Form 10-Q Chewy, Inc. For: Nov 01
Exhibit 10.1
AMENDMENT
TO
MASTER TRANSACTION AGREEMENT
This AMENDMENT to the MASTER TRANSACTION AGREEMENT (this “Amendment Agreement”), is made effective as of August 12, 2020 (the “Effective Date”), by and between Chewy, Inc., a Delaware corporation (“Chewy”), and PetSmart, Inc., a Delaware corporation (“PetSmart”). Each party hereto may be referred to in this Agreement as a “Party” or, collectively, the “Parties.”
WHEREAS, Chewy and PetSmart executed that certain Master Transaction Agreement dated June 13, 2019 (the “Agreement”);
WHEREAS, Chewy has entered into arrangements with the City of Belton, Missouri (the “City”) whereby the City will provide certain ad valorem tax benefits (the “Benefits”) to Chewy in connection with a capital investment of up to $70 million in property, plant, and equipment purchases for a new fulfillment center in the State of Missouri;
WHEREAS, the City will issue to Chewy Taxable Industrial Development Revenue Bonds, Series 2020 in a maximum aggregate principal amount of $70 million (the “Bonds”) and in exchange for the Bonds, Chewy will convey certain purchased equipment to the City and will lease such equipment from the City over a three-year period (the “Arrangement”);
WHEREAS, the Parties are entering into this Amendment Agreement to permit Chewy’s entry into and performance of the Arrangement to use certain covenant capacity under the PetSmart Debt Agreements; and
WHEREAS, the Parties now desire to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:
1.The Amendment Agreement will be effective as of the Effective Date.
2.Article I of the Agreement will be amended to include the following defined terms:
“Arrangement” means the arrangements under which the City will issue to Chewy the Bonds and in exchange thereof Chewy will convey certain purchased equipment to the City and will lease such equipment from the City over a three-year period.
“Benefits” mean the ad valorem tax benefits to be provided by the City to Chewy in connection with a capital investment of up to $70 million in property, plant, and equipment purchases to be made by Chewy for a new fulfillment center in the State of Missouri.
“Bonds” mean the Taxable Industrial Development Revenue Bonds, Series 2020 to be issued by the City in favor of Chewy in a maximum aggregate principal amount of $70 million.
“City” shall mean the City of Belton, Missouri.
1
“Commitment Fee” shall have the meaning set forth in Article IV.A.
3.The following new Article IV.A (Commitment Fee) will be added to the Agreement immediately following Article IV of the Agreement:
“In consideration of PetSmart facilitating the Arrangement under the PetSmart Debt Agreements by reserving capacity under certain covenants, Chewy shall pay to PetSmart a fee (the “Commitment Fee”) equal to twenty five percent (25)% of the Benefits Chewy receives from the City.”
4.Article V (Compliance with Agreements) will be amended to include the following:
(iii) Within forty-five (45) days following the end of each of its fiscal quarters, Chewy shall provide a written report to PetSmart setting forth the total Bonds issued to Chewy, equipment purchased by Chewy and sold to the City and Benefits Chewy has received as of the end of each quarter.
5.Section 6.1 of the Agreement will be amended and restated as follows:
“6.1 Payment Terms. The Service Fee shall be recorded on a financial monthly basis and be due and payable by Chewy to PetSmart no later than thirty (30) days following the end of each PetSmart fiscal quarter. The Guarantee Fee shall be due and payable by Chewy to PetSmart no later than thirty (30) days following the end of each calendar quarter. The Commitment Fee shall be due and payable by Chewy to PetSmart no later than thirty (30) days following the earlier of (i) December 1 , 2030 and (ii) the date on which the Bonds have been repaid or redeemed by the City. All payments shall be made in U.S. dollars without set off.”
6.Section 7.3(a) of the Agreement will be amended and restated as follows:
“(a) such payments as shall be due from Chewy to PetSmart as of such termination date shall be recoverable without prejudice (including, without limitation, the Commitment Fee); and”
7.Except as specifically modified in this Amendment Agreement, the Agreement shall remain unchanged and in full force and effect.
8.If any term contained in this Amendment Agreement conflicts with any term contained in the Agreement or any previously executed amendment, the term contained in this Amendment shall prevail.
9.This Amendment Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument.
10.The Parties acknowledge that they have read this Amendment Agreement and agree to be bound by its terms. The Parties further agree that the Amendment Agreement constitutes the entire agreement between the Parties with respect to the subject matter therein.
2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be executed by their respective duly authorized officers or representatives, as of the date first written above.
CHEWY, INC.
| By: | /s/ Mario J. Marte | ||||||||||
| Mario J. Marte | |||||||||||
| Chief Financial Officer | |||||||||||
PETSMART, INC.
| By: | /s/ Alan M. Schnaid | ||||||||||
| Alan M. Schnaid | |||||||||||
| EVP and CFO | |||||||||||
EXHIBIT 31.1
Certification of the Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Sumit Singh, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Chewy, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | December 8, 2020 | /s/ Sumit Singh | |||||||||
| Sumit Singh | |||||||||||
| Chief Executive Officer | |||||||||||
| (Principal Executive Officer) | |||||||||||
EXHIBIT 31.2
Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Mario Marte, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Chewy, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | December 8, 2020 | /s/ Mario Marte | |||||||||
| Mario Marte | |||||||||||
| Chief Financial Officer | |||||||||||
| (Principal Financial Officer) | |||||||||||
EXHIBIT 32.1
Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Chewy, Inc. (the “Company”) on Form 10-Q for the period ended November 1, 2020, as filed with the Securities and Exchange Commission (the “Periodic Report”), we, Sumit Singh, Chief Executive Officer of the Company, and Mario Marte, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:
1.The Periodic Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and
2.The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: December 8, 2020
| /s/ Sumit Singh | |||||
| Sumit Singh | |||||
| Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
| /s/ Mario Marte | |||||
| Mario Marte | |||||
| Chief Financial Officer | |||||
| (Principal Financial Officer) | |||||