UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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Cantel Medical Corp.
150 CLOVE ROAD
LITTLE FALLS,Clove Road
Little Falls, NJ 07424
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NOTICE OF 20022005 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 19, 2002
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NOTICE IS HEREBY GIVEN that the
To 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 07424
We 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 of three years. (Proposal 1)
2. To amend the Company's 1997 Employee Stock Option Plan to increase the
numbersolicitation of shares reserved for issuanceproxies including preparation, assembly, printing and available 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 the mailing of this proxy statement and the enclosed proxy.
You are cordially invitedany additional information furnished to attend the Meeting. Whether or not you planstockholders. Copies of solicitation materials will be furnished to attend, please act promptly to vote yourbanks, brokerage houses, fiduciaries and custodians holding in their names shares on 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, 2002
CANTEL MEDICAL CORP.
150 CLOVE ROAD
LITTLE FALLS, NJ 07424
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PROXY STATEMENT
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The enclosed proxy is solicited by the Board of Directors of Cantel Medical
Corp. for use at the Annual Meeting of Stockholderscommon stock beneficially owned by others to be 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 the Meeting, there were
9,263,503 outstanding sharesAnnual Meeting. Each holder of record of common stock which 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 voted upon.
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, and in favor of the other proposals described herein.
The Board of Directors does not intend to presentherein, and at the Meeting 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 any
In the event that a broker, nominee or other matters are properly presented, it is the intentionrecord holder of the 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
outstanding shares of 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 a particular proposal because the nomineeproxy that it does not have discretionary voting power with respectauthority to that 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 such
tabulations. An abstention from votingshares on a particular matter or(a “broker non-vote”), those shares will be counted towards a Proxy instructing that a
votequorum, but will not be withheld has the same effect as a vote againstcounted for any purpose in determining whether a matter since 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 proxy
is requirednecessary for the approval of Proposal 2,3, 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 directors
Revocability of the Company areProxies
Any proxy given pursuant to this solicitation may be electedrevoked at any time prior to its use at the Annual Meeting, by delivery to servethe Secretary of Cantel of a three-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 have been 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 is withheld,an incumbent director whose nomination was recommended by our Nominating and Governance Committee and approved by the enclosed 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 the nominees currently serves as a
directorremainder of the Company,those nominated and has 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 for the election of another person as a director.
NOMINEES FOR DIRECTORS
Set forth below is also a
director of Chyron Corporation (OTC), a supplier of graphics forinformation with respect to the television
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 |
Robert 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 and a 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. Dornbush
Charles M. Diker has served as Secretaryour Chairman of the CompanyBoard 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 counsel to the Company for more than the past five years. Mr. Dornbush is also a director of Benihana, Inc. (NASDAQ), a company which operates Japanese restaurants.
3
Mr. Offit restaurants and Levitt Corporation (NYSE), a commercial and residential property developer.
Dr. Spencer Foreman has served as Chief Executive OfficerPresident and CEO of Offit 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 York State Banking Department. Mr. OffitCity, one of the largest academic medical centers in the United States, since 1986. He is a Trustee of Johns Hopkins University where he served asmember and past Chairman of the Board of Trustees 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
Company since 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 flavorings Daxor 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 DIRECTORS
We 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
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 and Slovin, all of whom have been determined
by the Board of Directors to be independent (as independence is defined under
the NYSE listing standards).Slovin. All the members of the audit committeeAudit Committee members are financially literate, and at least one member has accounting and financial management expertise. The primary 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 to recommend(a) the appointmentintegrity 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 the Company's independent auditors,SEC to review 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 full Audit Committee held foursix meetings during fiscal 2002 at2005, of which all members of the committeethree were present except for
Mr. Offit, who missed two meetings. The chairman of the Audit Committeemeetings held
three additional meetings with the Company's financial management and its
independent auditors prior to the filing the 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 a Compensation Committee of 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 the Compensation Committee on October 10, 2001. The primary
functionsBoard and recommending that the Board select the director nominees for the next annual meeting of the Compensation Committee are the establishment of compensation
policiesstockholders; (2) developing and to consider and make recommendationsrecommending to the Board concerning
compensation to the Company's seniorCorporate Governance Guidelines; and (3) overseeing evaluation of the Board and management. The CompensationNominating Committee held one meeting during fiscal 20022005.
The Nominating Committee has established a process for identifying and actedevaluating nominees for director. Although the Committee will consider nominees recommended by unanimous 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 Medical
Corp., 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 the Company 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 of the 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.
5
DIRECTOR 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 Committee and Compensation
Committee wereis paid $1,000 perfor each meeting attended and each member of the other non-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 who servedfirst become a director of Cantel. The options are exercisable in three equal annual installments commencing on the committees were paid $750 per meeting attended. The
1998 Directors'date of the grant. Such Plan further provides for the automatic grant to each of the Company'sour directors of an option to purchase 1,500 shares of common stock on the last business day of the 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 STOCK
The Board of Directors has adopted a resolution declaring it advisable and in the Chairmanbest interests of Cantel and the Audit
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 per year.
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, from time20,000,000 to time, 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, the timerecord date for the Annual Meeting; and 1,000,000 shares of adoption, 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 the Employee 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 stock reservedand otherwise to be in a position to take various steps requiring the issuance of additional shares of
common 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 of Directors 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 the Employee 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 to 2,000,000 shares. Adoptiona vote of suchthe stockholders. Approval of the proposed amendment requires stockholder approval. A
copythe affirmative vote of a majority of the Employee 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 effect is 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 the Internal Revenue
Codestock ownership of 1986, 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 is administerednot in all
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 the Stock 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 the employeesCertificate would amend Article Fourth of the Certificate by striking out the first sentence of Article FOURTH, up to whom 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 power of 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 the Company (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 is subjectexpected to adjustment 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.
6
INCOME 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 the grant 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
7
exercise 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 2
8
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The 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 of the amendment to
the Employee Plan isnon-audit professional services rendered by Ernst & Young LLP, as discussed in the best 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 the Company in that itAnnual Meeting, will aid
the Company in securing and retaining competent management personnel and other
employees by making it possible to offer themhave an opportunity to acquire 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.
8
The following table sets forth stock ownership information as of November 4, 200215, 2005 concerning (i) each directorof 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 the Securities Exchange Act of 1934)Act) who is known by Cantelus to beneficially own more than five (5%) percent of the outstanding shares of Cantel'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 |
|
|
| Position with Cantel |
| Number |
| Percent of |
| ||||
Charles M. Diker |
| 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 |
|
|
| (14) |
|
| * |
|
| ||
William J. Vella |
| President and CEO of Carsen Group |
|
|
| (15) |
|
| * |
|
| ||
FMR Corp. |
| 5% Stockholder |
|
| 1,144,450 | (16) |
|
| % |
|
| ||
All officers and directors |
|
|
|
|
| (17) |
|
| % |
|
| ||
* Less Represents beneficial ownership of less than 1%
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 November 4, 200215, 2005 upon the exercise of options. Each beneficial owner'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 November 4, 200215, 2005 have been exercised.
(2) Includes 237,750 shares which Mr. Diker may acquire pursuant to stock options. Does not include an aggregate of 899,5841,291,944 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 investment
discretion, (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 9
directors.directors; Mr. Diker disclaims beneficial ownership as to all of the foregoing 1,291,944 shares.
(3) Includes 35,250 shares which Mr. Hirschfield may acquire pursuant to stock options.
(4) Includes 24,750 shares which Mr. Barbanell may acquire pursuant to stock options. Does not include 3,7505,625 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 27,750 shares 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 38,250 shares 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 3,750 shares 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 656,184 shares 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 of Directors 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 the Compensation 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 the Chief ExecutiveFinancial Officer where
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 is to 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 as described below.our Assistant Controller. From April 1999 through October 2001, Mr. James ReillyAnaya was employed and compensated pursuant toby Great Universal Inc., most recently as Corporate Controller. Great Universal Inc. is a written 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 the case 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.
10
The 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, the President and Chief Executive Officer of the
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 and himself.
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 Other Fees. 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 COMPENSATION
Compensation
The following table sets forth, for the fiscal years ended July 31, 2002,
2001,2005, 2004 and 2000,2003, compensation, including salary, bonuses, stock options and certain other compensation, paid by us to the Company toChairman of the Board, the Chief Executive Officer and to the otherour four most highly compensated executive officers ofother than the Company who received more than
$100,000 in salaryChairman and bonusthe Chief Executive Officer during fiscal 2002:
SUMMARY COMPENSATION TABLE
|
|
| Annual |
| Long-Term |
|
|
| |||||||||
Name and Principal Position |
|
|
| Year |
| Salary |
| Bonus |
| Shares |
| All Other |
| ||||
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 Company We 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 a Companycompany 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 has We have no long-term incentive compensation plan other than its 1997 Employee Stock Option Plan and the 1998 Directors'Directors’ Stock Option Plan described herein and various individually granted options. 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 to a four-yearan employment agreement that expiredexpires on July 31, 2002.2007. Under the employment
agreement, for fiscal 2002, Mr. Reilly was entitled tohe is paid (i) an annual base salary of $318,347,$450,000 for fiscal 2006 and $500,000 for fiscal 2007 and (ii) incentive compensation equal to 6%3-3/8% of the his annual base salary for every one cent ($.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 the highest pre-tax income of any
prior fiscal 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 a new agreement is not entered into, under“Change in Control” (as defined in the terms of the recently expired
employment agreement, if Mr. Reilly's employment is terminated for any
reason,agreement), Mr. Reilly willmay terminate his employment and be entitled to receive in a severance paymentlump sum an amount equal to one
year's(i) if during the first contract year, 150% of his base salary plusand bonus with respect to fiscal 2005 and (ii) if during the amountsecond contract year, the greater of (a) $500,000 or (b) 100% of his base salary and bonus forwith respect to fiscal 2006. In addition, upon a Change in Control, all stock options held by him vest in full. During the most 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. Malkin that expires on OctoberAugust 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 incentive compensationbonus ranging from 30% to 70% of his base salary (determined on a formula basis) for each full fiscal 2002,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 to 5%150% of the excessbase salary and incentive compensation paid to Mr. Krakauer during the last completed fiscal year if termination occurs after the end of the combined earningsfirst contract year, or (ii) $275,000, if such termination occurs prior to the end of Minntech 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 in the agreement, (iii) participationControl, all stock options held by him vest in employee 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 to his
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 into an employment agreement with
Craig A. Sheldon that 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 increases equal toof no less than 5% or a cost of living formula and (ii) an annual discretionary bonus, (iii) participation in employee health,
insurance and other benefit plans, (iv) maintenance bybonus. In the Companyevent of a life
insurance policy on“Change in Control” (as defined in the life ofemployment agreement), Mr. Sheldon may terminate his employment and be entitled to receive in a lump sum an amount equal to 150% of the face amount of $175,000
payablebase salary and bonus paid to his 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 salary was 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 the Company 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 a two-year
employment agreement that expires on November 17, 2004. Mr. Segel's employment
agreement provides for (i)lump sum an annual base salary of $180,000, subject to annual
increasesamount equal to no less than 5% or a cost200% of living 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 compensation equal 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 $10.59 (the fair value of the shares on the date of grant). The option is
exercisable in three approximately equal annual installments beginning
November 2003. In the event of a "Change in Control" (as defined in the
employment agreement), the options will automatically become fully vested and
Mr. Segel may terminate his employment and continue to receive his base salary and bonus following such termination through the end of the two-year term of the
employment agreement.
STOCK OPTIONS
bonus) and all stock options held by him will vest in full.
The following stock option information is furnished for the fiscal year ended July 31, 20022005 with respect to the Company'sour Chief Executive Officer and theour other executive officers of the Company named in the Compensation Table above, for stock options granted during such fiscal year. Stock options were granted without tandem stock appreciation rights.
14
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SHARES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES PRICE PER OPTION TERM($)(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, were granted under the Company'sour 1998 Directors'Directors’ Stock Option Plan. ThePlan, have an exercise price per 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, were granted under the Company's 1997 Employee Stock Option Plan. 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. The options are subjectoption became exercisable as to vesting42,500 shares immediately and will become exercisable as follows:
25% of the totalto an additional 21,250 shares covered by the options vest on each of the first
four anniversaries of the date of the grant.
OPTION EXERCISE AND HOLDINGS
July 31, 2006 and July 31, 2007.
The following information is furnished for fiscal 20022005 with respect to the
Company'sour Chief Executive Officer and theour other executive officers of the
Company named 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 VALUES
2005.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-end Option Values
Number of Shares | Value of | ||||||||||||||
Shares | Underlying Unexercised | Unexercised in-the-Money | |||||||||||||
Acquired On | Value | Options at 7/31/ | Options at 7/31/ | ||||||||||||
Name | Exercise(#) | Realized($)(1) | Exercisable | Non-Exercisable | Exercisable | Non-Exercisable | |||||||||
Charles M. | |||||||||||||||
James P. | |||||||||||||||
Andrew A. Krakauer | |||||||||||||||
Roy K. | |||||||||||||||
Craig A. | |||||||||||||||
William J. | |||||||||||||||
(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.
15
STOCK 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 $8.01 581,837
An 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 under the Company'sour 1997 Employee Stock Option Plan, as amended (the "1997 Employee Plan"“Employee Plan”). Options granted under the 1997 Employee Plan aremay be intended to qualify as incentive stock options within the meaning of
Section 422 of the Code.ISOs or non-ISOs. The 1997 Employee Plan is administered in all respects by the Stock OptionCompensation Committee. The Stock 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 the 1997 Employee Plan, all employees of the
Company or subsidiaries of the Companyour employees are eligible for option grants. The option exercise price of options granted under the 1997 Employee Plan is fixed by the Stock 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 of an 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 the Stock OptionCompensation Committee, equal to the option exercise price. Options granted under the 1997 Employee Plan may not be exercised more than ten years after the date of grant, five years in the case of an incentive stock optionISO granted to a 10% Holder. All options outstanding at July 31, 20022005 under the 1997 Employee Plan have a term of five years, except for 150,000 ten-year options granted to Mr. Reilly and 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 purchase 918,492
and1,982,462 shares of common stock at prices between $3.25$2.33 and $19.15$29.49 per share were outstanding under the 1997 Employee Plan and 381,075590,343 shares were available for grant under the 1997 Employee Plan.
16
An aggregate of 300,000450,000 shares of common stock was reserved for issuance or available for grant under the Company'sour 1991 Directors'Directors’ Stock Option Plan (the "1991 Directors' Plan"“1991 Directors’ Plan”), which expired in fiscal 2001. Options granted under the 1991 Directors'Directors’ Plan do not qualify as incentive stock options within the
meaning of Section 422 of the Code.ISOs. At July 31, 2002,2005, options to purchase 121,50079,875 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 1991 Directors'Directors’ Plan. All of the options have a ten-year term and are exercisable in full. No additional options will be granted under the 1991 Directors'Directors’ Plan.
An aggregate of 300,000450,000 shares of common stock is reserved for issuance or available for grant under the Company'sour 1998 Directors'Directors’ Stock Option Plan (the "1998 Directors' Plan"“1998 Directors’ Plan”). Options granted under the 1998 Directors'Directors’ Plan do not qualify as incentive stock options within the meaning of Section 422 of the
Code.ISOs. The 1998 Directors'Directors’ Plan provides for the automatic grant to each of the
Company'sour directors of options to purchase 1,500 shares of common stock on the last business day of the 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 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 option grantto 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 purchase 91,500243,375 shares of common stock at prices between $3.41$2.27 and $17.56$26.61 per share were outstanding under the 1998 Directors'Directors’ Plan, and 208,500142,500 shares were available for grant under the 1998 Directors'Directors’ Plan.
Between 19911996 and 2000, Mr. Dornbush was granted ten-year non-plan options to purchase an aggregate of 9,00013,500 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 purchase 75,000112,500 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 purchase 75,000112,500 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 in three 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.
17
STOCK PERFORMANCE GRAPH
The 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 the Nasdaq Stock Market/U.S. Index, the Nasdaq Non-Financial Index,
the New York Stock Exchange CompositeRussell 2000 Index and the Dow Jones U.S. Medical
ProductsHealthcare Equipment and Services Index over the same period (assuming the investment of $100 in the
Company'sour common stock, the Nasdaq Stock Market/U.S. Index, the Nasdaq
Non-Financial Index, the New York Stock Exchange CompositeRussell 2000 Index, and the Dow Jones U.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
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 of the
Company'sour common stock are required to report their initial ownership of the
Company'sour common stock and any subsequent changes in their ownership to the Securities and Exchange Commission ("SEC").SEC. Specific due dates have been established by the SEC, and the Company iswe are required to disclose in this Reportproxy statement any failure to file by those dates. Based upon (i) the copiesa review of Section 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
18
Company 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 the following: (i) a reportgrant of an 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 of shares 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 Slovin due by November 10, 2001 wason July 31, 2005, which reports were filed on November 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 STATEMENT
The deadline for submitting a stockholder proposal for inclusion in the Company's proxy statement and formmaterials for our 2006 Annual Meeting of proxyStockholders 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 for the Company's 2003 annual
meeting of stockholders is the closeelection as directors or to introduce an item of business on July 11, 2003. In orderat an Annual Meeting of Stockholders without inclusion in our proxy materials. These procedures provide that stockholders wishing to comply with applicable provisionssubmit proposals or director nominations at the 2006 Annual Meeting of the Company's By-Laws, proposals of
stockholders intendedStockholders that are not to be presented at the Company's 2003 annual meeting of
stockholders without inclusion ofincluded in such proposals in the Company's proxy statement and form of proxy relating to the meetingmaterials must be receiveddo so by the
Company nonot later than the close of business on September 9, 2003the 60th day and nonot earlier than the close of business on Augustthe 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 10 2003.
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. JOANNA Z.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
19
EXHIBIT
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 employees
Director 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-employee members of the Board which shall have plenary authority, in its discretion, to determine the
employees of the Corporation and its 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-1
is 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 or all of the Stock 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 the death or disability ofAudit Committee, the Optionee or as otherwise approved by theCompensation Committee and (c) unless the Optionee
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 as provided 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-2
on 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 applicable lawsprovisions of the Corporation's jurisdictionSecurities Exchange Act of incorporation1934, 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 by the written 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-3
Please 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 of CANTEL 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 Provided
absence 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
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 | ||
o | o | o |
3.Ratification of Ernst & Young, LLP as Independent Registered Public Accounting Firm.
FOR | 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.
PROXY
THIS 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)