GRAHAM FIELD HEALTH PRODUCTS INC, DEF 14A, 1997-04-29

GRAHAM FIELD HEALTH PRODUCTS INC
DEF 14A, 1997-04-29
MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>

<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

</TABLE>

GRAHAM FIELD HEALTH PRODUCTS INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(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 materials.

[ ] 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.

(1) Amount Previously Paid:

------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

------------------------------------------------------------------------

(3) Filing Party:

------------------------------------------------------------------------

(4) Date Filed:

------------------------------------------------------------------------
<PAGE> 2

GRAHAM-FIELD HEALTH PRODUCTS, INC.
400 RABRO DRIVE EAST
HAUPPAUGE, NEW YORK 11788
------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 18, 1997

The Annual Meeting of Stockholders of Graham-Field Health Products, Inc.
(the "Company") will be held in the Media Room on the lower level of 395 North
Service Road, Melville, New York 11747 on Wednesday, June 18, 1997 at 1:00 P.M.
to:

(1) elect three Class I Directors of the Company to serve for a term of
three years;

(2) consider and act upon a proposal to ratify the appointment of Ernst &
Young LLP as the Company's independent auditors for the current fiscal
year;

(3) transact such other business as may properly come before the Annual
Meeting.

Only stockholders of record at the close of business on April 30, 1997 are
entitled to notice of and to vote at the Annual Meeting. The annual meeting for
which this notice is given may be adjourned from time to time without further
notice other than announcement at the meeting or any adjournment thereof. Any
business for which notice is hereby given may be transacted at such adjourned
meeting.

Your attention is directed to the accompanying proxy statement.

RICHARD S. KOLODNY
Vice President, General
Counsel and Secretary

Hauppauge, New York
May 12, 1997

STOCKHOLDERS UNABLE TO ATTEND THE ANNUAL MEETING IN PERSON ARE URGED TO
DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED ADDRESSED
ENVELOPE, WHICH DOES NOT REQUIRE ANY UNITED STATES POSTAGE.
<PAGE> 3

GRAHAM-FIELD HEALTH PRODUCTS, INC.
400 RABRO DRIVE EAST
HAUPPAUGE, NEW YORK 11788

-------------------------------

PROXY STATEMENT
-------------------------------

Proxies in the form enclosed are solicited by the Board of Directors of
Graham-Field Health Products, Inc. (the "Company") for use at the 1997 Annual
Meeting of Stockholders scheduled to be held on June 18, 1997 in the Media Room
on the lower level of 395 North Service Road, Melville, New York 11747 (the
"Annual Meeting"). All properly executed proxies received prior to or at the
Annual Meeting will be voted. If a proxy specifies how it is to be voted, it
will be so voted. If no specification is made, it will be voted (1) for the
election of the Board's nominees as directors, (2) for ratification of the
appointment of Ernst & Young LLP as the Company's independent auditors for the
current fiscal year, and (3) if other matters properly come before the Annual
Meeting, in the discretion of either of the persons named in the enclosed proxy
card. Any stockholder giving a proxy has the right to revoke it at any time
before the proxy is voted by giving written notice of revocation to the
Secretary of the Company (at the address set forth above), by submitting a
properly-executed subsequently dated proxy or by voting in person at the Annual
Meeting.

Holders of record of the common stock, par value $.025 per share, of the
Company (the "Common Stock"), the Company's Series B Cumulative Convertible
Preferred Stock (the "Series B Preferred Stock") and the Company's Series C
Cumulative Convertible Preferred Stock (the "Series C Preferred Stock") as of
the close of business on the record date of April 30, 1997 (the "Record Date")
are entitled to notice of and to vote at the Annual Meeting. As of the Record
Date, there were 18,926,460 shares of Common Stock issued and outstanding, 6,100
shares of the Series B Preferred Stock issued and outstanding, and 1,000 shares
of the Series C Preferred Stock issued and outstanding. Each share of Common
Stock is entitled to one vote. The shares of the Series B Preferred Stock and
the shares of the Series C Preferred Stock are entitled to 3,935,483 and 500,000
votes, respectively. The shares of the Series B Preferred Stock and the Series C
Preferred Stock vote as a single class with the Common Stock, and are
beneficially owned by BIL (Far East Holdings) Limited ("BIL Far East") and its
affiliate, BIL Securities (Offshore) Limited ("BIL Securities"; BIL Securities
and BIL Far East are collectively referred to hereinafter as "BIL"). BIL's
ownership of Common Stock, Series B Preferred Stock and Series C Preferred Stock
represents 36% of the total number of votes entitled to be cast at the Annual
Meeting. Pursuant to the Amended and Restated Stockholder Agreement, by and
among the Company, BIL and Irwin Selinger, dated as of September 3, 1996 and
amended as of September 19, 1996 (the "Stockholder Agreement"), BIL has agreed
to vote its shares of Common Stock, Series B Preferred Stock, and Series C
Preferred Stock in accordance with the direction of the Company's Board of
Directors for any nominees recommended by the Board of Directors and on all
proposals presented by any other stockholder of the Company. This proxy
statement, the proxy card and the Annual Report of the Company for its fiscal
year ended December 31, 1996 are being mailed on or about May 12, 1997 to all
holders of Common Stock, the Series B Preferred Stock and the Series C Preferred
Stock as of the Record Date.

As required under Section 231 of the Delaware General Corporation Law (the
"DGCL"), the Company will, in advance of the Annual Meeting, appoint one or more
Inspectors of Election to conduct the vote at the Annual Meeting. The Company
may designate one or more persons as alternate Inspectors of Election to replace
any Inspector of Election who fails to act. If no Inspector or alternate
Inspector is able to act at the Annual Meeting, the person presiding at the
Annual Meeting will appoint one or more Inspectors of Election. Each Inspector
of Election before entering the discharge of his duties shall take and sign an
oath faithfully to execute the duties of inspector with strict impartiality. The
Inspectors of Election will (i) ascertain the number of shares of Common Stock,
the Series B Preferred Stock and the Series C Preferred Stock outstanding as of
the record date, (ii) determine the voting power of the shares of Common Stock,
the Series B Preferred Stock and the Series C Preferred Stock present or
represented by proxy at the Annual Meeting and the validity of the proxies and
ballots, (iii) count all votes and ballots, and (iv) certify the determination
<PAGE> 4

of the number of shares of Common Stock, the Series B Preferred Stock and Series
C Preferred Stock present in person or represented by proxy at the Annual
Meeting and the count of all votes and ballots.

The holders of shares of Common Stock, Series B Preferred Stock and Series
C Preferred Stock representing a majority of the total number of votes entitled
to be cast by the holders of all outstanding shares of Common Stock, Series B
Preferred Stock and Series C Preferred Stock must be present in person or
represented by proxy at the Annual Meeting in order for a quorum to be present.
Under Section 216 of the DGCL, any stockholder who abstains from voting on any
particular matter described herein will be counted for purposes of determining a
quorum. For purposes of voting on the matters described herein, the affirmative
vote of (i) the holders of shares of Common Stock, Series B Preferred Stock and
Series C Preferred Stock, representing a plurality of the total votes cast (not
including abstentions) by the holders of shares of Common Stock, Series B
Preferred Stock and Series C Preferred Stock present or represented at the
Annual Meeting is required to elect management's nominees as directors, and (ii)
the holders of shares of Common Stock, Series B Preferred Stock and Series C
Preferred Stock, representing a majority of the total votes cast (including
abstentions) by the holders of shares of Common Stock, Series B Preferred Stock
and Series C Preferred Stock present or represented at the Annual Meeting is
required to ratify the selection by the Board of Directors of Ernst & Young LLP
as independent auditors of the Company for the fiscal year ending December 31,
1997. Abstentions have no legal effect with respect to the election of directors
and the same legal effect as a vote against the ratification of the selection of
Ernst & Young LLP as independent auditors of the Company for the fiscal year
ending December 31, 1997. Any shares as to which a broker or nominee does not
have discretionary voting authority with respect to a particular matter
presented at the Annual Meeting under applicable New York Stock Exchange rules
will be considered as shares not entitled to vote on such matter and will
therefore not be considered in the tabulation of the votes on such matter.

No compensation will be paid by the Company to any person in connection
with the solicitation of proxies. Brokers, banks and other nominees will be
reimbursed by the Company for out-of-pocket and other reasonable clerical
expenses incurred in obtaining instructions from beneficial owners of the Common
Stock. In addition to the solicitation by mail, solicitation of proxies may, in
certain instances, be made personally or by telephone by directors, officers and
a few regular employees of the Company. It is expected that the expense of such
special solicitation will be nominal. All expenses incurred in connection with
this solicitation will be borne by the Company.

2
<PAGE> 5

PRINCIPAL STOCKHOLDERS OF THE COMPANY

The following table sets forth certain information regarding the beneficial
ownership of Common Stock, Series B Preferred Stock and Series C Preferred Stock
with respect to the persons who, to the knowledge of the management of the
Company, own beneficially more than five percent of each class of stock as of
April 30, 1997. Beneficial ownership has been determined for purposes of the
following table in accordance with Rule 13d-3 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), under which a person is deemed to be the
beneficial owner of securities if he or she has or shares voting power or
investment power in respect of such securities or has the right to acquire
beneficial ownership within 60 days.

<TABLE>
<CAPTION>
SHARES OF SERIES B SHARES OF SERIES C
SHARES OF COMMON PREFERRED STOCK PREFERRED STOCK
STOCK BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED(1) OWNED(6) OWNED(7)
--------------------- --------------------- ---------------------
NAME AND ADDRESS NUMBER NUMBER NUMBER
OF BENEFICIAL OWNER OF SHARES PERCENT OF SHARES PERCENT OF SHARES PERCENT
- --------------------------------- --------- ------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Irwin Selinger(2)................ 955,113 5.0% -0- -0- -0- -0-
c/o Graham-Field Health
Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Steinberg Asset Management....... 1,022,065 5.4% -0- -0- -0- -0-
Company, L.P.(3)
12 East 49th Street
New York, New York 10017
Shufro, Rose & Ehrman(4)......... 1,302,350 6.9% -0- -0- -0- -0-
745 Fifth Avenue
New York, New York 10151-2600
BIL.............................. 3,945,219(5) 21% 6,100 100% 1,000 100%
c/o Brierley Investments Ltd.
3rd Floor
10 Eastcheap
London EC3M1AJ
United Kingdom
</TABLE>

- ---------------

(1) All shares are beneficially owned and the sole voting and investment power
is held by the person or entities named, except as otherwise specified
herein.

(2) The amount set forth above includes 25,000 shares underlying stock options
issued pursuant to the Company's Incentive Program, which are exercisable
within 60 days of April 30, 1997, and 5,500 shares owned by Mr. Selinger's
wife as to which shares Mr. Selinger disclaims any beneficial interest.

(3) According to information contained in a joint Schedule 13G filing dated as
of February 5, 1997, with the SEC pursuant to Section 13(d) of the Exchange
Act, Steinberg Asset Management Company, Inc. ("Steinberg Management"), a
registered investment advisor and the general partner of Steinberg Asset
Management Company, L.P. ("Steinberg L.P."), beneficially owns 82,000
shares; Steinberg L.P. beneficially owns 811,415; Michael A. Steinberg &
Company, Inc. ("MAS Company") beneficially owns 23,650 shares; and Michael
A. Steinberg beneficially owns 105,000 shares. According to such filing,
Michael A. Steinberg may be deemed to have beneficial ownership of the
shares beneficially owned by Steinberg Management, Steinberg L.P., and MAS
Company. The shares reported as beneficially owned by Michael A. Steinberg
include shares held by Mr. Steinberg's wife and children, as well as
securities held in trust for Mr. Steinberg's children of which Mr. Steinberg
is trustee. Steinberg Management, as the general partner of Steinberg L.P.,
may be deemed to have beneficial ownership of the shares beneficially owned
by Steinberg L.P.

3
<PAGE> 6

(4) According to information contained in a Schedule 13G filing dated as of
February 14, 1997, Shufro, Rose & Ehrman, a registered investment advisor
and broker-dealer, beneficially owns 1,302,350 shares, and has the sole
power to vote or to direct the vote of 91,850 shares.

(5) Does not include up to 3,935,438 shares of Common Stock issuable upon the
conversion of the shares of the Series B Preferred Stock and up to 500,000
shares of Common Stock issuable upon the conversion of the shares of the
Series C Preferred Stock.

(6) The Series B Preferred Stock is convertible into shares of the Common Stock
(x) at the option of BIL, at a conversion price of $20 per share (or, in the
case of certain dividend payment defaults, at a conversion price of $15.50
per share), (y) at the option of the Company, at a conversion price equal to
current trading prices (subject to a minimum conversion price of $15.50 and
a maximum conversion price of $20 per share) and (z) automatically on
November 27, 2001 at a conversion price of $15.50 per share. The conversion
prices are subject to customary antidilution adjustments. The shares of the
Series B Preferred Stock are entitled to 3,935,483 votes, and vote as a
single class with the Common Stock and the Series C Preferred Stock.

(7) The Series C Preferred Stock is subject to redemption as a whole at the
option of the Company on the fifth anniversary of the date of issuance at a
stated value plus accrued and unpaid dividends and, if not redeemed will be
convertible into shares of the Common Stock automatically at a conversion
price of $20 per share, subject to customary antidilution adjustments. The
shares of the Series C Preferred Stock are entitled to 500,000 votes, and
vote as a single class with the Common Stock and the Series B Preferred
Stock.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of Common Stock, Series B Preferred Stock and Series C Preferred Stock
with respect to the Company's directors, the Company's "named executive
officers" (the "Named Executive Officers") within the meaning of Item 402(a)(3)
of Regulation S-K, and by all of the Company's directors and executive officers
as a group, as reported to the Company as of April 30, 1997. Beneficial
ownership has been determined for purposes of the following table in accordance
with Rule 13d-3 of the Exchange Act, under which a person is deemed to be the
beneficial owner of securities if he or she has or shares voting power or
investment power in respect of such securities or has the right to acquire
beneficial ownership within 60 days.

4
<PAGE> 7

<TABLE>
<CAPTION>
SHARES OF SERIES B SHARES OF SERIES C
SHARES OF COMMON PREFERRED STOCK PREFERRED STOCK
STOCK BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED(1) OWNED(11) OWNED(12)
--------------------- --------------------- ---------------------
NAME AND ADDRESS NUMBER NUMBER NUMBER
OF BENEFICIAL OWNER OF SHARES PERCENT OF SHARES PERCENT OF SHARES PERCENT
- --------------------------------- --------- ------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Dr. Harold Lazarus(5)............ 20,194 * -0- -0- -0- -0-
c/o Hofstra University
Management Department
Weller Hall 228
Hempstead, New York 11550
Andrew A. Giordano(6)............ 23,500 * -0- -0- -0- -0-
c/o The Giordano Group,
Limited
1811 South 24th Street
Arlington, Virginia 22202-1534
Donald Press(7).................. 25,400 * -0- -0- -0- -0-
c/o Donald Press, P.C.
39 Broadway
New York, New York 10006
David P. Delaney, Jr.(8)......... 10,666 * -0- -0- -0- -0-
c/o Lancer Financial Group,
Inc.
370 West Park Avenue
Long Beach, New York 11561
Steven D. Levkoff(9)............. 7,666 * -0- -0- -0- -0-
c/o Standard Folding
Cartons, Inc.
85th & 24th Avenue
Jackson Heights, New York 11370
Bevil J. Hogg.................... 14,411 * -0- -0- -0- -0-
c/o Graham-Field Health
Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
Rodney F. Price.................. 3,945,219(10) 21% 6,100 100% 1,000 100%
c/o Brierley Investments Ltd.
2nd Floor
10 Eastcheap
London EC3M 1AJ
United Kingdom
Peter Handal..................... -0- -0- -0- -0- -0- -0-
c/o COWI International Group
280 Park Avenue
5th Floor -- East Building
New York, New York 10017
NAMED EXECUTIVE OFFICERS:
Irwin Selinger(2)................ 955,113 5.0% -0- -0- -0- -0-
c/o Graham-Field
Health Products, Inc.
400 Rabro Drive East
Hauppauge, New York 11788
</TABLE>

5
<PAGE> 8

- ---------------
* Less than 1%.

(1) All shares are beneficially owned and the sole voting power and investment
power is held by the persons named, except as otherwise specified herein.

(3) The amount set forth above includes 10,000 shares owned by the Robert &
Gail Spiegel Foundation, and 45,000 shares owned by the Richard J. Spiegel
Trust (1987). The amount set forth above also includes 115,000 shares owned
by Mr. Spiegel's wife and 47,900 shares currently issuable upon the
exercise of directors' stock options issued pursuant to the Company's
Incentive Program. Mr. Spiegel, who has been a director since 1987, will
retire from the Board of Directors at the Annual Meeting.

(4) The amount set forth above includes 200 shares owned by the Virginia
Lubrano Trust, and 55,000 shares currently issuable upon the exercise of
directors' stock options issued pursuant to the Company's Incentive
Program.

6
<PAGE> 9

(5) The amount set forth above includes 20,000 shares currently issuable upon
the exercise of directors' stock options issued pursuant to the Company's
Incentive Program.

(6) The amount set forth above includes 20,000 shares currently issuable upon
the exercise of directors' stock options issued pursuant to the Company's
Incentive Program.

(7) The amount set forth above includes 3,000 shares owned by Donald Press
P.C., Profit Sharing Plan, 1,000 shares owned by Donald Press, P.C.
Employees Pension Plan, 6,666 shares currently issuable upon the exercise
of directors' stock options issued pursuant to the Company's Incentive
Program, and 3,333 shares underlying directors' stock options which are
exercisable within 60 days of April 30, 1997.

(8) The amount set forth above includes 6,666 shares currently issuable upon
the exercise of directors' stock options issued pursuant to the Company's
Incentive Program.

(9) The amount set forth includes 1,000 shares owned by Mr. Levkoff's daughter,
and 6,666 shares currently issuable upon the exercise of director's stock
options issued pursuant to the Company's Incentive Program.

(10) Consists entirely of shares of Common Stock owned by BIL, which Mr. Price
may be deemed to own beneficially as a director of BIL. Does not include up
to 3,935,438 shares of Common Stock issuable upon the conversion of the
shares of the Series B Preferred Stock owned by BIL and up to 500,000
shares of Common Stock issuable upon the conversion of the shares of the
Series C Preferred Stock owned by BIL.

(11) Consists entirely of shares of the Series B Preferred Stock owned by BIL,
which Mr. Price may be deemed to beneficially own as a director of BIL. The
Series B Preferred Stock is convertible into shares of the Common Stock (x)
at the option of BIL, at a conversion price of $20 per share (or, in the
case of certain dividend payment defaults, at a conversion price of $15.50
per share), (y) at the option of the Company, at a conversion price equal
to current trading prices (subject to a minimum conversion price of $15.50
and a maximum conversion price of $20 per share) and (z) automatically on
November 27, 2001 at a conversion price of $15.50 per share. The conversion
prices are subject to customary antidilution adjustments. The shares of the
Series B Preferred Stock are entitled to 3,935,483 votes, and vote as a
single class with the Common Stock and the Series C Preferred Stock.

(12) Consists entirely of shares of the Series C Preferred Stock owned by BIL,
which Mr. Price may be deemed to beneficially own as a director of BIL. The
Series C Preferred Stock is subject to redemption as a whole at the option
of the Company on the fifth anniversary of the date of issuance at a stated
value plus accrued and unpaid dividends and, if not redeemed will be
convertible into shares of the Common Stock automatically at a conversion
price of $20 per share, subject to customary antidilution adjustments. The
shares of the Series C Preferred Stock are entitled to 500,000 votes, and
vote as a single class with the Common Stock and the Series B Preferred
Stock.

(13) The amount set forth includes 22,500 currently issuable upon the exercise
of stock options issued pursuant to the Company's Incentive Program, and
25,000 shares underlying stock options which are exercisable within 60 days
of April 30, 1997.

(14) The amount set forth includes 55,000 currently issuable upon the exercise
of stock options issued pursuant to the Company's Incentive Program, and
20,000 shares underlying stock options which are exercisable within 60 days
of April 30, 1997.

(15) The amount set forth above includes 45,000 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program, and 20,000 shares underlying stock options which are exercisable
within 60 days of April 30, 1997.

(16) The amount set forth above includes 12,500 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program, and 10,000 shares underlying stock options which are exercisable
within 60 days of April 30, 1997.

(17) The amount set forth above includes 358,364 shares currently issuable upon
the exercise of stock options issued pursuant to the Company's Incentive
Program, and 130,833 shares underlying stock options which are exercisable
within 60 days of April 30, 1997.

7
<PAGE> 10

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of the Common Stock of the
Company to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the exchange on which the Common
Stock is listed for trading. Officers, directors and more than ten percent
stockholders are required by regulations promulgated under the Exchange Act to
furnish the Company with copies of all Section 16(a) reports filed.

Based solely on the Company's review of copies of the Section 16(a) reports
filed for the year ended December 31, 1996, and written representations from
certain reporting persons that no Forms 5 were required for such persons for the
year ended December 31, 1996, the Company believes that all reporting
requirements applicable to its officers, directors, and more than ten percent
stockholders were complied with for the year ended December 31, 1996.

ELECTION OF DIRECTORS

At the Annual Meeting, three Class I directors are to be elected for
three-year terms expiring in 2000. Unless authority to do so is withheld, the
Board of Directors intends to vote the enclosed proxy at the Annual Meeting for
the election of the nominees named below. If any nominee for any reason should
become unavailable for election, it is intended that discretionary authority
will be exercised by either of the persons named in the enclosed proxy card in
respect of the election of such other person as the Board of Directors shall
nominate or the number of directors may be reduced accordingly by the Board of
Directors. The Board of Directors is not aware of any circumstances likely to
cause any nominee to become unavailable for election.

Set forth in the following table is certain information with respect to
each nominee nominated to serve as a Class I director whose term will expire in
2000. Each nominee was previously elected by the stockholders of the Company,
except Donald Press, who was elected by the Board of Directors on May 17, 1995
to fill a vacancy on the Board of Directors, and Peter Handal, who was elected
by the Board of Directors on February 28, 1997. Robert Spiegel, who has been a
director of the Company since 1987, will retire as a Class I director at the
Annual Meeting.

NOMINEES

CLASS I: TERM EXPIRING IN 2000

<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- ------------------------------------------------ --- ----------------------- --------------
<S> <C> <C> <C>
Irwin Selinger.................................. 56 Chairman of the Board 1981
and Chief Executive
Officer; Member of
the Executive
Committee
Donald Press.................................... 63 Director and Member of 1995
the Compensation
Committee
Peter Handal.................................... 54 Director 1997
</TABLE>

8
<PAGE> 11

DIRECTORS CONTINUING IN OFFICE

The following directors are continuing in office for the respective periods
indicated and until their successors are elected and qualified.

CLASS II: TERM EXPIRING IN 1998

<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- ------------------------------------------------ --- ----------------------- --------------
<S> <C> <C> <C>
Andrew A. Giordano.............................. 64 Director and Member of 1994
the Executive and
Compensation
Committees
David P. Delaney, Jr............................ 44 Director and Member of 1995
the Compensation and
Nominating Committees
Bevil J. Hogg................................... 48 Director 1996
</TABLE>

CLASS III: TERM EXPIRING IN 1999

<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- ------------------------------------------------ --- ----------------------- --------------
<S> <C> <C> <C>
Louis A. Lubrano................................ 63 Director and Member of 1984
the Audit Committee
Dr. Harold Lazarus.............................. 70 Director and Member of 1994
the Nominating
Committee
Steven D. Levkoff............................... 49 Director and Member of 1995
the Audit and
Nominating Committees
Rodney F. Price................................. 53 Director and Member of 1996
the Executive
Committee
</TABLE>

Mr. Selinger, a founder of the Company, has been the Chairman of the Board
and Chief Executive Officer of the Company since April 1981. Mr. Selinger was a
founder and the Chief Executive Officer of Surgicot, Inc., a manufacturer of
sterilization indicators, and its predecessor from 1968 to April 1980. In 1979,
Surgicot, Inc. was acquired by E.R. Squibb & Sons, Inc., a subsidiary of Squibb
Corporation. From April 1980 to June 1984, Mr. Selinger was a consultant to E.R.
Squibb & Sons, Inc.

Mr. Press is an attorney and has been a principal of Donald Press, P.C., a
law firm located in New York, New York, since 1979. Mr. Press has served as an
Executive Vice President of Broadway Management Co., Inc., an owner and manager
of commercial office buildings since 1981 and serves as a director of The Cooper
Companies, Inc., Component Specialties, Inc., and Branford Savings Bank.

Mr. Handal has been the President of COWI International Group, a management
consulting firm which provides strategic planning and other consulting services
for companies located in the United States and Eastern Europe, since 1990. In
addition, Mr. Handal is the President of J4P Associates, a real estate concern
in Baltimore, and the President of Fillmore Leasing Company, Inc., which leases
automobiles, computers and warehouse equipment. Mr. Handal serves on the Board
of Directors of Cole National Corporation, Joseph A. Bank Clothiers, Inc., Perry
Ellis International and Family Bargain Corp.

Mr. Giordano has been a principal of The Giordano Group, Limited, a
diversified consulting firm, since its founding in February 1993. From May 1987
to February 1993, Mr. Giordano was Executive Vice President

9
<PAGE> 12

of Lamonts Apparel, Inc. Mr. Giordano also currently serves as a director of
Cherry & Webb Inc., a ladies specialty apparel company, Joseph A. Bank
Clothiers, Inc., a manufacturer and retailer of men's clothing, and Nomos
Corporation, a conformal radiation therapy provider. In 1984, Mr. Giordano
retired from his position as CEO, Naval Supply Systems Command and Chief of the
Supply Corps., with the rank of Rear Admiral.

Mr. Delaney has been the President and Chief Executive Officer of Lancer
Financial Group and its principal operating subsidiary, Lancer Insurance
Company, since 1985. Mr. Delaney founded the Lancer Financial Group, which
currently provides insurance coverage and specialized services to the United
States passenger transportation industry. In addition, Mr. Delaney has served as
the Chairman of the Long Island Chapter of the Young President's Organization,
and serves as the Chairperson of the Community Campaign at Mercy Medical Center
and is a member of the Advisory Board of the Alliance of American Insurers.

Mr. Hogg was the President and Chief Executive Officer of Everest &
Jennings International Ltd. ("Everest & Jennings") from January 1994 to March
31, 1997. From December 1992 to January 1994, Mr. Hogg was the Chief Executive
Officer of Medical Composite Technology, Inc., a wheelchair designer and
manufacturer. Prior to such time, Mr. Hogg was the Chief Executive Officer of
Cycle Composite, Inc., a bicycle manufacturer, from 1986 to December 1992. Mr.
Hogg currently serves as a consultant to the Company. Pursuant to the
Stockholder Agreement, Mr. Hogg has been nominated by BIL to serve on the
Company's Board of Directors.

Mr. Lubrano has been an investment banker with Herzog, Heine, Geduld, Inc.,
a member of the New York Stock Exchange firm, since December 1996. From March 1,
1991 to December 1996, Mr. Lubrano was a managing director of Stires & Company,
Inc., an investment banking firm. Mr. Lubrano was a director of the Nasdaq
Forum. Prior to such time, Mr. Lubrano was a managing director of Home Group
Capital Markets, Inc., an investment banking firm. From April 1986 to March
1989, he was President of Gabelli & Company, Inc., an investment banking firm.
He is also a director of Andersen Group, Inc., a diversified manufacturing
company.

Dr. Lazarus was the Dean of the School of Business at Hofstra University
for seven years, and is now its Mel Weitz Distinguished Professor of Business.
Currently, Dr. Lazarus serves on the Boards of Directors of Stage II Apparel
Corporation and Facelifters Home Systems, Incorporated. He served as president
of the North American Management Council, the Eastern Academy of Management, the
Middle Atlantic Association of Colleges of Business Administration, and on the
Boards of Directors of Ideal Toy Corporation, Superior Surgical Manufacturing
Company, the Academy of Management, and the World Management Council.

Mr. Levkoff has been the Chief Executive Officer and President of Standard
Folding Cartons, Inc., a manufacturer of paperboard packaging for the private
label, over-the-counter and food industries, since 1982. Mr. Levkoff is also a
member of the national industry association, the Paperboard Packaging Council.

Mr. Price was the Chairman of the Board of Everest & Jennings from May 23,
1994 to November 27, 1996. Mr. Price has been a Director of Brierley Investments
Limited, a New Zealand investment holding company and an affiliate of BIL, since
1993. From 1990 to 1993, Mr. Price was the Managing Director and Chief Executive
Officer of Pioneer International Ltd., a producer of building construction
materials. Prior to such time, Mr. Price was a Managing Director and the Chief
Executive Officer of Industrial Equity Limited (IEL) from 1986 to 1989. Pursuant
to the Stockholder Agreement, Mr. Price has been nominated by BIL to serve on
the Company's Board of Directors.

Each of the persons listed is now serving as a director, and was previously
elected as a director by the stockholders, except for Donald Press, David P.
Delaney, Jr., Steven D. Levkoff, Bevil J. Hogg, Rodney F. Price and Peter
Handal, who were elected at meetings of the Board of Directors held on May 17,
1995, August 9, 1995, October 26, 1995, November 27, 1996 and February 28, 1997,
respectively. No director is related to any other director or executive officer.

10
<PAGE> 13

MEETINGS OF THE BOARD; COMMITTEES

The Board of Directors held nine meetings during 1996. No director attended
fewer than 75% of the meetings of the Board of Directors and the Committees of
the Board of Directors on which he served during 1996.

The Board has an Executive Committee, currently consisting of Irwin
Selinger, Andrew A. Giordano, and Rodney F. Price. The Executive Committee has
all the authority which, under the DGCL, may be delegated to such Committee. The
Executive Committee held four meetings during 1996. The Compensation Committee
currently consists of Andrew A. Giordano, Donald Press and David P. Delaney, Jr.
The Compensation Committee reviews and approves the salary and bonus levels for
the Company's executive officers, and awards stock options under the Company's
Incentive Program. The Compensation Committee held nine meetings during 1996.
The Audit Committee currently consists of Louis A. Lubrano, Robert Spiegel and
Steven D. Levkoff. The Audit Committee serves as a focal point for
communications with respect to financial accounting, reporting and controls, and
recommends the appointment of independent auditors and reviews the audit fees.
The Audit Committee met once during 1996.

The Board has a Nominating Committee, which currently consists of Dr.
Harold Lazarus, Steven D. Levkoff and David P. Delaney, Jr. The Nominating
Committee is responsible for recommending qualified candidates to the Board for
election as directors of the Company, including the slate of directors that the
Board proposes for election by stockholders at the Annual Meeting.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee currently consists of Andrew A. Giordano, Donald
Press and David P. Delaney, Jr. No member of the Company's Compensation
Committee is a current or former officer or employee of the Company or any of
its subsidiaries. In addition, there are no other compensation committee
interlocks between the Company and other entities involving any of the executive
officers of the Company who serve as executive officers of such other entities.

COMPENSATION OF DIRECTORS

The directors' cash compensation program provides for the payment of
directors' fees to outside directors of $1,000 for the attendance at each Board
meeting and $500 for each Committee meeting, provided each Committee meeting is
held on a date other than a Board meeting. Under the terms of the program, no
directors' fees are paid to any outside director who has received or will
receive in excess of $75,000 in fees or compensation from the Company during any
calendar year. In addition, no directors' fees are provided for telephonic Board
or Committee meetings which are less than two (2) hours in duration.

Under the Company's Incentive Program, Directors' Options are granted
automatically as of January 2nd of each year that the Program is in effect to
each director who is neither an employee nor officer of the Company or any of
its subsidiaries. Each Director's Option entitles the qualifying director to
whom it is granted to purchase 10,000 shares of the Common Stock at an option
price equal to the fair market value of the Common Stock on the date of grant.
Directors' Options vest and are exercisable at the rate of one-third ( 1/3) of
each grant annually. Directors' Options are exercisable in full for a period of
ninety days following (i) the death or permanent disability of a director or
(ii) a change in control of the Company. Directors' Options terminate ten years
from the date of grant or two years after a director's termination, if other
than for cause. If a director is terminated for cause, the Directors' Options
terminate immediately.

11
<PAGE> 14

EXECUTIVE COMPENSATION

The following summary compensation table sets forth certain information
concerning the compensation of the Company's Named Executive Officers for each
of the three years during the period ended December 31, 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-------------------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
---------------------------------- RESTRICTED OPTIONS TO
OTHER ANNUAL STOCK PURCHASE ALL OTHER
SALARY BONUS COMPENSATION AWARDS SHARES COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (1)($) ($) (2)(#) ($)
- ---------------------------------- ----- -------- -------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Irwin Selinger.................... 1996 250,000 100,000 180,000(3) -- 245,517 31,098(4)
Chairman of the Board and 1995 200,000 50,000 -- -- -- 30,740(4)
Chief Executive Officer 1994 200,000 -- -- -- 50,143 32,117(4)

Gary M. Jacobs.................... 1996 150,000 50,000 -- -- 35,000 --
Vice President, Finance and 1995 120,000 25,000 -- -- 20,000 --
Chief Financial Officer 1994 120,000 -- -- -- 15,000 --

Richard S. Kolodny................ 1996 150,000 75,000 -- -- 35,000 --
Vice President, General Counsel 1995 120,000 25,000 -- -- 20,000 --
and Secretary 1994 120,000 -- -- -- 15,000 --

Peter Winocur(5).................. 1996 150,000 75,000 -- -- 110,000 --
Executive Vice President 1995 53,000 -- 72,234 -- 15,000 --
of Sales and Marketing 1994 -- -- 96,009 -- -- --

Ralph Liguori(6).................. 1996 175,000 50,000 -- -- 35,000 --
Executive Vice President 1995 77,403 -- -- -- 25,000 --
of Operations
</TABLE>

- ---------------
(1) Except as set forth in note (3) below, the aggregate amount of Other Annual
Compensation for each of the Named Executive Officers did not equal or
exceed the lesser of either $50,000 or 10% of the total of such individual's
base salary and bonus, as reported herein for the last fiscal year, and is
not reflected in the table.

(2) Stock options are granted under the terms and provisions of the Company's
Incentive Program. For a description of the stock options, see "Executive
Compensation -- Option Grants in Last Fiscal Year."

(3) On November 27, 1996, the Company forgave all indebtedness in the amount of
$180,000 (inclusive of accrued interest), under a secured loan provided to
Mr. Selinger on April 1, 1996. The loan was used by Mr. Selinger to purchase
50,000 shares of Common Stock on the open market.

(4) In June 1992, the Company entered into a split-dollar life insurance
arrangement for the benefit of Irwin Selinger. During the fiscal years ended
December 31, 1996, 1995 and 1994, the Company paid the premiums on the life
insurance policy owned by a trust for the benefit of Irwin Selinger's
children on a split-dollar basis. With respect to the payment of such
premiums by the Company, the benefit to Mr. Selinger for the years ended
December 31, 1996, 1995 and 1994, projected on an actuarial basis was
$31,098, $30,740 and $32,117, respectively, which is included in the table
above.

(5) Mr. Winocur became the Executive Vice President of Sales and Marketing of
the Company on January 1, 1996. During 1994 and through July 1, 1995, Mr.
Winocur was an exclusive sales representative for the Company. From July 1,
1995 through December 31, 1995, Mr. Winocur was the Vice President of Sales
and Marketing. All sales commissions paid to Mr. Winocur during 1994 and
1995 are reported under the column "Other Annual Compensation."

(6) On July 17, 1995, Mr. Liguori joined the Company as the Executive Vice
President of Operations.

12
<PAGE> 15

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain summary information concerning the
number of stock options granted and the potential realizable value of the stock
options granted to the Company's Named Executive Officers during the fiscal year
ended December 31, 1996:

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES ANNUAL RATES OF
UNDERLYING % OF TOTAL STOCK PRICE
OPTIONS OPTIONS APPRECIATION
GRANTED GRANTED TO EXERCISE OR FOR OPTION TERM(2)
IN EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME 1996(1) FISCAL YEAR ($/SH) DATE 5% 10%
- ---------------------------- --------- ------------ ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Irwin Selinger.............. 45,517 5.8% 3.625 01/11/01 $ 45,590 $100,730
Chairman of the Board and 50,000 6.3% 4.250 03/13/01 58,710 129,730
Chief Executive Officer 50,000 6.3% 7.500 06/05/01 103,610 228,940
100,000 12.6% 7.125 11/19/01 196,850 434,990
Gary M. Jacobs.............. 20,000 2.5% 7.500 06/05/01 $ 41,440 $ 91,580
Vice President, Finance
and 15,000 1.9% 7.125 11/19/01 29,530 65,250
Chief Financial Officer
Richard S. Kolodny.......... 20,000 2.5% 7.500 06/05/01 $ 41,440 $ 91,580
Vice President, General 15,000 1.9% 7.125 11/19/01 29,530 65,250
Counsel and Secretary
Peter Winocur............... 35,000 4.4% 7.500 06/05/01 $ 72,520 $160,260
Executive Vice President 75,000 9.5% 7.125 11/19/01 147,640 326,240
of Sales & Marketing
Ralph Liguori............... 20,000 2.5% 7.500 06/05/01 $ 41,440 $ 91,580
Executive Vice President 15,000 1.9% 7.125 11/19/01 29,530 65,250
of Operations
</TABLE>

- ---------------
(1) During the fiscal year ended December 31, 1996 stock options were granted
under the Company's Incentive Program at an exercise price equal to the fair
market value of the Common Stock on the date of grant. The stock options
have a term of five years, subject to earlier termination in the event of
termination for cause. The stock options are non-transferable, other than by
will or the laws of descent and distribution, and vest and are exercisable
at the rate of 50% per year, subject to certain exceptions including a
change of control of the Company and the death of an optionee. The stock
options may be exercised by payment of cash, shares of Common Stock or other
consideration. The Company's Incentive Program is administered by the
Compensation Committee of the Board of Directors, which is granted the
authority to amend and modify the terms and provisions of stock options
granted under the Company's Incentive Program.

(2) Represents gain that would be realized assuming the stock options were held
for the entire five-year period and the stock price increased at compounded
rates of 5% and 10%, respectively, from the exercise prices set forth in the
table. These amounts represent assumed rates of appreciation only. Actual
gains, if any, on stock option exercises will be dependent on overall market
conditions and on the future performance of the Company. There can be no
assurance that the amounts reflected in the table will be achieved.

13
<PAGE> 16

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES

The following table provides certain summary information concerning stock
option exercises during the fiscal year ended December 31, 1996 by the Company's
Named Executive Officers and the value of unexercised stock options held by the
Company's Named Executive Officers as of December 31, 1996.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED "IN THE MONEY"
NUMBER OF OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES ACQUIRED VALUE YEAR END(2) YEAR END(3)
UPON REALIZED --------------------------- ---------------------------
NAME EXERCISE ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Irwin Selinger............. 50,000 $ 16,250 116,411 245,517 $ 297,110 $ 652,585
Chairman of the Board and
Chief Executive Officer
Gary M. Jacobs............. -- -- 55,000 45,000 $ 185,000 $ 98,750
Vice President, Finance
and Chief Financial
Officer
Richard S. Kolodny......... -- -- 45,000 45,000 $ 195,000 $ 98,750
Vice President, General
Counsel and Secretary
Peter Winocur.............. -- -- 22,500 117,500 $ 72,810 $ 192,190
Executive Vice President
of Sales and Marketing
Ralph Liguori.............. -- -- 12,500 47,500 $ 57,810 $ 102,815
Executive Vice President
of Operations
</TABLE>

- ---------------
(1) Values were calculated by multiplying the closing market price of the Common
Stock as reported on the New York Stock Exchange, Inc. on the date of
exercise, by the respective number of shares and subtracting the exercise
price per share.

(2) Represents the aggregate number of stock options held as of December 31,
1996.

(3) Values were calculated by multiplying the closing market price of the Common
Stock ($8.625), as reported on the New York Stock Exchange, Inc. on December
31, 1996 by the respective number of shares and subtracting the exercise
price per share, without any adjustment for any termination or vesting
contingencies.

EMPLOYMENT, TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS AND OTHER
ARRANGEMENTS

In July 1981, Mr. Selinger entered into a ten-year employment agreement
with the Company, which, in June 1991, was amended and extended for an
additional five-year period ending July 8, 1996. As of May 3, 1996, Mr.
Selinger's employment agreement was extended for an additional five-year period
ending July 8, 2001. Under Mr. Selinger's employment agreement, Mr. Selinger
receives a base salary of $350,000 for 1997. For 1996, Mr. Selinger received a
base salary of $250,000. During the term of the employment agreement between Mr.
Selinger and the Company, and for a period of one year following termination of
the employment agreement, if termination occurs as a result of a breach of the
employment agreement by Mr. Selinger, Mr. Selinger has agreed that he will not
directly or indirectly engage in any business or invest in any privately held
company or own more than one percent of the outstanding securities of any
publicly owned corporation which competes with any business of the Company.

Each of the Company's Named Executive Officers has entered into an
agreement with the Company providing for the payment of certain benefits if
within two years following the occurrence of a "change in control" (as defined
in each such agreement), a Named Executive Officer of the Company is terminated
other than by reason of death, disability, retirement, or for cause, or if such
Named Executive Officer terminates his or her employment for good reason (each,
a "Triggering Event"). Under the terms of each agreement, each of

14
<PAGE> 17

the Named Executive Officers of the Company is entitled upon the occurrence of a
Triggering Event to receive his or her base salary and incentive compensation,
if any, through the date of termination, plus a lump sum severance payment equal
to one times the Named Executive Officer's base salary (as defined in each such
agreement), provided that in no event shall the total payments exceed 2.99 times
the Named Executive Officer's "base amount" as such term is defined in Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"). In addition,
the terms of each agreement provide that in the event that a Named Executive
Officer's employment is terminated within two (2) years following the occurrence
of a change of control by reason of death or disability, the Named Executive
Officer shall be entitled to death or long-term disability benefits, as the case
may be, on terms no less favorable than the most favorable benefits to which he
would have been entitled had the death or termination for disability occurred at
any time during the period commencing one year prior to the initiation of
actions resulting in a change of control of the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In the ordinary course of business, the Company from time to time engages
in transactions on an arms' length basis with other corporations or entities
whose officers or directors are also officers or directors of the Company.

On March 1, 1996, the Company entered into a three (3) year lease
arrangement with HIP Realty, Inc. ("HIP") for the Company's facility located in
Mount Vernon, New York. Under the terms of the lease, the Company has an option
to renew the lease for an additional three (3) year period at a fixed annual
rent of $180,000. The principal stockholders of HIP are Harvey P. Diamond, a
former director and former President of the Company, and Peter Winocur, the
Company's Executive Vice President of Sales and Marketing. The lease with HIP
Realty provides for the payment by the Company of fixed annual rents of $162,000
for the first year escalating to $180,000 for years two and three, and the
payment of incremental real estate taxes over a base year. The Company believes
that the terms of the lease are at least as favorable to it as those it would
have received from an unrelated third party.

15
<PAGE> 18

STOCK PERFORMANCE GRAPH

Set forth below is a line graph comparing the cumulative total stockholder
return of the Common Stock of the Company for the last five years with the
cumulative total return of the Standard & Poor's 500 Stock Index ("S&P 500") and
the Standard & Poor's Medical Products and Supplies Index ("S&P Health Care")
over the same period assuming the investment of $100 in the Common Stock of the
Company, the Standard & Poor's 500 Stock Index and the Standard & Poor's Medical
Products and Supplies Index on December 31, 1991 (assuming the reinvestment of
all dividends).

<TABLE>
<CAPTION>
S&P
HEALTHCARE(MEDICAL GRAHAM- FIELD
Measurement Period PRODUCTS AND HEALTH |PRODUCTS,
(Fiscal Year Covered) S&P 500 SUPPLIES) INC.
<S> <C> <C> <C>
Dec-91 100 100 100
Dec-92 108 86 47
Dec-93 118 65 38
Dec-94 120 77 30
Dec-95 165 131 27
Dec-96 203 150 70
</TABLE>

REPORT OF COMPENSATION COMMITTEE

OVERALL POLICY

The Company's executive officer compensation program is administered to be
closely linked to corporate performance and the total return to stockholders
over the long-term. The overall objectives of the executive officer compensation
program are to attract and retain the best possible executive talent, to
motivate these executives to achieve the goals inherent in the Company's
business strategy, to link executive and stockholder interests through
participation in the Company's Incentive Program and finally to provide a
compensation package that recognizes individual contributions as well as overall
business results.

The key elements of the Company's executive officer compensation consist of
base salary, an annual bonus pursuant to the Company's Bonus Plan, and the grant
of stock options under the Company's Incentive Program. The Compensation
Committee reviews and approves the compensation package for the executive
officers of the Company. In addition, while the elements of compensation
described below are considered separately, the Compensation Committee takes into
account the full compensation package afforded by the Company to the individual.

BASE SALARIES

Base salaries for executive officers (officers with principal
decision-making authority) are initially determined by evaluating the
responsibilities of the position held and the experience of the individual.
Annual salary adjustments and increases are determined by evaluating the
performance of the Company and of each executive officer, and also take into
account new responsibilities. The Chairman of the Board makes salary
recommendations, which are based upon the subjective assessment of the nature of
the position and the

16
<PAGE> 19

contribution, experience and tenure of the executive officer. The
recommendations are reviewed and approved by the Compensation Committee.

For 1996, Mr. Selinger received a base salary of $250,000, representing a
$50,000 increase in base salary received in 1995. The Compensation Committee set
Mr. Selinger's base salary at $350,000 for 1997 in view of the Company's
performance in 1996.

ANNUAL BONUS

Cash bonuses are granted on a discretionary basis primarily to reward
individual contribution, following years in which the Company achieved projected
earnings and revenue growth. The Chairman of the Board makes bonus
recommendations, which are based upon the subjective evaluation of each
executive officer's direct contribution to Company performance. The
recommendations are reviewed and approved by the Compensation Committee. Based
on the Company's performance in 1996 and Mr. Selinger's significant role in the
Company's acquisition of Everest & Jennings on November 27, 1996, Mr. Selinger
was granted a cash bonus of $100,000, and a loan made by the Company to Mr.
Selinger in April 1996 in the amount of $180,000 (inclusive of accrued interest)
was forgiven in its entirety in November 1996.

STOCK OPTIONS

Under the Company's Incentive Program, which was approved by the Company's
stockholders, stock options exercisable for Common Stock are granted to the
Company's employees, including executive officers. The Compensation Committee
approves the grant of stock options awards. In the event of poor corporate
performance, the Compensation Committee can elect not to approve the grant of
stock options.

Stock options are designed to align the interests of executives with those
of the stockholders. Stock options are granted with an exercise price equal to
the market price of the Common Stock on the date of grant and generally vest and
are exercisable at the rate of 50 percent per year. This approach is designed to
incentivize the creation of stockholder value over the long term since the full
benefit of a compensation package cannot be realized unless stock price
appreciation occurs over a number of years.

In 1996, Mr. Selinger was awarded stock options to purchase in the
aggregate 200,000 shares, and a restored stock option to purchase 45,517 shares,
which was granted in connection with his exercise of certain stock options.

DEDUCTIBILITY OF COMPENSATION OVER $1 MILLION

The Company has not awarded any compensation that is non-deductible under
Section 162(m) of the Code and does not anticipate doing so in the foreseeable
future. In the event that the Company determines to award compensation in any
amount in excess of the amount which may be deducted under Section 162(m) of the
Code, the Company will determine whether it will conform its compensation to
comply with such provision.

1996 Compensation Committee

Andrew A. Giordano
Donald Press
David P. Delaney, Jr.

17
<PAGE> 20

RATIFICATION OF APPOINTMENT
OF
THE COMPANY'S INDEPENDENT AUDITORS

Upon the recommendation of the Audit Committee of the Board of Directors,
the firm of Ernst & Young LLP has been appointed independent auditors for 1997,
subject to ratification of such appointment by the stockholders. Ernst & Young
LLP has acted as the Company's independent auditors since 1986. If the
stockholders do not ratify such appointment, the Audit Committee will recommend
another accounting firm for selection by the Board of Directors. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting and will have an opportunity to make a statement and will be available
to answer proper questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.

PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS

Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present
proper proposals for inclusion in the Company's proxy statement and for
consideration at the next annual meeting of its stockholders by submitting their
proposals to the Company in a timely manner. In order to be included in the
Company's proxy statement and proxy relating to the 1998 Annual Meeting,
stockholder proposals must be received by the Company no later than January 12,
1998, and must otherwise comply with the requirements of Rule 14a-8.

Pursuant to the Company's By-Laws, as amended, any stockholder entitled to
vote at an annual meeting of stockholders of the Company may nominate persons
for election as directors or submit a proposal to be voted on by stockholders
(other than proposals to be included in the Company's proxy materials as
provided in the preceding paragraph) at such annual meeting only if written
notice of such stockholder's intent to make such nomination or proposal is given
either by personal delivery or by the United States mail, postage prepaid, to
the Secretary of the Company not later than one hundred twenty (120) days in
advance of such annual meeting of stockholders.

All notices of proposals by stockholders, whether or not to be included in
the Company's proxy materials, should be sent to the attention of the Secretary
of the Company at 400 Rabro Drive East, Hauppauge, New York 11788.

OTHER BUSINESS

The Board of Directors does not intend to present to the meeting any
business other than the matters stated in the accompanying Notice of the Annual
Meeting of Stockholders and, at the time the proxy statement was printed, was
not aware of any other business that properly might be presented. If any other
business not described herein should properly come before the meeting for action
by the stockholders, or if any procedural matters requiring a vote of
stockholders should arise at the meeting, the persons named as proxies on the
enclosed card or their substitutes will vote the shares represented by them in
accordance with their best judgment.

By Order of the Board of Directors

RICHARD S. KOLODNY
Vice President, General
Counsel and Secretary

Dated: May 12, 1997

18
<PAGE> 21
[FRONT OF CARD]

GRAHAM-FIELD HEALTH PRODUCTS, INC.

400 Rabro Drive East, Hauppauge, New York 11788

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints IRWIN SELINGER and DR. HAROLD
LAZARUS as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
Common Stock of Graham-Field Health Products, Inc., held of record by the
undersigned on April 30, 1997, at the Annual Meeting of Stockholders to be held
on June 18, 1997, or any adjournment thereof.

1. Election of Directors.

Class I Nominees: Irwin Selinger
Donald Press
Peter Handal

FOR all nominees (except WITHHOLD AUTHORITY
as marked to the contrary to vote for all
above) [ ] nominees [ ]

INSTRUCTION: TO WITHHOLD VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE
LIST PROVIDED ABOVE)

2. Ratification of appointment of Ernst & Young LLP as
independent auditors.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. In their discretion upon any other matters which may
properly come before such meeting.

(continued on reverse side)
<PAGE> 22
[REVERSE OF CARD]

This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR the election of management's nominees for directors, and FOR Proposal 2.

PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

Dated _________________ , 1997

______________________________
(Signature)

______________________________
(Signature if held
jointly)

Please sign exactly as your name
appears hereon. When shares
are held by joint tenants,
both should sign. When
signing as attorney, as
executor, administrator,
trustee or guardian, please
give full title as such. If
a corporation, please sign
in full corporate name by
President or other
authorized officer. If a
partnership, please sign in
partnership name by
authorized person.