Exhibit 10.1

 

CENTRAL GARDEN & PET COMPANY

 

DEFERRED COMPENSATION PLAN

 

1. Purpose

 

The purpose of the Central Garden & Pet Company Deferred Compensation Plan is to
allow Eligible Employees of Central Garden & Pet Company and its affiliates that
adopt this Plan to defer the receipt of Compensation, to which such Eligible
Employees would otherwise be entitled. The Plan is an unfunded nonqualified
deferred compensation plan that is intended to qualify for the “top-hat”
exemptions provided in, and shall be implemented and administered in a manner
consistent with, Sections 201, 301 and 401 of ERISA. Moreover, the Plan is
intended to qualify with, and shall be implemented and administered in a manner
consistent with, Section 409A of the Code and any valid regulation promulgated
thereunder and any comparable provision of any future legislation or regulation
amending, supplementing, or superseding such section or regulation.

 

2. Definitions

 

Whenever referred to in this Plan, the following terms shall have the meanings
set forth below, except where the context indicates otherwise:

 

2.1 “Beneficiary” means the individual(s) or entity designated by a Participant
to receive any benefit payable upon the death of a Participant.

 

2.2 “Code” means the Internal Revenue Code of 1986, as amended.

 

2.3 “Company” means Central Garden & Pet Company, a Delaware corporation.

 

2.4 “Compensation” means an Eligible Employee’s base salary and incentive
bonuses. Compensation shall be determined before taking into account any
reduction in taxable income by salary deferral contribution under Code
Section 125, 401(k) or under this Plan.

 

2.5 “Deferral” means the amounts credited to a Participant’s Savings Account
under the Plan pursuant to their Deferral election made pursuant to Section 3 of
the Plan.

 

2.6 “Disability” or “Disabled” means either that the Participant (i) is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to lost for a continuous period of not less than 12
months or (ii) is, by reason of any medically determinable physical or mental
impairment, which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health
plan covering employees of the Participant’s Employer.

 

2.7 “Distribution Event” means any one of the following: (i) the Participant’s
death, (ii) the Participant becoming Disabled, (iii) a Separation from Service,
or (iv) the date specified by the Participant.

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2.8 “Effective Date” means January 1, 2005 except as otherwise indicated herein.
Any amendments shall be effective immediately unless otherwise indicated.

 

2.9 “Eligible Employee” means a regular employee of an Employer who is selected
for participation in the Plan by the Company in its sole discretion. The group
of Eligible Employees for any Plan Year will be limited to, and may be more
restrictive than, the group of employees who are members of a select group of
management or highly compensated employees (within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA). An individual’s eligibility to
participate in the Plan for a Plan Year does not guarantee continued eligibility
to participate in any future Plan Year.

 

2.10 “Employer” means the Company and any entity affiliated with the Company
that, with the consent of the Company, adopts this Plan. A list of participating
Employers is attached as Exhibit A.

 

2.11 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended. Reference to a specific section of ERISA shall include such section,
any valid regulation promulgated thereunder and any comparable provision of any
future legislation or regulation amending, supplementing, or superseding such
section or regulation.

 

2.12 “Key Employee” means an Eligible Employee who meets the criteria in
Section 416(i) of the Code (without regard to paragraph 5). “Participant” means
a current or former Eligible Employee who has a Savings Account balance.

 

2.13 “Participant” means a current or former Eligible Employee who has a Savings
Account balance.

 

2.14 “Payment Date” means the earliest of (i) the Participant’s death; (ii) the
Participant’s Separation from Service, provided, however, that if the
Participant is a “Key Employee,” the Payment Date following a Separation from
Service will be six months after the last day of such Participant’s employment
with his or her Employer; (iii) the Participant’s Disability; or (iv) upon the
occurrence of a “change in event” as defined in Section 409A of the Code and
guidance issued thereunder. Notwithstanding the foregoing, Participant’s also
shall be allowed to select a date certain as the “Payment Date” in accordance
with rules established by the Committee.

 

2.15 “Plan” means this Deferred Compensation Plan. This Plan is an amendment and
restatement of the Company’s Nonqualified Deferred Compensation Agreement (the
“Agreement”) and amounts deferred under that Agreement shall be adjusted in
accordance with the terms of that Agreement as in effect on December 31, 2004.
This amended and restated Plan is effective January 1, 2005.

 

2.16 “Plan Year” means the calendar year.

 

2.17 “Savings Account” means an Employee’s bookkeeping account on the Employer’s
books to which the Participant’s elective deferrals, and any earnings thereon,
are credited.

 

2.18 “Separation from Service” means the Participant’s termination of employment
or service with the Company and all of its affiliated entities.

 

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2.19 “Unforeseeable Emergency” means the occurrence of any one or more of the
following: (i) a severe financial hardship to the Participant resulting from an
illness or accident of the Participant, the Participant’s spouse or a dependent
(as defined in Section 152(a) of the Code) of the Participant, (ii) the loss of
the Participant’s property due to casualty, or (iii) other similar extraordinary
unforeseeable circumstances arising as a result of events beyond the control of
the Participant.

 

2.20 “Valuation Date” means each business day that the NASDAQ is open for
business.

 

3. Election to Defer

 

3.1 An Eligible Employee may elect to defer the receipt of Compensation in
accordance with such limits as may be established by the Company . The decision
of each Eligible Employee to become a Participant shall be entirely voluntary.

 

3.2 An Eligible Employee may first elect to become a Participant with respect to
base salary deferrals by making an irrevocable election to make such deferrals
under this Section 3.2 on a such date as may established by the Company which
shall be no later than December 31, 2005. An Eligible Employee may elect to
defer a bonus by making an irrevocable election before the beginning of the
relevant fiscal year. If a bonus qualifies as a “performance-based bonus” under
Section 409A of the Code, an election to defer the bonus may be made until 90
days after the beginning of the relevant fiscal year.

 

3.3 When a person first becomes an Eligible Employee, he or she may elect to
become a Participant for the Plan Year in which he or she first became an
Eligible Employee, by electing, within thirty (30) calendar days of the date
first becoming an Eligible Employee, to make Deferrals under this Section 3.3 of
the Plan. An election under this Section 3.3 to make Deferrals shall be
effective only for the remainder of the Plan Year (and the Company’s fiscal year
in the case of the deferral of a bonus) with respect to which the election is
made.

 

3.4 An Eligible Employee may elect to become a Participant (or to continue or
reinstate his or her active participation) in the Plan for any subsequent Plan
Year by electing, no later than December 15th (or the next following business
day) of the immediately preceding Plan Year, to make Deferrals under the Plan
with respect to his or her Compensation. An election under this Section 3.4 to
make Deferrals shall be effective only for the Plan Year with respect to which
the election is made. Bonus deferral elections must be made before the beginning
of the Company’s fiscal year unless the bonus qualifies as a performance-based
bonus under Section 409A of the Code or the individual first becomes an eligible
Employee.

 

3.5 An Eligible Employee who has become a Participant shall remain a Participant
until his or her entire Savings Account balance is distributed.

 

3.6 The Deferral election form shall specify a whole percentage of Compensation
to be deferred. The Eligible Employee must specify the Payment Date and the form
of payment when completing the initial Deferral election form. If the
Participant fails to specify a form of payment, then his entire account balance
shall be paid in a single lump sum.

 

3.7 The Deferral election form shall also specify the percentages of such
Deferrals that are to receive investment performance attributable to each
investment fund. A Participant may

 

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change his or her investment fund allocation percentages, both for current
allocations and future allocations, by notifying the Company in accordance with
such procedures as may be established by the Company. Notwithstanding the
foregoing, the Company may establish a default initial measuring investment rate
of return.

 

3.8 Deferrals shall be subject to such tax withholding as is required by
applicable law.

 

4. Change to Deferral Election

 

After the beginning of a Plan Year, a Participant shall not be permitted to
change or revoke his or her Deferral election for such Plan Year, except to the
limited extent provided in Section 409A of the Code and guidance issued
thereunder.

 

5. Savings Account

 

5.1 Compensation deferred pursuant to Section 3 shall be credited to the Savings
Account within 15 days of the date it otherwise would have been paid.

 

5.2 The balance credited to each Savings Account shall be credited on each
Valuation Date with a return on investment (or charged with an investment loss).
The measure of the investment return shall be equal to the proportionate pre-tax
gain or loss the Participant’s directed investment would have incurred if it had
been invested in one or more of the investment fund(s) identified by the
Company. In crediting gains or losses to each Savings Account, the Company may
employ such accounting methods as the Company deems appropriate in order to
fairly reflect the fair market values of each investment fund. The Company may,
but is not required to, actually invest the Participant’s Savings Account
pursuant to his or her investment directions. Such directions shall be made in
the manner prescribed by the Company on or prior to the dates permitted by the
Company.

 

6. Payment of Savings Account

 

6.1 To receive distribution of a portion or all of a Savings Account, a
Participant must comply with the rules prescribed by the Company and the terms
of this Plan.

 

6.2 A Participant’s Savings Account shall be valued as of the applicable Payment
Date, as defined in Section 2.14. A single lump-sum cash payment shall be made
as soon as practicable, but not later than 60 business days after the Payment
Date, unless the Participant elects to receive 5 years of substantially equal
annual installments. The Participant may elect different forms of payment for a
distribution on a specified date certain and for distributions on the occurrence
of any other Distribution Event. Notwithstanding the provisions of this
Section 6.2, distributions on account of a Participant’s death shall not be made
prior to the date the Company, in its sole discretion, receives proper notice of
the Participant’s death. All payments shall be subject to reduction to reflect
any withholding tax obligations imposed by law.

 

6.3 If an Employee dies before his or her Savings Account has been distributed,
the unpaid balance shall be paid to the Beneficiary designated by the
Participant. If no such Beneficiary has been designated, such unpaid balance
shall be paid to the Participant’s spouse living at the time of his or her death
and if there is no surviving spouse, to the Participant’s estate.

 

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6.4 Prior to the occurrence of a Distribution Event, distribution of the amounts
credited to the Participant’s Savings Account may be permitted only in the event
of an Unforeseeable Emergency. The amount of any Unforeseeable Emergency
distribution shall not exceed the amount necessary to satisfy such Unforeseeable
Emergency (plus an amount necessary to pay taxes reasonably anticipated as a
result of the distribution) after taking into account the extent to which such
Unforeseeable Emergency is or may be relieved through reimbursement or
compensation by insurance (or otherwise) or by liquidation of the Participant’s
assets (to the extent such liquidation of assets would not itself cause a severe
financial hardship). The Employee shall submit a written request to the Company
which shall have sole discretion to determine whether to make an Unforeseeable
Emergency distribution from the Participant’s Savings Account, and to determine
the amount of such distribution, if any. The Company’s decision on all
withdrawals shall be final and binding on all interested parties.

 

6.5 If the Participant has specified a date certain as the Payment Date, the
Participant may postpone such Payment Date, provided (i) that the new date
certain the Participant specified is at least 5 years later than the prior
specified date and (ii) that the change in the specified date is made at least
12 months before the prior specified date. A change the date certain specified
as the Payment Date under this Section 6.5 will be effective 12 months after it
is made. A change in the form of payment (from lump sum to installments or vice
versa) must be made at least 12 months before payments are scheduled to begin
and the payments in the new elected form may not begin for at least 5 years.

 

7. Plan Administration

 

7.1 This Plan shall be adopted by each Employer and shall be administered by the
Company.

 

7.2 This Plan may be amended in any way or may be terminated, in whole or in
part, at any time, in the discretion of the Company. No amendment or termination
of the Plan shall adversely affect the amount in any Savings Account prior to or
as of the effective date of such amendment or termination.

 

7.3 The Company shall have the sole authority, in its discretion, to adopt,
amend and rescind such rules and regulations as it deems advisable in the
administration of the Plan, to construe and interpret the Plan, the rules and
regulations, and deferral elections forms, and to make all other determinations
deemed necessary or advisable for the administration of the Plan. All decisions,
determinations, and interpretations of the Company shall be binding on all
persons. The Company has delegated its responsibilities with respect to the
administration of the Plan to a committee which shall act on the Company’s
behalf.

 

8. Funding Obligation

 

The Plan is unfunded, for tax purposes and for purposes of ERISA. However, the
Employer may transfer all amounts credited to each Participant’s Savings Account
to an irrevocable grantor Trust to be held, administered and disposed of by the
Trustees in accordance with the terms of this Plan. The principal of the trust,
and any earnings thereon shall be held separate and apart from other funds of
the Employer and shall be used exclusively for the uses and purposes of
Participants, and general creditors in the event of insolvency of the Company.
Participants will have

 

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no preferred claim or beneficial interest in the assets of the trust and are
general unsecured creditors of the Company with respect to deferrals hereunder.

 

9. Nonalienation of Benefits

 

No benefit under this Plan may be sold, assigned, transferred, conveyed,
hypothecated, encumbered, anticipated, or otherwise disposed of, and any attempt
to do so shall be void. No such benefit shall, prior to receipt thereof by the
Participant, be in any manner subject to the debts, contracts, liabilities,
engagements, or torts of such Participant.

 

10. Limitation of Rights

 

Nothing in this Plan shall be construed to limit in any way the right of any
Employer to terminate a Participant’s employment at any time for any reason; nor
shall it be evidence of any agreement or understanding, express or implied, that
any Employer (i) will employ a Participant in any particular position, (ii) will
ensure participation in any incentive programs, or (iii) will grant any awards
under such programs.

 

11. Applicable Law

 

This Plan shall be construed and its provisions enforced and administered in
accordance with the requirements of ERISA.

 

 

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EXHIBIT A

 

PARTICIPATING EMPLOYERS

 

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