and shall include amounts not otherwise included in the
Participant’s gross income because of deferrals under Code Sections 125, 402(e)(3), 402(h), or
403(b) to plans established by the Employer; provided, however, that all such amounts
will be included only to the extent that, had there been no such plan, the amount would have
been payable in cash. Annual Base Salary shall also include amounts attributable to any
Annual 401(k) Refund Offset Amount attributable to services for the Plan Year immediately
preceding the particular Plan Year and Annual 401(k) Reduction Amount for the particular Plan
Year.
	 
	1.5.	 	“Annual Deferral Amount” shall mean, for any particular Plan Year, that portion of a
Participant’s Annual Base Salary, Bonus/Incentive, and Directors’ Fees payable in cash that a
Participant elects to have deferred, and is deferred, in accordance with Article 3, for the
Plan Year. In the event of a Participant’s Retirement, death, or Termination of Employment
prior to the end of a Plan Year, the Annual Deferral Amount for such Plan Year shall be the
amount actually deferred prior to such event.
	 
	1.6.	 	“Annual 401(k) Reduction Amount” shall mean, for any particular Plan Year, an amount of
Annual Base Salary, if any, that a Participant would have deferred under the

-2-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

401(k) Plan for the Plan Year, based upon the Participant’s election under the 401(k) Plan
in effect on December 31 of the prior Plan Year, but for the Company’s involuntary
reduction of the Participant’s deferral percentage as a result of nondiscrimination testing
under the 401(k) Plan.

	1.7.	 	“Annual 401(k) Refund Offset Amount” shall mean, for any particular Plan Year, an amount of
Annual Base Salary, if any, attributable to the gross amount of a Participant’s elective
deferrals and related earnings under the 401(k) Plan related to services in the immediately
preceding Plan Year that are refunded because of nondiscrimination testing under the 401(k)
Plan for the prior Plan Year.
	 
	1.8.	 	“Annual 401(k) Restoration Matching Amount” shall mean, for any particular Plan Year, the
amount determined in accordance with Section 3.7.
	 
	1.9.	 	“Annual Installment Method” shall be a series of annual installment payments elected and paid
in accordance with Article 5.
	 
	1.10.	 	“Annual Performance Matching Amount” shall mean, for any particular Plan Year, the amount,
if any, determined in accordance with Section 3.6.
	 
	1.11.	 	“Beneficiary” shall mean one or more persons, trusts, estates, or other entities, designated
in accordance with Article 9 as entitled to receive benefits under the Plan upon the death of
a Participant or Former Participant.
	 
	1.12.	 	“Beneficiary Designation Form” shall mean the form (including a form in electronic,
telephonic, or other format) established from time to time by the Administrative Committee
that a Participant completes, signs, and returns to the Administrative Committee to designate
one or more Beneficiaries.
	 
	1.13.	 	“Board” shall mean the board of directors of the Company.
	 
	1.14.	 	“Bonus/Incentive” shall mean, for any particular Plan Year, the amount of any cash
compensation, in addition to Annual Base Salary, (i) that relates to services performed during
the Fiscal Year that begins in the Plan Year for which a deferral election is being made and
(ii) that is payable (or otherwise payable but for deferral under the Plan) to a Participant
as an Employee under the Employer’s bonus/incentive plans (excluding stock option and other
equity plans of the Company) within two and one-half (2-1/2) months following the end of the
applicable Fiscal Year (or any other later time specified in the bonus/incentive plan).
Bonus/Incentive may be Performance-Based Compensation.
	 
	1.15.	 	“Change in Control” shall mean a change in the ownership or effective control of the Company
or a change in the ownership of a substantial portion of the assets of the Company that is a
“change in control” under Section 409A of the Code.
	 
	1.16.	 	“Claimant” shall have the meaning set forth in Section 15.1.

-3-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	1.17.	 	“Code” shall mean the Internal Revenue Code of 1986 and applicable Treasury regulations, as
they may be amended from time to time.
	 
	1.18.	 	“Company” shall mean PetSmart, Inc., a Delaware corporation, and any successor to all or
substantially all of the Company’s assets or business.
	 
	1.19.	 	“Deduction Limitation” shall mean, to the extent allowed under Section 1.409A-2(b)(7)(i) of
the Treasury Regulations and guidance thereunder, the following described limitation on a
distribution that is otherwise payable pursuant to the provisions of the Plan. If the
Employer reasonably anticipates that if a payment under the Plan were made as scheduled, the
deduction with respect to such payment would not be permitted solely due to the application of
Section 162(m) of the Code, the Employer may defer that amount of the distribution to the
extent deemed necessary to ensure deductibility; provided, however, that (i) the
Deduction Limitation shall be applied to all payments to similarly situated Participants on a
reasonably consistent basis; (ii) the payment must be made by the earliest of (x) during the
Employer’s first taxable year in which the Employer reasonably anticipates, or should
reasonably anticipate, that if the payment is made during such year, the deduction of such
payment will not be barred by application of Section 162(m) of the Code or (y) during the
period beginning with the date of the Participant’s Separation from Service and ending on the
later of the last day of the taxable year of the Employer in which the Participant incurs a
Separation from Service or the fifteenth (15th)day of the third (3rd)
month following the Participant’s Separation from Service; (iii) where any scheduled payment
to a particular Participant in the Employer’s taxable year is delayed because of Section
162(m), the delay in payment will be treated as a subsequent deferral election unless all
scheduled payments to such Participant that could be delayed are also delayed; (iv) where a
payment is delayed to a date on or after the Participant’s Separation from Service, the
payment will be considered a payment upon a Separation from Service for purposes of the six-
(6-) month delay for Specified Employees; and (v) no election may be provided to a Participant
with respect to the timing of payment hereunder. Any amounts deferred pursuant to the
Deduction Limitation shall continue to be credited/debited with additional amounts in
accordance with Section 3.10, even if such amount is being paid out in installments.
	 
	1.20.	 	“Deferral Account” shall mean, with respect to a Participant or Former Participant, (i) the
sum of all Annual Deferral Amounts, plus (ii) credited earnings and losses that relate to such
Annual Deferral Amounts, less (iii) all related distributions.
	 
	1.21.	 	“Director” shall mean any member of the board of directors of the Company.
	 
	1.22.	 	“Directors’ Fees” shall mean, for any particular Plan Year, the annual cash fees (excluding
any fees paid in stock) for serving on the Board, including retainer fees, meetings fees, and
committee chair fees, relating to services performed during the Plan

-4-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

Year for which an election is being made, whether or not paid
in, or included on a Form 1099 for, such year.

	1.23.	 	“Disability” or “Disabled” shall mean:

	 	(i) If the Participant or Former Participant is not covered under a disability insurance
program of the Company or an Affiliate, that the Participant or Former Participant is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than twelve (12) months or
	 
	 	(ii) If the Participant or Former Participant is covered by a disability insurance program
of the Company or an Affiliate, that the Participant or Former Participant is, by reason of
any medically determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than twelve (12)
months, receiving income replacement benefits for a period of not less than three (3)
months under an accident and health plan covering employees of the Company or an Affiliate.
	 
	 	For purposes of the Plan, a Participant or Former Participant shall be deemed to be Disabled
if he is determined to be totally disabled by the United States Social Security
Administration or if he is determined to be disabled in accordance with the applicable
disability insurance program; provided that the definition of “disability” under
such disability insurance program complies with the requirements of this Section 1.23.

	1.24.	 	“Election Form” shall mean the form (including a form in electronic, telephonic, or other
format) established from time to time by the Administrative Committee that a Participant
completes, signs (using electronic, telephonic, or other designated signature methods), and
returns to the Administrative Committee to make an election under the Plan.
	 
	1.25.	 	“Employee” shall mean an individual carried on and paid through the payroll of an Employer
as an employee.
	 
	1.26.	 	“Employer” shall mean the Company and/or each Affiliate (now in existence or hereafter
formed or acquired) that, selected by the Board to participate in the Plan, has adopted the
Plan.
	 
	1.27.	 	“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended
from time to time.
	 
	1.28.	 	“Fiscal Year” shall mean the Company’s fiscal year ending on the Sunday that coincides with
or falls closest to each January 31.

-5-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	1.29.	 	“Former Participant” shall mean a Participant who is no longer an active Participant and who
has not received payment of his entire vested interest under the Plan.
	 
	1.30.	 	“401(k) Plan” shall mean the PetSmart, Inc. SaveSmart 401(k) Plan adopted by the Company, as
it may be amended from time to time.
	 
	1.31.	 	“401(k) Restoration Matching Account” shall mean, with respect to a Participant or Former
Participant (i) the sum of all Annual 401(k) Restoration Matching Amounts, plus (ii) credited
earnings and losses that relate to such Annual 401(k) Restoration Matching Amounts, less (iii)
all related distributions.
	 
	1.32.	 	“Frozen Plan” shall mean the PetSmart, Inc. Amended & Restated Deferred Compensation Plan,
as in effect on October 3, 2004.
	 
	1.33.	 	“Grandfathered Participant” shall mean a Participant who has been notified by the Plan
Committee that he has been permitted to continue (“grandfathered”) as a Participant in the
Plan, subject to Section 2.7.
	 
	1.34.	 	“Participant” shall mean any Employee or Director (i) who is selected to participate in the
Plan, (ii) who elects to participate in and be bound by the Plan in accordance with Articles 2
and 3, and (iii) whose status as an eligible Employee or Director (or Grandfathered
Participant) has not been terminated. A spouse or former spouse of a Participant or Former
Participant shall not be treated as a Participant in the Plan and shall not have an account
balance under the Plan, even if he or she has an interest in the Participant’s or Former
Participant’s benefits under the Plan as a result of applicable law or property settlements
resulting from legal separation or divorce.
	 
	1.35.	 	“Performance-Based Compensation” shall mean compensation that is not equity-based
compensation, the amount of which, or the entitlement to which, is contingent on the
satisfaction of pre-established organizational or individual performance criteria relating to
a performance period of at least twelve (12) consecutive months in which Participants perform
services. (Thus, Performance-Based Compensation shall not include any Bonus/Incentive that is
paid other than annually.) Performance criteria shall be established in writing not later
than ninety (90) days after the commencement of the period of service to which the criteria
relate; provided that the outcome is substantially uncertain at the time the criteria
are established. Performance-Based Compensation shall not include any amount or portion of
any amount that will be paid regardless of performance or is based upon a level of performance
that is substantially certain to be met at the time the criteria are established.
	 
	1.36.	 	“Performance Matching Account” shall mean (i) the sum of the Participant’s Annual
Performance Matching Amounts, plus (ii) credited earnings and losses that relate to such
Annual Performance Matching Amounts, less (iii) all related distributions made to the
Participant (or Beneficiary).

-6-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	1.37.	 	“Plan” shall mean the PetSmart, Inc. 2005 Deferred Compensation Plan, effective January 1,
2005, and as amended from time to time.
	 
	1.38.	 	“Plan Committee” shall mean the Compensation and Benefits Committee of the Board as
described in Section 13.1.
	 
	1.39.	 	“Plan Year” shall mean the initial plan year beginning on January 1, 2005, and ending on
December 31, 2005, and the calendar year beginning on January 1 of each subsequent year during
the continuation of the Plan. The term “Plan Year” shall not be changed to a period that is
not the calendar year unless appropriate changes are made to provisions of the Plan, including
various definitions and provisions dealing with Participant elections, to conform with the
requirements of Section 409A of the Code.
	 
	1.40.	 	“Pre-Retirement Survivor Benefit” shall mean the benefit set forth in Article 6.
	 
	1.41.	 	“Retirement,” “Retire(s),” or “Retired” shall mean (in each case subject to the proviso that
follows at the end of this Section 1.39):

(i) With respect to an Employee, a “separation from service” from the Company and all
Affiliates for any reason other than death or Disability at such time as the sum of the
Employee’s age and Years of Service equals fifty-five (55) or more;

(ii) With respect to a Director who is not an Employee, a “separation from service” with
the Company and all Affiliates on or after the attainment of age seventy (70); and

(iii) With respect to a Participant or Former Participant who is both an Employee and a
Director (or otherwise), a “separation from service” from the Company and all Affiliates
in all employment capacities, whether as an Employee, a Director, consultant, or
otherwise after satisfaction of (i) or (ii) of this Section 1.39;

provided, however, that a Participant or Former Participant, regardless of his
employment status as Employee, Director, Employee and Director, consultant, or otherwise,
must have incurred a “separation from service” within the meaning of Section 409A of the
Code.

	1.42.	 	“Retirement Benefit” shall mean the benefit set forth in Article 5.1.
	 
	1.43.	 	“Short-Term Payout” shall mean the payout set forth in Section 4.1.
	 
	1.44.	 	“Specified Employee” shall mean a “specified employee” within the meaning of Section 409A of
the Code and the Company’s Specified Employee identification policy, if any.
	 
	1.45.	 	“Termination Benefit” shall mean the benefit set forth in Article 7.

-7-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	1.46.	 	“Termination of Employment” shall mean a Participant’s or Former Participant’s termination
of service with the Company and all Affiliates, voluntarily or involuntarily, for any reason
other than Retirement, Disability, or death; provided that the Participant or Former
Participant, regardless of his employment status as Employee, Director, Employee and Director,
consultant, or otherwise, shall have incurred a “separation from service” within the meaning
of Section 409A of the Code. A bona fide Employer-authorized leave of absence shall not be
considered a Termination of Employment if the leave does not exceed six (6) months (or, if
longer, (i) so long as the right to reemployment is provided either by statute or by contract
and (ii) so long as the leave meets any requirements of Section 409A of the Code for continued
employment).
	 
	1.47.	 	“Trust” shall mean one or more trusts established pursuant to that certain Master Trust
Agreement, dated as of July 3, 2000, between the Company and the Trustee, as amended from time
to time.
	 
	1.48.	 	“Trustee” shall mean the designated trustee acting at any time under the Trust.
	 
	1.49.	 	“Unforeseeable Financial Emergency” shall mean a severe financial hardship of the
Participant (or, in each case, the Former Participant) resulting from (i) an illness or
accident of the Participant, the Participant’s spouse, the Participant’s beneficiary, or the
Participant’s dependent (as defined in Section 152 of the Code, without regard to Sections
152(b)(1), (b)(2), and (d)(1)(B)); (ii) loss of the Participant’s property due to casualty
(including the need to rebuild a home following damage to the home by natural disaster not
otherwise covered by insurance); or (iii) other similar or extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant, all as
determined in the sole discretion of the Administrative Committee in accordance with Section
409A of the Code. Except as otherwise permitted under Section 409A of the Code, the purchase
of a home and the payment of college tuition shall not be Unforeseeable Financial Emergencies.
	 
	1.50.	 	“Years of Service” shall mean the total number of full years in which an Employee has been
employed by one or more Employers, as determined by the Administrative Committee. For
purposes of this definition, a year of employment shall be a 365 day period (or 366 day period
in the case of a leap year) that, for the first year of employment, commences on the
Employee’s date of hire and that, for any subsequent year, commences on an anniversary of the
date of hire. Any partial year of employment shall not be counted as a Year of Service. Any
period of time after an Employee’s employment with all Employers has terminated shall not be
counted toward Years of Service, notwithstanding any determination that the Employee has not
incurred a “separation from service” under Section 409A of the Code (and thus has not incurred
a Termination of Employment).

-8-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

ARTICLE 2

Eligibility

	2.1	 	Selection by Plan Committee. Participation in the Plan shall be limited to a select
group of management and highly compensated Employees and Directors, as determined by the Plan
Committee in its sole discretion. From that group, the Plan Committee shall select, in its
sole discretion, Employees and Directors to participate in the Plan. For purposes of the
Plan, the phrase “select group of management or highly compensated employees” shall include,
but not be limited to, those individuals employed as an executive officer, senior officer, or
corporate officer of the Employer, all as determined by the Plan Committee.
	 
	2.2	 	Frozen Plan Participants. Each Participant in the Frozen Plan as of December 31,
2004, who is an Employee or Director on such date shall be eligible to participate in the Plan
effective as of January 1, 2005, unless the Plan Committee has determined otherwise pursuant
to Section 2.6.
	 
	2.3	 	Other Employees and Directors. Employees and Directors who are not eligible to
participate under Section 2.2 shall be eligible to participate in the Plan if designated as
eligible pursuant to Section 2.1.
	 
	2.4	 	Enrollment Requirements. As a condition to participation, each selected Employee or
Director shall agree to be bound by the terms of the Plan and shall complete, execute, and
return to the Administrative Committee an Election Form within the time permitted for making
elections.
	 
	2.5	 	Commencement of Participation. Provided all enrollment requirements have been met, a
Participant shall commence participation on the first day of the following Plan Year.
	 
	 	 	Notwithstanding the foregoing, if a Participant has not previously been eligible to
participate in the Plan (taking into consideration eligibility under the Frozen Plan and all
other nonqualified account balance plans of the Company and of any Affiliate that are
required to be aggregated with the Plan under Section 409A of the Code in determining
whether such Plan Year is in fact the first year of eligibility, as well as the rules of
Treasury Regulation Section 1.409A-2(a)(7)(ii)), such Participant may commence participation
in the Plan within thirty (30) days of becoming “first eligible,” subject to the terms of
the Plan.
	 
	 	 	For purposes of the Plan (but subject to Section 409A), a Participant is “first eligible” to
participate in the Plan beginning on the fortieth (40th) day after being selected
to participate in the Plan and can defer compensation subject to the terms of the Plan and
accrue employer contributions only after the later of such fortieth (40th) day or
the date (within the thirty- (30-) day period of becoming first eligible) that he submits
his Election Form to the Administrative Committee.

-9-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	2.6	 	Termination of Active Participation by Plan Committee. If the Plan Committee
determines in good faith that a Participant no longer qualifies as a member of a select group
of management or highly compensated employees, as membership in such group is determined in
accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Plan Committee shall
have the right, in its sole discretion, to terminate his active participation as of the end of
the Plan Year in which the Participant’s membership status changes. The Plan Committee shall
give such a Participant notice of its decision, and his deferral election shall be void at the
end of the Plan Year. The Account Balance of such a Former Participant shall be maintained
until it is forfeited or distributed in accordance with the Plan.
	 
	2.7	 	Termination of Active Participation by Grandfathered Participant. If a Grandfathered
Participant terminates his active participation as of the end of a Plan Year, such
Grandfathered Participant shall not be permitted to again become a Participant in the Plan
unless he is later designated as eligible to participate pursuant to Section 2.1. The Account
Balance of such a Former Participant shall be maintained until it is forfeited or distributed
in accordance with the Plan.

ARTICLE 3

Deferral Commitments/Company Matching/Crediting/Taxes

	3.1	 	Minimum and Maximum Deferrals.

	 	(a)	 	Full Plan Year of Participation. For each Plan Year, subject to
the provisos below, a Participant who begins participation on the first day of the
Plan Year may elect to defer, as his Annual Deferral Amount, the following
percentages of Annual Base Salary, Bonus/Incentive, and/or Directors’ Fees, as
applicable:

	 	 	 	 	 
	Deferral

	 	Minimum Amount
	 	Maximum
	 
	 	 
	 	 
	Annual Base Salary
	 	  2%
	 	  75%
	Bonus/Incentive
	 	  2%
	 	100%
	Directors’ Fees (Cash Only)
	 	30%
	 	100%

If an election is made for less than stated minimum amounts or if no election is
made for any particular type of deferral, the amount deferred shall be zero (0). If
an election is made for more than stated maximum amounts, the amount deferred shall
be the stated maximum.

Notwithstanding anything to the contrary in this Section 3.1(a), the deferral amount
elected for Annual Base Salary attributable to either Annual 401(k) Refund Amount or
Annual 401(k) Reduction Amount, if any, shall be one hundred percent (100%);
provided that any such deferral:

-10-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	(i)	 	Shall be zero (0) if the actual amount is less than one percent
(1%) of a Participant’s Annual Base Salary; and
	 
	 	(ii)	 	Shall satisfy the requirements of Section 409A of the Code.

	 	(b)	 	Less Than Full Plan Year. Notwithstanding the foregoing, if a
Participant first becomes a Participant after the first day of a Plan Year and can
participate pursuant to Section 2.5 before the following Plan Year:

	 	(i)	 	The Annual Deferral Amount with respect to Annual Base Salary
and Directors’ Fees shall be calculated based on the compensation earned by the
Participant after the Election Form is submitted to the Administrative
Committee; and
	 
	 	(ii)	 	The Annual Deferral Amount with respect to Bonus/Incentive for
a Participant who first becomes a Participant between January 1 and July 20
shall be limited to the Bonus/Incentive for the period from August through
January of the applicable Fiscal Year multiplied by the deferral percentage
elected by the Participant. No Participant may defer a Bonus/Incentive for the
Fiscal Year if he first becomes a Participant after July 20.

	3.2	 	Time of Deferral Elections.

	 	(a)	 	In General. Except for (i) an election in connection with the
Annual 401(k) Refund Offset Amount and (ii) an election for Bonus/Incentive that is
Performance-Based Compensation, a Participant may, not later than the December 31
immediately preceding the Plan Year for which the election is made, make an
irrevocable election to defer eligible compensation for the immediately following
Plan Year (or immediately following Fiscal Year for Bonus/Incentive that is not
Performance-Based Compensation). Such election shall be irrevocable as of the end
of each December 31 with respect to compensation payable for services to be
performed in the immediately following Plan Year (or in the immediately following
Fiscal Year for Bonus/Incentive that is not Performance-Based Compensation) for
which an election has been made. Elections to be made under this general timing
rule include elections with respect to Annual Base Salary, Annual 401(k) Reduction
Amount, Bonus/Incentive that is not Performance-Based Compensation, and Directors’
Fees.
	 
	 	(b)	 	Annual 401(k) Refund Offset Amount. An election for Annual
401(k) Refund Offset Amount must be made a year earlier than other elections.
Specifically, a Participant may, not later than the December 31 of the Plan Year
(“Plan Year 1”) immediately preceding the Plan Year in which services are to be
performed and elective deferrals made (“Plan Year 2”), elect to defer any

-11-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	 	Annual 401(k) Refund Offset Amount that may be refunded in the following year
(“Plan Year 3”) as part of his Annual Base Salary for that Plan Year (“Plan Year
3”). Such election shall be irrevocable as of the end of each applicable December
31 of Plan Year 1 with respect to the Annual 401(k) Refund Offset Amount for which
the election has been made.
	 
	 	(c)	 	Bonus/Incentive That Is Performance-Based Compensation. A
Participant may, not later than July 20 of the applicable Fiscal Year, elect to
defer all or a portion of his Bonus/Incentive that is Performance-Based Compensation
and that relates to services to be performed in the Fiscal Year; (i) provided
that the Participant has continuously performed services from the later of the
beginning of the performance period or the date the performance criteria are
established through the date on which the deferral election is made and (ii)
provided, further that, in no event shall such election be made after such
Bonus/Incentive has become readily ascertainable (including payable other than
annually). Such election shall be irrevocable as of the end of each July 20 with
respect to Bonus/Incentive payable for services to be performed in the Fiscal Year
for which an election has been made.
	 
	 	(d)	 	First Year of Participation. Pursuant to Section 2.5, certain
Employees and Directors may be able to make deferral elections in the first Plan
Year in which they become eligible to participate in the Plan.
	 
	 	(e)	 	Duration of Elections to Defer an Amount.

	 	(i)	 	Beginning with elections for Plan Year 2008, once made, elections
to defer an amount of Annual Base Salary, Annual 401(k) Refund Offset Amount,
Annual 401(k) Reduction Amount, Bonus/Incentive that is not Performance-Based
Compensation, and/or Directors’ Fees shall continue in effect until revoked by
the Participant on or before the December 31 immediately preceding the Plan Year
for which such revocation is to take effect; and
	 
	 	(ii)	 	Beginning with elections for the Fiscal Year beginning in January
2008, once elected, an election to defer an amount of Bonus/Incentive that is
Performance-Based Compensation shall continue in effect until revoked by the
Participant on or before the July 20 of the Fiscal Year with respect to which
such revocation is to take effect.

	3.3	 	Elections As to Time and Form of Payment.

	 	(a)	 	Participant Elections.

-12-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	(i)	 	At the time of making the initial deferral election pursuant to
Section 3.2, a Participant may elect, pursuant to Section 4.1 or Section 5.2,
the time and the form of payment of the Annual Deferral Amount (and related
income) for such Plan Year (and the Fiscal Year beginning in such Plan Year).
	 
	 	(ii)	 	Except as provided in Section 5.2 (relating to election of
installment payments upon Retirement), no election as to time and form of
payment shall be allowed with respect to the Annual Performance Matching Amount
and the Annual 401(k) Restoration Matching Amount to be credited to a
Participant’s Account Balance for the Plan Year. Except as provided in Section
5.2, such amounts (and related earnings), if vested, shall be paid upon the
earliest to occur of death, Disability, Termination of Employment, or
Retirement, whichever is applicable, in accordance with Article 5, 6, 7, or 8.

	 	(b)	 	Duration of Time and Form Elections.

	 	(i)	 	The time and form of payment elected for Retirement, or if
applicable, the default payment, shall continue to apply to subsequent deferrals
until revoked by the Participant in accordance with the Plan.
	 
	 	(ii)	 	An in-service election pursuant to Section 4.1 shall only be
effective for the Plan Year for which it is made.

	 	(c)	 	Default Payment. As the Plan’s default time and form of payment,
the Annual Deferral Amount for a Plan Year (and related income) shall be paid upon
the earliest to occur of death, Disability, Termination of Employment, or
Retirement, whichever is applicable, in accordance with Article 5, 6, 7, or 8. Such
default payment shall apply, for example, when a Participant fails to make a payment
election (for example, after having made an in-service election in the prior Plan
Year), when a distribution event supersedes an in-service election, or when the
requirements for installment payments upon Retirement are not met.

	3.4	 	Changing Elections (“Subsequent Elections”). A Participant may change an initial
election as to time and form of payment (including an election under Section 4.1) in order to
delay payment or to change the form of payment for a Plan Year if the following conditions are
met:

	 	(a)	 	The Participant is permitted to make an election as to the time and form
of payment under the terms of the Plan; and
	 
	 	(b)	 	Such subsequent election shall not take effect until at least twelve (12)
months after the date on which the election is made; and

-13-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	(c)	 	The payment with respect to which such subsequent election is made is
deferred for a period of not less than five (5) years from the date such payment
would otherwise be made (treating payments under the Annual Installment Method as a
single payment); and
	 
	 	(d)	 	Any subsequent election may not be made less than twelve (12) months
prior to the date of the first scheduled payment; and
	 
	 	(e)	 	The election shall be irrevocable twelve (12) months prior to the date of
the first scheduled payment. (Such election may be changed prior to the last
permissible date for making a subsequent election.)
	 
	 	(f)	 	An Election Form must be completed and signed by the Participant and
delivered to, and accepted by, the Administrative Committee.

	3.5	 	Crediting of Annual Deferral Amounts. For each Plan Year, the Annual Base Salary
portion of the Annual Deferral Amount of a Participant shall be deducted from each regularly
scheduled Annual Base Salary payroll period in equal amounts, as adjusted from time to time
for increases and decreases in Annual Base Salary, and shall be credited to the Participant’s
Deferral Account. The portion of the Annual Deferral Amount attributable to Bonus/Incentive
and/or Directors’ Fees shall be deducted and credited at the time such amounts would have been
paid to the Participant but for the deferral election. Subject to the conditions of Section
3.1(a), deferrals of a Participant’s Annual 401(k) Refund Offset Amount shall be deducted on a
prorated basis from the regularly scheduled payroll periods remaining in the Plan Year
following the distribution of mandatory 401(k) Plan refunds commencing with the first payroll
period following (or as soon as administratively practical thereafter) the distribution.
Subject to the conditions of Section 3.1(a), deferrals of a Participant’s Annual 401(k)
Reduction Amount shall be deducted on a prorated basis from the regularly scheduled payroll
periods remaining in the Plan Year, commencing with the first payroll period following (or as
soon as administratively practical thereafter), the Company’s reduction of 401(k) Plan
deferrals.

	3.6	 	Annual Performance Matching Amount. Subject to employment requirements, a
Participant’s Annual Performance Matching Amount for any Plan Year shall be equal to a
percentage of his Annual Deferral Amount for such Plan Year, up to an Annual Deferral Amount
that does not exceed ten percent (10%) of the Participant’s Annual Base Salary, which
percentage (i) shall be determined, in the sole discretion of the Plan Committee, contingent
upon the Company’s achieving certain pre-tax earnings targets established and announced by the
Plan Committee, in its sole discretion, for the Fiscal Year beginning in the Plan Year, (ii)
will be at least one percent (1%) of Annual Base Salary, and (iii) will be credited to a
Participant’s Performance Matching Account as of April 1 of the following Plan Year. If a
Participant is not employed by the Employer as of the last day of a Plan Year other than by
reason of his Retirement, Disability, or death, the Annual Performance Matching Amount for
such Plan Year for that Participant shall be zero (0).

-14-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	In the event of Retirement, Disability, or death, a Participant shall be credited with the
Annual Performance Matching Amount for the Plan Year in which he Retires, becomes Disabled,
or dies.

	3.7	 	Annual 401(k) Restoration Matching Amount. A Participant’s Annual 401(k) Restoration
Matching Amount for any Plan Year shall be equal to fifty percent (50%) of the Participant’s
Annual Deferral Amount for such Plan Year, up to an Annual Deferral Amount that does not
exceed six percent (6%) of the Participant’s Annual Base Salary, reduced, to the extent
permitted under Section 409A of the Code, by the amount of any matching contributions made to
the 401(k) Plan on his behalf for the plan year of the 401(k) Plan that corresponds to the
Plan Year; provided that if the formula for the Annual Restoration 401(k) Matching
Amount is subsequently amended, the limitations of Section 409A of the Code will be taken into
consideration. The Participant’s Annual 401(k) Restoration Matching Amount shall be credited
to his 401(k) Restoration Matching Account as of a date determined by the Administrative
Committee after such Annual 401(k) Restoration Matching Amount is determined. If a
Participant is not employed by the Employer as of the last day of a Plan Year other than by
reason of his Retirement, Disability, or death, the Annual 401(k) Restoration Matching Amount
for such Plan Year shall be zero (0). In the event of Retirement, Disability, or death, a
Participant shall be credited with the Annual 401(k) Restoration Matching Amount for the Plan
Year in which he Retires, becomes Disabled, or dies.

	3.8	 	Investment of Trust Assets. The Trustee of the Trust shall be authorized, upon
written instructions received from the Administrative Committee or investment manager
appointed by the Administrative Committee, to invest and reinvest the assets of the Trust in
accordance with the applicable Trust Agreement in one or more investment vehicles designated
by the Administrative Committee.
	 
	3.9	 	Vesting.

	 	(a)	 	A Participant shall at all times be one hundred percent (100%) vested in
his Deferral Account.
	 
	 	(b)	 	A Participant shall be vested in his Performance Matching Account and
401(k) Restoration Matching Account based upon his Years of Service in accordance
with the following schedule:

	 	 	 
	Years of Service
	 	Vested Percentage
	 
	 	 
	Less than 5 years
	 	    0%
	5 years or more
	 	100%

	 	(c)	 	Notwithstanding anything to the contrary contained in this Section 3.9,
in the event of Retirement, Disability, death during employment, or a Change in

-15-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	 	Control, a Participant’s Performance Matching Account and 401(k) Restoration
Matching Account shall immediately become one hundred percent (100%) vested (if
such accounts are not already vested in accordance with the above vesting
schedule).
	 
	 	(d)	 	In the event that any payment provided under this Plan (i) constitutes
“parachute payments,” within the meaning of Section 280G of the Code or any
comparable successor provisions, and (ii) but for this Section 3.9(d) would be
subject to the excise tax imposed by Section 4999 of the Code or any comparable
successor provisions (the “Excise Tax”), then Participant’s payment hereunder shall
be either:
	 
	 	 	 	(i)  Provided to Participant in full, or
	 
	 	 	 	(ii)  Provided to Participant as to such lesser extent which
would result in no portion being subject to the Excise Tax,
	 
	 	 	 	whichever of the foregoing amounts, when taking into account applicable federal,
state, local, and foreign income and employment taxes, the Excise Tax, and any
other applicable taxes, results in the receipt by Participant, on an after-tax
basis, of the greater amount, notwithstanding that all or some portion of such
amount may be taxable under the Excise Tax.
	 
	 	 	 	Any determination required under this Section 3.9(d) shall be made in writing in
good faith by a professional service firm selected by the Company (the
“Professional Advisers.”). For purposes of making the calculations required by
this Section 3.9(d), the Professional Advisers may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of the Code and other applicable legal
authority. The Company and Participant shall furnish to the Professional Advisers
such information and documents as the Professional Advisers may reasonably request
in order to make a determination under this Section 3.9(d). The Company shall
bear all costs the Professional Advisers may reasonably incur in connection with
any calculations contemplated by this Section 3.9(d); provided that, as
required by Section 409A of the Code, the Company shall bear such costs, to the
extent necessary, during a period of time no longer than ten years following a
Change in Control; the right to such benefit in kind is not subject to liquidation
or exchange for another benefit; and the amount of such benefit in one year shall
not affect any other benefits to be provided in any other year.
	 
	 	 	 	If, notwithstanding any reduction described in this Section 3.9(d), the Internal
Revenue Service determines that the Participant is liable for the Excise Tax as a
result of the receipt of the payment described in this Plan, then the Participant

-16-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	 	shall be obliged to pay back to the Company, within thirty (30) days after a final
IRS determination or in the event that the Participant challenges the final IRS
determination, a final judicial determination, a portion of the payment equal to
the “Repayment Amount.” The Repayment Amount shall be the smallest such amount,
if any, as shall be required to be paid to the Company so that the Participant’s
net after-tax proceeds with respect to any payment (after taking into account the
payment of the Excise Tax and all other applicable taxes imposed on such payment)
shall be maximized. The Repayment Amount with respect to the payment shall be
zero if a Repayment Amount of more than zero would not result in the Participant’s
net after-tax proceeds being maximized. If the Excise Tax is not eliminated
pursuant to this paragraph, the Participant shall pay the Excise Tax.
	 
	 	 	 	Notwithstanding any other provision of this Section 3.9(d), if (i) there is a
reduction in the payment under the Plan as described in this section, (ii) the IRS
later determines that the Participant is liable for the Excise Tax, the payment of
which would result in the maximization of the Participant’s net after-tax proceeds
(calculated as if the Participant’s payment had not previously been reduced), and
(iii) the Participant pays the Excise Tax, then the Company shall pay to the
Participant the amount by which his Plan payment was reduced; provided
that, to the extent required by Section 409A of the Code, the reimbursement is
made on or before the last day of the Participant’s taxable year following the
taxable year in which the Excise Tax was paid; the right to reimbursement is not
subject to liquidation or exchange for another benefit; and the amount subject to
reimbursement in one year shall not affect any other amounts eligible for
reimbursement in any other year.
	 
	 	 	 	If the Participant either (x) brings any action to enforce rights pursuant to this
Section 3.9(d), or (y) defends any legal challenge to his rights hereunder, the
Participant shall be entitled to recover attorneys’ fees and costs incurred in
connection with such action, regardless of the outcome of such action;
provided that (i) if such action is commenced by the Participant, the
court finds the claim was brought in good faith; (ii) such fees shall be
reimbursable for ten (10) years after the Change in Control; (iii) the amounts
eligible for reimbursement in one taxable year shall not affect the amount
eligible for reimbursement in any other taxable year; (iv) the reimbursement is
made on or before the last day of the Participant’s taxable year following the
taxable year in which the expense was incurred; and (v) the right to reimbursement
is not subject to liquidation or exchange for another benefit.

	3.10	 	Crediting/Debiting of Account Balances. In accordance with, and subject to, the
rules and procedures that are established from time to time by the Administrative Committee,
in its sole discretion, amounts shall be credited or debited to a Participant’s Account
Balance in accordance with the following rules:

-17-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	(a)	 	Election of Measurement Funds. Upon becoming first eligible to
participate in the Plan, a Participant shall elect, on the Election Form, one or
more Measurement Fund(s) (as described in Section 3.10(c)) to be used to determine
the value of his Account Balance. If a Participant does not elect any of the
Measurement Funds, the Participant’s Account Balance shall automatically be
allocated into the lowest risk Measurement Fund, as determined by the Administrative
Committee in its sole discretion. From time to time, the Participant (or Former
Participant) may (but is not required to) elect, in the manner prescribed by the
Administrative Committee, to add or delete one or more Measurement Fund(s) to be
used to value his Account Balance and/or to change the portion of his Account
Balance allocated to each previously elected Measurement Fund. If accepted by the
Administrative Committee, an election shall apply as of the next business day and
shall continue thereafter, unless changed in accordance with the previous sentence,
so long as the Participant or Former Participant has an Account Balance under the
Plan.
	 
	 	(b)	 	Proportionate Allocation. In making any election described in
Section 3.10(a), the Participant shall specify, in increments of five percentage
points (5%), the percentage of his Account Balance to be allocated to a Measurement
Fund (as if the Participant were making an investment in that Measurement Fund with
that portion of his Account Balance).
	 
	 	(c)	 	Measurement Funds. The Administrative Committee shall select, in
its sole discretion, one or more measurement funds (the “Measurement Funds”) to be
used in valuing Account Balances under the Plan. The available Measurement Funds
will be communicated to Participants in the enrollment materials or in periodic
notices. As necessary, the Administrative Committee may, in its sole discretion,
discontinue, substitute, or add a Measurement Fund. Each such action will take
effect as of the first day of the calendar quarter that follows by thirty (30) days
the day on which the Administrative Committee gives notice (written or electronic)
of such change.
	 
	 	(d)	 	Crediting or Debiting Method. The performance of each elected
Measurement Fund (either positive or negative) shall be determined on a daily basis,
and the Participant’s or Former Participant’s Account Balance shall be credited or
debited accordingly based on the performance of the Measurement Fund(s) in which his
Account Balance is hypothetically invested pursuant to Section 3.10(a).
	 
	 	(e)	 	No Actual Investment. Notwithstanding any other provision of the
Plan that may be interpreted to the contrary, the Measurement Funds shall be used
for measurement purposes only. Elections of any Measurement Fund by Participants or
Former Participants, allocations to Account Balances, and the crediting and/or
debiting of Account Balances shall not be considered or

-18-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

construed in any manner as an actual investment in any Measurement Fund. In the
event that the Company or the Trustee, in its own discretion, decides to invest
funds in any or all of the Measurement Funds, no Participant or Former Participant
shall have any rights in or to such investments themselves. Without limiting the
foregoing, Account Balances shall at all times be bookkeeping entries only and
shall not represent any investment made on behalf of a Participant or Former
Participant by the Company or the Trustee. Participants and Former Participants
shall at all times remain unsecured creditors of the Company and/or the
Affiliates.

	3.11	 	Tax Withholding and Reporting.

	 	(a)	 	Annual Deferral Amounts. Each Plan Year, a Participant’s
Employer(s) shall report any deferrals and withhold from compensation that is not
deferred, in a manner determined solely by the Employer, the Participant’s share of
social security (and any other required taxes) on the Annual Deferral Amount. If
necessary, the Administrative Committee may reduce, in accordance with Section 409A
of the Code, the Annual Deferral Account in order to comply with this Section 3.11.
The Employer shall make such reports and disclosures regarding Annual Deferral
Amounts as are required, in the sole discretion of the Employer, to be made under
applicable laws, including Section 409A of the Code.
	 
	 	(b)	 	401(k) Restoration Matching and Performance Matching Amounts.
When a Participant becomes vested in his 401(k) Restoration Matching Account and/or
Performance Matching Account, the Employer shall withhold from the Participant’s
compensation that is not deferred, in a manner determined solely by the Employer,
the Participant’s share of social security (and any other required taxes) on such
amounts. If necessary, the Administrative Committee may, in accordance with Section
409A of the Code, reduce the vested portion of the Participant’s 401(k) Restoration
Matching Account and/or Performance Matching Account, as the case may be, in order
to comply with this Section 3.11. The Employer shall make such reports and
disclosures regarding the Annual 401(k) Restoration Matching Amounts and/or Annual
Performance Matching Amounts as are required, in the sole discretion of the
Employer, to be made under applicable laws, including Section 409A of the Code.
	 
	 	(c)	 	Distributions, Etc. The Employer or the Trustee shall report
income and withhold from any payments made to a Participant under the Plan all
federal, state, local, and foreign income, employment, and other taxes required to
be withheld by the Employer or the Trustee, in connection with payments, in amounts
and in a manner determined in the sole discretion of the Employer and/or the
Trustee. The Employer shall make such reports and disclosures regarding amounts
deferred under the Plan as are required, in the sole

-19-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

discretion of the Employer, to be made under applicable laws, including Section
409A of the Code.

ARTICLE 4

Short-Term Payout; Unforeseeable Financial Emergencies

	4.1	 	Short-Term Payout. A Participant may irrevocably elect pursuant to Section 3.2 to
receive a Short-Term Payout of his Annual Deferral Amount for a particular Plan Year. Subject
to the Deduction Limitation, the Short-Term Payout shall be a future lump sum payment equal to
the Annual Deferral Amount, together with credits and/or debits on such amount, valued as of
the time that the Short-Term Payout becomes payable. Subject to the Deduction Limitation and
the other terms and conditions of the Plan, a Short-Term Payout shall be paid within sixty
(60) days following the last day of any Plan Year designated by the Participant that is at
least three (3) Plan Years after the end of the Plan Year in which the Annual Deferral Amount
is actually deferred. By way of example, if a three (3) year Short-Term Payout is elected for
Annual Deferral Amount deferred in the Plan Year commencing January 1, 2005, the three (3)
year Short-Term Payout would become payable within the sixty (60) days after December 31,
2008. Short-Term Payout elections may be changed; provided that any such change meets
the requirements of Section 3.4.

	4.2	 	Other Occurrences Take Precedence. Should an event occur that triggers a payment
under Article 5, 6, 7, or 8, any Annual Deferral Amount, plus amounts credited or debited
thereon, that is subject to a Short-Term Payout election under Section 4.1 shall not be paid
in accordance with Section 4.1 but shall be paid in accordance with the other applicable
Article.

	4.3	 	Unforeseeable Financial Emergencies. Upon the written request of a Participant and
the showing of an Unforeseeable Financial Emergency, the Administrative Committee may, upon
its determination that such an emergency exists, direct that an amount of such Participant’s
Account Balance be paid to him. The amount that can be paid shall not exceed the lesser of
(i) the Participant’s vested Account Balance or (ii) the amount necessary to satisfy the
Unforeseeable Financial Emergency (plus an amount necessary to pay taxes reasonably
anticipated because of such distribution), after taking into account the extent to which such
emergency is or may be relieved through reimbursement or compensation from insurance or
otherwise, by liquidation of the Participant’s assets (to the extent the liquidation would not
itself cause severe financial hardship), or the cessation of deferrals under the Plan. If the
Administrative Committee determines that the extent of an Unforeseeable Financial Emergency
requires a suspension of the Participant’s deferrals for the Plan Year in which the
Unforeseeable Financial Emergency occurs, suspension shall take effect upon the date of
approval of such emergency. Any payout shall be made in a lump sum within sixty (60) days of
the date of approval; provided that if the sixty- (60-) day period begins in one
taxable year and ends in another, the Participant shall not have a right to designate the
taxable year of payment. The

-20-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	payment of any amount under this Section 4.3 shall not be subject to the Deduction
Limitation.

ARTICLE 5

Retirement Benefit

	5.1	 	Valuation Date(s). Subject to the Deduction Limitation (to the extent applicable),
the Account Balance payable to a Participant who Retires shall be calculated as follows:

	 	(a)	 	Annual Installment Method. An Account Balance (or portion
thereof) subject to the Annual Installment Method shall be valued (i) for the first
annual installment, as of the close of business on the last business day of the Plan
Year in which the Participant Retires and (ii) for remaining annual installments, as
of the close of business on each December 31 thereafter (or the last business day of
such year if December 31 is not a business day) until the Account Balance has been
paid. Each annual installment shall be calculated by multiplying this balance by a
fraction, the numerator of which is one, and the denominator of which is the
remaining number of annual installments to be paid. By way of example, if a
Participant elects a ten- (10-) year Annual Installment Method, the first payment
shall be one-tenth (1/10) of the Account Balance (or portion thereof) subject to the
installment election. The following year, the payment shall be one-ninth (1/9) of
the Account Balance (or portion thereof) subject to the installment election.
Debits to the Account Balance shall be made each January 1 (or the first business
day if January 1 is not a business day) following the applicable valuation date.
	 
	 	(b)	 	Lump Sum. An Account Balance (or portion thereof) to be paid in
a lump sum shall be valued:

	 	(i)	 	For a Participant who is not a Specified Employee, as of the
close of business on the date on which the Participant Retires (or if such date
is not a business day, the next day that is a business day); and
	 
	 	(ii)	 	For a Participant who is a Specified Employee, as of the close of
business on the date that is the first (1st) day of the seventh
(7th) month after the Specified Employee Retires (or if such date is
not a business day, the next day that is a business day).

	5.2	 	Payment Upon Retirement.

	 	(a)	 	Participant Elections.

	 	(i)	 	Initial Elections. Subject to Sections 3.2 and 3.3, a
Participant may make an election to receive payment of his Account Balance in
installments upon Retirement; provided that any such election:

-21-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	(A)	 	Shall apply only to that portion of his Account
Balance attributable to Plan Years beginning the latest of (x) January
1, 2008, (y) January 1 of the Plan Year for which the election is first
made; or (z) the Plan Year date the Participant is “first eligible”
pursuant to Section 2.5;
	 
	 	(B)	 	Shall continue to apply to all distributions
upon Retirement for all Plan Years thereafter; and
	 
	 	(C)	 	Shall be subject to the cash out provision of
Section 5.2(d) and the Deduction Limitation (to the extent applicable).
	 
	 	Any such election shall specify an Annual Installment Method of two (2),
five (5), ten (10), or fifteen (15) years.

	 	(ii)	 	Special Election for Account Balance Credited for 2005 though
2007. During the 2007 enrollment for Plan Year 2008, a Participant may make
an election to receive payment of that portion of his Account Balance credited
for Plan Years 2005 through 2007 in installments upon Retirement; provided
that:

	 	(A)	 	The requirements for transition relief under
Section 409A of the Code are met, including the requirements that no
amount subject to the election shall otherwise be payable in 2007 and
that the election shall not cause an amount to be paid in 2007 that
would not otherwise be payable in such year;
	 
	 	(B)	 	The number of years elected under the Annual
Installment Method under this Section 5.2(a)(ii) shall be the same as
that elected under Section 5.2(a)(i); and
	 
	 	(C)	 	The special election shall be subject to the
cash out provision of Section 5.2(d) and the Deduction Limitation (to
the extent applicable).

	 	(iii)	 	No Valid Election. The remaining Account Balance (or
portion thereof), if any, of a Participant who Retires without having made any
valid election pursuant to Section 5.2(a)(i), Section 5.2(a)(ii), and/or Section
5.2(b) shall be paid in a lump sum.

	 	(b)	 	Change of Elections. A Participant may change his elections
under Section 5.2(a) to a lump sum or an alternative installment payout upon
Retirement by submitting a new Election Form to the Administrative Committee;
provided that any such change meets the requirements of Sections 3.4.

-22-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	(c)	 	Payment Commencement Date. Any payment upon Retirement shall be
subject to the Deduction Limitation, to the limited extent permitted under Section
409A of the Code.

	 	(i)	 	Not Specified Employee. For a Participant or Former
Participant who is not a Specified Employee:

	 	(A)	 	A lump sum shall be paid within sixty (60) days
following the Participant’s Retirement; provided that if such
sixty- (60-) day period begins in one taxable year and ends in another,
the Participant shall not have a right to designate the taxable year of
payment; and
	 
	 	(B)	 	Installment payments shall commence within
sixty (60) days after the January 1 following the Participant’s
Retirement. Subsequent annual installments shall be paid within sixty
(60) days after each January 1 thereafter.

	 	(ii)	 	Specified Employees. Notwithstanding any other
provisions of the Plan, no distribution upon Retirement shall be made to a
Specified Employee before the date that is six (6) months after the date of his
Retirement, and shall be made as follows:

	 	(A)	 	A lump sum to a Specified Employee shall be
paid within sixty (60) days after the first day of the seventh
(7th) month after the date of his Retirement; provided
that if such sixty- (60-) day period begins in one taxable year and
ends in another, the Specified Employee shall not have a right to
designate the taxable year of payment; and
	 
	 	(B)	 	The initial installment payment to a Specified
Employee shall begin the later of:

	 	(1)	 	Within sixty (60) days after the
first day of the seventh (7th) month after the date
of his Retirement; provided that if such sixty- (60-)
day period begins in one taxable year and ends in another, the
Specified Employee shall not have a right to designate the
taxable year of payment; or
	 
	 	(2)	 	Within sixty (60) days after the
January 1 following his Retirement.

Subsequent annual installments shall be paid within sixty (60) days
after each subsequent January 1 following the anniversary of the

-23-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

Specified Employee’s Retirement; provided that any second
installment is at least six (6) months after the Specified Employee’s
Retirement.

	 	(d)	 	No Election; “Cash Out.” Upon Retirement, subject to the
Deduction Limitation (to the extent applicable), a Participant’s remaining Account
Balance shall be paid in a lump sum unless (i) the Participant has made a valid
installment election with respect to payment of his Account Balance (or portion
thereof) upon Retirement and (ii) his Account Balance subject to the installment
election exceeds $50,000.

	5.3	 	Death after Retirement. If a Participant dies after Retirement but before his
Account Balance is paid in full, his unpaid remaining Account Balance shall be paid in a lump
sum to his Beneficiary within sixty (60) days of his death; provided that if such
sixty- (60-) day period begins in one taxable year and ends in another, the Beneficiary shall
not have a right to designate the taxable year of payment.

ARTICLE 6

Pre-Retirement Survivor Benefit

	6.1	 	Pre-Retirement Survivor Benefit. If a Participant dies before he Retires, incurs a
Termination of Employment, or suffers a Disability, his Beneficiary shall receive a
Pre-Retirement Survivor Benefit equal to his Account Balance calculated as of the close of
business on the date of death (or, if the date of death is not a business day, the next
business day following the date of death).

	6.2	 	Payment of Pre-Retirement Survivor Benefit. The Pre-Retirement Survivor Benefit
shall be made in a lump sum within sixty (60) days of the Participant’s death; provided
that if such sixty- (60-) day period begins in one taxable year and ends in another, the
Beneficiary shall not have a right to designate the taxable year of payment.

ARTICLE 7

Termination Benefit

	7.1	 	Termination Benefit. Subject to the Deduction Limitation (to the extent applicable),
a Participant or Former Participant who incurs a Termination of Employment prior to
Retirement, death, or Disability shall be paid his vested Account Balance, which shall be his
Termination Benefit. Any portion of the Account Balance that is not vested pursuant to
Section 3.7 shall be forfeited.

	7.2	 	Form of Payment. If the vested Account Balance under the Plan payable as a
Termination Benefit exceeds one hundred thousand dollars ($100,000), the Account Balance shall
be paid in two (2) installments, subject to the Deduction Limitation (to the extent
applicable). If such balance is one hundred thousand dollars ($100,000) or less,

-24-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	the Account Balance shall be paid in a lump sum,
subject to the Deduction Limitation (to the extent
applicable). For purposes of determining the form of
payment of a Termination Benefit under this
Section 7.2, the vested Account Balance shall be
valued as of the date of Termination of Employment
(or if such date is not a business day, the next day
that is a business day).

	7.3	 	Valuation Date for Payments.

	 	(a)	 	Installments. In the case of a Termination Benefit that exceeds
one hundred thousand dollars ($100,000), the amount of each installment payment
shall be calculated as follows:

	 	(i)	 	Not Specified Employee. If the Participant or Former
Participant is not a Specified Employee, the first installment shall be valued
as of the close of business on the date of his Termination of Employment, and
the second installment shall be valued as of January 1 of the Plan Year in which
the second installment is paid pursuant to Section 7.4; provided that if
either date is not a business day, the valuation date shall be the next day that
is a business day.
	 
	 	(ii)	 	Specified Employee. If the Participant or Former
Participant is a Specified Employee:

	 	(A)	 	The first installment shall be valued as of the
close of business on the first (1st) day of the seventh
(7th) month after his Termination of Employment; and
	 
	 	(B)	 	The second installment shall be valued as of
January 1 of the Plan Year immediately following the Plan Year in which
occurs the six- (6-) month anniversary of his Termination of
Employment;

provided that if either date is not a business day, the valuation
date shall be the next day that is a business day.

	 	(b)	 	Lump Sum. In the case of a Termination Benefit that is one
hundred thousand dollars ($100,000) or less, the lump sum shall be calculated as
follows:

	 	(i)	 	Not Specified Employee. If the Participant or Former
Participant is not a Specified Employee, his Account Balance shall be valued as
of the close of business on the date of his Termination of Employment (or the
next day that is a business day).
	 
	 	(ii)	 	Specified Employee. If the Participant or Former
Participant is a Specified Employee, his Account Balance shall be valued as of
the close of business on the date that is the first (1st) day of the
seventh (7th) month after his

-25-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

Termination of Employment; provided that if such date is not a
business day, the next following business day shall be used.

	7.4	 	Payment of Termination Benefit. Any payment of a Termination Benefit shall be
subject to the Deduction Limitation (to the extent applicable) and shall be made as follows.

	 	(a)	 	Not Specified Employee. In the case of a Participant or Former
Participant who is not a Specified Employee:

	 	(i)	 	A lump sum shall be paid within sixty (60) days following his
Termination of Employment; provided that if such sixty- (60-) day period
begins in one taxable year and ends in another, the Participant shall not have a
right to designate the taxable year of payment; and
	 
	 	(ii)	 	Installment payments shall begin within sixty (60) days after his
Termination of Employment; provided that if such sixty- (60-) day period
begins in one taxable year and ends in another, the Participant shall not have a
right to designate the taxable year of payment. The second installment shall be
paid in the first sixty (60) days of the Plan Year immediately following the
Plan Year in which the first installment is paid.

	 	(b)	 	Specified Employee. Notwithstanding any other provision of the
Plan, in the case of a Specified Employee:

	 	(i)	 	A lump sum shall be made within sixty (60) days after the first
day of the seventh (7th) month after the date of his Termination of
Employment; provided that if such sixty- (60-) day period begins in one
taxable year and ends in another, the Specified Employee shall not have a right
to designate the taxable year of payment; and
	 
	 	(ii)	 	The initial installment payment shall be paid within sixty (60)
days after the first day of the seventh (7th) month after the date of
his Termination of Employment; provided that if such sixty- (60-) day
period begins in one taxable year and ends in another, the Specified Employee
shall not have a right to designate the taxable year of payment. The second
installment shall be paid in the first sixty (60) days of the Plan Year
immediately following the Plan Year in which the first installment is paid;
provided that any second installment is at least six (6) months after
the Specified Employee’s Termination of Employment.

	7.5	 	Death after Termination of Employment. If a Participant or Former Participant dies
after Termination of Employment but before his Termination Benefit is paid in full, the unpaid
remaining Termination Benefit, if any, shall be paid in a lump sum to the

-26-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	Participant’s Beneficiary within sixty (60) days of the Participant’s death; provided
that if such sixty- (60-) day period begins in one taxable year and ends in another, the
Beneficiary shall not have a right to designate the taxable year of payment.

ARTICLE 8

Distributions Upon Disability

	8.1	 	Payment upon Disability. If the Administrative Committee determines that a
Participant has become Disabled before all of his Account Balance has been distributed, the
remaining Account Balance (including 401(k) Restoration Matching Account and/or Performance
Matching Account) shall be distributed in one lump sum within sixty (60) days of the
determination by the Administrative Committee that the Participant is Disabled; provided
that any payment shall be subject to the Deduction Limitation and provided further
that if such sixty- (60-) day period begins in one taxable year and ends in another, the
Participant shall not have a right to designate the taxable year of payment.

	8.2	 	Elections/Credits. No deferral elections shall be permitted by a Disabled
Participant after the Plan Year in which the Participant is determined to be Disabled. Any
401(k) Restoration Matching Amounts and/or Performance Matching Amounts shall be credited to
his Account Balance through the end of the Plan Year in which Disability occurs.

	8.3	 	Payment of Final Credits. So long as the Participant remains Disabled, any remaining
Account Balance attributable to 401(k) Restoration Matching Amounts and/or Performance
Matching Amounts shall be distributed, subject to the Deduction Limitation, within sixty (60)
days of the Plan Year for which such final credits were made. If for any reason the
Participant is found to be no longer Disabled, payment of any final credits may be made
pursuant to Article 7 (assuming the Participant has incurred a termination of Employment),
unless another Article applies.

	8.4	 	Death after Disability. If a Participant dies after becoming Disabled but before his
Account Balance is paid in full, the unpaid remaining Account Balance shall be paid in a lump
sum to his Beneficiary within sixty (60) days of death and/or within sixty (60) days of the
Plan Year for which final credits were made, as applicable; provided that if such
sixty- (60-) day period begins in one taxable year and ends in another, the Beneficiary shall
not have a right to designate the taxable year of payment.

ARTICLE 9

Beneficiary Designation

	9.1	 	Beneficiary. Each Participant shall have the right, at any time, to designate his
Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable under
the Plan to a beneficiary upon the death of a Participant.

-27-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	9.2	 	Beneficiary Designation; Change; Spousal Consent. A Participant shall designate his
Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to
the Administrative Committee or its designated agent. A Participant shall have the right to
change a Beneficiary by completing, signing, and otherwise complying with the terms of the
Beneficiary Designation Form and the Administrative Committee’s rules and procedures, as in
effect from time to time. If the Participant names someone other than his spouse as a primary
Beneficiary, a spousal consent, in the form designated by the Administrative Committee, must
be signed by that Participant’s spouse and returned to the Administrative Committee. Upon the
acceptance by the Administrative Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled. The Administrative Committee
shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant
and accepted by the Administrative Committee prior to his death.

	9.3	 	Acknowledgment. No designation or change in designation of a Beneficiary shall be
effective until received and acknowledged in writing by the Administrative Committee or its
designated agent.

	9.4	 	No Beneficiary Designation. If a Participant fails to designate a Beneficiary as
provided in Sections 9.1, 9.2 and 9.3 or, if all designated Beneficiaries predecease the
Participant or die prior to complete distribution of the Participant’s benefits, then the
Participant’s designated Beneficiary shall be deemed to be his surviving spouse. If the
Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a
Beneficiary shall be payable to the Participant’s estate.

	9.5	 	Doubt as to Beneficiary. If the Administrative Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to the Plan, the Administrative Committee
shall have the right, exercisable in its discretion, to cause the Employer to withhold such
payments until this matter is resolved to the Administrative Committee’s satisfaction.

	9.6	 	Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary
shall fully and completely discharge the Employer and the Administrative Committee from all
further obligations under the Plan with respect to the Participant.

ARTICLE 10

Leaves of Absence

	10.1	 	Paid Leave of Absence. If a Participant is authorized by the Employer for any bona
fide reason to take a paid leave of absence from the employment of the Employer, the
Participant shall continue to be considered employed by the Employer and the Annual Deferral
Amount shall continue to be withheld during such paid leave of absence in accordance with
Sections 3.1 and 3.2; provided, however, that any such leave that is

-28-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	expected to exceed (or does exceed) six (6) months shall be reviewed to determine if there
will be (or has been) a “separation from service” under Section 409A of the Code.

	10.2	 	Unpaid Leave of Absence. If a Participant is authorized by the Employer for any bona
fide reason to take an unpaid leave of absence from the employment of the Employer, the
Participant shall continue to be considered employed by the Employer and the Participant’s
deferrals shall cease during the unpaid absence. Upon Participant’s return to a paid
employment status, deferrals shall resume for the remaining portion of the Plan Year in which
the return occurs, based on the Participant’s deferral election, if any, for that Plan Year.
If no election was made for that Plan Year, no deferrals shall be withheld.

ARTICLE 11

Permissible Acceleration

	11.1	 	In General No Acceleration. Except as provided in this Section 11 and permitted under
Section 409A of the Code, no acceleration of the time or form of payment of a Participant’s
Account Balance, or any portion thereof, shall be permitted.

	11.2	 	Death. If a Participant should die before all of his Account Balance has been paid
to him and payment upon death is not otherwise provided for under Article 5, 6, 7, and 8, the
Participant’s remaining vested Account Balance shall be distributed to his Beneficiary in one
lump sum within sixty (60) days following the Participant’s death; provided that if
such sixty- (60-) day period begins in one taxable year and ends in another, the Beneficiary
shall not have a right to designate the taxable year of payment.

	11.3	 	Disability. Payment upon Disability shall be in accordance with Article 8.

	11.4	 	Unforeseeable Financial Emergency. Payment upon Unforeseeable Financial Emergency
shall be made in accordance with Article 4.

	11.5	 	Change in Control. Notwithstanding any provision of the Plan to the contrary, to the
extent permitted under Section 409A of the Code, upon a Change in Control, Account Balances of
Participants shall be paid in a lump sum to such Participants within fifteen (15) business
days following the Change in Control; provided that if such fifteen- (15-) day period
begins in one taxable year and ends in another, Participants shall not have a right to
designate the taxable year of payment.

	11.6	 	Section 409A Violation. If the Plan fails to meet the requirements of Section 409A
of the Code with respect to a Participant, the Administrative Committee shall distribute the
amount required to be included in such Participant’s gross income as a result of such failure
within sixty (60) days of the Administrative Committee’s determination of the compliance
failure; provided that if such sixty-
(60-) day period begins in one taxable year and
ends in another, the Participant shall not have a right to designate the taxable year of
payment.

-29-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	11.7	 	Termination of Plan. Payments may be accelerated upon the termination of the Plan
only in accordance with the requirements of Section 409A of the Code.

	11.8	 	Domestic Relations Orders. Payments in connection with domestic relations orders may
be accelerated pursuant to Section 17.15 and Section 409A of the Code.

ARTICLE 12

Termination, Amendment, or Modification

	12.1	 	Termination. Although the Company anticipates that it will continue the Plan for an
indefinite period of time, there is no guarantee that it will continue the Plan, or will not
terminate the Plan, at any time in the future. Accordingly, the Company reserves the right to
discontinue its sponsorship of the Plan and/or to terminate the Plan at any time with respect
to any or all of its participating Employees and Directors, by action of the Board (or any
properly delegated committee thereof).

	12.2	 	Effect of Termination. Upon the termination of the Plan, the Deferral Elections of
the affected Participants shall terminate to the extent permitted by Section 409A of the Code.
The termination of the Plan shall not adversely affect any Participant or Beneficiary who has
become entitled to the payment of any benefits under the Plan as of the date of termination;
provided however, that the Company shall have the right to accelerate payments without
a premium or prepayment penalty if permitted under Section 409A of the Code.

	12.3	 	Amendment. The Company reserves the right to amend any provisions of the Plan at any
time upon an action by the Board (or any properly delegated committee thereof) to the extent
that it may deem advisable without the consent of the Participant or any Beneficiary;
provided, however, that, without a Participant’s prior written consent, no such
amendment shall impair or adversely affect the rights of any Participant or Beneficiary with
respect to any amounts deferred, contributions made or authorized, or any earnings on such
amounts credited to a Participant’s Account Balance before such amendment. In no event will
an amendment or modification of this Section 12.3 or Section 13.2 of the Plan be effective.

	12.4	 	Effect of Payment. The full payment of the applicable benefit under Articles 4, 5,
6, 7, 8, or 11 of the Plan shall completely discharge all obligations under the Plan to a
Participant, his designated Beneficiaries, and any other party claiming benefits through the
Participant or his Beneficiaries.

ARTICLE 13

Administration

	13.1	 	Administrative and Plan Committee Duties. For purposes of the Plan and except as
otherwise provided in this Article 13, at all times prior to the occurrence of a Change in

-30-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	Control the Plan shall be administered by the Administrative Committee, which shall be the
“Administrator.” Members of the Administrative Committee may be Participants under this
Plan. The Administrative Committee shall also have the discretion and authority to (i)
make, amend, interpret, and enforce all appropriate rules and regulations for the
administration of the Plan and (ii) decide or resolve any and all questions including
interpretations of the Plan, as may arise in connection with the Plan. Any individual
serving on the Administrative Committee who is a Participant shall not vote or act on any
matter relating solely to himself. When making a determination or calculation, the
Administrative Committee shall be entitled to rely on information furnished by a Participant
or the Company. Notwithstanding the foregoing, the Plan Committee shall have the sole
discretion to determine (i) an Employee’s or Director’s eligibility to participate in the
Plan and (ii) the Annual Performance Matching Amount for any Plan Year. For the Company’s
rights to amend and terminate the Plan, see Article 12.

	13.2	 	Administration upon Change in Control. Upon and after the occurrence of a Change in
Control, the “Administrator” shall be an independent third party selected by the Trustee and
approved by the individual who, immediately prior to such event, was the Company’s Chief
Executive Officer or, if not so identified, the Company’s highest ranking officer (the
“Ex-CEO”). The Administrator shall have the discretionary power to determine all questions
arising in connection with the administration of the Plan and the interpretation of the Plan
and Trust including, but not limited to, benefit entitlement determinations; provided,
however, upon and after the occurrence of a Change in Control, the Administrator shall
have no power to direct the investment of Plan or Trust assets or select any investment
manager or custodial firm for the Plan or Trust. Upon and after the occurrence of a Change in
Control, the Company must: (1) pay all reasonable administrative expenses and fees of the
Administrator; (2) indemnify the Administrator against any costs, expenses, and liabilities
including, without limitation, attorneys’ fees and expenses arising in connection with the
performance of the Administrator hereunder, except with respect to matters resulting from the
gross negligence or willful misconduct of the Administrator or its employees or agents; and
(3) supply full and timely information to the Administrator on all matters relating to the
Plan, the Trust, the Participants and their Beneficiaries, the Account Balances of the
Participants, the date of circumstances of the Retirement, Disability, death, or Termination
of Employment of the Participants, and such other pertinent information as the Administrator
may reasonably require. Upon and after a Change in Control, the Administrator may be
terminated (and a replacement appointed) by the Trustee only with the approval of the Ex-CEO.
Upon and after a Change in Control, the Administrator may not be terminated by the Company.

	13.3	 	Agents. In the administration of this Plan, the Administrative Committee may, from
time to time, employ agents and delegate to them such administrative duties as it sees fit
(including acting through a duly appointed representative) and may from time to time consult
with counsel who may be counsel to the Company.

-31-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	13.4	 	Binding Effect of Decisions. The Administrator shall be vested with sole
discretionary authority (i) to construe and interpret the Plan, its Trust, and related Plan
forms and documents (collectively referred to as “Documents”), their terms, and any rules and
regulations promulgated thereunder, including but not limited to resolving ambiguities,
inconsistencies, and omissions, (ii) to construe and interpret the federal and state laws and
regulations that relate to the Documents, (iii) to decide all factual questions arising in
connection with the Documents, and (iv) to decide other questions arising in connection with
the Documents (excluding determinations within the jurisdiction of the Plan Committee). All
findings of the Administrator shall be final and shall be binding and conclusive upon all
persons having any interest in the Plan and Trust.

	13.5	 	Indemnity of Committees. The Company shall indemnify and hold harmless the members
of the Administrative and Plan Committees, any Employee to whom the duties of either or both
of the Committees may be delegated, and the Administrator against any and all claims, losses,
damages, expenses or liabilities arising from any action or failure to act with respect to the
Plan, except in the case of willful misconduct by the Administrative Committee, the Plan
Committee, any of their members, any Employee, or the Administrator.

	13.6	 	Employer Information. To enable the Administrative Committee, Plan Committee, and/or
Administrator to perform its functions, the Employer shall supply full and timely information
to such Committees and/or Administrator, as the case may be, on all matters relating to the
compensation of its Participants, the date and circumstances of the Retirement, Disability,
death, or Termination of Employment of its Participants, and such other pertinent information
as the Administrative Committee, Plan Committee, or Administrator may reasonably require.

ARTICLE 14

Other Benefits and Agreements

	14.1	 	Coordination with Other Benefits. The benefits provided for a Participant and
Participant’s Beneficiary under the Plan are in addition to any other benefits available to
such Participant under any other plan or program for employees of the Employer. The Plan
shall supplement and shall not supersede, modify, or amend any other such plan or program
except as may otherwise be expressly provided.

ARTICLE 15

Claims Procedures

	15.1	 	Presentation of Claim. Generally benefits will be paid under the Plan without the
necessity of filing a claim. Any Participant or Beneficiary of a deceased Participant (such
Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the
Administrative Committee a written claim for a determination with respect to the

-32-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	amounts distributable to such Claimant from the Plan. The claim must state with
particularity the determination desired by the Claimant.

	15.2	 	Notification of Decision. The Administrative Committee shall consider a Claimant’s
claim within 90 days (45 days for a claim based upon Disability), unless special circumstances
require any an extension of time for processing the claim. Notice of any such extension shall
be furnished to the Claimant prior to the termination of the initial 90- (45-) day period and
shall indicate the special circumstances requiring the extension and the date by which a
determination is expected to be made. Such extension shall not exceed 90 days (30 days for a
claim based upon Disability). The Administrative Committee shall notify the Claimant in
writing:

	 	(a)	 	That the Claimant’s requested determination has been made, and that the
claim has been allowed in full; or

	 	(b)	 	That the Administrative Committee has reached a conclusion contrary, in
whole or in part, to the Claimant’s requested determination, and such notice must
set forth in a manner calculated to be understood by the Claimant:

	 	(i)	 	The specific reason(s) for the denial of the claim, or any part
of it;
	 
	 	(ii)	 	Specific reference(s) to pertinent provisions of the Plan upon
which such denial was based;
	 
	 	(iii)	 	A description of any additional material or information
necessary for the Claimant to perfect the claim, and an explanation of why such
material or information is necessary; and
	 
	 	(iv)	 	An explanation of the claim review procedures.

	15.3	 	Review of a Denied Claim. Within 60 days (180 days for a claim based upon
Disability) after receiving a notice from the Administrative Committee that a claim has been
denied, in whole or in part, a Claimant (or the Claimant’s duly authorized representative) may
file with the Administrative Committee a written request for a review of the denial of the
claim. The Claimant (or the Claimant’s duly authorized representative):

	 	(a)	 	May review pertinent documents and receive copies of them free of charge;
	 
	 	(b)	 	May submit written comments or other documents; and/or
	 
	 	(c)	 	May request a hearing, which the Administrative Committee, in its sole
discretion, may grant.

	15.4	 	Decision on Review. Any decision on review shall take into consideration all
comments, documents, records, and other information submitted by the Claimant (or the
Claimant’s

-33-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	duly authorized representative) relating to the claim, without regard to whether such information
was submitted or considered in the initial benefit determination. Any review of a decision
involving a claim based upon Disability shall not afford deference to the initial adverse
determination and shall not be conducted by an individual(s) who made the adverse benefit
determination that is the subject of the appeal, nor the subordinate of such individual(s). If a
decision on review of a claim based upon Disability is based upon a medical judgment, a health care
professional who has appropriate training and experience in the field of medicine involved in the
medical judgment will be consulted. The decision on review shall be rendered promptly, and not
later than 60 days (45 days for a claim based upon Disability) after the filing of a written
request for review of the denial, unless a hearing is held or other special circumstances require
additional time, in which case the decision must be rendered within 60 days after such date.
Notice of any such extension shall be furnished to the Claimant prior to the termination of the
initial 60- (45-) day period and shall indicate the special circumstances requiring the extension
and the date by which a determination is expected to be made. Such extension shall not exceed 60
days (45 days for a claim based upon Disability). Such decision must be written in a manner
calculated to be understood by the Claimant, and it must contain:

	 	(a)	 	Specific reasons for the decision;
	 
	 	(b)	 	Specific reference(s) to the pertinent Plan provisions upon which the
decision was based; and
	 
	 	(c)	 	Such other matters as the Administrative Committee or Plan Committee
deems relevant.

	15.5	 	Legal Action. A Claimant’s compliance with the foregoing provisions of this Article
15 is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect
to any claim for benefits under the Plan.

ARTICLE 16

Trust

	16.1	 	Establishment of the Trust. The Company shall establish the Trust, and the Employer
shall at least annually transfer over to the Trust such cash and/or cash equivalent assets
that are equal in amount to the increase in each Participant’s Deferral Account balance for
the preceding twelve (12) month period. In addition, the Employer shall at least annually
transfer over to the Trust such additional assets as the Company determines, in its sole
discretion, are necessary to provide, on a present value basis, for its respective future
liabilities created with respect to the Annual Deferral Amounts, Annual Performance Matching
Amounts, and 401(k) Restoration Matching Amounts for Employer’s Participants for all periods
prior to the transfer, as well as any debits and credits to the Participants’ Account
Balances for all periods prior to the transfer, taking into consideration the value of the
assets in the Trust at the time of the transfer. Immediately

-34-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	prior to a Change in Control, the Employer shall transfer over to the Trust a sufficient amount of cash and/or cash
equivalent assets so that the liquidation value of the Trust’s cash and/or cash equivalent
assets are at least equal to the sum of all Account Balances under the Plan.
	 
	16.2	 	Interrelationship of the Plan and the Trust. The provisions of the Plan shall govern
the rights of a Participant to receive distributions pursuant to the Plan. The provisions of
the Trust shall govern the rights of the Employer, Participants, and creditors of the Employer
to the assets transferred to the Trust. The Employer shall at all times remain liable to
carry out its obligations under the Plan.
	 
	16.3	 	Distributions from the Trust. The Employer’s obligations under the Plan may be
satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such
distribution shall reduce the Employer’s obligations under the Plan.

ARTICLE 17

Miscellaneous

	17.1	 	Status of Plan. The Plan is intended to be a plan that is not qualified within the
meaning of Code Section 401(a) and that “is unfunded and is maintained by an employer
primarily for the purpose of providing deferred compensation for a select group of management
or highly compensated employee” within the meaning of ERISA Sections 201(2), 301(a)(3) and
401(a)(1). The Plan is intended to comply with Section 409A of the Code. The Plan shall be
administered and interpreted to the extent possible in a manner consistent with this intent.
	 
	17.2	 	Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors,
and assigns shall have no legal or equitable rights, interests, or claims in any property or
assets of the Employer. For purposes of the payment of benefits under the Plan, any and all
of the assets of the Employer shall be, and remain, the general, unpledged unrestricted assets
of the Employer. The obligations of the Employer under the Plan shall be merely that of an
unfunded and unsecured promise to pay money in the future.
	 
	17.3	 	Liability. The liability of the Employer for the payment of benefits shall be
defined only by the Plan. The Employer shall have no obligation to a Participant under the
Plan except as expressly provided in the Plan.
	 
	17.4	 	Nonassignability. Neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber,
transfer, hypothecate, alienate, or convey in advance of actual receipt, the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which are expressly
declared to be, unassignable and non-transferable. No part of the amounts
payable shall, prior to actual payment, be subject to seizure, attachment, garnishment, or
sequestration for the payment of any debts, judgments, alimony, or separate maintenance

-35-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	owed by a Participant or any other person; be transferable by operation of law in the event of a
Participant’s or any other person’s bankruptcy or insolvency; or be transferable to a spouse
as a result of a property settlement or otherwise.
	 
	17.5	 	Not a Contract of Employment. The terms and conditions of this Plan shall not be
deemed to constitute a contract of employment between the Employer and the Participant. Such
employment is hereby acknowledged to be an “at will” employment relationship that can be
terminated at any time for any reason, or no reason, with or without cause, and with or
without notice, unless expressly provided in a written employment agreement. Nothing in the
Plan shall be deemed to give a Participant the right to be retained in the service of the
Employer, either as an Employee or a Director, or to interfere with the right of the Employer
to discipline or discharge the Participant at any time.
	 
	17.6	 	Furnishing Information. A Participant or his Beneficiary will cooperate with the
Administrative Committee by furnishing any and all information requested by the Administrative
Committee and take such other actions as may be requested in order to facilitate the
administration of the Plan and the payments of benefits hereunder, including but not limited
to taking such physical examinations as the Administrative Committee may deem necessary.
	 
	17.7	 	Terms. Whenever any words are used herein in the masculine, they shall be construed
as though they were in the feminine in all cases where they would so apply; and whenever any
words are used herein in the singular or in the plural, they shall be construed as though they
were used in the plural or the singular, as the case may be, in all cases where they would so
apply.
	 
	17.8	 	Captions. The captions of the articles, sections, and paragraphs of the Plan are for
convenience only and shall not control or affect the meaning or construction of any of its
provisions.
	 
	17.9	 	Governing Law. Subject to ERISA, the provisions of this Plan shall be construed and
interpreted according to the internal laws of the State of Arizona without regard to its
conflicts of laws principles.
	 
	17.10	 	Notice. Any notice or filing required or permitted to be given to the
Administrative Committee under the Plan shall be sufficient if in writing and hand-delivered,
or sent by registered or certified mail, to the address below:

401(k)/Deferred Compensation Committee

Attention: Senior Vice President, People

PetSmart, Inc.

19601 North 27th Avenue

Phoenix, AZ 85027

-36-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	Such notice shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or certification.
	 
	 	 	Any notice or filing required or permitted to be given to a Participant under the Plan shall
be sufficient if in writing and hand-delivered, or sent by mail, to the last known address
of the Participant.
	 
	17.11	 	Successors. The provisions of the Plan shall bind and inure to the benefit of the
Employer and its successors and assigns and the Participant and the Participant’s designated
Beneficiaries.
	 
	17.12	 	Spouse’s Interest. The interest in the benefits hereunder of a spouse of a
Participant who has predeceased the Participant shall automatically pass to the Participant
and shall not be transferable by such spouse in any manner, including but not limited to such
spouse’s will, nor shall such interest pass under the laws of intestate succession.
	 
	17.13	 	Validity. In case any provision of this Plan shall be illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts hereof, but the
Plan shall be construed and enforced as if such illegal or invalid provision had never been
inserted herein.
	 
	17.14	 	Incompetent. If the Administrative Committee determines in its discretion that a
benefit under the Plan is to be paid to a minor, a person declared incompetent, or to a person
incapable of handling the disposition of that person’s property, the Administrative Committee
may direct payment of such benefit to the guardian, legal representative, or person having the
care and custody of such minor, incompetent, or incapable person. The Administrative
Committee may require proof of minority, incompetence, incapacity, or guardianship, as it may
deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a
payment for the account of the Participant and/or the Participant’s Beneficiary, as the case
may be, and shall be a complete discharge of any liability under the Plan for such payment
amount.
	 
	17.15	 	Court Order. The Administrative Committee is authorized to make any payments
directed by court order in any action in which the Plan or the Administrative Committee has
been named as a party. In addition, if a court determines that a spouse or former spouse of a
Participant has an interest in the Participant’s benefits under the Plan in connection with a
domestic relations order (as defined in Section 414(p)(1)(B) of the Code), the Administrative
Committee, shall have the right, notwithstanding any election made by a Participant, to
immediately distribute the spouse’s or former spouse’s interest in the Participant’s benefits
under the Plan to that spouse or former spouse to the extent necessary to fulfill such
domestic relations order.
	 
	17.16	 	Tax Treatment. Notwithstanding any other provision of the Plan, although the Board
and any designee of the Board shall use their best efforts to avoid the imposition of

-37-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	taxation, penalties, and interest under Section 409A and other provisions of the Code, the tax
treatment of Participant deferrals, Company credits, and earnings under the Plan shall not be,
and is not, warranted or guaranteed. Neither the Company, the Board, the
Administrative Committee, the Plan Committee, the Administrator, nor any of their designees
shall be held liable for any taxes, penalties, or other monetary amounts owed by a
Participant, Employee, Beneficiary, or other person as a result of any deferral or payment
under the Plan or the administration of the Plan.
	 
	17.17	 	Insurance. The Employer, on its own behalf or on behalf of the Trustee, and, in
their sole discretion, may apply for and procure insurance on the life of the Participant, in
such amounts and in such forms as the Trust may choose. The Employer or the Trustee, as the
case may be, shall be the sole owner and beneficiary of any such insurance. The Participant
shall have no interest whatsoever in any such policy or policies, and at the request of the
Employer shall submit to medical examinations and supply such information and execute such
documents as may be required by the Code or the insurance company or companies to whom the
Employer has applied for insurance.
	 
	17.18	 	Legal Fees to Enforce Rights after Change in Control. The Employer is aware that
upon the occurrence of a Change in Control, the Board or the board of directors of the
Employer (which might then be composed of new members) or a shareholder of the Employer, or of
any successor corporation might then cause or attempt to cause the Company, the Employer or
such successor to refuse to comply with its obligations under the Plan and might cause or
attempt to cause the Employer to institute, or may institute, litigation seeking to deny
Participants the benefits intended under the Plan. In these circumstances, the purpose of the
Plan could be frustrated. Accordingly, if, following a Change in Control, it should appear to
any Participant that the Employer or any successor corporation has failed to comply with any
of its obligations under the Plan or any agreement thereunder or, if the Employer or any other
person takes any action to declare the Plan void or unenforceable or institutes any litigation
or other legal action designed to deny, diminish, or to recover from any Participant the
benefits intended to be provided, then the Employer irrevocably authorizes such Participant to
retain counsel of his choice at the expense of the Company and any Employer (who shall be
jointly and severally liable) to represent such Participant in connection with the initiation
or defense of any litigation or other legal action, whether by or against the Company, the
Employer, or any director, officer, shareholder, or other person affiliated with the Company,
the Employer, or any successor thereto in any jurisdiction.
	 
	 	 	In order to comply with Section 409A of the Code, (i) the legal fees to enforce participant
rights under the Plan after a Change in Control (which generally assumes that there has been
noncompliance with Section 11.5), shall be reimbursable for a period of ten (10) years
immediately following a Change in Control; (ii) the amount of expenses eligible for
reimbursement (or in-kind benefits provided) in one taxable year shall not affect the
expenses eligible for reimbursement (or in-kind benefits to be provided) in any other
taxable year; (iii) reimbursement of eligible expenses shall be made on or before the last

-38-

 

PetSmart, Inc.

2005 Deferred Compensation Plan

Master Plan Document

	 	 	day of the Participant’s taxable year following the taxable year in which the expense was
incurred; and (iv) the right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.
	 
	17.19	 	Effective Date. The effective date of the Plan is January 1, 2005.

            IN WITNESS WHEREOF, the Company has signed this Plan document as of this 26th day
of November, 2007.

	 	 	 	 	 	 	 
	 	 	“Company”
	 
	 	 	 	 	 	 
	 	 	PetSmart, Inc., a Delaware corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

-39-exv10w30

 

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[***]” ARE SUBJECT TO A CONFIDENTIAL TREATMENT
REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT. COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS PART OF THIS COMPANY’S CONFIDENTIAL
TREATMENT REQUEST.

EXECUTION COPY

     AMENDMENT, dated as of July 17, 2007 (this “Amendment”), to the Manufacturing
and Distribution Agreement, dated as of April 7, 2005 (the “Agreement”), between
SIRIUS SATELLITE RADIO INC., a Delaware corporation (“Sirius”), and DIRECTED
ELECTRONICS, INC., a Florida corporation (“Directed”), as amended.

WITNESSETH:

     WHEREAS, Sirius and Directed desire to amend certain provisions of the Agreement in the manner
provided for in this Amendment.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

     1. Definitions. (a) Terms used in this Amendment and not defined herein shall have
the meanings assigned to such terms in the Agreement.

     (b) Section 1.01 of the Agreement is hereby amended by adding the following definitions in
the appropriate alphabetical order:

     “Core Accessory Products” means all Accessory Products that (a) have been
designed or developed by or for Sirius at its expense and (b) include a Sirius brand and no
third party hardware brand.

     “Core Products” means Core Sirius Receivers and Core Accessory Products.

     “Core Sirius Receivers” means Sirius Receivers that (a) have been designed or
developed by or for Sirius at its expense and (b) include a Sirius brand and no third party
hardware brand.

     “Landed Cost” means, with respect to any product, [* * *] plus [* * *] , in
each case, required to deliver such product [* * *] .

     2. Amendment to Section 3.07 of the Agreement. Section 3.07 of the Agreement is
hereby amended by deleting such Section in its entirety and substituting in lieu thereof the
following Section:

     “SECTION 3.07. Forecasting and Order Placement for Core Products. (a) Sirius
and Directed shall work together in good faith to create mutually agreeable six-month
rolling forecasts of Core Product sales and four-month purchase plans for Core
Products, broken out by distribution channel and including such information as Sirius may
reasonably request.

 

 

[* * *] — CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

     (b) Sirius may, from time to time, provide written instructions (in a form to be
mutually agreed) to Directed to place orders with Authorized Manufacturers for specified
quantities of Core Products (each such order placed by Directed pursuant to such written
instructions, a “Backstop Purchase Order”). In no event shall any order for Products other
than Core Products be considered a Backstop Purchase Order. In the event that any Core
Products purchased by Directed under a Backstop Purchase Order are not shipped to a customer
within ninety days of receipt by Directed, Sirius shall purchase such Core Products from
Directed at the then current [* * *] offered by the applicable Authorized Manufacturer.
Directed shall invoice Sirius on a monthly basis for the applicable amount (which invoice
shall include reasonable supporting documentation) and Sirius shall pay such invoices within
[* * *] of receipt. Title to any Core Products purchased by Sirius pursuant to this Section
3.07(b) shall pass to Sirius upon payment (such Core Products purchased by Sirius, “Sirius
Backstop Inventory”). Directed shall identify the Sirius Backstop Inventory in its warehouse
in a manner that clearly indicates that Sirius owns such inventory. Directed shall [* * *]
, pending orders from customers or other instructions from Sirius. Directed shall repurchase
the Sirius Backstop Inventory from Sirius, [* * *] Authorized Manufacturer, immediately upon
[* * *]. Directed shall fulfill all customer orders on a first in – first out basis.

     (c) Absent written instructions from Sirius to place a Backstop Purchase Order,
Directed shall be solely responsible for determining the quantities of Core Product(s) to be
ordered, and shall incur all associated inventory risk.”

     3. Addition of Section 3.11 of the Agreement. The following Section 3.11 is hereby
added to the Agreement:

     “SECTION 3.11. Expedited Shipping Costs. Sirius shall be responsible for the
incremental costs associated with the expedited shipment of Products by Directed to Approved
Dealers (in comparison to standard shipment costs), only to the extent that such expedited
shipment has been approved by Sirius in advance in writing.”

     4. Amendment to Section 4.02 of the Agreement. Section 4.02 of the Agreement is
hereby amended by deleting such Section in its entirety and substituting in lieu thereof the
following Section:

     “SECTION 4.02. Activation Payments. (a) Sirius shall pay Directed an
activation fee of $[* * *] (an “Activation Fee”) and a dealer payment of $[* * *] (a
“Dealer Payment”) for the initial activation of the Sirius Radio Service by a Subscriber on
a new Sirius Receiver sold by Directed (identified by electronic serial number), excluding:

	 	(i)	 	the activation of a Sirius Receiver by an existing subscriber
in connection with a Sirius Receiver exchange, upgrade or subscription
transfer;
	 
	 	(ii)	 	the activation of a re-manufactured or refurbished Sirius
Receiver;

2

 

[* * *] — CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

	 	(iii)	 	activations that occur more than [* * *] after the expiration
or earlier termination of this Agreement; and
	 
	 	(iv)	 	activations of Sirius Receivers sold by Directed to Sirius, any
of the dealers set forth on Exhibit A hereto or any other dealer that receives
a commission or similar payment directly from Sirius. Sirius may, upon at
least [* * *] prior written notice to Directed, modify Exhibit A to include
additional dealers.

Directed shall use each Dealer Payment to fund a $[* * *] commission to the Approved Dealer
that sold the applicable Sirius Receiver.

     (b) Sirius may change the amount of the Activation Fee and Dealer Payment at any time
upon ninety days prior written notice to Directed (such ninetieth day, the “Change Date”);
provided that (i) such new Activation Fees and Dealer Payments shall be paid only
with respect to activations of Products that occur on or after the Change Date and (ii)
Directed may terminate this Agreement by providing written notice to Sirius within thirty
days of receiving notice of such change.

     (c) All Activation Fees and Dealer Payments shall be based on a full uninterrupted
purchase of the Sirius Radio Service by a Subscriber for a period of 270 days from the date
of activation. If any subscription to the Sirius Radio Service is terminated, cancelled or
disconnected (whether by the Subscriber or Sirius) prior to the end of such period, or the
Subscriber fails to pay Sirius the full price of a subscription during such period, Sirius
shall charge back to Directed a portion of the Activation Fee and Dealer Payment
corresponding to the unused or unpaid portion of such period as follows:

	 	 	 
	Cancellation, Disconnection or Nonpayment Occurs:	 	Chargeback percentage:
	Within first [* * *] days of activation

	 	[* * *] %
	Between [* * *] days of activation

	 	[* * *] %
	Between [* * *] days of activation

	 	[* * *] %

     (d) Subject to Directed providing the reports described in Section 4.01 in a timely
manner, Sirius shall pay Activation Fees and Dealer Payments to Directed, net of any
chargebacks pursuant to Section 4.02(c), within [* * *] of the end of the month in which the
applicable activation occurs. Together with such payment, Sirius shall provide a report
setting forth (i) the electronic serial number of each Product that is a Sirius Receiver and
was activated during the applicable month, (ii) the electronic serial number of each Product
that is a Sirius Receiver and for which Sirius is charging back payments pursuant to Section
4.02(c), (iii) the name of the Approved Dealer that sold such Sirius
Receiver, (iv) the Sirius corporate identification number for such Approved Dealer, and
(v) and the amount paid or charged back.”

3

 

[* * *] — CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

     5. Amendment to Section 12.03(a) of the Agreement. Section 12.03(a) of the Agreement
is hereby amended by deleting such Section in its entirety and substituting in lieu thereof the
following Section:

     “SECTION 12.03. Insurance. (a) Directed shall secure and maintain in full force
and effect at all times during the Term and for two years thereafter:

     (i) comprehensive general liability insurance in the minimum amount $5,000,000
per occurrence, with aggregate coverage of at least $5,000,000;

     (ii) umbrella insurance in the minimum amount $3,000,000 per claim, with
aggregate coverage of at least $5,000,000; and

     (iii) property insurance sufficient to fully insure all Products (including
Sirius Backstop Inventory) from loss due to [* * *] or other damage while in the
possession of Directed or in transit to and from Directed. Notwithstanding the
foregoing, Directed shall have [* * *] from the date of execution of this Amendment
to secure property insurance for damage of any Product caused by [* * *] .

Directed shall name Sirius as an additional insured and loss payee on each insurance policy.
Directed shall ensure that each insurance policy contains an endorsement deleting the
condition thereof entitled “Other Insurance” as to any insurance in force for or in the name
of Sirius. Directed shall ensure that each insurance policy includes a provision requiring
the insurance company issuing such insurance policy to give Sirius prompt notice of any
revision or modification to any insurance policy affecting Sirius’ rights or any
cancellation of any such insurance policy. Upon Sirius’ request, Directed shall provide
Sirius with a certificate of insurance evidencing the coverage described in this Section
12.03(a).”

     6. No Other Amendments. Except as expressly amended, modified and supplemented by
this Amendment, the provisions of the Agreement are and shall remain in full force and effect.

     7. Counterparts. This Amendment may be executed in counterparts, all of which shall
be considered one and the same instrument, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other party. Delivery of this
Amendment by facsimile shall be as effective as delivery of an originally executed copy hereof.

     8. Entire Agreement. This Amendment, together with the terms of the Agreement,
constitutes the entire agreement and supersedes all prior agreements and understandings, both
written and oral, between Sirius and Directed with respect to the subject matter hereof.

4

 

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date set forth
above.

	 	 	 	 	 
	 	SIRIUS SATELLITE RADIO INC.

 	 
	 	By:  	/s/ Robert F. Law
 	 
	 	 	Robert F. Law 	 
	 	 	Senior Vice President and General Manager,

Consumer Electronics Division 	 
	 
	 	DIRECTED ELECTRONICS, INC.

 	 
	 	By:  	/s/ Jim Minarik
 	 
	 	 	Jim Minarik 	 
	 	 	President and Chief Executive Officer 	 
	 

5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}]]