-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UkLaSU4305gH1f0Lp5fqPCRQJwDmolIWbX/W4ukPJ5qLqao7S0DnzFmFoQ8sr+T7 L+bOCfzz7vN+BgO4caFUaQ== /in/edgar/work/20000620/0000912057-00-029203/0000912057-00-029203.txt : 20000920 0000912057-00-029203.hdr.sgml : 20000920 ACCESSION NUMBER: 0000912057-00-029203 CONFORMED SUBMISSION TYPE: SC 13E3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20000620 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PETCO ANIMAL SUPPLIES INC CENTRAL INDEX KEY: 0000888455 STANDARD INDUSTRIAL CLASSIFICATION: [5990 ] IRS NUMBER: 330479906 STATE OF INCORPORATION: DE FISCAL YEAR END: 0128 FILING VALUES: FORM TYPE: SC 13E3 SEC ACT: SEC FILE NUMBER: 005-44229 FILM NUMBER: 657983 BUSINESS ADDRESS: STREET 1: 9125 REHCO RD CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6194537845 MAIL ADDRESS: STREET 1: 9125 REHCO RD CITY: SAN DIEGO STATE: CA ZIP: 92121 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PETCO ANIMAL SUPPLIES INC CENTRAL INDEX KEY: 0000888455 STANDARD INDUSTRIAL CLASSIFICATION: [5990 ] IRS NUMBER: 330479906 STATE OF INCORPORATION: DE FISCAL YEAR END: 0128 FILING VALUES: FORM TYPE: SC 13E3 BUSINESS ADDRESS: STREET 1: 9125 REHCO RD CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6194537845 MAIL ADDRESS: STREET 1: 9125 REHCO RD CITY: SAN DIEGO STATE: CA ZIP: 92121 SC 13E3 1 sc13e3.txt SC 13E3 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- SCHEDULE 13E-3 (RULE 13e-100) TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 13E-3 THEREUNDER RULE 13-E TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. _________) PETCO ANIMAL SUPPLIES, INC. - -------------------------------------------------------------------------------- (Name of the Issuer) PETCO ANIMAL SUPPLIES, INC. - -------------------------------------------------------------------------------- (Name of the Person(s) Filing Statement) Common Stock, Par Value $.0001 Per Share - -------------------------------------------------------------------------------- (Title of Class of Securities) 716016100 - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) BRIAN K. DEVINE THOMAS A. EDWARDS, ESQ. Chairman, President Latham & Watkins and Chief Executive Officer 701 "B" Street PETCO Animal Supplies, Inc. Suite 2100 9125 Rehco Road San Diego, California 92101 San Diego, California 92121 (619) 236-1234 (858) 453-7845 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Person(s) Filing Statement) This statement is filed in connection with (check the appropriate box): a. [X] The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the Securities Exchange Act of 1934. b. [ ] The filing of a registration statement under the Securities Act of 1933. c. [ ] A tender offer. d. [ ] None of the above. Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies. [X] Check the following box if the filing is a final amendment reporting the results of the transaction. [ ]
CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- Transaction Valuation* Amount Of Filing Fee** $486,852,846 $97,371
*For purposes of calculating the filing fee only. Determined by (1) multiplying 21,021,224 shares of common stock, par value $.0001 per share, of PETCO Animal Supplies, Inc. by $22.00 per share, and (2) adding thereto $24,385,918 anticipated to be paid to certain persons holding options to acquire shares of common stock in consideration of cancellation of such options (assuming an aggregate of 2,524,681 options are cancelled in exchange for cash in the transaction). **The amount of the filing fee calculated in accordance with Exchange Act Rule 0-11 equals 1/50th of 1% of the value of the securities proposed to be acquired. [X] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-1l(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount previously paid $97,371 Filing party: PETCO Animal Supplies, Inc. Form or registration no.: Schedule 14(a) Date filed: June 20, 2000
INTRODUCTION This Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") is being filed by PETCO Animal Supplies, Inc., a Delaware corporation ("PETCO"), the issuer of the equity securities which are the subject of a Rule 13e-3 transaction. Pursuant to an Agreement and Plan of Merger, dated as of May 17, 2000, BD Recapitalization Corp. will merge into PETCO. BD Recapitalization Corp. is a newly formed Delaware corporation wholly owned by BD Recapitalization Holdings LLC, a newly formed Delaware limited liability company whose members are affiliates of Leonard Green & Partners, L.P. and Texas Pacific Group. In the merger, each issued and outstanding share of PETCO common stock will be cancelled and automatically converted into the right to receive $22.00 in cash, without interest or any other payment thereon, with the following exceptions: 86,105 shares of PETCO common stock will be retained by four members of PETCO's management and additional shares will be retained by these members of PETCO's management and other PETCO employees (such individuals are referred to collectively as the "continuing stockholders"); treasury shares and shares of PETCO common stock owned by BD Recapitalization Corp. or by any of PETCO's subsidiaries will be canceled; and shares held by dissenting stockholders will be subject to appraisal in accordance with Delaware law. Upon completion of the merger, after taking into account employee incentive options and warrants to be issued in connection with financing the merger, BD Recapitalization Holdings LLC and the continuing stockholders will own, 75% and 20%, respectively, of PETCO, on a fully diluted basis. Concurrently with the filing of this Schedule 13E-3, PETCO is filing a preliminary proxy statement pursuant to which the stockholders of PETCO will be given notice of the merger. The cross reference sheet below is being supplied pursuant to General Instruction F to Schedule 13E-3 and shows the location in the proxy statement of the information required to be included in response to the items of this Schedule 13E-3. The information set forth in the proxy statement, including all schedules, exhibits, appendices and annexes thereto, is hereby expressly incorporated herein by reference and the responses to each item in this Schedule 13E-3 are qualified in their entirety by the information contained in the proxy statement and the schedules, exhibits, appendices and annexes thereto. ITEM 1. SUMMARY TERM SHEET. The information contained in the sections entitled "SUMMARY TERM SHEET" and "QUESTIONS AND ANSWERS ABOUT THE MERGER" of the proxy statement is incorporated herein by reference. ITEM 2. SUBJECT COMPANY INFORMATION. (a) NAME AND ADDRESS. The information contained in the section entitled "SUMMARY--The Companies" in the proxy statement is incorporated herein by reference. (b) SECURITIES. The information contained in the section entitled "THE SPECIAL MEETING--Date; Time; Place and Record Date of the Special Meeting" in the proxy statement is incorporated herein by reference. (c) TRADING MARKET AND PRICE. The information contained in the section entitled "PRICE RANGE OF COMMON STOCK" in the proxy statement is incorporated herein by reference. (d) DIVIDENDS. The information contained in the section entitled "DIVIDENDS" in the proxy statement is incorporated herein by reference. (e) PRIOR PUBLIC OFFERINGS. None. (f) PRIOR STOCK PURCHASES. The information contained in the section entitled "COMMON STOCK PURCHASE INFORMATION" of the proxy statement is incorporated herein by reference. ITEM 3. IDENTITY AND BACKGROUND OF THE FILING PERSON. (a),(c) NAME AND ADDRESS; BUSINESS AND BACKGROUND OF NATURAL PERSONS. The information contained in the sections entitled "SUMMARY--The Companies," "PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP," and "DIRECTORS AND EXECUTIVE OFFICERS OF PETCO" in the proxy statement is incorporated herein by reference. During the last five years, to the best knowledge of PETCO, none of PETCO's current directors or executive officers has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. All current PETCO directors and executive officers are U.S. citizens. (b) BUSINESS AND BACKGROUND OF ENTITIES. The information contained in the section entitled "SUMMARY--The Companies" in the proxy statement is incorporated herein by reference. ITEM 4. TERMS OF THE TRANSACTION. (a) (1) TENDER OFFERS. Not applicable. (a) (2 )(i) TRANSACTION DESCRIPTION. The information contained in the sections entitled "QUESTIONS AND ANSWERS ABOUT THE MERGER," "SUMMARY" and "THE MERGER AGREEMENT" in the proxy statement is incorporated herein by reference. (a) (2) (ii) CONSIDERATION. The information contained in the section entitled "THE MERGER AGREEMENT--Merger Consideration" in the proxy statement is incorporated herein by reference. (a) (2) (iii) REASONS FOR TRANSACTION. The information contained in the sections entitled "THE MERGER--Background of the Merger," "--Recommendation of the Special Committee to the Board of Directors; Fairness of the Merger" and "--Purpose and Structure of the Merger" in the proxy statement is incorporated herein by reference. (a) (2) (iv) VOTE REQUIRED FOR APPROVAL. The information contained in the section entitled "THE SPECIAL MEETING--Voting Information" in the proxy statement is incorporated herein by reference. (a) (2) (v) DIFFERENCES IN THE RIGHTS OF SECURITY HOLDERS. The information contained in the sections entitled "THE MERGER AGREEMENT--Merger Consideration" and "THE MERGER--Interests of PETCO Directors and Officers in the Merger" in the proxy statement is incorporated herein by reference. (a) (2) (vi) ACCOUNTING TREATMENT. The information contained in the sections entitled "THE MERGER--Accounting Treatment of the Merger" in the proxy statement is incorporated herein by reference. (a) (2) (vii) INCOME TAX CONSEQUENCES. The information contained in the section entitled "THE MERGER--Material Federal Income Tax Consequences to Stockholders" in the proxy statement is incorporated herein by reference. (c) DIFFERENT TERMS. The information contained in the section entitled "THE MERGER--Interests of PETCO Directors and Officers in the Merger" in the proxy statement is incorporated herein by reference. (d) APPRAISAL RIGHTS. The information contained in the section entitled "THE MERGER--Dissenters' Rights of Appraisal" in the proxy statement is incorporated herein by reference. (e) PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS. PETCO has made no provisions in connection with the merger to grant unaffiliated security holders access to the corporate files of PETCO or to obtain counsel or appraisal services at the expense of PETCO. (f) ELIGIBILITY FOR LISTING OR TRADING. Not applicable. ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. (a) TRANSACTIONS. None. (b)-(c) SIGNIFICANT CORPORATE EVENTS; NEGOTIATIONS OR CONTACTS. The information contained in the sections entitled "THE MERGER--Background of the Merger, " "--Purpose and Structure of the Merger" and "--Interests of PETCO Directors and Officers in the Merger" in the proxy statement is incorporated herein by reference. (e) AGREEMENTS INVOLVING THE SUBJECT COMPANY'S SECURITIES. The information contained in the sections entitled "SUMMARY--Share Ownership of Stockholders and Management," "THE MERGER--Background of the Merger," "--Interests of PETCO Directors and Officers in the Merger," "THE MERGER AGREEMENT," "THE MERGER--Effects of the Merger," and "RIGHTS AGREEMENT" in the proxy statement is incorporated herein by reference. ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS. (b) USE OF SECURITIES ACQUIRED. The information contained in the section entitled "SUMMARY," "THE MERGER--Effects of the Merger" and "THE MERGER AGREEMENT" in the proxy statement is incorporated herein by reference. (c) PLANS. The information contained in the sections entitled "SUMMARY," "THE MERGER--Effects of the Merger," "--Interests of PETCO Directors and Officers in the Merger" and "DIVIDENDS" in the proxy statement is incorporated herein by reference. ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS. (a), (c) PURPOSES; REASONS. The information contained in the sections entitled "QUESTIONS AND ANSWERS ABOUT THE MERGER" and "THE MERGER--Background of the Merger," "--Recommendations of the Special Committee; Fairness of the Merger" and "--Purpose and Structure of the Merger" in the proxy statement is incorporated herein by reference. (b) ALTERNATIVES. The information contained in the sections entitled "SUMMARY--What Happens if PETCO Receives a Better Offer," "THE MERGER----Background of the Merger" and "--Risk that the Merger will not be Completed" in the proxy statement is incorporated herein by reference. (d) EFFECTS. The information contained in the sections entitled "QUESTIONS AND ANSWERS ABOUT THE MERGER," "SUMMARY," "THE MERGER--Effects of the Merger," "--Interests of PETCO Directors and Officers in the Merger," "--Material Federal Income Tax Consequences to Stockholders," "THE MERGER AGREEMENT," "RIGHTS AGREEMENT" and "FEES AND EXPENSES," in the proxy statement is incorporated herein by reference. ITEM 8. FAIRNESS OF THE TRANSACTION. (a), (b) FAIRNESS; FACTORS CONSIDERED IN DETERMINING FAIRNESS. The information contained in the sections entitled "QUESTIONS AND ANSWERS ABOUT THE MERGER," "SUMMARY," "THE SPECIAL MEETING--Voting Information," "THE MERGER--Background of the Merger," "--Recommendations of the Special Committee; Fairness of the Merger" and "--Opinion of Financial Advisor to the Special Committee" in the proxy statement and Appendix B, "Opinion of Donaldson, Lufkin & Jenrette Securities Corporation" is incorporated herein by reference. (c) APPROVAL OF SECURITY HOLDERS. The information contained in the section entitled "THE SPECIAL MEETING--Voting Information" in the proxy statement is incorporated herein by reference. (d) UNAFFILIATED REPRESENTATIVE. The information contained in the sections entitled "THE MERGER--Background of the Merger" and "--Recommendations of the Special Committee; Fairness of the Merger" in the proxy statement is incorporated herein by reference. (e) APPROVAL OF DIRECTORS. The information contained in the sections entitled "THE MERGER--Background of the Merger" and "--Recommendations of the Special Committee; Fairness of the Merger" in the proxy statement is incorporated herein by reference. (f) OTHER OFFERS. The information contained in the sections entitled "THE MERGER--Background of the Merger" and "--Recommendations of the Special Committee, Fairness of the Merger" in the proxy statement is incorporated herein by reference. ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS. (a)-(c) REPORT, OPINION, OR APPRAISAL; PREPARER AND SUMMARY OF THE REPORT; AVAILABILITY OF DOCUMENTS. The information contained in the sections entitled "THE MERGER--Background of the Merger," "--Recommendations of the Special Committee; Fairness of the Merger," "--Opinion of Financial Advisor to the Special Committee" and "WHERE YOU CAN FIND MORE INFORMATION" in the proxy statement and Appendix B, "Opinion of Donaldson, Lufkin & Jenrette Securities Corporation" is incorporated herein by reference. ITEM 10. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION. (a), (b), (d) SOURCE OF FUNDS; CONDITIONS; BORROWED FUNDS. The information contained in the section entitled "THE MERGER--Financing for the Merger" in the proxy statement is incorporated herein by reference. PETCO has no alternative financing arrangements or alternative financing plans if the primary financing falls through. (c) EXPENSES. The information contained in the sections entitled "FEES AND EXPENSES" in the proxy statement is incorporated herein by reference. ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) SECURITIES OWNERSHIP. The information contained in the section entitled "PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP" in the proxy statement is incorporated herein by reference. (b) SECURITIES TRANSACTIONS. None. ITEM 12. THE SOLICITATION OR RECOMMENDATION. (d) INTENT TO TENDER OR VOTE IN A GOING-PRIVATE TRANSACTION. The information contained in the sections entitled "QUESTIONS AND ANSWERS ABOUT THE MERGER," "SUMMARY," "THE SPECIAL MEETING--Voting Information" and "THE MERGER--Interests of PETCO Directors and Officers in the Merger" in the proxy statement is incorporated herein by reference. (e) RECOMMENDATIONS TO OTHERS. The information contained in the sections entitled "SUMMARY" and "THE MERGER--Recommendations of the Special Committee; Fairness of the Merger" in the proxy statement is incorporated herein by reference. ITEM 13. FINANCIAL STATEMENTS. (a) FINANCIAL INFORMATION. The information contained in the section entitled "SELECTED CONSOLIDATED FINANCIAL DATA" in the proxy statement is incorporated herein by reference. (b) PRO FORMA INFORMATION. Not applicable. ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED. (a), (b) SOLICITATIONS OR RECOMMENDATIONS; EMPLOYEES AND CORPORATE ASSETS. The information contained in the sections entitled "QUESTIONS AND ANSWERS ABOUT THE MERGER," "THE MERGER--Background of the Merger," "THE SPECIAL MEETING--Solicitation; Revocation and Use of Proxies" and "FEES AND EXPENSES" in the proxy statement is incorporated herein by reference. ITEM 15. ADDITIONAL INFORMATION. (b) OTHER MATERIAL INFORMATION. The information contained in the sections entitled "SUMMARY--Litigation Related to the Merger" and "THE MERGER--Litigation" in the proxy statement is incorporated herein by reference. As a result of the proposed merger, PETCO, its directors and one of its officers have been named as defendants in the following lawsuits: - Great Neck Capital Appreciation, L.P. v. Brian K. Devine et al., Delaware Chancery Court, New Castle County C.A. No. 18057-NC; filed May 18, 2000. - Jerry Krim v. Petco Animal Supplies, Inc. et al., San Diego Superior Court Case No. GIC 748422; filed May 18, 2000. - William J. Neiman v. Brian K. Devine et al., Delaware Chancery Court, New Castle County C.A. No. 18058-NC; filed May 18, 2000. - Madeline Peterson v. Petco Animal Supplies, Inc., et al., San Diego Superior Court Case No. GIC 748499, filed May 19, 2000. - Scott Sewart v. Petco Animal Supplies Inc., et al., San Diego Superior Court Case No. GIC 748424; filed May 18, 2000. - William Steiner v. Brian K. Devine et al., Delaware Chancery Court, Newcastle County C.A. No. 18056-NC; filed May 18, 2000. ITEM 16. EXHIBITS. (a) Preliminary proxy statement on Schedule 14A filed with the Securities and Exchange Commission on June 20, 2000 (incorporated herein by reference to the proxy statement). (b)(1) Commitment letter from Trust Company of the West to Leonard Green & Partners, L.P. and Texas Pacific Group, dated May 16, 2000. (b)(2) Commitment letter from Green Equity Investors III, L.P. to PETCO Animal Supplies, Inc., dated May 17, 2000. (b)(3) Commitment letter from Goldman Sachs Credit Partners L.P. and Wells Fargo Bank, N.A. to Green Equity Investors III, L.P. and TPG Partners III, L.P., dated May 17, 2000. (b)(4) Commitment letter from TPG Partners III, L.P. to PETCO Animal Supplies, Inc., dated May 17, 2000. (c) Opinion of Donaldson, Lufkin & Jenrette Securities Corporation (incorporated herein by reference to Appendix B of the proxy statement). (d)(1) Agreement and Plan of Merger, dated May 17, 2000, by and between PETCO Animal Supplies, Inc. and BD Recapitalization Corp. (incorporated herein by reference to Appendix A of the proxy statement). (d)(2) Voting Agreement, dated as of May 17, 2000, by and between BD Recapitalization Holdings LLC and the stockholders signatory thereto. (d)(3) Rights Agreement (incorporated by reference to PETCO's Report on Form 8-K dated September 22, 1998, File No. 000-23574). (f) Section 262 of the Delaware General Corporation Law (incorporated herein by reference to Appendix C of the proxy statement). (g) Not applicable. SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: June 20, 2000 PETCO Animal Supplies, Inc. By /s/ JAMES M. MYERS -------------------------------------- Name: James M. Myers Title: Senior Vice President and Chief Financial Officer EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION (a) Preliminary proxy statement on Schedule 14A filed with the Securities and Exchange Commission on June 20, 2000 (incorporated herein by reference to the proxy statement). (b)(1) Commitment letter from Trust Company of the West to Leonard Green & Partners, L.P. and Texas Pacific Group, dated May 16, 2000. (b)(2) Commitment letter from Green Equity Investors III, L.P. to PETCO Animal Supplies, Inc., dated May 17, 2000. (b)(3) Commitment letter from Goldman Sachs Credit Partners L.P. and Wells Fargo Bank, N.A. to Green Equity Investors III, L.P. and TPG Partners III, L.P., dated May 17, 2000. (b)(4) Commitment letter from TPG Partners III, L.P. to PETCO Animal Supplies, Inc., dated May 17, 2000. (c) Opinion of Donaldson, Lufkin & Jenrette Securities Corporation (incorporated herein by reference to Appendix B of the proxy statement). (d)(1) Agreement and Plan of Merger, dated May 17, 2000, by and between PETCO Animal Supplies, Inc. and BD Recapitalization Corp. (incorporated herein by reference to Appendix A of the proxy statement). (d)(2) Voting Agreement, dated as of May 17, 2000, by and between BD Recapitalization Holdings LLC and the stockholders signatory thereto. (d)(3) Rights Agreement (incorporated by reference to PETCO's Report on Form 8-K dated September 22, 1998, File No. 000-23574). (f) Section 262 of the Delaware General Corporation Law (incorporated herein by reference to Appendix C of the proxy statement). (g) Not applicable. EX-99.B-1 2 ex-99_b1.txt EXHIBIT 99.B-1 EXHIBIT B-1 TRUST COMPANY OF THE WEST 11100 SANTA MONICA BOULEVARD, SUITE 2000 LOS ANGELES, CALIFORNIA 90025 (310) 235-5900 May 16, 2000 Mr. John G. Danhakl Leonard Green & Partners 11111 Santa Monica Blvd., Suite 2000 Los Angeles, CA 90025 Mr. Jonathan Coslet Texas Pacific Group 345 California Street, Suite 3300 San Francisco, CA 94104 Dear John and Jonathan: We understand that Green Equity Investors III, LP ("GEI") and TPG Partners III, LP ("TPG") intend to purchase a control interest of Petco Animal Supplies, Inc. and its subsidiaries (the "Company") by means of a leveraged buyout (the "Acquisition"). You have advised us that the Acquisition will be financed with senior debt facilities of $400.0 million (including a largely undrawn revolver for approximately $100 million), assumed capital leases of $17.0 million, $125.0 million of senior subordinated notes (the "Notes"), and $169.0 million of preferred stock and $17.9 million of common equity (collectively, the "Equity"). This letter will confirm the commitment by Trust Company of the West ("TCW"), on behalf of one or more of its managed accounts, to purchase $125.0 million of the Notes issued by the Company in connection with the Acquisition, with terms as described in the attached "Summary of Terms." The foregoing commitment is conditioned upon the following: (i) completion of definitive documentation, containing representations, warranties, conditions, covenants, indemnities, opinions and other terms reasonably satisfactory to TCW and its counsel and consistent with the terms attached, (ii) the completion of the Acquisition of the Company as described above, including the financing and equity contributions described herein, pursuant to a definitive purchase agreement between GEI, TPG or one of their affiliates and the Company, (iii) the absence of any material adverse change in the business, operations, prospects or financial condition of the Company and its direct and indirect subsidiaries, taken as a whole; and (iv) all governmental and regulatory approvals have been obtained as required by the definitive purchase agreement. This commitment will expire at the earlier of (i) 5:00 p.m. Los Angeles time, on May 19, 2000, unless this letter is accepted prior to such time, or (ii) upon your being notified by TCW of the failure of any one of the foregoing conditions. As consideration for the execution of this commitment letter, you agree, severally and not jointly, to pay TCW a commitment fee (the "Commitment Fee") equal to $1,250,000 conditioned upon the closing of the Acquisition of the Company by GEI and TPG, or any of their affiliates, regardless of whether (x) you utilize the Notes committed to hereunder or (y) this commitment letter expires or is otherwise terminated in accordance with its terms. You shall not be obligated to pay TCW the Commitment Fee if you or any of your affiliates do not acquire the Company or any of its subsidiaries or if TCW terminates this commitment letter without the fault of GEI, TPG or any of their affiliates. The Company agrees to pay all reasonable costs, fees and expenses incurred or to be incurred by TCW in connection with the examination, review, documentation and closing of the transactions completed hereby, including without limitation reasonable attorney's fees, rating agency fees and out-of-pocket B-1-1 expenses relating to any of the foregoing. The obligation to pay such expenses shall survive the expiration or termination of this commitment letter and shall remain in full force and effect whether or not the Acquisition is consummated. The Commitment Fee and such expenses shall be paid at the closing of the Acquisition, or if you decide not to proceed with such Acquisition or if this commitment letter expires or is terminated based upon the fault of TCW, such expenses will be paid as soon as practicable after being billed. This commitment is not assignable by you. Nothing in this letter, express or implied, shall give any person, other than the parties hereto, any benefit or any legal or equitable right, remedy, or claim under this letter. During the period that this commitment letter is in effect, you will continue to make available to TCW all information, financial or otherwise, documents or other material in your possession or otherwise reasonably requested by TCW in connection with its due diligence examination of the Company, which shall include providing TCW with the Company's financial statements and using your reasonable best efforts to provide access to the Company's management. Upon the execution by the Company of definitive documentation with respect to the Notes, GEI and TPG shall be released from all obligations hereunder. TCW currently manages approximately $1.5 billion in mezzanine capital and is actively involved in all aspects of the leveraged finance market. Our most recent fund is TCW/Crescent Mezzanine Partners II, L. P., an $810.0 million committed fund. As you know, we have the resources and experience to provide you with capital on a timely basis. We look forward to working with you towards the successful completion of the acquisition of the Company. This commitment may be executed in counterparts, each of which will be considered one and the same instrument. This commitment will be governed by and construed in accordance with the laws of the state of New York. GEI and TPG may disclose this letter to the Company, if so requested by the Company. Please indicate GEI's and TPG's acceptance of this commitment by executing a copy of this letter where indicated below and returning one original to me no later than 5:00 P.M. on May 19, 2000. If we do not receive an executed copy from you by such date, this commitment shall automatically terminate. Sincerely, /s/ JEAN-MARC CHAPUS Jean-Marc Chapus Managing Director Agreed and Accepted to as of the date first above written. Green Equity Investors III, LP TPG Partners III, LP By: GEI CAPITAL III, LLC By: TPG GENPAR III, LP Its: GENERAL PARTNER By: TPG ADVISORS III, INC. By: /s/ JOHN DANHAKL By: /s/ JONATHAN J. COSLET --------------------------- --------------------------- Title: Title: Vice President ------------------------ ----------------------- B-1-2 - ------------------------------------------------------------------------------- PETCO ANIMAL SUPPLIES, INC. SUMMARY OF TERMS - ------------------------------------------------------------------------------- ISSUER: Petco Animal Supplies, Inc. or the operating entity (the "Company"). PURCHASERS: Accounts designated by Trust Company of the West ("TCW"). DEBT SECURITIES: $125,000,000 aggregate principal amount of Senior Subordinated Notes due 2010 (the "Notes"). INTEREST RATE: 13.0% per annum, payable semi-annually in cash. PRICE: 100%. WARRANTS: Detachable warrants (the "Warrants") at no additional cost to purchase Equity of the Company, representing 5.0% of the fully-diluted Equity (including dilution for management stock options) for a nominal price. Equity shall include common stock and the accreted value of any preferred stock of the Company. The Warrants shall have the customary tag-along, drag-along, anti-dilution, demand registration, pre-emptive and piggy-back rights with respect to the underlying Equity. COMMITMENT FEE: Equal to 1.0% of the principal amount of the Notes payable in cash at the completion of the acquisition of the Company by Green Equity Investors III, LP and TPG Partners III, LP (as defined in the commitment letter) regardless of whether the Notes described herein are utilized. FUNDING FEE: Equal to 0.5% of the principal amount of the Notes payable in cash at closing. RANKING: The Notes will be general senior subordinated unsecured obligations of the Company and will be subordinated in right of payment to all existing and future Senior Indebtedness (to be defined) of the Company. The Company will not incur any indebtedness senior to the Notes, which is not Senior Indebtedness. OPTIONAL REDEMPTION: Non-call for five years, except that any time prior to _____, 2003, the Company may redeem up to 35% of the Notes with the net cash proceeds of a Qualified Public Offering, at 113.0% of principal plus accrued interest. After five years, the Notes are redeemable at various premiums declining ratably to par at maturity plus accrued interest. MANDATORY REDEMPTION: $125,000,000 due in 2010. BOARD REPRESENTATION: Purchasers shall have the right to appoint one member to the Board of Directors and to receive copies of all documents pertaining to any Board meeting.
B-1-3 - ------------------------------------------------------------------------------- PETCO ANIMAL SUPPLIES, INC. SUMMARY OF TERMS - ------------------------------------------------------------------------------- COVENANTS: The agreement governing the Notes will contain customary covenants including, but not limited to, Change of Control, Limitation on Additional Indebtedness, Limitation on Restricted Payments, Limitation on Asset Dispositions, Limitation on Investments, Limitation on Mergers and Consolidations and Limitation on Transactions with Affiliates. The agreement will not contain any maintenance covenants. SENIOR CREDIT FACILITY: The Company shall have entered into a $400.0 million senior credit facility (the "Senior Credit Facility") on terms and conditions acceptable to the Purchasers. EXPENSES: The Company agrees to reimburse Purchasers for all reasonable out of pocket expenses, including without limitation reasonable attorney's fees, reasonable accountant's fees, rating agency fees, and out-of-pocket expenses incurred in connection with this transaction whether or not the transaction described herein is consummated. EQUITY COINVESTMENT: TCW shall have the right to purchase up to $10,000,000 of Equity on the same terms and conditions as the Equity being purchased by Green Equity Investors III, LP and TPG Partners III, LP. EXPIRATION: This Summary of Terms expires on May 19, 2000 unless accepted prior to such date. Once accepted, this Summary of Terms shall expire on a date consistent with the final termination date set forth in the acquisition agreement. RELEASE: Upon the execution by the Company of definitive documentation with respect to the Notes, Green Equity Investors III, LP and TPG Partners III, LP shall be released from all obligations hereunder.
ACCEPTED AND AGREED TO ON MAY 17, 2000 Green Equity Investors III, LP By: GEI CAPITAL III, LLC Its: GENERAL PARTNER By: /s/ JOHN DANHAKL ------------------------------- Title: ------------------------------- TPG Partners III, LP By: TPG GENPAR III, LP By: TPG ADVISORS III, INC. By: /s/ JONATHAN J. COSLET ------------------------------- Title: Vice President ------------------------------- B-1-4 EX-99.B-2 3 ex-99_b2.txt EXHIBIT 99.B-2 EXHIBIT B-2 GREEN EQUITY INVESTORS III, LP 11111 SANTA MONICA BOULEVARD, SUITE 2000 LOS ANGELES, CA 90025 May 17, 2000 Board of Directors Petco Animal Supplies, Inc. 9125 Rehco Road San Diego, CA 92121 Gentlemen: This letter will confirm that Green Equity Investors III, L.P. ("GEI III"), commits, subject to the terms and conditions set forth herein, to provide BD Recapitalization Corp. up to $92,500,000 in the aggregate in financing in consider ation for MergerSub Common Shares, Merger Sub Series A Preferred Shares and MergerSub Series B Preferred Shares in connection with the recapitalization of Petco Animal Supplies, Inc. (the "Company") through the merger (the "Merger") of BD Recapitalization Corp. ("MergerSub") with and into the Company, with the Com pany as the surviving corporation (the "Recapitalization"). Such securities shall represent at least a 50% equity interest in MergerSub immediately prior to the Merger. GEI III may effect its purchase of such securities directly or indirectly through one or more affiliated entities. The Merger will occur pursuant to the terms of the Agreement and Plan of Merger (the "Merger Agreement"), between the Company and MergerSub. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Merger Agreement. GEI III's investment will be provided immediately prior to, and in connection with, the closing of the Merger and is subject only to compliance with the terms and provisions of the Merger Agreement as of the date hereof by the parties thereto, and satisfaction or waiver of the conditions set forth therein, including receipt of the Financing on the terms set forth in the Financing Letters. GEI III understands that you will be relying on its commitments in this letter if the Company enters into the Merger Agreement. B-2-1 Petco Animal Supplies, Inc. May 17, 2000 Page 2 GEI III's commitment hereunder is provided for your sole benefit and shall not benefit, be disclosed to, or be assigned to, any other party without our written consent, except that the terms of this letter may be disclosed (i) to your accountants, attorneys, investment banks and other advisors or (ii) as required by law or legal process. No modification of this letter shall be binding upon or enforceable against GEI III without the written approval of GEI III. This agreement represents the entire agreement between us with respect to the matters set forth herein, and shall replace and supersede any and all discussions and written communications regarding such matters. This letter may be executed in counterparts, each of which, when so executed, shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. The terms of this letter shall be governed by and construed in accor dance with the laws of the State of Delaware applicable to contracts made and to be performed in such state. Any dispute arising under or with respect to this letter or the subject matter hereof shall be brought exclusively in the state or federal courts located in the State of Delaware. Each party hereto waives all right to trial by jury in any action, proceeding and counterclaim (whether based upon contract, tort or otherwise) related to or arising out of this letter, any of the transactions contemplated hereby or GEI III's commitment hereunder. GEI III's commitment hereunder shall terminate contemporaneously with the termination or expiration of the Merger Agreement, but in any event on November 1, 2000 (or if earlier, the Terminal Date), if the Merger has not been consummated by such date. LGP is delighted to be part of a transaction that will bring substantial value to the public stockholders of Petco Animal Supplies, Inc. If the terms of this letter are acceptable to you, please indicate by signing below and returning a copy of this letter to us. B-2-2 Petco Animal Supplies, Inc. May 17, 2000 Page 3 Very truly yours, GREEN EQUITY INVESTORS III, LP By: GEI Capital III, LLC, its general partner By: /s/ JOHN DANHAKL ------------------------------- Agreed to and accepted: PETCO ANIMAL SUPPLIES, INC. By: /s/ JAMES M. MYERS ------------------------------- Name: James M. Myers Title: Senior Vice President & Chief Financial Officer B-2-3 EX-99.B-3 4 ex-99_b3.txt EXHIBIT 99.B-3 EXHIBIT B-3 GOLDMAN SACHS CREDIT PARTNERS L.P. WELLS FARGO BANK, N.A. 85 BROAD STREET 333 SOUTH GRAND AVENUE NEW YORK, NEW YORK 10004 SUITE 900 LOS ANGELES, CA 90071 PERSONAL AND CONFIDENTIAL May 17, 2000 Green Equity Investors III, L.P. c/o Leonard Green & Partners, L.P. 11111 Santa Monica Boulevard Suite 2000 Los Angeles, CA 90025 Attention: Mr. John G. Danhakl Mr. John Baumer TPG Partners III, L.P. c/o Texas Pacific Group 345 California Street Suite 3300 San Francisco, CA 94104 Attention: Mr. Jonathan Coslet PETCO ANIMAL SUPPLIES, INC. Ladies and Gentlemen: We are pleased to confirm the arrangements under which (i) Goldman Sachs Credit Partners L.P. ("GSCP") is exclusively authorized by Green Equity Investors III, L.P. and TPG Partners III, L.P. (the "SPONSORS") to act as Joint Lead Arranger, Joint Book-runner and Sole Syndication Agent in connection with, (ii) Wells Fargo Bank, N.A. ("Wells") is exclusively authorized by the Sponsors to act as Joint Lead Arranger, Joint Book-runner and Sole Administrative Agent in connection with and (iii) each of GSCP and Wells commits to provide the financing for, certain loans described herein, in each case on the terms and subject to the conditions set forth in this letter, the attached Annex A and the attached Annex B (together, the "COMMITMENT LETTER"). You have advised us that the Sponsors intend to consummate a leveraged acquisition (the "ACQUISITION") of Petco Animal Supplies, Inc. (the "COMPANY"). While the structure and certain terms of the Acquisition have yet to be finally determined, it is anticipated that the Sponsors will create a holding company subsidiary ("HOLDCO"), which, in turn, will create a merger subsidiary ("MERGERCO"). MergerCo would merge with the Company, with the B-3-1 Company being the surviving corporation. You have also advised us that you propose to finance the Acquisition (which includes the refinancing of the Company's and its subsidiaries' existing indebtedness (except capital lease obligations estimated at approximately $17 million)), including transaction costs, and provide financing for the Company's and its subsidiaries' working capital and general corporate needs after the consummation of the Acquisition with the proceeds of (i) up to $400.0 million of senior secured credit facilities (the "FACILITIES") to be made available to the Company, (ii) a private placement by the Company of $125.0 million of senior subordinated unsecured debt securities (the "SUBORDINATED DEBT") and (iii) common and cumulating and compounding preferred cash equity contributions by Sponsors and their respective affiliates of approximately $185 million (the "SPONSOR EQUITY") and "rollovers" by existing management of Company (the "ROLLOVER EQUITY") of their equity interests or options valued at approximately $3.3 million; PROVIDED that, in any event the aggregate of the Sponsor Equity and the Rollover Equity shall be approximately $188.3 million. Upon consummation of the Acquisition, the Sponsors will own, through their 100% ownership of the equity of HoldCo, approximately 75% of the fully diluted common stock of the Company. GSCP is pleased to confirm its commitment to act as Joint Lead Arranger and Joint Book-runner to provide you and the Company with structuring advice in connection with the Facilities and as Sole Syndication Agent (the "SYNDICATION AGENT ") to provide you and the Company with syndication advice in connection with the Facilities. Wells is pleased to confirm its commitment to act as Joint Lead Arranger and Joint Book-runner to provide you and the Company with structuring advice in connection with the Facilities and as Sole Administrative Agent (the "ADMINISTRATIVE AGENT ", and together with the Syndication Agent, the "AGENTS ") in connection with the administration of the Facilities. In addition, each of GSCP and Wells is pleased to confirm, severally, its commitment to provide the Company one-half of the full $400.0 million of the Facilities, in each case on the terms and subject to the conditions contained in this Commitment Letter. Our fees for such services are set forth in a separate fee letter (the "FEE LETTER") entered into by the Sponsors and the Agents on the date hereof, PROVIDED, that GSCP will be listed on the "left-hand side" (or first, as the context requires), in all materials relating to the Facilities. Our several commitments are subject, in our reasonable discretion, to the following conditions: (i) there shall not have been, since January 29, 2000, any material adverse change in or affecting the business, financial condition, results of operations or prospects of the Company and its subsidiaries, taken as a whole, in each case other than pursuant to or disclosed in the Agreement and Plan of Merger (the "AGREEMENT AND PLAN OF MERGER") with respect to the Company dated as of even date herewith, (ii) there shall not exist material adverse conditions in the financial or capital markets generally, or in the market for loan syndications in particular, which in any such case under clause (i) or (ii) we, in our reasonable judgment, deem material and (iii) the Facilities being assigned a credit rating by two nationally recognized rating agencies (which agencies must be acceptable to us). Our several commitments are also subject, in our reasonable discretion, to the satisfactory negotiation, execution and delivery of appropriate loan documents relating to the Facilities, including, without limitation, a credit agreement, guaranties, security agreements, pledge agreements, real property security agreements, opinions of counsel and other related definitive documents (collectively, the "LOAN DOCUMENTS") to be based upon and substantially consistent with the terms set forth in this Commitment Letter. In addition, our several commitments are subject, in our reasonable discretion, to our being satisfied with the results of our due diligence (to be completed within 2 weeks after your acceptance of this Commitment B-3-2 Letter assuming we are provided promptly with all requested information and access we deem necessary to complete such due diligence) with respect to the tax, accounting, legal and regulatory issues relevant to the Acquisition and the Company and its subsidiaries. The terms of this Commitment Letter are intended as an outline of certain of the material terms of the Facilities, but do not include all of the terms, conditions, covenants, representations, warranties, default clauses and other provisions that will be contained in the Loan Documents. The Loan Documents shall include, in addition, provisions that are customary or typical for financings of this type and other provisions that the Agents may reasonably determine to be appropriate in the context of the proposed transactions. GSCP and Wells intend and reserve the right to syndicate the Facilities to the Lenders (as defined in the attached Annex B) and the several commitments of GSCP and Wells hereunder shall be reduced dollar-for-dollar (on a 50/50 basis) as and when corresponding commitments are received from the Lenders. In consultation with you, GSCP and Wells shall select the Lenders with your consent, not to be unreasonably withheld. GSCP and Wells will jointly lead the syndication, including determining the timing of all offers to potential Lenders, any title of agent or similar designations awarded to any Lender and the acceptance of commitments, the amounts offered and the compensation provided to each Lender from the amounts to be paid to the Agents pursuant to the terms of this Commitment Letter and the Fee Letter. GSCP and Wells will jointly determine the final commitment allocations and will notify the Sponsors of such determinations. To ensure an orderly and effective syndication of the Facilities, you agree that, until the later of the termination of the syndication as determined by GSCP and Wells jointly and 90 days following the date of initial funding under the Facilities, you will not, and will not permit any of your affiliates (including HoldCo, the Company and its subsidiaries) to, syndicate or issue, attempt to syndicate or issue, announce or authorize the announcement of the syndication or issuance of, or engage in discussions concerning the syndication or issuance of, any debt facility or debt security of HoldCo, the Company or any of its subsidiaries (other than the Facilities, the Subordinated Debt and other indebtedness contemplated hereby), including any renewals or refinancings of any existing debt facility or debt security, without the prior written consent of the Agents. You also agree that the Agents shall be entitled, but not obligated, after consultation with you, to change the terms, conditions, pricing and/or structure of the Facilities if the Agents determine in their reasonable discretion that such changes are advisable to insure the successful syndication of all of the Facilities; PROVIDED that (i) the aggregate amount of the Term Facilities remains unchanged, (ii) the total amount of the Revolving Facility remains unchanged, (iii) the pricing with respect to loans made under the Facilities shall not be increased by more than .75% per annum in excess of the rates set forth in Annex B and (iv) the fees set forth in the accompanying Fee Letter shall not change. You agree to cooperate and to use best efforts to cause the Company to cooperate with the Agents in connection with (i) the preparation of an information package regarding the business, operations and prospects of the Company and HoldCo including, without limitation, the delivery of all information relating to the transactions contemplated hereunder prepared by or on behalf of the Sponsors, the Company or HoldCo deemed reasonably necessary by the Agents to complete the syndication of the Facilities and (ii) the presentation of such information package in bank meetings and other communications with prospective Lenders in connection with the syndication of the Facilities. The Company shall be solely responsible for the contents of any such information package and presentation and you acknowledge that the Agents will be using and B-3-3 relying upon the information contained in such information package and presentation without independent verification thereof. In addition, you represent and covenant that all information about the Sponsors, HoldCo or MergerCo provided by you to the Agents or the Lenders in connection with the transactions contemplated hereunder is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading; and that to the best of your knowledge all information provided by or about the Company to the Agents or the Lenders in connection with the transactions contemplated hereunder is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading. We acknowledge that projections or other forward looking statements do not constitute "information" and that you represent and covenant that such projections and other forward looking statements will have been prepared in good faith based on assumptions believed by you to be reasonable. In connection with arrangements such as this, it is the policy of our respective firms to receive indemnification. You agree to the provisions with respect to our indemnity and other matters set forth in Annex A which is incorporated by reference into this Commitment Letter. The Agents agree that your obligations and liabilities under this Commitment Letter, including Annex A hereto, and the Fee Letter shall terminate to the extent that both the Acquisition has been consummated and the Company has assumed such obligations and liabilities. Please note that this Commitment Letter, the Fee Letter and any written or oral advice provided by the Agents in connection with this arrangement is exclusively for your information and may not be disclosed to any third party or circulated or referred to publicly without our prior written consent, except, after providing written notice to the Agents, pursuant to a subpoena or order issued by a court of competent jurisdiction or by a judicial, administrative or legislative body or committee. In addition, we hereby consent to your disclosure of (i) such advice, this Commitment Letter and the Fee Letter to your officers, directors, agents, advisors and other providers of financing who are directly involved in the consideration of the Facilities to the extent such persons are obligated to hold such advice in confidence, and (ii) this Commitment Letter (but not the Fee Letter) or the information contained herein (but not in the Fee Letter) (x) to the Company and the Company's financial and legal advisors to the extent you notify such persons of their obligations to keep such material confidential and (y) after your acceptance of this Commitment Letter and the Fee Letter, as required in filings with the Securities and Exchange Commission and other applicable regulatory authorities. Our several commitments hereunder shall terminate on November 1, 2000 unless the closing of the Facilities, on the terms and subject to the conditions contained herein, shall have been consummated. As you know, each of GSCP and Wells may from time to time effect transactions, for its own account or the account of customers, and hold positions in loans or options on loans of HoldCo, the Company and other companies that may be the subject of this arrangement. In addition, Goldman, Sachs & Co. is a full service securities firm and as such may from time to time effect transactions, for its own account or the account of customers, and hold positions in securities or options on securities of HoldCo, the Company and other companies that may be the subject of this arrangement. In addition, each of GSCP and Wells may employ the services of its affiliates B-3-4 in providing certain services hereunder and may exchange with such affiliates information concerning HoldCo and the Company and other companies that may be the subject of this arrangement in providing such services, and such affiliates shall be entitled to the benefits afforded to GSCP and Wells hereunder. This Commitment Letter and the Fee Letter may be executed in counterparts which, taken together, shall constitute an original. Delivery of an executed counterpart of this Commitment Letter or the Fee Letter by telecopier shall be effective as delivery of a manually executed counterpart thereof. This letter shall be governed by and construed in accordance with the laws of the State of New York. Please confirm that the foregoing is in accordance with your understanding by signing and returning to us the enclosed copy of this Commitment Letter, together, if not previously executed and delivered, with the Fee Letter, on or before the close of business on the third business day following the date of this letter, whereupon this Commitment Letter and the Fee Letter shall become binding agreements between us. If not signed and returned as described in the preceding sentence by such date, this offer will terminate on such date. We look forward to working with you on this assignment. Very truly yours, GOLDMAN SACHS CREDIT WELLS FARGO BANK, N.A. PARTNERS L.P. By /s/ R.T. WAGNER By /s/ KEVIN MEKHANN ------------------------------ ------------------------------ Authorized Signatory Name: Kevin Mekhann Title: Vice President ACCEPTED AS OF THE DATE HEREOF: GREEN EQUITY INVESTORS III, L.P. By: GEI CAPITAL III, LLC its General Partner By /s/ JOHN DANHAKL ------------------------------ Name: John Danhakl Title Manager TPG PARTNERS III, L.P. By: TPG GenPar III, L.P. By: TPG Advisors III, Inc. By /s/ JONATHAN J. COSLET ------------------------------ Name: Jonathan Coslet Title Vice President B-3-5 ANNEX A IN THE EVENT THAT EITHER AGENT BECOMES INVOLVED IN ANY CAPACITY IN ANY ACTION, PROCEEDING OR INVESTIGATION BROUGHT BY OR AGAINST ANY PERSON, INCLUDING STOCKHOLDERS OR OTHER OWNERS OF EITHER SPONSOR, HOLDCO OR THE COMPANY, IN CONNECTION WITH OR AS A RESULT OF EITHER THIS ARRANGEMENT OR ANY MATTER REFERRED TO IN THIS COMMITMENT LETTER OR THE FEE LETTER (TOGETHER, THE "LETTERS"), THE SPONSORS, SEVERALLY AND NOT JOINTLY, PERIODICALLY WILL REIMBURSE SUCH AGENT FOR ITS REASONABLE AND DOCUMENTED LEGAL AND OTHER EXPENSES (INCLUDING THE REASONABLE AND DOCUMENTED COST OF ANY INVESTIGATION AND PREPARATION) INCURRED IN CONNECTION THEREWITH; PROVIDED, HOWEVER, THAT IF IT IS FOUND IN ANY SUCH ACTION, PROCEEDING OR INVESTIGATION THAT ANY LOSS, CLAIM, DAMAGE OR LIABILITY OF SUCH AGENT HAS RESULTED FROM THE GROSS NEGLIGENCE OR BAD FAITH OF SUCH AGENT IN PERFORMING THE SERVICES WHICH ARE THE SUBJECT OF THIS LETTER, SUCH AGENT SHALL REPAY SUCH PORTION OF THE REIMBURSED AMOUNTS THAT IS ATTRIBUTABLE TO EXPENSES INCURRED IN RELATION TO THE ACT OR OMISSION OF SUCH AGENT WHICH IS THE SUBJECT OF SUCH FINDING. THE SPONSORS, SEVERALLY AND NOT JOINTLY, ALSO WILL INDEMNIFY AND HOLD EACH AGENT HARMLESS AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES OR LIABILITIES TO ANY SUCH PERSON IN CONNECTION WITH OR AS A RESULT OF EITHER THIS ARRANGEMENT OR ANY MATTER REFERRED TO IN THE LETTERS, EXCEPT TO THE EXTENT THAT ANY SUCH LOSS, CLAIM, DAMAGE OR LIABILITY RESULTS FROM THE GROSS NEGLIGENCE OR BAD FAITH OF SUCH AGENT IN PERFORMING THE SERVICES THAT ARE THE SUBJECT OF THE LETTERS. IF FOR ANY REASON THE FOREGOING INDEMNIFICATION IS UNAVAILABLE TO SUCH AGENT OR INSUFFICIENT TO HOLD IT HARMLESS, THEN THE SPONSORS, SEVERALLY AND NOT JOINTLY, SHALL CONTRIBUTE TO THE AMOUNT PAID OR PAYABLE BY SUCH AGENT AS A RESULT OF SUCH LOSS, CLAIM, DAMAGE OR LIABILITY IN SUCH PROPORTION AS IS APPROPRIATE TO REFLECT THE RELATIVE ECONOMIC INTERESTS OF THE SPONSORS AND THEIR RESPECTIVE STOCKHOLDERS OR OTHER OWNERS ON THE ONE HAND AND SUCH AGENT ON THE OTHER HAND IN THE MATTERS CONTEMPLATED BY THE LETTERS AS WELL AS THE RELATIVE FAULT OF THE SPONSORS AND SUCH AGENT WITH RESPECT TO SUCH LOSS, CLAIM, DAMAGE OR LIABILITY AND ANY OTHER RELEVANT EQUITABLE CONSIDERATIONS. THE REIMBURSEMENT, INDEMNITY AND CONTRIBUTION OBLIGATIONS OF THE SPONSORS UNDER THIS PARAGRAPH SHALL BE IN ADDITION TO ANY LIABILITY WHICH THE SPONSORS MAY OTHERWISE HAVE, SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO ANY AFFILIATE OF SUCH AGENT AND THE PARTNERS, DIRECTORS, AGENTS, EMPLOYEES AND CONTROLLING PERSONS (IF ANY), AS THE CASE MAY BE, OF SUCH AGENT AND ANY SUCH AFFILIATE, AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL REPRESENTATIVES OF THE SPONSORS, HOLDCO, COMPANY, EACH AGENT, ANY SUCH AFFILIATE AND ANY SUCH PERSON. THE SPONSORS ALSO AGREE THAT NEITHER AGENT NOR ANY OF SUCH AFFILIATES, PARTNERS, DIRECTORS, AGENTS, EMPLOYEES OR CONTROLLING PERSONS SHALL HAVE ANY LIABILITY TO THE SPONSORS OR ANY PERSON ASSERTING CLAIMS ON BEHALF OF OR IN RIGHT OF EITHER SPONSOR OR ANY OTHER PERSON IN CONNECTION WITH OR AS A RESULT OF EITHER THIS ARRANGEMENT OR ANY MATTER REFERRED TO IN THE LETTERS EXCEPT TO THE EXTENT THAT ANY LOSSES, CLAIMS, DAMAGES, LIABILITIES OR EXPENSES INCURRED BY SUCH SPONSOR RESULT FROM THE GROSS NEGLIGENCE OR BAD FAITH OF SUCH AGENT IN PERFORMING THE SERVICES THAT ARE THE SUBJECT OF THE LETTERS; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL SUCH INDEMNIFIED PARTY OR SUCH OTHER PARTIES HAVE ANY LIABILITY FOR ANY INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH OR AS A RESULT OF SUCH INDEMNIFIED PARTY'S OR SUCH OTHER PARTIES' ACTIVITIES RELATED TO THE LETTERS. ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING IN CONNECTION WITH OR AS A RESULT OF EITHER THIS ARRANGEMENT OR ANY MATTER REFERRED TO IN THE LETTERS IS HEREBY WAIVED BY THE PARTIES HERETO. EXCEPT AS EXPRESSLY PROVIDED IN THE COMMITMENT LETTER TO WHICH THIS ANNEX A IS ATTACHED, THE PROVISIONS OF THIS ANNEX A SHALL SURVIVE ANY TERMINATION OR COMPLETION OF THE ARRANGEMENT PROVIDED BY THE LETTERS. B-3-6 ANNEX B PETCO ANIMAL SUPPLIES, INC. SUMMARY OF TERMS AND CONDITIONS OF THE FACILITIES
THIS SUMMARY OF TERMS AND CONDITIONS OUTLINES CERTAIN TERMS OF THE FACILITIES REFERRED TO IN THE COMMITMENT LETTER, OF WHICH THIS ANNEX B IS A PART. CERTAIN CAPITALIZED TERMS USED HEREIN ARE DEFINED IN THE COMMITMENT LETTER. BORROWER: Petco Animal Supplies, Inc. (the "COMPANY"). GUARANTORS: HoldCo and each of the Borrower's subsidiaries (other than any subsidiary that is a "controlled foreign corporation" (a "CFC") under Section 957 of the Internal Revenue Code) shall guaranty all obligations under the Facilities; provided that, notwithstanding the foregoing, any subsidiary of the Borrower providing any guaranty of any of the Subordinated Debt (defined below) or any refinancings of any of the foregoing, shall guaranty the Facilities. JOINT LEAD ARRANGER, JOINT BOOK-RUNNER AND SOLE SYNDICATION AGENT: Goldman Sachs Credit Partners L.P. ("GSCP", and in such capacities, the "SYNDICATION AGENT"). JOINT LEAD ARRANGER, JOINT BOOK-RUNNER AND SOLE ADMINISTRATIVE AGENT: Wells Fargo Bank, N.A. ("WELLS ", and in such capacity, the "ADMINISTRATIVE AGENT"). LENDERS: GSCP, Wells and/or other financial institutions selected by GSCP and Wells jointly in consultation with the Sponsors, and with the consent (not to be unreasonably withheld) of the Sponsors (each a "LENDER" and collectively, the "LENDERS"). AMOUNT OF SENIOR FACILITIES: Up to $400.0 million of senior secured bank financing (the "FACILITIES") to include: (i) $100.0 million senior term loan facility (the "TERM FACILITY A"); (ii) $200.0 million senior term loan facility (the "TERM FACILITY B"; and together with Term Facility A, the "TERM FACILITIES"); and (iii) $100.0 million senior revolving credit facility (the "REVOLVING FACILITY"). B-3-7 AVAILABILITY: Term Facilities: One drawing may be made under the Term Facilities on the Closing Date. Revolving Facility: Amounts available under the Revolving Facility may be borrowed, repaid and reborrowed after the Closing Date until the maturity date of the Revolving Facility. Up to $8.0 million of the Revolving Facility may be drawn on the Closing Date. PURPOSE/USE OF PROCEEDS: Term Facilities: To be used in full to finance the Acquisition, to repay the Company's and its subsidiaries' outstanding indebtedness and to pay related fees and expenses. Revolving Facility: To be used to finance a portion of the Acquisition and the working capital and general corporate needs of the Borrower and its subsidiaries. MATURITIES: Term Facility A: 6th anniversary of the Closing Date Term Facility B: 8th anniversary of the Closing Date Revolving Facility: 6th anniversary of the Closing Date CLOSING DATE: The date on or before November 1, 2000 on which the initial borrowings under the Facilities are made. AMORTIZATION: Term Facility A: The outstanding principal amount of the Term Facility A will be payable in equal quarterly amounts as follows:
Year 1: $2,000,000 Year 2: $7,000,000 Year 3: $13,000,000 Year 4: $18,000,000 Year 5: $25,000,000 Year 6: $35,000,000
Term Facility B: The outstanding principal amount of the Term Facility B will be payable in equal quarterly amounts to be determined (it being understood that only minimal amortization will be required with respect to Term Facility B until after the sixth anniversary of the Closing Date). Revolving Facility: The entire outstanding principal of the Revolving Facility will be due on the sixth anniversary of the Closing Date. B-3-8 LETTERS OF CREDIT: At the Borrower's option, a portion of the Revolving Facility to be determined will be made available for the issuance of letters of credit ("LETTERS OF CREDIT"). SWINGLINE FACILITY: At the Borrower's option, a portion of the Revolving Facility to be determined will be made available to the Borrower pursuant to a swingline facility. INTEREST RATE: All borrowings under the Facilities shall bear interest, at the Borrower's option, as follows with respect to all loans made under the Facilities: (i) for Term Facility A and the Revolving Facility: (A) at the Base Rate plus 2.25% per annum; or (B) at the reserve adjusted Eurodollar Rate plus 3.25% per annum; and (ii) for Term Facility B: (A) at the Base Rate plus 3.00% per annum; or (B) at the reserve adjusted Eurodollar Rate plus 4.00% per annum. Commencing six-months after the Closing Date, after the delivery of quarterly reports of the Borrower evidencing the calculation of total debt to EBITDA, the Term Facility A and the Revolving Facility will bear interest at the Base Rate or the reserve adjusted Eurodollar Rate, as the case may be, plus in each case an applicable margin, based upon a performance pricing grid to be determined. As used herein, the terms "Base Rate" and "reserve adjusted Eurodollar Rate" shall have meanings customary and appropriate for financings of this type, and the basis for calculating accrued interest and the interest periods for loans bearing interest at the reserve adjusted Eurodollar Rate shall be customary and appropriate for financings of this type. Interest on outstanding amounts following the occurrence and during the continuance of an Event of Default shall accrue at a rate equal to the rate borne from time to time by the loans plus an additional 2.00% per annum and shall be payable on demand. INTEREST PAYMENTS: Quarterly for loans bearing interest with reference to the Base Rate; on the last day of selected interest periods (which shall be one, two, three and six months) for loans bearing interest with B-3-9 reference to the reserve adjusted Eurodollar Rate (and at the end of every three months, in the case of interest periods of longer than three months); and upon prepayment, in each case payable in arrears and computed on the basis of a 360-day year for Eurodollar Rate Loans and on the basis of a 365-/366-day year for Base Rate Loans. INTEREST RATE PROTECTION: Within 90 days after the Closing Date, the Borrower will obtain interest rate protection through interest rate swaps, caps or other agreements reasonably satisfactory to the Agents against increases in the interest rates with respect to a notional amount equal to not less than 25% of the Term Facilities for a period of not less than 2 years. FUNDING PROTECTION: Customary for transactions of this type, including breakage costs, gross-up for withholding, compensation for increased costs and compliance with capital adequacy and other regulatory restrictions. COMMITMENT FEES: Commitment fees on the daily average unused portion of the Revolving Facility (reduced by the amount of letters of credit issued and outstanding) shall accrue from the Closing Date at the rate of .50% per annum, and shall be payable quarterly in arrears. LETTERS OF CREDIT FEES: The letter of credit fee shall be a percentage per annum equal to the applicable margin for Eurodollar Rate loans under the Revolving Facility, which shall be shared by all Lenders under the Revolving Facility, and an additional fronting fee of a percentage per annum to be mutually agreed upon with the Administrative Agent, which shall be retained by the Lender issuing the letter of credit, in each case based upon the applicable percentage multiplied by the amount available from time to time for drawing under such letter of credit. In addition, certain customary fees assessed by the issuing Lender shall be payable. VOLUNTARY PREPAYMENTS: The Facilities may be prepaid in whole or in part without premium or penalty (provided that loans bearing interest with reference to the reserve adjusted Eurodollar Rate shall be prepayable only on the last day of the related interest period unless the Borrower pays any related "broken funding" costs). Voluntary prepayments shall be applied among the Facilities as determined by the Borrower; provided that any voluntary prepayments of the Term Facility A or Term Facility B, as the case may be, shall be further applied to the remaining scheduled amortization payments of such Term Facility on a pro rata basis. B-3-10 MANDATORY PREPAYMENTS: The Borrower shall make the following mandatory prepayments (subject to certain basket amounts to be mutually agreed upon in the definitive Loan Documents): 1. ASSET SALES - prepayments in the amount of all of the net after-tax cash proceeds of the sale or other disposition of any property or assets of the Borrower or any of its subsidiaries, other than net cash proceeds (y) of sales or other dispositions of inventory or other assets in the ordinary course of business, and (z) reinvested in long-term productive assets of the Borrower or its subsidiaries within 270 days of receipt of such net cash proceeds; 2. INSURANCE/CONDEMNATION PROCEEDS -prepayments in the amount of all of the net cash proceeds received under any casualty insurance maintained by HoldCo, the Borrower or any of its subsidiaries or pursuant to the power of eminent domain or condemnation, other than permitted reinvestments to be mutually agreed upon in the definitive Loan Documents; 3. EQUITY OFFERINGS - prepayments in an amount equal to 75% of the net cash proceeds received from the issuance of equity securities of HoldCo, the Borrower or any of its subsidiaries; 4. PROCEEDS OF DEBT ISSUANCES -prepayments in the amount of all of the net cash proceeds received by any of HoldCo, Borrower or its subsidiaries from issuances of debt securities by HoldCo, the Borrower or any of its subsidiaries (other than indebtedness permitted under the Loan Documents); 5. EXCESS CASH FLOW - prepayments in an amount equal to 75% of excess cash flow (to be defined), payable within 100 days of each fiscal year-end commencing with the fiscal year ending January 29, 2002. The percentage of proceeds required for prepayments in each of 3 and 5 above shall decrease to 50% when the Borrower's leverage ratio reaches less than 3.0: 1.0. All such prepayments shall be applied without premium or penalty (except for breakage costs, if any) to repay, first, outstanding loans under the Term Facilities as set forth in the next sentence and, second, outstanding loans (and to the permanent reduction of B-3-11 commitments) under the Revolving Facility. All mandatory prepayments of the Term Facilities shall be applied to scheduled amortization prepayments of the Term Facilities pro rata between the Term Facilities and further applied pro rata to the remaining scheduled amortization payments thereon; provided that any Lender under Term Facility B may, so long as there is a corresponding principal amount outstanding under the Term Facility A, decline to accept any such prepayment, in which case the amount of such declined payment shall be applied to the further prepayment of Term Facility A. SECURITY: The Facilities and each guarantee thereof will be secured by first priority security interests in substantially all assets, including without limitation, all personal, real and mixed property of the Borrower and the subsidiary Guarantors (except as otherwise agreed to by the Agents including leaseholds which the Agents determine are immaterial to the collateral package as a whole). In addition, the Facilities shall be secured by a first priority security interest in 100% of the stock of the Borrower and each of its subsidiaries (limited, in the case of the voting stock of subsidiaries that are CFC's, to a pledge of 66% of the stock of each first-tier CFC subsidiary) and all intercompany debt. All security arrangements shall be in form and substance reasonably satisfactory to the Syndication Agent and the Administrative Agent (collectively, the "AGENTS"). REPRESENTATIONS AND WARRANTIES: Customary and appropriate including, without limitation, due organization and authorization, execution, delivery and enforceability of the Loan Documents, financial condition, no material adverse change, title to properties, liens, litigation, payment of taxes, compliance with laws, environmental and ERISA matters, consents and approvals and full disclosure. COVENANTS: Customary and appropriate affirmative and negative covenants, including, without limitation, financial covenants related to minimum fixed charge coverage, minimum interest coverage, maximum capital expenditures, total adjusted debt to EBITDAR and senior leverage tests. Other covenants will include, without limitation, financial and other reporting requirements, and, subject to customary exceptions and baskets, limitations on other indebtedness, liens, negative pledge, investments, guarantees, restricted junior payments (dividends, redemptions and payments on subordinated debt and junior capital), mergers and acquisitions, sales or transfers of assets, sales and leasebacks, transactions with affiliates. B-3-12 EVENTS OF DEFAULT: Customary and appropriate including, without limitation, failure to make payments when due, defaults under other agreements or instruments of indebtedness, noncompliance with covenants, breaches of representations and warranties, bankruptcy, uninsured judgments in excess of specified amounts, ERISA, impairment of security interests in collateral, invalidity of guarantees, and "changes of control" (to be defined in a mutually agreed upon manner). CONDITIONS PRECEDENT TO INITIAL BORROWINGS: 1. SATISFACTORY DOCUMENTATION. The definitive Loan Documents and the other documentation evidencing the Facilities shall be prepared by counsel to the Agents and shall be in form and substance reasonably satisfactory to the Agents and the Lenders. 2. ACQUISITION STRUCTURE AND DOCUMENTATION. The structure utilized to consummate the Acquisition, the terms thereof, the pro forma capitalization of HoldCo and the Borrower after giving effect to the Acquisition, and the definitive documentation relating thereto (the "DEFINITIVE ACQUISITION DOCUMENTS") shall be in form and substance reasonably satisfactory to the Agents (it being understood and agreed that the draft of Agreement and Plan of Merger dated May 15, 2000 is satisfactory), and the Definitive Acquisition Documents shall be in full force and effect on the Closing Date. 3. CONSUMMATION OF ACQUISITION. Prior to the initial borrowing under the Facilities or simultaneously therewith, the Acquisition shall have been consummated pursuant to the Definitive Acquisition Documents, no provision of which shall have been amended, supplemented, waived or otherwise modified in any material respect without the prior written consent of the Agents. 4. EQUITY CONTRIBUTIONS. Prior to the initial borrowing under the Facilities or simultaneously therewith, (i) the Sponsors shall have consummated the purchase of approximately $185 million of common and/or cumulating and compounding preferred equity (the "SPONSOR EQUITY") of the Company and approximately $3.3 million of additional common and/or cumulating and compounding preferred equity (the "ROLLOVER EQUITY") shall have been provided through "rollovers" by existing management shareholders of the Company; PROVIDED that, in any event the aggregate of the Sponsor Equity and the Rollover Equity shall be B-3-13 approximately $188.3 million, and (ii) the terms and provisions of the Sponsor Equity and the Rollover Equity shall be reasonably satisfactory to the Agents. 5. ISSUANCE OF SUBORDINATED DEBT. Prior to the initial borrowing under the Facilities or simultaneously therewith (i) the Borrower shall have received the proceeds of a private placement by the Borrower of $125.0 million of subordinated unsecured debt securities (the "SUBORDINATED DEBT"); (ii) the terms and provisions of the Subordinated Debt shall be reasonably satisfactory to the Agents (it being acknowledged that the term sheet attached to the commitment letter dated May 15, 2000 provided by Trust Company of the West is satisfactory); and (iii) the proceeds of the Subordinated Debt shall have been applied in full to finance a portion of the Acquisition, repay existing indebtedness of the Company and its subsidiaries and to pay related fees and expenses. 6. DISCHARGE OF EXISTING DEBT. Concurrently with the consummation of the Acquisition, substantially all pre-existing indebtedness (including, without limitation, any earnout obligations and seller paper but excluding capital lease obligations estimated at approximately $17 million) of the Company and its subsidiaries shall have been repaid or repurchased in full, all commitments relating thereto shall have been terminated, and all liens or security interests related thereto shall have been terminated or released, in each case on terms reasonably satisfactory to the Agents. 7. SECURITY. The Administrative Agent, for the benefit of the Lenders, shall have been granted perfected first priority security interests in all assets to the extent described above under the heading "Security" in form and substance reasonably satisfactory to the Agents. 8. PAYMENTS OF AMOUNTS DUE. On the Closing Date, all costs, fees, expenses and other compensation contemplated hereby payable to the Agents or the Lenders shall have been paid to the extent due. 9. CAPITAL STRUCTURE: RELATED AGREEMENTS. All agreements (other than the Definitive Acquisition Documents, which are provided for at paragraph 2 of the Conditions Precedent to Initial Borrowings) relating to the corporate and capital structure of the Borrower and the guarantors, all B-3-14 organizational documents of such entities and the employment contracts of key employees and executives shall be reasonably satisfactory to the Agents (it being acknowledged that the form of employment agreement attached to the Agreement and Plan of Merger is satisfactory). 10. SOLVENCY. The Lenders shall have received an opinion from an independent valuation consultant or appraiser reasonably satisfactory to the Agents and a certificate of the chief financial officer of the Borrower, in each case in form and substance reasonably satisfactory to the Agents, supporting the conclusions that, after giving effect to the Acquisition and the related transactions contemplated hereby, the Borrower will not be insolvent or be rendered insolvent by the indebtedness incurred in connection therewith, or be left with unreasonably small capital with which to engage in its businesses, or have incurred debts beyond its ability to pay such debts as they mature. 11. ENVIRONMENTAL MATTERS. The Lenders shall have received reports and other information in form, scope and substance reasonably satisfactory to the Agents concerning any material environmental liabilities. 12. CONSENTS AND APPROVALS. All necessary governmental and third party approvals and consents in connection with the Facilities, the Acquisition and the other transactions contemplated by the Facilities shall have been obtained and remain in effect, and all applicable waiting periods shall have expired without any action being taken by any applicable authority. 13. LITIGATION, ETC. There shall not exist any action, suit, investigation, litigation or proceeding pending or threatened in any court or before any arbitrator or governmental authority that materially impairs the Acquisition, the financing thereof or any of the other transactions contemplated hereby, or that could have a material adverse effect on HoldCo, the Borrower, the Acquisition, the financing thereof or any of the transactions contemplated hereby. 14. FINANCIAL STATEMENTS AND PERFORMANCE. The Lenders shall have received the unaudited financial statements for the most recently concluded quarterly periods and copies of the monthly reporting package to be provided under the B-3-15 Agreement and Plan of Merger. The Lenders shall have received pro forma consolidated financial statements satisfactory to the Agents with respect to the Company for the fiscal year ended January 29, 2000 and with respect to the most recently concluded fiscal quarter and month, reflecting the Acquisition and all other acquisitions and divestitures occurring during such periods and any other recent or pending acquisitions or divestitures, as of the beginning of such periods. Such financial statements shall confirm that pro forma EBITDA (to be calculated on a mutually satisfactory basis) for the Company and its subsidiaries for the twelve month period ending April 29, 2000 (or, if later, the most recently ended fiscal quarter prior to the Closing Date for which financial statements are available, which financial statements shall in any event be prepared within thirty (30) days after fiscal quarter end) shall not be less than $97.0 million. 15. CUSTOMARY CLOSING DOCUMENTS. All documents required to be delivered under the Loan Documents, including customary legal opinions, corporate records and documents from public officials and officers' certificates, shall have been delivered and shall be reasonably satisfactory to Agents. CONDITIONS TO ALL BORROWINGS: The conditions to all borrowings will include requirements relating to prior written notice of borrowing, the accuracy in all material respects of representations and warranties, and the absence of any default or potential event of default, and will otherwise be customary and appropriate for financings of this type. ASSIGNMENTS AND PARTICIPATIONS: The Lenders may assign all, or in an amount of not less than (y) $5 million with respect to the Revolving Facility and/or Term Facility A and (z) $1.0 million with respect to the Term Facility B any part of, their respective shares of the Facilities to their affiliates or one or more banks, financial institutions or other entities that are eligible assignees (to be described in the Loan Documents) which, in the case of assignments with respect to the Revolving Facility (other than the case of assignments made by or to GSCP), are acceptable to the Administrative Agent and (except during the existence of an Event of Default) the Borrower, each such consent not to be unreasonably withheld. Upon such assignment, such affiliate, bank, financial institution or entity shall become a Lender for all purposes under the Loan Documents; provided, assignments made to affiliates and other Lenders shall not be subject to the B-3-16 above described consent or minimum assignment amount requirements. The Administrative Agent will receive a processing fee of $2,000 payable by the assignor or assignee, in connection with each assignment; provided, for any assignments made to affiliates, other Lenders or made by or to GSCP, the processing fee shall be $500. The Lenders will also have the right to sell participations, subject to customary limitations on voting rights, in their respective shares of the Facilities. REQUISITE LENDERS: Lenders holding more than 50% of total commitments or exposure under the Facilities, except that (x) any amendment which would disproportionately affect the obligation of the Borrower to make payment of the loans under the Revolving Facility or either of the Term Facilities shall not be effective without the approval of holders of more than 50% of such class of loans and (y) with respect to certain matters relating to the interest rates, maturity, amortization, release of all or substantially all collateral and the definition of Requisite Lenders, Requisite Lenders will be defined as Lenders holding 100% of total commitments or exposure of the Facilities affected thereby. TAXES, RESERVE REQUIREMENTS AND INDEMNITIES: All payments are to be made free and clear of any taxes (other than franchise taxes and taxes on overall net income), imposts, assessments, withholdings or other deductions whatsoever. Foreign Lenders shall furnish to the Administrative Agent appropriate certificates or other evidence of exemption from U.S. federal tax withholding. INDEMNITY: Customary and appropriate provisions relating to indemnity and related matters in a form reasonably satisfactory to the Agents and the Lenders. GOVERNING LAW AND JURISDICTION: The Borrower and the guarantors will submit to the non-exclusive jurisdiction and venue of the federal and state courts of the State of New York and shall waive any right to trial by jury. New York law shall govern the Loan Documents. The foregoing is intended to summarize certain basic terms of the Facilities. It is not intended to be a definitive list of all of the requirements of the Lenders in connection with the Facilities.
B-3-17 EX-99.B-4 5 ex-99_b4.txt EXHIBIT 99.B-4 Exhibit B-4 TPG PARTNERS III, L.P. 201 MAIN STREET, SUITE 2420 FORT WORTH, TEXAS 76102 May 17, 2000 Board of Directors Petco Animal Supplies, Inc. 9125 Rehco Road San Diego, California 92121 Ladies and Gentlemen: This letter sets forth the commitment of TPG Partners III, L.P. ("TPG"), subject to the terms and conditions contained herein, to purchase certain securities of BD Recapitalization Corp. ("MERGERSUB") in connection with the recapitalization (the "RECAPITALIZATION") of Petco Animal Supplies, Inc. (the "COMPANY"). The Recapitalization will occur under the Agreement and Plan of Merger, dated as of even date herewith (the "MERGER AGREEMENT"), pursuant to which MergerSub will merge with and into the Company, with the Company as the surviving entity. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings set forth in the Merger Agreement. 1. COMMITMENT. TPG hereby commits, subject to the terms and conditions set forth herein, to purchase, upon the consummation of the Merger, common stock and preferred stock of MergerSub (the "EQUITY SECURITIES") for consideration of up to $92,500,000, which Equity Securities shall represent at least a 50% equity interest in MergerSub immediately prior to the Merger. TPG may effect its purchase of the Equity Securities directly or indirectly through one or more affiliated entities. 2. CONDITIONS. TPG's commitment hereunder to purchase the Equity Securities shall be subject to compliance with the terms of the Merger Agreement by the parties thereto, satisfaction of each of the conditions to MergerSub's obligations to consummate the transactions under the Merger Agreement, MergerSub's receipt of the Financing on the terms set forth in the Financing Letters, and consummation of the Merger. 3. SOLE BENEFICIARY. TPG's commitment hereunder is provided for your sole benefit and shall not benefit, be disclosed to, or be assigned to, any other party without our written consent, except that the terms of this letter may be disclosed (i) to your accountants, attorneys, investment banks and other advisors or (ii) as required by law or legal process. 4. NO MODIFICATION; ENTIRE AGREEMENT. No modification of this letter shall be binding upon or enforceable against TPG without the written approval of TPG. This agreement B-4-1 represents the entire agreement between us with respect to the matters set forth herein, and shall replace and supersede any and all discussions and written communications regarding such matters. 5. COUNTERPARTS. This letter may be executed in counterparts, each of which, when so executed, shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 6. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. (a) The terms of this letter shall be governed by the laws of the State of New York applicable to contracts made and to be performed in such state. (b) Any dispute arising under or with respect to this letter or the subject matter hereof shall be brought exclusively in the state or federal courts located in the State of New York, New York County. (c) Each party hereto waives all right to trial by jury in any action, proceeding and counterclaim (whether based upon contract, tort or otherwise) related to or arising out of this letter, any of the transactions contemplated hereby or TPG's commitment hereunder. 7. TERMINATION. TPG's commitment hereunder shall terminate contemporaneously with the termination or expiration of the Merger Agreement, but in any event on November 1, 2000 (or if earlier, the Terminal Date), if the Merger has not been consummated by such date. B-4-2 If the terms of this letter are acceptable to you, please indicate by signing below and returning a copy of this letter to us. Sincerely, TPG PARTNERS III, L.P. By: TPG GenPar III, L.P., General Partner By: TPG Advisors III, Inc. General Partner By: /s/ Jonathan J. Coslet ------------------------------- Name: Jonathan Coslet Title: Vice President Agreed to and accepted: Petco Animal Supplies, Inc. By: /s/ James M. Myers ----------------------------------- Name: James Myers Title: Senior VP & CFO B-4-3 EX-99.D-2 6 ex-99_d2.txt EXHIBIT 99.D-2 EXHIBIT D-2 VOTING AGREEMENT VOTING AGREEMENT, dated as of May 17, 2000 (this "Agreement"), by and among the individuals signatory hereto (each a "Stockholder" and collectively, the "Stockholders") and BD Recapitalization Holdings LLC, a Delaware limited liability company ("Holdings"). WHEREAS, as of the date hereof, the Stockholders, in the aggregate, own 103,510 shares of Common Stock, par value $0.0001 per share, of the Company (the "Company Common Stock"); WHEREAS, BD Recapitalization Corp., a Delaware corporation ("MergerSub"), an affiliate of Holdings, proposes to enter into a transaction (such transaction, including the contemplated merger and the effects thereof, the "Transac tion") with Petco Animal Supplies, Inc., a Delaware corporation (the "Company"), upon the terms, and subject to the conditions, set forth in the Agreement and Plan of Merger, dated May 17, 2000, by and between the Company and MergerSub (the "Merger Agreement"); and WHEREAS, as an inducement to MergerSub to continue to pursue the Transaction, MergerSub has required that the Stockholders execute and deliver this Agreement. NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows: 1. REPRESENTATIONS OF THE STOCKHOLDERS. The Stockholders hereby, jointly and severally, represent and warrant to Holdings as follows: (a) Each Stockholder is the beneficial owner (as such term is defined in clause (b) below) of the number of shares of Company Common Stock set forth opposite such Stockholder's name on ANNEX A attached hereto. All of such shares are collectively referred to herein as the "Shares." (b) Each Stockholder is not the beneficial owner (for purposes of this Agreement, such term shall have the meaning set forth in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and the rules and regulations promulgated thereunder), without regard to any conditions (including the D-2-1 passage of time) to the acquisition of such shares, of any shares of Company Common Stock or other voting securities of the Company, other than the Shares. (c) Each Stockholder has the exclusive right, power and authority to execute and deliver this Agreement, to vote the Shares beneficially owned by it and to otherwise perform its respective obligations under this Agreement, and this Agreement has been duly executed and delivered by each Stockholder; and, assuming that this Agreement has been duly and validly authorized, executed and delivered by Holdings, this Agreement constitutes a valid and binding agreement of each Stockholder, enforceable against each Stockholder in accordance with its terms, except to the extent that the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganiza tion, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditor's rights generally, (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding at law or in equity) and (iii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the discretion of the court before which any enforcement proceeding therefor may be brought. (d) The Shares are now and will at all times during the term of this Agreement be owned of record by the Stockholders as set forth in ANNEX A or by a nominee or custodian for the account of the applicable Stockholder, free and clear of all pledges, liens, proxies, claims, charges, security interests, preemptive rights, voting trusts, voting agreements and any other encumbrances or arrangements whatsoever with respect to the ownership, transfer or voting of the Shares; and there are no outstanding options, warrants or rights to purchase or acquire, or agreements relating to the voting of, any of the Shares other than this Agreement. (e) The execution and delivery of this Agreement by each Stockholder, the consummation by each Stockholder of the transactions contemplated hereby and the performance by such Stockholder of its obligations hereunder will not: (i) require any consent, approval, order, authorization or permit of, or registration, filing with or notification to, any court, governmental or regulatory authority or agency (a "Governmental Entity") or any private third party, except for (A) the filing of a pre- merger notification and report form by the Company under the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR Act"), and (B) the filing with the Securities and Exchange Commission (the "Commis sion") of any Schedules 13D or 13G or amendments to Schedules 13D D-2-2 or 13G and filings under Section 16 of the Exchange Act, as may be required in connection with this Agreement and the transactions contemplated hereby; (ii) result in any violation of or the breach of or constitute a default (with notice or lapse of time or both) under (or give rise to any right of termination, cancellation or acceleration or guaranteed payments under or to, a loss of a material benefit or result in the creation or imposition of a lien under) any of the terms, conditions or provisions of any note, lease, mortgage, indenture, license, agreement or other instrument or obligation to which such Stockholder or by which such Stockholder or any of its assets may be bound; or (iii) violate the provisions of any order, writ, injunction, judgment, decree, statute, rule or regulation applicable to such Stock holder in such a manner as could, individually or in the aggregate, reasonably be expected to materially impair the ability of such Stock holder to perform its obligations under this Agreement or prevent or delay the consummation of any of the transactions contemplated by this Agreement. (f) Each Stockholder has reviewed the Merger Agreement and understands and accepts the terms and conditions thereof. (g) Each Stockholder has had the opportunity to review this Agreement and the Merger Agreement with counsel of his or her own choosing. The representations and warranties contained herein shall be made as of the date hereof and as of each date from the date hereof through and including the date of termination of this Agreement. 2. AGREEMENT TO VOTE SHARES. The Stockholders agree to: (a) appear, or cause the record holder of any Shares on the applicable record date (each a "Record Holder") to appear (in person or by proxy), at any annual or special meeting of the stockholders of the Company for the purpose of obtaining a quorum, or, if stockholders of the Company are permitted or required to vote their shares through the execution of an action by written consent, the Stockholders, jointly and severally, agree to execute or cause all Record Holders to execute such consent, and (b) vote (or execute consents or proxies with respect to), and cause each Record Holder to vote (or execute consents or proxies with respect to), the Shares and any New Shares (as defined in D-2-3 Section 8 hereof) (i) in favor of adoption and approval of the Merger Agreement and the Transaction, including each other actions, agreements and transactions contemplated by or in furtherance of the Merger Agreement, the Transaction and this Agreement, at every meeting (or in connection with any action by written consent) of the stockholders of the Company at which such matters are considered and at every adjournment thereof and (ii) against any action or proposal that would compete with or could serve to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Transaction (including any Third Party Acquisition (as such term is defined in the Merger Agreement)). Each Stockholder agrees to deliver or cause each Record Holder of any Shares or New Shares of such Stockholder to deliver to Holdings upon request a proxy, substantially in the form of ANNEX B attached hereto, for any such stockholder meeting (or action by written consent), which proxy shall be coupled with an interest and irrevocable to the extent permitted under Delaware law, with the total number of Shares and any New Shares beneficially owned by such Stockholder correctly indicated thereon. 3. AGREEMENT TO RETAIN SHARES. Each of the Stockholders acknowledges that pursuant to the terms of the Merger Agreement and by virtue of the Merger (as defined in the Merger Agreement), at the Effective Time (as defined in the Merger Agreement), at least that number of Shares (collectively, the "Retained Shares") beneficially owned by such Stockholder set forth opposite such Stockholder's name on ANNEX C attached hereto shall not be converted, exchanged or canceled as provided in the Merger Agreement with respect to the Other Shares (as defined in the Merger Agreement). Each of the Stockholders consents to the treatment of the Retained Shares beneficially owned by such Stockholder as provided in the Merger Agreement. Each of the Stockholders represents and warrants to Holdings that the character of such Stockholder's Retained Shares shall be such as to allow the Merger (as defined in the Merger Agreement) to be accounted for as a recapitalization under United Stated generally accepted accounting princples. Each of the Stockholders further agrees that such Stockholder shall take no action that would reasonably be likely to cause such accounting treatment not to be obtained. The aggregate number of Retained Shares shall be sufficient in number and of a character to allow the Merger (as defined in the Merger Agreement) to be accounted for as a recapitalization under United States generally accepted accounting principles assuming the Stockholders hold on the date hereof sufficient Shares, to allow the Merger (as defined in the Merger Agreement) to be accounted for as a recapitalization. 4. STOCKHOLDERS AGREEMENT. On or prior to the Effective Time (as defined in the Merger Agreeement), Holdings and the Stockholders agree to enter into the Stockholders Agreement, including the Amended and Restated Employment D-2-4 Agreements contained in the exhibits thereto on the terms set forth on Schedule 1.10, substantially in the form contained in EXHIBIT I attached hereto. 5. REPRESENTATIONS OF HOLDINGS. Holdings hereby represents and warrants to the Stockholders that: (a) Holdings is a limited liability company duly formed, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers necessary to execute and deliver the Agreement and to consummate the transactions contemplated hereby. (b) No limited liability company proceedings on the part of Holdings are necessary, as a matter of law or otherwise, for the consummation of the transactions contemplated hereby. The Agreement has been duly and validly executed and delivered by Holdings and, assuming the due authorization, execution and delivery of the Agreement by the Stockholders, is a valid and binding agreement of Holdings enforceable against it in accordance with its terms, except to the extent that the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditor's rights generally, (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding at law or in equity) and (iii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the discretion of the court before which any enforcement proceeding therefor may be brought. (c) The execution, delivery and performance by Holdings of the Agreement and the consummation by Holdings of the transactions contemplated hereby do not and will not (a) contravene or conflict with the certificate of formation or operating agreement of Holdings, (b) contravene, conflict with or constitute a violation of any provision of law, regulation, judgment, order or decree binding upon Holdings, or (c) constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation of Holdings or to a loss of any benefit to which Holdings is entitled under any agreement, contract or other instrument binding upon Holdings which in the aggregate would have a Material Adverse Effect (as defined in the Merger Agreement) on Holdings. 6. NO PROXY SOLICITATIONS. Each Stockholder, in its capacity as a beneficial owner of Shares and New Shares (as defined in Section 8 hereof), agrees that such Stockholder will not, nor will such Stockholder permit any entity under its control (as such term is used in the Exchange Act) to, (a) solicit proxies or become a D-2-5 "participant" in a "solicitation" (as such terms are defined in Regulation 14A under the Exchange Act) that would compete with or could serve to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Transaction (including with respect to any Third Party Acquisition (as defined in the Merger Agreement) or any action related thereto;) (b) otherwise encourage or assist any party in taking or planning any action (including any Third Party Acquisition (as defined in the Merger Agreement) or any action related thereto) which would compete with or otherwise could serve to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Transaction, (c) directly or indirectly encourage, initiate or cooperate in a stockholders' vote or action by written consent of the Company's stockholders that would compete with or could serve to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Transaction (including with respect to any Third Party Acquisition (as defined in the Merger Agreement) or any action related thereto) or (d) become a member of a "group" (as such term is used in Section 13(d) of the Exchange Act) with respect to any voting securities of the Company for any purpose that would compete with or could serve to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Transaction (including with respect to any Third Party Acquisition (as defined in the Merger Agreement) or any action related thereto). 7. TRANSFER AND ENCUMBRANCE. (a) On and after the date hereof and prior to the termination of this Agreement pursuant to Section 14 hereof, each Stockholder agrees not to, directly or indirectly, transfer, sell, offer, assign, pledge or otherwise dispose of or encumber ("Transfer") any of the Shares or New Shares or such Stockholder's voting or economic interest therein prior to the date this Agreement shall be terminated in accordance with its terms. Each Stockholder agrees not to grant any proxies or options with respect to any of the Shares or New Shares nor enter into any voting agreement or voting trust with respect to any of the Shares or New Shares except as provided herein. (b) In furtherance of this Agreement, concurrently herewith each Stockholder shall, and hereby does, authorize the Company and the Company's transfer agent to place a stop transfer order with respect to the Shares and, upon delivery, any New Shares. Each Stockholder agrees and acknowledges that this Agreement places limitations on the voting and transfer of such Shares. On the Business Day (as defined below) following the execution and delivery of this Agreement and on the Business Day following receipt of any New Shares, each Stockholder agrees to deliver to the transfer agent for such Shares or New Shares, as the case may be, certificates representing the Shares or New Shares, as the case may be, whereupon the transfer agent shall affix the following legend: D-2-6 THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER GRANTED PURSUANT TO A VOTING AGREEMENT, DATED AS OF MAY 17, 2000. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICES OF THE COMPANY. 8. ADDITIONAL PURCHASES. Each Stockholder agrees that in the event (i) any shares of Company Common Stock or other voting securities of the Company are issued pursuant to any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of capital stock of the Company on, of or affecting the Shares of such Stockholder; (ii) such Stockholder purchases or otherwise acquires beneficial ownership of any shares of Company Common Stock or other voting securities of the Company after the execution of this Agreement; or (iii) such Stockholder acquires the right to vote or share in the voting of any shares of Company Common Stock or other voting securities of the Company, other than the Shares (such Company Common Stock and other voting securities of the Company, collectively, the "New Shares"), each Stockholder agrees to vote such New Shares in the same manner as the Shares and to notify Holdings and then deliver promptly to Holdings upon request of Holdings an irrevocable proxy with respect to such New Shares, substantially in the form of ANNEX B attached hereto. Each Stockholder also agrees that any New Shares acquired or purchased by such Stockholder shall be subject to the terms of this Agreement to the same extent as if they constituted Shares. 9. COVENANTS OF THE STOCKHOLDERS. (a) Each Stockholder agrees that such Stockholder will not, by any voluntary act, avoid or seek to avoid the observance or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder by any of the Stockholders; (b) Upon receipt by the Stockholders of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Agreement, if mutilated, each Stockholder will execute and deliver a new Agreement of like tenor and date. Any such new Agreement executed and delivered shall constitute an additional contractual obligation on the part of the Stockholders, whether or not the Agreement so lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone. D-2-7 (c) Each Stockholder will, in its capacity as a beneficial owner of Shares and New Shares, (a) use all reasonable efforts to cooperate with the Company and Holdings in connection with the Transaction, (b) promptly take such actions as are necessary or appropriate to consummate the Transaction, and (c) provide any information reasonably requested by the Company or Holdings for any regulatory application or filing made or approval sought for the Transaction. If requested by Holdings, such Stockholder shall execute and deliver an "affiliate letter" in form and substance reasonably satisfactory to Holdings. 10. COVENANTS OF THE STOCKHOLDERS AND HOLDINGS. (a) Each of Holdings and the Stockholders will use their respective best efforts to make all filings with, and to obtain consents of, all third parties and Governmental Entities necessary to the consummation of the transactions contemplated by this Agreement. (b) Except as otherwise expressly provided herein, each of the parties hereto shall bear and pay all costs and expenses incurred by them or on their behalf in connection with the transactions contemplated hereunder, including fees and expenses of their own financial consultants, investment bankers, accountants and counsel. 11. FIDUCIARY DUTIES. Each Stockholder is signing this Agreement solely in such Stockholder's capacity as the beneficial owner of Shares and New Shares and nothing contained herein shall limit or affect any actions taken by such Stockholder in his or her capacity as an officer or director of the Company and none of such actions in any such capacity shall be deemed to constitute a breach of this Agreement; PROVIDED, HOWEVER, that nothing in this Section 11 shall affect such Stockholder's obligations as a beneficial owner of Shares set forth in this Agreement. 12. SPECIFIC PERFORMANCE. Each party hereto acknowledges that it will be impossible to measure in money the damages to the other parties if a party hereto fails to comply with any of the obligations imposed by this Agreement, that every such obligation is material and that, in the event of any such failure, the other parties will not have an adequate remedy at law or damages. Accordingly, each party hereto agrees that injunctive relief or other equitable remedy, in addition to remedies at law or damages, is the appropriate remedy for any such failure and will not oppose the granting of such relief on the basis that the other party has an adequate remedy at law. Each party hereto agrees that it will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection with any other parties' seeking or obtaining such equitable relief. D-2-8 13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective successors and assigns; and nothing in this Agreement, express or implied, (except Section 7(b) hereof) is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement. This Agreement shall not be assignable without the written consent of the other party hereto, except that Holdings may assign, in its sole discretion, all or any of its rights, interests and obligations hereunder to any of its affiliates. 14. TERMINATION. This Agreement will terminate on the earlier of (a) the Effective Time (as defined in the Merger Agreement) and (b) the close of business immediately after the date upon which the Merger Agreement is terminated pursuant to its terms. 15. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof and contains the entire agreement among the parties with respect to the subject matter hereof. This Agreement may not be amended, supplemented or modified, and no provisions hereof may be modified or waived, except by an instrument in writing signed by the parties hereto. No waiver of any provisions hereof by any party shall be deemed a waiver of any other provisions hereof by any such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party. 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. FURTHERMORE, EACH OF THE PARTIES HERETO (A) CONSENTS TO SUBMIT ITSELF TO THE PERSONAL JURISDICTION OF ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF DELAWARE IN THE EVENT ANY DISPUTE ARISES OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (B) AGREES THAT IT SHALL NOT ATTEMPT TO DENY SUCH PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT AND (C) AGREES THAT IT SHALL NOT BRING AN ACTION RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN A FEDERAL OR STATE COURT SITTING IN THE STATE OF DELAWARE. 17. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon personal delivery, facsimile transmission D-2-9 (which is confirmed), telex or delivery by an overnight express courier service (delivery, postage or freight charges prepaid), or on the fourth day following deposit in the United States mail (if sent by registered or certified mail, return receipt requested, delivery, postage or freight charges prepaid, and otherwise to be sent by first class mail), addressed to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) If to Holdings to: BD Recapitalization Holdings LLC 11111 Santa Monica Blvd., Suite 2000 Los Angeles, CA 90025 Attention: John G. Danhakl Telephone: (310) 954-0444 Facsimile: (310) 954-0404 with a copy (which shall not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071-3144 Attention: Nicholas P. Saggese, Esq. Telephone: (213) 687-5000 Facsimile: (213) 687-5600 Cleary, Gottlieb, Steen & Hamilton One Liberty Plaza New York, New York 10006 Attention: David Leinwand, Esq. Telephone: (212) 225-2000 Facsimile: (212) 225-3999 D-2-10 (ii) if to any of the Stockholders, to: Petco Animal Supplies 9125 Rehco Road San Diego, California 92121-2270 Attention: Brian Devine, CEO Telephone: (858) 453-7845 Fax: (858) 638-2197 with a copy (which shall not constitute notice) to: Munger Tolles & Olson LLP 355 South Grand Avenue, Suite 3500 Los Angeles, California 90071-1560 Attention: Simon M. Lorne, Esq. Telephone: (213) 683-9100 Facsimile: (213) 687-3702 18. SEVERABILITY. If any provision of this Agreement or the application of such provision to any person or circumstances shall be held invalid by a court of competent jurisdiction, the portion of such provision which is not held invalid and the other provisions hereof shall remain enforceable and shall not be affected and the application of such provision to persons or circumstances other than the party as to which it is held invalid shall not be affected. 19. OUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 20. HEADINGS; CAPITALIZED TERMS. All Section headings herein are for convenience of reference only and are not part of this Agreement, and no construction or reference shall be derived therefrom. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first written above. By: /s/ BRIAN K. DEVINE -------------------------------- Name: Brian K. Devine D-2-11 By: /s/ WILLIAM W. WOODARD -------------------------------- Name: William W. Woodard By: /s/ BRUCE C. HALL -------------------------------- Name: Bruce C. Hall By: /s/ JAMES M. MYERS -------------------------------- Name: James M. Myers D-2-12 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first written above. BD RECAPITALIZATION HOLDINGS LLC By: /s/ JOHN DANHAKL -------------------------------- Name: John G. Danhakl D-2-13 ANNEX A
SHARES OF COMPANY STOCKHOLDERS COMMON STOCK OWNED - ------------ ------------------ Brian K. Devine 61,195 William W. Woodard 4,115 Bruce C. Hall 35,000 James M. Myers 3,200
A - 1 ANNEX B FORM OF IRREVOCABLE PROXY The undersigned hereby revokes any previous proxies and appoints BD Recapitalization Holdings, a Delaware limited liability company ("Holdings"), with full power of substitution and resubstitution as attorney and proxy of the undersigned to attend any and all meetings of Stockholders (and any adjournments or postponements thereof) of Petco Animal Supplies, Inc., a Delaware corporation (the "Company"), to vote all shares of Common Stock, par value $0.0001 per share, of the Company that the undersigned is then entitled to vote, and to represent and otherwise to act for the undersigned in the same manner and with the same effect as if the undersigned were personally present, with respect to all matters specified in the Voting Agreement, dated as of May 17, 2000 (the "Voting Agreement"), by and among Holdings, the undersigned and the other persons signatory thereto. Capitalized terms used and not defined herein have the respective meanings ascribed to them in the Voting Agreement. This proxy shall be deemed to be a proxy coupled with an interest and is irrevocable during the term of the Voting Agreement and has been granted pursuant to Section 2 of the Voting Agreement. B - 1 The undersigned authorizes such attorney and proxy to substitute any other person to act hereunder, to revoke any substitution and to file this proxy and any substitution or revocation with the Secretary of the Company. Dated: May 17, 2000 By: ------------------------------- Name: Brian K. Devine By: ------------------------------- Name: William W. Woodard By: ------------------------------- Name: Bruce C. Hall By: ------------------------------- Name: James M. Myers B - 2 ANNEX C
STOCKHOLDERS RETAINED SHARES - ------------ --------------- Brian K. Devine 61,195 William W. Woodard 4,115 Bruce C. Hall 17,595 James M. Myers 3,200 C - 1
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