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Employee Stock Purchase Plan P R O S P E C T U S A N D P L A N D O C U M E N T JANUARY 2011 ENROLLMENT THIS DOCUMENT INCLUDES THE PROSPECTUS COVERING THESE SECURITIES, W H I C H H A V E B E E N R E G I S T E R E D U N D E R T H E S E C U R I T I E S A C T O F 1 9 3 3. E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S I P R OS P E C T U S July, 2010 Employee Stock Purchase Plan Prospectus This prospectus relates to shares of common stock of PetSmart Inc., offered to our employees pursuant to our 2002 Employee Stock Purchase Plan. The terms and conditions of the Purchase Plan, including the prices of the shares of our common stock, are governed by the provisions of the Purchase Plan and the agreements issued under the Purchase Plan. PetSmart, Inc., is referred to in this prospectus as the “Company” as well as “we,” “us,” or “our.” THIS DoCUMENT CoNSTITUTES The following information is intended as a summary as “10-Ks,” and quarterly reports, commonly PART oF A PRoSPECTUS CoVERING and may not answer all the questions you have known as “10-Qs.” These reports are filed SECURITIES THAT HAVE BEEN about the Purchase Plan and is not intended to with the Securities and Exchange Commission. REGISTERED UNDER THE SECURITIES go into every detail of the Purchase Plan. A copy In addition, if certain important corporate events ACT oF 1933, AS AMENDED. of the Purchase Plan is found on page 15. The occur during the year, the Company may file Benefits Line (1-866-263-8411) will be happy to current reports commonly known as “8-Ks.” our principal offices are located at 19601 answer further questions about your rights and The Company will also be preparing and filing North 27th Avenue, Phoenix, Arizona benefits under the Plan. Questions relating to with the Securities and Exchange Commission 85027 and our telephone number at that the tax consequences of your participation in the proxy statements in connection with its annual location is 1-623-580-6100. Purchase Plan should be referred to your personal meetings of stockholders. The proxy statements tax advisor. If you wish to participate in the Purchase will provide further information about the To our Associates Plan, you will need to enroll online or by phone. Company and its officers, directors and major stockholders. From time to time the Company We are pleased to provide you with information may also file other documents with the Securities regarding our Employee Stock Purchase Plan, Information about PetSmart, Inc. and Exchange Commission as required by referred to in these materials as the “Purchase An important part of your participation in the Sections 13(a), 13(c), 14 and 15(d) of the Plan” or the “Plan.” PetSmart, Inc. adopted the Purchase Plan is understanding the Company, Securities Exchange Act of 1934. Purchase Plan in order to provide you with an its products, operations and financial condition. opportunity to participate in the Company’s All of these documents constitute part of the Like any stockholder of the Company, you can potential growth. We believe the Purchase Plan information required by the securities laws to be keep yourself informed about the Company by is an important part of the benefits provided to provided or made available to you in connection reviewing reports and other documents that our employees and we hope you will take the with your purchase of stock under the Purchase the Company prepares for stockholders and the time to review this information carefully. Plan; and, these documents are incorporated by general public. If you become a stockholder of reference into these materials, which constitute the Company, you will be entitled to receive all We have divided our discussion of the Purchase the prospectus for the Purchase Plan. stockholder communications, attend stockholder Plan into two parts. The first part of this document meetings, and vote in the election of members describes the terms of the Purchase Plan, which For a copy of these documents, all of which are of the Board and other matters brought before provides for the purchase of common stock at a available without charge and upon written or the stockholders. discount and on tax advantaged terms. The second oral request, please contact PetSmart Investor part of this document describes the potential tax Relations, 19601 N. 27th Avenue, Phoenix, AZ The federal securities laws require the Company to consequences relating to your participation in the 85027, or at 1-623-587-2025. provide information about its business and financial Purchase Plan. status in annual reports, commonly known E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 1 P R OSPECTUS The information in this prospectus is not the closing price of the stock as of Company will use your deductions intended to provide you with investment the purchase date. Note that the to purchase common stock for you guidance regarding your purchase rights. extent to which you decide to make at a price equal to 95 percent of the You should consult your personal tax and contributions to the plan (i.e., up to 15 “Fair Market Value” of the stock on the financial advisers for guidance regarding percent of your earnings) is calculated stock on the Purchase Date. The Fair your purchase rights. based on your gross dollars earned, Market Value of the common stock up to a max $25,000. However, the is the closing price on the Purchase Please note that the Purchase Plan, and the payroll deductions come out of your date in question, as reported on the purchase rights you receive thereunder is net (i.e., after-tax) pay. NASDAQ Stock Market exchange. not a retirement plan, and the Purchase Plan and your purchase rights are not a The Purchase Plan authorizes the Board The Board has authorized an offering substitute for a retirement plan. of Directors of the Company to specify: to commence on Feb. 1, and Aug. 1, of each calendar year. Each offering Neither the delivery of this prospectus nor a (a) date (“offering Date”) or dates will begin on the offering Date and any sale made hereunder shall under any (“offering Dates”) on which rights to end six months after the offering circumstances create any implication that purchase the Company’s common Date, unless otherwise adjusted by there has been no change in the affairs of stock will be offered to employees the Administrator. offerings beginning the Company since the date hereof. (an “offering”); on Feb. 1, and Aug. 1, shall have one six-month offering Period, and end on t (b) he period of time (an “offering Part I Period”), which will commence July 31 and Jan. 31, respectively. Terms of the Purchase Plan on each offering Date and cannot Part I of this document provides general exceed 27 months, during which 2. Am I eligible to buy information about participation in the rights will be offered and the dates common stock as part Purchase Plan. Part II of this document (“Purchase Dates”) on which the of the Purchase Plan? describes various potential U.S. tax rights become exercisable; and Because the Purchase Plan is a tax- consequences related to your participation advantaged plan, Internal Revenue t (c) he terms under which employees in the Purchase Plan, and Part III describes Service (“IRS”) regulations require may contribute money for exercising the various Canadian tax consequences. certain minimal standards for the rights. participation in the Purchase Plan. Questions & Answers If you decide to participate in the The Board of Directors of the Purchase Plan (become a “Participant”), Company has the discretion to specify 1. How does the you will authorize the Company to other standards for participation.These Purchase Plan work? automatically deduct after-tax dollars standards, together with the from each of your paychecks until you IRS standards, are set forth in the Basically, the Purchase Plan enables instruct the Company to stop these Purchase Plan. you to purchase, through payroll deductions or until you terminate your deductions, shares of the Company’s Under upcoming offerings, you are employment. See Question 7. on common stock at 95 percent of eligible to participate if, on an offering each designated Purchase Date, the 2 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S Date, you have been employed by the purchased under such right shall again individual director may be removed Company, or by a Designated Affiliate become available for issuance. There from office, prior to the expiration of a of the Company, for at least six months are approximately 1,850,000 shares Board member’s term of office, only in on such offering Date and you worked available for sale remaining in the Plan. the manner and within the limitations at least 20 hours per week and at provided by our Bylaws and the law least five months per calendar year. 4. Who has the right to of Delaware. Information about the Consultants and advisors are not entitled determine what benefits current members of the Board and to participate in the Purchase Plan. I receive under the the Committee is provided in our final Purchase Plan? prospectus by which shares of our Even if you are otherwise eligible, you common stock were sold to the public, may not accrue the right to purchase The Board of Directors of the or if later, the proxy statement for our more than $25,000 worth of stock, as Company (the “Board”) administers last Annual Meeting of Stockholders. valued at the beginning of an offering, and interprets the provisions of Additional information about the pursuant to all stock purchase plans the Purchase Plan. The Board has administration of the Purchase Plan can of the Company or its affiliates during delegated authority to administer the be obtained by calling the Benefits Line any calendar year (as of the date of this Purchase Plan to the Compensation at 1-866-263-8411. Prospectus, the Company does not Committee (the “Committee”). The have any other stock purchase plans). Committee is currently composed 5. How do I enroll in the of four members of the Board. Each Employees who own, or who are Purchase Plan? member of the Committee serves entitled to purchase under certain for so long as the Board deems Generally, in order to participate options, 5 percent or more of the stock appropriate and may be removed in an offering under the Purchase of the Company or any subsidiary or by the Board at any time. The Plan, you must enroll online at parent of the Company, are not eligible Committee also has the power to www.etrade.com/enroll or by phone to participate in the Purchase Plan. administer and interpret the provisions at 1-877-367-6552 on or before the of the Purchase Plan. References to last day of the enrollment period 3. How many shares are the Board in this document should for the offering in which your reserved under the be construed as references to the participation will begin. Purchase Plan? Committee, as applicable. The Enrollment process authorizes The Purchase Plan currently authorizes Members of the Board normally are the Company to deduct automatically the sale of up to 4,000,000 shares nominated by the Board and elected a percentage of each gross paycheck of our common stock. The common by the stockholders of the Company specified by you. The money deducted stock subject to the Purchase Plan for three year terms. All directors hold is used to purchase the Company’s may be unissued shares or reacquired office until the expiration of the term for stock for you. shares, purchased on the open market which elected and until their successors or otherwise. To the extent a right are elected and qualified or until their under the Purchase Plan terminates earlier death, resignation, or removal for any reason, any shares not from office. The entire Board or any E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 3 P R OSPECTUS t (e) he Board of Directors of the arising under any Company group 6. When can I enroll? Company discontinues the insurance or benefit program, traveling Subject to the eligibility requirements program, which it has the right expenses, business and moving set forth in Question 2 at the time to do at anytime. expense reimbursements, income of enrollment, you can enroll in an received in connection with stock offering during the open en ollment r 8. How much of my earnings options, contributions made by the period. If you meet the eligibility can I have withheld to Company under any employee benefit requirements and you would like purchase common stock plan and similar items. to enroll in this offering beginning under the Purchase Plan? If your earnings increase or decrease, February 1, 2011, you must enroll If you are eligible to participate in the the amount (but not the percentage) online at www.etrade.com/enroll or Purchase Plan, you can authorize deducted will be adjusted accordingly. by phone at 1-877-367-6552 on or the Company to withhold up to 15 before the enrollment deadline. percent of your gross earnings, up 9. When is common 7. How long is my to a max of $25,000, for each pay stock purchased? period by enrolling either online at enrollment effective? Shares are purchased for you under the www.etrade.com/enroll or by phone Purchase Plan on the Purchase Dates, once you complete the enrollment at 1-877-367-6552. You may choose which are each July 31 and January 31. process, deductions will be made any whole percentage of deductions continually during the first offering but cannot choose a fraction of a Period for which your enrollment was percentage. For example, you may 10. At what price are the effective and during each subsequent choose to have 2 percent or 3 percent shares purchased? offering Period until: of your earnings deducted during each The shares are purchased at a price pay period but not 2.5 percent. The which is 95 percent of the Fair Market y (a) ou choose to continue in the next amount you choose to have deducted Value of the Company’s common stock offering but change your contribution is up to you. on the Purchase Date (See Question 1 level during open enrollment; for a definition of Fair Market Value). For purposes of the Purchase Plan, y (b) ou instruct the Company to your “earnings” includes all salary, terminate your deductions wages (including any amounts you may (see Question 14, 16); elect to defer under the Company’s 401(k) plan or other cash or deferred y (c) ou are no longer eligible arrangements), overtime pay, (see Question 2); commissions, incentives, bonuses and n (d) o further shares are authorized for other remuneration paid directly to purchase under the Plan; or you, but excludes profit sharing, the cost of employee benefits paid for by the Company, education or tuition reimbursements, imputed income 4 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S months in the offering Period. If The following chart illustrates the calculation of shares purchased the maximum limit on the aggregate number of shares that can be Assume that: purchased by all employees would be exceeded, the Board will allocate Your total payroll deductions were $1,000.00 a prorated portion of the shares offering Date (at which time you are eligible) February 1, 2011 available for purchase for you and Purchase Date July 31, 2011 other employees in as nearly a Fair Market Value of stock on Purchase Date $30.00 uniform manner as practicable and 95 percent of stock value on Purchase Date $28.50 as it deems equitable. Your shares are purchased at $28.50 12. What happens to my Number of shares purchased for you $1,000 ÷ $$28.50 = 35 money during the period You would receive 35 shares, and $2.50 (the excess of $1,000 over the purchase price of before stock is purchased? 35 shares) would be retained in your account to be used to purchase shares in the future. Your payroll deductions are maintained If you sold one of the 35 shares, the tax consequences of that sale can be determined in accordance with the chart on the page 10. with the general funds of the Company and do not earn interest for you. 11. How many shares can as valued at the beginning of the 13. What happens to my money I purchase under the offering Period, worth of stock in (carry forward amount) Purchase Plan? any calendar year; at the end of an offering Period if it is not used to The maximum number of shares that (c) No fractional shares will be issued; purchase common stock? you can purchase on any Purchase o (d) n any single Purchase Date, all Unless one of the limitations described Date will be determined by dividing employees in the aggregate can in Question 11 applies to you, the only the balance of your payroll deductions purchase no more than the lesser funds in your account at the end of an on the Purchase Date by the of: 300,000 shares; the number of offering Period will be the remaining applicable purchase price. However, shares remaining in the Purchase amount withheld for you that cannot purchases will be subject to the Plan; or the number of shares that be used to purchase a whole share on following limitations: were remaining in the Purchase Plan the final Purchase Date. This amount Y (a) ou may purchase a maximum of as of the beginning of the applicable will remain in your account for use on 3,750 shares of Common Stock on offering Period; and the next Purchase Date. If one of the any Purchase Date; limitations described in Question 11 I (e) f any offering Period is less than does apply to you, the amount left in Y (b) ou may not accrue the right to six months, each participant may your account because of such limitation, purchase more than $25,000, purchase no more than 625 as required by IRS regulations, will be shares multiplied by the number of E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 5 P R OSPECTUS returned to you, without interest, as reduction in your deductions generally You cannot re-enroll during any soon as reasonably practicable after the will begin with the next full pay period offering if you had previously end of the offering Period. after the Company receives your notice. withdrawn from the Purchase Plan in that offering. However, you can enroll For example, assume that the purchase You can stop your payroll deduction in the Purchase Plan for any subsequent price of the stock is $28.50 and that at any time by logging on to offerings, assuming you are otherwise you had payroll deductions equal to www.etrade.com/enroll or call eligible, if you complete the enrollment $1,000. The Company will be able E*Trade at 1-877-367-6552. process. See Questions 5 and 6. to purchase 35 shares of common You can withdraw the money deducted stock for you with $2.50 remaining. for you during most times in an 17. What happens if I leave Since $2.50 is less than $28.50 (the offering Period. See Question 16. the Company? purchase price of the stock), the $2.50 will remain in your account and will be Whether you leave the Company used to purchase stock on the next 15. Can I contribute additional voluntarily or your employment is Purchase Date. Assume, however, that amounts if I want to buy terminated for any reason (including for reasons discussed in Question 11, additional shares of stock? death or disability), your rights to the Company can buy only 20 shares purchase stock under the Purchase No. only amounts withheld through of common stock for you with $570.00 Plan terminate immediately and your payroll deductions can be used toward remaining. In this case, $430.00 will be payroll deductions and any carry the purchase of shares under the returned to you. forward amount not already used to Purchase Plan. purchase stock under the Purchase 14. Can I reduce or increase 16. Can I withdraw the money Plan will be returned to you (or your the percentage of my payroll deducted for me, and estate) without interest as soon as deductions at any time? thereby cease to participate, reasonably practicable. You can increase your payroll at any time? Can I later recommence my deductions 18. What happens if I take deductions only during open in that same offering? a leave of absence? enrollment for the next offering. To increase your payroll deductions, During an approved leave of absence, You can withdraw your money, and you must either log on to you can continue to participate in the thereby cease to participate at any www.etrade.com/enroll or call Purchase Plan. If you cannot return time prior to the last month of the E*Trade at 1-877-367-6552 before the to your job and your employment is offering Period by logging on to enrollment deadline. terminated you will receive a refund www.etrade.com/enroll or call E*Trade of all deductions accumulated to date at 1-877-367-6552. Payroll will stop You can reduce your payroll deductions (reduced for prior stock purchases) deducting money and your deductions during open enrollment and also once without interest. will be returned to you without interest, during any offering Period by logging as soon as reasonably practicable. on to www.etrade.com/enroll or call E*Trade at 1-877-367-6552. The 6 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S You will not be permitted to participate otherwise to the public). Whether 21. Do I pay commissions on in any future offerings until such time information is material will depend on the purchase of stock under as you become eligible again under the the specific circumstances. the Purchase Plan or on the Purchase Plan. A general test is whether dissemination sale of that stock? of the information to the public would 19. When can I sell stock You pay no commissions when stock be likely to affect the market price of purchased under the is purchased for you under the Plan. the Company’s stock or would be likely Purchase Plan? Generally, to sell your stock, you to be considered important by people will need to activate your E*Trade Subject to the Insider Trading Policy, who are considering whether to buy account, if you haven’t already done you can sell stock purchased under the or sell the Company’s stock. Certainly so. You can then sell your stock Purchase Plan as soon as it is deposited if the information makes you want to through E*Trade either online or via into your E*Trade account, or you can buy or sell, it would probably have the telephone. You can expect to be retain the shares and enjoy your rights the same effect on others. Material charged a fee or commission when as a stockholder of the Company. information may include financial results you sell your stock. The Company See Question 4 in Part II for the tax or forecasts, real estate strategy, major will not buy from you or sell on your consequences of an immediate sale. contract awards or cancellations and behalf, or assist you in selling stock For Canadian Associates see question 4 top management or control changes. purchased for you under the Purchase in Part III. officers are subject to special If you have questions regarding what Plan. officers are subject to special limitations on the sale of their stock. constitutes inside information, please limitations on the sale of their stock. refer to the Company’s Insider Trading 20. If I am aware of material Policy or contact the office of the 22. Can I request that the stock non-public information, can General Counsel at 1-800-738-1385. be issued in the name I sell my stock before this of my child, or a family If you are contemplating selling your news is disclosed to the trust, or in “street name” stock and you think you might have public? for my broker? “inside information” you should discuss No. If you are aware of material your possible sale with the General No. However, after shares are inside information, you should not Counsel of the Company. purchased under the Purchase Plan sell shares of the Company’s stock, and deposited into your E*Trade If, after such discussion, it is determined whether purchased through the “Plan” account, you may transfer the shares to that such information is, in fact, inside or otherwise, before dissemination of any party you designate by contacting information, you must wait to sell your the information to the public. “Inside E*Trade at 1-800-838-0908. stock until after such information has information” is information that is been made public. both very important (material) and non–public (not disclosed through press releases, newspaper articles or E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 7 P R OSPECTUS Date, including an offering purchase of common stock for each 23. Can the Company change underway at the time of the Participant properly correspond the terms and conditions of Company’s action; and with amounts withheld from the the Plan? Participant’s Earnings; a (3) llocating shares. Except as provided below in the t (5) o amend the Purchase Plan and/or following two paragraphs, the Such modifications or amendments any outstanding rights to enable the Company will not change the terms shall not require stockholder approval Purchase Plan and/or outstanding and conditions during an ongoing or the consent of any participants. rights to qualify under Section 423 offering without your consent. The of the Internal Revenue Code; Company can prospectively change These actions by the Company may be the terms and conditions under made regardless of whether they alter t (6) o establish multiple Purchase Dates the Purchase Plan at any time by or impair the rights granted under the within an offering Period; amending the Purchase Plan or the Purchase Plan. terms applicable in future offerings. t (7) o provide for automatic withdrawal The Board may authorize the Furthermore, certain changes in rights or enrollment provisions; and Company to make any of the will require stockholder approval. following changes without consent t (8) o establish such other limitations Stockholder approval must be obtained of any participants: or procedures as the Company if the amendment increases the determines in its sole discretion number of shares authorized under t (1) o change the offerings, limit advisable which are consistent with the Purchase Plan or tax, securities or the frequency and/or number of the Purchase Plan. other laws require stockholder approval changes in the amount withheld for the amendment. In the event the during an offering; Company determines that the ongoing 24. Does the Company operation of the Purchase Plan may (2) o establish the exchange ratio t pay dividends on its result in unfavorable financial accounting applicable to amounts withheld in a common stock? consequences, the Company may currency other than U.S. dollars; The Company currently pays dividends modify or amend the Purchase Plan on its common stock. Dividends t (3) o permit payroll withholding in to reduce or eliminate such accounting will be paid to the stockholder who excess of the amount designated by consequence including, but not owns the stock on the record date a Participant in order to adjust for limited to: (date Board of Directors determines). delays or mistakes in the Company’s The Board of Directors decides each a (1) ltering the purchase price for processing of properly completed quarter whether a dividend will be paid any offering including an offering withholding elections; and if so, the amount. Contributions underway at the time of the change t (4) o establish Purchase Plan (payroll deductions) made by you from in purchase price; reasonable waiting and adjustment February 1, 2011 to July 31, 2011, are s (2) hortening any offering so that periods and/or accounting and not eligible for dividends, because offering ends on a new Purchase crediting procedures to ensure that amounts applied toward the 8 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S the purchase of the shares for this A corporate transaction will be Part II purchase period does not occur until deemed to occur in the event of: July 31, 2011. (1) a dissolution or liquidation of the Company; (2) a merger or U.S. Tax Issues Relating to Your 25. What happens if there is a consolidation in which the Company Participation in the Purchase change in the Company’s is not the surviving corporation; (3) a Plan capital structure? merger in which the Company is the The information contained in Part II is surviving corporation but the shares designed to respond to questions you If certain changes occur to the of the Company’s Common Stock may have about the United States federal Company’s capitalization (e.g., a are converted into other property; or tax consequences of participating in the stock split or reverse stock split of (4) any capital reorganization in which Purchase Plan. our common stock), the Board will the stockholders of the Company appropriately adjust the purchase price immediately before the reorganization You should understand, however, that and number of shares under each cease to own more than fifty percent this tax information is not complete. For outstanding purchase right. (50%) of the shares of the Company example, it does not address state or local entitled to vote. tax laws or the application of laws if you 26. What happens to my are subject to tax laws in Canada or other purchase rights in the event 27. Is the Purchase Plan countries besides the U.S. of a corporate transaction? subject to ERISA? Furthermore, because tax laws and In the event of a corporate transaction The Purchase Plan is not subject to the regulations may change, and interpretations any surviving or acquiring corporation provisions of the Employee Retirement of these laws and regulations can change the may either continue or assume Income Security Act of 1974 (“ERISA”). way the laws and regulations apply to you, purchase rights outstanding under the we recommend that you consult with a tax Purchase Plan or may substitute similar The Purchase Plan does not enjoy advisor if you have questions relating to the rights for those outstanding under the the tax deferral benefits of a qualified tax consequences of any specific transaction. Purchase Plan. If a surviving or acquiring retirement plan. Your participation corporation does not continue or in the Purchase Plan does not affect 1. Am I taxed on the money assume such purchase rights or does your ability to participate in any 401(k) withheld to purchase stock? not substitute similar rights for those plan or other qualified retirement plan outstanding purchase rights, then maintained by the Company. Yes. The money withheld from your accumulated contributions will be earnings to purchase common stock used to purchase stock within five (5) under the Purchase Plan is taxable business days prior to the corporate income to you just as if you had actually transaction and your purchase rights received the money. The amount under the ongoing offering will withheld under the Purchase Plan is terminate immediately thereafter. subject to all payroll taxes such as Social Security, Medicare, and state, local and federal income taxes. E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 9 T A XES Tax Treatment for ESPP Shares Fair Market Value Purchase Price (95%) Discount Purchase Date $30.00 (d) $28.50 (a) $1.50 January 31, 2011 Basis (Based on Selling Price Then the Total Income Included Capital Gain Purchase Price): (a) Per Share: (b) Gain (Loss) is: (c) on Your W2: (e) (Loss) Per Share: (f) Disqualifying Disposition Example 1 $28.50 $20.00 -$8.50 $1.50 -$10.00 Example 2 $28.50 $35.00 $6.50 $1.50 $5.00 Qualifying Disposition Example 1 $28.50 $20.00 -$8.50 $0.00 -$8.50 Example 2 $28.50 $35.00 $6.50 $1.00 $5.00 (a) The purchase price is 95% of the Fair Market Value on the Purchase Date. (b) The selling price per share. (c) The Total Gain (Loss) is calculated by subtracting the Purchase Price (a) from the Selling Price (b). (d) The Fair Market Value on the Purchase Date. (e) For a disqualifying disposition the Income Included on Your W2 is calculated by taking the Fair Market Value on the date of purchase (d) and subtracting the Purchase Price (a). For a qualifying disposition the Income Included on Your W2 is calculated by taking the Fair Market Value on the purchase date (d) and subtracting the Purchase Price (a). (f) The Capital Gain (Loss) Per Share is calculated by subtracting column (e) from column (c). Whether your share is sold in a disqualifying disposition or a qualifying disposition will depend on how long you hold that share. Be sure to consult with your personal tax advisor. time of purchase, you do not have to Generally, you will include in income 2. Do I have to pay tax when pay federal income tax on this benefit and pay tax on the difference between stock is purchased by me at the time of purchase. what you paid for the common stock under the Purchase Plan? and the higher of what you sold it for Even though you are buying the stock 3. What is my tax when I sell or the Fair Market Value at the time of at a price which is 95 percent of the the stock purchased by me the purchase. The amount of tax will Fair Market Value of the stock at the under the Purchase Plan? depend on your personal tax situation and the characterization of any profit or loss on the sale as ordinary 10 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S income or capital gain or loss, or a stock in a disqualifying disposition for common stock purchased by you under combination of ordinary income and an amount less than the Purchase the Purchase Plan will be long-term capital gain or loss. Date Value, you generally will be capital gain or loss if the common stock deemed to have received ordinary was held by you for more than one 4. Will my profit or loss be income equal to the difference year from the date of purchase. ordinary income or capital between the Purchase Date Value gain or loss? and the Purchase Price. However, 5. What is the difference you generally will be able to report between ordinary income The characterization of the income you a capital loss equal to the difference and capital gain income recognize varies and depends upon between the sales price and the for federal income tax how long you hold the common stock Purchase Date Value. Thus you will purposes? before you dispose of it. have ordinary income and a capital As of the date of this document, loss in the same year, and you may Disqualifying Disposition the maximum tax rate applicable to not be able to fully offset the income Generally, if you transfer your stock in a long-term capital gain is 15 percent with the loss. “disposition” within: while the maximum effective rate Qualifying Disposition applicable to ordinary income and t (a) wo years after the first date Normally, if you transfer your stock in a short-term capital gain is 35 percent. on which you were eligible to qualifying disposition (a disposition other Additionally, capital gains and losses participate in the offering in which than a disqualifying disposition), or if you are subject to certain other provisions you purchased the stock; or die while owning the stock, then any of the Internal Revenue Code not o (b) ne year after the issuance of the gain will be characterized as ordinary applicable to ordinary income. stock to you (generally the Purchase income to the extent of the lesser of Date). In either case, a “disqualifying the gain recognized or an amount equal 6. Is there any withholding at disposition” – the difference between to 5 percent of the Fair Market Value of the time common stock is the stock on the first date on which you purchased by me or when I t (1) he Fair Market Value of the stock were eligible to enroll in the offering sell the stock? on the date it was purchased by you in which you purchased the stock. Any (the “Purchase Date Value”) and There currently is no income tax recognized gain in excess of the amount withholding required when common characterized as ordinary income will t (2) he price at which the stock was stock is purchased or sold by you. The be treated as capital gain. purchased (the “Purchase Price”) Company is required to report to the will be characterized as ordinary If you make a qualifying disposition IRS any ordinary income recognized by income, and the balance of the that results in a loss, there will be no you as a result of a disposition if such profit (if any) – the difference recognition of ordinary income and information is available to the Company. between the sale price and the you will have a capital loss equal to the Purchase Date Value – will be difference between the sale price and characterized as capital gain. If you the Purchase Price. Any capital gain or sell or otherwise dispose of your loss recognized on a sale or transfer of E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 11 T A XES Resources no person has been A (3) ll documents we have filed 7. What constitutes a authorized to give any information or pursuant to Sections 13(a), 13(c), disposition of stock for tax make any representations, other than 14 and 15(d) of the Exchange Act purposes? those contained in this prospectus, in of 1934, as amended, after the A disposition usually includes any sale, connection with the Purchase Plan, date of this prospectus and prior exchange, gift or transfer of legal title. and, if given or made, such information to the filing of a post-effective Certain transactions are excluded, or representations must not be relied amendment which indicates that all including a pledge or a transfer by upon as having been authorized by us. securities offered have been sold or bequest or inheritance, or certain This prospectus does not constitute which deregisters all securities then transfers to a spouse or former spouse an offering in any state in which such remaining unsold, will be deemed incident to a divorce. As this is a offering may not lawfully be made. to be incorporated by reference in complicated area, you should consult this prospectus and to be part of this your tax advisor for the consequences prospectus from the date of filing Information Incorporated of any disposition of plan stock. such documents. by Reference This prospectus contains information concerning PetSmart, Inc. and the The following documents and Part III information we previously filed with the Purchase Plan, but does not contain Securities and Exchange Commission all the information set forth in the are incorporated into this prospectus Canadian Tax Issues Relating Form S-8 registration statement for by reference: To Your Participation In The the Purchase Plan which we have Purchase Plan filed with the Securities and Exchange o (1) ur latest annual report on Form The following is a general discussion of the Commission, referred to as the 10K filed pursuant to Sections 13(a) Canadian federal income tax consequences Commission, under the Securities or 15(d) of the Securities Exchange of participation in the Plan and any Act of 1933, as amended, referred to Act of 1934, as amended, or our disposition of stock acquired under the Plan. as the Securities Act. The Form S-8 latest prospectus filed pursuant to registration statement, including the Rule 424(b) under the Securities Act This discussion is based on current Canadian exhibits to the registration a statement, of 1933, as amended, that contains federal tax laws and regulations (as of may be inspected at the Commission’s audited financial statements for April 28, 2009) and is not a complete office in Washington, D.C. In addition, our latest fiscal year for which such description of those Canadian federal tax the Commission maintains a web statements have been filed. laws. In addition, you should understand site that contains reports, proxy and that this tax information does not address T (2) he description of our common information statements and other all taxes that may be applicable to you. For stock which is contained in our information regarding registrants that example, it does not address provincial tax registration statement on Form file electronically with the Commission. laws or the application of laws if you are 8-A filed on 9/10/96 (SEC File No. The address of the Commission’s web subject to tax laws in the United States or 021888) pursuant to Section 12(g) of site is http:\\www.sec.gov. Except for other countries besides Canada. the Securities Exchange Act of 1934, the Senior Vice President, Human as amended. 12 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S Furthermore, because tax laws and stock) is included in your employment In the most straightforward case, the ACB regulations may change, and interpretations income and is subject to income tax of the shares acquired under the Plan of these laws and regulations can change the at the applicable graduated rates. See will equal the amount you paid for the way the laws and regulations apply to you, paragraph 4 for an example that shows shares plus the amount of the discount we recommend that you consult with a tax the tax treatment on both purchase which was included in your income advisor if you have questions relating to the and sale of shares. Where the purchase upon acquisition of the shares. However, tax consequences of any specific transaction. price of the shares is at least equal to where you have acquired shares of the market price of the shares when Common Stock at different times and 1. Is the grant of a purchase you were granted the right to purchase prices (including shares acquired outside right under the Purchase the shares, you may be able to deduct the Purchase Plan), you may be required Plan taxable to me? 50% of the discount in calculating your to average the cost of some or all of those taxable income for the year in which shares in order to determine the ACB of No. The grant of a purchase right you purchased the shares. You may each share you sell. under the Plan does not result in also be eligible to defer some or all of taxable income to you. You are generally required to include the tax on the discount until you sell 50% of any capital gain in income for 2. Am I taxed on the money the shares. You should consult with tax purposes for the year in which withheld to purchase stock? a professional tax advisor prior to the the capital gain arises. Net taxable end of the year in which you purchase Yes. The money withheld from your capital gain in any year will be subject shares under the plan for more earnings to purchase common stock to income tax for that year at the details about the requirements for this under the Purchase Plan is taxable applicable rates. Your tax advisor deduction and/or tax deferral. income to you just as if you had actually can assist you in determining the tax The amount of the discount will be received the money. The amount treatment of capital gains or losses reported on your T-4 form for the withheld under the Purchase Plan arising from the disposition of stock year in which you acquire the stock. is subject to all payroll taxes such as acquired under the Purchase Plan. It is your responsibility to report the Canada Pension Plan and Employment income on your annual income tax For Example: Assume that the Fair Insurance contributions and provincial return and pay any applicable taxes Market Value of a share of Common and federal income taxes. when you file your tax return. Stock on the Purchase Date was $20. 3. Do I have to pay tax when Further assume that you acquired 50 stock is purchased by me 4. What is my tax when I sell shares under the Plan for that offering under the Purchase Plan? the stock purchased by me Period at a Purchase Price of $19 (95% under the Purchase Plan? of $20). Assume that you sell the 50 Yes. When you purchase stock under If you sell your shares, you will have a shares for $25 per share six months the Plan, the discount on those shares capital gain (or loss, as applicable) equal later and do not own any other shares (i.e., the difference between the Fair to the difference between the amount of Common Stock. Market Value of the stock on the date received from the sale (less reasonable of purchase and the amount of your You will recognize $50 of income from selling expenses) and the adjusted cost payroll deductions used to purchase the employment for the year in which you base (“ACB”) of the shares. E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 13 T A XES acquire the shares (which represents (These examples have been prepared year of receipt and will be subject the $20 Fair Market Value of the shares on the assumption that no deduction to tax on those dividends at normal on the last day of the offering Period or deferral in respect of the tax on graduated rates. No special dividend less the $19 Purchase Price, multiplied the discount (see paragraph 3 above) tax treatment will apply as the dividends by the 50 shares which were acquired). applies as it will be a question of fact, are not payable by a Canadian resident You will also recognize $250 of capital based, among other things, on the price corporation. You will also be subject gain income (which represents the of the shares at the start of an offering to U.S. non-resident withholding tax sale price of $25 less the $20 ACB of period and the purchase price you on your dividends, but may be able the shares multiplied by the 50 shares actually pay, whether such deduction or to claim a foreign tax credit when which were sold). The ACB in this case deferral is available.) calculating your Canadian income tax is equal to the $19 Purchase Price plus payable in respect of the dividends. the $1.00 discount included in your 5. Will taxes be withheld when Your tax advisor can assist you in income upon acquisition of the shares. I acquire stock under the determining the tax treatment of any 50% of that capital gain, or $125, will Purchase Plan or when I sell dividends you receive on your stock have to be included in your income for stock that I acquire under acquired under the Purchase Plan and the year in which you sell the shares. the Purchase Plan? the availability of any foreign tax credit. Your employer is required to withhold Another Example: Assume the same 7. Do I need to convert share federal and provincial income taxes, facts as in the last example, except that values and dividends into as well as Canada Pension Plan you sell the stock six months after the Canadian currency? contributions, in respect to the discount end of the offering Period at a price on the stock you purchase under the Yes. Generally, the Income Tax Act of $15 instead of $25. In this case, you Purchase Plan at the time you acquire (Canada) (the “ITA”) provides that will still recognize $50 of income from it. These withholdings will be deducted Canadian tax results as defined by employment for the year in which you from your regular salary and will reduce the ITA must be determined using acquire the shares (which represents the amount of tax you could otherwise Canadian currency and the amount the $20 Fair Market Value of the shares be required to pay in respect to the of such Canadian currency is to be on the last day of the offering Period purchase of shares under the Plan when determined in the manner provided less the $19 Purchase Price, multiplied you file your return (see question 3). under the ITA. As the shares are by the 50 shares which were acquired). denominated in U.S. dollars and any Instead of a capital gain, you will have a Capital gain on the sale of stock is not dividends will be paid to you in U.S. capital loss of $250 (which represents subject to withholding.. dollars, you will need to convert share the $20 ACB of the shares (determined prices and dividends to Canadian as in the last example) less the $15 sales 6. Are dividends I receive on dollars in accordance with the price of the shares, multiplied by the 50 stock acquired under the requirements of the ITA. shares which were sold). 50% of that Purchase Plan taxable? capital loss, or $125, may be used to Yes. You will be required to include offset the taxable portion of your capital the gross amount of any dividends gains (if any). in income for tax purposes in the 14 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 2002 Employee Stock Purchase Plan Amended and Restated, Plan Document Effective August 1, 2008 “ (h) Designated Affiliate” means any 1. Purpose 2. Definitions Affiliate that has adopted the Plan, as T (a) he purpose of the 2002 Employee The capitalized terms set forth below set forth in Appendix A. Stock Purchase Plan is to provide shall have the meaning stated herein, “ (i) Earnings” means the total a means by which employees unless context requires otherwise. compensation paid to an Employee, of PetSmart, Inc., a Delaware “ (a) Administrator” means either the including all salary, wages (including corporation, and employees of its Board or any Committee designated amounts elected to be deferred by Designated Affiliates, as defined by the Board in accordance with the Employee, that would otherwise below, may be given an opportunity paragraph 3(a). have been paid, under any cash or to purchase stock of PetSmart, Inc. deferred arrangement established “ (b) Affiliate” means any “parent (b) PetSmart, Inc., by means of the by the Company), overtime pay, corporation” or “subsidiary 2002 Employee Stock Purchase Plan, commissions, bonuses, and other corporation” of the Company, as seeks to retain the services of its remuneration paid directly to the those terms are defined in Sections employees, to secure and retain the Employee, but excluding profit 424(e) and (f), respectively, of services of new employees, and to sharing, the cost of Employee the Code. provide incentives for such persons benefits paid for by the Company, to exert maximum efforts for the education or tuition reimbursements, “ (c) Board” means the Board of success of PetSmart, Inc. imputed income arising under any Directors of the Company. Company group insurance P (c) etSmart, Inc. intends that the “ (d) Code” means the Internal Revenue or benefit program, traveling rights to purchase its common stock Code of 1986, as amended. expenses, business and moving granted under the 2002 Employee expense reimbursements, signing, Stock Purchase Plan be considered “ (e) Committee” means a committee relocation and other bonuses not options issued under an “employee of the Board which is delegated paid in cash such as through loan stock purchase plan” as that term authority to administer the Plan as forgiveness or cancellation, loans is defined in Section 423(b) of the provided in paragraph 3(a). treated as income for income tax Internal Revenue Code of 1986, purposes, income received in “ (f) Common Stock” means shares of as amended. connection with stock options, common stock of the Company. contributions made by the Company “ (g) Company” means PetSmart, Inc., a under any Employee benefit plan, Delaware corporation. and similar items of compensation. “ (j) Eligible Employee” means, as of the relevant offering Date, an Employee E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 15 P L A N (i) who has been continuously Administrator. If the Common Stock otherwise provided by the employed by the Company or by is listed on any established stock Administrator in connection with a Designated Affiliate for at least six exchange including the NASDAQ an offering. (6) months, (ii) whose customary Global Market or the NASDAQ “ (o) offering Period” means a period of employment with the Company or a Capital Market, the Fair Market time during which the Administrator Designated Affiliate is at least twenty Value of a share of Common Stock, grants rights to Eligible Employees (20) hours per week and at least five unless otherwise determined by the to purchase Common Stock under (5) months per calendar year, (iii) Administrator, shall be the closing this Plan. who will not, if allowed to participate sales price (rounded up where in the offering commencing on such necessary to the nearest whole “ (p) Participant” means with respect offering Date, be deemed to own, cent) for such security (or the closing to an offering an Eligible Employee as set forth in Section 423(b)(3) of bid, if no sales were reported) as who is participating in such offering. the Code, five percent (5%) or more quoted on such exchange (or the of the total combined voting power exchange or market with the greatest “ (q) Plan” means this 2002 Employee of all classes of stock of the Company volume of trading in the Common Stock Purchase Plan. or of any Affiliate, and (iv) who is not Stock) on the date of determination, “ (r) Purchase Date” means the date on a member of a highly compensated as reported in The Wall Street which each Participant’s accumulated class of employees within the Journal or such other source as payroll deductions and other meaning of Section 423(b)(4)(D) of the Administrator deems reliable. additional payments specifically the Code that has been designated Unless otherwise determined by the provided for in the offering are by the Administrator as not eligible Administrator, if there is no closing applied to the purchase of shares of to participate in the offering. To sales price (or closing bid if no sales Common Stock as further described the extent determined by the were reported) for the Common in paragraph 8(a). Administrator, in its sole discretion, Stock on the date of determination, service with an Affiliate prior to such then the Fair Market Value shall be “ (s) Purchase Period” means the time corporation becoming an Affiliate of the closing sales price (or closing bid designated by the Administrator or the Company may be considered if no sales were reported) on the by the Plan for Eligible Employees as continuous employment with the last preceding date for which such to accumulate payroll deductions in Company or a Designated Affiliate quotation exists. order to purchase Common Stock for purposes of the requirement in (i) at the end of such Purchase Period “ (m) offering” means the grant of rights above of this paragraph. under the Plan. from time to time to purchase “ (k) Employee” means an employee Common Stock of the Company “ (t) Purchase Price” has the meaning of the Company or of a made during an offering Period described in paragraph 10. Designated Affiliate. under paragraph 6 of the Plan. “ (l) Fair Market Value” means the “ (n) offering Date” has the meaning value of the Common Stock, as defined in paragraph 6(b) unless determined in good faith by the 16 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S “employee stock purchase shares. The number of shares 3. Administration plan” as defined in Section 423 available under the Plan shall be T (a) he Plan shall be administered of the Code. subject to adjustment as provided by the Board unless and until the under paragraph 14(a) of this Plan. T (ii) o construe and interpret the Board delegates administration to If any rights granted under the Plan Plan and rights granted under a Committee. Whether or not the terminate for any reason without it, and to establish, amend and Board has delegated administration, having been exercised, the shares revoke rules and regulations the Board shall have the final of Common Stock not purchased for its administration. The power to determine all questions under such rights shall again become Administrator, in the exercise of policy and expediency that may available for issuance under the Plan. of this power, may correct arise in the administration of the any defect, omission or T (b) he Common Stock subject to the Plan. If administration is delegated inconsistency in the Plan, in Plan may be unissued shares or to a Committee, the Committee a manner and to the extent reacquired shares, bought on the shall have, in connection with it shall deem necessary or market or otherwise. the administration of the Plan, expedient to make the Plan the powers possessed by the fully effective. Board, subject, however, to such 5. Eligible Employees resolutions as may be adopted T (iii) o amend or terminate the A (a) ll Eligible Employees of the from time to time by the Board. The Plan as provided in paragraphs Company and each of its Designated Board may abolish the Committee 15 and 16. Affiliates on the offering Date of or revoke the authority of the each offering shall receive grants of Committee at any time and revest T (iv) o decide from time to time rights to purchase Common Stock in the Board the administration of which Designated Affiliates of on such offering Date pursuant to the Plan. the Company shall be eligible such offering. to participate in the Plan. T (b) he Administrator shall have the R (b) ights may be granted only to power, subject to, and within the G (v) enerally, to exercise such Eligible Employees of the Company limitations of, the express provisions powers and to perform such or Designated Affiliates. of the Plan: acts as the Administrator deems necessary or expedient to T (i) o determine when and how promote the best interests of 6. Grant of Rights; offering rights to purchase Common the Company. Stock of the Company shall T (a) he Administrator may from time be granted and the provisions to time initiate an offering, by which of each offering of such rights; 4. Shares Subject to the Plan it provides for the grant of rights to provided, however, that such purchase Common Stock of the T (a) he number of shares of Common rights shall qualify as options Company under the Plan to Eligible Stock initially reserved for issuance granted pursuant to an Employees on the offering Date of under the Plan shall be 4,000,000 such offering. Each offering shall E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 17 P L A N be made only during the offering Company may provide for any offering 7. Participation Period and shall be in such form that a Participant may more frequently and shall contain such terms and Each Eligible Employee as of an increase such Participant’s participation conditions as the Administrator offering Date for an offering shall percentage. A Participant may reduce shall deem appropriate. In no event be a Participant in such offering. A his or her participation percentage will an offering Period exceed Participant may purchase shares in an only once during any Purchase Period; twenty-seven (27) months. offering by delivering an agreement provided, however, that a Participant authorizing payroll deductions for the may withdraw from an offering after U (b) nless the Administrator acts period for which such authorization having previously decreased his or otherwise as provided in paragraph is effective, and for each offering her participation percentage during 6(a), the adoption of this Plan by thereafter the Eligible Employee’s any Purchase Period. A reduction of a the Board and the stockholders deductions shall continue as originally Participant’s participation percentage of the Company authorizes the elected, unless otherwise modified to zero shall not be treated as a Administrator to grant rights to or terminated. Such deductions from withdrawal from the offering except to purchase shares of the Common Earnings may be in whole percentages the extent otherwise provided by the Stock to all Eligible Employees. only, with a maximum percentage Company or specifically requested by offerings beginning on February 1 specified by the Administrator (but no the Participant. Any such reduction in and August 1 (the “offering Date”), more than the percentage provided a Participant’s participation percentage will each consist of an offering for in paragraph 9(c). The payroll shall be effectuated by delivering a Period with only one Purchase deductions made for each Participant written notice to the Company in such Period of 6 months. Prior to the shall be credited to an account for such form as the Company provides and commencement of any offering, Participant under the Plan and shall such reduction shall take effect as soon the Administrator may change any be deposited with the general funds as administratively practicable. or all terms of such offering and any of the Company. A Participant may subsequent offerings. The granting not make additional payments into of rights pursuant to each offering 8. Purchase his or her account unless specifically hereunder shall occur on each provided for in the offering and only o (a) n each Purchase Date, during the respective offering Date unless, prior if the Participant has not had the relevant offering, each Participant’s to such date (i) the Administrator maximum amount withheld during the accumulated payroll deductions and determines that such offering shall Purchase Period. The payroll deduction other additional payments specifically not occur, or (ii) no shares remain agreement shall be in such form as provided for in the offering (without available for issuance under the Plan the Company approves. A Participant any increase for interest) will be in connection with the offering. The may increase his or her participation applied to the purchase of whole shares will be purchased as provided percentage during the course of an shares of Common Stock of the in paragraph 8. offering only once and such increase Company, up to the maximum will only take effect at the beginning of number of shares permitted the next Purchase Period under such pursuant to the terms of the Plan offering; provided, however, that the and the applicable offering, at the 18 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S Purchase Price specified in the registered, no rights granted under to adjustment as provided under offering. Unless the Administrator the Plan or any offering shall be paragraph 14(a), no Participant otherwise provides, the Purchase exercised on said Purchase Date and may purchase more than three Dates shall be each January 31st the Purchase Date shall be delayed thousand seven hundred fifty and July 31st. No fractional shares until the Plan is subject to such an (3,750) shares of Common Stock on shall be issued upon the exercise effective registration statement, any Purchase Date. of rights granted under the Plan. except that the Purchase Date shall T (c) he maximum number of shares of The amount, if any, of accumulated not be delayed more than two (2) Common Stock that a Participant payroll deductions remaining in months. If on the Purchase Date of may purchase on any Purchase each Participant’s account after the any offering hereunder, as delayed Date is that number of shares purchase of shares which is less than to the maximum extent permissible, that can be purchased with fifteen the amount required to purchase the Plan is not registered, no rights percent (15%) of the Earnings one share of Common Stock on the granted under the Plan or any received by the Participant during Purchase Date of an offering shall offering shall be exercised and all the Purchase Period. be held in each such Participant’s payroll deductions accumulated account for the purchase of shares during the Purchase Period (reduced I (d) n no event may a Participant’s right under the next Purchase Date under to the extent, if any, such deductions to purchase shares of Common the offering or, if applicable, the have been used to acquire Stock exceed the limitation set next offering. stock) shall be distributed to the forth in Section 423(b)(8) of the Participants, without interest. Code (commonly referred to as the I (b) f a Participant withdraws from an “$25,000 limitation”). offering during a Purchase Period, as provided in paragraph 11(a), or 9. Limitation on Participation S (e) ubject to adjustment as provided ceases to be an Eligible Employee, Rights; Maximum Number under paragraph 14(a), the no shares of Common Stock will of Shares Purchasable maximum aggregate number of be purchased and the amount of S (a) ubject to the limitations contained shares available to be purchased accumulated payroll deductions shall in this paragraph 9 and adjustment by all Participants on any Purchase be refunded to the Participant within as provided under paragraph Date shall be the least of (i) three a reasonable time, without interest. 14(a), on each offering Date each hundred thousand (300,000) shares Participant shall be granted the right of Common Stock, (ii) the number N (c) o rights granted under the Plan to purchase a number of shares of shares remaining available may be exercised to any extent of Common Stock equal to the under the Plan as of the relevant unless the Plan (including rights product of six hundred twenty-five offering Date, or (iii) the number granted thereunder) is covered by (625) multiplied by the number of of shares remaining available under a registration statement filed and months in the offering Period. the Plan as of such Purchase Date. If, effective pursuant to the Securities on any Purchase Date, the aggregate Act of 1933, as amended. If on N (b) otwithstanding anything contained purchase of shares of Common a Purchase Date of any offering herein to the contrary but subject Stock upon exercise of rights granted hereunder the Plan is not so E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 19 P L A N under the offering would exceed of his or her accumulated payroll 11. Withdrawal; Termination the maximum aggregate number of deductions (reduced to the extent, shares available, the Administrator D (a) uring an offering, a Participant if any, such deductions have been shall make a pro rata allocation of may withdraw from an offering used to acquire Common Stock the shares available in a uniform and by delivering to the Company a for him or her), without interest, equitable manner. For the purposes notice of withdrawal in such form within a reasonable amount of time of clarifying, but not limiting, the as the Company may provide. after he or she ceases to be an authority of the Administrator in Such withdrawal may be elected Eligible Employee. the preceding sentence, an equal at any time prior to the end of A Participant’s rights under the Plan allocation to each Participant or the offering, except as provided shall not be transferable, and shall be an allocation based on the relative otherwise by the Company. Upon exercisable only by the Participant to amounts withheld would each such withdrawal from the offering whom such rights are granted. result in a uniform and equitable by a Participant, the Company shall pro rata allocation. distribute to such Participant all of his or her accumulated payroll 12. Use of Proceeds 10. Purchase Price deductions (reduced to the extent, From Stock if any, such deductions have been Proceeds received by the Company The purchase price (the “Purchase used to acquire shares of Common from the sale of Common Stock Price”) for the Common Stock acquired Stock for the Participant) under pursuant to rights granted under the pursuant to rights granted under the the offering, and such Participant’s Plan shall constitute general funds of Plan shall be determined in the manner purchase right in that offering the Company, and may be applied for established by the Administrator. shall thereupon terminate. A general corporate purposes. Unless otherwise established by the Participant’s withdrawal from an Administrator, the Purchase Price for offering shall have no effect upon rights granted pursuant to an offering such Participant’s eligibility to 13. Rights as a Stockholder shall be equal to the lesser of: participate in any other offerings A Participant shall not be deemed to under the Plan, but such Participant A (a) n amount equal to eighty-five be the holder of, or to have any of shall be required to deliver a percent (85%) of the Fair Market the rights of a holder with respect to, new enrollment form in order to Value of the Common Stock on the any shares subject to rights granted participate in any other offerings. offering Date rounded up to the under the Plan unless and until the nearest cent per share; or R (b) ights granted to a Participant Participant’s share holdings acquired pursuant to any offering under the upon exercise of rights hereunder are A (b) n amount equal to eighty-five Plan shall terminate immediately recorded in the books of the Company. percent (85%) of the Fair Market upon the Participant ceasing, Value of the Common Stock on the for any reason, to be an Eligible Purchase Date rounded up to the Employee, and the Company nearest cent per share. shall distribute to such person all 20 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S Company shall not be treated as a preceding sentence, the Participants’ 14. Adjustments Upon “transaction not involving the receipt accumulated payroll deductions Changes in Stock of consideration by the Company.” shall be used to purchase Common I (a) f any change is made in the shares Stock on such special Purchase I (b) n the event of: (1) a dissolution of Common Stock subject to the Date, and the Participants’ rights or liquidation of the Company; Plan or subject to any right granted under the ongoing offering shall (2) a merger or consolidation under the Plan, without the receipt thereafter be terminated. in which the Company is not of consideration by the Company the surviving corporation; (3) a (through merger; consolidation; merger in which the Company 15. Amendment of the Plan reorganization; recapitalization; is the surviving corporation but reincorporation; stock dividend; T (a) he Administrator at any time, and the shares of the Company’s dividend in property other than from time to time, may amend the Common Stock outstanding cash; stock split; liquidating dividend; Plan. To the extent determined immediately preceding the merger combination of shares; exchange necessary and desirable by the are converted by virtue of the of shares; change in corporate Administrator, amendments to merger into property other than structure or other transaction not the Plan shall be submitted to Common Stock of the Company; involving the receipt of consideration the stockholders of the Company or (4) any capital reorganization by the Company), the Board shall for approval. in which the stockholders of the appropriately and proportionately Company immediately before the R (b) ights and obligations under any adjust: (i) the class(es) and maximum reorganization cease to own more rights granted before amendment number of securities subject to the than fifty percent (50%) of the of the Plan shall not be adversely Plan pursuant to paragraph 4(a); (ii) shares of the Company entitled to altered or impaired by any the class(es) and number of securities vote, then, as determined by the amendment of the Plan, except subject to, and the purchase price Administrator in its sole discretion, with the consent of the person to in effect for, outstanding offerings (i) any surviving corporation may whom such rights were granted and rights granted under the Plan; assume outstanding rights or or except as necessary to comply and (iii) the class(es) and number substitute similar rights for those with any laws or governmental of securities imposed by purchase under the Plan, (ii) such rights may regulation or as otherwise limits of such outstanding offerings continue in full force and effect, specifically provided in the Plan and rights granted under the Plan or (iii) the Administrator may (such as in paragraph 15(c)). pursuant to paragraphs 9(a), 9(b), establish a special Purchase Date and 9(e). The Administrator shall W (c) ithout stockholder consent, the that, if established, shall occur make such adjustments, and its Administrator shall be entitled (i) within five (5) business days prior determination shall be final, binding to change the offering Periods; to the transaction described in and conclusive. The conversion of (ii) to limit the frequency of clauses (1) through (4) above. If a any convertible securities of the Purchase Dates; (iii) to establish special Purchase Date is established multiple Purchase Dates within an pursuant to clause (iii) of the offering Period; (iv) to provide for E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 21 P L A N automatic withdrawal or enrollment on the earlier of July 31, 2012, or the proceeding requests that the arbitration provisions; (v) to limit the number date on which the shares available be heard by a panel of three arbitrators. of changes permitted in the amount under the Plan, as adjusted from If a panel of three arbitrators is withheld during an offering Period; time to time, are exhausted. No used, the arbitration decision shall (vi) to establish the exchange ratio rights may be granted under the Plan be made by a majority of the three applicable to amounts withheld in while the Plan is suspended or after it arbitrators. By electing to participate a currency other than U.S. dollars; is terminated. in the Plan, the Company and each (vii) to permit payroll withholding Participant EXPRESSLY AGREE R (b) ights and obligations under any in excess of the amount designated TO ARBITRATION AND WAIVE rights granted while the Plan by a Participant in order to adjust ANY RIGHT TO TRIAL BY JURY, is in effect shall not be altered for delays or mistakes in the JUDGE, OR ADMINISTRATIVE or impaired by suspension or Company’s processing of properly PROCEEDING. An arbitrator shall termination of the Plan, except with completed withholding elections; have the same powers that a judge for the consent of the person to whom (viii) to establish reasonable waiting a United States District Court located such rights were granted or except and adjustment periods and/or in the State of Arizona may exercise in as necessary to comply with any accounting and crediting procedures comparable circumstances. Nothing in laws or governmental regulation or to ensure that amounts applied this Plan shall limit or restrict any right as provided in paragraph 15. toward the purchase of Common of offset a party may have. Stock for each Participant properly correspond with amounts withheld 17. Arbitration of Disputes 18. Effective Date of Plan from the Participant’s Earnings; The Federal Arbitration Act shall apply (ix) to amend the Plan and/or any The Plan shall become effective as to and govern all disputes arising under outstanding rights to enable the determined by the Administrator, but the Plan or an offering made pursuant Plan and/or outstanding rights to no rights granted under the Plan shall to the Plan. Any disputes with respect qualify under Section 423 of the be exercised unless and until the Plan to the terms of this Plan or any rights Code; and (x) to establish such has been approved by the stockholders granted hereunder, including, without other limitations or procedures as of the Company. limitation, the scope of this arbitration, the Administrator determines in its shall be subject to arbitration pursuant sole discretion advisable which are to the rules of the American Arbitration 19. Notices and Agreements consistent with the Plan. Association governing commercial Any notices or agreements provided disputes. Arbitration shall occur in for in an offering or the Plan shall 16. Termination or Phoenix, Arizona. Judgment on any be in writing, in a form provided by Suspension of the Plan arbitration award may be entered the Company, and unless specifically in any court having jurisdiction. A T (a) he Administrator, in its sole provided for in the Plan or this offering single arbitrator shall be used unless discretion, may suspend or terminate shall be deemed effectively given upon the amount in dispute exceeds the Plan at any time. Unless sooner receipt or, in the case of notices and $200,000 and a party to the arbitration terminated, the Plan shall terminate 22 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S agreements delivered by the Company, R 22. egistration of Shares five (5) days after deposit in the United States mail, postage prepaid. The shares offered pursuant to the Plan will initially be registered with the Securities and Exchange Commission 20. Exercise Contingent on on Form S-8. Stockholder Approval PetSmart, Inc., a Delaware corporation The exercise of rights granted under an offering prior to receiving any required approval of the Plan by the By: / S / stockholders of the Company shall be Name: Philip L. Francis subject to receiving such approval. C Its: hairman and Chief Executive officer 21. offering Subject to Plan By: / S / Each offering is subject to all the Name: Scott A. Crozier provisions of the Plan, and its provisions S Its: enior Vice President, are hereby made a part of the General Counsel and Secretary offering, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted Appendix A pursuant to the Plan. In the event of any conflict between the provisions of an Designated Affiliates (none) offering and those of the Plan (including interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan), the provisions of the Plan shall control. E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 23 19601 North 27th Ave. • Phoenix, Arizona 85027 T3-MC1262 E M P L o Y E E S T o C K P U R C H A S E P L A N P R o S P E C T U S 24
"Employee Stock Purchase Plan"