<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:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
/ / 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:
-----------------------------------------------------------------------
(2) Form, schedule or registration statement No.:
-----------------------------------------------------------------------
(3) Filing party:
-----------------------------------------------------------------------
(4) Date filed:
-----------------------------------------------------------------------
<PAGE>
CANTEL INDUSTRIES, INC.
1135 BROAD STREET
CLIFTON, NEW JERSEY 07013
NOTICE OF 1999 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,
March 28, 2000 at 10:00 a.m., for the following purposes:
1. To elect two (2) directors to serve a term of three (3) years. (Proposal
1)
2. 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 400,000 to 700,000. (Proposal 2)
3. To consider and act upon a proposal to amend the Company's Certificate
of Incorporation to change the name of the Company to Cantel Medical
Corp. (Proposal 3)
4. To transact such other business as may properly be brought before the
Meeting.
Only stockholders of record at the close of business on February 16, 2000
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, 1999 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 Tuesday, March 28, 2000 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 March 6, 2000.
As of February 16, 2000, the record date fixed for the determination of
stockholders entitled to notice of and to vote at the Meeting, there were
4,398,195 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 two management nominees for election as
directors and in favor of the other proposals described herein.
The Board of Directors does not intend to present at the Meeting any matters
other than those set forth in this Proxy Statement, nor does the Board know of
any other matters which may come before the Meeting. However, if any other
matters are properly presented, it is the intention of the persons named in the
enclosed proxy to vote it in accordance with their judgment.
IT IS DESIRABLE THAT AS LARGE A PERCENTAGE AS POSSIBLE OF THE STOCKHOLDERS'
INTERESTS BE REPRESENTED AT THE MEETING. THEREFORE, EVEN IF YOU INTEND TO BE
PRESENT AT THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY
TO ENSURE THAT YOUR STOCK WILL BE REPRESENTED. ANY PROXY GIVEN PURSUANT TO THIS
SOLICITATION MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE AT THE MEETING, BY
DELIVERY TO THE SECRETARY OF THE COMPANY OF A WRITTEN NOTICE OF REVOCATION, BY
SUBMISSION OF A LATER DATED AND PROPERLY EXECUTED PROXY, OR BY VOTING IN PERSON
AT THE MEETING. ATTENDANCE AT THE MEETING WILL NOT, IN AND OF ITSELF, CONSTITUTE
A REVOCATION OF A PROXY.
Only stockholders of record at the close of business on February 16, 2000
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 Proposal 2. The affirmative vote of
a majority of shares of Common Stock outstanding as of the record date is
necessary for the approval of Proposal 3. Votes at the Annual Meeting will be
tabulated by an independent inspector of election appointed by the Company or
the Company's transfer agent.
As the affirmative vote of a plurality of votes cast is required for the
election of directors, abstentions and "broker non-votes" will have no effect on
the outcome of such election. As the affirmative vote of a majority of shares of
Common Stock present in person or represented by proxy is necessary for the
approval of Proposal 2, an abstention will have the same effect as a negative
vote, but "broker non-votes" will have no effect on the outcome of the vote.
Abstentions and "broker non-votes" on Proposal 3 will have the same effect as
negative votes since the affirmative vote of a majority of the outstanding
shares of Common Stock is required to approve Proposal 3.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
GENERAL
Two directors of the Company are to be elected at the Annual Meeting to
serve a three-year term expiring at the 2002 Annual Meeting of Stockholders and
until their respective successors have been duly elected and qualified.
Management has nominated James P. Reilly and Robert L. Barbanell 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 2002 DIRECTOR
ANNUAL MEETING OF STOCKHOLDERS AGE SINCE
- ------------------------------ -------- --------
<S> <C> <C>
James P. Reilly
President and Chief Executive Officer of
the Company............................................... 59 1989
Robert L. Barbanell
President of Robert L. Barbanell Associates, Inc.......... 69 1994
</TABLE>
DIRECTORS WHOSE TERMS OF OFFICE CONTINUE
<TABLE>
<CAPTION>
TERMS EXPIRING AT 2000 DIRECTOR
ANNUAL MEETING OF STOCKHOLDERS AGE SINCE
- ------------------------------ -------- --------
<S> <C> <C>
Darwin C. Dornbush, Esq.
Partner in the law firm of Dornbush Mensch
Mandelstam & Schaeffer, LLP............................... 69 1963
Morris W. Offit
Chief Executive Officer of OFFITBANK...................... 63 1986
John W. Rowe, M.D.
President and Chief Executive Officer of Mount
Sinai-NYU Health.......................................... 55 1998
</TABLE>
<TABLE>
<CAPTION>
TERMS EXPIRING AT 2001 DIRECTOR
ANNUAL MEETING OF STOCKHOLDERS AGE SINCE
- ------------------------------ -------- --------
<S> <C> <C>
Charles M. Diker
Chairman of the Board of the Company and Non-
Managing Principal of Weiss, Peck & Greer................. 65 1985
Alan J. Hirschfield
Vice Chairman of the Board of the Company
Private Investor and Consultant........................... 64 1986
Bruce Slovin
President of McAndrews & Forbes Holdings
Inc. and President of Revlon Group, Inc................... 64 1986
</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, and Chyron Corporation (NYSE), a
supplier of graphics for the television industry.
Mr. Hirschfield has served as Vice Chairman of the Board of the Company
since January 1988. He is currently a private investor and consultant. From July
1992 to February 2000, Mr. Hirschfield served as Co-Chairman and Co-Chief
Executive Officer of Data Broadcasting Corp. (NASDAQ), a communication services
and technology company. Mr. Hirschfield is a director of Data Broadcasting Corp.
as well as Chyron Corporation (NYSE), a supplier of graphics for the television
industry, MarketWatch.com, Inc. (NASDAQ), an Internet financial site, and
Jackpot, Inc. (NYSE), a gaming machine operator.
Mr. Barbanell has served as President of Robert L. Barbanell
Associates, Inc., a financial consulting company, since July 1994.
Mr. Barbanell is also Chairman of the Board and a director of Marine Drilling
Companies, Inc. (NYSE), 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,
which has been general counsel to the Company for more than the past five years.
Mr. Dornbush is also a director of Benihana, Inc. (NASDAQ), a company which
operates Japanese style restaurants.
Mr. Offit has served as Chief Executive Officer of OFFITBANK (a Wachovia
company), 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. He serves as a director of Wachovia Corporation (NYSE), 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 Health since July 1998, President of the Mount Sinai Hospital from
July 1988 to July 1998, and President of the Mount Sinai School of Medicine from
July 1988 to July 1999. He also serves as a Professor of Medicine and of
Geriatrics at the Mount Sinai School of Medicine.
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 Kuala Healthcare, Inc.
(NASDAQ), a home health care services company, Infu-Tech, Inc. (NASDAQ), a home
health care company, and M&F Worldwide Corp. (NYSE), a manufacturer of licorice
extract and flavorings.
COMMITTEES AND MEETINGS
The Company has an Audit Committee of the Board of Directors consisting of
Messrs. Barbanell (Chairman), Offit 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 auditors' report, and to meet with the Company's
financial management and its independent auditors to satisfy itself of the
adequacy of the Company's
3
<PAGE>
internal controls. The Audit Committee held two meetings during fiscal 1999 at
which all members of the committee were present.
The Company has a Compensation Committee of the Board of Directors
consisting of Messrs. Hirschfield (Chairman) and Barbanell. 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 the approval
of an employment agreement with the President of the Company that provided for
an increase in compensation and the grant of a stock option to the President of
the Company. Such recommendation was considered and approved by the Board of
Directors.
The Board of Directors of the Company held four meetings and a special
telephonic meeting during the fiscal year ended July 31, 1999. 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 1999, Directors who were not officers of the Company were paid
a $2,500 annual fee and $1,000 per meeting attended, plus expenses. Under the
1991 Directors' Stock Option Plan, directors who are not officers of the Company
were 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) was granted a non-plan option to purchase 500
shares of Common Stock for each such meeting attended by Mr. Dornbush. In
addition, under the 1991 Directors' Stock Option Plan, all Directors were
automatically granted annual options to purchase 1,000 shares of Common Stock at
the fiscal year-end. Commencing August 1999, Directors who are not employees of
the Company are granted options under the Company's 1998 Directors' Stock Option
Plan described below under "Stock Option Plans."
THE BOARD RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED HEREIN.
PROPOSAL 2
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. In
April 1999, stockholders approved an amendment to the Employee Plan that
increased the number of shares of Common Stock reserved for issuance by 200,000
shares, to 400,000 shares. 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 300,000 shares, to 700,000 shares. Adoption of such amendment
requires stockholder approval. A copy of the Employee Plan, as currently in
effect, is attached hereto as Exhibit A.
Options granted under the Employee Plan are intended to qualify as Incentive
Stock Options ("ISOs") within the meaning of Section 422 of the Code. The
Employee Plan is administered in all respects by the Stock Option Committee. The
Stock Option Committee may determine the employees
4
<PAGE>
to whom options are to be granted and the number of shares subject to each
option. Under the terms of the Employee Plan, all employees of the Company or
subsidiaries of the Company are eligible for option grants. Options under the
Employee Plan are granted to reward past performance by employees, as an
incentive for future performance, and to recruit and retain qualified personnel.
The option exercise price of options granted under the Employee Plan is
fixed by the Stock Option Committee but must be no less than 100% of the fair
market value of the shares of Common Stock subject to the option at the time of
grant, except that in the case of an employee who possesses more than 10% of the
total combined voting power of all classes of stock of the Company (a "10%
Holder"), the exercise price for incentive stock options must be no less than
110% of said fair market value. Options may be exercised by the payment in full
in cash or by tendering shares of Common Stock having a fair market value, as
determined by the Stock Option Committee, equal to the option exercise price.
Options granted under the Employee Plan may not be exercised more than ten years
after the date of grant, five years in the case of an incentive stock option
granted to a 10% Holder.
As of February 16, 2000, options to purchase 239,500 shares were outstanding
under the Employee Plan. No shares were issued pursuant to the exercise of
options granted under the Employee Plan. With the adoption of the proposed
amendment, 460,500 shares would be available for future grants. The number of
shares is subject to adjustment on account of stock splits, stock dividends and
other dilutive changes in the Common Stock. Shares of Common Stock covered by
unexercised stock options that expire, terminate, or are cancelled are available
for option grant under the Employee Plan.
The principal United States federal income tax consequences of the issuance
and exercise of options, and subsequent stock dispositions, are as follows:
Although an individual can receive an unlimited number of ISOs during any
calendar year, the aggregate fair market value (determined at the time of option
grant) of the stock with respect to which ISO's first become exercisable during
any calendar year (under all of the Company's stock option plans) cannot exceed
$100,000. ISO tax treatment is denied by the Code to any options in excess of
such dollar limits. For purposes of computing an optionee's regular tax
liability, an optionee will not realize taxable income for federal income tax
purposes upon the grant or exercise of an ISO and the Company will not be
entitled to a deduction in connection with the grant or the exercise of the
option. For purposes of the alternative minimum tax only, stock acquired
pursuant to the exercise of an ISO will be subject to the rules applicable to
non-ISOs. Thus, in general, the amount by which the fair market value of the
option shares at the time of ISO exercise exceeds the option exercise price (the
"Option Spread") will be an item of tax preference for purposes of the federal
alternative minimum tax and thus the Option Spread may be subject to the
alternative minimum tax unless the shares are disposed of in a non-qualifying
disposition in the year of exercise. If the Optionee is subject to the
alternative minimum tax in the year of the option exercise, the shares purchased
upon the exercise of the ISO will generally have a tax basis equal to their fair
market value at the time of ISO exercise only for purposes of computing gain or
loss on a subsequent disposition of the option shares under the alternative
minimum tax. If instead, the Optionee is not subject to the alternative minimum
tax in the year of the disposition of his option shares, the shares purchased
upon the exercise of an ISO will have a tax basis (for purposes of calculating
gain or loss on such disposition under the regular tax) equal to their ISO
exercise price. Each Optionee should consult his tax advisor as to the
application of the alternative minimum tax to the exercise of ISOs and the
disposition of shares acquired thereby.
Provided that the optionee does not dispose of the shares acquired upon the
exercise of an ISO within two years from the date of grant or within one year
from the date of exercise, the net gain realized on the sale or other taxable
disposition of the shares is subject to tax at capital gains tax rates. If
Common Stock acquired pursuant to the exercise of an ISO is disposed of within
the two year or one year periods mentioned above, any gain realized by the
optionee generally will be taxable at the time of such disposition as
(i) ordinary income to the extent of the difference between the exercise
5
<PAGE>
price and the lesser of (a) the fair market value of the Common Stock on the
date the ISO is exercised, or (b) the amount realized on such disposition, and
(ii) short-term or long-term capital gain to the extent of any excess of the
amount realized on the disposition over the fair market value of the Common
Stock on the date the ISO is exercised. The Company will be entitled to a
deduction equal to the amount of ordinary income recognized by the optionee at
the time such income is recognized. The Company will be required to satisfy any
applicable withholding requirements in order to be entitled to a tax deduction.
If the optionee pays the option exercise price by transferring to the
Company shares of its stock, the optionee will generally not recognize any gain
or loss with respect to the transfer of such shares, and the optionee will have
a tax basis in the shares acquired equal to the amount of cash plus the adjusted
tax basis of any shares transferred by such optionee to the Company. (But see
the discussion above relating to the alternative minimum tax.) However, if the
transferred shares were themselves acquired by the Optionee upon the exercise of
an ISO and the transfer of such shares to the Company occurs within the two-year
period or the one-year period referred to above, the optionee will generally
recognize gain in connection with such transfer to the extent the fair market
value of the transferred shares exceeds the tax basis with respect to such
shares.
State and local income tax consequences may, depending on the jurisdiction,
differ from the federal income tax consequences of the granting and exercise of
an option and any later sale by the Optionee of his option stock. There may also
be, again depending on the jurisdiction, transfer or other taxes imposed in
connection with a disposition, by sale, bequest or otherwise, of options and
option stock. Optionees should consult their personal tax advisors with respect
to the specific state, local and other tax effects on them of option grants,
exercises and stock dispositions.
The Board of Directors is of the opinion that adoption of the amendment to
the Employee Plan 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 3
AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF
THE COMPANY TO CHANGE THE COMPANY'S NAME
The Board of Directors has unanimously approved the change of the company's
name from Cantel Industries, Inc. to Cantel Medical Corp. Management believes
that this name more accurately describes the Company's business as well as its
future strategic focus. In particular, the Company is concentrating its
resources on diagnostic and therapeutic endoscopy, infection prevention and
infection control products and services, and medical equipment maintenance
services, and in developing a range of imaging based products and services.
The name change will be effected through an amendment to the Company's
Certificate of Incorporation. If the amendment is approved, Article FIRST of the
Certificate of Incorporation will be amended to read as follows: "FIRST: The
name of the Corporation is Cantel Medical Corp."
THE BOARD RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION TO EFFECT THE PROPOSED NAME CHANGE.
6
<PAGE>
OWNERSHIP OF SECURITIES
The following table sets forth stock ownership information as of
February 16, 2000 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
NAME AND ADDRESS BENEFICIAL PERCENTAGE
OF BENEFICIAL OWNERS POSITION WITH THE COMPANY OWNERSHIP (1) OF CLASS
- -------------------- --------------------------------- ------------- ----------
<S> <C> <C> <C>
Charles M. Diker................. Chairman of the Board and 969,967(2) 21.4%
One New York Plaza Director
New York, New York
Alan J. Hirschfield.............. Vice Chairman of the Board and 224,833(3) 5.1%
P.O. Box 7443 Director
Jackson, Wyoming
Robert L. Barbanell.............. Director 46,269(4) 1.0%
Darwin C. Dornbush, Esq.......... Secretary and Director 26,180(5) .6%
Morris W. Offit.................. Director 57,000(6) 1.3%
James P. Reilly.................. President and CEO and Director 186,073(7) 4.1%
1135 Broad Street
Clifton, New Jersey
John W. Rowe, M.D................ Director 15,834(8) .4%
Bruce Slovin..................... Director 179,000(9) 4.0%
Craig A. Sheldon................. Vice President and Controller 14,525(10) .3%
William J. Vella................. President and Chief Operating 45,003(11) 1.0%
All officers and directors as a Officer of Carsen Group Inc. 1,764,684(12) 36.8%
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 February 16, 2000 upon the
exercise of options. Each beneficial owner's percentage ownership is
determined by assuming that options that are held by such person (but not
those held by any other person) and which are exercisable within 60 days
from February 16, 2000 have been exercised.
(2) Includes 142,834 shares which Mr. Diker may acquire pursuant to stock
options. Does not include an aggregate of 577,590 shares owned by
(i) Mr. Diker's wife, (ii) certain trusts for the benefit of Mr. Diker's
children, (iii) certain accounts with Weiss, Peck and Greer, an investment
firm of which Mr. Diker is a non-managing principal, over which accounts
Mr. Diker exercises investment discretion, (iv) the DicoGroup, Inc., a
corporation of which Mr. Diker serves as Chairman of the Board, and (v) a
non-profit corporation of which Mr. Diker and his wife are the principal
officers and directors. Mr. Diker disclaims beneficial ownership as to all
of the foregoing shares.
7
<PAGE>
(3) Includes 28,500 shares which Mr. Hirschfield may acquire pursuant to stock
options.
(4) Includes 15,500 shares which Mr. Barbanell may acquire pursuant to stock
options. Does not include 2,500 shares owned by Mr. Barbanell's wife as to
which Mr. Barbanell disclaims beneficial ownership.
(5) Includes 16,500 shares which Mr. Dornbush may acquire pursuant to stock
options.
(6) Includes 25,000 shares which Mr. Offit may acquire pursuant to stock
options.
(7) Includes 89,832 shares which Mr. Reilly may acquire pursuant to stock
options. Does not include 69,907 shares owned by Mr. Reilly's wife as to
which Mr. Reilly disclaims beneficial ownership.
(8) Includes 15,834 shares which Dr. Rowe may acquire pursuant to stock options.
(9) Includes 29,000 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 12,750 shares which Mr. Sheldon may acquire pursuant to stock
options.
(11) Includes 27,000 shares which Mr. Vella may acquire pursuant to stock
options.
(12) Includes 402,750 shares which may be acquired pursuant to stock options.
8
<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 annual executive compensation. The Committee is currently comprised of
two members, Alan J. Hirschfield and Robert L. Barbanell, both of whom are
non-employee directors.
Executive compensation for the fiscal year ended July 31, 1999 consisted of
base salary plus an incentive bonus when earned. The policy of the Committee, in
consultation with the Chairman and the Chief Executive Officer, is to provide
compensation to the Chairman, the President and Chief Executive Officer and the
Company's other executive officers reflecting the contribution of such
executives to the Company's growth in sales and earnings, the implementation of
strategic plans consistent with the Company's long-term objectives, and the
enhancement of stockholder value.
Mr. Reilly, the President and Chief Executive Officer of the Company, serves
the Company pursuant to a four-year employment agreement effective as of
August 1, 1998 and is compensated pursuant to the express terms of such
agreement.
Long-term incentive compensation policy consists exclusively of the award of
stock options under the Company's 1991 Employee Plan and 1997 Employee Plan and,
in the case of officers who serve as directors of the Company, non-discretionary
annual option grants of 1,000 shares under the Company's 1991 Directors' Stock
Option Plan and 1998 Directors' Stock Option Plan.
The Stock Option Committee under the 1991 Employee Plan and the 1997
Employee Plan is responsible for the award of stock options. Two non-employee
directors, Alan J. Hirschfield and Robert L. Barbanell, currently serve on the
Stock Option Committee, which administers the 1991 Employee Plan and the 1997
Employee Plan.
COMPENSATION COMMITTEE:
Alan J. Hirschfield (Chairman)
Robert L. Barbanell
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
No officer of the Company served on the Company's Compensation Committee
during its last fiscal year. James P. Reilly, the President and Chief Executive
Officer of the Company, however, participated in deliberations concerning
executive compensation, except with respect to the compensation of the Chairman
of the Board and himself.
9
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Company's Common Stock for the last five fiscal years with the cumulative total
return on the Nasdaq Stock Market/U.S. Index and the Nasdaq Non-Financial Index
over the same period (assuming the investment of $100 in the Company's Common
Stock, the Nasdaq Stock Market/U.S. and the Nasdaq Non-Financial Index on
July 31, 1994, and, where applicable, 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
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
<S> <C> <C> <C> <C> <C> <C>
Jul-94 Jul-95 Jul-96 Jul-97 Jul-98 Jul-99
CANTEL INDUSTRIES, INC. 100 121 143 116 184 112
NASDAQ STOCK MARKET (U.S.) 100 140 153 226 266 380
NASDAQ NON-FINANCIAL 100 144 153 222 258 381
</TABLE>
* $100 INVESTED ON 7/31/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JULY 31.
10
<PAGE>
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the fiscal years ended July 31, 1999,
1998, and 1997, compensation, including salary, bonuses, stock options and
certain other compensation, paid by the Company to the Chief Executive Officer
and to the other executive officers of the Company who received more than
$100,000 in salary and bonus during the fiscal year ended July 31, 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION (1) AWARDS (2)
------------------- ------------
NAME AND SALARY BONUS OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) (#) COMPENSATION(3) ($)
- ------------------ -------- -------- -------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Charles M. Diker....................... 1999 150,000 0 51,000 4,500
Chairman of the Company 1998 125,000 0 51,000 4,038
1997 100,000 0 51,000 577
James P. Reilly........................ 1999 275,000 98,494 101,000 4,800
President and Chief Executive Officer 1998 250,000 39,225 1,000 4,800
of the Company 1997 250,000 12,600 1,000 1,099
Craig A. Sheldon....................... 1999 109,000 18,000 6,000 3,952
Vice President and Controller of the 1998 97,500 15,000 5,000 3,499
Company 1997 88,125 10,000 5,000 756
William J. Vella (4)................... 1999 144,997 69,668 10,000 2,498
President and Chief Operating Officer 1998 133,447 16,500 10,000 1,896
of Carsen Group Inc. 1997 122,060 10,150 6,000 1,764
</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) Includes annual registrant contributions to defined contribution plans of
the Company, including a 401(k) savings and retirement plan, and a Canadian
profit sharing plan.
(4) Mr. Vella was paid his salary and bonus in Canadian dollars. The dollar
amounts above have been translated from Canadian dollars to U.S. dollars
based upon an average exchange rate during the respective fiscal years.
EMPLOYMENT AGREEMENTS
In March 1999, the Company entered into a four 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 a cost of
living formula, (ii) annual incentive compensation equal to 6% of the increase
in the current fiscal year's pre-tax income over the highest pre-tax income of
any prior fiscal year commencing July 31, 1998, subject to adjustment for
specified events, (iii) bonuses of $65,000 payable upon each of
11
<PAGE>
the execution of the Employment Agreement, August 1, 1999 and August 1, 2000,
(iv) participation in employee health, insurance and other benefit plans,
(v) maintenance by the Company of a life insurance policy on the life of
Mr. Reilly in the face amount of $500,000 payable to his designated beneficiary,
and (vi) use of a Company owned or leased automobile. In addition, Mr. Reilly
was granted a stock option under the Company's 1997 Employee Stock Option Plan
to purchase 100,000 shares of Common Stock at an exercise price equal to $6.00
(the fair market value of the shares on the date of grant) and having a ten year
term. The Employment Agreement provides that if Mr. Reilly's employment is
terminated for any reason, including voluntary termination, death, disability or
cause, prior to August 1, 2000, he will be entitled to a severance payment of
$65,000. If the Employment 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 was prior to August 1, 1999, severance would have been 2.5
times such average compensation. After August 1, 1999 such amount is reduced by
2.5% per month, but not below the Severance Amount described above. The
Employment 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.
On May 19, 1999, MediVators, Inc., a wholly-owned subsidiary of the Company
("MediVators"), entered into an employment agreement with Roy K. Malkin that
expires on July 31, 2002. Mr. Malkin's employment provides for (i) for annual
base salary of $175,000, subject to annual increases equal to the greater of 5%
or a cost of living formula, (ii) annual incentive compensation commencing
July 31, 2000, equal to 5% of the increase in MediVators' current fiscal year's
pre-tax income over MediVators' highest pre-tax income of any prior fiscal year,
(iii) participation in employee health, insurance and other benefit plans,
(iv) maintenance by MediVators of a life insurance policy on the life of
Mr. Malkin in the face amount of $250,000 payable to his designated beneficiary,
(v) use of a Company owned or leased automobile and (vi) the Company to grant
Mr. Malkin an option to purchase 50,000 shares of Common Stock under the 1997
Employee Stock Option Plan at an exercise price equal to $5.25 (the fair market
value of the shares on the date of grant). Since Mr. Malkin was employed for
only a portion of fiscal 1999, he is not included in the Compensation Table
above.
STOCK OPTIONS
The following stock option information is furnished for the fiscal year
ended July 31, 1999 with respect to the Company's Chief Executive Officer and
the other executive officers of the Company named in the Compensation Table
above, for stock options granted during such fiscal year. Stock options were
granted without tandem stock appreciation rights.
12
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SHARES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM($)(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) 19.5 7.75 10/29/08 631,197 1,005,075
1,000(3) 0.4 5.3125 07/30/09 8,654 13,779
James P. Reilly.................. 100,000(3) 39.1 6.00 03/28/09 977,337 1,556,245
1,000(4) 0.4 5.3125 07/30/09 8,654 13,779
Craig A. Sheldon................. 6,000(5) 2.3 6.50 02/24/04 49,775 62,810
William J. Vella................. 10,000(5) 3.9 6.50 02/24/04 82,958 104,683
</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 the option is the market value per share on the date of grant.
(3) This option was granted under the Company's 1997 Employee Stock Option Plan.
The exercise price per share of the option is the market value per share on
the date of grant. The option is subject to vesting as follows: 16,666
shares each in six equal annual installments, the first on the date of
grant, and the remaining four shares on 01/01/05. In the event Mr. Reilly's
employment is terminated prior to the full vesting of the option, the
Company will grant Mr. Reilly an additional option, exercisable for three
months following such termination at $6.00 per share, to purchase a number
of shares equal to the number of "unvested shares."
(4) These options were granted under the Company's 1991 Directors' Stock Option
Plan. The exercise price per share of the options is the market value per
share on the date of grant. The options are subject to vesting as follows:
50% of the total shares covered by the options vest on the first anniversary
of the date of grant and the remaining 50% vest on the second anniversary of
such date of grant.
(5) These options were granted under the Company's 1997 Employee Stock Option
Plan. The exercise price per share of the options is the market value per
share on the date of grant. The options are subject to vesting as follows:
25% of the total shares covered by the options vest on each of the first
four anniversaries of the date of the grant.
OPTION EXERCISE AND HOLDINGS
The following information is furnished for the fiscal year ended July 31,
1999 with respect to the Company's Chief Executive Officer and the other
executive officers of the Company named in the Compensation Table above, for
stock option exercises during such fiscal year.
13
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES OPTIONS AT 7/31/99 MONEY OPTIONS AT 7/31/99 ($)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE
- ---- ----------- ----------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Diker........... 0 0 109,501 51,499 13,875 0
James P. Reilly............ 139,815 489,353 73,166 84,834 177,313 0
Craig A. Sheldon........... 0 0 22,500 13,500 15,938 0
William J. Vella........... 5,000 12,500 18,750 24,250 2,125 0
</TABLE>
STOCK OPTION PLANS
An aggregate of 250,000 shares of Common Stock were reserved for issuance or
available for grant under the Company's 1991 Employee Stock Option Plan (the
"1991 Employee Plan"). At July 31, 1999, options to purchase 122,834 shares of
Common Stock at prices between $4.25 and $8.75 per share (the fair market value
of the shares of Common Stock on the date of grant) were outstanding under the
1991 Employee Plan. All options outstanding at July 31, 1999 have a term of five
years and are intended to qualify as incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Options may be exercised 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 equal to the option exercise price. No
additional options will be granted under the 1991 Employee Plan.
An aggregate of 400,000 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 300,000
shares, to a total of 700,000 shares. See "Proposal 2--Approval of Amendment to
the 1997 Employee Stock Option Plan." Options granted under the 1997 Employee
Plan are intended to qualify as incentive stock options within the meaning of
Section 422 of the Code. The 1997 Employee Plan is administered in all respects
by the Stock Option Committee. The Stock Option Committee may determine the
employees to whom options are to be granted and the number of shares subject to
each option. Under the terms of the 1997 Employee Plan, all employees of the
Company or subsidiaries of the Company are eligible for option grants. The
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 option granted to a 10% Holder. All options outstanding at
July 31, 1999 have a term of five years, except for 100,000 options granted to
Mr. Reilly under the terms of his employment agreement, which have a term of ten
years. At July 31, 1999, options to purchase 236,500 shares of Common Stock at
prices between $5.25 and $8.75 per share were outstanding under the 1997
Employee Plan, and 163,500 shares were available for grant under the 1997
Employee Plan.
An aggregate of 200,000 shares of Common Stock were 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
14
<PAGE>
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 was granted automatically on
the last business day of each fiscal quarter to each director (exclusive of
Messrs. Diker, Reilly and Dornbush) provided that the director attended any
regularly scheduled meeting of the Board, if any, held during such quarter. Each
such option grant is at an exercise price equal to the fair market value of the
Common Stock on the date of grant and has a ten year term. Mr. Dornbush, who is
both an officer and director of the Company (and who thereby does not receive
said quarterly option grant), was granted a non-plan option to purchase 500
shares of Common Stock on the last business day of each fiscal quarter provided
that Mr. Dornbush attended any regularly scheduled meeting of the Board, if any,
held during such quarter. The fiscal year options are exercisable in two equal
annual installments commencing on the first anniversary of the grant thereof and
the quarterly options, including the non-plan options issued to Mr. Dornbush,
are exercisable in full immediately. At July 31, 1999, options to purchase
133,500 shares of Common Stock at prices between $2.00 and $10.25 per share were
outstanding under the 1991 Directors' Plan, and 16,500 shares were available for
grant under the 1991 Directors' Plan. In addition, at July 31, 1999,
Mr. Dornbush had non-plan options to purchase an aggregate of 6,000 shares of
Common Stock at prices between $5.3125 and $8.75 per share. No additional
options will be granted under the 1991 Directors' Plan and no additional
quarterly non-plan options will be granted to Mr. Dornbush.
An aggregate of 200,000 shares of Common Stock is reserved for issuance or
available for grant under the Company's 1998 Directors' Stock Option Plan (the
"1998 Directors' Plan"). Options granted under the 1998 Directors' Plan do not
qualify as incentive stock options within the meaning of Section 422 of the
Code. The 1998 Directors' Plan provides for the automatic grant to each of the
Company's directors of options to purchase 1,000 shares of Common Stock on the
last business day of the Company's fiscal year. In addition, an option to
purchase 500 shares of Common Stock is granted automatically on the last
business day of each fiscal quarter to each director (exclusive of
Messrs. Diker and Reilly and any other director who is a full-time employee of
the Company) provided that the director attended any regularly scheduled meeting
of the Board, if any, held during such quarter. Each such option grant is at an
exercise price equal to the fair market value of the Common Stock on the date of
grant and has a ten year term. The fiscal year options are exercisable in two
equal annual installments commencing on the first anniversary of the grant
thereof and the quarterly options are exercisable in full immediately. At
July 31, 1999 there were no options to purchase shares of Common Stock
outstanding under the 1998 Directors' Plan, and 200,000 shares were available
for grant under the 1998 Directors' Plan.
The Company also has outstanding options granted by MediVators prior to the
MediVators merger under the MediVators 1991 Stock Option Plan (the "MediVators
Plan") which became fully exercisable as a result of the MediVators merger. At
July 31, 1999, options to purchase 9,321 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 July 1990, Mr. Reilly was granted a ten year non-plan option to purchase
50,000 shares of Common Stock at an exercise price of $1.875 per share. This
option is exercisable in full and expires in July 2000.
In December 1994, Mr. Barbanell was granted a five year non-plan option to
purchase 25,000 shares of Common Stock at an exercisable price of $3.75 per
share. The option was exercised in full in December 1999.
In October 1996, Mr. Diker was granted a ten year non-plan option to
purchase 50,000 shares of Common Stock at an exercise price of $7.375 per share.
This option is exercisable in full. In October 1997, Mr. Diker was granted a ten
year non-plan option to purchase 50,000 shares of Common
15
<PAGE>
Stock at an exercise price of $7.00 per share. This option is exercisable in
full. In October 1998, Mr. Diker was granted a ten-year non-plan option to
purchase 50,000 shares of Common Stock at an exercise price of $7.75 per share.
This option is exercisable in three equal annual installments beginning
October 1998.
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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in their ownership to the
Securities and Exchange Commission ("SEC"). Specific due dates have been
established by the SEC, and the Company is required to disclose in this Report
any failure to file by those dates. Based upon (i) those copies of
Section 16(a) reports that the Company received from such persons for their 1999
fiscal year transactions and (ii) the written representations received from one
or more of such persons that no annual Form 5 reports were required to be filed
for them for the 1999 fiscal year, the Company believes that there has been
compliance with all Section 16(a) filing requirements applicable to such
officers, directors and ten-percent beneficial owners for such fiscal year,
except for the following: (i) a single transaction (purchase of shares) of
Charlie M. Diker was not included in a report filed for the month that such
transaction occurred, but was included in the following month's report; (ii) a
report of a single transaction (purchase of shares) of Bruce Slovin was filed
late; and (iii) a report of a single transaction (exercise of an option by
delivery of shares) of William J. Vella was filed late.
STOCKHOLDER PROPOSALS FOR 2000 PROXY STATEMENT
Stockholder proposals that are intended to be presented at the Company's
2000 Annual Meeting of Stockholders must be received by the Company no later
than October 20, 2000 in order to be included in the proxy statement and related
materials.
FORM 10-K
UPON THE WRITTEN REQUEST OF A RECORD HOLDER OR BENEFICIAL OWNER OF COMMON
STOCK ENTITLED TO VOTE AT THE MEETING, THE COMPANY WILL PROVIDE WITHOUT CHARGE A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31, 1999,
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
16
<PAGE>
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
March 6, 2000
17
<PAGE>
Exhibit A
1997 EMPLOYEE STOCK OPTION PLAN
OF
CANTEL INDUSTRIES, INC.
(As adopted by the Board of Directors as of October 16, 1997
and amended on April 27, 1999)
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 400,000. 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
A-1
<PAGE>
less than 110% in the case of an ISO granted to an individual who, at the time
the Option is granted, is a 10% Holder (as hereinafter defined). The fair market
value of shares of Stock shall be determined by the Board and shall be (i) the
closing price of the Stock on the date of the granting of the Option as reported
by NASDAQ or any quotation reporting organizations, or (ii) if the Stock did not
trade on such date, the mean between the high bid and low asked prices.
8. TERM OF OPTIONS. The term of each Option granted under this Plan shall
be for a maximum of ten years from the date of granting thereof, and a maximum
of five years in the case of an ISO granted to a 10% Holder, but may be for a
lesser period or be subject to earlier termination as hereinafter provided.
9. EXERCISE OF OPTIONS. An Option may be exercised from time to time as to
any part or all of the Stock to which the Optionee shall then be entitled,
provided, however, that an Option may not be exercised (a) as to less than 100
shares at any time (or for the remaining shares then purchasable under the
Option, if less than 100 shares), (b) prior to the expiration of at least six
months from the date of grant except in case of the death or disability of the
Optionee and (c) unless the Optionee shall have been in the continuous employ of
the Corporation or its subsidiaries from the date of the granting of the Option
to the date of its exercise, except as provided in Paragraphs 12 and 13. The
Exercise Price shall be paid in full at the time of the exercise of an Option
(i) in cash or (ii) by the transfer to the Corporation of shares of its Stock
with a fair market value (as determined by the Committee) equal to the purchase
price of the Stock issuable upon exercise of such Option. The holder of an
Option shall not have any rights as a stockholder with respect to the Stock
issuable upon exercise of an Option until certificates for such Stock shall have
been delivered to him after the exercise of the Option.
10. NON-TRANSFERABILITY OF OPTIONS. Except as provided in the following
sentence, an Option shall not be transferable otherwise than by will or the laws
of descent and distribution and is exercisable during the lifetime of the
employee only by him or his guardian or legal representative. The Committee
shall have discretionary authority to grant Options which will be transferable
to members of an Optionee's immediate family, including trusts for the benefit
of such family members and partnerships in which such family members are the
only partners. A transferred Option would be subject to all of the same terms
and conditions as if such Option had not been transferred.
11. FORM OF OPTION. Each Option granted pursuant to the Plan shall be
evidenced by an agreement (the "Option Agreement") which shall clearly identify
the status of the Options granted thereunder (i.e., an ISO) and which shall be
in such form as the Committee shall from time to time approve. The Option
Agreement shall comply in all respects with the terms and conditions of the Plan
and may contain such additional provisions, including, without limitation,
restrictions upon the exercise of the Option, as the Committee shall deem
advisable.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of an
Optionee shall be terminated (otherwise by reason of death), such Option shall
be exercisable (to the extent that such Option was exercisable at the time of
termination of his employment) at any time prior to the expiration of a period
of time not exceeding three months after such termination, but not more than ten
years (five years in the case of an ISO granted to a 10% Holder) after the date
on which such Option shall have been granted. Nothing in the Plan or in the
Option Agreement shall confer upon an Optionee any right to be continued as an
employee of the Corporation or its subsidiaries or interfere in any way with the
right of the Corporation or any subsidiary to terminate or otherwise modify the
terms of an Optionee's employment, provided, however, that a change in an
Optionee's duties or position shall not affect such Optionee's Option so long as
such Optionee is still an employee of the Corporation or one of its
subsidiaries.
13. DEATH OF OPTIONEE. In the event of the death of an Optionee, any
unexercised portion of such Optionee's Option shall be exercisable (to the
extent that such Option was exercisable at the time of his death) at any time
prior to the expiration of a period not exceeding three months after his death
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<PAGE>
but not more than ten years (five years in the case of an ISO granted to a 10%
Holder) after the date on which such Option shall have been granted and only by
such person or persons to whom such deceased Optionee's rights shall pass under
such Optionee's will or by the laws of descent and distribution.
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in
the outstanding Stock of the Corporation by reason of stock dividends, splitups,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations or liquidations, the number and class of shares or
the amount of cash or other assets or securities available upon the exercise of
any Option granted hereunder and the maximum number of shares as to which
Options may be granted to an employee shall be correspondingly adjusted, to the
end that the Optionee's proportionate interest in the Corporation, any successor
thereto or in the cash, assets or other securities into which shares are
converted or exchanged shall be maintained to the same extent, as near as may be
practicable, as immediately before the occurrence of any such event. All
references in this Plan to "Stock" from and after the occurrence of such event
shall be deemed for all purposes of this Plan to refer to such other class of
shares or securities issuable upon the exercise of Options granted pursuant
hereto.
15. STOCKHOLDER AND STOCK EXCHANGE APPROVAL. This Plan is subject to and no
Options shall be exercisable hereunder until after the approval by the holders
of a majority of the Stock of the Corporation voting at a duly held meeting of
the stockholders of the Corporation within twelve months after the date of the
adoption of the Plan by the Board.
16. AMENDMENT OF THE PLAN. The Board shall have complete power and
authority to modify or amend the Plan (including the form of Option Agreement)
from time to time in such respects as it shall deem advisable; provided,
however, that the Board shall not, without the approval of the votes represented
by a majority of the outstanding Stock of the Corporation present or represented
at a meeting duly held in accordance with the applicable laws of the
Corporation's jurisdiction of incorporation 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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<PAGE>
CANTEL INDUSTRIES, INC.
PROXY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned stockholder of CANTEL
INDUSTRIES, INC. (the "Company") hereby appoints Charles M. Diker and James P.
Reilly, and each them, as proxies, with full power of substitution, to vote, as
designated below, on behalf of the undersigned the number of votes to which the
undersigned is entitled, at the Annual Meeting of Stockholders of CANTEL
INDUSTRIES, INC., to be held on Tuesday, March 28, 2000 at 10:00 a.m. at The
Harmonie Club, 4 East 60th Street, New York, New York, or at any adjournments
thereof:
(1) ELECTION OF DIRECTORS
NOMINEES FOR TERMS EXPIRING AT 2002 ANNUAL MEETING OF STOCKHOLDERS:
JAMES P. REILLY and ROBERT L. BARBANELL
FOR ALL NOMINEES / / WITHHOLD AUTHORITY / /
To withhold authority to vote for any individual nominee, write the
nominee's name in the space provided below.
___________________________
(2) TO APPROVE AN AMENDMENT TO THE COMPANY'S 1997 EMPLOYEE STOCK OPTION PLAN TO
INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE AND AVAILABLE FOR GRANT.
FOR / / AGAINST / / ABSTAIN / /
(3) TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
CHANGE THE NAME OF COMPANY TO CANTEL MEDICAL CORP.
FOR / / AGAINST / / ABSTAIN / /
(4) IN THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Unless a contrary direction is indicated, the shares represented by this
proxy will be voted for all nominees for directors named in the proxy statement
enclosed herewith and for Proposals 2 and 3; if specific instructions are
indicated, this proxy will be voted in accordance with such instructions.
<PAGE>
PLEASE VOTE, DATE AND SIGN THIS PROXY AND RETURN IT AT ONCE, WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING. YOU MAY VOTE IN PERSON IF YOU DO ATTEND.
Dated: ____________________________
___________________________________
___________________________________
Signature(s)
NOTE: If signing for estates,
trusts or corporations, title or
capacity should be stated. If
shares are held jointly, each
holder should sign.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
