<PAGE>
FORM S-3 REG. NO. 333-02411
FINAL PROSPECTUS UNDER RULES 430A AND 424(b)
PROSPECTUS
HEALTH-CHEM CORPORATION
1,320,000 Shares of Common Stock
Health-Chem Corporation ("Health-Chem" or the "Company") is
granting to holders of the outstanding shares of common stock, par
value $.01 per share ("Common Stock"), of Health-Chem of record at
the close of business on August 2, 1996 (the "Record Date"),
transferable subscription rights (the "Rights" or the "Subscription
Rights") to purchase up to 1,320,000 shares of Common Stock, at the
price of $1.10 per share (the "Subscription Price"), on the basis
of three shares of Common Stock for each ten shares of Common Stock
owned on the Record Date (the "Subscription Privilege"). The
Rights will be evidenced by transferable stock purchase warrants
(the "Warrants"). No fractional Rights or cash in lieu thereof
will be distributed or paid by the Company. Each record holder of
Common Stock will receive a Warrant representing one Right for each
share held. A holder of ten Rights shall be entitled to exercise
all ten Rights to purchase three shares of Common Stock. Holders
of Warrants may not exercise Rights in groups of less than ten.
Approximately 1,320,000 shares of Common Stock will be offered for
sale in this offering, representing seventeen percent of the
Company's outstanding Common Stock. The grant of Rights and the
offering of shares of Common Stock hereby is referred to in this
Prospectus as the "Offering". See "The Offering".
The Rights are transferrable and are expected to trade on the
American Stock Exchange, Inc. and in the over-the-counter market.
The Rights will expire at 5:00 p.m., Eastern Daylight Time, on
September 6, 1996, unless extended by Health-Chem (as extended, the
"Expiration Date"). The Company makes no representation as to
whether a market will develop in the Rights, and, if such market
should develop, the price at which Rights may trade.
The Rights being offered hereby are subject to cancellation if
the Offering is prohibited by law or enjoined by a court of law.
In that event, any payments received by Continental Stock Transfer
and Trust Company, New York, New York (the "Rights Agent"), in
respect of the Subscription Price shall be promptly returned. See
"The Offering - Right to Extend or Terminate the Offering" and
"Recent Developments".
<PAGE>
Exercise of the Subscription Rights is irrevocable.
The Subscription Price has been determined by Health-Chem's
Board of Directors. The closing price of a share of Common Stock
reported on the American Stock Exchange, Inc. on August 1, 1996 was
$1 3/8.
________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Subscription Discounts and Proceeds to
Price Commissions the Company (1)
<S> <C> <C> <C>
Per Share. . $1.10 $0.00 $1.10
Total. . . . $1,452,000 $0.00 $1,452,000
</TABLE>
(1) Before deducting expenses of the Offering and the amount to be
paid by the Company in acquiring the shares of Common Stock being
offered hereby. See "Use of Proceeds" and "Stock Purchase
Agreement".
The date of this Prospectus is August 2, 1996.
<PAGE>
<PAGE>
IN CONNECTION WITH THIS OFFERING THE COMPANY MAY EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE RESPECTIVE MARKET
PRICES OF THE COMMON STOCK AND THE RIGHTS AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE, IN THE
OVER-THE-COUNTER-MARKET, OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
ADDITIONAL INFORMATION
Health-Chem Corporation ("Health-Chem" or the "Company"), has
filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (including all
amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act") with
respect to the Common Stock offered hereby. As permitted by the
rules and regulations of the Commission, this Prospectus omits
certain information contained in the Registration Statement. For
further information with respect to the Company and the Common
Stock offered hereby, reference is hereby made to the Registration
Statement and to the exhibits and schedules filed therewith.
Statements contained in this Prospectus regarding the contents of
any agreement or other document filed as an exhibit to the
Registration Statement are not necessarily complete, and in each
instance reference is made to the copy of such agreement or
document filed as an exhibit to the Registration Statement, each
statement being qualified in all respects by such reference. The
Registration Statement, including exhibits and schedules thereto,
may be inspected at the public reference facilities maintained by
the SEC at 450 Fifth Street, N.W. Washington, DC 20549, and copies
of all or any part thereof may be obtained from such office upon
payment of the prescribed fees.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the
Commission are incorporated by reference into this prospectus:
(1) The Company's annual report for the fiscal year ended
December 31, 1995 on Form 10-K
(2) The Company's definitive proxy statement dated April 5,
1996 for the 1996 Annual Meeting of Stockholders
(3) The Company's quarterly report for the fiscal quarter
ended March 31, 1996 on Form 10-Q.
<PAGE>
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), prior to the termination
of the Offering shall be deemed to be incorporated by reference
into the Prospectus.
The Company will provide without charge to each person to whom
a copy of this Prospectus has been delivered on the written request
of any such person, a copy of any or all of the documents described
above which have been incorporated by reference in this Prospectus,
other than exhibits to such documents. Written requests for copies
of such documents should be addressed to Bruce M. Schloss, Esq.,
Secretary, Health-Chem Corporation, 1212 Avenue of the Americas,
24th Floor, New York, New York, 10036.
_____________________________
<PAGE>
<PAGE>
THE OFFERING
The Subscription Rights Offering
The Company is offering up to 1,320,000 shares of Common Stock
(the "Total Maximum") to record holders of Health-Chem Common Stock
other than Marvin M. Speiser as of the close of business on the
Record Date pursuant to transferable Subscription Rights
represented by the Warrants. The total number of shares being
offered to record holders reflects Mr. Speiser's retention of such
number of shares as would have been offered to Mr. Speiser had the
Company offered, and had he participated in, an offering composed
of all 1,782,689 shares held by Mr. Speiser subject to the
Company's options described under the section of this prospectus
entitled "Stock Purchase Agreement". The Subscription Privilege
entitles holders of Common Stock as of the Record Date to purchase
three shares of Common Stock for every ten shares of Common Stock
held on the Record Date. No fractional shares or fractional Rights
or cash in lieu therefor will be issued, distributed, or paid by
the Company. Stockholders of record will be delivered a Warrant
representing one Right for each share of Common Stock held on the
Record Date. Warrants shall be exercisable by a holder in groups
of ten Rights (for three shares) and not in groups of less than ten
Rights, but a holder may exercise some Rights without exercising
all Rights granted to such holder. Subject to the foregoing,
holders of the Company's Common Stock are entitled to subscribe for
all, or any portion of, the shares of Common Stock underlying their
Subscription Privilege.
The Purpose of the Offering
The Board of Directors of the Company has concluded that it is
in the best interest of the Company and its stockholders to
increase the number of shares of the Company's Common Stock in the
hands of non-affiliates, and that it is likely that the capital
markets will be better able to analyze and evaluate the performance
of the Company from a financial perspective if a relatively large
percentage of the Company's outstanding Common Stock were not
subject to repurchase by the Company. The Company has the right to
acquire from Mr. Speiser 1,207,689 shares of its Common Stock
pursuant to an option agreement dated as of August 30, 1991 (the
"1991 Option") and 575,000 shares of its Common Stock pursuant to
an option agreement dated as of July 15, 1994 (the "1994 Option"
and, collectively with the 1991 Option, the "Options"). As of July
31, 1996, the per share exercise price under the 1991 Option was
$0.46, and the per share exercise price under the 1994 Option was
$2.36. The exercise price under each Option is an amount equal to
Mr. Speiser's acquisition cost for the underlying Common Stock,
<PAGE>
including amount equal to interest calculated at prime from the
creation of such Option. The Company and Mr. Speiser have entered
into a Stock Purchase Agreement dated as of March 29, 1996, as
amended (the "Stock Purchase Agreement") pursuant to which this
Offering is being effected. Under the terms of the Stock Purchase
Agreement, Mr. Speiser will provide the shares of Common Stock for
purchase by the Company in an amount approximately equal to the
number of shares of Common Stock to be issued to subscribers in the
Subscription Rights Offering. Under the Stock Purchase Agreement,
Mr. Speiser is obligated to sell up to 1,269,820 shares of Common
Stock to the Company, which shares are currently subject to the
Options, at a price equal to the weighted per share average
exercise price under the Options (which was $1.07 as of July 31,
1996). To the extent that subscriptions are validly exercised for
an amount in excess of that, Mr. Speiser may sell the additional
amount to the Company at the Average Option Price (as defined below
in the section entitled "Stock Purchase Agreement") or the Company
will issue shares from treasury. For terms of the Options and the
Stock Purchase Agreement, see "Stock Purchase Agreement."
The proceeds of the Offering will be used, in part, to fund the
purchase of the Common Stock from Mr. Speiser under the Stock
Purchase Agreement. See "Stock Purchase Agreement" and "Use of
Proceeds."
Rights Agent
In connection with the Offering and the related transactions,
Continental Stock Transfer & Trust Company (the "Rights Agent") has
been engaged by the Company as a rights agent pursuant to an
agreement executed between the Company and the Rights Agent (the
"Rights Agent Agreement"). The Rights Agent acts as the Transfer
Agent and Registrar for the Company. Holders of Rights will be
permitted to exercise and/or transfer all or a portion of such
Rights through the Rights Agent, and/or may sell all or a portion
of such Rights through a registered broker-dealer, by appropriate
endorsement and delivery of the Warrant. The Company will pay the
fees and expenses of the Rights Agent and has also agreed to
indemnify the Rights Agent from certain liability that the Rights
Agent may incur in connection with the Offering.
Information Agent
Questions and requests for copies of applicable documents and
for assistance concerning the exercise or transfer of the Rights
should be directed to MacKenzie Partners, Inc., (the "Information
Agent") at 156 Fifth Avenue, New York, New York 10010, Telephone
<PAGE>
(800) 322-2885, Telecopy (212) 929-0308. The Company will pay the
fees and expenses of the Information Agent and has also agreed to
indemnify the Information Agent from certain liability that the
Information Agent may incur in connection with the Offering.
Plan of Distribution
The Rights are transferable and it is expected that the Rights
will be traded on the American Stock Exchange until the close of
business on the day preceding the Expiration Date of the
Subscription Rights Offering. There can be no assurances as to
whether a market will develop in the Rights, and, if such market
should develop, whether the market will remain available throughout
the exercise period, or the price at which Rights may trade.
Expiration Date
The Subscription Rights Offering will expire at 5:00 p.m.,
Eastern Daylight Time, on September 6, 1996, unless extended in the
sole discretion of the Board of Directors of the Company to a date
not later than September 16, 1996. After the Expiration Date,
unexercised Subscription Rights will be null and void. The Company
will not be obligated to honor any Warrants received by the Rights
Agent after the Expiration Date, regardless of when the documents
were sent.
Procedure for Subscribing for Common Stock in the Offering
Holders of Warrants who desire to exercise their Subscription
Rights must deliver to the Rights Agent, on or prior to the
Expiration Date, the properly completed and endorsed Warrant with
the required signatures guaranteed, together with a payment in full
of the Subscription Price for each share of Common Stock subscribed
for. Such payment must be by check or bank draft drawn upon a U.S.
bank, payable to Continental Stock Transfer & Trust Company, as
Rights Agent for the Company. Parties interested in wiring funds
for subscription may do so in accordance with the Warrant and the
related Letter of Instruction and should contact the Rights Agent
at (212) 509-4000, ext. 227. The Subscription Price will be deemed
to have been received by the Rights Agent only upon (i) clearance
of any uncertified check, (ii) receipt by the Rights Agent of any
certified check or bank draft drawn upon a U.S. bank, or (iii)
receipt of good funds in the Rights Agent's account designated
above. If paying by uncertified personal check, please note that
<PAGE>
the funds paid thereby may take at least five business days to
clear. Accordingly, persons who wish to pay the Subscription Price
by means of an uncertified personal check are urged to make payment
sufficiently in advance of the Expiration Date to ensure that such
payment is received and clears by such date and are urged to
consider payment by means of certified or cashier's check or wire
transfer of funds. All funds received in payment of the
Subscription Price shall be held by the Rights Agent and held in a
special agency account. Earnings on such funds, if any, will be
retained by the
Company whether or not the Offering is consummated.
The address to which the Warrant and payment of the
Subscription Price should be delivered is:
To: Continental Stock Transfer & Trust Company,
Attn: Reorganization Department
By Hand By Overnight Courier By Mail
2 Broadway 2 Broadway 2 Broadway
19th Floor New York, NY 10004 New York, NY 10004
New York, NY 10004
Telephone questions are directed to the Reorganization
Department at (212) 509-4000, ext. 227.
If the aggregate Subscription Price paid by a holder of Common
Stock exceeds the amount necessary to purchase the number of shares
of Common Stock for which such holder has indicated an intention to
subscribe, the excess payment tendered shall be returned following
the Expiration Date.
With respect to endorsed Warrants submitted by holders of
Common Stock, unless such endorsed Warrant (i) provides that the
shares of Common Stock to be issued pursuant to the exercise of
Subscription Rights are to be delivered to the holder of such
Subscription Rights or (ii) is submitted for the account of an
eligible guarantor institution, pursuant to Rule 17Ad-15 (an
"Eligible Institution"), promulgated under the Exchange Act,
signatures on such endorsed Warrants must be guaranteed with a
Medallion Guarantee by an Eligible Institution.
Holders of the Company's Common Stock for the account of
others, such as brokers, trustees or depositories for securities,
should notify the respective beneficial owners of such shares as
soon as possible to ascertain such beneficial owners' intentions
and to obtain instructions with respect to Subscription Rights. If
such a beneficial owner so instructs, the record holder of such
<PAGE>
Subscription Rights should complete, endorse, and deliver the
appropriate Warrants to the Rights Agent with the proper payment.
In addition, beneficial owners of Common Stock held through such a
nominee holder should contact the holder and request the holder to
affect transactions in accordance with the beneficial owners'
instructions.
The instructions accompanying the Warrants should be read
carefully and followed in detail. Warrants and payment should be
sent to the Rights Agent. Do not send Warrants or payments to the
Company.
The method of delivery of Warrants and payments of the
Subscription Price to the Rights Agent will be at the election and
risk of holders of Common Stock, but if sent by mail, it is
recommended that such Warrants and payments be sent by registered
mail, properly insured, with return receipt requested and that a
sufficient number of days be allowed to ensure receipt by the
Rights Agent and clearance of payment prior to the Expiration Date.
Because uncertified personal checks may take five business days to
clear, holders are strongly urged to pay, or arrange for payment,
by means of certified or cashier's check or wire transfer of funds.
All questions concerning the time limits, validity, form,
endorsement, exercise or eligibility of Warrants received or any
exercise of Subscription Rights will be determined by the Company,
whose determinations will be final and binding. The Company in its
sole discretion may waive any defect or irregularity, or permit a
defect or irregularity to be corrected within such time as it may
determine, or reject the purported subscriptions for shares of
Common Stock. Warrants will not be deemed to have been received or
accepted until all irregularities have been waived or cured within
such time as the Company determines in its sole discretion.
Neither the Company nor the Rights Agent will be under any duty to
give notification of any defect or irregularity in connection with
the submission of Warrants or incur any liability for failure to
give such notification.
Subscriptions for Common Stock which are received by the Rights
Agent from holders of Common Stock exercising Subscription Rights
may not be revoked. Subscription Rights are transferable by
appropriate endorsement and delivery of the Warrant or Warrants
representing such Rights.
Certain directors and executive officers of the Company may
assist in the Offering by, among other things, generally being
available to answer questions of potential subscribers. None of
<PAGE>
such directors and executive officers will receive compensation for
such services.
None of such directors and executive officers are registered as
securities brokers or dealers under the federal or applicable state
securities laws, nor are any such persons affiliated with any
broker or dealer. Because none of such persons are in the business
of either effecting securities transactions for others or buying
and selling securities for their own account, they are not required
to register as brokers or dealers under the federal securities
laws. In addition, the proposed activities of such directors and
executive officers are exempted from registration pursuant to a
specific safe-harbor provision of Rule 3a4-1 under the Exchange
Act. Substantially similar exemptions from registration are
available under applicable state securities laws.
If a Rights holder wishes to exercise Rights, but time will
not permit such holder to cause the Warrant(s) evidencing such
Rights to reach the Rights Agent on or prior to the Expiration
Date, such Rights may nevertheless be exercised if all of the
following conditions (the "Guaranteed Delivery Procedures") are
met:
(a) such holder has caused payment in full of the Subscription
Price for each share being purchased pursuant to the Subscription
Privilege to be received (in the manner set forth above) by the
Rights Agent on or prior to the Expiration Date;
(b) the Rights Agent receives, on or prior to the Expiration
Date, a notice of guaranteed delivery (a "Notice of Guaranteed
Delivery"), substantially in the form provided with the
"Instructions as to Exercise of Warrants" (the "Instructions")
distributed with the Warrants, from a member firm of a registered
national securities exchange or a member of the National
Association of Securities Dealers, Inc., from a commercial bank or
trust company having an office or correspondent in the United
States, or from a financial institution acceptable to the Rights
Agent (each an "Acceptable Institution"), stating the name of the
exercising Rights holder, the number of Rights represented by the
Warrant(s) held by such exercising Rights holder, the number of
shares being purchased pursuant to the Subscription Privilege and
guaranteeing the delivery to the Rights Agent of any Warrant(s)
evidencing such Rights within three AMEX trading days following the
date of the Notice of Guaranteed Delivery; and
(c) the properly completed Warrant(s) evidencing the Rights
being exercised, with any required signature guaranties, is
received by the Rights Agent within three AMEX trading days
following the date of the Notice of Guaranteed Delivery relating
<PAGE>
thereto. The Notice of Guaranteed Delivery may be delivered to the
Rights Agent in the same manner as Warrants at the address set
forth above, or may be transmitted to the Rights Agent by telegram
or facsimile transmission to the attention of the Reorganization
Department, with reference to this Offering (telecopy No. (212)
509-5150). Additional copies of the form of Notice of Guaranteed
Delivery are available upon request from the Rights Agent, whose
addresses and telephone numbers are set forth herein.
If an exercising Rights holder does not indicate the number of
Rights being exercised, or does not forward full payment of the
aggregate Subscription Price for the number of Rights that the
Rights holder indicates are being exercised, then the Rights holder
will be deemed to have exercised the Subscription Privilege with
respect to the maximum number of Rights that may be exercised for
the aggregate Subscription Price payment delivered by the Rights
holder. To the extent that the aggregate Subscription Price
payment delivered by the Rights holder exceeds the product of the
Subscription Price multiplied by the number of shares receivable
for the number of Rights evidenced by the Warrants delivered by the
Rights holder (such excess being the "Subscription Excess"), the
Subscription Excess paid by that Rights holder shall be returned as
soon as practicable by mail, without interest or deduction.
Any questions or requests for assistance concerning the method
of exercising Rights or requests for additional copies of this
Prospectus, the Instructions, or the Notice of Guaranteed Delivery
should be directed to the Information Agent at the address and
telephone and telecopy numbers set forth under the heading
"Additional Information" below.
Methods of Transferring Rights
The Rights may be purchased or sold through usual investment
channels. It is anticipated that they will trade on the AMEX until
the close of business on the last AMEX trading day preceding the
Expiration Date.
The Rights evidenced by a single Warrant may be transferred in
whole by endorsing the Warrant for transfer in accordance with the
accompanying instructions. A portion of the Rights evidenced by a
single Warrant (but not fractional Rights) may be transferred by
delivering to the Rights Agent a Warrant properly endorsed for
transfer, with instructions to register such portion of the Rights
evidenced thereby in the name of the transferee (and to issue a new
Warrant to the transferee evidencing such transferred Rights). In
such event, a new Warrant evidencing the balance of the Rights will
<PAGE>
be issued to the Rights holder or, if the Rights holder so
instructs, to an additional transferee.
Rights holders wishing to transfer all or a portion of their
Rights (but not fractional Rights) should allow a sufficient amount
of time prior to the Expiration Date for (i) the transfer
instructions to be received and processed by the Rights Agent, (ii)
a new Warrant to be issued and transmitted to the transferee or
transferees with respect to transferred Rights, and to the
transferor with respect to retained Rights, if any, and (iii) the
Rights evidenced by such new Warrants to be exercised or sold by
the recipients thereof. Neither the Company nor the Rights Agent
shall have any liability to a transferee or transferor of Rights if
Warrants are not received in time for exercise or sale prior to the
Expiration Date.
Except for the fees charged to the Company by the Rights
Agent, all commissions, fees and other expenses (including
brokerage commissions and transfer taxes) incurred in connection
with the purchase, sale or exercise of Rights will be for the
account of the transferor of the Rights, and none of such
commissions, fees or expenses will be paid by the Company or the
Rights Agent.
Issuance of Common Stock
Certificates representing shares of Common Stock purchased
pursuant to the Offering will be delivered to purchasers as soon as
practicable after the receipt of a valid Subscription. No
fractional shares of Common Stock will be issued in the Offering.
Certain Federal Income Tax Considerations
The following is a summary of the opinion of the Company's tax
counsel, Hinckley, Allen & Snyder, as to material federal income
tax consequences under present law to holders of Common Stock upon
the issuance of Rights and to Rights holders upon exercise and
disposition of the Rights. This discussion is based on the
provisions of the Internal Revenue Code of 1986, as amended (the
"Tax Code"), final, temporary and proposed Treasury regulations
thereunder, and administrative and judicial interpretations
thereof, all as in effect as of the date hereof and all of which
are subject to change (possibly on a retroactive basis).
Legislative, judicial or administrative changes or interpretations
could alter or modify the tax discussion set forth below. This
discussion does not purport to deal with all aspects of federal
income taxation that may be relevant to a particular Rights holder
in light of such Rights holder's personal investment circumstances
<PAGE>
or to certain types of Rights holders subject to special treatment
under the federal income tax laws (e.g., life insurance companies,
tax exempt organizations, foreign corporations and nonresident
aliens). No attempt is made to consider any aspects of state,
local or foreign taxation. Finally, substantial uncertainties
resulting from the lack of definitive judicial or administrative
authority and interpretations apply to various tax issues addressed
herein. The Company has not sought, nor does it intend to seek,
any rulings from the IRS relating to such issues or any other
issues.
EACH RIGHTS HOLDER IS URGED TO CONSULT SUCH RIGHTS HOLDER'S OWN TAX
ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE RIGHTS OFFERING
WITH RESPECT TO SUCH RIGHTS HOLDER'S OWN PARTICULAR TAX SITUATION,
INCLUDING THE APPLICATION AND EFFECT OF THE TAX CODE, AS WELL AS
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
Issuance of the Rights. Holders of Common Stock will not recognize
taxable income, for federal income tax purposes, in connection with
the receipt of the Rights.
Basis and Holding Period of the Rights. Unless a stockholder
elects otherwise (as provided in (ii) below), if the fair market
value of the Rights on the date of issuance is less than 15% of the
fair market value (on the date of issuance) of the Common Stock
with respect to which the Rights are received, the basis of the
Rights received by a stockholder as a distribution with respect to
such stockholder's Common Stock will be zero. If, however, either
(i) the fair market value of the Rights on the date of issuance is
15% or more of the fair market value (on the date of issuance) of
the Common Stock with respect to which the Rights are received or
(ii) the stockholder elects, in his or her federal income tax
return for the taxable year in which the Rights are received, to
allocate part of the basis of such Common Stock to the Rights, then
upon exercise or transfer of the Rights, the stockholder will
allocate such stockholder's basis in such Common Stock between the
Common Stock and the Rights in proportion to the fair market values
of each on the date of issuance, except that, in either case, no
allocation of basis will be made to the Rights if the Rights expire
unexercised. The holding period of a stockholder with respect to
the Rights received as a distribution on such stockholder's Common
Stock will include the stockholder's holding period for the Common
Stock with respect to which the Rights were issued. With respect
to a purchaser of Rights, the tax basis of such Rights will be
equal to the purchase price paid therefore and the holding period
for such Rights will begin on the date following the date of
purchase.
<PAGE>
Transfer of the Rights. Holders of Common Stock who sell the
Rights received in the issuance prior to exercise will recognize
gain or loss equal to the difference between the sale proceeds and
the basis of such stockholder, if any, in the Rights sold. Such
gain or loss will be capital gain or loss if gain or loss from a
sale of Common Stock held by such stockholder would be
characterized as capital gain or loss at the time of such sale.
Any gain or loss recognized on a sale of Rights acquired by
purchase will be capital gain or loss if Common Stock would, if
acquired by the seller, be a capital asset in the hands of such
seller.
Lapse of the Rights. Upon the lapse of any Rights received by
Rights holders on the issuance, such Rights holders will not
recognize any gain or loss, and no adjustment will be made to the
basis of the Common Stock, if any, owned by such Rights holders.
Upon the expiration of any Rights purchased by purchasers of the
Rights, such purchasers will be entitled to a loss equal to their
tax basis in the Rights. Any loss recognized on the expiration of
the Rights acquired by the purchase will be a capital loss if
Common Stock would, if acquired by the seller, be a capital asset
in the hands of such seller.
Exercise of the Rights; Basis and Holding Period of the Common
Stock Acquired through Exercise. Rights holders will not recognize
any gain or loss upon the exercise of such Rights. The basis of
the Common Stock acquired through the exercise of the Rights will
be equal to the sum of the Exercise Price therefor and any basis of
the Rights holder in such Rights. The holding period for the
Common Stock acquired through exercise of the Rights will commence
on the date the Rights are exercised.
Blue Sky Limitation
The Company will not be required to make the Offering available
to or to issue shares of Common Stock to any holder of Common Stock
who is resident in a state or other jurisdiction in which the
Company deems, in its sole discretion, that the costs associated
with the compliance with applicable securities law are excessive
relative to the benefit conferred or in which offers or sales may
be unlawful.
Right to Extend or Terminate the Offering
The Company expressly reserves the right: (i) to extend the
Expiration Date to a date not later than September 16, 1996, upon
notice to the Rights Agent; and (ii) as to then-unexercised Rights
<PAGE>
only, to terminate the Offering, by notice to the Rights Agent, if
the Offering is prohibited by law or regulation or is enjoined by
a court of law of competent jurisdiction. The Company is not aware
of any pending action which may result in such an injunction. The
Offering would be terminated by the Company giving oral or written
notice thereof to the Rights Agent, and making a public
announcement thereof. If the Offering is so terminated, all funds
received with respect to then-unexercised Rights will be promptly
refunded without interest. See "Recent Developments."
No Board Recommendation
An investment in the Common Stock must be made pursuant to
each Right holder's or prospective investor's evaluation of the
Offering and of his, her, or its best interests. Accordingly, the
Board of Directors of the Company does not make any recommendation
regarding the purchase, sale, transfer, or exercise of Rights. The
Board of Directors does, however, encourage Rights holders to
carefully consider either exercising or selling their Rights prior
to the Expiration Date.
Additional Information
If you have questions or require additional information
concerning the Offering, contact the Information Agent at 156 Fifth
Avenue, New York, New York 10010, Telephone (800) 322-2885,
Telecopy (212) 929-0308.
USE OF PROCEEDS
The Company intends to use the proceeds of the Offering to
fund the payment to Mr. Speiser for the purchase of shares of
Common Stock pursuant to the Stock Purchase Agreement (as described
below, which shares shall be approximately equal to the number of
shares of Common Stock to be issued in the Offering), and, to the
extent that such proceeds exceed the aggregate exercise price, to
offset costs incurred in connection with the Offering and for other
corporate purposes. See "Stock Purchase Agreement" for discussion
of the determination of the per share amount to be paid to Mr.
Speiser in exercise of the Options covering shares to be offered
hereunder.
STOCK PURCHASE AGREEMENT
<PAGE>
Mr. Speiser, his wife, and entities controlled by them are
currently the beneficial holders of 3,565,846 shares of the
7,982,424 outstanding shares of common stock $.01 par value of the
Company (the "Common Stock"). Of these 3,565,846 shares, a total
of 1,782,689 are subject to repurchase by the Company pursuant to
the Options. The terms of certain 10.375% convertible subordinated
debentures (the "Debentures") more fully described in the Company's
annual report incorporated herein by reference, restrict the
Company's ability to repurchase Company Common Stock, except in
certain circumstances, one of which is repurchase with the proceeds
of the substantially concurrent sale of Common Stock.
The Board of Directors of the Company, has concluded that it
is in the best interests of the Company and its stockholders to
increase the number of shares of the Company's Common Stock in the
hands of non-affiliates, and that it is likely that the capital
markets will be better able to analyze and evaluate the performance
of the Company from a financial perspective if a relatively large
percentage of the Company's outstanding Common Stock were not
subject to repurchase by the Company. The Company and Mr. Speiser
entered into a Stock Purchase Agreement dated as of March 29, 1996,
as amended (the "Stock Purchase Agreement") pursuant to which this
Offering is being effected. Under the Stock Purchase Agreement,
Mr. Speiser will provide the shares of Common Stock for purchase by
the Company in an amount approximately equal to the number of
shares of Common Stock to be issued to subscribers in the
Subscription Rights Offering.
Pursuant to the Stock Purchase Agreement, the Company has
agreed to (a) undertake this Offering; (b) set the Offering
exercise price per share at an amount not less than the Company's
weighted average purchase price for all 1,782,689 shares subject to
the 1991 Option and the 1994 Option (the "Average Option Price");
and (c) amend the 1991 Option and the 1994 Option to permit the
partial exercise of each option agreement in proportion to the
total number of shares subscribed for pursuant to the Offering,
producing a per share exercise price equal to the Average Option
Price. As of July 31, 1996 the per share exercise price was $0.46
for the 1,207,689 shares under the 1991 Option and the per share
exercise price was $2.36 for the 575,000 shares under the 1994
Option, and the Average Option Price for all 1,782,689 shares
subject to the Options was $1.07 per share. Under the terms of the
Stock Purchase Agreement, upon conclusion of the Offering Mr.
Speiser will retain the 512,869 shares subject to the Options but
not subject to the Stock Purchase Agreement and all unsubscribed
for shares free of any option of the Company and the Options shall
terminate.
<PAGE>
RECENT DEVELOPMENTS
On or about May 21, 1996, two stockholders of the Company
commenced an action against the Company, its directors, and a
former director in the Court of Chancery of the State of Delaware,
in and for the County of Newcastle (C.A. #15007). The Complaint,
which contains direct and derivative claims and is styled as both
an individual and a class action, alleges that the defendants have
breached their fiduciary duties insofar as the transactions under
the Stock Purchase Agreement unfairly benefit Mr. Speiser to the
detriment of the other stockholders and violate the terms of a 1991
Chancery Court order under which a derivative action was settled.
Plaintiffs sought expedited proceedings and preliminary
injunctive relief. A hearing before the Chancery Court on
Plaintiffs' Motion for a Preliminary Injunction was held on June
24, 1996. In a Memorandum Opinion dated July 3, 1996, the Vice
Chancellor denied the Plaintiffs' Motion, on the basis that the
Plaintiffs failed to show irreparable harm or the likelihood of
establishing that the 1991 Chancery Court order was violated. On
July 23, 1994, the Delaware Supreme Court denied the Plaintiffs'
interlocutory appeal of the Vice Chancellor's decision. The
Plaintiffs may still seek money damages after a trial on the
merits. No trial date has been established. The Company continues
to believe that the allegations in the Complaint are without merit
and that its directors have acted scrupulously in the exercise of
their fiduciary duties. The Company also believes that an adverse
determination in this proceeding would not have a materially
adverse effect on the business or financial condition of the
Company. The Company intends to vigorously resist the efforts of
these Plaintiffs to interfere with the effectuation of this
Offering and the transactions contemplated hereunder.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock
offered hereby will be passed on for the Company by Hinckley, Allen
& Snyder, Boston, Massachusetts.
EXPERTS
The consolidated financial statements and the related
financial statement schedule of the Company as of December 31,
1995, and for the year then ended which were included in the
Company's Annual Report Form 10-K for the year ended December 31,
1995, and incorporated herein by reference, have been audited by
<PAGE>
Coopers & Lybrand L.L.P., independent auditors as stated in their
report appearing therein. The consolidated financial statement and
related financial schedules of the Company as of December 31, 1994
and for each of the two years in the period ended December 31, 1994
which were included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995, and incorporated herein by
reference have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing therein. In each
case, these financial statements have been so incorporated herein
by reference in reliance upon the respective reports of each such
firm given upon their authority as experts in accounting and
auditing.
<PAGE>
<PAGE>
HEALTH-CHEM CORPORATION
_____________________
No dealer, salesman or other person has been authorized to
give any information or to make any representations not contained
in this Prospectus in connection with the offer contained in this
Prospectus by the Company. This Prospectus does not constitute an
offer to sell or the solicitation of any offer to buy the
securities offered hereby by anyone in any jurisdiction in which
such offer or solicitation is not authorized, or to any person to
whom it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that information
herein is correct as of any time subsequent to the date hereof.
_____________________
TABLE OF CONTENTS
Page
Additional Information 2
Documents Incorporated by Reference 2
The Offering 3
Use of Proceeds 8
Stock Purchase Agreement 8
Recent Developments 9
Legal Matters 9
Experts 9
_______________________
Prospectus dated August 2, 1996
