<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-
12
................Health-Chem Corporation.....................
(Name of Registrant as Specified in Its Charter)
.................Health-Chem Corporation.....................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
...............................................................
2) Aggregate number of securities to which transaction
applies:
...............................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
...............................................................
4)Proposed maximum aggregate value of transaction:
...............................................................
5)Total fee paid:
...............................................................
[ ]Fee paid previously with preliminary material:
...............................................................
[ ]Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
<PAGE>
1) Amount previously paid:
...............................................................
2) Form, Schedule or Registration Statement No.:
...............................................................
3) Filing Party:
...............................................................
4) Date Filed:
...............................................................
<PAGE>
<PAGE>
HEALTH-CHEM CORPORATION
1212 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 12, 1997
To the Stockholders of Health-Chem Corporation:
Notice is hereby given that the Annual Meeting of
Stockholders of Health-Chem Corporation (the "Company") will be
held at the Boardroom of the American Stock Exchange, 86 Trinity
Place, New York, New York, on May 12, 1997, at 10:00 A.M. (local
time) for the following purposes:
1. To elect ten directors.
2. To transact any such other business as may come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on
April 2, 1997 as the record date for determining stockholders
entitled to notice of and to vote at the meeting.
A proxy and return envelope are enclosed for your
convenience.
By Order of the Board of Directors
Marvin M. Speiser,
Chairman of the Board and President
April 7, 1997
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, A
RETURN ENVELOPE REQUIRING NO POSTAGE IF MAILED IN THE UNITED
STATES IS ENCLOSED FOR YOUR CONVENIENCE. PROMPT RETURN OF THE
PROXY WILL ASSURE A QUORUM AND SAVE THE COMPANY UNNECESSARY
EXPENSE.
<PAGE>
<PAGE>
HEALTH-CHEM CORPORATION
1212 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
_________________
PROXY STATEMENT
_________________
This Proxy Statement is furnished to the stockholders of
Health-Chem Corporation, a Delaware corporation (the "Company"),
in connection with the solicitation of proxies by the Board of
Directors for use at the annual meeting of stockholders of the
Company (the "Meeting") to be held on May 12, 1997 and any
adjournment or adjournments thereof. A copy of the notice of
meeting accompanies this Proxy Statement. It is anticipated that
the mailing of this Proxy Statement and the enclosed proxy will
commence on April 9, 1997.
Only stockholders of record at the close of business on
April 2, 1997, the record date for the Meeting, will be entitled
to notice of and to vote at the Meeting. On the record date, the
Company had outstanding for purposes of voting at the Meeting
7,982,424 shares of common stock, par value $.01 per share (the
"Common Stock"). See "Security Ownership of Certain Beneficial
Owners and Management."
Directors of the Company will be elected by a plurality vote
of the outstanding shares of Common Stock present and entitled to
vote at the Meeting. Action on any other matter is approved by a
majority vote of the outstanding shares of Common Stock present
and entitled to vote at the Meeting.
Stockholders who execute proxies may revoke them by giving
written notice to the Secretary of the Company at any time before
such proxies are voted or by submitting a duly executed proxy
bearing a later date. Attendance at the Meeting shall not have
the effect of revoking a proxy unless the stockholder so
attending shall, in writing, so notify the Secretary of the
Meeting at any time prior to the voting of the proxy.
The Board of Directors does not know of any matter that is
expected to be presented for consideration at the Meeting other
than as is described in this Proxy Statement. However, if other
matters properly come before the Meeting, the persons named in
the accompanying proxy intend to vote thereon in accordance with
their judgment.
All proxies received pursuant to this solicitation will be
voted except as to matters where authority to vote is
specifically withheld and, where a choice is specified as to the
proposal, they will be voted in accordance with such
specification. If no instructions are given, the proxy will be
voted for the nominees for election as directors of the Company
listed below. Abstentions and broker non-votes will each be
counted as present for purposes of determining the presence of a
quorum but will not be treated as votes cast for purposes of any
of the matters to be voted on at the meeting.
The address of the Company's principal executive office is
1212 Avenue of the Americas, New York, New York 10036.<PAGE>
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The By-laws of the Company provide that the Board of
Directors may, from time to time, fix the number of directors
constituting the Board of Directors to be not less than three and
not more than fifteen. The Board of Directors currently consists
of ten members. At the Meeting, ten directors are to be elected
to serve until the next annual meeting of stockholders or until
their respective successors are elected and qualified. Set forth
below are the names of the nominees for director, their ages,
principal occupations and business experience for at least the
previous five years. All of the nominees are presently directors
of the Company. It is the intention of the persons named in the
enclosed proxy to vote for the election as directors of the
persons named in the table below unless a contrary direction is
indicated on the enclosed proxy. If any such nominee should
become unavailable for any reason, which the Board of Directors
has no reason to anticipate, the persons named in the enclosed
proxy reserve the right to substitute another person of their
choice in his place. The holders of Common Stock are entitled to
one vote per share. The election of each director will require
the affirmative vote of a plurality of the votes cast at the
Meeting.
Name Age(1) Principal Occupation
Martin Benis, Ph.D. 70 Professor of Accounting
and Auditing at Baruch
College of the City
University of New York
Steven Bernstein 40 Senior Vice President
of the Company
Matthew Goldstein, Ph.D. 55 President of Baruch
College of the City
University of New York
Samuel R. Goodson 67 President of Pacific
Combining Corporation
Paul R. Moeller 50 Vice President-Finance
of the Company and
President of Hercon
Environmental Corporation
Eugene Roshwalb 57 Certified Public
Accountant
<PAGE>
<PAGE>
Name Age(1) Principal Occupation
Bruce M. Schloss 41 Vice President, Secretary
and General Counsel of
the Company
Marvin M. Speiser(2) 71 Chairman of the Board and
President of the Company
Robert D. Speiser(2) 43 Executive Vice President
of the Company
and President
of Transderm Laboratories
Corporation and Hercon
Laboratories Corporation
Milton Y. Zussman 75 Attorney
(1) Age as of March 1, 1997.
(2) Marvin M. Speiser is the father of Robert D. Speiser.
The following are summaries of the business experience
during at least the last five years of each of the persons
nominated for election as a director of the Company.
Martin Benis, Ph.D. has been Professor of Accounting and
Auditing at Baruch College of the City University of New York
since 1972. Dr. Benis served as the Chairman of the Department
of Accounting at Baruch from 1981 to 1987. He is a certified
public accountant and the author of a book on auditing standards
and procedures as well as numerous articles and chapters in books
on accounting and auditing. He became a director of the Company
in March 1996.
Steven Bernstein is an industrial engineer. He has been
Senior Vice President of the Company since April 1, 1994. From
September 1986 to March 1994, Mr. Bernstein served as Vice
President-Operations of the Company. Prior thereto, he was Vice
President-Operations of Union Broach Corporation, a former
wholly-owned subsidiary of the Company ("Union Broach"). Mr.
Bernstein was elected a director of the Company in December 1988.
Matthew Goldstein, Ph.D. has served as President of Baruch
College of the City University of New York ("The University")
since September 1991. Dr. Goldstein was previously the Acting
Vice Chancellor for Academic Affairs for The University and
President of the Research Foundation of The University. Dr.
Goldstein is a member of the Board of Trustees of the Bronx-
Lebanon Hospital Center and of the Board of Directors of the Jean
Cocteau Repertory, ex-officio. He also serves on the Board of
Directors of Audits and Surveys Worldwide, a market research
company. Dr. Goldstein became a director of the Company in March
1994.
<PAGE>
<PAGE>
Samuel R. Goodson has served as President of Pacific
Combining Corporation, a wholly-owned subsidiary of the Company
("Pacific"), for more than five years. He was elected a director
of the Company in November 1989.
Paul R. Moeller is a certified public accountant. In
September 1985, he joined the Company as Group Controller. He
has been Vice President-Finance of the Company since November
1988 and President of the Company's 98.5% owned subsidiary,
Hercon Environmental Corporation ("Hercon Environmental"), since
January 1992.
Eugene Roshwalb is a certified public accountant. He has
maintained a practice as a sole practitioner for more than five
years. He became a director of the Company in March 1991.
Bruce M. Schloss is an attorney. He has been General
Counsel of the Company since September 1991, Secretary since
October 1991 and Vice President since May 1992. Prior to joining
the Company, Mr. Schloss was a member of the firm of McLaughlin &
Stern, Ballen and Ballen. Mr. Schloss was elected a director of
the Company in May 1994.
Marvin M. Speiser has served as Chairman of the Board of
Directors of the Company and President since January 1969.
Robert D. Speiser has been Executive Vice President of the
Company since April 1, 1994, President of the Company's 90% owned
subsidiary Transderm Laboratories Corporation ("Transderm") since
April 1989 and President of Transderm's 98.5% owned subsidiary
Hercon Laboratories Corporation ("Hercon Laboratories") since May
1990. From October 1986 to March 1994, he served as Senior Vice
President of the Company. Mr. Speiser also served as President
of Union Broach from January 1983 through November 1993. Prior
to 1986, he served as Vice President of the Company. Mr. Speiser
was elected a director of the Company in February 1983. Mr.
Speiser is an attorney.
Milton Y. Zussman has been an attorney operating as a sole
practitioner for more than five years. Mr. Zussman also serves
as Chairman of the Board of Directors of United Community
Services of Metropolitan Detroit. He became a director of the
Company in March 1991.
Directors' Fees, Committees and Meetings
The Company does not compensate its employee directors for
services rendered as directors. Non-employee directors receive
$1,250 per month and an additional fee of $500 for each meeting
of the Board of Directors attended and $500 for each committee
meeting attended that is independently scheduled. Non-employee
directors were also reimbursed for expenses incurred in attending
such meetings. In addition, in 1996, Mr. Eugene Roshwalb, a non-
employee director, was provided with the use of a leased
automobile for consulting services rendered to the Company in
connection with the resolution of certain workers' compensation
rate disputes. The adjusted annual lease value of this
automobile in 1996 was $4,088.
<PAGE>
During 1996, the Board of Directors held four meetings and
acted by unanimous consent on two occasions. During such period
no director participated in fewer than 80% of the aggregate of
the number of meetings of the Board of Directors and committees
thereof of which such director was a member. The Board of
Directors has, among others, an Audit Committee and a
Compensation Committee. The Committees receive their authority
and assignments from the Board of Directors and report to the
Board. The Audit Committee is currently composed of Martin Benis
and Eugene Roshwalb. The Compensation Committee is currently
composed of Martin Benis, Eugene Roshwalb and Milton Y. Zussman.
All Committee members are non-employee directors.
The Audit Committee, among other things, is empowered to
recommend to the Board of Directors the engagement of the
independent auditors and to review the scope and procedures of
the activities of the independent auditors and their reports on
their audits. The Audit Committee meets periodically with the
independent auditors and management to review their work and
confirm that they are properly discharging their
responsibilities. The Audit Committee met twice during the last
year.
The Compensation Committee is empowered to make
recommendations to the Board of Directors relating to the overall
compensation arrangements for senior management of the Company
and to make recommendations to the Board of Directors pertaining
to any compensation plans in which officers and directors of the
Company are eligible to participate. The Compensation Committee
is also responsible for the administration of the Company's stock
option and performance equity plans and is the approving
authority for management's recommendations with respect to option
grants. The Compensation Committee met once and acted by
unanimous consent on another occasion during 1996.
The Company does not have a standing nomination committee.
<PAGE>
<PAGE>
EXECUTIVE OFFICERS
The following are the executive officers of the Company:
Officers Position Age(1)
Marvin M. Speiser(2) Chairman of the Board 71
and President
Robert D. Speiser(2) Executive Vice President of 43
the Company and President
of Transderm and Hercon
Laboratories
Thomas J. Atkins, Ph.D. Vice President of Transderm 50
and Vice President-Research
and Development of Hercon
Laboratories
Steven Bernstein Senior Vice President 40
Samuel R. Goodson President of Pacific 67
James H. Heath Vice President-Market 51
Development of Hercon
Environmental
Donald E. Kauffman, Jr. Vice President of 42
Transderm and Vice
President-Manufacturing of
Hercon Laboratories
Murray Lieber Vice President of Transderm 58
and Vice President-Marketing
of Hercon Laboratories
Peter F. McKernan Executive Vice President 43
of Herculite
James N. Merrill Executive Vice President 41
of Herculite
Paul R. Moeller Vice President-Finance and 50
President of Hercon
Environmental
Alberto R. Vice President-Product 49
Quisumbing, Ph.D. Development of Hercon
Environmental
Bruce M. Schloss Vice President, Secretary 41
and General Counsel
James M. Schrader Vice President - Manufacturing 41
of Pacific
(1) As of March 1, 1997
(2) Marvin M. Speiser is the father of Robert D. Speiser.
<PAGE>
The following is a summary of the business experience during
at least the last five years of all executive officers of the
Company and its subsidiaries who are not directors or nominees
for election as directors. Each of the officers serves at the
discretion of the Board of Directors of the Company or its
subsidiary, as the case may be, from the date of his election
until the next annual meeting of the Board of Directors of the
Company or its subsidiary or until his successor is elected and
qualified, subject to earlier termination by removal or
resignation.
Thomas J. Atkins, Ph.D. has been Vice President of Transderm
and Vice President-Research and Development of Hercon
Laboratories since March 1996. Prior to joining Hercon
Laboratories and since 1995, Dr. Atkins served as Vice President,
Research and Development for Medisorb Technologies International,
L.P. ("Medisorb"). From 1988 to 1994, he served as Director,
Polymer Research and Drug Delivery Systems for Stolle Research &
Development Corporation ("Stolle"). Both Medisorb and its parent
Stolle are engaged in research and manufacturing of controlled
release drug delivery systems. Dr. Atkins is the author of
numerous publications and the named inventor on numerous United
States and foreign patents.
James H. Heath has been Vice President-Market Development of
Hercon Environmental since February 1995. From May 1994 to
January 1995, Mr. Heath was Director of Marketing and Sales at
Trece, Inc., a marketer of pheromone products. From 1992 to May
1994, he was a co-principal of Ridge Technologies, Inc.,
providing consulting services to the specialty chemical, pest
control and animal health industries. From 1990 to 1992, Mr.
Heath was Marketing Manager and then Business Manager at Roussel
Bio Corporation for Roussel's Pest Control and Lawn & Garden
Product divisions.
Donald E. Kauffman, Jr. has been Vice President of Transderm
since July 1995 and Vice President-Manufacturing of Hercon
Laboratories since July 1987. Mr. Kauffman joined the Company in
June 1976 and has served in various positions prior to becoming a
Vice President of Hercon Laboratories in 1987.
Murray Lieber has been Vice President of Transderm since
July 1995 and Vice President-Marketing of Hercon Laboratories
since June 1992. From September 1989 to June 1992, he was Vice
President, Account Supervisor at Klemtner Advertising, a
pharmaceutical advertising agency. Mr. Lieber was Vice President
of Diversified Health Affiliates, Inc., a pharmaceutical and
health care consulting firm, from January 1988 to September 1989.
Prior thereto, Mr. Lieber held positions in marketing and
business development at companies including Berlex Laboratories
(a division of Schering AG), Roche Laboratories, and Warner-
Chilcott Laboratories (a division of Warner Lambert Company).
Peter F. McKernan has been an Executive Vice President of
Herculite Products, Inc., a wholly-owned subsidiary of the
Company ("Herculite"), since June 1993. For more than ten years
prior thereto, Mr. McKernan was employed by the BTR Group of
companies, a British industrial manufacturing concern where, for
in excess of five years prior to June 1993, Mr. McKernan served
as a Director of Business Development.
<PAGE>
James N. Merrill has been an Executive Vice President of
Herculite since June 1993. Mr. Merrill joined Herculite in 1983
as Industrial Sales Manager. From July 1986 to June 1993, he
served as Vice President-Sales and Marketing of Herculite. Mr.
Merrill also served as President of the environmental division of
Hercon Laboratories from April 1989 to December 1991.
Alberto R. Quisumbing, Ph.D. has been Vice President-Product
Development of Hercon Environmental since April 1989.
Dr. Quisumbing joined the Company in April 1975 as Field
Applications Manager and has served in various positions prior to
becoming a Vice President of Hercon Environmental.
James M. Schrader has been Vice President-Manufacturing of
Pacific since May 1996. From January 1995 to April 1996, Mr.
Schrader served as Plant Manager of Formica Corporation's
Evandale, Ohio facility. Mr. Schrader served as Plant Manager at
the Port Clinton, Ohio facility of Uniroyal Technology
Corporation ("Uniroyal") from 1993 to 1994, and in various other
capacities with Uniroyal from 1979 to 1993.
<PAGE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
(a) As of February 28, 1997, other than as set forth in the
following table, the Company knows of no other person or "group"
(as that term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934) who beneficially owns more than 5% of any
class of the Company's voting securities. The following table
contains, as to each class of the Company's voting securities,
the name and address of each such 5% beneficial owner, the amount
of securities of such class beneficially owned, and the percent
of such class beneficially owned.
<PAGE>
<PAGE>
<TABLE> Number of Shares
<CAPTION> Beneficially Owned
<S> as of
Title of Class Name and address February 28, Percent
of Beneficial Owner 1997 (1) of Class
<C> <C> <C>
Common Stock Marvin M. Speiser (2) 2,769,567 (3)(4) 34.03%
Common Stock Laura G. and Marvin M. 2,769,567 (5) 34.03%
Speiser 1995 Trust (2)
Common Stock Andy E. Yurowitz 506,214 6.34%
8 Kupperman Lane
Monsey, NY 10952
/TABLE
<PAGE>
<PAGE>
(1) The information concerning security holders is based upon
information furnished to the Company by such security holder.
Except as otherwise indicated, all of the shares are owned of
record and beneficially and the persons identified have sole
voting and investment power with respect thereto.
(2) Address is c/o Health-Chem Corporation, 1212 Avenue of the
Americas, New York, NY 10036.
(3) Includes the following shares of Common Stock: (i) 266,664
shares owned by Lauralei Investors, Inc. ("Lauralei"), of which
Mr. Speiser and his wife, Laura G. Speiser, are the sole
stockholders; (ii) 144,000 shares which Mr. Speiser would receive
upon the exercise of all stock options which are currently
exercisable or exercisable within 60 days; (iii) 12,141 shares
which Mr. Speiser would receive upon conversion of 10 3/8%
convertible subordinated debentures; (iv) 1,000,890 shares held
by the Laura G. and Marvin M. Speiser 1995 Trust (the "1995
Trust"), of which Laura G. Speiser and Marvin M. Speiser serve as
trustees; (v) 204,000 shares held by the Marvin M. Speiser 1996
Trust (the "1996 Trust"), of which Laura G. Speiser and Robert D.
Speiser serve as trustees; and (vi) 311,703 shares owned by Laura
G. Speiser. Marvin M. Speiser disclaims beneficial ownership of
the shares of Common Stock referenced in (vi) above.
(4) Includes 317,406 shares subject to repurchase by the
Company from Marvin M. Speiser pursuant to option agreements
entered into in 1991 and 1994. See "Interest of Management in
Certain Transactions."
(5) Includes the following shares of Common Stock: (i)
1,000,890 shares of Common Stock held by the 1995 Trust; (ii)
204,000 shares of Common Stock held by the 1996 Trust; (iii)
266,664 shares of Common Stock owned by Lauralei; (iv) 144,000
shares which Marvin M. Speiser would receive upon the exercise of
all stock options which are currently exercisable or exercisable
within 60 days; (v) 12,141 shares of Common Stock which Marvin M.
Speiser would receive upon the conversion of 10 3/8% convertible
subordinated debentures; (vi) 830,169 shares of Common Stock
owned by Marvin M. Speiser; and (vii) 311,703 shares of Common
Stock owned by Laura G. Speiser. The Trusts and Laura G. Speiser
disclaim beneficial ownership of all shares of Common Stock other
than those referenced in (i), (ii) and (vii) above.
(b) As of February 28, 1997, each director of the Company, each
of the Company's current executive officers named in the Summary
Compensation Table below and all directors and officers of the
Company, as a group, beneficially owned the following amounts
(and percentages) of each class of the voting securities of the
Company.
<PAGE>
<PAGE>
<TABLE> Number of Shares
<CAPTION> Beneficially Owned
<S> Name of as of Percent of
Title of Class Beneficial Owner February 28, 1997 (1) Class
<C> <C> <C>
Common Stock Martin Benis 3,900 *
Common Stock Steven Bernstein 43,600 (2) *
Common Stock Matthew Goldstein 3,000 *
Common Stock Samuel R. Goodson 18,000 (2) *
Common Stock Peter F. McKernan 7,000 (2) *
Common Stock James N. Merrill 20,700 (2) *
Common Stock Paul R. Moeller 25,000 (2) *
Common Stock Eugene Roshwalb 6,500 *
Common Stock Bruce M. Schloss 18,000 (2) *
Common Stock Marvin M. Speiser 2,769,567 (2,3,4) 34.03%
Common Stock Robert D. Speiser 303,725 (2)(3)(5) 3.77%
Common Stock Milton Y. Zussman 29,380 (3) *
Common Stock All directors and
officers as a group
(18 Persons) 3,078,872 (6) 36.81%
</TABLE>
<PAGE>
<PAGE>
* Indicates ownership of less than one percent (1%) of class.
(1) The information concerning security holders is based upon
information furnished to the Company by such security holder.
Except as otherwise indicated, all of the shares are owned of
record and beneficially and the persons identified have sole
voting and investment power with respect thereto.
(2) Includes the following shares of Common Stock subject to
stock options which are currently exercisable or exercisable
within 60 days: Mr. Bernstein - 36,000; Mr. Goodson - 18,000;
Mr. McKernan - 2,000; Mr. Merrill - 20,700; Mr. Moeller - 25,000;
Mr. Schloss - 18,000; Mr. Marvin M. Speiser - 144,000; and Mr.
Robert D. Speiser - 66,000.
(3) Includes the following shares of Common Stock which the
named individual would receive upon the conversion of 10 3/8%
convertible subordinated debentures: Mr. Marvin M. Speiser -
12,141; Mr. Robert D. Speiser - 7,838; and Mr. Zussman - 1,895.
(4) See footnote (3) to the table under (a) above for the
number of shares with respect to which Marvin M. Speiser has the
right to acquire beneficial ownership and footnote (4) to the
table under (a) as to the beneficial ownership of certain other
shares.
(5) Includes 204,000 shares held by the 1996 Trust of which
Robert D. Speiser serves as a trustee. Mr. Speiser disclaims
beneficial ownership of these shares.
(6) Includes the following shares of Common Stock: (i) 357,700
shares which eleven of such persons would receive upon the
exercise of stock options which are either currently exercisable,
or exercisable within 60 days; (ii) 21,874 shares which would be
acquired by three of such persons upon the conversion of 10 3/8%
convertible subordinated debentures; and (iii) an aggregate of
266,664 shares owned by an entity controlled by or for the
benefit of certain relatives of two of such persons, all of which
shares are or may be deemed to be beneficially owned by such
persons.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's executive officers, directors and persons who
beneficially own more than 10% of the Company's Common Stock to
file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission ("SEC").
Such persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) reports filed by such
persons.
<PAGE>
Based solely on the Company's review of such reports furnished
to the Company, and written representations from certain
reporting persons, the Company believes that all such filing
requirements were complied with during or in respect of the year
ended December 31, 1996, except for the inadvertent late filing
by Dr. Matthew Goldstein, a director, of a report on Form 4 with
respect to his purchase of 3,000 shares in December 1996.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the
compensation of each of the Chief Executive Officer and the four
most highly-compensated executive officers of the Company whose
annual salary and bonus, if any, exceeded $100,000 for services
in all capacities to the Company during the last three fiscal
years.
<PAGE>
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
<S> Long-term
Compensation All Other
Name and Principal Annual Compensation Other Annual Awards Compensa-
Position Year Salary Bonus Compensation(1) Options tion(1)(3)
<C> <C> <C> <C> <C>
Marvin M. Speiser 1996 $443,462 $78,553 $ 36,151 0 $99,785
Chairman and Chief 1995 422,425 --- 39,917 5,000,000(2) 99,047
Executive Officer 1994 395,070 152,075 101,749 30,000 34,428
Robert D. Speiser 1996 $238,691 $ --- $ 3,876 0 $ 510
Executive Vice 1995 227,367 --- 13,561 5,000,000(2) 510
President and 1994 212,644 152,075 13,561 20,000 510
President - Transderm
Laboratories Corporation
and Hercon Laboratories
Corporation
James N. Merrill 1996 $138,375 $ 54,987 $ 2,119 0 306
Executive Vice 1995 130,000 --- 2,239 0 294
President - 1994 120,039 --- 2,353 10,000 171
Herculite
Products, Inc.
Peter F. McKernan 1996 $132,500 $ 39,277 $ 4,892 0 301
Executive Vice 1995 127,500 --- 24,826 0 289
President- 1994 126,546 --- 23,544 5,000 264
Herculite
Products, Inc.
Bruce M. Schloss 1996 $150,500 $ --- $10,698 0 306
Vice President and 1995 143,500 --- 9,724 0 198
General Counsel 1994 135,039 --- 9,136 10,000 194
/TABLE
<PAGE>
<PAGE>
(1) Does not include information with respect to personal
benefits provided to the named individuals which do not exceed
disclosure thresholds established under Securities and Exchange
Commission rules.
(2) Represents options to purchase 5,000,000 shares of common
stock of Transderm Laboratories Corporation subsidiary. See
"Executive Compensation-Employment Agreements."
(3) Represents the term cost value of all excess group life
insurance policies on behalf of the named individuals. For
Marvin M. Speiser, also includes $32,113 which represents the
term portion of the premium paid with respect to a split dollar
life insurance arrangement between the Company and Mr. Speiser,
and $56,392 which represents the present value to Mr. Speiser of
the non-term portion of the premium paid by the Company with
respect to this arrangement. The present value was calculated as
an interest-free loan on the whole life portion of the premium
over the maturation of the policy.
OPTION GRANTS IN LAST FISCAL YEAR
During 1996, no options to purchase Common Stock of the
Company were granted to any named executives.
<PAGE>
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
<S>
Number of Value of
Unexercised Unexercised
Options In-the-Money
at Options at
Shares Acquired 12/31/96 12/31/96(2)
on Value Exercisable/ Exercisable/
Name Exercises (1) Realized Unexercisable Unexercisable
(#) ($)(1) (#) ($)
<C> <C> <C> <C>
Marvin M. Speiser --- --- 144,000/36,000 0/0
Robert D. Speiser --- --- 66,000/24,000 0/0
James N. Merrill --- --- 20,700/ 8,800 0/0
Peter F. McKernan --- --- 2,000/ 3,000 0/0
Bruce M. Schloss --- --- 18,000/12,000 0/0
</TABLE>
<PAGE>
<PAGE>
(1) None of the named executive officers exercised any stock
options during the fiscal year ended December 31, 1996.
(2) Based upon the closing sale price per share of $1.00 of the
Company's Common Stock on December 31, 1996 on the American Stock
Exchange minus the respective option exercise price.
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENTS
In April 1995, Health-Chem entered into a five-year Employment
Agreement with Marvin M. Speiser which provided for an initial
base annual salary of $415,552 ($120,000 in respect of services
as an officer of the Company's Herculite subsidiary) plus an
annual bonus determined by the Company's Board at least equal to
ten percent of the amount by which pretax net income of each of
the Company's Herculite, Hercon Laboratories and Hercon
Environmental subsidiaries for a calendar year exceeds the
average of such subsidiary's pretax net income, as defined, for
the prior two calendar years, and for similar benefits, vacation
and perquisites as that made available to comparable executives
of the Company. The Employment Agreement also provides for
minimum yearly salary increases of 4% on each September 1 during
the employment period. Mr. Speiser received 5% salary increases
on each of September 1, 1995 and 1996. The Employment Agreement
further provides that upon retirement on or after January 1, 2000
(the "retirement date"), Marvin M. Speiser will be entitled to
receive an annual supplemental pension benefit equal to 60% of
his final base salary, which for this purpose will be the highest
nominal annual salary paid to him during his employment. The
supplemental pension will be payable for a period of ten (10)
years beginning on the retirement date, or if later, the January
1 following termination of employment. In the event of
termination of employment prior to the retirement date, the
amount of the supplemental pension payable on that date will be
prorated based on the period of employment from December 31, 1994
to the date of termination. No proration will be applied,
however, if Mr. Speiser's employment is involuntarily terminated
(as described below). An actuarially reduced supplemental
pension benefit may be paid if the benefit is commenced upon
termination of employment prior to the retirement date.
Pursuant to the Employment Agreement, the Company caused its
Transderm subsidiary to grant to Marvin M. Speiser an option to
purchase 5,000,000 shares of common stock of Transderm, at an
exercise price of $.10 per share, which was the per share
subscription exercise price in Transderm's initial public
offering. This option became exercisable in full on November 13,
1996, the first anniversary of the date of grant, and will expire
ten (10) years from the date of grant, subject to earlier
termination on the first anniversary of termination of Mr.
Speiser's employment due to death or disability, or in
circumstances that do not qualify as involuntary termination
under the Employment Agreement. In the event of involuntary
termination, the option will terminate on the earlier of the
fifth anniversary of such termination of employment or ten (10)
years from the date of grant. Finally, if within 18 months
following the termination of his employment with the Company or
any of its subsidiaries, Marvin M. Speiser accepts employment
with a competitor or otherwise engages in competition with the
business of the Company or any of its subsidiaries, any
<PAGE>
unexercised options at that time will be forfeited and he will be
obligated to pay Transderm with respect to any exercised options,
the economic value realized or obtained at the time of exercise.
Marvin M. Speiser is entitled to continue to receive the
salary, bonus and other compensation provided for under the
Employment Agreement for a period of five (5) years following an
involuntary termination of his employment during the term of the
Employment Agreement. Marvin M. Speiser's employment will be
deemed to have been involuntarily terminated if his employment is
terminated by the Company for reasons other than cause, which is
defined to mean certain felony convictions or the willful and
continued failure to substantially perform duties. Mr. Speiser's
employment will be deemed to have been involuntarily terminated
in the event of his resignation following a breach of the
Employment Agreement by the Company, a material diminution of his
duties and responsibilities, a change in his primary employment
location to a place outside the New York City metropolitan area,
or for any reason within one year following a Change in Control.
For purposes of the Employment Agreement, a "Change in Control"
is defined to include (i) the acquisition of beneficial ownership
of 25% of the combined voting power of the Company's securities,
(ii) the first purchase of the Company's Common Stock pursuant to
a tender or exchange offer, (iii) the approval by the Company's
stockholders of a merger or consolidation in which the Company is
not the surviving corporation or a sale or disposition of
substantially all of the Company's assets or a plan of
liquidation or dissolution, or (iv) a change in the composition
of the Board of the Company by more than one-third (1/3) in any
two-year period other than directors nominated by the existing
Board. The Employment Agreement also provides that Marvin M.
Speiser will be entitled to supplemental compensation to mitigate
the effect of any excise taxes to which he may be subject as a
result of a Change in Control.
In April 1995, Health-Chem also entered into a similar
Employment Agreement with Robert D. Speiser, with the following
material differences: (i) his initial base annual salary was
$223,668 ($104,000 in respect of his services as an officer of
Hercon Laboratories) plus an annual bonus determined by the
Company's Board at least equal to the increase in pretax net
income, as defined, for Hercon Laboratories under the same terms
as set forth above for Marvin M. Speiser; and (ii) his
"retirement date," as defined in the Employment Agreement, is
January 1, 2010. Mr. Speiser received 5% salary increases on
each of September 1, 1995 and 1996. The Company also caused
Transderm to grant Robert D. Speiser, in accordance with his
Employment Agreement, an option to purchase up to 5,000,000
shares of common stock of Transderm at an exercise price of $.10
per share on substantially the same terms and conditions as set
forth above for Marvin M. Speiser.<PAGE>
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in
the cumulative total stockholder return for the five years ended
December 31, 1996 based upon the market price of the Company's
Common Stock, with the cumulative total return on the AMEX Market
Value Index and a defined peer group based on (a) similar market
capitalization as of December 31, 1996 and (b) comparable sales
performance over the five year period. The Company has elected
to compare its yearly percentage change in total stockholder
return against a market capitalization peer group because the
Company operates in several lines of business and financial
information on the Company's competitors in the synthetic fabric
industry is not publicly available. The Company therefore does
not believe that it can reasonably identify an industry-based
peer group. The graph assumes a $100 investment on December 31,
1991 and the reinvestment of any and all dividends.
HEALTH-CHEM CORPORATION
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Health-Chem Corporation, AMEX Market Value Index and Market
Capitalization Peer Group
<PAGE>
<PAGE>
<TABLE>
<CAPTION> 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
<S>
<C> <C> <C> <C> <C> <C>
Health-Chem
Corporation $100.00 $188.89 $333.33 $277.78 $133.33 $ 88.89
Market
Capitalization
Peer Group* $100.00 83.25 66.23 60.40 37.28 24.39
AMEX Market $100.00 101.37 120.44 106.39 137.13 144.70
Value Index
__________________
* Comprised of American Ecology Corp., Harmony Holdings, Inc., Hosposable Products, Inc.,
Integrated Brands, Inc. (Class A Stock) and Wendt-Bristol Health Services Corp.
/TABLE
<PAGE>
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the
"Committee") is composed of three independent outside directors
of the Company. During 1996, the Committee met on one occasion
(and acted on another occasion by unanimous consent) to carry out
its responsibilities including the development and administration
of policies governing annual compensation for senior executives
of the Company.
In developing and administering the policies, the Committee
has focused on compensating Company executives: on a competitive
basis with other comparably sized (in terms of revenues and
assets) and managed companies (which are not the same group of
companies used for purposes of the five-year performance chart);
in a manner consistent and supportive of overall Company
objectives; and, through a compensation plan which is intended to
balance the longer and shorter-term strategic initiatives of the
Company. Consistent with compensation program objectives
identified in last year's Compensation Committee Report, the
Committee intends that the executive compensation program will:
1.reward executives for strategic management and enhancement of
stockholder value;
2.reflect each executive's success at resolving key operational
issues;
3.facilitate both the short and long-term planning process; and
4.attract and retain key executives believed to be critical to
the long-term success of the Company.
The Company's compensation program for executive officers
generally consists of a fixed base salary, performance-related
bonus awards and long-term incentive compensation in the form of
stock options. In addition, Company executives are able to
participate in various benefit plans generally available to other
full-time employees of the Company.
In reviewing the Company and executives' performance of the
past fiscal year, the Committee took into consideration, among
other things, the following performance factors in making its
compensation recommendations: continued implementation of
materials management and cost control programs and the overall
improved performance of the Company's Herculite Products, Inc.
subsidiary ("Herculite").
Compensation of two senior executives, Marvin M. Speiser and
Robert D. Speiser, is governed largely by the terms of employment
agreements entered into between the Company and each of them in
1995. For a more complete description of these employment
<PAGE>
agreements see "Executive Compensation-Employment Agreements"
elsewhere in this Proxy Statement.
Base Salary
An executive's base salary is intended to provide competitive
remuneration for services provided to the Company over a one-year
period or such longer period as may be covered under employment
agreements. Base salaries are set at levels designed to attract
and retain the most appropriately qualified individuals for each
of the key management level positions within the Company. In
determining these amounts, the Committee has taken into
consideration regional and national compensation information for
comparable companies, industry patterns, and levels of executive
responsibility.
Short-Term Incentives
Short-term incentives are paid primarily to recognize specific
operating performance achieved within the last fiscal year.
Since such incentive payments are related to a specific year's
performance, the Committee understands and accepts that such
payments may vary considerably from one year to the next. The
Company's bonus program ties executive compensation directly back
to operating profitability in each of the Company's subsidiaries.
Depending on management level and seniority, certain executives
within each entity are able to earn a percentage of the
improvement in earnings over the average earnings for the
preceding two calendar years within the entity. Based on this
formula, certain of the named executives earned bonus payments
aggregating $172,817 for the fiscal year 1996 based on the
increase in average earnings of Herculite.
Long-Term Incentives
Although the Committee recognizes the value of stock option
grants in motivating long-term strategic decision making, in 1996
no options to acquire Common Stock of the Company were granted
nor were any awards made under the Company's 1995 Performance
Equity Plan to any executive officers, officers or any employees
of the Company.
Chief Executive Officer
Under his employment agreement with the Company, Mr. Marvin M.
Speiser, Chief Executive Officer, is entitled to an increase in
his base salary of at least 4% over the prior year's level. As
of September 1, 1996, Mr. Speiser received an increase in his
base salary of 5% over the prior year's level, adjusted
proportionately for the balance of 1996. Pursuant to his
employment agreement, the amount of any bonus for Mr. Speiser is
based on the improvement in earnings over the average earnings
for the preceding two calendar years within certain of the
<PAGE>
Company's operating businesses. On this basis, Mr. Speiser
earned a bonus for fiscal year 1996 in the amount of $78,553 due
to the improvement in earnings of Herculite.
The Committee believes that Mr. Speiser's compensation
reflects his contribution to the Company and the achievement of
specific long-term and short-term objectives of the Company and
that the performance bonus arrangement under his employment
agreement creates the appropriate incentives to improve Company
performance. In acting on Mr. Speiser's base salary increase in
1996, the Committee has taken into consideration a number of
managerial and leadership factors, including the spearheading of
programs related to cost containment and materials management and
Mr. Speiser's role in a successful subscription rights offering
as well as the improved performance of the Company's Herculite
subsidiary.
Compensation Committee,
MARTIN BENIS
EUGENE ROSHWALB
MILTON Y. ZUSSMAN
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
In September 1996, the Company exercised its options pursuant
to option agreements with Marvin M. Speiser entered into in 1991
and 1994, respectively (the "Option Agreements") and acquired
952,520 shares of Common Stock from Mr. Speiser for an aggregate
of $1,030,246 (or $1.0816 per share). This amount represented a
portion of the proceeds received by the Company from the sale of
952,520 shares of Common Stock (at $1.10 per share) pursuant to a
subscription rights offering commenced in August 1996 to its
stockholders of record. Of the total of 1,782,689 shares of
Common Stock previously held by Mr. Speiser subject to the
Company's repurchase rights under the Option Agreements, 952,520
shares were repurchased by the Company, 512,763 shares were
retained by Mr. Speiser free of the Company's option (as the
deemed exercise of his pro rata subscription rights) and 317,406
shares remain subject to the Option Agreements.
The 1991 Option Agreement, as to which 215,028 of Mr.
Speiser's shares remain subject, expires June 30, 1999. The
exercise price is $0.3125 per share plus an amount equal to
accrued interest at a rate of prime plus one percent from the
date of grant to the date of exercise. At December 31, 1996 the
exercise price was $0.4717 per share. The 1994 Option Agreement,
as to which 102,378 of Mr. Speiser's shares remain subject, also
expires on June 30, 1999. The exercise price is $2.00 per share
plus an amount equal to accrued interest at prime rate from the
date of grant to the date of exercise. At December 31, 1996, the
<PAGE>
exercise price was $2.4273 per share. The Option Agreements
provide that Mr. Speiser will vote all shares subject thereto on
all matters in which stockholders are entitled to vote at any
annual or special meeting substantially in the same proportion as
all other shares of Common Stock are voted.
In July 1994, Mr. Speiser purchased 575,000 shares of Common
Stock from the Company which shares were the subject of the 1994
Option Agreement. For this purchase he borrowed $1,150,000 from
The First National Bank of Maryland (the "Bank"). The Bank loan
bore interest at the prime rate and was secured by the stock, and
other collateral, including the cash value of a life insurance
policy on Mr. Speiser. In 1996, concurrently with the Company's
purchase of the 952,520 shares of Common Stock from Mr. Speiser,
the Bank loan was repaid in full. In July 1995 and July 1996,
the Company advanced Mr. Speiser $150,000 and $250,000,
respectively, the amounts of the annual principal repayment under
the Bank loan. In addition, the Company advanced to Mr. Speiser
amounts equal to the interest on the Bank loan. During 1996, the
highest amount owed by Mr. Speiser to the Company was $586,000
and at December 31, 1996, the aggregate amount due from him was
$311,000. This amount is intended to be repaid by Mr. Speiser
upon the earliest of (i) the sale of the shares which remain
subject to the Option Agreements; (ii) the Company's exercise of
its options under the Option Agreements; and (iii) the expiration
of the Option Agreements on June 30, 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand, L.L.P., independent public accountants,
currently audits the Company's books and records.
Representatives of Coopers & Lybrand, L.L.P., are expected to
be present at the Meeting, will be given the opportunity to make
a statement if they so desire, and are expected to be available
to respond to appropriate questions.
ANNUAL REPORT TO STOCKHOLDERS
A copy of the Company's 1996 Annual Report has been mailed to
stockholders of record at the close of business on April 2, 1997
together with this Notice of Meeting and Proxy Statement. The
Company files an annual report on Form 10-K with the Securities
and Exchange Commission which includes additional information
concerning the Company and its operations. This report, except
for exhibits, will be furnished to stockholders, without charge,
upon written request to the Secretary of the Company.
<PAGE>
COST OF SOLICITATION
The Company will bear the cost of the Meeting and the cost of
soliciting proxies, including the cost of mailing the proxy
material. In addition to solicitation by mail, directors,
officers, and regular employees of the Company (who will not be
specifically compensated for such services) may solicit proxies
by telephone or otherwise. Arrangements will be made with
brokerage houses and other custodians, nominees, and fiduciaries
to forward proxies and proxy material to their principals, and
the Company will reimburse them for their reasonable expenses
incurred in connection therewith.
STOCKHOLDER PROPOSALS
Stockholders of the Company wishing to include proposals in
the proxy material in relation to the annual meeting of the
Company to be held in 1998 must submit the same in writing so as
to be received at the principal executive office of the Company
on or before November 14, 1997. Such proposals must also meet
the other requirements of the rules of the Securities and
Exchange Commission relating to stockholder proposals.
By Order of the Board of Directors,
Marvin M. Speiser
Chairman of the Board and President
New York, New York
