<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CANTEL INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
CANTEL INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing 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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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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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount previously paid:
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2) Form, schedule or registration statement No.:
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3) Filing party:
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4) Date filed:
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<PAGE>
CANTEL INDUSTRIES, INC.
1135 BROAD STREET
CLIFTON, NEW JERSEY 07013
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of CANTEL INDUSTRIES, INC. ("Cantel" or the "Company"), will be held
at The Harmonie Club, 4 East 60th Street, New York, New York on Tuesday, April
27, 1999 at 10:00 a.m., for the following purposes:
1. To elect three (3) directors to serve a term of three (3) years.
(Proposal 1)
2. To approve and adopt a new stock option plan to be designated the
1998 Directors' Stock Option Plan. (Proposal 2)
3. To amend the Company's 1997 Employee Stock Option Plan to increase
the number of shares reserved for issuance and available for grant
thereunder from 200,000 to 400,000. (Proposal 3)
4. To approve and ratify three stock options, each to purchase 50,000
shares of the Company's Common Stock, granted to the Company's Chairman of
the Board during the period October 1996 through October 1998. (Proposal 4)
5. To amend the Certificate of Incorporation of the Company to increase
the authorized number of shares of Common Stock from 7,500,000 to 12,000,000
shares. (Proposal 5)
6. To consider the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending July 31, 1999. (Proposal 6)
7. To transact such other business as may properly be brought before the
Meeting.
Only stockholders of record at the close of business on March 29, 1999 are
entitled to notice of, and to vote at, the Meeting or any adjournment thereof. A
copy of the Company's Annual Report to Stockholders for the fiscal year ended
July 31, 1998 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. If you do not plan to be
present, kindly fill in, date and sign the accompanying proxy exactly as your
name appears on your stock certificates and mail it promptly in the enclosed
return envelope to assure that your shares are represented and your vote can be
recorded. This may save the Company the expense of further proxy solicitation.
By order of the Board of Directors
Darwin C. Dornbush
Secretary
<PAGE>
CANTEL INDUSTRIES, INC.
1135 BROAD STREET
CLIFTON, NEW JERSEY 07013
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Cantel
Industries, Inc. (the "Company") for use at the Annual Meeting of Stockholders
(the "Meeting") to be held on April 27, 1999 at 10:00 a.m. at The Harmonie Club,
4 East 60th Street, New York, New York, and at any and all adjournments thereof.
This Proxy Statement and form of proxy are being mailed to stockholders on or
about April 1, 1999.
As of March 29, 1999, the record date fixed for the determination of
stockholders entitled to notice of and to vote at the Meeting, there were
4,382,268 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 three 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 March 29, 1999 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 the shares of Common Stock present in person
or by proxy is necessary for the approval of Proposals 2, 3 and 6. The
affirmative vote of a majority of the total votes cast in person or by proxy is
necessary for the approval of Proposal 4. The affirmative vote of a majority of
all the outstanding shares of Common Stock entitled to vote is necessaary for
the approval of Proposal 5. 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 shares of
Common Stock present in person or represented by proxy is necessary for the
approval of Proposals 2, 3 and 6, 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. As the affirmative vote of a majority of the total votes cast in person or
by proxy is necessary for the approval of Proposal 4, an abstention and "broker
non-votes" will have no effect on the outcome of the vote. As the affirmative
vote of a majority of all of the issued and outstanding shares of Common Stock
is required for the approval of Proposal 5, abstentions and "broker non-votes"
will have the same effect as negative votes.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
GENERAL
Three directors of the Company are to be elected at the Annual Meeting to
serve a three-year term expiring at the 2001 Annual Meeting of Stockholders and
until their respective successors have been duly elected and qualified.
Management has nominated Charles M. Diker, Alan J. Hirschfield and Bruce 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
<TABLE>
<CAPTION>
TERMS EXPIRING AT 2001 DIRECTOR
ANNUAL MEETING OF STOCKHOLDERS AGE SINCE
- -------------------------------------------------------------------------------------------------- --- -----------
<S> <C> <C>
Charles M. Diker.................................................................................. 64 1985
Chairman of the Board of the Company and
Non-Managing Principal of Weiss, Peck & Greer
Alan J. Hirschfield............................................................................... 63 1986
Vice Chairman of the Board of the Company and Co-Chairman and Co-Chief Executive Officer of Data
Broadcasting Corp.
Bruce Slovin...................................................................................... 63 1986
President of McAndrews & Forbes Holdings Inc. and President of Revlon Group, Inc.
DIRECTORS WHOSE TERMS OF OFFICE CONTINUE
<CAPTION>
TERMS EXPIRING AT 1999
ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
James P. Reilly................................................................................... 58 1989
President and Chief Executive Officer of the Company
Robert L. Barbanell............................................................................... 68 1994
President of Robert L. Barbanell Associates, Inc.
<CAPTION>
TERMS EXPIRING AT 2000
ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Darwin C. Dornbush, Esq........................................................................... 69 1963
Partner in the law firm of Dornbush Mensch Mandelstam & Schaeffer, LLP
Morris W. Offit................................................................................... 62 1986
Chief Executive Officer of OFFITBANK
John W. Rowe, M.D................................................................................. 54 1998
President and Chief Executive Officer of Mount Sinai-NYU Medical Center and Health System
</TABLE>
2
<PAGE>
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, an investment management company. 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),
a designer and manufacturer of video equipment and software for the television
industry.
Mr. Hirschfield has served as Vice Chairman of the Board of the Company
since January 1988. Since July 1992, he has 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 Chyron Corporation
(NYSE), a designer and manufacturer of video equipment and software for the
television industry, and a director of an Internet financial site known as CBS
MarketWatch.com (NASDAQ).
Mr. Barbanell has served as President of Robert L. Barbanell Associates,
Inc., a financial consulting company, since July 1994. From September 1981 to
June 1994, Mr. Barbanell was employed in various capacities by Bankers Trust New
York Corporation, most recently as Managing Director of the European Merchant
Bank of Bankers Trust International PLC. Mr. Barbanell is also a director of
Marine Drilling Companies, Inc. (NASDAQ), a drilling contractor, a director of
Kaye Group Inc. (NASDAQ), an insurance brokerage and insurance underwriting
company, and a director of Sentry Technology Corporation (AMEX), a security
products company.
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,
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 Chief Executive Officer of OFFITBANK, a limited
purpose trust company chartered by the New York State Banking Department, since
July 1990. Mr. Offit is a Trustee of Johns Hopkins University where he served as
Chairman of the Board of Trustees from 1990 through 1996, and a former partner
of Salomon Brothers, Inc. He serves as a director of Mercantile Bankshares Corp.
(NASDAQ), a bank holding company, and 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 President and Chief Executive Officer of Mount
Sinai-NYU Medical Center and Health System since July 1998, President of the
Mount Sinai Hospital from July 1988 to July 1998, and President of the Mount
Sinai School of Medicine since July 1988, where he also serves as a Professor of
Medicine and Geriatrics. Prior to July 1988, Dr. Rowe was a Professor of
Medicine and the founding Director of the Division on Aging at Harvard Medical
School and Chief of Gerontology at Boston's Beth Israel Hospital. Dr. Rowe is
also a director of the MacArthur Foundation Research Network on Successful Aging
and a director of Global Pharmaceutical Corp. (NASDAQ), a manufacturer and
marketer of generic prescription pharmaceuticals.
Mr. Slovin has served as President and a director of MacAndrews & Forbes
Holdings Inc. and Revlon Group, Inc., privately held industrial holding
companies, since 1985. Mr. Slovin is also a director of Koala Healthcare, Inc.
(NASDAQ), a health care services company, Meridian Sports Incorporated (NASDAQ),
a watersports company, Infu-Tech, Inc. (NASDAQ), a home health care company, and
M&F Worldwide Corp. (NYSE), a manufacturer of licorice extract and flavorings.
3
<PAGE>
COMMITTEES AND MEETINGS
The Company has an Audit Committee of the Board of Directors consisting of
Messrs. Barbanell, Dornbush and Slovin. 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 auditor's report, and to meet with the Company's
financial management and its independent auditors to satisfy itself of the
adequacy of the Company's internal controls. The Audit Committee held two
meetings during fiscal 1998 at which all members of the committee were present.
The Company has a Compensation Committee of the Board of Directors
consisting of Messrs. Dornbush and Hirschfield. 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
meetings at which compensation issues were discussed and approved, including a
recommendation to the Board of Directors for an increase in compensation and the
grant of a non-plan stock option to the Chairman of the Board. Such
recommendation was considered and approved by the Board of Directors.
The Board of Directors of the Company held four meetings during the fiscal
year ended July 31, 1998. Except for Messrs. Hirschfield and Offit, both of whom
did not attend two 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 1998, Directors who were not officers of the Company were paid
$500 per meeting attended, plus expenses. Commencing August 1998, non-officer
Directors were paid an annual directors' fee of $5,000 and $1,000 per meeting
attended, plus expenses. Under the 1991 Directors' Stock Option Plan, directors
who are not officers of the Company are automatically granted quarterly options
to purchase 500 shares of Common Stock, 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) is 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 are automatically granted annual options to purchase 1,000 shares of
Common Stock at the fiscal year end.
THE BOARD RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED HEREIN.
PROPOSAL 2
APPROVAL OF THE 1998 DIRECTORS' STOCK OPTION PLAN
The Board of Directors has adopted, subject to stockholder approval, and
recommends the adoption of the proposed 1998 Directors' Stock Option Plan
("Directors' Plan"), under which options may be granted for an aggregate of
200,000 shares of Common Stock on or prior to December 1, 2008. All of the
Company's directors are eligible to participate in the Directors' Plan.
The following description of the Directors' Plan is qualified in its
entirety by reference to such Plan, a copy of which is attached to this Proxy
Statement as Exhibit A and is incorporated by reference herein. Attention is
particularly directed to the description therein of the prices, expiration dates
and other material conditions upon which the options may be granted and
exercised. No options have been granted to date under the Directors' Plan.
4
<PAGE>
The Directors' Plan provides for the issuance of up to 200,000 shares of
Common Stock to directors of the Company upon the exercise of options granted
thereunder. Options granted under the Directors' Plan are not intended to be
incentive stock options ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). The 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, commencing with the fiscal year ending July 31, 2000. In
addition, an option to purchase 500 shares of Common Stock will be granted
automatically on the last business day of each fiscal quarter, commencing with
the quarter ending October 31, 1999, to each director (exclusive of the Chairman
of the Board and President of the Company, and any director who is a full-time
employee of the Company), provided that the director attended any regularly
scheduled meeting of the Board, if any, which was held during such quarter. Each
such option grant will be at an exercise price equal to the fair market value of
the Common Stock on the date of grant and have a ten-year term (subject to
termination three months following the optionee's ceasing to serve as a director
of the Company). The fiscal year options will be exercisable in two equal annual
installments commencing on the first anniversary of the grant thereof and the
quarterly options will be exercisable in full immediately. 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 Directors' Plan.
For Federal income tax purposes, directors will realize ordinary income upon
exercise of options granted under the Directors' Plan measured by the excess of
the fair market value of the shares at the time of exercise over the option
price (even though the optionee will have received no cash), and the Company
will be entitled to a deduction in the same amount. Any difference between the
greater of such market value or option price and the price at which the optionee
may subsequently sell the shares will be treated as gain or loss from the sale
or disposition of a capital asset.
The Board of Directors is of the opinion that adoption of the proposed
Directors' Plan is in the best interests of the Company in that it will aid the
Company in securing and retaining the services of persons having the breadth of
professional and business experience who, through their efforts and expertise,
can make a significant contribution to the success of the Company's business by
serving as members of the Company's Board of Directors. The Board believes that
the Directors' Plan will provide an additional incentive for such directors by
making it possible to offer them an opportunity to acquire stock of the Company
and thereby increase their proprietary interest in the Company's success.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 1998 DIRECTORS' STOCK
OPTION PLAN.
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE
1997 EMPLOYEE STOCK OPTION PLAN
In October 1997, the Company adopted the 1997 Employee Stock Option Plan
(the "Employee Plan") under which the Company may, from time to time, issue
options exercisable for shares of Common Stock. At the time of adoption, 200,000
shares of Common Stock were reserved for issuance under the Employee Plan. The
Board of Directors has adopted an amendment to the Employee Plan to increase the
number of shares of Common Stock reserved for issuance by 200,000 shares, to
400,000 shares. Adoption of such amendment requires stockholder approval. A copy
of the Employee Plan, as currently in effect, is attached hereto as Exhibit B.
Options granted under the Employee Plan are intended to qualify as 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 to whom options are to be granted and the number of
shares subject to each option. Under the terms of the Employee Plan, all
5
<PAGE>
employees of the Company or subsidiaries of the Company are eligible for option
grants. Options under the Employee Plan are granted to reward past performance
by employees, as an incentive for future performance, and to recruit and retain
qualified personnel.
The option exercise price of options granted under the Employee Plan is
fixed by the Stock Option Committee but must be no less than 100% of the fair
market value of the shares of Common Stock subject to the option at the time of
grant, except that in the case of an employee who possesses more than 10% of the
total combined voting power of all classes of stock 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 March 29, 1999, options to purchase 194,500 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, 205,500 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 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
6
<PAGE>
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 is in the best interests of the Company in that it will aid
the Company in securing and retaining competent management personnel and other
employees by making it possible to offer them an opportunity to acquire stock of
the Company and thereby increase their proprietary interest in the Company's
success.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE
EMPLOYEE PLAN.
PROPOSAL 4
APPROVAL OF OPTION GRANTS
TO CHAIRMAN OF THE BOARD
The Company has granted to Charles M. Diker, Chairman of the Board and a
Director of the Company, non-plan options, each to purchase 50,000 shares of
Common Stock (an aggregate of 150,000 shares), on October 15, 1996 (the "1996
Option"), October 15, 1997 (the "1997 Option") and October 30, 1998 (the "1998
Option"). Each of the options (collectively, the "Diker Options") was granted
pursuant to an Option Agreement between the Company and Mr. Diker in the form
annexed hereto as Exhibit C. The Diker Options each has a ten-year term and is
exercisable in three equal annual installments beginning on the date of grant.
The exercise prices of the 1996 Option, 1997 Option and 1998 Option are $7.375
per share, $7.00 per share, and $7.75 per share, respectively, each being the
fair market value of the shares of Common Stock on the date of grant. The Diker
Options, which do not qualify as ISOs, 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 equal to the option exercise price.
The Diker Options were recommended by the Company's Compensation Committee
and approved by the Board of Directors based upon the significant services
provided by Mr. Diker to the Company. Approval of the Diker Options by the
stockholders of the Company is required pursuant to Nasdaq Rule
4310(c)(25)(H)(i), which Rule requires (among other things) stockholder approval
of non-plan options to purchase 25,000 or more shares granted to officers or
directors of companies with securities listed on NASDAQ. Therefore, the Company
proposes that the stockholders approve and ratify the Diker Option.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE AND RATIFY THE
DIKER OPTIONS.
7
<PAGE>
PROPOSAL 5
AMENDMENT OF CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
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 from 7,500,000 shares to 12,000,000 shares. A copy of the
resolution to be presented for adoption by the stockholders is annexed hereto as
Exhibit D.
The Company's Certificate of Incorporation, as amended, authorizes the
Company to issue up to 7,500,000 shares of Common Stock and 1,000,000 shares of
Preferred Stock. As of March 29, 1999, 4,382,268 shares of Common Stock were
issued and outstanding. Additionally, as of that date an aggregate of 868,964
shares of Common Stock were reserved for issuance upon the exercise of options
granted or available for grant under the Company's various stock option plans or
under stock options individually granted by the Board of Directors.
If the proposal to increase the authorized number of shares of Common Stock
is 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 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 Exhibit D to this Proxy Statement.
The Board of Directors considers it desirable to have available for issuance
sufficient authorized shares of Common Stock to enable the Company to act
without delay if favorable opportunities arise to raise additional equity
capital or to acquire companies or products by the issuance of shares of Common
Stock and otherwise to be in a position to take various steps requiring the
issuance of additional shares of Common Stock (including stock splits or stock
dividends) that in the judgment of the Board of Directors are in the best
interests of the Company. The Company has no current plans, arrangements or
understandings regarding the issuance of any of the additional shares of Common
Stock for which authorization is sought and there are no negotiations pending
with respect to the issuance thereof for any purpose.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION.
PROPOSAL 6
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Ernst & Young LLP has audited the financial statements of the
Company for more than the past five fiscal years. The Board of Directors desires
to continue the services of Ernst & Young LLP for the current fiscal year ending
July 31, l999. Accordingly, the Board of Directors will recommend to the Meeting
that the stockholders ratify the appointment by the Board of Directors of the
firm of Ernst & Young LLP to audit the financial statements of the Company for
the current fiscal year. Representatives of that firm are expected to be present
at the Meeting, will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF ERNST & YOUNG LLP.
8
<PAGE>
OWNERSHIP OF SECURITIES
The following table sets forth stock ownership information as of March 29,
1999 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:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNERS POSITION WITH COMPANY OWNERSHIP (1) OF CLASS
- --------------------------------------- -------------------------------------------- ------------- -------------
<S> <C> <C> <C>
Charles M. Diker....................... Chairman of the Board and Director 879,134(2) 19.6
One New York Plaza
New York, New York
Alan J. Hirschfield.................... Vice Chairman of the Board and Director 222,333(3) 5.0
P.O. Box 7443
Jackson, Wyoming
Robert L. Barbanell.................... Director 63,000(4) 1.4
Darwin C. Dornbush..................... Secretary and Director 23,180(5) .5
Morris W. Offit........................ Director 55,000(6) 1.2
James P. Reilly........................ President and Chief Executive Officer and 238,314(7) 5.2
1135 Broad Street Director
Clifton, New Jersey
John W. Rowe, M.D...................... Director 7,668(8) .2
Bruce Slovin........................... Director 161,500(9) 3.7
Richard M. Rumble...................... President and Chief Executive Officer of 8,334(10) .2
MediVators, Inc.
Craig A. Sheldon....................... Vice President and Controller 22,500(11) .5
William J. Vella....................... President and Chief Operating Officer of 36,453(12) .8
Carsen Group Inc.
All officers and directors as a 1,717,416(13) 35.1
group of 11 persons..................
</TABLE>
- ------------------------
(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 March 29, 1999 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 March 29,
1999 have been exercised.
(2) Includes 108,501 shares which Mr. Diker may acquire pursuant to stock
options. Does not include an aggregate of 519,515 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.
(3) Includes 26,000 shares which Mr. Hirschfield may acquire pursuant to stock
options.
9
<PAGE>
(4) Includes 38,000 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 13,500 shares which Mr. Dornbush may acquire pursuant to stock
options.
(6) Includes 23,000 shares which Mr. Offit may acquire pursuant to stock
options.
(7) Includes 211,981 shares which Mr. Reilly may acquire pursuant to stock
options.
(8) Includes 7,668 shares which Dr. Rowe may acquire pursuant to stock options.
(9) Includes 26,500 shares which Mr. Slovin may acquire pursuant to stock
options. Does not include an aggregate of 9,000 shares owned by (i) certain
trusts for the benefit of Mr. Slovin's children and (ii) a charitable
foundation established by Mr. Slovin. Mr Slovin disclaims beneficial
ownership as to all of the foregoing shares.
(10) Includes 8,334 shares which Mr. Rumble may acquire pursuant to stock
options.
(11) Includes 22,500 shares which Mr. Sheldon may acquire pursuant to stock
options.
(12) Includes 18,750 shares which Mr. Vella may acquire pursuant to stock
options.
(13) Includes 504,734 shares which may be acquired pursuant to stock options.
10
<PAGE>
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 executive compensation. The Committee is currently comprised of two
members, both of whom are non-employee directors.
Executive compensation for the fiscal year ended July 31, 1998 consisted of
base salary plus, in certain cases, an incentive bonus when earned. The policy
of the Committee, in consultation with the Chairman and the Chief Executive
Officer, is to provide compensation to the 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 shareholder value.
Mr. Reilly, the President and Chief Executive Officer of the Company, served
the Company pursuant to a written employment agreement from June 1989 through
July 1992 and was compensated pursuant to the express terms of such agreement.
Although the agreement expired in accordance with its terms, the Compensation
Committee has agreed to compensate Mr. Reilly at the same base salary and bonus
formula as was in effect during the last year of the agreement. In March 1999,
the Board of Directors approved a new Employment Agreement between the Company
and Mr. Reilly. See "Employment Agreements" below.
Long-term incentive compensation policy consists exclusively of the award of
stock options under the Company's 1997 Employee Stock Option Plan,
non-discretionary annual option grants of 1,000 shares under the Company's 1991
Directors' Stock Option Plan (in the case of officers who serve as directors of
the Company) and discretionary non-plan options (in the case of the Chairman).
The Stock Option Committee under the 1997 Employee Stock Option Plan is
responsible for the award of stock options. Two non-employee directors, Darwin
C. Dornbush and Alan J. Hirschfield, currently serve on the Stock Option
Committee, which administers the granting of options under said Plans.
Compensation Committee:
Darwin C. Dornbush
Alan J. Hirschfield
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No officer of the Company served on the Company's Compensation Committee
during its last fiscal year. Charles M. Diker, Chairman of the Company, and
James P. Reilly, President and Chief Executive Officer of the Company, however,
participated in deliberations concerning executive compensation, except with
respect to their own compensation.
11
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder 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, 1993, and the reinvestment 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
CANTEL INDS. INC (CNTL)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
<S> <C> <C> <C>
CANTEL INDUSTRIES, INC. NASDAQ STOCK MARKET (U.S) NASDAQ NON-FINANCIAL
7/93 100 100 100
7/94 158 103 101
7/95 192 145 146
7/96 227 157 154
7/97 183 232 224
7/98 292 273 262
</TABLE>
- ------------------------
* $100 invested on 7/31/93 in stock or index, including reinvestment of
dividends, fiscal year ending
July 31.
12
<PAGE>
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the fiscal years ended July 31, 1998,
1997, and 1996, 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
$100,000 in salary and bonus during the fiscal year ended July 31, 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION(1) AWARDS(2)
-------------------- -------------
SALARY BONUS OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#)
- ---------------------------------------------------------------------- --------- --------- --------- -------------
<S> <C> <C> <C> <C>
Charles M. Diker...................................................... 1998 125,000 0 51,000
Chairman of the Company 1997 100,000 0 51,000
1996 83,333 0 1,000
James P. Reilly(3).................................................... 1998 250,000 39,225 1,000
President and Chief Executive Officer of the Company 1997 250,000 12,600 1,000
1996 250,000 0 1,000
Richard M. Rumble(4).................................................. 1998 125,000 25,000 25,000
President and Chief Executive Officer of MediVators, Inc.
Craig A. Sheldon...................................................... 1998 97,500 15,000 5,000
Vice President and Controller of the Company 1997 88,125 10,000 5,000
1996 80,625 9,000 5,000
William J. Vella(5)................................................... 1998 133,447 19,000 10,000
President and Chief Operating Officer of Carsen Group Inc. 1997 122,060 10,150 6,000
1996 118,438 7,360 15,000
</TABLE>
- ------------------------
(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 of $50,000 or 10% of the total
annual salary and bonus reported for such officers.
(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) See "Employment Agreements" below.
(4) See "Employment Agreements" below.
(5) 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 fiscal year.
EMPLOYMENT AGREEMENTS
In March 1999, the Company entered into a four year employment agreement
with James P. Reilly (the "Employment Agreement") that is effective as of August
1, 1998. The Employment Agreement provides for (i) an annual base salary of
$275,000, subject to annual increases equal to the greater of 5% or
13
<PAGE>
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
or recalculation on a formula basis if an acquisition of another company occurs
during the employment term, (iii) bonuses of $65,000 payable upon each of the
execution of the Employment Agreement, August 1, 1999 and August 1, 2000
(subject to his continued employment on such dates), (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 year term. The Employment
Agreement provided that if Mr. Reilly's employment is terminated for any reason,
including voluntary termination, death, disability or cause, prior to August 1,
1999, he will be entitled to a severance payment of $130,000; if his employment
is terminated on or after August 1, 1999 and prior to August 1, 2000, he will be
entitled to a severance payment of $65,000. If the Employment 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), Mr. Reilly has a nine 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 is prior to August 1, 1999,
severance is 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 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 Agreement for death, disability and
"cause" (as defined in the Employment Agreement") and Mr. Reilly has the right
to terminate the Employment Agreement upon three months' notice.
Mr. Rumble was employed by MediVators commencing in fiscal 1998. MediVators
entered into a an employment agreement with Mr. Rumble that took effect on
August 1, 1997 and, as amended, expires on July 31, 2001. Mr. Rumble's
employment provides for (i) a base salary of $125,000, subject to annual
increases of no less than 5%, (ii) a discretionary bonus based upon factors
including the performance of MediVators, with a guaranteed minimum bonus of
$25,000 during the initial contract year; (iii) use of a MediVators owned or
leased automobile; (iv) MediVators to maintain a life insurance policy on the
life of Mr. Rumble in the face amount of $250,000, payable to his designated
beneficiary; (v) the Company to grant Mr. Rumble an option to purchase 25,000
shares of Common Stock under the 1991 Employee Stock Option Plan; and (vi) Mr.
Rumble to participate in all benefit plans applicable generally to executive
officers of MediVators.
STOCK OPTIONS
The following stock option information is furnished for the fiscal year
ended July 31, 1998 with respect to the Company's Chief Executive Officer and
the other executive officers of the Company named in the Compensation Table
above. Stock options were granted without tandem stock appreciation rights.
14
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SHARES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM($)(1)
OPTIONS DURING THE PRICE PER EXPIRATION --------------------
NAME GRANTED FISCAL YEAR SHARE($) DATE 5% 10%
- ----------------------------------------- ----------- ------------- --------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Diker......................... 50,000(2) 38.3 7.00 10/15/07 570,113 907,810
1,000(3) 0.8 8.75 07/30/08 14,253 22,695
James P. Reilly.......................... 1,000(3) 0.8 8.75 07/30/08 14,253 22,695
Richard M. Rumble........................ 25,000(4) 19.2 5.50 07/31/02 175,489 221,445
Craig A. Sheldon......................... 5,000(6) 3.8 6.50 02/17/03 41,479 52,342
William J. Vella......................... 6,000(5) 4.6 5.50 07/31/02 42,117 53,147
4,000(6) 3.1 6.50 02/17/03 33,183 41,873
</TABLE>
- ------------------------
(1) Represents the potential 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 on the date of grant. The exercise price per share
of this option is the market value per share on the date of grant.
(3) These options were granted under the Company's 1991 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.
(4) This option was granted under the Company's 1991 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: 33.3% of the
total shares covered by the option vest on each of the first three
anniversaries of the date of grant.
(5) This option was granted under the Company's 1991 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: 25% of the
total shares covered by the option vest on each of the first four
anniversaries of the date of the grant.
(6) These options were 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,
1998 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.
15
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 7/31/98 OPTIONS AT 7/31/98 ($)
ACQUIRED ON VALUE ---------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE
- ------------------------------------ ------------- ----------- ----------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Diker.................... 0 0 58,501 51,499 116,321 82,866
James P. Reilly..................... 0 0 195,315 1,500 1,345,018 1,625
Richard M. Rumble................... 0 0 8,334 16,666 27,089 54,161
Craig A. Sheldon.................... 0 0 15,000 15,000 52,344 33,281
William J. Vella.................... 2,500 11,875 17,000 21,000 35,563 32,063
</TABLE>
STOCK OPTIONS
An aggregate of 250,000 shares of Common Stock is reserved for issuance or
available for grant under the Company's 1991 Employee Stock Option Plan (the
"1991 Employee Plan"). Options granted under the 1991 Employee Plan are intended
to qualify as ISOs within the meaning of Section 422 of the Code. The 1991
Employee Plan is administered in all respects by a committee composed of at
least two non-employee members of the Company's Board of Directors who are
designated by the Board (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 1991 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 1991
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"), 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 or of
options to acquire 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 1991 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, 1998 have a
term of five years. At July 31, 1998, options to purchase 170,000 shares of
Common Stock at prices between $4.25 and $8.75 per share were outstanding under
the 1991 Employee Plan. No additional options will be granted under the 1991
Employee Plan.
An aggregate of 200,000 shares of Common Stock is currently reserved for
issuance or available for grant under the Company's 1997 Employee Stock Option
Plan (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 200,000
shares, to a total of 400,000 shares. See "Proposal 3--Approval of Amendment to
the 1997 Employee Stock Option Plan." Options granted under the 1997 Employee
Plan are intended to qualify as ISOs 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 a 10% 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
16
<PAGE>
option granted to a 10% Holder. All options outstanding at July 31, 1998, have a
term of five years. At July 31, 1998, options to purchase 32,500 shares of
Common Stock at prices between $6.50 and $8.75 per share were outstanding under
the 1997 Employee Plan, and 167,500 shares were available for grant under the
1997 Employee Plan.
An aggregate of 200,000 shares of Common Stock is reserved for issuance or
available for grant under the Company's 1991 Directors' Stock Option Plan (the
"1991 Directors' Plan"). Options granted under the 1991 Directors' Plan do not
qualify as incentive stock options within the meaning of Section 422 of the
Code. The 1991 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 automatically on the last
business day of each fiscal quarter to each director (exclusive of Messrs.
Diker, Reilly and Dornbush and any other director who serves as an officer or
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 grant and has a ten year term (subject to
termination three months following the optionee's ceasing to serve as a director
of the Company). Mr. Dornbush, who is both an officer and director of the
Company (and who thereby does not receive said quarterly option grant), is
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, 1998, options to purchase 141,000 shares of Common
Stock at prices between $2.00 and $10.25 per share were outstanding under the
1991 Directors' Plan, and 9,000 shares were available for grant under the 1991
Directors' Plan. Subject to approval of the 1998 Directors' Stock Option Plan,
no additional options will be granted under the 1991 Directors' Plan after July
31, 1999. In addition, at July 31, 1998, Mr. Dornbush had non-plan options to
purchase an aggregate of 4,000 shares of Common Stock at prices between $5.50
and $8.75 per share.
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. See
"Proposal 2--Approval of the Directors' Stock Option Plan" above for a
description of the 1998 Directors' Stock Option Plan, which is subject to
shareholder approval.
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, 1998, options to purchase 32,848 shares of Common Stock at prices
between $6.08 and $8.27 per share were outstanding under the MediVators Plan. No
additional options will be granted under the MediVators Plan.
In June 1990, Mr. Reilly was granted a ten year non-plan option to purchase
139,815 shares of Common Stock at an exercise price of $1.75 per share. This
option is exercisable in full. In addition, in July 1990, Mr. Reilly was granted
a ten year non-plan option to purchase 50,000 shares at an exercise price of
$1.875 per share. This option is exercisable in full. See "Employment
Agreements" above for description of an option granted to Mr. Reilly in March
1999 under the Company's 1997 Employee Stock Option Plan.
In December 1994, Mr. Barbanell was granted a five year non-plan option to
purchase 25,000 shares of Common Stock at an exercise price of $3.75 per share.
This option is currently exercisable in full and expires in December 1999.
In October 1996, Mr. Diker was granted a ten 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 three equal annual installments beginning October
1996. In October 1997, Mr. Diker was granted a ten year non-plan option
17
<PAGE>
to purchase 50,000 shares of Common Stock at an exercise price of $7.00 per
share. This option is exercisable in three equal annual installments beginning
October 1997. 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 is exercisable in three equal annual installments beginning
October 1998. All three of the option grants to Mr. Diker are subject to
shareholder approval at this meeting. See "Proposal 4--Approval of Option Grants
to Chairman of the Board."
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. This
option is exercisable in three equal annual installments beginning March 1999.
SHAREHOLDER PROPOSALS FOR 1999 PROXY STATEMENT
Shareholder proposals that are intended to be presented at the Company's
1999 annual meeting of stockholders must be received by the Company no later
than September 30, 1999 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, 1998,
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., 1135 BROAD STREET, SUITE 203, CLIFTON, NEW
JERSEY 07013-3346.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the accompanying form has been or
will be borne by the Company. In addition to solicitation by mail, arrangements
may be made with brokerage houses and other custodians, nominees and fiduciaries
to send proxy material to beneficial owners, and the Company will, upon request,
reimburse them for any attendant expenses.
In order to ensure the presence of a quorum at the Meeting, all stockholders
are requested to sign and return promptly the enclosed proxy in the postage paid
envelope provided for that purpose. The signing of the proxy will not prevent
your attending the meeting and voting in person if you wish to do so.
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
April 1, 1999
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EXHIBIT A
1998 DIRECTORS' STOCK OPTION PLAN
OF
CANTEL INDUSTRIES, INC.
(As adopted by the Board of Directors as of December 2, 1998)
1. THE PLAN. The 1998 Directors' Stock Option Plan (the "Plan") is intended
to strengthen the ability of Cantel Industries, Inc. (the "Corporation") to
attract and retain the services of persons having the breadth of professional
and business experience who, through their efforts and expertise, can make a
significant contribution to the success of the Corporation's business by serving
as members of the Corporation's Board of Directors and to provide additional
incentive for such directors to continue to work for the best interests of the
Corporation and its stockholders through ownership of its Common Stock, par
value $.10 per share (the "Stock"). Accordingly, the Company will grant to each
director (the "Optionee") an option (the "Option") to purchase shares of Stock
on the terms and conditions hereinafter set forth.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 11
hereof, the total number of shares of Stock which may be issued pursuant to
Options granted under the Plan shall be 200,000. Such shares of Stock may be, in
whole or in part, either authorized and unissued shares or treasury shares as
the Board of Directors of the Corporation (the "Board") shall from time to time
determine. If an Option shall expire or terminate for any reason without having
been exercised in full, the unpurchased shares covered thereby shall (unless the
Plan shall have been terminated) again be available for Options under the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a committee
(the "Committee") composed of two or more non-employee members of the Board. The
Committee shall have plenary authority, subject to the express provisions of the
Plan, to interpret the Plan, to prescribe, amend and rescind any rules and
regulations relating to the Plan and to take such other action in connection
with the Plan as it deems necessary or advisable; provided, however, that the
grant of Options under the Plan, the exercise price of such Options and the
timing and manner in which such Options become exercisable shall not be subject
to discretion by the Board but shall be governed by the terms of the Plan. The
interpretation and construction by the Board of any provisions of the Plan or of
any Option granted thereunder shall be final, and no member of the Board shall
be liable for any action or determination made in good faith with respect to the
Plan or any Option granted thereunder.
4. DIRECTORS ELIGIBLE FOR OPTIONS; GRANT OF OPTIONS.
1. Each director of the Corporation, whether or not an employee, shall
be eligible for Options under this Plan.
2. Subject to Section 12, an Option to purchase 1,000 shares of Stock
shall automatically be granted under the Plan each year on the last
business day of the Corporation's fiscal year, commencing with the
fiscal year ending July 31, 2000, to each member of the Corporation's
Board serving as such on said date. Each Option granted under this
subsection B shall be exercisable as to 50% of the number of shares
of Stock covered thereby on the first anniversary of the grant of
such Option and shall become exercisable for the balance of shares of
Stock covered thereby on the second anniversary of the grant of such
Option. The exercise price of each Option granted under this
subsection B shall be the fair market value (as hereinafter defined)
of Stock covered thereby on the date the Option is granted.
3. Subject to Section 12, an Option to purchase 500 shares of Stock
shall be automatically be granted on the last business day of each
fiscal quarter, commencing with the quarter ending October 31, 1999,
to each member of the Corporation's Board serving as such on said
date provided that the member attended any regularly scheduled
meeting of the Board, if any,
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which was held during such quarter (whether in person or by
telephonic means). Notwithstanding the foregoing to the contrary,
neither Messrs. Diker nor Reilly, nor any member of the Board who is
an employee of the Corporation, shall be entitled to receive any
quarterly Option grants in accordance with this subsection C. Each
Option granted under this subsection C shall be exercisable
immediately and the exercise price of each such Option shall be the
fair market value (as hereinafter defined) of the Stock covered
thereby on the date the Option is granted (the "Determination Date").
4. For purposes of this Plan, the fair market value shall be:
(1) if the Stock is listed on a national stock exchange, the closing
price of the Stock on the largest principal securities exchange
on the Determination Date, or, if there shall have been no sales
on any such exchange on such Determination Date, such closing
price on the first date prior to the Determination Date that
there was a sale on the exchange; or
(2) if the Stock is not listed on a national stock exchange, the
closing price of the Stock on the National Market System of the
National Association of Securities Dealers, Inc., Automated
Quotation System ("NASDAQ"), or, if there shall have been no
sales on such Determination Date on the NASDAQ National Market
System, such closing price on the first date prior to the
Determination Date that there was a sale on the NASDAQ Market
system; or
(3) if the Common Stock is not listed on a securities exchange or the
NASDAQ National Market System, the mean of the highest bid and
lowest asked prices of the Stock on the Determination Date as
quoted in the NASDAQ System; or
(4) if the Common Stock is not quoted in the NASDAQ System, the mean
of the highest bid and lowest asked prices of the Stock on the
Determination Date in the over-the-counter market as reported by
the National Quotation Bureau, Incorporated, or any similar
successor organization.
5. TERM OF PLAN. The Plan shall terminate on, and no Options shall be
granted after, December 1, 2008, provided that the Board may at any time
terminate the Plan prior thereto.
6. TERM OF OPTIONS. The term of each Option granted under this Plan shall be
for a period of ten years from the date of granting thereof.
7. 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 as to less than 100
shares at any one time (or for the remaining shares then purchasable under the
Option, if less than 100 shares). The purchase price of the Stock issuable upon
exercise of an Option shall be paid in full at the time of the exercise thereof
(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 Board) 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.
8. NON-TRANSFERABILITY OF OPTIONS. An Option shall not be transferable
otherwise than by will or the laws of descent and distribution and is
exercisable during the lifetime of the Optionee only by the Optionee.
9. FORM OF OPTION. Each Option granted pursuant to the Plan shall be
evidenced by an agreement (the "Option Agreement") which shall be in such form
as the Board shall from time to time approve. The Option Agreement shall comply
in all respects with the terms and conditions of the Plan.
10. TERMINATION OF BOARD MEMBERSHIP. In the event that an Optionee shall
cease to be a member of the Board (whether by resignation, death or disability
or otherwise), the Options of the Optionee granted
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pursuant to this Plan shall be exercisable (to the extent that such Options were
exercisable at the time of termination of Board membership) at any time prior to
the expiration of a period of time not exceeding three months after such
termination by the Optionee (or, in the event such termination resulted from the
Optionee's death, by the legal representative of the Optionee) and the balance
of such Option, if any, shall be cancelled.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in
the outstanding Stock of the Corporation by reason of stock dividends,
split-ups, recapitalizations, mergers, consolidations, combinations or exchanges
of shares, separations, reorganizations or liquidations, the number and class of
shares available under the Plan, 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 number of shares as to which Options are to be granted
to an Optionee 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
the Plan to refer to such other class of shares or securities issuable upon the
exercise of Options granted pursuant hereof.
12. STOCKHOLDER APPROVAL. This Plan is subject to, and no Options shall be
exercisable hereunder, until the approval of this Plan by the Corporation's
stockholders at the next annual meeting of stockholders.
13. 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 and entitled to vote at a meeting of the
stockholders or by the written consent of stockholders owning stock representing
a majority of the votes of the Corporation's outstanding Stock, (i) increase the
maximum number of shares which in the aggregate are subject to Options under the
Plan (except as provided by Paragraph 11, (ii) extend the term of the Plan or
the period during which Options may be granted or exercised, (iii) reduce the
Option exercise price below 100% 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) modify the
requirements as to eligibility for participation in the Plan. 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.
14. 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 Optionee upon any disposition of Stock acquired
pursuant to the exercise of Options granted hereunder.
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EXHIBIT B
1997 EMPLOYEE STOCK OPTION PLAN
OF
CANTEL INDUSTRIES, INC.
(As adopted by the Board of Directors as of October 16, 1997)
1. THE PLAN. This 1997 Employee Stock Option Plan (the "Plan") is intended
to encourage ownership of stock of Cantel Industries, Inc. (the "Corporation")
by specified employees of the Corporation and its subsidiaries and to provide
additional incentive for them to promote the success of the business of the
Corporation.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 14
hereof, the total number of shares of Common Stock, par value $.10 per share, of
the Corporation (the "Stock") which may be issued pursuant to Incentive Stock
Options, as defined by Section 422 of the Internal Revenue Code ("ISOs"), under
the Plan (the "Options") shall be 200,000. Such shares of Stock may be in whole
or in part, either authorized and unissued shares or treasury shares as the
Board of Directors of the Corporation (the "Board") shall from time to time
determine. If an Option shall expire or terminate for any reason without having
been exercised in full, the unpurchased shares covered thereby shall (unless the
Plan shall have been terminated) again be available for Options under the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a committee
(the "Committee") composed of two or more non-employee members of the Board
which shall have plenary authority, in its discretion, to determine the
employees of the Corporation and its subsidiaries to whom Options shall be
granted ("Optionees"), the number of shares to be subject to each Option
(subject to the provisions of Paragraph 2), the option exercise price (the
"Exercise Price") (subject to the provisions of Paragraph 7), the vesting
schedule of each option and the other terms of each Option. The Board shall have
plenary authority, subject to the express provisions of the Plan, to interpret
the Plan, to prescribe, amend and rescind any rules and regulations relating to
the Plan and to take such other action in connection with the Plan as it deems
necessary or advisable. The interpretation and construction by the Board of any
provisions of the Plan or of any Option granted thereunder shall be final and no
member of the Board shall be liable for any action or determination made in good
faith with respect to the Plan or any Option granted thereunder by the
Committee.
4. EMPLOYEES ELIGIBLE FOR OPTIONS. All employees of the Corporation or its
subsidiaries shall be eligible for Options. In making the determination as to
employees to whom Options shall be granted and as to the number of shares to be
covered by such Options, the Committee shall take into account the duties of the
respective employees, their present and potential contributions to the success
of the Corporation and such other factors as it shall deem relevant in
connection with accomplishing the purpose of the Plan.
5. TERM OF PLAN. The Plan shall terminate on, and no Options shall be
granted after October 15, 2007 provided that the Committee may at any time
terminate the Plan prior thereto.
6. MAXIMUM OPTION GRANT. With respect to an Option granted to an individual
that is intended to qualify as an ISO, the aggregate fair market value
(determined as of the time the Option is granted) of the Stock with respect to
which such Option and all other ISOs granted to the individual (whether under
this Plan or under any other stock option plan of the Corporation or any of its
subsidiaries) are exercisable for the first time during a calendar year may not
exceed $100,000.
7. EXERCISE PRICE. Each Option shall state the Exercise Price, which shall
be, in the case of ISOs, not less than 100% of the fair market value of the
Stock on the date of the granting of the Option, nor less than 110% in the case
of an ISO granted to an individual who, at the time the Option 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
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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
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.
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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. SHAREHOLDER 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 and entitled to vote at a meeting of stockholders
or by the written consent of stockholders owning stock representing a majority
of the votes of the corporation's outstanding stock, (i) increase the maximum
number of shares which in the aggregate are subject to Options under the Plan
(except as provided by Paragraph 14), (ii) extend the term of the Plan or the
period during which Options may be granted or exercised, (iii) reduce the
Exercise Price, in the case of ISOs below 100% (110% in the case of an ISO
granted to a 10% Holder) of the fair market value of the Stock issuable upon
exercise of Options at the time of the granting thereof, other than to change
the manner of determining the fair market value thereof, (iv) increase the
maximum number of shares of Stock for which any employee may be granted Options
under the Plan pursuant to Paragraph 6, (v) modify the requirements as to
eligibility for participation in the Plan, or (vi) amend the plan in any respect
which would cause such options to no longer qualify for ISO treatment pursuant
to the Internal Revenue Code. No termination or amendment of the Plan shall,
without the consent of the individual Optionee, adversely affect the rights of
such Optionee under an Option theretofore granted to him or under such
Optionee's Option Agreement.
17. TAXES. The Corporation may make such provisions as it may deem
appropriate for the withholding of any taxes which it determines is required in
connection with any Options granted under the Plan. The Corporation may further
require notification from the Optionees upon any disposition of Stock acquired
pursuant to the exercise of Options granted hereunder.
18. CODE REFERENCES AND DEFINITIONS. Whenever reference is made in this Plan
to a section of the Internal Revenue Code, the reference shall be to said
section as it is now in force or as it may hereafter be amended by any amendment
which is applicable to this Plan. The term "subsidiary" shall have the meaning
given to the term "subsidiary corporation" by Section 425(f) of the Internal
Revenue Code. The term "10% Holder" shall mean any person who, for purposes of
Section 422 of the Internal Revenue Code owns more than 10% of the total
combined voting power of all classes of stock of the employer corporation or of
any subsidiary corporation.
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EXHIBIT C
STOCK OPTION AGREEMENT made as of the th day of October 199 , by and
between CANTEL INDUSTRIES, INC., a Delaware corporation with principal offices
located at 1135 Broad Street, Clifton, New Jersey, 07013 (the "Company"), and
CHARLES M. DIKER, One New York Plaza, New York, New York 10004 (the "Optionee").
The Optionee is presently a director and employee of the Company and is
hereby granted an option to purchase shares of the Company's Common Stock, par
value $.10 per share ("Common Stock"), on the terms and conditions set forth
below.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Company
hereby grants the Optionee the option to acquire shares of the Common Stock of
the Company upon the following terms and conditions:
1. GRANT OF OPTION.
(a) The Company hereby grants to the Optionee the right and option (the
"Option") to purchase up to 50,000 shares of Common Stock (the "Shares"), to
be issued upon the exercise hereof, fully paid and non-assessable, during
the following periods:
(i) 16,667 Shares may be purchased commencing October , 199 (date
of grant);
(ii) an additional 16,667 Shares may be purchased commencing October
, 199 (first anniversary of date of grant);
(iii) and an additional 16,666 Shares may be purchased commencing
October , 199 (second anniversary of date of grant).
(b) The Option granted hereby shall expire and terminate at 5:00 p.m.
local time in New York, New York on October , 200 (tenth anniversary of
date of grant) (the "Expiration Date") at which time the Optionee shall have
no further right to purchase any Shares not then purchased.
2. EXERCISE PRICE. The exercise price of the Option shall be $ per
Share (fair market value on date of grant), and shall be payable in cash or by
certified check; provided, however, that in lieu of payment in full in cash or
by such check, the exercise price (or balance thereof) may be paid in full or in
part by the delivery and transfer to the Company of Common Stock already owned
by the Optionee and having a fair market value (as determined by the Board of
Directors in its absolute discretion) equal to the cash exercise price (or
balance thereof) for the number of Shares as to which the Option is being
exercised. The Company shall pay all original issue or transfer taxes on the
exercise of the Option.
3. EXERCISE OF OPTION. The Optionee shall notify the Company by registered
or certified mail, return receipt requested, addressed to its principal office,
as to the number of Shares which he desires to purchase under the Option, which
notice shall be accompanied by payment of the Option exercise price therefor as
specified in Paragraph 2 above. As soon as practicable after the receipt of such
notice, the Company shall, at its principal office or another mutually
convenient location, tender to the Optionee certificates issued in the
Optionee's name evidencing the Shares purchased by the Optionee hereunder.
4. CONDITIONS OF EXERCISE. The Optionee (or his legal representative
following the death of the Optionee) shall have the right to exercise the Option
only while the Optionee is a director or employee of the Company; provided,
however, the Option may be exercised at any time within three (3) months after
the date the Optionee ceases to be a director or employee, but only to the
extent that it was exercisable upon such date of termination and in no event
after the Expiration Date.
5. NON-ASSIGNABILITY OF OPTION. The Optionee may not give, grant, sell,
exchange, transfer legal title, pledge, assign or otherwise encumber or dispose
of the Option herein granted or any interest therein,
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otherwise than by will or the laws of descent and distribution and, except as
provided in Paragraph 4 hereof, the Option shall be exercisable only by the
Optionee.
6. THE SHARES AS INVESTMENT. By accepting the Option, the Optionee agrees
for himself, his heirs and legatees that any and all Shares purchased upon the
exercise thereof shall be acquired for investment and not for distribution, and
upon the issuance of any or all of the Shares subject to the Option, the
Optionee, or his heirs or legatees receiving such Shares, shall deliver to the
Company a representation in writing that such Shares are being acquired in good
faith for investment and not for distribution. The Company may place a "stop
transfer" order with respect to such Shares with its transfer agent and may
place an appropriate restrictive legend on the certificate(s) evidencing such
Shares.
7. RESTRICTION OF ISSUANCE OF SHARES. The Optionee shall, if so requested by
the Company, represent and agree, in writing and in such form as the Company
shall determine, that any securities purchased by the Optionee upon the exercise
of this Option are being purchased for investment and not with a view to the
distribution thereof, and shall make such other or additional representations
and agreements and furnish such information as the Company may in its reasonable
discretion deem necessary or desirable to assure compliance by the Company, on
terms acceptable to the Company, with provisions of the Securities Act of 1933
and any other applicable legal requirements. If at any time the Company shall
reasonably determine that the listing, registration or qualification of the
Shares subject to this Option upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, are
necessary or desirable in connection with the issuance or purchase of the Shares
subject thereto, this Option may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company. The
Optionee shall have no rights against the Company if this Option is not
exercisable by virtue of the foregoing provision. The certificate representing
any securities issued pursuant to the exercise of this Option may, at the
discretion of the Company, bear a legend in substantially the following form:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933. The securities have been acquired for
investment and may not be pledged or hypothecated and may not be sold or
transferred in the absence of an effective Registration Statement for the
securities under the Securities Act of 1933 or an opinion of counsel to the
Company that registration is not required under said Act. In the event that
a Registration Statement becomes effective covering the securities or
counsel to the Company delivers a written opinion that registration is not
required under said Act, this certificate may be exchanged for a certificate
free from this legend."
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) In the event of changes in the outstanding Shares by reason of stock
dividends, split-ups, recapitalizations, mergers, consolidations, combination,
exchanges of shares, separations, reorganizations, liquidations and the like,
the number and class of Shares or the amount of cash or other assets or
securities available upon the exercise of the Option and the exercise price
thereof shall be correspondingly adjusted by the Company, to the end that the
Optionee's proportionate interest in the Company, 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.
(b) Any adjustment in the number of Shares shall apply proportionately to
only the then unexercised portion of the Option. If fractional Shares would
result from any such adjustment, the adjustment shall be revised to the next
higher whole number.
(c) In case the Company is merged or consolidated with another corporation,
or the property or shares of the Company are acquired by another corporation, or
the Optionee is discharged other than for cause, the exercise schedule set forth
in paragraph 1 above shall be waived and all options for the entire
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50,000 shares of the Company's Common Stock shall be immediately exercisable by
the Optionee pursuant to paragraph 3 above.
For purposes of this paragraph (c), merger or consolidation with another
corporation or acquisition by another corporation shall be defined as the
acquisition by another corporation of more than forty percent (40%) of any of
the then outstanding stock, voting power, or assets of the Company.
9. NO RIGHTS AS SHAREHOLDERS. The Optionee shall have no rights as a
shareholder in respect of the Shares as to which the Option shall not have been
exercised and payment made as herein provided.
10. BINDING EFFECT. Except as herein otherwise expressly provided, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto, their legal representatives and assigns.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey applicable to agreements
made and to be performed wholly within the State of New Jersey.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
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CANTEL INDUSTRIES, INC.
By:
- ------------------------------------------- -------------------------------------------
Charles M. Diker James P. Reilly, President
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EXHIBIT D
RESOLVED, that the first paragraph of Article FOURTH of the Company's
Certificate of Incorporation be amended to read as follows:
"FOURTH: The total number of shares of all classes of stock that the
Corporation shall have authority to issue is Thirteen Million (13,000,000),
of which Twelve Million (12,000,000) shall be shares of Common Stock, par
value $.10 per share, and One Million (1,000,000) shall be shares of
Preferred Stock, par value $1.00 per share, and the voting powers,
designations, preferences and relative, participating, optional or other
special qualifications, limitations or restrictions thereof are as follows:"
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CANTEL INDUSTRIES, INC.
PROXY--FOR THE ANNUAL MEETING OF STOCKHOLDERS--APRIL 27, 1999
The undersigned stockholder of CANTEL INDUSTRIES, INC., revoking any
previous proxy for such stock, hereby appoints James P. Reilly and Darwin C.
Dornbush, or either of them, the attorneys and proxies of the undersigned, with
full power of substitution, and hereby authorizes them to vote all shares of
Common Stock of CANTEL INDUSTRIES, INC. which the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held on April 27, 1999 at 10:00
a.m. at The Harmonie Club, 4 East 60th Street, New York, New York, and any
adjournments thereof on all matters coming before said meeting, or at any
adjournments thereof:
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(1) ELECTION OF DIRECTORS
NOMINEES FOR TERMS EXPIRING AT 2001 ANNUAL MEETING OF STOCKHOLDERS:
Charles M. Diker, Alan J. Hirschfield and Bruce Slovin
FOR ALL NOMINEES / / WITHHOLD AUTHORITY / /
To withhold authority to vote for any individual nominee, write the nominee's name in the space provided above.
(2) TO APPROVE THE 1998 DIRECTORS' STOCK OPTION PLAN.
FOR / / AGAINST
/ / ABSTAIN / /
(3) TO AMEND THE COMPANY'S 1997 EMPLOYEE STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE AND AVAILABLE FOR
GRANT THEREUNDER.
FOR / / AGAINST
/ / ABSTAIN / /
(4) TO APPROVE AND RATIFY THREE STOCK OPTIONS GRANTED TO THE COMPANY'S CHAIRMAN OF THE BOARD.
FOR / / AGAINST
/ / ABSTAIN / /
(5) TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO AUTHORIZE ADDITIONAL SHARES OF THE COMPANY'S COMMON STOCK.
FOR / / AGAINST
/ / ABSTAIN / /
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(6) TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR ENDING JULY 31,
1999.
FOR / / AGAINST
/ / ABSTAIN / /
(7) IN THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
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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, 3, 4, 5 and 6; 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.
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DATED:
SIGNATURE(S)
NOTE: IF SIGNING FOR ESTATES,
TRUSTS OR CORPORATIONS, TITLE OR
CAPACITY SHOULD BE STATED.
IF SHARES ARE HELD JOINTLY,
EACH HOLDER SHOULD SIGN.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
