SCHEDULE 14A INFORMATION
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OFProxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (AMENDMENT NO.(Amendment No. )
Filed by registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CANTEL INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
CANTEL INDUSTRIES, INC.
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(Name of Person(s) Filing Proxy Statement)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
CANTEL MEDICAL CORP.
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(Name of Registrant as Specified In Its Charter)
CANTEL MEDICAL CORP.
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of filing fee (checkFiling Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
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(1) Amount previously paid:
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(2) Form, schedule or registration statement No.:
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(4) Date filed:
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/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
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the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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CANTEL INDUSTRIES, INC.
1135 BROAD STREET
CLIFTON, NEW JERSEY 07013MEDICAL CORP.
150 CLOVE ROAD
LITTLE FALLS, NJ 07424
------------------------
NOTICE OF 19992001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 2002
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of CANTEL
INDUSTRIES, INC. ("Cantel" or the "Company")MEDICAL CORP., will be held at The Harmonie Club, 4 East 60th Street, New York,
New York on Tuesday,
March 28, 2000Wednesday, May 29, 2002 at 10:2:00 a.m.p.m., eastern time, for the
following purposes:
1. To elect two (2)three directors to serve a term of three (3) years. (Proposal 1)
2. To amend the Company's 1997 Employee Stock Option PlanCertificate of Incorporation of the Company to increase the
authorized number of shares reserved for issuance and available for grant thereunderof Common Stock from 400,00012,000,000 to 700,000.20,000,000
shares. (Proposal 2)
3. To consider and act upon a proposal to amend the Company's Certificate
of Incorporation to change the name of the Company to Cantel Medical
Corp. (Proposal 3)
4. To transact suchon any other business asmatters that may properly be brought before the
Meeting or any adjournment or postponement of the Meeting.
Only stockholders of record at the close of business on February 16, 2000May 2, 2002 are
entitled to notice of, and to vote at, the Meeting or any adjournment or
postponement thereof. A copy of the Company's Annual Report to Stockholders for
the fiscal year ended July 31, 19992001 is being mailed to stockholders together
with the mailing of this proxy statement and the enclosed proxy.
You are cordially invited to attend the Meeting. IfWhether or not you do not plan to
be
present, kindly fill in, dateattend, please act promptly to vote your shares on the proposals described
above. You may vote your shares by completing, signing, and signdating the accompanyingenclosed
proxy exactlycard and returning it as your
name appears on your stock certificates and mail it promptly as possible in the enclosed return envelope to assure thatpostage-paid
envelope. You may revoke your proxy in the manner described in this proxy
statement at any time before it has been voted at the Meeting.
If you attend the Meeting, you may revoke your prior proxy and vote your
shares are represented and your vote can be
recorded. This may save the Company the expense of further proxy solicitation.in person if you wish.
By order of the Board of Directors
Darwin C. Dornbush
SecretarySECRETARY
Little Falls, New Jersey
May 3, 2002
CANTEL INDUSTRIES, INC.
1135 Broad Street
Clifton, New Jersey 07013MEDICAL CORP.
150 CLOVE ROAD
LITTLE FALLS, NJ 07424
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PROXY STATEMENT
---------------------
The enclosed proxy is solicited by the Board of Directors of Cantel Industries, Inc. (the "Company")Medical
Corp. for use at the Annual Meeting of Stockholders (the "Meeting") to be held on Tuesday, March 28, 2000Wednesday,
May 29, 2002 at 10:2:00 a.m.p.m., eastern time, at The Harmonie Club, 4 East 60th
Street, New York, New York, and at any and all adjournments or postponements
thereof. This Proxy Statement and form of proxy are being mailed to stockholders
on or about February 23, 2000.May 3, 2002.
As of February 16, 2000,May 2, 2002, the record date fixed for the determination of
stockholders entitled to notice of and to vote at the Meeting, there were
4,398,1956,104,799 outstanding shares of Common Stock, which is the only outstanding
class of voting securities of the Company. Each outstanding share of Common
Stock is entitled to one vote on each matter to be voted upon.
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 twothree management nominees for election
as directors and in favor of the other proposals described herein.
The Board of Directors does not intend to present at the Meeting any matters
other than those set forth in this Proxy Statement, nor does the Board know of
any other matters which may come before the Meeting. However, if any other
matters are properly presented, it is the intention of the persons named in the
enclosed proxy to vote it in accordance with their judgment.
IT IS DESIRABLE THAT AS LARGE A PERCENTAGE AS POSSIBLE OF THE STOCKHOLDERS'
INTERESTS BE REPRESENTED AT THE MEETING. THEREFORE, EVEN IF YOU INTEND TO BE
PRESENT AT THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY
TO ENSURE THAT YOUR STOCK WILL BE REPRESENTED. ANY PROXY GIVEN PURSUANT TO THIS
SOLICITATION MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE AT THE MEETING, BY
DELIVERY TO THE SECRETARY OF THE COMPANY OF A WRITTEN NOTICE OF REVOCATION, BY
SUBMISSION OF A LATER DATED AND PROPERLY EXECUTED PROXY, OR BY VOTING IN PERSON
AT THE MEETING. ATTENDANCE AT THE MEETING WILL NOT, IN AND OF ITSELF, CONSTITUTE
A REVOCATION OF A PROXY.
Only stockholders of record at the close of business on February 16, 2000May 2, 2002 will be
entitled to vote at the Meeting or any adjournment or adjournments thereof.
The Company's by-laws provide that stockholders holding one-third of the
shares of Common Stock entitled to vote shall constitute a quorum at meetings of
the stockholders. Shares represented in person or by proxy as to any matter will
be counted toward the fulfillment of a quorum. The vote of a plurality of the
votes cast in person or by proxy is necessary for the election of directors. The
affirmative vote of a majority of all the outstanding shares of Common Stock
present in person
or by proxyentitled to vote is necessary for the approval of Proposal 2. The affirmative vote of
a majority of shares of Common Stock outstanding as of the record date is
necessary for the approval of Proposal 3. Votes at the
Annual Meeting will be tabulated by an independent inspector of election
appointed by the Company or the Company's transfer agent.
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 on
the outcome of such election. As the affirmative vote of a majority of all of
the issued and outstanding shares of Common Stock present in person or represented by proxy is necessaryrequired
1
for the approval of Proposal 2, 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.
Abstentionsabstentions and "broker non-votes" on Proposal 3 will have the
same effect as negative votes since the affirmative vote of a majority of the outstanding
shares of Common Stock is required to approve Proposal 3.
votes.
PROPOSAL 1
ELECTION OF DIRECTORS
GENERAL
TwoThree directors of the Company are to be elected at the Annual Meeting to
serve a three-year term expiring at the 20022004 Annual Meeting of Stockholders and
until their respective successors have been duly elected and qualified.
Management has nominated James P. ReillyCharles M. Diker, Alan J. Hirschfield and Robert L. BarbanellBruce Slovin
for election as directors. Unless authority to vote for the election of
management's nominees is withheld, the enclosed proxy will be voted for the
election of said nominees. Each of the nominees currently serves as a director
of the Company, and has consented to be named a nominee in the Proxy Statement
and to continue serving as a director if elected. While management has no reason
to believe that any of the nominees will not be available as a candidate, should
such situation arise, proxies given to management will be voted for the election
of another person as a director.
NOMINEES FOR DIRECTORS
TERMS EXPIRING AT 2004 DIRECTOR
ANNUAL MEETING OF STOCKHOLDERS AGE SINCE
- ------------------------------ -------- --------
Charles M. Diker ........................................... 67 1985
Chairman of the Board of the Company and Private Investor
Alan J. Hirschfield ........................................ 66 1986
Vice Chairman of the Board of the Company, Private
Investor and Consultant
Bruce Slovin ............................................... 66 1986
President of 1 Eleven Associates, LLC
DIRECTORS WHOSE TERMS OF OFFICE CONTINUE
TERMS EXPIRING AT 2003 DIRECTOR
ANNUAL MEETING OF STOCKHOLDERS AGE SINCE
- ------------------------------ -------- --------
Darwin C. Dornbush, Esq. ................................... 72 1963
Partner in the law firm of Dornbush Mensch Mandelstam &
Schaeffer, LLP
Morris W. Offit ............................................ 65 1986
Chairman and Chief Executive Officer of Offit Hall Capital
Management, LLC
John W. Rowe, M.D. ......................................... 57 1998
Chairman, President and CEO of Aetna Inc.
2
TERMS EXPIRING AT 2002 DIRECTOR
ANNUAL MEETING OF STOCKHOLDERS AGE SINCE
- ------------------------------ -------- --------
James P. Reilly ............................................ 61 1989
President and Chief Executive Officer of the Company............................................... 59 1989Company
Robert L. Barbanell ........................................ 71 1994
President of Robert L. Barbanell Associates, Inc.......... 69 1994
DIRECTORS WHOSE TERMS OF OFFICE CONTINUE
TERMS EXPIRING ATInc.
Joseph M. Cohen ............................................ 64 2000 DIRECTOR
ANNUAL MEETING OF STOCKHOLDERS AGE SINCE
- ------------------------------ -------- --------
Darwin C. Dornbush, Esq.
Partner in the law firm of Dornbush Mensch
Mandelstam & Schaeffer, LLP............................... 69 1963
Morris W. Offit
Chief Executive Officer of OFFITBANK...................... 63 1986
John W. Rowe, M.D.
President and Chief Executive Officer of Mount
Sinai-NYU Health.......................................... 55 1998
TERMS EXPIRING AT 2001 DIRECTOR
ANNUAL MEETING OF STOCKHOLDERS AGE SINCE
- ------------------------------ -------- --------
Charles M. Diker
Chairman of the Board of the Company and Non-
Managing Principal of Weiss, PeckJM Cohen & Greer................. 65 1985
Alan J. Hirschfield
Vice Chairman of the Board of the Company and
Co-Chairman and Co-Chief Executive Officer of
Data Broadcasting Corp.................................... 64 1986
Bruce Slovin
President of McAndrews & Forbes Holdings
Inc. and President of Revlon Group, Inc................... 64 1986Co., L.L.C.
Fred Shapiro, M.D. ......................................... 67 2001
Retired Physician
2
BUSINESS EXPERIENCE OF DIRECTORS
Mr. Diker has served as Chairman of the Board of the Company since April
1986. He is a private investor and a non-managing principal of Weiss,
Peck & Greer,currently acts as an investment management company.adviser. Mr. Diker is also a director
of
AMF Bowling, Inc. (NYSE), an owner and operator of bowling centers and a
manufacturer of bowling equipment, BeautiControl Cosmetics, Inc. (NASDAQ), a
manufacturer of cosmetics marketed by direct sales, International Specialty Products (NYSE), a specialty chemical company Data Broadcasting Corp. (NASDAQ),
a communication services and technology company, and
Chyron Corporation (NYSE)(OTC), a supplier of graphics for the television industry.
Mr. Hirschfield has served as Vice Chairman of the Board of the Company
since January 1988. SinceHe is currently a private investor and consultant. From July
1992 he hasto February 2000, Mr. Hirschfield served as Co-Chairman and Co-Chief
Executive Officer of Data Broadcasting Corp. (NASDAQ), a communication services
and technology company. Mr. Hirschfield is also a director of Interactive Data
Corp. (formerly Data Broadcasting Corp.) as well as Chyron Corporation (NYSE)(OTC), a
supplier of graphics for the television industry, MarketWatch.com, Inc. (NASDAQ), an Internet financial site, and Jackpot,J NET Enterprises, Inc.
(NYSE), an internet venture investor, and Carmike Cinemas (OTC), a gaming machine operator.national
theater chain.
Mr. Barbanell has served as President of Robert L. Barbanell Associates,
Inc., a financial consulting company, since July 1994. Mr. Barbanell is also
Chairman of the Board and a director of Marine Drilling
Companies,Pride International, Inc. (NYSE), aan oil
drilling contractor, a directorcontractor.
Mr. Cohen has served as Chairman of Kaye Group Inc.
(NASDAQ)JM Cohen & Co., an insurance brokerage and insurance underwriting company, and a
director of Sentry Technology Corporation (AMEX)L.L.C., a security products company.family
investment group, since February 2000. From July 1998 until February 2000, Mr.
Cohen was Chairman of SG Cowen Securities Corp., a securities firm. From June
1967 until July 1998, Mr. Cohen was Managing Partner and Chairman of Cowen &
Company, a research and investment banking firm.
Mr. Dornbush has served as Secretary of the Company since July 1990. He has
been a partner in the law firm of Dornbush Mensch Mandelstam & Schaeffer, LLP,
which has been general counsel to the Company for more than the past five years.
Mr. Dornbush is also a director of Benihana, Inc. (NASDAQ), a company which
operates Japanese style restaurants.
Mr. Offit has served as Chairman and Chief Executive Officer of OFFITBANKOffit Hall
Capital Management, LLC, since April 2002. From July 1990 to December 2001, Mr.
Offit was Chief Executive Officer of Offitbank (a Wachovia company), a limited
purpose trust company chartered by the New York State Banking Department, since July 1990.Department. Mr.
Offit is a Trustee of Johns Hopkins University where he served as Chairman of
the Board of Trustees from 1990 through 1996. He serves as a director of Hasbro Inc. (AMEX), a toy manufacturer.
Mr. Reilly has served as President and Chief Executive Officer of the
Company since June 1989. Mr. Reilly is a certified public accountant.
Dr. Rowe has served as Chairman, President and CEO of Aetna Inc. since
September 2000. From July 1998 until September 2000, Dr. Rowe was President and
Chief Executive Officer of Mount Sinai NYU Health sinceHealth. From July 1988 until July
1998, Dr. Rowe was President of the Mount Sinai Hospital fromHospital.
3
From July 1988 tountil July 1998, and1999, Dr. Rowe was President of the Mount Sinai School
of Medicine from
July 1988 to July 1999.Medicine. He also serves as a Professor of Medicine and of Geriatrics at the
Mount Sinai School of Medicine.
Dr. Shapiro served as a consultant to Hennepin Faculty Associates, a
non-profit organization involved in medical education, research and patient
care, from July 1995 to June 1999, President of Hennepin Faculty Associates from
January 1984 to June 1995, and Medical Director of the Regional Kidney Disease
Program from July 1966 to January 1984. He has also been a Professor of Medicine
at the Hennepin County Medical Center and the University of Minnesota from July
1976 to the present. Prior to the merger with Cantel, Dr. Shapiro served as a
director of Minntech since 1982.
Mr. Slovin has served as President of 1 Eleven Associates, LLC, a private
investment firm since January 2000. From 1985 until December 2000, Mr. Slovin
served as President and a director of MacAndrews & Forbes Holdings Inc. and
Revlon Group, Inc., privately held industrial holding companies, since 1985.companies. Mr. Slovin is also a
director of Kuala Healthcare, Inc.
(NASDAQ), a home health care services company, Infu-Tech, Inc. (NASDAQ), a home
health care company, and M&F Worldwide Corp. (NYSE), a manufacturer of licorice extract and
flavorings.flavorings, and a manufacturer and supplier of movie cameras and similar
technologies for the feature film industry, Daxor Corporation (AMEX), the
developer and manufacturer of the Blood Volume Analyzer, and Youthstream Media
(Nasdaq), an integrated media, marketing, promotions and retail company.
COMMITTEES AND MEETINGS
The Company has an Audit Committee of the Board of Directors consisting of
Messrs. Barbanell (Chairman), Offit and Slovin.Slovin, all of whom have been determined
by the Board of Directors to be independent (as independence is defined under
the NASDAQ listing standards). All the members of the audit committee are
financially literate, and at least one member has accounting and financial
management expertise. The primary functions of the Audit Committee are to
recommend the appointment of the Company's independent auditors, to review the
overall scope of the audit, the Company's financial statements and the
independent auditors' report, and to meet with the Company's financial
management and its independent auditors to satisfy itself of the adequacy of the
Company's 3
internal controls. The full Audit Committee held two meetings during
fiscal 19992001 at which all members of the committee were present. The chairman of
the Audit Committee held three additional meetings with the Company's financial
management and its independent auditors prior to filing the Company's Quarterly
Reports on Form 10-Q for the purpose of reviewing such reports.
The Company has a Compensation Committee of the Board of Directors
consisting of Messrs. Hirschfield (Chairman), Barbanell and Barbanell.Cohen. Mr. Cohen was
appointed to the Compensation Committee on October 10, 2001. The primary
functions of the Compensation Committee are the establishment of compensation
policies and to consider and make recommendations to the Board concerning
compensation to the Company's senior management. The Compensation Committee had
several telephonic meetingsheld
one meeting during fiscal 2001 at which compensation issues were discussed and
approved, including a recommendation to the Board of Directors for the approval
of an employment agreement with the Presidentall members of the Company that provided for
an increase in compensation and the grant of a stock option to the President of
the Company. Such recommendation was considered and approved by the Board of
Directors.committee attended.
The Board of Directors of the Company held fourseven meetings and a special
telephonic meeting during the fiscal
year ended July 31, 1999.2001. Except for Messrs.Mr. Offit, who did not attend four of the
Board meetings, and Mr. Hirschfield and Offit, bothDr. Rowe, each of whom did not attend
twothree of the Board meetings, no incumbent director attended fewer than 75% of
the aggregate of (i) the total number of meetings of the Board (held during the
period for which he has been a director) and (ii) the total number of meetings
held by all committees of the Board on which he served (during the periods that
he served). The Company does not have a nominating committee.
DIRECTOR COMPENSATION
During fiscal 1999,2001, Directors who were not officers of the Company were paid
a $2,500 annual fee and $1,000 per meeting attended, plus expenses. Under the
1991 Directors' Stock Option Plan, directorsIn addition,
Directors who are not officersserved as chairmen of the CompanyAudit Committee and Compensation
Committee were automatically granted quarterly optionspaid $1,000 per meeting attended, and the other
4
non-employee Directors who served on the committees were paid $750 per meeting
attended. The 1998 Directors' Plan provides for the automatic grant to each of
the Company's directors of an option to purchase 1,000 shares of Common Stock on
the last business day of the Company's fiscal year. In addition, an option to
purchase 500 shares of Common Stock is granted automatically on the last
business day of each fiscal quarter to each director (exclusive of Messrs. Diker
and Reilly and any other director who is a full-time employee of the Company)
provided that the director attended any regularly scheduled meeting of the
Board, if any, held during such fiscal year quarter. Mr. Dornbush, who is
both an officer and director of the Company (and who thereby does not receive
said quarterly option grant) was granted a non-plan option to purchase 500
shares of Common Stock for each such meeting attended by Mr. Dornbush. In
addition, under the 1991 Directors' Stock Option Plan, all Directors were
automatically granted annual options to purchase 1,000 shares of Common Stock at
the fiscal year-end. Commencing August 1999, Directors who are not employees of
the Company are granted options under the Company's 1998 Directors' Stock Option
Plan described below under "Stock Option Plans."
THE BOARD RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED HEREIN.
PROPOSAL 2
APPROVALAMENDMENT OF AMENDMENTCERTIFICATE OF INCORPORATION
TO THE
1997 EMPLOYEEINCREASE AUTHORIZED COMMON STOCK
OPTION PLAN
In October 1997,The stockholders are asked to consider and approve a proposed amendment to
the Company's Certificate of Incorporation to increase the authorized Common
Stock of the Company adoptedfrom 12,000,000 shares to 20,000,000 shares. A copy of the
1997 Employee Stock Option Plan
(the "Employee Plan") under whichresolution to be presented for adoption by the stockholders is annexed hereto as
Annex B.
The Company's Certificate of Incorporation, as amended, authorizes the
Company may, from time to time, issue options exercisable forup to 12,000,000 shares of Common Stock and 1,000,000 shares of
Preferred Stock. At the timeAs of adoption, 200,000May 2, 2002, 6,104,799 shares of Common Stock were issued
and outstanding. Additionally, as of that date an aggregate of 1,444,607 shares
of Common Stock were reserved for issuance upon the exercise of options granted
or available for grant under the Employee Plan. In
April 1999, stockholders approved an amendmentCompany's various stock option plans or under
stock options individually granted by the Board of Directors.
If the proposal to increase the Employee Plan that
increased theauthorized number of shares of Common Stock
reservedis approved by the stockholders, the additional shares may be issued at such
time and on such terms and conditions as the Board of Directors may determine
without further approval by the stockholders, subject to applicable provisions
of law and the rules of any securities exchange on which shares of the Common
Stock are listed for issuance by 200,000
shares,trading.
To accomplish the proposed increase in the Company's authorized Common
Stock, Article FOURTH of the Company's Certificate of Incorporation must be
amended as set forth in Annex B to 400,000 shares.this Proxy Statement.
The Board of Directors has adopted an amendmentconsiders it desirable to have available for issuance
sufficient authorized shares of Common Stock to enable the Employee PlanCompany to increaseact
without delay if favorable opportunities arise to raise additional equity
capital or to acquire companies or products by the numberissuance of shares of Common
Stock reserved for
issuance by 300,000 shares, to 700,000 shares. Adoption of such amendment
requires stockholder approval. A copy of the Employee Plan, as currently in
effect, is attached hereto as Exhibit A.
Options granted under the Employee Plan are intended to qualify as Incentive
Stock Options ("ISOs") within the meaning of Section 422 of the Code. The
Employee Plan is administered in all respects by the Stock Option Committee. The
Stock Option Committee may determine the employees
4
to whom options areand otherwise to be granted andin a position to take various steps requiring the
numberissuance of shares subject to each
option. Under the terms of the Employee Plan, all employees of the Company or
subsidiaries of the Company are eligible for option grants. Options under the
Employee Plan are granted to reward past performance by employees, as an
incentive for future performance, and to recruit and retain qualified personnel.
The option exercise price of options granted under the Employee Plan is
fixed by the Stock Option Committee but must be no less than 100% of the fair
market value of theadditional shares of Common Stock subject to the option at the time of
grant, except(including stock splits or stock
dividends) that in the casejudgment of an employee who possesses more than 10% of the
total combined voting power of all classes of stock of the Company (a "10%
Holder"), the exercise price for incentive stock options must be no less than
110% of said fair market value. Options may be exercised by the payment in full
in cash or by tendering shares of Common Stock having a fair market value, as
determined by the Stock Option Committee, equal to the option exercise price.
Options granted under the Employee Plan may not be exercised more than ten years
after the date of grant, five years in the case of an incentive stock option
granted to a 10% Holder.
As of February 16, 2000, options to purchase 239,500 shares were outstanding
under the Employee Plan. No shares were issued pursuant to the exercise of
options granted under the Employee Plan. With the adoption of the proposed
amendment, 160,500 shares would be available for future grants. The number of
shares is subject to adjustment on account of stock splits, stock dividends and
other dilutive changes in the Common Stock. Shares of Common Stock covered by
unexercised stock options that expire, terminate, or are cancelled are available
for option grant under the Employee Plan.
The principal United States federal income tax consequences of the issuance
and exercise of options, and subsequent stock dispositions, are as follows:
Although an individual can receive an unlimited number of ISOs during any
calendar year, the aggregate fair market value (determined at the time of option
grant) of the stock with respect to which ISO's first become exercisable during
any calendar year (under all of the Company's stock option plans) cannot exceed
$100,000. ISO tax treatment is denied by the Code to any options in excess of
such dollar limits. For purposes of computing an optionee's regular tax
liability, an optionee will not realize taxable income for federal income tax
purposes upon the grant or exercise of an ISO and the Company will not be
entitled to a deduction in connection with the grant or the exercise of the
option. For purposes of the alternative minimum tax only, stock acquired
pursuant to the exercise of an ISO will be subject to the rules applicable to
non-ISOs. Thus, in general, the amount by which the fair market value of the
option shares at the time of ISO exercise exceeds the option exercise price (the
"Option Spread") will be an item of tax preference for purposes of the federal
alternative minimum tax and thus the Option Spread may be subject to the
alternative minimum tax unless the shares are disposed of in a non-qualifying
disposition in the year of exercise. If the Optionee is subject to the
alternative minimum tax in the year of the option exercise, the shares purchased
upon the exercise of the ISO will generally have a tax basis equal to their fair
market value at the time of ISO exercise only for purposes of computing gain or
loss on a subsequent disposition of the option shares under the alternative
minimum tax. If instead, the Optionee is not subject to the alternative minimum
tax in the year of the disposition of his option shares, the shares purchased
upon the exercise of an ISO will have a tax basis (for purposes of calculating
gain or loss on such disposition under the regular tax) equal to their ISO
exercise price. Each Optionee should consult his tax advisor as to the
application of the alternative minimum tax to the exercise of ISOs and the
disposition of shares acquired thereby.
Provided that the optionee does not dispose of the shares acquired upon the
exercise of an ISO within two years from the date of grant or within one year
from the date of exercise, the net gain realized on the sale or other taxable
disposition of the shares is subject to tax at capital gains tax rates. If
Common Stock acquired pursuant to the exercise of an ISO is disposed of within
the two year or one year periods mentioned above, any gain realized by the
optionee generally will be taxable at the time of such disposition as
(i) ordinary income to the extent of the difference between the exercise
5
price and the lesser of (a) the fair market value of the Common Stock on the
date the ISO is exercised, or (b) the amount realized on such disposition, and
(ii) short-term or long-term capital gain to the extent of any excess of the
amount realized on the disposition over the fair market value of the Common
Stock on the date the ISO is exercised. The Company will be entitled to a
deduction equal to the amount of ordinary income recognized by the optionee at
the time such income is recognized. The Company will be required to satisfy any
applicable withholding requirements in order to be entitled to a tax deduction.
If the optionee pays the option exercise price by transferring to the
Company shares of its stock, the optionee will generally not recognize any gain
or loss with respect to the transfer of such shares, and the optionee will have
a tax basis in the shares acquired equal to the amount of cash plus the adjusted
tax basis of any shares transferred by such optionee to the Company. (But see
the discussion above relating to the alternative minimum tax.) However, if the
transferred shares were themselves acquired by the Optionee upon the exercise of
an ISO and the transfer of such shares to the Company occurs within the two-year
period or the one-year period referred to above, the optionee will generally
recognize gain in connection with such transfer to the extent the fair market
value of the transferred shares exceeds the tax basis with respect to such
shares.
State and local income tax consequences may, depending on the jurisdiction,
differ from the federal income tax consequences of the granting and exercise of
an option and any later sale by the Optionee of his option stock. There may also
be, again depending on the jurisdiction, transfer or other taxes imposed in
connection with a disposition, by sale, bequest or otherwise, of options and
option stock. Optionees should consult their personal tax advisors with respect
to the specific state, local and other tax effects on them of option grants,
exercises and stock dispositions.
The Board of Directors is of the opinion that adoption of the amendment to
the Employee Plan isare in the best
interests of the Company. The Company in that it will aidhas no current plans, arrangements or
understandings regarding the Company in securing and retaining competent management personnel and other
employees by making it possible to offer them an opportunity to acquire stockissuance of any of the Companyadditional shares of Common
Stock for which authorization is sought and thereby increase their proprietary interest inthere are no negotiations pending
with respect to the Company's
success.issuance thereof for any purpose.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE
EMPLOYEE PLAN.
PROPOSAL 3
AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF
THE COMPANY TO CHANGE THE COMPANY'S NAME
The Board of Directors has unanimously approved the change of the company's
name from Cantel Industries, Inc. to Cantel Medical Corp. Management believes
that this name more accurately describes the Company's business as well as its
future strategic focus. In particular, the Company is concentrating its
resources on diagnostic and therapeutic endoscopy, infection prevention and
infection control products and services, and medical equipment maintenance
services, and in developing a range of imaging based products and services.
The name change will be effected through an amendment to the Company's
Certificate of Incorporation. If the amendment is approved, Article FIRST of the
Certificate of Incorporation will be amended to read as follows: "FIRST: The
name of the Corporation is Cantel Medical Corp."
THE BOARD RECOMMENDS A VOTE "FOR" THEPROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO EFFECT THE PROPOSED NAME CHANGE.
6INCORPORATION.
5
OWNERSHIP OF SECURITIES
The following table sets forth stock ownership information as of February 16, 2000May 2, 2002
concerning (i) each director and persons nominated to become directors of
Cantel, (ii) each person (including any "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934) who is known by Cantel to beneficially
own more than five (5%) percent of the outstanding shares of Cantel's Common
Stock, (iii) the Chief Executive Officer and the other executive officers named
in the Summary Compensation Table below, and (iv) Cantel's executive officers
and directors as a group:
NAME AND ADDRESS AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENTAGE
OF BENEFICIAL OWNERS POSITION WITH THE COMPANY OWNERSHIP (1)BENEFICIAL OWNERSHIP(1) OF CLASS
- -------------------- --------------------------------- ----------------------------------------------- ----------------------- ----------
Charles M. Diker.................Diker .............. Chairman of the Board and 969,967(2) 21.4%
One New York Plaza Director 970,133(2) 15.5%
767 Fifth Avenue
New York, New York
Alan J. Hirschfield..............Hirschfield............ Vice Chairman of the Board and 224,833(3) 5.1%
P.O. Box 7443189,333(3) 3.1%
Director
Jackson, Wyoming
Robert L. Barbanell..............Barbanell............ Director 46,269(4) 1.0%46,523(4) *
Joseph M. Cohen................ Director 10,667(5) *
Darwin C. Dornbush, Esq..........Esq........ Secretary and Director 26,180(5) .6%19,780(6) *
Morris W. Offit..................Offit................ Director 57,000(6) 1.3%30,500(7) *
James P. Reilly..................Reilly................ President and CEO and Director 186,073(7) 4.1%
1135 Broad Street
Clifton, New Jersey186,614(8) 3.0%
John W. Rowe, M.D................M.D.............. Director 15,834(8) .4%27,500(9) *
Fred L. Shapiro, M.D........... Director 22,885(10) *
Bruce Slovin.....................Slovin................... Director 179,000(9) 4.0%159,500(11) 2.6%
Joseph L. Harris............... Senior Vice President--Corporate 65,417(12) 1.1%
Development
Roy K. Malkin.................. President and CEO of Minntech 38,000(13) *
Corporation and MediVators, Inc.
Craig A. Sheldon.................Sheldon............... Vice President and Controller 14,525(10) .3%CFO 9,046(14) *
William J. Vella.................Vella............... President and Chief Operating 45,003(11) 1.0%CEO of Carsen Group 22,452 *
Inc.
All officers and directors as a
Officer of Carsen Group Inc. 1,764,684(12) 36.8%
group of 11 persons14 persons.......... 1,798,350(15) 27.3%
- ------------------------
* Less than 1%
(1) Unless otherwise noted, Cantel believes that all persons named in the table
have sole voting and investment power with respect to all shares of Common
Stock beneficially owned by them.
A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from February 16, 2000May 2, 2002 upon the exercise
of options. Each beneficial owner's percentage ownership is determined by
assuming that options that are held by such person (but not those held by
any other person) and which are exercisable within 60 days from February 16, 2000May 2, 2002
have been exercised.
6
(2) Includes 142,834158,500 shares which Mr. Diker may acquire pursuant to stock
options. Does not include an aggregate of 577,590596,390 shares owned by (i) Mr.
Diker's wife, (ii) certain trusts for the benefit of Mr. Diker's children,
(iii) certain accounts with Weiss, Peck and Greer, an investment
firm of which Mr. Diker is a non-managing principal, over which accounts Mr. Diker exercises investment
discretion, (iv) the DicoGroup, Inc., a corporation of which Mr. Diker
serves as Chairman of the Board, and (v) a non-profit corporation of which
Mr. Diker and his wife are the principal officers and directors. Mr. Diker
disclaims beneficial ownership as to all of the foregoing shares.
7
(3) Includes 28,50023,500 shares which Mr. Hirschfield may acquire pursuant to stock
options.
(4) Includes 15,50014,500 shares which Mr. Barbanell may acquire pursuant to stock
options. Does not include 2,500 shares owned by Mr. Barbanell's wife as to
which Mr. Barbanell disclaims beneficial ownership.
(5) Includes 9,667 shares which Mr. Cohen may acquire pursuant to stock
options.
(6) Includes 16,500 shares which Mr. Dornbush may acquire pursuant to stock
options.
(6)(7) Includes 25,00018,500 shares which Mr. Offit may acquire pursuant to stock
options.
(7)(8) Includes 89,83275,164 shares which Mr. Reilly may acquire pursuant to stock
options. Does not include 69,90787,115 shares owned by Mr. Reilly's wife as to
which Mr. Reilly disclaims beneficial ownership.
(8)(9) Includes 15,83427,500 shares which Dr. Rowe may acquire pursuant to stock
options.
(9)(10) Includes 29,0004,834 shares which Dr. Shapiro may acquire pursuant to stock
options. Does not include 5,000 shares owned by certain trusts for the
benefit of Dr. Shapiro's grandchildren.
(11) Includes 25,500 shares which Mr. Slovin may acquire pursuant to stock
options.
Does not include an aggregate of 9,000(12) Includes 61,417 shares owned by (i) certain
trusts for the benefit ofwhich Mr. Slovin's children and (ii) a charitable
foundation established byHarris may acquire pursuant to stock
options.
(13) Includes 37,500 shares which Mr. Slovin. Mr Slovin disclaims beneficial
ownership asMalkin may acquire pursuant to all of the foregoing shares.
(10)stock
options.
(14) Includes 12,750500 shares which Mr. Sheldon may acquire pursuant to stock
options.
(11)(15) Includes 27,000 shares which Mr. Vella may acquire pursuant to stock
options.
(12) Includes 402,750473,582 shares which may be acquired pursuant to stock options.
8
EXECUTIVE COMPENSATION AND RELATED INFORMATION
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS AND THE STOCK
OPTION COMMITTEE
The Compensation Committee of the Company's Board of Directors (the
"Committee") is responsible for setting and administering the policies which
govern annual executive compensation. The Committee is currently comprised of
twothree members, Alan J.Mr. Hirschfield, Chairman, and Robert L.Messrs. Barbanell bothand Cohen, each
of whom are non-employee directors.
Executive compensation for the fiscal year ended July 31, 19992001 consisted of
base salary plus an incentive bonus when earned. The policy of the Committee, in consultation
with the Chairman and the Chief Executive Officer, where appropriate, is to
provide compensation to the Chairman, the President and Chief Executive Officer and the Company's other
executive officers reflecting the contribution of such executives to the
Company's growth in sales and earnings, the implementation of strategic plans
consistent with the Company's long-term objectives, and the enhancement of
stockholdershareholder value.
Mr.Each of Messrs. Reilly, the PresidentHarris, Malkin and Chief Executive Officer of the Company, serves
the Company pursuant to a four-year employment agreement effective as of
August 1, 1998Sheldon are employed and is
compensated pursuant to the express terms of such
agreement.written employment agreements as described below.
Long-term incentive compensation policy consists exclusively of the award of stock
options under the Company's 1991 Employee Plan and 1997 Employee Plan and, in the case of officers who
serve as directors of the Company, non-discretionarynon- discretionary annual option grants of
1,000 shares under the Company's 1991 Directors' Stock
Option Plan and 1998 Directors' Stock Option Plan.
7
The Stock Option Committee under the 1991 Employee Plan and the 1997 Employee Plan is responsible for
the award of stock options. TwoThree non-employee directors, Alan J.Messrs. Hirschfield,
Barbanell and Robert L. Barbanell,Cohen, currently serve on the Stock Option Committee, which
administers the 1991 Employee Plan andgranting of options under the 1997 Employee Plan.
COMPENSATION COMMITTEE:
Alan J. Hirschfield (Chairman)
Robert L. Barbanell
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No officer of the Company served on the Company's Compensation Committee
during its last fiscal year. James P.Mr. Reilly, the President and Chief Executive
Officer of the Company, however, participated in deliberations concerning
executive compensation, except with respect to the compensation of the Chairman
of the Board and himself.
9
STOCK PERFORMANCE GRAPHCOMPENSATION COMMITTEE:
Alan J. Hirschfield (Chairman)
Robert L. Barbanell
Joseph M. Cohen
INDEPENDENT AUDITORS
The graph below comparesfirm of Ernst & Young LLP has audited the cumulative total stockholder return onfinancial statements of the
Company for more than ten years. In addition to retaining Ernst & Young LLP to
audit our consolidated financial statements for the fiscal year ended 2001, the
Company and its affiliates retained Ernst & Young LLP to provide tax and other
advisory services in the fiscal year ended 2001, and expect to continue to do so
in the future. The aggregate fees billed for professional services by Ernst &
Young LLP in the fiscal year ended 2001 were as follows:
- Audit Fees. The aggregate fees billed by Ernst & Young LLP for
professional services rendered for the audit of the Company's Common Stockconsolidated
financial statements for the last five fiscal years with the cumulative total
return on the Nasdaq Stock Market/U.S. Indexyear ended July 31, 2001 and the
Nasdaq Non-Financial Index
over the same period (assuming the investmentreviews of $100its interim financial statements included in the Company's
Common
Stock,Form 10-Qs were approximately $108,000.
- Financial Information Systems Design and Implementation Fees. There were
no fees billed by Ernst & Young LLP for services rendered in connection
with the Nasdaq Stock Market/U.S.Company's financial information systems design and implementation
during the Nasdaq Non-Financial Index onfiscal year ended July 31, 1994, and, where applicable, the reinvestment2001.
- All Other Fees. The aggregate amount of all dividends).
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG CANTEL INDUSTRIES, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ NON-FINANCIAL INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DOLLARS
Jul-94 Jul-95 Jul-96 Jul-97 Jul-98 Jul-99
CANTEL INDUSTRIES, INC. 100 121 143 116 184 112
NASDAQ STOCK MARKET (U.S.) 100 140 153 226 266 380
NASDAQ NON-FINANCIAL 100 144 153 222 258 381
* $100 INVESTED ON 7/31/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JULY 31.
10fees billed for services
rendered to the Company by Ernst & Young LLP for the fiscal year ended
July 31, 2001 (other than the audit fees described above) were
approximately $250,000. These primarily consist of fees for tax matters
and other advisory services principally related to the acquisition of
Minntech Corporation. The Audit Committee has determined that the
provision of all non-audit services performed for the Company by Ernst &
Young LLP is compatible with maintaining that firm's independence.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is providing this report to
enable stockholders to understand how it monitors and oversees Cantel's
financial reporting process. The Audit Committee operates pursuant to an Audit
Committee Charter that is reviewed annually by the Audit Committee and updated
as appropriate. A copy of the revised Audit Committee Charter has been included
as Annex A to this Proxy Statement.
This report confirms that the Audit Committee has (1) reviewed and discussed
the auditors financial statements for the year ended July 31, 2001 with
management and Cantel's independent auditors; (2) discussed with Cantel's
independent auditors the matters required to be reviewed pursuant to the
Statement on Auditing Standards No. 61 (Communications with Audit Committees);
8
(3) reviewed the written disclosures letter from Cantel's independent auditors
as required by Independence Standards Board Standard No. 1 (Independent
Discussions with Audit Committees); and (4) discussed with Cantel's independent
auditors their independence from Cantel.
The Audit Committee of the Board of Directors has considered whether the
provision of non-audit professional services rendered by Ernst & Young LLP, as
discussed above and disclosed elsewhere in this proxy statement, is compatible
with maintaining their independence. Based upon the above review and
discussions, the Audit Committee recommended to the Board of Directors that the
audited financial statements for the year ended July 31, 2001 be included in
Cantel's Annual Report on Form 10-K for filing with the Securities and Exchange
Commission.
AUDIT COMMITTEE
Robert L. Barbanell (Chairman)
Morris W. Offit
Bruce Slovin
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the fiscal years ended July 31, 1999,
1998,2001,
2000, and 1997,1999, compensation, including salary, bonuses, stock options and
certain other compensation, paid by the Company to the Chief Executive Officer
and to the other executive officers of the Company who received more than
$100,000 in salary and bonus during the fiscal year ended July 31, 1999:2001:
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION (1) AWARDS (2)
-------------------COMPENSATION(1) AWARDS(2)
---------------------- ------------
NAME AND
SALARY BONUS OPTIONS
ALL OTHERNAME AND PRINCIPAL POSITION YEAR ($) ($) (#)
COMPENSATION(3) ($)
- --------------------------------------------- -------- -------- -------- ------------
-------------------
Charles M. Diker.......................Diker ................................. 2001 160,000 0 1,000
Chairman of the Company 2000 150,000 0 1,000
1999 150,000 0 51,000
4,500
Chairman of the Company 1998 125,000 0 51,000 4,038
1997 100,000 0 51,000 577
James P. Reilly........................ 1999 275,000 98,494 101,000 4,800Reilly(3) ............................... 2001 303,188 171,757 1,000
President and Chief Executive Officer 1998 250,000 39,225 1,000 4,800
of the 2000 288,750 141,967 1,000
Company 1997 250,000 12,600 1,000 1,0991999 275,000 98,494 101,000
Joseph L. Harris(4) .............................. 2001 195,000 75,000 150,000
Senior Vice President--Corporate Development
Roy K. Malkin(5) ................................. 2001 192,500 46,000 0
President and Chief Executive Officer of 2000 175,000 60,000 5,000
Minntech Corporation and MediVators, Inc. 1999 20,192 0 50,000
Craig A. Sheldon.......................Sheldon(6) .............................. 2001 136,250 40,000 0
Vice President and Chief Financial Officer of 2000 121,750 30,000 25,000
the Company 1999 109,000 18,000 6,000
3,952
ViceWilliam J. Vella(7) .............................. 2001 179,444 103,548 0
President and ControllerChief Executive Officer of the 1998 97,500 15,000 5,000 3,499
Company 1997 88,125 10,000 5,000 756
William J. Vella (4)...................Carsen 2000 169,950 40,000 25,000
Group Inc. 1999 144,997 69,668 10,000 2,498
President and Chief Operating Officer 1998 133,447 16,500 10,000 1,896
of Carsen Group Inc. 1997 122,060 10,150 6,000 1,764
- ------------------------
(1) The Company 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
9
of $50,000 or 10% of the total annual salary and bonus reported for such
officers.officers with the exception of (i) a one-time relocation allowance provided
to Mr. Malkin of $58,877 paid during fiscal 2000 and (ii) reimbursement to a
Company affiliated with Mr. Diker of office expenses amounting to $24,000 in
fiscal 2001 and $12,000 in fiscal 2000.
(2) The Company has no long-term incentive compensation plan other than its 1991
Employee Stock Option Plan, the 1997
Employee Stock Option Plan, the
MediVators 1991 Stock Option Plan, the 1991 Directors' Stock Option Plan and the 1998 Directors' Stock Option Plan
described herein and various individually granted options. The Company does
not award stock appreciation rights, restricted stock awards or long-term
incentive plan pay-outs.
(3) Includes annual registrant contributions to defined contribution plans of
the Company, including a 401(k) savings and retirement plan, and a Canadian
profit sharing plan.
(4) 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 years.
EMPLOYMENT AGREEMENTS
In March 1999, the Company entered into a four yearfour-year employment agreement
with James P. Reilly (the "Employment Agreement") that iswhich was effective as of August 1, 1998. The
Employment Agreementemployment agreement provides for (i) an annual base salary of $275,000,
subject to annual increases equal to the greater of 5% or a cost of living
formula, (ii) annual incentive compensation equal to 6% of the increase in
the current fiscal year's pre-tax income over the highest pre-tax income of
any prior fiscal year commencing July 31, 1998, subject to adjustment for
specified events, (iii) bonuses of $65,000 payablewhich were paid upon each of
11
the
execution of the Employment Agreement,employment agreement, August 1, 1999 and August 1, 2000,
(iv) participation in employee health, insurance and other benefit plans,
(v) maintenance by the Company of a life insurance policy on the life of Mr.
Reilly in the face amount of $500,000 payable to his designated beneficiary,
and (vi) use of a Company owned or leased automobile. In addition,
Mr. Reilly was granted a stock option under the Company's 1997 Employee
Stock Option Plan to purchase 100,000 shares of Common Stock at an exercise
price equal to $6.00 (the fair market value of the shares on the date of
grant) and having a ten yearten-year term. The Employment Agreement provides that if Mr. Reilly's employment is
terminated for any reason, including voluntary termination, death, disability or
cause, prior to August 1, 2000, he will be entitled to a severance payment of
$65,000. If the Employment Agreementemployment agreement expires and
Mr. Reilly's employment is terminated thereafter for any reason, Mr. Reilly
will be entitled to a severance payment equal to one year's base salary plus
the amount of his bonus for the most recently completed fiscal year (the
"Severance Amount"). In the event of a "Change In Control" (as defined in
the Employment Agreement)employment agreement), Mr. Reilly has a nine monthnine-month option to terminate
his employment and receive a severance payment on a formula basis based on his
average compensation over the previous three years. If such termination was
prior to August 1, 1999, severance would have been 2.5 times such average
compensation. After August 1, 1999 such amount is reduced by 2.5% per month,
but not below the Severance Amount described above. The Employment Agreementemployment agreement
contains a non-competition provision applicable for two years following
termination of Mr. Reilly's employment. The Company has the right to
terminate the Agreementagreement for death, disability and "cause" (as defined in the
Employment Agreement")employment agreement) and Mr. Reilly has the right to terminate the
Employment Agreementemployment agreement upon three months'month's notice.
(4) On May 19, 1999, MediVators, Inc.,November 1, 2000, the Company entered into a wholly-owned subsidiarythree-year employment
agreement with Mr. Joseph L. Harris. The term of the agreement will be
extended by 18 months if certain relocation conditions are satisfied by Mr.
Harris. Mr. Harris' employment agreement provides for (i) an annual base
salary of $260,000, subject to annual increases based on a cost of living
formula, (ii) minimum guaranteed bonuses equal to $100,000, $75,000 and
$50,000 on each of the first three anniversaries of his employment
agreement, respectively, (iii) incentive compensation equal to .75% of the
total consideration paid or received by the Company ("MediVators")with respect to an
acquisition or divestiture transaction during the employment period, such
incentive bonus to be reduced by the minimum guaranteed bonuses specified
above, (iv) a relocation bonus of $150,000 (subject to satisfaction of
certain relocation provisions), payable over three years, (v) participation
in employee health, insurance and other benefit plans, (vi) maintenance by
the Company of a life insurance policy on the life of Mr. Harris in a face
amount equal to Mr. Harris' base salary payable to his designated
beneficiary, and (vii) an automobile allowance. In addition, Mr. Harris was
granted a non-plan option to purchase 26,250 shares of Common Stock and an
option to purchase 123,750 shares of Common Stock under the 1997 Employee
Stock Option Plan. Both options have ten-year terms and have exercise prices
of $8.88 (the fair value of the shares on the date of grant).
10
Pursuant to the terms of his employment agreement, on the first year
anniversary of Mr. Harris' employment, the Company granted Mr. Harris a
non-plan option to purchase 50,000 shares of Common Stock at an exercise
price equal to the fair value of the shares on the date of grant. Mr.
Harris' employment agreement also provides for the grant of a non-plan
option covering 50,000 shares of Common Stock in accordance with the same
terms on the second annual anniversary of Mr. Harris' employment. In the
event of a "Change in Control" (as defined in the employment agreement), Mr.
Harris may terminate his employment and continue to receive his base salary
and bonus following such termination through the end of the term of the
employment agreement. Mr. Harris was not employed by the Company prior to
November 2000.
(5) In November 2001, Minntech Corporation entered into an employment agreement
with Roy K. Malkin that expires on JulyOctober 31, 2002.2004. Mr. Malkin's employment
agreement provides for (i) foran annual base salary of $175,000,$250,000, subject to
annual increases equal to the greater ofno less than 5% or a cost of living formula,
(ii) annual incentive compensation commencing
July 31, 2000,for fiscal 2002, equal to 5% of the
increaseexcess of the combined earnings of Minntech and MediVators, Inc. before
interest and taxes for such Fiscal Year over certain amounts which are set
forth in MediVators' current fiscal year's
pre-tax income over MediVators' highest pre-tax income of any prior fiscal year,the agreement, (iii) participation in employee health, insurance
and other benefit plans, (iv) maintenance by MediVatorsMinntech of a life insurance
policy on the life of Mr. Malkin in the face amount of $250,000 payable to
his designated beneficiary, and (v) usean automobile allowance. From May 1999
through the effective date of the employment agreement, Mr. Malkin served
the Company pursuant to an employment agreement with MediVators.
(6) In November 2001, the Company entered into an employment agreement with
Craig A. Sheldon that expires on October 31, 2004. Mr. Sheldon's employment
agreement provides for (i) an annual base salary of $175,000, subject to
annual increases equal to no less than 5% or a cost of living formula,
(ii) an annual discretionary bonus, (iii) participation in employee health,
insurance and other benefit plans, (iv) maintenance by the Company of a Company owned or leased automobile and (vi) the Company to grant
Mr. Malkin an option to purchase 50,000 shares of Common Stock under the 1997
Employee Stock Option Plan at an exercise price equal to $5.25 (the fair market
value of the shareslife
insurance policy on the datelife of grant). Since Mr. Malkin was employed for
only a portion of fiscal 1999, he is not includedSheldon in the Compensation Table
above.face amount of $175,000
payable to his designated beneficiary, and (v) an automobile allowance.
(7) Mr. Vella was paid his salary and bonus in Canadian dollars. The dollar
amounts above have been translated from Canadian dollars to U.S. dollars
based upon an average exchange rate during the respective fiscal year.
11
STOCK OPTIONS
The following stock option information is furnished for the fiscal year
ended July 31, 19992001 with respect to the Company's Chief Executive Officer and
the other executive officers of the Company named in the Compensation Table
above, for stock options granted during such fiscal year. Stock options were
granted without tandem stock appreciation rights.
12
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SHARES GRANTED TO EXERCISE PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISEPRICE PER OPTION TERM($)(1)
OPTIONS DURING THE PRICE PERSHARE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR SHARE($($) DATE 5% 10%
- ---- ---------- ----------- --------- ---------- --------- ----------
Charles M. Diker................. 50,000(2) 19.5 7.75 10/29/08 631,197 1,005,075
1,000(3) 0.4 5.3125 07/Diker................ 1,000(2) 0.6 25.24 7/30/09 8,654 13,77906 6,973 15,409
James P. Reilly.................. 100,000(3) 39.1 6.00 03/28/09 977,337 1,556,245
1,000(4) 0.4 5.3125 07/Reilly................. 1,000(2) 0.6 25.24 7/30/09 8,654 13,779
Craig A. Sheldon................. 6,000(5) 2.3 6.50 02/24/04 49,775 62,810
William J. Vella................. 10,000(5) 3.9 6.50 02/24/04 82,958 104,68306 6,973 15,409
Joseph L. Harris................ 150,000(3) 98.7 8.88 10/31/10 837,688 2,122,865
- ------------------------
(1) Represents the potential realizable value of the options granted at assumed
5% and 10% rates of compounded annual stock price appreciation from the date
of grant of such options.
(2) This option is a non-plan option and vests in three equal annual
installments, the first onoptions to the date of grant. The exercise price per share
of the option is the market value per share on the date of grant.
(3) This option was granted under the Company's 1997 Employee Stock Option Plan.
The exercise price per share of the option is the market value per share on
the date of grant. The option is subject to vesting as follows: 16,666
shares each in six equal annual installments, the first on the date of
grant, and the remaining four shares on 01/01/05. In the event Mr. Reilly's
employment is terminated prior to the full vesting of the option, the
Company will grant Mr. Reilly an additional option, exercisable for three
months following such termination at $6.00 per share, to purchase a number
of shares equal to the number of "unvested shares."
(4)expiry.
(2) These options were granted under the Company's 19911998 Directors' Stock Option
Plan. The exercise price per share of the options is the market value per
share on the date of grant. The options are subject to vesting as follows:
50% of the total shares covered by the options vest on the first anniversary
of the date of grant and the remaining 50% vest on the second anniversary of
such date of grant.
(5)(3) These options were granted pursuant to Mr. Harris' employment agreement and
include 26,250 non-plan options and 123,750 options granted under the
Company's 1997 Employee Stock Option Plan. The exercise price per share of the options is the market value per
share on the date of grant. The options are subject to vesting as follows:
25% of the total shares covered by the options vest on each of the first
four anniversaries of the date of the grant.
OPTION EXERCISE AND HOLDINGS
The following information is furnished for the fiscal year ended July 31,
19992001 with respect to the
Company's Chief Executive Officer and the other executive officers of the
Company named in the Compensation Table above, for stock option exercises during
such fiscal year.
13
year and unexercised stock option values at July 31, 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
IN-THE-UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT 7/31/99 MONEY OPTIONS AT01 7/31/99 ($01($)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE
- ---- ----------- ------------------------- ----------- --------------- ----------- ---------------
Charles M. Diker...........Diker....... 3,000 25,140 158,500 1,500 2,848,025 8,730
James P. Reilly........ 0 0 109,501 51,499 13,87558,498 51,502 1,130,237 970,768
Joseph L. Harris....... 0 James P. Reilly............ 139,815 489,353 73,166 84,834 177,313 0 37,500 112,500 613,500 1,840,500
Roy K. Malkin.......... 0 0 34,584 20,416 691,334 408,116
Craig A. Sheldon...........Sheldon....... 18,000 309,438 0 23,000 0 22,500 13,500 15,938 0454,458
William J. Vella........... 5,000 12,500 18,750 24,250 2,125Vella....... 24,750 275,750 0 26,250 0 516,863
- ------------------------
(1) Value realized is calculated as the market value of the shares exercised
using the closing price of the Company's common stock on such exercise date.
The value realized is for informational
12
purposes only and does not purport to represent that such individual
actually sold the underlying shares, or that the underlying shares were sold
on the date of exercise. Furthermore, such value realized does not take into
consideration individual income tax consequences.
STOCK OPTION PLANS
An aggregate of 250,000 shares of Common Stock werewas reserved for issuance or
available for grant under the Company's 1991 Employee Stock Option Plan (the
"1991 Employee Plan"). At July 31, 1999, options to purchase 122,834 shares of
Common Stock at prices between $4.25 and $8.75 per share (the fair market value
of the shares of Common Stock on the date of grant) were outstanding, which expired in fiscal 2001. Options granted under the
1991 Employee Plan. All options outstanding at July 31, 1999 have a term of five
years andPlan are intended to qualify as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Options may be exercised byAll options outstanding at July 31, 2001 under the payment1991 Employee Plan
have a term of five years and are currently exercisable in full in cash or by the tendering or
cashless exchange offull. At July 31,
2001, options to purchase 12,500 shares of Common Stock or of options to acquire shares of
Common Stock having aat prices between $5.50
and $7.375 per share (the fair market value equal toof the option exercise price.shares at the time of grant)
were outstanding under the 1991 Employee Plan. No additional options will be
granted under the 1991 Employee Plan.
An aggregate of 400,0001,000,000 shares of Common Stock is currently reserved for issuance or
available for grant under the Company's 1997 Employee Stock Option Plan, as
amended (the "1997 Employee Plan"). Stockholders at the Meeting are being asked to
approve an amendment to the 1997 Employee Plan that would increase the number of
shares of Common Stock reserved for issuance or available for grant by 300,000
shares, to a total of 700,000 shares. See "Proposal 2--Approval of Amendment to
the 1997 Employee Stock Option Plan." Options granted under the 1997 Employee Plan
are intended to qualify as incentive stock options within the meaning of Section
422 of the Code. The 1997 Employee Plan is administered in all respects by the
Stock Option Committee. The Stock Option Committee may determine the employees
to whom options are to be granted and the number of shares subject to each
option. Under the terms of the 1997 Employee Plan, all employees of the Company
or subsidiaries of the Company are eligible for option grants. The option
exercise price of options granted under the 1997 Employee Plan is fixed by the
Stock Option Committee but must be no less than 100% of the fair market value of
the shares of Common Stock subject to the option at the time of grant, except
that in the case of an employee who possesses more than 10% of the total
combined voting power of all classes of stock of the Company ("a 10% Holder,Holder") ,
the exercise price must be no less than 110% of said fair market value. Options
may be exercised by the payment in full in cash or by the tendering or cashless
exchange of shares of Common Stock having a fair market value, as determined by
the Stock Option Committee, equal to the option exercise price. Options granted
under the 1997 Employee Plan may not be exercised more than ten years after the
date of grant, five years in the case of an incentive stock option granted to a
10% Holder. All options outstanding at July 31, 19992001 under the 1997 Employee
Plan have a term of five years, except for 100,000 options granted to Mr. Reilly
and 123,750 options granted to Mr. Harris under the terms of histheir respective
employment agreement,agreements, each of which have a term of ten years. At July 31, 1999,2001,
options to purchase 236,500393,000 shares of Common Stock at prices between $5.25$4.875 and
$8.75$9.63 per share were outstanding under the 1997 Employee Plan, and 163,500545,875
shares were available for grant under the 1997 Employee Plan.
An aggregate of 200,000 shares of Common Stock werewas reserved for issuance or
available for grant under the Company's 1991 Directors' Stock Option Plan (the
"1991 Directors' Plan")., which expired in fiscal 2001. Options granted under the
1991 Directors' Plan do not qualify as incentive stock options within the
meaning of 14
Section 422 of the Code. The 1991 Directors' Plan provides for the automatic
grant to each of the Company's directors ofAt July 31, 2001, options to purchase
1,000 shares of
Common Stock on the last business day of the Company's fiscal year. In addition,
an option to purchase 500 shares of Common Stock was granted automatically on
the last business day of each fiscal quarter to each director (exclusive of
Messrs. Diker, Reilly and Dornbush) provided that the director attended any
regularly scheduled meeting of the Board, if any, held during such quarter. Each
such option grant is at an exercise price equal to the fair market value of the
Common Stock on the date of grant and has a ten year term. Mr. Dornbush, who is
both an officer and director of the Company (and who thereby does not receive
said quarterly option grant), was granted a non-plan option to purchase 500
shares of Common Stock on the last business day of each fiscal quarter provided
that Mr. Dornbush attended any regularly scheduled meeting of the Board, if any,
held during such quarter. The fiscal year options are exercisable in two equal
annual installments commencing on the first anniversary of the grant thereof and
the quarterly options, including the non-plan options issued to Mr. Dornbush,
are exercisable in full immediately. At July 31, 1999, options to purchase
133,500101,000 shares of Common Stock at prices between $2.00 and $10.25 per share (the
fair market value of the shares at the time of grant) were outstanding under the
1991 Directors' Plan,Plan. All of the options have a ten-year term and 16,500 shares were available for
grant under the 1991 Directors' Plan. In addition, at July 31, 1999,
Mr. Dornbush had non-plan options to purchase an aggregate of 6,000 shares of
Common Stock at prices between $5.3125 and $8.75 per share.are
exercisable in full. No additional options will be granted under the 1991
Directors' Plan and no additional
quarterly non-plan options will be granted to Mr. Dornbush.Plan.
An aggregate of 200,000 shares of Common Stock is reserved for issuance or
available for grant under the Company's 1998 Directors' Stock Option Plan (the
"1998 Directors' Plan"). Options granted under the 1998 Directors' Plan do not
qualify as incentive stock options within the meaning of Section 422 of the
Code. The 1998 Directors' Plan provides for the automatic grant to each of the
Company's directors of options to purchase 1,000 shares of Common Stock on the
last business day of the Company's fiscal year. In addition, an option to
purchase 500 shares of Common Stock is granted
13
automatically on the last business day of each fiscal quarter to each director
(exclusive of Messrs. Diker and Reilly and any other director who is a full-time
employee of the Company) provided that the director attended any regularly
scheduled meeting of the Board, if any, held during such quarter. Each such
option grant is at an exercise price equal to the fair market value of the
Common Stock on the date of grantgrant. Options granted prior to July 31, 2000 have a
term of ten years and hasoptions granted on and after July 31, 2000 have a ten year term.term of
five years. The fiscal year options are exercisable in two equal annual
installments commencing on the first anniversary of the grant thereof and the
quarterly options are exercisable in full immediately. At July 31, 1999 there were no2001 options
to purchase 37,500 shares of Common Stock at prices between $5.125 and $25.24
per share were outstanding under the 1998 Directors' Plan, and 200,000162,500 shares
were available for grant under the 1998 Directors' Plan.
The Company also has outstanding options granted by MediVators prior to the
MediVators merger under the MediVators 1991 Stock Option Plan (the "MediVators
Plan") which became fully exercisable as a result of the MediVators merger. At
July 31, 1999, options2001, one option to purchase 9,3211,607 shares of Common Stock at prices
betweena price of
$6.08 and $8.27 per share werewas outstanding under the MediVators Plan. No additional options
will be granted under the MediVators Plan.
In July 1990, Mr. Reilly was granted a ten year non-plan option to purchase
50,000 shares of Common Stock at an exercise price of $1.875 per share. This
option is exercisable in full and expires in July 2000.
In December 1994, Mr. Barbanell was granted a five year non-plan option to
purchase 25,000 shares of Common Stock at an exercisable price of $3.75 per
share. The option was exercised in full in December 1999.
In October 1996, Mr. Diker was granted a ten yearten-year non-plan option to
purchase 50,000 shares of Common Stock at an exercise price of $7.375 per share.
This option is exercisable in full. In October 1997, Mr. Diker was granted a ten
yearten-year non-plan option to purchase
50,000 shares of Common
15
Stock at an exercise price of $7.00 per share. This option is exercisable in
full. In
October 1998, Mr. Diker was granted a ten-year non-plan option to purchase
50,000 shares of Common Stock at an exercise price of $7.75 per share. This option isAll of
said options are exercisable in three equal annual installments beginning
October 1998.full.
In October 1998, Dr. Rowe was granted a ten-year non-plan option to purchase
10,000 shares of Common Stock at an exercise price of $8.00 per share. This
option is exercisable in three equal annual installments beginning
October 1998. In March
1999, Dr. Rowe was granted a ten-year non-plan option to purchase 10,000 shares
of Common Stock at an exercise price of $6.375 per share. All of said options
are exercisable in full.
In October 2000, Mr. Cohen was granted a five-year non-plan option to
purchase 10,000 shares of Common Stock at an exercise price of $8.38 per share.
This option is exercisable in three equal annual installments beginning March 1999.October
2000.
In November 2000, Mr. Harris was granted a ten-year, non-plan option to
purchase 26,250 shares of Common Stock at an exercise price of $8.88 per share.
This option is exercisable immediately. In October 2001, Mr. Harris was granted
a ten-year non-plan option to purchase 50,000 shares of Common Stock at an
exercise price of $22.45. This option is exercisable in three equal annual
installments beginning October 2001.
In September 2001, Dr. Shapiro was granted a five-year non-plan option to
purchase 10,000 shares of Common Stock at an exercise price of $18.49 per share.
This option is exercisable in three equal annual installments beginning
September 2001.
14
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Company's Common Stock for the last five fiscal years with the cumulative total
return on the Nasdaq Stock Market/U.S. Index and the Nasdaq Non-Financial Index
over the same period (assuming the investment of $100 in the Company's Common
Stock, the Nasdaq Stock Market/U.S. and the Nasdaq Non-Financial Index on
July 31, 1996, and, where applicable, the reinvestment of all dividends).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
JUL-96 JUL-97 JUL-98 JUL-99 JUL-00 1-JUL
CANTEL MEDICAL CORP. 100.00 80.73 128.44 77.98 114.22 370.50
NASDAQ STOCK MARKET (U.S.) 100.00 147.55 173.64 248.14 353.41 189.68
NASDAQ NON-FINANCIAL 100.00 145.15 168.98 249.19 368.46 185.06
SECTION 16(A)16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in their ownership to the
Securities and Exchange Commission ("SEC"). Specific due dates have been
established by the SEC, and the Company is required to disclose in this Report
any failure to file by those dates. Based upon (i) thosethe copies of Section 16(a)
reports that the Company received from such persons for their 19992001 fiscal year
transactions and (ii) the written representations received from one or more of
such persons that no annual Form 5 reports were required to be filed for them
for the 19992001 fiscal year, the Company believes 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
annual Form 5 reports for all directors of the following: (i) a single transaction (purchaseCompany as of shares) of
Charlie M. Diker wasthe fiscal year
ended 2000, which reports were due by September 14, 2001 but were not included in a report filed
for the month that such
transaction occurred, but was included in the following month's report; (ii) a
report of a single transaction (purchase of shares) of Bruce Slovin was filed
late; and (iii) a report of a single transaction (exercise of an option by
delivery of shares) of William J. Vella was filed late.until October 15, 2001.
15
STOCKHOLDER PROPOSALS FOR 20002002 PROXY STATEMENT
Stockholder proposals that are intended to be presented at the Company's
20002002 Annual Meeting of Stockholders must be received by the Company no later
than October 20, 20001, 2002 (based on Company's intention to hold its next annual
meeting in December 2002) in order to be included in the proxy statement and
related materials.
FORM 10-K
UPON THE WRITTEN REQUEST OF A RECORD HOLDER OR BENEFICIAL OWNER OF COMMON
STOCK ENTITLED TO VOTE AT THE MEETING, THE COMPANY WILL PROVIDE WITHOUT CHARGE A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31, 1999,2001,
INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE, FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD BE MAILED TO MS. JOANNA
Z. ALBRECHT, CANTEL INDUSTRIES, INC.MEDICAL CORP., 1135 BROAD STREET, SUITE 203, CLIFTON, NEW
JERSEY 07013-3346.150 CLOVE ROAD, LITTLE FALLS, NJ 07424.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the accompanying form has been or
will be borne by the Company. In addition to solicitation by mail, arrangements
may be made with brokerage houses and other custodians, nominees and fiduciaries
to send proxy material to beneficial owners, and the Company will, upon request,
reimburse them for any attendant expenses.
In order to ensure the presence of a quorum at the Meeting, all stockholders
are requested to sign and return promptly the enclosed proxy in the postage paid
envelope provided for that purpose. The 16
signing of the proxy will not prevent
your attending the meeting and voting in person if you wish to do so.
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.
BY ORDER OF THE BOARD OF DIRECTORS
Darwin C. Dornbush
Secretary
February 23, 2000
17SECRETARY
May 3, 2002
16
ExhibitANNEX A
1997 EMPLOYEE STOCK OPTION PLANCANTEL MEDICAL CORP.
CHARTER OF CANTEL INDUSTRIES, INC.
(As adopted byTHE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
(REVISED APRIL 15, 2002)
I. PURPOSE
The primary function of the Audit Committee is to represent the Board of
Directors in fulfilling its oversight responsibilities by:
1. Reviewing the integrity of financial reports an other financial and
related information released by the Company to the public, or in certain
circumstances governmental bodies
2. Reviewing the Company's system of internal controls regarding finance,
accounting, business conduct and ethics and legal compliance that
management and the Board have established;
3. Reviewing the Company's accounting and financial reporting processes;
4. Reviewing and appraising with management the performance of the
Company's independent auditors;
5. Providing an open avenue of communication between the independent
auditors and the Board of Directors.
II. COMPOSITION
The Audit Committee shall be comprised of three directors, each of whom
shall be independent directors and free from any relationship that, in the
opinion of the Board, would interfere with the exercise of his or her
independent judgment as a member of October 16, 1997the Committee.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee shall
have financial management expertise.
The members of the Committee shall be elected or reappointed by the Board
annually for a one year term. A Chairperson shall be appointed by the Board.
III. MEETINGS
The Committee will meet at least two times annually and be available to meet
more frequently as circumstances dictate. Scheduled meetings of the Audit
Committee are (a) to review and approve the scope of the annual audit to be
performed by the Company's independent auditors and (b) to review and discuss
the results of the audit and the Company's 10-K report, prior to its filing. In
addition, the Committee Chairperson should meet with the independent auditors
and senior management periodically to review the Company's financial statements,
10-Q report and other relevant interim reports before release and/or filing.
Incidental to any of these regularly scheduled meetings, the Committee should
meet, if necessary, with management and the independent auditors in separate
executive sessions to discuss any matters that the Committee and each of these
groups believe should be discussed privately.
A-1
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
DOCUMENTS/REPORTS REVIEW
1. Review and update this Charter periodically, as conditions dictate.
2. Review the Company's annual financial statement and other reports and
financial and related information released to the public, or in certain
circumstances governmental bodies, including any certification, report,
opinion or review rendered by the independent auditors.
3. Review with financial management and the independent auditors each
quarterly earnings release and 10-Q prior to it filing. The Chairperson
of the Committee may represent the entire Committe for purposes of this
review.
4. Review with independent auditors the recommendations included in their
management letter, if any, and their informal observations regarding the
adequacy of overall financial and accountin procedures of the Company.
On the basis of this review, make recommendations to senior management
for any changes that seem appropriate.
5. Prepare the minutes of each meeting, distribute to all members of the
Board of Directors and provide periodic summary reports to the Board of
Directors. The permanent file of the minute will be maintained by the
Secretary of the Company.
INDEPENDENT AUDITORS
6. Review with management and recommend to the Board of Directors the
selection of the independent auditors. On an annual basis, the Committee
will review and discuss with the auditors all significant relationships,
including non-audit services proposed or performed, the auditors have
with the Company to determine the auditors' independence.
7. Review the fees, expenses and performance of th independent auditors
and, if so determined by the Audit Committee, recommend that the Board
replace the independent auditor.
8. Meet with the independent auditor prior to the audit to review the
planning and staffing of the audit.
9. Annually consult with the independent auditors out of the presence of
management about internal controls and the fullness and accuracy of the
Company's financial statements.
FINANCIAL REPORTING PROCESS
10. In consultation with the independent auditors, review the integrity of
the Company's financial reporting process, both internal and external.
11. Review and consider the independent auditors' judgments about the
appropriateness of the Company's accounting principles as applied in its
financial reporting.
12. Review and consider major changes to the Company's accounting principles
and practices as proposed by management or the independent auditors.
PROCESS IMPROVEMENT
13. Establish regular reporting to the Audit Committee by management and the
independent auditors regarding any principal/critical risks, emerging or
developing issues and significant judgments made or to be made in
management's preparation of the financial statements.
A-2
14. Following completion of the annual audit, review separately with
management and the independent auditors any significant difficulties
encountered during the course of the audit, including any restrictions
on the scope of work or access to required information, or any
significant changes to the planned scope of the audit.
15. Review any significant disagreement among management and the independent
auditors in connection with the preparation of the financial statements.
16. Review with the independent auditors and management the extent to which
changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented.
ETHICAL AND LEGAL COMPLIANCE
17. Review the Company's programs and processes for risk management and
protection of the Company's assets and business, including management's
monitoring of compliance with such programs.
18. Review that management has sufficient policies and procedures in place
to ensure that the Company's financial statements, reports and other
financial information disseminated to governmental organizations and the
public satisfy legal requirements.
19. Review, with the Company's counsel, legal compliance matters, including
corporate securities trading policies.
20. Review, with the Company's counsel, any legal matter that could have a
significant impact on the Company's financial statements.
21. Perform any other activities consistent with this Charter, the Company's
By- laws and government law, as the Committee or the Board deems
necessary or appropriate.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations.
A-3
ANNEX B
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF CANTEL MEDICAL CORP.
------------------------
ADOPTED IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 242 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
------------------------
We, James P. Reilly, President, and Darwin C. Dornbush, Secretary of Cantel
Medical Corp., a corporation existing under the laws of the State of Delaware,
do hereby certify as follows:
FIRST: That the Certificate of Incorporation of said corporation has been
amended on April 27, 1999)
1. THE PLAN. This 1997 Employee Stock Option Plan (the "Plan") is intendedas follows:
By striking out the first sentence of Article FOURTH, up to encourage ownershipthe colon,
as it now exists and inserting in lieu and instead thereof the following:
"FOURTH: The total number of shares of all classes of stock of Cantel Industries, Inc. (the "Corporation")
by specified employees ofthat the
Corporation and its subsidiaries andshall have authority to provide
additional incentive for them to promote the successissue is Twenty-One Million
(21,000,000), of the business of the
Corporation.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 14
hereof, the total number ofwhich Twenty Million (20,000,000) shall be shares of Common
Stock, par value $.10$0.10 per share, of
the Corporation (the "Stock") which may be issued pursuant to Incentive Stock
Options, as defined by Section 422 of the Internal Revenue Code ("ISOs"), under
the Plan (the "Options")and One Million (1,000,000) shall be
400,000. Such shares of Preferred Stock, may bepar 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:"
SECOND: That such amendment has been duly adopted in whole
or in part, either authorized and unissued shares or treasury shares as the
Board of Directors of the Corporation (the "Board") shall from time to time
determine. If an Option shall expire or terminate for any reason without having
been exercised in full, the unpurchased shares covered thereby shall (unless the
Plan shall have been terminated) again be available for Options under the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
committee (the "Committee") composed of two or more non-employee members of the
Board which shall have plenary authority, in its discretion, to determine the
employees of the Corporation and its subsidiaries to whom Options shall be
granted ("Optionees"), the number of shares to be subject to each Option
(subject toaccordance with the
provisions of Paragraph 2), the option exercise price (the
"Exercise Price") (subject to the provisions of Paragraph 7), the vesting
schedule of each option and the other terms of each Option. The Board shall have
plenary authority, subject to the express provisionsSection 242(b)(1) of the Plan, to interpretGeneral Corporation Law of the Plan, to prescribe, amend and rescind any rules and regulations relating to
the Plan and to take such other action in connection with the Plan as it deems
necessary or advisable. The interpretation and constructionState of
Delaware by the Boardaffirmative vote of any
provisions of the Plan or of any Option granted thereunder shall be final and no
member of the Board shall be liable for any action or determination made in good
faith with respect to the Plan or any Option granted thereunder by the
Committee.
4. EMPLOYEES ELIGIBLE FOR OPTIONS. All employees of the Corporation or its
subsidiaries shall be eligible for Options. In making the determination as to
employees to whom Options shall be granted and as to the number of shares to be
covered by such Options, the Committee shall take into account the duties of the
respective employees, their present and potential contributions to the success
of the Corporation and such other factors as it shall deem relevant in
connection with accomplishing the purpose of the Plan.
5. TERM OF PLAN. The Plan shall terminate on, and no Options shall be
granted after October 15, 2007 provided that the Committee may at any time
terminate the Plan prior thereto.
6. MAXIMUM OPTION GRANT. With respect to an Option granted to an individual
that is intended to qualify as an ISO, the aggregate fair market value
(determined as of the time the Option is granted) of the Stock with respect to
which such Option and all other ISOs granted to the individual (whether under
this Plan or under any other stock option plan of the Corporation or any of its
subsidiaries) are exercisable for the first time during a calendar year may not
exceed $100,000.
7. EXERCISE PRICE. Each Option shall state the Exercise Price, which shall
be, in the case of ISOs, not less than 100% of the fair market value of the
Stock on the date of the granting of the Option, nor
A-1
less than 110% in the case of an ISO granted to an individual who, at the time
the Option is granted, is a 10% Holder (as hereinafter defined). The fair market
value of shares of Stock shall be determined by the Board and shall be (i) the
closing price of the Stock on the date of the granting of the Option as reported
by NASDAQ or any quotation reporting organizations, or (ii) if the Stock did not
trade on such date, the mean between the high bid and low asked prices.
8. TERM OF OPTIONS. The term of each Option granted under this Plan shall
be for a maximum of ten years from the date of granting thereof, and a maximum
of five years in the case of an ISO granted to a 10% Holder, but may be for a
lesser period or be subject to earlier termination as hereinafter provided.
9. EXERCISE OF OPTIONS. An Option may be exercised from time to time as to
any part or all of the Stock to which the Optionee shall then be entitled,
provided, however, that an Option may not be exercised (a) as to less than 100
shares at any time (or for the remaining shares then purchasable under the
Option, if less than 100 shares), (b) prior to the expiration of at least six
months from the date of grant except in case of the death or disability of the
Optionee and (c) unless the Optionee shall have been in the continuous employ of
the Corporation or its subsidiaries from the date of the granting of the Option
to the date of its exercise, except as provided in Paragraphs 12 and 13. The
Exercise Price shall be paid in full at the time of the exercise of an Option
(i) in cash or (ii) by the transfer to the Corporation of shares of its Stock
with a fair market value (as determined by the Committee) equal to the purchase
price of the Stock issuable upon exercise of such Option. The holder of an
Option shall not have any rights as a stockholder with respect to the Stock
issuable upon exercise of an Option until certificates for such Stock shall have
been delivered to him after the exercise of the Option.
10. NON-TRANSFERABILITY OF OPTIONS. Except as provided in the following
sentence, an Option shall not be transferable otherwise than by will or the laws
of descent and distribution and is exercisable during the lifetime of the
employee only by him or his guardian or legal representative. The Committee
shall have discretionary authority to grant Options which will be transferable
to members of an Optionee's immediate family, including trusts for the benefit
of such family members and partnerships in which such family members are the
only partners. A transferred Option would be subject to all of the same terms
and conditions as if such Option had not been transferred.
11. FORM OF OPTION. Each Option granted pursuant to the Plan shall be
evidenced by an agreement (the "Option Agreement") which shall clearly identify
the status of the Options granted thereunder (i.e., an ISO) and which shall be
in such form as the Committee shall from time to time approve. The Option
Agreement shall comply in all respects with the terms and conditions of the Plan
and may contain such additional provisions, including, without limitation,
restrictions upon the exercise of the Option, as the Committee shall deem
advisable.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of an
Optionee shall be terminated (otherwise by reason of death), such Option shall
be exercisable (to the extent that such Option was exercisable at the time of
termination of his employment) at any time prior to the expiration of a period
of time not exceeding three months after such termination, but not more than ten
years (five years in the case of an ISO granted to a 10% Holder) after the date
on which such Option shall have been granted. Nothing in the Plan or in the
Option Agreement shall confer upon an Optionee any right to be continued as an
employee of the Corporation or its subsidiaries or interfere in any way with the
right of the Corporation or any subsidiary to terminate or otherwise modify the
terms of an Optionee's employment, provided, however, that a change in an
Optionee's duties or position shall not affect such Optionee's Option so long as
such Optionee is still an employee of the Corporation or one of its
subsidiaries.
13. DEATH OF OPTIONEE. In the event of the death of an Optionee, any
unexercised portion of such Optionee's Option shall be exercisable (to the
extent that such Option was exercisable at the time of his death) at any time
prior to the expiration of a period not exceeding three months after his death
A-2
but not more than ten years (five years in the case of an ISO granted to a 10%
Holder) after the date on which such Option shall have been granted and only by
such person or persons to whom such deceased Optionee's rights shall pass under
such Optionee's will or by the laws of descent and distribution.
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in
the outstanding Stock of the Corporation by reason of stock dividends, splitups,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations or liquidations, the number and class of shares or
the amount of cash or other assets or securities available upon the exercise of
any Option granted hereunder and the maximum number of shares as to which
Options may be granted to an employee shall be correspondingly adjusted, to the
end that the Optionee's proportionate interest in the Corporation, any successor
thereto or in the cash, assets or other securities into which shares are
converted or exchanged shall be maintained to the same extent, as near as may be
practicable, as immediately before the occurrence of any such event. All
references in this Plan to "Stock" from and after the occurrence of such event
shall be deemed for all purposes of this Plan to refer to such other class of
shares or securities issuable upon the exercise of Options granted pursuant
hereto.
15. STOCKHOLDER AND STOCK EXCHANGE APPROVAL. This Plan is subject to and no
Options shall be exercisable hereunder until after the approval by the holders of a majority of the Stock of the Corporation voting at a duly held meeting of
the stockholders of the Corporation within twelve months after the date of the
adoption of the Plan by the Board.
16. AMENDMENT OF THE PLAN. The Board shall have complete power and
authority to modify or amend the Plan (including the form of Option Agreement)
from time to time in such respects as it shall deem advisable; provided,
however, that the Board shall not, without the approval of the votes represented
by a majority of the outstanding
Stock of the Corporation present or represented
at a meeting duly held in accordance with the applicable laws of the
Corporation's jurisdiction of incorporation andcommon stock entitled to vote thereon at a meeting of stockholders or by the written consentholders of stockholders owning stock representing
a majoritycommon stock.
IN WITNESS WHEREOF, we have signed this Certificate this day of the votes of the corporation's outstanding stock, (i) increase the
maximum number of shares which in the aggregate are subject to Options under the
Plan (except as provided by Paragraph 14), (ii) extend the term of the Plan or
the period during which Options may be granted or exercised, (iii) reduce the
Exercise Price, in the case of ISOs below 100% (110% in the case of an ISO
granted to a 10% Holder) of the fair market value of the Stock issuable upon
exercise of Options at the time of the granting thereof, other than to change
the manner of determining the fair market value thereof, (iv) increase the
maximum number of shares of Stock for which any employee may be granted Options
under the Plan pursuant to Paragraph 6, (v) modify the requirements as to
eligibility for participation in the Plan, or (vi) amend the plan in any respect
which would cause such options to no longer qualify for ISO treatment pursuant
to the Internal Revenue Code. No termination or amendment of the Plan shall,
without the consent of the individual Optionee, adversely affect the rights of
such Optionee under an Option theretofore granted to him or under such
Optionee's Option Agreement.
17. TAXES. The Corporation may make such provisions as it may deem
appropriate for the withholding of any taxes which it determines is required in
connection with any Options granted under the Plan. The Corporation may further
require notification from the Optionees upon any disposition of Stock acquired
pursuant to the exercise of Options granted hereunder.
18. CODE REFERENCES AND DEFINITIONS. Whenever reference is made in this
Plan to a section of the Internal Revenue Code, the reference shall be to said
section as it is now in force or as it may hereafter be amended by any amendment
which is applicable to this Plan. The term "subsidiary" shall have the meaning
given to the term "subsidiary corporation" by Section 425(f) of the Internal
Revenue Code. The term "10% Holder" shall mean any person who, for purposes of
Section 422 of the Internal Revenue Code owns more than 10% of the total
combined voting power of all classes of stock of the employer corporation or of
any subsidiary corporation.
A-3May,
2002.
CANTEL MEDICAL CORP.
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James P. Reilly, President
ATTEST:
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Darwin C. Dornbush, Secretary
B-1
CANTEL INDUSTRIES, INC.MEDICAL CORP.
PROXY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned stockholder of
CANTEL INDUSTRIES, INC.MEDICAL CORP. (the "Company") hereby appoints Charles M. Diker and
James P. Reilly, and each them, as proxies, with full power of substitution,
to vote, as designated below, on behalf of the undersigned the number of
votes to which the undersigned is entitled, at the Annual Meeting of
Stockholders of CANTEL INDUSTRIES, INC.MEDICAL CORP., to be held on Tuesday, March 28, 2000Wednesday, May 29, 2002
at 10:2:00 a.m.p.m. at The Harmonie Club, 4 East 60th Street, New York, New York, or
at any adjournments thereof:
(1) ELECTION OF DIRECTORS
NOMINEES FOR TERMS EXPIRING AT 2002 ANNUAL MEETING OF STOCKHOLDERS:
JAMES P. REILLYCHARLES M. DIKER, ALAN J. HIRSCHFIELD and ROBERT L. BARBANELLBRUCE SLOVIN
FOR ALL NOMINEES / / WITHHOLD AUTHORITY
/ /------------- -------------
To withhold authority to vote for any individual nominee, write the nominee's
name in the space provided below.
___________________________- ------------------------------
(2) TO APPROVE AN AMENDMENT TO THE COMPANY'S 1997 EMPLOYEE STOCK OPTION PLAN TO
INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE AND AVAILABLE FOR GRANT.
FOR / / AGAINST / / ABSTAIN / /
(3) TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
TO CHANGEINCREASE THE NAMEAUTHORIZED NUMBER OF COMPANY TO CANTEL MEDICAL CORP.SHARES OF COMMON STOCK FROM 12,000,000 to
20,000,000 SHARES.
FOR / /_____ AGAINST / /_____ ABSTAIN / /
(4)_____
(3) IN THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Unless a contrary direction is indicated, the shares represented by
this proxy will be voted for all nominees for directors named in the proxy
statement enclosed herewith and for Proposals 2 and 3;Proposal 2; if specific instructions are
indicated, this proxy will be voted in accordance with such instructions.
PLEASE VOTE, DATE AND SIGN THIS PROXY AND RETURN IT AT ONCE, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY VOTE IN PERSON IF YOU DO
ATTEND.
Dated:
____________________________
___________________________________
___________________________________--------------------------------------
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Signature(s)
NOTE: If signing for estates, trusts or corporations,
title or capacity should be stated. If shares
are held jointly, each holder should sign.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS