<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Central Garden & Pet Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
CENTRAL GARDEN & PET COMPANY
3697 MT. DIABLO BOULEVARD
LAFAYETTE, CALIFORNIA 94549
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MONDAY, MARCH 31, 1997, 10:30 A.M.
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of Central
Garden & Pet Company will be held at the LAFAYETTE PARK HOTEL, 3287 Mt. Diablo
Boulevard, Lafayette, California, on Monday, March 31, 1997, at 10:30 A.M. for
the following purposes:
(1) To elect four directors.
(2) To approve the Nonemployee Director Stock Option Plan.
(3) To approve the Employee Stock Purchase Plan.
(4) To transact such other business as may properly come before the
meeting.
Only stockholders of record on the books of the Company as of 5:00 P.M.,
February 21, 1997, will be entitled to vote at the meeting and any adjournment
thereof.
Dated: March 5, 1997
By Order of the Board of Directors
Robert B. Jones, Secretary
STOCKHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE.
<PAGE>
CENTRAL GARDEN & PET COMPANY
3697 MT. DIABLO BOULEVARD
LAFAYETTE, CALIFORNIA 94549
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Central Garden
& Pet Company (the "Company") to be used at the Annual Meeting of Stockholders
on March 31, 1997, for the purposes set forth in the foregoing notice. This
proxy statement and the enclosed form of proxy were first sent to stockholders
on or about March 6, 1997.
If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented thereby are to be voted, the proxy will be voted as recommended by
the Board of Directors. Any stockholder signing a proxy in the form
accompanying this Proxy Statement has the power to revoke it prior to or at
the Annual Meeting. A proxy may be revoked by a writing delivered to the
Secretary of the Company stating that the proxy is revoked, by a subsequent
proxy signed by the person who signed the earlier proxy, or by attendance at
the Annual Meeting and voting in person.
VOTING SECURITIES
Only stockholders of record on the books of the Company as of 5:00 P.M.,
February 21, 1997, will be entitled to vote at the Annual Meeting.
As of the close of business on February 21, 1997, there were outstanding
13,071,957 shares of Common Stock of the Company, entitled to one vote per
share, and 1,863,167 shares of Class B Stock of the Company, entitled to the
lesser of ten votes per share or 49% of the total votes cast. In addition,
there were 100 shares of Series A Preferred Stock outstanding, each of which
is convertible into 1,000 shares of Common Stock and has a number of votes
equal to the number of shares of Common Stock into which it is convertible.
Holders of Common Stock and Class B Stock will vote together on all matters
presented to the stockholders for their vote or approval at the meeting,
including the election of directors. The holders of a majority of the
outstanding shares of the stock of the Company, present in person or by proxy,
will constitute a quorum for the transaction of business at the Annual Meeting
or any adjournment thereof.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether
or not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval
of any matter submitted to the stockholders for a vote. If a broker indicates
on the proxy that it does not have discretionary authority as to certain
shares to vote on a particular matter, those shares will not be considered as
present and entitled to vote with respect to that matter.
ELECTION OF DIRECTORS
The persons named below are nominees for director to serve until the next
Annual Meeting of Stockholders and until their successors shall have been
elected. The nominees constitute the present Board of Directors.
In the absence of instructions to the contrary, shares represented by the
proxy will be voted and the proxies will vote for the election of all such
nominees to the Board of Directors. If any of such persons is unable or
unwilling to be a candidate for the office of director at the date of the
Annual Meeting, or any adjournment
<PAGE>
thereof, the proxies will vote for such substitute nominee as shall be
designated by the proxies. The management has no reason to believe that any of
such nominees will be unable or unwilling to serve if elected a director. Set
forth below is certain information concerning the nominees which is based on
data furnished by them.
<TABLE>
<CAPTION>
SERVED AS
BUSINESS EXPERIENCE DURING PAST DIRECTOR
NOMINEES FOR DIRECTOR AGE FIVE YEARS AND OTHER INFORMATION SINCE
--------------------- --- ------------------------------------------- ---------
<C> <C> <S> <C>
William E. Brown............ 55 Chairman of the Board and Chief Executive 1980
Officer since 1980.
Glenn W. Novotny............ 50 President since June 1990. Prior to June 1990
1990, Mr. Novotny was with Weyerhaeuser
Corporation in a variety of capacities.
Lee D. Hines, Jr............ 50 Self-employed consultant. From April 1991 1992
until June 1993, Mr. Hines was Executive
Vice President and Chief Financial Officer
of the Company. From May 1990 to April
1991, Mr. Hines was President and Chief
Executive Officer of International Tropic-
Cal, Inc. (designer and marketer of
sunglasses and hair accessories).
Daniel P. Hogan, Jr. ....... 68 Self-employed consultant. Prior to his 1993
retirement in 1987, Mr. Hogan was a Vice
President of Chevron Chemical Company and
General Manager of its Ortho Consumer
Products Division.
</TABLE>
2
<PAGE>
FURTHER INFORMATION CONCERNING
THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
During fiscal 1996, the Board of Directors held eight meetings and acted by
unanimous written consent on a number of occasions. In October 1993, after
consummation of its initial public offering, the Company established an Audit
and Compensation Committee. The Company does not have a Nominating Committee.
The members of the Audit and Compensation Committee are Lee D. Hines, Jr.
and Daniel P. Hogan, Jr. Among the functions performed by this committee in
its capacity as an Audit Committee are to make recommendations to the Board of
Directors with respect to the engagement or discharge of independent auditors,
to review with the independent auditors the plan and results of the auditing
engagement, to review the Company's internal auditing procedures and system of
internal accounting controls and to make inquiries into matters within the
scope of its functions. Among the functions performed by this committee in its
capacity as a Compensation Committee are to review and make recommendations to
the Board of Directors concerning the compensation of the key management
employees of the Company and to administer the Company's equity incentive
plan. The Audit and Compensation Committee held six meetings during fiscal
1996.
ATTENDANCE AT MEETINGS
During fiscal 1996, there were no members of the Board of Directors who
attended fewer than seventy-five percent of the meetings of the Board of
Directors and all committees of the Board on which they served.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid directors fees
consisting of $12,000 per year and $1,000 for each Board meeting attended.
Directors who attend meetings of the Audit and Compensation Committee receive
an additional $1,000 for each meeting not held on the same day as a Board
meeting. In addition, Lee Hines performed certain consulting services for the
Company during fiscal 1996 for which he received compensation of $40,000.
Under the Nonemployee Director Stock Option Plan, Messrs. Hines and Hogan have
each been granted options to purchase 10,000 shares of Common Stock, subject
to approval of this plan at the Annual Meeting. See "Proposal to Approve the
Nonemployee Director Stock Option Plan".
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The compensation paid to the Company's Chief Executive Officer and the only
other executive officers who received compensation in excess of $100,000 for
services in all capacities to the Company and its subsidiaries during fiscal
1994, 1995 and 1996 is set forth below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------- ----------------------
OTHER ANNUAL RESTRICTED SECURITIES ALL OTHER
COMPENSATION STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR(1) SALARY($) BONUS($) ($) AWARDS(#) OPTIONS(#) SATION($)
- --------------------------- ------- --------- -------- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
William E. Brown 1996 $300,000 -- -- -- 30,000 --
Chairman and Chief 1995 $200,000 -- -- -- -- --
Executive Officer 1994 $200,000 -- -- -- -- --
Glenn W. Novotny 1996 $257,908 $15,000 -- -- 30,000 --
President 1995 $199,841 -- -- -- 37,000 --
1994 $207,295 -- $38,036(2) -- 9,487 --
Neill J. Hines 1996 $160,656 -- -- -- 10,000 --
Executive Vice President 1995 $103,508 -- -- -- 21,000 --
1994 $132,538 -- -- -- 5,128 --
Robert B. Jones 1996 $118,165 -- -- -- 10,000 --
Vice President, Chief 1995 $ 90,896 -- -- -- 21,000 --
Financial Officer 1994 $112,000 $25,000 -- 10,000(3) -- --
</TABLE>
- --------
(1) In July 1995, the Company changed its fiscal year end to be the last
Saturday in September; as a result the fiscal year ending September 30,
1995 ("fiscal 1995") was a nine month period.
3
<PAGE>
(2) Includes for 1994, reimbursement to Mr. Novotny of moving expenses in the
amount of $30,456. While the named executive officers enjoy certain
perquisites, for fiscal years 1994, 1995 and 1996 these did not exceed the
lesser of $50,000 or 10% of each officer's salary and bonus.
(3) The fair market value of these shares on the grant date was $107,500. The
fair market value on the grant date, however is not necessarily indicative
of the restricted stock's real value, which is impossible to determine
until the vesting date; it is at this point that executives recognize
income on the stock and must pay taxes on it. As of the end of fiscal
1996, the aggregate restricted stock holdings for such executive officer
consisted of 10,000 shares worth $207,500 at the then-current fair market
value (as represented by the closing price of the Company's Common Stock
on September 27, 1996), without giving effect to the diminution of value
attributable to the restrictions on such stock. Dividends are paid on the
restricted shares to the extent payable on the Company's Common Stock
generally.
The following table sets forth certain information regarding stock options
granted during fiscal 1996 to the executive officers named in the foregoing
Summary Compensation Table. None of such persons received awards of stock
appreciation rights during fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(3)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(#) (1) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
- ---- -------------- ------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
William E. Brown........ 30,000 6.5% $18.125 7/24/02 $ 150,228 $ 331,964
Glenn W. Novotny........ 30,000 6.5% $18.125 7/24/02 $ 150,228 $ 331,964
Neill J. Hines.......... 10,000 2.2% $18.125 7/24/02 $ 50,076 $ 110,655
Robert B. Jones......... 10,000 2.2% $18.125 7/24/02 $ 50,076 $ 110,655
</TABLE>
- --------
(1) All options granted in fiscal 1996 are exercisable in full, commencing one
year prior to expiration. Under the terms of the Company's Stock Option
Plan, the Audit and Compensation Committee retains discretion, subject to
plan limits, to modify the terms of outstanding options.
(2) All options were granted at fair market value at date of grant.
(3) Realizable values are reported net of the option exercise price. The
dollar amounts under these columns are the result of calculations at the
5% and 10% rates (determined from the price at the date of grant, not the
stock's current market value) set by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation, if any, of the Company's stock price. Actual gains, if any,
on stock option exercises are dependent on the future performance of the
Common Stock as well as the optionholder's continued employment through
the vesting period. The potential realizable value calculation assumes
that the optionholder waits until the end of the option term to exercise
the option.
4
<PAGE>
There were no option exercises during fiscal 1996 by any of the executive
officers listed. The following table sets forth certain information with
respect to stock options held by each of the Company's executive officers as
of September 28, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END($)
--------------------- --------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ---- --------------------- --------------------
<S> <C> <C>
William E. Brown..................... 0/30,000 0/$ 78,750
Glenn W. Novotny..................... 10,360/77,360 $113,960/$702,250
Neill J. Hines....................... 5,718/36,718 $ 62,898/$381,600
Robert B. Jones...................... 530/31,530 $ 5,830/$381,600
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Lee D. Hines, Jr., a member of the Board of Directors and the Audit and
Compensation Committee, performed certain consulting services for the Company
during fiscal 1996 for which he received compensation of $40,000.
TRANSACTIONS WITH THE COMPANY
The Company leases a warehouse facility and certain related equipment in
Visalia, California from Road 80 Investors, a California general partnership
controlled by William E. Brown. In fiscal 1996, the Company paid approximately
$155,688 to Road 80 Investors under this lease.
On December 30, 1992, in connection with an acquisition, the Company issued
a note in the amount of $2.4 million payable in four equal annual installments
commencing in 1994. The note bears interest at 1% per annum below prime rate.
This indebtedness is secured by shares of Class B Stock owned by Mr. Brown.
PROPOSAL TO APPROVE THE
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
On February 20, 1996, the Board of Directors approved the adoption of the
Nonemployee Director Stock Option Plan (the "Director Plan"), subject to the
approval of the holders of a majority of the outstanding shares of the Common
Stock of the Company and the Class B Stock of the Company which are present in
person or by proxy and entitled to vote at the Annual Meeting.
DESCRIPTION OF THE DIRECTOR PLAN
The following summary of the principal features of the Director Plan is
qualified in its entirety by the full text of the Director Plan, which appears
as Exhibit A to this Proxy Statement.
PURPOSE
The purpose of the Director Plan is to promote the success, and enhance the
value, of the Company, by attracting, retaining and motivating members of the
Board of Directors who possess outstanding competence and who are neither
employees of the Company nor of any affiliate of the Company ("Nonemployee
Directors"). The Director Plan also is designed to align the interests of
Nonemployee Directors with the interests of the stockholders of the Company.
ELIGIBILITY TO PARTICIPATE IN THE DIRECTOR PLAN
All Nonemployee Directors automatically become participants in the Director
Plan. At present, the Company has two Nonemployee Directors: Lee D. Hines, Jr.
and Daniel P. Hogan, Jr.
5
<PAGE>
ADMINISTRATION, AMENDMENT AND TERMINATION
The Director Plan is administered by the Board of Directors. The Board of
Directors has all discretion and authority necessary or appropriate to
administer the Director Plan and to control its operation in accordance with
its terms. The Board of Directors also may amend or terminate the Director
Plan at any time and for any reason.
NUMBER OF SHARES AVAILABLE UNDER THE DIRECTOR PLAN
A total of 100,000 shares of Common Stock have been reserved for issuance
under the Director Plan. In the event of any stock split, stock dividend or
other change in the capital structure of the Company, the Board of Directors
may make such adjustment, if any, as it deems appropriate in the number and/or
class of shares of Common Stock that are available for grant under the
Director Plan and the number and class of and/or the exercise price of shares
of Common Stock subject to outstanding Options. Shares issued under the
Director Plan may be authorized but unissued shares of Common Stock or
treasury shares. If an Option expires without having been fully exercised, the
shares subject thereto again will be available for grant.
OPTIONS
Under the Director Plan, each person who was a Nonemployee Director on
February 20, 1996 automatically received on that date an Option to purchase
10,000 shares of Common Stock. Each participant who received an Option
pursuant to the preceding sentence, and each person who becomes a Nonemployee
Director after February 20, 1996, automatically will receive, on the date of
each subsequent Annual Meeting on which he or she is a Nonemployee Director,
an Option to purchase such number of shares of Common Stock as determined by
dividing $25,000 by the fair market value of a share of Common Stock on the
date of the Annual Meeting in question. In this connection, any fractional
share will be rounded up to the next full share. For purposes of the Plan,
fair market value on any date means the average of the highest and lowest
selling prices for shares of Common Stock on The Nasdaq Stock Market on that
date.
For example, if the fair market value of a share of Common Stock on the date
of the Annual Meeting in question is $14.00, then the Nonemployee Director
would receive an Option to purchase 1,786 shares (i.e., $25,000 divided by
$14.00, rounded up to the next full share.
The exercise price of the shares subject to each Option will be 100% of the
fair market value of the shares on the date of grant. Each Option will become
exercisable in full four years from the date of grant of the Option; provided,
however, that if prior to such date the participant terminates his or her
service on the Board of Directors on account of death or disability, then the
Option will become exercisable in full on the date of such termination of
service. Each Option will terminate five years from the date of grant of the
Option.
PAYMENT OF EXERCISE PRICE
The exercise price of each Option must be paid in full in cash at the time
of exercise. Any taxes required to be withheld also must be paid at the time
of exercise.
RESTRICTIONS ON SHARE TRANSFERABILITY
If the Board of Directors determines that applicable law or the requirements
of any national securities exchange make it necessary or appropriate to delay
the issuance of any shares of Common Stock under the Director Plan, each
participant will receive his or her shares after the Board of Directors
determines that such legal or other requirements have been satisfied.
NONTRANSFERABILITY OF OPTIONS
Options may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the applicable laws of
descent and distribution. However, if permitted by the Board of Directors (in
its discretion), a participant may designate one or more beneficiaries to
receive any exercisable Options following his or her death.
6
<PAGE>
OPTION GRANTS
Under the terms of the Director Plan, Options to purchase 10,000 shares of
Common Stock were granted to Messrs. Hines and Hogan on February 20, 1996 at
an exercise price of $9.00 per share, which was the fair market value of a
share of Common Stock on that date. Under the terms of the Director Plan,
Messrs. Hines and Hogan each will receive an additional Option on the date of
the Annual Meeting. The number of shares of Common Stock covered by the
additional Options will be determined by dividing $25,000 by the fair market
value of a share of Common Stock on the date of the Annual Meeting. All of the
preceding grants are subject to approval of the Director Plan by the Company's
stockholders at the Annual Meeting.
TAX ASPECTS
Based on management's understanding of current federal income tax laws, the
tax consequences of the grant of Options under the Director Plan are as
follows.
A participant will not have taxable income at the time of grant of an
Option, but generally will have ordinary income upon the exercise of such
Option in an amount equal to the excess of the fair market value of the shares
of Common Stock on the date of exercise over the exercise price of such
shares. Any gain or loss recognized upon any later sale or other disposition
of the shares of Common Stock generally will be capital gain or loss.
The Company generally will be entitled to a tax deduction in connection with
an Option granted under the Director Plan in an amount equal to the ordinary
income realized by the participant.
NEW PLAN BENEFITS
Regulations recently adopted by the Securities and Exchange Commission
require disclosure of benefits to the executive officers of the Company named
in the summary compensation table and to certain other categories of award
recipient, if such benefits are determinable. In addition to the grants of
stock options set forth below, it is likely that additional grants will be
made to such persons and others during the life of the Director Plan in
accordance with the terms of the Director Plan.
The following table sets forth as of December 27, 1996 (a) the aggregate
number of shares of the Company's Common Stock subject to Awards granted under
the Director Plan, and (b) the dollar value of such Awards based on the
difference between the exercise price and $21.125 per share, the closing price
for the shares of Common Stock on December 27, 1996.
<TABLE>
<CAPTION>
NUMBER OF DOLLAR VALUE OF
NAME OF INDIVIDUAL OR GROUP SHARES GRANTED SHARES GRANTED
--------------------------- -------------- ---------------
<S> <C> <C>
William E. Brown, Chairman and Chief
Executive Officer............................ -- --
Glenn W. Novotny, President and Chief
Operating Officer............................ -- --
Neill J. Hines, Executive Vice President..... -- --
Robert B. Jones, Vice President Finance and
Secretary.................................... -- --
Lee D. Hines, Jr., Director.................. 10,000 $121,250
Daniel P. Hogan, Jr., Director............... 10,000 $121,250
All executive officers, as a group........... -- --
All employees who are not executive officers,
as a group................................... -- --
All directors who are not executive officers,
as a group................................... 20,000 $242,500
</TABLE>
REQUIRED VOTE
The affirmative vote of a majority of shares present in person or by proxy
at the Annual Meeting and entitled to vote is required to approve the proposed
amendment to the Director Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
PROPOSAL TO APPROVE THE DIRECTOR PLAN.
7
<PAGE>
PROPOSAL TO APPROVE THE
EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has adopted an Employee Stock Purchase Plan (the
"Plan"), subject to the approval of a majority of the outstanding shares of
the Company's Common Stock and Class B Common Stock which are present in
person or by proxy and entitled to vote at the Annual Meeting.
PURPOSE
The purpose of the Plan is to provide a means for eligible employees of the
Company and its participating subsidiaries to increase their ownership of
Common Stock, thereby aligning their interests with those of the Company's
stockholders. The Plan is intended to qualify as an employee stock purchase
plan under Section 423 of the Internal Revenue Code of 1986, as amended.
ELIGIBILITY TO PARTICIPATE
Most employees of the Company and of any participating subsidiaries of the
Company will be eligible to elect to participate in the Plan. However, an
employee will not be eligible if he or she has the right to acquire five
percent or more of the voting stock of the Company or of any subsidiary of the
Company. Also, if determined by the Committee (see below) on a uniform basis,
an employee will not be eligible if he or she normally is scheduled to work
less than or equal to twenty hours per week or five months per calendar year.
Approximately 1,550 employees currently meet the Plan's eligibility
requirements. However, no employees currently are participating in the Plan,
pending approval of the Plan by stockholders. Assuming that the Plan is
approved at the Annual Meeting, it is expected that eligible employees will be
offered the opportunity to join the Plan sometime thereafter.
ADMINISTRATION, AMENDMENT AND TERMINATION
The Plan is administered by the Audit and Compensation Committee (the
"Committee") of the Board of Directors of the Company. The members of the
Committee serve at the pleasure of the Board.
Subject to the terms of the Plan, the Committee has all discretion and
authority necessary or appropriate to control and manage the operation and
administration of the Plan, including the power to designate the subsidiaries
of the Company which will be permitted to participate in the Plan and to
establish a waiting period (not to exceed two years) before new employees may
become eligible for the Plan. The Committee may make whatever rules,
interpretations, and computations, and take any other actions to administer
the Plan that it considers appropriate to promote the Company's best
interests, and to ensure that the Plan remains qualified under Section 423 of
the Internal Revenue Code. The Committee may delegate one or more of its
functions to any one of its members or to any other person.
The Company's Board of Directors, in its sole discretion, may amend or
terminate the Plan at any time and for any reason.
NUMBER OF SHARES OF COMMON STOCK AVAILABLE UNDER THE PLAN
A maximum of 400,000 shares of Common Stock are available for issuance
pursuant to the Plan. Shares sold under the Plan may be newly issued shares or
treasury shares. In the event of any stock split or other change in the
capital structure of the Company, the Committee will make such adjustments, if
any, as it deems appropriate in the number, kind and purchase price of the
shares available for purchase under the Plan.
ENROLLMENT AND CONTRIBUTIONS
Eligible employees voluntarily elect whether or not to enroll in the Plan.
Employees join for an enrollment period of six months, unless otherwise
determined by the Committee. Employees who have joined the Plan automatically
are re-enrolled for additional rolling six month periods; provided, however,
that an employee may cancel his or her enrollment at any time (subject to Plan
rules).
8
<PAGE>
Employees contribute to the Plan through payroll deductions. Participating
employees generally may contribute up to 15% of their eligible compensation
through after-tax payroll deductions. From time to time, the Committee may
establish a lower maximum permitted contribution percentage or change the
definition of eligible compensation. After an enrollment period has begun, an
employee may increase or decrease his or her contribution percentage (subject
to Plan rules).
PURCHASE OF SHARES
On the last business day of each six-month enrollment period, each
participating employee's payroll deductions are used to purchase shares of
Common Stock for the employee. The price of the shares purchased will be 85%
of the lower of (1) the stock's market value on the first day of the six-month
enrollment period, or (2) the stock's market value on the last day of the
enrollment period. Market value under the Plan means the closing price of the
Common Stock on The Nasdaq/National Market for the day in question. With
respect to future enrollment periods, the Committee may alter the purchase
price formula increase (but not decrease) the price of shares purchased under
the Plan.
TERMINATION OF PARTICIPATION
Participation in the Plan terminates when a participating employee's
employment with the Company ceases for any reason, the employee withdraws from
the Plan, or the Plan is terminated or amended such that the employee no
longer is eligible to participate.
TAX ASPECTS
Based on management's understanding of current federal income tax laws, the
tax consequences of the purchase of shares of common stock under the Plan are
as follows.
An employee will not have taxable income when the shares of common stock are
purchased for him or her, but the employee generally will have taxable income
when the employee sells or otherwise disposes of stock purchased through the
Plan.
For shares which are not disposed of until more than 24 months after the
enrollment date under which the shares were purchased (the "24-month holding
period"), gain up to the amount of the discount (if any) from the market price
of the stock on the enrollment date (or re-enrollment date) is taxed as
ordinary income. Any additional gain above that amount is taxed at long-term
capital gain rates. If, after the 24-month holding period, the employee sells
the stock for less than the purchase price, the difference is a long-term
capital loss. Shares sold within the 24-month holding period are taxed at
ordinary income rates on the amount of discount received from the stock's
market price on the purchase date. Any additional gain (or loss) is taxed to
the stockholder as long-term or short-term capital gain (or loss). The
purchase date beings the holding period for determining whether the gain (or
loss) is short-term or long-term.
The Company will receive a deduction for federal income tax purposes for the
ordinary income an employee must recognize when he or she disposes of stock
purchased under the Plan within the 24-month holding period. The Company will
not receive such a deduction for shares disposed of after the 24-month holding
period.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
PROPOSAL TO APPROVE THE PLAN.
9
<PAGE>
REPORT OF THE AUDIT AND COMPENSATION COMMITTEE
To the Board of Directors:
In July 1993, the Company consummated its initial public offering, and on
October 19, 1993, the Board of Directors created the Audit and Compensation
Committee, consisting solely of independent directors.
As members of the Audit and Compensation Committee, it is our duty to
determine the compensation for officers and directors, to administer the
Company's 1993 Omnibus Equity Incentive Plan and to review the Company's
salary, bonus and compensation arrangements generally. In addition, we
evaluate the performance of management and related matters.
In discharging our responsibilities as members of the Committee, our
objective is to establish policies which will enhance the long-term
performance of the Company, enable the Company to attract and retain
outstanding executives and employees and provide meaningful incentives --
without subjecting the Company to excessive costs. The Company has
historically relied principally on cash payments in the form of salary and
bonus, together with equity incentives, to motivate its key executives and
managers. Prior to fiscal 1995, base salary for senior officers, including the
officers named in the Summary Compensation Table, was set by continuing the
salary levels which had been previously paid in the years when the Company was
privately held, subject to modest increases, based on management
recommendations.
As a public company, we intend to utilize three primary tools to assist in
compensating executives. They are base salary, bonus, and stock options.
Together they combine to provide an executive's total compensation package. We
view base salary as a primary indicator of the market value needed to attract
an executive with the skill and expertise to perform the position. We
periodically retain outside assistance to assist us in determining market
value. Peer group reviews, salary surveys, and research are utilized in this
process. We view bonuses as a means of rewarding short-term performance which
exceeds established goals and we utilize stock options as a means of linking
our executive's long-term benefits to that received by our shareholders.
During 1996, the Committee retained the services of a compensation
consulting firm to assist in determining the market value compensation for the
Chairman of the Board, Bill Brown. Survey data, coupled with performance-based
peer group evaluation were utilized to determine competitive base and bonus
levels for Mr. Brown. The Committee reviewed the data and, at its meeting of
December 27, 1996, approved the following actions regarding Mr. Brown.
Base Pay: The data indicated that Mr. Brown's base pay continues to be at a
very low level when compared to his peers. The Committee made the decision to
review the documentation early in 1997 with the goal to align his base in much
closer proximity to his peers.
Bonus: The performance of the Company clearly indicates that a bonus is
warranted for Mr. Brown's performance for the past fiscal year. At Mr. Brown's
request, no cash bonus will be authorized for his 1996 performance; however,
in lieu of bonus, the Committee has decided to grant stock options to Mr.
Brown which will reward him for the outstanding 1996 performance of the
Company and, at the same time, provide him with benefits in the future that
are directly aligned with the interests of the stockholders.
Stock Option Grant: The Committee has authorized a grant of non-qualified
stock options to Mr. Brown. The option grant is for 300,000 shares of the
Company's Common Stock at a price equal to the closing price of the stock on
December 27, 1996. No discount will be provided. In order to ensure that the
Company preserves its maximum tax deductibility in accordance with Internal
Revenue Code Section 162(m), Mr. Brown will require the approval of the
Committee prior to the annual exercise of more than 50,000 non-qualified stock
options.
As has been stated in prior reports of the Audit and Compensation Committee,
it is the policy of the Committee to consider the impact of Section 162(m) on
the Company and to document as necessary specific performance goals in order
to seek to preserve the Company's tax deduction.
The Committee had three objectives in making the grant. First, it wanted to
reward Mr. Brown for his outstanding performance during 1996. Second, it
wanted to align Mr. Brown's future personal gain to that of the stockholders
of Central Garden & Pet Company. Lastly, it wanted the option grant to Mr.
Brown to be consistent with similar annual grants to
10
<PAGE>
Chief Executive Officers at comparable companies. The Committee also believes
the long-term aspect of this grant will benefit both the Company, with Mr.
Brown's continued leadership, and the shareholders, who will benefit from Mr.
Brown's leadership of the Company and the impact of that leadership on the
Company's stock price.
Stock Options and Restricted Stock are viewed as key long-term retention
tools. Where appropriate, the Committee intends to continue to use this
vehicle as a means of retaining key executive talent, including Mr. Brown, for
the long term benefit of shareholders.
Audit and Compensation Committee
Lee D. Hines, Jr.
Daniel P. Hogan, Jr.
December 31, 1996
11
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's
cumulative total stockholder return on its Common Stock for the period from
the Company's initial public offering on July 15, 1993 to September 28, 1996
with the cumulative total return of the NASDAQ Composite (U.S.) Index and the
Dow Jones Household Products, Non-durable Index, a peer group index consisting
of thirty manufacturers and distributors of household products. The
performance graph for last year had utilized the Dow Jones Household Products
Index, a peer group index consisting of ten manufacturers and distributors of
household products. The Company has been advised that the index used last year
is no longer available and has been replaced by the Dow Jones Household
Products, Non-durable Index, which the Company is using in connection with
this year's performance graph.
The comparisons in the graph below are based on historical data and are not
indicative of, or intended to forecast, the possible future performance of the
Company's Common Stock.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG CENTRAL GARDEN & PET CO.
DOW JONES HOUSEHOLD PRODUCTS AND NASDAQ COMPOSITE (US)
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CENTRAL DOW JONES NASDAQ
Measurement Period GARDEN & HOUSEHOLD COMPOSITE
(Fiscal Year Covered) PET CO PRODUCTS (US)
- --------------------- --------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-07/15/93 $100.00 $100.00 $100.00
FYE 12/31/1993 $106.38 $111.69 $110.43
FYE 12/30/1994 $ 35.11 $120.70 $107.94
FYE 09/29/1995 $ 52.13 $148.83 $150.81
FYE 09/28/1996 $176.60 $192.86 $178.96
</TABLE>
12
<PAGE>
OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table indicates, as to (i) each person who is known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock and Class B Stock, (ii) each director, (iii) each named executive
officer and (iv) all directors and executive officers as a group, the number
of shares and percentage of the Company's stock beneficially owned as of
December 31, 1996.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
AS OF DECEMBER 31, 1996
----------------------------------------
NUMBER OF NUMBER OF
BENEFICIAL OWNER CLASS B SHARES COMMON SHARES PERCENT(1)
---------------- -------------- ------------- ---------
<S> <C> <C> <C>
William E. Brown (2)................... 1,806,359 -- 12.5%
Putnam Investments, Inc. (3)........... -- 1,485,581(4) 10.2%
Warburg, Pincus Counsellors, Inc. (5).. -- 1,484,700(4) 10.2%
The Kaufmann Fund, Inc. (6)............ -- 1,000,000(4) 6.9%
Strong Capital Management, Inc. (7).... -- 895,725(4) 6.2%
AIM Management Group Inc. (8).......... -- 823,500(4) 5.7%
Oppenheimer Funds, Inc. (9)............ -- 767,143(4) 5.3%
FMR Corp. (10)......................... -- 732,513(4) 5.1%
Glenn W. Novotny....................... -- 92,669(11) *
Lee D. Hines, Jr....................... -- 51,000 *
Daniel P. Hogan, Jr. .................. -- 6,000 *
Neill J. Hines......................... 45,548 37,807(12) *
Robert B. Jones........................ -- 12,538(13) *
All directors and officers as a
group (six persons)................... 1,851,907 200,014(14) 14.2%
</TABLE>
- --------
(*) Less than 1%.
(1) Represents the number of shares of Class B Stock and Common Stock
beneficially owned by each stockholder as a percentage of the total
number of shares of Class B Stock and Common Stock outstanding.
(2) The address of Mr. Brown is 3697 Mt. Diablo Boulevard, Lafayette,
California 94549. Mr. Brown may be deemed to be a "control person" of the
Company within the meaning of the rules and regulations of the Securities
and Exchange Commission by reason of his stock ownership and positions
with the Company.
(3) The address of Putnam Investments, Inc. is One Post Office Square, 12th
Floor, Boston, Massachusetts 02109.
(4) Based on a Schedule 13G filed with the Company reflecting beneficial
ownership as of December 31, 1996.
(5) The address of Warburg, Pincus Counsellors, Inc. is 466 Lexington Avenue,
New York, New York 10017.
(6) The address of The Kaufmann Fund, Inc. is 140 East 45th Street, 43rd
Floor, New York, New York 10017.
(7) The address of Strong Capital Management, Inc. is 100 Heritage Reserve,
Menomonee Falls, Wisconsin 53051.
(8) The address of AIM Management Group Inc. is 11 Greenway Plaza, Suite
1919, Houston, Texas 77046.
(9) The address of Oppenheimer Funds, Inc. is Two World Trade Center, New
York, New York 10048.
(10) The address of FMR Corp. is 82 Devonshire Street, Boston, Massachusetts
02109-3614.
(11) Includes 10,360 shares issuable upon exercise of outstanding options
exercisable within 60 days of December 31, 1996.
(12) Includes 5,718 shares issuable upon exercise of outstanding options
exercisable within 60 days of December 31, 1996.
(13) Includes 530 shares issuable upon exercise of outstanding options
exercisable within 60 days of December 31, 1996.
(14) Includes employee stock options exercisable within 60 days of December
31, 1996.
13
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
October 1, 1995 to September 28, 1996 all filing requirements applicable to
its officers, directors, and greater than ten-percent beneficial owners were
complied with.
AUDITORS
Deloitte & Touche LLP, independent certified public accountants, serves as
the Company's principal accountants. Representatives of Deloitte & Touche LLP
will be present at the Annual Meeting with the opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions.
OTHER MATTERS
As of the date of this Proxy Statement, there are no other matters which
management intends to present or has reason to believe others will present to
the meeting. If other matters properly come before the meeting, those who act
as proxies will vote in accordance with their judgment.
STOCKHOLDER PROPOSALS
If any stockholder intends to present a proposal for action at the Company's
1998 Annual Meeting and wishes to have such proposal set forth in management's
proxy statement, such stockholder must forward the proposal to the Company so
that it is received on or before November 5, 1997. Proposals should be
addressed to the Company at 3697 Mt. Diablo Boulevard, Lafayette, California
94549, Attention: Corporate Secretary.
COST OF SOLICITATION
All expenses in connection with the solicitation of this proxy, including
the charges of brokerage houses and other custodians, nominees or fiduciaries
for forwarding documents to stockholders, will be paid by the Company.
Dated: March 5, 1997.
By Order of the Board of Directors
Robert B. Jones, Secretary
14
<PAGE>
EXHIBIT A
CENTRAL GARDEN & PET COMPANY
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
(EFFECTIVE FEBRUARY 20, 1996)
SECTION 1
ESTABLISHMENT, PURPOSE AND DURATION
1.1 Establishment. Central Garden & Pet Company, a Delaware corporation (the
"Company"), hereby establishes the "Central Garden & Pet Company Nonemployee
Director Stock Option Plan" (the "Plan"), for the benefit of nonemployee
members of the Board of Directors of the Company ("Nonemployee Directors"), in
order to compensate such Nonemployee Directors for their past services by
awarding them stock options under the Plan ("Options").
1.2 Purpose of the Plan. The purpose of the Plan is to promote the success,
and enhance the value, of the Company, by attracting, retaining and motivating
Nonemployee Directors of outstanding competence. The Plan also is designed to
align the interests of Nonemployee Directors with the interests of the
stockholders of the Company.
1.3 Effective Date. The Plan is effective as of February 20, 1996, subject
to the approval by an affirmative vote, at the next meeting of the
stockholders of the Company, or any adjournment thereof, of the holders of a
majority of the outstanding shares of the common stock of the Company
("Shares"), present in person or by proxy and entitled to vote at such
meeting. As provided in the Plan, Options will be granted prior to the receipt
of such vote, but such grants shall be null and void if such vote is not in
fact received.
1.4 Duration of the Plan. The Plan shall commence on the date specified in
Section 1.3, and subject to the right of the Board of Directors of the Company
to terminate the Plan at any time and for any reason pursuant to Section 7,
shall remain in effect thereafter. In the event that on any date of grant the
number of Shares to be subject to Options granted to all Nonemployee Directors
exceeds the number of Shares then available for grant under the Plan, each
Nonemployee Director shall share pro rata in the number of Shares that remain
available for grant on such date.
SECTION 2
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
indicated unless a different meaning is plainly required by the context:
2.1 "Affiliate" means any corporation or any other entity (including, but
not limited to, partnerships and joint ventures) controlling, controlled by,
or under common control with the Company.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended. Reference to
a specific section of the Code shall include such section, any valid
regulation promulgated thereunder, and any comparable provision of any future
legislation amending, supplementing or superseding such section.
2.4 "Company" means Central Garden & Pet Company, a Delaware corporation, or
any successor thereto.
<PAGE>
2.5 "Director" means an individual who is a member of the Board.
2.6 "Disability" means a permanent and total disability within the meaning
of section 22(e)(3) of the Code.
2.7 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor Act thereto. Reference to a specific
section of the Exchange Act shall include such section, any valid regulation
promulgated thereunder, and any comparable provision of any future legislation
amending, supplementing or superseding such section.
2.8 "Exercise Price" means the price at which a Share may be purchased
pursuant to an Option.
2.9 "Fair Market Value" means the average of the highest and lowest quoted
selling prices for Shares on the relevant date, or if there were no sales on
such date, the arithmetic mean of the highest and lowest quoted selling prices
on the nearest day after the relevant date, as determined by the Board.
2.10 "Nonemployee Director" means a Director who is an employee of neither
the Company nor of any Affiliate.
2.11 "Option" means an option to purchase Shares which has been granted
under the provisions of the Plan. Options are not intended to be an incentive
stock option under section 422 of the Code.
2.12 "Optionee" means a Nonemployee Director to whom an Option has been
granted under the provisions of the Plan.
2.13 "Plan" means the Central Garden & Pet Company Nonemployee Director
Stock Option Plan, as set forth in this instrument and as hereafter amended
from time to time.
2.14 "Shares" means the shares of common stock, $0.01 par value, of the
Company.
SECTION 3
ADMINISTRATION OF THE PLAN
3.1 The Board. The Plan shall be administered by the Board. It shall be the
duty of the Board to conduct the general administration of the Plan in
accordance with its provisions.
3.2 Authority of the Board. The Board shall have all powers and discretion
necessary or appropriate to administer the Plan and to control its operation
in accordance with its terms, including, but not by way of limitation, the
following powers:
(a) To interpret the provisions of the Plan and to determine, in its sole
discretion, any question arising under, or in connection with the
administration or operation of, the Plan;
(b) To employ such counsel, agents and advisers, and to obtain such
legal, clerical and other services, as it may deem necessary or appropriate
in carrying out the provisions of the Plan; and
(c) To prescribe, amend and rescind rules and regulations relating to the
Plan, and to make all other determinations which may be necessary or
advisable for the administration of the Plan.
3.3 Decisions Binding. All actions, interpretations and decisions of the
Board shall be final, conclusive and binding on all persons, and shall be
given the maximum deference permitted by law.
3.4 Administrative Expenses. All expenses incurred in the administration of
the Plan by the Board, or otherwise, including legal fees and expenses, shall
be paid and borne by the Company.
2
<PAGE>
3.5 Indemnification. Each person who is or shall have been a member of the
Board shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, notion,
suit, or proceeding to which he or she may be a party or in which he or she
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him or her in settlement
thereof, with the Company's approval, or paid by him or her in satisfaction of
any judgment in any such action, suit, or proceeding against him or her,
provided he or she shall give the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf. The foregoing right of indemnification shall not
be exclusive of any other rights of indemnification to which such persons may
be entitled under the Company's Certificate of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
SECTION 4
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, the
maximum number of Shares available for grant under the Plan may not exceed
100,000. Such Shares may be either authorized but unissued Shares or treasury
Shares.
4.2 Effect of Lapsed Options. If an Option is cancelled, terminates, expires
or lapses for any reason, any Shares subject to such Option again shall be
made available for grant under the Plan (to the same Optionee or to a
different person).
4.3 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation,
stock dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares, such adjustment shall be made
in the number and class of Shares which may be delivered under the Plan, and
in the number and class of and/or the Exercise Price of Shares subject to
outstanding Options, as the Board, in its sole discretion, shall determine to
be appropriate to prevent the dilution or diminishment of Options.
Notwithstanding the preceding sentence, the number of Shares subject to any
Option always shall be a whole number.
SECTION 5
ELIGIBILITY
5.1 Eligibility. All Nonemployee Directors shall be eligible to participate
in the Plan.
5.2 Consideration for Grant of Option. Any Option under the Plan shall be
granted in consideration of the past services of the Optionee.
SECTION 6
OPTIONS
6.1 Grant of Options.
6.1.1 Each Nonemployee Director who is a Nonemployee Director on February
20, 1996 automatically will receive on such date an Option to purchase 10,000
Shares.
6.1.2 Each Optionee who received an Option to purchase 10,000 Shares
pursuant to Section 6.1.1, and each Nonemployee Director who becomes a
Nonemployee Director after February 20, 1996, automatically will receive, on
the date of each subsequent annual meeting of the stockholders of the Company
on which the
3
<PAGE>
Nonemployee Director is such, an Option to purchase such number of Shares as
determined by A divided by B, where "A" is $25,000 and "B" is the Fair Market
Value of a Share on the date on which the Option is granted. Any fractional
Share shall be rounded up to the next full Share. Accordingly, for example, if
the Fair Market Value of a Share on the date of grant is $9.00, then the
Optionee or Nonemployee Director (as applicable) would receive an Option to
purchase 2,778 Shares (i.e., $25,000 divided by $9.00, rounded up to the next
full Share).
6.2 Terms of Options.
6.2.1 Option Agreement. Each Option shall be evidenced by a written stock
option agreement which shall be executed by the Optionee and the Company.
6.2.2 Exercise Price. The Exercise Price for the Shares subject to each
Option shall be one hundred percent (100%) of the Fair Market Value of such
Shares on the date of grant.
6.2.3 Exercisability. Each Option shall become exercisable in full four (4)
years after the date of grant of the Option. Notwithstanding the preceding
sentence, if prior to the date when an Option would become exercisable, the
Optionee terminates service on the Board on account of death or Disability,
the Option shall become exercisable in full on the date of such termination of
service.
6.2.4 Expiration of Options. Each Option shall terminate upon the expiration
of five (5) years from the date of grant of the Option.
6.2.5 Payment. Options shall be exercised by the Optionee's delivery of a
written notice of exercise to the Secretary of the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares. The Exercise Price for any such
Shares shall be payable to the Company in full in cash or its equivalent.
As soon as practicable after receipt of a written notification of exercise
and full payment for the Shares purchased, the Company shall deliver to the
Optionee Share certificates (in the Optionee's name) representing such Shares.
6.2.6 Restrictions on Share Transferability. The Board may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option, as
it may deem advisable, including, but not limited to, restrictions related to
applicable Federal securities laws, the requirements of any national
securities exchange or system upon which Shares are then listed and/or traded,
and/or under any blue sky or state securities laws.
6.2.7 Nontransferability of Options. No Option granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will, the laws of descent and distribution, or as permitted in
Section 7.2. All Options granted to an Optionee under the Plan shall be
exercisable during his or her lifetime only by such Optionee.
SECTION 7
MISCELLANEOUS
7.1 Amendment or Termination of the Plan. The Board, in its sole discretion,
may amend, alter, modify or terminate the Plan, in whole or in part, at any
time and for any reason. However, only if and to the extent required to
maintain the Plan's qualification under Rule 16b-3 promulgated under the
Exchange Act, any such amendment shall be subject to stockholder approval. In
addition, as required by Rule 16b-3, the provisions regarding the formula for
determining the amount and timing of Options shall in no event be amended more
than once every six months, other than to comport with changes in the Code
and/or the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). (ERISA is inapplicable to the Plan.) Neither the amendment,
suspension, termination, nor scheduled expiration of the Plan shall, without
the consent of the Optionee, alter or impair any rights or obligations under
any Option theretofore granted. No Option may be granted during any period of
suspension nor after termination of the Plan.
4
<PAGE>
7.2 Beneficiary Designation. If permitted by the Board, an Optionee may name
a beneficiary or beneficiaries to whom any benefit under the Plan is to be
paid in case of the Optionee's death before he or she receives any or all of
such benefit. Each such designation shall revoke all prior designations by the
same Optionee and must be in a form and manner acceptable to the Board. In the
absence of any such designation, or if no beneficiary survives the Optionee,
benefits remaining unpaid at the Optionee's death shall be paid to the person
or persons entitled to such benefits under the Optionee's will or, if the
Optionee shall fail to make testamentary disposition of such benefits, his or
her legal representative. Any transferee must furnish the Company with (a)
written notice of his or her status as a transferee, and (b) evidence
satisfactory to the Company to establish the validity of the transfer and
compliance with any laws or regulations pertaining to said transfer.
7.3 Captions. The captions contained herein and in the table of contents are
provided as a matter of convenience only, and in no way define, limit, enlarge
or describe the scope or intent of the Plan. Such captions shall not affect in
any way the construction of any provision of the Plan.
7.4 Applicable Law; Severability. The Plan hereby created shall be
construed, administered and governed in all respects in accordance with the
laws of the State of California (with the exception of its conflict of laws
provisions). If any provision of this instrument shall be held invalid or
unenforceable by a court of competent jurisdiction, the remaining provisions
hereof shall continue to be fully effective.
7.5 No Effect Upon Other Compensation Plans. The adoption of this Plan shall
not affect any other stock option, compensation or incentive plans in effect
for the Company or any Affiliate, and this Plan shall not preclude the Board
from establishing any other forms of incentive or compensation for Nonemployee
Directors.
7.6 No Effect on Service. Nothing in the Plan shall interfere with or limit
in any way the right of the Company to terminate any Optionee's service on the
Board at any time, with or without cause.
7.7 Requirements of Law. The granting of Options and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
7.8 Rule 16b-3 Compliance. Transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under
the Exchange Act. To the extent any provision of the Plan, an Option or any
action by the Board fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Board. Notwithstanding
any contrary provision of the Plan, if the Board specifically determines that
compliance with Rule 16b-3 no longer is required, all references in the Plan
to Rule 16b-3 shall be of no force or effect.
5
<PAGE>
APPENDIX A
CENTRAL GARDEN & PET COMPANY
EMPLOYEE STOCK PURCHASE PLAN
SECTION 1
PURPOSE
Central Garden & Pet Company hereby establishes the Central Garden & Pet
Company Employee Stock Purchase Plan, effective as of March 3, 1997, in order to
provide eligible employees of the Company and its participating Subsidiaries
with the opportunity to purchase Common Stock through payroll deductions. The
Plan is intended to qualify as an employee stock purchase plan under Section
423(b) of the Code.
SECTION 2
DEFINITIONS
2.1 "1934 Act" means the Securities Exchange Act of 1934, as amended.
--------
Reference to a specific Section of the 1934 Act or regulation thereunder shall
include such Section or regulation, any valid regulation promulgated under such
Section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such Section or regulation.
2.2 "Board" means the Board of Directors of the Company.
-----
2.3 "Code" means the Internal Revenue Code of 1986, as amended. Reference
----
to a specific Section of the Code or regulation thereunder shall include such
Section or regulation, any valid regulation promulgated under such Section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such Section or regulation.
2.4 "Committee" shall mean the committee appointed by the Board to
---------
administer the Plan. Any member of the Committee may resign at any time by
notice in writing mailed or delivered to the Secretary of the Company. As of
the effective date of the Plan, the Committee shall be administered by the
Compensation Committee of the Board.
2.5 "Common Stock" means the common stock of the Company.
------------
2.6 "Company" means Central Garden & Pet Company, a Delaware corporation.
-------
2.7 "Compensation" means a Participant's base salary or regular wages
------------
(including sick pay and vacation pay). The
<PAGE>
Committee, in its discretion, may (on a uniform and nondiscriminatory basis)
establish a different definition of Compensation prior to an Enrollment Date for
all options to be granted on such Enrollment Date.
2.8 "Eligible Employee" means every Employee of an Employer, except (a)
-----------------
any Employee who immediately after the grant of an option under the Plan, would
own stock and/or hold outstanding options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or of any Subsidiary of the Company (including stock
attributed to such Employee pursuant to Section 424(d) of the Code), or (b) as
provided in the following sentence. The Committee, in its discretion, from time
to time may, prior to an Enrollment Date for all options to be granted on such
Enrollment Date, determine (on a uniform and nondiscriminatory basis) that an
Employee shall not be an Eligible Employee if he or she: (1) has not completed
at least two years of service since his or her last hire date, (2) customarily
works not more than 20 hours per week, (3) customarily works not more than 5
months per calendar year, or (4) is an officer or other manager.
2.9 "Employee" means an individual who is a common-law employee of any
--------
Employer, whether such employee is so employed at the time the Plan is adopted
or becomes so employed subsequent to the adoption of the Plan.
2.10 "Employer" or "Employers" means any one or all of the Company and
-------- ---------
those Subsidiaries which, with the consent of the Board, have adopted the Plan.
2.11 "Enrollment Date" means such dates as may be determined by the
---------------
Committee (in its discretion and on a uniform and nondiscriminatory basis) from
time to time.
2.12 "Grant Date" means any date on which a Participant is granted an
----------
option under the Plan.
2.13 "Participant" means an Eligible Employee who (a) has become a
-----------
Participant in the Plan pursuant to Section 4.1 and (b) has not ceased to be a
Participant pursuant to Section 8 or Section 9.
2.14 "Plan" means the Central Garden & Pet Company Employee Stock Purchase
----
Plan, as set forth in this instrument and as hereafter amended from time to
time.
2.15 "Purchase Date" means such dates as may be determined by the
-------------
Committee (in its discretion and on a uniform and nondiscriminatory basis) from
time to time prior to an Enrollment Date for all options to be granted on such
Enrollment Date.
2
<PAGE>
0.1 "Subsidiary" means any corporation in an unbroken chain of
----------
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
SECTION 3
SHARES SUBJECT TO THE PLAN
3.1 Number Available. A maximum of 400,000 shares of Common Stock shall
----------------
be available for issuance pursuant to the Plan. Shares sold under the Plan may
be newly issued shares or treasury shares.
3.2 Adjustments. In the event of any reorganization, recapitalization,
-----------
stock split, reverse stock split, stock dividend, combination of shares, merger,
consolidation, offering of rights or other similar change in the capital
structure of the Company, the Board may make such adjustment, if any, as it
deems appropriate in the number, kind and purchase price of the shares available
for purchase under the Plan and in the maximum number of shares subject to any
option under the Plan.
SECTION 4
ENROLLMENT
4.1 Participation. Each Eligible Employee may elect to become a
-------------
Participant by enrolling or re-enrolling in the Plan effective as of any
Enrollment Date. In order to enroll, an Eligible Employee must complete, sign
and submit to the Company an enrollment form in such form, manner and by such
deadline as may be specified by the Committee from time to time (in its
discretion and on a nondiscriminatory basis). Any Participant whose option
expires and who has not withdrawn from the Plan automatically will be re-
enrolled in the Plan on the Enrollment Date immediately following the Purchase
Date on which his or her option expires.
4.2 Payroll Withholding. On his or her enrollment form, each Participant
-------------------
must elect to make Plan contributions via payroll withholding from his or her
Compensation. Pursuant to such procedures as the Committee may specify from
time to time, a Participant may elect to have withholding equal to a whole
percentage from 1% to 15% (or such lesser percentage that the Committee may
establish from time to time for all options to be granted on any Enrollment
Date). A Participant may elect to increase or decrease his or her rate of
payroll withholding by submitting a new enrollment form in accordance with such
procedures as may be established by the Committee from time to time. A
Participant may stop his or her payroll withholding by submitting a new
enrollment form in accordance with such
3
<PAGE>
procedures as may be established by the Committee from time to time. In order
to be effective as of a specific date, an enrollment form must be received by
the Company no later than the deadline specified by the Committee, in its
discretion and on a nondiscriminatory basis, from time to time. Any Participant
who is automatically re-enrolled in the Plan will be deemed to have elected to
continue his or her contributions at the percentage last elected by the
Participant.
SECTION 5
OPTIONS TO PURCHASE COMMON STOCK
5.1 Grant of Option. On each Enrollment Date on which the Participant
---------------
enrolls or re-enrolls in the Plan, he or she shall be granted an option to
purchase shares of Common Stock.
5.2 Duration of Option. Each option granted under the Plan shall expire
------------------
on the earliest to occur of (a) the completion of the purchase of shares on the
last Purchase Date occurring within 27 months of the Grant Date of such option,
(b) such shorter option period as may be established by the Committee from time
to time prior to an Enrollment Date for all options to be granted on such
Enrollment Date, or (c) the date on which the Participant ceases to be such for
any reason. Until otherwise determined by the Committee for all options to be
granted on an Enrollment Date, the period referred to in clause (b) in the
preceding sentence shall mean the period from the applicable Enrollment Date
through the last business day prior to the immediately following Enrollment
Date.
5.3 Number of Shares Subject to Option. The number of shares available
----------------------------------
for purchase by each Participant under the option will be established by the
Committee from time to time prior to an Enrollment Date for all options to be
granted on such Enrollment Date. In addition and notwithstanding the preceding,
an option (taken together with all other options then outstanding under this
Plan and under all other similar employee stock purchase plans of the Employers)
shall not give the Participant the right to purchase shares at a rate which
accrues in excess of $25,000 of fair market value at the applicable Grant Dates
of such shares in any calendar year during which such Participant is enrolled in
the Plan at any time.
5.4 Other Terms and Conditions. Each option shall be subject to the
--------------------------
following additional terms and conditions:
(a) payment for shares purchased under the option shall be made only
through payroll withholding under Section 4.2;
(b) purchase of shares upon exercise of the option will be
accomplished only in accordance with Section 6.1;
4
<PAGE>
(c) the price per share under the option will be determined as
provided in Section 6.1; and
(d) the option in all respects shall be subject to such other terms
and conditions (applied on a uniform and nondiscriminatory basis), as the
Committee shall determine from time to time in its discretion.
SECTION 6
PURCHASE OF SHARES
6.1 Exercise of Option. Subject to Section 6.2, on each Purchase
------------------
Date, the funds then credited to each Participant's account shall be used to
purchase whole shares of Common Stock. Any cash remaining after whole shares of
Common Stock have been purchased shall be carried forward in the Participant's
account for the purchase of shares on the next Purchase Date. The price per
Share of the Shares purchased under any option granted under the Plan shall be
eighty-five percent (85%) of the lower of:
(a) the closing price per Share on the Grant Date for such option on
the Nasdaq National Market; or
(b) the closing price per Share on the Purchase Date on the Nasdaq
National Market.
6.2 Delivery of Shares. As directed by the Committee in its sole
------------------
discretion, shares purchased on any Purchase Date shall be delivered directly to
the Participant or to a custodian or broker (if any) designated by the Committee
to hold shares for the benefit of the Participants. As determined by the
Committee from time to time, such shares shall be delivered as physical
certificates or by means of a book entry system.
6.3 Exhaustion of Shares. If at any time the shares available under
--------------------
the Plan are over-enrolled, enrollments shall be reduced proportionately to
eliminate the over-enrollment. Such reduction method shall be "bottom up", with
the result that all option exercises for one share shall be satisfied first,
followed by all exercises for two shares, and so on, until all available shares
have been exhausted. Any funds that, due to over-enrollment, cannot be applied
to the purchase of whole shares shall be refunded to the Participants (without
interest thereon).
SECTION 7
WITHDRAWAL
7.1 Withdrawal. A Participant may withdraw from the Plan by
----------
submitting a completed enrollment form to the Company. A withdrawal will be
effective only if it is received by the Company by the deadline specified by the
Committee (in its discretion and on a uniform and nondiscriminatory basis) from
5
<PAGE>
time to time. When a withdrawal becomes effective, the Participant's payroll
contributions shall cease and all amounts then credited to the Participant's
account shall be distributed to him or her (without interest thereon).
SECTION 8
CESSATION OF PARTICIPATION
8.1 Termination of Status as Eligible Employee. A Participant shall
------------------------------------------
cease to be a Participant immediately upon the cessation of his or her status as
an Eligible Employee (for example, because of his or her termination of
employment from all Employers for any reason). As soon as practicable after
such cessation, the Participant's payroll contributions shall cease and all
amounts then credited to the Participant's account shall be distributed to him
or her (without interest thereon). If a Participant is on a Company-approved
leave of absence, his or her participation in the Plan shall continue for so
long as he or she remains an Eligible Employee and has not withdrawn from the
Plan pursuant to Section 7.1.
SECTION 9
DESIGNATION OF BENEFICIARY
9.1 Designation. Each Participant may, pursuant to such uniform and
-----------
nondiscriminatory procedures as the Committee may specify from time to time,
designate one or more Beneficiaries to receive any amounts credited to the
Participant's account at the time of his or her death. Notwithstanding any
contrary provision of this Section 9, Sections 9.1 and 9.2 shall be operative
only after (and for so long as) the Committee determines (on a uniform and
nondiscriminatory basis) to permit the designation of Beneficiaries.
9.2 Changes. A Participant may designate different Beneficiaries (or
-------
may revoke a prior Beneficiary designation) at any time by delivering a new
designation (or revocation of a prior designation) in like manner. Any
designation or revocation shall be effective only if it is received by the
Committee. However, when so received, the designation or revocation shall be
effective as of the date the designation or revocation is executed (whether or
not the Participant still is living), but without prejudice to the Committee on
account of any payment made before the change is recorded. The last effective
designation received by the Committee shall supersede all prior designations.
9.3 Failed Designations. If a Participant dies without having
-------------------
effectively designated a Beneficiary, or if no Beneficiary survives the
Participant, the Participant's Account shall be payable to his or her estate.
6
<PAGE>
SECTION 10
ADMINISTRATION
10.1 Plan Administrator. The Plan shall be administered by the
------------------
Committee. The Committee shall have the authority to control and manage the
operation and administration of the Plan.
10.2 Actions by Committee. Each decision of a majority of the members
--------------------
of the Committee then in office shall constitute the final and binding act of
the Committee. The Committee may act with or without a meeting being called or
held and shall keep minutes of all meetings held and a record of all actions
taken by written consent.
10.3 Powers of Committee. The Committee shall have all powers and
-------------------
discretion necessary or appropriate to supervise the administration of the Plan
and to control its operation in accordance with its terms, including, but not by
way of limitation, the following discretionary powers:
(a) To interpret and determine the meaning and validity of the
provisions of the Plan and the options and to determine any question
arising under, or in connection with, the administration, operation or
validity of the Plan or the options;
(b) To determine any and all considerations affecting the eligibility
of any employee to become a Participant or to remain a Participant in the
Plan;
(c) To cause an account or accounts to be maintained for each
Participant;
(d) To determine the time or times when, and the number of shares for
which, options shall be granted;
(e) To establish and revise an accounting method or formula for the
Plan;
(f) To designate a custodian or broker to receive shares purchased
under the Plan and to determine the manner and form in which shares are to
be delivered to the designated custodian or broker;
(g) To determine the status and rights of Participants and their
Beneficiaries or estates;
(h) To employ such brokers, counsel, agents and advisers, and to
obtain such broker, legal, clerical and other services, as it may deem
necessary or appropriate in carrying out the provisions of the Plan;
7
<PAGE>
(i) To establish, from time to time, rules for the performance of its
powers and duties and for the administration of the Plan;
(j) To adopt such procedures and subplans as are necessary or
appropriate to permit participation in the Plan by employees who are
foreign nationals or employed outside of the United States; and
(k) To delegate to any one or more of its members or to any other
person, severally or jointly, the authority to perform for and on behalf of
the Committee one or more of the functions of the Committee under the Plan.
10.4 Decisions of Committee. All actions, interpretations, and
----------------------
decisions of the Committee shall be conclusive and binding on all persons, and
shall be given the maximum possible deference allowed by law.
10.5 Administrative Expenses. All expenses incurred in the
-----------------------
administration of the Plan by the Committee, or otherwise, including legal fees
and expenses, shall be paid and borne by the Employers, except any stamp duties
or transfer taxes applicable to the purchase of shares may be charged to the
account of each Participant. Any brokerage fees for the purchase of shares by a
Participant shall be paid by the Company, but fees and taxes (including
brokerage fees) for the transfer, sale or resale of shares by a Participant, or
the issuance of physical share certificates, shall be borne solely by the
Participant.
10.6 Eligibility to Participate. No member of the Committee who is
--------------------------
also an employee of an Employer shall be excluded from participating in the Plan
if otherwise eligible, but he or she shall not be entitled, as a member of the
Committee, to act or pass upon any matters pertaining specifically to his or her
own account under the Plan.
10.7 Indemnification. Each of the Employers shall, and hereby does,
---------------
indemnify and hold harmless the members of the Committee and the Board, from and
against any and all losses, claims, damages or liabilities (including attorneys'
fees and amounts paid, with the approval of the Board, in settlement of any
claim) arising out of or resulting from the implementation of a duty, act or
decision with respect to the Plan, so long as such duty, act or decision does
not involve gross negligence or willful misconduct on the part of any such
individual.
8
<PAGE>
SECTION 11
AMENDMENT, TERMINATION, AND DURATION
11.1 Amendment, Suspension, or Termination. The Board, in its sole
-------------------------------------
discretion, may amend or terminate the Plan, or any part thereof, at any time
and for any reason. If the Plan is terminated, the Board, in its discretion,
may elect to terminate all outstanding options either immediately or upon
completion of the purchase of shares on the next Purchase Date, or may elect to
permit options to expire in accordance with their terms (and participation to
continue through such expiration dates). If the options are terminated prior to
expiration, all amounts then credited to Participants' accounts which have not
been used to purchase shares shall be returned to the Participants (without
interest thereon) as soon as administratively practicable.
11.2 Duration of the Plan. The Plan shall commence on the date
--------------------
specified herein, and subject to Section 11.1 (regarding the Board's right to
amend or terminate the Plan), shall remain in effect thereafter.
SECTION 12
GENERAL PROVISIONS
12.1 Participation by Subsidiaries. One or more Subsidiaries of the
-----------------------------
Company may become participating Employers by adopting the Plan and obtaining
approval for such adoption from the Board. By adopting the Plan, a Subsidiary
shall be deemed to agree to all of its terms, including (but not limited to) the
provisions granting exclusive authority (a) to the Board to amend the Plan, and
(b) to the Committee to administer and interpret the Plan. An Employer may
terminate its participation in the Plan at any time. The liabilities incurred
under the Plan to the Participants employed by each Employer shall be solely the
liabilities of that Employer, and no other Employer shall be liable for benefits
accrued by a Participant during any period when he or she was not employed by
such Employer.
12.2 Inalienability. In no event may either a Participant, a former
--------------
Participant or his or her Beneficiary, spouse or estate sell, transfer,
anticipate, assign, hypothecate, or otherwise dispose of any right or interest
under the Plan; and such rights and interests shall not at any time be subject
to the claims of creditors nor be liable to attachment, execution or other legal
process. Accordingly, for example, a Participant's interest in the Plan is not
transferable pursuant to a domestic relations order.
12.3 Severability. In the event any provision of the Plan shall be
------------
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
9
<PAGE>
12.4 Requirements of Law. The granting of options and the issuance
-------------------
of shares shall be subject to all applicable laws, rules, and regulations, and
to such approvals by any governmental agencies or securities exchanges as the
Committee may determine are necessary or appropriate.
12.5 Compliance with Rule 16b-3. Any transactions under this Plan
--------------------------
with respect to officers (as defined in Rule 16a-1 promulgated under the 1934
Act) are intended to comply with all applicable conditions of Rule 16b-3. To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee. Notwithstanding any contrary provision of
the Plan, if the Committee specifically determines that compliance with Rule
16b-3 no longer is required, all references in the Plan to Rule 16b-3 shall be
null and void.
12.6 No Enlargement of Employment Rights. Neither the establishment
-----------------------------------
or maintenance of the Plan, the granting of options, the purchase of shares, nor
any action of any Employer or the Committee, shall be held or construed to
confer upon any individual any right to be continued as an employee of the
Employer nor, upon dismissal, any right or interest in any specific assets of
the Employers other than as provided in the Plan. Each Employer expressly
reserves the right to discharge any employee at any time, with or without cause.
12.7 Apportionment of Costs and Duties. All acts required of the
---------------------------------
Employers under the Plan may be performed by the Company for itself and its
Subsidiaries, and the costs of the Plan may be equitably apportioned by the
Committee among the Company and the other Employers. Whenever an Employer is
permitted or required under the terms of the Plan to do or perform any act,
matter or thing, it shall be done and performed by any officer or employee of
the Employers who is thereunto duly authorized by the Employers.
12.8 Construction and Applicable Law. The Plan is intended to qualify
-------------------------------
as an "employee stock purchase plan" within the meaning of Section 423(b) of the
Code. Any provision of the Plan which is inconsistent with Section 423(b) of
the Code shall, without further act or amendment by the Company or the
Committee, be reformed to comply with the requirements of Section 423(b). The
provisions of the Plan shall be construed, administered and enforced in
accordance with such Section and with the laws of the State of California
(excluding California's conflict of laws provisions).
12.9 Captions. The captions contained in and the table of contents
--------
prefixed to the Plan are inserted only as a matter of convenience, and in no way
define, limit, enlarge or describe the scope or intent of the Plan nor in any
way shall affect the construction of any provision of the Plan.
10
<PAGE>
PROXY
CENTRAL GARDEN & PET COMPANY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MARCH 31, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William E. Brown, Glenn W. Novotny and Lee D.
Hines, Jr., or any of them, each with power of substitution, as proxies of the
undersigned, to attend the Annual Meeting of Stockholders of CENTRAL GARDEN &
PET COMPANY to be held at the LAFAYETTE PARK HOTEL, 3287 Mt. Diablo Boulevard,
Lafayette, California, on March 31, 1997, at 10:30 A.M., and any adjournment
thereof, and to vote the number of shares the undersigned would be entitled to
vote if personally present on the following:
(CONTINUED, AND TO BE SIGNED, ON THE REVERSE SIDE)
<PAGE>
This proxy will be voted as directed. In the absence of contrary directions,
this proxy will be voted FOR the election of the directors listed above and FOR
Proposals 2 and 3.
[X] Please mark your votes as this
1. THE ELECTION OF FOUR DIRECTORS:
[ ] FOR all nominees listed (except as marked to the contrary below)
[ ] WITHHOLD authority to vote for all nominees listed below.
Instruction: To withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the list below:
William E. Brown, Glenn W. Novotny, Lee D. Hines, Jr. and Daniel P. Hogan, Jr.
FOR AGAINST ABSTAIN
2. To approve the Nonemployee Director [ ] [ ] [ ]
Stock Option Plan.
3. To approve the Employee Stock [ ] [ ] [ ]
Purchase Plan.
4. In their discretion, upon any and all [ ] [ ] [ ]
such other matters as may properly
come before the meeting or any
adjournment thereof.
I plan to attend the meeting [ ]
STOCKHOLDERS ARE URGED TO MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN
THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
Signature(s) ___________________________ Date _______________________________
The signature should correspond exactly with the name appearing on the
certificate evidencing your Stock. If more than one name appears, all should
sign. Joint owners should each sign personally.
