Document:

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

AGREEMENT
dated as of the 1st day of August, 2005, by and between CANTEL
MEDICAL CORP., a Delaware corporation (the “Company”), and JAMES P. REILLY (the “Employee”).

 

Introduction

 

Employee
is currently employed as President and Chief Executive Officer of the Company
pursuant to an Employment Agreement dated as of October 16, 2003 (the “2003
Agreement”), which expires under its terms on July 31, 2005.  Employee and the Company desire to enter into
a new employment agreement that will take effect immediately and automatically
upon the expiration of the 2003 Agreement.

 

NOW, THEREFORE,
in consideration of the mutual covenants herein contained, it is hereby agreed
by and between the Company and Employee as follows:

 

1.                                       Engagement and Term. 
The Company hereby
employs Employee and Employee hereby accepts such employment by the Company on
the terms and conditions set forth herein, for the period commencing as of August 1,
2005 (the “Effective Date”) and ending, unless sooner terminated in accordance
with the provisions of Section 4 hereof, on July 31, 2007 (the “Employment
Period”).  As used in this Agreement, the
term “Contract Year” shall refer to each twelve-month period during the
Employment Period ending July 31.

 

2.                                       Scope of Duties. 
Employee shall be
employed by the Company as its President and Chief Executive Officer.  In such capacities, Employee shall have such
authority, powers and duties customarily attendant upon such offices.  If elected or appointed, Employee shall also
serve, without additional compensation, in one or more offices and, if and when
elected, as a

 

 

director
of the Company or any subsidiary or affiliate of the Company, provided that his
duties and responsibilities are not inconsistent with those pertaining to his
position as stated above.  Employee
agrees to perform the duties associated with his employment to the best of his
abilities, and shall faithfully devote his full business time and efforts so as
to advance the best interests of the Company. 
During the Employment Period, Employee shall not be engaged in any other
business activity, whether or not such business activity is pursued for profit
or other pecuniary advantage, unless otherwise approved in writing by the Board
of Directors of the Company.

 

3.                                       Compensation.

 

3.1                                 Base Salary.  In
respect of services to be performed by Employee during the Employment Period,
the Company agrees to pay Employee a base salary (“Base Salary”) at the rate of
$450,000 per annum during the initial Contract Year and $500,000 per annum
during the second Contract Year, payable in accordance with the Company’s
customary payroll practices for executive employees.

 

3.2                                 Incentive Compensation. 
For each Contract
Year during the Employment Period (commencing with the Contract Year ending July 31,
2006), Employee shall be paid, as additional compensation for his services, a
bonus (the “Bonus”) based on the increase in the Company’s earnings per
share.  The Bonus for each Contract Year
shall be equal to three and three-eighths percent (3-3/8%) (the “Multiple”) of Employee’s annual Base Salary for
such Contract Year for every one cent ($.01) increase in the EPS (as defined
below) for such Contract Year over the EPS for the Company’s immediately
preceding Contract Year (which, for purposes of this Section 3.2 shall be
deemed to include, where applicable, the fiscal year ending July 31, 2005).

 

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3.2.1                        “EPS” shall mean the diluted
earnings per share of the Company and its consolidated subsidiaries for a given
Contract Year of the Company as set forth in its audited financial statements,
adjusted to exclude the Bonus and any other bonus paid or payable to Employee
with respect to such Contract Year; provided, however, that (i) for purposes of
determining the Bonus for the Contract Year ending July 31, 2006, EPS for
the Contract Years ending July 31, 2006 and 2005 shall include the operations
of Carsen Group Inc. (“Carsen”) but shall exclude (a) all amounts paid or
payable under the Agreement dated as of July 25, 2005 among the Company,
Carsen, Olympus America Inc. and Olympus Surgical & Industrial America,
Inc. (collectively “Olympus”), and (b) all wind-down costs associated with or arising
out of the termination of the Olympus (and any other) distribution business of
Carsen (e.g., severance payments to employees, lease obligations related to the
termination, etc.) and (ii) for purposes of determining the Bonus for the
Contract Year ending July 31, 2007, EPS for the Contract Years ending July 31,
2007 and 2006 shall exclude any and all operations of Carsen (whether
discontinued or continuing; and further, provided, however that for purposes of
determining the Bonus for the Contract Years ending July 31, 2006 and 2007, EPS
for all Contract Years shall exclude any impact on EPS directly attributable to
the recording of employee stock compensation expense.

 

3.2.2                        Notwithstanding the foregoing (but subject to
Section 4), in the event that Employee is not employed hereunder during a
full Contract Year, the amount of the Bonus for such Contract Year shall be calculated
by first determining the amount of the Bonus for the full Contract Year
(determined by the calculation above), and then multiplying such amount by a
number (i) the numerator of which shall be the number of days during the Contract
Year that Employee is employed hereunder and (ii) the denominator of which
shall be 365.  The Bonus for a Contract
Year shall be determined as soon as practicable following the end of such year,
and payable not later than ten (10) days following completion of the
Company’s audited financial statements for such year.

 

3.2.3                        The amount of the Bonus shall be determined by
the Compensation Committee of the Company’s Board of Directors, subject to
final approval by the

 

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Board.

 

3.2.4                        Notwithstanding the foregoing, in no event
may the Bonus for any Contract Year exceed one hundred fifty percent (150%) of
the Base Salary for such Contract Year.

 

3.2.5                        In the event of changes in the outstanding
shares of the Company during any Contract Year by reason of stock dividends,
stock splits, reorganizations and the like, both the EPS for the prior Contract
Year and the Multiple shall be correspondingly adjusted by the Company.

 

3.3                                 Discretionary Compensation. 
Employee shall also
be entitled to such additional increases in Base Salary, bonuses and stock
options as may be determined from time to time by the Compensation Committee of
the Board of Directors of the Company.

 

3.4                                 Life Insurance. 
Provided that
Employee is insurable at rates that are comparable to those obtainable on other
persons of similar age and position in good health (if Employee is classified
in a higher risk category, he may elect to pay the excess premium cost to

 

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obtain
the coverage), during the Employment Period the Company shall procure and
maintain term life insurance on the life of Employee in the face amount of
$500,000.  Employee shall be the owner of
such life insurance policy and shall have the absolute right to designate the
beneficiaries thereunder.  The Company
shall pay all premiums for such life insurance. 
Employee agrees to submit to all medical examinations, supply all
information and execute all documents required by insurance companies in
connection with the issuance of such policy.

 

3.5                                 Use of Automobile. 
During the Employment
Period, Employee shall be entitled to the use of an automobile leased or owned
by the Company in connection with the Company’s business.  The make and model of the automobile shall be
reasonably satisfactory to Employee, provided that the Company’s monthly
payments in respect thereof (exclusive of the expenses referred to in the
following sentence) shall not exceed $700. 
In lieu of the foregoing, the Company may pay Employee an automobile
allowance of $700 a month.  Employee
shall also be entitled to receive reimbursement for reasonable out-of-pocket
expenses related to the automobile, including, without limitation, cost of gas,
oil, insurance and other costs incurred by Employee in operating and
maintaining the automobile; provided, however, that Employee shall be
responsible for keeping appropriate records regarding the use of said
automobile, as instructed by the Company or its accountants.

 

3.6                                 Other Benefits.

 

3.6.1              During the Employment Period, Employee shall
be entitled to participate, at Company expense (subject to applicable employee
contribution requirements imposed by the Company from time to time on its employees
generally), in the medical and dental health insurance plan, and all other
health, insurance and other benefit plans applicable generally to executive
officers of the Company on the same basis as such officers.  In addition,

 

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Employee
shall be entitled to participate in the Company’s 401(k) benefit plan.

 

3.6.2              During the Employment Period, Employee will
be entitled to paid vacation (four weeks) and holidays consistent with the
Company’s policy applicable to executives generally.  All vacations shall be scheduled at the
mutual convenience of the Company and Employee.

 

3.6.3              The Company will reimburse Employee for
reasonable out-of-pocket expenses incurred in furtherance of the business of
the Company, including travel, entertainment and similar items, upon the
presentation of appropriate receipts or vouchers therefor, consistent with the
Company’s policy applicable to executives generally.

 

3.6.4              In the event of a “Change in Control” (as
defined in Section 4.4 below), all stock options held by Employee which
were granted under an employee stock option plan of the Company shall thereupon
automatically vest in full and become exercisable for all of the shares
thereunder.

 

4.                                       Termination of Employment.  The provisions of Section 1 of this Agreement notwithstanding,
this Agreement and Employee’s employment hereunder may be terminated in the
manner and for the causes hereinafter set forth, in which event the Company
shall have no further obligation under this Agreement to make any payments to
Employee or to bestow any benefits on Employee, other than as specifically
provided herein.

 

4.1                                 If Employee is absent from work or otherwise
substantially unable to assume his normal duties for a period of sixty (60) successive
days or an aggregate of ninety (90) business days during any consecutive
twelve-month period during the Employment Period because of physical or mental
disability, accident, illness, or any other cause other than vacation or
approved leave of absence, the Company may thereupon, or at any time thereafter
while such

 

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absence
or disability still exists, terminate the employment of Employee hereunder upon
ten (10) days’ written notice to Employee.

 

4.2                                 In the event of the death of Employee, this
Agreement shall immediately terminate on the date thereof, subject to the terms
of this Section 4 and Section 5.

 

4.3                                 If Employee (a) willfully discloses
material trade secrets or other material confidential information related to
the business of the Company in breach of this Agreement or otherwise willfully
violates a covenant set forth in Section 6 hereof; (b) willfully
fails or refuses to carry out the business of the Company as lawfully directed
and as required by the terms of this Agreement after written demand is
delivered to Employee by the Board of Directors of the Company, which demand
specifically identifies the manner in which the Board of Directors believes
that Employee has willfully failed or refused to carry out the Company’s
business, which failure or refusal is not substantially remedied by Employee
within ten (10) days of receipt of such demand; (c) commits any
criminal act or an act of dishonesty or moral turpitude, in the reasonable
judgment of the Company’s Board of Directors; or (d) abuses alcohol,
prescription drugs or controlled substances, then the Company may, in addition
to other rights and remedies available at law or equity, immediately terminate
this Agreement upon written notice to Employee with the date of such notice
being the “termination date” and such termination being deemed for “cause.”

 

4.4                                 Employee may terminate his employment under
this Agreement upon not less than thirty (30) days’ written notice to the
Company if the Company, without Employee’s consent, undergoes a “Change in
Control” (as defined below).  “Change in
Control” shall mean (1) the acquisition of beneficial ownership, direct or
indirect, of securities of the Company by any person (as that term is defined
in Section 13(d) and 14(d) of the Securities Exchange Act of

 

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1934,
as amended), other than Employee or a person approved by Employee, which when
combined with all other securities of the Company beneficially owned, directly
or indirectly, by that person, equals or exceeds 50% of the combined voting
power of the Company’s then outstanding securities, (2) at any time after
the Effective Date, a majority of the Board of Directors is composed of persons
who are not “Continuing Directors” as hereinafter defined or (3) Mr. Charles
Diker and a total of three (3) other persons who were members of
the Board of Directors on the Effective Date have ceased to serve as members of
the Board of Directors  “Continuing Directors” as used herein shall
mean (i) the directors of the Company at the close of business on the
Effective Date, and (ii) any person who was or is elected (A) to
succeed a Continuing Director or (B) to become a director as a result of
an increase in the size of the board, recommended, in each case, by a majority
of the Continuing Directors then on the Board. 
Any Termination Notice given by Employee hereunder must be given within
ninety (90) days following the occurrence of the event giving rise to such
termination.

 

4.5                                 Employee shall have the right to terminate
his employment without cause at any time after July 31, 2006 upon not less
than three (3) months’ prior written notice to the Company.  Upon termination of Employee’s employment
under this Section, the Company shall have no further obligation under this
Agreement to make any payments to Employee or to bestow any benefits on
Employee after the termination date, other than payments and benefits accrued
and due and payable to Employee prior to the termination date.

 

4.6                                 In the event Employee’s employment shall be
terminated by reason of the provisions of Section 4.1 or 4.2, then in such
event, the Company shall continue to pay to Employee, if living, or other
person or persons as Employee may from time to time designate in writing as the
beneficiary of such payments, the Base Salary in effect at the time which such

 

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death
or disability occurred during the three-month period following such death or
disability.  Except for such Base Salary,
the Company shall have no further obligation under this Agreement to make any
payments to Employee or to bestow any benefits on Employee after the
termination date, other than payments and benefits accrued and due and payable
to Employee prior to the termination date.

 

4.7                                 Upon termination of Employee’s employment
under Section 4.3, the Company shall have no further obligation under this
Agreement to make any payments to Employee or to bestow any benefits on
Employee after the termination date, other than payments and benefits accrued
and due and payable to Employee prior to the termination date.

 

4.8                                 Upon termination of Employee’s employment by
Employee under Section 4.4, then in addition to payments and benefits
accrued and due and payable to Employee prior to the termination date, the
Company shall pay to Employee in a lump sum, within ten (10) days
following the termination date, (i) if such termination occurs during the
first Contract Year, an amount equal to one hundred fifty percent (150%) of the
Base Salary and Bonus paid or accrued by the Company to Employee with respect
to the fiscal year ending July 31, 2005 and (ii) if such termination
occurs during the second Contract Year, the greater of (i) $500,000
or (ii) the sum of one year’s Base Salary (at the rate in effect
immediately prior to such termination) and the amount of the Bonus paid (or
payable) for the most recently completed Contract Year.  Except for such payments and the
benefits described in Section 4.9, the Company shall have no further
obligation under this Agreement to make any payments to Employee or to bestow
any benefits on Employee after the termination date.  Any payment to Employee under this Section shall
constitute liquidated damages and not a penalty, and Employee shall not be
obligated to seek employment to mitigate his damages; nor shall any
compensation the Employee receives from

 

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any
party subsequent to such termination be an offset to the amount of any payment
hereunder.

 

4.9                                 Upon termination of Employee’s employment
under Sections 4.1, 4.2 or 4.4, then in addition to the payments and benefits
payable to Employee specified above, the Company agrees that for a period of
ninety (90) days following such termination it will (i) in the case of
termination under Section 4.1 or 4.4, continue Employee’s coverage under
the Company’s medical health insurance plan provided under Section 3.6.1
above to the extent such coverage was in effect at the time of termination
(e.g., individual coverage or family coverage), directly or through the payment
of all applicable amounts under COBRA or, (ii) in the event of termination
under Section 4.2, pay the cost of family coverage (for Employee’s wife)
under a medical health insurance plan having benefits similar to those in
effect under the Company’s medical health insurance plan in effect at the time
of termination.

 

4.10                           In the event Employee’s employment hereunder
is terminated by the Company without cause (i.e., for a reason outside the
scope of Section 4.1, 4.2, 4.3 and 4.4), then, in addition to payments and
benefits accrued and due and payable to Employee prior to the termination date,
the Company shall continue payments to Employee of his Base Salary through July 31,
2007.  In addition, the Company shall (i) continue
to pay Employee the Bonus under Section 3.2 through the Contract Year
ending July 31, 2007 in accordance with the terms thereof as if he
remained an employee of the Company hereunder and (ii) continue Employee’s
coverage under the Company’s medical health insurance plan provided under Section 3.6.1
above (directly or through the payment of all applicable amounts under COBRA)
for a period of ninety (90) days following such termination.  Subject to the foregoing and to benefits
payable to Employee under Sections 4.2 and 4.3, the Company shall have no
further obligation under this Agreement to make any payments to Employee or to
bestow any benefits to Employee after the termination

 

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date.
The foregoing shall be Employee’s exclusive right and remedy against the
Company in the event of such termination, which termination shall not be deemed
a “Breach” for purposes of Section 6.3.

 

5.                                       Consulting Services.

 

5.1                                 During the five-year period following the termination
of Employee’s employment hereunder (for any reason whatsoever, including
without limitation, termination by Employee under Section 4.5, and
notwithstanding anything to the contrary in this Agreement), whether by the
Company or by Employee, and whether during the Employment Term or thereafter
(e.g., due to the failure to renew this Agreement or enter into a new
employment agreement), Employee agrees to make himself available to provide
consulting services to the Company as the Company’s Chairman of the Board may
reasonably request in writing.  Such
services shall be limited to counseling and advising the directors and the
principal executive officers concerning the Company’s business.  Employee acknowledges that (i) such
services will be provided solely as an independent contractor and not as an
employee of the Company and (ii) he will not be entitled to any employment
rights or benefits of the Company.  The
consulting services shall be provided at mutually convenient times and places;
provided, however, that in no event shall Employee be obligated to (i) provide
services in any manner other than by telephone or in person at meetings at the
Company’s offices in Little Falls, New Jersey or (ii) expend more than ten
hours a month during the first year of the consulting term nor more than five
hours a month during the remainder of the consulting term.

 

5.2                                 In consideration for the consulting services,
the Company agrees to pay Employee a Consulting Fee, as defined below, commencing
on the first anniversary of the termination date and continuing on each of the
next four anniversaries thereafter.  The

 

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Consulting
Fee shall be equal to $105,910 per year as adjusted pursuant to the terms of
this paragraph.  Commencing August 1,
2006, the Consulting Fee shall be increased annually by an amount established
by reference to the “Consumer Price Index for Urban Wage Earners and Clerical
Workers, New York, New York, all items “Series A-01” published by
the Bureau of Labor Statistics of the United States Department of Labor (the “Consumer
Price Index”).  The base period shall be
the month ended May 31, 2005 (the “Base Period”).  If the Consumer Price Index for the month of May in
any year, commencing in 2006, is greater than the Consumer Price Index for the
Base Period, then the Consulting Fee shall be increased, commencing on the next
anniversary of the termination date, to the amount obtained by multiplying Base
Consulting Fee by a fraction, the numerator of which is the Consumer Price
Index for the month of May of the year in which such determination is
being made and the denominator of which is the Consumer Price Index for the
Base Period.  In order to enable the Company
to obtain the commitment of Employee to make his services available for the
consulting relationship contemplated hereby, the Company has assumed the risk
of Employee’s death during the term hereof, and in the event of Employee’s
death while this Agreement is in effect, the Company shall, following notice of
Employee’s death, pay the remaining severance hereunder to Employee’s wife or
other designated beneficiary on the same installment basis.  The Consulting Fee hereunder is in addition
to, and shall in no way reduce, amounts payable to Employee under Sections 4.1
and 4.2.

 

6.                                       Disclosure of Confidential
Information, Assignment of Inventions, and Covenants Not to Compete.

 

6.1                                 Confidential Information.  Employee acknowledges that the Company (which term, for purposes of Section 6
shall be deemed to include Cantel Medical Corp. and all

 

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of
its direct and indirect subsidiaries) possesses confidential information,
know-how, customer lists, purchasing, merchandising and selling techniques and
strategies, and other information used in its operations of which Employee has
or will obtain knowledge, and that the Company will suffer serious and
irreparable damages and harm if this confidential information were disclosed to
any other party or if Employee used this information to compete against the
Company.  Accordingly, Employee hereby
agrees that except as required by Employee’s duties to the Company, Employee,
without the consent of the Company’s Board of Directors, shall not at any time
during or after the Employment Period disclose or use any secret or
confidential information of the Company, including, without limitation, such
business opportunities, customer lists, trade secrets, formulas, techniques and
methods of which Employee shall become informed during his employment, whether
learned by him as an employee of the Company, as a member of its Board of
Directors or otherwise, and whether or not developed by Employee, unless such
information shall be or becomes public knowledge other than as a result of
Employee’s direct or indirect disclosure of the same.

 

6.2                                 Patent and Related Matters.

 

6.2.1                        Inventions. 
Employee will promptly disclose in writing to the Company complete
information concerning each and every invention, discovery, improvement and
idea (whether or not shown or described in writing or reduced to practice), and
device, design, apparatus, process, and work of authorship, whether or not
patentable, copyrightable or registerable, which is made, developed, perfected,
devised, conceived or first reduced to practice by Employee, either solely or
in collaboration with others, during the Employment Period, whether or not
during regular working hours (hereinafter collectively referred to as the “Inventions”).  Employee, to the extent that he has the legal
right to do so, hereby acknowledges

 

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that
any and all of the Inventions are property of the Company and hereby assigns
and agrees to assign to the Company any and all of Employee’s right, title and
interest in and to any and all of the Inventions.

 

6.2.2                        Limitation.  It
is further agreed and Employee is hereby notified that the above agreement to
assign the Inventions to the Company does not apply to an Invention for which
no equipment, supplies, facility or confidential information of the Company was
used and which was developed entirely on Employee’s own time, and

 

(i)                                     which does not relate (a) directly to
the business of the Company or (b) to the Company’s actual or demonstrably
anticipated research or development, or

 

(ii)                                  which does not result from any work performed
by Employee for the Company.

 

6.2.3                        Assistance.  Upon request and without further compensation therefor, but at no
expense to Employee, and whether during the Employment Period or thereafter,
Employee will do all lawful acts, including, but not limited to, the execution
of documents and instruments and the giving of testimony, that in the opinion
of the Company, its successors and assigns, may be necessary or desirable in
obtaining, sustaining, reissuing, extending or enforcing United States and
foreign copyrights and Letters Patent, including, but not limited to, design
patents, on any and all of the Inventions, and for perfecting, affirming and recording
the Company’s complete ownership and title thereto, and to cooperate otherwise
in all proceedings and matters relating thereto.

 

6.2.4                        Records.  Employee will keep complete, accurate and authentic accounts, notes,
data and records of all the Inventions in the manner and form requested by the

 

14

 

Company.  Such accounts, notes, data and records shall
be the property of the Company, and upon its request, Employee will promptly
surrender the same to it.

 

Upon
the termination of his employment hereunder, Employee agrees to deliver
promptly to the Company all equipment (including computers, etc.), records,
manuals, books, blank forms, documents, letters, memoranda, notes, notebooks,
reports, data, tables, accounts, calculations and copies thereof, which are the
property of the Company or which relate in any way to the business, products,
practices or techniques of the Company, and all other property, trade secrets
and confidential information of the Company, including, but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in his possession
or under his control.

 

6.3                                 Non-Compete.  Employee agrees that for a period of twelve (12) months following the
termination of Employee’s employment hereunder, except as a result of the
breach by the Company of any material term or condition hereof (a “Breach”),
Employee will not, directly or indirectly, alone or with others, individually
or through or by a corporate or other business entity in which he may be
interested as a partner, shareholder, joint venturer, officer, director,
employee or otherwise, own, manage, control, participate in, lend his name to,
or render services to or for any business within the continental United States
or Canada which is competitive with that of the Company, provided, however,
that the foregoing shall not be deemed to prevent the ownership by Employee of
up to five (5%) percent of any class of securities of any corporation which is
regularly traded on any stock exchange or over-the-counter market.  For the purpose of this Agreement, a business
activity competitive with the business of the Company shall include only the
design, manufacture, marketing, sale, distribution or service of any of the
following products (collectively, “Products”): 
(i) endoscopes, (ii) endoscope

 

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disinfection
or sterilization equipment or supplies, (iii) infection control equipment,
products, supplies or systems, (iv) water treatment systems and supplies, (v) specialty
packaging products for transporting infectious and biological specimens,(vi) products
or services for the dialysis, medical device reprocessing, or filtration and
separation markets or (vii) any other product or product group hereafter
manufactured, marketed, sold, distributed or serviced by the Company after the
date hereof; but in each case which are the same as or similar to or compete
with, or have a usage allied to, Products being developed, marketed, sold or
distributed by the Company at any time during the last twelve months of
Employee’s employment by the Company.

 

6.4                                 Non-interference.  Employee further agrees that for a period of two years following
termination of Employee’s employment hereunder, he will not (i) induce or
attempt to induce any other employee of the Company to leave the employ of the
Company, or in any way interfere with the relationship between the Company and
any other employee, or (ii) induce or attempt to induce any customer,
supplier, franchisee, licensee, distributor or other business relation of the
Company to cease doing business with the Company, or in any way interfere with
the relationship between any customer, franchisee or other business relation
and the Company without prior written consent of the Board of Directors of the
Company.

 

6.5                                 Enforcement.  If, at the time of enforcement of any provisions of this Section, a
court of competent jurisdiction holds that the restrictions stated herein are
unreasonable under the circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reasonable under such
circumstances will be substituted for the stated period, scope or area.  Employee agrees that the covenants made in
this Section shall be construed as an agreement independent of any other
provision of this Agreement, and shall survive the termination of this
Agreement.

 

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7.                                       Miscellaneous Provisions.

 

7.1                                 Section headings are for convenience
only and shall not be deemed to govern, limit, modify or supersede the
provisions of this Agreement.

 

7.2                                 This Agreement is entered into in the State
of New Jersey and shall be governed pursuant to the laws of the State of New
Jersey.  If any provision of this
Agreement shall be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable, the remaining provisions hereof shall continue to be
fully effective.

 

7.3                                 This Agreement contains the entire agreement
of the parties regarding this subject matter. 
There are no contemporaneous oral agreements, and all prior
understandings, agreements, negotiations and representations are merged herein.

 

7.4                                 This Agreement may be modified only by means
of a writing signed by the party to be charged with such modification.

 

7.5                                 Notices or other communications required or
permitted to be given hereunder shall be in writing and shall be deemed duly
given upon receipt by the party to whom sent at the respective addresses set
forth below or to such other address as any party shall hereafter designate to
the other in writing delivered in accordance herewith:

 

If
to the Company:

 

Cantel
Medical Corp.

150
Clove Road

Little
Falls, NJ  07424

 

If
to Employee:

 

James
P. Reilly

12
Mulberry Lane

Edison,
NJ  08820

 

7.6                                 This Agreement shall inure to the benefit of,
and shall be binding upon,

 

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the
Company, its successors and assigns, including, without limitation, any entity
that may acquire all or substantially all of the Company’s assets and business
or into which the Company may be consolidated or merged.  This Agreement may not be assigned by
Employee.

 

7.7                                 This Agreement may be executed in separate
counterparts and may be delivered by facsimile, each of which shall constitute
the original hereof.

 

IN WITNESS WHEREOF, the parties have set their hands as of the date first above written.

 

 

	
   

  	
  CANTEL MEDICAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Charles M. Diker

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  James P. Reilly

  	
   

  

 

18Exhibit 10.58

 

FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT

 

This FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
“Amendment”), made and entered into as of July 28, 2005, is by and among
LECG, LLC, a California limited liability company (the “Borrower”), the banks
which are signatories hereto (each individually, a “Bank,” and collectively,
the “Banks”), and U.S. BANK NATIONAL ASSOCIATION, a national banking
association, as one of the Banks, and as administrative agent for the Banks (in
such capacity, the “Agent”)

 

RECITALS

 

1.                                       The Agent, the Banks and the
Borrower entered into an Amended and Restated Credit Agreement dated as of March 31,
2003, as amended by a First Amendment to Amended and Restated Credit Agreement
dated as of August 18, 2003, a Second Amendment to Amended and Restated
Credit Agreement dated as of November 12, 2003, a Third Amendment to
Amended and Restated Credit Agreement dated as of April 15, 2004, a Fourth
Amendment to Amended and Restated Credit Agreement dated as of August 12,
2004 and a letter agreement dated as of December 31, 2004 (as amended, the
“Credit Agreement”).

 

2.                                       The Borrower has requested that the
Banks agree to amend certain provisions of the Credit Agreement and the Banks
have agreed to such amendments, subject to the terms and conditions set forth
in this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby covenant and agree to be bound as follows:

 

Section 1.  Capitalized Terms. 
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement, unless the context
shall otherwise require.

 

Section 2.  Amendments.  The
Credit Agreement is hereby amended as follows:

 

2.1                               Definitions.  Section 1.1 of the Credit Agreement is
amended by deleting the definitions of “Applicable Revolving Loan Margin”,
“Distributions for Tax”, “Fixed Charge Coverage Ratio”, “Performance
Payments”, “Permitted Acquisitions” and “Sponsor” as they
appear therein and by inserting in such Section the following definitions
in the appropriate alphabetical order:

 

 

“Applicable Revolving Loan Margin”:  With respect to (a) LIBOR Rate Advances,
2.0%, (b) Prime Rate Advances, 0.00% and (c) Revolving Commitment
Fees, 0.375%.

 

“Bates Acquisition”:  The purchase by the Borrower, either directly
or indirectly through one or more Subsidiaries, of certain assets of Bates
Private Capital Incorporated pursuant to an Asset Purchase Agreement in a form
acceptable to the Agent.

 

“Fixed Charge Coverage Ratio”: For any period
of determination, the ratio of

 

(a)                                  EBITDA
minus the sum of (i) Capital Expenditures to the extent not
financed with Indebtedness permitted hereunder, (ii) cash taxes, and (iii) cash
dividends and distributions,

 

to

 

(b)                                 the
sum of (i) Interest Expense plus (ii) all Performance Payments
actually paid during such period of determination plus (iii) the
greater of (a) all required principal payments with respect to
Indebtedness (including but not limited to all payments with respect to
Capitalized Lease Obligations of the Parent and its Subsidiaries) and (b) $5,000,000,

 

in
each case determined for said period on a consolidated basis for the Parent and
its Subsidiaries in accordance with GAAP.

 

“Performance Payments”:  Deferred payments, earn out payments or other
additional payments made to the seller as part of the purchase price in
connection with a Permitted Acquisition and that are based upon the performance
of the assets or business acquired in such Permitted Acquisition after the
consummation of such Permitted Acquisition, but in each case excluding cash
payments made upon the consummation of such Permitted Acquisition and any
performance bonuses which are treated for accounting purposes as compensation.

 

“Permitted Acquisitions”:  (a) The Bates Acquisition, and (b) any
other acquisition by the Borrower of all or substantially all (or such other
amounts that constitute a controlling interest) of the Equity Interests of, or
all or substantially all of the assets of, Persons conducting businesses
similar to those of the Borrower, as long as 
(i) the Agent is notified of such Acquisition not less than 15 days
in advance and is provided with such information as the Agent may request on
the acquired business, (ii) the Borrower has not less than $5,000,000 of
unused availability under the Revolving Note after making such acquisition, (iii) the
Borrower has cash or additional unused availability under the Revolving Note of
not less than $5,000,000 after making such acquisition, and (iv) the total
consideration paid by the Borrower in connection with such acquisitions does
not exceed (x) $20,000,000 in the aggregate for the period of August 1,

 

2

 

2004
through December 31, 2004, and (y) commencing on January 1, 2005,
$20,000,000 in the aggregate in any fiscal year of the Borrower; provided that
any deferred payments shall be included in the determination of total consideration
for purposes of this clause (iv) at the time payments are actually
made.  For purposes of the foregoing, “total
consideration” shall mean, without duplication, cash or other consideration
paid, the fair market value of property or stock exchanged (or the face amount,
if preferred stock), the total amount of any deferred payments or purchase
money debt, all seller financing of Permitted Acquisitions, and the total
amount of any Indebtedness assumed or undertaken in such transactions.

 

2.2                               Term Loan. 
Section 2.1(b) of the Credit Agreement is amended by adding
the following new sentence at the end thereof:

 

Notwithstanding anything in this
Agreement to the contrary, the Borrower and the Banks acknowledge and agree
that (a) the Term Loans have been paid in full prior to the date of the
Fifth Amendment hereto and (b) no further Term Loans shall be made
available to the Borrower.

 

2.3                               Letter of Credit
Sublimit.   Section 2.8 of the Credit Agreement is
amended by deleting the clause “$2,000,000” as it appears therein and by
substituting in lieu thereof the clause “$10,000,000”.

 

2.4                               Revolving
Commitment Ending Date.  Section 2.19
of the Credit Agreement is amended to read in its entirety as follows:

 

Section 2.19                                Revolving Commitment Ending Date. 
The “Revolving Commitment Ending Date” is May 31, 2008.

 

2.5                               Monthly Financial
Statements and Compliance Certificate.  Sections 5.1(c) and
(d) of the Credit Agreement are each amended by deleting each appearance
of the clause “30 days” as it appears therein and by substituting in lieu
thereof the clause “45 days”.

 

2.6                               EBITDA. 
Section 6.15 of the Credit Agreement is amended to read in its
entirety as follows:

 

Section 6.15                                EBITDA. 
Neither the Parent nor the Borrower will permit the EBITDA, for each
period of four fiscal quarters indicated below, to be less than (a) $16,000,000
for the four fiscal quarters ending on or about June 30, 2005, (b) $18,000,000
for the four fiscal quarters ending on or about September 30, 2005 and (c) $25,000,000
for the four fiscal quarters ending on or about December 31, 2005 and each
period of four fiscal quarters thereafter.

 

3

 

2.7                               Borrowing Base and
Borrowing Base Certificates.  Exhibits A
and B to the Credit Agreement are hereby amended and restated in their
entireties to read as set forth on Exhibits A and B attached to
this Amendment, respectively, which are made part of the Credit Agreement as Exhibits
A and B thereto.

 

2.8                               Schedule of
Commitment Amounts.  Schedule 1.1 of the Credit Agreement
is hereby amended and restated in its entirety to read as set forth on Exhibit C
hereto.

 

2.9                               New Form of
Revolving Note.  Exhibit D to the Credit Agreement
is hereby amended in its entirety to read as set forth on Exhibit D
attached to this Amendment, which is made a part of the Credit Agreement as Exhibit D
thereto.

 

2.10                        New Form of
Compliance Certificate.  Exhibit G
to the Credit Agreement is hereby amended in its entirety to read as set forth
on Exhibit E attached to this Amendment, which is made a part of
the Credit Agreement as Exhibit G thereto.

 

Section 3.  Effectiveness of Amendments.  The
amendments contained in this Amendment shall become effective upon delivery by
the Borrower of, and compliance by the Borrower with, the following:

 

3.1                               This Amendment, duly executed by the
Borrower.

 

3.2                               Each Bank shall have received a non-refundable
amendment fee in the amount of $200,000.

 

3.3                               A Reaffirmation of Guaranty and
Security Agreement, in the form of Exhibit F hereto, duly executed
by each of the Parent, LECG Canada Holding, Inc., and Silicon Valley
Expert Witness Group, Inc.

 

3.4                               A copy of the company resolutions of
the Borrower authorizing the execution, delivery and performance of this
Amendment certified as true and accurate by its Secretary or Assistant
Secretary, along with a certification by such Secretary or Assistant Secretary (i) certifying
that there has been no amendment to the organizational documents of the
Borrower since true and accurate copies of the same were delivered to the Agent
with a certificate of the Secretary of the Borrower dated April 15, 2004, (ii) certifying
as to true and accurate copies of the resolutions of the governing body of the
Borrower authorizing the execution and delivery of this Amendment and each
other document or instrument in connection with this Amendment (collectively,
the “Amendment Documents”) to be executed by the Borrower, and (iii) identifying
each officer of the Borrower authorized to execute the Amendment Documents,
and, if specimens of such officers’ signatures were not previously provided to
the Agent, certifying as to specimens of such officers’ signatures and such
officers’ incumbency in such offices as such officers hold.

 

4

 

3.5                               The Borrower shall have satisfied
such other conditions as specified by the Agent, including payment of all
unpaid legal fees and expenses incurred by the Agent through the date of this
Amendment in connection with the Credit Agreement, the Security Documents and
the Amendment Documents.

 

Section 4.  Representations, Warranties,
Authority, No Adverse Claim.

 

4.1                               Reassertion of
Representations and Warranties, No Default. 
The
Borrower hereby represents that on and as of the date hereof and after giving
effect to this Amendment all of the representations and warranties contained in
the Credit Agreement are true, correct and complete in all respects as of the
date hereof as though made on and as of such date, except for changes permitted
by the terms of the Credit Agreement as amended by this Amendment and there
will exist no Default or Event of Default under the Credit Agreement as amended
by this Amendment on such date which has not been waived by the Banks.

 

4.2                               Authority, No
Conflict, No Consent Required. The Borrower represents and warrants that the Borrower
has the power and legal right and authority to enter into the Amendment
Documents and has duly authorized as appropriate the execution and delivery of
the Amendment Documents and other agreements and documents executed and
delivered by the Borrower in connection herewith or therewith by proper company
action, and none of the Amendment Documents nor the agreements contained herein
or therein contravenes or constitutes a default under any agreement, instrument
or indenture to which the Borrower is a party or a signatory or a provision of
the Borrower’s organizational documents or any other agreement or requirement
of law, or results in the imposition of any Lien on any of its property under
any agreement binding on or applicable to the Borrower or any of its property
except, if any, in favor of the Agent and the Banks.  The Borrower represents and warrants that no
consent, approval or authorization of or registration or declaration with any
Person, including but not limited to any governmental authority, is required in
connection with the execution and delivery by the Borrower of the Amendment
Documents or other agreements and documents executed and delivered by the
Borrower in connection therewith or the performance of obligations of the
Borrower therein described, except (a) for those which the Borrower has
made, obtained or provided and as to which the Borrower has delivered certified
copies of documents evidencing each such action to the Agent and the Banks and (b) for
those which the Borrower will make, obtain or provide upon the consummation of
this Amendment and as to which the Borrower will promptly deliver certified
copies of documents evidencing each such action to the Agent and the Banks.

 

4.3                               No Adverse Claim. The Borrower warrants, acknowledges
and agrees that no events have been taken place and no circumstances exist at
the date hereof which would give the Borrower a basis to assert a defense,
offset or counterclaim to any claim of the Agent or the Banks with respect to
the Obligations.

 

5

 

Section 5.  Affirmation of Credit Agreement,
Further References, Affirmation of Security Interest.  The
Agent, each Bank and the Borrower each acknowledge and affirm that the Credit
Agreement, as hereby amended, is hereby ratified and confirmed in all respects
and all terms, conditions and provisions of the Credit Agreement, except as
amended by this Amendment, shall remain unmodified and in full force and
effect.  All references in any document
or instrument to the Credit Agreement are hereby amended and shall refer to the
Credit Agreement as amended by this Amendment. 
The Borrower confirms to the Agent and the Banks that the Obligations
are and continue to be secured by the security interest granted by the Borrower
in favor of the Agent and the Banks under the Security Agreement, and all of
the terms, conditions, provisions, agreements, requirements, promises,
obligations, duties, covenants and representations of the Borrower under such
documents and any and all other documents and agreements entered into with
respect to the obligations under the Credit Agreement are incorporated herein
by reference and are hereby ratified and affirmed in all respects by the
Borrower.

 

Section 6.  Merger and Integration,
Superseding Effect.  This Amendment, from and after the date
hereof, embodies the entire agreement and understanding between the parties
hereto and supersedes and has merged into this Amendment all prior oral and
written agreements on the same subjects by and between the parties hereto with
the effect that this Amendment, shall control with respect to the specific
subjects hereof and thereof.

 

Section 7.  Severability.  Whenever
possible, each provision of this Amendment and the other Amendment Documents
and any other statement, instrument or transaction contemplated hereby or
thereby or relating hereto or thereto shall be interpreted in such manner as to
be effective, valid and enforceable under the applicable law of any jurisdiction,
but, if any provision of this Amendment, the other Amendment Documents or any
other statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto shall be held to be prohibited, invalid or
unenforceable under the applicable law, such provision shall be ineffective in
such jurisdiction only to the extent of such prohibition, invalidity or
unenforceability, without invalidating or rendering unenforceable the remainder
of such provision or the remaining provisions of this Amendment, the other
Amendment Documents or any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto in such
jurisdiction, or affecting the effectiveness, validity or enforceability of
such provision in any other jurisdiction.

 

Section 8.  Successors. 
The Amendment Documents
shall be binding upon the Borrower, the Agent and the Banks and their
respective successors and assigns, and shall inure to the benefit of the
Borrower, the Agent and the Banks and the successors and assigns of the Agent
and the Banks.

 

Section 9.  Legal Expenses.  As
provided in Section 9.2 of the Credit Agreement, the Borrower agrees to
reimburse the Agent upon demand for all reasonable out-of-pocket expenses
(including filing and recording costs and fees, charges and disbursements of
outside

 

6

 

counsel to the Agent (determined
on the basis of such counsel’s generally applicable rates, which may be higher
than the rates such counsel charges the Agent in certain matters) and/or the
allocated costs of in-house counsel incurred from time to time) incurred in
connection with the negotiation, preparation, enforcement and collection of
this Amendment and the Loan Documents and all other documents negotiated and
prepared in connection with this Amendment and the Loan Documents.

 

Section 10.  Headings.  The
headings of various sections of this Amendment have been inserted for reference
only and shall not be deemed to be a part of this Amendment.

 

Section 11.  Counterparts.  The
Amendment Documents may be executed in several counterparts as deemed necessary
or convenient, each of which, when so executed, shall be deemed an original,
provided that all such counterparts shall be regarded as one and the same
document, and either party to the Amendment Documents may execute any such
agreement by executing a counterpart of such agreement.

 

Section 12.  Governing
Law.  THE AMENDMENT DOCUMENTS SHALL
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING
EFFECT TO CONFLICT OF LAW PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS, THEIR HOLDING COMPANIES AND THEIR AFFILIATES.

 

[Remainder of page is intentionally left blank.]

 

7

 

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date and year first above written.

 

 

	
   

  	
  LECG,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  C. Burke

  	
   

  
	
   

  	
   

  	
  John
  C. Burke

  
	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION,

  In its individual corporate capacity and as Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert A. Rosati

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LASALLE
  BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Patrick J. O'Toole

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  First
  Vice President

  	
   

  
						

 

S-1

 

EXHIBIT F
TO

FIFTH AMENDMENT TO

AMENDED AND RESTATED

CREDIT AGREEMENT

 

REAFFIRMATION
OF GUARANTY AND SECURITY AGREEMENT

 

This will confirm (a) that each of the
undersigned hereby consents to the terms of that Fifth Amendment to Amended and
Restated Credit Agreement dated concurrently herewith by and among LECG, LLC
(the “Borrower”), the banks party thereto (the “Banks”) and U.S. Bank National
Association, as agent for the Banks (the “Agent”) (the “Fifth Amendment”) and
to the execution, delivery and consummation of the Fifth Amendment and the
transactions contemplated thereby by the Borrower; and (b) that the
obligations of the Borrower to the Agent or any Bank under the Amended and
Restated Credit Agreement dated as of March 31, 2003 by and among the
Borrower, the Banks and the Agent (as previously amended the “Credit Agreement”)
as amended by the Fifth Amendment constitute “Obligations” of the Borrower to
the Banks within the meaning of those certain separate Guaranties and Security
Agreements and executed by the undersigned in favor of the Agent and the Banks
(as amended, restated or otherwise modified. 
Each of the undersigned further confirms that all of the terms,
conditions, provisions, agreements, requirements, promises, obligations,
duties, covenants and representations of the undersigned under its Guaranty or
its Security Agreement, and any and all other documents and agreements entered
into with respect to the obligations under its Guaranty or its Security
Agreement, are incorporated herein by reference and are hereby ratified and
affirmed in all respects by the undersigned.

 

[the Signature Page follows]

 

F-1

 

	
   

  	
  LECG
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  John C. Burke

  	
   

  
	
   

  	
  Its

  	
  Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  SILICON
  VALLEY EXPERT WITNESS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  John C. Burke

  	
   

  
	
   

  	
  Its

  	
  Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LECG
  CANADA HOLDING, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  John C. Burke

  	
   

  
	
   

  	
  Its

  	
  Chief
  Financial Officer

  	
   

  
						

 

F-2

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