**Exhibit 10(b)**

 

**1998DIRECTORS’ STOCK OPTION PLAN**

**OF**

**CANTELMEDICAL CORP.**

 

(As amended throughMarch 18, 2010)

 

1.             **The Plan. **The 1998 Directors’ Stock Option Plan (the “Plan”) is intended tostrengthen the ability of Cantel Medical Corp. (the “Corporation”) to attractand retain the services of persons having the breadth of professional andbusiness experience who, through their efforts and expertise, can make asignificant contribution to the success of the Corporation’s business byserving as members of the Corporation’s Board of Directors and to provideadditional incentive for such directors to continue to work for the bestinterests of the Corporation and its stockholders through ownership of itsCommon Stock, par value $.10 per share (the “Stock”).  Accordingly, the Company will grant to eachdirector (the “Optionee”) an option (the “Option”) to purchase shares of Stockon the terms and conditions hereinafter set forth.

 

2.             **Stock Subject to the Plan. **Subject to the provisions of Paragraph 11hereof, the total number of shares of Stock which may be issued pursuant toOptions granted under the Plan shall be 450,000.  Such shares of Stock may be, in whole or inpart, either authorized and unissued shares or treasury shares as the Board ofDirectors of the Corporation (the “Board”) shall from time to timedetermine.  If an Option shall expire orterminate for any reason without having been exercised in full, the unpurchasedshares covered thereby shall (unless the Plan shall have been terminated) againbe 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 theBoard.  The Committee shall have plenaryauthority, subject to the express provisions of the Plan, to interpret thePlan, to prescribe, amend and rescind any rules and regulations relatingto the Plan and to take such other action in connection with the Plan as itdeems necessary or advisable; provided, however, that the grant of Optionsunder the Plan, the exercise price of such Options and the timing and manner inwhich such Options become exercisable shall not be subject to discretion by theBoard but shall be governed by the terms of the Plan.  The interpretation and construction by theBoard of any provisions of the Plan or of any Option granted thereunder shallbe final, and no member of the Board shall be liable for any action ordetermination made in good faith with respect to the Plan or any Option grantedthereunder.

 

4.             **Directors Eligible for Options; Grant of Options**.

 

(a)           Eachdirector of the Corporation, whether or not an employee, shall be eligible forOptions under this Plan.

 

 

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(b)           Subjectto Section 12, an Option to purchase 15,000 shares of Stock shall be automaticallygranted to each person who is appointed or elected for the first time to be adirector of the Corporation.  Each Optiongranted under this subsection (b) shall be exercisable in three equalannual installments commencing on the date of the grant.  The exercise price of each Option grantedunder this subsection (b) shall be the fair market value (as hereinafterdefined) of Stock covered thereby on the date the Option is granted.

 

(c)           Subjectto Section 12, an Option to purchase 1,500 shares of Stock shall beautomatically granted under the Plan each year on the last business day of theCorporation’s fiscal year, commencing with the fiscal year ending July 31,2005, to each member of the Corporation’s Board serving as such on saiddate.  Each Option granted under thissubsection (c) shall be exercisable as to 50% of the number of shares ofStock covered thereby on the first anniversary of the grant of such Option andshall become exercisable for the balance of shares of Stock covered thereby onthe second anniversary of the grant of such Option.  The exercise price of each Option grantedunder this subsection (c) shall be the fair market value (as hereinafterdefined) of Stock covered thereby on the date the Option is granted.

 

(d)           Subjectto Section 12, an Option to purchase 750 shares of Stock shall beautomatically granted on the last business day of each fiscal quarter,commencing with the quarter ending April 30, 2005, to each member of theCorporation’s Board serving as such on said date provided that the memberattended any regularly scheduled meeting of the Board, if any, which was heldduring such quarter (whether in person or by telephonic means).  Notwithstanding the foregoing to thecontrary, neither Messrs. Diker nor Reilly, nor any member of the Boardwho is an employee of the Corporation, shall be entitled to receive anyquarterly Option grants in accordance with this subsection (d).  Each Option granted under this subsection (d) shallbe exercisable immediately and the exercise price of each such Option shall bethe fair market value (as hereinafter defined) of the Stock covered thereby onthe date the Option is granted (the “Determination Date”).

 

(e)           Forpurposes of this Plan, the fair market value shall be:

 

(i)            ifthe Stock is listed on a securities exchange, the closing price of the Stock onthe largest principal securities exchange on the Determination Date, or, ifthere shall have been no sales on any such exchange on such Determination Date,the mean of the highest bid and lowest asked prices on such securities exchangeon such Determination Date; or

 

(ii)           ifthe Stock is not listed on a securities exchange, the closing price of theStock on the National Market System of the National Association of SecuritiesDealers, Inc., Automated Quotation System (“NASDAQ”), or, if there shallhave been no sales on such Determination Date on the NASDAQ National MarketSystem, such closing price on the first date prior to the Determination Datethat there was a sale on the NASDAQ Market system; or

 

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(iii)          ifthe Common Stock is not listed on a securities exchange or the NASDAQ NationalMarket System, the mean of the highest bid and lowest asked prices of the Stockon the Determination Date as quoted in the NASDAQ System; or

 

(iv)          ifthe Common Stock is not quoted in the NASDAQ System, the mean of the highestbid and lowest asked prices of the Stock on the Determination Date in theover-the-counter market as reported by the National Quotation Bureau,Incorporated, or any similar successor organization; provided, however that:

 

(v)           withrespect to shares of Stock delivered to pay the Exercise Price of an Optionunder Section 7(a) or the settlement of all or part of an Optionunder Section 7(b), the fair market value shall be the most recent closingprice of the Stock on the largest principal securities exchange listing theStock immediately prior to the exercise of the Option.

 

5.             **Term of Plan.**  The Plan shall terminate on, and no Optionsshall be granted after, December 1, 2008, provided that the Board may atany time terminate the Plan prior thereto.

 

6.             **Term of Options.** The term of each Option granted under thisPlan before July 31, 2000 shall be for a period of ten years from the dateof granting thereof and**t**he termof each Option granted under this Plan on or after July 31, 2000 shall befor a period of five years from the date of granting thereof.

 

7.             **Exercise of Options**.

 

(a)           AnOption may be exercised from time to time as to any part or all of the Stock towhich the Optionee shall then be entitled, provided, however, that an Optionmay not be exercised (a) as to less than 100 shares at any time (or forthe remaining shares then purchasable under the Option, if less than 100shares), (b) prior to the expiration of at least six months from the dateof grant except in case of the death or disability of the Optionee or asotherwise approved by the Committee and (c) unless the Optionee shall havea director of the Corporation from the date of the granting of the Option tothe date of its exercise, except as provided in Paragraph 10.  The exercise price of an Option shall be paidin full at the time of the exercise of the Option (i) in cash (by wiretransfer or personal, certified or bank check) or (ii) by the transfer tothe Corporation of whole shares of its Stock that are already owned by theOptionee with a fair market value determined under Section 4(e)(v) equalto the purchase price of the Stock issuable upon exercise of such Option (orpartly in cash and partly in such Stock); provided, however, that theCorporation shall not be required to deliver (or make available) shares ofStock with respect to which an Option is exercised until the Corporation hasconfirmed the receipt of good and available funds in payment of the ExercisePrice thereof as well as any required tax withholding obligation.  In addition to the foregoing, payment of theExercise Price may be made by delivery to the Corporation by the Optionee of anexecuted exercise form, together with irrevocable instructions to abroker-dealer to sell or margin a sufficient portion of the shares of Stockcovered

 

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by the Option and deliver the sale or margin loan proceeds directly tothe Company (sufficient to pay the Exercise Price and tax withholdingobligation).   The holder of an Optionshall not have any rights as a stockholder with respect to the Stock issuableupon exercise of an Option until certificates for such Stock shall have beendelivered to him (or an appropriate book entry registration or electronicissuance has been made by the transfer agent) after the exercise of the Option.

 

(b)           Ator after the time of grant of an Option, the Board or the Committee may agree(regardless of the terms set forth in the agreement reflecting such Optiongrant) to authorize the settlement of all or part of any Option by deliveringto the Optionee shares of Stock having a fair market value (determined under Section 4(e)(v))equal to the product of the excess of the fair market value of one share ofStock (determined under Section 4(e)(v)), over the Option exercise price,multiplied by the number of shares of Stock with respect to which the Optioneeproposes to exercise the Option.

 

8.             **Non-transferability of Options.**  An Option shall not be transferable otherwisethan by will or the laws of descent and distribution and is exercisable duringthe lifetime of the Optionee only by him.

 

9.             **Form of Option.**  Each Option granted pursuant to the Planshall be evidenced by an agreement (the “Option Agreement”) which shall be insuch form as the Board shall from time to time approve.  The Option Agreement shall comply in allrespects with the terms and conditions of the Plan.

 

10.           **Termination of Board Membership. **In the event that an Optionee shall ceaseto be a member of the Board (whether by resignation, death or disability orotherwise), the Options of the Optionee granted pursuant to this Plan shall beexercisable (to the extent that such Options were exercisable at the time oftermination of Board membership) at any time prior to the expiration of aperiod of time not exceeding three months after such termination by theOptionee (or, in the event such termination resulted from the Optionee’s death,by the legal representative of the Optionee) and the balance of such Option, ifany, shall be cancelled.

 

11.           **Adjustments Upon Changes in Capitalization. **In the event of changes in theoutstanding Stock of the Corporation by reason of stock dividends, split-ups,recapitalizations, mergers, consolidations, combinations or exchanges ofshares, separations, reorganizations of liquidations, the number and class ofshares available under the Plan, the number and class of shares or the amountof cash or other assets or securities available upon the exercise of any Optiongranted hereunder and the number of shares as to which Options are to begranted to an Optionee shall be correspondingly adjusted, to the end that theOptionee’s proportionate interest in the Corporation, any successor thereto orin the cash, assets or other securities into which shares are converted orexchanged shall be maintained to the same extent, as near as may bepracticable, as immediately before the occurrence of any such event.  All references in this Plan

 

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to “Stock” from and after the occurrence of such event shall be deemedfor all purposes of the Plan to refer to such other class of shares orsecurities issuable upon the exercise of Options granted pursuant hereof.

 

12.           **Stockholder And Stock Exchange Approval**.  This Plan is subject to, and no Options shallbe exercisable hereunder until after (i) the approval by the holders of amajority of the Stock of the Corporation voting at a duly held meeting of thestockholders of the Corporation within twelve months after the date of theadoption of the Plan by the Board, and (ii) the approval by the New YorkStock Exchange, Inc. of a listing application covering the shares of Stockcovered by this Plan.

 

13.           **Amendment of the Plan. **The Board shall have complete power andauthority 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 votesrepresented by a majority of the outstanding Stock of the Corporation presentor represented at a meeting duly held in accordance with the applicable laws ofthe Corporation’s jurisdiction of incorporation and entitled to vote at ameeting of the stockholders or by the written consent of stockholders owningstock representing a majority of the votes of the Corporation’s outstandingStock, (i) increase the maximum number of shares which in the aggregateare subject to Options under the Plan (except as provided by Paragraph 11, (ii) extendthe term of the Plan or the period during which Options may be granted orexercised, (iii) reduce the Option exercise price below 100% of the fairmarket value of the Stock issuable upon exercise of Options at the time of thegranting thereof, other than to change the manner of determining the fairmarket value thereof, (iv) materially increase the benefits accruing toparticipants under the Plan, (v) modify the requirements as to eligibilityfor participation in the Plan, or (vi) make any other change to the termsof the plan which would require approval by the stockholders pursuant to the rules andregulations of the Securities and Exchange Commission or the listing standardsand rules of the securities exchange on which the Stock is listed.  No termination or amendment of the Planshall, without the consent of the individual Optionee, adversely affect therights of such Optionee under an Option theretofore granted to him or undersuch Optionee’s Option Agreement.

 

14.           **Taxes. **The Corporation may make such provisions as it may deem appropriatefor the withholding of any taxes which it determines is required in connectionwith any Options granted under the Plan. The Corporation may further require notification from the Optionee uponany disposition of Stock acquired pursuant to the exercise of Options grantedhereunder.

 

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