SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 9, 1999
Health-Chem Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-6787 13-2682801
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
460 Park Avenue, Suite 1300, New York, NY 10022
(Address of principal executive offices) (Zip Code)
(212) 751-5600
(Registrant's telephone number, including area code)
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ITEM 5. Other Events
On Thursday, December 9, 1999, Health-Chem Corporation ("Health-Chem"
or the "Company") commenced an action against Andy E. Yurowitz, Manfred
Mayerfeld, Michael M. Goldberg, Barry B. Kanarek, Wolf Prensky, Zachary Prensky
and Jack I. Zwick (collectively referred to herein as the "Yurowitz Group") in
the United States District Court for the District of Delaware, C.A. No. 99-853,
seeking, among other things, a preliminary and a permanent injunction against
the Yurowitz Group from soliciting and utilizing proxies with respect to the
election of its slate of directors at Health-Chem's 1999 Annual Meeting of
Stockholders (the "Annual Meeting"). In the Verified Complaint, a copy of which
is annexed hereto as Exhibit 99.1 and incorporated herein by reference, the
Company has alleged that the Defendants have committed various violations of the
federal securities laws, including, among other things, the solicitation of
proxies based upon false and misleading proxy materials in violation of the
Securities Exchange Act of 1934 (the "Exchange Act"), the false and misleading
filings under Section 13(d) of the Exchange Act, and the failure to make
required filings regarding beneficial ownership of Common Stock under Section 16
of the Exchange Act.
The Company's Annual Meeting was convened as scheduled on December 10,
1999. However, as a result of the initiation of the action in the United States
District Court and the pendency of the Company's request for preliminary
equitable relief, the presiding officer announced that the polls would remain
open pending the resolution of the lawsuit. The Annual Meeting was adjourned
until the later of (i) 10:30 a.m. Eastern Standard Time on December 23, 1999 or
(ii) 10:30 a.m. Eastern Standard Time on the second business day following the
date of the ruling of the Court on the Company's application for an injunction,
at the offices of the Company, 460 Park Avenue, New York, New York, subject to
further extension of the date and time of the closing of the polls with respect
to the election of directors at the Annual Meeting should the litigation warrant
such further extension.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
Exhibit Description
99.1 Verified Complaint in the matter of Health-Chem Corporation v. Andy E.
Yurowitz et al., U.S. District Court for the District of Delaware, C.A. No.
99-853
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HEALTH-CHEM CORPORATION
Date: December 13, 1999 By: /s/Marvin M. Speiser
----------------------------------
Marvin M. Speiser
Chairman of the Board and President
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Exhibit Description
99.1 Verified Complaint in the matter of Health-Chem Corporation v. Andy E.
Yurowitz et al., U.S. District Court for the District of Delaware, C.A. No.
99-853
EXHIBIT 99.1
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
HEALTH-CHEM CORPORATION, )
)
Plaintiff, )
)
v. ) C.A. No. 99-__________
)
ANDY E. YUROWITZ, MANFRED )
MAYERFELD MICHAEL M. )
GOLDBERG, BARRY B. KANAREK, )
WOLF PRENSKY, ZACHARY )
PRENSKY, and JACK I. ZWICK, )
)
Defendants. )
VERIFIED COMPLAINT
INTRODUCTION
Plaintiff Health-Chem Corporation ("Health-Chem "or the "Company")
brings this action, seeking a temporary restraining order, a preliminary
injunction, and a permanent injunction on an expedited basis, because: (a)
Defendants have solicited stockholders of the Company and obtained proxies from
such stockholders for the election of directors of the Company on the basis of
materially false and misleading proxy materials in violation of Section 14(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (b)
Defendants have made materially misleading statements in filings made pursuant
to Section 13(d) of the Exchange Act; and (c) Defendants have failed to make
filings pursuant to Sections 13(d) and 16(a) of the Exchange Act.
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JURISDICTION AND VENUE
1. This action arises under Section 13(d), 14(a) and 16(a) of the Exchange
Act.
2. Jurisdiction and venue are predicated on 28 U.S.C. ss. 1331, 28 U.S.C.
ss. 1391, and Section 27 of the Exchange Act, 15 U.S.C. ss. 27aa, in that the
actions constituting the violations herein alleged are occurring in this
District and are being carried out through the instrumentalities of interstate
commerce, including the United States mail and wires. Defendants are not found
in this district. PARTIES
3. Plaintiff Health-Chem is a Delaware corporation which, through its
subsidiary, is engaged in the development, manufacture and marketing of
transdermal drug delivery systems. Health-Chem maintains it principal
headquarters at 460 Park Avenue, Suite 1300, New York, New York.
4. Defendant Andy E. Yurowitz, is, and at all times relevant hereto has
been, the beneficial owner of at least 540,00 shares of Health-Chem common stock
and has nominated himself and the other defendants (expect Mayerfeld) for
election as directors of the Company.
5. Defendant Manfred Mayerfeld ("Mayerfeld") is, and at all times relevant
hereto has been, the beneficial owner of at least 390,000 shares of Health-Chem
common stock.
6. Defendants Michael M. Goldberg ("Goldberg"), Barry B. Kanarek
("Kanarek"), Wolf Prensky (W. Prensky"), Zachary Prensky ("Z. Prensky") and Jack
Zwick ("Zwick") beneficially own 0 shares, 0 shares, 500 shares and 100 shares,
respectively of the Company's common stock.
7. Yurowitz, Mayerfeld, Goldberg, Kanarek, W. Prensky, Z. Prensky and Zwick
are collectively referred to herein as the "Yurowitz Group".
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FACTS
8. Health-Chem's common stock is registered under the Exchange Act and
trades in the over-the-counter market. Prior to May 1999, the common stock was
listed on the American Stock Exchange.
9. As of October 29, 1999, Health-Chem had 7,665,018 shares of common stock
outstanding.
10. At all times relevant hereto, the Yurowitz Group has held a legal or
beneficial interest in more than ten percent (10%) of Health-Chem's outstanding
stock.
11. The Defendants have, at all times relevant hereto, acted pursuant to an
agreement between them to acquire, hold, vote and/or for dispose of equity
securities of the Company.
12. Pursuant to a notice of meeting the annual meeting of Health-Chem is
scheduled to take place tomorrow, December 10, 1999 at 10:00 a.m. in New York
City.
13. As a result of continuing financial difficulties, the Company was
unable to pay, at maturity on April 15, 1999, the $8 million principal amount of
the Company's subordinated convertible debentures.
14. To provide funds to repay its outstanding secured bank debt, and to
repay --- at least in part --these debentures, assets of two of the Company's
subsidiaries were sold. The sale process had been began by the Company in late
1998, and was completed in August of 1999.
15. Because of the impact of the asset sale on the Company's consolidated
financial statements, and the requirement under generally accepted accounting
principals with regard to the manner of reporting same, the Company made a
decision to defer its 1999 Annual Meeting of Stockholders until after the
above-described sales were consummated. A copy of each of the
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Company's Form 10K for the year ended December 31, 1998 and it Form 10-Q for the
Quarter ended September 30, 1999 are attached hereto as Exhibits A and B.
16. On or about March 10, 1999, Defendant Yurowitz advised the Company that
he intended to nominate nine (9) individuals (including himself) to stand for
election as Directors of the Company.
17. At the same time Defendant Yurowitz filed an amendment to his statement
of beneficial ownership on Schedule 13D with the Securities and Exchange
Commission identifying certain changes to his beneficial ownership in the
Company and disclosing his above-stated intention to nominate persons for
election as Directors of the Company. In that Section 13D filing, Defendant
Yurowitz disclosed that Mayerfeld, the beneficial owner of 391,789 shares of the
common stock of the Company, was providing $25,000.00 to support to the election
of the Yurowitz candidates, but failed to disclose that Mayerfeld and Yurowitz
had formed a "group" within the meaning of Section 13D of the Exchange Act.
18. Mayerfeld subsequently increased his financial support the Yurowitz
Group's efforts to elect an insurgent Board of Directors.
19. On August 9, 1999, Yurowitz initiated an action against the Company and
its Directors in the Court of Chancery of the State of Delaware in and for New
Castle County (C.A. No. 17356) in which Yurowitz sought to summarily direct the
prompt holding of a meeting of the Company stockholders pursuant to Court
supervision.
20. In that action, Yurowitz also sought to enjoin the above-described
sale of assets by the Company (the "Asset Sale"). On August 13, 1999, Yurowitz
and the Company enter into a stipulation (the "August Stipulation") wherein,
among other things: (i) Yurowitz agreed to
<PAGE>
withdraw his motion for injunctive relief and to take no steps to interfere
with or impede the consummation of the Asset Sale; and (ii) the Company agreed
to provide Yurowitz with prior notice before entering into and/or consummating
any extraordinary corporate transaction requiring approval of the Company's
Board of Directors in advance of the 1999 Annual Meeting.
21. On October 26, 1999, the Company and the Yurowitz entered into a
further stipulation amending the August Stipulation (the "October Stipulation")
which provides, among other things: (i) the Company will provide two (2)
business days notice of any extraordinary corporate transaction requiring the
approval of the Company's Board of Directors; (ii) the Company will mail on
behalf of Yurowitz and at his expenses any soliciting materials prepared by
Yurowitz; (iii) Yurowitz shall reduce from nine (9) to six (6) the persons
nominated by him for election as Directors at the 1999 Annual Meeting; and (iv)
Yurowitz shall not solicit or encourage an involuntary bankruptcy naming the
Company as debtor.
22. By supplemental stipulation between Yurowitz and the Company ("the
Supplemental Stipulation") the date for the 1999 Annual Meeting was extended to
December 10, 1999. Copies of said Stipulations are attached hereto as Exhibits
C, D, and E.
23. The Company has filed soliciting materials with the SEC pursuant to the
Exchange Act soliciting votes seeking the election of certain nominees proposed
by the current Board of Directors as directors of the Company. Copies of the
Company's soliciting materials are attached hereto as Exhibit F.
24. The Defendants (other than Mayerfeld) are individuals nominated by the
Yurowitz Group for election as directors of the Company.
<PAGE>
25. All communications relating to the Yurowitz Group solicitation of votes
are subject to the anti-fraud provisions established by the SEC pursuant to
Section 14A and Rule 14(a) promulgated there under.
26. On or about November 23, 1999, the Yurowitz Group initiated a
solicitation of votes with regard to the Annual Meeting by use of materials
filed with SEC.
27. True and correct copies of these materials are attached hereto as
Exhibit G.
28. The Yurowitz Group's solicitation materials are false and misleading,
inter alia,: (a) Because the solicitation materials state that Yurowitz Group
intends to review the propriety of the Asset Sales, and holds out as an
inducement for the grant of the proxy to the Yurowitz Group the ripe "plum" of
the Yurowitz Group's nominees' recovering a material asset as a result of a
challenge to the Asset Sales, without disclosing the possibility that such
challenge might be estopped or rendered inactionable in any event by virtue of
Yurowitz' conduct in entering into the August Stipulation and allowing the Asset
Sales to proceed; and. (b) Because said materials hold out, as an inducement to
potential voters, the possibility of creating a material asset through a
challenge to certain employment contracts while at the same time failing to
disclose that any such challenge is likely to be estopped by virtue of the
Delaware Chancery Court's approval of the settlement of the 1995 derivative
action entitled: Gershon Yormack vs. Health-Chem Corporation (Civil Action No.
14639) (the "Yormack Action") in which those contracts were challenged. A copy
of the November 18, 1998 Order and Final Judgment in the Gershon Yormack action
is attached hereto as Exhibit I.
<PAGE>
29. The Yurowitz Group's proxy statement states that Mayerfeld beneficially
owns 5.11% of the outstanding shares of common stock of the company. Mayerfeld
has failed to file a Schedule 13D, as required by Section 13(d) of the Exchange
Act and the rules corresponding thereunder with respect to his beneficial
ownership of more than five percent (5%) of the shares of the common stock of
the Company.
30. Yurowitz has filed a statement pursuant to Section 13D of the Exchange
Act with regard to his beneficial ownership of common stock of the Company,
which statement is materially false and misleading in that Yurowitz fails to
disclose that he and Mayerfeld were acting, and continue to act, as a "group"
within the meaning of said term under Section 13(d) of the Exchange Act. See
also 15 U.S.C., ss. 78(d)(3) and (g)(3).
31. The Yurowitz Group has failed to file the statements required pursuant
to Section 16(a) of the Exchange Act and the rules promulgated thereunder with
regard to the ownership by the Yurowitz Group of greater than ten percent (10%)
of the common stock of the Company.
32. If the Defendants are allowed to continue to solicit the proxies of
stockholders of the Company, and to use said proxies in the election of
directors at the Annual Meeting, the Company's stockholders and the Company
would suffer irreparable harm --- i.e., there could be an election of directors
of the Company procured with materially false and misleading statements in
violation of the Exchange Act. COUNT I
(False and Misleading Proxy Materials)
33. Plaintiff repeats and re-alleges the allegations set forth in
Paragraphs 1 though 32 above as though fully incorporated herein.
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34. The shares of Health-Chem common stock are registered under the
Exchange Act.
35. The Defendants solicited proxies in connection with the Health-Chem
1999 Annual Meeting of Stockholders by means of false and misleading soliciting
materials.
36. The misrepresentations and omissions contained within the soliciting
materials were "material" --i.e., there is and was a substantial likelihood that
a reasonable Stockholder would consider the omitted or misstated fact important
in deciding how to vote.
37. Health-Chem and its stockholders will be irreparably harmed unless the
Defendants are preliminary and permanently enjoined from further soliciting
proxies, and from utilizing the proxies they have already collected to vote at
the 1999 Annual Meeting of Stockholders.
COUNT II
(False and Misleading Disclosure By Defendant Yurowitz Under Section 13)
38. Plaintiff repeats and re-alleges the allegations set forth in
Paragraphs 1 through 37 above as though fully incorporated herein.
38. Defendants are "persons" within the meaning of Section 13 of the
Exchange Act, 15 U.S.C., ss. 78m.
39. The Defendants, acting as a group, together constitute a "person"
within the meaning of 15 U.S.C. ss. 78m.
40. Health-Chem's shares of common stock registered securities within the
meaning of 15 U.S.C. ss. 78m.
41. As stockholders with a combined beneficial ownership exceeding five
percent (5%) of the outstanding shares of the common stock of Health-Chem,
Defendants were and are required to make certain filings were and disclosures
with respect to their ownership and intentions. Defendant
<PAGE>
Yurowitz' filings were and are false and materially misleading because, inter
alia they fail to disclose Defendants Mayerfeld's participation as a member of
the Yurowitz Group.
42. As a result of the Defendant Yurowitz's unlawful conduct, Health-Chem
and its stockholders have been, and will continue to be irreparably harmed.
COUNT III
(Mayerfeld's Willful Failure to Comply with the Exchange Act)
43. Plaintiff repeats and re-alleges the allegations set forth in
Paragraphs 1 through 42 above as though fully incorporated herein.
44. Defendant Mayerfeld is a "person" within the meaning of 15U.S.C., ss.
78m.
45. Health-Chem's shares of common stock registered are securities under
the Exchange Act.
46. As a stockholder with a beneficial ownership exceeding five percent
(5%) of the outstanding shares of the common stock of Health-Chem, Defendant
Mayerfeld was and is required to make certain filings and disclosures with
respect to his ownership and intentions. Defendant Mayerfeld has not made the
required filings and disclosures.
47. As a result of Defendant Mayerfeld's unlawful conduct, Health-Chem and
its stockholders have been, and will continue to be, irreparably harmed.
COUNT IV
(Defendants' Failure to Comply with Section 16 of the Exchange Act)
48. Plaintiff repeats and re-alleges the allegations set forth in
Paragraphs 1 through 47 above as though fully incorporated herein.
<PAGE>
49. The Defendants, acting as the Yurowitz Group, together constitute a
"person" within the meaning of 15 U.S.C., ss. 78p.
50. Health-Chem's shares of common stock are registered securities within
the meaning of the Exchange Act.
51. As stockholders with a combined beneficial ownership exceeding 10
percent (10%) of the outstanding shares of the common stock of Health-Chem,
Defendants were and are required to make certain filings and disclosures with
respect to such beneficial ownership pursuant to ss.16(a) of the Exchange Act.
Defendants have failed to make such required filings and disclosures.
52. As a result of the Defendants' unlawful conduct, Health-Chem and its
stockholders have been, and will continue to be, irreparably harmed.
WHEREFORE, Health-Chem respectfully requests that this Court:
A. Preliminarily and permanently enjoin the Defendants from further
soliciting proxies, and from utilizing the proxies they have already solicited
to vote at the Health-Chem 1999 Annual meeting, unless and until the Defendants
have circulated to Health-Chem's Stockholders corrective disclosure statements
in a form approved by the Court and by a date and time to be determined by the
Court;
B. Order the Defendants Yurowitz to file corrected disclosure statements
pursuant to Section 13 of the Exchange Act, 28 U.S.C. ss.78m;
C. Ordering Defendant Mayerfeld to file disclosure statements pursuant to
Section 13 of the Exchange Act, 28 U.S.C. ss. 78m;
D. Ordering the Defendants to file disclosure statements pursuant to
Section 16 of the Exchange Act, 28 U.S.C. ss. 78p;
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E. Award to the Plaintiff the costs and expenses of this action, including
reasonable attorneys fees and expenses; and
F. Grant such further relief as the Court deems just and proper.
Respectfully submitted,
YOUNG CONAWAY STARGATT & TAYLOR, LLP
/s/ Bruce L. Silverstein
Bruce L. Silverstein (#2495)
John W. Shaw (#3362)
11th Floor, Rodney Square North
P. O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6659
Attorneys for Plaintiff Health-Chem Corporation
OF COUNSEL:
HINCKLEY, ALLEN & SNYDER LLP
Paul Bork
Eric F. Heisenberg
28 State Street
Boston, Massachusetts 02109
(617) 345-9000
Dated: December 9, 1999
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VERIFICATION
I, Bruce Schloss, Vice President, General Counsel and Secretary of
Health-Chem Corporation, certify under the penalties of perjury: (a) that I have
read the foregoing Verified Complaint; and (b) that the allegations contained in
the Verified Complaint are true and accurate based upon my personal knowledge,
except such allegations as are made upon information and belief, which
allegations I believe to be true.
/s/ Bruce Schloss
