Cantel Medical Corp.
150 Clove Road
Little Falls, NJ 07424

PROXY STATEMENT

General

We are providing these proxy materials in connection with the solicitation by our Board of Directors of proxies to be voted at our 20052006 Annual Meeting of Stockholders to be held on Tuesday, December 20, 2005Wednesday, January 10, 2007 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.

Solicitation

We will bear the entire cost of solicitation of proxies including preparation, assembly, printing and mailing of this proxy statement and any additional information furnished to stockholders. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of Cantel common stock beneficially owned by others to forward to such beneficial owners.

This Proxy Statement and form of proxy are being mailed to stockholders on or about November 21, 2005.27, 2006. You should review this information together with our 20052006 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 15, 20052006 will be entitled to notice of and to vote at the Annual Meeting. Each holder of record of common stock on 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, 2005,2006, Cantel had outstanding and entitled to vote 15,475,98115,556,621 shares of common stock.

A quorumThe presence of stockholders is necessary to hold a valid meeting. A quorum will be present if at leastthe holders of a majority of the outstanding shares areof common stock entitled to vote at the Annual Meeting, present in person or represented by votes atproxy, is necessary to constitute a quorum. Abstentions and “broker non-votes” are counted as present and entitled to vote for purposes of determining a quorum. A “broker non-vote” occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the meeting or by proxy. broker does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner.

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 ten Board nominees for election as directors, in favor of the other proposals described herein, and at the proxy holder’s discretion on such other matters, if any, that may come before the Annual Meeting.

InIf you are a beneficial stockholder and your broker holds your shares in its name, the event thatbroker is permitted to vote your shares on the election of directors and the approval of Ernst & Young LLP as our independent registered public accounting firm even if the broker does not receive voting instructions from you. Under the New York Stock Exchange rules, your broker may not vote your shares on Proposal 2,

which relates to the 2006 Equity Incentive Plan. Without your voting instructions on this item, a broker nominee or other record holdernon-vote will occur.

A plurality of shares indicates on a proxy that it does not have discretionary authority to vote such shares on a particular matter (a “broker non-vote”), those shares will be counted towards a quorum, but will not be counted for any purpose in determining whether a matter 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” will have no effect onDirectors. This means that the outcomedirector nominee with the most votes for a particular slot is elected for that slot. Only votes “for” or “withheld” affect the outcome. Abstentions are not counted for purposes of such election. As the election of Directors. The affirmative vote of a majority of all the issued and outstanding shares of common stockvotes cast is required forto approve the adoption2006 Equity Incentive Plan and the appointment of Proposal 2, an abstentionErnst & Young LLP as our independent registered public accounting firm. Abstentions and, a “broker non-vote” will have the same effectif applicable, broker non-votes, are not counted as a negative vote. As the affirmative vote of a majority of shares of common stock present in personvotes “for” or represented by proxy is necessary for the approval of Proposal 3, an abstention will have the same effect as a negative vote, but “broker non-votes” will have no effect on the outcome of the vote.“against” these proposals.

Revocability of Proxies

Any proxy given pursuant to this solicitation may be revoked at any time prior to its use at the Annual Meeting by delivery to the Secretary of Cantel of a written 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

PROPOSAL 1

ELECTION OF DIRECTORS

General

The Board of Directors is currently divided into three classes with three-year staggered terms. One class consists of fourten directors, and two classes consisteach 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 bewhom is 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 each director elected at this Annual Meeting will have a 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 each 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 an incumbent director whose nomination was recommended by our Nominating and Governance Committee and approved by the Board: 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 in favor of the remainder of those nominated and may be voted for substitute nominees, unless the Board chooses to reduce the number of directors serving on the Board.

Set forth below is information with respect to the nominees.

PROPOSAL 2

Approval of the Cantel Medical Corp.
2006 Incentive Equity Plan

On November 2, 2006, the Compensation and Stock Option Committee of the Board of Directors (the “Committee”) adopted the Cantel Medical Corp. 2006 Incentive Equity Plan (the “2006 Plan”). The Board of Directors approved the 2006 Plan on November 14, 2006, subject to stockholder approval at the Annual Meeting. Upon approval of the 2006 Plan by the stockholders at this Meeting, we will immediately terminate our 1997 Employee Stock Option Plan and the 1998 Directors’ Stock Option Plan, our only two plans under which employees or directors currently may receive option grants.

The following table shows, as of November 15, 2006, the number of options or other awards currently outstanding, as well as the number of shares remaining available for grant under our existing option plans. No further grants may be made from the 1991 Directors’ Stock Option Plan. For this plan, therefore, the table shows only the number of options outstanding.

AMENDMENT OF CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCKIf the 2006 Plan is approved by our stockholders, no further options or awards will be granted under any of these existing plans.

The Board believes that our ability to offer our key employees and non-employee directors long-term, equity-based compensation under the 2006 Plan will help enable us to attract, motivate and retain experienced and highly qualified employees and directors who will contribute to our financial success. It is the judgment of Directors has adopted a resolution declaring it advisable andthe Board that approval of the 2006 Plan is in the best interests of Cantelthe Company and our stockholders.

The 2006 Plan provides for the stockholdersgranting of stock options, restricted stock awards, stock appreciation rights and performance-based awards to amend our Certificateemployees. It also will provide the flexibility to grant equity-based awards to our non-employee Directors. The 2006 Plan does not permit the granting of Incorporation,discounted options or discounted stock appreciation rights.

Provisions have been included to meet the requirements for deductibility of executive compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended, (the “Certificate”“Code”) with respect to increaseoptions and other awards by qualifying payments under the authorizedPlan as performance-based compensation. In addition, provisions have been included to comply with the requirements of Section 409A of the Code to the extent applicable to options and other awards granted under the 2006 Plan.

The following is a brief description of the 2006 Plan. The full text of this Plan is attached as Annex B to this Proxy Statement, and the following description is qualified in its entirety by reference to this Annex.

Administration and Duration

The selection of employee participants in the 2006 Plan and the level of participation of each participant will be determined by the Committee (the Board will make these determinations as to non-employee Directors). Each member of the Committee must be a “non-employee Director” within the meaning of Rule 16b-3 under the Exchange Act and an “outside director” within the meaning of Section 162(m) of the Code. Currently the Committee is comprised of three independent directors who are not employees of the Company. The Committee will have the authority to interpret the 2006 Plan, to

establish and revise rules and regulations relating to the 2006 Plan, and to make any other determinations that it believes necessary or advisable for the administration of the 2006 Plan. Subject to the limitations set forth in the 2006 Plan, the Committee may delegate to our CEO or other executive officers such duties and powers as the Committee may deem advisable with respect to the designation of employees to be recipients of plan awards and the nature and size of such awards, except that no delegation may be made in the case of awards to executive officers or directors or awards intended to be qualified under Section 162(m) of the Code, or individual awards in excess of 1,500 restricted shares or 5,000 options (or aggregate awards during any fiscal quarter in excess of 5,000 restricted shares or 25,000 options).

The 2006 Plan will terminate on November 13, 2016, unless terminated earlier by the Board of Directors.

Limit On Awards Under the 2006 Plan

The maximum number of shares as to which stock options and stock awards may be granted under the 2006 Plan is one million (1,000,000) shares, of which 500,000 shares are authorized for issuance pursuant to stock options and stock appreciation rights and 500,000 shares are authorized for issuance pursuant to restricted stock and other stock awards. We believe that equity-based long-term incentives are a necessary component of our compensation program and we have designed the plan to allow for significant flexibility. The shares to be delivered under the 2006 Plan will be made available from authorized but unissued shares of Cantel common stock, from treasury shares, or from shares purchased in the open market or otherwise. Shares initially issued under the 2006 Plan that become subject to lapsed or cancelled awards or options will be available for further awards and options.

Eligibility

All of our employees as well as our non-employee Directors will be eligible to participate in the Plan. From time to time, the Committee, or as to non-employee Directors, the Board, will determine who will be granted awards, and the number of shares subject to such grants.

Stock Options and Stock Appreciation Rights

The 2006 Plan permits the grant of non-qualified stock options, incentive stock options qualifying under Section 422 of the Code (ISOs) and stock appreciation rights (“SARs”). SARs permit the recipient to receive a payment measured by the increase in the fair market value of a specified number of Cantel shares from the date of grant to the date of exercise. Distributions to the recipient of a SAR may be made in common stock, in cash or in a combination of both as determined by the Committee.

The Committee determines the terms of each stock option and SAR at the time of the grant. The exercise price of a stock option may not be less than the fair market value of the stock on the date the option is granted and the aggregate fair market value (determined as of the date the option is granted) of shares underlying ISOs that are exercisable for the first time in any calendar year may not exceed the maximum permitted under the Code (presently $100,000). Likewise, no SAR may be granted at less than the fair market value of the stock on the date the SAR is granted.

The Committee determines the exercise period of each stock option and SAR, however, the terms of options and SARs granted under the 2006 Plan may not exceed ten years. Generally, no option or SAR may be exercised during the first year of its term or such longer period as may be specified in the option grant. However, the 2006 Plan allows the Committee to make unvested options and SARs immediately exercisable upon a change of control or in its discretion. The exercise price of options is payable in cash or, if the grant provides, in common stock.

Stock Awards

Under the 2006 Plan, the Committee may also grant stock awards, subject to specified restrictions, including but not limited to continued employment of the recipient with the Company or the achievement of one or more specific goals related to the performance of the Company, a business unit or the recipient over a specified period of time. Performance-based awards could have various performance measures such as: revenues, cost reductions, operating income, income before taxes, net income, adjusted net income, earnings per share, adjusted earnings per share, operating margins, working capital measures, return on assets, return on equity, return on invested capital, cash flow measures, market share, and/or economic value added, of the Company or one of its business units within which the recipient is primarily employed. The performance goals will be set by the Committee within the time period prescribed by, and will otherwise comply with the requirements of, Section 162(m) of the Code. Any performance goals imposed on awards granted to executive officers will be described in the Compensation Committee Report.

Termination of Service

Unless otherwise provided by the Committee, in the event of termination of a participant’s service as an employee or non-employee director for any reason other than the participant’s death or disability, stock options and SARs (to the extent exercisable) will remain exercisable for a period of 90 days from such date or until the expiration of the stated term of such options or SARs, whichever period is shorter (except that in the case of termination of employment for cause, such options and SARs will immediately expire). Unless otherwise provided by the Committee, upon a participant’s death, options and SARs granted to such participant will remain exercisable (to the extent exercisable) for a period of one year from such date or until the expiration of the stated term of such options or SARs, whichever period is shorter. In addition, when a non-employee director who has served as a director of the Company for at least ten years and is at least 65 years of age terminates his or her service as a director, all options and SARs granted under the 2006 Plan that are held by such director will, upon such termination, become immediately exercisable in full and remain exercisable through the original term of the award, and the restrictions on all restricted stock awards will immediately lapse such that the underlying shares will become fully vested.

Transferability

Unless otherwise determined by the Committee, awards granted under the Plan may not be transferred except by will or the laws of descent and distribution and, during his or her lifetime, any options or other awards may be exercised only by the recipient (or legal representative).

Certain Adjustments

In the event of any change in the number or kind of outstanding shares of our common stock par value $.10 per share, from 20,000,000 to 30,000,000 shares.by reason of a merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, spin-off or similar transaction or any other change in corporate structure affecting Cantel shares, an appropriate adjustment will be made consistent with applicable provisions of the Code and applicable Treasury Department rulings and regulations:

The Certificate presently authorizes 20,000,000·       in the maximum aggregate number and kind of shares available for the grant of common stock,awards under the plan;

·       in the number and kind of which 15,475,981 shares wereor the amount of cash that may be issued and outstanding as of November 15, 2005, the record date for the Annual Meeting; and 1,000,000 shares of preferred stock, one dollar ($1.00) par value, none of which is presently issued and outstanding. As of November 15, 2005, 445,588 shares of common stock were held by us as treasury shares. Additionally, as of that date an aggregate of 3,331,029 shares of common stock were reserved for issuancedelivered to plan participants upon the exercise of options grantedany award or available for grant under our various stock option plans or under stock options individually granted byin payment with respect to any award, that is outstanding at the Board. As a resulttime of such reservation requirement, if we desirechange; and

·       in the exercise or grant price per share of options or SARs subject 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 tooutstanding awards granted under the issuance of 747,402 shares of common stock.plan.

Amendment and Revocation

The Board considers it desirable to have available for issuance sufficient authorized sharesmay amend or revoke the 2006 Plan, but may not, without prior approval 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 byour stockholders:

·       increase the issuancemaximum number of shares of common stock and otherwise tothat may be issued under the plan;

·       extend the term of the plan or of options granted under the plan;

·       change the eligibility criteria for participation in a position to take various steps requiring the issuanceplan;

·       grant options or SARs with an exercise or grant price below the fair market value of additional shares of

our common stock (includingon the date of grant; or

·       take any other action that requires stockholder approval to comply with any tax or regulatory requirement.

Plan Benefits

Because benefits under the 2006 Plan will be determined by the Committee, in its sole discretion, it is not possible to determine the benefits that will be received by non-employee directors, executive officers and other employees if the 2006 Plan is approved by stockholders. However, current benefits granted to non-employee directors, executive officers and other employees would not have been increased if they had been made under the proposed 2006 Plan.

U.S. Tax Treatment of Options and Awards

Incentive Stock Options

An incentive stock splitsoption results in no taxable income to the optionee or a deduction to us at the time it is granted or exercised. However, the excess of the fair market value of the shares acquired over the option price is an item of adjustment in computing the alternative minimum taxable income of the optionee. If the optionee holds the stock dividends) thatreceived as a result of an exercise of an incentive stock option for at least two years from the date of the grant and one year from the date of exercise, then the gain realized on disposition of the stock is treated as a long-term capital gain. If the shares are disposed of during this period, however, (i.e., a “disqualifying disposition”), then the optionee will include in income, as compensation in the judgmentyear of the Board are in our best interests. Thedisposition, an amount equal to the excess, if any, of the fair market value of the shares will also be available for issuance under current and future employee equity compensation plans. Other than issuances upon exercise of outstanding stock options and futurethe option grants under ourover the option price (or, if less, the excess of the amount realized upon disposition over the option price). The excess, if any, of the sale price over the fair market value on the date of exercise will be a capital gain. In such case, we will be entitled to a deduction, in the year of such a disposition, for the amount includible in the optionee’s income as compensation. The optionee’s basis in the shares acquired upon exercise of an incentive stock option plans, we haveis equal to the option price paid, plus any amount includible in his or her income as a result of a disqualifying disposition.

Non-Qualified Stock Options

A non-qualified stock option results in no current plans, arrangementstaxable income to the optionee or understandings regardingdeduction to us at the issuancetime it is granted. An optionee exercising such an option will, at that time, realize taxable compensation in the amount of any additionalthe difference between the option price and the then market value of the shares. Subject to the applicable provisions of the Code, a deduction for federal income tax purposes will be allowable to us in the year of exercise in an amount equal to the taxable compensation realized by the optionee.

The optionee’s basis in such shares is equal to the sum of the option price plus the amount includible in his or her income as compensation upon exercise. Any gain (or loss) upon subsequent disposition of the shares will be a long-term or short-term gain (or loss), depending upon the holding period of the shares.

If a non-qualified option is exercised by tendering previously owned shares of the Company’s common stock in payment of the option price, then, instead of the treatment described above, the following will apply: a number of new shares equal to the number of previously owned shares tendered will be considered to have been received in a tax-free exchange; the optionee’s basis and holding period for which authorizationsuch number of new shares will be equal to the basis and holding period of the previously owned shares exchanged. The optionee will have compensation income equal to the fair market value on the date of exercise of the number of new shares received in excess of such number of exchanged shares; the optionee’s basis in such excess shares will be equal to the amount of such compensation income, and the holding period in such shares will begin on the date of exercise.

Stock Appreciation Rights

Generally, the recipient of a SAR will not recognize taxable income at the time the SAR is sought andgranted.

If an employee receives the appreciation inherent in the SARs in cash, the cash will be taxed as ordinary income to the employee at the time it is received. If an employee receives the appreciation inherent in the SARs in stock, the value of the shares will be taxed as ordinary income to the employee at the time the shares are received.

In general, there arewill be no negotiations pendingfederal income tax deduction allowed to the Company upon the grant or termination of SARs. However, upon the exercise of a SAR, the Company will be entitled to a deduction equal to the amount of ordinary income the recipient is required to recognize as a result of the exercise.

Stock Awards/ Performance Awards

No income will be recognized at the time of grant by the recipient of a stock award or performance award if such award is subject to a substantial risk of forfeiture. Generally, at the time the substantial risk of forfeiture terminates with respect to a stock award, the issuance 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 be submitted to a vote of the stockholders. Approval of the proposed amendment requires the affirmative vote of a majority of the 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 having an anti-takeover effect (for example, by permitting easier dilutionthen fair market value of the stock ownership ofwill constitute ordinary income to the employee. Alternatively, if the recipient makes a person seeking to effect a change“Section 83(b)” election, the recipient will, in the compositionyear that the restricted stock award is granted, recognize compensation taxable as ordinary income equal to the fair market value of the Board or contemplatingshares on the date of the award. Subject to the applicable provisions of the Code, a tender offer or other transaction resultingdeduction for federal income tax purposes will be allowable to us in our acquisition by another company),an amount equal to the proposed increase is not in response 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 plancompensation realized by the Boardemployee.

Tax Treatment of Awards to recommend or implement a series of anti-takeover measures or any other corporate transactions.Non-Employee Directors and to Employees Outside the United States

The proposed amendmentgrant and exercise of options and awards under the 2006 Plan to non-employee Directors and to employees outside the Certificate would amend Article Fourth of the Certificate by striking out the first sentence of Article FOURTH, up to the colon, as it now exists and inserting in lieu and instead thereof the following:United States may be taxed on a different basis.

“FOURTH: The total number of shares 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 voting powers, designations, preferences and relative, participating, optional or other special qualifications, limitations or restrictions thereof are as follows:”

If approved by the requisite 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 expected to occur promptly following the Annual Meeting.

The Board of Directors unanimously recommends a vote in Favor of Proposal 2

8

PROPOSAL 3

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, 20062007 and has further directed that management submit the selection of the independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. The Audit Committee has considered whether the provision of non-audit professional services rendered by Ernst & Young LLP, as discussed in the section entitled “Independent Registered Public Accounting Firm” below and disclosed elsewhere in this proxy statement, is compatible with Ernst & Young LLP maintaining theirits independence. Ernst & Young LLP has audited our financial statements for the past sixteenseventeen years. A representative of Ernst & Young LLP is expected to be present

at the Annual Meeting, will have an opportunity to make a statement if he so desires, and will be available to respond to appropriate questions.

Stockholder ratification of the selection 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

TRANSACTION OF OTHER BUSINESS

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 accompanying proxy to vote on such matters in accordance with their best judgment.

OWNERSHIP OF SECURITIES

The following table sets forth stock ownership information as of November 15, 20052006 concerning (i) each of our directors and persons nominated to become directors, (ii) each person (including any “group” as defined in Section 13(d)(3) of the Exchange Act) who is known by us to beneficially own more than five (5%) percent of the outstanding shares of our common stock, (iii) the Chief Executive Officer and the other executive officers named in the Summary Compensation Table below, and (iv) our executive officers and directors as a group:

EXECUTIVE COMPENSATION AND RELATED INFORMATION

Summary of Cash and Certain Other Compensation

The following table sets forth, for the fiscal years ended July 31, 2006, 2005 2004 and 2003,2004, compensation, including salary, bonuses, stock options and certain other compensation, paid by us to the Chairman of the

Board, the Chief Executive Officer and our four most highly compensated executive officers other than the Chairman and the Chief Executive Officer during fiscal 2005:2006:

Summary Compensation Table

(1)          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 company affiliated with Mr. Diker of office expenses amounting to $36,000 in each of fiscal 2006, 2005 2004 and 2003,2004, respectively.

(2)          We have no long-term incentive compensation plan other than our 1997 Employee Stock Option Plan and the 1998 Directors’ Stock Option Plan described herein and various individually granted options aand 401(k) profit sharing plan and a Canadian profit sharing plan.plans. We do not currently award stock appreciation rights, restricted stock awards or long-term incentive plan pay-outs.

(3)          This amount consists of (i) term life insurance premiums paid by us and (ii) contributions paid or accrued by us under oura 401(k) plan for the benefit of the named executive.

(4)          Mr. Reilly is party to an employment agreement that expires on July 31, 2007. Under the agreement, he is paid (i) an annual base salary of $450,000 for fiscal 2006 and $500,000 for fiscal 2007 and (ii) incentive compensation equal to 3-3/8% of his annual base salary for every one cent ($.01)

increase in the diluted earnings per share of our common stock (as adjusted in accordance with the agreement) for the current year over the prior year. In the event of a “Change in Control” (as defined in the employment agreement), Mr. Reilly may terminate his employment and be entitled to receive in a lump sum an amount equal to (i) if during the first contract year, 150% of his base salary and bonus with respect to fiscal 2005 and (ii) if during the second contract year, the greater of (a) $500,000 or (b) 100% of his base salary and bonus with respect to fiscal 2006. In addition, upon a Change in Control, all stock options held by him vest in full. During the five-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. As previously announced, Mr. Reilly has advised the Board that he will retire upon the expiration of his employment agreement on July 31, 2007 or earlier if a successor is appointed prior to that time.

(5)          Mr. Krakauer’s employment commenced with us commenced on August 30, 2004. He is party to an employment agreement that expires on August 31, 2007. Under the agreement, Mr. Krakauer is paid (i) an annual base salary of $288,750$325,000 (for the twelve month period ending August 29, 2006)31, 2007), subject to annual increases equal to no less than 5% or a cost of living formula, and (ii) an annual incentive bonus ranging from 30% to 70% of his base salary (determined on a formula basis) for each full fiscal year (commencing with the year ended July 31, 2005) in which our adjusted pre-tax income exceeds 90% of our 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 150% of the base salary and incentive compensation paid to Mr. Krakauer during the last completed fiscal year if termination occurs after the end of the first contract year, or (ii) $275,000, if such termination occurs prior to the end of the first contract year. In addition, upon a Change in Control, all stock options held by him vest in full. The Compensation Committee has recently recommended a two-year extension of Mr. Krakauer’s employment agreement.

(6)          Mr. SheldonNodiff’s employment with us commenced on January 1, 2005. He is party to an employment agreement that expires on OctoberDecember 31, 2007. Under the agreement, heMr. Nodiff is paid (i) an annual base salary of $242,000262,500 (for the twelve month period ending OctoberDecember 31, 2006), subject to annual increases of no less than 5% or a cost of living formula and (ii) an annual discretionary bonus. In the event of a “Change in Control” (as defined in the employment agreement), Mr. SheldonNodiff may terminate his employment and be entitled to receive in a lump sum an amount equal to 150% of the base salary and bonus paid to Mr. SheldonNodiff during the last completed contract year. In addition, upon a Change in Control, all stock options held by him vest in full. The Compensation Committee has recently recommended a one-year extension of Mr. Nodiff’s employment agreement.

(7)          Mr. Segel is party to an employment agreement that expires on October 31, 2007. Under the agreement, he is paid (i) an annual base salary of $220,920 (for the twelve month period ending October 31, 2007), subject to annual increases of no less than 5% or a cost of living formula, and (ii) incentive compensation equal to .45% of the first $50 million of total consideration, ..325% of the next $50 million of total consideration, and .20% of any additional 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 maximum annual incentive compensation of $500,000. In the event of a “Change in Control” (as defined in the employment agreement), Mr. Segel may terminate his employment and be entitled to receive in a lump sum an amount equal to 150% of the base salary and bonus paid to Mr. Segel during the last completed contract year. In addition, upon a Change in Control, all stock options held by him vest in full. The Compensation Committee has recently recommended a one-year extension of Mr. Segel’s employment agreement.

(8)          Mr. Malkin is party to an employment agreement with Minntech that expires on July 31, 2007. Under the agreement, Mr. Malkin is paid (i) an annual base salary of $357,680$375,493 (for the twelve month period ending October 31, 2006)2007), subject to 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. The Compensation Committee has recently recommended a one-year extension of Mr. Malkin’s employment agreement.

(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. In connection with the expiration of the distribution 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 lump sum an amount equal to 200% of his total fiscal 2005 cash compensation (i.e., salary and bonus) and all stock options held by him will vest in full.17

Stock Performance Graph

The graph below compares the cumulative total stockholder return on our common stock for the last five fiscal years with the cumulative total return on the Russell 2000 Index and the Dow Jones Healthcare Equipment and Services Index over the same period (assuming the investment of $100 in our common stock, the Russell 2000 Index, and the Dow Jones Healthcare Equipment and Services Index on July 31, 2000,2001, and, where applicable, the reinvestment of all dividends). We are using The Dow Jones Healthcare Equipment and Services Index to replace the Dow Jones

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

AMONG CANTEL MEDICAL CORP., THE RUSSELL 2000 INDEX

AND THE DOW JONES US Medical Products Index, which was used in the proxy statement for our 2004 Annual Meeting of Stockholders, since the later index has been discontinued. Due to such discontinuance, we are unable to provide five-year comparative data for that index.HEALTH CARE EQUIPMENT & SERVICES INDEX

* $100 invested on 7/31/01 in stock or index-including reinvestment of dividends.
Fiscal Year ending July 31.

Section 16(a) Beneficial Ownership Reporting Compliance

Under the securities laws of the United to the SEC. Specific States, our directors, executive officers, and any persons holding more than ten percent of our common stock are required to report their initial ownership of our common stock and any subsequent changes in their ownership to the SEC. Specific due dates have been established by the SEC, and we are required to disclose in this proxy statement any failure to file by those dates. Based upon a review of our records and other 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 reportsa report on Form 4 as follows: (a) reports forrelated to the grantexercise of options 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 options to Robert L. Barbanell, Alan R. Batkin,a stock option by Joseph M. Cohen Charles M. Diker, Darwin C. Dornbush, Spencer Foreman, M.D., Alan J. Hirschfield, James P. Reilly and Bruce Slovin on July 31, 2005, which reports wereApril 17, 2006 that was filed on August 4, 2005.April 20, 2006 (one day late).

STOCKHOLDER PROPOSALS FOR 20062007 PROXY STATEMENT

The deadline for submitting a stockholder proposal for inclusion in the proxy materials for our 20062007 Annual Meeting of Stockholders pursuant to Rule 14a-8 of the Exchange Act is July 12, 2006.30, 2007. Under our By-laws, certain procedures are provided that a stockholder must follow to nominate persons for election as directors or to introduce an item of business at an Annual Meeting of Stockholders without inclusion in our proxy materials. These procedures provide that stockholders wishing to submit proposals or director nominations at the 20062007 Annual Meeting of Stockholders that are not to be included in such proxy materials must do so by not later than the close of business on the 60th day and not earlier than the close of business on the 90^th day prior to the first anniversary of the 20052006 Annual Meeting of Stockholders (no earlier than September 21, 2006October 12, 2007 and no later than October 21, 2006,November 11, 2007, as currently scheduled); provided, however, that in the event that the date of the 20062007 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 90^th day prior to such annual meeting and not later than the close of business on the later of the 60^th day prior to the such annual meeting or the 10^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.

FORM 10-K

UPON THE WRITTEN REQUEST OF A RECORD HOLDER OR BENEFICIAL OWNER OF COMMON STOCK ENTITLED TO VOTE AT THE MEETING, WE WILL PROVIDE WITHOUT CHARGE A COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31, 2005,2006, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD BE MAILED TO MS. JOANNA ZISA ALBRECHT, CANTEL MEDICAL CORP., 150 CLOVE ROAD, LITTLE FALLS, NJ 07424. OUR ANNUAL REPORT ON FORM 10-K IS ALSO AVAILABLE THROUGH OUR WEBSITE AT WWW.CANTELMEDICAL.COMWWW.CANTELMEDICAL.COM..

OTHER MATTERS

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.

2225

Annex B

CANTEL MEDICAL CORP.
2006 EQUITY INCENTIVE PLAN

1. Purpose.   The purpose of the Cantel Medical Corp. 2006 Equity Incentive Plan (“the Plan”) is to attract and retain employees and Directors of the Company and its Subsidiaries, and to provide such persons incentives and rewards for performance, by making available to them stock options and other awards. It is believed that these increased incentives and rewards stimulate the efforts of employees and non-employee Directors towards the continued success of the Company and its Subsidiaries.

2. Definitions.As used in the Plan, the following terms shall have the meanings set forth below:

“Award” means any Option, Stock Appreciation Right, Restricted Stock Award, Performance Award, or any other right, interest or option relating to Shares granted pursuant to the provisions of the Plan.

“Award Agreement” means any written agreement, contract or other instrument or document evidencing any Award granted by the Committee hereunder.

“Board” means the Board of Directors of the Company.

“Cause” means, unless otherwise provided in a particular Award Agreement, “cause” as defined in any employment or severance agreement the Participant may have with the Company or a Subsidiary or, if no such agreement exists, (a) commission of any criminal act; (b) engaging in any act involving dishonesty or moral turpitude; (c) material violation of the Company’s or any of its Subsidiaries’ written policies; (e) serious neglect or misconduct in the performance of the Participant’s duties for the Company or any of its Subsidiaries or willful or repeated failure or refusal to perform such duties; in each case as determined by the Committee in its sole discretion, which determination will be final, binding and conclusive.

“Change in Control” means the occurrence of any of the following events: (i) at any time after the Effective Date at least a majority of the Board shall cease to consist of “Continuing Directors” (meaning directors of the Company who either were directors on the Effective Date or who subsequently became directors and whose election, or nomination for election by the Company’s stockholders, was approved by a majority of the then Continuing Directors); or (ii) any “person” or “group” (as determined for purposes of Section 13(d)(3) of the Exchange Act, except any majority-owned subsidiary of the Company or any employee benefit plan of the Company or any trust thereunder, shall have acquired “beneficial ownership” (as determined for purposes of Securities and Exchange Commission (“SEC”) Regulation 13d-3) of Shares having 40% or more of the voting power of all outstanding Shares, unless such acquisition is approved by a majority of the directors of the Company in office immediately preceding such acquisition; or (iii) a merger or consolidation occurs to which the Company is a party, in which outstanding Shares are converted into shares of another company (other than a conversion into shares of voting common stock of the successor corporation or a holding company thereof representing 80% of the voting power of all capital stock thereof outstanding immediately after the merger or consolidation) or other securities (of either the Company or another company) or cash or other property; or (iv) the sale of all, or substantially all, of the Company’s assets occurs; or (v) the stockholders of the Company approve a plan of complete liquidation of the Company.

“Change in Control Price” means, with respect to a Share, the average per share closing sales price of a Share (rounded to four decimal places), as reported on the New York Stock Exchange Consolidated Tape, over the ten consecutive trading day period prior to and including the date of a Change in Control; provided, however, that in the case of Incentive Stock Options, Change in Control Price shall be the Fair Market Value of such Share on the date such Incentive Stock Option is exercised or deemed exercised pursuant to Section 10(b). To the extent the consideration paid in any such transaction described above

B-1

consists in full or in part of securities or other noncash consideration, the value of such securities or other noncash consideration shall be determined in the sole discretion of the Board.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

“Committee” means the Compensation and Stock Option Committee of the Board or such other person(s) or committee to whom it has delegated any authority, as may be appropriate. A person may serve on the Compensation Committee only if he or she (i) is a “Non-employee Director” for purposes of Rule 16b-3 under the Exchange Act, and (ii) satisfies the requirements of an “outside director” for purposes of Section 162(m) of the Code.

“Company” means Cantel Medical Corp., a Delaware corporation.

“Covered Employee” means a “covered employee” within the meaning of Section 162(m)(3) of the Code, or any successor provision thereto.

“Disability” means a permanent and total disability within the meaning of Section 22(e)(3) of the Code.

“Director” means a member of the Board.

“Effective Date” means November 14, 2006, the date this Plan is effective.

“Employee” means any employee of the Company or any Subsidiary. For any and all purposes under this Plan, the term “Employee” shall not include a person hired as an independent contractor, leased employee, consultant or a person otherwise designated by the Committee, the Company or a Subsidiary at the time of hire as not eligible to participate in or receive benefits under the Plan or not on the payroll, even if such ineligible person is subsequently determined to be a common law employee of the Company or a Subsidiary or otherwise an employee by any governmental or judicial authority. Unless otherwise determined by the Committee in its sole discretion, for purposes of the Plan, an Employee shall be considered to have terminated employment or services and to have ceased to be an Employee if his or her employer ceases to be a Subsidiary, even if he or she continues to be employed by such employer.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, with respect to Shares, as of any date, the closing sales price for the Shares as reported on the New York Stock Exchange Consolidated Tape for that date or, if no closing price is reported for that date, the closing sales price on the next preceding date for which such prices were reported, unless otherwise determined by the Committee.

“Incentive Stock Option” means an Option granted under Section 6 that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.

“Nonqualified Stock Option” means either an Option granted under Section 6 that is not intended to be an Incentive Stock Option or an Incentive Stock Option that has been disqualified.

“Option” means any right granted to a Participant under the Plan allowing such Participant to purchase Shares at such price or prices and during such period or periods as the Committee shall determine.

“Participant” means an Employee or a non-employee member of the Board who is selected by the Committee or the Board from time to time in their sole discretion to receive an Award under the Plan.

“Performance Award” means any Award of Performance Shares granted pursuant to Section 9.

B-2

“Performance Period” means that period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are to be measured.

“Performance Share” means any grant pursuant to Section 9 of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

“Person” means any individual, corporation, partnership, association, limited liability company, joint-stock company, trust, unincorporated organization or government or political subdivision thereof.

“Restricted Stock” means any Share issued with the restriction that the holder may not sell, transfer, pledge or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose (including, without limitation, any restriction on the right to vote such Share and the right to receive any cash dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.

“Restricted Stock Award” means an award of Restricted Stock under Section 8.

“Shares” means the shares of common stock of the Company.

“Stock Appreciation Right” means any right granted to a Participant pursuant to Section 7 to receive, upon exercise by the Participant, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the right on the date of grant. Any payment by the Company in respect of such right may be made in cash, Shares, other property, or any combination thereof, as the Committee, in its sole discretion, shall determine.

“Subsidiary” means a corporation, company or other entity in which the Company beneficially owns, directly or indirectly, at least 50 percent of the total combined voting stock or voting power.

“Substitute Awards” means Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or with which the Company combines.

3. Administration.

(a) The Plan shall be administered by the Committee. The Committee shall have full power and authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to (a) select the Employees of the Company and its Subsidiaries to whom Awards may from time to time be granted hereunder; (b) determine the type or types of Award to be granted to each Participant hereunder; (c) determine the number of Shares to be covered by or relating to each Award granted hereunder; (d) determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted hereunder; (e) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other property or canceled or suspended; (f) determine whether, to what extent, and under what circumstances payment of cash, Shares and other property payable with respect to an Award made under the Plan shall be deferred either automatically or at the election of the Participant; (g) interpret and administer the Plan and any instrument or agreement entered into under the Plan; (h) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (i) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan. The decisions of the Committee shall be final, conclusive and binding with respect to the interpretation and administration of the Plan and any grant made under it. The Committee shall make, in its sole discretion, all determinations arising in the administration, construction or interpretation of the Plan and Awards

B-3

under the Plan, including the right to construe disputed or doubtful Plan or Award terms and provisions, and any such determination shall be conclusive and binding on all persons, except as otherwise provided by law. A majority of the members of the Committee may determine its actions and fix the time and place of its meetings.

(b) Except as provided in Section 12, the Committee shall be authorized to make adjustments in Performance Award criteria or in the terms and conditions of other Awards in recognition of unusual or nonrecurring events affecting the Company or its financial statements or changes in applicable laws, regulations or accounting principles. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry it into effect. In the event that the Company shall assume outstanding employee benefit awards or the right or obligation to make future such awards in connection with the acquisition of or combination with another corporation or business entity, the Committee may, in its discretion, make such adjustments in the terms of Awards under the Plan as it shall deem appropriate.

(c) The Committee shall have the right, from time to time, to delegate to the Chief Executive Officer or one or more other officers of the Company such duties or powers as the Committee may deem advisable with respect to the designation of employees to be recipients of Awards and the nature and size of any such Awards, subject to the requirements of Section 157(c) of the Delaware General Corporation Law (or any successor provision) and such other limitations as the Committee shall determine; provided, however, that (i) in no event shall any such delegation of authority be permitted with respect to Awards to any members of the Board or to any other person who is subject to Rule 16b-3 under the Exchange Act or Section 162(m) of the Code and (ii) the resolution providing for such authorization sets forth the extent and limitations of such authority, including without limitation the maximum size of Awards and number of Awards that can be approved by the delegatee(s) in any fiscal quarter. The Committee shall also be permitted to delegate, to any appropriate officer or employee of the Company, responsibility for performing certain ministerial and administrative functions under the Plan. In the event that the Committee’s authority is delegated to officers or employees in accordance with the foregoing, all provisions of the Plan relating to the Committee shall be interpreted in a manner consistent with the foregoing by treating any such reference as a reference to such officer or employee for such purpose. Any action undertaken in accordance with the Committee’s delegation of authority hereunder shall have the same force and effect as if such action was undertaken directly by the Committee and shall be deemed for all purposes of the Plan to have been taken by the Committee.

(d) Notwithstanding the foregoing to the contrary, any Awards or formula for granting Awards under the Plan made to Non-Employee Directors shall be approved by the Board. With respect to awards to such directors, all rights, powers and authorities vested in the Committee under the Plan shall instead be exercised by the Board, and all provisions of the Plan relating to the Committee shall be interpreted in a manner consistent with the foregoing by treating any such reference as a reference to the Board for such purpose.

(e) The terms and conditions of all Awards granted pursuant to the Plan, including the grant date, shall be approved in writing by the Board, Committee or Chief Executive Officer (or other permitted delegate), as the case may be. The grant date for an Award shall be on or after, but never earlier then, the date of such written approval. In no event shall the grant date for an Award be changed after such approval.

4. Shares Subject to the Plan.

(a) Subject to adjustment as provided in Section 4(c), a total of one million (1,000,000) Shares shall be authorized for issuance pursuant to Awards granted under the Plan, of which (i) an aggregate of five hundred thousand (500,000) Shares are authorized for issuance pursuant to Options and Stock

B-4

Appreciation Rights and (ii) an aggregate of five hundred thousand (500,000) Shares are authorized for issuance pursuant to Restricted Stock Awards and Performance Awards.

(b) Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued Shares, treasury Shares or Shares purchased in the open market or otherwise.

(c) In the event of any change in the Shares by reason of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, spin-off or similar transaction or any other change in corporate structure affecting the Shares, (i) the maximum aggregate number and kind of shares specified herein as available for the grant of Awards, (ii) the number and kind of shares or the amount of cash or other property that may be issued and delivered to Participants upon the exercise of any Award or in payment with respect to any Award, that is outstanding at the time of such change, (iii) the exercise or grant price per share of Options or Stock Appreciation Rights subject to outstanding Awards granted under the Plan, shall be correspondingly adjusted so as to prevent substantial dilution or enlargement of the rights granted to, or available for, the Participants hereunder. Such adjustment shall be automatic in the case of stock dividends, stock splits, reverse stock splits and other transactions where the requisite adjustment is readily ascertainable such that the Participant’s proportionate interest in the Company or in the cash, Shares or other property issuable under an Award shall be maintained to the same extent, as near as may be practicable, as immediately before the occurrence of any such event. In all other cases, the adjustment shall be made in such manner as the Compensation Committee, in its sole discretion, may deem equitable to achieve the above stated purpose as near as may be practicable; provided, however, that the number of Shares subject to any Award shall always be a whole number and further provided that in no event may any change be made to an Incentive Stock Option that would constitute a “modification” within the meaning of Section 424(h)(3) of the Code.

(d) Any Shares that are not purchased or awarded under an Award that has terminated or lapsed, either by its terms or pursuant to the exercise (in whole or in part) of an Award granted under the Plan, may be used for the further grant of Awards.

5. Eligibility.Any Employee or non-employee Director shall be eligible to be selected as a Participant; provided, however, that Incentive Stock Options shall only be awarded to Employees of the Company, or a parent or subsidiary, within the meaning of Section 422 of the Code. Notwithstanding any provision in this Plan to the contrary, the Board shall have the authority, in its sole and absolute discretion, to select non-employee members of the Board as Participants who are eligible to receive Awards other than Incentive Stock Options under the Plan. The Board shall set the terms of any such Awards in its sole and absolute discretion, and the Board shall be responsible for administering and construing such Awards in substantially the same manner that the Committee administers and construes Awards to Employees.

6. Stock Options.   Options may be granted hereunder to any Participant, either alone or in addition to other Awards granted under the Plan and shall be subject to the following terms and conditions:

(a) Exercise Price. The exercise price per Share shall be not less than the Fair Market Value of the Shares on the date the Option is granted.

(b) Number of Shares. The Option shall state the number of Shares covered thereby.

(c) Exercise of Option. Unless otherwise determined by the Committee, an Option will be deemed exercised by the optionee, or in the event of death, an option shall be deemed exercised by the estate of the optionee, or by a person who acquired the right to exercise such option by bequest or inheritance or otherwise by reason of the death of the optionee, upon delivery of (i) a notice of exercise to the Company or its representative, or by using other methods of notice as the Committee shall adopt, and (ii) accompanying payment of the exercise price in accordance with any restrictions as the Committee shall adopt. The notice of exercise, once delivered, shall be irrevocable.

B-5

(d) Term of Option. The Committee shall determine the option exercise period of each Option. The period for Options shall not exceed ten years from the grant date.

(e) First Exercisable Date. Subject to Section 10, no Option may be exercised during the first year of its term or such longer period as may be specified in the Option; provided, however, that the Committee may in its discretion make any Options that are not yet exercisable immediately exercisable.

(f) Termination of Option. Subject to Section 13 below, all Options shall terminate upon their expiration, their surrender, upon breach by the optionee of any provisions of the Option, or in accordance with any other rules and procedures incorporated into the terms and conditions governing the Options as the Committee shall deem advisable or appropriate.

(g) Incorporation by Reference. The Option shall contain a provision that all the applicable terms and conditions of this Plan are incorporated by reference therein.

(h) Deferred Payment. To the extent permitted by law, any Option may provide for deferred payment of the exercise price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates. If any such deferral is to be permitted by the Committee, the Committee shall establish rules and procedures relating to such deferral in a manner intended to comply with the requirements of Section 409A of the Code, including, without limitation, the time when an election to defer may be made, the time period of the deferral and the events that would result in payment of the deferred amount, the interest or other earnings attributable to the deferral and the method of funding, if any, attributable to the deferred amount.

(i) Other Provisions. The Option shall also be subject to such other terms and conditions as the Committee shall deem advisable or appropriate, consistent with the provisions of the Plan as herein set forth. In addition, Incentive Stock Options shall contain such other provisions as may be necessary to meet the requirements of the Code and the Treasury Department rulings and regulations issued thereunder with respect to Incentive Stock Options.

7. Stock Appreciation Rights.Stock Appreciation Rights may be granted hereunder to any Participant either alone or in addition to other Awards granted under the Plan. The provisions of Stock Appreciation Rights need not be the same with respect to each recipient. The Committee may impose such terms and conditions or restrictions on the exercise of any Stock Appreciation Right, as it shall deem advisable or appropriate; provided that a Stock Appreciation Right shall not have a grant price less than Fair Market Value of a Share on the date of grant or a term of greater than ten years.

8. Restricted Stock.

(a) Issuance. A Restricted Stock Award shall be subject to restrictions imposed by the Committee at the time of grant for a period of time specified by the Committee (the “Restriction Period”). Restricted Stock Awards may be issued hereunder to Participants for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. Any Restricted Stock grant shall also be subject to such other terms and conditions as the Committee shall deem advisable or appropriate, consistent with the provisions of the Plan as herein set forth.

B-6

(b) Registration. Any Restricted Stock issued hereunder may be evidenced in such manner, as the Committee, in its sole discretion, shall deem appropriate, including, without limitation, book entry registration or issuance of a stock certificate or certificates. In the event any stock certificates are issued in respect of Shares of Restricted Stock awarded under the Plan, such certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award.

9. Performance Awards.Performance Awards may be paid in cash, Shares, other property, or any combination thereof, and may be subject to such other terms and conditions as the Committee shall deem advisable or appropriate, consistent with the provisions of the Plan as set forth, in the sole discretion of the Committee at the time of payment. Each grant of Performance Shares will specify the performance goals which, if achieved, will result in payment or early payment of the award, and each grant may specify in respect of such specified performance goals a level or levels of achievement and will set forth a formula for determining the number of Performance Shares that will be earned if performance is at or above the minimum level or levels, but falls short of full achievement of the specified performance goal. The performance levels to be achieved for each Performance Period and the amount of the Performance Shares to be distributed shall be conclusively determined by the Committee. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis. The Committee may designate whether any Performance Award, either alone or in addition to other Awards granted under the Plan, being granted to any Employee is intended to be “performance-based compensation” as that term is used in Section 162(m) of the Code. Any such awards designated to be “performance-based compensation” shall be conditioned on the achievement of one or more performance measures, to the extent required by Code Section 162(m), and shall be issued in accordance with Section 12.

10. Change In Control Provisions.

(a) Unless the Committee or Board shall determine otherwise at the time of grant with respect to a particular Award, and notwithstanding any other provision of the Plan to the contrary, in the event a Participant’s employment or service is involuntarily terminated without cause (as determined by the Committee or Board in its sole discretion) during the 12-month period following a Change in Control:

(i)    any Options and Stock Appreciation Rights outstanding, and which are not then exercisable and vested, shall become immediately fully vested and exercisable;

(ii)   the restrictions and deferral limitations applicable to any Restricted Stock shall lapse, and such Restricted Stock shall immediately become free of all restrictions and limitations and become fully vested and transferable to the full extent of the original grant; and

(iii)  all Performance Awards shall be considered to be earned and payable in full, based on the applicable performance criteria or, if not determinable, at the target level and any deferral or other restriction shall lapse and such Performance Awards shall be immediately settled or distributed.

(b) Change in Control Cash Out. Notwithstanding any other provision of the Plan, in the event of a Change in Control the Committee or Board may, in its discretion, provide that each or any Award outstanding at the time of the Change in Control shall, upon the occurrence of a Change in Control, be cancelled in exchange for a cash payment to be made within 30 days of the Change in Control in an amount equal to (i) with respect to an Option or Stock Appreciation Right, the amount by which the Change in Control Price per Share exceeds the exercise or grant price per Share under the Option or Stock Appreciation Right (the “spread”) multiplied by the number of Shares granted under the Option or Stock Appreciation Right and (ii) with respect to Restricted Stock Awards and Performance Awards, an amount equal to the Change in Control Price multiplied by the number of Shares issuable under the Restricted Stock Award or Performance Award, as the case may be.

B-7

11. Compliance with Section 409A of the Code.

(a) To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code. This Plan and any grants made hereunder shall be administrated in a manner consistent with this intent, and any provision that would cause this Plan or any grant made hereunder to fail to satisfy Section 409A of the Code shall have no force and effect unless and until amended to comply with Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Board without the consent of Participants). Any reference in this Plan to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

(b) In order to determine for purposes of Section 409A of the Code whether a Participant is in the service of a member of the Company’s controlled group of corporations under Section 414(b) of the Code (or by a member of a group of trades or businesses under common control with the Company under Section 414(c) of the Code) and, therefore, whether the Common Shares that are or have been purchased by or awarded under this Plan to the Participant are shares of “service recipient” stock within the meaning of Section 409A of the Code:

(i)    In applying Code Section 1563(a)(1), (2) and (3) for purposes of determining the Company’s controlled group under Section 414(b) of the Code, the language “at least 50 percent” is to be used instead of “at least 80 percent” each place it appears in Code Section 1563(a)(1), (2) and (3), and

(ii)   In applying Treasury Regulation Section 1.414(c)-2 for purposes of determining trades or businesses under common control with the Company for purposes of Section 414(c) of the Code, the language “at least 50 percent” is to be used instead of “at least 80 percent” each place it appears in Treasury Regulation Section 1.414(c)-2.

12. Code Section 162(M) Provisions.

(a) Notwithstanding any other provision of the Plan if the Committee determines at the time, a Performance Award is granted to a Participant who is then an officer that such Participant is, or is likely to be as of the end of the tax year in which the Company would ordinarily claim a tax deduction in connection with such Award, a Covered Employee, then the Committee may provide that this Section 12 is applicable to such Award.

(b) If a Performance Award is subject to this Section 12, then the lapsing of restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of one or any combination of the following: revenues, cost reductions, operating income, income before taxes, net income, adjusted net income, earnings per share, adjusted earnings per share, operating margins, working capital measures, return on assets, return on equity, return on invested capital, cash flow measures, market share, shareholder return or economic value added of the Company or the Subsidiary or division of the Company for or within which the Participant is primarily employed. Such performance goals also may be based on the achievement of specified levels of Company performance (or performance of an applicable Subsidiary) under one or more of the measures described above relative to the performance of other corporations. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code, or any successor provision thereto, and the regulations thereunder.

(c) Notwithstanding any provision of the Plan other than Section 10, with respect to any Performance Award that is subject to this Section 12, the Committee may adjust downwards, but not upwards, the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals except in the case of the death or disability of the Participant, or under such

B-8

other conditions where such waiver will not jeopardize the treatment of other Awards under this Section as “performance-based compensation” under Section 162(m) of the Code.

(d) The Committee shall have the power to impose such other restrictions on Awards subject to this Section 12 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code, or any successor provision thereto.

13. Termination of Service.

(a) Unless otherwise provided in the relevant Award Agreement, upon the termination of a Participant’s service as an employee or non-employee director of the Company or as an employee of one of its Subsidiaries (the date of such termination referred to as the “Service Termination Date”):

(i)    Options and Stock Appreciation Rights of such Participant shall terminate on the earlier of (A) the date that the Option terminates or expires in accordance with its terms or (B) the expiration of the following time periods after termination of service with the Company or Subsidiary: (1) twelve months if such service ceased due to death or Disability and (2) three months if such service ceased as a result of a termination for any other reason; provided that, in the event of a termination for Cause, such Participant’s right to any further payments, vesting or exercisability with respect to any Award shall be forfeited in its entirety;

(ii)   the Participant shall forfeit each (i) share of Restricted Stock and (ii) Performance Share held by the Participant at the Service Termination Date, as to which, as of that date, any restrictions, conditions, or contingencies have not lapsed; provided, however, that if the Participant paid an acquisition price for any of such Restricted Stock, the Company shall fully reimburse the acquisition price to the Participant on or promptly following the Service Termination Date.

(b) Notwithstanding anything set forth above, if a non-employee director of the Company ceases to serve as a director of the Company for any reason other than removal for cause, and such director has served as a non-employee director of the Company for at least ten years and is at least 65 years of age on the Service Termination Date, then on the Service Termination Date (i) all outstanding Options and Stock Appreciation Rights held by such director on the Service Termination Date that are not then exercisable and vested shall become immediately fully vested and exercisable, (ii) each Option and Stock Appreciation Right held by such director on the Service Termination Date shall remain exercisable and not terminate until the expiration of the original term of such Option or Stock Appreciation Right, and (iii) the restrictions and deferral limitations applicable to any Restricted Stock held by such director on the Service Termination Date shall immediately become free of all restrictions and limitations and become fully vested and transferable to the full extent of the original grant.

(c) Notwithstanding anything set forth above or in Section 6, and unless the Committee determines otherwise, in the event that (i) the holder of an Option or a Stock Appreciation Right dies, (ii) his representative has a right to exercise such Option or Stock Appreciation Right (the “Decedent’s Award”), (iii) the Decedent’s Award is not exercised by the last day on which it is exercisable (the “Final Exercise Date”), and (iv) the exercise or grant price per share is below the Fair Market Value of a Share on such date, the Committee shall either (i) cancel the Option or Stock Appreciation Right in exchange for a cash payment equal to the excess of (a) the Fair Market Value of one Share on the Final Exercise Date over (b) the exercise or grant price of the Decedent’s Award, multiplied by the number of Shares granted under the Option or Stock Appreciation Right or (ii) deem the Decedent’s Award to be exercised on the Final Exercise Date via a cashless exercise procedure determined by the Committee, and in either case, the resulting proceeds net of any required tax withholding shall be paid to the representative.

B-9

14. Amendments and Termination.

(a) The Board may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time; provided, however, that no such amendment, alteration, suspension, discontinuation or termination shall be made without (a) stockholder approval if such approval is necessary to qualify for or comply with any tax or regulatory requirement for which or with which the Board deems it necessary or desirable to qualify or comply, (b) the consent of the affected Participant, if such action would materially impair the rights of such Participant under any outstanding Award or (c) approval of the holders of a majority of the outstanding Common Stock with respect to any alteration or amendment to the Plan which increases the maximum number of shares of Common Stock which may be issued under the Plan, extends the term of the Plan or of options granted thereunder, changes the eligibility criteria in Section 5, or reduces the exercise or grant price below that now provided for in the Plan.

(b) The Committee may delegate to another committee, as it may appoint, the authority to take any action consistent with the terms of the Plan, either before or after an Award has been granted, which such other committee deems necessary or advisable to comply with any government laws or regulatory requirements of a foreign country, including but not limited to, modifying or amending the terms and conditions governing any Awards, or establishing any local country plans as sub-plans to this Plan. In addition, under all circumstances, the Committee may make non-substantive administrative changes to the Plan as to conform with or take advantage of governmental requirements, statutes or regulations.

(c) The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but no such amendment shall (a) materially impair the rights of any Participant without his or her consent or (b) except for adjustments made pursuant to Section 4(c) or in connection with Substitute Awards, reduce the exercise or grant price of outstanding Options or Stock Appreciation Rights or cancel or amend outstanding Options or Stock Appreciation Rights for the purpose of repricing, replacing or regranting such Options or Stock Appreciation Rights with an exercise or grant price that is less than the exercise or grant price of the original Options or Stock Appreciation Rights without stockholder approval. Any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Participant, be made in a manner so as to constitute a “modification” that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option. Notwithstanding the foregoing, any adjustments made pursuant to Section 4(c) shall not be subject to these restrictions.

(d) If permitted by Section 409A of the Code, in case of termination of service by reason of death, disability or normal or early retirement, or in the case of unforeseeable emergency or other special circumstances, of a Participant who holds an Option or Stock Appreciation Right not immediately exercisable in full, or any shares of Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Performance Shares that have not been fully earned, the Committee may, in its sole discretion, accelerate the time at which such Option, Stock Appreciation Right or other award may be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or the time at which such Performance Shares will be deemed to have been fully earned or may waive any other limitation or requirement under any such award, except in the case of an award to a “covered employee” who is designated by the Board as intended to satisfy the requirements for “qualified performance-based compensation” under Section 162(m) of the Code where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.

15. Dividends.Subject to the provisions of the Plan and any Award Agreement, the recipient of a Restricted Stock Award may, if so determined by the Committee, be entitled to receive, currently or on a deferred basis, cash or stock dividends, or cash payments in amounts equivalent to cash or stock dividends on Shares (“dividend equivalents”) with respect to the number of Shares covered by the Restricted Stock

B-10

Award, as determined by the Committee, in its sole discretion, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested.

16. General Provisions.

(a) An Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant or, in the event of a Participant’s legal incapacity to do so, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law and/or court supervision.; provided that the Committee, in its sole discretion, may permit additional transferability, on a general or specific basis, and may impose conditions and limitations on any permitted transferability.

(b) No Employee shall have the right to be selected to receive an Option or other Award under this Plan or, having been so selected, to be selected to receive a future Award grant or Option. Neither the Award nor any benefits arising out of this Plan shall constitute part of a Participant’s employment or service contract with the Company or any Subsidiary and, accordingly, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Board without giving rise to liability on the part of the Company or any Subsidiary for severance payments. The Awards under this Plan are not intended to be treated as compensation for any purpose under any other Company plan.

(c) No Employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Employees or Participants under the Plan.

(d) The prospective recipient of any Award under the Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have accepted any Award Agreement or other instrument evidencing the Award.

(e) Nothing in the Plan or any Award granted under the Plan shall be deemed to constitute an employment or service contract or confer or be deemed to confer on any Employee or Participant any right to continue in the employ or service of, or to continue any other relationship with, the Company or any Subsidiary or limit in any way the right of the Company or any Subsidiary to terminate an Employee’s employment or Participant’s service at any time, with or without cause.

(f) All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

(g) No Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would comply with all applicable requirements of the U.S. federal securities laws and any other laws to which such offer, if made, would be subject.

(h) Except as otherwise required in any applicable Award Agreement or by the terms of the Plan, recipients of Awards under the Plan shall not be required to make any payment or provide consideration other than the rendering of services.

(i) The Company and its Subsidiaries shall be authorized to withhold from any Award granted or payment due under the Plan the amount of withholding taxes due in respect of an Award or payment hereunder and to take such other action as may be necessary in the opinion of the Company or Subsidiary to satisfy all obligations for the payment of such taxes. The Committee shall be authorized to establish procedures for election by Participants to satisfy such obligation for the payment of such taxes by delivery

B-11

of or transfer of Shares to the Company (to the extent the Participant has owned the surrendered shares for more than six months if such a limitation is necessary to avoid a charge to the Company for financial reporting purposes), or by directing the Company to retain Shares (up to the employee’s minimum required tax withholding rate) otherwise deliverable in connection with the Award.

(j) Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

(k) Any Award shall contain a provision that it may not be exercised at a time when the exercise thereof or the issuance of shares thereunder would constitute a violation of any federal or state law or listing requirements of the New York Stock Exchange for such shares or a violation of any foreign jurisdiction where Awards are or will be granted under the Plan. The provisions of the Plan shall be construed, regulated and administered according to the laws of the State of New York without giving effect to principles of conflicts of law, except to the extent superseded by any controlling Federal statute.

(l) If any provision of the Plan is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan shall remain in full force and effect.

(m) Awards may be granted to Participants who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those applicable to Awards to Employees employed in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalization for Employees on assignments outside their home country.

(n) If approved by the Committee in its sole discretion, an Employee’s absence or leave because of military or governmental service, disability or other reason shall not be considered an interruption of employment for any purpose under the Plan.

16. Term of Plan.   The Plan shall terminate on the tenth anniversary of the Effective Date, unless sooner terminated by the Board pursuant to Section 14.

17. Compliance with Section 16.   With respect to Participants subject to Section 16 of the Exchange Act (“Members”), transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent that compliance with any Plan provision applicable solely to such Members that is included solely for purposes of complying with Rule 16b-3 is not required in order to bring a transaction by such Member in compliance with Rule 16b-3, it shall be deemed null and void as to such transaction, to the extent permitted by law and deemed advisable by the Committee. To the extent any provision in the Plan or action by the Committee involving such Members is deemed not to comply with an applicable condition of Rule 16b-3, it shall be deemed null and void as to such Members, to the extent permitted by law and deemed advisable by the Committee.

B-12