UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549SCHEDULE 14A
(RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATIONProxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by
registrant /X/the Registrant xFiled by a
partyParty other than theregistrant / /Registrant oCheck the appropriate box:
/ /x
Preliminary
proxy statement /X/Proxy Statemento
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o
Definitive
proxy statement / /Proxy Statemento
Definitive
additional materials / /Additional Materialso
Soliciting
material pursuantMaterial Pursuant toRule 14a-11(c) or Rule 14a-12 CANTEL MEDICAL CORP. ----------------------------------------------------------------------- (Name§240.14a-12
Cantel Medical Corp.
(Name of Registrant as Specified
in itsIn Its Charter)CANTEL MEDICAL CORP. ----------------------------------------------------------------------- (NameCantel Medical Corp.
(Name of Person(s) Filing Proxy
Statement)Payment of filing fee (Check the appropriate box):
/X/Statement, if other than the Registrant)Payment of Filing Fee (Check the appropriate box):
x
No fee required.
/ /o
Fee computed on table below per Exchange Act Rules 14a-6(i)
(4)(1) and 0-11.(1)
Title of each class of securities to which transaction applies:
----------------------------------------------------------(2)
Aggregate number of securities to which transaction applies:
----------------------------------------------------------(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule
0- 11: ----------------------------------------------------------0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):(4)
Proposed maximum aggregate value of transaction:
---------------------------------------------------------- / /(5)
Total fee paid:
o
Fee paid previously with preliminary materials.
o
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount
previously paid: ----------------------------------------------------------Previously Paid:(2)
Form,
scheduleSchedule orregistration statementRegistration Statement No.:----------------------------------------------------------(3)
Filing Party:
----------------------------------------------------------(4)
Date Filed:
----------------------------------------------------------Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.
CANTEL MEDICAL CORP.Cantel Medical Corp.
150CLOVE ROAD LITTLE FALLS,Clove Road
Little Falls, NJ 07424------------------------NOTICE OF
20022005 ANNUAL MEETING OF STOCKHOLDERSTO BE HELD ON DECEMBER 19, 2002 ------------------------ NOTICE IS HEREBY GIVEN that theTo Be Held On December 20, 2005
The Annual Meeting of Stockholders of
CANTEL MEDICAL CORP.Cantel Medical Corp. will be held on December 20, 2005 at 9:30 a.m., Eastern Standard Time, at The Harmonie Club, 4 East 60th Street, New York, New York. We are holding the Annual Meeting to:1. Elect ten (10) directors to serve a one-year term. (Proposal 1)
2. Amend our Certificate of Incorporation to increase the number of authorized shares of common stock from 20,000,000 to 30,000,000. (Proposal 2)
3. Ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending July 31, 2006. (Proposal 3)
4. Transact such other business as may properly be brought before the meeting.
The record date for the Annual Meeting is November 15, 2005. Only our stockholders of record at the close of business on that date may vote at the meeting, or any adjournment of the meeting. A copy of our Annual Report to Stockholders for the fiscal year ended July 31, 2005 is being mailed with this Proxy Statement.
You are invited to attend the meeting. Whether or not you plan to attend the meeting, please mark and sign the enclosed proxy exactly as your name appears on your stock certificates, and mail it promptly in the enclosed return envelope in order that your vote can be recorded.
By order of the Board of Directors
/s/ DARWIN C. DORNBUSH
Darwin C. Dornbush
Secretary
Little Falls, New Jersey
November 21, 2005
Cantel Medical Corp.
150 Clove Road
Little Falls, NJ 07424We are providing these proxy materials in connection with the solicitation by our Board of Directors of proxies to be voted at our 2005 Annual Meeting of Stockholders to be held on Tuesday, December 20, 2005 beginning at 9:30 a.m., Eastern Standard Time, and at any adjournment or postponement. The Annual Meeting will be held at The Harmonie Club, 4 East 60th Street, New York, New
York on Thursday, December 19, 2002 at 10:00 a.m., eastern time, forYork.We will bear the
following purposes: 1. To elect four directors to serve a termentire cost ofthree years. (Proposal 1) 2. To amend the Company's 1997 Employee Stock Option Plan to increase the numbersolicitation ofshares reserved for issuanceproxies including preparation, assembly, printing andavailable for grant thereunder from 1,500,000 to 2,000,000. (Proposal 2) 3. To act on any other matters that may properly be brought before the Meeting or any adjournment or postponement of the Meeting. Only stockholders of record at the close of business on November 4, 2002 are entitled to notice of, and to vote at, the Meeting or any adjournment or postponement thereof. A copy of the Company's Annual Report to Stockholders for the fiscal year ended July 31, 2002 is being mailed to stockholders together with themailing of this proxy statement andthe enclosed proxy. You are cordially invitedany additional information furnished toattend the Meeting. Whether or not you planstockholders. Copies of solicitation materials will be furnished toattend, please act promptly to vote yourbanks, brokerage houses, fiduciaries and custodians holding in their names shareson the proposals described above. You may vote your shares by completing, signing, and dating the enclosed proxy card and returning it as promptly as possible in the enclosed postage-paid envelope. You may revoke your proxy in the manner described in this proxy statement at any time before it has been voted at the Meeting. If you attend the Meeting, you may revoke your prior proxy and vote your shares in person if you wish. By order of the Board of Directors Darwin C. Dornbush SECRETARY Little Falls, New Jersey November 25, 2002CANTEL MEDICAL CORP. 150 CLOVE ROAD LITTLE FALLS, NJ 07424 ------------------------ PROXY STATEMENT --------------------- The enclosed proxy is solicited by the Board of Directorsof CantelMedical Corp. for use at the Annual Meeting of Stockholderscommon stock beneficially owned by others tobe held on Thursday, December 19, 2002 at 10:00 a.m., eastern time, at The Harmonie Club, 4 East 60th Street, New York, New York, and at any and all adjournments or postponements thereof.forward to such beneficial owners.This Proxy Statement and form of proxy are being mailed to stockholders on or about November
25, 2002. As21, 2005. You should review this information together with our 2005 Annual Report to Stockholders, which accompanies this Proxy Statement.In order to ensure the presence of a quorum at the Annual Meeting, all stockholders are requested to sign and return promptly the enclosed proxy in the postage paid envelope provided for that purpose. The signing of the proxy will not prevent your attending the meeting and voting in person if you wish to do so.
Voting Rights and Outstanding Shares
Only holders of record of common stock at the close of business on November
4, 2002, the record date fixed for the determination of stockholders15, 2005 will be entitled to notice of and to vote at theMeeting, there were 9,263,503 outstanding sharesAnnual Meeting. Each holder of record of common stockwhich is the only outstanding class of voting securities of the Company. Each outstandingon such date will be entitled to one vote for each share of common stock held on all matters to be voted upon at the Annual Meeting. At the close of business on November 15, 2005, Cantel had outstanding and entitled to vote XX,XXX,XXX shares of common stock.A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares are represented by votes at the meeting or by proxy. Each holder of record of common stock on such date will be entitled to one vote for each share held on
each matterall matters to be votedupon.upon at the Annual Meeting. The inspector of election appointed for the Annual Meeting will tabulate all votes, and will separately tabulate affirmative and negative votes, abstentions and broker non-votes.Properly executed proxies will be voted in accordance with the instructions indicated in such proxies. If no instructions are indicated, such proxies will be voted for the election of each of the
four managementten Board nominees for election as directors,andin favor of the other proposals describedherein. The Board of Directors does not intend to presentherein, and at theMeeting any matters other than those set forth in this Proxy Statement, nor does the Board know of anyproxy holder’s discretion on such other matters,whichif any, that may come before the Annual Meeting.However, if anyIn the event that a broker, nominee or other
matters are properly presented, it is the intentionrecord holder ofthe persons named in the enclosed proxy to vote it in accordance with their judgment. IT IS DESIRABLE THAT AS LARGE A PERCENTAGE AS POSSIBLE OF THE STOCKHOLDERS' INTERESTS BE REPRESENTED AT THE MEETING. THEREFORE, EVEN IF YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY TO ENSURE THAT YOUR STOCK WILL BE REPRESENTED. ANY PROXY GIVEN PURSUANT TO THIS SOLICITATION MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE AT THE MEETING, BY DELIVERY TO THE SECRETARY OF THE COMPANY OF A WRITTEN NOTICE OF REVOCATION, BY SUBMISSION OF A LATER DATED AND PROPERLY EXECUTED PROXY, OR BY VOTING IN PERSON AT THE MEETING. ATTENDANCE AT THE MEETING WILL NOT, IN AND OF ITSELF, CONSTITUTE A REVOCATION OF A PROXY. Only stockholders of record at the close of business on November 4, 2002 will be entitled to vote at the Meeting or any adjournment or adjournments thereof. The Company's by-laws provide that stockholders holding a majority of the outstandingsharesof common stock entitled to vote shall constitute a quorum at meetings of the stockholders. Shares represented in person or by proxy as to any matter will be counted toward the fulfillment of a quorum. The vote of a plurality of the votes cast in person or by proxy is necessary for the election of directors. The affirmative vote of the holders of a majority of the shares of common stock present, in person or represented by proxy, and entitled to vote at the meeting is necessary for the approval of Proposal 2. Votes at the Annual Meeting will be tabulated by an independent inspector of election appointed by the Company or the Company's transfer agent. A broker "non-vote" occurs when a nominee holding shares for a beneficial owner does not voteindicates on aparticular proposal because the nomineeproxy that it does not have discretionaryvoting power with respectauthority tothat item and has not received instructions from the beneficial owner. Broker "non-votes" are not included in the tabulation of the voting results on the election of directors or issues requiring approval of the majority of the votes present and, therefore, do not have the effect of votes in opposition invote suchtabulations. An abstention from votingshares on a particular matteror(a “broker non-vote”), those shares will be counted towards aProxy instructing that a votequorum, but will not bewithheld has the same effect as a vote againstcounted for any purpose in determining whether a mattersince it is one less vote for approval.has been approved. As the affirmative vote of a plurality of votes cast is required for the election of directors, abstentions and"broker non-votes"“broker non-votes” will have no effect on the outcome of such election. As the affirmative vote of a majority of all the issued and outstanding shares of common stock is required for the adoption of Proposal 2, an abstention and a “broker non-vote” will have the same effect as a negative vote. As the affirmative vote of a majority of shares of common stock present in person or represented by proxyis
requirednecessary for the approval of Proposal2,3, an abstention will have the same effect as a negative vote, but"broker non-votes"“broker non-votes” will have no effect on the outcome of the vote.PROPOSAL 1 ELECTION OF DIRECTORS GENERAL Four directorsRevocability of
the Company areProxiesAny proxy given pursuant to this solicitation may be
electedrevoked at any time prior to its use at the Annual Meeting, by delivery toservethe Secretary of Cantel of athree-year term expiringwritten notice of revocation, by submission of a later dated and properly executed proxy, or by voting in person at the Annual Meeting. Attendance at the Annual Meeting will not, in and of itself, constitute a revocation of a proxy.2
The Board of Directors is currently divided into three classes with three-year staggered terms. One class consists of four directors and two classes consist of three directors. However, on November 8, 2005, the Board amended our By-laws to eliminate the classification of the Board. As a result of the amendment, our entire Board of Directors will now be elected each year at the Annual Meeting of Stockholders for a one-year term. The term of all ten current directors will continue until this Annual Meeting and
until their respective successorseach director elected at this Annual Meeting will havebeen duly elected and qualified. Management has nominated James P. Reilly, Robert L. Barbanell, Joseph M. Cohen and Fred L. Shapiro for election as directors. Unless authoritya one-year term ending at the 2006 Annual Meeting of Stockholders.The persons named in the enclosed proxy intend to vote the proxy for the election of
management'seach of the ten nominees, unless you indicate on the proxy card that your vote should be withheld from any or all of the nominees. The Board has proposed the following nominees for election as directors, each of whom iswithheld,an incumbent director whose nomination was recommended by our Nominating and Governance Committee and approved by theenclosed proxyBoard: Robert L. Barbanell, Alan R. Batkin, Joseph M. Cohen, Charles M. Diker, Darwin C. Dornbush, Spencer Foreman, M.D., Alan J. Hirschfield, Elizabeth McCaughey, James P. Reilly and Bruce Slovin.Directors will be elected by a plurality of the votes properly cast (in person or by proxy) at the meeting. Since there are ten nominees, this means that the persons who receive the ten highest number of votes will be elected, even if he or she receives less than a majority of the votes cast. Each nominee elected as a director will continue in office until his or her successor has been elected and qualified, or until his or her earlier death, resignation or retirement. Each person nominated has agreed to serve if elected. If for some reason any nominee is unable to serve, proxies will be voted
for the election of said nominees. Eachin favor of thenominees currently serves as a directorremainder ofthe Company,those nominated andhas consented to be named a nominee in the Proxy Statement and to continue serving as a director if elected. While management has no reason to believe that any of the nominees will not be available as a candidate, should such situation arise, proxies given to management willmay be voted forthe election of another person as a director. NOMINEES FOR DIRECTORS
NOMINEES FOR THREE-YEAR TERMS EXPIRING AT 2005 DIRECTOR ANNUAL MEETING OF STOCKHOLDERS AGE SINCE - ---------------------------------------------- -------- --------James P. Reilly ............................................ 62 1989 President and Chief Executive Officer of the Company Robert L. Barbanell ........................................ 72 1994 President of Robert L. Barbanell Associates, Inc. Joseph M. Cohen ............................................ 65 2000 Chairman of JM Cohen & Co., LLC Fred L. Shapiro ............................................ 68 2001 M.D. Retired Physician2DIRECTORS WHOSE TERMS OF OFFICE CONTINUE
TERMS EXPIRING AT 2003 DIRECTOR ANNUAL MEETING OF STOCKHOLDERS AGE SINCE - ------------------------------ -------- --------Darwin C. Dornbush Esq. .................................... 72 1963 Partner in the law firm of Dornbush Mensch Mandelstam & Schaeffer, LLP Morris W. Offit ............................................ 65 1986 Chief Executive Officer of Offit Hall Capital Management LLC John W. Rowe M.D. .......................................... 58 1998 Chairman and CEO of Aetna Inc.
TERMS EXPIRING AT 2004 DIRECTOR ANNUAL MEETING OF STOCKHOLDERS AGE SINCE - ------------------------------ -------- --------Charles M. Diker ........................................... 67 1985 Chairman of the Board of the Company and Private Investor Alan J. Hirschfield ........................................ 67 1986 Vice Chairman of the Board of the Company, Private Investor and Consultant Bruce Slovin ............................................... 66 1986 President of 1 Eleven Associates, LLCBUSINESS EXPERIENCE OF DIRECTORS Mr. Diker has served as Chairman ofsubstitute nominees, unless the Board chooses to reduce the number of directors serving on theCompany since April 1986. He currently acts as an investment adviser. Mr. DikerBoard.Set forth below is
also a director of Chyron Corporation (OTC), a supplier of graphics forinformation with respect to thetelevision industry. Mr. Hirschfield has served as Vice Chairman of the Board of the Company since January 1988. He is currently a private investor and consultant. From July 1992 to February 2000, Mr. Hirschfield served as Co-Chairman and Co-Chief Executive Officer of Data Broadcasting Corp. (NASDAQ), a communication services and technology company. Mr. Hirschfield is also a director of Interactive Data Corp. (formerly Data Broadcasting Corp.) as well as J NET Enterprises, Inc. (NYSE), an internet venture investor, Carmike Cinemas (OTC), a national theater chain, and WilTel Communications Group, Inc. (OTC), an operator of fiber optic networks spanning the continental United States. Mr.nominees.
Name of Director
Age
Principal Occupation
Director
SinceRobert L. Barbanell
75
President of Robert L. Barbanell Associates, Inc.
1994
Alan R. Batkin
61
Vice Chairman of Kissinger Associates, Inc.
2004
Joseph M. Cohen
68
Chairman of JM Cohen & Co., LLC
2000
Charles M. Diker
70
Chairman of the Board of Cantel and managing partner of Diker Management LLC
1985
Darwin C. Dornbush, Esq.
75
Partner in the law firm of Dornbush Schaeffer Strongin & Weinstein, LLP
1963
Spencer Foreman, M.D.
70
President of Montefiore Medical Center
2003
Alan J. Hirschfield
70
Vice Chairman of the Board of Cantel, and private investor and consultant
1986
Elizabeth McCaughey
57
Chairman of Committee to Reduce Infection Deaths
2005
James P. Reilly
65
President and Chief Executive Officer of Cantel
1989
Bruce Slovin
69
President of 1 Eleven Associates, LLC
1986
Robert L. Barbanell has served as President of Robert L. Barbanell Associates, Inc., a financial consulting company, since July 1994. Mr. Barbanell is also
Chairman of the Board anda director of Pride International, Inc. (NYSE), an oil drilling contractor.Alan R. Batkinhas served as Vice Chairman of Kissinger Associates, Inc., a geopolitical consulting firm that advises multi-national companies, since May 1990. Mr. Batkin is also a director of Hasbro, Inc. (NYSE), a toy and game design, manufacturing and distribution company, Overseas Shipholding Group, Inc. (NYSE), a company that operates oceangoing bulk cargo vessels, and Diamond Offshore Drilling, Inc. (NYSE), an oil and gas offshore drilling company. In addition, he is Chairman of the Board of the Merrill Lynch IQ Investment Advisors Fund Complex and is on the Board of Advisors of Vantis Capital Management, LLC.
Joseph M. Cohen has served as Chairman of JM Cohen & Co.,
L.L.C.,LLC, a family investment group, since February 2000.From July 1998 until February 2000, Mr. Cohen was Chairman of SG Cowen Securities Corp., a securities firm. From June 1967 until July 1998, Mr. Cohen was Managing Partner and Chairman of Cowen & Company, a research and investment banking firm. Mr. DornbushCharles M. Diker has served as
Secretaryour Chairman of theCompanyBoard since April 1986 and is currently managing partner of Diker Management LLC, a registered investment adviser. Mr. Diker is also a director of Loews Corporation (NYSE), a holding company whose subsidiaries include a property, casualty and life insurance company, a tobacco company, a hotel chain, an offshore oil and gas drilling company, and a watch company.Darwin C. Dornbush has served as our Secretary since July 1990. He has been a partner in the law firm of Dornbush
Mensch MandelstamSchaeffer Strongin &Schaeffer,Weinstein, LLP, which has been our general outside counselto the Companyfor more than the past five years. Mr. Dornbush is also a director of Benihana, Inc. (NASDAQ), a company which operates Japaneserestaurants. 3Mr. Offitrestaurants and Levitt Corporation (NYSE), a commercial and residential property developer.Dr. Spencer Foreman has served as
Chief Executive OfficerPresident and CEO ofOffit Hall Capital Management LLC since April 2002. From July 1990 to December 2001 Mr. Offit was Chief Executive Officer of Offitbank (a Wachovia company), a limited purpose trust company chartered by theMontefiore Medical Center in New YorkState Banking Department. Mr. OffitCity, one of the largest academic medical centers in the United States, since 1986. He is aTrustee of Johns Hopkins University where he served asmember and past Chairman of the Board ofTrustees from 1990 through 1996. Mr. ReillyGovernors of the Greater New York Hospital Association and the Board of Directors of the League of Voluntary Hospitals.Alan J. Hirschfield has served as our Vice Chairman of the Board since January 1988. Since February 2000 he has been a private investor and consultant. Mr. Hirschfield is also a director of Interactive Data Corp. (formerly Data Broadcasting Corp.) (NYSE), Carmike Cinemas, Inc. (NASDAQ), a national theater chain, Peregrine Systems, Inc. (OTC), a provider of asset and service management software solutions, and Leucadia National Corp. (NYSE), a holding company whose subsidiaries include telecommunications, healthcare services, banking, manufacturing, real estate activities, winery operations and property and casualty reinsurance.
Elizabeth McCaughey has served as the Chairman of the Committee to Reduce Infection Deaths, which she founded, since 2004. Since 1999 she has served as a senior fellow or adjunct senior fellow at Hudson Institute, a policy research organization, where she focuses on the impact of medical innovation and scientific discovery on longevity, health care costs and the economy.
James P. Reilly has served as our President and Chief Executive Officer
of the Companysince June 1989. Mr. Reilly is a certified public accountant.Dr. Rowe has served as Chairman and CEO of Aetna Inc. since September 2000. From July 1998 until September 2000, Dr. Rowe was President and Chief Executive Officer of Mount Sinai NYU Health. From July 1988 until July 1998, Dr. Rowe was President of the Mount Sinai Hospital. From July 1988 until July 1999, Dr. Rowe was President of the Mount Sinai School of Medicine. He also serves as a Professor of Medicine and of Geriatrics at the Mount Sinai School of Medicine. Dr. Shapiro served as a consultant to Hennepin Faculty Associates, a non-profit organization involved in medical education, research and patient care, from July 1995 to June 1999, President of Hennepin Faculty Associates from January 1984 to June 1995, and Medical Director of the Regional Kidney Disease Program from July 1966 to January 1984. He has also been a Professor of Medicine at the Hennepin County Medical Center and the University of Minnesota from July 1976 to the present. Prior to the merger with Cantel, Dr. Shapiro served as a director of Minntech since 1982. Mr.Bruce Slovin has served as President of 1 Eleven Associates, LLC, a private investment firm, since January 2000.
From 1985 until December 2000, Mr. Slovin was the President and a director of MacAndrews & Forbes Holdings Inc. and Revlon Group, Inc., privately held industrial holding companies.Mr. Slovin is a director of M&F Worldwide Corp. (NYSE), a manufacturer of licorice extract and flavoringsDaxor Corporation (AMEX)and Sentigen Holding Corp. (NASDAQ), a biomedical research company.The Board of Directors unanimously recommends a vote FOR the
developerelection of these nominees as directors.STRUCTURE AND PRACTICES
OF THE BOARD OF DIRECTORSWe seek to follow best practices in corporate governance in a manner that is in the best interests of our business and
manufacturerstockholders. We are in compliance with the corporate governance requirements imposed by the Sarbanes-Oxley Act of 2002, the SEC and the NYSE. We will continue to review our policies and practices to meet ongoing developments in this area.Our current corporate governance principles, including the Corporate Governance Guidelines and the Code of Business Conduct and Ethics, are available on our website under the “Investor Relations-Corporate Governance” link at www.cantelmedical.com or (free of charge) by sending a written request to Cantel Medical Corp., 150 Clove Road, 9th Floor, Little Falls, NJ 07424, Attn: Assistant Secretary. Aspects of our corporate governance principles are discussed throughout this Proxy Statement.
Board Meetings and Attendance of Directors
The Board held four regular meetings and two special meetings during the fiscal year ended July 31, 2005. During fiscal 2005, each of the
Blood Volume Analyzer, and Youthstream Media (Nasdaq), an integrated media, marketing, promotions and retail company. EXECUTIVE OFFICERS OF THE COMPANY
NAME AGE POSITION WITH THE COMPANY - ---- -------- ------------------------------------------Charles M. Diker.......................... 67 Chairman of the Board James P. Reilly........................... 62 President and Chief Executive Officer Roy K. Malkin............................. 56 President and CEO of Minntech Corporation and MediVators, Inc. Seth R. Segel............................. 33 Senior Vice President--Corporate Development Craig A. Sheldon.......................... 40 Senior Vice President and Chief Financial Officer William J. Vella.......................... 46 President and CEO of Carsen Group Inc.See "Business Experience of Directors" above for biographical data with respect to Messrs. Diker and Reilly. Mr. Malkin has served as President and Chief Executive Officer of Minntech since September 2001, and as President and Chief Executive Officer of MediVators since June 1999. From June 1984 until July 1994 and from November 1996 until May 1999, Mr. Malkin was President and 4Chief Executive Officer of RKM Enterprises Ltd., a multi-national consulting group for the healthcare industry. From July 1994 until October 1996, Mr. Malkin was employed by Steris Corporation, most recently as Senior Vice President. Mr. Segel was appointed Senior Vice President--Corporate Developmentincumbent directors attended 75% or more of theCompany on November 18, 2002. From May 1999 through October 2002, he served in various positions at Jupiter Media Metrix, Inc. (Nasdaq), a provider of global market research, and LiveTechnology Holdings, Inc., a company owned and then sold by Jupiter Media Metrix in May 2002. Mr. Segel served most recently as Senior Vice President of Finance and Corporate Development at Jupiter Media Metrix and as Managing Director of LiveTechnology. From August 1996 through April 1999, Mr. Segel served as Senior Associate at Broadview International LLC, an investment bank. Mr. Segel has a Masters Degree in Business Administration. Mr. Sheldon has served as Senior Vice President and Chief Financial Officer of the Company since November 2002. From November 2001 through October 2002 he served as Vice President and Chief Financial Officer. From November 1994 until October 2001 Mr. Sheldon served as Vice President and Controller of the Company. Mr. Sheldon is a certified public accountant. Mr. Vella has served as President and Chief Executive Officer of Carsen Group Inc. since October 2001, as President and Chief Operating Officer of Carsen from December 1996 until October 2001, as Executive Vice President from January 1995 until November 1996, and prior thereto in various sales and sales management positions since October 1981. COMMITTEES AND MEETINGS The Company has an Audit Committeetotal meetings of the Board and the respective committees on which he served. Directors are required to make every reasonable effort to attend the Annual Meeting of Stockholders. Four members of the Board attended our 2004 Annual Meeting of Stockholders.The Board has affirmatively determined that the following directors have no material relationship with us and are independent within the meaning of Rule 10A-3 of the Securities Exchange Act of 1934 (the “Exchange Act”) and within the NYSE definition of “independence”: Robert L. Barbanell, Alan R. Batkin, Joseph M. Cohen, Spencer Foreman, M.D., Alan J. Hirschfield, Elizabeth McCaughey and Bruce Slovin. To assist in making the independence determination, the Board has adopted categorical standards for Director Independence as part of our Corporate Governance Guidelines. These standards, a copy of which is attached to this Proxy Statement as Annex A, satisfy the NYSE independence requirements. Independent directors receive no compensation from us for service on the Board or the Committees other than directors’ fees and non-discretionary grants under our 1998 Directors’ Stock Option Plan.
Meetings of Non-Management Directors; Presiding Director
Under our Corporate Governance Guidelines, non-management directors meet at regularly scheduled meetings, without any employee directors or members of management present. During fiscal year 2005, the non-management directors held one such meeting. Currently, Alan R. Batkin, who was selected by our non-management directors to serve a one-year term as the presiding independent director, is the chairperson for all non-management director meetings.
Communications with Directors; Hotline
You may contact the entire Board of Directors,
consistingany Committee, the non-management directors as a group, the presiding independent director or any other individual director by calling our toll-free Hotline at 1-800-826-6762. An outside vendor collects all reports or complaints and delivers them to our General Counsel, who forwards them to the Audit Committee and/or the appropriate director or group of directors. You are also welcome to communicate directly with the Board at our Annual Meeting of Stockholders. Additional information regarding the Hotline can be found through a link under “Investor Relations-Corporate Governance” on our website at www.cantelmedical.com.The Board of Directors has three standing committees: the Audit Committee, the Compensation and Stock Option Committee (the “Compensation Committee”) and the Nominating and Governance Committee (“Nominating Committee”). All of the members of the Audit Committee, the Compensation Committee and the Nominating Committee are independent directors within the definition in the NYSE listing standards and Rule 10A-3 of the Exchange Act. Each of the Committees has the authority to retain independent advisors and consultants, with all fees and expenses to be paid by us. The Board-approved charters of each of the Committees are available on our website under the “Investor Relations-Corporate Governance” link at www.cantelmedical.com or (free of charge) by sending a written request to Cantel Medical Corp., 150 Clove Road, 9th Floor, Little Falls, NJ 07424, Attn: Assistant Secretary.
Audit Committee.The Audit Committee is composed of Messrs. Barbanell (Chairman),
OffitBatkin andSlovin, all of whom have been determined by the Board of Directors to be independent (as independence is defined under the NYSE listing standards).Slovin. Allthe membersof theaudit committeeAudit Committee members are financially literate, and at least one member has accounting and financial management expertise. Theprimary functionsBoard has determined that Mr. Barbanell qualifies as an “audit committee financial expert” for purposes of the SEC’s rules.The Audit Committee
areperforms the following functions: (1) assisting the Board in fulfilling its oversight responsibilities with respect torecommend(a) theappointmentintegrity of our financial statements, (b) our compliance with legal and regulatory requirements, (c) the independent registered public accounting firm’s qualifications and independence, and (d) the performance of our internal audit function and independent registered public accounting firm and (2) preparing a report in accordance with the rules of theCompany's independent auditors,SEC toreview the overall scope of the audit, the Company's financial statements and the independent auditors' report, and to meet with the Company's financial management and its independent auditors to satisfy itself of the adequacy of the Company's internal controls.be included in our annual proxy statement.The
fullAudit Committee heldfoursix meetings during fiscal2002 at2005, of whichall members of the committeethree werepresent except for Mr. Offit, who missed two meetings. The chairman of the Audit Committeemeetings heldthree additional meetings with the Company's financial management and its independent auditorsprior to the filingthe Company'sof our Quarterly Reports on Form 10-Q for the purpose of reviewing such reports. Only the Committee Chairman is required to attend (although the other members of the Committee may attend) meetings in connection with the review of our Quarterly Reports pursuant to the Audit Committee Charter.Compensation Committee.The
Company has aCompensation Committeeof the Board of Directors consistingis composed of Messrs. Hirschfield (Chairman), Cohen and Dr. Foreman. The Compensation Committee performs the following functions: (1) discharging the Board’s responsibilities relating to compensation of our executive officers; (2) producing an annual report on executive compensation for inclusion in our proxy statement in accordance with applicable rules and regulations; and (3) administering our stock option plans in accordance with the terms of such plans.The Compensation Committee held two formal meetings during fiscal 2005. In addition, it had several informal telephonic meetings regarding the compensation of our executive officers.
Nominating Committee.The Nominating Committee is composed of Messrs. Slovin (Chairman), Barbanell and Cohen.
Mr. Cohen was appointedThe Committee performs the following functions: (1) identifying individuals qualified to become Board members, consistent with criteria approved by theCompensation Committee on October 10, 2001. The primary functionsBoard and recommending that the Board select the director nominees for the next annual meeting ofthe Compensation Committee are the establishment of compensation policiesstockholders; (2) developing andto consider and make recommendationsrecommending to the Boardconcerning compensation totheCompany's seniorCorporate Governance Guidelines; and (3) overseeing evaluation of the Board and management. TheCompensationNominating Committee held one meeting during fiscal20022005.The Nominating Committee has established a process for identifying and
actedevaluating nominees for director. Although the Committee will consider nominees recommended byunanimous written consent on one occasion.stockholders, the Committee believes that the process it utilizes to identify and evaluate nominees for director is designed to produce nominees that possess the educational, professional, business and personal attributes that are best suited to further our purposes. Any interested person may recommend a nominee by submitting the nomination, together with appropriate biographical information, to the Nominating Committee, c/o Cantel MedicalCorp., 150 Clove Road, 9th Floor, Little Falls, NJ 07424, Attn: Assistant Secretary. All recommended candidates will be considered using the criteria set forth in our Corporate Governance Guidelines.
The Nominating Committee will consider, among other things, the following factors to evaluate recommended nominees: the Board’s current composition, including expertise, diversity, balance of management and non-management directors, independence and other qualifications required or recommended by applicable laws, rules and regulations (including NYSE requirements) and company policies or procedures. The Committee will also consider the general qualifications of potential nominees, including, but not limited to personal integrity; loyalty to Cantel and concern for its success and welfare; experience at strategy/policy setting level; high-level leadership experience in business or administrative activity; breadth of knowledge about issues affecting Cantel; an ability to work effectively with others; sufficient time to devote to us; and freedom from conflicts of interest.
Since February 1, 2005, directors other than Messrs. Diker and Reilly are paid a fee of $20,000 per year and $1,000 per Board meeting attended ($2,000 for meetings longer than a half-day), plus reimbursement for expenses. In addition, the Presiding Director is paid a fee of
Directors of$5,000, and theCompany held six meetings during the fiscal year ended July 31, 2002. Except for Mr. Hirschfield, who did not attend three of the Board meetings, and Mr. Offit, who did not attend three of the Board meetings and twoChairmen of the Audit Committee,meetings, no incumbent director attended fewer than 75%the Compensation Committee and the Nominating Committee are paid annual fees ofthe aggregate of (i) the total number of meetings of the Board (held during the period for which he has been a director)$15,000, $6,000 and(ii) the total number of meetings held by all committees of the Board on which he served (during the periods that he served). The Company does not have a nominating committee. 5DIRECTOR COMPENSATION During fiscal 2002, Directors who were not officers of the Company were paid a $2,500 annual fee and $1,000 per meeting attended, plus expenses. In addition, Directors who served as chairmen$3,000, respectively. Each member of the Audit Committeeand Compensation Committee wereis paid $1,000perfor each meeting attended and each member of the othernon-employee Directorscommittees is paid $750 for each meeting attended. Our 1998 Directors’ Stock Option Plan provides for an automatic grant of options to purchase 15,000 shares of common stock to persons whoservedfirst become a director of Cantel. The options are exercisable in three equal annual installments commencing on thecommittees were paid $750 per meeting attended. The 1998 Directors'date of the grant. Such Plan further provides for the automatic grant to each ofthe Company'sour directors of an option to purchase 1,500 shares of common stock on the last business day ofthe Company'sour fiscal year. In addition, an option to purchase 750 shares of common stock is granted automatically on the last business day of each fiscal quarter to each non-employee director(exclusive of Messrs. Diker and Reilly and any other director who is a full-time employee of the Company)provided that the director attended any regularly scheduled meeting of the Board, if any, held during such quarter.Commencing August 1, 2002,AMENDMENT OF CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCKThe Board of Directors has adopted a resolution declaring it advisable and in the
Chairmanbest interests of Cantel and theAudit Committee will be paid an additional director's feestockholders to amend our Certificate of$5,000Incorporation, as amended (the “Certificate”) to increase the authorized number of shares of our common stock, par value $.10 peryear. THE BOARD RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED HEREIN. PROPOSAL 2 APPROVAL OF AMENDMENT TO THE 1997 EMPLOYEE STOCK OPTION PLAN In October 1997, the Company adopted the 1997 Employee Stock Option Plan (the "Employee Plan") under which the Company may,share, fromtime20,000,000 totime, issue options exercisable for30,000,000 shares.The Certificate presently authorizes 20,000,000 shares of common
stock. Atstock, of which XX,XXX,XXX shares were issued and outstanding as of November 15, 2005, thetimerecord date for the Annual Meeting; and 1,000,000 shares ofadoption, 300,000preferred stock, one dollar ($1.00) par value, none of which is presently issued and outstanding. As of November 15, 2005, XXX,XXX shares of common stock were held by us as treasury shares. Additionally, as of that date an aggregate of XXX,XXX shares of common stock were reserved for issuance upon the exercise of options granted or available for grant under our various stock option plans or under stock options individually granted by theEmployee Plan. Thereafter, stockholders approved amendmentsBoard. As a result of such reservation requirement, if we desire to issue common equity for stock splits or acquisitions or to obtain funds through an offering or for any other purpose, we are currently limited to issuance of X,XXX,XXX shares of common stock.The Board considers it desirable to have available for issuance sufficient authorized shares of common stock to enable us to act without delay of seeking shareholder approval if favorable opportunities arise to raise additional equity capital or to acquire companies or products by the
Employee Plan that increased the numberissuance of shares of common stockreservedand otherwise to be in a position to take various steps requiring the issuance of additional shares ofcommon stock (including stock splits or stock dividends) that in the judgment of the Board are in our best interests. The shares will also be available for issuance
to 1,500,000 shares. The Boardunder current and future employee equity compensation plans. Other than issuances upon exercise ofDirectors has adopted an amendmentoutstanding stock options and future option grants under our stock option plans, we have no current plans, arrangements or understandings regarding the issuance of any additional shares of common stock for which authorization is sought and there are no negotiations pending with respect to theEmployee Planissuance thereof for any purpose.Additional shares of common stock authorized pursuant to this proposal would be identical in all respects to the common stock now authorized. While authorization of the additional shares will not currently dilute the proportionate voting power or other rights of existing stockholders, future issuances of common stock could reduce the proportionate ownership of existing holders of common stock, and, depending on the price at which such shares are issued, may be dilutive to the existing stockholders.
Common stock (including the additional shares of common stock authorized pursuant to this proposal) and preferred stock may be issued from time to time upon authorization of the Board, without further approval by the stockholders, unless otherwise required by applicable law, and for the consideration that the Board may determine is appropriate and as may be permitted by applicable law.
As provided for by the Delaware General Corporation Law, the Board has directed that the proposed amendment to increase the number of authorized shares of common stock
reserved for issuance by 500,000 shares,be submitted to2,000,000 shares. Adoptiona vote ofsuchthe stockholders. Approval of the proposed amendment requiresstockholder approval. A copythe affirmative vote of a majority of theEmployee Plan,votes entitled to be cast by the holders of common stock.Although an increase in the authorized shares of our capital stock could, under certain circumstances, also be construed as
currently inhaving an anti-takeover effectis attached hereto as Exhibit A. Options granted under the Employee Plan are intended to qualify as Incentive Stock Options ("ISOs") within the meaning of Section 422(for example, by permitting easier dilution of theInternal Revenue Codestock ownership of1986, as amended (the "Code"). The Employee Plana person seeking to effect a change in the composition of the Board or contemplating a tender offer or other transaction resulting in our acquisition by another company), the proposed increase isadministerednot inall respectsresponse to any effort by any person or group to accumulate our stock or to obtain control of Cantel by any means. In addition, the proposal is not part of any current plan by theStock Option Committee.Board to recommend or implement a series of anti-takeover measures or any other corporate transactions.The
Stock Option Committee may determineproposed amendment to theemployeesCertificate would amend Article Fourth of the Certificate by striking out the first sentence of Article FOURTH, up towhom options are to be grantedthe colon, as it now exists and inserting in lieu and instead thereof the following:“FOURTH: The total number of shares
subject to each option. Under the terms of the Employee Plan, all employees of the Company or subsidiaries of the Company are eligible for option grants. Options under the Employee Plan are granted to reward past performance by employees, as an incentive for future performance, and to recruit and retain qualified personnel. The option exercise price of options granted under the Employee Plan is fixed by the Stock Option Committee but must be no less than 100% of the fair market value of the shares of common stock subject to the option at the time of grant, except that in the case of an employee who possesses more than 10% of the total combined voting powerof all classes of stock that the Corporation shall have authority to issue is Thirty-One Million (31,000,000), of which Thirty Million (30,000,000) shall be shares of Common Stock, par value $0.10 per share, and One Million (1,000,000) shall be shares of Preferred Stock, par value $1.00 per share, and theCompany (a "10% Holder"), the exercise price for incentive stock options must be no less than 110% of said fair market value. Options may be exercisedvoting powers, designations, preferences and relative, participating, optional or other special qualifications, limitations or restrictions thereof are as follows:”If approved by the
payment in full in cash or by tendering shares of common stock having a fair market value, as determined by the Stock Option Committee, equal to the option exercise price. Options granted under the Employee Plan may not be exercised more than ten years after the date of grant, five years in the case of an ISO granted to a 10% Holder. As of November 4, 2002, options to purchase 889,480 shares were outstanding under the Employee Plan. With the adoption of the proposed amendment, 878,587 shares would be available for future grants. Therequisite number of shares, the amendment to our Certificate will become effective upon filing the Certificate of Amendment with the Delaware Secretary of State, which issubjectexpected toadjustment on account of stock splits, stock dividends and other dilutive changes in the common stock. Shares of common stock covered by unexercised stock options that expire, terminate, or are cancelled are available for option grant under the Employee Plan. 6INCOME TAX CONSEQUENCES: The principal United States federal income tax consequences of the issuance and exercise of ISOs, and subsequent stock dispositions, are as follows: The Employee Plan provides that the aggregate fair market value (determined at the time of option grant) of stock with respect to which ISOs become exercisable by the Optionee for the first time in any calendar year under all of the stock option plans of the Company or any of its subsidiaries cannot exceed $100,000. ISO tax treatment is denied by the Code to any options in excess of such dollar limits. The granting of an ISO results in no federal income tax consequences to the Optionee. No income is recognized by the Optionee upon the exercise of an ISO. However, for purposes of the alternative minimum tax only, the amount by which the fair market value of the option shares at the time of ISO exercise exceeds the option exercise price (the "Option Spread") will be an item of tax preference for purposes of the federal alternative minimum tax and thus the Option Spread may be subject to the alternative minimum tax unless the shares are disposed of in a Disqualifying Disposition (as defined below) in the year of exercise. If the Optionee is subject to the alternative minimum tax in the year of the option exercise, the shares purchased upon the exercise of the ISO will generally have a tax basis equal to their fair market value at the time of ISO exercise only for purposes of computing gain or loss on a subsequent disposition of the option shares under the alternative minimum tax. If instead the Optionee is subject to the regular tax in the year of the disposition of his option shares, the shares purchased upon the exercise of an ISO will have a tax basis (for purposes of calculating gain or loss on such disposition under the regular tax) equal to their ISO exercise price. Each Optionee should consult his tax advisor as to the application of the alternative minimum tax to the exercise of ISOs and the disposition of shares acquired thereby. The Internal Revenue Service (the "IRS") recently announced that it will not apply income tax withholding obligations on the employer or assess FICA or FUTA taxes (on either the employee or the employer) with respect to the Option Spread upon the exercise of an ISO until at least two years after final regulations with respect thereto have been issued by the IRS. If the shares purchased upon the exercise of an ISO are disposed of by the Optionee (other than by transfer to his estate, executor, administrator or heir by reason of his death), neither (a) within the two-year periodoccur promptly following thegrant of the option nor (b) within the one-year period following the issuance of the shares to the Optionee, then upon such disposition, any excess of the sale price of the shares over the option exercise price will constitute a capital gain to the Optionee (assuming the shares are a capital asset in his hands). If the Optionee disposes of the shares within such two-year period or one-year period (other than by transfer to his estate, executor, administrator or heir by reason of his death) (a "Disqualifying Disposition"), the Optionee will generally recognize ordinary income in the year of the disposition to the extent that his tax basis in the shares is exceeded by the lesser of (i) the fair market value of the shares on the date the option was exercised, or (ii) the amount realized on the disposition of the shares. If the Optionee pays the option exercise price by surrendering (or constructively surrendering) to the Company shares of its stock, the Optionee will generally not recognize any gain or loss with respect to the surrender of such shares to the Company. (But see the discussion above relating to the alternative minimum tax and the discussion below relating to surrendered shares that were acquired upon the exercise of an ISO.) The Optionee will have the following tax basis in the shares acquired on the exercise of the ISO: as to the number of shares acquired that equals the number of shares actually or constructively surrendered, the Optionee's tax basis will be equal to the tax basis of the shares surrendered and the Optionee will have a carryover holding period for purposes of determining any gain or loss on a sale of those shares; as to the balance of the shares received on the option exercise, the Optionee will have a tax basis equal to the cash, if any, paid by him to the Company upon the 7exercise of the option and a holding period (for purposes of determining gain or loss on a sale of those shares) that begins on the date of option exercise. As to all of the shares acquired on the exercise of the option, a new two-year period and one-year period (referred to above) will be determined based on the date of option exercise. However, if the surrendered shares were themselves acquired by the Optionee upon the exercise of an ISO and the surrender of such shares occurs within the two-year period or one-year period referred to above, the Optionee will generally recognize ordinary income in the year of the surrender to the extent that the fair market value of the surrendered shares on the date they were acquired exceeds the Optionee's tax basis with respect to such shares. At the present time, the IRS has proposed that the Company will have no income tax withholding obligation with respect to this income but may have an obligation to report this income on a periodic filing to the IRS. The Optionee will have the following tax basis in the shares acquired on the exercise of the ISO: as to the number of shares acquired that equals the number of shares actually or constructively surrendered, the Optionee's tax basis will be equal to the tax basis of the shares surrendered and the Optionee will have a carryover holding period for purposes of determining any gain or loss on a sale of those shares; as to the balance of the shares received on the option exercise, the Optionee will have a tax basis equal to the cash (if any) paid by him to the Company upon the exercise of the option plus any compensation income reported by him with respect to the Disqualifying Disposition, and a holding period (for purposes of determining gain or loss on a sale of those shares) that begins on the date of option exercise. As to all of the shares acquired on the exercise of the option, a new two-year period and one-year period (referred to above) will be determined based on the date of option exercise. In general, the federal income tax consequences to the Company of the grant and exercise of ISOs under the Employee Plan and the sale of shares purchased on the exercise of ISOs are as follows: Neither the grant nor the exercise of an ISO result in any federal income tax consequences to the Company. But see the discussion above relating to income tax withholding and FICA taxes with respect to the Option Spread upon the exercise of an ISO. In any year in which the Optionee recognizes ordinary income (as a result of a Disqualifying Disposition of the shares), the Company is entitled to a corresponding income tax deduction assuming such compensation to the Optionee is reasonable in amount. The Employee Plan is not a "qualified" stock bonus, pension or profit-sharing plan within the meaning of Section 401 of the Code. The principal state, local and foreign tax income tax consequences of the issuance and exercise of options, and subsequent stock dispositions, are discussed below. State, local and foreign income tax consequences may, depending on the jurisdiction, differ from the federal income tax consequences of the granting and exercise of an option and any later sale by the Optionee of his option stock. There may also be, again depending on the jurisdiction, transfer or other taxes imposed in connection with a disposition, by sale, bequest or otherwise, of option stock. Optionees should consult their personal tax advisors with respect to the specific state, local, foreign and other tax consequences to them of option grants, option exercises and stock dispositions.Annual Meeting.The Board of Directors
isunanimously recommends a vote in Favor of Proposal 28
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Audit Committee has selected Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending July 31, 2006 and has further directed that management submit the selection of the
opinion that adoptionindependent registered public accounting firm for ratification by the stockholders at the Annual Meeting. The Audit Committee has considered whether the provision ofthe amendment to the Employee Plan isnon-audit professional services rendered by Ernst & Young LLP, as discussed in thebest interestssection entitled “Independent Registered Public Accounting Firm” below and disclosed elsewhere in this proxy statement, is compatible with Ernst & Young maintaining their independence. Ernst & Young LLP has audited our financial statements for the past sixteen years. A representative of Ernst & Young LLP is expected to be present at theCompany in that itAnnual Meeting, willaid the Company in securing and retaining competent management personnel and other employees by making it possible to offer themhave an opportunity toacquire stockmake a statement if he so desires, and will be available to respond to appropriate questions.Stockholder ratification of the
Company and thereby increase their proprietary interestselection of Ernst & Young LLP as our independent registered public accounting firm is not required by our By-laws or otherwise; however, the Board is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our or our stockholders’ best interests.The Board of Directors unanimously recommends a vote in Favor of Proposal 3
The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the
Company's success. THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE EMPLOYEE PLAN. 8accompanying proxy to vote on such matters in accordance with their best judgment. The following table sets forth stock ownership information as of November
4, 200215, 2005 concerning (i) eachdirectorof our directors and persons nominated to become directors,of Cantel,(ii) each person (including any"group"“group” as defined in Section 13(d)(3) of theSecuritiesExchangeAct of 1934)Act) who is known byCantelus to beneficially own more than five (5%) percent of the outstanding shares ofCantel'sour common stock, (iii) the Chief Executive Officer and the other executive officers named in the Summary Compensation Table below, and (iv)Cantel'sour executive officers and directors as a group:
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENTAGE OF BENEFICIAL OWNERS POSITION WITH THE COMPANY BENEFICIAL OWNERSHIP(1) OF CLASS - -------------------- ---------------------------------- ------------------------ ----------Charles M. Diker .............. Chairman of the Board and Director 1,457,799(2) 15.3% 767 Fifth Avenue New York, New York Alan J. Hirschfield............ Vice Chairman of the Board and 286,999(3) 3.1% Director Robert L. Barbanell............ Director 72,784(4) * Joseph M. Cohen................ Director 43,250(5) * Darwin C. Dornbush, Esq........ Secretary and Director 32,670(6) * Morris W. Offit................ Director 47,250(7) * James P. Reilly................ President and CEO and Director 281,421(8) 3.0% John W. Rowe, M.D.............. Director 44,250(9) * Fred L. Shapiro, M.D........... Director 36,829(10) * Bruce Slovin................... Director 242,250(11) 2.6% Roy K. Malkin.................. President and CEO of Minntech 63,750(12) * Corporation and MediVators, Inc. Craig A. Sheldon............... Senior Vice President and CFO 18,256(13) * William J. Vella............... President and CEO of Carsen Group 37,428(14) * Inc. All officers and directors as a group of 13 persons.......... 2,664,936(15) 26.9%- ------------------------
Shares Beneficially Owned(1)
Name and Address
of Beneficial Owners
Position with Cantel
Number
Percent of
Total
Charles M. Diker
150 Clove Road
Little Falls, NJ 07424
Chairman of the Board and Director
(2)
%
Alan J. Hirschfield
Vice Chairman of the Board and Director
(3)
%
Robert L. Barbanell
Director
(4)
*
Alan R. Batkin
Director
(5)
*
Joseph M. Cohen
Director
(6)
*
Darwin C. Dornbush, Esq.
Secretary and Director
(7)
*
Spencer Foreman, M.D.
Director
(8)
*
Elizabeth McCaughey
Director
(9)
*
James P. Reilly
��
President and CEO and Director
(10)
%
Bruce Slovin
Director
(11)
%
Andrew A. Krakauer
Executive Vice President and COO
(12)
*
Craig A. Sheldon
Senior Vice President and CFO
(13)
*
Roy K. Malkin
President and CEO of Minntech
Corporation, a subsidiary of Cantel
(14)
*
William J. Vella
President and CEO of Carsen Group
Inc., a subsidiary of Cantel
(15)
*
FMR Corp.
82 Devonshire Street
Boston, MA 02109
5% Stockholder
1,144,450
(16)
%
All officers and directors
as a group of 18 persons
(17)
%
*
LessRepresents beneficial ownership of less than1%one percent (1%).(1) Unless otherwise noted,
Cantel believeswe believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days from November4, 200215, 2005 upon the exercise of options. Each beneficialowner'sowner’s percentage ownership is determined by assuming that options that are held by such person (but not those held by any other person) and which are exercisable within 60 days from November4, 200215, 2005 have been exercised.(2) Includes
237,750shares which Mr. Diker may acquire pursuant to stock options. Does not include an aggregate of899,5841,291,944 shares owned by (i) Mr.Diker'sDiker’s wife, (ii) certain trusts for the benefit of Mr.Diker'sDiker’s children, (iii) accounts for his grandchildren over which Mr. Diker exercises investmentdiscretion, (iv) certain other accounts over which Mr. Diker exercises investment discretion, (v) the DicoGroup, Inc., a corporation of which Mr. Diker serves as Chairman of the Board, and (vi) a
9non-profit corporation of which Mr. Diker and his wife are the principal officers and directors.directors; Mr. Diker disclaims beneficial ownership as to all of the foregoing 1,291,944 shares.(3) Includes
35,250shares which Mr. Hirschfield may acquire pursuant to stock options.(4) Includes
24,750shares which Mr. Barbanell may acquire pursuant to stock options. Does not include3,7505,625 shares owned by Mr.Barbanell'sBarbanell’s wife as to which Mr. Barbanell disclaims beneficial ownership.(5) Includes
21,750shares which Mr. Batkin may acquire pursuant to stock options.(6) Includes shares which Mr. Cohen may acquire pursuant to stock options.
(6)(7) Includes
27,750shares which Mr. Dornbush may acquire pursuant to stock options.(7) Includes 27,000(8) Consists of shares which
Mr. OffitDr. Foreman may acquire pursuant to stock options.(8)(9) Includes
112,746shares which Ms. McCaughey may acquire pursuant to stock options.(10) Includes shares which Mr. Reilly may acquire pursuant to stock options. Does not include 130,672 shares owned by Mr.
Reilly'sReilly’s wife as to which Mr. Reilly disclaims beneficial ownership.(9)(11) Includes
44,250 shares which Dr. Rowe may acquire pursuant to stock options. (10) Includes 13,750 shares which Dr. Shapiro may acquire pursuant to stock options. Does not include 7,500 shares owned by certain trusts for the benefit of Dr. Shapiro's grandchildren. (11) Includes 38,250shares which Mr. Slovin may acquire pursuant to stock options.(12) Consists of shares which Mr. Segel may acquire pursuant to stock options.
(13) Includes
63,750shares which Mr. Sheldon may acquire pursuant to stock options.(14) Includes shares which Mr. Malkin may acquire pursuant to stock options.
(13)(15) Includes
5,438 shares which Mr. Sheldon may acquire pursuant to stock options. (14) Includes 3,750shares which Mr. Vella may acquire pursuant to stock options.(15)(16) Based upon information as of June 30, 2005 set forth in a 13F Holdings Report filed by the beneficial owner with the SEC.
(17) Includes
656,184shares which may be acquired pursuant to stock options.EXECUTIVE COMPENSATION AND RELATED INFORMATION REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE AND THE STOCK OPTION COMMITTEE The Compensation Committee
Name
Age
Position with Cantel
Charles M. Diker
70
Chairman of the Board
James P. Reilly
65
President and Chief Executive Officer
Andrew A. Krakauer
50
Executive Vice President and Chief Operating Officer
Eric W. Nodiff
48
Senior Vice President and General Counsel
Seth R. Segel
36
Senior Vice President—Corporate Development
Craig A. Sheldon
43
Senior Vice President and Chief Financial Officer
Steven C. Anaya
35
Vice President and Controller
Roy K. Malkin
59
President and CEO of Minntech
Richard Allen Orofino
66
President and CEO of Crosstex International, Inc.
William J. Vella
49
President and CEO of Carsen Group
See “Business Experience of Directors” above for biographical data with respect to Messrs. Diker and Reilly.
Mr. Krakauer has served as our Executive Vice President and Chief Operating Officer since August 2004. From 1998 to February 2004, he served as President of the
Company's BoardOhmeda Medical Division ofDirectors is responsible for setting and administering the policies which govern annual executive compensation. The Compensation Committee is currently comprised of three members,Instrumentarium / GE Healthcare. Prior thereto, Mr.Hirschfield, Chairman, and Messrs. Barbanell and Cohen, each of whom are non-employee directors. Executive compensation for the fiscal year ended July 31, 2002 consisted of base salary plus bonus when earned. The policyKrakauer served Ohmeda as President of theCompensation Committee,Specialty Products Division and Business Development from 1994 through 1998.Mr. Nodiff has served as our Senior Vice President and General Counsel since January 1, 2005. For more than five years prior there he served as a partner of Dornbush Schaeffer Strongin & Weinstein, LLP, a law firm that served as our outside general counsel.
Mr. Segel has served as our Senior Vice President—Corporate Development since November 2002. From May 1999 through October 2002, he served in
consultation with the Chairmanvarious management positions at Jupiter Media Metrix, Inc. (NASDAQ), a provider of global market research.Mr. Sheldon has served as our Senior Vice President and
theChiefExecutiveFinancial Officerwhere appropriate,since November 2002. From November 2001 through October 2002 he served as our Vice President and Chief Financial Officer. From November 1994 until October 2001 Mr. Sheldon served as our Vice President and Controller. Mr. Sheldon isto provide compensation to the Chief Executive Officera certified public accountant.Mr. Anaya, who has been employed by us since March 2002, has served as Vice President since November 2003 and
the Company's other executive officers reflecting the contribution of such executives to the Company's growth in sales and earnings, the implementation of strategic plans consistent with the Company's long-term objectives, and the enhancement of shareholder value. Messrs. Roy Malkin and Craig Sheldon are employed and compensated pursuant to written employment agreementsController since November 2002. Prior thereto, he served asdescribed below.our Assistant Controller. From April 1999 through October 2001, Mr.James ReillyAnaya was employedand compensated pursuant toby Great Universal Inc., most recently as Corporate Controller. Great Universal Inc. is awritten employment agreement that expired on July 31, 2002. The Company and Mr. Reilly are currently negotiating the terms of a new three-year employment agreement. Long-term incentive compensation consists exclusively of the award of stock options under the Company's 1997 Employee Plan and,holding company for numerous companies located in thecase of officers who serveUnited States and Europe primarily in the telecommunications and computer industries. Mr. Anaya is a certified public accountant.Mr. Malkin has served as
directors of the Company, non-discretionary annual option grants of 1,500 shares under the Company's 1998 Directors' Plan. 10The Stock Option Committee under the 1997 Employee Plan is responsible for the award of stock options. Three non-employee directors, Messrs. Hirschfield, Barbanell and Cohen, currently serve on the Stock Option Committee, which administers the granting of options under the 1997 Employee Plan. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No officer of the Company served on the Compensation Committee during its last fiscal year. Mr. Reilly, thePresident and Chief Executive Officer ofthe Company, however, participatedMinntech since September 2001 and as President and Chief Executive Officer of Medivators, Inc. (former subsidiary of Cantel that merged into Minntech) since June 1999.Mr. Vella has served as President and Chief Executive Officer of Carsen Group since October 2001, as President and Chief Operating Officer of Carsen Group from December 1996 until October 2001, as Executive Vice President of Carsen Group from January 1995 until November 1996, and prior thereto in
deliberations concerning executive compensation, except with respect to the compensationvarious sales and sales management positions at Carsen Group since October 1981.12
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Summary of
the Chairman of the BoardCash andhimself. COMPENSATION COMMITTEE: Alan J. Hirschfield (Chairman) Robert L. Barbanell Joseph M. Cohen INDEPENDENT AUDITORS The firm of Ernst & Young LLP has audited the financial statements of the Company for more than ten years. In addition to retaining Ernst & Young LLP to audit our consolidated financial statements for the fiscal year ended 2002, the Company and its affiliates retained Ernst & Young LLP to provide tax and other advisory services in the fiscal year ended 2002, and expect to continue to do so in the future. The aggregate fees billed for professional services by Ernst & Young LLP in the fiscal year ended 2002 were as follows: - Audit Fees. The aggregate fees billed by Ernst & Young LLP for professional services rendered for the audit of the Company's consolidated financial statements for the fiscal year ended July 31, 2002 and the reviews of its interim financial statements included in the Company's Form 10-Qs were approximately $233,000. - Financial Information Systems Design and Implementation Fees. There were no fees billed by Ernst & Young LLP for services rendered in connection with the Company's financial information systems design and implementation during the fiscal year ended July 31, 2002. - AllCertain OtherFees. The aggregate amount of all fees billed for services rendered to the Company by Ernst & Young LLP for the fiscal year ended July 31, 2002 (other than the audit fees described above) were approximately $302,500. These primarily consist of fees for the preparation of the Company's income tax returns and for tax and accounting matters, due diligence and other advisory services related to the acquisition of Minntech Corporation. The Audit Committee has determined that the provision of all non-audit services performed for the Company by Ernst & Young LLP is compatible with maintaining that firm's independence. AUDIT COMMITTEE REPORT The Audit Committee of the Board of Directors is providing this report to enable stockholders to understand how it monitors and oversees Cantel's financial reporting process. The Audit Committee operates pursuant to an Audit Committee Charter that is reviewed annually by the Audit Committee and updated as appropriate. This report confirms that the Audit Committee has (1) reviewed and discussed the audited financial statements for the year ended July 31, 2002 with management and Cantel's independent auditors; (2) discussed with Cantel's independent auditors the matters required to be reviewed pursuant to the Statement on Auditing Standards No. 61 (Communications with Audit Committees); 11(3) reviewed the written disclosures letter from Cantel's independent auditors as required by Independence Standards Board Standard No. 1 (Independent Discussions with Audit Committees); and (4) discussed with Cantel's independent auditors their independence from Cantel. The Audit Committee of the Board of Directors has considered whether the provision of non-audit professional services rendered by Ernst & Young LLP, as discussed above and disclosed elsewhere in this proxy statement, is compatible with maintaining their independence. Based upon the above review and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements for the year ended July 31, 2002 be included in Cantel's Annual Report on Form 10-K for filing with the Securities and Exchange Commission. AUDIT COMMITTEE Robert L. Barbanell (Chairman) Morris W. Offit Bruce Slovin SUMMARY OF CASH AND CERTAIN OTHER COMPENSATIONCompensationThe following table sets forth, for the fiscal years ended July 31,
2002, 2001,2005, 2004 and2000,2003, compensation, including salary, bonuses, stock options and certain other compensation, paid by us to theCompany toChairman of the Board, the Chief Executive Officer andto the otherour four most highly compensated executive officersofother than theCompany who received more than $100,000 in salaryChairman andbonusthe Chief Executive Officer during fiscal2002: SUMMARY COMPENSATION TABLE
LONG-TERM ANNUAL COMPENSATION COMPENSATION(1) AWARDS(2) ---------------------- ------------ NAME AND SALARY BONUS OPTIONS PRINCIPAL POSITION YEAR ($) ($) (#) - ------------------ -------- -------- -------- ------------Charles M. Diker ................................. 2002 175,000 0 1,500 Chairman of the Company 2001 160,000 0 1,500 2000 150,000 0 1,500 James P. Reilly(3) ............................... 2002 318,347 250,000 1,500 President and Chief Executive Officer of the 2001 303,188 171,757 1,500 Company 2000 288,750 141,969 1,500 Roy K. Malkin(4) ................................. 2002 250,530 150,822 30,000 President and Chief Executive Officer of 2001 192,500 46,000 0 Minntech Corporation and MediVators, Inc. 2000 175,000 60,000 7,500 Craig A. Sheldon(5) .............................. 2002 166,250 50,000 18,750 Senior Vice President and Chief Financial 2001 136,250 40,000 0 Officer of the Company 2000 121,750 30,000 37,500 William J. Vella(6) .............................. 2002 193,000 0 15,000 President and Chief Executive Officer of Carsen 2001 179,444 103,548 0 Group Inc. 2000 169,950 40,000 37,500- ------------------------2005:
Annual
Compensation(1)
Long-Term
Compensation
Awards(2)
Name and Principal Position
Year
Salary
($)
Bonus
($)
Shares
Underlying
Options(#)
All Other
Compensation
($)(3)
Charles M. Diker
2005
225,000
0
76,500
11,388
Chairman of the Board
2004
225,000
0
2,250
6,691
2003
225,000
0
2,250
6,708
James P. Reilly(4)
2005
385,875
338,605
86,500
15,120
President and Chief Executive Officer
2004
367,500
214,988
189,750
11,420
2003
350,000
47,250
2,250
13,515
Andrew A. Krakauer(5)
2005
253,846
165,000
75,000
10,371
Executive Vice President and Chief Operating
Officer
Craig A. Sheldon(6)
2005
223,750
75,000
12,128
Senior Vice President and Chief Financial
2004
201,250
75,000
0
7,164
Officer
2003
186,250
28,400
30,000
6,404
Roy K. Malkin(7)
2005
333,750
368,094
112,500
12,308
President and Chief Executive Officer of
2004
311,250
50,000
0
6,621
Minntech
2003
293,750
150,822
15,000
6,944
William J. Vella(8)
2005
293,550
130,704
75,000
6,443
President and Chief Executive Officer of
2004
256,100
143,563
0
4,814
Carsen Group
2003
212,220
24,218
37,500
3,237
(1)
The CompanyWe did not pay or provide other forms of annual compensation (such as perquisites and other personal benefits) to the above-named executive officers having a value exceeding the lesser of $50,000 or 10% of the total annual salary and bonus reported for such officers with the exception of reimbursement to aCompanycompany affiliated with Mr. Diker of office expenses amounting to $36,000$24,000in each of fiscal 2005, 2004 and$12,000 in fiscal 2002, 2001 and 2000,2003, respectively.12(2)
The Company hasWe have no long-term incentive compensation plan other than its 1997 Employee Stock Option Plan and the 1998Directors'Directors’ Stock Option Plan described herein and various individually grantedoptions. The Company doesoptions, a 401(k) profit sharing plan and a Canadian profit sharing plan. We do not currently award stock appreciation rights, restricted stock awards or long-term incentive plan pay-outs.(3)
During fiscal 2002, James P.This amount consists of (i) term life insurance premiums paid by us and (ii) contributions paid or accrued by us under our 401(k) plan for the benefit of the named executive.(4) Mr. Reilly
was employed pursuantis party toa four-yearan employment agreement thatexpiredexpires on July 31,2002.2007. Under theemploymentagreement,for fiscal 2002, Mr. Reilly was entitled tohe is paid (i) an annual base salary of$318,347,$450,000 for fiscal 2006 and $500,000 for fiscal 2007 and (ii) incentive compensation equal to6%3-3/8% ofthehis annual base salary for every one cent ($.01)increase in the
fiscal 2002 pre-tax incomediluted earnings per share of our common stock (as adjusted in accordance with the agreement) for the current year over thehighest pre-tax income of anypriorfiscal year commencing July 31, 1998, subject to adjustment for specified events, (iii) participation in employee health, insurance and other benefit plans, (iv) maintenance by the Company of a life insurance policy on the life of Mr. Reilly in the face amount of $500,000 payable to his designated beneficiary, and (v) use of a Company owned or leased automobile. Commencing August 1, 2002, Mr. Reilly is being paid an annual base salary of $350,000. The Company and Mr. Reilly are currently negotiating the terms of a new three-year employment agreement.year. In the event of anew agreement is not entered into, under“Change in Control” (as defined in theterms of the recently expiredemploymentagreement, if Mr. Reilly's employment is terminated for any reason,agreement), Mr. Reillywillmay terminate his employment and be entitled to receive in aseverance paymentlump sum an amount equal toone year's(i) if during the first contract year, 150% of his base salaryplusand bonus with respect to fiscal 2005 and (ii) if during theamountsecond contract year, the greater of (a) $500,000 or (b) 100% of his base salary and bonusforwith respect to fiscal 2006. In addition, upon a Change in Control, all stock options held by him vest in full. During themost recently completed fiscal year. (4) In November 2001, Minntech Corporation entered intofive-year period following the termination of Mr. Reilly’s employment (for any reason), he will be paid a consulting fee of approximately $100,000 per year, adjusted by a cost of living formula.(5) Mr. Krakauer’s employment commenced with us on August 30, 2004. He is party to an employment agreement
with Roy K. Malkinthat expires onOctoberAugust 31,2004.2007. Under the agreement, Mr.Malkin's employment agreement provides forKrakauer is paid (i) an annual base salary of$250,000,$288,750 (for the twelve month period ending August 29, 2006), subject to annual increases equal to no less than 5% or a cost of living formula, and (ii) an annual incentivecompensationbonus ranging from 30% to 70% of his base salary (determined on a formula basis) for each full fiscal2002,year (commencing with the year ending July 31, 2005) in which our adjusted pre-tax income exceeds 90% of its budgeted pre-tax income. In the event of a “Change in Control” (as defined in the employment agreement), Mr. Krakauer may terminate his employment and be entitled to receive (i) in a lump sum an amount equal to5%150% of theexcessbase salary and incentive compensation paid to Mr. Krakauer during the last completed fiscal year if termination occurs after the end of thecombined earningsfirst contract year, or (ii) $275,000, if such termination occurs prior to the end ofMinntech and MediVators before interest and taxes for such Fiscal Year over certain amounts which are set forththe first contract year. In addition, upon a Change inthe agreement, (iii) participationControl, all stock options held by him vest inemployee health, insurance and other benefit plans, (iv) maintenance by Minntech of a life insurance policy on the life offull.(6) Mr.
Malkin in the face amount of $250,000 payableSheldon is party tohis designated beneficiary, and (v) an automobile allowance. On February 1, 2002, Mr. Malkin's annual base salary was increased to $275,000. (5) In November 2001, the Company entered intoan employment agreementwith Craig A. Sheldonthat expires on October 31,2004. Mr. Sheldon's employment2007. Under the agreement,provides forhe is paid (i) an annual base salary of$175,000,$241,500 (for the twelve month period ending October 31, 2006), subject to annual increasesequal toof no less than 5% or a cost of living formula and (ii) an annual discretionarybonus, (iii) participation in employee health, insurance and other benefit plans, (iv) maintenance bybonus. In theCompanyevent of alife insurance policy on“Change in Control” (as defined in thelife ofemployment agreement), Mr. Sheldon may terminate his employment and be entitled to receive in a lump sum an amount equal to 150% of theface amount of $175,000 payablebase salary and bonus paid tohis designated beneficiary, and (v)Mr. Sheldon during the last completed contract year. In addition, upon a Change in Control, all stock options held by him vest in full.(7) Mr. Malkin is party to an
automobile allowance. On November 1, 2002,employment agreement with Minntech that expires on July 31, 2007. Under the agreement, Mr.Sheldon'sMalkin is paid (i) an annual base salarywas increasedof $357,000 (for the twelve month period ending October 31, 2006), subject to$190,000. (6)annual increases of no less than 5% or a cost of living formula and (ii) incentive compensation equal to a “designated percentage” of the excess of Pretax Income (as defined in the agreement) of Minntech for a subject fiscal year over the highest Pretax Income of Minntech since fiscal 2004, with the “designated percentage” being 5% of the first ten percent excess in Pretax Income and 10% of any additional excess in Pretax Income. In the event of a “Change in Control” (as defined in the employment agreement), Mr. Malkin may terminate his employment and be entitled to receive in a lump sum an amount equal to 150% of the base salary and incentive compensation paid to Mr. Malkin during the last completed contract year. In addition, upon a Change in Control, all stock options held by him vest in full.(8) Mr. Vella was paid his salary and bonus in Canadian dollars. The dollar amounts above have been translated from Canadian dollars to U.S. dollars based upon an average exchange rate during the respective fiscal year.
On November 18, 2002, Seth R. Segel was appointed Senior Vice President--Corporate DevelopmentIn connection with the expiration of theCompany pursuantdistribution agreements between Carsen Group and Olympus on July 31, 2006, if Mr. Vella’s employment with Carsen Group is terminated at any time after August 30, 2006, he will be entitled to receive in atwo-year employment agreement that expires on November 17, 2004. Mr. Segel's employment agreement provides for (i)lump sum anannual base salary of $180,000, subject to annual increasesamount equal tono less than 5% or a cost200% ofliving formula, (ii) bonuses of $50,000 following the first year of employment and $50,000 on August 1, 2004, (iii) incentivehis total fiscal 2005 cash compensationequal to .45% of the total consideration paid by the Company with respect to an acquisition during the employment period on which Mr. Segel plays a lead role on the transaction, subject to a $50,000 minimum guaranteed bonus for the first year of employment (in addition to the bonus under item (ii) above)(i.e.,(iv) participation in employee health, insurance and other benefit plans, 13(v) maintenance by the Company of a life insurance policy on the life of Mr. Segel in the face amount of $180,000 payable to his designated beneficiary, and (vi) an automobile allowance. In addition, Mr. Segel was granted a five-year non-plan option to purchase 50,000 shares of Common Stock with an exercise price of $10.59 (the fair value of the shares on the date of grant). The option is exercisable in three approximately equal annual installments beginning November 2003. In the event of a "Change in Control" (as defined in the employment agreement), the options will automatically become fully vested and Mr. Segel may terminate his employment and continue to receive his basesalary andbonus following such termination through the end of the two-year term of the employment agreement. STOCK OPTIONSbonus) and all stock options held by him will vest in full.The following stock option information is furnished for the fiscal year ended July 31,
20022005 with respect tothe Company'sour Chief Executive Officer andtheour other executive officersof the Companynamed in the Compensation Table above, for stock options granted during such fiscal year. Stock options were granted without tandem stock appreciation rights.14OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT ASSUMED % OF TOTAL ANNUAL RATES OF NUMBER OF OPTIONS STOCK PRICE SHARES GRANTED TO EXERCISE APPRECIATION FOR UNDERLYING EMPLOYEES PRICE PER OPTION TERM($)(1) OPTIONS DURING THE SHARE EXPIRATION --------------------- NAME GRANTED FISCAL YEAR ($) DATE 5% 10% - ---- ---------- ----------- --------- ---------- --------- ---------Charles M. Diker................. 1,500(2) 0.3% $14.54 7/30/07 6,026 13,315 James P. Reilly.................. 1,500(2) 0.3% $14.54 7/30/07 6,026 13,315 Roy K. Malkin.................... 30,000(3) 5.1% $12.32 9/6/06 102,114 225,644 Craig A. Sheldon................. 18,750(3) 3.2% $12.32 9/6/06 63,821 141,028 William J. Vella................. 15,000(3) 2.5% $12.32 9/6/06 51,057 112,822- ------------------------Option Grants in Last Fiscal Year
% of Total
Potential Realizable
Number of
Options
Value at Assumed
Shares
Granted to
Annual Rates of Stock
Underlying
Employees
Exercise
Price Appreciation
Options
During the
Price Per
Expiration
for Option Term($)(1)
Name
Granted(#)
Fiscal Year
Share($)
Date
5%
10%
Charles M. Diker
1,500
(2)
17.51
07/30/09
75,000
(3)
20.10
12/05/09
James P. Reilly
1,500
(2)
17.51
7/30/10
85,000
(4)
17.51
7/30/10
Andrew A. Krakauer
75,000
(3)
17.14
8/29/09
Roy K. Malkin
112,500
(3)
20.10
12/05/09
Craig A. Sheldon
75,000
(3)
20.10
12/05/09
William J. Vella
75,000
(3)
20.10
12/05/09
(1) Represents the potential realizable value of the options granted at assumed 5% and 10% rates of compounded annual stock price appreciation from the date of grant of such options to the date of the option
expiry.expiration.(2) These options,
weregranted underthe Company'sour 1998Directors'Directors’ Stock OptionPlan. ThePlan, have an exercise priceper share of the options isequal to the market value per share on the date of grant. The options are subject to vesting as follows: 50% of the total shares covered by the options vest on the first anniversary of the date of grant and the remaining 50% vest on the second anniversary of such date of grant.(3) These options,
weregranted under theCompany's1997 Employee Stock OptionPlan. ThePlan, have an exercise price equal to the market value per share on the date of grant and are immediately exercisable.(4) This option, granted under the
options is1997 Employee Stock Option Plan, has an exercise price equal to the market value per share on the date of grant. Theoptions are subjectoption became exercisable as tovesting42,500 shares immediately and will become exercisable asfollows: 25% of the totalto an additional 21,250 sharescovered by the options veston each ofthe first four anniversaries of the date of the grant. OPTION EXERCISE AND HOLDINGSJuly 31, 2006 and July 31, 2007.The following information is furnished for fiscal
20022005 with respect tothe Company'sour Chief Executive Officer andtheour other executive officersof the Companynamed in the Compensation Table above, for stock option exercises during such fiscal year and unexercised stock option values at July 31,2002. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES2005.Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-end Option Values
NUMBER OF SHARES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT SHARES OPTIONS ATNumber of Shares
Value of
Shares
Underlying Unexercised
Unexercised in-the-Money
Acquired On
Value
Options at 7/31/
0204Options at 7/31/
02($04 ($)ACQUIRED ON VALUE ----------------------------- ----------------------------- NAME EXERCISE(#) REALIZED($Name
Exercise(#)
Realized($)(1)
EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE - ---- ----------- -------------- ----------- --------------- ----------- ---------------Exercisable
Non-Exercisable
Exercisable
Non-Exercisable
Charles M.
Diker....... 1,500 23,655 237,750 2,250 2,293,125 0DikerJames P.
Reilly........ 1,500 24,405 112,746 52,254 1,180,333 527,042ReillyAndrew A. Krakauer
Roy K.
Malkin.......... 22,500 227,993 56,250 33,750 621,000 108,000MalkinCraig A.
Sheldon....... 12,750 188,247 750 39,750 8,280 271,598SheldonWilliam J.
Vella....... 16,875 247,851 0 37,500 0 278,588Vella- ------------------------(1) Value realized is calculated as the market value of the shares exercised using the closing price of
the Company'sour common stock on such exercise date. The value realized is for informational purposes only and does not purport to represent that such individual actually sold the underlying shares, or that the underlying shares were sold on the date of exercise. Furthermore, such value realized does not take into consideration individual income tax consequences.15STOCK OPTION PLANS The following sets forth certain information as of July 31, 2002 with respect to compensation plans of the Company under which securities of the Company may be issued: EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES REMAINING AVAILABLE FOR NUMBER OF SECURITIES FUTURE ISSUANCE UNDER TO BE ISSUED UPON EQUITY COMPENSATION EXERCISE OF WEIGHTED-AVERAGE EXERCISE PLANS OUTSTANDING OPTIONS, PRICE OF OUTSTANDING OPTIONS, (EXCLUDING SECURITIES PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN FIRST COLUMN) - ------------- -------------------- ----------------------------- --------------------------Equity compensation plans approved by security holders............... 1,133,367 $8.55 581,837 Equity compensation plans not approved by security holders...... 329,625 $6.16 NA Total............................... 1,462,992 $8.01 581,837An aggregate of
375,000 shares of common stock was reserved for issuance or available for grant under the Company's 1991 Employee Stock Option Plan (the "1991 Employee Plan"), which expired in fiscal 2001. Options granted under the 1991 Employee Plan are intended to qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). All options outstanding at July 31, 2002 under the 1991 Employee Plan have a term of five years and are currently exercisable in full. At July 31, 2002, options to purchase 1,875 shares of common stock at a price of $4.66 per share (the fair market value of the common stock at the time of grant) were outstanding under the 1991 Employee Plan. No additional options will be granted under the 1991 Employee Plan. An aggregate of 1,500,0003,750,000 shares of common stock is reserved for issuance or available for grant underthe Company'sour 1997 Employee Stock Option Plan, as amended (the"1997 Employee Plan"“Employee Plan”). Options granted under the1997Employee Planaremay be intended to qualify asincentive stock options within the meaning of Section 422 of the Code.ISOs or non-ISOs. The1997Employee Plan is administered in all respects by theStock OptionCompensation Committee. TheStock OptionCompensation Committee may determine the employees to whom options are to be granted and the number of shares subject to each option. Under the terms of the1997Employee Plan, allemployees of the Companyorsubsidiaries of the Companyour employees are eligible for option grants. The option exercise price of options granted under the1997Employee Plan is fixed by theStock OptionCompensation Committee but, in the case of ISOs, must be no less than 100% of the fair market value of the shares of common stock subject to the option at the time of grant, except that in the case ofan employee who possesses more than 10% of the total combined voting power of all classes of stock of the Company ("a 10%Holder"),Holder, the exercise price must be no less than 110% of said fair market value. Options may be exercised by the payment in full in cash or by the tendering or cashless exchange of shares of our common stock having a fair market value, as determined by theStock OptionCompensation Committee, equal to the option exercise price. Options granted under the1997Employee Plan may not be exercised more than ten years after the date of grant, five years in the case of anincentive stock optionISO granted to a 10% Holder. All options outstanding at July 31,20022005 under the1997Employee Plan have a term of five years, except for 150,000 ten-year options granted to Mr. Reillyand 128,625 options granted to a former executive officer under the terms of their respective employment agreements, each of which had an original term of ten years. Of the 128,625 options granted to the former executive officer, 12,375 options terminate on October 31, 2002 and 116,250 options remain exercisable through July 31, 2004.in 1999. At July 31,2002,2005, options to purchase918,492 and1,982,462 shares of common stock at prices between$3.25$2.33 and$19.15$29.49 per share were outstanding under the1997Employee Plan and381,075590,343 shares were available for grant under the1997Employee Plan.16An aggregate of
300,000450,000 shares of common stock was reserved for issuance or available for grant underthe Company'sour 1991Directors'Directors’ Stock Option Plan (the"1991 Directors' Plan"“1991 Directors’ Plan”), which expired in fiscal 2001. Options granted under the 1991Directors'Directors’ Plan do not qualify asincentive stock options within the meaning of Section 422 of the Code.ISOs. At July 31,2002,2005, options to purchase121,50079,875 shares of common stock at prices between$2.33$2.00 and$6.83$4.55 per share (the fair market value of the shares at the time of grant) were outstanding under the 1991Directors'Directors’ Plan. All of the options have a ten-year term and are exercisable in full. No additional options will be granted under the 1991Directors'Directors’ Plan.An aggregate of
300,000450,000 shares of common stock is reserved for issuance or available for grant underthe Company'sour 1998Directors'Directors’ Stock Option Plan (the"1998 Directors' Plan"“1998 Directors’ Plan”). Options granted under the 1998Directors'Directors’ Plan do not qualify asincentive stock options within the meaning of Section 422 of the Code.ISOs. The 1998Directors'Directors’ Plan provides for the automatic grant to each ofthe Company'sour directors of options to purchase 1,500 shares of common stock on the last business day ofthe Company'sour fiscal year. In addition, an option to purchase 750 shares of common stock is granted automatically on the lastbusiness day of each fiscal quarter to each director (exclusive of Messrs. Diker and
Reilly and any other director who is a full-time employee of the Company)Reilly) provided that the director attended any regularly scheduled meeting of the Board, if any, held during such quarter.Each suchAn optiongrantto purchase 15,000 shares of common stock is also granted to each person who is appointed or elected for the first time to be a director. All option grants under the 1998 Directors’ Plan are at an exercise price equal to the fair market value of the common stock on the date of grant. Options granted prior to July 31, 2000 have a term of ten years and options granted on and after July 31, 2000 have a term of five years. The fiscal year options are exercisable in two equal annual installments commencing on the first anniversary of the grant thereof and the quarterly options are exercisable in full immediately. The options granted to newly appointed or elected directors are exercisable in three equal annual installments commencing on the date of grant. At July 31,20022005, options to purchase91,500243,375 shares of common stock at prices between$3.41$2.27 and$17.56$26.61 per share were outstanding under the 1998Directors'Directors’ Plan, and208,500142,500 shares were available for grant under the 1998Directors'Directors’ Plan.Between
19911996 and 2000, Mr. Dornbush was granted ten-year non-plan options to purchase an aggregate of9,00013,500 shares of common stock at prices between$3.54$2.36 and$5.83$3.88 per share. These options are exercisable in full.In October 1996, Mr. Diker was granted a ten-year non-plan option to purchase
75,000112,500 shares of common stock at an exercise price of$4.91$3.27 per share. In October 1997, Mr. Diker was granted a ten-year non-plan option to purchase75,000112,500 shares of common stock at an exercise price of$4.66$3.10 per share. In October 1998, Mr. Diker was granted a ten-year non-plan option to purchase75,000112,500 shares of common stock at an exercise price of$5.16$3.44 per share. All of said options are exercisable in full.In October 1998, Dr. Rowe was granted a ten-year non-plan option to purchase 15,000 shares of common stock at an exercise price of $5.33 per share. In March 1999, Dr. Rowe was granted a ten-year non-plan option to purchase 15,000 shares of common stock at an exercise price of $4.25 per share. All of said options are exercisable in full.In October 2000, Mr. Cohen was granted a five-year non-plan option to purchase
15,00022,500 shares of common stock at an exercise price of$5.58$3.72 per share. This option is exercisable inthree equal annual installments beginning October 2000. In November 2000, a former executive officer was granted a ten-year non-plan option to purchase 39,375 shares of common stock at an exercise price of $5.92 per share. At July 31, 2002 (the termination date of the officer's employment), 6,875 options were outstanding (the balance were exercised) and have an expiration date of July 31, 2004. In October 2001, the same individual was granted a ten-year non-option plan to purchase 75,000 shares of common stock at an exercise price of $14.96 per share. At July 31, 2002, 50,000 of such options were terminated and 25,000 options have an expiration date of July 31, 2004. In September 2001, Dr. Shapiro was granted a five-year non-plan option to purchase 15,000 shares of common stock at an exercise price of $12.32 per share. This option is exercisable in three equal annual installments beginning September 2001.full.In November 2002, Mr. Segel was granted a five-year non-plan option to purchase
50,000112,500 shares of common stock at an exercise price of$10.59$7.06 per share. This option is exercisable in three equal annual installments beginning November 2003.17STOCK PERFORMANCE GRAPHThe Compensation Committee is responsible for setting and administering the policies which govern annual executive compensation and for administering the grant of options under our stock option plans. The Compensation Committee is currently comprised of three members, Mr. Hirschfield, Chairman, and Mr. Cohen and Dr. Foreman, each of whom is an independent director.
Executive compensation generally consists of base salary, a bonus or incentive compensation (when earned) and the award of stock options as described below. The policy of the Compensation Committee, in consultation with the Chairman and the Chief Executive Officer, where appropriate, is to provide compensation to the Chief Executive Officer and our executive officers reflecting the contribution of such executives to our growth in sales and earnings, the implementation of strategic plans consistent with our long-term objectives, and the enhancement of shareholder value.
Long-term incentive compensation consists exclusively of the award of stock options under our Employee Plan and, in the case of officers who serve as directors, non-discretionary annual option grants of 1,500 shares under our 1998 Directors’ Plan. In addition, officers participate in our 401(k) plan and Mr. Vella participates in the deferred profit sharing plan of our Canadian subsidiary. The Compensation Committee is responsible for the award of stock options under the Employee Plan.
With respect to executive compensation for the fiscal year ended July 31, 2005, the Compensation Committee met in December 2004 to evaluate the performance of the three executive officers of the Company, Messrs. Segel (Senior Vice President-Corporate Development), Sheldon (Senior Vice President
and CFO) and Malkin (President and CEO of Minntech), each of whom had an employment agreement expiring on December 31, 2004. It was the Committee’s desire to have each of said executives enter into new three-year employment agreements with compensation levels determined in a manner consistent with its policy stated above. In reaching its decision on compensation, the Committee, in addition to considering the recommendations of the CEO and Chairman, considered several factors, including the report of an independent compensation consultant that provided compensation information of comparable public companies, our significant increase in sales, net income and stock price, the successful implementation of strategic plans consistent with our long-term growth objectives including the consummation of three important acquisitions during the prior fiscal year, and the awards given to the executives in prior years. The terms of each of the new employment agreements is described above in the footnotes to the Summary Compensation Table. Compensation paid to Mr. Reilly, President and CEO, during fiscal 2005 was based solely on the terms of his employment agreement that expired on July 31, 2005. On August 1, 2006 Mr. Reilly entered into a new employment agreement that covers fiscal 2006 and 2007, the terms of which are described in the footnotes to the Summary Compensation Table.
In addition, the Committee resolved to continue our long-standing policy of utilizing the award of stock options (which provide value to the executive over time as growth in the market price of our shares reflects the successful achievement of our business objectives) to identify the success of the executives with the growth in equity value to our stockholders. The Committee took into account its view of the appropriate equity position of our executive officers in light of our market capitalization in determining the size of all awards. Except for new executive officers hired by the Company during fiscal 2005, whose option awards were granted in connection with their employment agreements, the Committee also based the size of each award upon the officer's contribution to the achievement of the performance objectives described above. Each of these factors was equally considered. The number of options awarded during fiscal 2005 to the executive officers named in the Summary Compensation Table is set forth under “Option Grants in Last Fiscal Year.”
Compensation Committee Interlocks and Insider Participation
None of our officers served on the Compensation Committee during its last fiscal year. Mr. Reilly, our President and Chief Executive Officer, however, participated in deliberations concerning executive compensation, except with respect to the compensation of the Chairman of the Board and himself. Mr. Diker, our Chairman of the Board, also participated in such deliberations except with respect to his own compensation.
Compensation Committee:
Alan J. Hirschfield (Chairman)
Joseph M. Cohen
Spencer Foreman, M.D.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of Ernst & Young LLP has audited our financial statements for the last sixteen years. In addition to retaining Ernst & Young LLP to audit our consolidated financial statements for the fiscal year ended July 31, 2005, we retained Ernst & Young LLP to provide tax and other advisory services in the fiscal year ended July 31, 2005, and expect to continue to do so in the future.
The following table presents fees for professional audit services rendered by Ernst & Young LLP for the audit of our annual financial statements and review of financial statements included in our quarterly reports on Form 10-Q (“Audit Fees”) for fiscal 2005 and 2004, and fees billed for other services rendered by Ernst & Young LLP.
2005
2004
Audit Fees
$
$
366,855
Audit Related Fees(1)(2)
67,380
Tax Fees(2)(3)
154,226
Total
$
$
588,461
(1) Audit related fees for fiscal 2005 and 2004 consisted principally of fees related to advice given with the respect to our internal control project and various accounting matters and fees related to the audit of a benefit plan.
(2) The Audit Committee has determined that the provision of all non-audit services performed for us by Ernst & Young LLP is compatible with maintaining that firm’s independence.
(3) Tax fees consisted primarily of services related to federal, state and international tax compliance, the majority of which related to the preparation of fiscal 2004 and 2003 income tax returns, as well as of services related to tax due diligence in connection with acquisitions.
The Audit Committee has a written preapproval policy. However, as a matter of practice, prior to engaging Ernst & Young LLP for any services, we generally obtain the prior approval of the Audit Committee. In 2005, all of the audit fees, audit-related fees and tax fees were approved by the Audit Committee.
The Audit Committee is providing this report to enable stockholders to understand how it monitors and oversees our financial reporting process. The Audit Committee operates pursuant to an Audit Committee Charter that is reviewed annually by the Audit Committee and updated as appropriate.
This report confirms that the Audit Committee has (1) reviewed and discussed the audited financial statements for the year ended July 31, 2005 as well as the unaudited financial statements included in Quarterly Reports on Form 10-Q for each of the first three quarters of the fiscal year, with management and Cantel’s independent registered public accounting firm; (2) discussed with our independent registered public accounting firm the matters required to be reviewed pursuant to the Statement on Auditing Standards No. 61 (Communications with Audit Committees); (3) reviewed the written disclosures letter from our independent registered public accounting firm as required by Independence Standards Board Standard No. 1 (Independent Discussions with Audit Committees); and (4) discussed with our independent registered public accounting firm their independence.
Based upon the above review and discussions, the Audit Committee recommended to the Board that the audited financial statements for the year ended July 31, 2005 be included in our Annual Report on Form 10-K for filing with the Securities and Exchange Commission.
No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, through any general statement incorporating by reference in its entirety the Proxy Statement in which this report appears, except to the extent that we specifically incorporate this report or a portion of it by reference. In addition, this report shall not be deemed to be filed under either the Securities Act or the Exchange Act.
Audit Committee:
Robert L. Barbanell (Chairman)
Alan R. Batkin
Bruce Slovin
20
The graph below compares the cumulative total stockholder return on
the Company'sour common stock for the last five fiscal years with the cumulative total return on theNasdaq Stock Market/U.S. Index, the Nasdaq Non-Financial Index, the New York Stock Exchange CompositeRussell 2000 Index and the Dow JonesU.S. Medical ProductsHealthcare Equipment and Services Index over the same period (assuming the investment of $100 inthe Company'sour common stock, theNasdaq Stock Market/U.S. Index, the Nasdaq Non-Financial Index, the New York Stock Exchange CompositeRussell 2000 Index, and the Dow JonesU.S. Medical ProductsHealthcare Equipment and Services Index on July 31,1997,2000, and, where applicable, the reinvestment of all dividends).COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* AMONG CANTEL MEDICAL CORP EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
JUL-97 JUL-98 JUL-99 JUL-00 1-JUL 2-JULCANTEL MEDICAL CORP. 100.00 159.09 96.59 141.47 458.91 396.53 NASDAQ STOCK MARKET (U.S.) 100.00 117.68 168.18 239.52 128.56 84.94 NYSE COMPOSITE 100.00 114.31 126.61 129.55 124.76 99.37 NASDAQ NON-FINANCIAL 100.00 116.42 171.68 253.86 127.50 79.28 DOW JONES US MEDICAL PRODUCTS 100.00 124.41 139.63 152.69 173.13 150.82* $100 invested on 7/31/97We are using The Dow Jones Healthcare Equipment and Services Index to replace the Dow Jones US Medical Products Index, which was used instock or index-including reinvestmentthe proxy statement for our 2004 Annual Meeting ofdividends. Fiscal year ending July 31. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEStockholders, since the later index has been discontinued. Due to such discontinuance, we are unable to provide five-year comparative data for that index.Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States,
the Company'sour directors, executive officers, and any persons holding more than ten percent ofthe Company'sour common stock are required to report their initial ownership ofthe Company'sour common stock and any subsequent changes in their ownership to theSecurities and Exchange Commission ("SEC").SEC. Specific due dates have been established by the SEC, andthe Company iswe are required to disclose in thisReportproxy statement any failure to file by those dates. Based upon(i) the copiesa review ofSection 16(a) reports that the Company received from such persons for their 2001 fiscal year transactionsour records and(ii) the written representations received from one or more of such persons that no annual Form 5 reports were required to be filed for them for the 2002 fiscal year, the 18Company believesother information, we believe that there has been compliance with all Section 16(a) filing requirements applicable to such officers, directors, and ten-percent beneficial owners for such fiscal year, except for reports on Form 4 as follows: (a) reports for thefollowing: (i) a reportgrant ofan open market saleoptions to Steven C. Anaya, Charles M. Diker, Roy K. Malkin, Seth R. Segel, Craig A. Sheldon and William J. Vella on December 16, 2004, which reports were filed on or before January 12, 2005 and (b) reports for the grant ofshares byoptions to Robert L. Barbanell, Alan R. Batkin, Joseph M. Cohen, Charles M. Diker, Darwin C. Dornbush, Spencer Foreman, M.D., Alan J. Hirschfield, James P. Reilly and Bruce Slovindue by November 10, 2001 wason July 31, 2005, which reports were filed onNovember 14, 2001, (ii) a report of an open market purchase of shares by Joseph Cohen due by November 10, 2001 was filed on March 18, 2002, (iii) a report of a stock option grant to Fred L. Shapiro due by October 10, 2001 was filed on November 8, 2001, and (iv) a report of an open market sale of shares by Roy Malkin due by December 10, 2001 was filed on February 8, 2002.August 4, 2005.STOCKHOLDER PROPOSALS FOR
20032006 PROXY STATEMENTThe deadline for submitting a stockholder proposal for inclusion in the
Company'sproxystatement and formmaterials for our 2006 Annual Meeting ofproxyStockholders pursuant to Rule 14a-8 of the Exchange Act is July 12, 2006. Under our By-laws, certain procedures are provided that a stockholder must follow to nominate persons forthe Company's 2003 annual meeting of stockholders is the closeelection as directors or to introduce an item of businesson July 11, 2003. In orderat an Annual Meeting of Stockholders without inclusion in our proxy materials. These procedures provide that stockholders wishing tocomply with applicable provisionssubmit proposals or director nominations at the 2006 Annual Meeting ofthe Company's By-Laws, proposals of stockholders intendedStockholders that are not to bepresented at the Company's 2003 annual meeting of stockholders without inclusion ofincluded in suchproposals in the Company'sproxystatement and form of proxy relating to the meetingmaterials mustbe receiveddo so bythe Company nonot later than the close of business onSeptember 9, 2003the 60th day andnonot earlier than the close of business onAugustthe 90th day prior to the first anniversary of the 2005 Annual Meeting of Stockholders (no earlier than September 21, 2006 and no later than October 21, 2006, as currently scheduled); provided, however, that in the event that the date of the 2006 Annual Meeting of Stockholders is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be delivered not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to the such annual meeting or the 102003.th day following the day on which public announcement of the date of the meeting is first made by us. Stockholders wishing to submit any such proposal are also advised to review Rule 14a-8 under the Exchange Act and our By-laws.UPON THE WRITTEN REQUEST OF A RECORD HOLDER OR BENEFICIAL OWNER OF COMMON STOCK ENTITLED TO VOTE AT THE MEETING,
THE COMPANYWE WILL PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31,2002,2005, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD BE MAILED TO MS. JOANNAZ.ZISA ALBRECHT, CANTEL MEDICAL CORP., 150 CLOVE ROAD, LITTLE FALLS, NJ 07424.SOLICITATION OF PROXIES The cost of solicitation of proxies in the accompanying form has been or will be borne by the Company. In addition to solicitation by mail, arrangements may be made with brokerage houses and other custodians, nominees and fiduciaries to send proxy material to beneficial owners, and the Company will, upon request, reimburse them for any attendant expenses. In order to ensure the presence of a quorum at the Meeting, all stockholders are requested to sign and return promptly the enclosed proxy in the postage paid envelope provided for that purpose. The signing of the proxy will not prevent your attending the meeting and voting in person if you wish to do so.OUR ANNUAL REPORT ON FORM 10-K IS ALSO AVAILABLE THROUGH OUR WEBSITE AT WWW.CANTELMEDICAL.COM.The Board knows of no other matters to be presented for stockholder action at the Annual Meeting. However, if other matters do properly come before the Annual Meeting or any adjournments or postponements thereof, the Board intends that the persons named in the proxies will vote upon such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS Darwin C. Dornbush SECRETARY November 25, 2002 19EXHIBIT
BY ORDER OF THE BOARD OF DIRECTORS
Darwin C. Dornbush
Secretary
November 21, 2005
22
Annex A
1997 EMPLOYEE STOCK OPTION PLAN OF CANTEL MEDICAL CORP. (As adopted by the Board of Directors as of October 16, 1997 and by the stockholders on January 22, 1998 and amended on April 27, 1999, March 28, 2000, September 6, 2001 and May 29, 2002) 1. THE PLAN. This 1997 Employee Stock Option Plan (the "Plan") is intended to encourage ownership of stock of Cantel Medical Corp. (the "Corporation") by specified employeesDirector Qualification Standards
A majority of the
Corporation and its subsidiaries and to provide additional incentive for them to promote the success of the business of the Corporation. 2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 14 hereof, the total number of shares of Common Stock, par value $.10 per share, of the Corporation (the "Stock") which may be issued pursuant to Incentive Stock Options, as defined by Section 422 of the Internal Revenue Code ("ISOs"), under the Plan (the "Options") shall be 1,500,000. Such shares of Stock may be in whole or in part, either authorized and unissued shares or treasury shares as the Board of Directors of the Corporation (the "Board") shall from time to time determine. If an Option shall expire or terminate for any reason without having been exercised in full, the unpurchased shares covered thereby shall (unless the Plan shall have been terminated) again be available for Options under the Plan. 3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a committee (the "Committee") composed of two or more non-employeemembers of the Boardwhich shall have plenary authority, in its discretion, to determine the employees of the Corporationandits subsidiaries to whom Options shall be granted ("Optionees"), the number of shares to be subject to each Option (subject to the provisions of Paragraph 2), the option exercise price (the "Exercise Price") (subject to the provisions of Paragraph 7), the vesting schedule of each option and the other terms of each Option. The Board shall have plenary authority, subject to the express provisions of the Plan, to interpret the Plan, to prescribe, amend and rescind any rules and regulations relating to the Plan and to take such other action in connection with the Plan as it deems necessary or advisable. The interpretation and construction by the Board of any provisions of the Plan or of any Option granted thereunder shall be final and no member of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted thereunder by the Committee. 4. EMPLOYEES ELIGIBLE FOR OPTIONS. All employees of the Corporation or its subsidiaries shall be eligible for Options. In making the determination as to employees to whom Options shall be granted and as to the number of shares to be covered by such Options, the Committee shall take into account the duties of the respective employees, their present and potential contributions to the success of the Corporation and such other factors as it shall deem relevant in connection with accomplishing the purpose of the Plan. 5. TERM OF PLAN. The Plan shall terminate on, and no Options shall be granted after October 15, 2007 provided that the Committee may at any time terminate the Plan prior thereto. 6. MAXIMUM OPTION GRANT. With respect to an Option granted to an individual that is intended to qualify as an ISO, the aggregate fair market value (determined as of the time the Option is granted) of the Stock with respect to which such Option and all other ISOs granted to the individual (whether under this Plan or under any other stock option plan of the Corporation or any of its subsidiaries) are exercisable for the first time during a calendar year may not exceed $100,000. 7. EXERCISE PRICE. Each Option shall state the Exercise Price, which shall be, in the case of ISOs, not less than 100% of the fair market value of the Stock on the date of the granting of the Option, nor less than 110% in the case of an ISO granted to an individual who, at the time the Option A-1is granted, is a 10% Holder (as hereinafter defined). The fair market value of shares of Stock shall be determined by the Board and shall be (i) the closing price of the Stock on the date of the granting of the Option as reported by the principal exchange on which the Company's Stock is traded or any quotation reporting organization, or (ii) if the Stock did not trade on such date, the closing price of the Stock on the first day immediately preceding such date on which the Common Stock traded. 8. TERM OF OPTIONS. The term of each Option granted under this Plan shall be for a maximum of ten years from the date of granting thereof, and a maximum of five years in the case of an ISO granted to a 10% Holder, but may be for a lesser period or be subject to earlier termination as hereinafter provided. 9. EXERCISE OF OPTIONS. An Option may be exercised from time to time as to any part orall of theStock to which the Optionee shall then be entitled, provided, however, that an Option may not be exercised (a) as to less than 100 shares at any time (or for the remaining shares then purchasable under the Option, if less than 100 shares), (b) prior to the expiration of at least six months from the date of grant except in casemembers of thedeath or disability ofAudit Committee, theOptionee or as otherwise approved by theCompensation Committee and(c) unlesstheOptionee shall have been in the continuous employ of the Corporation or its subsidiaries from the date of the granting of the Option to the date of its exercise, exceptNominating and Governance Committee must qualify asprovided in Paragraphs 12 and 13. The Exercise Price shall be paid in full at the time of the exercise of an Option (i) by certified or bank check or (ii) by the transfer to the Corporation of shares of its Stock with a fair market value (as determined by the Committee) equal to the purchase price of the Stock issuable upon exercise of such Option; provided, however, that shares transferred under this subparagraph (ii) must have been continuously owned by the Optionee for at least one year immediately preceding such transfer or such shorter period (but in no event less than six months) approved by the Committee. The holder of an Option shall not have any rights as a stockholder with respect to the Stock issuable upon exercise of an Option until certificates for such Stock shall have been delivered to him after the exercise of the Option. 10. NON-TRANSFERABILITY OF OPTIONS. An Option shall not be transferable otherwise than by will or the laws of descent and distribution and is exercisable during the lifetime of the employee only by him or his guardian or legal representative. 11. FORM OF OPTION. Each Option granted pursuant to the Plan shall be evidenced by an agreement (the "Option Agreement") which shall clearly identify the status of the Options granted thereunder (i.e., an ISO) and which shall be in such form as the Committee shall from time to time approve. The Option Agreement shall comply in all respects with the terms and conditions of the Plan and may contain such additional provisions, including, without limitation, restrictions upon the exercise of the Option, as the Committee shall deem advisable. 12. TERMINATION OF EMPLOYMENT. In the event that the employment of an Optionee shall be terminated (otherwise by reason of death), such Option shall be exercisable (to the extent that such Option was exercisable at the time of termination of his employment) at any time prior to the expiration of a period of time not exceeding three months after such termination, but not more than ten years (five years in the case of an ISO granted to a 10% Holder) after the date on which such Option shall have been granted. Nothing in the Plan or in the Option Agreement shall confer upon an Optionee any right to be continued as an employee of the Corporation or its subsidiaries or interfere in any way with the right of the Corporation or any subsidiary to terminate or otherwise modify the terms of an Optionee's employment, provided, however, that a change in an Optionee's duties or position shall not affect such Optionee's Option so long as such Optionee is still an employee of the Corporation or one of its subsidiaries. 13. DEATH OF OPTIONEE. In the event of the death of an Optionee, any unexercised portion of such Optionee's Option shall be exercisable (to the extent that such Option was exercisable at the time of his death) at any time prior to the expiration of a period not exceeding three months after his death but not more than ten years (five years in the case of an ISO granted to a 10% Holder) after the date A-2on which such Option shall have been granted and only by such person or persons to whom such deceased Optionee's rights shall pass under such Optionee's will or by the laws of descent and distribution. 14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in the outstanding Stock of the Corporation by reason of stock dividends, splitups, recapitalizations, mergers, consolidations, combinations or exchanges of shares, separations, reorganizations or liquidations, the number and class of shares or the amount of cash or other assets or securities available upon the exercise of any Option granted hereunder and the maximum number of shares as to which Options may be granted to an employee shall be correspondingly adjusted, to the end that the Optionee's proportionate interest in the Corporation, any successor thereto or in the cash, assets or other securities into which shares are converted or exchanged shall be maintained to the same extent, as near as may be practicable, as immediately before the occurrence of any such event. All references in this Plan to "Stock" from and after the occurrence of such event shall be deemed for all purposes of this Plan to refer to such other class of shares or securities issuable upon the exercise of Options granted pursuant hereto. 15. STOCKHOLDER AND STOCK EXCHANGE APPROVAL. This Plan is subject to and no Options shall be exercisable hereunder until after the approval by the holders of a majority of the Stock of the Corporation voting at a duly held meeting of the stockholders of the Corporation within twelve months after the date of the adoption of the Plan by the Board. 16. AMENDMENT OF THE PLAN. The Board shall have complete power and authority to modify or amend the Plan (including the form of Option Agreement) from time to time in such respects as it shall deem advisable; provided, however, that the Board shall not, without the approval of the votes represented by a majority of the outstanding Stock of the Corporation present or represented at a meeting duly heldindependent directors in accordance with the applicablelawsprovisions of theCorporation's jurisdictionSecurities Exchange Act ofincorporation1934, and the rules promulgated thereunder and the applicable rules of the NYSE.To assist it in making its determination regarding independence, the Board will consider, at a minimum, the following categorical standards:
· No Director who is an employee or a former employee of the Company will be considered “independent” until three years after the employment has ended.
· No Director will be considered independent who receives more than $100,000 per year in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service) until three years after he ceases to receive more than $100,000 per year in such compensation.
· No Director who is, or in the past three years has been, affiliated with or employed by a present or former auditor of the Company or an affiliate will be considered “independent” until three years after the end of either the affiliation or the auditing relationship.
· No Director who is, or in the past three years has been, part of an interlocking directorate in which an executive officer of the Company serves on the compensation committee of another company that currently employs the Director will be considered “independent.”
· Directors with immediate family members in any of the above categories will not be considered “independent” until the expiration of the relevant three-year period; provided, however, that employment of a family member of a Director in a non-officer position will not preclude a determination that the Director is independent.
· No Director who during the prior three years was an executive officer or an employee, or whose immediate family member was an executive officer, of a company that made payments to, or received payments from the Company for property or services in an amount which, in any single fiscal year, exceeded the greater of $1,000,000 or 2% of such other company’s consolidated gross assets.
23
Proxy - For the Annual Meeting of Stockholders - December 20, 2005
I appoint Charles M. Diker and James P. Reilly, or either of them, as my proxies, with full power of substitution, to vote all shares of Common Stock of CANTEL MEDICAL CORP. that I am entitled to vote at
a meeting of stockholders or bythewritten consent of stockholders owning stock representing a majority of the votes of the corporation's outstanding stock, (i) increase the maximum number of shares which in the aggregate are subject to Options under the Plan (except as provided by Paragraph 14), (ii) extend the term of the Plan or the period during which Options may be granted or exercised, (iii) reduce the Exercise Price, in the case of ISOs below 100% (110% in the case of an ISO granted to a 10% Holder) of the fair market value of the Stock issuable upon exercise of Options at the time of the granting thereof, other than to change the manner of determining the fair market value thereof, (iv) increase the maximum number of shares of Stock for which any employee may be granted Options under the Plan pursuant to Paragraph 6, (v) modify the requirements as to eligibility for participation in the Plan, or (vi) amend the plan in any respect which would cause such options to no longer qualify for ISO treatment pursuant to the Internal Revenue Code. No termination or amendment of the Plan shall, without the consent of the individual Optionee, adversely affect the rights of such Optionee under an Option theretofore granted to him or under such Optionee's Option Agreement. 17. TAXES. The Corporation may make such provisions as it may deem appropriate for the withholding of any taxes which it determines is required in connection with any Options granted under the Plan. The Corporation may further require notification from the Optionees upon any disposition of Stock acquired pursuant to the exercise of Options granted hereunder. 18. CODE REFERENCES AND DEFINITIONS. Whenever reference is made in this Plan to a section of the Internal Revenue Code, the reference shall be to said section as it is now in force or as it may hereafter be amended by any amendment which is applicable to this Plan. The term "subsidiary" shall have the meaning given to the term "subsidiary corporation" by Section 425(f) of the Internal Revenue Code. The term "10% Holder" shall mean any person who, for purposes of Section 422 of the Internal Revenue Code owns more than 10% of the total combined voting power of all classes of stock of the employer corporation or of any subsidiary corporation. A-3Please date, sign and mail your proxy card as soon as possible.Annual Meeting of Stockholders to be held on December 20, 2005 at 9:30 A.M. at The Harmonie Club, 4 East 60th Street, New York, New York, and any adjournments ofCANTEL MEDICAL CORP. December 19, 2002 Please Detach and Mailthe meeting on all matters coming before said meeting.My proxies will vote the shares represented by this proxy as directed on the other side of this card, but in the
Envelope Providedabsence of any instructions from me, my proxies will vote “FOR” the election of all the nominees listed under Item 1 and “FOR” Items 2 and 3. My proxies may vote according to their discretion on any other matter which may properly come before the meeting. I may revoke this proxy prior to its exercise.1.Election of ten directors: Robert L. Barbanell, Alan R. Batkin, Joseph M. Cohen, Charles M. Diker, Darwin C. Dornbush, Spencer Foreman, M.D., Alan J. Hirschfield, Elizabeth McCaughey, James P. Reilly and Bruce Slovin
A /X/ Please mark your votes as in this example.WITHHOLD
NOMINEES
AUTHORITY
o
o
(INSTRUCTION: To withhold authority to vote for any individual nominee, write the nominee’s name on the line provided above.)
2.To approve the amendment to the Certificate of Incorporation to increase the number of authorized shares of common stock from 20,000,000 to 30,000,000:
FOR
AGAINST
ABSTAIN
(1)ELECTION OF / / / / Nominees: JAMES P. REILLY (2) TO APPROVE THE AMENDMENT TO THE / / / / / / DIRECTORS ROBERT L. BARBANELL COMPANY'S 1997 EMPLOYEE STOCK NOMINEES JOSEPH M. COHEN OPTION PLAN.o
o
o
3.Ratification of Ernst & Young, LLP as Independent Registered Public Accounting Firm.
FOR
TERMS FRED L. SHAPIRO (3) IN THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS EXPIRING AT 2005 ANNUAL MEETING OF THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY STOCKHOLDERS: ADJOURNMENT THEREOF. TO WITHHOLD AUTHORITY TO VOTE FOR ANY Unless a contrary direction is indicated, the shares INDIVIDUAL NOMINEE, WRITE THE NOMINEE'S represented by this proxy will be voted for all nominees NAME IN THE SPACE PROVIDED BELOW. for directors named in the proxy statement enclosed herewith and for Proposal 2; if specific instructions are indicated, this proxy will be voted in accordance with such instructions. PLEASE VOTE, DATE AND SIGN THIS PROXY AND RETURN IT AT ONCE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY VOTE IN PERSON IF YOU DO ATTEND. Signature(s) ______________________________________________________ Dated _______________________________________AGAINST
ABSTAIN
o
o
o
PLEASE VOTE, DATE AND SIGN THIS PROXY AND RETURN IT AT ONCE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY VOTE IN PERSON IF YOU DO ATTEND.
Dated:
Signature(s)
NOTE:If signing for estates, trusts or corporations, title or capacity should be stated. If shares are held jointly, each holder should sign.
CANTEL MEDICAL CORP. PROXYTHIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned stockholder of CANTEL MEDICAL CORP. (the "Company") hereby appoints Charles M. Diker and James P. Reilly, and each them, as proxies, with full power of substitution, to vote, as designated below, on behalf of the undersigned the number of votes to which the undersigned is entitled, at the Annual Meeting of Stockholders of CANTEL MEDICAL CORP., to be held on Thursday, December 19, 2002 at 10:00 a.m. at The Harmonie Club, 4 East 60th Street, New York, New York, or at any adjournments thereof: (Continued, and to be dated and signed on other side)