CEL-SCI CORPORATION
66 Canal Center Plaza
Suite 510
Alexandria, Virginia 223l4
(703) 549-5293
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD JUNE 14, 1996
AND PROXY STATEMENT
To the Shareholders:
Notice is hereby given that the annual meeting of the
shareholders of CEL-SCI Corporation (the "Company") will be at
the Holiday Inn Hotel & Suites, 625 First Street, Alexandria,
Virginia 223l4 on June 14, 1996, at 10:00 A.M., for the following
purposes:
(1) to elect the directors who shall constitute
the Company's Board of Directors for the ensuing year;
(2) to approve the adoption of the Company's 1996
Employee Incentive Stock Option Plan which provides
for the issuance of up to 600,000 shares of the
Company's common stock upon the exercise of options
which may be granted pursuant to the plan;
(3) to approve the adoption of the Company's 1996
Non-Qualified Stock Option Plan which provides for the
issuance of up to 400,000 shares of the Company's
Common Stock upon the exercise of options which may be
granted pursuant to the Plan.
(4) to ratify the appointment of Deloitte &
Touche as the Company's independent accountants for
the fiscal year ending September 30, 1996;
(5) to transact such other business as may
properly come before the meeting.
The Board of Directors has fixed the close of business on May 14,
1996 as the record date for the determination of shareholders
entitled to notice of and to vote at such meeting. Shareholders
are entitled to one vote for each share held. As of May 14,
1996, there were 6,295,664 shares of the Company's Common Stock
issued and outstanding.
CEL-SCI CORPORATION
May 15, 1996 By Geert R. Kersten
Chief Executive Officer
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY
CARD, AND SIGN, DATE AND RETURN THE PROXY CARD.
TO SAVE THE COST OF FURTHER SOLICITATION PLEASE MAIL YOUR PROXY
CARD PROMPTLY.
CEL-SCI CORPORATION
66 Canal Center Plaza
Suite 510
Alexandria, Virginia 223l4
(703) 549-5293
PROXY STATEMENT
The accompanying proxy is solicited by the Board of
Directors of the Company for voting at the annual meeting of
shareholders to be held on June 14, 1996, and at any and all
adjournments of such meeting. If the proxy is executed and
returned, it will be voted at the meeting in accordance with any
instructions, and if no specification is made the proxy will be
voted for the proposals set forth in the accompanying notice of
the annual meeting of shareholders. Shareholders who execute
proxies may revoke them at any time before they are voted, either
by writing to the Company at the address set forth on page one or
in person at the time of the meeting. Additionally, any later
dated proxy will revoke a previous proxy from the same
shareholder. This proxy statement was mailed to shareholders of
record on or about May 14, 1996.
There is one class of capital stock outstanding. Provided
a quorum consisting of one-third of the shares entitled to vote
is present at the meeting, the affirmative vote of a majority of
the shares of Common Stock voting in person or represented by
proxy is required to elect directors, to adopt the 1996 Incentive
and Non-Qualified Stock Option Plans and to ratify the
appointment of Deloitte & Touche as the Company independent
accountants for the fiscal year ending September 30, 1996.
Cumulative voting in the election of directors is not permitted.
The adoption of any other proposals to come before the meeting
will require the approval of a majority of votes cast at the
meeting.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of April 30, 1996,
information with respect to the only persons owning beneficially
5% or more of the outstanding Common Stock and the number and
percentage of outstanding shares owned by each director and
officer and by the officers and directors as a group. Unless
otherwise indicated, each owner has sole voting and investment
powers over his shares of Common Stock.
<TABLE>
<CAPTION>
Number of Percent of
Name and Address Shares (1) Class
(4)
<S> <C> <C>
Maximilian de Clara 48,334 (2) *
Bergstrasse 79
6078 Lungern,
Obwalden, Switzerland
Geert R. Kersten 251,690 (3) 4.1%
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
Patricia B. Prichep 18,030 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
M. Douglas Winship 12,000 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
Dr. Eyal Talor 9,334 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
Dr. Prem Sarin 10,000 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 22314
Mark Soresi 14,375 *
l0l0 Wayne Ave., 8th Floor
Silver Spring, MD 209l0
F. Donald Hudson 10,500 *
53 Mt. Vernon Street
Boston, MA 02108
Edwin A. Shalloway 10,500 *
413 North Washington Street
Alexandria, VA 22314
All Officers and Directors
as a Group (10 persons) 384,763 6.0%
*Less than 1%
<FN>
(1)Includes shares issuable prior to July 1, 1996 upon the
exercise of options
or warrants granted to the following persons:
</FN>
<CAPTION>
Options or Warrants
Exercisable
Name Prior to July 1, 1996
<S> <C>
Maximilian de Clara 43,334
Geert R. Kersten 146,750
Patricia B. Prichep 15,000
M. Douglas Winship 12,000
Dr. Eyal Talor 7,834
Mark Soresi 12,500
F. Donald Hudson 10,500
Edwin A. Shalloway 10,500
Dr. Prem Sarin 10,000
<FN>
(2)All shares are held of record by Milford Trading, Ltd., a
corporation organized pursuant to the laws of Liberia. All of
the issued and outstanding shares of Milford Trading, Ltd. are
owned beneficially by Mr. de Clara.
(3)Amount includes shares held in trust for the benefit of Mr.
Kersten's minor children. Geert R. Kersten is the stepson of
Maximilian de Clara.
(4)Amount excludes shares which may be issued upon the exercise
of other options, warrants and convertible securities
previously issued by the Company.
</FN>
</TABLE>
ELECTION OF DIRECTORS
Unless the proxy contains contrary instructions, it is
intended that the proxies will be voted for the election of the
nominees listed below to serve until the next annual meeting of
shareholders and until their successors shall be elected and
shall qualify.
All nominees have consented to serve if elected. In case
any nominee shall be unable or shall fail to act as a director by
virtue of an unexpected occurrence, the proxies may be voted for
such other person or persons as shall be determined by the
persons acting under the proxies in their discretion.
Officers and Directors
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Maximilian de Clara 65 Director and President
Geert R. Kersten, Esq. 37 Director, Chief Executive
Officer, Secretary and Treasurer
Patricia B. Prichep 44 Vice President of Operations
M. Douglas Winship 47 Vice President of Regulatory
Affairs and Quality Assurance
Dr. Eyal Talor
40 Vice President of
Research and Manufacturing
Dr. Prem S. Sarin 61
Vice President of Research for
Viral Technologies, Inc.
Dr. Daniel H. Zimmerman 54
Vice President of Cellular
Immunology
Mark V. Soresi 43 Director
F. Donald Hudson 62 Director
Edwin A. Shalloway 60 Director
</TABLE>
Mr. Maximilian de Clara, by virtue of his position as an
officer and director of the Company, may be deemed to be the
"parent" and "founder" of the Company as those terms are defined
under applicable rules and regulations of the Securities and
Exchange Commission.
The principal occupations of the Company's officers and
directors, during the past several years, are as follows:
Maximilian de Clara. Mr. de Clara has been a director of
the Company since its inception in March, l983, and has been
president of the Company since July, l983. Prior to his
affiliation with the Company, and since at least l978, Mr. de
Clara was involved in the management of his personal investments
and personally funding research in the fields of biotechnology
and biomedicine. Mr. de Clara attended the medical school of the
University of Munich from l949 to l955, but left before he
received a medical degree. During the summers of l954 and l955,
he worked as a research assistant at the University of Istanbul
in the field of cancer research. For his efforts and dedication
to research and development in the fight against cancer and AIDS,
Mr. de Clara was awarded the "Pour le Merit" honorary medal of
the Austrian Military Order "Merito Navale" as well as the honor
cross of the Austrian Albert Schweitzer Society.
Geert R. Kersten, Esq. Mr. Kersten was Director of
Corporate and Investment Relations for the Company between
February, 1987 and October, 1987. In October of 1987, he was
appointed Vice President of Operations. In December, 1988, Mr.
Kersten was appointed director of the Company. Mr. Kersten also
became the Company's secretary and treasurer in 1989. In May,
1992, Mr. Kersten was appointed Chief Operating Officer and in
February, 1995, Mr. Kersten became the Company's Chief Executive
Officer. In previous years, Mr. Kersten worked as a financial
analyst with Source Capital, Ltd., an investment advising firm in
McLean, Virginia. Mr. Kersten is a stepson of Maximilian de
Clara, who is the President and a Director of the Company. Mr.
Kersten attended George Washington University in Washington, D.C.
where he earned a B.A. in Accounting and an M.B.A. with emphasis
on International Finance. He also attended law school at
American University in Washington, D.C. where he received a Juris
Doctor degree.
Patricia B. Prichep has been the Company's Vice President
of Operations since March, 1994. Between December, 1992 and
March, 1994, Ms. Prichep was the Company's Director of
Operations. From June, 1990 to December, 1992, Ms. Prichep was
the Manager of Quality and Productivity for the NASD's
Management, Systems and Support Department. Between 1982 and
1990, Ms. Prichep was Vice President and Operations Manager for
Source Capital, Ltd.
M. Douglas Winship has been the Company's Vice President
of Regulatory Affairs and Quality Assurance since April, 1994.
Between 1988 and April, 1994, Mr. Winship held various positions
with Curative Technologies, Inc., including Vice President of
Regulatory Affairs and Quality Assurance (1991-1994).
Dr. Eyal Talor has been the Company's Vice President of
Research and Manufacturing since March, 1994. From October, 1993
until March, 1994, Dr. Talor was Director of Research,
Manufacturing and Quality Control, as well as the Director of the
Clinical Laboratory, for Chesapeake Biological Laboratories, Inc.
From 1991 to 1993, Dr. Talor was a scientist with SRA
Technologies, Inc., as well as the director of SRA's Flow
Cytometry Laboratory (1991-1993) and Clinical Laboratory
(1992-1993). During 1992 and 1993, Dr. Talor was also the
Regulatory Affairs and Safety Officer For SRA. Since 1987, Dr.
Talor has held various positions with the John Hopkins
University, including course coordinator for the School of
Continuing Studies (1989-Present), research associate and
lecturer in the Department of Immunology and Infectious Diseases
(1987-1991), and associate professor (1991-Present).
Prem S. Sarin, Ph.D. has been the Vice President of
Research for Viral Technologies, Inc. (the Company's wholly-owned
subsidiary) since May 1, 1993. Dr. Sarin was an Adjunct
Professor of Biochemistry at the George Washington University
School of Medicine, Washington, D.C., from 1986-1992. From
1975-1991 Dr. Sarin held the position of Deputy Chief, Laboratory
of Tumor Cell Biology at the National Cancer Institute (NCI),
NIH, Bethesda, Maryland. Dr. Sarin was a Senior Investigator
(1974-1975) and a Visiting Scientist (1972-1974) at the
Laboratory of Tumor Cell Biology at NCI, NIH. From 1971-1972 Dr.
Sarin held the position of Director, Department of Molecular
Biology, Bionetics Research Laboratory, Bethesda, Maryland.
Daniel H. Zimmerman, Ph.D. has been the Company's Vice
President of Cellular Immunology since January 1996. Dr.
Zimmerman founded CELL MED, Inc. and was its president from
1987-1995. From 1973 to 1987 Dr. Zimmerman served in various
positions at Electronucleonics, Inc. including Scientist, Senior
Scientist, Technical Director and Program Manager. From
1969-1973 Dr. Zimmerman was a Senior Staff Fellow at NIH.
Mark V. Soresi. Mr. Soresi became a director of the
Company in July, 1989. In 1982, Mr. Soresi founded, and since
that date has been the president and Chief Executive Officer of
REMAC(R), Inc. REMAC(R) is involved in the clean-up of hazardous
and toxic waste dump sites. Mr. Soresi attended George
Washington University in Washington, D.C. where he earned a
Bachelor of Science in Chemistry.
F. Donald Hudson. F. Donald Hudson has been a director of
the Company since May, 1992. From December 1994 to October 1995
Mr. Hudson was President and Chief Executive Officer of VIMRx
Pharmaceuticals, Inc. Between 1990 and 1993, Mr. Hudson was
President and Chief Executive Officer of Neuromedica, Inc., a
development stage company engaged in neurological research.
Until January, 1989, Mr. Hudson served as Chairman and Chief
Executive Officer of Transgenic Sciences, Inc. (now TSI
Corporation), a publicly held biotechnology corporation which he
founded in January, 1987. From October, 1985 until January,
1987, Mr. Hudson was a director of Organogenesis, Inc., a
publicly held biotechnology corporation of which he was a
founder, and for five years prior thereto was Executive Vice
President and a director of Integrated Genetics, Inc., a
corporation also engaged in biotechnology which he co-founded and
which was publicly traded until its acquisition in 1989 by
Genzyme, Inc.
Edwin A. Shalloway, Esq. Mr. Shalloway has been a
director of the Company since May, 1992. Mr. Shalloway is and
has been since 1964, a partner in the law firm of Sherman and
Shalloway which specializes in matters of patent law. Mr.
Shalloway attended the University of Georgia where he earned a
Bachelor of Science and Bachelor of Arts degrees. Mr. Shalloway
received his law degree from the American University in
Washington, D.C. Mr. Shalloway is also the President of the
International Licensing Executive Society.
All of the Company's officers devote substantially all of
their time on the Company's business. Messrs. Soresi, Hudson and
Shalloway, as directors, devote only a minimal amount of time to
the Company.
The Company's Board of Directors met eleven times during
the year ending September 30, 1995. All Directors attended all
of these meetings. The Company has an Audit Committee comprised
of Mr. Kersten, Mr. Hudson and Mr. Shalloway. The purpose of the
Audit Committee is to review and approve the selection of the
Company's auditors, review the Company's financial statements
with the Company's independent auditors, and review and discuss
the independent auditor's management letter relating to the
Company's internal accounting controls. During the fiscal year
ending September 30, 1995, the Audit Committee met on one
occasion. All members of the Audit Committee attended this
meeting. The Company has a Compensation Committee comprised of
all members of the Board of Directors except Mr. Kersten. The
Compensation Committee met once during the fiscal year ending
September 30, 1995. All members of the Compensation Committee
attended this meeting.
Executive Compensation
The following table sets forth in summary form the
compensation received by (i) the Chief Executive Officer of the
Company and (ii) by each other executive officer of the Company
who received in excess of $100,000 during the fiscal year ended
September 30, 1995.
<TABLE>
<CAPTION>
Annual Compensation Long Term
Compensation
Re- All
Other stric- Other
Annual ted LTIP
Com-
Name and Compen- Stock Options Pay-
pensa-
Principal Fiscal Salary Bonus sation Awards Granted
outs tion
Position Year (1) (2) (3) (4) (5) (6)
(7)
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Maximilian
de Clara, 1995 - - $95,181 -
225,000 - -
President 1994 - - $93,752 -
70,000 - -
1993 - - $59,376 - -
- - -
Geert R.
Kersten, 1995 $164,801 - $ 9,426 -
224,750 - $3,911
Chief 1994 $182,539 - $ 8,183 -
50,000 - $4,497
Executive 1993 $163,204 - $ 6,046 -
- - -$3,289
Officer,
Secretary
and Treasurer
M. Douglas
Winship, 1995 $113,500 - $ 1,200 -
22,000 - $2,100
Vice President
of Regulatory
Affairs
Suzanne Beckner, 1995 $102,250 - - -
25,000 - $2,830
Vice President
of Clinical
Development*
* Dr. Beckner resigned her position with the Company in
November 1995.
<FN>
(1)The dollar value of base salary (cash and non-cash) received.
(2)The dollar value of bonus (cash and non-cash) received.
(3)Any other annual compensation not properly categorized as
salary or bonus, including perquisites and other personal
benefits, securities or property. Amounts in the table
represent automobile, parking and other transportation
expenses.
(4)During the period covered by the Table, no shares of
restricted stock were issued as compensation for services to
the persons listed in the table. As of September 30, 1995,
the number of shares of the Company's common stock, owned by
the officers included in the table above, and the value of
such shares at such date, based upon the market price of the
Company's common stock were:
</FN>
<CAPTION>
Name Shares Value
<S> <C>
<C>
Maximilian de Clara 5,000 $23,100
Geert R. Kersten 84,940 $392,423
Dividends may be paid on shares of restricted stock owned by
the Company's officers and directors, although the Company has
no plans to pay dividends.
Mr. Winship and Ms. Beckner did not own any shares of the
Company's Common Stock at September 30, 1995.
<FN>
(5)The shares of Common Stock to be received upon the exercise of
all stock options granted during the period covered by the
Table. The amounts in this table include options granted in
prior years but which were repriced during the year ending
September 30, 1995. See "Ten Year Option/SAR Repricings"
table below.
(6)"LTIP" is an abbreviation for "Long-Term Incentive Plan". An
LTIP is any plan that is intended to serve as an incentive for
performance to occur over a period longer than one fiscal
year. Amounts reported in this column represent payments
received during the applicable fiscal year by the named
officer pursuant to an LTIP.
(7)All other compensation received that the Company could not
properly report in any other column of the Table including
annual Company contributions or other allocations to vested
and unvested defined contribution plans, and the dollar value
of any insurance premiums paid by, or on behalf of, the
Company with respect to term life insurance for the benefit of
the named executive officer, and the full dollar value of the
remainder of the premiums paid by, or on behalf of, the
Company. Amounts in the table represent contributions made by
the Company to a 401(k) pension plan on behalf of persons
named in the table.
</FN>
</TABLE>
Long Term Incentive Plans - Awards in Last Fiscal Year
None.
Employee Pension, Profit Sharing or Other Retirement Plans
During 1993 the Company implemented a defined contribution
retirement plan, qualifying under Section 401(k) of the Internal
Revenue Code and covering substantially all the Company's
employees. The Company's contribution is equal to the lesser of
3% of each employee's salary, or 50% of the employee's
contribution. The 1995 expenses for this plan were $24,913.
Other than the 401(k) Plan, the Company does not have a defined
benefit, pension plan, profit sharing or other retirement plan.
Compensation of Directors
Standard Arrangements. The Company currently pays its
directors $1,500 per quarter, plus expenses. The Company has no
standard arrangement pursuant to which directors of the Company
are compensated for any services provided as a director or for
committee participation or special assignments.
Other Arrangements. The Company has from time to time
granted options
to its outside directors, Mr. Soresi, Mr. Hudson and Mr.
Shalloway. See "Stock Options" below for additional information
concerning options granted to the Com-
pany's directors.
Employment Contracts
Effective August 1, 1994, the Company entered into a
three-year employment agreement with Mr. Kersten. The employment
agreement provides that during the period between August 1, 1994
and July 31, 1995, the Company will pay Mr. Kersten an annual
salary of $198,985. During the years ending August 31, 1996 and
1997, the Company will pay Mr. Kersten a salary of $218,883 and
$240,771 respectively. In the event that there is a material
reduction in Mr. Kersten's authority, duties or activities, or in
the event there is a change in the control of the Company, then
the agreement allows Mr. Kersten to resign from his position at
the Company and receive a lump-sum payment from the Company equal
to 18 months salary. For purposes of the employment agreement, a
change in the control of the Company means the sale of more than
50% of the outstanding shares of the Company's Common Stock, or a
change in a majority of the Company's directors. Pursuant to the
agreement, the Company also agreed to grant Mr. Kersten, in
accordance with the Company's 1994 Incentive Stock Option Plan,
options to purchase 50,000 shares of the Company's Common Stock.
Compensation Committee Interlocks and Insider Participation
The Company has a compensation committee comprised of all
of the Company's directors, with the exception of Mr. Kersten.
During the year ended September 30, 1995, Mr. de Clara was the
only officer participating in deliberations of the Company's
compensation committee concerning executive officer compensation.
See "Transactions with Related Parties" in this section of the
Proxy Statement for information concerning transactions between
the Company and Mr. de Clara.
During the year ended September 30, 1995, no director of
the Company was also an executive officer of another entity,
which had an executive officer of the Company serving as a
director of such entity or as a member of the compensation
committee of such entity.
Stock Options
The following tables set forth information concerning the
options granted, during the fiscal year ended September 30, 1995,
to the persons named below, and the fiscal year-end value of all
unexercised options (regardless of when granted) held by these
persons.
<TABLE>
<CAPTION>
Options Granted During Fiscal Year Ending September 30, l995
Potential
Individual Grants (1)
Realizable Value at
% of Total Assumed
Annual Rates
Options of
Stock Price
Granted to Exercise
Appreciation for
Options Employees in Price Per
Expiration Option Term (2)
Name Granted (#) Fiscal Year Share (1)
Date 5% 10%
<S> <C> <C> <C> <C> <C>
<C>
Maximilian 15,000 $2.87
3/19/01 $ 14,550 $ 30,750
de Clara 70,000 $2.87
11/1/01 $ 67,900 $176,400
70,000 $2.87 7/29/04
$272,300 $272,300
70,000 $3.87 7/31/05
$240,100 $501,200
225,000 32%
Geert R. 50,000 (2) $2.87 1/10/98
$ 20,500 $ 42,000
Kersten 750 $2.87
3/28/98 $ 287 $ 705
4,000 $2.87 10/31/99 $ 2,440 $
5,320
10,000 $2.87 10/31/00 $ 7,900 $
17,500
10,000 $2.87 3/19/01 $
9,700 $ 22,100
50,000 $2.87 11/01/01 $ 48,500
$110,700
50,000 $2.87 7/29/04 $
79,000 $194,500
50,000 $3.87 7/31/05
$171,500 $358,000
224,750 32%
M. Douglas 2,000 (2) $2.87 1/10/98 $ 720 $
1,660
Winship 15,000 $2.87 4/4/04 $ 23,700
$58,350
5,000 $3.87 7/31/05 $ 17,150
$35,800
22,000 3%
Suzanne 5,000 (2) $2.87 1/10/98 $ 1,750 $
4,150
Beckner 8,000 $2.87 7/11/04 $
12,640 $31,120
12,000 $3.87
7/31/05 $ 41,160 $85,920
25,000 3.5%
<FN>
(1)Includes options granted in prior fiscal years but which were
repriced in June 1995. See "Ten-Year Option/SAR Repricings"
table below.
(2)Options were granted in accordance with the Company's 1995
salary reduction
plan. Pursuant to the salary reduction plan, any employee of
the Company was allowed to receive options in exchange for a
one-time reduction in such employee's salary.
(3)The potential realizable value of the options shown in the
table assuming the market price of the Company's Common Stock
appreciates in value from the date of the grant to the end of
the option term at 5% or 10%.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Option Exercises and Year End Option Values
Value of
Unexer-
cised In-
the-Money
Number of Options
Unexercised at Fiscal
Options Year-End
Shares (3) (4)
Acquired Value
on Exercise Realized Exercisable/
Exercisable/
Name (1) (2) Unexercisable
Unexercisable
<S> <C> <C> <C>
<C>
Maximilian de Clara - - 108,334/116,666
$189,584/$134,165
Geert R. Kersten - - 85,750/139,000
$150,062/$193,250
M. Douglas Winship - - 5,000/ 17,000 $8,750/$
24,750
Suzanne Beckner - - 2,667/ 22,333 $4,667/$
27,083
<FN>
(1)The number of shares received upon exercise of options during
the fiscal year ended September 30, 1995.
(2)With respect to options exercised during the Company's fiscal
year ended September 30, 1995, the dollar value of the
difference between the option exercise price and the market
value of the option shares purchased on the date of the
exercise of the options.
(3)The total number of unexercised options held as of September
30, 1995, separated between those options that were
exercisable and those options that were not exercisable.
(4)For all unexercised options held as of September 30, 1995, the
aggregate dollar value of the excess of the market value of
the stock underlying those options (as of September 30, 1995)
over the exercise price of those unexercised options. Values
are shown separately for those options that were exercisable,
and those options that were not yet exercisable, on September
30, 1995.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Ten-Year Option/SAR Repricings
In June 1995 the Company lowered the exercise price on
options held by all of the Company's officers, directors and
employees to $2.87 per share. The options subject to this
repricing allowed for the purchase of up to 444,250
shares of the Company's Common Stock and included options
previously granted to those persons listed below. The Company's
Board of Directors lowered the exercise of these options since at
the time of repricing (June 10, 1995), the options no longer
provided a benefit to the option holders due to the difference
between the exercise price of the options and the market price of
the Company's Common Stock. The following table provides more
information concerning the repricing of these options.
Number Length of
Securities Market Exercise
Original Op-
Underlying Price of Price at
tion Term
Options/ Stock at Time of Remaining
at
SARs Re- Repricing Repricing New
Date of Re-
priced or or Amend- or Amend- Exercise
pricing or
Name Date Amended(#) ment ($) ment ($) Price
($) Amendment
<S> <C> <C> <C> <C> <C>
<C>
Maximilian 6/10/95 15,000 $2.87 $10.90 $2.87 63 mos.
de Clara 70,000 $2.87 $20.90 $2.87 70
mos.
70,000 $2.87 $8.70 $2.87 108
mos.
Geert R. 6/10/95 50,000 $2.87 $4.10 $2.87 30
mos.
Kersten 750 $2.87 $11.60 $2.87 33
mos.
4,000 $2.87 $4.00 $2.87 52
mos.
10,000 $2.87 $8.40 $2.87 64
mos.
10,000 $2.87 $10.90 $2.87 68
mos.
50,000 $2.87 $20.90 $2.87 76
mos.
50,000 $2.87 $8.70 $2.87 108
mos.
M. Douglas 6/10/95 2,000 $2.87 $4.10 $2.87 30 mos.
Winship 15,000 $2.87 $11.20 $2.87 105
mos.
Suzanne 6/10/95 5,000 $2.87 $4.10 $2.87 30
mos.
Beckner 8,000 $2.87 $6.80 $2.87 107
mos.
</TABLE>
Stock Option and Bonus Plans
The Company has two Incentive Stock Option Plans, three
Non-Qualified Stock Option Plans and a Stock Bonus Plan. A
summary description of these Plans follows. In some cases these
Plans are collectively referred to as the "Plans". At the June
14, 1996 annual meeting of shareholders of the Company, the
Company will consider a proposal to adopt a new Incentive Stock
Option Plan and a new Non-Qualified Stock Option Plan.
Incentive Stock Option Plan. The two Incentive Stock
Option Plans collectively authorize the issuance of up to 200,000
shares of the Company's Common Stock to persons that exercise
options granted pursuant to the Plan. Only Company employees may
be granted options pursuant to the Incentive Stock Option Plan.
To be classified as incentive stock options under the
Internal Revenue Code, options granted pursuant to the Plans must
be exercised prior to the following dates:
(a) The expiration of three months after the date
on which an option holder's employment by the Company
is terminated (except if such termination is due to
the death or permanent and total disability);
(b) The expiration of 12 months after the date on
which an option holder's employment by the Company is
terminated, if such termination is due to the
Employee's permanent and total disability;
(c) In the event of an option holder's death
while in the employ of the Company, his executors or
administrators may exercise, within three months
following the date of his death, the option as to any
of the shares not previously exercised;
The total fair market value of the shares of Common Stock
(determined at the time of the grant of the option) for which any
employee may be granted options which are first exercisable in
any calendar year may not exceed $100,000.
Options may not be exercised until one year following the
date of grant. Options granted to an employee then owning more
than 10% of the Common Stock of the Company may not be
exercisable by its terms after five years from the date of grant.
Any other option granted pursuant to the Plan may not be
exercisable by its terms after ten years from the date of grant.
The purchase price per share of Common Stock purchasable
under an option is determined by the Committee but cannot be less
than the fair market value of the Common Stock on the date of the
grant of the option (or 110% of the fair market value in the case
of a person owning more than 10% of the Company's outstanding
shares).
Non-Qualified Stock Option Plan. The three Non-Qualified
Stock Option Plans collectively authorize the issuance of up to
960,000 shares of the Company's Common Stock to persons that
exercise options granted pursuant to the Plans. The Company's
employees, directors, officers, consultants and advisors are
eligible to be granted options pursuant to the Plans, provided
however that bona fide services must be rendered by such
consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-
raising transaction. The option exercise price is determined by
the Committee but cannot be less than the market price of the
Company's Common Stock on the date the option is granted.
Stock Bonus Plan. Up to 40,000 shares of Common Stock may
be granted under the Stock Bonus Plan. Such shares may consist,
in whole or in part, of authorized but unissued shares, or
treasury shares. Under the Stock Bonus Plan, the Company's
employees, directors, officers, consultants and advisors are
eligible to receive a grant of the Company's shares, provided
however that bona fide services must be rendered by consultants
or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
Other Information Regarding the Plans. The Plans are
administered by the Company's Compensation Committee ("the
Committee"), each member of which is a director of the Company.
The members of the Committee were selected by the Company's Board
of Directors and serve for a one-year tenure and until their
successors are elected. A member of the Committee may be removed
at any time by action of the Board of Directors. Any vacancies
which may occur on the Committee will be filled by the Board of
Directors. The Committee is vested with the authority to
interpret the provisions of the Plans and supervise the
administration of the Plans. In addition, the Committee is
empowered to select those persons to whom shares or options are
to be granted, to determine the number of shares subject to each
grant of a stock bonus or an option and to determine when, and
upon what conditions, shares or options granted under the Plans
will vest or otherwise be subject to forfeiture and cancellation.
In the discretion of the Committee, any option granted
pursuant to the Plans may include installment exercise terms such
that the option becomes fully exercisable in a series of
cumulating portions. The Committee may also accelerate the date
upon which any option (or any part of any options) is first
exercisable. Any shares issued pursuant to the Stock Bonus Plan
and any options granted pursuant to the Incentive Stock Option
Plan or the Non-Qualified Stock Option Plan will be forfeited if
the "vesting" schedule established by the Committee administering
the Plan at the time of the grant is not met. For this purpose,
vesting means the period during which the employee must remain an
employee of the Company or the period of time a non-employee must
provide services to the Company. At the time an employee ceases
working for the Company (or at the time a non-employee ceases to
perform services for the Company), any shares or options not
fully vested will be forfeited and cancelled. At the discretion
of the Committee payment for the shares of Common Stock
underlying options may be paid through the delivery of shares of
the Company's Common Stock having an aggregate fair market value
equal to the option price, provided such shares have been owned
by the option holder for at least one year prior to such
exercise. A combination of cash and shares of Common Stock may
also be permitted at the discretion of the Committee.
Options are generally non-transferable except upon death
of the option holder. Shares issued pursuant to the Stock Bonus
Plan will generally not be transferable until the person
receiving the shares satisfies the vesting requirements imposed
by the Committee when the shares were issued.
The Board of Directors of the Company may at any time, and
from time to time, amend, terminate, or suspend one or more of
the Plans in any manner they deem appropriate, provided that such
amendment, termination or suspension will not adversely affect
rights or obligations with respect to shares or options
previously granted. The Board of Directors may not, without
shareholder approval: make any amendment which would materially
modify the eligibility requirements for the Plans; increase or
decrease the total number of shares of Common Stock which may be
issued pursuant to the Plans except in the case of a
reclassification of the Company's capital stock or a
consolidation or merger of the Company; reduce the minimum option
price per share; extend the period for granting options; or
materially increase in any other way the benefits accruing to
employees who are eligible to participate in the Plans.
Prior Stock Option and Bonus Plan. The Company previously
had in effect a Stock Option and Bonus Plan ("the 1987 Plan")
which provided for the grant to the Company's officers,
directors, employees and consultants of either (i) shares of the
Company's Common Stock for services rendered or (ii) options to
purchase shares of Common Stock. The 1987 Plan was terminated by
the Company in 1992. Since the 1987 Plan was terminated, no
further options will be granted and no further bonus shares will
be issued pursuant to the 1987 Plan. However, options previously
granted may nevertheless still be exercised according to the
terms of the options. Prior to the termination of the 1987 Plan,
the Company granted options to purchase 189,250 shares of the
Company's Common Stock. To date, options to purchase 6,000
shares have been
exercised. In June, 1995 the Company cancelled options to
purchase 176,250 shares that had previously been granted under
this Plan and reissued options for the same number of shares
under the Company's other stock option plans. See "Option
Summary" below.
Option Summary. The following sets forth certain
information, as of April 30, 1996, concerning the stock options
granted by the Company. Each option represents the right to
purchase one share of the Company's Common Stock.
<TABLE>
<CAPTION>
Total Shares
Shares Reserved for
Remaining
Reserved Outstanding Options
Name of Plan Under Plan Options Under
Plan
<S> <C> <C>
<C>
1987 Stock Option and Bonus Plan 200,000 7,000 (1)
1992 Incentive Stock Option Plan 100,000 94,050 3,283
1992 Non-Qualified Stock Option Plan 60,000 45,000
- -
1994 Incentive Stock Option Plan 100,000 100,000 -
1994 Non-Qualified Stock Option Plan 100,000 97,250
2,750
1995 Non-Qualified Stock Option Plan 800,000 638,626
111,374
TOTAL: 981,926 117,407
<FN>
(1)This Plan was terminated in 1992 and as a result, no new
options will be granted pursuant to this Plan.
</FN>
</TABLE>
As of April 30, 1996, 1,500 shares had been issued
pursuant to the Company's 1992 Stock Bonus Plan. All of these
shares were issued during the fiscal year ending September 30,
1994.
Transactions with Related Parties
The technology and know-how licensed to the Company was
developed by a group of researchers under the direction of Dr.
Hans-Ake Fabricius and was assigned, during l980 and l98l, to
Hooper Trading Company, N.V., a Netherlands Antilles' corporation
("Hooper"), and Shanksville Corporation, also a Netherlands
Antilles corporation ("Shanksville"). Mr. de Clara and Dr.
Fabricius own 50% and 30%, respectively, of each of these
companies. The technology and know-how assigned to Hooper and
Shanksville was licensed to Sittona Company, B.V., a Netherlands
corporation ("Sittona"), effective September, l982 pursuant to a
licensing agreement which requires Sittona to pay to Hooper and
Shanksville royalties on income received by Sittona respecting
the technology and know-how licensed to Sittona. In l983,
Sittona licensed this technology to the Company and received from
the Company a $1,400,000 advance royalty payment. At such time
as the Company generates revenues from the sale or sublicense of
this technology, the Company will be required to pay royalties to
Sittona equal to l0% of net sales and l5% of the licensing
royalties received from third parties. In that event, Sittona,
pursuant to its licensing agreements with Hooper and Shanksville,
will be required to pay to those companies a minimum of l0% of
any royalty payments received from the Company.
In l985, Mr. de Clara acquired all of the issued and
outstanding stock of Sittona. Mr. de Clara and Dr. Fabricius,
because of their ownership interests in Hooper and Shanksville,
could receive approximately 50% and 30% respectively of any
royalties paid by Sittona to Hooper and Shanksville, and Mr. de
Clara, through his interest in all three companies (Hooper,
Shanksville and Sittona), will receive up to 95% of any royalties
paid by the Company.
Legal Matters
During the three year period ended September 30, 1993, the
Company paid Mr. de Clara approximately $96,000 for legal
expenses incurred by Mr. de Clara in defending a legal action
brought against Mr. de Clara by an unrelated third party who
claimed that Mr. de Clara owed the third party 250,000 shares of
the Company's Common Stock as a fee for introducing the Company
(in 1985) to persons who allegedly were willing to (but did not)
provide funds to the Company. Although the Company was not a
party to this proceeding, the Company's Board of Directors has
determined, based upon information supplied by Mr. de Clara, that
the third party's claims against Mr. de Clara arose as a result
of Mr. de Clara's efforts to obtain funding for the Company.
Accordingly, the Board of Directors determined that Mr. de Clara
was entitled by law to indemnification and in October, 1993, the
Company issued 250,000 shares of its common stock to the third
party claiming the shares from Mr. de Clara.
The Securities and Exchange Commission found that between
1988 and 1991 Mr. de Clara failed to timely file reports of
beneficial ownership required by the Securities Exchange Act of
1934. In May, 1992, the Commission entered an order requiring
Mr. de Clara to file reports of beneficial ownership on a timely
basis.
PROPOSAL TO ADOPT 1996 INCENTIVE STOCK OPTION PLAN
Shareholders are being requested to vote on the adoption
of the Company's 1996 Incentive Stock Option Plan ("the 1996
Plan"). The purpose of the 1996 Incentive Stock Option Plan is
to furnish additional compensation and incentives to the
Company's officers and employees. The Board of Directors
recommends that the shareholders of the Company approve the
adoption of the 1996 Plan.
The 1996 Plan authorizes the issuance of up to 600,000
shares of the Company's Common Stock to persons that exercise
options granted pursuant to the 1996 Plan. As of May 14, 1996
the Company had not granted any options pursuant to the 1996
Plan.
Options granted under the Plan will be incentive stock
options within the meaning of Section 422 of the Internal Revenue
Code (the "Code"). Generally, if Common Stock of the Company is
issued to an employee pursuant to an option granted as described
below, and if no disqualifying disposition of such shares is made
by such employee within one year after the transfer of such
shares to him or within two years after the date of grant: (a) no
income will be realized by the employee at the time of the grant
of the option; (b) no income will be realized by the employee at
the date of exercise; (c) when the employee sells such shares,
any amount realized in excess of the option price will be taxed
as a long-term capital gain and any loss sustained will be a
long-term capital loss; and (d) no deduction will be allowed to
the Company for federal income tax purposes. Generally, if any
disqualifying disposition of such shares is made by an employee
within one year after the transfer of such shares to him, or
within two years after the date of grant, the difference between
the amount paid for the shares upon exercise of the option and
the fair market value of the shares on the date the option was
exercised will be taxed as ordinary income in the year the
disqualifying disposition occurs and the Company will be allowed
a deduction for such amount. However, if such disqualifying
disposition is a sale or exchange for which a loss would have
been recognized (if sustained), the amount taxed to the employee
as ordinary income (and deductible by the Company) will be
limited to the excess of the amount realized upon such sale or
exchange over the amount paid for the shares where such excess is
less than the amount referred to in the preceding sentence. This
limitation does not apply to a disposition of the type as to
which losses (if sustained) are not recognized as deductible
losses for income tax purposes, e.g., a gift, a sale to certain
related persons or a so-called "wash" sale (a sale within 30 days
before or after the acquisition of the Company's shares or the
receipt of an option or the entering into a contract to buy the
Company's shares). If the shares are sold in a disqualifying
disposition during such one-year period and the amount realized
is in excess of the fair market value of the shares at the time
of exercise, such excess will be taxed as a long-term or
short-term capital gain depending upon the holding period.
An employee who exercises an incentive stock option may be
subject to the alternative minimum tax since the difference
between the option price and the fair market value of the stock
on the date of exercise is an item of tax preference. However,
no item of preference will result if a disqualifying disposition
is made of the optioned stock.
The 1996 Plan is not qualified under Section 401(a) of the
Internal Revenue Code, nor is it subject to any provisions of the
Employee Retirement Income Security Act of 1974. Only employees
of the Company may be granted options pursuant to the 1996 Plan.
The 1996 Plan was adopted by the Board of Directors on
April 30, 1996.
Any options granted under the 1996 Plan must be granted before
April 30, 2006. If adopted, the 1996 Plan will function and be
administered in the same manner as the Company's two other
Incentive Stock Option Plans. See "Election of Directors Stock
Option and Bonus Plans".
PROPOSAL TO ADOPT 1996 NON-QUALIFIED STOCK OPTION PLAN
Shareholders are being requested to vote on the adoption
of the Company's 1996 Non-Qualified Stock Option Plan ("the 1996
Non-Qualified Plan"). The Company's employees, directors and
officers, and consultants or advisors to the Company are eligible
to be granted options pursuant to the 1996 Non-Qualified Plan as
may be determined by the Company's Compensation Committee which
administers the Plan, provided however that bona fide services
must be rendered by such consultants or advisors and such
services must not be in connection with the offer or sale of
securities in a capital-raising transaction.
The Non-Qualified Plan, if adopted, will authorize the
issuance of up to 400,000 shares of the Company's Common Stock to
persons that exercise options granted pursuant to the Plan. The
1996 Non-Qualified Plan was adopted by the Board of Directors on
April 30, 1996. Any options granted under the Non-Qualified Plan
must be granted before April 30, 2006. As of the date of this
Proxy Statement, no options have been granted pursuant to this
Plan. The 1996 Non-Qualified Stock Option Plan will function and
will be administered in the same manner as the Company's other
Non-Qualified Stock Plans. See "Executive Compensation - Stock
Option and Bonus Plans." The Board of Directors recommends that
the shareholders of the Company approve the adoption of the 1996
Non-Qualified Plan.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche,
independent certified public accountants, to audit the books and
records of the Company for the 1996 fiscal year. Deloitte &
Touche served as the the Company's independent public accountants
for the fiscal year ended September 30, 1995. A representative
of Deloitte & Touche is expected to be present at the
shareholders meeting and will be available to respond to any
appropriate questions raised at the meeting. Such representative
may make a statement if desired.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K for the year
ending September 30, 1995 will be sent to any shareholder of the
Company upon request. Requests for a copy of this report should
be addressed to the Secretary of the Company at the address
provided on the first page of this proxy statement.
SHAREHOLDER PROPOSALS
Any shareholder proposal which may properly be included in
the proxy solicitation material for the 1995 annual meeting of
shareholders must be received by the Secretary of the Company no
later than December 31, 1996.
GENERAL
The cost of preparing, printing and mailing the enclosed
proxy, accompanying notice and proxy statement, and all other
costs in connection with solicitation of proxies will be paid by
the Company including any additional solicitation made by letter,
telephone or telegraph. Failure of a quorum to be present at the
meeting will necessitate adjournment and will subject the Company
to additional expense. The Company's annual report, including
financial statements for the 1995 fiscal year, is included in
this mailing.
Management of the Company does not intend to present and
does not have reason to believe that others will present any
other items of business at the annual meeting. However, if other
matters are properly presented to the meeting for a vote, the
proxies will be voted upon such matters in accordance with the
judgment of the persons acting under the proxies.
Please complete, sign and return the enclosed proxy promptly. No
postage is required if mailed in the United States.
CEL-SCI CORPORATION
This Proxy is Solicited by the Board of Directors
The undersigned stockholder of the Company, acknowledges
receipt of the Notice of the Annual Meeting of Stockholders, to
be held June 14, 1996, 10:00 A.M. local time, at the Holiday Inn
Hotel & Suites, 625 First Street, Alexandria, Virginia 22314, and
hereby appoints Maximilian de Clara or Geert R. Kersten with the
power of substitution, as Attorneys and Proxies to vote all the
shares of the undersigned at said annual meeting of stockholders
and at all adjournments thereof, hereby ratifying and confirming
all that said Attorneys and Proxies may do or cause to be done by
virtue hereof. The above- named Attorneys and Proxies are
instructed to vote all of the undersigned's shares as follows:
(1)To elect the directors who shall constitute the
Company's Board of Directors for the ensuing year.
/ / FOR all nominees listed below (except as marked to the
contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST BELOW)
/ / WITHHOLD AUTHORITY to vote for all nominees listed
below
Nominees:
Maximilian de Clara Geert R. Kersten Mark V.
Soresi
F. Donald Hudson Edwin A. Shalloway
(2)To approve the adoption of the Company's 1996 Employee
Incentive Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
(3)To approve the adoption of the Company's 1996
Non-Qualified Stock Option Plan which provides for the
issuance of up to 400,000 shares of the Company's Common
Stock upon the exercise of options which may be granted
pursuant to the Plan.
/ / FOR / / AGAINST / / ABSTAIN
(4)To ratify the appointment of Deloitte & Touche as the
Company's independent accounts for the fiscal year ending
September 30, 1996.
/ / FOR / / AGAINST / / ABSTAIN
To transact such other business as may properly come
before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DISCRETION
IS INDICATED, THIS PROXY WILL BE VOTED IN FAVOR OF ITEMS 1
THROUGH 4.
Dated this day of ,
1996.
(Signature)
(Signature)
Please sign your name exactly as it
appears on your stock certificate.
If shares are held jointly, each
holder should sign. Executors,
trustees, and other fiduciaries
should so indicate when signing.
Please Sign, Date and Return this
Proxy so that your shares may be
voted at the meeting.
