AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This Amended and
Restated Employment Agreement (this “ Agreement
”) is made and entered into as of the 24
th day of September, 2008 (the “
Effective Date ”) by and between PetSmart,
Inc., a Delaware corporation (the “ Company
”), and Philip L. Francis (“ Executive
”). As of the Effective Date, this Agreement shall replace
and supersede in its entirety that certain Employment Agreement
between Executive and the Company entered into effective as of
May 15, 1999 (the “ Prior Agreement
”).
WHEREAS,
the Company and Executive previously entered into the Prior
Agreement and desire to amend and restate the Prior Agreement in
its entirety as set forth herein, effective as of the Effective
Date, in order to, among other things, clarify the application of
Section 409A of the Internal Revenue Code (the “
Code ”) to the benefits provided to Executive
under the Prior Agreement, clarify Employee’s participation
in the Executive Short Term Incentive Plan as such plan may amended
from time to time hereafter (the “ ESTIP
”) and clarify Employee’s participation in the Change
in Control and Severance Benefit Plan, as amended and restated on
September 24, 2008 (the “ CinC/SBP
”).
WHEREAS ,
the Company desires to continue to employ Executive as Chief
Executive Officer on the terms and conditions set forth herein and
Executive desires to accept such continued employment with the
Company.
NOW,
THEREFORE, in consideration of the foregoing premises, the
terms and conditions set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES . The Company hereby engages
Executive in the capacity of Chief Executive Officer. Executive
shall perform such duties and functions as shall be specified from
time to time by the Company’s Board of Directors (the “
Board ”) or its Compensation Committee.
Executive hereby accepts such employment and agrees to perform such
duties. During the term of the Agreement, Executive shall not be
required without Executive’s consent to undertake
responsibilities not at least commensurate with Executive’s
position as the Company’s Chief Executive Officer. In
connection with any termination of Executive’s employment by
the Company as Chief Executive Officer, Executive shall resign from
the Board effective simultaneously with the effective date of such
termination, unless such requirement is waived by the remainder of
the Board members.
(a) Base Salary. For all services to be rendered by
Executive hereunder, Executive shall be paid a base salary at the
rate of Nine Hundred Seventy Five Thousand Dollars ($975,000) per
year. Executive’s base compensation shall be reviewed at
least annually and may be increased at the discretion of the Board,
but during the term of this Agreement may not be decreased below
the then-effective base salary. Executive’s salary shall be
paid on such basis as
is the normal
payment pattern for executive officers of the Company. The base
salary payable under this Section 2(a) shall be in addition to and
exclusive of any payments to Executive from time to time under
formal or informal bonus, incentive compensation or similar plans
now in effect or which hereafter may be adopted.
(b) Performance Bonus. With respect to each full fiscal year
of the Company during which Executive is an officer of the Company
pursuant to this Agreement (each, a “ Bonus
Year ”), Executive shall be entitled to participate
in the ESTIP. The calculation and payment to Executive of a
performance bonus contemplated by this Section 2(b), if any,
shall be determined and paid in accordance with the terms of the
ESTIP.
3. CHANGE
IN CONTROL AND SEVERANCE BENEFITS .
(a) While Executive remains an officer of the Company,
Executive shall be a participant in the CinC/SBP. The terms and
conditions of the CinC/SBP as in effect on the date hereof with
respect to Executive are hereby incorporated by reference
herein.
(b) In the event the CinC/SBP is amended after the date
hereof to provide Executive greater benefits, Executive shall
received such greater benefits. In the event the CinC/SBP is
amended after the date hereof in a manner that would result in
Executive receiving lesser benefits, Executive shall receive the
benefits provided by the CinC/SBP as in effect on the date
hereof.
(a) Executive shall, in accordance with Company policy and
the terms of the applicable plan documents, be eligible to receive
discretionary grants of equity awards, as determined by the Board
or its Compensation Committee in its sole discretion. Executive
shall be entitled to participate in any performance equity award
plan approved annually for other executive officers of the Company
by the Compensation Committee of the Board.
(b) In the event of Executive incurs an Involuntary
Termination Without Cause, as defined in the CinC/SBP as in effect
on the date hereof, Executive shall receive the following
benefits:
(i) Vesting of each Company equity award held by
Executive shall accelerate on such date of termination by the
number of shares that would have vested in accordance with the
applicable vesting schedule had Executive remained employed by the
Company for an additional twelve (12) months as of the date of
termination. Notwithstanding the foregoing, this
Section 4(b)(i) shall not apply to equity awards issued under
or held in any plan that is intended to be qualified under Section
401(a) of the Code (“ Qualified Plan
”).
(ii) Executive shall have continued exercisability of
each Company stock option and stock appreciation right held by the
Executive (if any) until the earlier of (A) a period of
fifteen (15) months following the date of termination, or
(B) the expiration of the maximum term of the award.
Notwithstanding the foregoing, nothing in this Section 4(b)
prohibits the Company or a successor organization (or its parent)
from causing such awards to early terminate in connection with a
merger, consolidation or other corporate transaction
2
pursuant to the
terms of the applicable equity plan or award agreements, except to
the extent such early termination would be inconsistent with any
continued exercisability benefits available to Executive under the
CinC/SBP.
(a) Executive shall be entitled to participate in such
fringe benefits and perquisites as are generally made available to
executive officers of the Company, and such other fringe benefits
as may be approved by the Board for executive officers of the
Company during the term hereof including, without limitation,
medical, dental and disability insurance, group term life insurance
at least equal in face amount to the base salary payable pursuant
to Section 2(a), and annual vacation time of at least four
weeks.
(b) Nothing contained herein is intended or shall be deemed
to be granted to Executive in lieu of any rights or privileges to
which Executive may currently be or become entitled as an employee
of the Company under any medical, dental, disability, life
insurance, retirement, stock option, stock bonus or purchase,
incentive compensation or other plan or arrangement of the Company
which may now be in effect or which may hereafter be adopted, it
being understood that Executive shall have the same rights and
privileges to participate in such plans as any other similarly
situated executive officer of the Company.
6. REIMBURSEMENT OF EXPENSES . The Company shall
reimburse Executive for all reasonable business expenses incurred
by Executive in connection with the performance of
Executive’s duties hereunder and consistent with Company
policy and practice, provided that Executive furnishes to the
Company receipts and other documentation reasonably acceptable to
the Company evidencing such expenditures no later than three
(3) months following the date such expenditures were incurred.
The Company shall reimburse such expenses within ninety
(90) days after receiving such documentation.
7. PERFORMANCE OF DUTIES .
(a) In consideration of the payments to be made hereunder,
Executive agrees to devote Executive’s entire business time
and attention to the performance of Executive’s duties
hereunder, to serve the Company diligently and to the best of
Executive’s abilities, and not to compete with the Company or
any of its Affiliates (as defined below) in any manner whatsoever.
Without limiting the generality of the foregoing, Executive shall
not, during the term of Executive’s employment by the
Company, directly or indirectly (whether for compensation or
otherwise), alone or as an agent, principal, partner, officer,
employee, trustee, director, shareholder or in any other capacity,
own, manage, operate, join, control or participate in the
ownership, management, operation or control of or furnish any
capital to or be connected in any manner with or provide any
services as a consultant for any business which competes directly
or indirectly with any of the businesses of the Company or any of
its Affiliates (as defined below) as they may be conducted from
time to time (including any pet food, pet supplies, or pet services
superstore business within the meaning of Sections 12(a));
provided, however, that notwithstanding the foregoing, nothing
contained in this Agreement shall be deemed to preclude Executive
from owning not more than one percent of the publicly-traded
capital stock of an entity which is in competition with any of such
businesses. “ Affiliate ” of the Company
means
3
any person,
association or entity: (a) that, in whole or in part,
materially owns or is materially owned by, or otherwise has a
material interest (whether debt, equity or otherwise) in, the
Company; (b) that controls or is controlled by the Company;
(c) that is a subsidiary (whether owned in whole or in part)
of the Company; or (d) to which the Company is a
“related taxpayer” as defined in Section 1313(c) of the
Code.
(b) Executive may conduct civic, educational and charitable
activities and may also serve on boards of directors of other
companies, if consistent with this Section 7 and if
Executive’s service on the boards of directors of other
companies is approved by the Board.
8. TERM
AND TERMINATION .
(a) The term of Executive’s employment with the
Company hereunder shall continue until Executive resigns or is
terminated under this Section 8 or under Section 9 of
this Agreement.
(b) In the event of Executive’s death, this Agreement
shall terminate. In the event of Executive’s Total Disability
during the term of this Agreement, the Company may at its sole
option thereafter (unless Executive shall have resumed
Executive’s duties in full prior to such termination)
terminate this Agreement, to the extent permitted by applicable
laws. In the event of the Executive’s death or termination
due to Total Disability, the sole right hereunder of Executive,
Executive’s widow or Executive’s legal representative,
as the case may be, shall be to receive the following
benefits:
(i) A lump sum severance payment equal to one
(1) times the annual Base Salary at the rate in effect
immediately preceding the date of Executive’s termination
plus the Base Salary for the remainder of the calendar month in
which the Executive’s employment terminated, payable within
three (3) business days following the date of
termination;
(ii) Payment of any amounts due Executive pursuant to
the ESTIP;
(iii) Vesting of each Company equity award held by
Executive shall fully accelerate on such date of termination.
Notwithstanding the foregoing, this Section 8(b)(iii) shall
not apply to equity awards issued under or held in any Qualified
Plan; and
(iv) Assuming the Executive and/or the
Executive’s spouse or eligible dependents timely and
accurately elect to continue health insurance benefits under COBRA,
the Company shall pay the COBRA premiums for Executive,
|
