Exhibit 10.2

 

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CANTEL MEDICAL CORP.

 

ANNUAL INCENTIVE COMPENSATION PLAN

 

PERSONAL AND CONFIDENTIAL

 

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Purpose and Objectives

 

The purpose of the Incentive Compensation Plan (Plan) is to contribute to the
motivation of key employees in accomplishing the Company’s goals.  The
objectives of the Plan are as follows:

 

·                  Clearly communicate and reinforce strategic, operational and
financial objectives.

 

·                  Provide a competitive incentive for achievement of corporate
and divisional goals on both an individual and team basis.

 

·                  Establish an objective basis for determining annual awards.

 

Plan Definitions

 

Certain words or phrases used in this plan document are defined as follows:

 

·                  Award — An annual incentive compensation award.

 

·                  Base Salary — Base salary as of July 31st of the Plan Year
(or a participant’s last day of employment with the Company if prior to
July 31st), disregarding any reduction in the rate of base salary during the
six-month period immediately preceding such date.

 

·                  Company — Cantel Medical Corp.

 

·                  Compensation Committee — a subgroup of the Company’s Board of
Directors responsible for the following functions: (1) discharging the Board’s
responsibilities relating to compensation of executive officers; (2) producing
an annual report on executive compensation for inclusion in the proxy statement;
and (3) design, maintenance and administration of the Company’s incentive plans.

 

·                  Plan Year — The period from August 1st — July 31st (fiscal
year of Company).  The initial Plan Year is the fiscal year ending July 31,
2010.

 

·                  Target Award — An incentive compensation award to be earned
by a participant based on achieving pre-determined financial objectives and
other performance objectives during the Plan Year that represents payment at
100%.

 

Eligibility

 

All executive officers of the Company, the CEOs of the Company’s Minntech
Corporation, Mar Cor Purification, Inc. and Crosstex International, Inc.
subsidiaries and other direct reports to the CEO of the Company and key
employees who are approved by the Compensation Committee are eligible for Awards
under this Plan.  New hires/promotions are eligible for a pro-rated Award.
Participation will be based on a position’s level and ability to influence the
long term performance of the Company.  Participants are identified by title and
recommended by the CEO of Cantel Medical Corp., subject to the approval of the
Compensation Committee.

 

Administration

 

The Compensation Committee has ultimate authority over the Plan, is responsible
for approving the Plan and may alter any provision of the Plan or terminate the
Plan at any time subject to the terms of the Plan herein. The Compensation
Committee will directly administer the Plan with respect to all participants. 
Specific responsibilities of the Committee include:

 

·                  Approving the performance objectives, targets and ranges

 

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·                  Determining incentive compensation award percentages

 

·                  Approving incentive compensation awards

 

The CEO of the Company will make recommendations to the Compensation Committee
and resolve questions regarding the interpretation of the Plan.

 

Prior to the commencement of each new Plan Year or within seventy-five (75) days
thereafter, the Compensation Committee shall approve and adopt specific
performance targets and target award levels for Plan participants for such Year,
which shall be based on the attainment of specified levels of one or any
combination of the following: revenues, cost reductions, operating income,
income before taxes, net income, adjusted net income, earnings per share,
adjusted earnings per share, operating margins, working capital measures, return
on assets, return on equity, return on invested capital, cash flow measures,
market share, shareholder return or economic value added of the Company or the
subsidiary or division of the Company for or within which the participant is
primarily employed. Such performance goals also may be based on the achievement
of specified levels of Company performance (or performance of an applicable
subsidiary) under one or more of the measures described above relative to the
performance of other corporations.

 

Target Award Levels

 

The target incentive awards for each eligible position (by category) are
expressed as a percentage of Base Salary as follows:

 

ELIGIBLE POSITION

 

TARGET INCENTIVE AWARD

CEO/President

 

70% – 100%

COO, Division CEO, Executive Vice President, Senior Vice Presidents

 

45% – 65%

Vice Presidents

 

40% – 55%

Other Key Employees

 

10% – 35%

 

Notwithstanding the foregoing, Division CEOs will have 25% of their Bonus Target
based on the annual Performance Target established for executives of Cantel
Medical Corp.  The remaining 75% will be based on the annual performance target
specific to the operations of such CEO’s division(s), which shall be established
by the CEO of the Company in consultation with the Compensation Committee.

 

Awards will be determined as follows:

 

 

 

COMPANY-WIDE
EARNINGS

 

DIVISION EARNINGS
OR OTHER TARGET

 

CORPORATE EXECUTIVES

 

100

%

—

 

DIVISION CEOs

 

25

%

75

%

 

Payout Ranges

 

Payout ranges are based upon levels of achievement of the targets and are
expressed as a percentage of the Target Award as follows:

 

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MINIMUM

 

TARGET MET

 

MAXIMUM

 

Financial Objective

 

50

%

100

%

200

%

 

Determination of Awards

 

To maintain a focus on increasing shareholder value and driving superior
financial performance, awards under this Plan will be based on the achievement
of targets relating to the Company’s earnings, as measured by earnings per share
or on such other performance criteria as may be established by the Compensation
Committee for each Plan Year as described above under the heading
“Administration”. Notwithstanding the specific performance criteria established,
in making a determination as to whether or not such criteria was satisfied and
the extent to which a bonus should be awarded, the Compensation Committee shall
take into consideration factors such as unanticipated taxes, acquisition costs,
non-recurring and extraordinary items, and other equitable factors, as
determined by the Compensation Committee in its discretion.

 

Distribution of Awards

 

Awards under the Plan are to be paid to eligible participants in cash as soon as
financial performance is finalized and individual performance has been assessed,
but in no case later than October 15th.

 

Subject to the terms of a participant’s employment, severance or other written
compensation agreement with the Company and the provisions of the following
paragraph, a participant must be actively employed by the Company on the date
the Award is paid to receive the Award.  Participants hired or promoted to an
eligible position for participation in the Plan during the Plan Year may receive
a pro-rated Award (based on time in the eligible position during the Plan Year)
subject to the approval of the Compensation Committee.

 

In the event the employment of a participant is terminated due to death,
disability, or Retirement (as defined below) prior to the payment date for such
Award, the participant will be entitled to receive the Award (in whole or on a
pro rata basis for the period employed, as applicable) that would have been
earned if the participant’s employment had continued through the next Award
payment date, subject to the approval of the Compensation Committee. 
“Retirement” means the termination by a Participant of his or her employment
with the Company (other than as a result of death or disability) on or after
(a) the participant’s 60th birthday if the Participant has completed at least
fifteen (15) years of service with the Company or any of its subsidiaries, or
(b) the Participant’s 65th birthday if the participant has completed at least
ten (10) years of service with the Company or any of its subsidiaries.

 

General Provisions

 

Limitations on Vested Interest

 

It is understood that the Awards hereunder are within the sole discretion of the
Company.  No participant has any vested interest in an Award under the Plan
until such Award has been approved by the Compensation Committee.

 

Participants may be deleted from the Plan at the beginning of each Plan Year at
the sole discretion of the Compensation Committee by giving written notice to
such participants at least thirty (30) days prior to the commencement of the
Plan Year. New participants may be added to the Plan at any time at the sole
discretion of the Compensation Committee.

 

Notwithstanding anything in the Plan to the contrary, at the sole discretion of
the Compensation Committee, a participant may be deleted from the Plan or a
participant’s Award may be reduced

 

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due to substantiated poor individual performance or misconduct. The Compensation
Committee intends to provide written notice to such participant promptly
following its knowledge or determination of poor individual performance or
misconduct and give the participant an opportunity to dispute or explain his
performance or misconduct and, to the extent practical, correct any correctible
poor performance; provided, however, that the failure to provide such notice
shall not affect the Committee’s rights under this paragraph.

 

Employment Rights

 

The Plan does not give any employee the right to be retained in the employ of
the Company.  Specifically, the Plan does not create an employment contract for
the Plan Year or any part thereof.

 

Participation in Other Plans

 

Participation in the Plan shall neither be deemed to limit a participant’s
rights under any other compensation or benefit plan maintained by the Company
that covers such participant nor to entitle a participant to benefits under any
other compensation or benefit plan maintained by the Company.

 

Non-Assignment

 

Incentive compensation payments may not be pledged, assigned or transferred for
any reason other than in connection with the death of a participant.

 

Construction

 

This Plan and the Company’s other cash or equity incentive compensation plans,
employee benefit plans or programs, the Company’s 2006 Equity Incentive Plan and
any successor thereto (the “Equity Plan”) and the agreements issued thereunder
and any employment or severance agreement that covers the participant
(collectively, “Benefit Plans”) shall be construed in a consistent manner.  In
the event of conflict between the terms and conditions of this Plan and any of
the Benefit Plans as they relate to the participant and any particular payment
or Award hereunder, the order of precedence shall be as follows: (i) any Benefit
Plan that constitutes an employment or severance agreement; (ii) this Plan;
(iii) any other Benefit Plan that constitutes an annual or long term incentive
plan; (iv) the Equity Plan; and (v) any agreement issued under the Equity Plan;
provided, however, that no effect shall be given to any provision of this Plan
that conflicts with any provision of the Equity Plan if and to the extent that
such conflicting provision could not have been approved by the Company’s Board
of Directors as an amendment to the Equity Plan pursuant to Section 14(a) of the
2006 Equity Incentive Plan (or any corresponding provision of any successor
Equity Plan) without stockholder approval or the consent of the relevant
participant, unless and until such approval or consent has been obtained.

 

Withholding

 

Any taxes required to be withheld by Federal, State or Local Regulations will be
deducted from incentive compensation payments hereunder.

 

Discontinuance, Suspension or Amendment of the Plan

 

The Company, with the approval of the Compensation Committee, may discontinue or
suspend the Plan at any time, or amend the Plan in any respect.  The Company may
review the Plan and its administration at any time to determine whether the
objectives of the Plan continue to be met.

 

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