THIS
        AGREEMENT (the “Agreement”) is dated as of December __ ,
        2003,
        and is by HEALTH-CHEM CORPORATION, a Delaware corporation (the “Company”), for
        the benefit of LAZAR & COMPANY, a New York [sole proprietorship] (the
“Holder”).
 
 WITNESSETH:
 
 WHEREAS,
        the Holder has been granted a warrant (the “Warrant”) to purchase 1,000,000
        shares of common stock, par value $.01 per share (the “Common Stock”), of the
        Company; and
 
 WHEREAS,
        the Company has agreed to grant the Holder certain registration rights with
        respect to the Common Stock issuable upon the exercise of the
        Warrant;
 
 NOW
        THEREFORE, for good and valuable consideration, the receipt and sufficiency
        of
        which are hereby acknowledged, the parties hereto hereby agree as
        follows.
 
 1.  Registrable
        Securities .
 
 As
        used
        herein, the term “Registrable Securities” shall mean without duplication, any
        shares of Common Stock issued pursuant to an exercise of the Warrant or issued
        in respect thereof as a result of a stock dividend or stock split or a
        recapitalization, merger or other reorganization of the Company in which
        the
        Company is the surviving entity.
 
 2.  Demand
        Registration .
 
 (a)  At
        any
        one time (and not more than one time) after the Company has filed its Annual
        Report on Form 10-K for the year ended December 31, 2003, upon the written
        request of the Holder (the “Demand Registration Request”) requesting that the
        Company effect the registration under the Securities Act of 1933, as amended
        (the “Securities Act”), of at least 50% of the Registrable Securities then held
        by or available for issuance to the Holder or any transferees directly from
        the
        Holder of the Warrant or the shares of Common Stock issuable upon exercise
        thereof and having a value of at least $5 million, the Company shall, as
        expeditiously as may be practicable, use reasonable efforts to effect such
        registration under the Securities Act (a “Demand Registration”).
 
 (b)  (i)  The
        Company may postpone for up to six months the filing or the effectiveness
        of a
        registration statement for a Demand Registration if the Company and the Holder
        agree that such Demand Registration would reasonably be expected to have
        an
        adverse effect on any proposal or plan by the Company or any of its subsidiaries
        to engage in any acquisition of assets (other than in the ordinary course
        of
        business) or any merger, consolidation, tender offer or similar transaction;
        provided that in each such event, the Holder will be entitled to withdraw
        any
        request and, if such request is withdrawn, such Demand Registration will
        not
        count as the one permitted Demand Registration hereunder and the Company
        will
        pay all expenses incurred by the Holder in connection with such
        registration.
 
  
  (ii)  If
        the
        Holder makes a Demand Registration Request within three months of the Company’s
        fiscal year end, the Company may postpone for up to six months the filing
        or the
        effectiveness of a registration statement for a Demand
        Registration.
 
 3.  Piggyback
        Registrations .
 
 (a)  Right
        to Piggyback .  Whenever
        the Company proposes to either (i) register any share of Common Stock under
        the
        Securities Act on its own behalf (other than any registration on Form S-4
        or S-8
        or any successor form thereto or a form of registration statement not available
        for the general registration of securities) (a “Company Registration”), or (ii)
        register any Registrable Securities pursuant to a Demand Registration (other
        than any registration on a form of registration statement not available for
        general registration of securities) and the registration form to be used
        may be
        used for the registration of Registrable Securities (a “Piggyback
        Registration”), the Company will, not less than 30 days prior to the filing of
        the registration statement to be used for such Piggyback Registration, give
        written notice (the “Registration Notice”) to the Holder of its intention to
        effect such a registration and will, subject to the provisions set forth
        below,
        include in such registration all Registrable Securities with respect to which
        the Company has received, within 15 days after the date on which the Holder
        has
        received the Registration Notice, a written request from the Holder for
        inclusion therein (which request shall specify the Registrable Securities
        intended to be included therein and the holders thereof).
 
 (b)  Priority
        on Company Registrations .
        If a
        Piggyback Registration is an underwritten primary Company Registration, and
        the
        managing underwriters advise the Company in writing that in their opinion
        the
        aggregate of the number of securities proposed to be sold by the Company
        and the
        number of Registrable Securities and other securities held by persons with
        piggyback registration rights requested to be included in such registration
        exceeds the number which can be sold in such offering without adversely
        affecting the marketability of the offering, the Company will include in
        such
        registration the following securities in the following order of priority:
        (i)
        first, all of the securities the Company proposes to sell and (ii) second,
        the
        Registrable Securities and all other securities held by persons with piggyback
        registration rights requested to be included in such registration, pro rata
        among the holders of such Registrable Securities and other securities on
        the
        basis of the number of shares of Registrable Securities or other securities
        owned by each such holder. Notwithstanding the foregoing or any other provision
        contained herein, the Company shall have the right, at any time prior to
        the
        effective date thereof, to postpone, withdraw or abandon any Company
        Registration without any obligation to any holder of Registrable
        Securities.
 
  
  (c)  Priority
        on Demand Registrations .
        If a
        Piggyback Registration is an underwritten primary Demand Registration, and
        the
        managing underwriters advise the Company in writing that in their opinion
        the
        aggregate of the number of securities proposed to be sold pursuant to the
        Demand
        Registration Request and the number of other Registrable Securities and other
        securities held by persons with piggyback registration rights requested to
        be
        included in such registration exceed the number which can be sold in such
        offering without adversely effecting the marketability of the offering, the
        Company will include in such registration the following securities in the
        following order of priority: (i) first, all of the securities requested to
        be
        included in such registration pursuant to a Demand Registration Request,
        pro
        rata among the holders of such securities on the basis of the number of shares
        of Registrable Securities or other securities owned by each such holder,
        and
        (ii) any other securities requested to be included in such registration by
        any
        other person having a right thereto. Notwithstanding the foregoing or any
        other
        provision contained herein, the party who delivered the Demand Registration
        Request shall have the right, at any time prior to the effective date thereof,
        to direct the Company to postpone, withdraw or abandon any Demand Registration
        without any obligation to any holder of Registrable Securities.
 
 4.  Registration
        Procedures .
 
 Whenever
        the holders of Registrable Securities have requested that any Registrable
        Securities be registered pursuant to this Agreement, the Company will, subject
        to the provisions set forth above, including without limitation, the right
        of
        the Company to postpone, withdraw or abandon any Company Registration and
        the
        right of the Holder to postpone, withdraw or abandon any Demand Registration,
        use its reasonable efforts to effect the registration of such Registrable
        Securities in accordance with the intended method of disposition thereof,
        and
        pursuant thereto the Company will as expeditiously as possible:
 
 (a)  prepare
        and file with the Securities and Exchange Commission a registration statement
        with respect to such Registrable Securities and use its reasonable efforts
        to
        cause such registration statement to become effective; provided that before
        filing a registration statement or prospectus or any amendments or supplements
        thereto, the Company will furnish to counsel selected by the reasonable
        opportunity to review and comment on such documents;
 
 (b)  prepare
        and file with the Securities and Exchange Commission such amendments and
        supplements to such registration statement and the prospectus used in connection
        therewith as may be necessary to keep such registration statement effective
        for
        a period of not less than 90 days (without taking into account any period
        during
        which a stop order may be in effect) and comply with the provisions of the
        Securities Act with respect to the disposition of all securities covered
        by such
        registration statement during such period in accordance with the tended methods
        of disposition by the sellers thereof set forth in such registration
        statement;
 
  
  (c)  furnish
        to each seller of Registrable Securities such number of copies of such
        registration statement, each amendment and supplement thereto, the prospectus
        included in such registration statement (including each preliminary prospectus)
        and such other documents as such seller may reasonably request in order to
        facilitate the disposition of the Registrable Securities owned by such
        seller;
 
 (d)  use
        its
        best efforts to register or qualify such Registrable Securities under such
        other
        securities or blue sky laws of such U.S. jurisdictions as any seller reasonably
        requests and do any and all other acts and things which may be reasonably
        necessary or advisable to enable such seller to consummate the disposition
        in
        such jurisdictions of the Registrable Securities owned by such seller, provided
        that the Company will not be required to (i) qualify generally to do business
        in
        any jurisdiction where it would not otherwise be required to qualify but
        for
        this subparagraph, (ii) subject itself to taxation in any such jurisdiction
        or
        (iii) consent to general service of process in any such
        jurisdiction;
 
 (e)  notify
        each seller of such Registrable Securities, at any time when a prospectus
        relating thereto is required to be delivered under the Securities Act, of
        the
        happening any event which causes the prospectus included in such registration
        statement to contain an true statement of a material fact or omits any fact
        necessary to make the statements therein not misleading, and, at the request
        of
        any such seller, the Company will prepare a supplement or amendment to such
        prospectus so that, as thereafter delivered to the purchasers of such
        Registrable Securities, such prospectus will not contain an untrue statement
        of
        a material fact or omit to state any fact necessary to make the statements
        therein not misleading, it being hereby acknowledged and agreed that each
        holder
        of Registrable Securities shall be deemed to have agreed by acquisition of
        such
        Registrable Securities that upon the receipt of any notice from the Company
        of
        the occurrence of any event of the kind described in this paragraph, such
        holder
        shall thereupon discontinue such holder’s offer and disposition of Registrable
        Securities until such holder’s receipt of the copies of the “stickered,”
supplemented or amended prospectus and/or registration statement contemplated
        hereby and, if so directed by the Company, shall deliver to the Company (at
        the
        Company’s expense) all copies, other than permanent file copies, of the
        prospectus covering such Registrable Securities then in such holder’s
        possession;
 
 (f)  cause
        all
        such Registrable Securities to be listed on each securities exchange on which
        similar securities issued by the Company are then listed and, if not so listed,
        use its best efforts in connection with any Company Registration (but not
        any
        Demand Registration) to cause all such Registrable Securities to be listed
        on
        the NASD automated quotation system;
 
 (g)  provide
        a
        transfer agent and registrar for all such Registrable Securities not later
        than
        the effective date of such registration statement;
 
 (h)  make
        available for inspection by any seller of Registrable Securities or any
        underwriter participating in any disposition pursuant to such registration
        statement and any attorney, accountant or other agent retained by any such
        seller or underwriter, all financial and other records, pertinent corporate
        documents and properties of the Company, and cause the Company’s officers,
        directors, employees and independent accountants to supply all information
        reasonably requested by any such seller, underwriter, attorney, accountant
        or
        agent in connection with such registration statement;
 
  
  (i)  otherwise
        use its reasonable efforts to comply with all applicable rules and regulations
        of the Securities and Exchange Commission, and make available to its security
        holders, as soon as reasonably practicable, an earnings statement covering
        the
        period of at least twelve months (but not more than eighteen months) beginning
        with the first day of the Company’s first full fiscal quarter after the
        effective date of the registration statement, which earnings statement shall
        satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
        thereunder;
 
 (j)  permit
        any holder of Registrable Securities, which holder, in its sole and exclusive
        judgment, might be deemed to be an underwriter or a controlling person of
        the
        Company, to participate in the preparation of such registration statement
        and to
        require the insertion therein of material, furnished to the Company in writing,
        which in the reasonable judgment of such holder and its counsel should be
        included (subject to the consent of the Company which shall not be unreasonably
        withheld);
 
 (k)  in
        the
        event of the issuance of any stop order suspending the effectiveness of a
        registration statement, or of any order suspending or preventing the use
        of any
        related prospectus or suspending the qualification of any Common Stock included
        in such registration statement for sale in any jurisdiction, the Company
        will
        notify each holder of Registrable Securities and use its reasonable efforts
        promptly to obtain the withdrawal of such order;
 
 (1)  use
        its
        reasonable efforts to cause such Registrable Securities covered by such
        registration statement to be registered with or approved by such other United
        States (or any state or territory thereof) governmental agencies or authorities
        as may be necessary to enable the sellers thereof to consummate the disposition
        of such Registrable Securities; and
 
 (m)  obtain
        a
        cold comfort letter from the Company’s independent public accountants in
        customary form and covering such matters of the type customarily covered
        by cold
        comfort letters as the Holders may reasonably request.
 
 5. Registration
            Expenses .
 
 All
        expenses incident to the Company’s performance of or compliance with the
        foregoing, including without limitation all registration and filing fees,
        fees
        and expenses compliance with securities or blue sky laws, printing expenses,
        messenger and delivery expenses and fees and disbursements of counsel for
        the
        Company and all independent certified public accountants (excluding discounts
        and commissions) and other persons retained by the Company shall be borne
        by the
        Company. All fees and expenses incurred by the holders of Registrable Securities
        requesting registration, including fees and disbursements of counsel, shall
        be
        borne by auch holders, pro rata, based upon the number of shares of Registrable
        Securities held by each such holder.
 
  
  6. Indemnification .
 
 (a)  The
        Company agrees to indemnify, to the extent permitted by law, each holder
        of
        Registrable Securities, its officers and directors and each person who controls
        such holder (within the meaning of the Securities Act) against all losses,
        claims, damages, liabilities and expenses caused by any untrue or alleged
        untrue
        statement of material fact contained in any registration statement, prospectus
        or preliminary prospectus or any amendment thereof or supplement thereto
        or any
        omission or alleged omission of a material fact required to be stated therein
        or
        necessary to make the statements therein not misleading, except insofar as
        the
        same is caused by or contained in any information furnished in writing to
        the
        Company by such holder expressly for use therein or by such holder’s failure to
        deliver a copy of the registration statement or prospectus or any amendments
        or
        supplements thereto after the Company has furnished such holder with a
        sufficient number of copies of the same in a timely manner. In connection
        with
        an underwritten offering, the Company will indemnify such underwriters, their
        officers and directors and each person who controls such underwriters (within
        the meaning of the Securities Act) to the same extent as provided above with
        respect to the indemnification of the holders of Registrable
        Securities.
 
 (b)  In
        connection with any registration statement in which a holder of Registrable
        Securities is participating, each such holder will furnish to the Company
        in
        writing such information and affidavits as the Company reasonably requests
        for
        use in connection with any such registration statement or prospectus and,
        to the
        extent permitted by law, will indemnify the Company, its directors and officers
        and each person who controls the Company (within the meaning of the Securities
        Act) against any losses, claims, damages, liabilities and expenses resulting
        from any untrue or alleged untrue statement of material fact contained in
        the
        registration statement, prospectus or preliminary prospectus or any amendment
        thereof or supplement thereto or any omission or alleged omission of a material
        fact required to be stated therein or necessary to make the statements therein
        not misleading, but only to the extent that such untrue statement or omission
        is
        contained in, or omitted from, any information or affidavit so furnished
        in
        writing by such holder; provided that the obligation to indemnify will be
        limited to the net amount of proceeds received by such holder from the sale
        of
        Registrable Securities pursuant to such registration statement.
 
 (c)  Any
        person entitled to indemnification hereunder will (i) give prompt written
        notice
        to the indemnifying party of any claim with respect to which it seeks
        indemnification, provided that the failure to give such notice shall relieve
        the
        indemnifying party hereunder of liability hereunder only if and to the extent
        that the indemnifying party has been prejudiced in any material respect by
        such
        failure, and (ii) unless in such indemnified party’s reasonable judgment a
        conflict of interest between such indemnified and indemnifying parties may
        exist
        with respect to such claim, permit such indemnifying party to assume the
        defense
        of such claim with counsel reasonably satisfactory to the indemnified party.
        If
        such defense is assumed, the indemnifying party will not be subject to any
        liability for any settlement made by the indemnified party without its consent
        (but such consent will not be unreasonably withheld). An indemnifying party
        who
        is not entitled to, or elects not to, assume the defense of a claim will
        not be
        obligated to pay the fees and expenses of more than one counsel for all parties
        indemnified by such indemnifying party with respect to such claim, unless
        in the
        reasonable judgment of an indemnified party a conflict of interest may exist
        between such indemnified party and any other of such indemnified parties
        with
        respect to such claim.
 
  
  7.  Participation
        in Underwritten Registrations .
 
 No
        holder
        of Registrable Securities may participate in any registration hereunder which
        is
        underwritten unless such person (i) agrees to sell such Registrable Securities
        on the basis provided in any underwriting arrangements to be executed in
        connection with such offering and (ii) completes and executes all
        questionnaires, powers of attorney, indemnities, underwriting agreements
        and
        other document required under the terms of such underwriting arrangements;
        provided that no holder of Registrable Securities included in any underwritten
        registration shall be required to make any representations or warranties
        to the
        Company or the underwriters other than representations and warranties regarding
        such holder and such holder’s intended method of distribution, ownership of
        securities or other information required under federal or state securities
        laws.
 
 8.  Termination
        of Registrable Securities .
 
 As
        to any
        particular Registrable Securitres, such securities will cease to be Registrable
        Securities when they have been distributed to the public pursuant to a public
        offering registered under the Securities Act or sold to the public through
        a
        broker, dealer or market maker in compliance with Rule 144 under the Securities
        Act (or any similar rule then in force) or if the Registrable Securities
        may, in
        the opinion of counsel reasonably acceptable to the holder of such Registrable
        Securities, be freely sold to the public without registration under the
        Securities Act.
  **** 9.  Amendments
        and Waivers
 
 Except
        as
        otherwise provided herein, the provisions of this Agreement may be amended
        or
        waived only upon the prior written consent of the Company and the
        Holder.
 
  
  10.
        S uccessors
        and Assigns.
 
 All
        covenants and agreements in this Agreement by or on behalf of any of the
        parties
        hereto will bind and inure to the benefit of the respective successors and
        assigns of the parties hereto (including, with respect to all Registrable
        Securities, all subsequent registered holders of such Registrable
        Securities).
 
  11.  Severability .
 
 Whenever
        possible, each provision of this Agreement will be interpreted in such manner
        as
        to be effective and valid under applicable law, but if any provision of this
        Agreement is held to be prohibited by or invalid under applicable law, such
        provision will be ineffective only to the extent of such prohibition or
        invalidity, without invalidating the remainder of this Agreement.
 
 12  Counterparts .
 
 This
        Agreement may be executed in one or more cousnterparts, and all such
        counterparts taken together will constitute one and the same
        Agreement.
 
 13.  Notices .
 
 All
        notices, demands or other communications to be given or delivered under or
        by
        reason of the provisions of this Agreement shall be in writing and shall
        be
        delivered personally to the recipient, sent to the recipient by reputable
        express courier service (charges prepaid) or mailed to the recipient by
        certified or registered mail, return receipt requested and postage prepaid
        and
        shall be deemed given when received. Such notices, demands and other
        communications may be sent to each party hereto (other than the Company)
        at the
        address set forth in the Company’s records for such party, and to the Company at
        the address of its chief executive office, or to such other address as the
        recipient party has specified by prior written notice to the sending
        party.
 
 14.  Governing
        Law .
 
 This
        Agreement shall be governed by **** and
        construed in accordance with the laws of the State of New York applicable
        to
        contracts made and to be wholly performed within such State.
   
 
 IN
        WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
        as of the day and year first above written.
  HEALTH-CHEM
                  CORPORATIONBy:
                  ___________________________________Name:Title:LAZAR
                  & COMPANYBy:
                  ___________________________________Name:Title: