Exhibit 10.8
CENTRAL GARDEN & PET COMPANY
2003 OMNIBUS EQUITY INCENTIVE PLAN
TABLE OF CONTENTS
Page
SECTION 1 ................................................................. 1
1.1 Background and Effective Date .................................. 1
1.2 Purpose of the Plan ............................................ 1
1.3 Duration of the Plan ........................................... 1
SECTION 2 DEFINITIONS ................................................. 1
2.1 "1934 Act" ..................................................... 1
2.2 "Affiliate" .................................................... 1
2.3 "Affiliated SAR" ............................................... 2
2.4 "Award" ........................................................ 2
2.5 "Award Agreement" .............................................. 2
2.6 "Board" or "Board of Directors" ................................ 2
2.7 "Code" ......................................................... 2
2.8 "Committee" .................................................... 2
2.9 "Company" ...................................................... 2
2.10 "Consultant" ................................................... 2
2.11 "Director" ..................................................... 2
2.12 "Disability" ................................................... 2
2.13 "Employee" ..................................................... 2
2.14 "ERISA" ........................................................ 2
2.15 "Fair Market Value" ............................................ 2
2.16 "Freestanding SAR" ............................................. 3
2.17 "Incentive Stock Option" or "ISO" .............................. 3
2.18 "Nonqualified Stock Option" .................................... 3
2.19 "Option" ....................................................... 3
2.20 "Option Price" ................................................. 3
2.21 "Participant" .................................................. 3
2.22 "Performance Unit" ............................................. 3
2.23 "Performance Share" ............................................ 3
2.24 "Period of Restriction" ........................................ 3
2.25 "Plan" ......................................................... 3
2.26 "Restricted Stock" ............................................. 3
2.27 "Retirement" ................................................... 3
2.28 "Rule 16b-3" ................................................... 3
2.29 "Section 16 Person" ............................................ 3
2.30 "Shares" ....................................................... 3
2.31 "Stock Appreciation Right" or "SAR" ............................ 4
2.32 "Subsidiary" ................................................... 4
2.33 "Tandem SAR" .................................................. 4
2.34 "Termination of Employment" .................................... 4
2.35 "Window Period" ................................................ 4
SECTION 3 ADMINISTRATION .............................................. 4
3.1 The Committee .................................................. 4
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TABLE OF CONTENTS
(continued)
Page
3.2 Authority of the Committee ........................................ 4
3.3 Decisions Binding ................................................. 4
SECTION 4 SHARES SUBJECT TO THE PLAN ..................................... 5
4.1 Number of Shares .................................................. 5
4.2 Lapsed Awards ..................................................... 6
4.3 Adjustments in Authorized Shares .................................. 6
SECTION 5 STOCK OPTIONS .................................................. 6
5.1 Grant of Options .................................................. 6
5.2 Award Agreement ................................................... 6
5.3 Option Price ...................................................... 6
5.3.1 Nonqualified Stock Options ................................. 7
5.3.2 Incentive Stock Options .................................... 7
5.3.3 Substitute Options ......................................... 7
5.4 Expiration of Options ............................................. 7
5.4.1 Expiration Dates ........................................... 7
5.4.2 Committee Discretion ....................................... 8
5.5 Exercise of Options ............................................... 8
5.6 Payment ........................................................... 8
5.7 Restrictions on Share Transferability ............................. 8
5.8 Certain Additional Provisions for Incentive Stock Options ......... 8
5.8.1 Exercisability ............................................. 8
5.8.2 Termination of Employment .................................. 8
5.8.3 Company and Subsidiaries Only .............................. 9
5.8.4 Expiration ................................................. 9
5.9 Nontransferability of Options ..................................... 9
SECTION 6 STOCK APPRECIATION RIGHTS ...................................... 9
6.1 Grant of SARs ..................................................... 9
6.2 Exercise of Tandem SARs ........................................... 9
6.2.1 ISOs ....................................................... 9
6.3 Exercise of Affiliated SARs ....................................... 10
6.4 Exercise of Freestanding SARs ..................................... 10
6.5 SAR Agreement ..................................................... 10
6.6 Expiration of SARs ................................................ 10
6.7 Payment of SAR Amount ............................................. 10
6.8 Nontransferability of SARs ........................................ 10
SECTION 7 RESTRICTED STOCK ............................................... 10
7.1 Grant of Restricted Stock ......................................... 10
7.2 Restricted Stock Agreement ........................................ 10
7.3 Transferability ................................................... 11
7.4 Other Restrictions ................................................ 11
7.5 Removal of Restrictions ........................................... 11
7.6 Voting Rights ..................................................... 11
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TABLE OF CONTENTS
(continued)
Page
7.7 Dividends and Other Distributions ............................... 11
7.8 Return of Restricted Stock to Company ........................... 11
SECTION 8 PERFORMANCE UNITS AND PERFORMANCE SHARES .................... 12
8.1 Grant of Performance Units/Shares ............................... 12
8.2 Value of Performance Units/Shares ............................... 12
8.3 Earning of Performance Units/Shares ............................. 12
8.4 Form and Timing of Payment of Performance Units/Shares .......... 12
8.5 Cancellation of Performance Units/Shares ........................ 12
8.6 Nontransferability .............................................. 12
SECTION 9 BENEFICIARY DESIGNATION ..................................... 13
SECTION 10 DEFERRALS ................................................... 13
SECTION 11 RIGHTS OF EMPLOYEES AND CONSULTANTS ......................... 13
11.1 No Effect on Employment or Service .............................. 13
11.2 Participation ................................................... 13
SECTION 12 AMENDMENT, SUSPENSION, OR TERMINATION ....................... 13
12.1 Amendment, Suspension, or Termination ........................... 13
SECTION 13 TAX WITHHOLDING ............................................. 13
13.1 Withholding Requirements ........................................ 13
13.2 Shares Withholding .............................................. 14
SECTION 14 INDEMNIFICATION ............................................. 14
SECTION 15 SUCCESSORS .................................................. 14
SECTION 16 LEGAL CONSTRUCTION .......................................... 14
16.1 Gender and Number ............................................... 14
16.2 Severability .................................................... 14
16.3 Requirements of Law ............................................. 15
16.4 Securities Law Compliance ....................................... 15
16.5 Governing Law ................................................... 15
16.6 Captions ........................................................ 15
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CENTRAL GARDEN & PET COMPANY
2003 OMNIBUS EQUITY INCENTIVE PLAN
CENTRAL GARDEN & PET COMPANY, hereby adopts the Central Garden & Pet
Company 2003 Omnibus Equity Incentive Plan, effective as of December 4, 2002, as
follows:
SECTION 1
BACKGROUND, PURPOSE AND DURATION
1.1 Background and Effective Date. The Plan provides for the
granting of Nonqualified Stock Options, Incentive Stock Options, SARs,
Restricted Stock, Performance Units, and Performance Shares. The Plan is
effective as of December 4, 2002, subject to ratification by an affirmative vote
of the holders of a majority of Shares. Awards may 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.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
success, and enhance the value, of the Company by aligning the interests of
Participants with those of the Company's shareholders, and by providing
Participants with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to the Company in
its ability to motivate, attract, and retain the services of outstanding
individuals, upon whose judgment, interest, and special effort the success of
the Company largely is dependent.
1.3 Duration of the Plan. The Plan shall commence on the date
specified in Section 1.1, and subject to Section 12 (concerning the Board's
right to amend or terminate the Plan), shall remain in effect thereafter.
However, without further stockholder approval, no Incentive Stock Option may be
granted under the Plan on or after December 3, 2012.
SECTION 2
DEFINITIONS
The following words and phrases shall have the following meanings
unless a different meaning is plainly required by the context:
2.1 "1934 Act" means the Securities Exchange Act of 1934, as
amended. Reference to a specific section of the Exchange 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 "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.
2.3 "Affiliated SAR" means an SAR that is granted in connection with
a related Option, and which automatically will be deemed to be exercised at the
same time that the related Option is exercised.
2.4 "Award" means, individually or collectively, a grant under the
Plan of Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted
Stock, Performance Units, or Performance Shares.
2.5 "Award Agreement" means the written agreement setting forth the
terms and provisions applicable to each Award granted under the Plan.
2.6 "Board" or "Board of Directors" means the Board of Directors of
the Company.
2.7 "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.
2.8 "Committee" means the committee appointed by the Board (pursuant
to Section 3.1) to administer the Plan.
2.9 "Company" means Central Garden & Pet Company, a Delaware
corporation, or any successor thereto.
2.10 "Consultant" means an individual who provides significant
services to the Company and/or an Affiliate, including a Director who is not an
Employee.
2.11 "Director" means any individual who is a member of the Board of
Directors of the Company.
2.12 "Disability" means a permanent and total disability within the
meaning of Code Section 22(e)(3).
2.13 "Employee" means an employee of the Company or of an Affiliate,
whether such employee is so employed at the time the Plan is adopted or becomes
so employed subsequent to the adoption of the Plan.
2.14 "ERISA" mea ns 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 amending, supplementing or superseding such
section.
2.15 "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 before and the nearest day after the relevant date, as
determined by the Committee.
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2.16 "Freestanding SAR" means a SAR that is granted independently of
any Option.
2.17 "Incentive Stock Option" or "ISO" means an option to purchase
Shares, which is designated as an Incentive Stock Option and is intended to meet
the requirements of Section 422 of the Code.
2.18 "Nonqualified Stock Option" means an option to purchase Shares
which is not intended to be an Incentive Stock Option.
2.19 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
2.20 "Option Price" means the price at which a Share may be purchased
pursuant to an Option.
2.21 "Participant" means an Employee or Consultant who has an
outstanding Award.
2.22 "Performance Unit" means an Award granted to an Employee
pursuant to Section 8.
2.23 "Performance Share" means an Award granted to an Employee
pursuant to Section 8.
2.24 "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock are subject to restrictions.
2.25 "Plan" means the Central Garden & Pet Company 2003 Omnibus
Equity Incentive Plan, as set forth in this instrument and as hereafter amended
from time to time.
2.26 "Restricted Stock" means an Award granted to a Participant
pursuant to Section 7.
2.27 "Retirement" means, in the case of an Employee, a Termination of
Employment by reason of the Employee's retirement at or after age 62.
2.28 "Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act,
and any future regulation amending, supplementing or superseding such
regulation.
2.29 "Section 16 Person" means a person who, with respect to the
Shares, is subject to Section 16 of the 1934 Act.
2.30 "Shares" means the shares of common stock, $0.01 par value, of
the Company.
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2.31 "Stock Appreciation Right" or "SAR" means an Award, granted
alone or in connection with a related Option, that pursuant to the terms of
Section 7 is designated as an SAR.
2.32 "Subsidiary" means any "subsidiary corporation" (other than the
Company) as defined in Code Section 424(f).
2.33 "Tandem SAR" means an SAR that is granted in connection with a
related Option, the exercise of which shall require forfeiture of the right to
purchase an equal number of Shares under the related Option (and when a Share is
purchased under the Option, the SAR shall be canceled to the same extent).
2.34 "Termination of Employment" means a cessation of the
employee-employer or director or other service arrangement relationship between
an Employee, Consultant or Director and the Company or an Affiliate for any
reason, including, but not by way of limitation, a termination by resignation,
discharge, death, Disability, Retirement, or the disaffiliation of an Affiliate,
but excluding any such termination where there is a simultaneous reemployment or
re-engagement by the Company or an Affiliate.
2.35 "Window Period" means the period beginning on the third business
day following the date of public release of the Company's quarterly sales and
earnings information, and ending on the twelfth business day following such
date.
SECTION 3
ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Committee.
The Committee shall consist of not less than two (2) Directors. The members of
the Committee shall be appointed from time to time by, and shall serve at the
pleasure of, the Board of Directors. The Committee shall be comprised solely of
Directors who are "outside directors" under Rule 16b-3.
3.2 Authority of the Committee. The Committee shall have all powers
and discretion necessary or appropriate to administer the Plan and to control
its operation, including, but not limited to, the power (a) to determine which
Employees and Consultants shall be granted Awards, (b) to prescribe the terms
and conditions of such Awards, (c) to interpret the Plan and the Awards, (d) to
adopt rules for the administration, interpretation and application of the Plan
as are consistent therewith, and (e) to interpret, amend or revoke any such
rules.
The Committee, in its sole discretion and on such terms and conditions
as it may provide, may delegate all or any part of its authority and powers
under the Plan to one or more directors and/or officers of the Company;
provided, however, that the Committee may not delegate its authority and powers
with respect to Section 16 Persons.
3.3 Decisions Binding. All determinations and decisions made by the
Committee shall be final, conclusive, and binding on all persons, and shall be
given the maximum deference permitted by law.
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SECTION 4
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section
4.3, the total number of Shares available for grant under the Plan may not
exceed 2,500,000. Such Shares may be authorized but unissued Shares or Treasury
Shares. No Participant may receive Options or SARs for more than 500,000 shares
under the Plan in a calendar year.
The following rules will apply for purposes of the determination of
the number of Shares available for grant under the Plan:
(a) While an Award is outstanding, it shall be counted against
the authorized pool of Shares, regardless of its vested
status.
(b) The grant of an Option or Restricted Stock shall reduce the
Shares available for grant under the Plan by the number of
Shares subject to such Award.
(c) The grant of a Tandem SAR shall reduce the number of Shares
available for grant by the number of Shares subject to the
related Option (i.e., there is no double counting of
Options and their related Tandem SARs); provided, however,
that, upon the exercise of such Tandem SAR, the authorized
Share pool shall be credited with the appropriate number of
Shares representing the number of shares reserved for such
Tandem SAR less the number of Shares actually delivered
upon exercise thereof or the number of Shares having a Fair
Market Value equal to the cash payment made upon such
exercise.
(d) The grant of an Affiliated SAR shall reduce the number of
Shares available for grant by the number of Shares subject
to the SAR, in addition to the number of Shares subject to
the related Option; provided, however, that, upon the
exercise of such Affiliated SAR, the authorized Share pool
shall be credited with the appropriate number of Shares
representing the number of shares reserved for such
Affiliated SAR less the number of Shares actually delivered
upon exercise thereof or the number of Shares having a Fair
Market Value equal to the cash payment made upon such
exercise.
(e) The grant of a Freestanding SAR shall reduce the number of
Shares available for grant by the number of Freestanding
SARs granted; provided, however, that, upon the exercise of
such Freestanding SAR, the authorized Share pool shall be
credited with the appropriate number of Shares representing
the number of shares reserved for such Freestanding SAR
less the number of Shares actually delivered upon exercise
thereof or the number of
5
Shares having a Fair Market Value equal to the cash payment
made upon such exercise.
(f) The Committee shall in each case determine the appropriate
number of Shares to deduct from the authorized pool in
connection with the grant of Performance Units and/or
Performance Shares.
(g) To the extent that an Award is settled in cash rather than
in Shares, the authorized Share pool shall be credited with
the appropriate number of Shares having a Fair Market Value
equal to the cash settlement of the Award.
4.2 Lapsed Awards. If an Award is cancelled, terminates, expires, or
lapses for any reason (with the exception of the termination of a Tandem SAR
upon exercise of the related Option, or the termination of a related Option upon
exercise of the corresponding Tandem SAR), any Shares subject to such Award
again shall be available to be the subject of an Award.
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 price of Shares subject to outstanding Options, SARs,
and Restricted Stock granted under the Plan, as the Committee, in its sole
discretion, shall determine to be appropriate to prevent the dilution or
diminishment of Awards. Notwithstanding the preceding sentence, the number of
Shares subject to any Award always shall be a whole number.
SECTION 5
STOCK OPTIONS
5.1 Grant of Options. Options may be granted to Employees and
Consultants at any time and from time to time, as determined by the Committee in
its sole discretion. The Committee, in its sole discretion, shall determine the
number of Shares subject to Options granted to each Participant. The Committee
may grant ISOs, NQSOs, or a combination thereof.
5.2 Award Agreement. Each Option shall be evidenced by an Award
Agreement that shall specify the Option Price, the expiration date of the
Option, the number of Shares to which the Option pertains, any conditions to
exercise of the Option, and such other terms and conditions as the Committee, in
its discretion, shall determine. The Award Agreement also shall specify whether
the Option is intended to be an ISO or a NQSO.
5.3 Option Price. Subject to the provisions of this Section 5.3, the
Option Price for each Option shall be determined by the Committee in its sole
discretion.
5.3.1 Nonqualified Stock Options. In the case of a Nonqualified
Stock Option, the Option Price shall be not less than one hundred percent (100%)
of the Fair Market Value of a Share on the date that the Option is granted.
6
5.3.2 Incentive Stock Options. In the case of an Incentive Stock
Option, the Option Price shall be not less than one hundred percent (100%) of
the Fair Market Value of a Share on the date that the Option is granted;
provided, however, that if at the time that the Option is granted, the Employee
(together with persons whose stock ownership is attributed to the Employee
pursuant to Section 424(d) of the Code) owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or any of
its Subsidiaries, the Option Price shall be not less than one hundred and ten
percent (110%) of the Fair Market Value of a Share on the date that the Option
is granted.
5.3.3 Substitute Options. Notwithstanding the provisions of
Sections 5.3.1 and 5.3.2, in the event that the Company or an Affiliate
consummates a transaction described in Section 424(a) of the Code (e.g., the
acquisition of property or stock from an unrelated corporation), persons who
become Employees or Consultants on account of such transaction may be granted
Options in substitution for options granted by their former employer. If such
substitute Options are granted, the Committee, in its sole discretion, may
determine that such substitute Options shall have an exercise price less than
100% of the Fair Market Value of the Shares on the date the Option is granted.
5.4 Expiration of Options. Unless the applicable stock option
agreement provides otherwise, each Option shall terminate upon the first to
occur of the events listed in Section 5.4.1, subject to Section 5.4.2.
5.4.1 Expiration Dates.
(a) The date for termination of the Option set forth in the
written stock option agreement;
(b) The expiration of ten years from the date the Option was
granted, subject to the provisions of clause (f), below;
or
(c) The expiration of one year from the date of the Optionee's
Termination of Employment for a reason other than the
Optionee's death, Disability or Retirement, subject to the
provisions of clause (f) below; or
(d) The expiration of three years from the date of the
Optionee's Termination of Employment by reason of
Disability, subject to the provisions of clause (f) below;
or
(e) The expiration of three years from the date of the
Optionee's Retirement; provided that no Incentive Stock
Option may be exercised after the expiration of three
months from the date of the Optionee's Retirement, subject
in each case to the provisions of clause (f) below; or
(f) The expiration of one year from the date of the Optionee's
death, if such death occurs while the Optionee is in the
employ or service of
7
the Company or an Affiliate or within the one-year or
three-year periods referred to in (c), (d) or (e) above,
whichever is applicable.
5.4.2 Committee Discretion. Subject to the provisions of this
Section 5.4, the Committee shall provide, in the terms of each individual
Option, when such Option expires and becomes unexercisable. After the Option is
granted, the Committee, in its sole discretion and subject to Section 5.8.4 and
this Section 5.4, may extend the maximum term of such Option.
5.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times, and subject to such restrictions and conditions, as
the Committee shall determine in its sole discretion. After an Option is
granted, the Committee, in its sole discretion, may accelerate the
exercisability of the Option.
5.6 Payment. Options shall be exercised by the Participant'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 Option Price upon exercise of any Option shall be payable to the
Company in full in cash. The Committee, in its sole discretion, also may permit
exercise (a) by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered must have been held by the Participant for at
least six (6) months prior to their tender to satisfy the Option Price), or (b)
by any other means which the Committee, in its sole discretion, determines to
both provide legal consideration for the Shares, and to be consistent with the
purposes of the Plan.
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 Participant Share certificates (in the Participant's name) representing such
Shares.
5.7 Restrictions on Share Transferability. The Committee 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
Federal securities laws, the requirements of any national securities exchange or
system upon which such Shares are then listed and/or traded, and/or any blue sky
or state securities laws.
5.8 Certain Additional Provisions for Incentive Stock Options.
5.8.1 Exercisability. The aggregate Fair Market Value
(determined at the time the Option is granted) of the Shares with respect to
which Incentive Stock Options are exercisable for the first time by any Employee
during any calendar year (under all plans of the Company and its Subsidiaries)
shall not exceed $100,000.
5.8.2 Termination of Employment. No Incentive Stock Option may
be exercised more than three months after the Participant's termination of
employment for any reason other than Disability or death, unless (a) the
Participant dies during such three-month period, and (b) the Award Agreement
and/or the Committee permits later exercise. No Incentive Stock Option may be
exercised more than one year after the Participant's termination of
8
employment on account of Disability, unless (a) the Participant dies during such
one-year period, and (b) the Award Agreement and/or the Committee permit later
exercise.
5.8.3 Company and Subsidiaries Only. Incentive Stock Options may
be granted only to persons who are employees of the Company and/or a Subsidiary
at the time of grant.
5.8.4 Expiration. No Incentive Stock Option may be exercised
after the expiration of 10 years from the date such Option was granted;
provided, however, that if the Option is granted to an Employee who, together
with persons whose stock ownership is attributed to the Employee pursuant to
Section 424(d) of the Code, owns stock possessing more than 10% of the total
combined voting power of all classes of the stock of the Company or any of its
Subsidiaries, the Option may not be exercised after the expiration of 5 years
from the date that it was granted.
5.9 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
provided under Section 9. All Options granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant.
SECTION 6
STOCK APPRECIATION RIGHTS
6.1 Grant of SARs. An SAR may be granted to an Employee or
Consultant at any time and from time to time as determined by the Committee, in
its sole discretion. The Committee may grant Affiliated SARs, Freestanding SARs,
Tandem SARs, or any combination thereof.
The Committee shall have complete discretion to determine the number
of SARs granted to any Participant, and consistent with the provisions of the
Plan, the terms and conditions pertaining to such SARs. However, the grant price
of a Freestanding SAR shall be at least equal to the Fair Market Value of a
Share on the date of grant. The grant price of Tandem or Affiliated SARs shall
equal the Option Price of the related Option.
6.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right
to exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
6.2.1 ISOs. Notwithstanding any contrary provision of the Plan,
with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem
SAR shall expire no later than the expiration of the underlying ISO; (ii) the
value of the payout with respect to the Tandem SAR shall be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the underlying
ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR shall be
exercisable only when the Fair Market Value of the Shares subject to the ISO
exceeds the Option Price of the ISO.
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6.3 Exercise of Affiliated SARs. An Affiliated SAR shall be deemed
to be exercised upon the exercise of the related Option. The deemed exercise of
an Affiliated SAR shall not necessitate a reduction in the number of Shares
subject to the related Option.
6.4 Exercise of Freestanding SARs. Freestanding SARs shall be
exercisable on such terms and conditions as the Committee, in its sole
discretion, shall determine.
6.5 SAR Agreement. Each SAR shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, the conditions of
exercise, and such other terms and conditions as the Committee, in its sole
discretion, shall determine.
6.6 Expiration of SARs. An SAR granted under the Plan shall expire
upon the date determined by the Committee, in its sole discretion, and set forth
in the Award Agreement. Notwithstanding the foregoing, the rules of Section 5.4
(pertaining to Options) also shall apply to SARs.
6.7 Payment of SAR Amount. Upon exercise of an SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on
the date of exercise over the grant price; times
(b) The number of Shares with respect to which the SAR is
exercised.
At the discretion of the Committee, the payment upon SAR exercise may
be in cash, in Shares of equivalent value, or in some combination thereof.
6.8 Nontransferability of SARs. No SAR 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 under
Section 9. An SAR granted to a Participant shall be exercisable during the
Participant's lifetime only by such Participant.
SECTION 7
RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the terms and provisions
of the Plan, the Committee, at any time and from time to time, may grant Shares
of Restricted Stock to Employees and Consultants in such amounts as the
Committee, in its sole discretion, shall determine.
7.2 Restricted Stock Agreement. Each Award of Restricted Stock shall
be evidenced by an Award Agreement that shall specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Committee, in its sole discretion, shall determine. Unless the Committee
determines otherwise, shares of Restricted Stock shall be held by the Company as
escrow agent until the restrictions on such shares have lapsed.
7.3 Transferability. Except as provided in this Section 7, Shares of
Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated
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until the end of the applicable Period of Restriction. All rights with respect
to the Restricted Stock granted to a Participant under the Plan shall be
available during his or her lifetime only to such Participant.
7.4 Other Restrictions. The Committee, in its sole discretion, may
impose such other restrictions on any Shares of Restricted Stock as it may deem
advisable including, without limitation, restrictions based upon the achievement
of specific performance goals (Company-wide, divisional, and/or individual),
and/or restrictions under applicable Federal or state securities laws; and may
legend the certificates representing Restricted Stock to give appropriate notice
of such restrictions. For example, the Committee may determine that some or all
certificates representing Shares of Restricted Stock shall bear the following
legend:
"The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law,
is subject to certain restrictions on transfer as set forth in the
Central Garden & Pet Company 2003 Omnibus Equity Incentive Plan, and
in a Restricted Stock Agreement. A copy of the Plan and such
Restricted Stock Agreement may be obtained from the Secretary of
Central Garden & Pet Company."
7.5 Removal of Restrictions. Except as otherwise provided in this
Section 7, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall be released from escrow as soon as practicable after
the last day of the Period of Restriction. The Committee, in its discretion, may
accelerate the time at which any restrictions shall lapse, and/or remove any
restrictions. After the restrictions have lapsed, the Participant shall be
entitled to have any legend or legends under Section 7.4 removed from his or her
Share certificate, and the Shares shall be freely transferable by the
Participant.
7.6 Voting Rights. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless the Committee determines otherwise.
7.7 Dividends and Other Distributions. During the Period of
Restriction, Participants holding Shares of Restricted Stock shall be entitled
to receive all dividends and other distributions paid with respect to such
Shares, unless otherwise provided in the Award Agreement. If any such dividends
or distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.
7.8 Return of Restricted Stock to Company. Subject to the applicable
Award Agreement and Section 7.5, upon the earlier of (a) the Participant's
termination of employment, or (b) the date set forth in the Award Agreement, the
Restricted Stock for which restrictions have not lapsed shall revert to the
Company and, subject to Section 4.2, again shall become available for grant
under the Plan.
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SECTION 8
PERFORMANCE UNITS AND PERFORMANCE SHARES
8.1 Grant of Performance Units/Shares. Performance Units and
Performance Shares may be granted to Employees and Consultants at any time and
from time to time, as shall be determined by the Committee, in its sole
discretion. The Committee shall have complete discretion in determining the
number of Performance Units and Performance Shares granted to each Participant.
8.2 Value of Performance Units/Shares. Each Performance Unit shall
have an initial value that is established by the Committee at the time of grant.
Each Performance Share shall have an initial value equal to the Fair Market
Value of a Share on the date of grant. The Committee shall set performance goals
in its discretion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Units/Shares that will be paid
out to the Participants. The time period during which the performance goals must
be met shall be called the "Performance Period".
8.3 Earning of Performance Units/Shares. After the applicable
Performance Period has ended, the holder of Performance Units/Shares shall be
entitled to receive a payout of the number of Performance Units/Shares earned by
the Participant over the Performance Period, to be determined as a function of
the extent to which the corresponding performance goals have been achieved.
After the grant of a Performance Unit/Share, the Committee, in its sole
discretion, may adjust and/or waive the achievement of any performance goals for
such Performance Unit/Share.
8.4 Form and Timing of Payment of Performance Units/Shares. Payment
of earned Performance Units/Shares shall be made as soon as practicable after
the expiration of the applicable Performance Period. The Committee, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.
8.5 Cancellation of Performance Units/Shares. Subject to the
applicable Award Agreement, upon the earlier of (a) the Participant's
termination of employment, or (b) the date set forth in the Award Agreement, all
remaining Performance Units/Shares shall be forfeited by the Participant to the
Company, and subject to Section 4.2, the Shares subject thereto shall again be
available for grant under the Plan.
8.6 Nontransferability. Performance Units/Shares may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will, the laws of descent and distribution, or as permitted under
Section 9. A Participant's rights under the Plan shall be exercisable during the
Participant's lifetime only by the Participant or the Participant's legal
representative.
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SECTION 9
BENEFICIARY DESIGNATION
If permitted by the Committee, a Participant may name a beneficiary or
beneficiaries to whom any unpaid vested Award shall be paid in event of the
Participant's death. Each such designation shall revoke all prior designations
by the same Participant and shall be effective only if given in a form and
manner acceptable to the Committee. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate and, subject to the terms of the Plan, any unexercised
vested Award may be exercised by the administrator or executor of the
Participant's estate.
SECTION 10
DEFERRALS
The Committee, in its sole discretion, may permit a Participant to
defer receipt of the payment of cash or the delivery of Shares that would
otherwise be due to such Participant under an Award. Any such deferral elections
shall be subject to such rules and procedures as shall be determined by the
Committee in its sole discretion.
SECTION 11
RIGHTS OF EMPLOYEES AND CONSULTANTS
11.1 No Effect on Employment or Service. Nothing in the Plan shall
interfere with or limit in any way the right of the Company to terminate any
Participant's employment or service at any time, with or without cause.
11.2 Participation. No Employee or Consultant shall have the right to
be selected to receive an Award under this Plan, or, having been so selected, to
be selected to receive a future Award.
SECTION 12
AMENDMENT, SUSPENSION, OR TERMINATION
12.1 Amendment, Suspension, or Termination. The Board, in its sole
discretion, may alter, amend or terminate the Plan, or any part thereof, at any
time and for any reason. However, as required by applicable law, no alteration
or amendment shall be effective without further stockholder approval. Neither
the amendment, suspension, nor termination of the Plan shall, without the
consent of the Participant, alter or impair any rights or obligations under any
Award theretofore granted. No Award may be granted during any period of
suspension nor after termination of the Plan.
SECTION 13
TAX WITHHOLDING
13.1 Withholding Requirements. Prior to the delivery of any Shares or
cash pursuant to an Award, the Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes required to be withheld
with respect to such Award.
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13.2 Shares Withholding. The Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy the minimum statutory tax withholding obligation, in
whole or in part, by electing to have the Company withhold Shares having a value
equal to the amount required to be withheld or by delivering to the Company
already-owned shares to satisfy the withholding requirement. The value of the
Shares to be withheld or delivered will be based on their Fair Market Value on
the date that the taxes are required to be withheld.
SECTION 14
INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or 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 or any Award Agreement 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 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 Articles 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 15
SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
SECTION 16
LEGAL CONSTRUCTION
16.1 Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
16.2 Severability. In the event any provision of the Plan shall be
held illegal or invalid for any reason, such 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.
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16.3 Requirements of Law. The granting of Awards 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.
16.4 Securities Law Compliance. With respect to Section 16 Persons,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3. To the extent any provision of the Plan, Award
Agreement 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.
16.5 Governing Law. The Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the State of
California.
16.6 Captions. Captions are provided herein for convenience only, and
shall not serve as a basis for interpretation or construction of the Plan.
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EXECUTION
IN WITNESS WHEREOF, the Company, by its duly authorized officer, has
executed the Plan on the date indicated below.
CENTRAL GARDEN & PET COMPANY
Dated: _____________________ By ________________________________
Title
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