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Exhibit 10(b)
STOCK OPTION AGREEMENT made as of the 14th day of November, 2002, by and
between CANTEL MEDICAL CORP., a Delaware corporation with principal offices
located at 150 Clove Road, 9th Floor, Little Falls, New Jersey 07424 (the
"Company"), and SETH R. SEGEL (the "Optionee").
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The Company has entered into an Employment Agreement dated November 14,
2002 (the "Employment Agreement") with the Optionee in which the Company has
agreed to grant a stock option to Optionee. This Option is being granted as a
material inducement to Optionee in becoming an employee of the Company. The
Company is desirous of increasing the incentive of the Optionee to exert his
utmost efforts to improve the business and increase the assets of the Company.
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, par value $.10
per share, of the Company (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 hereunder commencing
November 17, 2003;
(ii) an additional 16,667 Shares may be purchased commencing
November 17, 2004;
(iii) an additional 16,666 Shares may be purchased commencing
November 17, 2005.
(b) The Option granted hereby shall expire and terminate at 5:00 p.m.
local time in New York, New York on November 17, 2007 (the "Expiration Date") at
which time the Optionee shall have no further right to purchase any Shares not
then purchased.
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(c) Notwithstanding paragraph (a) above, in the event of a "Change in
Control" (as defined in Section 4.4 of the Employment Agreement) prior to the
Option becoming exercisable in its entirety, the Option shall automatically vest
in full and thereafter become exercisable for all of the Shares hereunder
(subject to the other terms of this Agreement).
2. EXERCISE PRICE. The exercise price of the Option shall be $10.59 per
Share, 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 Shares that have been continuously owned by the Optionee for at
least one year immediately preceding such transfer 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.
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.
(a) The Optionee shall have the right to exercise the Option only
while he shall be in the full-time employ of the Company or any of its
subsidiaries, except that if the Optionee's employment shall be terminated for
any reason other than his death (to which paragraph (b) below shall apply), the
Option may be exercised at any time within three (3) months after the date of
termination, but only for the number of Shares for which the Option was
exercisable pursuant to Section 1(a) on the date of termination.
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(b) If the Optionee shall die while in the employ of the Company or
any of its subsidiaries, this Option may be exercised, to the extent set forth
in the table in Section 1 based on the date of the Optionee's death, by his
executor, administrator or other person at the time entitled by law to his
rights under this Option, at any time within one year after such date of death,
but 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, 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 ON 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
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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,
combinations, 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.
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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. EFFECT UPON EMPLOYMENT. This Agreement does not give nor shall it be
construed as giving the Optionee any right to continued employment by the
Company or any of its subsidiaries.
11. 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.
12. 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.
CANTEL MEDICAL CORP.
By: /s/ James P. Reilly
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James P. Reilly, President
/s/ Seth R. Segel
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Seth R. Segel