EXHIBIT 10.31
FORM OF STANDSTILL AGREEMENT
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This Standstill Agreement, dated February [_], 2000 (the "Agreement"),
is entered into by and between XXXxXXXX.xxx, Inc., a Delaware corporation
("XXXxXXXX.xxx") and PETsMART, Inc., a Delaware corporation ("PETsMART").
RECITALS
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WHEREAS, PETsMART beneficially owns as of the date of this agreement,
an aggregate of [_______________________] shares of the common stock of
XXXxXXXX.xxx (the "Common Stock");
WHEREAS, substantially concurrently with the execution of this
Agreement, PETsMART and XXXxXXXX.xxx have entered into a Web and Content Hosting
Agreement, a Merchandising, Procurement, Distribution, and Fulfillment
Agreement, and a Marketing Agreement, each dated as of December 31, 1999;
WHEREAS, XXXxXXXX.xxx and PETsMART desire to enter into this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises hereinafter
made, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:
AGREEMENT
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1. Standstill
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1.1 Limitations. For a period of 30 months from the date of this
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Agreement, without the prior written consent of the Board of Directors of
XXXxXXXX.xxx, specifically expressed in a resolution adopted by a major-
ity of the directors of XXXxXXXX.xxx who are not affiliates of, and are
neither officers nor directors of, PETsMART or any corporation or other
entity controlling, controlled by or under common control with PETsMART
(each a member of the "PETsMART Group"), PETsMART shall not, and shall not
permit any member of the PETsMART Group to, in any manner, directly or
indirectly:
(i) acquire, or offer or agree to acquire, directly or
indirectly, by purchase or otherwise, any capital stock of
XXXxXXXX.xxx ("Capital Stock"), or any securities convertible into or
exchangeable for, or any other right to acquire, Capital Stock
(collectively, "Convertible Securities") (except by way of stock
dividends or other distributions made on a pro rata basis with respect
to securities of XXXxXXXX.xxx acquired by any member of the PETsMART
Group prior to the date of this Agreement) if, immediately following
such acquisition, the members of the PETsMART Group would beneficially
own, in the aggregate, more than 49.9% (the "Threshold Percentage") of
the then outstanding Common Stock (assuming the conversion, exchange
and/or exercise of all Convertible Securities beneficially owned by
members of the PETsMART Group but not of any Convertible Securities
owned by any other person or entity); provided, that if XXXxXXXX.xxx
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repurchases or recapitalizes any of its shares and such repurchases or
recapitalization result in the members of the PETsMART Group owning
more than the Threshold Percentage at the effective time of such
repurchase or recapitalization, no member of the PETsMART Group shall
be obligated to divest itself of shares of Capital Stock to meet the
Threshold Percentage, but no member of the PETsMART Group shall
acquire any additional shares of Capital Stock unless such acquisition
would otherwise be permitted under this Section 1;
(ii) solicit proxies or consents or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the
Securities Exchange Act of 1934, as amended) of proxies or consents
with respect to securities of XXXxXXXX.xxx with regard to any matter;
(iii) seek to advise, encourage or influence any person with
respect to the voting of any securities of XXXxXXXX.xxx, or induce,
attempt to induce or in any manner assist any other person in
initiating any stockholder proposal or tender or exchange offer for
securities of XXXxXXXX.xxx or any change of control of XXXxXXXX.xxx,
or for the purpose of convening a stockholders' meeting of
XXXxXXXX.xxx; provided, that PETsMART may tender in any such tender or
exchange offer;
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(iv) acquire or agree to acquire, by purchase or otherwise,
more than 5% of any class of equity securities of any entity which,
prior to the time the PETsMART Group acquires more than 5% of such
class, is publicly disclosed (by filing with the Securities and
Exchange Commission or otherwise), or is otherwise known to PETsMART,
to be the beneficial owner of more than 5% of the outstanding Common
Stock;
(v) make any public announcement, regarding any possibility,
intention, plan or arrangement, relating to a tender or exchange offer
for securities of XXXxXXXX.xxx or a business combination (or other
similar transaction that would result in a change of control), sale of
assets, liquidation or other extraordinary corporate transaction
between any member of the PETsMART Group and XXXxXXXX.xxx, or take any
action that could reasonably be expected to require XXXxXXXX.xxx to
make a public announcement regarding any of the foregoing;
(vi) other than [ ] shares of Common Stock purchased
pursuant to that Stock Subscription Agreement, dated February [_],
2000, between XXXxXXXX.xxx and PETsMART, deposit any securities of
XXXxXXXX.xxx in a voting trust or subject any securities of
XXXxXXXX.xxx to any arrangement or agreement with respect to the
voting of securities of XXXxXXXX.xxx; or
(vii) form, join or in any way participate in a partnership,
limited partnership, syndicate or other group (or otherwise act in
concert with any other person) other than other members of the
PETsMART Group for the purpose of (A) acquiring, holding, or voting of
securities of XXXxXXXX.xxx or (B) taking any other actions restricted
or prohibited under clauses (i) through (vi) of this Section 1, or
announce an intention to do, or enter into any arrangement or
understanding with others to do, any of the actions restricted or
prohibited under clauses (i) through (vi) of this Section 1.
1.2 Notice of Capital Stock Purchases. For a period of 30 months
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from the date of this Agreement, PETsMART shall notify XXXxXXXX.xxx as to
any acquisition by any member of the PETsMART Group of beneficial ownership
of Capital Stock or Convertible Securities, within ten (10) busi-
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ness days after such action in order for XXXxXXXX.xxx to monitor compli-
ance with the terms of this Agreement. All such purchases shall be made in
compliance with applicable laws and regulations.
1.3 Permitted Transaction. The restrictions contained in Section 1.1
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of this Agreement shall immediately and automatically be suspended upon the
occurrence and during the continuation of any of the following events: (a)
the filing with the Securities and Exchange Commission ("SEC") of a
Schedule 13D (or any successor filing) by any person, entity or group
outside the PETsMART Group indicating that such person, entity or group has
acquired more than 5% of the outstanding shares of Common Stock, which
Schedule 13D expresses the filing party's intention to assume control of
the Company, whether by tender offer, merger, proxy contest or otherwise;
(b) the commencements of a tender offer by any person, entity or group
outside the PETsMART Group to acquire 30% or more of the outstanding shares
of Common Stock; or (c) the solicitation of proxies by any party other than
XXXxXXXX.xxx or a member of the PETsMART Group to which Rules 14a-3 to 14a-
15 under the Securities Exchange Act of 1934, as amended (or any successor
rules) applies that is intended to effect a change in the majority of
members of the XXXxXXXX.xxx Board of Directors.
1.4 No Waiver Request. No request or proposal to amend, modify or
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waive any provision of this Section 1 (other than a request or proposal
made or solicited by XXXxXXXX.xxx) shall be made or solicited during the 30
months beginning on the date of this Agreement.
1.5 No Limitation on Disposition. Nothing in this Agreement shall be
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construed in any manner to limit any member of the PETsMART Group's rights
to sell or otherwise dispose of Capital Stock in any manner or to any
person(s) or entity(ies).
2. Miscellaneous
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2.1 Merger Clause. This Agreement constitutes the complete agreement
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between the parties hereto with respect to the subject matter hereof and
shall continue in full force and effect until terminated by mutual
agreement of the parties hereto or pursuant to the terms hereof. The
section headings used herein are for reference purposes only and shall not
in any way affect the meaning or interpretation of this Agreement.
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2.2 Choice of Law. This Agreement shall be construed, performed
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and enforced in accordance with, and governed by the internal laws of the
State of Delaware, without giving effect to the principles of conflicts of
law thereof, and each party consents to personal jurisdiction in such state
and voluntarily submits to the jurisdiction of the courts of such state in
any action or proceeding relating to this Agreement. Whenever possible,
each provision of this Agreement shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision hereof
is held to be invalid, illegal or unenforceable under any applicable law or
rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality, or unenforceability, without
invalidating the remainder of this Agreement. This Agreement may not be
modified or amended and no provision hereof may be waived, in whole or in
part, except by a written agreement signed by the parties hereto. No
waiver of any breach or default hereunder shall be considered valid unless
in writing, and no such waiver shall be deemed a waiver of any subsequent
breach or default.
2.3 Remedy. PETsMART acknowledges that XXXxXXXX.xxx would not have
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an adequate remedy at law for money damages in the event that this
agreement is not performed in accordance with its terms and therefore
PETsMART agrees that XXXxXXXX.xxx shall be entitled to specific enforcement
of the terms hereof, without being required to post any bond, in addition
to any other remedy to which it may be entitled, at law or in equity.
2.4 Notices. All notices, consents, waivers, and other
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communications under this Agreement must be in writing and will be deemed
to have been duly given when (a) delivered by hand (with written
confirmation of receipt), (b) sent by facsimile (with written confirmation
of receipt), provided that a copy is mailed by registered mail, return
receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and facsimile numbers set forth
below (or to such other addresses and facsimile numbers as a party may
designate by notice to the other parties):
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(i) If to XXXxXXXX.xxx:
XXXxXXXX.xxx, Inc.
00 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxx XxXxxxxx, Jr.
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxx. 0000
Xxx Xxxxxxx, XX 00000
Facsimile No.: 213-687-5600
Attn: Xxxxxxx X. Xxxxxxxx
(ii) If to PETsMART:
PETsMART, Inc.
00000 X. 00/xx/ Xxxxxx
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx
With a copy to:
PETsMART, Inc.
00000 X. 00/xx/ Xxxxxx
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: General Counsel
2.5 Counterparts. This Agreement may be executed in counterparts,
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all of which shall be taken together as one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
XXXXXXXX.XXX, INC.
By:
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Name:
Title:
PETSMART, INC.
By:
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Name:
Title:
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