PETSMART, INC.
6-3/4% CONVERTIBLE SUBORDINATED NOTE
DUE 2004
No. 1 CUSIP No. 716768 AA 4
$174,250,000
PETSMART, Inc., a Delaware corporation (hereinafter called the "Company,"
which term includes any successors under the Indenture hereinafter referred
to), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of One Hundred Seventy-Four Million Two Hundred
Fifty Thousand Dollars, on November 1, 2004.
Interest Payment Dates: May 1 and November 1; commencing May 1, 1998.
Record Dates: April 15 and October 15.
Reference is made to the further provisions of this Security set forth
below, which will, for all purposes, have the same effect as if set forth at
this place.
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IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal
Dated: November 7, 1997
PETSMART, INC.
a Delaware corporation
[Seal]
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Operating Officer
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FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within-mentioned Indenture.
NORWEST BANK MINNESOTA, N.A.
----------------------------
as Trustee
By: /s/ (illegible)
-----------------------
Authorized Signatory
Dated: 11/7/97
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UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (00 XXXXX XXXXXX, XXX XXXX, XXX
XXXX) ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH BELOW. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, EACH HOLDER (1) AGREES, FOR THE
BENEFIT OF PETSMART, INC., THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE
904 OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A) (1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE)
AND, IF THE COMPANY SO REQUESTS, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY)
OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (2) AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
SECURITY IN VIOLATION OF THE FOREGOING."
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PETSMART, INC.
6-3/4% CONVERTIBLE SUBORDINATED NOTE
DUE 2004
1. INTEREST.
PETSMART, Inc, a Delaware corporation (hereinafter called the "Company,"
which term includes any successors under the Indenture hereinafter referred
to), promises to pay interest on the principal amount of this Security at the
rate of 6 3/4 % per annum. To the extent it is lawful, the Company promises to
pay interest on any interest payment or Liquidated Damages due but unpaid on
such principal amount at a rate of 6 3/4 % per annum compounded semi-annually.
The Company will pay interest semi-annually on May 1 and November 1 of
each year (each, an "Interest Payment Date"), commencing May 1, 1998. Interest
on the Securities will accrue from the most recent date to which interest has
been paid or, if no interest has been paid on the Securities, from the date of
issuance. Interest will be computed on the basis of a 360-day year consisting
of twelve 30-day months.
2. METHOD OF PAYMENT.
The Company shall pay interest on the Securities (except Defaulted
Interest) to the persons who are the registered Holders at the close of
business on the Record Date immediately preceding the Interest Payment Date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. Any such interest not so punctually paid, and Defaulted Interest
relating thereto, may be paid to the persons who are registered Holders at the
close of business on a Special Record Date for the payment of such Defaulted
Interest, as more fully provided in the Indenture referred to below. Except as
provided below, the Company shall pay principal, premium and interest in such
coin or currency of the United States of America as at the time of payment
shall be legal tender for payment of public and private debts ("U.S. Legal
Tender"). The Securities will be payable as to principal, premium and interest
at the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or at the option of the Company,
payment of principal, premium and interest may be made by check mailed to the
Holders at their addresses set forth in the registry of Holders, and provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of, premium and interest on Global Securities and all
other Securities the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent.
3. PAYING AGENT AND REGISTRAR.
Initially, Norwest Bank Minnesota, N.A. (the "Trustee") will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar or co-
Registrar without notice to the Holders. The Company or any of its Subsidiaries
may, subject to certain exceptions, act as Paying Agent, Registrar or co-
Registrar.
4. INDENTURE.
The Company issued the Securities under an Indenture, dated as of November
7, 1997 (the "Indenture"), between the Company and the Trustee. Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act, as in
effect on the date of the Indenture. The Securities are subject to all such
terms, and Holders of Securities are referred to the Indenture and said Act for
a statement of them. The Securities are general unsecured obligations of the
Company limited in aggregate principal amount to $175,000,000 ($201,250,000 if
the Initial Purchaser over-allotment option is exercised in full).
5. OPTIONAL REDEMPTION.
The Securities will not be subject to redemption at the Company's option
prior to November 1, 2000. On or after November 1, 2000, upon not less than 20
nor more than 60 days notice to each Holder of Securities, the Securities will
be redeemable for cash at the option of the Company, in whole or in part, at
the following Redemption Prices (expressed as a percentage of principal amount)
set forth below with respect to the indicated Redemption Date, in each case,
plus any accrued but unpaid interest and Liquidated Damages, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
record date to receive interest due on any Interest Payment Date that is on or
prior to the Redemption Date.
If redeemed during the
12-month period beginning
November 1 of the years
indicated below: Redemption Price
------------------------- ----------------
2000 103.857 %
2001 102.893
2002 101.929
2003 100.964
Any such redemption will comply with Article III of the Indenture.
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6. MANDATORY REDEMPTION.
Except as set forth in paragraph 15, the Company shall not be required to
make mandatory redemption or sinking fund payments with respect to the
Securities.
7. NOTICE OF REDEMPTION.
Notice of redemption will be sent by first class mail, at least 20 days
and not more than 60 days prior to the Redemption Date to the Holder of each
Security to be redeemed at such Holder's last address as then shown upon the
registry books of the Registrar. Securities may be redeemed in part in
multiples of $1,000 only.
Except as set forth in the Indenture, from and after any Redemption Date,
if monies for the redemption of the Securities called for redemption shall have
been deposited with the Paying Agent on such Redemption Date and payment of the
Securities called for redemption is not prohibited under Article XI of the
Indenture, the Securities called for redemption will cease to bear interest and
the only right of the Holders of such Securities will be to receive payment of
the Redemption Price, plus any accrued and unpaid interest and Liquidated
Damages, if any, to the Redemption Date.
8. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are in registered form, without coupons, in denominations
of $1,000 and integral multiples of $1,000. A Holder may register the transfer
of, or exchange Securities in accordance with, the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted
by the Indenture. The Registrar need not register the transfer of or exchange
any Securities selected for redemption.
9. PERSONS DEEMED OWNERS.
The registered Holder of a Security may be treated as the owner of it for
all purposes.
10. UNCLAIMED MONEY.
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee and the Paying Agent(s) will pay the money back to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease and the Holder of
such Security shall thereafter look only to the Company for payment of such
money.
11. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented, and any existing Default or Event of Default or
compliance with any provision may be waived, with the written consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Securities to, among other things,
cure any ambiguity, defect or inconsistency, or make any other change that does
not adversely affect the rights of any Holder of a Security.
12. CONVERSION RIGHTS.
Subject to the provisions of the Indenture, the Holders have the right to
convert the principal amount of the Securities into fully paid and
nonassessable shares of Common Stock of the Company at the initial conversion
price per share of Common Stock of $8.75 (or 114.2857 shares per $1,000
principal amount of Securities), or at the adjusted conversion price then in
effect, if adjustment has been made as provided in the Indenture, upon
surrender of the Security to the Company, together with a fully executed notice
in substantially the form attached hereto and, if required by the Indenture, an
amount equal to accrued interest payable on such Security. The number of shares
of Common Stock into which the Holders have the right to convert shall be
determined by dividing the principal amount of such Securities by the
conversion price then in effect.
13. ADDITIONAL RIGHTS.
In addition to the rights provided to Holders of the Securities under the
Indenture, Holders of Transfer Restricted Securities (as defined in the
Registration Rights Agreement) shall have all the rights set forth in the
Registration Rights Agreement, dated as of the date hereof, among the Company
and the Initial Purchasers (the "Registration Rights Agreement").
14. RANKING.
Payment of principal, premium, if any, interest and Liquidated Damages, if
any, on the Securities is subordinated, in the manner and to the extent set
forth in the Indenture, to the prior payment in full of all Senior
Indebtedness.
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15. REPURCHASE AT OPTION OF HOLDER UPON A CHANGE OF CONTROL.
If there is a Change of Control, the Company shall be required to offer to
purchase on the Repurchase Date all outstanding Securities at a purchase price
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, to the Repurchase Date. Holders of Securities
will receive a Repurchase Offer from the Company prior to any related
Repurchase Date and may elect to have such Securities purchased by completing
the form entitled "Option of Holder to Elect Purchase" appearing below.
16. SUCCESSORS.
When a successor assumes all the obligations of its predecessor under the
Securities and the Indenture, the predecessor will be released from those
obligations (except with respect to any obligations that arise from or as a
result of such transaction).
17. DEFAULTS AND REMEDIES
If an Event of Default occurs and is continuing (other than an Event of
Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture. Holders of Securities may not
enforce the Indenture or the Securities except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in aggregate principal amount of the Securities then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Securities notice of any continuing Default or Event
of Default (except a Default in payment of principal, premium or interest), if
it determines that withholding notice is in their interest.
18. TRUSTEE DEALINGS WITH COMPANY.
The Trustee under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services for the Company
or its Affiliates or any subsidiary of the Company's Affiliates, and may
otherwise deal with the Company or its Affiliates as if it were not the
Trustee.
19. NO RECOURSE AGAINST OTHERS.
No director or indirect partner, employee, stockholder, director, or
officer or, as such, past, present or future, of the Company or any successor
corporation or any Subsidiary or any of the Company's Affiliates shall have any
personal liability in respect of the obligations of the Company under the
Securities or the Indenture by reason of his, her or its status as such partner
stockholder, director, officer or employee. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
20. GOVERNING LAW.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THE
NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.
21. AUTHENTICATION.
This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Security.
22. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
23. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
primed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
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