Exhibit 10.3
 
EXECUTION
 
AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
 
AMENDMENT NO. 1, dated as of July 12, 2002, entered into by and among Congress
Financial Corporation (Western), a California corporation (“Lender”), Central
Garden & Pet Company, a Delaware corporation (“CG&Pet”), Matthews Redwood and
Nursery Supply, Inc., a California corporation (“Matthews”), Four Paws Products,
Ltd., a New York corporation (“Four Paws”), Kaytee Products Incorporated, a
Wisconsin corporation (“Kaytee”), T.F.H. Publications, Inc., a Delaware
corporation (“T.F.H.”), Norcal Pottery Products, Inc., a California corporation
(“Norcal”) and Wellmark International, a California corporation (“Wellmark”, and
together with CG&Pet, Matthews, Four Paws, Kaytee, Norcal, T.F.H., individually,
each a “Borrower” and collectively, “Borrowers”).
 
W I T N E S S E T H :
 
WHEREAS, Lender and Borrowers have entered into financing arrangements pursuant
to which Lender may make loans and advances and provide other financial
accommodations to Borrowers as set forth in the Second Amended and Restated Loan
and Security Agreement, dated as of December 12, 2000, by and among Lender and
Borrowers (as amended hereby and as the same may hereafter be further amended,
modified, supplemented, extended, renewed, restated or replaced, the “Loan
Agreement”, and together with all agreements, documents and instruments at any
time executed and/or delivered in connection therewith or related thereto, as
from time to time amended, modified, supplemented, extended, renewed, restated,
or replaced, collectively, the “Financing Agreements”);
 
WHEREAS, Ezell Nursery Supply, Inc., a California corporation (“Ezell”),
formerly a wholly-owned subsidiary of CG&Pet, has merged with and into CG&Pet,
with CG&Pet as the surviving corporation; and
 
WHEREAS, Borrowers have requested that Lender make certain amendments to the
Loan Agreement; and
 
WHEREAS, Lender is willing to consent to such merger and make such amendments to
the extent and upon the terms and conditions as set forth herein. By this
Amendment, Lender and Borrowers desire and intend to evidence such consent and
amendments;
 
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lender and Borrowers agree as
follows:
 
1.  Definitions.
 
(a) Additional Definitions. As used herein, the following terms shall have the
respective meanings given to them below and the Loan Agreement shall be deemed
and is hereby amended to include, in addition and not in limitation, each of the
following definitions:
 
(i) “Amendment No. 1” shall mean this Amendment No. 1 to the Second Amended and
Restated Loan and Security Agreement by and among Lender and Borrowers, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
 
(ii) “Applicable Margin” shall mean, at any time, as to the Interest Rate for
Eurodollar Rate Loans, the applicable percentage (on a per annum basis) set
forth below from the

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applicable date set forth below determined based on the EBITDA for the
immediately preceding twelve (12) months prior to such date:
 
(A)  From September 30, 2002:
 
Tier

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EBITDA

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Eurodollar Rate Margin

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1
  
INTENTIONALLY DELETED
    
2
  
INTENTIONALLY DELETED
    
3
  
Less than $14,000,000
  
2.50%
4
  
Greater than or equal to $14,000,000 and less than $16,000,000
  
2.25%
5
  
Greater than or equal to $16,000,000 and less than $20,000,000
  
2.00%
6
  
Greater than or equal to $20,000,000
  
1.75%

 
(B)  From December 31, 2002:
 
Tier

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EBITDA

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Eurodollar Rate Margin

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1
  
INTENTIONALLY DELETED
    
2
  
INTENTIONALLY DELETED
    
3
  
Less than $18,000,000
  
2.50%
4
  
Greater than or equal to $18,000,000 and less than $20,000,000
  
2.25%
5
  
Greater than or equal to $20,000,000 and less than $24,000,000
  
2.00%
6
  
Greater than or equal to $24,000,000
  
1.75%

 
(C)  From March 31, 2003:
 
Tier

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EBITDA

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Eurodollar Rate Margin

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1
  
INTENTIONALLY DELETED
    
2
  
INTENTIONALLY DELETED
    
3
  
Less than $24,000,000
  
2.50%
4
  
Greater than or equal to $24,000,000 and less than $26,000,000
  
2.25%
5
  
Greater than or equal to $26,000,000 and less than $30,000,000
  
2.00%

2

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6
  
    Greater than or equal to $30,000,000
  
1.75%

 
(D)  From the last day of each fiscal quarter thereafter:
 
Tier

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EBITDA

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Eurodollar Rate Margin

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1
  
Less than $32,000,000
  
3.00%
2
  
Greater than or equal to $32,000,000 and less than $33,000,000
  
2.75%
3
  
Greater than or equal to $33,000,000 and less than $34,000,000
  
2.50%
4
  
Greater than or equal to $34,000,000 and less than $35,000,000
  
2.25%
5
  
Greater than or equal to $35,000,000 and less than $39,000,000
  
2.00%
6
  
Greater than or equal to $39,000,000
  
1.75%

 
The Applicable Margin shall be determined and established (in accordance with
the above definition) on the first day of the calendar month following the
delivery of the Compliance Certificate for each March, June, September and
December of each fiscal year pursuant to Section 9.6(e) of the Loan Agreement,
commencing with the Compliance Certificate for the month ending September 30,
2002 (without regard to any subsequent corrections to reflect year-end audit
adjustments). The Applicable Margin so determined shall apply to all Eurodollar
Rate Loans for the period from and including the date of determination to and
excluding the first day of the calendar month following the delivery of the next
Compliance Certificate and to all Eurodollar Rate Loans for any Interest Period
commencing during the period from and including the date of determination to and
excluding the first day of the calendar month following the delivery of the next
Compliance Certificate; provided, that, if Borrowers fail to deliver any
Compliance Certificate in a timely manner pursuant to Section 9.6(e) of the Loan
Agreement, the greater of (i) the then existing Applicable Margin and (ii) 3.00%
per annum in excess of the Adjusted Eurodollar Rate shall apply to all
Eurodollar Rate Loans for the period from and including the first date on which
such Compliance Certificate was required to be delivered, to and excluding the
date on which the Lender receives such Compliance Certificate.
 
(iii) “Capital Leases” shall mean, as applied to any Person, any lease of (or
any agreement conveying the right to use) any property (whether real, personal
or mixed) by such Person as lessee which in accordance with GAAP, is required to
be reflected as a liability on the balance sheet of such Person.
 
(iv) “Consolidated Net Income” shall mean, with respect to Borrowers for any
period, the aggregate of the net income (loss) of Borrowers, on a consolidated
basis, for such period (excluding to the extent included therein any
extraordinary and/or one time or unusual and non-recurring gains) after
deducting all charges which should be deducted before arriving at the net income
(loss) for such period and, without duplication, after deducting the Provision
for Taxes for such period, all as determined in accordance with GAAP. For the
purposes of this definition, net income excludes any gain together with any
related Provision for Taxes for such gain realized upon the sale or other
disposition of any assets that are not sold in the ordinary course of business
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or of any Capital Stock of Borrowers and any net income realized
or loss incurred as a result of changes in accounting principles or the
application thereof to any Borrower.

3

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(v) “EBITDA” shall mean, as to Borrowers, with respect to any period, an amount
equal to: (i) the Consolidated Net Income of Borrowers for such period
determined in accordance with GAAP, plus (ii) depreciation, amortization and
other non-cash charges (including, but not limited to, imputed interest and
deferred compensation) for such period (to the extent deducted in the
computation of Consolidated Net Income of such Borrower), all in accordance with
GAAP, plus (iii) Interest Expense for such period (to the extent deducted in the
computation of Consolidated Net Income of Borrowers), plus (iv) the Provision
for Taxes (to the extent deducted in the computation of Consolidated Net Income
of Borrowers).
 
(vi) “Ezell Merger” shall mean the merger of Ezell with and into CG&Pet,
pursuant to the terms of the Ezell Merger Agreements (as in effect on July 26,
2001), with CG&Pet as the surviving corporation.
 
(vii) “Ezell Merger Agreements” shall mean, collectively, the following: (A) the
Certificate of Ownership Merging Ezell Nursery Supply, Inc. Into Central Garden
& Pet Company, dated July 15, 2001, by CG&Pet with respect to the Ezell Merger
(the “Certificate of Merger”) and (B) all agreements, documents and instruments
related to the foregoing.
 
(viii) “Interest Expense” shall mean, for any period as to Borrowers, as
determined in accordance with GAAP, the total interest expense, whether paid or
accrued during such period (including the interest component of Capital Leases
for such period), including, without limitation, discounts in connection with
the sale of any Accounts and bank fees, commissions, discounts and other fees
and charges owed with respect to letters of credit, banker’s acceptances or
similar instruments.
 
(ix) “Provision for Taxes” shall mean, with respect to Borrowers for any period,
an amount equal to all taxes imposed on or measured by net income, whether
Federal, State, county or local, and whether foreign or domestic, that are paid
or payable by Borrowers in respect of such period in accordance with GAAP.
 
(x) “Tangible Net Worth” shall mean as to Borrowers, at any time, in accordance
with GAAP (except as otherwise specifically set forth below), the amount equal
to: stockholders’ equity less goodwill, capitalized financing costs,
intercompany accounts (exclusive of amounts identified on Borrowers’ financial
statements as “due from affiliates”) and other assets deemed intangible under
GAAP, less amounts identified on Borrowers’ financial statements as “other
assets” plus indebtedness of Borrowers which is subordinated in right of payment
to the full and final payment and satisfaction of all Obligations, on terms and
conditions acceptable to Lender.
 
(xi) All references to the term “Financing Agreements” in the Loan Agreement and
in any of the other Financing Agreements shall be deemed to include, in addition
and not in limitation, this Amendment No. 1.
 
(b)       Interpretation. For purposes of this Amendment No. 1, unless otherwise
defined herein, all terms used herein, including, but not limited to, those
terms used and/or defined in the recitals above, shall have the respective
meanings assigned to such terms in the Loan Agreement.
 
2.  Consent. Subject to the terms and conditions contained herein, Lender hereby
consents to the Ezell Merger.
 
3.  Acknowledgment.
 
(a) CG&Pet hereby acknowledges, confirms, and agrees that as of the date hereof
(i) Lender has and shall continue to have a security interest in and lien upon
the Collateral of Ezell heretofore granted to Lender pursuant to certain of the
Financing Agreements to which Ezell is a party and (ii) the consent contained
herein to the Ezell Merger shall not be deemed to release, terminate or waive
such

4

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security interests and liens, or any rights or remedies of Lender pursuant
thereto, all of which shall continue in all respects.
 
(b) Borrowers hereby acknowledge, confirm, and agree that as of and after the
effectiveness of the Ezell Merger: (i) CG&Pet, as survivor pursuant to the Ezell
Merger, is and shall continue to be liable in all respects for, and has assumed
as of such date, all of the Obligations of Ezell pursuant to the Financing
Agreements; (ii) the security interests in and liens upon the assets and
properties of Ezell in favor of Lender continues upon all assets and properties
of CG&Pet, including such assets and properties to which CG&Pet succeeded
pursuant to the Ezell Merger, and such security interests and liens and their
perfection and priority continues and shall continue in all respects in full
force and effect; and (iii) without limiting the generality of the foregoing,
the Ezell Merger shall in no way limit, impair or adversely affect the
Obligations howsoever arising, or any security interests or liens securing the
same.
 
4.  Adjusted Eurodollar Rate. Section 1.2 of the Loan Agreement is hereby
amended by deleting the reference to “one-sixteenth (1/16)” therein and
substituting “one-thirty secondth (1/32)” therefor.
 
5.  Eligible Accounts. Section 1.13(e) of the Loan Agreement is hereby amended
by adding the following provision at the end thereof:
 
“The principal amount of Revolving Loans, if any, made by Lender, in Lender’s
discretion, with respect to Accounts in which the chief executive office of the
account debtor is located outside of the United States in accordance with
Section 1.13(e) above shall not, in any event, exceed $5,000,000 at any time;”
 
6.  Eligible Inventory. Section 1.14 of the Loan Agreement is hereby deleted in
its entirety and the following is substituted therefor:
 
“1.14 ‘Eligible Inventory’ shall mean, as to each Borrower, Inventory consisting
of finished goods in the categories of lawn and garden and pet products
purchased and held for resale in the ordinary course of the business of such
Borrower and raw materials with respect to such finished goods, in each case
which are acceptable to Lender based on the criteria set forth below. In
general, Eligible Inventory shall not include (a) work-in-process or any goods
(not consisting of finished goods in the categories of lawn and garden and pet
products purchased and held for resale in the ordinary course of the business of
any Borrower as described above) manufactured by or for Borrowers; (b)
components which are not part of finished goods; (c) spare parts for equipment;
(d) packaging and shipping materials; (e) supplies used or consumed in such
Borrower’s business; (f) Inventory at premises other than those owned and
controlled by such Borrower, except if Lender shall have received an agreement
in writing from the person in possession of such Inventory and/or the owner or
operator of such premises in form and substance satisfactory to Lender
acknowledging Lender’s first priority security interest in the Inventory,
waiving security interests and claims by such person against the Inventory and
permitting Lender access to, and the right to remain on, the premises so as to
exercise Lender’s rights and remedies and otherwise deal with the Collateral;
(g) Inventory subject to a security interest or lien in favor of any person
other than Lender except those permitted in this Agreement; (h) bill and hold
goods; (i) unserviceable, obsolete or slow moving Inventory; (j) Inventory which
is not subject to the first priority, valid and perfected security interest of
Lender; (k) damaged, out of date and/or defective Inventory; and (l) Inventory
purchased or sold on consignment, including, but not limited to, Inventory sold
on consignment by Distributor/Agents. General criteria for Eligible Inventory
may be established and revised from time to time by Lender in good faith. Any
Inventory which is not Eligible Inventory shall nevertheless be part of the
Collateral.”
 
7.  Eurodollar Rate. Section 1.20 of the Loan Agreement is hereby amended by
deleting the reference to “one-sixteenth (1/16)” therein and substituting
“one-thirty secondth (1/32)” therefor.
 
8.  Interest Rate. Section 1.33 of the Loan Agreement is hereby deleted in its
entirety and the following is substituted therefor:
 
“1.33 ‘Interest Rate’ shall mean,

5

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(a) subject to clauses (b) and (c) below:
 
(i) as to Prime Rate Loans, the Prime Rate, and
 
(ii) as to Eurodollar Rate Loans, a rate equal to two (2%) percent per annum in
excess of the Adjusted Eurodollar Rate (based on the Eurodollar Rate applicable
for the Interest Period selected by Borrower as in effect three (3) Business
Days after the date of receipt by Lender of the request of a Borrower for such
Eurodollar Rate Loans in accordance with the terms hereof, whether such rate is
higher or lower than any rate previously quoted to any Borrower);
 
(b) subject to clause (c) of this definition below, effective from the date that
the Applicable Margin shall first become effective pursuant to the definition of
the term Applicable Margin, the Interest Rate payable by Borrowers as to
Eurodollar Rate Loans shall be increased or decreased, as the case may be, to
the rate equal to the Applicable Margin on a per annum basis in excess of the
Adjusted Eurodollar Rate; and
 
(c) notwithstanding anything to the contrary contained in clauses (a) and (b) of
this definition, the Interest Rate shall mean (i) as to Prime Rate Loans, the
rate of two (2%) percent per annum in excess of the Prime Rate and (ii) as to
Eurodollar Rate Loans, (A) before the date the Applicable Margin is in effect,
the rate of four (4%) percent per annum in excess of the Adjusted Eurodollar
Rate and (B) on and after the date the Applicable Margin is in effect, the
Applicable Margin otherwise used to calculate the Interest Rate for Eurodollar
Rate Loans shall be two (2%) percent per annum in excess of the percentage then
in effect as set forth in the definition of the term Applicable Margin, in each
case, at Lender’s option, without notice, (a) for the period (i) from and after
the date of termination or non-renewal hereof until Lender has received full and
final payment of all obligations (notwithstanding entry of a judgment against
any Borrower) and (ii) from and after the date of the occurrence of an Event of
Default for so long as such Event of Default is continuing as determined by
Lender, and (b) on the Revolving Loans at any time outstanding in excess of the
amounts available to the applicable Borrowers under Section 2 (whether or not
such excess(es), arise or are made with or without Lender’s knowledge or consent
and whether made before or after an Event of Default). Lender shall provide
Borrowers with prompt notice following the exercise by Lender of its right to
increase the Interest Rate in accordance with this clause (c), provided, that,
the date of the receipt by Borrowers of any such notice shall not affect the
right of Lender to increase the Interest Rate effective from the earliest date
provided for under this clause (c).
 
9.  Inventory Loan Limit. Section 1.35 of the Loan Agreement is hereby deleted
in its entirety and the following is substituted therefor:
 
“1.35 ‘Inventory Loan Limit’ shall mean (a) as to CG&Pet, the amount of
$85,000,000, less the amount of Obligations determined by Lender to be
outstanding at such time in respect of inventory loans of the other Borrowers,
(b) as to Matthews, the amount of $10,000,000, (c) as to Four Paws, the amount
of $10,000,000, (d) as to Kaytee, the amount of $10,000,000, (e) as to T.F.H.,
the amount of $5,000,000, (f) as to Norcal, the amount of $7,500,000, and (g) as
to Wellmark, the amount of $10,000,000.”
 
10.  Maximum Credit. Section 1.40 of the Loan Agreement is hereby deleted in its
entirety and the following is substituted therefor:
 
“1.40 ‘Maximum Credit’ shall mean the amount of $125,000,000.”
 
11.  Raw Materials Loan Limit. Section 1.53 of the Loan Agreement is hereby
deleted in its entirety and the following is substituted therefor:
 
“1.53 ‘Raw Materials Loan Limit’ shall mean the amount of $15,000,000.”
 
12.  Permitted Acquisition.

6

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(a) Sections 1.49(a)(v) and 1.49(b)(vii) of the Loan Agreement are hereby
amended by deleting the reference to “$20,000,000” therein and substituting
“$10,000,000” therefor.
 
(b) Section 1.49(b)(iii) of the Loan Agreement is hereby deleted in its entirety
and the following is substituted therefor:
 
“(iii) in no event shall the total amount of all payments by CG&Pet in
connection with all such acquisitions pursuant to this Section 1.49(b) exceed
$25,000,000 in the aggregate at any time from the date of this Agreement,”
 
13.  Revolving Loans. Section 2.1(a) of the Loan Agreement is hereby deleted in
its entirety and the following is substituted therefor:
 
“(a) Subject to, and upon the terms and conditions contained herein, Lender
agrees to make Revolving Loans to each Borrower from time to time in amounts
requested by such Borrower (or by CG&Pet on behalf of such Borrower), up to the
amount equal to the sum of:
 
(i) eighty-five (85%) percent of the Net Amount of Eligible Accounts of such
Borrower, plus
 
(ii) the lesser of: (A) sixty-five (65%) percent of the Value of Eligible
Inventory of such Borrower consisting of finished goods, (B) 85% of the net
orderly liquidation Value of Eligible Inventory of such Borrower consisting of
finished goods, as determined by Lender based on the results of written reports
or appraisals as to the Inventory delivered or caused to be delivered by
Borrowers to Lender at any time or times as Lender may request, at Borrowers’
expense, in form, scope and methodology acceptable to Lender and by an appraiser
acceptable to Lender, or (C) the Inventory Loan Limit applicable to such
Borrower, plus
 
(iii) the lesser of: (A) 65% of the Value of Eligible Inventory of such Borrower
consisting of raw materials for finished goods which are part of Eligible
Inventory, (B) 85% of the net orderly liquidation Value of Eligible Inventory of
such Borrower consisting of raw materials for finished goods which are part of
Eligible Inventory, as determined by Lender based on the results of written
reports or appraisals as to the Inventory (including such raw materials)
delivered or caused to be delivered by Borrowers to Lender at any time or times
as Lender may request, at Borrowers’ expense, in form, scope and methodology
acceptable to Lender and by an appraiser acceptable to Lender, or (C) the Raw
Materials Loan Limit, less
 
(iv) any Availability Reserves.”
 
14.  Letter of Credit Accommodations.
 
(a) Letter of Credit Fees. Section 2.2(b) of the Loan Agreement is hereby
amended by deleting the reference to “two and one-quarter (2.25%) percent per
annum” therein and substituting “one and one-half (1.50%) percent per annum”
therefor and by deleting the reference to “four and one-quarter (4.25%) percent
per annum” therein and substituting “three and one-half (3.50%) percent per
annum” therefor.
 
(b) Letter of Credit Sublimit. Section 2.2(d) of the Loan Agreement is hereby
amended by deleting the reference to “$10,000,000” therein and substituting
“$15,000,000” therefor.
 
15.  Interest.
 
(a) Section 3.1(b)(iv) of the Loan Agreement is hereby deleted in its entirety
and the following is substituted therefor:

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“(iv) no more than ten (10) Interest Periods may be in effect at any one time,”
 
(a) Section 3.1(b)(v) of the Loan Agreement is hereby deleted in its entirety
and the following is substituted therefor:
 
“(v) the amount of each Eurodollar Rate Loan must be in an amount not less than
$1,000,000 or an integral multiple of $500,000 in excess thereof,”
 
16.  Inventory Covenants. Section 7.3(d) of the Loan Agreement is hereby deleted
in its entirety and the following is substituted therefor:
 
“(d) upon Lender’s request, Borrowers shall, at their expense, (i) no more than
semi-annually, but at any time or times as Lender may request on or after an
Event of Default, deliver or cause to be delivered to Lender written reports or
appraisals as to the Inventory in form, scope and methodology acceptable to
Lender and by an appraiser acceptable to Lender, addressed to Lender or upon
which Lender is expressly permitted to rely and (ii) semi-annually (except for a
fiscal quarter in which Lender has received an appraisal as described in and in
accordance with Section 7.13(d)(i) above), but at any time or times as Lender
may request on or after an Event of Default, deliver or cause to be delivered to
Lender desktop appraisals, in form, scope and methodology acceptable to Lender
and by an appraiser acceptable to Lender, addressed to Lender or upon which
Lender is expressly permitted to rely;”
 
17.  Financial Statements and Other Information. Section 9.6 of the Loan
Agreement is hereby amended by adding the following new subsection (e) thereto:
 
“(e) CG&Pet (on behalf of all Borrowers) shall deliver to Lender, simultaneously
with the delivery by Borrowers to Lender of each of the annual audited financial
statements required to be delivered pursuant to Section 9.6(a)(ii) of the Loan
Agreement, and within forty-five (45) days after the end of each fiscal month, a
certificate (“Compliance Certificate”) of the chief financial officer of CG&Pet
(on behalf of all Borrowers) in a form satisfactory to Lender (i) setting forth
in reasonable detail (as determined by Lender) the calculations required to
establish that each Borrower was in compliance with the covenants set forth in
Sections 9.18 and Section 9.19 of the Loan Agreement during the period covered
in such financial statements and as of the end thereof, and (ii) stating that,
except as explained in reasonable detail in such certificate, (A) all of the
representations and warranties of the Borrowers contained in this Agreement and
the other Financing Agreements are correct and complete in all material respects
as of the date of such certificate as if made at such time, other than any such
representation or warranty which relates to a specified prior date, (B) the
Borrowers are, at the date of such certificate, in compliance in all material
respects with all of its respective covenants and agreements in this Agreement
and the other Financing Agreements, and (C) as of the date of such certificate,
no Event of Default, and no condition or event which, with the giving of notice
or lapse of time, or both, would constitute an Event of Default, exists or has
occurred and is continuing or existed during the period covered by such
financial statements. If such certificate discloses that a representation or
warranty is not correct or complete, or that a covenant has not been complied
with, or that an Event of Default existed or exists, such certificate shall set
forth what action the Borrowers have taken or propose to take with respect
thereto.”
 
18.  Disposition of Obsolete Equipment. Section 9.7(b)(ii)(B) of the Loan
Agreement is hereby amended by deleting the reference to “$1,000,000” therein
and substituting “$2,000,000” therefor.
 
19.  Consolidated Net Worth. Section 9.15 of the Loan Agreement is hereby
deleted in its entirety and the following is substituted therefor:
 
“9.15 Intentionally Deleted.”
 
20.  Tangible Net Worth. Section 9 of the Loan Agreement is hereby amended by
adding the following new Section 9.18 at the end thereto:

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“9.18 Tangible Net Worth. Borrowers shall as of the end of each month have
Tangible Net Worth of not less than $32,000,000.”
 
21.  EBITDA. Section 9 of the Loan Agreement is hereby amended by adding the
following new Section 9.19 at the end thereto:
 
“9.19 Minimum EBITDA. The EBITDA of Borrowers shall, as of the end of each
fiscal quarter set forth below, be not less than the amount set forth below
opposite each such fiscal quarter determined based on the EBITDA for the
immediately preceding twelve (12) months:
 
 
Period

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Minimum EBITDA

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Fiscal Quarter ending September 30, 2002
  
$13,000,000
Fiscal Quarter ending December 31, 2002
  
$17,400,000
Fiscal Quarter ending March 31, 2003
  
$23,000,000
Fiscal Quarter ending June 30, 2003
  
$32,000,000
Each Fiscal Quarter thereafter
  
$36,000,000”

 
22.  Events of Default.
 
(a) Section 10.1(d) of the Loan Agreement is hereby deleted in its entirety and
the following is substituted therefor:
 
“(d) (i) any judgment for the payment of money is rendered against any Borrower
or Obligor in excess of $1,000,000 in any one case or i.n excess of $2,500,000
in the aggregate and shall remain undischarged or unvacated for a period in
excess of thirty (30) days or execution shall at any time not be effectively
stayed, or (ii) any judgment other than for the payment of money or an order of
injunction, attachment, garnishment or execution is rendered against any
Borrower or any Obligor or any of their assets (including the Collateral) if
such judgment or order may result in a loss to or a liability of any Borrower or
any Obligor in excess of $1,000,000 in any one case or in excess of $2,500,000
in the aggregate or any attachment, garnishment or execution is rendered against
any of their assets (including the Collateral) having a value in excess of
$1,000,000 in any one case or in excess of $2,500,000 in the aggregate.”
 
(b) Section 10.1(i) of the Loan Agreement is hereby amended by deleting the
reference to “$100,000” therein and substituting “$2,500,000” therefor.
 
23.  Term. Section 12.1(a) of the Loan Agreement is hereby deleted in its
entirety and the following is substituted therefor:
 
“(a) This Agreement and the other Financing Agreements shall become effective as
of the date set forth on the first page thereof and shall continue in full force
and effect for a term ending on July 12, 2004 (the “Renewal Date”), and from
year to year thereafter, unless sooner terminated pursuant to the terms hereof.
Lender or Borrowers may terminate this Agreement and the other Financing
Agreements effective on the Renewal Date or on the anniversary of the Renewal
Date in any year by giving to the other party at least sixty (60) days prior
written notice; provided, that, this Agreement and all other Financing
Agreements must be terminated simultaneously. Upon the effective date of
termination or non-renewal of the Financing Agreements, Borrowers shall pay to
Lender, in full, all outstanding and unpaid Obligations and shall furnish cash
collateral to Lender in such amounts as Lender determines are reasonably
necessary to secure Lender from loss, cost, damage or expense, including
reasonable attorneys’ fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Lender has not yet received final and indefeasible payment. Such
payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to such bank account of Lender, as Lender may, in
its discretion, designate in writing to Borrowers for such purpose. Interest
shall

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be due until and including the next business day, if the amounts so paid by
Borrowers to the bank account designated by Lender are received in such bank
account later than 12:00 noon, Los Angeles, California time.
 
24.  Notices. Section 12.2(a) of the Loan Agreement is hereby deleted in its
entirety and the following is substituted therefor:
 
“(a) made to Lender at its address set forth below and to any or all Borrowers
c/o CG&Pet at its chief executive office set forth below to the attention of
Chief Financial Officer, or to such other address as either party may designate
by written notice to the other in accordance with this provision,
 
25.  Waiver of Event of Default.
 
(a) Subject to the terms and conditions set forth herein, Lender hereby waives
the Event of Default arising under Section 10.1(d) of the Loan Agreement as a
result of the judgment in favor of The Scotts Company against Borrowers in an
amount up to $10,500,000 entered in case no. C2-00-755 with the United States
District Court for the Southern District of Ohio on May 16, 2002.
 
(b) Lender has not waived, is not by this Amendment No. 1 waiving, and has no
intention of waiving any Event of Default which is continuing on or which may
occur after the date hereof (whether the same or similar to the Event of Default
referred to above or otherwise), other than the Event of Default specifically
referred to above. The foregoing waiver shall not be construed as a bar to or a
waiver of any other or further Event of Default on any future occasion, whether
similar in kind or otherwise and shall not constitute a waiver, express or
implied, of any of the rights and remedies of Lender arising under the terms of
the Loan Agreement or any other Financing Agreements on any future occasion or
otherwise.
 
26.  Amendment Fee. In consideration of the amendments set forth herein,
Borrowers shall on the date hereof, pay to Lender or Lender, at its option, may
charge the account of Borrowers maintained by Lender, an amendment fee in the
amount of $375,000 which fee is fully earned as of the date hereof and shall
constitute part of the Obligations.
 
27.  Representations, Warranties and Covenants. Borrowers, jointly and
severally, represent, warrant and covenant with and to Lender as follows, which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof, the truth and accuracy of, or compliance with
each, together with the representations, warranties and covenants in the other
Financing Agreements, being a continuing condition of the making of any
Revolving Loans by Lender to Borrowers:
 
(a) As of the date hereof, (i) the Ezell Merger is valid and effective in
accordance with the Ezell Merger Agreements and the corporation statutes of the
State of Delaware and the State of California and CG&Pet is the surviving
corporation pursuant to the Ezell Merger, (ii) all actions and proceedings
required by the Ezell Merger Agreements, applicable law and regulation have been
taken and the transactions required thereunder have been duly and validly taken
and consummated, and (iii) no court of competent jurisdiction has issued any
injunction, restraining order or other order which prohibits or has prohibited
consummation of the transactions described in the Ezell Merger Agreements and no
government action or proceeding has been threatened or commenced seeking any
injunction, restraining order or other order which seeks to void or otherwise
modify the transactions described in the Ezell Merger Agreements.
 
(b) The Ezell Merger and the other arrangements contemplated herein do not
violate any law or regulation or any order or decree of any court or
governmental instrumentality in any respect and do not and will not conflict
with or result in the breach of, or constitute a default in any respect under,
any agreement, document or instrument to which any Borrower is a party or may be
bound, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property of any Borrower or violate any provision of
the Certificate of Incorporation or By-Laws of any Borrower.
 
(c) Borrowers have delivered, or caused to be delivered, to Lender, true,
correct and complete copies of the Ezell Merger Agreements.

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(d) This Amendment No. 1 and each other agreement or instrument to be executed
and delivered by the Borrowers have been duly authorized, executed and delivered
by all necessary action on the part of the Borrowers and, if necessary, their
respective stockholders, and is in full force and effect as of the date hereof,
as the case may be, and the agreements and obligations of the Borrowers
contained herein and therein constitute legal, valid and binding obligations of
the Borrowers, respectively, enforceable against them in accordance with their
terms.
 
(e) All of the representations and warranties set forth in the Loan Agreement
and the other Financing Agreements, each as amended hereby, are true and correct
in all material respects on and as of the date hereof as if made on the date
hereof, except to the extent any such representation or warranty is made as of a
specified date, in which case such representation or warranty shall have been
true and correct as of such date.
 
(f) As of the date hereof, and after giving effect to the provisions of this
Amendment No. 1, no Event of Default, and no condition or event which, with the
giving of notice or lapse of time, or both, would constitute an Event of
Default, exists or has occurred and is continuing.
 
28.  Conditions Precedent. The consent and amendments contained herein shall
only be effective upon the satisfaction of each of the following conditions
precedent in a manner satisfactory to Lender:
 
(a) Lender shall have received, in form and substance satisfactory to Lender, an
original of this Amendment No. 1, duly authorized, executed and delivered by
Borrowers;
 
(b) Lender shall have received from Borrowers, Borrowers’ financial projections
for fiscal year ending September 30, 2003, with sufficient time to review and
analyze such projections, which projections shall be satisfactory to Lender; and
 
(c) Lender shall have received from Borrowers (or Borrowers have caused to be
delivered to Lender), an updated appraisal of Borrowers’ Inventory in form,
scope and methodology acceptable to Lender and by an appraiser acceptable to
Lender, with sufficient time to review and analyze such appraisal, which results
of the appraisal shall be satisfactory to Lender.
 
29.  Effect of this Amendment. Except for the specific amendments expressly set
forth herein, no other waiver, changes or modifications to the Financing
Agreements, and no waivers of any provisions thereof are intended or implied,
and in all other respects the Financing Agreements are hereby specifically
ratified, restated and confirmed by all parties hereto as of the date hereof. To
the extent of conflict between the terms of this Amendment No. 1 and the other
Financing Agreements, the terms of this Amendment No. 1 shall control. The Loan
Agreement and this Amendment No. 1 shall be read and construed as one agreement.
 
30.  Further Assurances. Borrowers shall execute and deliver such additional
documents and take such additional action as may be reasonably requested by
Lender to effectuate the provisions and purposes of this Amendment No. 1.
 
31.  Governing Law. The rights and obligations hereunder of each of the parties
hereto shall be governed by and interpreted and determined in accordance with
the internal laws of the State of California (without giving effect to
principles of conflicts of laws).
 
32.  Binding Effect. This Amendment No. 1 shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
 
33.  Counterparts. This Amendment No. 1 may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment No. 1, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto. Delivery of an executed counterpart of this
Amendment No. 1 by

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telefacsimile shall have the same force and effect as delivery of an original
executed counterpart of this Amendment No. 1. Any party delivering an executed
counterpart of this Amendment No. 1 by telefacsimile also shall deliver an
original executed counterpart of this Amendment No. 1, but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Amendment No. 1 as to such party or
any other party.
 
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be
duly executed and delivered by their authorized officers as of the day and year
first above written.
 
CENTRAL GARDEN & PET COMPANY
By:
 
/s/    STUART W. BOOTH        

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Title:
 
VP & CFO

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MATTHEWS REDWOOD AND NURSERY SUPPLY, INC.
By:
 
/s/    STUART W. BOOTH        

--------------------------------------------------------------------------------

Title:
 
VP & CFO

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FOUR PAWS PRODUCTS, LTD.
By:
 
/s/    STUART W. BOOTH        

--------------------------------------------------------------------------------

Title:
 
VP & CFO

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KAYTEE PRODUCTS INCORPORATED
By:
 
/s/    STUART W. BOOTH        

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Title:
 
VP

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[SIGNATURES CONTINUED ON FOLLOWING PAGE]

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
 
T.F.H. PUBLICATIONS, INC.
By:
 
/s/    STUART W. BOOTH        

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Title:
 
VP & CFO

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NORCAL POTTERY PRODUCTS, INC.
By:
 
/s/    STUART W. BOOTH        

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Title:
 
VP & CFO

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WELLMARK INTERNATIONAL
By:
 
/s/    STUART W. BOOTH        

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Title:
 
VP - Finance

--------------------------------------------------------------------------------

 
AGREED:
 
CONGRESS FINANCIAL CORPORATION (WESTERN)
By:
 
/s/    GARY WHITAKER        

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Title:
 
VP

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