CENTRAL GARDEN & PET COMPANY SECOND AMENDMENT TO CREDIT AGREEMENT

Exhibit 10.2.2

CENTRAL GARDEN & PET COMPANY

SECOND AMENDMENT

TO CREDIT AGREEMENT

This SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of February 12, 2004 between CENTRAL GARDEN & PET COMPANY, a Delaware corporation (“Borrower”) and CANADIAN IMPERIAL BANK OF COMMERCE, as administrative agent for Lenders (“Administrative Agent”), and is made with reference to that certain Credit Agreement dated as of May 14, 2003, as amended by the First Amendment to Credit Agreement dated as of October 27, 2003 (the “Credit Agreement”), by and among Borrower, the financial institutions listed therein as Lenders, the Co-Syndication Agents named therein, and the Administrative Agent. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement.

RECITALS

WHEREAS, Borrower, Agents and Lenders desire to amend the Credit Agreement (i) to permit Borrower to acquire (a) substantially all of the assets of Kent Marine, Inc. and (b) substantially all of the assets of New England Pottery Co., Inc., (ii) to amend the definition of “Cash Equivalents”, (iii) to change the dates for delivery of Margin Determination Certificates and Financial Plans, (iv) to provide for Letters of Credit supporting trade payables, and (v) to make certain other amendments as provided herein;

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

Section 1. AMENDMENTS TO THE CREDIT AGREEMENT

1.1 Amendments to Section 1: Definitions

A. New Definitions. Subsection 1.1 of the Credit Agreement is hereby amended by adding the following definitions, inserted in proper alphabetical order:

“ ‘Kent Marine Acquisition’ means the acquisition by Borrower of substantially all of the assets of Kent Marine, Inc. for an aggregate purchase price not to exceed $9,600,000, on terms and conditions acceptable to Administrative Agent.”

“ ‘New England Pottery Acquisition’ means the acquisition by Borrower of substantially all of the assets of New England Pottery Co., Inc., for an aggregate cash purchase price not to exceed $69,000,000, plus up to $3,500,000 in investments made in connection with such acquisition, on terms and conditions acceptable to Administrative Agent.”

B. Cash Equivalents. Subsection 1.1 of the Credit Agreement is hereby further amended by amending the definition of “Cash Equivalents” appearing therein as follows: (i) by deleting the phrase “the highest rating obtainable from either S&P or Xxxxx’x” appearing in clauses (ii), (v) and (vi) of such definition and substituting the phrase “a rating of at least BBB-/A-2 from S&P or at least Baa3/P-2 from Xxxxx’x” in each case therefor, and (ii) by deleting the phrase “a rating of at least A-1 from S&P or at least P-1 from Xxxxx’x” appearing in clause (iii) of such definition and substituting the phrase “a rating of at least A-2 from S&P or at least P-2 from Xxxxx’x” therefor.

C. Letters of Credit. Subsection 1.1 of the Credit Agreement is hereby further amended by amending the definition of “Letter of Credit” appearing therein by deleting the proviso at the end thereof and substituting the following therefor: “provided that Letters of Credit may not be issued for the purpose of supporting any Indebtedness constituting ‘antecedent debt’ (as that term is used in Section 547 of the Bankruptcy Code)”.

1.2 Amendments to Section 2: Amounts and Terms of Commitments and Loans

Subsection 2.2A of the Credit Agreement is hereby amended by deleting the third paragraph thereof in its entirety and substituting the following therefor:

“Upon delivery of a Margin Determination Certificate by Borrower to Administrative Agent (a) with respect to each Fiscal Quarter other than each fourth Fiscal Quarter, within forty-five (45) days after the last day of such Fiscal Quarter, and (b) with respect to each fourth Fiscal Quarter, within sixty (60) days after the last day of such fourth Fiscal Quarter (each such date as described in clauses (a) and (b) hereof a “Certificate Due Date”), the Applicable Base Rate Margin and Applicable LIBOR Margin shall automatically be adjusted in accordance with such Margin Determination Certificate, such adjustment to become effective (1) with respect to each Fiscal Quarter other than each fourth Fiscal Quarter, on the 60^th day after the end of such Fiscal Quarter and (2) with respect to each fourth Fiscal Quarter, on the 75^th day after the end of such fourth Fiscal Quarter; provided that (A) at any time a Margin Determination Certificate is not delivered by the applicable Certificate Due Date, from such Certificate Due Date until delivery of such Margin Determination Certificate, the Applicable Base Rate Margin shall be 1.25% for Revolving Loans, and 0.75% for Tranche B Term Loans, and the Applicable LIBOR Margin shall be 2.75% for Revolving Loans, and 2.25% for Tranche B Term Loans, and (B) if a Margin Determination Certificate erroneously indicates (as determined by Administrative Agent after consultation with Borrower) an applicable margin more favorable to Borrower than should be afforded by the actual calculation of the Consolidated Total Leverage Ratio, Borrower shall promptly pay additional interest and letter of credit fees required to correct for such error.”

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1.3 Amendments to Section 6: Borrower’s Affirmative Covenants

A. Accountants’ Certification. Subsection 6.1(v) of the Credit Agreement is hereby amended by deleting the text thereof in it is entirety and substituting the following therefor:

“(v) Accountants’ Certification: together with each delivery of consolidated financial statements of Borrower and its Subsidiaries pursuant to subdivision (ii) above, a written statement by the independent certified public accountants giving the report thereon (a) stating whether, in connection with their audit examination, any condition or event that constitutes noncompliance with Section 8 of this Agreement as they relate to accounting matters has come to their attention and, if such a condition or event has come to their attention, specifying the nature and period of existence thereof; provided that such accountants shall not be liable by reason of any failure to obtain knowledge of any such noncompliance that would not be disclosed in the course of their audit examination, and (b) stating that based on their audit examination nothing has come to their attention that causes them to believe either or both that the information contained in the certificates delivered therewith pursuant to subdivision (iii) above is not correct or that the matters set forth in the Compliance Certificates delivered therewith pursuant to clause (b) of subdivision (iii) above for the applicable Fiscal Year are not stated in accordance with the terms of this Agreement;”

B. Financial Plans. Subsection 6.1(xi) of the Credit Agreement is hereby amended by deleting the phrase “no later than 30 days after the beginning of each Fiscal Year” appearing therein and substituting the phrase “no later than 60 days after the beginning of each Fiscal Year” therefor.

1.4 Amendments to Section 7: Borrower’s Negative Covenants

Subsection 7.3 of the Credit Agreement is hereby amended by: (i) deleting the word “and” at the end of clause (vi) thereof, (ii) deleting the period at the end of clause (vii) thereof and substituting “; and” therefor, and (iii) adding a new clause (viii) to the end thereof as follows:

“(viii) in addition to acquisitions permitted pursuant to clause (v) and investments permitted pursuant to clause (vi) above, Borrower may consummate the Kent Acquisition and the New England Pottery Acquisition as described in the definitions thereof; provided that no Potential Event of Default or Event of Default shall have occurred or be continuing as a result of any such acquisition or after giving effect thereto.”

Section 2. CONDITIONS TO EFFECTIVENESS

Section 1 of this Amendment shall become effective only upon the satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the “Second Amendment Effective Date”):

A. On or before the Second Amendment Effective Date, Borrower shall deliver to Lenders (or to Administrative Agent for Lenders with sufficient originally executed copies, where appropriate, for each Lender and its counsel) copies of this Amendment, executed by Borrower and each Credit Support Party.

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B. On or before the Second Amendment Effective Date, Administrative Agent shall have executed copies of this Amendment on behalf of itself and consenting Lenders.

C. On or before the Second Amendment Effective Date, all corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found acceptable by Administrative Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in form and substance to Administrative Agent and such counsel, and Administrative Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as Administrative Agent may reasonably request.

Section 3. BORROWER’S REPRESENTATIONS AND WARRANTIES

In order to induce Lenders to enter into this Amendment and to amend the Credit Agreement in the manner provided herein, Borrower represents and warrants to each Lender that the following statements are true, correct and complete:

A. Corporate Power and Authority. Borrower and each Credit Support Party has all requisite corporate power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment (the “Amended Agreement”).

B. Authorization of Agreements. The execution and delivery of this Amendment and the performance of the Amended Agreement have been duly authorized by all necessary corporate action on the part of Borrower and each Credit Support Party.

C. No Conflict. The execution and delivery by Borrower and each Credit Support Party of this Amendment and the performance by Borrower of the Amended Agreement do not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to Borrower or any of its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Borrower or any of its Subsidiaries or any order, judgment or decree of any court or other agency of government binding on Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Borrower or any of its Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of Borrower or any of its Subsidiaries, except pursuant to the Loan Documents, or (iv) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of Borrower or any of its Subsidiaries.

D. Governmental Consents. The execution and delivery by Borrower and each Credit Support Party of this Amendment and the performance by Borrower of the Amended Agreement do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body.

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E. Binding Obligation. This Amendment has been duly executed and delivered by Borrower and each Credit Support Party and this Amendment and the Amended Agreement are the legally valid and binding obligations of Borrower and each Credit Support Party, enforceable against Borrower and each Credit Support Party in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

F. Incorporation of Representations and Warranties From Credit Agreement. The representations and warranties contained in Section 4 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the Second Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date.

G. Absence of Default. No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute an Event of Default or a Potential Event of Default.

Section 4. ACKNOWLEDGEMENT AND CONSENT

Borrower is a party to certain Collateral Documents pursuant to which Borrower has created Liens in favor of Administrative Agent on certain Collateral to secure the Obligations. Each Subsidiary is a party to a Subsidiary Guaranty and certain Collateral Documents pursuant to which such Subsidiary has (i) guarantied the Obligations and (ii) created Liens in favor of Administrative Agent on certain Collateral to secure the obligations of such Subsidiary under the Subsidiary Guaranty. Borrower and each Subsidiary are collectively referred to herein as the “Credit Support Parties”, and the Subsidiary Guaranties and Collateral Documents referred to above are collectively referred to herein as the “Credit Support Documents”.

Each Credit Support Party hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Amendment and consents to the amendment of the Credit Agreement effected pursuant to this Amendment. Each Credit Support Party hereby confirms that each Credit Support Document to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guaranty or secure, as the case may be, to the fullest extent possible the payment and performance of all “Obligations,” “Guarantied Obligations” and “Secured Obligations,” or other similar terms, as the case may be (in each case as such terms are defined in the applicable Credit Support Document), including, without limitation, the payment and performance of all such “Obligations,” “Guarantied Obligations” or “Secured Obligations,” or similar terms, as the case may be, in respect of the Obligations of Borrower now or hereafter existing under or in respect of the Amended Agreement and the Notes.

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Each Credit Support Party acknowledges and agrees that any of the Credit Support Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment. Each Credit Support Party represents and warrants that all representations and warranties contained in the Amended Agreement and the Credit Support Documents to which it is a party or otherwise bound are true, correct and complete in all material respects on and as of the Second Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date.

Each Credit Support Party (other than Borrower) acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Credit Support Party is not required by the terms of the Credit Agreement or any other Loan Document to consent to the amendments to the Credit Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other Loan Document shall be deemed to require the consent of such Credit Support Party to any future amendments to the Credit Agreement.

Section 5. MISCELLANEOUS

A. Reference to and Effect on the Credit Agreement and the Other Loan Documents.

(i) On and after the Second Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Agreement.

(ii) Except as specifically amended by this Amendment, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.

(iii) The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of Agent or any Lender under, the Credit Agreement or any of the other Loan Documents.

B. Fees and Expenses. Borrower acknowledges that all costs, fees and expenses as described in subsection 10.2 of the Credit Agreement incurred by the Administrative Agent and its counsel with respect to this Amendment and the documents and transactions contemplated hereby shall be for the account of Borrower.

C. Headings. Section and subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect.

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D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

E. Counterparts; Effectiveness. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Amendment (other than the provisions of Section 1 hereof, the effectiveness of which is governed by Section 2 hereof) shall become effective upon the execution of a counterpart hereof by Borrower, each Credit Support Party and Administrative Agent and the execution of a Lender Consent by consenting Lenders and receipt by Borrower and Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

CENTRAL GARDEN & PET COMPANY
By:		/s/  Xxxxxx X. Xxxxx
Name:
Title:
ALL-GLASS AQUARIUM CO., INC. FOUR PAWS PRODUCTS LTD. GRANT LABORATORIES, INC. GRO TEC, INC.
KAYTEE PRODUCTS, INC.
XXXXXXXX REDWOOD & NURSERY SUPPLY, INC.
NORCAL POTTERY PRODUCTS, INC.
OCEANIC SYSTEMS, INC.
XXXXXXXXXX SEED INC. OF NEBRASKA
XXXXXXXXXX SEED, INC.
PHAETON CORPORATION
SEEDS WEST, INC.
T.F.H. PUBLICATIONS, INC.
WELLMARK INTERNATIONAL
(for purposes of Section 4 only)
as a Credit Support Party
By:		/s/  Xxxxxx X. Xxxxx
Name:
Title:

S-1

CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By:		/s/ Xxxx X. Xxxxxx
		Xxxx X. Xxxxxx
		Managing Director
		CIBC World Markets Corp., AS AGENT

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EXHIBIT A

to Second Amendment

to Credit Agreement

CONSENT OF LENDER

Reference is hereby made to the Second Amendment to Credit Agreement (the “Amendment”) dated as of February     , 2004 by and between Central Garden & Pet Company, a Delaware corporation (“Borrower”), and Canadian Imperial Bank of Commerce, as administrative agent for the Lenders (“Administrative Agent”), which is made with reference to that certain Credit Agreement dated as of May 14, 2003, as amended by the First Amendment to Credit Agreement dated as of October     , 2003 (the “Credit Agreement”), by and among Borrower, the financial institutions listed therein as Lenders, the Co-Syndication Agents listed therein, and the Administrative Agent.

The undersigned Lender hereby consents to the execution and delivery of the Amendment by Administrative Agent on its behalf, substantially in the form of the draft presented to the undersigned Lender on February     , 2004.

Dated: February     , 2004

[Name of Institution]

By:

Name:

Title:

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